September 25, 2012
IN THE MATTER OF MARK V. BRENNAN, JR.
On appeal from the New Jersey Transit Employees' Retirement Plan Committee, New Jersey Transit Corporation.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 12, 2012 Before Judges Axelrad and Haas.
Appellant Mark Brennan, Jr. appeals from a final decision of the New Jersey Transit Employee Retirement Plan's Committee (the Committee) denying his request to adjust his estimated monthly pension benefit because of an earlier clerical error. We affirm.
None of the critical facts of the matter are in dispute.
On August 15, 1977, appellant began working for Trackless Transit, a New Jersey bus company. He continued to work for this company until 1983, when the company was purchased by New Jersey Transit (NJT). On February 22, 1983, NJT hired appellant. Appellant enrolled in NJT's Employee Retirement Plan (NJTERP) on that date.
The Amalgamated Transit Union (ATU) represented appellant and the other former Trackless Transit employees. After negotiations, ATU and NJT agreed to grant vesting credit to former Trackless Transit employees, for seniority purposes only, dating back to their hire dates with Trackless Transit. Pursuant to this agreement, appellant's seniority with NJT was calculated from August 15, 1977, the date he was hired by Trackless Transit. However, the ATU and NJT also agreed that the employees' pension benefits would be based only on the time they were actually employed by NJT. Thus, appellant's pension benefits would be calculated from February 22, 1983, the date he was hired by NJT. Appellant never contributed any monies to his NJT pension for any period of time prior to February 22, 1983.
Appellant remained employed by NJT and, over the years, he received periodic statements from NJTERP advising him of his estimated pension benefits. Unfortunately, each of these statements incorrectly listed appellant's pension "benefit service date" as August 15, 1977, the date he was hired by Trackless Transit, rather than February 22, 1983, the date from which his pension benefits were supposed to be calculated pursuant to the negotiated agreement between ATU and NJT. This same error was also made on the 401k statements that appellant received during his employment.
Shortly after reaching the age of sixty, appellant advised NJT that he intended to retire on June 30, 2010. On April 5, 2010, he received a statement from NJTERP estimating that his monthly pension benefit would be $3,867. This estimate, however, was based upon the incorrect August 15, 1977 date. On June 17, 2010, NJT's Director of Pensions caught the error and notified appellant that, based upon the correct February 22, 1983 start date, his estimated monthly pension benefit would be $3,203.*fn1
Appellant asked the Committee to review NJTERP's recalculation of his estimated monthly retirement benefit based upon the February 22, 1983 negotiated start date. On July 24, 2011, the Committee denied appellant's request. The Committee acknowledged that an error had been made in the estimated benefit statements that had been provided to appellant during his employment with NJT. Thus, these statements incorrectly listed appellant's Trackless Transit hire date of August 15, 1977 for pension calculations instead of the February 22, 1983 NJT hire date. However, the Committee found that the error was corrected as soon as it was discovered. The estimated pension benefit was then recalculated based upon the correct date. The Committee also noted that neither appellant nor ATU had contributed any monies to fund appellant's pension prior to February 22, 1983. Therefore, the Committee denied appellant's request to use the date he was hired by Trackless Transit as the date from which his pension benefits should be calculated.
On appeal, appellant argues that the Committee's decision was (1) arbitrary and capricious and (2) that the Committee should be equitably estopped from correcting the calculation error. Both of these contentions lack merit.
Our review of an agency's decision is limited. In re Taylor, 158 N.J. 644, 656 (1999). The party challenging the validity of the administrative decision bears the burden of showing that the decision was "arbitrary, unreasonable or capricious." Boyle v. Riti, 175 N.J. Super. 158, 166 (App. Div. 1980)(internal citations omitted).
Mindful of this standard of review, we are satisfied that the Committee acted properly when it recalculated appellant's estimated monthly pension benefit. Administrative agencies have "inherent authority to reopen and modify previous orders," limited only by the exercise of "reasonable diligence[.]" Skulski v. Nolan, 68 N.J. 179, 195 (1975). In determining whether an administrative agency's modification occurred with reasonable diligence, we look to: (1) whether there was a particular occasion for administrative reexamination of the matter; (2) whether there was fraud or illegality in the original action, together with any contribution or participation in this wrongdoing by the beneficiary of the original action; and (3) the extent of any reliance or justified change of position by the party affected by the action. Id. at 196 (relying on Ruvoldt v. Nolan, 63 N.J. 171, 183-84 (1973)).
