The opinion
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
DAVID HILL, ) Case No. 1:22-CV-2073
)
Plaintiff, ) Judge J. Philip Calabrese
)
v. ) Magistrate Judge
) Jennifer D. Armstrong
CLEVELAND BAKERS AND )
TEAMSTERS PENSION FUND, )
)
Defendant. )
)
OPINION AND ORDER
Plaintiff David Hill, Jr. is the son of decedent, David Hill, Sr. and the
administrator of his father’s estate. David Hill, Sr. is a former employee of Nickles
Bakery in Cleveland, Ohio. In 2021, contemplating retirement, David Hill, Sr.
applied to his pension fund for benefits, and received approval. Unfortunately, he
passed away before any payments issued. After his father’s death, Plaintiff applied
for benefits as administrator of the estate and as a beneficiary. Twice, his claims
were denied. Then, Plaintiff filed this action seeking to reverse the denial of benefits.
Plaintiff and Defendant filed cross motions for judgment on the administrative
record. (ECF No. 17; ECF No. 18.) For the reasons that follow, the Court DENIES
Plaintiff’s motion for judgment on the administrative record (ECF No. 17) and
GRANTS Defendant’s motion for judgment on the administrative record (ECF No.
18).
STATEMENT OF FACTS
A. Pension Plan Application
David B. Hill, Sr. was employed as a shipper at Nickles Bakery from
September 1977 through December 2020. (ECF No. 14-1, PageID #109.) Throughout
his employment, Hill belonged to the Cleveland Bakers and Teamsters Union and
contributed to the union’s pension fund. (Id., PageID #159.) Hill retired on December
17, 2020 and requested an application for a pension on December 28, 2020. (Id.,
PageID #65.)
On February 24, 2021, Hill submitted a pension application to the fund
administrators. (Id.; see also id., PageID #112). The application designated Hill’s
son, David Hill, Jr., as the beneficiary of any plan benefits and listed Hill’s last day
of employment as December 31, 2020. (Id., PageID #126 & #128.) Hill listed the
effective date for benefits as April 1, 2021. (Id., PageID #121.)
The Cleveland Bakers and Teamsters Pension Plan sets a two-month waiting
period between the date a retiree submits an application for a pension and the date
benefits are first paid. (Id., PageID #246.) To comply with the two-month waiting
period, the Plan Administrator adjusted the pension’s effective date to May 1, 2021—
the first payment date two months after submission of the application. (Id., PageID
#112.) The Plan Administrator notified Hill of this adjustment on March 8, 2021 and
requested additional documents. (Id., PageID #108.)
On March 11, 2021, Hill passed away. (Id., PageID #87 & #106.) As of that
date, the Plan did not make any payments to Hill or his estate. (Id., PageID #65 &
#90–91.)
B. The Pension Plan
Under the Plan, participants qualify for a pension based on their age and
credited service at the time they cease working. (Id., PageID #213.) The parties agree
that Hill qualified for the “Golden 90” pension plan under Article IV, Section 4 of the
Plan. (Id., PageID #106, #159 & #228.)
B.1. Payment of Pension Plan Benefits
Article VI of the Plan governs payment of pension benefits and contains the
relevant provisions at issue that determine whether Hill’s estate is entitled to
payment. (Id., PageID #243–45.) Section 1(A) specifies the date when payments will
begin. It provides in relevant part:
Section 1 – Commencement and Duration of Pensions
A Participant who makes application in accordance with the
provisions of the Plan shall be entitled upon retirement to receive
the monthly benefits provided for the remainder of his life, subject
to all of the provisions of this Plan. Benefits shall be payable
commencing with the first full calendar month after the
Participant has fulfilled all the conditions for entitlement to
benefits and ending with the payment for the month in which the
death of the Participant occurs, except as otherwise provided in
this Article or in Article V. The payment of benefits under the
Plan to the Participant shall begin no later than the 60th day
after the close of the Plan year in which occurs the latest of:
(1) the Participant’s 65th birthday;
(2) the 10th anniversary of the year in which the Participant
commenced participating in the Plan; or
(3) the Participant’s Termination of Employment.
(Id., PageID #243.)
