Therefore, under Section 10 Mr. Carr became an "Employee" when his employer contributed to the Fund on his behalf; this occurred no earlier than 1971 when defendants concede the Ambassador Restaurant first became obligated to make contributions on his behalf under the terms of the collective bargaining agreement. To determine whether there was a break in service, one must look to the period of time commencing in 1971 that Mr. Carr was an "Employee" under the Plan. No break in service occurred for Mr. Carr from 1971 to the date of application in 1978. Under the terms of the Plan itself, Mr. Carr incurred no break in service. He is entitled to all accumulated past service earned prior to 1971.
Under Section 9 of the 1974 Plan, a participant receives one year of credited service for each uninterrupted year of membership in the Union prior to the effective date of the Plan. Mr. Carr was a member of Local 111 continuously from January 1, 1954. Under the terms of the Plan itself, Mr. Carr should have received past service credit for the period from January 1, 1954 to October 1, 1967 (the effective date of the 1974 Plan) or 13.75 years. This past service credit of 13.75 years plus Mr. Carr's credited years of 4.25 for which contributions were made beginning in 1971 total 18 credited years of service; that is more than the minimum 15 years required for pension benefit eligibility.
The 1974 and 1976 plans manifest an intention to make union members participants as their respective employers agree to contribute to the Fund; newly-included members are given credit for years as union members prior to the effective date of the 1974 Plan; thereafter, credit is given only for years for which contributions have been made. This is evident from the language of both the 1974 Plan and the 1976 Plan. The date in which an employer participated as a contributor to the Fund is the operative event for calculating past and future credited service for union members.
Defendants' erroneous interpretation of the break in service rules is based on Mr. Carr's being an "Employee" under the Plan as of October 1, 1967 when a plan was instituted even though his employer joined it in 1971. The Ambassador Restaurant was not required to contribute to the Fund until 1971. If the Restaurant as Mr. Carr's employer failed to meet an obligation under a collective bargaining agreement and its failure to contribute after 1967 jeopardized Mr. Carr's participation in the Fund, defendants, as fiduciaries of the participants in the Fund, had an obligation to inform Mr. Carr of his employer's failure to contribute. Rosen, supra at 599-601.
Defendants' failure to fulfill their fiduciary obligations would have rendered them liable for any benefits Mr. Carr lost. Rosen, supra at 601. Since defendants concede the Ambassador Restaurant first became obligated to pay into the Fund on Mr. Carr's behalf in 1971, it was not obligated to pay from 1967 to 1969; to declare a service break in 1969 was contrary to the plain language of the plans.
Whether the trustees' decision to deny benefits was in fact arbitrary and capricious depends on "a consideration of the relevant factors and whether there has been a clear error of judgment." Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971). Factors relevant to whether trustees of a pension plan acted arbitrarily and capriciously include: 1) uniformity of construction of the plan; 2) interpretation of the plan contrary to its terms; 3) fair interpretation and the reasonableness of the interpretation; and 4) unanticipated costs. Dennard v. Richards Group, Inc., 681 F.2d 306, 314 (5th Cir. 1982).
"When the trustee's interpretation of a plan is in direct conflict with express language in a plan, this action is a very strong indication of arbitrary and capricious behavior." Dennard, supra; accord Miles v. New York State Teamsters Conference, Etc., 698 F.2d 593, 599 (2d Cir.), cert. denied, 464 U.S. 829, 104 S. Ct. 105, 78 L. Ed. 2d 108 (1983) ("Where the trustees of a plan . . . interpret the plan in a manner inconsistent with its plain words . . . their actions may well be found to be arbitrary and capricious.") Morgan v. Mullins, 643 F.2d 1320, 1324 (8th Cir. 1981) ("The Trustees acted arbitrarily and capriciously in interpreting [the plan] in a way which is inconsistent with the plain words in the document. . . .").
"The fact that a trustee's interpretation is not the correct one as determined by a District Court does not establish in itself arbitrary and capricious action, but is a factor in that determination." Dennard, supra at 314. Once the plaintiff shows "that the eligibility requirement under consideration is unreasonable or is 'arbitrary and capricious' . . . the burden shifts to the trustees . . . to come forward with evidence establishing the reasonableness of the eligibility requirement, based on the purposes of the fund." Music, supra at 419 (citation omitted). While evidence of uniformity of application or unanticipated costs would not in and of themselves negate the indication of arbitrary and capricious action, no such evidence was offered by the trustees. Therefore, defendants' interpretation, in direct conflict with the plain language of the Plans, is arbitrary and capricious.
Mr. Carr was entitled to past service credit for years as a union member prior to 1967 and was entitled to a disability pension when he applied on March 26, 1978. Plaintiff Mrs. Carr, as representative of the Estate of Mr. Carr, is entitled to disability pension payments of $60.34 per month, for the period March 28, 1978 until Mr. Carr's death, December 29, 1982. Mrs. Carr is also entitled in her own capacity to the pension payments thereafter as the survivor under the Joint and Survivor Pension benefits to which Mr. Carr was entitled.
In accordance with Rule 52(a) of the Federal Rules of Civil Procedure, this Memorandum of Decision constitutes the court's Findings of Fact and Conclusions of Law.
AND NOW, this 6th day of April, 1984, it is ORDERED that:
Judgment is entered in favor of plaintiff, Caroline Carr in her representative capacity, in the amount of $3,420 (Disability pension benefits of $60.34 per month due under the pension plan for the period March 28, 1978 until December 29, 1982, the date of Mr. Carr's death) and, in her individual capacity, joint and survivor disability pension benefits thereafter.