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MCCOY v. BOARD OF TRUSTEES OF THE LABORERS' INTERNATIONAL UNION

February 26, 2002

WILLIE J. MCCOY, PLAINTIFF,
V.
BOARD OF TRUSTEES OF THE LABORERS' INTERNATIONAL UNION, LOCAL NO. 222 PENSION PLAN; LABORERS' INTERNATIONAL UNION, LOCAL NO. 222 PENSION PLAN; LABORERS' INTERNATIONAL UNION, LOCAL NO. 222; EDWARD HARRIS; OLIVER G. GLASS; NEW JERSEY BUILDING LABORERS STATEWIDE PENSION FUND; X, Y, Z CORPORATIONS (1-10); A, B, C PLAN SPONSORS OR ADMINISTRATORS (1-10), DEFENDANTS.



The opinion of the court was delivered by: Stephen M. Orlofsky, United States District Judge

  OPINION

INTRODUCTION

A good actor, it is often said, must have good timing. If this case is any indication, the Defendants, a Pension Benefit Plan and its Trustees, are bad actors. By raising the Plaintiff's alleged failure to exhaust his administrative remedies under the Plan for the first time in their Cross-Motion for Summary Judgment, the Defendants force me to determine whether or not exhaustion is a non-waivable jurisdictional requirement under ERISA. Since I find that it is not, I am also obliged to consider under what circumstances a Plaintiff may be prejudiced by a Plan's undue delay in raising an exhaustion defense.
Nor is that the only timing issue in this case. Invoking a provision that had been superseded eleven months before the Plaintiff filed his claim for benefits, the Trustees denied the Plaintiff benefits to which he believed he was due under the Plan. Although this Court is bound to respect the judgments of such trustees, who after all are presumptively expert within their field, that deference has its limits. In this case, the Trustees inexplicably disregarded a text that was clear both semantically and in a larger policy context. Thus, I will order the Defendants to make good the obligations they owe to the Plaintiff under their Plan. Finally, finding that the Trustees appear to have simply lost track of the time in which they must revise certain Plan materials, I shall also compel the Defendants to discharge their statutory obligation to provide full disclosure to all of their beneficiaries.
Therefore, for the reasons set forth in more detail below, I will grant in part and deny in part the Plaintiff's Motion for Summary Judgment. I will also grant in part and deny in part the Defendants' Cross-Motion for Summary Judgment, principally because the Plaintiff's claims for breach of fiduciary duty are largely already encompassed or effectively mooted by the other relief I grant him.

FACTS AND PROCEDURAL HISTORY

The Defendants, Laborers' International Union, Local No. 222 Pension Plan ("the Local Plan" or "the Plan"), and New Jersey Building Laborers Statewide Pension Fund ("the State Plan") are employee benefit plans organized under the Employee Retirement Income Security Act, 29 U.S.C. § 1001-1461 (2000) ("ERISA"). Until its merger into the State Plan in 2001, the Local Plan was administered by the Defendant, Board of Trustees of the Laborers' International Union, Local No. 222 Pension Plan ("the Trustees"). Defendants Edward Harris and Oliver G. Glass were individual members of the Board of Trustees. Obviously, most participants in the Local Plan were members of the Defendant Union, the Laborers' International Union, Local No. 222 ("the Union").
Willie McCoy ("McCoy") has been a member of the Union and a participant in the various Plans since 1981. McCoy's principal work during this time has been as a laborer in the construction trade. In January of 1995, McCoy suffered a back injury that, he claims, left him unable to perform his duties as a laborer. McCoy continued to attempt to work periodically over the next three years, although he never worked more than 100 hours in any given year.
At some time after suffering his injury, McCoy applied for Social Security Disability Benefits. On November 27, 1998, the Office of Hearings and Appeals of the Social Security Administration approved McCoy's application, see Hildebrand Decl. Exh. M, and on December 28, 1998, the Social Security Administration determined that McCoy was entitled to disability benefits retroactive to July, 1995. Id. Exh. N.
McCoy filed an application for disability retirement benefits under the Local Plan on December 18, 1998. Id. Exh. O. Under a provision of the Plan then in effect, applicants could demonstrate disability by proof that they had been awarded a disability benefit by the Social Security Administration. Id. Exh. G § 4.3(a)(3). If the applicant was otherwise qualified, his Disability Retirement Benefit would "begin as of the first day that he is eligible to receive a disability benefit under the Social Security Act." Id. § 4.3(a). In McCoy's case that date would have been July of 1995, as determined by the Social Security Administration. Id. Exh. N.
Although McCoy's application for Disability Retirement Benefits was approved, the Plan determined that he would receive benefits beginning January 1, 1999, rather than retroactive to July, 1995. Id. Exh. O. McCoy's benefits were set at $1,093.36 per month. Id.
Benefits under the plan are largely dependent on the amount of "Credit Years" an employee has accumulated. Employees get credit for a full year of service for any calendar year in which they work 1,000 or more hours. Employees who work a smaller amount of hours receive proportionately less credit, although below a certain threshold no credit at all is given. McCoy had a total of 13 years and eight months of "Credit Years" at the time of his disability. Id. The year in which credit was accumulated is relevant under the plan for participants who became "eligible" for benefits prior to 1997. For example, beneficiaries who became eligible during 1995 receive each month a total benefit of $60 times the number of pre-1986 credit years, plus $75 times the number of post-1986 credit years. The Plan calculated McCoy's benefit as if he became eligible in 1997, and accordingly awarded him a flat $80 times his total credit years. Id. The Plan notified McCoy of its determinations by letter dated March 4, 1998. Defs.' Br. Exh. D.
In March of 1998, McCoy wrote to the Plan Administrator seeking additional information on how his benefits were calculated, as well as a variety of general information about the Plan, such as the identity of its Trustees and its procedures for receiving legal process. Hildebrand Decl. Exh. Q. McCoy also spoke in person with the Plan Administrator, telling her that he was dissatisfied with the Plan's determination. Id. Exh. Y at 73. On April 13, 1998, the Plan Administrator wrote to McCoy to inform him that the Plan would treat his letter as a request to appeal its decision. Id. Exh. R. McCoy responded in writing two days later by asking that the Plan provide an explanation for why it had denied him the benefits he had requested. Id. Exh. S. There is no evidence in the summary judgment record that he received any explanation prior to April 17, 2000.
At a May 12, 1999 meeting, the Trustees voted unanimously to deny McCoy's appeal. Defs.' Br. Exh. H. The summary judgment record does not indicate whether or not McCoy was advised of this decision. McCoy, however, was invited to attend a subsequent meeting of the Trustees on November 18, 1999, where he was permitted to present his case. Id. Exh. I. The Trustees referred McCoy's claim to their counsel for a recommendation. Id.
At some point between January and April of 2000, McCoy learned that his appeal had been denied. See id. Exh. M. On or about April 17, 2000, counsel for the Plan sent a letter to McCoy confirming in writing that McCoy's appeal had been denied. Id. The denial letter explained:
The basis for the denial was that the plan of benefits provides for the payment of a disability pension the month following the date the application is completed and filed if that is later than six months following the date of disability. Your application for disability pension benefits was filed with the Pension Fund in December of 1998. You were found disabled by the Social Security Administration as of 1995. As a result, you were placed in payment status the month following the date of your application, which was January of 1999. Accordingly, since your application was processed in accordance with the plan of benefits, your claim appeal has been denied by the Trustees.
Id. The denial letter did not refer to the amended language of the Plan ยง 4.3(a). The letter also made no mention of McCoy's options ...

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