Article VI, Section 1(B) addresses the death of a Plan participant. It states as
follows:
With respect to any payments which commence due to the
preceding provisions of this section, the following clauses shall
apply notwithstanding any provision of the Plan to the contrary.
(1) In the event a Participant dies prior to the time
distributions commence: . . .
(b) Any portion of the Participant’s interest that is
payable to a designated Beneficiary will be
distributed either within five years after the
Participant’s death or over the life of the Beneficiary
. . . .
(Id., PageID #242–43.)
Finally, Article VI, Section 2 requires an application for the commencement of
Plan benefits. In relevant part, it provides:
Section 2 – Advance Written Application Required
Application for a pension shall be made in writing in a form and
manner prescribed by the Trustees and shall be filed with the
Trustees at least two months, but not more than twelve months,
in advance of the first month for which pension benefits are
payable. If the required application is filed later than such date,
payments will begin within 60 days from the date such
application is filed and, if applicable, payments will be made
retroactively to the date specified in the third and fourth
sentences of Section 1 of Article VI.
(Id., PageID #246.)
B.2. Beneficiary Payments after Pensioner’s Death
Article V is titled “Benefit in the Event of Death After Retirement.” (Id.,
PageID #242.) Under the Plan, where a pensioner “dies prior to the payment of
benefits for 36 months,” the named beneficiary is entitled to receive “the monthly
benefit that has been paid to the Pensioner for the remainder of the said 36-month
period.” (Id.)
C. Plaintiff’s Claim, April 8, 2021
After his father’s death, Plaintiff submitted a claim for entitlement to the
benefits under Article V. (Id., PageID #98–105.) By letter dated April 8, 2021, the
Plan Administrator denied Plaintiff’s claim (id., PageID #90–96) and explained that
the guaranteed 36-month benefit under Article V is only available to the designated
beneficiary of a “Pensioner,” which is defined within the Plan as a “person to whom
benefits are being paid” (id., PageID #90–91). In the Administrator’s view, Hill had
not become entitled to a payment before his death; therefore, he was not a “Pensioner”
for purposes of the Plan provisions. (Id.) As a result, Plaintiff was not entitled to the
36-month benefit. (Id.)
Plaintiff did not appeal the April 8, 2021 claim denial. (ECF No. 17, PageID
#405; ECF No. 18, PageID #422.)
D. Plaintiff’s Claim, February 2, 2022
Following his denial of benefits as his father’s beneficiary, Plaintiff opened an
estate for his father. On February 2, 2022, Plaintiff advised the Plan Administrator
that he was submitting claims in two capacities. (ECF No. 14-1, PageID #82.) First,
as administrator of his father’s estate, Plaintiff sought a single monthly payment for
March 2021. (Id.) Second, Plaintiff resubmitted his prior claim for 35 monthly
payments as the listed Beneficiary under Article V. (Id., PageID #82–83.) By letter
dated February 18, 2022, the Plan Administrator denied these claims as untimely.
(Id., PageID #78–81.) Also, the Administrator explained that Hill did not become
eligible for any payment in March 2021 because he died before any payment issued.
(Id.)
Plaintiff timely appealed the denial of his second claim. (Id., PageID 67–70.)
In accordance with the Plan’s required procedures, the appeal was presented to the
Board of Trustees of the Cleveland Bakers and Teamsters Pension Fund for
consideration at its regularly scheduled meeting on June 16, 2022. (Id., PageID #61.)
By letter dated June 22, 2022, the Plan denied the appeal. (Id., PageID #61–64.) This
lawsuit followed.
STATEMENT OF THE CASE
At issue in this case is when Hill became entitled to benefits under the Plan.
The Plan speaks only indirectly to the unusual circumstances presented, where Hill
vested, applied for benefits, then passed away before receiving his first monthly
payment. Plaintiff contends that Hill was entitled to benefits as of the date on which
he submitted his application. (ECF No. 17, PageID #404.) Defendant asserts that
entitlement to benefits arises only after the end of a two-month waiting period.
Resolution of this dispute requires the Court to determine whether the
Administrator’s interpretation of the Plan in a way that precludes any entitlement to
a benefit before the two-month waiting period was arbitrary and capricious.
