Hayes v. Twin City Carpenters & Joiners Pension Plan

Background

Steven Hayes received unreduced early-retirement benefits from the Twin City Carpenters & Joiners Pension Plan beginning March 1, 2011. The Plan suspended his benefits effective November 1, 2013, after learning that he had continued working for Alltech Engineering Corporation. The Plan’s rules generally restricted pensioners from working at least forty hours per month in covered employment. The Plan later determined that it had overpaid Hayes $233,508.48 and began recouping that amount from his later pension payments.

The Plan’s Claim Appeals Committee affirmed the suspension in June 2016. The Committee determined that Hayes had failed to provide required notice of his continued employment, applied a presumption that he had worked enough hours to justify suspending his benefits, and found that Hayes had not overcome that presumption. Hayes then brought claims under the Employee Retirement Income Security Act (ERISA) for benefits and for equitable relief based on an alleged breach of fiduciary duty.

Standards of review

The court held that the Plan granted its trustees discretion to interpret the Plan and decide benefit eligibility. As a result, the court reviewed the Committee’s benefits decision for abuse of discretion rather than under a fresh, independent review. The court rejected Hayes’s arguments that the Committee lacked a quorum or that other procedural irregularities required a more searching standard of review.

The court determined that the Committee had three voting members and that two attended and voted on Hayes’s claim, which was enough for a quorum. The court also considered the Plan’s failure initially to provide requested documents, its early statements that Hayes had to satisfy preliminary conditions before appealing, the unequal overall representation of employer and union trustees, and the lengthy administrative process. The court found these problems did not show the serious procedural failure required for heightened review. The court noted, however, that the Plan’s initial refusal to provide documents violated the Plan and perhaps ERISA, while finding that Hayes had not shown sufficient prejudice from that delay.

Benefits claim

The court held that the Committee’s decision could not survive abuse-of-discretion review because the Committee adjudicated Hayes’s claim under the wrong Plan provisions. Hayes had received unreduced early-retirement benefits, but the Committee’s written decision applied suspension rules for normal retirement benefits.

The court found that the correct provisions were materially different in potentially important ways. The correct provisions addressed employment of forty hours or more in a month in covered employment, while the provisions the Committee applied used a different definition of disqualifying employment. The correct notice-and-presumption provision also used different language about the hours presumed and the period covered by the presumption. The court found the correct provisions difficult to interpret and could not determine how the Committee would have applied them to Hayes’s claim.

The court therefore declined to decide whether Hayes was entitled to the disputed benefits. It remanded the benefits claim to the Plan for further administrative proceedings. The court stated that the administrative record did not eliminate genuine disputes about whether Hayes violated the forty-hour rule under a reasonable interpretation of the rules governing unreduced early-retirement benefits.

Fiduciary-duty claim

The court granted defendants’ motion for summary judgment on Hayes’s claim under 29 U.S.C. § 1132(a)(3), which sought equitable relief for breach of fiduciary duty. The court found that Hayes relied on the same facts and theories for this claim as for his claim seeking benefits under 29 U.S.C. § 1132(a)(1)(B). Hayes’s allegations concerning the presumption, the quorum, access to documents, and claim-processing deadlines did not establish a separate fiduciary-duty theory. The allegation that the Plan applied the forty-hour presumption incorrectly remained part of the benefits claim to be considered on remand.

Disposition

The court ordered:

- Hayes’s motion for summary judgment was denied. - Defendants’ motion for summary judgment was denied in part and granted in part. It was denied as to Hayes’s benefits claim and granted as to his fiduciary-duty claim. - The matter was remanded to the Plan for administrative proceedings consistent with the opinion and order. - The court retained jurisdiction over the matter.