Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 78 C 841 -- Thomas R. McMillen, judge.
Before Bauer, Circuit Judge, Fairchild, Senior Circuit Judge, and Brown, Senior District Judge.*fn*
The issue in this appeal is whether the International Brotherhood of Teamsters Local No. 710 Pension Fund (the Fund or Plan) as amended complies with the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. Two Plan participants, William R. Janowski and Robert H. Barnhisel (collectively Janowski), initiated this action alleging that the amendments deprived them of benefits which vested before ERISA became effective. The suit ultimately proceeded as a class action on behalf of all pre-ERISA participants of the Fund whose early retirement benefits were, or might be, affected by the amendments.
The district court, 500 F. Supp. 21, approved some of the amendments and disapproved others. It held that the designation of 65 as the normal retirement age under the amended Plan was permissible. It found, however, that the methods adopted for calculating accrued benefits for pre-ERISA service, for part-time service, and for certain early retirement and vested retirement benefits were improper. It also found that the initial Summary Plan Description Booklet distributed to Plan participants explaining the revisions did not clearly advise them of the option to elect benefits under either the old or the new Plan, whichever was greater. For these reasons, the district court entered a permanent injunction enjoining the trustees of the Fund from revoking the option of any participant who entered covered employment before July 1, 1976, to choose benefits under the prior Plan. It also awarded plaintiffs attorneys' fees in the amount of $142,485.00. Both sides have appealed. We affirm in part and reverse in part.
Each party assigns numerous errors. The trustees allege that plaintiffs may not bring this suit either as individuals or as class representatives. They attack the district court's finding that there was an implied accrual of benefits in the original Plan which had to be reflected in the formula adopted for computing pre-ERISA service credit and assert that the formula chosen to provide accrued benefits for part-time employees complies with the statute because it is both ratable and reasonable, as required by 29 U.S.C. § 1054(b) (3)(B). The trustees also maintain that they did not reduce any vested benefits available under the prior Plan as set forth in the July 1979 Summary Plan Description Booklet because participants enrolled in the pre-ERISA Plan may elect to receive the benefits under either Plan. Therefore, they argue that the injunction preserving this option was unwarranted. Finally, the trustees assert that the award of attorneys' fees is improper because the litigation has failed to benefit the entire class of Fund participants and has not added to the Fund's assets.
In contrast, Janowski maintains that 57 should have been designated as the normal retirement age because that was the normal retirement age under the prior Plan. He contends that the change from 57 to 65 deprives Fund participants of vested rights to: (1) reasonable actuarial reductions for benefits beginning before 57; (2) benefits beginning at 57 instead of 65; and (3) pre-retirement benefits between 47 and 57. Additionally, Janowski contends that if the class prevails on the issue of the normal retirement age the amount of the fee award should be increased to reflect this fact.
Initially, the trustees challenge Janowski's right to bring this action on several grounds and urge dismissal for lack of subject matter jurisdiction. They argue that this case is not ripe because no pre-ERISA Plan participant has applied for and been denied any benefits. The trustees maintain that the named plaintiffs cannot allege any concrete injury because they are not yet ready to retire and have never applied for early retirement benefits and that they do not have a common interest with the entire class of Fund participants. Additionally, the trustees allege that the exhaustion doctrine is applicable to ERISA actions and assert that Janowski has failed to pursue his administrative remedies.
The trustees' contention that the exhaustion doctrine applies to ERISA actions is persuasive. Although section 1132 provides that a civil action may be brought by a participant "to clarify his rights to future benefits under the terms of the plan," 29 U.S.C. § 1132, it is silent as to whether exhaustion is a prerequisite for exercising this statutory right. While this issue has not yet been considered by this court, the Ninth Circuit has held that "sound policy requires the application of the exhaustion doctrine in suits under the Act." Amato v. Bernard, 618 F.2d 559, 567 (9th Cir. 1980).
Assuming arguendo that the exhaustion doctrine should be applied to ERISA cases, the doctrine is not absolute, White Mountain Broadcasting Co., Inc. v. FCC, 194 U.S. App. D.C. 355, 598 F.2d 274 (D.C.Cir.), cert. denied, 444 U.S. 963, 100 S. Ct. 449, 62 L. Ed. 2d 375 (1979), and unless statutorily mandated, its application is committed to the sound discretion of the court. Aleknagik Natives Ltd. v. Andrus, 648 F.2d 496 (9th Cir. 1980). Where exhaustion is not specifically required by the statute, the district court's discretionary decision may only be disturbed on appeal when there has been a clear abuse of discretion. Medina v. Castillo, 627 F.2d 972 (9th Cir. 1980).
Exhaustion has no relevance here, for the doctrine is only appropriate where it is necessary to develop a full factual record or to take advantage of agency expertise. Aleknagik Natives Ltd. v. Andrus, 648 F.2d 496 (9th Cir. 1980). Thus, the exhaustion doctrine has been applied in ERISA cases only in situations where an individual has applied for and been denied current benefits. In contrast, this case concerns clarification of the right of an entire class to future benefits. This issue is solely a question of statutory interpretation and does not require a factual record. See McKart v. United States, 395 U.S. 185, 197-99, 89 S. Ct. 1657, 1664-65, 23 L. Ed. 2d 194 (1968); Frontier Airlines v. CAB, 621 F.2d 369 (10th Cir. 1980). Since the reasons for the doctrine are not present, the district court did not abuse its discretion in waiving the exhaustion requirement.
We reject the trustees' contention that this case is a "battle of hypotheticals, a classic example of the difficulty of deciding a case concerning a complex, technical subject without the benefit of specific facts." Defendants-Appellants, Cross-Appellees' br. at 35. Janowski seeks a determination of the nature and scope of Plan participants' rights to future benefits. Section 1132 provides that a civil action may be brought "by a participant ... to clarify his rights to future benefits under the terms of the plan ...." 29 U.S.C. § 1132. This action is precisely the type of action contemplated by the statute.
Lastly, the trustees' argument that the named plaintiffs are inadequate class representatives because they have no common interest with all Fund participants ignores the fact that the class which Janowski purports to represent, and which the trial court certified, includes only "all persons who are now, or who were as of February 1, 1976, members of Local 710 of the International Brotherhood of Teamsters and who have accepted early retirement or intend to do so under the terms of the Pension Plan of said Local 710 and whose early retirement benefits were or will be affected by the amendments to the Plan made as of February 1, 1976." The named plaintiffs certainly have interests in common with this class. The preliminary challenges to the right to bring this action fail.
The technical issues and the specific sections involved in this case must be analyzed in light of the scope and spirit of ERISA as a whole. Designed to revamp private employee pension plans to ensure minimum vesting, funding, and insurance benefits, H.R.No. 1522, 93rd Cong., 1st Sess. reprinted in (1974) U.S.Code Cong. & Ad.News 4639, 4647-48, ERISA is, of necessity, a highly complex and detailed statute. Three administrative agencies, the Internal Revenue Service (IRS), the Department of Labor, and the ...