James Price v. Bd of Trustees of the Ind. Laborer's Pension Fund

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 11a0011p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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JAMES R. PRICE,

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Plaintiff–Appellee,

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Nos. 09-3897/4204

v.

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BOARD OF TRUSTEES OF THE INDIANA

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LABORER’S PENSION FUND; INDIANA

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LABORER’S PENSION FUND,

Defendants–Appellants. -

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Appeal from the United States District Court

for the Southern District of Ohio at Columbus.

No. 07-00933—Algenon L. Marbley, District Judge.

Argued: August 6, 2010

Decided and Filed: January 12, 2011

Before: SUTTON and McKEAGUE, Circuit Judges; JONKER, District Judge.*

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COUNSEL

ARGUED: R. Gary Winters, McCASLIN, IMBUS & McCASLIN, Cincinnati, Ohio,

for Appellants. Tony C. Merry, LAW OFFICES OF TONY C. MERRY, LLC,

Columbus, Ohio, for Appellee. ON BRIEF: R. Gary Winters, McCASLIN, IMBUS

& McCASLIN, Cincinnati, Ohio, for Appellants. Tony C. Merry, LAW OFFICES OF

TONY C. MERRY, LLC, Columbus, Ohio, for Appellee.

McKEAGUE, J., delivered the opinion of the court, in which SUTTON, J.,

joined. JONKER, D. J. (pp. 15–19), delivered a separate concurring opinion.

*

The Honorable Robert J. Jonker, United States District Judge for the Western District of

Michigan, sitting by designation.

1

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OPINION

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McKEAGUE, Circuit Judge. This appeal arises at the intersection of numerous

areas of complex federal law. We are called upon to sift through this complexity in the

hopes of adding clarity. For many years prior to this appeal, James Price received

occupational disability benefit payments under an employee benefit plan established and

maintained in accordance with the Employee Retirement Income Security Act of 1974

(“ERISA”). Price’s benefits were discontinued after the trustees amended the plan to

limit the payment of occupational disability benefits to a period of two years. He then

filed suit in federal district court, challenging the denial of his benefits and alleging that

the plan amendment violated ERISA because his occupational disability benefits had

vested as a matter of law. The district court determined that Price’s occupational

disability benefits did indeed vest under this court’s Yard-Man line of cases and,

accordingly, found that the amendment as applied to Price violated ERISA. The pension

plan now appeals this determination, arguing that the benefits were not vested. After

considering all of the relevant bodies of law, we conclude that the district court failed

to apply the appropriate standard of review when analyzing Price’s claim. Accordingly,

we VACATE the district court’s opinion and order and REMAND for further

proceedings consistent with this opinion.

I.

The facts in this case are undisputed. The Indiana State District Counsel of

Laborers and Hod Carriers Pension Fund (the “Fund”) is a multi-employer employee

benefit pension plan established and maintained in accordance with ERISA. As required

by ERISA, the Fund has a written pension plan document (the “Plan”), which sets forth

the terms of the benefits provided by the Fund. The Plan indicates that Fund participants

must be union employees, working under various collective bargaining agreements. In

addition, the Plan also provides that the Fund will be administered by a Board of

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Trustees (the “Board”). The Board in turn possesses authority to make benefit

determinations, interpret the Plan, and amend the Plan. In granting the Board

amendment power, Section 15.1 of the Plan specifically states:

Any amendment to the Plan may be made retroactively by the majority

action of the Board of Trustees present and voting in order to bring the

Plan in compliance with the Act and any subsequent amendments thereto.

It is the desire of the Board of Trustees to maintain the Plan as a qualified

Plan and Trust under Code sections 401(a) and 501(a).

The Trustees who are present and voting may amend the Plan by

majority action. However, no amendment shall be made which results

in reduced benefits for any Participant whose rights have already become

vested under the provisions of the Plan on the date the amendment is

made, except upon the advice and counsel of an enrolled actuary.

James Price first began receiving disability benefits under the Plan in 1990, after

a series of work-related injuries left him unable to work. Price’s benefits were initially

approved under the Plan’s “Total and Permanent Disability Benefit” category. In 2001,

the Fund notified Price that he no longer qualified for benefits under this category, but

advised him that he could continue receiving benefits under Article 7A’s provisions for

“Occupational Disability Benefit.” At the time Price began receiving Occupational

Disability Benefits, payment of those benefits was limited according to terms in set forth

in Section 7A.5, which stated that “[t]he Occupational Disability Benefit shall be

payable only during continued Occupational Disability and until Early Retirement Age

under section 2.1(n).” In 2004, the Board exercised its amendment authority under Plan

Section 15.1 and amended Section 7.A5 (the “Amendment”) to state the following:

[T]he Occupational Disability Benefit shall be payable only during a

Participant’s continued Occupational Disability and—

* * *

(b) effective for Occupational Disability Benefits commencing prior to

January 1, 2005, for a period not to exceed December 31, 2006, or, if

earlier, the Participant’s attainment of Early Retirement Age . . . .

