By Pension and Benefits Editorial Staff
A multiemployer pension plan’s board of trustees did not abuse its discretion when it denied an application for early retirement benefits submitted by a participant currently working as a union administrator, because, under the plan’s prohibited employment clause, his administrative work was in the “electrical industry,” the US. Court of Appeals in San Francisco (CA-9) has ruled. The plan’s language was ambiguous, the court determined, and both the board’s and the participant’s arguments presented plausible interpretations of the plan.
Union administrator. A participant in a multiemployer pension plan worked for 20 years as an electrician. He subsequently held several full-time positions with his union, the International Brotherhood of Electrical Workers (IBEW), including business manager, and international field representative. As his local’s business manager, he also served for a time as a trustee on the six-member board administering the plan.
As he approached age 55, the participant, who was then working as a union district vice president, applied for an early retirement pension from the plan. He met the age and service requirements for the early pension, but there was a dispute within the Board as to whether the participant’s current job as a union administrator was, under the terms of the plan, “the performance of services in any capacity in the electrical industry.” Such work is “prohibited employment” that bars an otherwise eligible participant from receiving benefits.
The plan defines “electrical industry” as “all branches of the electrical trade in the United States.” The participant argued that his union work was “administrative” in nature, requiring no use of his skills as an electrician. The Board, after internal dispute and consultation with legal counsel, denied the claim. It determined that the participant’s union employment constituted prohibited employment because it entailed “the performance of services of some capacity in the electrical industry.”
After the board denied the participant’s appeal of its decision, the participant filed suit in district court under ERISA Sec. 502(a)(1)(B), arguing he was entitled to the early retirement benefits. The district court determined that the board did not abuse its discretion in its interpretation of the plan’s “prohibited employment” provision. Both the board’s and the participant’s interpretations were reasonable, the trial court said.
The appellate court upheld the lower court’s ruling in favor of the plan. It first rejected the participant’s contention that personal animus against him on the part of board members resulted in “procedural irregularities” that in and of themselves constituted an abuse of the board’s discretion. At most, the court reasoned, the current board of trustees subscribed to a different interpretation of the plan’s “prohibited employment” provision and was unwilling to change that interpretation. While this may indicate “stubbornness” on the part of the board, it did not reveal “serious procedural irregularities.”
The court next determined that the board did not abuse its discretion when it interpreted plan terms to mean that electrical industry work includes any type of livelihood involving electrical work, including administrative work for the union. The board’s construction of the plan did not clearly conflict with plan language; it did not nullify other provisions of the plan and it had a rational connection to the primary purpose of the plan.
Source: O’Rourke v. Northern California Electrical Workers Pension Plan (CA-9).
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