The opinion of the court was delivered by: Yohn, J.
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 pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq., against 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 ("Board of Trustees" or "Board"); and the Appeals Committee of the Board of Trustees ("Appeals Committee"). Plaintiffs seek pension credit for periods of layoff between 1976 and 1981.*fn1
Plaintiffs have moved for partial summary judgment and defendants have moved for judgment on the pleadings. At issue in both motions is the application of 29 C.F.R. § 2530.200b-2(a)(2), which requires that employees receive pension credits for "hours for which an employee is paid, or entitled to payment, by the employer on account of a period of time during which no duties are performed... due to... layoff...." Plaintiffs argue that, under the terms of a 1982 settlement of a sex discrimination class action, plaintiffs received payments on account of periods of layoff between 1976 and 1981 and are therefore entitled under (a)(2) to pension credit for those periods. Defendants counter that plaintiffs' payments under that settlement were not covered by (a)(2) because the settlement distribution formula did not distinguish between periods of layoff, periods of absence for other reasons, and periods of actual work; as a result, the payments did not compensate plaintiffs for periods of absence due to layoff but rather for overall longevity in employment.
Upon administrative review of plaintiffs' claims for additional pension credits, the Appeals Committee found that the class action settlement distributions were calculated based on the class members' overall longevity in their positions, not on the amount of their lost income due to layoff. As a matter of law, that factual finding cannot be set aside absent a showing it resulted from an abuse of discretion, and plaintiffs have not stated a plausible claim that the Appeals Committee's finding constituted such an abuse of discretion. Interpreting (a)(2) de novo and applying it to the Appeals Committee's factual finding, I conclude that plaintiffs have not stated a plausible claim that they are entitled to pension benefits for the periods in question and I will grant defendants' motion for judgment on the pleadings. Having granted judgment on the pleadings in favor of defendants, I will deny plaintiffs' motion for partial summary judgment.
I. Factual and Procedural Background*fn2
Plaintiffs are current or former employees at Nabisco's Philadelphia bakery, all of whom began work at Nabisco in the 1960s or 1970s. The Plan is a multi-employer defined benefit plan of which plaintiffs are beneficiaries. The Board of Trustees, which serves as the Plan Administrator, consists of ten members appointed by the employers that participate in the Plan and ten members appointed by the union. The Appeals Committee consisted of Frank Hurt, Chairman of the Board of Trustees, and Dick Cook, Secretary of the Board of Trustees. Hurt was a union appointee and Cook was an employer appointee.
The history of plaintiffs' claims is as follows.
Plaintiffs, along with many other female Nabisco employees, shared in the settlement of a sex discrimination class action against Nabisco, which was approved in 1982. See Karan v. Nabisco, Inc., Nos. 75-1356 & 77-927 (W.D. Pa., settlement approved Jan. 28, 1982). The Karan action involved more than seventeen allegations of employment discrimination, including an allegation of discriminatory layoff practices. Other allegations included pay discrimination, harassment, and failure to promote to higher-paying, supervisory positions.
Pursuant to the Karan settlement agreement, Nabisco set aside a $4.9 million settlement fund to be distributed among the class members as follows: after paying the Karan plaintiffs' attorneys' fees, expenses, and costs and after making payments to the named Karan plaintiffs and class members who had filed charges then pending before the EEOC, the balance of the settlement fund was allocated to the remaining Karan class members who submitted claims based on "distribution units." Eligible claimants received, for each month of employment, a set number of distribution units that varied according to job classification and whether the month of employment occurred before December 31, 1975.*fn3 Moreover, an eligible claimant who experienced a period of absence received distribution units for each month of absence "as though the person were still in the last classification (prior to the absence) recorded [in Nabisco's employment history records for that person]." (Karan Settlement Agreement ¶ 9(d).) "In other words," the Karan settlement agreement stated, claimants received "payments regarding periods of layoff, disability, pregnancy, and other absences." (Id.)
The monetary distribution paid to each eligible claimant was then calculated by dividing each claimant's number of distribution units by the total number of distribution units awarded overall, then multiplying that number by the amount of money remaining in the settlement fund after payment of the priority claims described above. (Id. ¶ 9(d)). Each of the plaintiffs in this action received a sum between $359.11 and $1,543.89; nine of the eighteen plaintiffs received $518.72. (See Pls.' Mot. Summ. J. (Doc. #45) Ex. B.)*fn4
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. (Karan Settlement Agreement ¶ 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.
