Unpublished Disposition, 935 F.2d 274 (9th Cir. 1991)Annotate this Case
United States Court of Appeals, Ninth Circuit.
Before KOZINSKI and O'SCANNLAIN, Circuit Judges, and McNAMEE,* District Judge.
Jerry Jantzen appeals the district court's grant of the Pension Plan for the California Ironworkers Field Pension Trust's motion for summary judgment and denial of his cross motion for summary judgment. We reverse and remand with instructions to the district court.
* Summary judgment is proper if no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The court must draw "all justifiable inferences" from the evidence in the non-movant's favor. Anderson, 477 U.S. at 255. We review a grant of summary judgment de novo. Jung v. FMC Corp., 755 F.2d 708, 710 (9th Cir. 1985).
* The trustees' interpretation of Section 9(a), as evidenced by their implementation of the Plan, was that a suspension of benefits under the Plan resulted in a new effective date for the pension. The trial court found Article VIII section 9(a) of the Plan to be ambiguous, and deferred to the trustees' interpretation pursuant to Jung. See Jung, 755 F.2d at 713. Section 9(a) provides:
Except as provided herein, if a Pensioner who is younger than Normal Retirement Age1 subsequently becomes employed in work of the type described in Section 8(a) of this Article, his pension payments shall be suspended for any calendar month in which he is so employed and, at the discretion of the Board of Trustees, for six (6) additional calendar months after ceasing such employment, but not beyond Normal Retirement Age. After that period, his pension shall again become payable. If a Disability Pensioner is re-employed after retirement and is again awarded a pension, he shall not be required to satisfy the foregoing six-month waiting period before his subsequent pension is effective.
In interpreting section 9(a), the trial court found that the first and last sentences in section 9(a) were in conflict, and that the conflict created an ambiguity with regard to "whether suspension leads to a new effective date."
When a pension plan contains a provision granting the plan administrator discretionary authority to construe the plan's terms, a denial of benefits is reviewed for abuse of discretion.2 Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Firestone modified this circuit's rule that courts must defer to trustees' interpretation of plan language when the language is ambiguous and the trustees' interpretation is not arbitrary and capricious. Id.; cf. Jung, 755 F.2d at 713. In interpreting provisions of a pension plan, courts look to the entire plan. See Jung, 755 F.2d at 715; Burditt v. Western Growers Pension Plan, 636 F. Supp. 1491, 1495-96 (C.D. Cal. 1986) (rejecting trustees' interpretation of plan that took section language out of context), aff'd per curiam, 818 F.2d 698 (9th Cir. 1987). In this case, a review of the entire Plan demonstrates that the first and last sentences of section 9(a) discuss different situations and should be interpreted separately.
The first sentence in section 9(a) uses the operative words "subsequently becomes employed in work of the type described in Section 8(a) of this Article," and provides for suspension and an additional six-month waiting period before payments are to resume. The first sentence applies generally to all pensioners who retire before Normal Retirement Age. The last sentence in section 9(a) applies only to disability pensioners and uses the operative words "is re-employed after retirement and is again awarded a pension," and affirmatively removes the six-month waiting period for resumption of payments.
Article VIII section 8(a) of the Plan defines the types of employment, depending on the effective date of the pension, pre-normal retirement age pensioners are prohibited from undertaking while receiving pension benefits. Re-employment, on the other hand, is not covered by section 8(a). Re-employment is covered under Article III section 10 of the Plan.3 Under section 10, a disability pensioner who becomes re-employed in Covered Employment stops receiving payments and begins accruing additional pension benefits. Upon subsequent retirement, the pensioner receives a new pension based on his age and the new credits earned. Section 10(a), (b). The pension amount is calculated according to the provisions in effect at the time of the subsequent retirement. Section 10(e). This explains why the last sentence of section 9(a), referring to re-employment, mentions a new pension effective date.
Courts interpret trust provisions in light of the "natural reading" of the provisions. See Firestone, 489 U.S. at 117-18. In this case, a natural reading of the various Plan provisions demonstrates that becoming employed in work prohibited under section 8(a) is not the same as re-employment. The first and last sentences of section 9(a) apply to different situations, and should not be construed together. Therefore, the portion of the last sentence in section 9(a) referring to a subsequent pension becoming effective is not part of the analysis of whether the suspension of Jantzen's pension resulted in a new effective date.
Section 9(a)'s effect on pensioners who engage in prohibited employment is clear when the last sentence is left out. Pensioners who engage in prohibited employment are subject to suspension and recoupment of their benefits. The pension again becomes payable once the pensioner ceases the prohibited employment. Nothing in any of the Plan's provisions implies that the pension terminates upon a pensioner's acceptance of prohibited employment.
