SAGER v. CARMEUSE LIME STONE INC (2020)

ORDER

This is a suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. Plaintiffs David Sager and Michal Mason claim entitlement to benefits under an ERISA retirement plan that their former employer, Oglebay Norton Marine Services (ONMS) established.

Pending is the defendants’ motion to dismiss (Doc. 9; Memorandum, Doc. 10).

For the reasons that follow, I grant the motion.

Background

Plaintiffs worked for ONMS as wheelman on Great Lakes freighters. Plaintiff Sager was hired on in 1987, Mason in 1988. In June 2006, ONMS sold its vessels, including the one on which plaintiffs were working, to the American Steamship Company (ASC), a subsidiary of defendant Carmeuse Lime & Stone, Inc. (CL&S). Thereafter, plaintiffs no longer worked for ONMS; ASC became their employer.

The pertinent ERISA plan at issue is the “70/80 Plan.” The controlling document is the Marine Unlicensed Pension Plan, as amended and restated, effective January 1, 2007. Proximate to the sale of its vessels, ONMS and the plaintiffs’ union, the United Steelworkers of America, Local 5000, agreed to the 2007 plan amendments. In addition, ONMS and the union entered into a collectively bargained “Effects and Release Agreement.” That Agreement, along with the 2007 plan amendments govern the dispute between plaintiffs and defendants.

The parties agree that, to be eligible under the 70/80 Plan, plaintiffs had to have had fifteen years of “continuous service,” as defined in the Marine Unlicensed Pension Plan and the Effects and Release Agreement.

The 70/80 Plan's is more favorable to retirees than the company's other pension plan, the “30 and Out” Plan. To qualify under the 30 and Out Plan, an employee had to have thirty years of continuous service and be sixty-two years old.

When ONMS sold its vessels neither plaintiff had fifteen years of continuous service with ONMS. They claim, in effect, that they can tack their ACS service onto their prior ONMS service to get to the necessary fifteen years of “continuous service” to qualify for the 70/80 Plan. Whether that is so under the Marine Unlicensed Pension Plan and Effects and Release Agreement is the dispositive question in this case.

For the reasons that follow, I conclude that service with ACS does not count toward the requisite fifteen years of “continuous service” under 7080 Plan. Accordingly, I grant defendants’ motion to dismiss.

Discussion

Plaintiffs assert four grounds for relief: 1) defendants impermissibly narrowed the definition of “continuous service;” 2) defendants’ reliance on the 2007 Effects and Release Agreement is misplaced and unlawful; 3) defendants historical interpretation of “continuous service” undermines its arguments; and 4) defendant waived any argument to dismiss Count II of the complaint.

The viability of all of plaintiffs’ variously stated claims depends entirely, as noted above, on whether, after ONMS sold its vessels and plaintiffs became ACS employees, they could tack their service with ACS onto that with ONMS to reach the necessary fifteen years of “continuous service.”

The answer to that determinative question is to be found in the interplay among, and interpretation of, the relevant documents. To learn that answer, I apply basic doctrines of contract interpretation. See Int'l Union, United Auto. v. Yard–Man, Inc., 716 F.2d 1476, 1479–80 (6th Cir. 1983) (citations omitted) (basic doctrines of interpretation applicable to collectively bargained agreements),¹

I first address the “continuous service” issue. Then I resolve plaintiffs’ other contentions.

1. Plaintiffs Do Not Satisfy the “Continuous Service” Requirement

Defendants contend that plaintiffs, not they, misinterpreted the “continuous service” requirement. I agree.

I turn to what the controlling documents say.

First, Art. VI, ¶ 6 of the 2007 Marine Unlicensed Pension Plan provides: continuous service (for the purpose of determining eligibility for a pension ․) will include continuous service with “each related corporation.” (Doc. 10, Ex A., 2007 Marine Unlicensed Subpart, Art. VI, ¶ 6) (emphasis added).

Plaintiffs do not contend that ONMS and ACS (or CL&S) are “related,” as the Plan uses that term. Thus, by its own terms, this limitation precludes the tacking of ACS service, on which plaintiffs rely to qualify for 70/80 benefits, onto their prior ONMS service.

