     06-3923-cv
     Robinson v. Sheet Metal W orkers’ National Pension Fund Plan A



 1                                UNITED STATES COURT OF APPEALS
 2
 3                                       FOR THE SECOND CIRCUIT
 4
 5
 6
 7                                               August Term, 2007
 8
 9      (Argued: October 5, 2007                                         Decided: February 5, 2008 )
10
11                                            Docket No. 06-3923-cv
12
13
14
15
16
17        ROBERT J. ROBINSON JR., on behalf of himself and all others similarly situated and
18          THOMAS J. DONOHUE, on behalf of himself and all others similarly situated,
19
20                                              Plaintiffs-Appellants,
21
22                                                       – v. –
23
24   SHEET METAL WORKERS’ NATIONAL PENSION FUND, PLAN A, MARC E. LEBLANC,
25       MICHAEL J. SULLIVAN, CHARLES HOLT, JOHN G. AGRELA, KENNETH D.
26   ALEXANDER, RONALD PALMERICK, BRUCE STOCKWELL, PHIL MEYERS, R. DEAN
27                        STEWARD and PAUL COLLINS JR.,
28
29                                             Defendants-Appellees.
30
31
32
33
34
35   Before: FEINBERG, CALABRESI, and WESLEY, Circuit Judges.
36
37            Appellants assert that the amendment of their disability pension, after they had become
38   disabled and were receiving benefits from it, violates the Employee Retirement and Income
39   Security Act of 1974, 29 U.S.C. §§ 1001-1461, and constitutes both a breach of contract and a
40   breach of fiduciary duty. Deciding, by agreement of the parties, on a stipulated record, the
41   district court found for Appellees on all claims.
42            The appeal is dismissed as moot as to Appellant Donohue and all class members over the
43   age of fifty-five, and the judgment of the district court is affirmed as to Appellant Robinson and
44   all other class members.


                                                          -1-
 1
 2
 3                                         KATHRYN EMMETT, Emmett & Glander (Christine
 4                                         Caulfield, on the brief), Stamford, Conn., for Plaintiffs-
 5                                         Appellants.
 6
 7                                         STEPHEN M. ROSENBLATT, Deputy General Counsel,
 8                                         Sheet Metal Workers’ National Pension Fund, Alexandria,
 9                                         Va., for Defendants-Appellees.
10
11
12
13
14   GUIDO CALABRESI, Circuit Judge:

15          Plaintiffs-Appellants Robert Robinson, Jr. and Thomas Donohue and the class they

16   represent were recipients of an Industry-Related Disability Pension (“IRD”) from Defendant-

17   Appellee Sheet Metal Workers’ National Pension Fund. In 2004, the IRD was amended to add

18   an earnings limitation. Appellants, who were receiving the IRD before the 2004 amendment

19   went into effect, assert that the amendment’s application to them violates the Employee

20   Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461, and constitutes

21   both a breach of contract and a breach of fiduciary duty.1 The district court, Kravitz, J., acting

22   on a stipulated record, found for Appellees on all issues. See Robinson v. Sheet Metal Workers’

23   Nat’l Pension Fund, 441 F. Supp. 2d 405 (D. Conn. 2006). Appellants brought this timely

24   appeal.

25

26   I. BACKGROUND

27                                          A. The Pension Plan


               1
              Appellants also asserted in the district court that Appellees were promissorily estopped
     from applying the earnings limitation to them. See Robinson v. Sheet Metal Workers’ Nat’l
     Pension Fund, 441 F. Supp. 2d 405, 432-33 (D. Conn. 2006). Appellants, however, have not
     raised that issue before this Court; it is therefore waived. See Dillon v. Morano, 497 F.3d 247,
     255 (2d Cir. 2007).

                                                     -2-
 1          The Sheet Metal Workers’ National Pension Fund is a multi-employer plan, established in

 2   1966. In 1994, the Plan was amended by its Trustees to include the IRD, in addition to its

 3   Normal Retirement Pension, Early Retirement Pension, and Disability Pension. The IRD pays

 4   benefits to participants when they are “totally and permanently unable to return to employment

 5   in the Sheet Metal Industry,” but are capable of gainful employment in some other field. The

 6   IRD is available to employees who have not attained the Normal Retirement Age (sixty-five),

 7   but who have earned sufficient pension and service credits. IRD benefits are calculated as

 8   follows:

 9          The [IRD] shall be 10% greater than the amount of the Early Retirement Pension
10          . . . , except that in no event shall the [IRD] exceed the Normal Retirement Pension
11          amount . . . that would be payable if the Participant had attained Normal
12          Retirement Age on the day he became disabled.
13
14          Eligibility for the IRD “is determined by the Trustees, in their sole and absolute

15   discretion,” and the Trustees may make eligibility subject to periodic medical examinations.

