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Lee v. Laborers' Local #231 Pension Plan Board of Trustees

June 8, 2006

JOHN L. LEE, PLAINTIFF,
v.
LABORERS' LOCAL #231 PENSION PLAN BOARD OF TRUSTEES ET AL. DEFENDANTS.



The opinion of the court was delivered by: Michael M. Mihm United States District Judge

ORDER

Before the Court is Plaintiff's Motion to Strike Paragraphs #9 and #10 from the Uncontested Facts section of the Proposed Final Pre-Trial Order and Defendants' Motion for Summary Judgment. For the reasons set forth below, Plaintiff's Motion to Strike [#34] is GRANTED IN PART and DENIED IN PART and Defendants' Motion for Summary Judgment [#26] is GRANTED.

JURISDICTION

The Court's jurisdiction arises pursuant to 28 U.S.C. § 1331, as the Complaint alleges a denial of benefits under an employee benefits plan governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq.

BACKGROUND

Plaintiff, John L. Lee ("Lee") is a union laborer and a participant in the Laborers' Local #231 Pension Plan. The Laborers' Local #231 Pension Plan (the "Plan") is a pension plan created and administered pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § § 1001 et seq. The Plan is a wholly self-funded ERISA pension plan, which means that the fund is totally funded by means of employer contributions computed by hours of work performed by employees pursuant to various collective bargaining agreements. The Plan is administered by a Board of Trustees.

Lee filed an application for disability benefits with the Plan on approximately July 7, 2000. He claimed that he was injured on the job and that as a result of the injury, he now suffers from a permanent and total disability because he is blind in one eye. On May 21, 2001, the Fund Administrator denied Lee's application. Specifically, the Fund Administrator found that the medical information provided by Lee was equivocal and non-definitive. Lee then filed an intra-fund appeal of the denial of his application.

In his appeal, Lee contested the competency of two board members by alleging that they were not competent to rule on his appeal because they were crack cocaine users. The Fund Trustees told Lee to remove the offensive language regarding the board members from the application and refused to process the appeal until the allegations were removed. Lee then filed a lawsuit against the Defendants in this Court (see Lee v. Laborers' Local #231 Pension Plan Board of Trustees, Case No. 02-1274). Lee and the Plan then agreed that Lee would dismiss the lawsuit and remove the scandalous matter regarding the individual trustees from his appeal in return for the Plan's agreement to pay Lee back disability pension payments from July 2000, if the Trustees determined that Lee was entitled to a disability pension.

Omitting any reference to the suspected drug use by the two Trustees, Lee re-submitted his intra-fund appeal to the Board of Trustees. On May 20, 2003, the Board of Trustees of the Plan conducted an intra-fund appeal hearing. Lee appeared at the hearing and presented arguments to the Board. On May 27, 2003, the Board of Trustees of the Plan denied Lee's appeal. As a result of the denial of his application, Lee filed the instant cause of action. In his Amended Complaint, Lee alleges that the Board of Trustees breached their fiduciaries duties and that the Plan wrongfully denied him benefits in violation of ERISA.

A. Motion to Strike

Lee has filed a Motion arguing that Paragraphs #9 and #10 of Exhibit Q of Defendants' Motion for Summary Judgment should be stricken. Specifically, Exhibit Q is a copy of the Proposed Final Pre-Trial Order that was developed by Plaintiff and Defendant in preparation for the initial Final Pre-Trial Conference that was held in this case on February 10, 2006.*fn1

Paragraphs #9 and #10 of the Proposed Final Pre-Trial Order state:

(9) The factual matters stated within the "Decision," including the specific Findings of Fact stated therein, numbered #1 through #15, are stipulated by the parties hereto as being accurate,

(10) The specific factual matters stated within the "Conclusions of Law" of said "Decision," which "Conclusions are numbered #1 through #10, are also stipulated by the parties hereto as being accurate.

(Proposed Final Pre-Trial Order, at 4.) These paragraphs refer to the Board of Trustees' Decision (the "Decision") on Lee's intra-fund appeal. The Decision is included as Exhibit A of Defendants' Motion for Summary Judgment. The Decision includes sections entitled "Findings of Fact" and "Conclusions of Law." Defendant claims that the items in these sections are undisputed because Lee agreed to the Proposed Final Pre-Trial Order which contained the above paragraphs. Lee disagrees and argues that these items should be stricken because he was not given adequate time to examine these undisputed facts before they were submitted to the Court on February 10, 2006, and, if he had examined them, he would not have agreed that these were "undisputed" facts. Additionally, in Lee's Response to Defendants' Motion for Summary Judgment, he refers to these items and argues that they are disputed because he did not sign the Proposed Final Pre-Trial Order. Lee repeatedly states that "[t]he Plaintiff was not served with a copy of the document until attached [sic] as Defendants' exhibit ("Q") of Defendants' Summary Judgment Motion." (Pl.'s Response to Motion for Summary, at 3, 5.)