Next, and of equal importance, ONMS and the union agreed in the Effects and Release Agreement that former ONMS employees could tack on their ACS service to meet the continuous service requirement of the 30 and Out Plan.

There is no similar provision with regard to the 70/80 Plan in the Effects and Release Agreement. Merely under the maxim, inclusio unius exclusio alterius, where a writing specifies one item, its effect is to exclude all others – in this case, the tacking of ACS service onto ONMS accrued service.

I need not, though, rely on antiquity: Section 12.1 of the Marine Unlicensed Pension Plan states, aside from the tacking on vis-a-vis the 30 and Out Plan, “that (a) such employment with ASC shall not count as continuous service for any other purpose under the Pension Plan.” (Doc. 10, Ex. C, ¶ 3(a)).

In sum, the applicable – and unambiguous – documents do not allow plaintiffs to tack their ACS service onto the ONMS service to reach the needed fifteen years to qualify for 70/80 benefits.

2. No Violation of the “Anti-Cutback” Proscription Occurred

Plaintiffs correctly contend that the Effects and Release Agreement “expanded” the meaning of “continuous service,” in favor of 30 and Out beneficiaries. The contend that by doing so, ONMS and the union violated ERISA's “anti-cutback” provision. 29 U.S.C. § 1054(g).

That proscription bars any “[d]ecrease of accrued benefits through amendment of [a] plan.” Id. Contrary to plaintiffs’ implicit presumption, § 1054(g) does not relate to potential or anticipated benefits. As the Sixth Circuit stated in Duncan v. Muzyn, 833 F.3d 567, 572 (6th Cir. 2016) (emphasis supplied), ERISA's anti-cutback provision “protects accrued benefits that are vested.” ERISA defines “accrued benefit” as “the individual's accrued benefit determined under the plan and ․ expressed in the form of an annual benefit commencing at normal retirement age.” 29 U.S.C. § 1002(23)(A).

Defendants argue, and they are correct, that plaintiffs never accrued any benefits under the 70/80 Plan. When, in 2006, ONMS and the plaintiffs’ union agreed to expand the meaning of “continuous service” vis-a-vis the 30 and Out Plan, their agreement did not affect any right the plaintiffs then had under ERISA.

No harm. No foul.

That being so, the parties did not violate ERISA's anti-cutback provision.

3. The Plan Administrator's Decision Was Neither an Abuse of Discretion, Arbitrary, or Capricious

Plaintiffs’ claim that the Plan Administrator acted impermissibly when the benefit-denying rationale they received differed from that which other applicants had been given. Accepting that that was so, it does not matter, or affect the legitimacy of the Plan Administrator's decision. I must evaluate that decision and its propriety on its own record, and not on the basis of decisions made as to other claimants and their individual circumstances.

As defendants point out, the Administrator's decision is entitled to deference unless the decision involved an abuse of discretion, was arbitrary, or capricious. See e.g. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). This standard reflects the deference that a reviewing court owes to an Administrator where, as here, the Plan provides that official with discretion to resolve claims for benefits. Id. at 102-103, 109 S.Ct. 948.

Even if denial of plaintiffs’ claim for benefits under the 70/80 Plan were not, as it is, entirely correct, plaintiffs have not shown that, in reaching that decision, the Administrator abused its discretion or acted arbitrarily or capriciously, as they must under Firestone Tire, supra, 489 U.S. at 109, 109 S.Ct. 948; Likas v. Life Ins. Co. Of North America, 347 Fed.Appx. 162, 166 (6th Cir. 2009).

4. Dismissal of Count I Requires Dismissal of Count II

Plaintiffs wrongly assert that defendants waived the opportunity to seek dismissal of their second Count, which seeks equitable and injunctive relief. Upholding that Count depends on the structural integrity of Count I; that Count not being sustainable, neither is Count II.

Conclusion

Applying basic principles of contract interpretation to the pertinent documents, and finding no error in the denial of 70/80 benefits to the plaintiffs, it is hereby

ORDERED THAT defendants’ motion to dismiss (Doc. 9) be, and the same hereby is granted.

So ordered.

FOOTNOTES

1.   The parties dispute the extent to which the plaintiffs were even “in service” after becoming ACS employees. I need not address this issue.

James G. Carr, Sr. U.S. District Judge