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Chavis v. Plumbers and Steamfitters Local 486 Pension Plan

United States District Court, D. Maryland

August 23, 2018

MICHAEL CHAVIS et al., Plaintiffs,


          Ellen Lipton Hollander United States District Judge

         This case arises under the Employer Retirement Income Security Act of 1974, as amended (“ERISA”), and concerns retirement benefits under the Plumbers and Steamfitters Local 486 Pension Plan (the “Plan”), an employee pension benefit plan. Plaintiffs Stanley Taylorson, Jr. and Michael Chavis are Plan participants who accrued vested benefits for the time they worked in union positions. ECF 1 (Complaint), ¶¶ 22-25, 77. After plaintiffs retired from union positions, they commenced working in non-union management positions, and began receiving service retirement benefits. Id. ¶¶ 32-37, 82-87. However, their benefits were subsequently suspended. Id. ¶¶ 38, 56, 89, 110. As a result, plaintiffs brought suit against the Plan, as well as several fiduciaries of the Plan, [1] seeking reinstatement of their benefits, removal of defendants as fiduciaries, and other equitable relief. See ECF 1 at 2.

         In particular, plaintiffs assert claims for wrongful denial of benefits under § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B) (Count I); breach of fiduciary duty under § 502(a)(2), 29 U.S.C. § 1132(a)(2) (Counts II and IV); and “other appropriate equitable relief” under § 502(a)(3), 29 U.S.C. § 1132(a)(3) (Counts III and V). In addition, plaintiffs seek attorneys' fees under § 502(g), 29 U.S.C. § 1132(g) (Count VI).

         Defendants have moved to dismiss the Complaint for failure to state a claim, pursuant to Fed.R.Civ.P. 12(b)(6). ECF 24. Their motion is supported by a memorandum of law (ECF 24-1) (collectively, “Motion”) and several exhibits. Plaintiffs oppose the Motion. ECF 25; ECF 25-1 (collectively, “Opposition”). Defendants have replied. ECF 27 (“Reply”). Plaintiffs' motion for leave to file a surreply (ECF 28) was granted. ECF 29. The surreply is docketed at ECF 30.

         No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I shall grant the Motion in part and deny it in part.

         I. Factual and Procedural Background[2]

         Taylorson became a member of the Plumbers and Steamfitters Local 486 Union (the “Union”) in November 1979, through which he became a participant in the Plan. ECF 1, ¶¶ 74, 77.[3] He remained a member of the Union until June 2009, when he retired from Union employment. Id. ¶ 76. While a member of the Union he installed, maintained, and repaired HVAC and refrigeration systems. Id. ¶ 75. Taylorson, who was born in 1954 (ECF 24-4 at 10), became eligible for a service retirement in May 2009. ECF 1, ¶ 79.

         Chavis became a member of the Union in April 1982, through which he also became a participant in the Plan. ECF 1, ¶¶ 20, 22. Like Taylorson, Chavis's Union work was mechanical in nature, involving installation, repair, and replacement of HVAC and refrigeration systems. Id. ¶ 21. Chavis, who was born in 1956 (ECF 24-3 at 132), became eligible for service retirement under the Plan in October 2011. Id. ¶ 28. He retired from Union employment on October 29, 2011. Id. ¶ 32.

         Through the Plan, plaintiffs accrued vested benefits for each “Hour of Service” they worked. Id. ¶¶ 22-24. An “Hour of Service” is defined in Section 1.15 of the Plan as each hour for which: (1) “an Employee is paid, or entitled to payment for the performance of duties in Covered Employment;” (2) “an Employee is paid or entitled to payment . . . [for] a period of time in which no duties are performed . . . due to vacation, holiday, illness, incapacity, . . . layoff, jury duty, military duty or leave of absence . . .;” or (3) “back pay, . . . is either awarded or agreed to by the Employer.” ECF 1, ¶ 24.

         Plaintiffs contend that, under the terms of the Plan, their retirement benefits are governed by the terms in effect at the time of their retirement. Id. ¶¶ 36, 88. Therefore, they allege that the operative Plan is the Plumbers and Steamfitters Local 486 Pension Plan, As Amended and Restated January 1, 2009. Id.

         As noted, as of May 2009, Taylorson was eligible for a “Service Retirement” under the Plan, which he defines as an “unreduced retirement.” Id. ¶ 79. Around that time, he was offered a non-Union management position by Johnson Controls International PLC (“Johnson Controls”). Id. ¶ 78. Before Taylorson retired from Union employment, and before accepting other employment, he asked defendants Troll and Hayes, two fiduciaries of the Plan, [4] if his Plan benefits would be affected if he were to work in a non-Union management position. Id. ¶ 80. Troll and Hayes allegedly told Taylorson that such work would have no impact on his entitlement to Plan benefits. Id. ¶ 81.