NJTERP exercised reasonable diligence in correcting the error. While it is unfortunate the incorrect date had appeared in previous estimated benefit statements issued to appellant, NJTERP caught and corrected the error before appellant's retirement became final. Clearly, the agency did not take this action to harm appellant. Rather, NJTERP had the fiduciary obligation to ensure its members received all of the benefits, but only the benefits, to which they were entitled. Appellant never contributed anything toward his pension prior to February 22, 1983, the date he was hired by NJT. Pursuant to the agreement negotiated by appellant's union and NJT, appellant was not entitled to receive any pension benefits for his employment at Trackless Transit prior to that date. Therefore, NJTERP did not act arbitrarily or capriciously when it corrected its mistake and provided appellant with a properly calculated estimate of his projected monthly pension benefit.
These same reasons underlie our rejection of appellant's argument based on the doctrine of equitable estoppel which, as a matter of public policy, is ordinarily rarely invoked against a government entity, particularly when estoppel would "'interfere with essential governmental functions.'" O'Malley v. Dept. of Energy, 109 N.J. 309, 316 (1987). We examine three criteria in determining whether estoppel applies in pension benefit cases. Skulski v. Nolan, supra, 68 N.J. at 200. Specifically, we evaluate "(1) the applicant's subjective good faith belief that he was entitled to benefits; (2) the extent of the applicant's change of position in reliance on the initial pension grant; and (3) the extent to which the applicant's reliance has foreclosed alternate opportunities for pension benefits." Ibid.
Here, appellant did receive periodic statements from NJTERP that incorrectly indicated that August 15, 1977 was the date on which his pension benefits began to accrue. At the same time, however, he knew he had never contributed anything to his pension until after he began working at NJT on February 22, 1983. While he asserted in a certification submitted to the Committee that, in 1983, he "was advised that his five-plus years of service with Trackless Transit would be carried over and my seniority would be kept intact and credited toward my years of service for pension calculation purposes," he never provided any details to support this allegation.
Appellant also argues that his union never advised him of the agreement it had reached with NJT. However, he does not dispute that ATU negotiated an agreement with NJT under which appellant, and the other former Trackless Transit employees, would only receive pension credit from the date they began working for NJT. As a union member, appellant is bound by his union's representation of his interests. DeMarco v. Thatcher Furnace Co., 102 N.J. Super. 258, 271 (Ch. Div. 1968). There is therefore no basis to hold NJTERP responsible for any failure by ATU to provide appellant with a copy of its agreement with NJT.
More significantly, appellant did not change his position in reliance upon the incorrect information that had been provided to him. When, upon applying for retirement, he was accurately advised of his monthly benefit entitlement, he postponed his retirement and continued to work at NJT. Thus, he did not retire in reliance upon incorrect information provided to him, only to have to return any benefits incorrectly paid. Compare Indursky v. Bd. of Trs. of Pub. Emps. Ret. Sys., 137 N.J. Super. 335 (App. Div. 1975) (holding that pension board, which waited six years after approving member's retirement to seek reimbursement of incorrectly-paid benefits and which, during that time, had failed to respond to the member's repeated requests for information, was equitably estopped from recovering the benefits). Therefore, appellant suffered no harm as the result of NJTERP's error.
Appellant argues that, had his estimated benefit statements included his correct pension start date of February 22, 1983, he would have worked overtime or sought out better-paying positions to increase his projected pension. However, he provides no details suggesting that this would have been possible. Appellant has held management positions with NJT since 1990 and, as a result, is not permitted to be paid overtime. In addition, he has not provided any information to indicate that he was eligible for any positions other than the ones he held at NJT.
The inconvenience to appellant caused by NJTERP's mistake is also outweighed by the strong public interest in protecting the fiscal integrity of public employee pension plans. Trackless Transit never funded a defined benefit pension plan when NJT purchased that company and there were no assets to be transferred to NJT to fund this liability. Appellant did not submit any evidence that he had contributed to any pension plan with Trackless Transit and he never contributed to NJTERP prior to being hired by NJT on February 22, 1983. Under these circumstances, it would be inequitable to permit appellant to collect additional pension benefits to which he is not entitled.