16   “These terms and any other terms as deemed necessary by the Trustees may be required as a

17   prerequisite to the granting or continuance of an [IRD].” Beneficiaries who lose eligibility for an

18   IRD on account of recovery from their disability may be entitled to a different type of pension,

19   including Early Retirement or Normal Retirement. A participant who is eligible to receive

20   benefits under the Plan “shall be entitled upon retirement to receive the monthly benefits

21   provided for the remainder of his life, subject to the provisions of this Plan.”

22          The Plan gives the Trustees “the sole and absolute power, authority and discretion” to

23   interpret and apply the Plan. It moreover provides that the Trustees may “amend[] [it] at any

24   time . . . consistent with the provisions of the Trust Agreement” (emphasis added). Thus, the

25   Trustees’ amending power is limited by the provision that “no amendment shall be effective if it




                                                      -3-
 1   is deemed to decrease the accrued benefit of any Participant.”2 Under the Plan, “‘Accrued

 2   Benefit’ shall mean generally the annual pension benefit provided under the Plan commencing at

 3   Normal Retirement Age.” The Plan more specifically provides that

 4          a Plan Amendment that has the effect of (1) eliminating or reducing an early
 5          retirement benefit or a retirement-type subsidy or (2) eliminating an optional form
 6          of benefit (as determined under applicable Treasury Regulations), with respect to
 7          benefits attributable to service before the amendment shall be treated as reducing
 8          Accrued Benefits. In the case of a retirement-type subsidy, the preceding sentence
 9          shall apply only with respect to a Participant who satisfies (either before or after
10          the amendment) the pre-amendment conditions for the subsidy. In general, a
11          retirement-type subsidy is a subsidy that continues after retirement, but does not
12          include a qualified disability benefit (within the meaning of Section 411(a) (9) of
13          the Code), a medical benefit, a social security supplement, or a death benefit
14          (including life insurance).
15
16          The Plan also defines “Vested Status,” which is the status “attained when a Participant

17   acquires a nonforfeitable right to his Normal Retirement Benefit or a nonforfeitable right to 100

18   percent of his Accrued Benefit.” A participant acquires a nonforfeitable right to his Normal

19   Retirement Benefit upon reaching the Normal Retirement Age.

20          In accordance with their obligations under ERISA, 29 U.S.C. § 1022, Appellees have

21   issued Summary Plan Descriptions (“SPDs”), which summarize the terms of their plans. The

22   SPDs state that they do not comprehensively set forth all of the terms of the Plan. The SPDs in

23   the Plan before us repeatedly note that the Trustees have the authority to amend the Plan. Thus,

24   the 1997 SPD states that “[t]he Trustees are empowered to amend the Plan at any time in

25   accordance with the law and for such purposes as the Trustees deem appropriate.” And the 2002

26   SPD confirms that “[t]he Trustees reserve the right to amend, modify or terminate the Plan at any


            2
             There are two exceptions to the rule that no amendment can decrease the accrued benefit
     of any participant: (1) if the amendment is necessary to comply with federal law, and (2) if the
     amendment meets the requirements of § 302(c)(8) of ERISA and § 412(c)(8) of the Internal
     Revenue Code and the Secretary of Labor has either approved it or failed to disapprove it within
     ninety days. Neither exception is relevant here.

                                                    -4-
 1   time,” and also that “[t]he Board of Trustees reserves the right to terminate, modify, suspend or

 2   amend the Pension Plan at any time, in whole or in part, under circumstances allowed by ERISA

 3   and the terms of the governing Trust Agreement. The Board will make such changes to the Plan

 4   by Plan Amendment. You will be notified in writing of any changes that are made.”

 5          In a November 2004 amendment, the Industry-Related Disability Pension was renamed

 6   the Industry-Related Disability Benefit. The amended Plan, for the first time, imposed an

 7   earnings limitation on IRD benefits:

 8          Effective for Plan years beginning on or after January 1, 2005, an [IRD] recipient
 9          who earns $35,000 or more in any calendar year, in any employment whatsoever,
10          will be deemed no longer disabled for any purpose under the Plan and his benefit
11          shall terminate . . . .
12
13   IRD recipients were notified of this change by letter in December 2004.3

14

15                                             B. Appellants

16          Robert Robinson, Jr., who was born in 1955, began working in the sheet metal trade in

17   1973. After a hip replacement surgery in 1999, he applied for the IRD. The application form

18   stated that he would “receive the monthly benefit payment listed for [his] lifetime.” It also noted

19   that “Plan rules prohibit a pensioner receiving an [IRD] to work in Disqualifying Employment,

20   BUT allows [sic] any other employment without an earnings’ limitation.” His application was

21   granted, and he began receiving IRD benefits.