However, a review of Defendants' Exhibit Q indicates that Lee did sign the Proposed Final Pre-Trial Order. Moreover, Lee was provided with a copy at the Final Pre-Trial Conference on February 10, 2006. Despite the presence of Lee's signature on the Proposed Order, the Court recognizes that Lee is proceeding pro se and that he now regrets agreeing to Paragraphs #9 and #10 in the Proposed Order. Accordingly, the Court grants Lee's Motion to Strike in part. Specifically, the Court grants Lee's motion and will consider these facts to be disputed facts for the purposes of summary judgment. However, in accordance with the standard of review on a motion for summary judgment, Defendants' assertions will be accepted as undisputed unless Lee is able to set forth evidence to show that there is a genuine issue of material fact.

B. Motion for Summary Judgment

A motion for summary judgment will be granted where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The moving party has the responsibility of informing the Court of portions of the record or affidavits that demonstrate the absence of a triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party may meet its burden of showing an absence of material facts by demonstrating "that there is an absence of evidence to support the nonmoving party's case." Id. at 325. Any doubt as to the existence of a genuine issue for trial is resolved against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Cain v. Lane, 857 F.2d 1139, 1142 (7th Cir. 1988).

If the moving party meets its burden, the nonmoving party then has the burden of presenting specific facts to show that there is a genuine issue of material fact. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Federal Rule of Civil Procedure 56(e) requires the nonmoving party to go beyond the pleadings and produce evidence of a genuine issue for trial. Celotex Corp., 106 S.Ct. at 2553. This Court must then determine whether there is a need for trial - whether, in other words, there are any genuine factual issues that can properly be resolved only by a finder of fact because they may be reasonably resolved in favor of either party. Anderson, 447 U.S. at 249; Hedberg v. Indiana Bell Tel. Co., 47 F.3d 928, 931 (7th Cir. 1995). Finally, "[w]here a party bears the burden of proof on an issue, he or she must affirmatively demonstrate, by specific factual allegations, that there is a genuine issue of material fact requiring trial." Sarsha v. Sears, Roebuck & Co., 3 F.3d 1035, 1041 (7th Cir. 1993). In his Complaint, Lee alleges that (1) the Plan wrongfully denied him benefits; and (2) the Board of Trustees breached their fiduciary duties in violation of various provisions of ERISA.

1. Denial of Benefits Claim

Lee's denial of benefits claim is brought pursuant to 29 U.S.C. § 1132(a)(1)(B) of ERISA, which authorizes a participant or beneficiary of an employee welfare benefit plan to bring a civil action "to recover benefits due to him under the terms of his plan . . . ." 29 U.S.C. § 1132(a)(1)(B). A challenge to a denial of benefits brought under § 1132(a)(1)(B) is to be reviewed de novo "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Phillips v. Lincoln National Life Ins. Co., 978 F.2d 302, 307 (7th Cir. 1992), citing Firestone Tire & Rubber Co. v. Bruch, 109 S.Ct. 948, 956 (1989); Hickey v. A.E. Staley Mfg., 995 F.2d 1385, 1389 (7th Cir. 1993). Neither party disputes that the Plan gives the Board of Trustees discretion to interpret the meaning of the terms of the Plan or authority to determine Lee's eligibility for benefits under the Plan. As described later in this Order, it appears that the Board of Trustees utilized the 2001 version of the Plan, rather than the 1993 version, despite the fact that the 1993 version was in effect at the time that Lee was injured. Regardless, both the 1993 and the 2001 versions give the Board of Trustees discretion to interpret the plan. Both versions state:

The Trustees shall, subject to the requirements of the law, be the sole judges of the standard of proof required in any case and in the application and interpretation of this Plan; and decisions of the Trustees shall be final and binding on all parties.

(1993 Summary Plan Description, at 47; 2001 Summary Plan Description, at 41.) Additionally, both versions of the Plan state:

The Trustees shall be the sole and final judges of total and permanent disability and of a Participant's entitlement to a Disability Pension hereunder.

(1993 Summary Plan Description, at 33; 2001 Summary Plan Description, at 31.) Both Plans clearly give the Board of Trustees discretionary authority to determine eligibility of disability benefits under the Plan. Where the plan grants discretionary authority to the administrator, the court reviews the decision under the arbitrary and capricious standard. Hess v. Hartford Life & Accident Ins. Co., 274 F.3d 456, 461 (7th Cir.2001). Accordingly, the Board of Trustees' Decision will only be overturned if it was arbitrary and capricious.

Lee argues that the Board's Decision was arbitrary and capricious because (1) the Board utilized the 2001 Plan definition, rather than the 1993 Plan definition, of Total and Permanent Disability when it found that Lee was not totally and permanently disabled; (2) the Board arbitrarily found that Russell Erbaugh was entitled to a disability pension but Lee was not; and (3) the Board failed to provide a fair and adequate procedure for deciding that Lee was not entitled to benefits.

Lee's first argument is that the Board's Decision is arbitrary and capricious because the Board utilized the 2001 definition of totally and permanently disabled when it found that Lee was not entitled to benefits. The 1993 Plan stated:

Section 3.10. Disability Defined

A Participant shall be considered permanently and totally disabled only if the Board of Trustees find, on the ...


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