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Anderson v. Bakery and Confectionery Union and Industry International Pension Fund

September 3, 2009

PHYLLIS ANDERSON, ET. AL., PLAINTIFFS,
v.
THE BAKERY AND CONFECTIONERY UNION AND INDUSTRY INTERNATIONAL PENSION FUND, ET. AL., DEFENDANTS.



The opinion of the court was delivered by: Yohn, J.

Memorandum

Plaintiffs, eighteen women who are current or former employees of Nabisco, Inc., bring this action on behalf of themselves and a class of similarly situated women*fn1 against three defendants: the Bakery and Confectionery Union and Industry International Pension Fund (the "Plan"); the Board of Trustees of the Bakery and Confectionery Union and Industry International Pension Fund ("Plan Administrator" or "Board of Trustees"); and the Appeals Committee of the Board of Trustees ("Appeals Committee"). Pursuant to 29 U.S.C. § 1132(a), the civil enforcement provision of the Employee Retirement Income Security Act ("ERISA"), plaintiffs seek pension benefits that they allege defendants improperly denied them and injunctive relief.

Presently before the court is a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) filed by two of the three defendants: the Plan and the Board of Trustees.*fn2 For the reasons set forth below, the court will grant in part and deny in part the motion.*fn3

I. Factual and Procedural Background*fn4

The history of plaintiffs' present case relates to several earlier proceedings.

A. The Karan Action

Plaintiffs, current or former employees at Nabisco, Inc.'s Philadelphia bakery whose Nabisco employment began in the 1960s and 1970s, participated in the settlement of a class action against Nabisco. (Am. Compl. ¶¶ 2, 31-34). The class action-Karan v. Nabisco, Inc., Nos. 75-1356 and 77-927 (W.D. Pa.) (see Am. Compl. ¶ 31)-raised more than seventeen allegations of discrimination. One of the allegations was that Nabisco maintained gender-segregated seniority lists and, "in instances of plant layoff, laid off all employees from the female seniority list before laying off any employee from the male seniority list" (Am. Compl. ¶ 29 (emphasis omitted)). Under this practice, plaintiffs were repeatedly laid off for periods of months and subsequently rehired. (See Am. Compl. ¶ 46 (listing, year by year, the number of months each of the eighteen plaintiffs was laid off).)

The Karan court approved a Stipulation and Settlement Agreement (the "Karan Settlement Agreement") on January 28, 1982. (Id. ¶ 34; Defs.' Mot. Dismiss (Doc. No. 10) Ex. C (the Karan Settlement Agreement).) Pursuant to the Karan Settlement Agreement, Nabisco set aside a $4.9 million settlement fund (Karan Settlement Agreement ¶ 8) to be distributed among all class claimants as follows:*fn5 after paying the Karan plaintiffs' attorneys' fees, expenses, and costs as well as monetary payments to the named Karan plaintiffs and certain class members who had filed charges then pending before the EEOC, the balance of the settlement fund was distributed to the remaining Karan class members who submitted claims (termed "Eligible Claimants") based on "Distribution Units." (Karan Settlement Agreement ¶ 9.) A stipulated formula "based upon the relative lengths of time during which [the Eligible Claimants] worked for [Nabisco] at any time between November 17, 1971 and the date of [the Karan Settlement Agreement]" determined the individual distribution paid to each Eligible Claimant. (Id. ¶ 9(d).)

In summary, two schedules enumerated the number of Distribution Units to be credited to each Eligible Claimant for each month that the Claimant held a particular job classification. One schedule applied to months between November 17, 1971 (the beginning of the covered Settlement Agreement period) and December 31, 1975. (Id. ¶ 9(d)(ii).) The other schedule applied to months between January 1, 1976*fn6 and the end of the covered Settlement Agreement period. (Id. ¶ 9(d)(i).) Certain job classifications garnered more Distribution Units than others, (id. ¶ 9(d)(i)-(ii)), and for most job classifications, the schedules credited Eligible Claimants more Distribution Units for months in the pre-1976 period than for months in and after 1976, (id. ¶ 9(d)(i)-(ii)).

Importantly for plaintiffs' present action, the Karan Settlement Agreement stated that: Periods of layoff, disability, pregnancy, or other types of absence (unless and until the person was treated as terminated) will be considered (solely for the purposes of this distribution) as though the person were still in the last classification (prior to the absence) recorded [in Nabisco's employment history records for that person]. In other words, persons will receive payments regarding periods of layoff, disability, pregnancy, and other absences. (Id. ¶ 9(d)(v).) Thus, the settlement payment that each Eligible Claimant received was based on length of service, but accounted for, inter alia, periods of layoff. The monetary distribution paid to each Eligible Claimant was then calculated by: (1) determining the ratio of an "Eligible Claimant's Distribution Units to the total Distribution Units credited to all Eligible Claimants," (id. ¶ 9(d)(iv)), and (2) multiplying that ratio by the amount of money remaining in the settlement fund after payment of the priority claims described above, (id. ¶ 9(d)). The Karan Settlement Agreement also stated that:

The monetary payments to which an Eligible Claimant is entitled upon application of the formula will not be included by [Nabisco] in any compensation base for computing employment benefits available to any Eligible Claimant. (Id. ¶ 9(f).)

