Mauer v. National Basketball Association

Background

Kenneth Mauer sued the National Basketball Association, NBA Services Corp., and the Pension Committee of the National Basketball Association Referees’ Pension Plan under the Employee Retirement Income Security Act (ERISA). He sought review of the Committee’s denial of his application for pension benefits.

Mauer had worked as a referee beginning in 1986. After NBA Services Corp. adopted a COVID-19 vaccination requirement for referees, Mauer requested a religious exemption. NBA Services Corp. denied the request, suspended him without pay or retirement benefits for the 2021–2022 season, and terminated him on September 1, 2022, for failing to comply with the vaccination policy.

Mauer later filed a separate lawsuit challenging his termination. He then applied for pension benefits, citing his termination as the reason for payment. The Committee denied the application because the separate lawsuit created uncertainty about whether Mauer might return to work as a referee. The Committee also denied his appeal.

The parties’ motions

The defendants moved to dismiss the case, and Mauer cross-moved for summary judgment. Mauer conceded that the NBA and NBA Services Corp. were not proper defendants. He also conceded that his second count, asserting a fiduciary-breach claim under ERISA, was duplicative of his first count.

Plan language and standard of review

The pension plan provided that benefit payments must begin no later than 60 days after the end of the plan year in which the latest of several events occurred, including the referee’s retirement or termination of employment. The plan did not define “termination of employment.”

The court held that the plan gave the Committee broad authority to interpret ambiguous language and determine eligibility for benefits. If the language were ambiguous, the court would therefore review the Committee’s decision under the deferential “arbitrary and capricious” standard. Under that standard, a denial may be overturned if it lacks a reason, lacks substantial supporting evidence, or is legally incorrect.

The court’s decision

The court concluded that “termination of employment” was unambiguous. It interpreted the phrase to require a complete severance of the employer-employee relationship, but not a permanent or irrevocable separation. The court relied in part on plan provisions addressing former referees who later return to employment, which showed that the plan contemplated reemployment after termination.

The court rejected the defendants’ interpretation that benefits could be withheld until it was certain that Mauer would never return to work. The court found no basis for treating the uncertainty about Mauer’s possible reemployment differently from the uncertainty surrounding any former referee’s possible reemployment. It also concluded that Mauer had been completely separated from employment, so the defendants’ tax-related arguments did not change the result.

The court held that Mauer experienced a termination of employment and was entitled to pension benefits under Section 8.2(a)(iii) of the plan. It granted Mauer’s motion for summary judgment on liability on Count I. It granted the defendants’ motion to dismiss as to the NBA and NBA Services Corp. and granted the motion to dismiss Count II; overall, the motion to dismiss was granted in part and denied in part.

The court directed the parties to confer about a proposed remedy and to submit either an agreed proposed judgment or a joint letter describing their proposals for further proceedings.