Appendix — Chambless v. Masters, Mates & Pilots Pension Plan

85-939 (2)

In the

JOSEPH F. SPANIOL,

Supreme Court of the United CLERK

October Term, 1985

ARTHUR CHAMBLESS and MILDRED H. CHAMBLESS,

Petitioners,

— against -

MASTERS, MATES & PILOTS PENSION PLAN, et al.,

Respondents.

APPENDIX TO A PETITION

FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Arthur M. Wisehart

WISEHART & KOCH

25 West 43rd Street

New York, New York 10036

(212) 730-0044

Attorneys for Petitioners

Of Counsel:

John W. Whittlesey

PRINTINGHOUSE PRESS — (212) 719-3120

TABLE OF CONTENTS FOR APPENDIX

Decision of the United States Court of Appeals

ee I ius cae e ke neha uans seu A-1l

Decision of the United States District Court for the

Southern District of New York filed August 8, 1984..... B-]

Judgment of the United States District Court

for the Southern District of New York

eS a ab enh ks Wail cv ce snes B-14

Endorsement Order of the United States District Court

for the Southern District of New York

en ee kaha aba cease C-1

Decision of the United States District Court for the

Southern District of New York on Defendants’ Summary

Judgment Motion dated September 14, 1983 ............ D-1

Trial Testimony of Dr. Ralph Garfield, Expert Witness

ee Oe IN one nents cps ser eesssuees E-]

Plaintiffs: Motion Pursuant to Fed.R.Civ.P. 59(e)

CI Wy, IE 5 nb exh is eee eK es ween ican E-7

Affidavit of Dr. Ralph Garfield in Support of Plaintiffs’

ee I th iene (a wic's Gee's a atu We's E-9

Statutory Provisions Relied Upon ...................... F-]

Opinion of District Court in Deak v. Masters, Mates

and Pilots Pension Plan, et al., Middle District of

En ey oe ee G-1

Excerpts from Plaintiffs’ Responses to Interrogatories

dated March 22, 1982, Relating to

SS Oe ee ae Ce H-1

Clipping entitled “End Age Rule on Vested Pensions” from

The Master, Mate & Pilot, “The Official Voice of International

Organization of Masters, Mates and Pilots,”

I I och cvs a aha lee scd bac des saes H-3

Excerpts from Trial Testimony of Robert J. Lowen,

PE PE OE svc on hehe wes ceassveeseen I-}

A-1

UNITED STATES COURT OF APPEALS

For THE SECOND CIRCUIT

PS orm

Nos, 994, 1086 — August Term, 1984

(Argued: May 20, 1985 Decided: August 28, 1985)

Docket Nos. 84-7987, 7989

=p oor

ARTHUR CHAMBLESS and MILDRED H. CHAMBLESS,

Plaintiffs-Appellees,

Cross-A ppellants,

— ee

MASTERS, MATES & PILOTS PENSION PLAN, STEPHEN P.

MAHER, Administrator of the Masters, Mates & Pilots

Pension Plan, C.J. BRACCO, RICHARD M. CASSELBERRY,

MICHAEL DI PRISCO, E. GRAS, GEORGE GROH, JUSTIN

Gross, JAMES R. HAMMER, JAMES J. HAYES, MARTIN

F. HICKEY, CHARLES JESS, FRANCIS E. KYSER,

CHARLES LANDRY, ORION A. LARSON, ROBERT J.

LOWEN, LLOYD MARTIN, J. ERIC MAY, DAVID MERRITT,

THOMAS E. MURPHY, HENRI L. NEREAUX, WILLIAM

OTT, MARTIN PECIL, FRANKLIN J. RILEY, JR., WIL-

LIAM I, RISTINE, A. C. Scott, CAPT. JOHN SMITH,

RUPERT SORIANO, ERNEST SWANSON, MICHAEN

SWAYNE, ALLEN TAYLOR, NICHOLAS TELESMANIC,

KENNETH P. WENTHEN, C.E. WHITCOMB, in their

fiduciary capacity as Trustees of the Masters, Mates

& Pilots Pensions Plan,

Defendants-A ppellants,

Cross-A ppellees,

a

A-2

AMERADA HESS CORPORATION, AMOCO SHIPPING COMPANY,

CENTRAL GULF LINES, INC., AMERICAN MARITIME

ASSOCIATION, NATIONAL TRANSPORT CORP., WABASH

TRANSPORT, INC., WATERMAN STEAMSHIP CORPORA-

TION, MARITIME SERVICES COMMITTEE, INC., INTER-

NATIONAL ORGANIZATION OF MASTERS, MATES & PILOTS,

Defendants, Cross-Appellees.

Before:

FEINBERG, Chief Judge, VAN GRAAFEILAND and

PIERCE, Circuit Judges.

oor

—— Ss

Appeal from an order of the United States District

Court for the Southern District of New York, Carter,

Judge, which held that appellees’ pension benefits were

improperly postponed and reduced based on an arbitrary

and capricious amendment to the pension plan.

Affirmed and remanded.

ARTHUR M. WISEHART, New York, New York

(Irene M. Opsahl, John Whittlesey, Wise-

hart & Koch, New York, N.Y., of counsel),

for Plaintiffs-Appellees, Cross-Appellants.

BETTINA B. PLEVAN, New York, New York

(Eileen Reinhardt, Joseph Baumgarten,

Proskauer, Rose, Goetz & Mendelsohn,

New York, N.Y., of counsel!, for Defen-

dants-Appellants, Cross-A ppellees.

——

A-3

BuRTON M. EPSTEIN, New York, New York

(Steinberg & Tugendrajch, Hal R. Gins-

burg, Levy & Tolman, New York, N.Y.,

of counsel), for Defendant, Cross-Appellee

International Organization of Masters,

Mates & Pilots.

_—

PIERCE, Circuit Judge:

The Masters, Mates & Pilots Pension Plan, et al.

(MM&P or the Plan) appeal from an order of the United

States District Court for the Southern District of New

York (Carter, Judge), dated August 2, 1984, which found

that plaintiff Arthur Chambless’ pension benefits were

improperly postponed and reduced pursuant to an arbi-

trary and capricious amendment to the pension plan of

which he and his wife are beneficiaries. The district

court declared the amendment to be a nullity.

We hold that the district court was correct in finding

that the amendment in question, while not violative of

section 203 of ERISA, 29 U.S.C. § 1053(a), is arbitrary

and capricious and is therefore a nullity and also that the

amendment would cause an unlawful reduction of Cham-

bless’ wage-related benefit. Furthermore, in our view,

the arguments made by plaintiffs in their cross appeal

are without merit.

We affirm the decision of the district court.

BACKGROUND

The Plan, established in 1955, is a multi-employer

plan designed to provide pension benefits to licensed deck

officers who retire from sailing in the American Merchant

a

A-4

Marine. It is jointly administered by an equal number

of employer-designated and Internationa] Organization of

Masters, Mates & Pilots (Union)-designated Trustees,

in accordance with section 302(c) (5) of the Labor Man-

agement Relations Act of 1947, 29 U.S.C. § 186(c) (5),

and regulations adopted by the Trustees of the Plan

‘Plan Regulations). The daily administration of the

Plan, however, has been delegated to an administrator.

Stephen Maher, now Executive Director of the Plan, func-

tioned as Administrator from 1965-81. The Administra-

tor decides initially whether an applicant satisfies the

Plan’s eligibility requirements and determines the appro-

priate pension benefit the applicant is entitled to receive.

The funds used to provide benefits under the Plan are

contributed solely by the participating employers.

In order to receive pension benefits, a participant

with a sufficient number of pension credits must “retire”

Within the meaning of the Plan Regulations. The per-

tinent portion of the definition of retirement in effect

during the period in question herein, i.e., April 1977, as

set forth in Article IIl-A, Section 15(a) of the Plan Reg-

ulations stated: “To be considered retired, a person must

withdraw completely from any further employment, in any

capacity, aboard any vessel whatsoever.”

As for the amount of pension benefits to be received,

Article II-A, Section 3, of the Plan Regulations, adopted

as Amendment 15 in 1966 as a result of collective bar-

gaining, provides for wage-related pension benefits based

on the “average base monthly wages of the employee

during the period of any 5 consecutive years within the

last ten years immediately preceding the effective date of

the pension, which will produce the highest average for

the employee.”

A-5

On August 26, 1976, the Trustees adopted Amend-

ments 46 and 47 as new Plan Regulations ‘the Amend-

ments!. Amendment 46 relates to individuals who have

“at one time retired. It states in pertinent part:

If a Pensioner works in employment forbidden by this

Section,

1. He shall not be entitled to pension benefits for

any month of such employment and for six

additional months, provided that the additional

six month period shall not extend beyond his

Normal Retirement Age. . . ; provided further,

however, that if such employment is in the

capacity of a Licensed Deck Officer on a U.S.

flag ocean-going vessel employed by a company

which is not a participant in the M.M.&P.

Pension Plan or the MM&P PMA Pension

Plan... , then the Pensioner shall not be

entitled to pension benefits for any month of

such employment nor for any months prior

to such Pensioner reaching his Normal Retire-

ment Age....

Amendment 47, on the other hand, relates to individ-

uals prior to retirement. It states:

In the event a Participant, subsequent to his accrual

of credit for 10 years of vesting service and prior to

his retirement, is employed in the capacity of a

Licensed Deck officer on a U.S. flag ocean going vessel

employed by a company which is not a participant

in the M.M.&P. Pension Plan or the MM&P PMA

Pension Plan... , such Participant shall not be en-

tilled to any pension benefits prior to his reaching

his Normal Retirement Age, as defined in Article I,

Section 13.

A-6

In 1975, the Plan had already adopted Amendment 42,

pursuant to which Article I, Section 13, stated that “ ‘Nor-

mal Retirement Age’ shal] mean the age of 65, or, if

later, the age of the Participant on the tenth anniversary

of his participation.”

As the district court noted, Amendments 46 and 47,

adopted during the following year, were discussed in

articles by Robert Lowen, then the Plan's Secretary-

Treasurer, and Stephen Maher, the Plan Administrator,

which were published in the October 1976 issue of the

Plan’s newspaper, the Pilot. The articles highlighted the

Plan Regulations’ ban on prohibited employment and dis-

cussed the meaning of the Amendments. One of the

articles contained the full text of the two provisions. The

December 1976 issue of the newspaper further discussed

the Amendments. Copies of the newspapers were dis-

tributed at Union hiring halls, and, according to the Plan,

were mailed to the homes of Union members and pension

participants.

Plaintiff Chambless sailed as a member of the Union

from 1944 until] 1977. He worked, at various times, as a

third mate, second mate, chief mate, and master. In

November, 1976, Chambless applied for pension benefits,

but shortly thereafter withdrew his aplication and con-

tinued employment aboard vessels covered by collective

bargaining agreements with the Union.

On April 2, 1977, Chambless filed a second application

for retirement benefits. Chambless received a letter from

Maher, Administrator of the Plan, informing him of the

Plan's definition of retirement. On June 30, 1977, a Plan

employee wrote to Chambless, informing him that his ap-

plication was being considered and that his monthly bene-

fits would be approximately $920, presumably based on

his 33', years of pension service credits as of April 2,

———

A-7

1977 and his average salary for \is five highest salary

years between 1967 and 1977.

Following an inquiry from Maher, in November 1977,

Chambiess informed the Plan that, between March 18,

1977 and April 1, 1977 and then again between April 4,

1977 and September 18, 1977, allegedly after asking a

Union agent whether there would be any Union problem

created in doing so, he had been employed as a master on

vessels which did not participate in the Plan. According

to Chambless, such employment was necessary as a result

of the Union exerting pressure on older licensed deck

officers to retire, by giving them only low paying and low

grade assignments. Whereas between 1966 and 1975

Chambless had regularly received assignments as chief

mate or master, subsequently, he allegedly was told to

retire or to accept assignments as second or third mate.

By letters dated January 26, 1978 and January 28,

1980, Maher responded to Chambless and to his attorney

stating that: 1) because Chambless had not retired under

the Plan's definition of retirement, he was not eligible for

a pension at that time; 2) pursuant to the definition of

retirement in Article I]l-A of the Plan Regulations and

pursuant to Amendment 47, the Plan would not pay him

any pension until December 7, 1986, at which time Cham-

bless would reach age 65, which the Plan defines as “nor-

mal retirement age’; and 3) the monthly benefits he could

expect upon reaching 65 would likely be $470.

On June 24, 1980, Chambless brought this suit against

the Plan, Plan Administrator Stephen Maher, the Union,

the Plan’s employer and Union Trustees, the Maritime

Services Committee and the American Maritime Associa-

tion, employer organizations that do collective bargaining

for shipping companies, and six shipping companies that

—————

A-8

formerly employed Chambless, have contracts with the

Union, and contribute to the Plan.

In his complaint, Chambless alleged that the Plan

violated Section 203 of ERISA, 29 U.S.C. § 1053(a), by

suspending payment of his vested pension after he went

to work on a non-MM&P vessel. Moreover, according

to Chambless, even if the Plan had the right to suspend

pension payments when a retiree returned to work, it

did not have the right to continue the suspension after

the Plan participant went back into retirement. In addi-

tion, Chambless asserted that the Regulations would cause

a forfeiture of his benefits by reducing them from an

estimated $920 per month beginning at age 55 to an

estimated $470 per month, beginning at age 65.

Among other allegations, Chambless also contended

that: Amendment 47, by discriminating against Plan

participants who worked on non-MM&P vessels, was puni-

tive and arbitrary and capricious and therefore violated

the trustees’ fiduciary duties; the selection of age 65 for

normal retirement age was a sham; at no time before he

took employment on a non-MM&P vessel did the Plan or

Union notify him of the effect cof Amendment 47 on par-

ticipants who took such employment; defendants inade-

quately reviewed his retirement application; the Plan im-

properly withheld information from him; defendants

conspired in restraint of trade in violation of the Sher-

man Act; defendants, because of the assurances they

allegedly gave him about accepting employment on non-

MM&P vessels, were estopped from denying him benefits;

the Union had breached its duty of fair representation by

discriminating against senior seamen; and the plaintiffs

had suffered emotional distress as a result of defendants’

actions.

oo a

AMA BG Apne LP

A-9

Chambless sought payment of his pension benefits

retroactive to May 1, 1977, damages of $100 per day for

the defendants’ failure to provide him with certain pen-

sion information, treble antitrust damages, and punitive

damages, costs, and attorneys’ fees.

By opinion dated September 14, 1983, the district

court granted defendants’ motion for summary judgment

on the following claims made by Chambless: that the

Plan’s review of his application was inadequate; that

defendants were guilty of violating the Sherman Act;

that the Plan improperly withheld information from him;

that the selection of age 65 as the normal retirement age

was a sham; and that defendants were estopped from

suspending his benefits.

As for Chambless’ claim that his benefits were for-

feited by reducing them from $920 a month to $470 a

month, the district court held that Chambless has no

vested right to a $920 a month pension and that Amend-

ment 47 did not violate the nonforfeitability requirements

of ERISA. The court did find, however, that there was

a dispute over the material issue of whether the provi-

sions which caused Chambless’ pension to be reduced were

arbitrary and capricious and, therefore, the court denied

summary judgment on this issue.

Similarly, as for Chambless’ argument that he did

not receive notice of the Amendment and its effect, the

district court held that there was a dispute over the

material issue of whether the Union took reasonable

steps to ensure that Chambless was notified after the

passage of Amendments 46 and 47 and before he took

work prohibited under those Amendments. ‘The court

therefore also denied summary judgment on this issue.

A-10

At trial, a jury was empanelled to consider the claims

for breach of the duty of fair representation, emotional

distress, and compensatory and punitive damages. At

the close of the plaintiffs’ case, these claims were taken

from the jury, dismissed by the court, and the jury was

discharged.

The only issue remaining for determination was

whether the forfeiture of Chambless’ pension benefits

until age 65 was arbitrary and capricious. Finding that

the regulation pursuant to which Chambless’ benefits

were reduced “is not in the interest of plan participants

or their beneficiaries and is not necessary to maintain

the financial integrity of the fund,” Judge Carter, by

order dated October 29, 1984, held that Amendment 47,

as applied to Chambless, was arbitrary and capricious

and ordered the Trustees to treat Chambless’ application

as if it had been made in 1977 and to grant him a wage-

related pension based on his 1967-77 employment record,

provided he retired and filed for benefits within six

months of the date of the decision by the district court

or within six months of a determination by the Court

of Appeals, if the decision were appealed.

On appeal, the Plan contends that: 1) Amendment 47

is not arbitrary and capricious and therefore should not

have been declared a nullity; 2) Amendment 47 did not

cause an unlawful reduction of Chambless’ wage-related

benefit; and 3) the Plan gave adequate notice of the

Amendment. Chambless and his wife cross appeal, con-

tending that: 1) Amendment 47 is not only arbitrary

and capricious but also violates section 203 of ERISA,

29 U.S.C. $1053(a) which prohibits forfeiture of all

vested pension benefits at normal retirement age; 2) the

Plan should be estopped from not paying Chambless the

—— _—

A-ll

pension benefits he would have received had he retired

in 1977; 3) the district court erred in dismissing his

antitrust claim against defendant shipping companies;

4) the district court erred in dismissing the plaintiffs’

claims for intentional infliction of emotonal dstress;

5) the district court erred by not awarding Chambless

benefits retroactive to May 1, 1977 and by conditioning

its judgment upon his retirement and filing for benefits

within six months of the date of the court’s decision; and

6) the district court erred in dismissing the plaintiffs’

claim for punitive damages.

