760 F.3d 585
7th Cir.2014Background
- Schane suffered a job-related injury and began workers’ compensation, then retired for pension purposes after leaving YRC; the plan calculates benefits from credits and age.
- The Local No. 710 Pension Plan has multiple categories; Schane is under the “special regular pension.”
- Total credits: Schane accumulated 26 credits; last employer contributions stopped August 2009; self-pay credits added to reach 26.4? Wait total 26 credits.
- The plan provides $2,600/month for 26 credits and $2,900/month for 26+ credits if retirement occurs on/after age 50; Schane’s age at retirement is disputed.
- Dispute centers on when Schane retired for plan purposes: August 2009 (plan) vs December 2011 (Schane).
- Section 6.05 defines retirement with a disjunctive structure and section 6.06 permits suspension if not retired; court examines whether cessation of covered employment alone suffices to retire.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is cessation of covered employment alone enough to retire under 6.05(a)? | Schane argues retirement requires cessation of both covered employment and listed activities. | Trustees argue retirement can be shown by cessation of covered employment alone (disjunctive). | Ambiguity resolved in favor of Schane; retirement requires both cessation of covered employment and listed activities. |
| Does the plan’s suspension provision 6.06 support the trustees’ interpretation? | 6.06 allows suspension if not retired; interpreting retirement as exclusive of later activities undermines suspension. | Discretion to interpret plan language; suspension aligns with renewal of eligibility. | Reading 6.05 with 6.06 supports requiring both components for retirement. |
| Is the trustees’ interpretation arbitrary and capricious under ERISA distinct standard? | Trustees misstate the definition of retirement and fail to justify disjunctive reading. | Plan language and prior practice permit discretionary interpretation; deference due. | Trustees’ interpretation deemed arbitrary and capricious; plan read as a whole supports Schane. |
Key Cases Cited
- Marquette General Hospital v. Goodman Forest Industries, 315 F.3d 629 (6th Cir. 2003) (interpretation of disjunctive language and ambiguity in plan terms)
- Reich v. Ladish Co., 306 F.3d 519 (7th Cir. 2002) (Deferential review requires substantial interpretation when plan language ambiguous)
- Cent. Laborers’ Pension Fund v. Heinz, 541 U.S. 739 (Supreme Court 2004) (suspension of benefits to prevent plan subsidy abuses)
- Schultz v. Aviall, Inc. Long Term Disability Plan, 670 F.3d 834 (7th Cir. 2012) (read plan as a whole; interpret terms in context)
- Tompkins v. Cent. Laborers’ Pension Fund, 712 F.3d 995 (7th Cir. 2013) (ERISA plan review standard; deference when language is ambiguous)
- Gritzer v. CBS, Inc., 275 F.3d 291 (3d Cir. 2002) (reversal of deference when plan interpretation lacks reasoning)
- Love v. National City Corp. Welfare Benefits Plan, 574 F.3d 392 (7th Cir. 2009) (deference limits when administrator fails to provide adequate reasoning)