22          Thomas Donohue began working in the sheet metal industry in 1969. In 1998, he became

23   disabled. At the time, he was fifty-five years old and therefore had the option of retiring on

24   either an Early Retirement Pension or an IRD. Because the IRD offered greater benefits, he


            3
              In October 2005, the Plan was again amended to eliminate the earnings limitation for
     those fifty-five or older. See infra note 4.

                                                     -5-
 1   selected that option.

 2             In January 2005, Robinson filed an administrative appeal protesting the November 2004

 3   amendment and its application to his benefits. This appeal was denied. In June 2005, he filed

 4   this action; in September 2005, it was amended to add Donohue as a plaintiff. Appellants then

 5   moved to certify the case as a class action, and the parties agreed on a joint stipulation as to

 6   certification. The district court certified a class of “[a]ll receipients of an [IRD] from the Plan

 7   who commenced receiving an [IRD] at any time during the period of January 1, 1994 to

 8   December 31, 2004.”4 Shortly thereafter, the parties agreed to seek judgment on a stipulated

 9   record. And on July 27, 2006, the district court found for Appellees on all counts.

10

11   II. DISCUSSION

12             Before us, Appellants assert three claims. First, they argue that applying the earnings

13   limitation to their IRDs would violate ERISA’s “anti-cutback” rule, 29 U.S.C. § 1054(g).

14   Second, they contend that the earnings limitation constitutes a breach of contract. And finally,

15   they assert that the earnings limitation would, as to them, be a breach of Appellees’ fiduciary

16   duties.

17             We note first that Appellants’ fiduciary duties claim derives from the contract claim, the

               4
               The Plan was again amended in October 2005 to restrict the earnings limitation to those
     under the age of fifty-five. Donohue is therefore now unaffected by the limitation, and his
     claim—along with the claims of other class members over the age of fifty-five—is now moot.
     Robinson and the remainder of the class members are, however, unaffected. The Supreme Court
     has held that the mootness of the claims of even the only lead plaintiff does not moot a class
     action. See Kremens v. Bartley, 431 U.S. 119, 129-30 (1977); Franks v. Bowman Transp. Co.,
     Inc., 424 U.S. 747, 755-56 (1976); Sosna v. Iowa, 419 U.S. 393, 399 (1975). It follows a fortiori
     that the mootness of the claims of one of two lead plaintiffs does not moot the class action, so
     long as “there are questions of law or fact common to the class” and “the representative parties
     will fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(2), (4). As
     that is the case here, we proceed to consider the merits as to Robinson and those class members
     under the age of fifty-five.

                                                       -6-
 1   ERISA claim, or both. If Appellees owed a fiduciary duty to Appellants in this case, it must

 2   have arisen as a result of contractual or statutory obligations. And hence any fiduciary duty

 3   claim depends for its survival on the validity of these latter claims. It is these we therefore must

 4   examine.

 5          The district court thoroughly analyzed Appellants’ ERISA anti-cutback claims and

 6   rejected them. Robinson, 441 F. Supp. 2d at 416-26. We concur completely in that portion of

 7   the district court’s opinion. In particular, we agree with that court that the IRD is a welfare

 8   benefit plan, not a pension plan, as those terms are used in ERISA. We moreover agree with its

 9   determination that the IRD is an ancillary benefit, not an accrued benefit. Either of these

10   findings would suffice to exempt the IRD from ERISA’s anti-cutback rule.

11          We turn next to Appellants’ breach of contract claim. Because the district court’s

12   judgment was based entirely on a stipulated record, our standard of review for that claim is de

13   novo. Skoros v. City of N.Y., 437 F.3d 1, 13 (2d Cir. 2006). We have held that, “absent explicit

14   language to the contrary, a plan document providing for disability benefits promises that these

15   benefits vest with respect to an employee no later than the time that the employee becomes

16   disabled.” Feifer v. Prudential Ins. Co. of Am., 306 F.3d 1202, 1212 (2d Cir. 2002). Appellees

17   thus bear the burden of identifying “explicit language reserving [the Fund’s] right to terminate or

18   alter a disabled employee’s benefits.” Gibbs ex rel. Estate of Gibbs v. CIGNA Corp., 440 F.3d

19   571, 577 (2d Cir. 2006) (internal quotation marks omitted).

20          Appellees assert that their statements—in both the Plan and the SPDs—which note that

21   the Trustees may amend the Plan at any time suffice to satisfy this requirement. We agree. As

22   noted above, both the Plan itself and the SPDs state that the Trustees may amend the Plan “at

23   any time.” The sole express exception to this amending power is that no amendment may reduce



                                                      -7-
 1   an accrued benefit. The contractual question, therefore, becomes: did the amendment reduce an

 2   accrued benefit? And the answer to that question, in turn, depends on a series of linked

 3   definitions that are given in the Plan. We examine these in detail.