Finding that Amendment 47 was arbitrary and capri-

cious, the district court declared the Amendment to be

a nuility. See Sharron v. Amalgamated Insurance Agency

Services, Inc., 704 F.2d 562, 564 (11th Cir. 1983). We

agrec with this determination.

DISCUSSION

Section 4041a) of ERISA, 29 U.S.C. § 1104(a) (1),

states that “a fiduciary shall discharge his duties with

respect to a plan solely in the interest of the participants

and beneficiaries ....” The Plan contends that Amend-

ment 47 is justifiable, pursuant to § 1104(a) (1), in that

it was adopted to enhance the financial integrity of the

Plan. According to the Plan, the purpose of Amend-

ment 47 is to preserve and enhance the corpus of the

Plan by discouraging participants from making their

services available to non-contributing employers. Also,

the Plan purportedly believed that the Amendment would

induce non-contributing employers to participate in the

Plan in order to obtain access to trained licensed deck

officers and would thereby decrease the claimed unfunded

liability of the Plan. We find the Plan’s argument un-

persuasive.

A-12

First, the Plan failed to substantiate its claim of

financial necessity and even failed to assert that alterna-

tive solutions were considered. See Central Tool Com-

pany V. International Association of Machinists National

Pension Fund, Benefit Plan A, 523 F. Supp. 812, 817-18

(D.D.C. 1981). Second, the Plan’s claim of financial

necessity was unsupported by any actuarial data. Sce

Elser v. 1.A.M. National Pension Fund, 684 F.2d 648,

657 (9th Cir. 1982), cert. denied, 104 S. Ct. 67 (1983);

Pompano Vv. Michael Schiavone & Sons, Inc., 680 F.2d

911, 914-15 (2d Cir.), cert. denied, 459 U.S. 1039 (1982).

The Plan points to an actuarial valuation by its con-

sultants for the year ending December 31, 1975. Ac-

cording to Chambless, and not contested by the Plan,

however, this valuation was not even transmitted to the

Plan until February 22, 1977, approximately six months

after the Trustees’ action that was assertedly “based in

part” upon it. Moreover, the Plan’s concern for its

financial] stability is undermined by a letter written by

defendant Maher, the Plan Administrator, to participants

only a month before Amendments 46 and 47 were adopted,

in which Maher stated that the Plan was “financially

sound.” Third, as the district court noted, Amendment

47 was of Union origin, drafted by Union counsel, and

the record is devoid of evidence showing that the Amend-

ment benefited the Plan or .its participants. Rather,

evidence was introduced demonstrating that employer

Trustees supported the Amendment to encourage par-

ticipants to remain working as long as possible for em-

ployers who had contributed to the Plan, so that the

employers could get their money’s worth, whereas Union

Trustees supported the Amendment to attract younger

licensed deck officers. Neither the employer nor Union

Trustees seemed to support the Amendment to enhance

the financial integrity of the Plan itself. Fourth, we

A-13

note that in addressing a class action challenge to com-

panion Amendment 46, a district court in Deak v. Masters,

Mates & Pilots Pension Plan, No. 79-190, slip op. (M.D.

Fla. June 4, 1984), determined that the Plan’s asser-

tions regarding the financial purpose of Amendment 46

“dlid} not mesh with the bulk of the evidence and in-

ferences indicative of their intentions at the time of

actual passage.” Jd. at 16. Given the basic similarities

between Amendments 46 and 47 and the fact that they

were adopted at the same time, we conclude that the

district court herein was correct in finding that Amend-

ment 47 also was not adopted to enhanee the financial

integrity of the Plan or to benefit the Plan participants

and is thus arbitrary and capricious.

The district court also concluded that, as to one in

the position of plaintiff Chambless, the combined effect of

Amendment 47 and Article II-A, Section 3 of the Pian

Regulations (the wage-related provision) was arbitrary

and capricious.

Article II-A, Section 3, of the Plan Regulations sets

forth the monthly wage-related pension benefit as a per-

centage of pay and defines pay as “the average base

monthly wages of the employee during the period of any

5 consecutive years within the last ten years immediately

preceding the effective date of the pension... .” (emphas-

sis added). Furthermore, according to this wage-related

provision, a participant with thirty years of credit is to

receive monthly pension benefits of $470 or 60%. of pay,

whichever is higher. Since the base years for calculating

the wage-related pension are the ten years immediately

prior to retirement and not necessarily the last ten years

in covered employment, the ten years in question in

Chambless’ situation are the years during which he was

A-14

employed at a low rate of pay on non-MM&P vessels. Since

60% of Chambless’ pay in the 5 highest paying years

within the statutory period would be less than $470, his

monthly pension would thus be $470. Consequently, by

postponing benefits until age 65, pursuant to Amendment

47, and then ultilizing the wage-related formula to calcu-

late those benefits, the amount of Chambless’ pension was

significantly reduced.

We agree with the district court that, by itself,

Article II-A, Section 3, the wage-related provision, might

not be arbitrary and capricious with regard to partici-

pants who apply for benefits immediately upon retiring

and who do not take any other employment, and similarly

with regard to participants who retire from covered em-

ployment, apply for a pension and then take work in a

different industry. When Article II-A, Section 3 is ap-

plied in conjunction with Amendment 47, however, as

occurred here, we believe it is arbitrary and capricious.

Here, the combined effect of Amendment 47 and the wage-

related provision essentially meant that Chambless, by

accepting other work with a competitor who did not parti-

cipate in the Plan, even for the purpose of avoiding the

low paying and low grade assignments the Union was

giving to older licensed deck’ officers, was placed in the

position of postponing his pension until age 65 and thus

could not have sought to fully retire beforehand, and he

also was effectively reducing his pension benefit. In our

view, the district court correctly held that no forfeiture of

benefits can be exacted from an employee for attempting

to improve his position by accepting work with a competi-

tor of his employer. Hummel v. S.E. Rykoff & Co., 634

F.2d 446, 452 (9th Cir. 1980); Westwood Chemical Co.

v. Kulick, 570 F. Supp. 1032, 1041-42 (S.D.N.Y. 1983).

A-15

Moreover, contrary to the Plan’s contention, this

Court’s decision in Morse v. Stanley, 732 F.2d 1139 (2d

Cir. 1984), stands for the proposition that suspension of

benefits is permissible only if those benefits are not there-

by reduced. As we stated, “[c]onsidering that . . . the

plaintiffs . . . will each receive their vested benefits with

interest upon reaching their normal retirement age (65),

their contention that the Trustees acted arbitrarily or in

bad faith in denying them accelerated distributions is

without merit.” Jd. at 1144. Defendants’ reliance on

the Morse decision is misplaced.

Furthermore, even if the Plan is correct in maintain-

ing that the wage-related provision of the Plan Regula-

tions, since it is the result of a collective bargaining

agreement, may not be found to be arbitrary and capri-

cious in itself, United Mine Workers of America Health

& Retirement Funds v. Robinson, 455 U.S. 562, 576

(1982), as the district court stated, it is not the wage-

related provision which is being contested herein. More-

over, as Chambless notes, Robinson is limited to a situation

in which the provision in question is both an outgrowth

of a collective bargaining agreement and not otherwise

violative of federal law or policy. Jd. at 575. Here,

the wage-related provision, Article II-A, Section 38, as

applied to the present circumstances, i.e., combined with

Amendment 47, would violate the Trustees’ fiduciary duty

to act solely in the interest of the participants and bene-

ficiaries, as required by ERISA, 29 U.S.C. §1104(a).

For the foregoing reasons, we agree with the district

court’s finding that Amendment 47 is arbitrary and

capricious and is therefore a nullity.

With regard to notice, the district court held that

both the method of distributing notice about the impact

A-16

of the Amendment and the content of the notice were

inadequate.

Regarding the adequacy of distributing information

about Amendment 47, while defendants contend that the

newspaper was mailed to all participants ai their homes,

the district court found that the newspapers discussing

the Amendment were merely left at the Union hiring hall

and were not mailed directly to Plan participants. The

district court therefore held that such distribution was

inadequate.

We believe that, even if distribution of the newspaper

were adequate, the content of the notice regarding Amend-

ment 47 was inadequate. We are unpersuaded by de-

fendants’ contention that because the method of calculating

wage-related benefits had not changed since its introduc-

tion in 1968 and because Chambless received notice of

that method at that time, no new notice by the Plan was

required. Rather, as the district court found, neither

of the publications regarding Amendment 47 explained the

full import of the interaction of the wage-related provision

and the Amendment for someone in Chambless’ position.

Thus, in our view, the notice was insufficient to satisfy

the requirements of ERISA, 29 U.S.C. §1022(a) and

(b) and § 1024(b)(1) (plans must furnish to partici-

pants clear, timely explanations of “circumstances which

may result in disqualification, ineligibility, or denial or

loss of benefits.”).

In his cross-appeal, Chambless makes several claims.

First, he contends that the suspension of his pension until

age 65 violates section 203(a) of ERISA, 29 U.S.C.

$ 1053(a), which states in pertinent part: “Each pension

plan shall provide that an employee’s right to his normal

A-17

retirement benefit is nonforfeitable upon the attainment

of normal retirement age... .” According to Chambless,

he is entitled to a “normal pension,” without regard to

age, since he has over twenty years of pension service

credits. We find Chambless’ argument to be without

merit. While prior to 1975, age was not a factor in de-

termining entitlement to pension benefits, in December

1975, the Plan adopted Amendment 42, which tracks the

language of ERISA and pursuant to which Article I,

Section 13 states that “‘Normal Retirement Age’ shall

mean the age of 65, or, if later, the age of the Participant

on the tenth anniversary of his participation.”

In addition, we have held that postponement of re-

tirement benefits until age 65 need not constitute an

unlawful forfeiture, violative of ERISA. Riley v. MEBA

Pension Trust, 452 F. Supp. 117, 120 (S.D.N.Y.), aff'd,

. 586 F.2d 968 (2d Cir. 1978) (“The Act, on its face,

requires only that pension benefits be nonforfeitable upon

attainment of normal] retirement age, in this case, age

sixty-five. The Act, therefore, gives plaintiff no vested

right to receive benefits until he reaches that age.”); sce

Fine v. Semet, 699 F.2d 1091, 1093 (11th Cir. 1983);

Hurn v. Retirement Fund Trust, 648 F.2d 1252, 1253-54

(9th Cir. 1981). Based on the above, we conclude that,

since Chambless has not reached age 65, suspension of

his benefits violates neither ERISA nor the Plan itself.

Chambless next maintains, in his cross-appeal, that

the Plan should be estopped from not paying him the

pension benefits he would have received had he retired

in 1977 and not worked for non-MM&P vessels. Chambless

alleges that it was only after asking a Union agent

whether it would be permissible for him to do so, that he

took an assignment as master on a vessel that did not

participate in the Plan.

|

A-18

In our view, Chambless’ allegations regarding repre-

sentations made to him by a Union representative are

insufficient to support a claim of estoppel against the Plan.

We have held that because “(t]he actuarial soundness of

pension funds is, absent extraordinary circumstances, too

important to permit trustees to obligate the fund to pay

pensions to persons not entitled to them under the express

terms of the pension plan,” Phillips v. Kennedy, 542 F.2d

52, 55 n.8 (8th Cir. 1976) (quoted in Haeberle v. Board

of Trustees of Buffalo Carpenters Health-Care Funds,

624 F.2d 1182, 1189 (2d Cir. 1980)), “courts have been

reluctant to apply the estoppel doctrine to require the pay-

ment of pension funds.” Haeberle, 624 F.2d at 1189. As

the district court stated herein, “(i]f such funds are too

vital to allow plan trustees to obligate the fund through

their representations, a fortiori union officials—who are

not as clearly identified with pension funds as are trus-

tees—should not be permitted to commit the funds to per-

sons not entitled to them.” Chambless v. Masters, Mates

& Pilots Pension Plan, 571 F. Supp. 1430, 1452 (S.D.N-Y.

1983) ; see Galvez v. Local 804 Welfare Trust Fund, 543

F. Supp. 316, 318 (E.D.N.Y. 1982). We agree with the

position articulated in Chamberlin v. Bakery & Confec-

tionery Union Pension Fund, 99 L.R.R.M. 2176 (N.D.

Cal“1977), where the court stated:

To permit . .. a single oral statement by a union busi-

ness agent to obligate the trust to provide benefits to

persons not otherwise entitled to them would seriously

erode the requirement that the fund be administered

by representatives of both the employe[r] and the

employees solely for the benefit of employees of the

contributing employer. 29 U.S.C. § 186(¢c) (5). Any

such erosion can create a loophole that would enable

the unscrupulous to divert funds away from the

proper parties ....

Id, at 3180.

A-19

Furthermore, as the district court noted, Chambless

admits that he never discussed with any Union representa-

tive the specific effect that employment on non-MM&P

vessels would have on his pension, as opposed to whether

the Union itself would object to such employment. 571 F.

Supp. at 1451. Rather, according to Chambless’ testi-

mony, the Union representative merely told Chambless

that “lots of our members does [sic] that [i.e., work on

non-MM&P vessels) ... . Don’t worry about it... . You

go right ahead if you want to go out there and work... .”

Based on the above, we believe that the district court

correctly granted summary judgment dismissing the claim

that the Plan is estopped from suspending Chambless’

benefits.

Chambless’ third contention in his cross-appeal is that

the district court erred in dismissing the antitrust claim

against the shipping companies. According to Chambless,

the suspension of pension benefits until normal retirement

age under Amendment 47 and the decrease in those bene-

fits created “a hindrance and interference with the ability

of licensed deck officers to market their skill,” thereby

creating an antitrust violation under the Sherman Act,

15 U.S.C. §§ 1-2.

The Supreme Court has held that, even if there has

heen a violation of the antitrust laws, an award of treble

damages is proper only when there has been an antitrust

injury. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,

429 U.S, 477, 489 (1977). Chambless has not made clear

exactly what his antitrust injury is. To the extent that

Chambless’ antitrust claim is based on a limiting of em-

ployment opportunities, he can claim no direct injury in

light of his successful continued employment on non-

MM&P vessels. To the extent that the claim is based on

A-20

diminished retirement benefits, it is essentially an ERISA

matter. See Laurie Visual Etudes, lnc. v. Chesebrough-

Ponds, Inc., 473 F. Supp. 951, 960 (S.D.N.Y. 1979). We

therefore hold that Chambless has not shown the requisite

antitrust injury.

Chambless’ fourth contention in his cross-appeal is

that the district court erred in dismissing the plaintiffs’

claims for intentional infliction of emotional distress

against the Plan and the Union. We believe these claims

were properly dismissed. With regard to the claim by

Chambless’ spouse, we believe that the district court did

not abuse its discretion in finding that there was insuf-

ficient evidence to raise a jury question. With regard to

Chambless’ own action to recover damages based upon

alleged emotional distress, we believe that the claim was

properly dismissed because of the absence of any evidence

to support his claim.

Chambless’ fifth contention in his cross-appeal is that,

hased on the district court's findings, he should have been

“warded benefits retroactive to May 1, 1977 and also that

the district court erred in conditioning its judgment upon

his retiring and filing for benefits within six months of

the date of the court’s decision. We agree with the dis-

trict court. Regarding retroactivity, as the Plan states, be-

cause Chambless has worked continuously in the maritime

industry since May 1, 1977, and has not “withdraw[n]

completely from any... employment . . . aboard any

vessel whatsoever,” as required by Article Ii-A, Section

15'a)’s definition of retirement, Chambless has not been

eligible to receive a pension. We have upheld rules for

suspending benefits of individuals who have not retired

within the meaning of the Regulations. Riley, 570 F.2d

at 412. We therefore believe that the district court was

correct in not awarding retroactive benefits but instead

——

ed ee Oo

A-21

requiring the Plan to pay Chambless, upon his retirement,

the monthly amount he would have received had he re-

tired in 1977.

Regarding the six month proviso, we also agree with

the district court. Even if Amendment 47 is a nullity,

both the wage-related provision, Article II-A, Section 38,

and the definition of retirement, Article II-A, Section

15(a), of which Chambless was on notice in 1877 when he

applied for benefits, remain intact. Therefore, when

Chambless applied for benefits in 1977, he is deenied to

have known that: the amount of his retirement benefit

would be based upon his salary during the ten year period

immediately prior to his retirement; if he continued to

work thereafter on non-MM&P vessels, his retirement date

would continue to advance; and the amount of his pensiun

probably would be reduced by virtue of adding to the

ten year period an increasing number of years of un-

covered and lower paying employment. Since the district

court decision gives Chambless the advantage of figuring

his wage-related benefits as of 1977, i.e., based upon his

last years of higher paying covered employment, and not

upon the ten year period immediately prior to his retire-

ment, we believe it is reasonable for this advantage to he

conditioned upon Chambless’ ceasing to work and filing for

benefits within six months of a decision rendered by this

Court.

Finally, the plaintiffs contend that the district court

erred in dismissing their claim for punitive damages. We

disagree. The issue of the availability of punitive dam-

ages under ERISA is now before the Supreme Court in

Russell v. Massachusetts Mutual Life Insurance Co., 722

F.2d 482 (9th Cir. 1983), cert. granted, 105 S. Ct. 81

(1984). As defendants argue, even where courts have

concluded that punitive damages are available under

A-22

ERISA, they have required a showing of wanton or

malicious conduct, see, e.g., id. at 492; Korn v. Levine

Bros. Iron Works Corp., 574 F. Supp. 836, 843 (S.D.N.Y.