Because Price began receiving Occupational Disability Benefits prior to January 1, 2005,

his benefits were discontinued after December 31, 2006, according to the Amendment.

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Price appealed the discontinuation of his Occupational Disability Benefits to the

Board, arguing that the Amendment as applied to him violated ERISA. The Board

denied Price’s appeal and stated in a written letter to Price’s attorney that Occupational

Disability Benefits could be amended under the terms of the Plan. Price then filed suit

in federal district court under 29 U.S.C. § 1132(a)(1)(B). His complaint alleged that the

Amendment violated ERISA because it deprived him of a benefit that had vested as a

matter of law.

After a short period of discovery, the parties cross-filed for summary judgment.

The district court granted judgment in favor of Price under this court’s precedent in Int’l

Union, United Auto., Aerospace, & Agric. Implement Workers of Am. v. Yard-Man, Inc.,

716 F.2d 1476, 1482 (6th Cir. 1983). Price v. Bd. of Trustees of the Ind. Laborer’s

Pension Fund, et al., 2:07-cv-00933 at 7 (S.D. Ohio Mar. 24, 2009). According to the

lower court, Price’s Occupational Disability Benefits vested under Yard-Man at the time

he began receiving the benefits because the Plan promised benefits “until Early

Retirement Age.” Id. at 8. The district court read this provision as an indication that the

parties intended the benefits to vest. Id. In separate orders, the lower court ordered the

Fund to reinstate Price’s benefits and pay Price’s attorney’s fees. The Board and the

Fund bring this appeal, challenging the district court’s determination that Price’s

Occupational Disability Benefits vested and its award of attorney’s fees in favor of Price.

II.

We review a district court’s grant of summary judgment de novo. Noe v.

PolyOne Corp., 520 F.3d 548, 551 (6th Cir. 2008). “[S]ummary judgment is appropriate

‘if the pleadings, the discovery and disclosure materials on file, and any affidavits show

that there is no genuine issue as to any material fact and that the movant is entitled to

judgment as a matter of law.’” Schreiber v. Philips Display Components Co., 580 F.3d

355, 363 (6th Cir. 2009) (quoting Fed. R. Civ. P. 56).

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III.

We begin by noting that disability benefits are a welfare-type benefit under

ERISA, and as such, ERISA’s statutory vesting requirements do not apply. See 29

U.S.C. § 1002(1); Robinson v. Sheet Metal Workers’ Nat’l Pension Fund, Plan A, 515

F.3d 93, 98 (2d Cir. 2008). When a benefit is exempt from ERISA’s vesting

requirements, no barrier exists to the modification or discontinuation of the benefit.

Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995). While ERISA does not

require vesting, the parties may nevertheless provide for vesting of welfare benefits

through agreement. Schreiber, 580 F.3d at 363. If the parties intended for the benefits

to vest and this agreement is breached, an ERISA violation occurs. Id. Neither party in

this case disputes that there is no express agreement providing for vesting of Price’s

Occupational Disability Benefits. Our inquiry does not end here, however, because

while Price’s benefits may not have vested under any express agreement, this court has

long recognized that under certain circumstances an intent to vest can be inferred from

specific language in the parties’ agreements. See, e.g., Yard-Man, 716 F.2d at 1482.

When these circumstances are present such that the inference exists, the benefit vests in

favor of the recipient. Accordingly, a unilateral decrease in these vested benefits would

result in an ERISA violation. The question for this case then becomes whether the

inference is present here.

To answer this question properly, we trace Sixth Circuit case law creating the

inference that the parties intended for benefits to vest. The inference first appears in this

court’s seminal decision in Yard-Man; indeed, the inference has been renamed in many

of our cases simply as the “Yard-Man inference.” In creating the Yard-Man inference,

this court addressed the specific question of “whether retiree insurance benefits continue

beyond the expiration of the collective bargaining agreement [based] upon the intent of

the parties.” Yard-Man, 716 F.2d at 1479. To answer this question, we applied

traditional rules of contract interpretation, consistent with federal labor law, and

determined that the provision of the relevant collective bargaining agreement (“CBA”),

which specifically provided for retiree benefits, was ambiguous as to whether the parties

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intended the benefits to vest. Id. at 1480. Due to this ambiguity, we looked to extrinsic

evidence, including durational provisions within the CBA and the context of the

bargaining process, and determined that the parties did in fact intend for the retiree

benefits to vest. Id. at 1480–83.

