Aracich v. The Board of Trustees of The Employee Benefit Funds of Heat & Frost…

Background

Matthew Aracich, formerly the business manager of the Heat & Frost Insulators Local 12 Union, participated in the Union’s pension and welfare plans. He later became president of the Building and Construction Trades Council of Nassau and Suffolk Counties. Although the Council was not a Union employer and did not contribute to the Plans, it entered into an agreement allowing it to contribute on Aracich’s behalf. The Council ended that agreement effective January 1, 2021, and Aracich continued working for the Council.

On February 26, 2021, Aracich told the Plans that he was retiring from the Union and expected to keep health coverage through the funds. The Plans denied his request because he had continued working for the Council. The Trustees later denied his appeal, explaining that although he was no longer working in covered employment, he had not separated from employment as required to retire under the Plans.

Rule 12(b)(6) standard

The defendants moved to dismiss under Rule 12(b)(6), which tests whether a complaint plausibly states a legal claim. The court accepted well-pleaded factual allegations as true for purposes of the motion but did not accept legal conclusions without supporting facts. The court also considered plan documents and related communications that the complaint relied on.

ERISA benefits claim

Aracich brought a claim under Section 502(a)(1)(B) of the Employee Retirement Income Security Act (ERISA), seeking benefits allegedly due under the Plans. The court found that the Plans gave the Trustees discretion to interpret the Plans and decide eligibility. Because the term “retire” was ambiguous, the Trustees’ decision could be overturned only if it was arbitrary and capricious—meaning without a reasonable basis, unsupported by substantial evidence, or legally erroneous.

The court concluded that the Trustees’ interpretation was not arbitrary or capricious. The Plans required a participant to separate from covered employment, the Pension Plan’s summary description said a participant must stop working before benefits could begin, and the Trustees reasonably considered the requirements for maintaining the Pension Plan’s tax-qualified status. The court dismissed the Section 502(a)(1)(B) claim.

ERISA Section 510 claim

The court dismissed Aracich’s Section 510 claim. Section 510 prohibits interference with a participant’s rights under an employee benefit plan and requires allegations that the defendants acted with the specific intent prohibited by that section. The court found Aracich’s allegation of an intentional scheme conclusory and unsupported by additional facts. It also found that the denial of benefits was not adequately pleaded as an adverse employment action because Aracich had not plausibly alleged that the denial was arbitrary or capricious.

ERISA Section 204(g) claim

The court dismissed Aracich’s Section 204(g) claim under ERISA’s anti-cutback rule, which generally bars a plan amendment from reducing an accrued benefit. The Trustees’ decision that Aracich had not retired was not a plan amendment. The court also found that Aracich had not plausibly alleged that the Trustees’ interpretation reduced his accrued benefits. The opinion states that the parties agreed he stopped working in covered employment on January 1, 2021, when he was sixty years old and had thirty years of service credit.

The opinion also states that Aracich’s claim for a declaratory judgment that the benefits denial was arbitrary and capricious was dismissed for the same reasons. The opinion refers to that declaratory-judgment claim as Count Three in a footnote while separately discussing an ERISA Section 204(g) claim as Count Three; the text does not resolve that numbering inconsistency.

Fiduciary-duty and disclosure claims

The court dismissed Aracich’s ERISA fiduciary-duty claims. It found that he adequately alleged that the defendants were fiduciaries performing fiduciary functions when communicating about his benefits, but he did not plausibly allege a breach. The court found no adequately pleaded arbitrary or capricious denial, misrepresentation about the Plans’ terms, or failure to provide identified documents or comply with an identified reporting requirement.

The court also dismissed a claim under 29 C.F.R. § 2520.104-23(b), explaining that the regulation applies only to plans maintained for a select group of management or highly compensated employees and does not apply to the Pension Plan or Welfare Plan.

Breach-of-contract claim

The court dismissed Aracich’s state-law breach-of-contract claim as preempted by ERISA. The claim sought payment under the Plans’ governing documents and therefore duplicated ERISA’s civil enforcement remedy rather than relying on an independent legal duty. To the extent Count Four asserted a benefits claim under ERISA Section 502(a)(1)(B), the court also dismissed it.

Disposition

The court granted defendants’ motion to dismiss and directed the Clerk to terminate the motion and close the case. Judge Vincent L. Briccetti entered the order on September 19, 2022.