1983), of which there is no evidence herein. Indeed, the

district court stated that it did “not believe that the

trustees willfully withheld information from Chambless

or other participants as to the effective reach and full

impact of Amendment 47.” Furthermore, we note that

in Deak, slip op. at 20, in which related Amendment 46

was at issue, the court held that the Trustees’ actions

were not so “‘malicious, flagrant or outrageous,’ as to

justify the imposition of punitive damages.” (citations

omitted). In our view, the district court herein was

correct in making a similar finding with regard to Amend-

ment 47 and in dismissing the plaintiffs’ claims for puni-

tive damages.

For the foregoing reasons, we affirm the decision of .

the district court in all respects and remand for a de-

termination of the benefits which Chambless would have

received in 1977.

7 : >

B-1

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

80 Civ. 4258 (RLC)

Filed August 8, 1984

ARTHUR CHAMBLESS

and MILDRED H. CHAMBLESS,

Plaintiffs,

- against -

MASTERS, MATES & PILOTS PENSION PLAN, et al.,

Defendants.

OPINION

CARTER, District Judge

Background Facts

Plaintiff, Albert Chambless, became a member of the International

Organization of Masters, Mates & Pilots (“MM&P”) in 1944 after

being issued a third mate’s license. He is a resident of Alabama and

received all of his MM&P work assignments through the union hiring

hall in Mobile, Alabama. He obtained his master’s license in 1956,

and his first assignment as a master in August, 1966, when he was

given command of the Frontenac Victory. This assignment lasted until

May, 1968. Thereafter, Chambless regularly hired out as master or

chief mate through 1975.

The MM&P pension plan (“plan”) was established in 1955. It is

an employer-funded pension and trust fund that provides retirement

benefits for MM&P licensed deck officers. The plan is administered

by an equal number of employee and employer designated trustees

who have broad powers to formulate regulations for the administration

B-2

of the plan. The trustees have delegated the day to day operation of

the plan to an administrator. Stephen Maher, now Executive Director

of the plan, functioned as administrator from 1965-1981. The admin-

istrator decides initially whether an applicant satisfies the plan’s

eligibility requirements and determines the appropriate pension benefit

the applicant is entitled to receive. His decisions are presented to the

trustees for approval. The administrator's determination that an

applicant is not entitled to benefits does not reach the trustees unless

the applicant appeals, in which case the trustees then determine

whether to uphold or reject the administrator’s determination.

The trustees have formulated a large body of regulations governing

the plan’s operations. Prior to the enactment of ERISA, 29 U.S.C.

§ 100, et seg., the plan’s regulations provided for normal retirement

without regard to age, after 20 years of pension service credits.

Pursuant to the terms of the 1966 collective bargaining agreement,

the plan was amended to provide for wage related pension benefits

based on the average salary for the five highest salary years in the

last ten years prior to the effective date of retirement.

Prior to August, 1976, retirement was defined in Article I], Section

13a of the plan regulations as complete withdrawal from “further

employment in any capacity in the maritime industry”, except that

the trustees “in their sole discretion could permit [a retiree to work]

in shoreside positions covered by a collective bargaining agreement

by the [union], and upon application submitted through the [union],

[to work] as a marine surveyor or employment aboard fishing vessels,

yachts and other small craft (such as supply boats) provided em-

ployment [is] in a capacity, not covered by the collective bargaining

agreements of the [union].” ,

Article II, Section 13(b) provided that if a retiree worked in

employment forbidden by Section 13a, he forfeited his pension benefits

for the month he worked and for six additional months. He had to

return all benefits received and if he failed or refused to do so, all

future benefits could be denied. The retiree had to notify the trustees

in writing within 15 days of the commencement of forbidden employ-

ment, and the trustees were empowered to disqualify him permanently

from receiving any future pension benefits if he failed to do so.

In December, 1975 the plan adopted Amendment 42 which added

a new Section 13 to Article I. Normal retirement age was defined

B-3

as “age 65, or, if later, the age of the participant on the tenth anniversary

of his participation. All references to ‘Normal Pension’ [were] changed

to read ‘Regular Pension’ ”.

In 1976, Walter Anderson, who was in charge of the hiring hall

in Mobile, Alabama, sought to induce Chamtiess to retire in accord

with then current union policy. Anderson advised Chambless that the

union wanted all the older licensed deck officers to retire and that

if Chambless did not retire, he could expect to be shipped out on

second or third mate assignments. During 1976 and 1977 all of

Chambless’ assignments through the Mobile, Alabama hiring hall were

in second or third mate jobs. In a letter deted March 17, 1979, sent

to all offshore ports, Robert Lowen, Union President, discussed the

union's effort to secure non-wage related benefits and other incentives

to induce older deck officers to retire.

Chambless apparently succumbed to the pressure and filed an

application for retirement benefits on November 12, 1976, but then,

having second thoughts, withdrew the application. On April 2, 1977,

he filed a second application. At that time he was advised that his

retirement benefits would be approximately $920 per month. This

calculation was presumably based on his 33% years of pension service

credits as of April 2, 1977, and his average salary for his five highest

salary years between 1967 and 1977, which appear to be 1970-1975

when he sailed two times as master (6/10/73-9/30/74 Hess Petrol;

7/1/75-11/24/75 Greenport) and five times as chief mate (1/1/70-

2/11/70, Spirit of Liberty; 5/25/70- 1/1/71, Golden Gate; 8/6/71 -3/31/73

Hess Voyager; 4/9/73-6/9/73, Hess Petrol; 2/14/75-4/10/75, Hess

Refiner).

Prior to filing his application, Chambless had accepted employment

as a master (3/18/77-4/1/77) on the Mission Viking, a vessel owned

by a company not a party to a collective bargaining agreement with

MM&P. He testified that before accepting this assignment, he had

spoken to the dispatcher at the union hiring hall in Mobile, Alabama

and was advised that there would be no problem. Two days after the

filing of his April 2, 1977 application, he accepted assignment as

master on the Mount Explorer, another non-MM&P contract vessel.

That assignment did not end until September 13, 1977. The Mission

Viking was an oil drilling rig. The Mount Explorer was a U.S. flag

ocean going vessel.

B-4

On August 24, 1976, the trustees adopted amendments 46 and 47

as new plan regulations, These amendments were proposed by union

designated trustees and drafted by union counsel who advised the

trustees that the two proposals were not at odds with any ERISA

provision. Amendment 46 provides that retirees working in forbidden

employment are not entitled to any pension benefits during such

employment and for six months thereafter, provided the six month

penalty does not extend beyond the retiree’s normal retirement agc

Moreover, if a retiree works as a licensed deck officer on a U.S. flag

ocean going vessel owned by a company not participating in the

MM&P plan, the retiree forfeits his pension benefits until] normal

retirement. Amendment 47 provides that an active member (i.e. one

not yet retired) who, subsequent to acquiring 10 years of vesting ser-

vice, works as a licensed deck officer on a United States flag ocean

going vessel for a company not under contract with MM&P, shall

not be entitled to any pension benefits until normal retirement age.

The two new amendments were discussed in articles by Robert

Lowen, then MM&P Secretary Treasurer and Stephen Maher, plan _

administrator, published in the October, 1976 issue of the MM&P

newspaper, The Pilot. Lowen’s article called attention to the regulations’

ban on prohibited employment. Maher's article highlighted the same

theme in a short explanation of the amendments’ meaning, and his

article carried the full text of the two provisions. In a later article

published in the December, 1976 issue of the newspaper, Maher again

focused on the two regulations and discussed their importance.

Copies of the newspaper, distributed at union hiring halls in various

ports from which the union operates, are not mailed to union members

or pension participants. Booklets concerning the pension plan and

explaining the regulations are sent to plan participants but the texts

of neither the regulations or amendments are sent directly to union

members. The first communication directly to the plan participants

about Amendment 47 is a letter from Maher dated March 13, 1978,

which states in pertinent part:

Further, subsequent to accruing ten (10) years of vesting service

credit and prior to retirement, if you work as a Licensed Deck

Officer aboard U.S. flag ocean going vessels which are operated

by a company whic},is not a participant in an MM&P Pension

Plan (excluding civilian employment with the Military Sealift

B-5

Command or another government entity) you will not be entitled

to any pension benefits prior to reaching Normal Retirement Age

(Normal Retirement Age means age 65 or, if after, the age of

the participant on the tenth (10th) anniversary of his participation).

An excerpt of the Pension Regulations pertaining to vested pension

credit is attached.

I urge you to read the attached language carefully, as violation

of the Rules will affect payment of your pension benefit, as well

as, any survivor's options.

Plaintiff's Ex. 38.

On July 19, 1977, Maher wrote asking Chambless to confirm or

deny that he was working as a licensed deck officer on a ship not

under MM&P contract. Defendants’ Ex. M. Chambless replied in

an undated letter confirming that he had accepted employment aboard

a non-MM&P vessel and inquired whether his pension would be

“payable as soon as he ceases such employment and withdraws

completely from employment aboard a vessel.” There is no direct reply

to this latter inquiry in the record.

Chambless.was subsequently advised by Maher that his pension

application had been denied and that because of his acceptance of

employment as a licensed deck officer with a company not under

contract with MM&P, he had forfeited all rights to pension benefits

until age 65. He was further advised that his estimated pension benefits

at age 65 would be $470 per month, not the $920 figure previously

given to him. Chambless appealed to the trustees who ratified the

decision of the administrator.

The Claims Involved

Plaintiffs (Chambless and his wife) instituted the instant action in

1980 making a wide variety of claims including antitrust infractions

by the shipping companies, breach of the duty of fair representation

by the union, breach of fiduciary duties as well as a variety of other

ERISA violations by the plan and its trustees, and the infliction of

emotional distress on both plaintiffs by the union and plan trustees.

Both compensatory and punitive damages were sought. Early on in

the litigation all claims against the trustees in their individual capacities

were dismissed, and the litigation proceeded against the trustees in

their official capacities only.

B-6

Many of the claims were dismissed when the court granted partial

summary judgment for defendants in an opinion reported at 571 F.

Supp. 1430 (1983), with which familiarity is assumed. At trial a jury

was empanelled to consider the claims for breach of the duty of fair

representation, for emotional distress, and for compensatory anc

punitive damages against the union and the trustees. At the close of

the plaintiffs’ case those claims were taken from the jury and dismissed

by the court. applving the standard enunciated in Simblest v. Maynard,

427 F.2d 1, 4 (2d Cir. 1970) and cognate cases, see e.g. Mattivi v.

South African Marine Corp., “Huguenot”, 618 F.2d 163, 167 (2d Cir.

1980).

This resulted in the dismissal of all claims against the union and

all claims concerning Mrs. Chambless, leaving Chambless as the sole

plaintiff in the case. What remained to be decided was whether the

forfeiture of Chambless pension benefits until age 65 by the plan

trustees was arbitrary and capricious. Since that matter was an issue

for court determination, the jury was dismissed and the trial proceeded

to the court. Subsequent to the conclusion of the trial, the parties

submitted post-trial proposed findings of fact and memoranda of law.

Determination

Chambless claims that the suspension of his pension until age 65

violates Section 203 of ERISA, 29 U.S.C. § 1053(a). Prior to De-

cember, 1975, a plan participant was entitled to what was described

as a normal pension after 20 years of pension service credits. Age

was not a factor. The regulations were changed in December, 1975

to conform to ERISA language, 29 U.S.C. § 1053(a), prohibit all vested

pension benefits from forfeiture at normal retirement age. The statute

defines normal retirement age as 65 years of age, or if later, the 10th

anniversary of a participant's participation in the plan. Amendment

42 to the plan regulations tracks this statutory language. It is clear

that ERISA imposes no obligation to pay retirement benefits to a plan

participant before he reaches age 65. Fine v. Semet, 699 F.2d 1091,

1093 (llth Cir. 1983). Riley v. MEBA Pension Trust (Riley Il), 452 F.

Supp. 117, 120 (S.D.N.Y.) (MacMahon, J.), affd 586 F.2d 968, 970

(2d Cir. 1978; Hurn v. Retirement Fund Trust, 648 F.2d 1252, 1253-54

(9th Cir. 1981). See also Morse v. Stanley, 732 F.2d 1139, 1144 (2d

Cir. 1984) (“Considering that. . .the plaintiffs. . .will each receive their

vested benefits with interest upon reaching their normal retirement

B-7

age (65), their contention that the trustees acted arbitrarily or in bad

faith in denying them accelerat “i benefits is without merit”). Moreover,

where the trustees act within the law their determina.ions may be

disturbed by court order only on a showing of bad faith, caprice or

arbitrariness. Riley v. MEBA Pension Trust (Riley I), 570 F.2d 406,

410 (2d Cir. 1977); Fine v. Semet, supra; Bayles v. Central Siates,

Southeast and Southwest Areas Pension Fund, 602 F.2d 97 (Sth Cir.

1979).

The trustees are required to provide plan participants with a summary

plan description which sets forth circumstances which may result in

disqualification, ineligibility, denial or loss of benefits. 29 U.S.C.

1022a(1), (2)(b). Neither the administrator nor the trustees complied

with this requirement before forfeiting Chambless’ benefits. The record

discloses that Amendment 47 to the regulations, pursuant to which

Chambless’ application was denied and he was held to have forefeited

his right to a pension until age 65, was adopted August, 1976. The

amendment was discussed in articles by Lowen and Maher in the

October, 1976 issue of the union newspaper. In Maher's column the

iext of the amendment was set out in full. The matter was again

discussed in another article by Maher in the December, 1976 issue

of the union newspaper. As I understand it the newspaper is distributed

in quantity at various union hiring halls at offshore ports. Chambless

says he never saw the articles. There is testimony that about 200 copies

of the October issue of the MM&P newspaper would normally be sent

to Mobile arriving about the first two weeks of November. The copies

are stacked on a table in the hall. A secretary in the Mobile office

testified by deposition that Chambless had knowledge of Amendment

47 before filing his application. She states that she discussed the matter

thoroughly with him and that she wrote the plan office for information

on the amount Chambless was expected to receive in pension benefits

when he retired. (Dep. Mary Smith at 118). I do not credit the tesumony

that Chambless and the secretary discussed Amendment 47 thoroughly.

Amendment 47 had no conceivable impact on Smith sufficient to

stimulate her interest in the provisions to the point that she would be

able to discuss it thoroughly with anybody. In any event, it is the trus-

tees’ responsibility to get the necessary information to the participants.

Chambless’ vicarious receipt of this knowledge through third parties

not connected with the plan does not suffice. Moreover, while it is

clear from Chambless’ response to Maher's inquiry about engaging

in forbidden employment that he knew that he would be barred from

receiving any pension until he had actually retired, I am satisfied that

he did not understand the impact which Amendment 47 would have

on his pension rights.

There is no evidence of any act by the plan or union to clarify that

impact for participants. What was published in the various articles

was the simple message that forbidden employment would result in

forfeiture of the right to retirement benefits until age 65. Neither the

articles in the October and December issue of the newspaper nor even

the letter sent to all participants dated 13 March 1978 explained the

full import of the forfeiture of the right to benefits until age 65 to a

participant such as Chambless with 32 years of pension service

credits. The forfeiture until age 65 brought into play an additional factor

not mentioned in any of these statements concerning the amendment.

A wage related pension benefit provision accords a participant the

right to have his benefits based on the average of his highest salary

for five of his last ten years before retirement during which he earned

the most. Denying Chambless the right to a pension until age 65 meant

not only that his pension was postponed, but since the ten years

preceeding the year in which he turns age 65 mant not only that his

pension was postponed, but since the ten years preceeding the year

in which he turns age 65, 1976-1986, cover a period in which he will

earn nothing 0: MM&P jobs, the wage related formula pursuant to

which he would have obtained a generous pension would not apply.

His benefits would be determined under a different formula which

results in reducing his benefits to roughly half of what he would have

received in 1977 based on a wage related formula.

While the court does not believe the trustees willfully withheld

information from Chambless or other participants as to the effective

reach and full import of Amendment 47, the statutory requirement

of full disclosure has no meaning in this context unless the trustees

are required to advise participants fully of what effect a new regulation

will have before they can penalize a participant for violating the

regulation. Defendants contended at trial that Chambless knew, or

should have been able to figure out by taking into account the wage

related provision, the effect forfeiture until age 65 would have on his

pension benefits. It is not all that obvious, however, and it seems to

me inequitable to enforce the new provision without first having its

full effect explained to all participants. In my judgment, therefore,

B-9

the trustees were barred in 1977 from applying Amendment 47 to

Chambless before first explaining all of its implications to him. It is

clear enough that Chambless believed he might be denied his pension

for the period he continued to work. He was not aware, however, that

by taking a non-MM&P assignment he had forfeited his rights to a

pension until age 65 and moreover that the forfeiture carned an added

penalty of halving the benefits he had been advised he would receive.

Amendment 47 is arbitrary and capricious in any event. In Riley

\. MEBA Trust Fund (Riley 1), supra at 413, the Second Circuit stated

that “new federal standards of fairness must apply with respect to

charges of breach of fiduciary duty not explicitly covered by Part 4

of ERISA’, but concluded that it knew of no applicable federal standard

other than the arbitrary or capricious yardstick. Suspension of benefits

until age 65 is, of course, permissible. Sutton v. Weirton Steel Division

of National Steel Corp., 724 F.2d 406, 410 (4th Cir. 1983), cert. denied,

— 104 S.Ct. 2387 (1984); Hurn v. Retirement Fund Trust

of the Plumbing, Heating and Piping Industry of Southern California,

460 F. Supp. 112 (C.D.Ca. 1978), affd, 648 F.2d 1252 (9th Cir. 1981).

However, the right to suspend benefits until age 65 is of no comfort

to defendants. They have not only suspended Chambless’ righis to

benefits until age 65 but have confiscated a considerable part of those

benefits. While the cases allow suspension, none has approved a

formula where the suspension results in greatly reduced benefits.

