Grandson v. Western Lake Superior Piping Industry Pension Plan

Background

James Grandson participated in the Western Lake Superior Piping Industry Pension Plan, a defined-benefit pension plan governed by the Employee Retirement Income Security Act (ERISA). The plan provided normal retirement benefits at age 62. Participants who retired later could be eligible for an actuarial increase, meaning an increase designed to account for delaying payment of benefits.

The plan stated that no actuarial increase would be provided for months in which a participant engaged in “Disqualifying Employment” if the requirements of a federal regulation were satisfied. At the relevant time, the plan defined Disqualifying Employment as at least 40 hours of work in the same covered industry, geographic area, and trade or craft, with the definition referring to the period after the participant “commenced benefits.”

Grandson continued working for the same contributing employer after turning 62 and did not begin receiving retirement benefits. After he asked how his benefits would be calculated, the Trustees concluded that he was engaged in Disqualifying Employment and denied him an actuarial increase. Grandson challenged that decision through multiple letters and requests for review. The Trustees ultimately treated their November 2022 decision as final and told him that his administrative remedies were exhausted.

Grandson filed this action on January 27, 2023. He sought benefits under ERISA, alleged a breach of fiduciary duty under ERISA, and sought attorneys’ fees and costs. The parties each moved for summary judgment, which asks the court to rule when the material facts are not genuinely disputed and one side is legally entitled to judgment.

Benefits Claim

The court first held that Grandson had exhausted the required administrative remedies. The 60-day deadline cited by the Defendants applied to challenging the suspension of benefits, but Grandson was challenging the later calculation of those suspended benefits. The Trustees also treated his submissions as an administrative appeal and told him that his administrative remedies were exhausted after the November 2022 decision.

The court reviewed the Trustees’ decision under ERISA’s abuse-of-discretion standard. Under that standard, an administrator’s interpretation must be reasonable and supported by substantial evidence; an unreasonable decision may be reversed as arbitrary and capricious.

The court concluded that the Trustees’ interpretation contradicted the plain language of the plan. Grandson had not commenced benefits while he continued working, so he could not be classified as engaging in Disqualifying Employment under the plan’s applicable definition. The court rejected the argument that the federal regulation’s separate definition of “section 203(a)(3)(B) service” changed the result. Even if the regulation’s other requirements were satisfied, the plan still required Grandson to be engaged in Disqualifying Employment as the plan itself defined that term.

The court also concluded that enforcing the plan’s language did not make the Disqualifying Employment provision meaningless. Instead, the provision could apply after a participant began receiving benefits and then continued working. The court further found that the plan’s purposes and the evidence about the Trustees’ past interpretations did not overcome the plan’s unambiguous language. The Trustees therefore abused their discretion by denying Grandson an actuarial increase.

Other Claims and Fees

The court did not address Grandson’s alternative arguments about notice deficiencies or procedural irregularities because it granted judgment on the benefits claim based on the plan’s language. It also did not address the alternative breach-of-fiduciary-duty claim, although it noted that the record appeared to contain multiple material factual disputes concerning that claim.

Grandson did not formally move for summary judgment on attorneys’ fees and costs. Because an ERISA fee award is discretionary and requires consideration of specified factors, the court deferred the fee request until Grandson seeks fees and costs through an appropriate motion.

Order

The court granted Grandson’s motion for summary judgment and denied the Defendants’ motion for summary judgment. It ordered Grandson and the Defendants to meet and confer about damages within 21 days and required the parties to file a joint status report about damages within 28 days.