         Following Taylorson's retirement from Union employment on June 1, 2009, Taylorson began working for Johnson Controls in a non-Union management position. Id. ¶¶ 82-83.

         Thereafter, on June 11, 2009, Taylorson applied for retirement benefits under the Plan and his application was approved on August 27, 2009. Id. ¶¶ 85-86. Taylorson began receiving pension payments under the Plan on September 1, 2009. Id. ¶¶ 87, 139.

         Similarly, around the time that Chavis became eligible for “Service Retirement” under the Plan, Chavis was also offered a non-Union management position at Johnson Controls. Id. ¶ 27. Chavis spoke to defendants Troll and Hayes before accepting Johnson Controls' offer, and was informed that working in a non-Union position would not jeopardize his Plan benefits, which he defines as an “unreduced retirement benefit.” Id. ¶¶ 28-30.

         Upon Chavis's retirement from Union employment on October 29, 2011, he accepted Johnson Controls' non-Union management position. Id. ¶¶ 31-32. On October 31, 2011, Chavis applied for his pension under the Plan and his application was approved on December 29, 2011. Id. ¶¶ 34-35. Chavis began receiving pension benefits under the Plan on January 1, 2012. ECF 1, ¶¶ 37, 139.

         On September 28, 2012, Kimberly Bradley, Esq., counsel for the Plan, sent “materially identical” letters to each plaintiff (the “Suspension Letters”), stating that their Plan benefits would be suspended. Id. ¶¶ 38, 89. As to Chavis, Bradley wrote, ECF 1, ¶ 38:

[T]he Internal Revenue Code provides that a retiree who is younger than age 62 must have a ‘bona fide retirement' in order to receive pension benefits from a qualified plan. 26 USC § 401(a). The IRS requires that in order to receive a distribution from a qualified plan, you ‘must have experienced a bona fide termination of employment in which the employer/employee relationship is completely severed.' IRS Information No. 2000-0245. (Emphasis in original).

         The Suspension Letter to Taylorson also said, id. ¶ 106: “The Pension Fund must suspend your pension benefits until you reach age 62 or permanently terminate all employment with your current employer.” (Bold in Complaint).

         Taylorson turned 62 in February 2016. Id. ¶ 108. To my knowledge, as of the time suit was filed, it does not appear that Chavis had turned 62 years of age.

         The Suspension Letters sent to plaintiffs also outlined the procedure to appeal suspension decisions, and stated that any appeal would be considered “at the next scheduled meeting of the Trustees following . . . receipt of [the] appeal.” Id. ¶¶ 50, 101. On October 30, 2012, Taylorson appealed the suspension of his benefits. Id. ¶¶ 100, 131. On November 19, 2012, Chavis appealed the suspension of his benefits. Id. ¶ 49. Both appeals were timely filed. Id. ¶¶ 49, 54, 100.

         In November 2015, after not receiving a decision regarding his appeal in over three years, Taylorson sent a letter to the Plan requesting immediate reinstatement of his benefits. He also provided notification that he would reach the age of sixty-two on February 10, 2016. Id. ¶¶ 103-04, 108. Defendant Talerico, a Plan fiduciary, responded on November 12, 2015, denying the request for reinstatement because Taylorson was engaged in “Unauthorized Employment.” Id. ¶ 105.

         The 2009 Plan defines “Unauthorized Employment” in Section 7.06. Id. ¶¶ 43, 94. A person is engaged in unauthorized employment when

a Pensioner in such month or in such payroll period ending in a month completes 40 or more Hours of Service in: (i) an industry in which Employees covered by the Plan were employed and accrued benefits under the Plan as a result of such employment at the time that he or she reached Normal Retirement Age or retired, if earlier; (ii) a trade or craft in which the Participant or Pensioner was employed at any time under the Plan; and (iii) the geographic area covered by the Plan at the time he or she reached Normal Retirement Age or retired, if earlier.

         Talerico attached copies of sections 7.06 and 7.07 of the 2016 Plan document. ECF 1, ¶ 105. The 2016 Plan language regarding “Unauthorized Employment” does not appear to be materially different from the provision in the 2009 Plan. However, as noted, plaintiffs maintain that they are subject to the 2009 Plan, and not the 2016 Plan. Accordingly, plaintiffs assert that the 2016 Plan is irrelevant to their benefits, and by attaching the 2016 Plan, Talerico misrepresented the terms of the governing Plan. Id.

