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McKay v. Board of Trustees of Bakery Drivers and Salesman Local 194 Pension Fund

United States District Court, D. New Jersey

December 5, 2017

JOHN MCKAY, Plaintiff,



         Plaintiff John McKay brings this action against the Board of Trustees of the Bakery Drivers and Salesmen Local 194 Pension Fund (“Defendant”), alleging a violation of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., in connection with Defendant's suspension of Plaintiff's pension benefit. This matter comes before the Court on the parties' cross-motions for summary judgment pursuant to Federal Rule of Civil Procedure 56. There was no oral argument. Fed.R.Civ.P. 78(b). For the reasons set forth below, Defendant's motion is DENIED and Plaintiff's motion is GRANTED.

         I. BACKGROUND

         Plaintiff is a participant in the Bakery Drivers and Salesmen Local 194 and Industry Pension Fund (“Pension Fund”). See Pl.'s Rule 56.1 Statement of Material Facts (“Pl.'s Statement.”) ¶ 1, ECF No. 10-1. The Pension Fund “is a multiemployer/single union defined benefit pension fund” administered by a board of trustees (“Defendant”), which is comprised of management and union representatives with equal decision-making authority. Def.'s Rule 56.1 Statement of Material Facts (“Def.'s Statement”) ¶¶ 1-2, ECF No. 13. The following facts are undisputed.

         Beginning in 1988, Plaintiff worked as a Route Salesman for the Wonder Bread Baking Company (“Wonder Bread”) at its New Jersey facility until the its closure in June 2013. See Pl.'s Statement at ¶¶ 2-3. In April 2013, roughly three months prior to the facility's closure, Plaintiff started working for the Kellogg Company (“Kellogg”) approximately 10 hours per week as a Merchandiser. Id. at ¶ 3; see Aff. of G. Prezioso (“Prezioso Aff.”), Bates No. 43.[1] After his termination as a Route Salesman, Plaintiff applied for and was awarded a monthly pension of $1, 249.00. Pl.'s Statement at ¶ 4. Born in 1957, Plaintiff had not reached the normal retirement age of 65 at the time of his pension application. Def.'s Statement at ¶ 17. Plaintiff, therefore, applied for an Early Retirement Benefit under the Pension Fund. Id. Plaintiff did not disclose his employment as a Merchandiser on his pension application. Id. at ¶ 21.

         On October 17, 2016, Plaintiff submitted a certification and employment verification to Defendant, in which he revealed his employment with Kellogg. Id. at ¶¶ 24-25. On December 4, 2016, Defendant determined that Plaintiff engaged in disqualifying employment under the Pension Fund rules (the “Rules”). Id. at ¶ 39. The Rules define “disqualifying employment” as “employment with a Contributing Employer; or self-employment in the same or related business as any Contributing Employer; or employment or self-employment in any business which is or may be under the jurisdiction of the Union.” See Prezioso Aff. at 95.

         In a letter dated December 19, 2016, Defendant informed Plaintiff that his monthly pension benefit was being permanently suspended due to his violation of the Rules and that he further owed $34, 972.00 in benefits paid for which he was not eligible. See id. at 156. Specifically, Defendant stated, “Since the Kellogg Company is in the same or related business as other contributing employers to the Plan, your current employment is disqualifying employment under the terms of the Plan.” Id.

         Plaintiff filed a written appeal, in which he argued that his employment did not meet any of the three prohibitions. See id. at 170-72. Plaintiff outlined the differences between his Kellogg employment and his Wonder Bread employment, including the use of his own car, an hourly wage, no sales responsibility and the absence of benefits. Id. at 171. Nonetheless, on March 8, 2017, Defendant denied Plaintiff's appeal, finding that “none of the materials provided by [Plaintiff] had addressed the application of the Plan's suspension rules or the basis of the Plan's initial suspension [letter] . . . .” See id. at 180. Defendant again stated that Plaintiff engaged in disqualifying employment because “delivering food to retail establishments is work that is within the jurisdiction of the Union.” See id. at 182.

         The parties now cross-move for summary judgment. Plaintiff argues first that Defendant's suspension violates § 1053(a)(3)(B)(ii) of ERISA because Plaintiff's Kellogg employment was not in the same industry as his Wonder Bread employment and he was not employed in the same “trade or craft.” See Pl.'s Mem. of Law in Supp. of Mot. for Summ. J. (“Pl.'s Mem.”) 4-6, ECF No. 10-2. Second, Plaintiff argues that Defendant misapplied the meaning of “disqualifying employment” to Plaintiff's Kellogg employment because nothing in the administrative record establishes that Plaintiff delivered food to retail establishments on behalf of Kellogg. See id. at 7. Plaintiff further contends that Kellogg is not in the same business as Wonder Bread because it does not make and sell bread. Id.

         Defendant argues that judicial review of its decision to suspend Plaintiff's pension is entitled to an abuse of discretion or “arbitrary and capricious” standard. See Def.'s Br. in Supp. of Mot. for Summ. J. (“Def.'s Br.”) 9-14, ECF No. 9-1. Defendant asserts that the Rules provide for “the grant of absolute and discretionary power to the Trustees over benefit and eligibility determinations.” Id. at 9. Consequently, according to Defendant, the Court must give deference to Defendant's interpretation of the Rules and enforcement thereof where such enforcement is reasonable. See id. at 11-14. Accordingly, Defendant's decision here is entitled to deference because “it was deliberate, rational and reasonable, and based upon the substantial evidence in the record.” See id. at 16-20. Both parties filed oppositions to their adversary's motion, which the Court will address below as necessary. See Pl.'s Mem. of Law in Opp'n to Def.'s Mot. (“Pl.'s Opp'n”), ECF No. 14; Def.'s Resp. in Opp'n to Summ. J. Mot. (“ Def.'s Opp'n”), ECF No. 16.


         Federal Rule of Civil Procedure 56 provides for summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Turner v. Schering-Plough Corp., 901 F.2d 335, 340 (3d Cir. 1990). A factual dispute is genuine if a reasonable jury could find for the non-moving party, and is material if it will affect the outcome of the trial under governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court considers all evidence and inferences drawn therefrom in the light most favorable to the non-moving party. Andreoli v. Gates, 482 F.3d 641, 647 (3d Cir. 2007). “When confronted with cross-motions for summary judgment, the court must rule on each party's motion on an individual and separate basis, determining, for each side, whether a judgment may be entered in accordance with the summary judgment standard.” Marciniak v. Prudential Fin. Ins. Co. of Am., 184 F. App'x 266, 270 (3d Cir. 2006).


         The Court will first address Defendant's motion because its argument concerning the appropriate standard of review requires correction. As an initial matter, the Court notes that the essence of the dispute is the meaning of “disqualifying employment” as defined under Section 6.10(a)(i) of the Rules. See Prezioso Aff. at 95. Ultimately, the Court finds that Defendant's position that Plaintiff's Kellogg employment disqualifies him from his pension benefit is unsupported by the administrative ...

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