Subsequent to Yard-Man, this court has consistently applied its analysis to cases

involving the issue of whether parties in the collective bargaining process intended for

retiree benefits to vest according to the terms of the CBA. We have specifically inferred

this intent that benefits vest where an ambiguity exists in the retiree benefits section of

the CBA and where extrinsic evidence evinces the parties intention that the benefits vest.

See, e.g., Noe, 520 F.3d at 553 (finding intent to vest where CBA contained general

durational clause, retiree benefits were tied to pension benefits, and promises in CBA

would be illusory without vesting); Yolton v. El Paso Tenn. Pipeline Co., 435 F.3d 571,

581 (6th Cir. 2006) (finding intent to vest could be inferred where CBA contained

general durational clause); Maurer v. Joy Techs. Inc., 212 F.3d 907, 917–18 (6th Cir.

2000) (finding intent to vest where durational clause of CBA was general rather than

specific); Int’l Union, United Auto., Aerospace, & Agric. Implement Workers of Am. v.

BVR Liquidating, Inc., 190 F.3d 768, 774 (6th Cir. 1999) (holding that district court

should have considered terms of insurance agreement where CBA was ambiguous as to

intent to vest). Price now seizes upon our reasoning in Yard-Man and its progeny and

argues that the intent to vest can be inferred in this case.

Admittedly Yard-Man contains many similarities to this case, which would make

its application attractive. Price’s Occupational Disability Benefits are arguably similar

in nature to the retiree health benefits at issue in Yard-Man. Additionally, the Plan in

this case indicates that Price was a union member, working under a CBA. Yet before

we plunge headlong—and perhaps haphazardly—into finding a Yard-Man inference

here, we pause to consider whether Yard-Man’s framework is even workable with the

facts present. In considering this issue, we note that principled distinctions exist

between this case and the Yard-Man line of cases. After careful consideration, we

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believe that these distinctions caution against applying Yard-Man’s set of rules in this

context.

Chief among these distinctions is that, unlike in Yard-Man, where the benefit at

issue was a retiree health benefit, the benefit at issue here is an occupational disability

benefit. Our case law has not addressed whether the Yard-Man inference can be

appropriately applied outside the context of retiree health benefits. This was a

distinction that the district court apparently did not find significant. Instead, that court

reasoned that “occupationally disabled” was a status similar to the“retiree” status

because both are open to their benefits being negotiated away by future bargaining

parties. Price, 2:07-cv-00933 at 6. We are not persuaded that the occupationally

disabled status and retiree status can be quite so easily analogized. And we again believe

that Yard-Man’s own language makes that case difficult to apply outside the context of

retiree health benefits.

To begin with, the Yard-Man court specifically recognized a uniqueness in the

retiree status because retiree benefits are considered a form of delayed compensation or

reward for past compensation. 716 F.2d at 1482. Because these benefits are a form of

delayed compensation, it is unlikely that the parties would leave them subject to future

negotiations. Thus, the court may properly infer that the parties intended for retiree

benefits to vest. Id. While this reasoning may hold true for retiree benefits, it resonates

less in the context of disability benefits. Specifically, occupational disability benefits

generally cannot be considered a form of delayed compensation. And, unlike retiree

benefits where everyone meeting the length-of-service requirement will realize the

benefit, only a small portion of those meeting the length-of-service requirement for

occupational disability benefits will actually realize the benefit. Thus, rather than

representing a form of delayed compensation, disability benefits are more appropriately

characterized as an uncertain potentially realized benefit.

Moreover, Yard-Man notes a uniqueness in the retiree status because unions do

not owe retired persons any obligation to bargain for their continued benefits. Id. Thus,

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Yard-Man teaches, it is more likely that the parties would intend the retiree benefits to

vest to avoid the benefits being left to future negotiations. Id. Unlike this feature of

retiree status, the occupationally disabled status does not necessarily leave itself open

to unrepresented future negotiations. This status is not as likely to be a permanent status,

as is the case with the retiree status, because an occupationally disabled person might

expect to recover at some point and return to a position of union representation. A more

fundamental issue related to the occupationally disabled status is whether a person in this

status is still considered an “employee” for the purpose of union bargaining. The record

in this case is silent as to whether Price remained an employee for the purpose of union

membership. However, it is likely that at least some persons in the occupationally

disabled status would be employees—and union members—due to the requirements

imposed by federal law. Specifically, the Family Medical Leave Act mandates that

employers must provide an eligible employee with twelve workweeks of leave during

a 12-month period if the leave is required due to “a serious health condition that makes

the employee unable to perform the functions of the position of such employee.” 29

