Norman Hansen v. International Union of Painter

• Court: Court of Appeals for the Third Circuit
• Decided: July 24, 2019
• Docket: 18-2921
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ____________

No. 18-2921 ____________

NORMAN HANSEN, Appellant v.

INTERNATIONAL UNION OF PAINTERS & ALLIED TRADES INDUSTRY PENSION PLAN; BOARD OF TRUSTEES INTERNATIONAL UNION OF PAINTERS AND ALLIED TRADES INDUSTRY PENSION PLAN ____________

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 2-16-cv-05028) District Judge: Honorable Robert F. Kelly ____________

Argued June 11, 2019 Before: HARDIMAN, KRAUSE, and PORTER, Circuit Judges.

(Filed: July 24, 2019) ____________

Kenneth D. Berman [Argued] 1626 Pine Street Philadelphia, PA 19103 Attorney for Appellant

Kent Cprek Judith A. Sznyter [Argued] Jennings Sigmond 1835 Market Street Suite 2800 Philadelphia, PA 19103 Attorneys for Appellees ____________

OPINION* ____________

HARDIMAN, Circuit Judge.

Norman Hansen appeals a summary judgment in favor of the International Union

of Painters & Allied Trades (IUPAT) Industry Pension Plan and the Plan’s Board of

Trustees (the Board). We will affirm.

I1

Hansen was a member of the IUPAT and a vested participant in the Plan, which is

a multiemployer, defined-benefit plan under the Employee Retirement Income Security

Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq. The Plan

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. 1 The District Court had jurisdiction under 29 U.S.C. § 1132(e)(1) and 28 U.S.C. § 1331. We have jurisdiction under 28 U.S.C. § 1291. We exercise plenary review over a summary judgment, applying the same standard as the District Court. E.g., Watson v. Abington Twp., 478 F.3d 144, 155 (3d Cir. 2007). Hansen concedes “the Plan grants discretion and authority to the plan administrator to determine eligibility and interpret the Plan terms.” Hansen Br. 18; see App. 145–46 (§ 2.03), 206 (§ 9.04). So we apply the arbitrary and capricious standard of review in evaluating the Board’s interpretation of the Plan. See Fleisher v. Standard Ins. Co., 679 F.3d 116, 120 (3d Cir. 2012). We will review the collective bargaining agreement (CBA) provisions de novo without resolving which standard of review applies to the Board’s interpretation of non-Plan documents. See Francis v. Rodman Local Union 201 Pension Fund, 367 F.3d 937, 939 (D.C. Cir. 2004) (declining to resolve the dispute over the standard of review of the pension plan’s interpretation because it was “plain that the Fund would be the victor under either standard of review”). We interpret both the Plan and CBA under ordinary contract principles. See M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926, 933 (2015).

2 provides retirement benefits for employees under collective bargaining agreements

between the IUPAT and employers. The Board is the named fiduciary under ERISA and

administers the Plan.

In January 2012, Hansen was injured at work. He later settled his wage, medical,

and loss benefits related to the injury under a “Workers’ Compensation Compromise and

Release Agreement” with his employer. He was deemed disabled by the Social Security

Administration as of September 2013. In February 2015, Hansen applied for disability

benefits from the Plan. After evaluating his claim based on his disability onset date from

the SSA, the Plan denied his application “because he did not meet the requirement of [§

6.12(a)(4)], which provides that a claimant must have ‘at least 1,000 Hours of Service in

Covered Employment [benefit hours] in the two Calendar Years prior to the year in

which he or she became disabled.’” Hansen v. Int’l Painters & Allied Trades Indus.

Pension Plan, 2017 WL 4539217, at *2 (E.D. Pa. Oct. 11, 2017) (quoting App. 173).

Hansen appealed the decision.

The Board denied the appeal, concluding Hansen accumulated 894 benefit hours

during the relevant period, short of the necessary 1,000 hours. The Board based its

decision on the definition of “Covered Employment”: “work or leave time that is . . .

Hours of Service for which an Employer is obligated to make contributions to the Plan or

the Trust for credit to the Plan[.]” App. 233–34. It determined Hansen could not receive

benefit-hours equivalency for workers’ compensation, unemployment compensation, and

3 vacation pay because “[t]here [was] no indication that [Hansen’s] employer was

obligated to make contributions to the Plan for [those] payment[s].” App. 134.

