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Crouch v. Bussen Quarries, Inc.

United States District Court, E.D. Missouri, Eastern Division

August 19, 2015

PAUL A. CROUCH, Plaintiff,
v.
BUSSEN QUARRIES, INC., et al., Defendants

Page 948

          For Paul A Crouch, Plaintiff: Richard J. Magee, Jr., LEAD ATTORNEY, ECKENRODE-MAUPIN, St. Louis, MO.

         For Bussen Quarries, Inc., Defendant: Adam Christopher Doerr, Andrew J. Martone, LEAD ATTORNEYS, Richard P. Perkins, HESSE MARTONE, P.C., St. Louis, MO.

         For Charles A. Whobey, Trustee of the Central States Southeast and Southwest Areas Health and Walfare and Pension Funds, Jerry Younger, Trustee of the Central States Southeast and Southwest Areas Health and Walfare and Pension Funds, George J. Westley, Trustee of the Central States Southeast and Southwest Areas Health and Walfare and Pension Funds, Marvin Kropp, Trustee of the Central States Southeast and Southwest Areas Health and Walfare and Pension Funds, Arthyr H. Bunte, Jr., Trustee of the Central States Southeast and Southwest Areas Health and Walfare and Pension Funds, Gary F. Caldwell, Trustee of the Central States Southeast and Southwest Areas Health and Walfare and Pension Funds, Ronald DeStefano, Trustee of the Central States Southeast and Southwest Areas Health and Walfare and Pension Funds, Greg R. May, Trustee of the Central States Southeast and Southwest Areas Health and Walfare and Pension Funds, Defendants: Francis J. Carey, LEAD ATTORNEY, CENTRAL STATES FUNDS, Law Department, Rosemont, IL; R. Thomas Avery, LEAD ATTORNEY, Chantal Sibilla Fink, Paul F. Woody, BLITZ AND BARDGETT, Clayton, MO.

Page 949

         MEMORANDUM AND ORDER

         CATHERINE D. PERRY, UNITED STATES DISTRICT JUDGE.

         Plaintiff Paul Crouch brought this lawsuit to recover early-retirement benefits he believes are due him under the terms of his pension plan. See Employee Retirement Income Security Act of 1974, 29 U.S.C. § § 1001 et seq. Crouch has sued the trustees of the plan as well as Bussen Quarries, Inc., his longtime employer. He alleges the plan trustees were acting under a structural conflict of interest and abused their discretion by eliminating some of his pension benefits without considering the hardship that would result to him. He also alleges that his employer breached its fiduciary duty to him by acting against his interest when it decided to withdraw from the pension fund.

         This action comes before me now on several motions: Bussen's motion to dismiss, the plan trustees' motion for summary judgment, and Crouch's motion to amend his complaint. I will grant the trustees' motion for summary judgment because there are no disputed material facts and, as a matter of law, they did not violate ERISA (as amended by the Pension Protection Act of 2006) when they eliminated Crouch's early-retirement benefits. I will grant Bussen Quarries' motion to dismiss because, as an employer negotiating a collective bargaining agreement and not exercising any discretionary control over the pension plan or its assets, Bussen was not acting as a " fiduciary" under ERISA and therefore owed no fiduciary duty to Crouch as a matter of law. I will deny Crouch's motion to amend his complaint because he has not complied with the procedural rules for amendments or explained why he waited so long to propose an amendment, and because the amendment he proposes would unduly prejudice the defendants. I will enter final judgment in favor of defendants.

         I. Background

         The material facts (as alleged in the current operative complaint) are not in dispute. In 1972, Crouch began working as a truck driver. In 1979, he was hired to do that same work by Bussen Quarries, where he remained until his retirement in 2011 at the age of 58. Beginning in 1972 and continuing during his employment with Bussen, Crouch participated in an ERISA-governed pension plan. See 29 U.S.C. § 1002(2)(A); Docs. 31, 38 ¶ 10 (defendants' statement of uncontroverted material facts and plaintiff's response thereto). Under a series of collective bargaining agreements between Bussen and the local union that bargained on behalf of Crouch, Bussen agreed to make contributions for Crouch's benefit to the pension plan. ( See Doc. 31, ¶ 1).

         In 2008, that plan -- the Central States Southeast and Southwest Areas Pension Fund -- slipped into " critical status" as defined by the Pension Protection Act of 2006, Pub. L. No. 109-280 (codified in scattered sections of 26 and 29 U.S.C.). ( See Def.'s Ex. B, Doc. 31-3, p. 1.) Critical-status plans are funded at less than 65%. 29 U.S.C. § 1085(b)(2). To ensure the plans' continued viability, the PPA requires them to " adopt a plan aimed at restoring [their] financial health." [1] See 26 U.S.C. § 432(a)(2)(A), (e).

Page 950

A critical-status fund's strategy for getting back on track is known as a " Rehabilitation Plan." So in 2008, after it was certified by its actuary as a critical-status plan, the Central States Pension Fund established a Rehabilitation Plan as mandated by the PPA.

