On Appeal from the United States District Court for the Middle District of Pennsylvania, (D.C. Civil No. 81-1198).
Before: Gibbons and Becker, Circuit Judges and Katz, District Judge*fn*
This appeal presents the question whether the trustees of a pension plan governed by the Employee Retirement Income Security Act. 29 U.S.C. § 1001 et seq. (ERISA), acted arbitrarily and capriciously or in violation of the vesting, accrual, and funding provisions of ERISA by including in the calculation of plaintiffs/appellants' pension benefits a period during which appellants were on strike and therefore were not compensated. The district court held that the trustees did not act in such a manner, and entered judgment for the defendants/appellees. We affirm.
II. FACTUAL AND PROCEDURAL HISTORY
This suit arises out of an impasse in collective bargaining between the Wilkes-Barre Publishing Company (the "Company"), publisher of the Times Leader, and the four separate labor organizations representing various groups of company employees. On October 6, 1978, appellants, all of whom were long-term employees of the Company and fully vested under its pension plan, ceased active employment with the Company when they began participation in a strike against it.*fn1 Appellants never returned to their jobs, retiring while still out on strike. Shortly thereafter, each appellant applied for benefits under the Wilkes-Barre Publishing Company Pension Trust (the "Plan").
The Plan provides that a participant shall have a fully vested right to pension benefits after he or she has completed ten years of credited service with the company (see Appellees' Brief, Exhibit I, Art. 5, Sec. 5.01 (hereinafter "Ex. 1")). Participants who retire on the normal retirement date, which is defined as the participant's sixty-fifth birthday (see Ex. 1 Art. 3, Sec. 3.1; Art. 1, Sec. 1.4(n)), are entitled to a normal retirement pension. The Plan also provides for the receipt of early retirement and disability retirement benefits (see Ex. 1, Art. 3, Sec. 3.1 and 3.4).
The formula for computing the amount of pension benefits available to participants who elect any of the typed of retirements mentioned above is based, inter alia. Upon an average compensation component. This compensation component is derived by calculating twenty-two percent of the retiree's average annual compensation. Average annual compensation is defined as the average yearly compensation received by a Plan participant during the five-consecutive-year-period immediately prior to the earlier of (1) the participant's sixty-fifth birthday, or (2) the date of the participant's termination of employment (see Ex. 1, Art. 1, Sec. 1.4(d)). The Plan, however, does not define termination of employment. Notwithstanding the foregoing, the Plan provides for a minimum monthly pension benefit of not less than one hundred dollars. This minimum may be reduced pro rata for credited service less than fifteen years (see Ex. 1, Art. 4, Sec. 4.1(c)).
In calculating appellants' benefits, the trustees interpreted the Plan to include in the computation of average annual compensation the period during which appellants were on strike and, therefore, received no compensation from the company. Under this interpretation, the monthly pension that each appellant was entitled to receive was significantly less than it would have been had appellants continued to work (rather than strike) until retirement. Similarly, the pension benefits were less than they would have been had appellants chosen to terminate their employment and take immediate retirement rather than to go out on strike.
In the three strikes that preceded the 1978 strike, strikers did not experience a reduction in their pension benefits due to the inclusion of strike time in the calculation of average annual compensation. According to the district court, "it is uncontroverted that in each prior strike, the result appellants now seek . . . was obtained as part of the negotiated settlement of each strike," App. at 1059. For example, as part of the collectively-bargained settlement of the 1954 strike, the Company paid retirees whose benefit calculation included the time period covered by the strike an additional amount equal to the reduction of benefits due to lost wages. And, pursuant to agreements arising out of the 1973 and 1974-75 strikes, a period of time equal to the length of the strike was added to the five-year period in the calculation of average annual compensation.
Dissatisfied with the trustees' interpretation of the Plan in the midst of this latest strike, appellants filed this suit on October 21, 1981, to compel a recalculation of their pension benefits. Named as defendants were the Wilkes-Barre Publishing Company Pension Trust and the Wilkes-Barre Publishing Company. On cross motions for summary judgment, the district court held that defendants acted reasonably in their calculation of plaintiffs' pension benefits and that no violation of ERISA occurred. The district court granted summary judgment in favor of the Pension Trust and the Company, and this appeal followed.*fn2