U.S.C. § 2612(a)(1)(D). In addition, while the Americans with Disabilities Act does not

require employers to grant a specified amount of leave to disabled employees, this act

does require employers to reasonably accommodate disabled employees, unless the

employer demonstrates undue hardship. 42 U.S.C. § 12112(b)(5)(A). Also, this court

has specifically noted that an employer might be required to provide an extended leave

period as part of a reasonable accommodation. See Cleveland v. Fed. Express Corp.,

83 F. App’x 74, 79 (6th Cir. 2003) (holding that a question of fact existed as to whether

six month leave was a reasonable accommodation). Thus, it is possible that some

disabled persons would never leave the confines of union bargaining. This possibility

strongly cuts against applying the Yard-Man inference to this status.1

1

Furthermore, we note that even if the Yard-Man framework was applicable to occupational

disability benefits, Price has not produced any CBA upon which we can infer that the parties intended for

his benefits to vest. To apply the Yard-Man inference in the absence of a CBA would require a court to

assume—without any evidence confirming—that Price’s Occupational Disability Benefits were provided

for in the CBA. Moreover, our case law has consistently stated that the parties can establish a lack of

intent to vest by including language within the CBA stating that the specific benefit would not survive the

expiration of the CBA. Noe, 520 F.3d at 562. These so-called specific durational clauses allow the parties

to overcome any inference that otherwise might exist regarding their intent for a benefit to vest. Applying

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Our analysis leaves us convinced that Yard-Man’s framework cannot be applied

here. Yet, our inquiry does not end there because the Board argues that in the absence

of Yard-Man, we should apply this court’s precedent in Sprague v. General Motors

Corp., 133 F.3d 388, 400 (6th Cir. 1998) (en banc). In Sprague, we evaluated whether

retiree health benefits vested in favor of salaried, non-union General Motors employees.

Id. at 393. We ultimately held that when a benefit is unilaterally provided by an

employer, the plan documents must contain a clear and express statement of intent to

vest. Id. at 400. Because that language was lacking in Sprague, the benefits did not

vest. Id. Applying Sprague to this case also presents an attractive solution. Yet for

many of the reasons stated above, we do not believe that Sprague governs the outcome

of this case either. The benefits at issue in Sprague were specifically characterized as

unilaterally offered benefits. Id. at 393, 402-03. Here, however, the administrative

record makes clear that Price’s Occupational Disability Benefits were bargained-for and

not unilaterally provided. Again, we are not convinced that the factual distinctions in

this case can so easily be dismissed. Moreover, we believe that this case is properly

understood under a different framework, one that does not include either Yard-Man or

Sprague.

IV.

If Price’s Occupational Disability Benefits do not vest under ERISA’s statutory

vesting requirements and the Yard-Man and Sprague frameworks are inapplicable, then

the only possible source for vesting of Price’s benefits is the Plan itself. Section 15.1 of

the Plan clearly gives the Board authority to amend the Plan. Yet it also specifically

prohibits any amendment “which results in reduced benefits for any Participant whose

rights have already become vested under the provisions of the Plan on the date the

amendment is made, except upon the advice and counsel of an enrolled actuary.” The

the Yard-Man inference to this case, without the benefit of consulting the relevant CBA, might

inadvertently thwart the parties’ intent to specifically prevent the vesting of Occupational Disability

Benefits. At minimum, this application of Yard-Man would undercut future parties’ ability to prevent

vesting through specific durational clauses, which would undermine Yard-Man’s carefully balanced

reasoning.

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issue then becomes whether Price’s Occupational Disability Benefits became vested

within the meaning of the Plan such that the Amendment could not be applied to him.

At the outset, we pause to determine whether the Board’s decision denying

Price’s appeal should be given any deference. The answer to this question lies in how

the issue is framed. The district court reviewed the Board’s decision de novo by framing

the issue as whether the “Plan Amendment violate[d] ERISA.” Price, 2:07-cv-00933

at 3. Yet we have already determined that neither ERISA nor Yard-Man provide for

vesting in this case. Moreover, Price’s own complaint, filed following an appeal of the

denial of his Occupational Disability Benefits, was brought under 29 U.S.C.

§ 1132(a)(1)(B), which allows for civil actions “to recover benefits due to [a claimant]

under the terms of his plan.” When the issue is properly framed as whether Price’s

Occupational Disability Benefits vested under the terms of this Plan, then de novo

review seems less appropriate. Rather, the standard for reviewing an administrator’s

determination on an individual’s claim for benefits seems most appropriate.

