Capocci v. General Motors Corp., 444 F. Supp. 1306 (D. Haw. 1978)
February 9, 1978
v.
GENERAL MOTORS CORPORATION, Individually and as trustee under the General Motors Hourly Rated Pension Plan, and General Motors Hourly Rated Pension Plan, Defendants.
United States District Court, D. Hawaii.
*1307 Robert A. Smith, Maciszewski & Smith, Honolulu, Hawaii, for plaintiffs.
Robert S. Katz, Torkildson, Katz, Jossem & Loden, Honolulu, Hawaii, for defendants.
DECISION ON CROSS MOTIONS FOR SUMMARY JUDGMENT
SAMUEL P. KING, Chief Judge.
After thirty-six years of employment with General Motors Corporation (GM), Patsy Capocci retired on August 1, 1972, at the age of fifty-eight years and nine months. He moved to Hawaii with his wife, Edith, and, in January 1973, obtained employment as a baggage inspector at the Kauai airport. Contrary to his union negotiated pension plan, Mr. Capocci earned more than the social security maxima for 1973, 1974, and 1975.
The GM plan provides that (1) any earnings exceeding the social security maxima for years during which the pensioner receives an early retirement supplement trigger a penalty equaling twice the excess, (2) early retirement supplements ordinarily due from the date of the excess are suspended until the penalty is recovered, (3) the penalty is not itself recovered against normal retirement benefits, and (4) if the pension plan discovers the excess earnings sometime after the excess arose, the interim supplemental payments are recaptured in undoubled amount against any available pension benefits, unless the pensioner repays the excess in lump sum.
Mr. Capocci's excess earnings for the three years were $1840.12, $4424.00, and $6593.00 respectively, totaling $12,857.12. The penalty was therefore $25,714.24 and supplements totaling $14,146.06 were to be suspended from August 1973 (the month after Capocci first exceeded $2100 in 1973) through November 1978 (the month after he turns sixty-five). Since GM learned of the excesses only after $9173.97 in interim payments were made, it began recapturing this overpayment in September 1976. There being no supplemental benefits available for set offs they had been suspended GM recaptured against Capocci's basic benefits. Because of this set off, Capocci will receive no benefits until July 1979, eight months after he obtains normal retirement age of sixty-five. The appendix summarizes the accounting.
Patsy and Edith Capocci brought this action, claiming that (1) the suspension and recapture violates nonforfeiture provisions of the Employee Retirement Income Security Act of 1974 (ERISA), (2) the union negotiated contract providing for the pension plan is adhesive and unconscionable, (3) defendants are prevented from recapturing the overpayments by the doctrine of estoppel in pais, and (4) the suspension of twice the excess earnings is part of unenforceable liquidated damages. Plaintiffs have moved for partial summary judgment on their first claim. Defendants have filed a cross motion for summary judgment on all claims.
This opinion deals exclusively with the first claim. The court is of the opinion that Rehmar v. Smith, 555 F.2d 1362, 1368 (9th Cir. 1976), disposes with the question of adhesion and unconscionability. Furthermore, genuine issues of material fact remain as to estoppel and liquidated damages. For these reasons, defendants' motion is granted on the second claim and denied on the third and fourth.
Plaintiff Patsy Capocci's early retirement supplement is not governed by ERISA § 203(a), 29 U.S.C. § 1053(a) (Supp. V 1975). Congress did not intend for early *1308 retirement supplements to be unforfeitable, Conf.Rep. No. 1280, 93d Cong., 2d Sess. 273, reprinted in [1974] U.S.Code Cong. & Admin.News pp. 5038, 5055, and ERISA is structured to implement that intent. The Employee Retirement Income Security Act of 1974 provides in section 203(a) that except in a few circumstances inapplicable here, "an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age . . .." 29 U.S.C. § 1053(a) (Supp. V 1975). Normal retirement age is defined as the earlier of the following: (1) normal retirement age as defined in the plan and (2) the later of (a) age sixty-five or (b) the tenth anniversary of the time a plan participant commenced participation in the plan. ERISA § 3(24); 29 U.S.C. § 1002(24) (Supp. V 1975). Plaintiffs argue that because the early retirement supplements constitute accrued benefits payable after Patsy Capocci had been a plan participant for over ten years, the supplements were nonforfeitable. This is not the case.
