McCulloch v. Board of Trustees of SEIU Affiliates Officers and Employees…

Background

Kevin McCulloch was a participant in the SEIU Affiliates Officers and Employees Pension Plan and had also participated in a pension plan provided by Local 32BJ. He retired from Local 32BJ in 1999 and began receiving benefits from the SEIU Plan. In 2008, the SEIU Plan converted from a single-employer plan to a multiemployer plan.

Before and after that conversion, Section 9.12(m) of the Plan stated that benefits from another defined-benefit plan of a participating organization would be combined with benefits from the SEIU Plan when applying limits under Section 415 of the Internal Revenue Code. In December 2008, the trustees adopted Amendment 12, which stated that the Plan would continue applying the Section 415 rules for single-employer plans rather than the rules for multiemployer plans.

After McCulloch began receiving benefits from the Local 32BJ plan in May 2014, the SEIU Plan reduced his monthly 50% husband-and-wife benefit from $10,075 to $9,007. The Plan attributed the reduction to the combined benefit limits. McCulloch later filed an administrative appeal, which the trustees denied as untimely. The trustees also stated that, even if the appeal had been timely, they would deny it because the Plan had always required aggregation of the benefits.

Claims and Motions

McCulloch claimed that Amendment 12 unlawfully reduced an accrued benefit in violation of Section 204(g) of the Employee Retirement Income Security Act (ERISA), commonly called the anti-cutback provision. He also claimed that the defendants improperly calculated his benefits under the Plan and sought additional pension payments, costs, and attorneys’ fees.

The parties filed cross-motions for summary judgment. Summary judgment is entered when the record shows no genuine dispute about a material fact and the moving party is entitled to judgment under the law.

Court’s Analysis

The court applied deferential review because McCulloch did not dispute that the trustees had authority to interpret the Plan. Under that standard, the trustees’ decision could be overturned only if it lacked a reasonable basis, lacked substantial evidentiary support, or was legally erroneous.

The court held that the trustees reasonably interpreted Section 9.12(m) to require aggregation. The provision used mandatory language stating that benefits “will be combined.” When the provision was adopted in 1999, Section 415(f) of the Internal Revenue Code did not contain the later exception for multiemployer plans. The court concluded that the provision was intended to require aggregation even after the law changed and that Amendment 12 merely continued the trustees’ longstanding policy.

The court also rejected McCulloch’s argument that the Internal Revenue Code’s multiemployer-plan exception created a right to receive benefits without aggregation. The court explained that Section 415 primarily governs the tax treatment of pension benefits and does not prevent an ERISA plan from imposing a stricter benefit limit through its own terms.

Finally, the court held that McCulloch had not accrued a protected right to have his benefits calculated without aggregation. At the time he retired in 1999, the Plan required aggregation. His claimed right depended on a later and unpredictable change in the law, and the Plan did not promise that future changes to Section 415(f) would alter his benefits. Therefore, Amendment 12 did not decrease an accrued benefit, and the trustees’ decision did not violate ERISA’s anti-cutback provision.

Disposition

The court granted the defendants’ motion for summary judgment and denied McCulloch’s motion for summary judgment. The clerk was directed to terminate the motions and close the case.