The process for resuming benefits demonstrates this point even more clearly. "A Participant whose pension has been suspended shall advise the Trustees in writing when disqualifying employment has ended. Benefit payment shall be held back until such notice is filed with the Trustees." Plan Art. VIII Sec. 9(e). Thus, section 9(e) made Jantzen's "application for pension" unnecessary, and the fact that he filled out the application is immaterial to the legal question of whether Jantzen's suspension and reinstatement resulted in a new effective date under the Plan. Once Jantzen notified the Plan that his prohibited employment had ceased, the trustees no longer were entitled to hold back his payments.
The language of the Plan does not provide for a new effective date when a pension is suspended and reinstated. Instead, a natural reading of the language demonstrates that benefits merely resume upon notification that the pensioner no longer is engaged in prohibited employment. The trustees' interpretation of the Plan was contrary to the Plan's plain meaning and was, therefore, unreasonable and an abuse of the trustees' discretion. Therefore, the trial court's reliance on the trustees' interpretation was misplaced.
The trustees' interpretation of the Plan also contravened Department of Labor regulations covering the administration of pension plans under ERISA. ERISA section 203(a) (3) (B), 29 U.S.C. § 1053(a) (3) (B), provides that pension benefits shall not be treated as forfeitable merely because a plan provides for suspension of benefits when an employee engages in prohibited employment. The Secretary of Labor has promulgated regulations to carry out the purposes of section 203(a) (3) (B). See 29 C.F.R. Sec. 2530.203-3 (1990). 29 C.F.R. section 2530.203-3(b) (2) requires a plan to resume payments "no later than the first day of the third calendar month after the calendar month in which the employee ceases" his prohibited employment, so long as the employee complies "with any reasonable procedure adopted by the plan for notifying the plan that he has ceased such employment."
Thus, the Department of Labor regulations provide for suspension and resumption of payments, not termination and reapplication. The regulations require resumption of payments once a plan receives notice that a pensioner no longer is engaging in prohibited employment. They do not require a pensioner to re-apply for benefits.
The facts before the trial court made it look as though Jantzen re-applied for his pension, because Jantzen filled out a new "Application for Pension" and "Disability Retirement Declaration," and the trustees approved his "application." Despite the conclusion suggested by those facts, however, the legal result under the regulations was that Jantzen notified the Plan of his renewed eligibility and the Plan acknowledged his eligibility status. Thus, although the trial court's interpretation of the facts was objectively reasonable, the regulations compel a different result. In addition, the conflict between the regulations and the trustees' interpretation of the Plan precluded the trial court from deferring to the trustees' interpretation.
The trustees' interpretation of the Plan language was unreasonable when viewed in the context of the entire Plan. The trustees' interpretation also contradicted the regulations promulgated by the Department of Labor. Therefore, the trial court should not have deferred to the trustees' interpretation of the Plan language, and should not have granted summary judgment in the Plan's favor.
The judgment in favor of the Pension Plan for the California Ironworkers Field Pension Trust is reversed, and this matter is remanded for entry of judgment in Jantzen's favor. Jantzen is entitled to his attorney's fees and costs on appeal. 29 U.S.C. § 1132(g) (1).
(e) A Disability Pensioner who recovers from his total disability and returns to Covered Employment shall subject to the provisions of Section 10 of Article III, be entitled, upon his subsequent retirement, to a pension in an amount calculated at the amount payable under the applicable provision of Article III at the time of his subsequent retirement, including any additional Pension Credit earned during his period of subsequent employment.
The Honorable Stephen M. McNamee, United States District Judge for the District of Arizona, sitting by designation
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit R. 36-3
Normal Retirement Age is 65 years of age. Plan Art. I Sec. 22
Counsel for Jantzen conceded at oral argument that the Plan grants the trustees discretionary authority to interpret its provisions
Section 10 provides, in pertinent part:
A Disability Pensioner who recovers from his disability shall from and after such date of recovery, no longer be entitled to a Disability Pension, and he may re-enter Covered Employment prior to Normal Retirement Age and will thereupon resume the accrual of Pension Credit and be entitled to a Regular, Early Retirement or Disability Pension calculated in accordance with the applicable Provisions of this Article III, with the following exceptions:
(a) In the case of a Disability Pensioner who initially retired prior to January 1, 1980, and recovers from his disability on or after January 1, 1980, the amount of Pension Credit used to determine the amount of his pension on his subsequent retirement shall be based on the number of Pension Credits used to determine the amount of his initial Disability Pension plus the number of Pension Credits earned during his subsequent period of work in Covered Employment, if any, subject to the maximums provided by this Plan.
(b) A Pensioner who returns to Covered Employment shall, upon his subsequent retirement, be entitled to receive an increased pension based on his age and Pension Credit accumulated during his subsequent period(s) of work in Covered Employment (subject to the maximums provided by this Plan), except that the pension payable upon his subsequent retirement(s) shall be reduced by the product of 1.0 percent and the total of an (sic) Early Retirement Pension payments he received during his previous period(s) of retirement and prior to the Normal Retirement Age.
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