General Motors' plan defines normal retirement age as age sixty-five. Under ERISA's definition of "normal retirement age," once a plan sets the age of sixty-five for normal retirement, normal retirement age can never be before the participant turns sixty-five. Consequently, only Capocci's benefits that are payable from December 1978 are nonforfeitable. Even so, to recapture against these benefits is merely to offset overpayments made from August 1973 through November 1978. Although this kind of recapture, beyond normal retirement age, might in some cases be due to overpayments made after the suspension has effected the recovery of undoubled excesses, this would be a matter better left to a common law claim of unenforceable liquidated damages.
As to the first claim, plaintiffs' motion is denied, and defendants', granted.
APPENDIX
DATE PENSION OVERPAID RECAPTURE PENALTY EVENT
==== ======= ======== ========= ======= =====
BASIC EARLY
1972
AUG 198.41 283.83 0.00 0.00 0.00 -Pension begins
SEPT 198.41 283.83 0.00 0.00 0.00
OCT 198.41 283.83 0.00 0.00 0.00
NOV 198.41 283.83 0.00 0.00 0.00
DEC 198.41 283.83 0.00 0.00 0.00
1973
JAN 198.41 283.83 0.00 0.00 0.00 -Kauai employment
begins
FEB 198.41 283.83 0.00 0.00 0.00
MAR 198.41 283.83 0.00 0.00 0.00
APR 198.41 283.83 0.00 0.00 0.00
MAY 198.41 283.83 0.00 0.00 0.00
JNE 198.41 283.83 0.00 0.00 0.00
JLY 198.41 283.83* 0.00 0.00 0.00 -Earnings exceed
$2100 [$3940.12]
*1309
DATE PENSION OVERPAID RECAPTURE PENALTY EVENT
==== ======= ======== ========= ======= =====
BASIC EARLY
1973
AUG 198.41 283.83* 283.83 0.00 0.00
SEPT 198.41 283.83* 283.83 0.00 0.00
OCT 218.25 263.99* 263.99 0.00 0.00
NOV 218.25 263.99* 263.99 0.00 0.00
DEC 218.25 263.99* 263.99 0.00 0.00
1974
JAN 218.25 263.99* 263.99 0.00 0.00
FEB 218.25 263.99* 263.99 0.00 0.00
MAR 218.25 263.99* 263.99 0.00 0.00
APR 218.25 263.99* 263.99 0.00 0.00
MAY 218.25 263.99* 263.99 0.00 0.00
[1974]
JNE 218.25 263.99* 263.99 0.00 0.00
JLY 218.25 263.99* 263.99 0.00 0.00 -Earnings exceed
$2400 [$6824.00]
AUG 218.25 263.99* 263.99 0.00 0.00
SEPT 218.25 263.99* 208.69+55.30 0.00 0.00 -1974 overpayments
begin with $55.30
OCT 221.85 260.39* 260.39 0.00 0.00
NOV 221.85 260.39* 260.39 0.00 0.00
DEC 221.85 260.39* 260.39 0.00 0.00
1975
JAN 221.85 260.39* 260.39 0.00 0.00
FEB 221.85 260.39* 260.39 0.00 0.00
MAR 221.85 260.39* 260.39 0.00 0.00
APR 221.85 260.39* 260.39 0.00 0.00
MAY 221.85 260.39* 260.39 0.00 0.00
JNE 221.85 260.39* 260.39 0.00 0.00
*1310
DATE PENSION OVERPAID RECAPTURE PENALTY EVENT
==== ======= ======== ========= ======= =====
BASIC EARLY
1975
JLY 221.85 260.39* 260.39 0.00 39.32 -Overpayments of
penalties '73 & '74
AUG 221.85 260.39* 260.39 0.00 260.39
SEPT 221.85 260.39* 260.39 0.00 260.39
