Novella v. Westchester County
661 F.3d 128
| 2d Cir. | 2011Background
- Novella, a 78-year-old former carpenter, had two periods of covered employment under the Westchester Fund (1962–1981 and 1987–1995) separated by a three-year break (1982–1986).
- Disability Pension calculations used two different per-credit rates ($17 and $40) based on period of credits, producing a lower total benefit for Novella.
- Fund Trustees explained the dual-rate method as tied to a Break in Service and sections governing Deferred Pensions, but Novella challenged the calculation as inconsistent with the plan documents.
- District court granted summary judgment for Novella on the two-rate issue, concluding the Plan did not authorize a two-rate Disability Pension calculation.
- Class certification was granted for a narrow Disability Pension subclass, based on accrual timing, but the court later certified a specific numerosity finding (24 members) and addressed statute-of-limitations accrual.
- The Second Circuit ultimately affirmed Novella’s individual disability pension ruling, vacated class certification and the class judgment, and remanded for case-by-case accrual determinations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether two rates may be used for Disability Pensions with a break in service | Novella argues Plan caps use of two rates for Disability Pensions. | Fund claims Plan allows two-rate calculation via 3.07 for Deferred Pensions. | Two-rate method for Disability Pension is arbitrary and capricious. |
| When the ERISA miscalculation claim accrues for class members | accrual starts when class member learns fund believed calculation correct. | accrual starts at first payment or denial per strict rule. | Court adopts case-by-case reasonable accrual, not strict first-payment rule. |
| Whether the class was properly certified | Class comprised Disability Pension recipients affected by dual-rate calculation. | Numerosity and typicality satisfied for broader class; issues moot. | Cert denied; class certification vacated and remanded for accrual-specific inquiry. |
| Whether prejudgment interest awards were proper for class | Interest should flow to class from date of first miscalculation claim. | Interest proper only from denial date; class eligibility unclear. | Prejudgment interest for class vacated with decertification; individual interest affirmed. |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (Supreme Court 1989) (establishes arbitrary-and-capricious standard when plan administrator has discretion)
- Celardo v. GNY Auto. Dealers Health & Welfare Trust, 318 F.3d 142 (2d Cir. 2003) (discretionary review under ERISA plans)
- Miller v. Fortis Benefits Insurance Co., 475 F.3d 516 (3d Cir. 2007) (discusses accrual/repudiation rule for ERISA miscalculation claims)
- Larsen v. NMU Pension Trust of the NMU Plan, 902 F.2d 1069 (2d Cir. 1990) (clear repudiation concept in accrual for denial claims)
- Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 504 F.3d 229 (2d Cir. 2007) (numerosity/practicality in Rule 23 analysis; class actions in ERISA)