ANALYSIS
Section 502(a)(1)(b) of the Employee Retirement Income Security Act of 1974
allows Plaintiff to bring this action “to recover benefits due to him under the terms of
his plan, to enforce his rights under the terms of the plan, or to clarify his rights to
future benefits under the terms of the plan.” 29 U.S.C. §1132(a)(1)(b). The Court
adjudicates the merits of the claims “based solely upon the administrative record”
and not pursuant to the summary judgment procedures set forth in Rule 56. Fed. R.
Civ. P. 56. Moore v. Lafayette Life Ins. Co., 458 F.3d 416, 430 (6th Cir. 2006) (citing
Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 619 (6th Cir. 1998)).
A benefit plan may grant the plan administrator discretionary authority to
determine eligibility and interpret the terms of the plan. Firestone Tire & Rubber
Co. v. Bruch, 489 U.S. 101, 115 (1989). Where it does, a district court reviews a plan
administrator’s decision to deny benefits under the “highly deferential arbitrary and
capricious standard of review.” Sanford v. Harvard Indus., Inc., 262 F.3d 590, 595
(6th Cir. 2001) (quoting Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 380
(6th Cir. 1996)). In this case, the parties agree that the Plan grants such authority
to the Administrator. (ECF No. 17, PageID #407; ECF No. 18, PageID #424.)
Accordingly, the arbitrary and capricious standard of review applies.
Under this standard, a reviewing court must affirm the decision of the
administrator if the evidence in the record establishes a reasonable basis for the
decision. Davis v. Kentucky Fin. Cos. Ret. Plan, 887 F.2d 689, 693–94 (6th Cir. 1989).
A plan administrator has not acted arbitrarily and capriciously if it is “possible to
offer a reasoned explanation, based on the evidence” for its decision to deny benefits.
Perry v. United Food & Com. Workers Dist. Union, 64 F.3d 238, 242 (6th Cir. 1995)
(internal quotations omitted). Where the administrator’s decision to deny benefits “is
the result of a deliberate, principled reasoning process and . . . is supported by
substantial evidence,” the decision will be upheld. Balmert v. Reliance Standard Life
Ins. Co., 601 F.3d 497, 501 (6th Cir. 2010) (quoting Baker v. United Mine Workers of
America Health & Ret. Funds, 929 F.2d 1140, 1144 (6th Cir. 1991)).
The arbitrary and capricious standard of review is not simply a “rubber
stamp[]” of the plan administrator’s decision. Balmert, 601 F.3d at 661 (quoting Moon
v. Unum Provident Corp., 405 F.3d 373, 379 (6th Cir. 2005)). “Deferential review is
not no review, and deference need not be abject.” McDonald v. W.S. Life Ins. Co., 347
F.3d 161, 172 (6th Cir. 2003) (internal quotations omitted). Where the plan
administrator’s interpretation creates internal inconsistency within the plan, this
standard calls its decision into question. Davis, 887 F.2d at 695. Similarly, an
interpretation that adds eligibility requirements may be arbitrary and capricious.
See Jones v. Metropolitan Life Ins. Co., 385 F.3d 654, 661 (6th Cir. 2004). But a plan
administrator’s rational interpretation of plan provisions must be accepted, “even in
the face of an equally rational interpretation offered by the participants.” Morgan v.
SKF USA, Inc., 385 F.3d 989, 992 (6th Cir. 2004). This deference extends to a plan
administrator’s interpretation of “ambiguous and general terms” of a plan. Jones,
385 F.3d at 661.
I. Plaintiff’s Claim as Administrator
The Plan Administrator determined that Hill died before fulfilling the
conditions precedent to entitlement to benefits and, as a result, that the fund does
not owe his estate a payment. Defendant interprets the plan document to require, as
a condition of entitlement to benefits, a two-month waiting period between the time
the application is submitted and the time a claimant accrues benefits. This
conclusion rests on the interpretation of Article VI of the Plan.
Under Article VI, Section 1(A), “[a] participant who makes application in
accordance with the provisions of the Plan” is entitled to benefits, “subject to all of
the provisions of this Plan.” (ECF No. 14-1, PageID #243.) Those benefits “shall be
payable commencing with the first full calendar month after the Participant has
fulfilled all the conditions for entitlement of benefits.” (ECF No. 14-1, PageID #243.)
