ERISA-District Court Upholds the Trustees’ Decision To Disregard The Plaintiff’s Self-Contributions In Calculating His Pension Benefit

Love v. Central States, Southeast and Southwest Areas Pension Plan, Case No. 1:11-cv-275-HJW (S.D. Ohio, Western Division, 2012), involved a pension calculation made by the Central States, Southeast and Southwest Areas Pension Plan (“the Plan”). The Plan is a multi-employer pension plan. It is maintained for the benefit of employees of contributing employers who have collective bargaining agreements with local unions affiliated with the International Brotherhood of Teamsters (the “Teamsters”).

The plaintiff in this case (the “Plaintiff”) was employed by Zenith Logistic, Inc. (“Zenith”) beginning in 1980 and was a member of the Teamsters. The Plaintiff last worked for Zenith during the week of November 9-13, 2003. At that time, the Plaintiff had approximately 24 years of service towards his pension under the Plan. The Plaintiff, with the assistance of the Teamsters, negotiated with Zenith for the Plaintiff to be designated as being on “leave status” so that he could make self-contributions to the Plan in order to reach the 25-year mark necessary to obtain a larger pension. On January 22, 2004, the Plaintiff, the Teamsters, and Zenith signed a letter agreement, stating that Zenith would put the Plaintiff on a “terminal leave of absence”, that the Plaintiff would not be eligible to return to work, and that the Plaintiff would be kept on the roster only as long as necessary during calendar year 2004 to qualify for retirement benefits (the “Letter Agreement”). Under this arrangement, the Plaintiff made 39 weeks of self-contributions to Zenith, which Zenith eventually forwarded to the Plan. Later, in a letter from Zenith to the Plan dated June 6, 2005, Zenith confirmed that the Plaintiff would not have returned to work at Zenith, even if capable, prior to his date of retirement (the “Zenith Letter”).

The Plaintiff applied for his retirement pension in July of 2004. Payments began, but they were lower than expected, because the Plan recognized only 24 years of service for the Plaintiff (the monthly payments were $610, when Plaintiff was expecting about $1,500). Why? The Plan’s Trustees decided to not recognize the Plaintiff’s self-contributions, on the grounds that the Plaintiff had been terminated from employment, and was not on leave status, and was thus ineligible to make self-contributions. As such, the Trustees would not increase the amount of the Plaintiff’s monthly pension payment. This suit ensued. The question for the Court: could it uphold the Trustees’ decision to ignore the self-contributions?

In analyzing the case, the Court said that the “arbitrary and capricious” standard of review applies, since the Plan gives the Trustees discretionary authority to determine eligibility for benefits and to construe the Plan’s terms. Further, where the plan administrator for a pension fund-here the Trustees- offers a reasonable explanation for its decision, and the decision is based upon the evidence, the decision is not arbitrary and capricious. Here, the Trustees’ decision to disregard the Plaintiff’s self-contributions is based on the Letter Agreement and the Zenith Letter. After reviewing these two letters, the Trustees concluded that the Plaintiff had not actually been on a leave of absence, but rather, had been terminated from his employment, and thus, was ineligible to make self-contributions. The Court concluded that the Trustees’ decision was based on well-articulated reasons supported by substantial evidence in the administrative record and was not “arbitrary or capricious.” Therefore, the Court upheld the Trustees’ decision, ruling that the Plaintiff’s pension payments should not be increased.

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