When an ERISA benefits plan gives the administrator discretion in interpreting

its terms or making benefits determinations, both this court and the district court review

the administrator’s decision under the arbitrary and capricious standard. See Kovach v.

Zurich Am. Ins. Co., 587 F.3d 323, 328 (6th Cir. 2009) (citing Firestone Tire & Rubber

Co. v. Bruch, 489 U.S. 101, 111–15 (1989)); Jones v. Metro. Life Ins. Co., 385 F.3d 654,

659–60 (6th Cir. 2004); Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 613 (6th

Cir. 1998). Under this standard of review, “we must uphold the administrator’s decision

if the administrator’s interpretation of the Plan’s provisions is reasonable.” Kovach,

587 F.3d at 328 (alteration and internal quotation marks omitted). While federal case

law has created confusion on the applicable standard of review applicable to cases

involving vesting of welfare benefits, court-fashioned common-law principles for

interpreting ERISA welfare plans “are properly understood as aids to determining

whether the denial of benefits by the administrator is reasonable, rather than as warrants

for a court’s resolving interpretive disputes without any deference to the administrator’s

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exercise of interpretive discretion.” Marrs v. Motorola Inc., 577 F.3d 783, 786–87 (7th

Cir. 2009).

Applying these mandates here, we conclude that, if the Plan gives the Board

discretion to interpret its terms, the essence of this case turns on the reasonableness of

the Board’s decision. And, indeed, the Plan does give such discretion, and that

discretion was invoked by the Board in terminating Price’s benefits. Section 11.9

provides that “[t]he Board of Trustees shall have the exclusive right and discretion to

interpret the terms and provisions of the Plan . . . .” Therefore, the Board’s decision

must be reviewed under the arbitrary and capricious standard of review, using common-

law principles as aids in undertaking this review, and looking to the terms of the Plan to

determine whether or not the Board’s interpretation was reasonable. See Marrs, 577

F.3d at 786–87.

We pause briefly to note that, while agreeing that the arbitrary and capricious

standard applies to review of Price’s claim, our concurring colleague nonetheless

suggests that Price’s disability benefits became vested at the time they were awarded,

regardless of the use of the terms of the Plan or any intent inferred therefrom. In fact,

our concurring colleague states that the subsequent amendment to the plan had “no

proper impact at all” on Price’s receipt of benefits. The concurrence claims that when

the Plan found Price eligible for disability benefits, it effectively issued an “IOU” that

was “a single and discrete event that was complete at the time the Plan made the award

decision.” Yet, our colleague provides no support for such assertions, either from the

Plan itself or from the controlling statutory or case law.2 Contrary to the claims in the

concurrence, review of the Board’s decision necessarily entails looking to the terms of

2

The Second Circuit has held that where an employee benefits plan provides for disability

benefits, those benefits vest “no later than the time that the employee becomes disabled.” Feifer v.

Prudential Ins. Co. of Am., 306 F.3d 1202, 1212 (2d Cir. 2002). Yet, in both Feifer and in Gibbs ex rel.

Estate of Gibbs v. CIGNA Corp., 440 F.3d 571 (2d Cir. 2006), where that same principle also was applied,

the welfare benefits plans at issue did not contain explicit language reserving the right to amend or revoke

the challenged benefits, while the Plan at issue here does. See Gibbs, 440 F.3d at 577; Feifer, 306 F.3d

at 1211. In fact, in Gibbs, the plan contained a provision expressly stating that “[a]ny modification or

termination will not affect [the employee’s] right to benefits from a covered disability that occurred before

the termination or modification.” 440 F.3d at 577. Thus, these cases are distinguishable from Price’s case,

and the Second Circuit’s holding does not alter the outcome here.

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the Plan to determine if Price’s disability benefits vested, as it is the Plan itself that sets

forth the terms by which benefits are conferred, vested, or terminated.3

In reviewing the terms of the Plan, it would be tempting to find that the language

of the Plan indicates an intent to vest because the Plan provides that amendments may

not reduce benefits that have become “vested” in Section 15.1. However, an analysis

of the context in which the word is used shows that it applies to retiree benefits and not

disability benefits. Article 7A, which governs Occupational Disability Benefits, does

not use the term vested or accrued to refer to or to modify the term “Occupational

Disability Benefit.” Nor does it provide any other vesting provisions for disability

benefits. Thus, one must look to other sections of the Plan for a definition of vesting,

since the Plan does not expressly provide one. The closest the Plan gets to a definition

of “vesting” is Section 9.2, titled “Vesting Schedule,”which states that “[a] participant

who begins benefit payments on or after June 1, 1997 shall be vested in his Accrued