         One component of the Central States Rehabilitation Plan was the elimination or reduction of so-called " adjustable benefits" for certain plan participants. ( See Def.'s Ex. B, Doc. 31-1, p. 4.) Adjustable benefits include, among other things, early retirement subsidies. 29 U.S.C. § § 1085(e)(8)(A)(iv)(II). Although ERISA generally prohibits reductions in accrued, vested pension benefits, see, e.g., 29 U.S.C. § 1054(g)(2)(A), the PPA creates an exception: it allows critical-status funds to cut the amount of adjustable benefits that certain plan participants receive if the plan sponsor deems it appropriate. 26 U.S.C. § 432(e)(8)(A)(i), (iv)(I); 29 U.S.C. § 1085(e)(1)(B). All critical-status pension plans have more obligations than they have money, and in accordance with the PPA, reducing adjustable benefits frees up funds for other plan obligations.

         When Crouch retired in 2011, the Central States fund was governed by a Rehabilitation Plan, which -- in addition to curtailing certain retiree benefits -- required additional contributions from participating employers. When the latest CBA between Bussen Quarries and the Teamsters expired in March 2012, Bussen and the union negotiated away Bussen's obligation to make payments to the Central States Pension Fund on behalf of its employees. (Docs. 31, 38 ¶ ¶ 4, 6, 7.) Instead, Bussen moved to an employee 401(k) retirement provision.

         Under the Central States Rehabilitation Plan, Bussen's decision to stop contributing to the pension fund triggered a " Rehabilitation Plan Withdrawal" (RPW). (Docs. 31, 38 ¶ ¶ 4, 40, 51, 52.) The Rehabilitation Plan provided that when an employer incurs an RPW for any reason, the adjustable benefits of certain plan participants could be eliminated. (Doc. 31-4, p.6) Unfortunately for Crouch, he was one of those participants: retirees who had started receiving adjustable benefits less than a year prior to the expiration of the CBA requiring employer contributions to the Central States Pension Fund. (Docs. 31, 38, ¶ ¶ 5, 6.) Crouch's benefits were " adjustable" because they were based on his early retirement. 29 U.S.C. § § 1085(e)(8)(A)(iv)(II); Doc. 31-4, p.5-6.

         In April 2008, Central States provided notice to Crouch and other plan participants that it had been designated as a critical-status plan. (Docs. 31, 38, ¶ 35.) This notice described the circumstances that would cause an RPW, explained that an RPW " will result the elimination or reduction of adjustable benefits," and advised that adjustable benefits " include early retirement benefits such as the ability to receive a pension prior to age 65." ( Id. ¶ 36.) Central States sent letters to the participants annually thereafter, notifying them that the pension fund remained in critical status. ( Id. ¶ 38.)

         On January 11, 2014, Central States wrote Crouch and informed him that his

Page 951

pension was about to drop from $2,517.44 to $1,725.26 per month. In accordance with the governing Plan Document, Crouch appealed the reduction: first to the Benefit Claims Appeals Committee and then to the plan trustees. Both groups denied his request to restore his benefits to the original amount. Crouch then filed this lawsuit against the trustees and employer Bussen Quarries.

         Governing Documents

         At the time of Crouch's administrative appeal, the Fund was governed by its Trust Agreement (Doc. 32-1), its Plan Document (Doc. 31-1 to 31-3), and the Rehabilitation Plan, which was appended to the Plan Document. As required by the PPA, the trustees had updated the Rehabilitation Plan annually and tacked on each yearly version in a successive appendix. ( See Doc. 31-3, p. 68 (App. M-1), p. 80 (App. M-2, 2010 update), p. 96 (App. M-3, 2011 update); Doc. 31-4, p. 13 (App. M-4, 2012 update), p. 32 (App. M-5, 2013 update))[2]

         II. Discussion

         A. Count I

         Crouch's Count I, based on ERISA Section 502, 29 U.S.C. § 1132, is directed against the trustees of the Central States Pension Fund. Crouch alleges that the trustees' denial of his appeal to restore his benefits was arbitrary and capricious, resulted in unjust enrichment to the pension fund, and " should be reversed because the terms of the Rehabilitation Plan are vague and ambiguous and, therefore, Defendant Trustees are estopped from enforcing it." (Comp., ¶ 12.)

         Summary Judgment standard

         The defendant trustees have moved for summary judgment on Count I. When determining whether to grant a motion for summary judgment, the court views the facts -- and any inferences from those facts -- in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The movant bears the burden of establishing that (1) it is entitled to judgment as a matter of law and (2) there are no genuine issues of material fact. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the movant has met this burden, however, the non-moving party may not rest on the allegations in its pleadings but must, by affidavit and other evidence, set forth specific facts showing that a genuine issue of material fact exists. Fed.R.Civ.P. 56(c),(e). Where a factual record taken as a whole could not lead a rational trier of fact to find for the nonmovant, there is no genuine issue for trial. Matsushita, 475 U.S. at 587.

         ERISA ...


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