OCT 230.99 251.25* 251.25 0.00 251.25
NOV 230.99 251.25* 251.25 0.00 251.25
DEC 230.99 201.25* 201.25 0.00 201.25 -Patsy turns 62
1976
JAN 230.99 201.25* 201.25 0.00 201.25
FEB 230.99 201.25* 201.25 0.00 201.25
MAR 230.99 201.25* 201.25 0.00 201.25
APR 230.99 201.25* 201.25 0.00 201.25
MAY 230.99 201.25* 201.25 0.00 201.25
JNE 230.99 201.25* 201.25 0.00 201.25
JLY 230.99 201.25* 201.25 0.00 201.25
AUG 230.99 201.25* 201.25 0.00 201.25
[1976]
SEPT 230.99 201.25* 0.00 230.99 201.25 -Recapture begins
OCT 244.03 188.71* 0.00 244.03 188.71
NOV 244.03 188.71* 0.00 244.03 188.71
DEC 244.03 188.71* 0.00 244.03 188.71
1977
JAN 244.03 188.71* 0.00 244.03 188.71
FEB 244.03 188.71* 0.00 244.03 188.71
MAR 244.03 188.71* 0.00 244.03 188.71
APR 244.03 188.71* 0.00 244.03 188.71
MAY 244.03 188.71* 0.00 244.03 188.71
JNE 244.03 188.71* 0.00 244.03 188.71
JLY 244.03 188.71* 0.00 244.03 188.71
*1311
DATE PENSION OVERPAID RECAPTURE PENALTY EVENT
==== ======= ======== ========= ======= =====
BASIC EARLY
1977
AUG 244.03 188.71* 0.00 244.03 188.71 -Penalty for 1975
withheld from this pt.
SEPT 244.03 188.71* 0.00 244.03 188.71
OCT 250.55 181.69* 0.00 250.55 181.69
NOV 250.55 181.69* 0.00 250.55 181.69
DEC 250.55 181.69* 0.00 250.55 181.69
1978
JAN 250.55 181.69* 0.00 250.55 181.69
FEB 250.55 181.69* 0.00 250.55 181.69
MAR 250.55 181.69* 0.00 250.55 181.69
APR 250.55 181.69* 0.00 250.55 181.69
MAY 250.55 181.69* 0.00 250.55 181.69
JNE 250.55 181.69* 0.00 250.55 181.69
JLY 250.55 181.69* 0.00 250.55 181.69
AUG 250.55 181.69* 0.00 250.55 181.69
SEPT 250.55 181.69* 0.00 250.55 181.69
OCT 266.22 166.02* 0.00 266.22 166.02
NOV 266.22 166.02* 0.00 266.22 166.02 -Last disqualified
supplement
DEC 349.69 0.00 0.00 349.69 0.00 -Patsy turns 65
1979
JAN 349.69 0.00 0.00 349.69 0.00
FEB 349.69 0.00 0.00 349.69 0.00
MAR 349.69 0.00 0.00 349.69 0.00
APR 349.69 0.00 0.00 349.69 0.00
MAY 349.69 0.00 0.00 349.69 0.00
JNE 349.69 0.00 0.00 349.69 0.00
JLY 349.69 0.00 0.00 27.75 0.00 -Recapture ends
AUG 349.69 0.00 0.00 0.00 0.00
SEPT 349.69 0.00 0.00 0.00 0.00
*1312
DATE PENSION OVERPAID RECAPTURE PENALTY EVENT
==== ======= ======== ========= ======= =====
BASIC EARLY
1979
OCT 349.69 0.00 0.00 0.00 0.00
NOV 349.69 0.00 0.00 0.00 0.00
DEC 349.69 0.00 0.00 0.00 0.00
EXPLANATION:
1. "*" indicates early retirement benefits suspended to
recapture excess earnings in 1973, 1974, and 1975.
2. Under PENALTY, the amounts are those suspended to effect
the penalty. The column contains zeros until July 1975.
By July the pension plan has recovered all of the undoubled
excess for 1973 and 1974. In August 1977, the pension plan
begins that part of the suspension of benefits to effect
the penalty for excess earnings in 1975.
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