Hansen then sued the Plan and Board in the District Court, alleging four claims

under ERISA: (1) claimed benefits under 29 U.S.C. § 1132(a)(1)(B); (2) failure to

provide plan documents in violation of § 1132(c)(1); (3) breach of fiduciary duty under

§ 1132(a)(2); and (4) equitable relief under § 1132(a)(3). After the parties filed cross-

motions for summary judgment, the District Court dismissed Hansen’s claims except for

his benefits claim. The District Court remanded the claim to the Board to consider

whether the collective bargaining agreement (CBA)2 between the IUPAT and Hansen’s

employers required them to contribute to the Plan for workers’ compensation,

unemployment compensation, and vacation pay under the “Covered Employment”

provision.

The Board evaluated the effect of the CBA, determining that the payments at issue

did not qualify as “Covered Employment,” so Hansen did not meet the 1,000-hour

requirement for benefits. Hansen then filed a motion for relief from the Board’s decision

and to reopen the case under Rule 60(b) with the District Court, which it granted. The

parties filed cross-motions for summary judgment, and the Court granted the Plan and

Board’s motion. The Court held the Board did not act arbitrarily or capriciously in

denying Hansen benefits because “there is no requirement in the CBA[] that Hansen’s

2 Hansen’s employers signed the same CBA with the IUPAT (the District Council No. 21 Collective Bargaining Agreement). 4 employers . . . make contributions to the Pension Plan for workers’ compensation and

unemployment benefits payments.” Hansen v. Int’l Painters & Allied Trades Indus.

Pension Plan, 2018 WL 3642297, at *5 (E.D. Pa. Aug. 1, 2018). And the Court agreed

with the Board’s determination that Hansen cannot receive double-credit for hours

worked and the resulting vacation pay under the CBA. Hansen timely appealed.

II

Hansen claims he is entitled to equivalent benefit hours for workers’ compensation

and unemployment compensation payments. To receive a disability pension under the

Plan, Hansen must show he had at least 1,000 “Hours of Service in Covered

Employment” in the two years before he became disabled. App. 173. Like the District

Court, we will focus on “Covered Employment” and assume without deciding that the

equivalent hours for workers’ compensation and unemployment compensation qualify as

“Hours of Service.”

The District Court instructed the Board to consider on remand whether the CBA

requires Hansen’s employers to make contributions to the Plan for workers’

compensation and unemployment compensation, which would qualify these payments as

“Covered Employment.” Hansen argues § 13.14.3 of the CBA mandates these payments

count towards his benefit hours. Under that provision, “each hour worked for, including

hours attributable to show up time, and other hours for which pay is received by the

Employee in accordance with the Agreement, shall be counted as hours for which

contributions are payable.” App. 428. On Hansen’s view, the final clause of § 13.14.3

5 “instructs the [Board] to treat hours for ‘other pay’ employees receive in connection with

the . . . CBA ‘as hours for which contributions are payable.’” Hansen Br. 25. So he

contends the provision “presupposes another category of pay which employers do not

contribute to the [Plan], which is exactly the case with workers’ and unemployment

compensation benefits that Hansen’s employers had to provide under the . . . CBA that

are paid under state law by third party insurers or agencies.” Id.

Hansen’s argument is flawed, as the Board noted. Although “Agreement” in

§ 13.14.3 does refer to the CBA, workers’ compensation and unemployment

compensation are not paid “in accordance with the [CBA].”3 See App. 428 (emphasis

added). Rather, the CBA merely recognizes the employer’s statutory obligation to

maintain workers’ compensation and unemployment compensation coverage. Section

12.1 of the CBA provides: “Upon signing an Employer to this Collective Bargaining

Agreement, the Employer must submit to the Union . . . proof of having proper Worker’s

Compensation and Unemployment Insurance.” App. 419. Likewise, Section 18.1 of the

3 The Board also argues § 13.14.3 does not apply to the Plan because that portion of the CBA “deals with contributions to the [IUPAT Labor-Management Cooperation Initiative]” and not contributions to the Plan. Board Br. 24. This is because the heading for § 13.14 (under which § 13.14.3 falls) only lists “The International Union of Painters and Allied Trades Labor-Management Cooperation Initiative,” a distinct entity from the Plan. App. 428. But the language “[f]or the purpose of this Article” in § 13.14.3, App. 428, shows the subsection applies to Article 13 as a whole, which includes subsections about contributions to the Plan. Because we interpret the CBA under ordinary contract principles, we decline to adopt the Board’s interpretation, which strays from the clear meaning of “Article” in the CBA. See M&G Polymers USA, LLC, 135 S. Ct. at 933 (“Where the words of a contract . . . are clear and unambiguous, its meaning is to be ascertained in accordance with its plainly expressed intent.” (quoting 11 Richard Lord, Williston on Contracts § 30:6 (4th ed. 2012))). 6 CBA explains that the “Employer shall be responsible for providing Workers’

