ERISA-Ninth Circuit Overturns The Trustees’ Interpretation of Plan Language, Which Equated Unskilled Jobs With The Job Of Skilled Mechanic

In Tapley v. Locals 302 and 612 of the International Union of Operating Engineers Employers Construction Industry Retirement Plan, No. 11-35220 (9th Cir. 2013), the plaintiffs were appealing a judgment of the district court, upholding the interpretation of plan language by the Trustees of their pension plan. The Trustees determined that the plaintiffs’ respective post-retirement jobs as a traffic flagger and snow plow operator fell into the same “job classification” as their former union jobs as skilled mechanics. On that basis, each plaintiff was precluded from working his job if he wanted to collect retirement benefits. The plaintiffs brought suit against the Trustees under ERISA, alleging that the Trustees’ interpretation of the plan language was an abuse of discretion. The district court affirmed the Trustees’ interpretation.

In analyzing the case, the Ninth Circuit Court of Appeals (the “Court”) said that the Trustees’ interpretation of the plan is entitled to a deferential review, since the plan gives them broad power to determine eligibility for benefits. However, the Court continued, by construing the plan language to preclude the plaintiffs from retiring to unskilled jobs entailing roadside work, the Trustees effectively re-write the plan to sweep within its ambit an overly broad range of skills. Common sense strongly suggests that a position flagging traffic or plowing snow is not in the same “job classification” as a skilled mechanic repairing heavy equipment utilizing specialized skills acquired over a long career. These two positions have little in common beyond basic skills widely acquired through everyday experiences. The record before us, the Court said, fails to identify a single instance when the Trustees found any overlapping skills or duties that were “material” or “significant,” much less essential to the work performed.

The Court said further, that it is not for this Court to proffer a reasonable interpretation of plan language, but instead to identify and reject any interpretation that is arbitrary, misfocused and contrary to the intent of those responsible for its terms. We must do so here. We are unable to see how any sensible application of a skills and duties test to the established facts can support the Trustees’ conclusion. The Court concluded by saying that, for the foregoing reasons, the Court reverses the district court’ decision (and overturns the Trustees’ interpretation of the plan), and returns the matter to the Trustees for reevaluation of the merits in a manner consistent with the Court’s opinion.

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