Indeed, in Morse v. Stanley, supra, the court was satisfied that all of

plaintiffs accrued benefits would be received, with interest, when they

reached age 65 and explicitly cited this factor in setting forth its reasons

for allowing the funds to be withheld.

Defendants argue that since the wage related benefits were

incorporated into the pension plan pursuant to a collective bargaining

agreement, the trustees’ enforcement was required unless modification

was necessary to comply with applicable federal standards and that

the arbitrary and capricious standard is not applicable. See United

Mine Workers of America Health & Retirement Fund v. Robinson, 455

U.S. 562 (1982). That contention, however, misses the point. The wage

related provision is not being contested. What is questioned is the

trustees’ right to forfeit a plan participant's vested rights by taking action

which results both in suspending his benefits until age 65 and in

reducing much of the accrued and vested pension benefits.

B-10

The discrimination that the plan practices against retirees and

applicants for retirement, barring participation in any maritime

employment while allowing others to continue working in the maritime

industries and permiting [sic] some retirees, pursuant to the 1981] col-

lective bargaining agreement, to accept, after three years, employment

on vessels engaged in offshore drilling, exploration and research, or

on vessels ancillary to such operations, and permitting short time em-

ployment on vessels engaged in trial runs or being delivered, provided

union approval is received and plan trustees are notified. does not

seem in the abstract so egregious as to come within the arbitrary or

capricious prohibition. Nonetheless, the bar became arbitrary and

capricious in its application to Chambiess.

In 1976, the union launched a plan to pressure older licensed deck

officers to retire. Chambless, who between 1966 and 1975 had regularly

received assignments as chief mate or master, was told either to retire

or to accept only the lowest grade assignment — second or third mate.

Indeed, his only assignments from MM&P hiring halls during 1976

and 1979 were second and third mate jobs. Subsequent to the events

in this case, the union sought, through collective bargaining agreement,

to secure for older licensed deck officers pension benefits that were

not wage related. This would have enabled the union to continue its

policy of giving choice assignments to younger men without unduly

penalizing the older officers. As of 1979 the union had not succeeded

in exacting those benefits from the employer.

The union cannot adopt a policy of forcing applicants to retire or

face low paying assignments if they refuse to do so and yet prohibit

or penalize them from working apart from MM&P in jobs matching

the skills and experience they have acquired. This is another reason

why the penalty imposed on Chambless for accepting employment

as a master on ships operated by companies not under contract to

MMa&P is capricious.

A retiree who works in forbidden employment but not as a licensed

deck officer on a U.S. flag ocean going vessel operated by a company

not under contract to MM&P forfeits his pension for the time he is

working and for six months thereafter. One, however, who works as

a licensed deck officer on a U.S. vessel under the jurisdiction of a

rival union forfeits his pension until age 65. This regulation does not

conform to ERISA requirements. It is evident that no forfeiture of

benefits can be exacted for competing with an employer. Hummel v.

S.E. Rykoff & Co. , 634 F.2d 446 (9th Cir. 1980); Westwood Chemical

Co. , Inc. , v. Kulick, 570 F. Supp. 1032, 1034 (S.D.N_Y. 1983) (Werker,

J.); Bonar v. Barnett Bank of Jacksonville, 488 F. Supp. 365 (M.D.

Fla. 1980). Trustees have a fiduciary obligation to act with care, skiil,

prudence and diligence, 29 U.S.C. §1104 (a)(1)(B), and they must

administer the plan solely in the interest of the participants and their

beneficiaries. The trustees’ basic fiduciary obligation is to maintain

the pension fund on a sound economic and actuarial basis. They must

not favor one group of participants over others, but where action is

taken to preserve or maintain the integrity of the fund which incidentally

disadvantages one group of participants, no fiduciary breach of trust

has occurred.

In this instance there was testimony by one of the employer

designated trustees that he favored Amendment 46's and Amendment

47's forfeiture uf benefits for participants who worked for parties not

contributing to the MM&P plan, because the pian was very costly

and employers wanted participants to work as long as possible so that

the employers could get their money's worth.' That testimony makes

clear that the employer trustees and the union trustees approved the

Amendments for different and conflicting reasons.

Employer trustees favored the regulations as a means of keeping

participants working on their vessels for a long time. They did not

like the idea of bearing the burden of financing a pension plan where

employees with 20 years of pension service credit could retire, receive

pension benefits, and then go to work for a competing employer in

the industry. The union wanted to keep younger licensed deck officers

content with their MM&P affiliation. Therefore they pressured the

older officers to retire with these provisions. Given the wage related

formula for computing pension benefits, the threat to assign older

officers lower paying second and third mate jobs was tantamount to

a threat to reduce their pensions. Thus they had to choose between

retiring and securing a greater pension benefit or continuing to work

faced with both a loss of pay and status and also a reduced pension.

Amendment 47 was intended to prevent older officers from escaping

this Hobson's choice by taking non-MMA&P jobs.

Defendants, to the court's surprise, presented no expert actuarial

testimony that the penalty imposed in the two amendments was needed

B-12

or even that it in at. way enhanced the financial integrity of the plan.

There was no evidence that actuarial considerations were a factor in

the trustees’ decision to adopt these amendments. Finally, it is impos-

sible to conclude that the financial integrity of the plan is protected

by severely penalizing defectors from MM&P ranks, when the impact

on the plan's financial well being of those retirees who work in forbid-

den employment other than on U.S. flag ocean going vessels not

covered by MM&P agreement is so insignificant that a denial of benefits

while they work and for six months thereafter suffices. There was,

moreover, no testimony that the plan's actuaries had advised imposing

the penalty or had approved it as needed to safeguard the plan. On

the contrary, the amendments were of union origin, drafted by union

counsel, and there is nothing in the record to show that the amendments

benefited the plan or its parw ‘pants.

I conclude, as did the court in Deak v. Masters, Mates and Pilots

Pension Program, No. 79-190 slip. op. at 15 (M.D. Fla. June 4, 1984),

“Trustees drew a distinction between certain types of re-employment

in the industry primarily to protect MM&P by discouraging members

who were eligible for their pension from accepting any job which

benefited a competing union.”

This penalty imposed on Chambless pursuant to Amendment 47

has not been justified, and is at best the product of the trustees’

uninformed analysis. Elser v. [AM National Pension Fund, 684 F.2d

648 (Sth Cir. 1982), cert. denied, US. , 104 S.Ct. 67 (1983);

Winpisinger v. Aurore Corp., 456 F. Supp. 559 (N.D. Ohio 1978).

While the trustees may clearly impose regulations requiring full

retirement before they are obligated to award pension benefits, they

cannot extract the harsh penalty they imposed on Chambless in this

case. The regulation pursuant to which the penalty was imposed is

not in the interest of the plan participants or their beneficiaries and

is not necessary to maintain the financial integrity of the fund.

Accordingly, the action of the trustees was arbitrary and capricious.

Moreover, while Chambless could be denied pension benefits while

he was still going to sea, he was not adequately informed of the harsh

penalty that would be inflicted by his working for a rival union. His

inquiry in his undated response to Maher's letter of July 19, 1977 makes

clear that he thought he would be denied a pension only during the

period he worked.

:

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-

.

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B-13

The action forfeiting his pension until age 65 is declared a nullity.

The trustees are ordered to approve Chambless’ application for a

pension provided he ceases working in the maritime industry and

certifies that he has done so and applies for a pension within six months

of the date of this decision. If he so applies the trustees are to treat

the application as if it had been made in 1977 and grant him a wage

related pension based on his 1967-1977 employment record.

IT IS SO ORDERED.

Dated: New York, New York

August 2, 1984

/s/ Robert L. Carter

ROBERT L. CARTER

U.S.DJ.

| Captain Lowen. Umon President, on being deposed by plaintiff's counsel before

trial. stated that he did not recollect the August 24, 1976 meeting of the trustees — the

date Amendments 46 and 47 were adopted. (Lowen Dep. PP 194). He did not recall!

Bernard Epstein’s review of the definition of retirement with the Jount Committee

of Trustees at the August. 1976 meeting and did not recall what amendments Epstein

had prepared. He did recall Amendments 46 and 47 from just having seen them.

id. 196-197. He did not recall having discussed the Amendments with Epstein before

the meeting and had only a vague recollection of the meeting when the Amendments

were discussed. /¢ 198.

Nonetheless, at tral on questioning by counse! for the plan Lowen launched into

a long and extensive dissertation on the reasoning behind the amendments and the

need to protect the integrity of the fund. It is clear that at the pretrial deposition Lowen

deliberately frustrated plaintiff's mgm to discovery. Accordingly. his testimony

concerning the basis for these amendments is striken and will not be considered by

the court. F.R.Civ.P. 37.

B-14

JUDGMENT DATED OCTOBER 29, 1984

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

80 Civ. 4258 (RLC)

Filed October 29, 1984

ARTHUR CHAMBLESS and

MILDRED H. CHAMBLESS,

Plaintiffs,

- against -

MASTERS, MATES & PILOTS PENSION PLAN, et al.,

Defendants.

JUDGMENT

This action having been tried by the Court, Hon. Robert L. Carter,

District Judge, presiding, on November 16 through November 23, 1983,

and the Court having duly made and filed findings of fact and

conclusions of law pursuant to Rule 52 of the Federal Rules of Civil

Procedure, it is,

ORDERED AND ADJUDGED that

(a) the action forfeiting Arthur Chambless’ pension rights unti! he

attains age 65 is declared a nullity;

(b) the trustees approve Arthur Chambless’ application for a pension

provided he ceases working in the maritime industry, certifies that

he has done so and applies for a pension within six months of the

date of this Court's judgment (October 29, 1984) and that if he does

so, the trustees will treat the application, for the purpose of calculating

his wage-related pension, as if it had been made in 1977, thereby

granting him a wage-related pension based on his 1967-1977

employment record;

B-15

(c) all other claims and causes of action asserted on behalf of

plaintiffs are dismissed; and

(d) the Court retains jurisdiction of the parties and of this cause

for the purpose of enforcing the judgment and making such further

orders as are necessary.

Dated: October 29, 1984

New York, New York

/s/ Robert L. Carter

U.S.D.J.

THIS DOCUMENT WAS ENTERED

ON THE DOCKET ON 10-30-84

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C-1

ENDORSEMENT ORDER DATED NOVEMBER 39, 1984

ARTHUR CHAMBLESS and MILDRED H. CHAMBLESS

— against -

MASTERS, MATES & PILOTS PENSION PLAN, et al

80 Civ. 4258 (RLC)

ENDORSEMENT

The motion is denied. Filing a motion to raise the kinds of questions

brought up in the motion papers is simply a waste of time. All Captain

Chambless is required to do is to certify to the plan administrator

that he has withdrawn from all active employment in the maritime

industry and wants to obtain his pension benefits. The form of the

application is not important, and if the reguiar form is used, it is clear

that there would be no need for him to answer questions that do not

apply to his situation.

The apparent concern about the six month grace running out is

groundless. If an appeal is taken, the six month grace is tolled. Under

a narrow interpretation, the time would commence to run again after

the Court of Appeals has rendered decision and issued its mandate

to the district court. Under a more liberal interpretation, Captain

Chambless would have six months from the date of the mandate of

the Court of Appeals. This is all, of course, on the assumption that

plaintiff prevails on appeal.

Under the court's judgment, Captain Chambless is entitled to receive

in 1985 the wage related benefits he would have been entitled to receive

in 1977. If 1977 pensioners similarly situated to Captain Chambless

have received cost of living increments which increase their monthly

benefits beyond the 1977 level, it may well be that Captain Chambless

might be entitled to a monthly stipend with cost of living increments

to bring him on par with other 1977 pensioners. It will be time enough

to study that issue, if necessary, on remand. My opinion did not

contemplate pension benefits for Captain Chambless retroactive to

C-2

1977. Mr. Garfield's approach was not considered. If this matter is

appealed, plaintiff would be advised to raise those questions on appeal.

Indeed, it would probably be prudent on plaintiff's part to cross-appeal,

since a notice of appeal has been filed by defendant, in order to be

certain that this matter is considered by the Court of Appeals. The

issue of the cost of living increments does not appear to the court

to necessitate a cross-appeal, but, again, prudence would dictate that

the matter be presented to the court in brief and argument upon appeal.

Further, the court's advice would be for Captain Chambiess to await

the conclusion of the appellate process before applying for benefits.

The attorney's fee issue should also be deferred until the case is again

in this court on remand.

Finally, since this matter is now on appeal, it is suggested that the

parties devote their time, effort and energy to the appeal. Whatever

matters the court has to determine can await remand of this case to

this court.

IT IS SOQ ORDERED.

Dated: New York, New York

November 30, 1984

/s/ Robert L. Carter

ROBERT L. CARTER

U.S.D.J.

D-1

SUMMARY JUDGMENT OPINION,

SEPTEMBER 14, 1983

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

80 Civ. 4258 (RLC)

ARTHUR CHAMBLESS and

MILDRED H. CHAMBLESS,

Plaintiffs,

- against -

MASTERS, MATES & PILOTS PENSION PLAN, et al.,

Defendants.

OPINION

CARTER, District Judge

I

In this action, Arthur M. Chambless (“plaintiff”), a veteran seaman,

and his wife, Mildred H. Chambless, allege, inter alia, that his pension

benefits have been improperly forfeited, that the trustees of his pension

plan violated their fiduciary duties, and that his former union and

former employers violated the antitrust laws by conspiring to deter

him from working on vessels owned by competing shipping companies

and represented by a rival union. Chambless and his wife seek

restitution of the allegedly forfeited pension benefits, treble antitrust

damages, and a clarification of their pension rights.

Chambless, a licensed deck officer, began sailing as a member of

the International Organization of Masters, Mates & Pilots (““MM&P”)

on October 27, 1944. Chambless Aff. 42; Maher Aff. 94. Often

serving as chief mate, Chambless continued working on vessels

represented by the MM&P until December, 1976, when he submitted

i

D-2

his first application to the M.M.&P. Pension Plan (“the pension plan”

or “the plan”). Complaint §2; Chambless Aff. (416-17; Maher Aff.

q5.

The plan is a multiemployer pension plan that was established by

an Agreement and Declaration of Trust dated August 1, 1955, in order |

to provide pension benefits to licensed deck officers working for

companies that have collective bargaining agreements with the MM&P.

Maher Aff. 442-3. The plan is funded solely by employer contribu-

tions and is administered by an equal number of employer and union

designated trustees. Jd. 42.

Chambless withdrew this pension application, however, because

his “love for the sea” continued to beckon. Complaint 418; Exh. 4

to Maher Aff. He maintains that he submitted his initial pension

application only after what he terms illicit union pressures compelled

him to consider retiring. Complaint 417.

First, Chambless alleges that the MM&P maintains a policy of

strongly encouraging — Chambless would say strong-arming — its older,

more experienced members to retire so that the union can replace

them with “new young blood” and thereby obtain more union dues.

Id. 415; Chambless Aff. 946-7. He maintains that the union

wrongfully assigned senior positions to officers more junior than he,

failed to pursue his grievances on these matters, and, beginning in

1976, offered him less prestigious, lower paying work as a first, second,

or even third mate. Chambless Aff. ¢44-6, 10-11. Chambless asserts

that being assigned to work as a third mate was of “great humiliation

for a licensed deck officer of my years of experience” and says that

such assignments caused him to consider retiring. fd. 411.

Second, Chambless maintains that the union sought to usher him

into retirement because he “knew too much” about, inter alia, favori-

tism and discrimination in work assignments and grievance processing,

self-dealing by union officials with local funds, improper recordkeep-

ing, and efforts to harass and intimidate certain employees into retiring.

Complaint 414. Both the union and the plan deny Chambless’ alle-

gations about favoritism, discrimination, intimidation, and pressures

placed on older members. Answer of MM&P 4414-16; Answer of

Pension Plan 4415-16.

In early 1977, disgruntled with the low-level, low-paying assignments

that the MM&P hiring hall had given him, Chambles took a two-

D-3

week assignment as master on an oil-drilling rig that did not have

a contract with the MM&P. Chambless Aff. 412. He said that he

did this only after he had asked a union agent at the hiring hall whether

it would be all right for him to take such a inb and only after the

union agent told him that the union would have no objection. Jd. ;

Complaint 421. When Chambless returned to shore after his fortnight

on the rig, he was informed that because he had worked on a non-

MM&P rig, he was no longer in good standing with the union. This

was so, Chambless maintains, even though many other union members

who worked on non-MM&P vessels were not so tarred. Chambless

Aff. $13.

Disgruntled, Chambless then, to use his words, “retired from em-

ployment under the MM&P contract and filed [his second] application

for pension benefits.” Jd. 414. At about the same time, Chambless

accepted employment as a master on the Mount Explorer, an ocean-

going vessel that was operated by a company that had a collective

bargaining agreement with a rival union, the Marine Engineers

Beneficial Association (“MEBA”). /d. 415. The two unions

representing licensed deck officers —- MM&P and MEBA~— have been

in intense competition for at least two decades, see MM&P v. NLRB

(Westchester Marine Shipping Co.), 539 F.2d 554, 556-57 (Sth Cir.

1976), cert. denied, 434 U.S. 828 (1977), and the Mount Explorer

on which Chambless sailed has been the focus of a picketing dispute

and unfair labor practice lawsuit between the two labor organizations.

See MM&P v. NLRB (Cove Tankers Corp.), 575 F.2d 896 (DC. Cir.