Compensation Insurance to his Employees pursuant to the provisions of the Workers’

Compensation Act of Pennsylvania and in any other state in which the Employee may be

working.” App. 436. These provisions—which are the only ones that address workers’

compensation and unemployment compensation—show these payments are not “hours

for which pay is received by the Employee in accordance with the [CBA].” App. 428.

Rather, they demonstrate that employers must maintain insurance policies by which

employees receive payments from the insurer or state—not the Plan.

Hansen also argues that employers need not contribute to the Plan for these

payments to count as benefit hours. We disagree because the CBA cannot expand the

plain language of the “Covered Employment” definition in the Plan. See Board Br. 24.

This provision explains that eligible Hours of Service are those “for which an Employer

is obligated to make contributions to the Plan or the Trust for credit to the Plan.” App.

234 (emphasis added).

For these reasons, we agree with the District Court’s conclusion “that there is no

requirement in the CBA[] that Hansen’s employers . . . make contributions to the Pension

Plan for workers’ compensation and unemployment benefits payments,” and that Hansen

“fail[ed] to point to any section of the CBA[] that require[s] contributions for such

hours.” Hansen, 2018 WL 3642297, at *5. Our de novo review of the Board’s

interpretation of the CBA confirms that because these payments do not qualify as

7 “Covered Employment,” the Board correctly declined to count them as equivalent benefit

hours.

III

We next consider Hansen’s argument that he should have received benefit hours

towards the 1,000-hour requirement for the $822 in vacation pay he received from his

employers under the CBA. It’s clear the CBA requires Hansen’s employers to contribute

to the Plan’s Vacation Fund for each hour worked. Section 13.4 of the CBA provides:

“The Employer agrees to contribute for each Employee covered by this Agreement to the

Vacation Fund in the manner provided herein . . . .” App. 422. And § 23.16.1 of the CBA

provides that employers will contribute one dollar to the Vacation Fund for every hour an

employee works. While Hansen and the Board agree the CBA requires employers to

contribute to the Vacation Fund this way, they diverge on whether the $822 Hansen

accrued in the Vacation Fund translates into 822 benefit hours.

Hansen argues reading § 23.16.1 with § 13.14.1 requires that his vacation pay

count as benefit hours. He claims each dollar employers contribute to the Vacation Fund

represents one hour of work and should be treated as such under the Plan’s benefit

calculations.

Hansen’s argument fails because his interpretation counts every hour worked

twice under “Hour of Service.” 4 He seeks credit for each hour worked (which triggered

4 “Hour of Service” as defined in Article 13 of the Plan includes

8 his employer to make a one-dollar contribution to the Vacation Fund), and then again for

the one-dollar contribution as a vacation “hour.” This is precluded by subsection (j) of the

“Hour of Service” definition, which provides that “[h]ours are credited to the Employee

for the computation period in which service is performed, for which payment is made or

to which the award or agreement pertains and will not be duplicated under different

subsections.” App. 236 (emphasis added). While each hour Hansen worked to receive the

vacation pay counts as an “Hour of Service,” the one-dollar contribution to the Vacation

Fund does not. The Department of Labor regulation defining “hours of service” for

ERISA pension plans confirms this as well. In explaining the “[r]ule against double

credit,” the regulation provides that “an employee is not required to be credited on

account of a period during which no duties are performed with a number of hours of

service which is greater than the number of hours regularly scheduled for the

performance of duties during such period.” 29 C.F.R. § 2530.200b-2(b)(3)(i); accord

Mora v. Constr. Laborers Pension Tr. for S. Cal., 435 F.3d 1121, 1124 (9th Cir. 2006).

(a) Each hour for which an Employee is paid or entitled to payment for the performance or nonperformance of duties with an employer.

...

(c) Each hour for which an Employee is paid, or entitled to payment, by an employer . . . due to vacation . . . .

App. 235–36.

9 So the Board did not act arbitrarily or capriciously when it found that Hansen’s

vacation pay does not count as benefit hours under the Plan.

* * *

For the reasons stated, we will affirm the District Court’s summary judgment in

favor of the Plan and Board.