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KESSEN v. PLUMBERS' PENSION FUND

February 27, 1995

JOSEPH H. KESSEN, Plaintiff,
v.
PLUMBERS' PENSION FUND, LOCAL 130, U.A., and JAMES R. BELZER, GERALD M. SULLIVAN, THOMAS J. McMANUS, GEORGE E. QUINN, SR., PHILIP J. HOZA, HENRY J. SWADE, JAMES T. FINN, JAMES T. SULLIVAN, JOHN H. KYLES and JAMES W. YOUNG, TRUSTEES OF THE PLUMBERS' PENSION FUND, LOCAL 130, U.A., Defendants.



The opinion of the court was delivered by: ELAINE E. BUCKLO

 Plaintiff, Joseph H. Kessen, was a plumber who in 1991 began receiving a pension under the Plumbers' Pension Fund, Local 130 U.A. In 1993, Mr. Kessen's pension was suspended on the ground that he was continuing to do plumbing work in violation of the terms of the Plan. After exhausting his administrative remedies, Mr. Kessen filed the present lawsuit, contending that the Trustees' interpretation of the Plan was arbitrary and capricious, that the Trustees are estopped from their interpretation of the Plan by prior inconsistent statements made to him before his retirement, and alleging a violation of fiduciary duty under ERISA. Jurisdiction is based on Section 1132(e) of the Employment Retirement Income Security Act of 1973, as amended ("ERISA"). 29 U.S.C. § 1132(e). Mr. Kessen has filed a motion for partial summary judgment. Defendants, including the Plumbers' Pension Fund, Local 130, U.A. (the "Plan"), James R. Belzer, Gerald M. Sullivan, Thomas J. McManus, George E. Quinn, Sr., Philip J. Hoza, Henry J. Swade, James T. Finn, James T. Sullivan, John H. Lyles and James W. Young, the Plan trustees, have also filed a motion for summary judgment.

 Undisputed Facts

 The Fund is a multi-employer, employee benefit fund within the meaning of Section 1002(3) of ERISA and a defined pension benefit plan under Section 1003(35) of ERISA. 29 U.S.C. §§ 1002(3) and 1003(35).

 Section 5.05A of the Plan provides, in part:

 Under Section 2.19 of the Plan, "Normal Retirement Age means the day a Participant attains age 65." When he retired Mr. Kessen executed a document entitled "Important Notice" which provides:

 
A. Reemployment prior to 65th Birthday. 1. If such employment or self employment takes place within the United States, regardless of for how long, benefits are suspended until the month following the Participant's 65th birthday . . . .

 Mr. Kessen was born January 22, 1930. In 1990, Mr. Kessen was employed by the Chicago Transit Authority ("CTA") as a plumber. He applied for retirement benefits in December, 1990. Before doing so, he attended meetings for CTA plumbing department employees at the Union hall and at the CTA maintenance shops. These meetings were usually conducted by two of the Fund's Trustees (who according to the briefs in this case were also union officials), Thomas McManus ("Mr. McManus") and Gerald Sullivan ("Mr. Sullivan"). At these meetings, Mr. McManus and Mr. Sullivan told the group that non-licensed plumbers were permitted to rod sewer lines and catch basins, do preventive maintenance on compressors and pumps, run the Vactor truck, replace fire heads, set flappers on sprinkler system valves and do general cleanup work. *fn1"

 On December 6, 1990, Mr. Kessen told John Bojan ("Mr. Bojan"), the Secretary of the Pension Fund, that he planned to retire on February 1, 1991, a date shortly following Mr. Kessen's 61st birthday. Mr. Bojan was authorized to discuss retirement entitlements with prospective retirees like Mr. Kessen. Mr. Kessen submitted to Mr. Bojan an application to receive pension benefits which represented that his last day of employment in the plumbing trade would be January 21, 1991. According to Mr. Kessen, he told Mr. Bojan that after retirement, he would do the work of a non-licensed plumber, as described by Mr. McManus and Mr. Sullivan. He says Mr. Bojan said that would be okay. Defendants deny this conversation. They say Mr. Kessen said only that he was going to be a member of a CTA cleaning crew, and that he would clean catch basins.

