Russo's position is that there is no evidence that anyone ever was allowed to switch from disability to early pension. The one witness who was asked about the matter said he did not know of such a switch "under Nick Russo's circumstances" and "would be very surprised" if it had ever occurred. A statement by Peick that he "would" permit a switch is not an interpretation of the Plan unless it is acted upon--a promise to interpret is not an interpretation.
(b) Peick's statement estops the defendant from adopting the interpretation it applied to Russo.
The use of estoppel in pension fund administration has always troubled courts. If an administrator, through carelessness or collusion, may bind a pension fund to pay what it should otherwise not pay, the financial security of the pension fund is endangered. A remedy against the personal estate of the administrator may well be inadequate. See Reiherzer v. Shannon, 581 F.2d 1266, 1267 (7th Cir. 1978) (estoppel principles not to be used in pension plan cases).
The equitable appeal of estoppel claims, however, may be quite strong and in Black v. TIC Investment Corp., 900 F.2d 112, 115 (7th Cir. 1990) the Court retreated from Reiherzer holding that "estoppel [applies] to claims . . . under unfunded single employer . . . plans under ERISA" and expressing "no opinion as to . . . estoppel . . . in other situations." Of course, an unfunded single employer plan does not ordinarily involve the same concerns for actuarial soundness that are inextricably linked to the operation of funded multi-employer plans.
The Plan here is funded and it is a multi-employer plan. Yet there is but one administrator so the danger of allowing estoppel is lessened. In Black, the Court observed:
[where] the plan has multiple fiduciaries with control over a common fund . . . [allowing] one employer to bind the fund to pay benefits outside the strict terms of the Plan would be to make all the employers pay for one employer's misrepresentations, and to the extent that such payments damage the actuarial soundness of the Plan, it hurts all the employees as well. It could even encourage employers to make intentional misrepresentations so as to bind the Plan to make improper payments in favor of their own employees . . .
It is true that there are multiple trustees (from both union and management) and there is a risk that individual trustees could make misrepresentations to employees. But the structure of the Plan puts the authority to administer in one person. To say that a single administrator could by estoppel bind the Plan is not to say that each individual trustee may do so. Indeed, the Plan empowers the administrator to decide all questions; absent appeal, the trustees do not consider the matter. This is not a case where multiple beneficiaries may bind the Plan and the existing structure does not inherently lend itself to acts which favor one employer's workers over another's.
The rule in Black is this: "where there is no danger that others associated with the Plan can be hurt, there is no good reason to breach the general rule that misrepresentations can give rise to an estoppel." Id. Russo concedes that (and thus waives objection to) an order which requires him to disgorge disability benefits paid prior to age 57 as a condition of his receipt of early pension--thus preventing an unjust double recovery and protecting the fund's assets. This concession seems to put Russo under the rule in Black.
But perhaps the rule in Black is not so clear. After all, the Court justified its rule by saying: "There is no reason for the employee who reasonably relied to his detriment on his employer's false representations to suffer. There is no reason for the employer who misled its employee to be allowed to profit from the misrepresentation." Id. Here there is no employer profit. Whether Black would permit estoppel in this case is a difficult question. It may not have to be answered if the elements of estoppel are not met.
To prove estoppel Russo must prove that Peick, with the intent that Russo act on Peick's statements, misrepresented a material fact knowing it to be untrue, and that Russo did not know the truth and relied on Peick's statements to his own detriment. On the facts accepted here, Russo did not know what the Plan meant, and Peick gave him advice with the intent that Russo act upon it and the advice was materially in error. Whether Peick knew he was wrong is unclear on this record, but I assume he did.
Defendant says Russo did not rely on Peick, reasonably or otherwise, to his detriment. At the time, Russo spoke with Peick the only way he could have gotten any money was to take disability so the disability pension clearly was the "financially advantageous choice." Russo was thus not hurt by taking disability. But Russo, by taking disability, lost forever his right to seek a deferred vested pension. He did not lose a right to an early pension, under the trustees' interpretation of the Plan he never had the right
to such a pension.
The choice Russo made led to the receipt of $ 8,430 that he would not have otherwise received. Through June 1991 he has received $ 31,931 as a result of his choice of disability. Had he waited until age 57 to collect a deferred pension (the only other choice really available to him when he spoke to Peick) he would have received $ 21,307.81 through June 1991. And he would not catch up. The monthly deferred pension was always lower than the disability pension and the gap between them today is quite large--over $ 120 a month.
In short, there is no estoppel here because there is no detriment. If Peick had told Russo the truth, Russo could not have done better than he already has done.
The federal law claim must fail on the merits. The state law claims of estoppel, breach of fiduciary duty and misrepresentation are all preempted by ERISA, Lister v. Stark, 890 F.2d 941 (7th Cir. 1989).