1978).

Chambless submitted his second pension application on or about

April 2, 1977. Chambless Aff. 414; Maher Aff. 46; Exh. 5 to Maher

Aff. Six days later, Stephen P. Maher, the administrator of the plan,

wrote Chambless, as he had done after Chambless had submitted his

first application, to acknowledge receipt of Chambless’ application

and to advise him of the plan's definition of retirement.' Maher Aff.

45-6; Exh. 6 to Maher Aff. On June 30, 1977, a plan employee

wrote Chambless to inform him that the trustee would consider his

application, and that his monthly benefits would be approximately

$920 on a percentage basis and $570 on a flat basis.? Exh. 8 to

Complaint.

On July 19, 1977, Maher wrote Chambless to inquire whether

Chambless had, as was rumored, taken a job on a non-MMA&P vessel.

ia a i

D-4

Exh. 9 to Maher Aff. In November, 1977, the plan received a letter

from Chambless acknowledging that he had taken such employment

beginning April 4, 1977. Exh. 8 to Maher Aff.

At their November 30, 1977 meeting, the pension trustees considered

Chambless’ application, Maher Aff. 413, and on January 26, 1978,

Maher wrote to Chambless to inform him that the plan's trustees had

concluded that because he had not retired under the plan's definition

of retirement, he was not eligible for a pension at the time. Exh. C

to Complaint. Furthermore, Maher informed Chambless that the plan

would not pay him any pension until he reached the age of 65, which

the plan defines as “normal retirement age.’ /d.; Article I, Section

13 of the plan regulations. Chambless will not turn 65 until December

7, 1986. Complaint { 10. In a January 28, 1980 letter, Maher advised

Chambless that the monthly pension benefits he is to receive upon

turning 65 will likely be $470. Exh. C to Complaint.

In deciding that Chambless would not receive pension benefits until

he turns 65, the trustees acted pursuant to Article I-A, Section

15(a)* and Amendments 46 and 47 to the plan regulations. The

amendments were passed on August 26, 1976, and were encoded in

Article I-A, Section 15(b) and Article I-A, Section 20.° Article

Il-A, Section 15(b) states in pertinent part:

If a Pensioner works in covered employment forbidden by this

Section,

1. He shall not be entitled to pension benefits for any month of

such employment and for six additional months, provided that

the additional six month period shall not extend beyond his Normal

Retirement Age, as defined in Article 1, Section 13; provided

further, however, that if such employment is in the capacity of

a Licensed Deck Officer on a U.S. flag ocean-going vessel em-

ployed by a company which is not a participant in the M.M.&P.

Pension Plan or the MM&P/PMA Pension Plan. .., then the

Pensioner shall not be entitled to pension benefits for any month

of such employment nor for any months prior to such Pensioner

reaching his Normal Retirement Age, as defined in Article I,

Section 13.°

Echoing the above quoted provision, Article II-A Section 20 states

in pertinent part:

D-5

In the event a Participant subsequent to his accrual of credit for

10 years of vesting service and prior to his retirement, is employed

in the capacity of a Licensed Deck Officer on a U.S. flag ocean-

going vessel employed by a company which is not a Participant

in the M.M.&P. Pension Plan or the MM&P/PMA Pension

Plan. .., such Participant shall \not be entitled to any pension

benefits prior to his reaching his Normal Retirement Age, as

defined in Article I, Section 13.

Chambless appealed the trustees’ rejection of his application and

appeared with counsel at the December 5, 1979 trustees’ meeting.

Maher. Aff. 410. On March 5, 1980, the trustees again voted to deny

Chambiess’ pension benefits until he turns 65. Jd.

On June 24, 1980, Chambless brought this suit against the pension

plan, Stephen Maher, the plan administrator, the MM&P, the plan's

employer and union trustees,’ the Maritime Services Committee and

the American Maritime Association, employer organizations that do

collective bargaining for shipping companies, and six shipping

companies that formerly employed Chambless, have contracts with

the MM&P and contribute to the MM&P plan: Amerada Hess Cor-

poration, Amoco Shipping Company, Central Gulf Lines, Inc., Na-

tional Transport Corporation, Wabash Transport, Inc., and Waterman

Steamship Corporation.

Chambless had alleged several wide-ranging claims against these

defendants, although it is often unclear which claims are directed

against which defendants. The legal theories behind his claims are

often obfuscated and occasionally overlapping, but the basic claim,

and it appears in several different guises, is that the union and plan

discriminated against him and caused his pension benefits to be

suspended and forfeited because he went to work on a vessel operated

by a competing company and represented by a rival union.

In his first cause of action, Chambless asserts that the defendants

violated the Employee Retirement Income Security Act of 1974, 29

U.S.C. § 1001 er seg. (“ERISA” or “the Act”), by suspending payment

of his vested pension after he went to work on a non-MM&P vessel.*

Complaint $28. In a related, if somewhat overlapping claim, he asserts

that even if a plan has the right to suspend pension payments when

a retiree returns to work, it does not have the right to continue

suspending thc.< benefits after the plan participant goes back into

re

D-6

a retiree returns to work, it does not have the right to continue

suspending those benefits after the plan participant goes back into

retirement. In addition, Chambless says that the plan regulations are

causing a forfeiture of his benefits by reducing them from an estimated

$920 a month beginning at age 55 to an estimated $470 a month

beginning at age 65. Chambless Aff. 425. The plan contends, however,

that its regulations do not provide for any illegal forfeiture and that

its trustees acted within the letter of the law in suspending Chambless'’

benefits until he turns age 65. Maher Aff. 411.

Chambless also contends that Amendments 46 and 47, by discrimi-

nating against plan participants who work on non-MM&P vessels,

are “punitive in purpose and effect” and “arbitrary and capricious”

and therefore violate the trustees’ fiduciary duties. Complaint 4428,

29, 33. He also argues that the age that the plan selected for normal

retirement age is a “sham” that was chosen to make it easier for the

plan and union to discriminate against disfavored members. Id. 428(a).

Chambless accuses the defendants of further violating their fiduciary |

duties by passing regulations that allegedly are not for the sole benefit ‘

of plan participants and their beneficiaries, by failing to provide a full

and fair review of his pension application, and by failing to provide

him with certain information that he had requested. In a related claim,

Chambless’ fifth cause of action charges—evidently alluding to

language in the plan documents which states that the trustees must

act solely in the interest of the plan participants — that the defendants

breached his contractual rights in violation of 29 U.S.C. § 185.° id.

$42.

In addition, Chambless maintains that at no time before he took

employment on a non-MM&P vessel did the plan or union notify him

of the import of newly enacted Amendments 46 and 47 for participants

who take non-MM&P employment. Complaint 429; Chambless Aff. |

§429-31; Exh. 10 to Maher Aff. |

The plan responds that all MM&P members were notified of the

new rules through The Master, Mate & Pilot, the union newspaper,

and that Chambless was specifically notified by letter. Maher Aff.

47; Exh. 8 to Maher Aff.

In his second cause of action, Chambless charges that defendants

combined and conspired in restraint of trade by “interfer{ing] with

the right of licensed deck officers to engage in their trade or profes-

sion.”” Jd. 435. He sees Amendments 46 and 47 as the chief instru-

ments of these efforts. The plan and union deny that the purpose of

. a2 oa

_—— —

D-7

the disputed amendments was to restrain trade. Answer of MM&P

§32, Answer of Pension Plan 432. Defendants say that the plan's regu-

lations have always required that benefits be suspended when plan

Participants work in “prohibited” employment and argue that Amend-

ments 46 and 47 aim to “preserve and enhance the corpus of the MM&P

plan.” Lowen Aff. 47.

Chambiess’ third cause of action alleges that defendants, because

of the assurances they allegedly gave him about accepting employment

on non-MM&P vessels “are estopped from denying” him benefits. "

Id. $38. In his fourth cause of action, Chambless asserts that the

MM&P has breached its duty of fair representation by discriminating

against senior seamen like himself and by failing to pursue several

of his grievances." Jd. 440. Defendants deny both the estoppel

claim, Answer of Pension Plan 438, and the duty of fair representation

claim. Answer of MM&P 440.

Plaintiff prays for the payment of his pension benefits retroactive

to May !, 1977, damages of $100 per day for the defendants’ failure

to furnish him with certain pension information, treble antitrust

damages for alleged lost earnings and pension benefits, and a

declaration that the defendants’ acts are unlawful and null and void

under the antitrust laws. Chambless also seeks punitive damages. costs,

and attorneys’ fees.

Il

The pension plan, the plan trustees and Maher, the plan adminis-

trator, and MM&P move for summary judgment on the grounds that

1) the actions taken by the plan trustees are in accordance with the

plan regulations and such regulations comply with ERISA and are

not arbitrary or capricious or effectuated in bad faith; 2) plaintiff's

claims for a declaration of the amount of benefits Chambless will

receive at age 65 and a declaration of his wife's rights are not ripe

for adjudication; 3) the plan cannot be estopped from acting on the

basis of statements allegedly made by employees of the union; 4) the

plan's regulations are exempt from antitrust serutiny by virtue of the

non-statutory labor exemption, 5) Chambless has not alleged that he

has suffered any antitrust injury, and 6) Chambless received or had

access to all the documents that ERISA requires the plan to supply.

for summary judgment, asserting that they are not fiduciaries of the

D-8

plan and cannot be held liable as such and that ERISA requires the

plan administrator, not them, to supply certain information. As for

the antitrust claims, they argue that they are protected by the non-

statutory labor exemption and that plaintiff has suffered no antitrust

injury.

Chambless has cross-moved to strike the affidavits of Maher, the

plan administrator, and of Robert J. Lowen, the International President

of the MM&P. Chambless asserts that the affidavits should be stricken

because they contain assertions and legal conclusions about which

the affiants allegedly have no personal know! sdge.

Il

LEGAL DETERMINATION

A

Ripeness of ERISA Claims — Defendants contend that Chambless’

ERISA claims should be dismissed for lack of ripeness because

Chambless has not alleged that he plans to retire in the immediate

future and because he is merely seeking a declaratory judgment

regarding what amount he will receive at age 65. Defendants maintain

that even if the court were to conclude that there is a dispute over

an issue of material fact regarding whether the plan has the right to

continue suspending Chambless’ benefits should he retire before age

65, that issue would not be ripe on the ground that there is no likelihood

that Chambless will soon retire.

Siznilarly, defendants argue that Mrs. Chambless’ claim is not ripe

because she is seeking merely a declaration of her rights to survivor

benefits should her husband die before age 65—an eventuality that

they assert is hypothetical and remote. In short, they contend that

neither Chambless nor his wife suffers any present harm from the

plan's regulations. Lastly, they argue that certain events may occur

before Chambless turns 65 — changes in federal statutes or regulations

: or changes in the plan regulations or the trustees’ interpretation of those

regulations — and that these events may significantly alter the inquiry

or render it moot.

Chambless responds that this suit does not seek a declaratory

judgment, but instead seeks an order overturning certain plan

regulations and awarding him benefits at once. He contends that the

ee

— oe.

ee ef

D-9

plan trustees acted arbitrarily and capriciously in suspending his

benefits, that the classifications in the regulations are illegal, and that

the “normal retirement age™ that the trustees selected, i.e., age 65,

is a “sham.”

In their ripeness arguments, both sides have distorted what

Chambless’ often unclear complaint says. What is clear, however, is

that Chambless and his wife seek a declaration or clarification of their

tights, assert that they suffer present harm due to the suspension of

Chambless retirement benefits, and seek damages under ERISA for

the defendants’ alleged pat wrongs.

The jurisdictional section of ERISA states:

A civil action may be brought —

(1) by a participant or beneficiary —(B) 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:

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any

act or practice which violates any provision of this subchapter

or the terms of the plan, or (B) to obtain other appropriate

equitable relief (i) to redress such violations or (ii) to enforce

any provision of this subchapter or the terms of the plan. . . .

29 U.S.C. §1132(a) (emphasis added).

Here, the Chambiesses seek not only a clarification of their rights

to future benefits but also to “enjoin” a “practice” that allegedly

“violates” ERISA. 29 U.S.C. § 1132(a)(3).

The Seventh Circuit addressed many of the ripeness questions raised

here in an ERISA case brought by a class of pension plan participants,

none of whom had reached the age of 65 or had yet applied for a

pension, for a declaration or clarification of their rights after the plan

had raised the normal retirement age from 57 to 65. In words that

might have been written for the case at bar, the Seventh Circuit stated:

We reject the trustees’ contention that this is a “battle of

hypotheticals, a classic example of the difficulty of deciding a case

concerning a complex technical subject without the benefit of

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specific facts.” . .[Plaintiff] seeks a determination of the nature

and scope of the Plan participants’ rights to future benefits. Section

1132 provides that a civil action may be brought “by a participant

to clarify his rights to future benefits under the terms of the

plan... 2 29 U.S.C. § 1132. This action is precisely the type of

action contemplated by the statute.

Janowski v. International Brotherhood of Teamsters, 673 F.2d 931,

935 (7th Cir. 1982) (emphasis added), vacated on other grounds and

remanded for reconsideration of attorneys’ fees, 51 U.S.L.W. 3937

(June 28, 1983).

Chambless’ suit to find out whether the plan has the right to suspend

his benefits when he took non-MM&P employment and whether he

has a right to obtain benefits before age 65 should he retire before that

age “is precisely the type of action contemplated by the statute.” /d.

The same is true regarding Mrs. Chambless’ effort to obtain a

clarification of what her rights are should her husband die before the

age of 65.

In arguing that the claims of Chambless and his wife are not ripe,

defendants rely on two pre-ERISA cases. In Lugo v. Employees

Retirement Fund, 529 F.2d 251 (2d Cir.), cert. denied, 429 U.S. 826

(1976), plaintiff challenged a pension plan rule that denied benefits

to participants who did not work a total of 90 months during the ten

years before they applied for a pension. Lugo was 53 at the time he

brought suit, and under the pension plan rules couid not recieve benefits

until he turned 60. The court concluded that Lugo’s lawsuit was not

ripe since Lugo had to wait seven yars before becoming eligible for

a pension, because it was very possible that he would accumulate 90

months of work in his last ten years, and because he did not allege

“present objective harm” or the “threat of specific future harm” as

a result of the challenged rule. Jd. at 258, quoting Lecci v. Cahn, 493

F.2d 826, 829 (2d Cir. 1974). The court wrote, however, that had Lugo

attacked the validity of the rule requiring that participants be at least

age 60 to obtain benefits and had he asserted that he was thus presently

entitled to a pension, he would have stated a ripe claim. /d. at 257-58.

The instant case is distinguishable from Lugo on several grounds.

First, whereas Lugo did not attack the age 60 rule and assert that he

deserved a pension at the present time, id., Chambless attacks the

age 65 normal retirement age of the MM&P plan as illegal, a sham,

D-11

and an improper bar to his receiving benefits ar the present time.

Second, the Lugo court deemed it wise to hold off adjudicating on

the merits because ERISA was soon to take effect and “the impact

of ERISA prior to the time Lugo reaches age 60 will undoubtedly

be considerable.” Jd. at 259. That reason for not addressing the merits

is absent here. Third, while Lugo brought his case under § 302(c)(5)

of the Labor Management Relations Act (“LMRA”), 29 U.S.C.

§ 186(c)(5), Chambless has brought his case under ERISA, which in

its language allowing plan participants and beneficiaries to sue for

a clarification of their rights has liberalized ripeness requirements.

See Janowski, supra, 673 F.2d at 935.

Defendants also rely on Stewart v. M.M.&P. Pension Plan, 608 F.2d

776 (9th Cir. 1979), which, like Lugo, was brought under the LMRA,

rather than ERISA. Stewart challenged a plan regulation that did not

give additional years of pension credit to plan participants who, after

having accumlated 20 years of pension credit and after having retired,

went back to work. His lawsuit was a declaratory judgment action.

Id. at 782. Stating that the plaintiff was not “in fact subjected to or

imminently threatened with substantial injury,” id, at 783, and that

the plaintiff “did not aver that he wanted to retire or would retire,”

id. at 784, the court held that Stewart's action was not ripe.

The instant case is distinguishable from Stewart in several ways.

Stewart was not brought under ERISA and therefore ERISA’s more

generous ripeness criteria regarding the clarification of rights were

not in effect. Second, while the plaintiff in Stewart did not aver that

he was suffering present harm, Chambless has alleged that because

his pension has been suspended he is suffering present harm from

the rules that he is challenging.

For the above reasons, the ERISA claims brought by Chambless

and his wife are ripe for adjudication.

B

The Validity of Amendments 46 and 47 under Section 203 and the

Federal Regulations—Amendments 46 and 47 provide that a plan

participant who leaves retirement and goes to work on an MM&P vessel

is to have his pension benefits suspended for the time he is working

plus six additional months after he ends his re-employment. These

amendments also provide that participants who leave retirement to

D-12

work on non-MM&P boats are to have their pension benefits suspended

until they reach normal retirement age —which is 65 under the plan —

even if they re-retire well before age 65. (Indeed, under these

amendments, any participant with more than ten years’ experience who

goes to work on a non-MM&P boat is not to receive any benefits until

he turns 65.) ERISA requires that participants receive their pension

benefits once they reach normal retirement age, so long as they do

not continue working in the same industry, trade, and geographical

area. 29 U.S.C. § 1053(a)(3)(B)(ii)."

Although the gravamen of Chambless’ claims here is not pellucid,

he appears to claim that the plan’s refusal to pay him benefits until

he reaches age 65, pursuant to Amendments 46 and 47, is a suspension

proscribed by section 203(a) of ERISA, 29 U.S.C. § 1053(a), and by

the regulations that the Department of Labor (“DOL”) has issued under

ERISA. Chambless argues that under section 203(a) and 29 C.F.R.