 Mr. Kessen began receiving pension benefits in February, 1991. Neither the minutes of the Trustees' meeting of February 6, 1991 at which Mr. Kessen's pension benefit was approved nor the report on pension applications dated January 31, 1991, incorporated in the minutes by reference, contain any discussion of Mr. Kessen's intended post-retirement work duties at the CTA. However, Mr. Bojan was at the February, 1991 meeting at which Mr. Kessen's pension was approved. At least one trustee, James R. Belzer, testified that Mr. Kessen's post-"retirement" work was discussed at that meeting. (Belzer Dep., pp. 42-43). Mr. Bojan did not say anything at that meeting about his knowledge of Mr. Kessen's plans. When Mr. Kessen began receiving retirement benefits, he believed that the Trustees had approved the type of work that he was planning to do. Mr. Kessen would not have done the work which the Trustees later concluded was prohibited if he knew or believed that it would cause him to lose any benefits. Those benefits were a large part of his monthly income.

 Between February, 1991 and September, 1994, Mr. Kessen's job duties at the CTA included rodding subway station and subway line sewers, cleaning catch basins, oiling compressors, operating the Vactor truck, *fn2" replacing fire sprinkler heads and resetting flappers on sprinkler system valves. Non-licensed plumbers at the CTA may perform all the duties that Mr. Kessen performed. One need not be an apprentice plumber to learn how to do these tasks.

 A letter dated August 11, 1992 from Plumbers' Pension Fund's counsel, David J. Creagan, Jr., informed Mr. Kessen that "it has been reported that on several occasions that after you commenced receiving retirement benefits from the Plumbers' Pension Fund, you did plumbing work." By letter dated September 30, 1992, Plumbers' Pension Fund's lawyer, Robert A. Wolz ("Mr. Wolz") advised Mr. Kessen that the Trustees would resolve all benefits disputes by means of written submissions. He was advised to set forth his position in writing. In a letter dated October 16, 1992 to Mr. Kelly, Mr. Kessen was reminded to provide to the Trustees in writing all details he felt relevant to his position.

 The CTA Manager of Electrical/Mechanical Bus Systems Maintenance (the CTA department in which Mr. Kessen is employed), William Lyke, sent a letter dated September 23, 1992 to the Chicago Journeyman Plumbers' Union, Local 130 describing Mr. Kessen as a plumber and stating that his duties included maintaining fire lines, performing preventive maintenance on compressors and pumps and rodding sewers. Mr. Kessen's attorney, Mr. Kelly, submitted a letter dated December 31, 1992 to the Trustees stating that Mr. Kessen's duties with the CTA included "rodding subway station and subway line sewer lines and cache [sic] basins." No correspondence described any alleged oral statements or interpretations of the Fund's suspension of benefit rules by Mr. Sullivan or Mr. McManus.

 The Trustees considered Mr. Kessen's situation during their meeting on January 13, 1993. The minutes of that meeting state that the Trustees determined that the rodding of drains and sewers utilize the skills of a plumber within the meaning of the Fund's suspension of benefits rule in the Plan. The minutes further state that the Trustees decided that the maintenance of fire lines and the performance of preventive maintenance on compressors and pumps utilize plumbing skills within the meaning of the Plan. The Trustees did not consult any studies or other information from actuaries and did not consider the effect of their decision on the actuarial integrity of the Plan.

 On January 25, 1993, Mr. Kessen received a letter dated January 15, 1993 from Plumbers' Pension Fund's counsel, Mr. Wolz, stating that the Trustees had determined that Mr. Kessen's employment with the CTA utilizes the skill or skills Possessed by a plumber, and therefore, his monthly pension benefit would be suspended under Section 5.05A of the Plan. The letter stated that the specific tasks that Mr. Kessen was performing which utilized plumbing skills were rodding subway station and ...


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