In addition to distribution of the settlement fund, the Karan Settlement Agreement set forth numerous remedial measures related to the Karan plaintiffs' allegations of discrimination. Those allegations touched on many aspects of employment practices at Nabisco, only one of which was the alleged practice of discriminatory layoffs.*fn7

In the present action, plaintiffs characterize the distributions they received under the Karan Settlement Agreement as back pay and claim that, under ERISA and the Rules and Regulations of the Plan, they are entitled to pension credit corresponding to the periods of discriminatory layoff "encompassed in the period for which back pay was given." (Am. Compl. ¶¶ 37-38.) Specifically, plaintiffs claim entitlement to: "(a) increased pension payments going forward; (b) recovery of under-payments for past pension payments that were lower than they should have been; (c) earlier eligibility for pension benefits; and (d) eligibility for higher pension payments." (Id. ¶¶ 99, 102.) Plaintiffs seek such relief in Count I of their Amended Complaint under 29 U.S.C. § 1132(a)(1)(B) and in Count II as injunctive relief under 29 U.S.C. § 1132(a)(3).

Defendant Plan is a multi-employer defined benefit plan, (id. ¶ 23),*fn8 and defendant Board of Trustees "serves as the Plan Administrator of the Plan under ERISA," (id. ¶ 24). The Board of Trustees consists of ten members appointed by the employers that participate in the Plan and ten members appointed by the union. Defendant Appeals Committee consisted of Frank Hurt, Chairman of the Board of Trustees, and Dick Cook, Secretary of the Board of Trustees. (Id. ¶ 25.) Presumably, one member of the Appeals Committee was an employer appointee and the other member was a union appointee. Plaintiffs are participants in and beneficiaries of the Plan. (Id. ¶ 3.)

B. The Wilson Action

In January 2001, the plaintiffs in this present action initiated a lawsuit against the Board of Trustees, Nabisco, and Phillip Morris, Inc. (which had become Nabisco's corporate parent) in which plaintiffs claimed they had been denied certain pension benefits owed to them. Wilson v. Nabisco, Inc., No. 01-415 (E.D. Pa.). In Wilson, as in the present action, plaintiffs sought pension credit, "alleging, inter alia, that the payments they received under the Karan Settlement Agreement constituted back pay for periods of discriminatory layoffs, and that they were wrongfully denied pension credit they were due under the Plan as a result of this back pay." (Am. Compl. ¶ 40.) The district court granted Nabisco's motion to dismiss and entered judgment in favor of the Wilson defendants. Wilson v. Nabisco, No. 01-415, 2002 WL 32351159 (E.D. Pa. April 2, 2002); (Am. Compl. ¶ 41). The court based its decision on its determinations that (1) "the Karan Settlement distributions were not intended to be 'hours of service' for back pay" within the meaning of ERISA, Wilson, 2002 WL 32351159 at *6-*8, and (2) the release in the Karan Settlement Agreement served to bar plaintiffs' claims, id. 2002 WL 32351159 at *8-*10.*fn9

On appeal, however, the Third Circuit vacated the district court's decision on December 8, 2003 and remanded "with directions to dismiss the complaint without prejudice to the right of the plan participants to present their claims for pension credits to the Plan in the first instance." Wilson v. Nabisco, 82 F. App'x 282, 284 (3d Cir. 2003.) Explaining that "an ERISA plan participant making a claim for benefits pursuant to § 502(a)(1)(B) [codified as 29 U.S.C. § 1132(a)(1)(B)] must exhaust the plan's administrative remedies before seeking judicial relief," the court implicitly determined that the Wilson plaintiffs had not satisfied the administrative exhaustion requirement. Id. at 283-84. The court noted that "at oral argument, the Plan's counsel agreed that the Plan would nonetheless hear and consider the women's claim for pension benefits." Id. at 284.

C. Administrative Exhaustion

Plaintiffs applied to the Plan on April 30, 2004 for additional pension credit and detailed for the Plan the specific periods of layoff for which each plaintiff sought pension credit. (Am. Compl. ¶¶ 45-46.) The Plan denied plaintiffs' administrative application (the "Initial Denial") on June 16, 2004. (Id. ¶ 51.) The Plan's explanation of the denial emphasized that the Karan distribution payments were intended to settle claims of discrimination by the company, not to provide back pay for periods of layoff. (Id. ¶ 52.) As to "claims for additional pension benefits for periods before January 1, 1976," the Plan also based its denial "on the ground that no pension fund contributions were made [by Nabisco] on Plaintiffs' behalf during the pre-1976 period." (Id. ¶ 54.)

Plaintiffs appealed the Initial Denial through the Plan's internal appeal process (the "Administrative Appeal") on December 22, 2004, arguing that plaintiffs were entitled to additional pension benefits and, moreover, that the Karan distribution payments were intended as back pay. (Id. ¶ 56.) Regarding the pre-1976 period, plaintiffs also argued in the Administrative Appeal that a failure on Nabisco's part to make required contributions on plaintiffs' behalf did not "absolve the Board of Trustees or the Plan's obligations" to plaintiffs. (Id. ¶ 69.) In support of that second argument, the Administrative Appeal cited a version of the Plan's "Standard Collective Bargaining Clause" that the Plan had represented to plaintiffs was "typical of the clause that would have pertained to Nabisco during the period at issue here." (Id. ¶ 68.) That version of the clause provides that a participating employer must contribute to the Plan "'[f]or each day or portion thereof, which an employee works . . . or receives pay in lieu of work (such as holiday, vacation, pro rata vacation, and severance pay).'" (Id.)

The Appeals Committee, on behalf of the Board of Trustees, denied the Administrative Appeal on March 22, 2005 (the "Plan Denial"). (Id. ΒΆ 70.) Plaintiffs attached the Plan Denial, a three-page letter, as Exhibit E to their response to defendants' original motion to dismiss (Pls.' Mem. Law Opp'n Defs.' Mot. Dismiss (Doc. No. 25) Ex. E ("Plan Denial")). As to pension benefits sought for periods of layoff prior to 1976, the Appeals Committee explained that, for pre-1976 periods, pension credit under the Plan was "awarded 'on the basis of [a Participant's] days of work in Covered Employment during a Calendar Year on which ...


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