In 2001 the plaintiffs in the present action initiated a lawsuit against the Board of Trustees, Nabisco, and Phillip Morris, Inc. (which had become Nabisco's corporate parent), seeking pension credit for the periods of layoff covered by the Karan settlement agreement. Plaintiffs argued that they were entitled to pension credit pursuant to ERISA regulations requiring that employers count as "hours of service," for the purposes of benefit computation, any periods of layoff on account of which the employee is "paid, or entitled to payment, by the employer," see 29 C.F.R. § 2530.200b-2(a)(2), or for which back pay is "awarded or agreed to by the employer," see id. § 2530.200b-2(a)(3).*fn5
The district court granted Nabisco's motion to dismiss and entered judgment in favor of all defendants. Wilson v. Nabisco, No. 01-415, 2002 WL 32351159 (E.D. Pa. April 2, 2002). The court based its decision on its determinations that (1) the Karan settlement distributions did not constitute "back pay" within the meaning of (a)(3) and (2) the release in the Karan settlement agreement served to bar plaintiffs' claims. Id. at *6-*10.*fn6 In support of the latter conclusion, the district court noted that most plaintiffs had received $518.72 pursuant to the Karan settlement agreement, whereas "the median total pension benefit sought in this action is 120 times that sum, or $63,150," which suggested that Nabisco had not foreseen that the settlement distributions would give rise to such a massive entitlement to benefits. Id. at *7 n.6. The district court did not address whether the distributions constituted payment on account of periods of layoff within the meaning of (a)(2).
The Third Circuit vacated the district court's decision on December 8, 2003, finding that plaintiffs had not exhausted their administrative remedies by applying to the Plan for benefits prior to filing suit, as required by ERISA. Wilson v. Nabisco, 82 F. App'x 282, 284 (3d Cir. 2003); 29 U.S.C. § 1132(a)(1)(B). Because, "at oral argument, the Plan's counsel agreed that the Plan would nonetheless hear and consider the women's claim for pension benefits," the Third Circuit remanded the matter to the district court "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." Id. at 284.
C. Administrative Exhaustion
Plaintiffs submitted an application for additional pension credit to the Plan on April 30, 2004. In their initial application, plaintiffs relied on both 29 C.F.R. § 2530.200b-2(a)(2), which governs periods of layoff for which employees are paid or entitled to payment, and (a)(3), which governs periods for which back pay is awarded or agreed to by the employer. The Plan denied plaintiffs' application on June 16, 2004 (the "Initial Denial"). The Initial Denial letter stated that the Karan settlement agreement was "intended to settle claims of discrimination by the company, not to provide back pay for periods of layoff [within the meaning of (a)(3)], or otherwise pay plaintiffs on account of time not worked [within the meaning of (a)(2)]." (Pls.' Opp'n Defs.' Mot. Dismiss (Doc. #25) Ex. C ("Initial Denial Letter").) Instead, the payments were intended to settle "more than a dozen discrete claims of sexual discrimination in employment," most of which were unrelated to discriminatory layoff. (Id.)
Plaintiffs appealed the Initial Denial through the Plan's internal appeal process on December 22, 2004. Although the parties are in disagreement as to the extent to which plaintiffs relied on (a)(2) in their appeal, the record reveals that plaintiffs cited both (a)(2) and (a)(3) in their appeal but did not include any argument with reference to (a)(2). Their argument focused on whether the Karan settlement distributions constituted "back pay" pursuant to (a)(3).
On March 22, 2005, the Appeals Committee, which reviewed plaintiffs' application on behalf of the Board of Trustees, issued a final denial (the "Plan Denial") of plaintiffs' claims.*fn7 (See Pls.' Opp'n Defs.' Mot. Dismiss Ex. E ("Plan Denial").) The Appeals Committee's reasoning largely echoed that in the Initial Denial but, unlike the Initial Denial, referred exclusively to 29 C.F.R. § 2530.200b-2(a)(3) and the Plan's own definition of an "hour of service," which was based on (a)(3).*fn8 The Appeals Committee found that the Karan settlement distributions were not "'intended to compensate [plaintiffs] for periods during which [they] would have been engaged in the performance of duties for [Nabisco],'" as required by the Plan's definition of "back pay." (Plan Denial 2 (quoting Plan Rules & Regulations § 1.25).) Nor were the payments "back pay for periods of layoff" within the definition of (a)(3) itself. (Id. at 3.) Rather, the Appeals Committee concluded that the language in the Karan Settlement Agreement that "persons will receive payments regarding periods of layoff" did "not establish that payments were made as back pay for those periods, only that those periods were included in measuring the longevity in specific job classifications that was the determining factor in the distribution." (Id.) The Appeals Committee noted, for example, that the distribution formula also awarded ...