 4          (1) The Plan says, first, that an amendment that reduces a retirement-type subsidy is

 5   treated as reducing an accrued benefit. (2) It goes on to define “a retirement-type subsidy [as] a

 6   subsidy that continues after retirement,” but makes clear that such a retirement-type subsidy

 7   “does not include a qualified disability benefit (within the meaning of Section 411(a) (9) of the

 8   Code).” (3) That section of the Internal Revenue Code provides that “a qualified disability

 9   benefit is a disability benefit provided by a plan which does not exceed the benefit which would

10   be provided for the participant if he separated from the service at normal retirement age.” 26

11   U.S.C. § 411(a)(9)(B).

12          This latter definition settles the contractual matter before us, for:

13                  (1) The Plan explicitly states that the IRD cannot “exceed the Normal Retirement

14                  Pension amount . . . that would be payable if the Participant had attained Normal

15                  Retirement Age on the day he became disabled.”

16                  (2) This means that the IRD cannot exceed the benefit which would be provided if

17                  the participant separated from employment at the normal retirement age.

18                  (3) It follows that the IRD is a qualified disability benefit and is not a retirement-

19                  type subsidy under the Plan.

20                  (4) A reduction of the IRD therefore does not reduce an accrued benefit.

21   Because the impermissibility of decreasing an accrued benefit is the only stated exception to the

22   Trustees’ power to amend the Plan in the manner here done, and because a reduction in the IRD

23   is not a reduction of an accrued benefit, the unambiguous effect of the Plan’s and SPDs’

24   language is that the IRD benefit could be so amended.

                                                      -8-
 1          Appellants direct our attention to language in a number of Plan documents describing the

 2   IRD as a “lifetime” pension or a pension to be paid “for life.” We addressed a very similar

 3   situation in Abbruscato v. Empire Blue Cross & Blue Shield, 274 F.3d 90, 99 (2d Cir. 2001),

 4   where we said,

 5                   Here, . . . we have SPD language that both appears to promise lifetime life
 6          insurance coverage at a particular level and clearly reserves [the insurer’s] right to
 7          amend or terminate such coverage. Because the same document that potentially
 8          provided the “lifetime” benefits also clearly informed employees that these
 9          benefits were subject to modification, we conclude that the language contained in
10          [that document] is not susceptible to an interpretation that promises vested lifetime
11          . . . benefits.
12
13          As the district court correctly noted, the “lifetime” language in Plan documents was

14   “merely a factually correct statement of the benefits then provided by the Plan—benefits that

15   were expressly subject to amendment ‘at any time.’” Robinson, 441 F. Supp. 2d at 431; see also

16   Sprague v. Gen. Motors Corp., 133 F.3d 388, 401 (6th Cir. 1998) (“We see no ambiguity in a

17   summary plan description that tells participants both that the terms of the current plan entitle

18   them to health insurance at no cost throughout retirement and that the terms of the current plan

19   are subject to change.”). Indeed, the “lifetime” language in the Plan is expressly made “subject

20   to the provisions of this Plan,” which, of course, include the amendment provisions. Notably, in

21   the context of the IRD, the “lifetime” language cannot be taken literally to mean that, once a

22   participant begins to receive IRD benefits, he will necessarily remain entitled to them for the

23   remainder of his life. For example, the IRD clearly ends if the participant ceases to be disabled.

24   And the Plan explicitly states that an IRD recipient may be required to undergo periodic medical

25   examinations in order to provide “evidence of continued entitlement to such benefit.” Read in

26   context, then, the “lifetime” language does not give Appellants a contractual and absolute right

27   to continue receiving the IRD for their lives.

28

                                                      -9-
1   III. CONCLUSION

2          Under Feifer and Abbruscato, Appellants had no vested contractual right to continue

3   receiving the IRD. Moreover, their claim that applying the earnings limitation to their IRDs

4   violates ERISA’s anti-cutback rule has been aptly disposed of by the district court. In light of

5   the failure of those two arguments,5 Appellants’ fiduciary duty argument must fail as well.

6          Accordingly, the appeal is DISMISSED as to Appellant Donohue and those class

7   members over the age of fifty-five, and the judgment of the district court is AFFIRMED as to

8   Appellant Robinson and all other class members.




           5
             We decide only the case before us and deal just with the aforementioned amendments to
    the IRD. We have no occasion to consider, for example, whether ERISA would place
    restrictions on other types of amendments or would require particular language in SPDs when
    dealing with changes that could be draconian, e.g., a total elimination of benefits to people who,
    by joining the Plan, forewent other, guaranteed, benefits. All that is beyond the scope of the
    present case, and we express no view on it either way.

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