Richard Lehman v. Warner Nelson
862 F.3d 1203
| 9th Cir. | 2017Background
- Richard Lehman, an electrical "traveler," sued trustees of the IBEW Pacific Coast Pension Fund after the Fund withheld $1.00/hour from employer contributions starting July 1, 2008 (Amendment 14) and later adopted a formal Rehabilitation Plan (Amendment 24) after the plan was certified in critical status.
- The Reciprocal Agreement (incorporated into the Pension Plan as Article 5, §5.04) requires participating funds to transfer all contributions received on behalf of travelers to their home funds and prohibits charging administrative fees for transfers.
- Amendment 14 withheld $1.00/hour from all contributions to improve funding; Amendment 24 (Rehabilitation Plan) (adopted after critical-status certification) withheld $1.00/hour only for contribution rates under $3.00/hour and also withheld increased "non-benefit" contributions and surcharge payments required by the Pension Protection Act.
- Lehman’s complaint focused primarily on withholdings under Amendment 14; he was not personally subject to Amendment 24 withholdings. District court granted summary judgment to Lehman on Amendment 14 claims and later awarded damages for withholdings under both Amendments 14 and 24 after class certification and clarification motions.
- On appeal, the Ninth Circuit affirmed judgment for withheld amounts under Amendment 14 but vacated the damages award for withholdings under Amendment 24 because the complaints and prior briefing did not give trustees adequate notice or opportunity to litigate Amendment 24 issues; attorneys’ fees award was vacated and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaints and prior litigation gave notice to litigate withholdings under Amendment 24 (Rehabilitation Plan) | Class argued prior pleadings and class definition encompassed all withholdings from July 1, 2008 to present, including Amendment 24 | Trustees argued complaint and summary judgment focused on Amendment 14; they lacked notice/opportunity to defend against Amendment 24 claims | Vacated damages for Amendment 24 withholdings: plaintiffs did not give adequate notice; trustees lacked opportunity to respond; remand for further proceedings |
| Whether Amendment 14’s $1.00/hour withholding could lawfully be applied to outgoing reciprocity transfers (conflict with Article 5/Reciprocal Agreement) | Lehman: Amendment 14 conflicts with Article 5 and the Reciprocal Agreement; withheld amounts must be transferred to home funds | Trustees: withholding is not a “contribution” under Reciprocal Agreement definition because it is used only to improve plan funding, so they need not transfer it | Affirmed for plaintiff: trustees abused discretion interpreting Amendment 14 to apply to outgoing transfers; Amendment 14 can be read to apply only to incoming transfers and not to pass-through contributions; award for withholdings under Amendment 14 affirmed |
| Whether ERISA §305 (rehabilitation-plan accrual minimums) barred Amendment 14 or otherwise controlled pre-certification actions | Plaintiffs argued Amendment 14 violated §305 by eliminating accruals | Trustees argued §305 governs only rehabilitation plans adopted after critical-status certification and does not apply to pre-certification amendments like Amendment 14 | Court: §305(e) is triggered by critical-status certification; district court erred to treat Amendment 14 as a §305 default schedule because it preceded certification; did not rely on §305 to affirm Amendment 14 ruling |
| Right to enforce Reciprocal Agreement provisions and role of Reciprocal Administrator | Plaintiffs: may enforce Pension Plan provisions that incorporate the Reciprocal Agreement under ERISA §502(a)(1)(B) | Trustees: disputes under Reciprocal Agreement should follow its dispute-resolution/arbitration and third parties lack enforcement rights | Court: plaintiffs can enforce the Pension Plan (which incorporates parts of the Reciprocal Agreement) under ERISA §502(a)(1)(B); district court did not improperly defer to the Reciprocal Administrator |
Key Cases Cited
- Tapley v. Locals 302 & 612 of Int’l Union of Operating Eng’rs-Emp’rs Constr. Indus. Ret. Plan, 728 F.3d 1134 (9th Cir. 2013) (plan-administrator interpretation reviewed for abuse of discretion when plan grants discretionary authority)
- Richardson v. Pension Plan of Bethlehem Steel Corp., 112 F.3d 982 (9th Cir. 1997) (standard for review of plan interpretation and administrator discretion)
- Pickern v. Pier 1 Imports (U.S.), Inc., 457 F.3d 963 (9th Cir. 2006) (complaint must give defendant fair notice under Rule 8)
- Swierkiewicz v. Sorema N.A., 534 U.S. 506 (Sup. Ct.) (notice pleading standards explained)
- Boggs v. Boggs, 520 U.S. 833 (Sup. Ct.) (ERISA’s purpose to protect participants and beneficiaries)
- Gonzalez v. City of Maywood, 729 F.3d 1196 (9th Cir. 2013) (forum-based community consideration for fee awards)