§ 2530.203-3(b)(2) (1982),* a plan may suspend a retiree’s benefits

only during the period he is re-employed and then only if the re-

employment is in the same industry, trade and geographical area.

Chambless maintains that the plan’s suspension of his benefits is illegal,

first, on the ground that he is not working in the same geographical

area and, second, on the ground that should he re-retire before turning

65, the suspension would continue beyond the period of his

re-employment.

The plan counters, however, that section 203(a) of ERISA, 29 U.S.C.

§ 1053(a), “does not restrict in any way” the suspension of a plan

participant's benefits before he reaches normal retirement age and that

because Chambless has not reached that age, the plan trustees are free

to suspend his benefits.

Inasmuch as Chambless misconstrues both section 203(a), 29 U.S.C.

§ 1053(a), and the DOL regulations, his attack on Amendments 46

and 47 will find no support in either of these sources.

Section 203(a) reads in pertinent part: “Each pension pian shall

provide that an employee's right to his normal retirement benefit is

nonforfeitable upon the attainment of normal retirement age...”

(emphasis added). This court has stated previously that “[t}he Act,

on its face, requires only that pension benefits be nonforfeitable upon

attainment of normal retirement age, in this case, age sixty-five. The

Act, therefore, gives plaintiff no vested right to receive benefits until

D-13

he reaches that age.” Riley v. MEBA Pension Trust, 452 F. Supp. 117,

120 (S.D.N.Y.) (MacMahon, J.), affd, 586 F.2d 968 (2d Cir. 1978).

Because Chambless has not reached age 65, the benefits that the plan

is suspending are not normal retirement benefits, but are instead early

retirement benefits. The Second Circuit has noted, moreover, albeit

in dictum, that “Congress did not intend for early retirement supple-

ments to be unforfeitable.” Riley v. MEBA Pension Trust, supra, 586

F.2d at 970 n.2, quoting Capocci v. General Motors Corp., 444 F.

Supp. 1306 (D. Hawaii 1978); see also Hurn v. Retirement Fund Trust,

648 F.2d 1252, 1253-54 (9th Cir. 1981) (*Hurn I’) (“The critical

inquiry is whether Hurn had reached “normal retirement age”, for if

he had not, section 1053(a) would not protect him from the suspension

of benefits he suffered”); Hernandez v. Southern Nevada Culinary &

Bartenders Pension Trust, 662 F.2d 617, 620 (9th Cir. 1981) (“ERISA

gives an employee-participant no vested right to receive pension benefits

until he reaches normal retirement age. . .. Congress never intended

to impose upon a plan a requirement that any benefits be payable before

age 65”) (emphasis in original).

The case law thus makes clear that section 203(a) provides no

protection against the suspension of benefits of plan participants, such

as Chambless, who have not yet reached normal retirement age. '

The DOL regulations support this position in stating that “{a] plan

may provide for the suspension of pension benefits which commence

prior to the attainment of normal retirement age..." 29 C.F.R.

§ 2530.203-3(a)(1982)(emphasis added). Therefore, as long as the

plan begins paying him benefits upon his attainment of normal

retirement age, Chambless has no claim under section 203(a) or the

DOL regulations."

.

Amendments 46 and 47 and Their Alleged Arbitrary, Capricious,

and Discriminatory Nature—Chambless next maintains that

Amendments 46 and 47 must fall under another section of ERISA,

the section setting forth the fiduciary duties of plan trustees. 29 U.S.C.

§ 1101 er seg. He argues that the amendments are arbitrary and

Capricious, discriminatory, and in bad faith and that the trustees violated

their fiduciary responsibilities in enacting such regulations.”

Chambless contends that the two amendments establish an invidious

discrimination by suspending the benefits of retiree-participants who

D-14

return to work on non-MM&P vessels for far longer than those of

participants who return to work on MM&P boats."* Complaint

§28(d). According to Chambless, in passing the amendments, the plan’s

trustees violated their fiduciary duties because the amendments, he

argues, were noi enacted “solely in the interest of the participants and

beneficiaries,” 29 U.S.C. § 1104(a)(1), but instead primarily to help

the MM&P and shipping companies that have contracts with the

MM@&pP in their struggle against rival companies and unions. Cham-

bless argues that the main purpose of the amendments was to deter

MM&P members from working on vessels that had contracts with

MEBA, that is, as yet another weapon in the MM&P’s war against

its rival union. Complaint 4415, 28; Chambless Aff. 4418-20.

To bolster his allegation that the amendments were passed for

discriminatory reasons and not in the interest of the plan's participants,

plaintiff has submitied an affidavit quoting the deposition of Charles

Hemming, a former MM&pP vice president, who stated that “the thrust

[for Amendments 46 and 47] was from the union side” and that the

idea of the amendments was to make it difficult for new shipping

companies to find workers. Opsahl Aff. 4i2. He said that the plan

trustees knew that “these new companies. . .would have a need for

skilled licensed deck officers,” and that “the only source. . .available

would be members of the MM&P.” Jd. Hemming stated:

The hoped effects of this amendment would be to deny the

experienced personnel to operate these newer ships that were

~ coming off because so much of an efficient ship operation depends

upon the master’s judgment, and he can make or break a company.

* * **

Q. So the purpose in effect was to keep these experienced

masters away from the companies that most needed them; is that

correct?

A. That was my understanding of it, yes.

A notice that was published numerous times in the union's official

newspaper unwittingly adds some weight to Chambless’ argument that

the amendments had a discriminatory aim. That notice, including its

telling title, reads in relevant part:

STAY ON COURSE...

eee

7 en

D-15

Sailing Non-MM&P Contract Ships Jeopardizes Pension &

Benefits

Should you be offered an opportunity to accept employment

aboard a non-MM&P contracted vessel, be sure you realize what

you are doing, insofar as your Health & Benefit and Pension

benefits are concerned.

* * * *

You accrue pension credits as a result of sailing aboard MM&P

contracted vessels participating in the Pension Plan. Do not

jeopardize your ultimate pension benefits by accepting employment

aboard non-MM&P contracted vessels.

Exh. 7 to Maher Aff. (emphasis in original).

Defendants of course differ with Chambless about the reasons behind

the disputed amendments. MM&P President Lowen asserts that they

were passed “to preserve and enhance the corpus of the MM&P Pension

Plan.” to “[s]trengthen the base of the MM&P Pension Plan.” Lowen

Aff. $7, quoting Lowen Dep. at 127-30. He said the amendments

would protect the corpus of the fund by “keeping available to our

companies the people who are sailing under them. . . . If you're sailing

under the MM&P Pension Plan, and contributions are being made

on your behalf, you're preserving the trust.” Jd.

While Lowen asserts that Amendments 46 and 47 were needed to

ensure that there were enough workers for the vessels of contributing

employers in the event of a labor shortage, id., Chambless retorts that

this is a mere pretext because in his view there has long been a surplus

of qualified workers — evidenced by the competition between the ex-

perienced seamen and the “new young blood’—to fill the spots of con-

tributing employers. Chambless Aff. 433. Chambless argues that

because this is so, the trustees could have adopted the amendments

only to prevent competing employers from obtaining the qualified em-

ployees they need.

Section 404 of ERISA, 29 U.S.C. § 1104, sets forth the fiduciary

duties of a plan trustee:

(a)(1). . .a fiduciary shall discharge his duties with respect to

a plan solely in the interest of the participants and beneficiaries

and —

D-16

(A) for the exclusive purpose of:

(i) providing benefits to participants and their

beneficiaries;

and

(ii) defraying reasonable expenses of administering the

plan;

(B) with the care, skill, prudence, and diligence under the cir-

cumstances then prevailing that a prudent man acting in a like

capacity and familiar with such matters would use in the conduct

of an enterprise of a like character and with like aims;

** * *

(D) in accordance with the documents and instruments governing

the plan insofar as such documents and instruments are consistent

with the provisions of this subchapter.

(emphasis added).

Several courts have held that pension fiduciaries may breach their

duties not only by violating these specific provisions, but also by acting

“arbitrarily and capriciously.” In Riley v. MEBA Pension Trust, 570

F.2d 406, 413 (2d Cir. 1977) (“Riley I’), a seminal ERISA case, Judge

Friendly wrote:

It has been suggested that after January 1, 1975 [the date ERISA’s

fiduciary provisions took effect], new federal standards of fairness

must apply with respect to charges of breach fiduciary duty not

explicity covered by Part 4 of ERISA. . . . We have no difficulty

with th[is] argument. . . . but we know of no federal standard that

would here be applicable other than the arbitrary or capricious

one already discussed, see Morgan [v. Laborers Pension Trust

Fund], 443 F. Supp. [518], 524 [(N.D. Cal. 1977)}; of Rehmar

v. Smith, 555 F.2d 1362, 1371 (9 Cir. 1976)

(emphasis added).

In the latter case cited by Judge Friendly, the Ninth Circuit wrote that

decisions of pension trustees “may be reversed only where they are

arbitrary, capricious or made in bad faith, not supported by substantial

evidence, or erroneous on a question of law.” Rehmar v. Smith, supra,

555 F.2d at 1362. This language is almost identical to that which the

D-17

Second Circuit used in a pre-ERISA case assessing whether pension

trustees had violated their fiduciary duties under section 302(c)(5)

of the LMRA, 29 U.S.C. § 186(c)(5)." See Beam v. MM&P. 511

F.2d 975, 980 (2d Cir. 1975).” Thus the court concludes that the

“arbitrary and capricious” standard is the proper level of review to

apply here.*!

Chambless’ argument that Amendments 46 and 47 violate ERISA’s

fiduciary duties on the ground that they were not adopted “solely in

the interest of the [plan's] participants and beneficiaries,” 29 U.S.C.

§ 1104(a)(1), draws support form Winpisinger v. Aurora Corp. , 456

F. Supp. 559, 566 (N.D. Ohio 1978). That case explores ERISA’s

fiduciary obligations in great depth and states that the “lead line of

section 1104(a)(1) imposes a separate and overall requirement upon

the trustees to discharge all of their duties ‘solely in the interest of

the participants and beneficiaries—Congress thereby added a

responsibility over and above the prohibition against self-dealing.”

In addition, Chambless argues that the amendments also violate 29

U.S.C. §1104(a)(1)(D) by failing to be “in accordance with the docu-

ments and instruments governing the plan.” The “Powers and Duties”

section of the Agreement and Declaration Trust establishing the plan

states that the trustees “shall discharge their duties solely in the interest

of those entitled to benefits hereunder.” Article V, Section (1)(b) of

Agreement and Declaration of Trust, Exh. 1 to Maher Aff. (emphasis

added). Cf Winpisinger v. Aurora Corp., supra, 456 F. Supp. at 567.

Chambless makes a similar claim in his fifth cause of action, which

alleges that “Defendants have breached the contractual rights to pension

benefits as provided under the plaintiff's contract of employment in

violation of 29 U.S.C. § 185." Complaint 442. In this cause of action,

Chambless is evidently referring to the plan’s Agreement and Decla-

ration of Trust and the “solely in the interest” language quoted

above.”

The court of course recognizes that “[a]ctuarial considerations and

the long-term health of the plan are valid concerns of the trustees[,]”

Kozlesky v. Board of Trustees for Amalgamated Department Store

Retiremeni Income Plan, 546 F. Supp. 466, 468 (E.D. Mich. 1982),

and that these considerations may have been a factor in the passage

of Amendments 46 and 47. Nevertheless, plaintiff has carried his

burden of showing that there is a dispute over the material issue of

D-18

whether Amendments 46 and 47 were adopted to maintain the fund's

financial integrity or for other, less laudable motives that might be

inconsistent with the trustees’ fiduciary obligations. Chambless has

also offered “concrete particulars,” SEC v. Research Automation Corp.,

585 F.2d 31, 33 (2d. Cir. 1978), such as the Hemming deposition,

to establish that there are additional disputes over whether the trustees,

in adopting the amendments, acted “solely in the interest of the

participants and beneficiaries,” acted arbitrarily and capriciously, or

acted with improper discriminatory or bad faith motives.*> Thus,

summary judgment is denied on these issues.

D

Selection of 65 as Normal Retirement Age —Chambless next argues

that the plan's establishing 65 as the normal retirement age is a “sham.”

Complaint ¢28(a). He asserts that 65 is not the normal retirement

age because more than 90 percent of the participants retire before 65.

Noonan Aff. 416; Noonan Reply Aff. 46. Chambless asserts that the

selection of 65 was arbitrary and capricious and that retirement has

“normally been based upon years of service rather than the attain-

ment of any chronological age.” Noonan Aff. 416. Although Chambless

is less than clear in his argument here, he seems to be saying that

the plan adopted 65 as its normal retirement age so as somehow to

deter licensed deck officers from working for competing companies

and unions and to make it easier for the plan to penalize participants

who take jobs on non-MM&P vessels. Chambless Aff. 428.

The plan maintains that its adoption of age 65 as the normal retire-

ment age was in good faith and was done pursuant to the recommenda-

tion of its actuarial consultant. Exh. 15 to Maher Aff. at 16. As

further evidence that selecting 65 as the normal retirement age was

not a “sham,” the plan notes that in 1980 the average age at which

plan participants retired was 62.7. Maher Reply Aff. 43. Defendants

maintain that the mere two-year difference between 62.7 and 65 negates

any inference that the new normal retirement age was adopted to

penalize “bad boys” who accept employment on competing vessels.

The relevant language of ERISA defines “normal retirement age as

the earlier of—

(A) the time a plan participant attains normal retirement age under

the plan, or

(B )the later of—

(i) the time a plan participant attains age 65, or

(ii) the 10th anniversary of the time a plan participant

commenced participation in the plan.

29 U.S.C. § 1002(24).

In mounting his attack against age 65 as the normal retirement age,

Chambless relies less on statutory language, legislative history or

precedent than on a dictionary definition of “normal” (“conforming

to a usual or typical pattern,” American Heritage Dictionary (1976) ).

While we are reluctant to parse through the many dictionary definitions

of “normal,” there is no need to turn to the dictionary here because

the statutory language is clear.

The leading case on the question of normal retirement age, one rather

similar to the the instant case, holds that ERISA presents no bar—

except in the case of arbitrary and capricious or bad faith actions —to

the decision of a pension plan to raise its normal retirement age to

65. In Janowski v. International Brotherhood of Teamsters, supra,

plaintiffs contended that their pension plan's decision to change the

normal retirement age from 57 to 65 improperly deprived them of

the right to receive their vested benefits at age 57. Rejecting their argu-

ments, the Seventh Circuit held that 26 U.S.C. § 411(a)(8), which is

the analog in the Internal Revenue Code of 29 U.S.C. § 1002(24) and

contains the identical definition of normal retirement age, “authorized

any normal retirement age subject to the limitations of 65 years or

10 years of service.” 673 F.2d at 937. The Janowski court found that

the trustees, acting as fiduciaries when they raised the normal retire-

ment age, did not act improperly in “balanc[ing]} desired benefits against

economic realities.” Jd. In other words, the court held that increasing

the normal retirement age was acceptable when its bona fide purpose

was to preserve the corpus of the pension fund.

The Seventh Circuit rejected the plaintiffs’ argument that ERISA

“mandate[d} that the normal retirement age remain the same in the

[post-ERISA] Pian as it was in the [pre-ERISA] Plan.” Jd. at 936. The

court concluded that “the trustees certainly could have established a

normal retirement age of less than 65; the statutory language, however,

in no way requires them to do so.” Jd. at 937. In explaining its decision,

the court added:

D-20

the required amendments were costly and Congress wisely

committed {to the plan trustees] the task of balancing eligibility

standards and benefit levels against the ability of the plans to

pay. We agree that 65 was permissibly chosen as the normal re-

tirement age.

Id. The Supreme Court specifically denied certiorari on this issue.

___.:;U.S. —__., 103 S.Ct. 130 (1982).

From the affidavit of Maher, the plan administrator, and from the

report and recommendations submitted by the Martin E. Segal Com-

pan), an actuarial consultant to the plan, Exh. 15 to Maher Aff., it

appears that the pian adopted aye 65 as its normal retirement age to

“promotje] the financial integrity” of the plan. Janowski, supra, 673

F.2d at 937. Plaintiff has offered only “conclusory allegations,” SEC

\. Research Automation Corp. , supra, 585 F.2d at 33, that the trustees’

selection of 65 was a sham, was not in good faith, or was taken for

reasons other than to maintain the financial integrity of the plan.

Chambless has failed to present any evidence shedding light on how

the amendment raising the normal retirement age, inasmuch as it was

passed a year before Amendments 46 and 47, was enacted with the

intention of operating in conjunction with those two amendments to

punish participants who went to work on non-MM&P boats. “Concrete

particulars” and not “conclusory allegations” are needed to oppose

a motion for summary judgment. /d. at 33.

Chambless’ challenge to the plan's adoption of 65 as the normal

retirement age must be rejected, and summary judgment is granted

the defendants on this issue.**

E

Reduction of Chambless’ Anticipated Benefits —-Chambless asserts

that as a result of his work on a non-MM&P vessel, his pension benefits

will be reduced from an estimated $920 a month to an estimated $470

a month and that the plan regulations therefore illegally cause his

benefits to be forfeited. Again, Chambless has failed to specify exactly

which provision of ERISA this reduction violates, but he is apparently

arguing that this alleged forfeiture violates § 203(a) of ERISA, 29

U.S.C. § 1053(a). In addition, Chambless charges that in allowing his

expected benefits to be reduced in such a manner, the plan trustees

have violated their fiduciary duties.