The next section, titled “Advance Written Application Required,” describes the
application process. It requires an application at least two months before the first
payment of benefits: “Application for a pension … shall be filed with the Trustees at
least two months … in advance of the first month for which pension benefits are
payable.” Put simply, Defendant reads the “conditions for entitlement of benefits” to
include the written application requirements. (ECF No. 18, PageID #432.) The
“conditions for entitlement of benefits” are not defined elsewhere in the Plan, and
Defendant finds support in the Section 1(A) language that makes entitlement “subject
to all of the provisions in [the] Plan.” Arbitrary and capricious review requires that
the Administrator’s interpretation of the Plan be the product of a deliberate,
principled reasoning process and supported by substantial evidence. Balmert, 601
F.3d at 501. This interpretation satisfies this standard.
As the administrator of his father’s estate, Plaintiff argues that Hill’s
payments would begin in May 2021 but account for eligibility beginning in March
2021. He argues that other provisions in the Plan render Defendant’s interpretation
internally inconsistent. (ECF No. 19, PageID #438.) Plaintiff points to specific
language in the Plan that governs the death of a participant. Article VI,
Section 1(B)(1) addresses the circumstance where a participant dies before
distributions begin. (ECF No. 14-1, PageID #243–44.) Plaintiff reads this provision
as “squarely contradict[ing]” Defendant’s interpretation of the Plan because that
language seems to support an interpretation that allows a participant to have accrued
payments before the end of the two-month waiting period. (ECF No. 19, PageID
#437.)
In Defendant’s view, the provisions on which Plaintiff relies reflect Section
206(a) of ERISA. 29 U.S.C. § 1056(a). That statutory language, and by extension the
parallel language in the Plan, sets certain dates when participants must begin
receiving payment. In this way, the statute and the Plan protect a participant’s right
to benefits by triggering distribution upon certain events––a situation that has no
application to participant’s circumstances, says Defendant. (ECF No. 18, PageID
#433; ECF No. 20, PageID #447–48.) Further, Defendant explains that the language
of Section 1(B) tracks the language of another statute: Section 401(a)(9)(A)(ii) of the
Internal Revenue Code, which prevents the continued use of pension funds as tax
shelters and does not apply to Hill’s circumstances. (ECF No. 20, PageID #447–48.)
Given the context and history of these provisions, the Court finds that
Defendants’ interpretation of the Plan represents a principled reasoning process, does
not render the provisions of the Plan meaningless or internally consistent, and is not
arbitrary or capricious. See Balmert, 601 F.3d at 501. A presentation by Plaintiff of
“an equally rational interpretation” does not change this determination. Morgan, 385
F.3d at 992.
II. Plaintiff’s Claim as Beneficiary
Under Article V of the Plan, benefits may be paid to the “Beneficiary[] of a
Pensioner.” (ECF No. 14-1, PageID #242.) The Plan expressly defines these terms.
(Id., PageID #198 & #204.) A “Beneficiary” means “the person designated in writing
by a Pensioner to receive any benefits due and payable upon the death of the
Pensioner under the terms of Article V hereof.” (Id., PageID #198.) And a “Pensioner”
is “a person to whom benefits are being paid.” (Id., PageID #204.)
The Administrator determined that Hill did not accrue benefits and never paid
him any. Therefore, he did not become a “Pensioner” within the meaning of the Plan.
For this reason, Defendant’s decision not to pay benefits to Plaintiff as his father’s
beneficiary is not arbitrary or capricious. Because Plaintiff is not entitled to benefits
as a beneficiary, his argument that the futility exception excuses his failure to
exhaust administrative remedies on his first claim is moot.
CONCLUSION
For these reasons, the Court GRANTS Defendant’s Motion for Judgment on
the Administrative Record (ECF No. 18), DENIES Plaintiff’s Motion for Judgment
on the Administrative Record (ECF No. 17), and DIRECTS the Clerk to enter
judgment accordingly.
SO ORDERED.
Dated: January 24, 2024
J. Philip Calabrese
United States District Judge
Northern District of Ohio
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