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ROBERT KAGARISE v. CUMBERLAND (10/02/81)

decided: October 2, 1981.

ROBERT KAGARISE, ALBERT E. MOUNTAIN, PAULINE MAY, INDIVIDUALLY AND ON BEHALF OF ALL OTHER PERSONS SIMILARLY SITUATED, APPELLANTS
v.
CUMBERLAND, MARYLAND AREA TEAMSTERS PENSION FUND, AN UNINCORPORATED ASSOCIATION



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 77-1037)

Before Gibbons and Hunter, Circuit Judges, and Stern, District Judge.*fn*

Author: Gibbons

Opinion OF THE COURT

Robert Kagarise, Albert E. Mountain and Pauline May, claimants, respectively, for a disability pension, a retirement pension and a survivors benefit pension, appeal from a judgment in favor of Cumberland, Maryland Area Teamsters Pension Fund (the Fund) in their suit which challenged the method of calculating benefits.*fn1 We affirm.

The Fund is a qualified pension trust organized and administered under Section 302 of the Labor Management Relations Act of 1947. 28 U.S.C. ยง 186. It provides benefits for eligible participants and beneficiaries from funds obtained by contributions agreed upon as a result of collective bargaining. The level of benefits is determined by a formula depending in part upon length of service during which contributions have been received. If an eligible participant has worked for only one employer, or for employers contributing to one pension fund, the calculation of service credit will ordinarily be made as of the date of termination of employment by employers contributing to that fund. Because Teamster Union members sometimes change location, that might result in ineligibility for benefits because of insufficient years of service. To meet this problem a number of Teamster pension funds have entered into the Reciprocal Agreement for Teamster Pension Funds. The Reciprocal Agreement provides that when contributions have been made to two or more funds for the account of an employee each fund will provide a partial benefit payment. This suit involves the method of calculation of the partial benefits to be paid by the Fund to participants or beneficiaries under the Reciprocal Agreement.

The Reciprocal Agreement requires that each participating Fund amend its plan to provide for payment of partial benefits as follows:

(a) The amount of the pension to which the employee would be entitled under this Plan taking into account his Combined Service Credit shall be determined, then

(b) The amount of service credit earned with this plan since January 1, 1955, shall be divided by the total amount of Combined Service Credit earned by the employee since January 1, 1955, then

(c) The fraction so determined in (b) shall be multiplied by the pension amount determined in (a) and the result shall be the Partial Pension Amount payable by this Plan.

Under this formula each Fund to which contributions have been made is charged with service credit for the period of time that contributions were made to it for the account of a participant. The dispute centers on the calculation of the amount of the benefit (unit multiplier) by which the proportionate share of service credit is multiplied. Shortly after the Fund became a participant in the Reciprocal Agreement it announced that in determining partial payments it would use the level of benefits to which the participant would be entitled at the date of his retirement, rather than at the date he ceased to be a participant. Since contributions and benefits were in an inflationary economy increasing, the result of this method of calculation was that the Fund would pay benefits disproportionate to contributions received in those cases where the employee ceased to be a participant prior to his retirement. In 1978 the Fund trustees, on the advice of their actuary, adopted a change in the method of calculation, using as the unit multiplier the level of benefits in effect on the date of termination of participation. The complaint requests that the trustees be ordered to rescind this action and to recalculate benefits using as the unit multiplier the benefits in effect at the date of retirement.

The claimants contend that the Reciprocal Agreement mandates the calculation which they urge. They argue that the words "the amount of the pension to which the employee would be entitled under this Plan taking into account credited service" can only be construed to require use of a unit multiplier determined at the time total combined service credit is known. The trial court rejected this construction, ruling that

section 8(a) states only that the amount of the partial pension benefits "shall be determined" by taking into account the amount of the individual's combined service credit. It does not state whether the partial pension benefit shall be determined at the time of retirement an application is made or at the time an individual leaves the Cumberland Fund.

We agree that the language relied upon does not determine the disputed issue.

Plaintiffs next argue that even if the wording is ambiguous, there is strong extrinsic evidence that the Reciprocal Agreement means the unit multiplier to be determined as of the date of retirement. They introduced two documents which were evidently prepared and distributed by the major draftsman of the Reciprocal Agreement shortly after it was drafted to aid in explaining it. The documents are entitled ...


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