Benefit . . . .” This section then points to the term “Accrued Benefit,” which is defined

in Section 2.1(a) as “the monthly benefit that has been earned by a Participant for the

years of Service he worked for an Employer according to the benefit formula described

in section 4.2 hereof.” Moving to Section 4.2, which is titled “Amount of Normal

Retirement Benefit,” this section provides a detailed formula for calculating a

participant’s monthly “Normal Retirement Benefit.” Specifically, Normal Retirement

Benefits are calculated using the sum of a participant’s “Past Credited Service Benefit”

and his “Future Credited Service Benefit.” The Future Credited Service Benefit

provision provides differing formulations depending on the participant’s retirement date,

and the Past Credited Service Benefit specifically references the “retired status.”

3

For example, the Plan requires that anyone seeking receipt of Occupational Disability Benefits

must have at least ten years of service at the time of his disability. The Plan also requires that the recipient

provide a copy of any federal income tax form reporting income earned from supplemental employment

in order to continue receiving benefits. Most importantly, the Plan explains that benefits may be

terminated for a number of reasons, including if the recipient’s annual income from supplemental

employment exceeds 150 percent of his annual occupational disability benefit, if the recipient fails to

provide the Board of Trustees evidence of income from supplemental employment, or if the recipient

refuses to undergo a medical examination as requested by the Board of Trustees. Accordingly, though our

colleague in the concurrence suggests that the terms of the Plan become irrelevant at the moment an

individual first receives disability benefits, in fact, it is the very terms of the Plan that determine the ways

that such benefits can be terminated even after they have already been provided to a recipient.

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Reading all of these provisions together, it would not seem unreasonable for the

Board to determine that Price’s Occupational Disability Benefits were not “Accrued

Benefits” and therefore did not vest. As noted above, Article 7A, which covers

Occupational Disability Benefits, does not contain specific vesting language. Nor do

Sections 9.2, 2.1(a), or 4.2 contain language including the Occupational Disability

Benefit within the meaning of “vested” or “Accrued Benefit.” Instead, Section 4.2

specifically refers to the “retired status” and provides amounts based on retirement

dates.4

Price nevertheless argues that his benefits vested under Section 7A.2 because that

section provides that “[t]he Occupational Disability Benefit shall be a monthly benefit

equal to 65 percent of the Participant’s vested Accrued Benefit, unreduced for early

payment.” Although Price’s alternate interpretation of Section 7A.2 could be plausible,

that would not render the Board’s interpretation unreasonable. Further, Price’s

interpretation does not seem to be the most logical reading of that section. The term

“vested” modifies the phrase “Accrued Benefit,” and the definition of Accrued Benefit

in Sections 2.1(a) and 4.2 does not contain any language indicating that Occupational

Disability Benefits are Accrued Benefits. To adopt Price’s reading of Section 7A.2

would seemingly rewrite that section to state that “the vested Occupational Disability

Benefit . . .” or would insert the term “Occupational Disability Benefit” within the

definition of Accrued Benefit. A more logical reading of Section 7A.2 would seem to

be that rather than providing a vested right to Occupational Disability Benefits, Section

7A.2 merely provides a formula for calculating the benefit amount.

4

We pause to note that, despite the assertion made by our colleague in the concurrence, we do

not suggest that the difference between pension benefits and welfare benefits alone justifies the Board’s

decision to revoke Price’s Occupational Disability Benefits. As we explained above, the difference

between pension and welfare benefits does compel our conclusion that Yard-Man cannot be applied to this

case. However, whether the Board properly decided to terminate Price’s disability benefits requires a

review of the Board’s interpretation of the terms of the Plan as applied to Price, and whether such

interpretation was arbitrary and capricious. Thus, our discussion of the reasonableness of the Board’s

decision focuses on the Plan’s use of the term “vest” in relation to the use of the terms “Occupational

Disability Benefit,” “Retirement Benefit,” and “Accrued Benefit,” and not, as the concurrence suggests,

on the difference between those benefits.

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The district court, however, did not review the Board’s determination under the

arbitrary and capricious standard, and neither party addressed the issue using the proper

standard of review in the district court or before this court. Accordingly, we believe that

the matter must be remanded to the district court. There, the parties will have the

opportunity to brief the issue with the correct standard in mind and the district court may

properly review the Board’s decision regarding the interpretation of the terms of the Plan

and the resulting termination of Price’s benefits using the arbitrary and capricious

standard.5 Additionally, because we vacate the district court’s judgment in favor of

Price, the award of attorney’s fees in favor of Price is no longer appropriate. See Sec’y

of Dep’t of Labor v. King, 775 F.2d 666, 669 (6th Cir. 1985) (stating the factors for

determining fee awards in ERISA cases). Accordingly, we vacate this decision as well.