         Defendant Troll sent a letter to Taylorson, on February 22, 2016, notifying him that the Board of Trustees had denied his appeal of October 20, 2012, on the ground that he was engaged in unauthorized employment. Id. ¶¶ 110-13. Plaintiffs assert that the denial again referenced language that is only found in the 2016 Plan, which is inapplicable to plaintiffs' appeals, as their appeals are subject to the 2009 Plan. Id. ¶¶ 112, 113.

         During the time in which Chavis waited for a response to his appeal, he periodically requested a status update from the Plan fiduciaries. Id. ¶ 52. Each time he asked for the update, he was told that the Board of Trustees was still considering his appeal. Id. ¶ 53. On March 23, 2017, the Board of Trustees denied Chavis's appeal, and he was notified of the denial on April 4, 2017. Id. ¶¶ 54-55. The denial states, id. ¶ 58:

[T]he Trustees have not made a determination regarding the work that you are performing and whether it constitutes unauthorized employment under the terms of the Plan, because the requirements of the Internal Revenue Code do not permit you to receive a distribution prior to Normal Retirement Age if you have not incurred a bona fide retirement.

         This suit followed.

         II. Standard of Review

         A defendant may test the legal sufficiency of a complaint by way of a motion to dismiss under Rule 12(b)(6). In re Birmingham, 846 F.3d 88, 92 (4th Cir. 2017); Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016); McBurney v. Cuccinelli, 616 F.3d 393, 408 (4th Cir. 2010), aff'd sub nom., McBurney v. Young, 569 U.S. 221 (2013); Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). A Rule 12(b)(6) motion constitutes an assertion by a defendant that, even if the facts alleged by a plaintiff are true, the complaint fails as a matter of law “to state a claim upon which relief can be granted.”

         Whether a complaint states a claim for relief is assessed by reference to the pleading requirements of Fed.R.Civ.P. 8(a)(2). That rule provides that a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” The purpose of the rule is to provide the defendants with “fair notice” of the claims and the “grounds” for entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007).

         To survive a motion under Fed.R.Civ.P. 12(b)(6), a complaint must contain facts sufficient to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (citation omitted) (“Our decision in Twombly expounded the pleading standard for ‘all civil actions' . . . .”); see also Willner v. Dimon, 849 F.3d 93, 112 (4th Cir. 2017). But, a plaintiff need not include “detailed factual allegations” in order to satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555. Moreover, federal pleading rules “do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.” Johnson v. City of Shelby, Miss., U.S., 135 S.Ct. 346, 346 (2014) (per curiam).

         Nevertheless, the rule demands more than bald accusations or mere speculation. Twombly, 550 U.S. at 555; see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013). If a complaint provides no more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action, ” it is insufficient. Twombly, 550 U.S. at 555. Rather, to satisfy the minimal requirements of Rule 8(a)(2), the complaint must set forth “enough factual matter (taken as true) to suggest” a cognizable cause of action, “even if . . . [the] actual proof of those facts is improbable and . . . recovery is very remote and unlikely.” Twombly, 550 U.S. at 556 (internal quotation marks omitted).

         In reviewing a Rule 12(b)(6) motion, a court “must accept as true all of the factual allegations contained in the complaint” and must “draw all reasonable inferences [from those facts] in favor of the plaintiff.” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011) (citations omitted); see Semenova v. MTA, 845 F.3d 564, 567 (4th Cir. 2017); Houck v. Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir. 2015); Kendall v. Balcerzak, 650 F.3d 515, 522 (4th Cir. 2011), cert. denied, 565 U.S. 943 (2011). But, a court is not required to accept legal conclusions drawn from the facts. See Papasan v. Allain, 478 U.S. 265, 286 (1986). “A court decides whether [the pleading] standard is met by separating the legal conclusions from the factual allegations, assuming the truth of only the factual allegations, and then determining whether those allegations allow the court to reasonably infer” that the plaintiff is entitled to the legal remedy sought. A Society Without a Name v. Virginia, 655 F.3d 342, 346 (4th. Cir. 2011), cert. denied, 566 U.S. 937 (2012).

         Courts generally do not “‘resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses'” through a Rule 12(b)(6) motion. Edwards, 178 F.3d at 243 (quoting Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992)). However, “in the relatively rare circumstances where facts sufficient to rule on an affirmative defense are alleged in the complaint, the defense may be reached by a motion to dismiss filed under Rule 12(b)(6).” Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007) (en banc); accord Pressley v. Tupperware Long Term Disability Plan, 553 F.3d 334, 336 (4th Cir. 2009). Because Rule 12(b)(6) “is intended [only] to test the legal adequacy of the complaint, ” Richmond, Fredericksburg & Potomac R.R. Co. v. Forst, 4 F.3d 244, 250 (4th Cir. 1993), “[t]his principle ...

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