D-21

On May 21, 1976, Jack Murray, a pension plan supervisor, sent

Chambless a letter stating that he had accumulated thirty-one and sne-

quarter years of pension credits and that this “will entitle you to a

monthly benefit of approximately $920.00." Exh. A to Complaint. On

June 30, 1977, Murray again wrote Chambless, informing him that

“on a flat rate basis you are entitled to $570.00 per month; and that

“your percentage benefit. . .will be in the area of $900.00 to $920.00."

Exh. B to Complaint.

After Chambless’ application for early retirement benefits was

rejected and after plaintiff took work on a non-MM&P vessel, Maher,

in a letter dated January 28, 1980, notified Chambless’ lawyer:

At the present time, based on employment through 1977, Capt.

Chambless has 324 years of pension credit. Under the Rules in

effect at the time he applied for a pension, the maximum credit

a Member could receive was 30 years of pension credit, which

would provide a monthly benefit of $470.00, or 60% of his “pay,”

whichever is higher.

Assuming he does not accrue additional pension credit under

the M.M.&P. Pension Plan, he will be entitled, commencing as

of January 1, 1987 [the date on which he would start receiving

benefits after he turns 65], to a monthly payment of $470.00

We arrive at the $470.00 per month in the following manner.

The Wage-Related Pension, as you know, is calculated by using

“pay” in the ten years preceding the effective date of the Member's

pension. This would mean the ten years ending December 31, 1986,

or 1977 through 1986. On the assumption described above, i.e.,

that Capt. Chambless does not engage in further covered [, i.e.,

MM&P,] employment thorugh the date of January 1, 1987, there -

would be no “pay” in the measuring ten-year period. The “flat”

$470.00 monthly amount would thus be higher than the Wage-

Related calculation and consequently such $470.00 per month

would be the pension benefit payable.

Exh. C to Complaint.

Chambless contends that this anticipated decrease in benefits is an

illegal forfeiture. He notes that before working on a non-MM&P vessel,

he was entitled to a $920-a-month early retirement benefit from age

55, but that after taking such work, he will likely be entitled to only

D-22

$470 a month from age 65. Chambless’ actuarial expert found that

this had resulted in a decline of more than $125,000 in the actuarial

value of his pension account. Garfield Aff. 49.

Although it is unclear which specific plan regulations Chambless

is attacking here, it appears that his target is that section of the

regulations which sets forth the rule on which Maher relied in his

letter quoted above. Under Article I]-A, Section 3 of the plan

regulations, a participant with thirty years of credit is to receive monthly

pension benefits of “$470 or 60% of pay, whichever is higher.” In Arti-

cle I-A, Section 3(ii), the plan regulations go on to define “pay” as

the “average base monthly wages of the employee during the period

of any 5 consecutive years within the last 10 years immediately pre-

ceding the effective date of the pension, which will produce the highest

average for the Employee.”

Chambless has failed to make any showing that he had a vested right

in a $920-a-month pension, and for that reason, the court, with the

record before it, does not find that the anticipated reduction in benefits

contravenes the nonforfeitability provisions of § 203(a) of ERISA, 29

U.S.C. § 1053(a). Nor has Chambless made any showing that the pro-

spective $470-a-month pension falls below a statutory minimum set

by ERISA. Chambless has made more of a showing, however, that

Article Il-A, Section 3 of the plan regulations, in conjunction with

other plan provisions, has an arbitrary, capricious and invidiously

discriminatory effect upon him and thus violates the trustees’ fiduciary

duties.

At first glance, Article II-A, Section 3 appears neutral and non-

discriminatory ; however, this case raises some serious questions about

its potential to be used in a discriminatory manner. As discussed above,

Chambless has made some showing that certain provisions of the plan

may improperly discriminate against participants who work on non-

MM&P boats and may not be in the sole interest of plan participants,

supra, at 22-29, and this has caused the court to question why Article

II-A, Section 3 uses as its base years—and the exact language is

important —“the last 10 years immediately preceding the effective date

of the pension,” rather than a more logical and more pro-participant

base such as “the last ten years in covered employment.”

Article I]-A, Section 3 is apparently fair to participants who apply

for benefits right after retiring and intend to spend the rest of their

D-23

lives in retirement. The provision also seems fair to participants who

retire from covered employment, apply for a pension, and take work

in a different industry ina.much as these individuals can still receive

a pension and still have their ten most recent — and likely most highly

paid —years of covered employment counted. The only participants

whom this provision would injure are those who retire from MM&P

work and then take work on a non-MM&P vessel because then,

pursuant to this provision in conjunction with Amendments 46 and

47, they cannot receive benefits until they turn 65 and wil! not have

these years in noncovered employment counted as base earning years.

Instead, these years count as zero. This likely means that instead of

having their benefits based on the more generous percentage basis,

they will be based on the lower flat basis.”

Thus it is patent that Article I-A, Section 3, in conjunction with

Amendments 46 and 47, not only will deter participants from taking

non-MM&P employment, but also will likely punish them by reducing

their benefits if they work on non-MMA&P vessels. Notwithstanding

Chambless' attacks on this provision, defendants have failed to come

forward with any bona fide rationale for this provision, which has

such great punitive potential.

This provision’s ability to punish is even greater in light of the fact

that under the pension regulations, a participant who works even one

day on a non-MMA&P vessei is not allowed to work again on an MM&P

vessel unless and until he receives “express” permission from the pian.

Article II-A, Section 16 of the plan regulations. Thus, if Chambless

wanted to return to MM&P employment to accumulate some new base

years from which his pension would be calculated, it appears that he

might not even be given permission to return to MM&P employment,

pursuant to Article II]-A, Section 16 of the regulations, because he

apparently is a disfavored employee. What is more, if what Chambless

alleges is true — that the union unintentionally assigned him to inferior

junior positions, refused to pursue his seniority claims, and in effect

forced him to take a less humiliating job on a non-MM&P vessel —

then the punitive, discriminatory potential of Article II-A, Section 3

becomes all the more glaring.*

In light of the defendants’ failure to offer a good faith explanation

for this challenged provision and viewing the record in the light most

favorable to the party opposing the motion for summary judgment,

D-24

Adickes v. §.H. Kress & Co., 398 U.S. 144, 157 (1970), the court

finds that there is a dispute over the material issue of whether the

regulations that cause Chambless’ prospective pension payments to

be reduced by almost 50 percent are arbitrary and capricious and im-

properly and purposely punitive and discriminatory. Accordingly,

summary judgment is denied, and this disputed issue will have to await

resolution at trial.

F

Estoppel and Representations of a Union Agent—Chambless next

maintains that because of alieged representations that a union hiring

hall representative made to him, the pension plan sould be estopped —

notwithstanding his employment on non-MM&P vessels—from

suspending his early retirement benefits.

According to Chambless, about the time that the union was assigning

him inferior positions on MM&P vessels, he asked George Clark,

a union representative who served as dispatcher 2° the hiring hall in

Mobile, Alabama, about he idea of his taking employment on a non-

MM&P vessel. Chambless alleges that “Clark encourged me to accept

such employment. He advised me that there would be no objection

from the MM&P, and that many MM&P members, while drawing

pension benefits, were so employed.” Chambless Aff. 412; see also

Complaint 421. Chambless maintains that he acted in reliance upon

Clark's advice and took a job upon a non-MM&P oil rig, the Mission

Viking, not knowing that this action would put him in bad standing

with the union and, together with his taking non-MM&P employment

on the Mount Explorer, result in his not being allowed to collect pension

benefits until he turns 65 and in the plan's cutting his prospective

pension benefits by almost 50 percent. Complaint 4421, 23.

Chambless argues that the union and the pension plan are so “com-

mingled” that is was reasonable for him to rely on the purported green

light that Clark gave him. As an example of such commingling,

Chambless notes that union officials and union hiring halls carry out

investigations, at the plan's bidding, into whether certain participants

are engaged in prohibited employment that would cause the suspension

of their benefits. Opsahl Aff. 446-8; Exh. C & D to Opsahl Aff.

In addition, Chambless points out, the union screens some applicants

regarding their pension eligibility, and union counsel serves as co-

counsel for the pension plan. Opsahl Aff. 411.

D-25

The plan denies improper commingling and replies that Cnambless

“only claims to have inquired about the Union rules, not the Pension

Plan's rules.” Plan’s Memorandum in Support of Motion for Summary

Judgment at 33. In its memorandum of law, the plan excerpts some

telling portions of Chambless’ deposition:

So I told him, I says, “How does the union look on that?”

“Oh, Arthur,” he [George Clark] says, “lots of our members does

that.” ... “Don't worry about it.” . . . “You go right ahead if you want

to go out there and work... .”

He says, “We have no objections whatsoever.”

Id., quoting Chambless Dep. at 821 (emphasis added by plan). The

plan points out, however, that Chambless never sought advice from

anyone in the union or at the plan regarding his subsequent employment

on other non-MM&P vessels, including the Mount Explorer. /d. at

34, quoting Chambless Dep. at 415-16.

The plan’s memorandum cites another illuminating segment of

plaintiff's deposition:

Q. When you spoke to Mr. Clark before you went on the Mission

Viking, did you say anything to Mr. Clark about your plans for

retiring?

A. No. | didnt discuss anything with Mr. Clark in my plans

1o retire....

Q. So you didn’t ask him whether sailing on the Mission Viking

would violate any rules of the pension plan; is that right?

A. I think I told you that Mr. Clark assured me that it was all

right for me to go out and go to work on the Mission Viking. . .

and I didn’ go into any discussion.

Id. at 34-35, quoting Chambless Dep. at 842 (emphasis added).

The principle of estoppel is that the “representation of fact made

to a party who relies thereon with the right to so rely may not be denied

by the party making the representation if such denial would result in

injury or damage to the relying party.” 1 S. Williston, Williston on

Contracts § 139, at 601-02 (3d ed. 1957). See also Rosen v. Hotel

& Restaurant Employees Union, 637 F.2d 592, 597 (3d Cir.), cert.

denied, 454 U.S. 898 (1981). The reliance of a party like Chambless

D-26

seeking to invoke the estoppel doctrine must be reasonable, however.

Knoll v. Phoenix Steel Corp., 465 F.2d 1128, 1132 (3d Cir. 1972),

cert. denied, 409 U.S. 1126 (1973).

In this context, the Second Circuit has written, “[cJourts have been

reluctant to apply the estoppel doctrine to require the payment of

pension funds.” Haeberle v. Board of Trustees of Buffalo Carpenters

Health-Care Funds, 624 F.2d 1132, 1139 (2d Cir. 1980). The principal

reason for such reticence is that “[t]he actuarial soundness of pension

funds is, absent extraordinary circumstances, too important to permit

trustees to obligate the fund to pay pensions to persons not entitled

to them under the express terms of the pension plan.” Phillips v.

Kennedy, 542 F.2d 52, 55 n.8 (8th Cir. 1976), quoted in Haeberle,

supra, 624 F.2d at 1139. Cf Rosen, supra, 637 F.2d at 598. If such

funds are too vital to allow plan trustees to obligate the fund through

their representations, a fortiori union officials —who are not as clearly

identified with pension funds as are trustees — should not be permitted

to commit the funds to persons not entitled to them. Chamberlin v.

Bakery & Confectionary Union Pension Fund, 99 LRRM 3176,

3179-80 (N.D. Cal. 1977).

The main issue here is whether Chambless’ reliance on Clark's rep-

resentations was reasonable.

The case law is instructive. In an analogous case involving a plaintiff's

relying on a union business agent's representation that he was eligible

for a pension, the court wrote that “it would plainly be unreasonable

to rely on a promise made by a person having no authority to commit

the Fund.” Chamberlin, supra, 99 LRRM at 3178. The court added:

“the principle of removal of administration from union control

is. . .fundamental to the” pension plan. /d. at 3179. In another case

where a participant relied on a union official’s representation that he

qualified for a pension, Yglesias v. United Paperworkers Pension Fund,

2 Emp. Ben. Cases 1851, 1852 (E.D.N.Y. 1981), Judge Nickerson

wrote: “It is too plain to require discussion that Yglesias may not base

a claim on the statements of the Brotherhood’s president.” It would

seem that if this is true for “the statements of the Brotherhood’s

president,” it is all the more true for those of a mere hiring hall

dispatcher like George Clark.

Article IV, Section 1 of the Agreement and Declaration of Trust

of the MM&P pension plan, like Section 302(c)(5)(B) of the LMRA,

D-27

29 U.S.C. § 186(c)(5)(B), makes crystal clear that only the trustees —

and not the union—are authorized to obligate the plan. Although there

is, aS one would expect, a close relationship between the union and

the plan in the instant case, the court concludes that it was simply un-

reasonable for someone with more than 32 years of experience to rely

with regard to the future of his pension benefits on a vague, informal

snippet of conversation with a mere hiring hall dispatcher, when that

conversation did not even discuss the effect of Chambless’ taking non-

MM&P employment on his pension and when that dispatcher had no

authority to bind the plan.

What the Chamberlin court wrote is on point here:

To permit. ..a single oral statement by a union business agent

to obligate the trust to provide benefits to persons not otherwise

entitled to them would seriously erode the requirement that the

fund be administered by representatives of both the employer and

the employees solely for the benefit of the employees of the

contributing employer. 29 U.S.C. § 186(c)(5). Any such erosion

can create a loophole that would enable the unscrupulous to divert

funds away from the proper parties... .

99 LRRM at 3180. See also Knoll v. Phoenix Steel Corp., supra, 465

F.2d at 1132 (“The district court felt that even if such a statement had

been made, it would have been unreasonable for the employees to have

relied upon it, since the authority to determine the use of the Pension

Fund rested solely with the Retirement Board... .Again, we

agree” ).*

While it is recognized that such rules may have a harsh effect on

some unsophisticated, unsuspecting pension plan participants, it is

clearly wise policy to reject invocations of the estoppel doctrine, except

in extraordinary circumstances. See Haeberle, supra, 624 F.2d at 1139.

Such an approach will help preserve the corpus of the pension fund

from improper obligations made by loose-lipped plan administrators,

company officials, and union agents and will encourage plan

participants to direct their pension questions to the responsible parties.

See Thurber v. Western Conference of Teamsters Pension Plan, 542

F.2d 1106, 1109 (9th Cir. 1976) (“The fact that Thurber relied on

representations of an employee of the firm retained to administer the

trust fund would not estop the Pension Fund and its trustees from

denying Thurber’s eligibility for the pension. The rights of other

D-28

pensioners must be considered and the trust fund may not be deflated

because of the misrepresentation or misconduct of the Administrator

of the fund”).*' Summary judgment is granted on this issue.

G

The Plan's Alleged Failure to Notify Chambless about Amendments

46 and 47 Before Plaintiff Accepted Non-MM&P Employment—

Chambless maintains that the plan failed to inform him of the far-

reaching changes contained in Amendments 46 and 47 before he ac-

cepted work on a non-MM&P vessel. Complaint 429. He is arguing

that the court should not allow the plan to enforce the punitive provi-

sions of these amendments against him because he allegedly learned

of them only after he took non-MM&P work.

Amendments 46 and 47 were adopted on August 26, 1976. Exh.

7 to Maher Aff.; Exh. E to Opsahl Aff. The amendments did not

specify when they took effect, but it appears as if they became effective

at passage. The October, 1976 edition of the Master, Maie & Pilot,

the union newspaper, carried an article about the changes wrought

by Amendments 46 and 47; it was written by plan administrator Mahe”

and was headlined, “Retirement Defined: Important Changes.” Exh.

7 to Maher Aff. The article, which ran on page 7, was accompanied

by the text of the amendments. /d. Similarly, in its December, 1976

issue, the Master, Mate & Pilot ran a long article on page 13 in which

Maher explained, inter alia, the import of the two new provisions.

The article’s headline was “Pensioners Are Still Prohibited From

Working in Maritime Industry.” Jd.

Chambless acknowledges that he took steady employment on the

Mount Explorer on April 4, 1977. Exh. 8 to Maher Aff.; Chambless

Aff. 415. Although the exact dates are not clear from the record,

Chambless apparently worked a two-week stint on a non-MM&P oil

rig shortly before he took work on the Mount Explorer. Chambless

Aff. 414. Chambless said he learned of the import of Amendments

46 and 47 “only after having made my [pension] application’— he was

probably talking about his April 2, 1977 application—Chambless Aff.

{29. He also stated that he “did not become aware of. . .the effects

of Amendments 42, 46 and 47 until receipt of a letter dated March

13, 1978, from the Administrator[.]” Plaintiffs’ Statement Pursuant

to Local Rule 3(g) at 10. Although the exact date on which Chambless

One shh Ne aes Vm te Oe ts

D-29

finally learned about these amendments is unclear, whichever date

it was apparently came after he started working on a non-MM&P

vessel.

Certainly it would be an arbitrary and capricious action and a breach

of fiduciary duty for fund trustees to penalize participants for taking

actions contfary to newly adopted eligibility requirements without first

providing them with adequate notice of the new provisions.” Fiduci-

aries of a fund cannot punish participants pursuant to a new rule unless

they first take responsible steps to notify them of the new rule.

The plan asserts that the two newspaper articles provided Chambless

with adequate notice of the amendments, but Chambless contends that

he learned of the amendments only after he took actions that the

amendments condemned. It is not clear to the court that Chambless

would have ever seen the Maher articles if he were at sea when the

October and December, 1976 editions of the MM&P newspaper were

published. If he had seen the articles early enough, perhaps he would

not have accepted non-MM&P work.