V.

For the foregoing reasons, we VACATE the decision of the district court and

REMAND for further proceedings consistent with this opinion.

5

Although we have undertaken a brief and cursory review of the terms of the Plan and its use of

the term “vest,” we do not intend to prejudge the outcome of this case on remand under the arbitrary and

capricious standard. Rather, we do so both in response to the arguments raised by Price in his brief and,

in light of the alternative framework proposed by the concurrence, to provide a clear and appropriate

starting point from which the district court may engage in its own analysis on remand.

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Pension Fund, et al.

_____________________

CONCURRENCE

_____________________

JONKER, District Judge, CONCURRING. I agree fully with the lead opinion’s

analysis and conclusion that Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609 (6th

Cir. 1998), rather than Int’l Union, United Auto., Aerospace, & Agric. Implement

Workers of Am. v. Yard-Man Inc., 716 F.2d 1476 (6th Cir. 1983), establishes the

appropriate framework of review here, and I have no objection to remanding the case to

the District Court for application of the Wilkins framework in the first instance. I do not

believe a remand is necessary, however, because in my view a change in the framework

of review does not alter the correct outcome in the case. I would readily vote to affirm

the District Court’s original decision now under the Wilkins standard.

The key insight of the District Court, and the practical hinge of its decision, was

recognition that this case involves a decision to terminate already awarded benefits, not

a decision to grant or deny benefits in the first instance. In my view, this is a critical

difference. Everyone agrees Mr. Price originally qualified for and received an award of

complete disability benefits in 1990. At that time the Plan by its terms promised to pay

the benefit all the way to early retirement age, as long as the qualifying participant

remained disabled. Everyone further agrees that Mr. Price later qualified for and

received an award of the Plan’s occupational disability benefit in 2001. At that time the

Plan by its terms promised to pay this benefit all the way to early retirement age, as long

as the qualifying participant remained disabled. And everyone agrees that Mr. Price

remains disabled to this very day. Even so, the Plan stopped paying Mr. Price the

promised disability benefit on January 1, 2007, not because he reached early retirement

age, and not because his disability status changed, but solely because the Plan adopted

an amendment after Mr. Price’s award that cut the occupational benefit off effective

December 31, 2006. Of course the amendment applies by its terms to anyone who first

qualifies for the benefit after the date of the amendment; the Plan had no obligation to

continue to offer the same package of welfare benefits to potential beneficiaries that it

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Pension Fund, et al.

had previously offered. But for someone like Mr. Price, whose disability benefit was

first awarded by the Plan before the amendment, when the Plan promised to pay the

benefit until the later of early retirement age or the end of disability status, I believe the

amendment has no proper impact at all.

What happens when the Plan awards a disability benefit to a qualified participant

like Mr. Price? In my view, when the Plan initially decides that a participant qualifies

– that the participant has worked the required ten years, has demonstrated disability

status and has otherwise satisfied the requirements for coverage – and awards the

disability benefit, something fundamentally changes: the Plan’s disability benefit

package generically offered to all qualifying participants confers enforceable contractual

rights and obligations on the Plan and on the particular qualifying participant. Those

contract rights and obligations, in my view, are defined by the terms of the Plan in effect

at the time of the initial qualification decision. It is as though the Plan effectively issues

the participant a benefit package IOU promising to pay the terms of the benefit in effect

at the time of qualification. In the case of Mr. Price, the benefit package promised

payment until the later of early retirement age or the end of disability status. The Plan

remained free to require Mr. Price to demonstrate his continuing disability status from

time to time, because the Plan terms said so at the time Mr. Price originally qualified.

But each such review was not a new decision to award benefits; rather, it was a simple

implementation of the terms of the benefit package conferred upon Mr. Price in the first

instance. The decision to award the benefit package was a single and discrete event that

was complete at the time the Plan made the award decision, and that conferred

enforceable contract rights and obligations on each party.

The lead opinion is quite correct to observe that I have cited no case or statute

that describes or applies the disability benefit award in the terms I have just used. It is,

I believe, equally correct to observe that the lead opinion cites no authority that applies

the general rules upon which we all agree to the particular fact pattern we have here. In

my view, citations to a particular case or statute cannot settle the precise dispute here

because there is no such authority, at least none that the parties have cited or that our

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Pension Fund, et al.

independent research has uncovered. It is the apparent dearth of on point authority that

leads to my effort to articulate for the first time a framework of analysis that is both

faithful to the agreed general rules and at the same time respectful of what I believe are

the real, reasonable and enforceable contractual expectations of the parties.

