Tapley v. Locals 302 & 612 of the International Union of Operating Engineers-Employers Construction Industry Retirement Plan
728 F.3d 1134
| 9th Cir. | 2013Background
- Tapley and Chapman, long-time skilled mechanics, sought early retirement under ERISA from a multi-employer pension plan administered by Locals 302 and 612 of the International Union of Operating Engineers
- The Plan allows early retirement at 52 with 10 years of Credited Service and permits retirees to work if they refrain from Post-Retirement Service for 51+ hours per month
- Post-Retirement Service is defined as employment in the same geographic area, in a job classification in which the participant was employed in Covered Employment, and in the same industry, with potential suspension of benefits if hours exceed the limit
- Tapley took early retirement after moving from heavy-duty to light-duty mechanics and later worked as a DOT flagger; Chapman became a snow plow operator after transitioning from a union mechanic role
- Trustees denied benefits to both, concluding their DOT jobs were in the same job classification as their Covered Employment, thereby triggering Post-Retirement Service and suspension of benefits
- District court upheld the Trustees’ interpretation; the panel reverses, holding the Trustees abused discretion by unlawfully broadening “job classification” beyond the Plan’s plain terms
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 'job classification' is ambiguously defined and lawfully interpreted | Tapley/Chapman argue term is ambiguous and Trustees’ broad BMI interpretation is unreasonable | Locals contend duties and skills test is reasonable and aligns with plan purpose | Trustees abused discretion; term ambiguous and overbroad interpretation not supported by plan |
| What standard applies to reviewing trustees’ plan interpretations | Review de novo for abuse of discretion, with strict scrutiny of rational nexus to plan goals | Deferential/abuse-of-discretion review (arbitrary and capricious) due to discretion granted by ERISA plan | Court applies abuse-of-discretion (deferential) review but requires rational basis; Trustees’ rationale failed |
| Did the district court correctly affirm remand/open-record procedures regarding additional facts | Discovery of Shampine’s post-retirement employment shows inconsistencies supporting reversal | Remand unnecessary given abuse-of-discretion finding; district court’s handling adequate | Remand to Trustees on open record allowed; discovery issue not necessary to resolve appeal |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (Supreme Court 1989) (establishes abuse-of-discretion review for plan interpretations)
- Canseco v. Constr. Laborers Pension Trust for S. Cal., 93 F.3d 600 (9th Cir. 1996) (abuse-of-discretion standard in ERISA review)
- Oster v. Barco of Cal. Emps.’ Ret. Plan, 869 F.2d 1215 (9th Cir. 1988) (deference to administrator’s interpretation when language ambiguous)
- Richardson v. Pension Plan of Bethlehem Steel Corp., 112 F.3d 982 (9th Cir. 1997) (avoid rendering plan provisions nugatory; interpret consistently)
- Cent. Laborers’ Pension Fund v. Heinz, 541 U.S. 739 (U.S. 2004) (ERISA central objective protecting employees' expectations)
- Eisenrich v. Minneapolis Retail Meat Cutters & Food Handlers Pension Plan, 574 F.3d 644 (8th Cir. 2009) (holistic approach preferred over broad overlap-based reasoning)
- Brown v. S. Cal. IBEW-NECA Trust Funds, 588 F.3d 1000 (9th Cir. 2009) (avoid overly broad interpretations that render plan terms nugatory)