The plan has failed to present any evidence regarding how widely

circulated the newspaper is and how likely it was that Chambless would

have seen it. Thus, viewing the record in the light most favorable to

the party opposing the motion for summary judgment, Adickes v. S.H.

Kress & Co., supra, 398 U.S. at 157, the court concludes that there

is a dispute over the material issue of whether the union took reasonabie

steps to ensure that Chambless was notified about Amendments 46

and 47 before he took work punishable under those amendments.

Accordingly, summary judgment is denied.

H

The Plan's Refusal to Comply with Chambless’ Request for Infor-

mation — Chambless next maintains that defendant Maher is liable

to him, pursuant to § 502(c) of ERISA, 29 U.S.C. § 1132(c), to the

amount of $100 per day since April 26, 1978, for the plan's failure

to supply Chambless with certain information that he requested.

Complaint 4423, 31.

In a lengthy correspondence with Maher, Chambless requested many

documents, and the plan furnished him with much of what he sought.

On March 6, 1978, Chambless’ previous counsel, Edward Thompson,

requested a copy of the plan’s regulations, Exh. 18 to Maher Aff.,

D-30

and on March 19, 1978, the plan sent him the regulations. Exh. 19

to Maher Aff. On March 22, 1978, Chambless’ attorney requested

all plan records “which involve applications. ..by other members

whose circumstances are or were. . .similar to the instant matter.” Exh.

20 to Maher Aff. On April 26, 1978, counsel for the plan wrote

Chambless’ lawyer that the plan had only one other case in which a

participant had his pension suspended until normal retirement age for

taking work on a non-MM&P vessel. Exh. 21 to Maher Aff. Plan

counsel advised Chambless’ attorney that “such records are not made

available to anyone other than the particular member himself or his

duly authorized representative.” Jd. With regard to the request of

Chambless’ counsel for the papers in any past or present litigation

over similar questions, Exh. 20 to Maher Aff., lawyers for the plan

responded that such a request is “beyond the scope of any documen-

tation that the Plan is required to furnish and would be an undue burden

upon the Plan.” Exh. 21 to Maher Aff.

After an almost yearlong gap in correspondence between Chambless’

lawyers and the plan, Arthur Wisehart, Chambless’ current counsel,

wrote the plan on April 12, 1979, to notify it that he was handling

plaintiff's appeal of the denial of his pension application. Exh. 22 to

Maher Aff. On April 23, 1979, Chambless’ counsel requested that

he be allowed “to examine prior decisions of the Board of Trustees

regarding claims under the pension plan.” Exh. 23 to Maher Aff. Five

days later, Maher wrote Chambless’ attorney that “it would be pre-

mature. . .to make Plan records available to you pertaining to prior

decisions. . . .Your request involves reviewing 24 years of Pension

Minutes.” Exh. 24 to Maher Aff.

On June 1, 1979, Chambless’ attorney requested copies of two col-

lective bargaining agreements and the collective bargaining history

of the changes in the pension plan regarding normal and early retire-

ment age. Exh. 27 to Maher Aff. On June 22, 1979, Maher sent copies

of the two collective bargaining agreements to Chambless’ counsel

and stated that he did not have the information requested on the collec-

tive bargaining history because the plan does not participate in such

bargaining. Exh. 28 to Maher Aff.

Chambless’ attorney wrote a letter on July 11, 1979, reiterating his

desire to review all the trustees’ decisions and asking for a copy of

the plan's Agreement and Declaration of Trust, a list of amendments

D-31

to the plan, and a copy of a third collective bargaining agreement.

Exh. 29 to Maher Aff. Twenty days later, Maher wrote that he would

provide copies of the Declaration of Trust, the amendments to it, and

the third collective bargaining agreement. Exh. 30 to Maher Aff. In

addition, Maher wrote that plan counsel had advised him that a

participant’s attorney is not entitled to access to any and all

determinations by the plan trustees. /d.

On August 4, 1979, Chambless’ lawyer wrote Maher to say that he

had not received “the information needed to prepare adequately” his

appeal to the trustees—he was evidently referring to the records of

past cases —and that he reserved “all rights as to the request for other

information, which was not supplied.” Exh. M to Opsahl Aff. At

Chambless’ appeal before the plan trustees on December 5, 1979, his

attorney renewed his demand to see information on past rulings in

similar cases. Tr. of Appeal Hearing at 15-17, Exh. F to Complaint.

ERISA contains numerous provisions that specify what documents

and information a plan must provide participants. The plan must furnish

each participant with a summary plan description containing such

information as the names and addresses of the administrator and

trustees, the eligibility requirements, and the circumstances that may

result in loss of benefits. 29 U.S.C. §§ 1021(a)(1), 1022(b); 29 C.F.R.

2520.104b-2 (1982); see Pompano v. Michael Schiavone & Sons, Inc.,

680 F.2d 911, 914 (2d Cir.), cert. denied, ___ U.S. ___.,, 103 S.Ct.

454 (1982). The plan administrator must also furnish to each participant

a copy of the plan's annual report, which is basically a report on the

plan's financial status. 29 U.S.C. §§ 1023, 1024(b)(3); 29 C.FR.

§ 2520.104b-10 (1982). ERISA also requires plan administrators to

furnish information on total benefits accrued to all participants who

request such information. 29 U.S.C. § 1025(a). The plan must also

make available for inspection the latest annual report, collective

bargaining agreement and trust agreement. 29 U.S.C. § 1024(b)(2).

Finally, the Act provides for the assessment of a penalty, at the discre-

tion of the court, against “[a]ny administrator who fails or refuses to

comply with a request for any information which such administrator

is required by this subchapter to furnish to a participant or a

beneficiary. ...” 29 U.S.C. § 1132(c) (emphasis added). See Paris v.

Profit Sharing Plan, 637 F.2d 357, 362 (Sth Cir.), cert. denied, 454

U.S. 836 (1981); Nugent v. Jesuit High School, 625 F.2d 1285, 1285-86

(Sth Cir. 1980); LeFebre v. Westinghouse Electric Corp. , 549 F. Supp.

1021, 1028 (D. Md. 1982).

D-32

The plan contends that it “fully complied with each request for

documents made by Chambless or his counsel; Pension Plan

Defendants’ Statement Pursuant to Local Rule 3(g) 421, while

Chambless maintains that the plan “did not fully comply with its duty

to supply information.” Plaintiffs’ Statement Pursuant to Local Rule

3(g) at 10. Here, the plan is clearly mistaken in stating that it “fully

complied” with Chambless’ requests for documents; however,

fortunately for the plan it has misstated the issue. The issue is not

whether the plan furnished Chambless with all the information that

he requested, but instead whether it provided him with all the docu-

ments that ERISA requires it to furnish.

The flood of correspondence between Chambless and the plan

indicates that the plan turned over everything or gave Chambless access

to everything that it was required to under ERISA. The Act states:

The administrator shall make copies of the plan description and

the latest annual report and the bargaining agreement, trust

agreement, contract, or other instruments under which tire plan

was established or is operated available for examination by any

plan participant or beneficiary in the principal office of the

administrator. . . .

29 U.S.C. § 1024(b)(2). The plan furnished Chambless with the Dec-

laration of Trust, three collective bargaining agreements, the amend-

ments to the plan, the plan’s rules and regulations, and information

about Chambless’ prospective benefits.

Neither ERISA nor the federal regulations issued thereunder make

any mention of any requirement that plan participants be allowed to

see the minutes of trustees’ meetings or prior decisions by the trustees.

Nor has Chambless furnished the court with even one case supporting

his position here.

The language of ERISA makes clear that Congress was concerned

that requests for pension plan information not be too taxing on plan

officials and not be too costly to the plan itself. See, e.g., 29 U.S.C.

§ 1024(b)(4). In addition, Maher's concern that Chambless’ request

for complete access to information about all past denials might invade

the privacy of some participants is a legitimate concern. Exh. 21 to

Maher Aff. What is more, the fact that the court gave Chambless access

to some of these materials during the discovery phase of this lawsuit

D-33

certainly does not mean that the trustees were required to turn over

that information in the first instance. The “relevance” standard of Rule

401, F.R.Evid., is far more generous to the participant seeking

information than are the specific standards that Congress set forth in

ERISA.

Because Congress, in spelling out in exacting detail what information

plans must make available to participants, did not require plans to

provide the information that the plan refused to furnish to Chambless,

the plan defendants’ motion for summary judgment is granted with

respect to Chambless’ demand for a $100-a-day penalty for their refusal

to comply with all of his information requests.**

Adequacy of the Plan's Review of Chambless’ Application —Chambless

charges that the plan failed to provide him with a “full and fair review”

of his application in violation of § 503 of ERISA, 29 U.S.C. § 1133.

Complaint 431. He asserts that the review was unfair on three grounds:

that he was denied access to certain information that he wanted to

use to prepare his appeal, Tr. of Appeal Hearing at 15-16, Exh. F

to Complaint, that he was not allowed to ask certain questions at his

March 5, 1980 appeal hearing before the trustees, id. at 8-10, 18, and

that the trustees were biased against him. Complaint 431.

Section 503 of ERISA, 29 U.S.C § 1133 states:

In accordance with regulations of the Secretary, every employee

benefit plan shall —

(1) provide adequate notice in writing to any participant [of any

denial], and

(2) afford a reasonable opportunity to any participant whose

claim for benefits has been denied for a full and fair review by

the appropriate named fiduciary on the decision denying the claim.

The regulations that the Secretary issued pursuant to this section reit-

erate the need for adequate notice, 29 C.F.R. § 2560.503-1(e) (1982),

a “reasonable opportunity to appeal a denied claim,” 29 C.FR.

§ 2560.503-1(g)(1), and a “full and fair review of the claim and its

denial.” Jd. The regulations add that

[e]very such procedure shall include but not be limited to provisions

that a claimant or his duly authorized representative may:

D-34

(i) Request a review upon written application to the plan;

(ii) Review pertinent documents; and

(iii) Submit issues and documents in writing.

Id.

As discussed supra, the plan did not refuse to furnish Chambless’

counsel with any material that ERISA requires be made available.

Because Chambless’ attorney was allowed to “[rjeview [those] pertinent

documents,” id., that he requested and that the plan was required by

law to turn over, the court cannot conclude thet Chambless was denied

a full and fair hearing on the ground that he did not receive ail the

information that he had sought.

During the trustees’ meeting, Chambless’ lawyer sought to interrogate

two trustees, but the chairman of the meeting would not let him question

the trustees at that time. The meeting chairman stated that the purpose

of the hearing was for Chambless’ counsel to “present the facts” and

for the trustees to ask questions, if they had any. Tr. of Appeal Hearing

at 6, 11, Exh. F to Complaint. In addition, in refusing to allow Cham-

bless’ attorney to interrogate trustees at the hearing, the chairman stated,

“we will give you the opportunity to submit questions in writing. . .and

we will give you the opportunity to present a further appeal at a future

Trustees’ meeting.” Jd. at 10. Later, he reiterated that “you can pose

any questions that you like, and. . .they will be answered in writing.”

Id. at 17. From the January 28, 1980 letter of Maher to Chambless’

counsel, it is clear that the plan did respond in writing to several of

the questions that plaintiff's lawyer had asked at the hearing. Exh.

C to Complaint. That the chairman of the hearing stated that the trustees

would respond to the questions of Chambless’ lawyer in writing rather

than orally at the meeting is certainly not reason to find that the hearing

was unfair.

Lastly, Chambiess stated that he “was told on December 4, 1979,

the evening before the hearing, that the Trustees had already made

up their minds.” Complaint 431. Chambless, however, has offered only

“conclusory allegations,” rather than “concrete particulars,” about the

trustees’ alleged bias. At no time during the hearing did any trustee

exhibit any of the specific bias that Chambless alleges. Indeed, con-

sidering the frequent testiness and contentiousness of Chambless’ coun-

sel, the trustees seemed downright patient during the 90-minute hear-

ing. They heard Chambless’ lawyer make a full presentation on a range

D-35

of issues — alleged breaches of the union's duty of fair representation,

Tr. of Appeal Hearing at 20-24, Exh. F to Complaint, estoppel, id.

at 29, the discrimination and intimidation that Chambless allegedly

faced, id. at 22-24, and the argument that the plan's normal retirement

age was a “sham”, id. at 32.

For al! these reasons, Chambless’ arguments that the hearing was

neither full, nor fair must be rejected, and the defendant's motion for

summary judgment must be granted on this issue.

J

Antitrust Claims —Chambless alleges that the MM&P and several

shipping companies that have collective bargaining agreements with

the MM&P have combined and conspired in restraint of trade by

interfering with the ability of licensed deck officers to engage in their

trade. Complaint ¢ 434-36. In short, Chambiess asserts that Amend-

ments 46 and 47, along with several accompanying regulations and

actions, restrain the mobility of many MM&P members and thus vio-

late sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1-2.

Although Amendments 46 and 47 appear to have anticompetitive

aims, Chambless has failed to make crystal clear exactly what the

antitrust injury is that he is suffering. He seems to say that the injury

is the alleged shrinkage of the actuarial value of his pension account.

He apparently is not suffering from lost earnings because his salary

now is evidently higher than before.

It is difficult to see how the injury that Chambless alleges “is antitrust

injury, that is to say, injury of the type the antitrust laws were intended

to prevent.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc. , 429 U.S.

477, 489 (1977) (emphasis in original). In his efforts to find a legal

theory about which relief for his client's grievance could be granted,

Chambless’ counsel adopted the blunderbluss or fishing expedition

approach—putting every colorable theory into his complaint.

“[P}laintiff has attempted to assert an antitrust claim when [his] true

grievance is grounded in” ERISA and duty of fair representation law.

Laurie Visual Etudes, Inc. v. Chesebrough-Pond’s, Inc. , 473 F. Supp.

951, 960 (S.D.N.Y. 1979) (Weinfeld, J.). In another context, Judge

Friendly has written: “Combining an assertion of general antitrust

violation with a claim of injury from breach of contract or tort does

not automatically make the latter a claim arising under the antitrust

D-36

laws.” Salerno v. American League of Professional Baseball Clubs,

429 F.2d 1003, 1004 (2d Cir. 1970), cert. denied, 400 U.S. 1001 (1971).

Similarly, trying to graft a purported antitrust injury onto a claim of

injury from a violation of ERISA “does not automatically make the

latter a claim arising under the antitrust laws.” Jd. Because the injury

that Chambless alleges is not the species of injury that the antitrust

laws aim to protect, defendants’ motion for summary judgment is

granted as to Chambless’ antitrust cause of action.“

K

Duty of Fair Representation—In his fourth cause of action,

Chambless claims that the MM&P breached its duty of fair

representation, but he does not specify exactly how the union violated

that duty. Complaint 4439-40.

A fair reading of Chambless’ complaint leads to a conclusion that

he is asserting a claim under both of the traditional types of fair rep-

resentation claims. First, in charging that his union has systematically

discriminated against older, more experienced employees in favor of

new, young blood, id. ¢ 15, Chambless makes a claim somewhai anal-

ogous to the discrimination claim made in the landmark duty of fair

representation case, Steele v. Louisville & Nashville Railroad, 323

U.S. 192 (1944). See Complaint 415; Chambless Aff. 446-7. Second,

in asserting that he had incurred the hostility of certain union officials

and that as a result they did not pursue his seniority grievance,

Complaint 4414-15; Chambless Aff. 44, or his overtime grievance,

Complaint 416; Chambless Aff. 410, Chambless articulates a duty

of fair representation claim similar to the type considered in Vaca v.

Sipes, 386 U.S. 171 (1967). In that case, the Court stated that “a union

may not arbitrarily ignore a meritorious grievance or process it in

a perfunctory fashion.” Jd. at 191.

In its answer, the MM&P has disputed Chambiess’ duty of fair rep-

resentation claim, Answer of MM&P 4414-16, 39-40, and this dis-

pute will have to be resolved at trial.

L

Plaintiffs’ Cross-Motion to Strike Maher and Lowen Affidavits —

Chambless has moved pursuant to Rule 56(e), F.R.Civ.P., to strike

the affidavits of plan administrator Maher & MM&P President Lowen

ee a

D-37

in support of the defendants’ motion for summary judgment. Chambless

contends that the two affidavits contain assertions that are legal

conclusions and about which the affiants had no personal knowledge.

While Chambless is correct that both affidavits contain such statements,

that is still not sufficient reason to strike them. Chambless can trust

the court to ignore or refrain from using those parts of the two affidavits

which are defective. At the same time, the court will use those parts

of the affidavits where it is clear that the affiants have personal

knowledge. Thus, Chambless’ motion to strike the affidavits is denied.

Conclusion

To recapitulate, summary judgment is granted defendants on

Chambless’ antitrust claim* and on his claims that the suspension of

his benefits violates section 203(a) of ERISA, that the age 65 normal

retirement age is a “sham.” that the plan is estopped from suspending

Chambless’ benefits, that his application failed to receive adequate

review, and that the plan improperly withheld information from him.

to Chambless claims that Amendments 46 and 47 and the anticipated

reduction in his benefits are arbitrary, capricious, and discriminatory.

Summery judgment is also denied on plaintiff's claim that the plan

failed to notify him about the import of Amendments 46 and 47 before

he took work on a non-MM&P vessel. The duty of fair representation

claim also survives to be resolved at trial.

IT IS SO ORDERED.

Dated: New York, New York

September 14, 1983

/s/ Robert L. Carter

ROBERT L. CARTER

U.S.D.J.

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FOOTNOTES

1. Article Il-A, Section 15(a) of the 1977 plan regulatio

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