The framework I am advocating has the salutary practical effect of treating this

case, which provides disability benefits through a trust fund created under a collective

bargaining agreement, in the same way federal courts routinely treat ERISA disability

cases involving benefits provided through a private insurance contract. Such cases are

a staple of the federal district court docket. I know of no such case in which any party

or the court has suggested that a change in disability benefits offered by the employer’s

disability Plan reaches back to change the terms of a previously awarded disability

benefit under the terms of the Plan, and the insurance policy funding the Plan, in effect

at the time of the initial award. The parties and the courts appear to assume – properly

in my view – that the governing terms of the disability award are the ones in effect at the

time of the original award. In my view, a union employee like Mr. Price, whose

disability benefit is funded by a Trust created under a collective bargaining agreement,

rather than by a private insurance contract, reasonably expects nothing less: the terms

of the Plan in effect at the time of the initial benefit award should define the contractual

rights and obligations of the parties.

Using the terms of the Plan in effect at the time a participant qualifies for the

initial disability award also works with the other welfare benefit funded through the

Trust in this case. The Plan at issue here provides for not only pension and disability

benefits, but also a death benefit. A death benefit, like a disability benefit, is a welfare

benefit under ERISA and therefore subject to the general rule against vesting of welfare

benefits. Suppose a covered and qualified employee dies and triggers the death benefit.

Does the Plan have the lawful power to amend the terms of the death benefit after the

employee’s death in a way that would prevent payment of the benefit? Under the lead

opinion’s analysis, it would seem the Plan could do so because the amendment would

allow the Plan to deny what had been in place on the original qualifying date. In my

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Pension Fund, et al.

view, the Plan would be obligated to pay the death benefit if the terms of the Plan in

effect on the qualifying date – the date of death – required it. Once again, I believe that

result is consistent with both the agreed general rules governing ERISA welfare benefits,

and the reasonable contractual expectations of the parties.

Finally, if the lead opinion’s view of the disability benefit prevails, then I would

submit that union employees whose disability benefit is protected only by a Trust like

the one here had better purchase their own private disability insurance policy, too,

because they really do not have meaningful disability protection. I say that, because

once a person is disabled, they are by definition not able to engage in income-generating

work, or at least not income-generating work of the kind they are accustomed to

performing. Nor, obviously, are they able to purchase private disability insurance after

they are already disabled. If the Trust obligated to fund their promised disability benefit

also has the power to amend the Plan after the qualifying disability event in a way that

cuts off the benefit even for people who have already qualified, then there is really no

reliable disability protection at all. Mr. Price, of course, is in exactly that position if the

lead opinion’s view of the Plan’s power prevails.

The lead opinion suggests that the well-established difference under ERISA

between pension benefits, on the one hand, and welfare benefits – including disability

benefits – on the other hand, may justify the Plan’s decision here to revoke the disability

benefit package it originally awarded to Mr. Price. I respectfully disagree with that

because in my view it overlooks a critical difference between the Plan’s undeniable

power to change the terms of a generally applicable welfare benefit – including a

disability benefit – prospectively for people who have not qualified for the benefit, on

the one hand; and the Plan’s quite different claim to have the unilateral power to change

or even eliminate disability benefit packages it has already awarded. I see nothing in the

ERISA welfare benefit cases, including those dealing with retiree health care benefits,

that suggests the Plan's undisputed power to make prospective changes in available

benefit packages not yet awarded includes the power to unilaterally change or eliminate

a benefit already conferred. A disability benefit award is not a recurring annual

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Pension Fund, et al.

decision; rather, it is a one time decision to grant or deny the benefit package followed

by ongoing administration – including periodic review of disability status – of any

package awarded.

For this reason, I do not believe it is even necessary to reach the reasonably

possible constructions of the amendment provision of the Plan. I simply do not believe

it applies by its terms to this unique situation. The provision permits amendments to the

benefits offered by the Plan, but this in my view is not the same thing as changing or

eliminating a particular benefit already conferred. Nothing in the Plan language purports

to permit a retroactive change to the contractual terms of a benefit already conferred.

Once the Plan awarded Mr. Price the disability benefit, I believe the Plan was

contractually obligated to pay the benefit by the terms as defined on the date of the

award. And in this case these terms did not permit the Plan to cut off benefits before Mr.

Price reached early retirement age as long as he remained disabled, as all agree he is to

this very day.

Accordingly, I would readily vote to affirm the District Court now, but I do not

object to a remand to give the District Court the first opportunity to apply the Wilkins

standard to this record, or to any expanded record the District Court may find proper.