ROBERT J. BAUER, Plaintiff,
INTERNATIONAL BROTHERHOOD ELECTRICAL WORKERS LOCAL NO. 150 PENSION FUND, Defendant.
MEMORANDUM OPINION AND ORDER
AMY J. ST. EVE, District Judge.
Plaintiff Robert J. Bauer brings this action against Defendant International Brotherhood Electrical Workers Local No. 150 Pension Fund (the "Plan" or "Defendant") seeking to recover disability benefits allegedly due to him. ( See R. 1, Compl. ¶ 4.) Before the Court are the parties' cross-motions for summary judgment. (R. 20, Pl. Mot.; R. 25, Def. Mot.) For the following reasons, the Court denies Plaintiff's motion for summary judgment, grants Defendant's motion for summary judgment, and dismisses Plaintiff's claim with prejudice.
I. Northern District of Illinois Local Rule 56.1
Local Rule 56.1 "is designed, in part, to aid the district court, which does not have the advantage of the parties' familiarity with the record and often cannot afford to spend the time combing the record to locate the relevant information, ' in determining whether trial is necessary." Delapaz v. Richardson, 634 F.3d 895, 899 (7th Cir. 2011) (citation omitted). Local Rule 56.1(a)(3) requires the moving party to provide "a statement of material facts as to which the moving party contends there is no genuine issue." Cracco v. Vitran Express, Inc., 559 F.3d 625, 632 (7th Cir. 2009). "The opposing party is required to file a response to each numbered paragraph in the moving party's statement, including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon." Id. (citing L.R. 56.1(b)(3)(B)). Local Rule 56.1(b)(3)(C) requires the nonmoving party to present a separate statement of additional facts that requires the denial of summary judgment. See Ciomber v. Cooperative Plus, Inc., 527 F.3d 635, 643-44 (7th Cir. 2008). The parties have complied with their obligations under Local Rule 56.1, and the facts material to their cross-motions for summary judgment are not in dispute.
II. Undisputed Facts
A. The Plan
The Plan is a multi-employer defined-benefit pension plan that provides benefits to eligible covered employees and their dependents. (R. 19, Def. L.R. 56.1 Stmt. ¶ 1.) Plaintiff is a resident of Wildwood, Illinois and a participant in the Plan. ( See id. ¶ 3, 5.) The Plan is subject to and governed by the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). ( Id. ¶ 2.) Specifically, the Plan is an "employee pension benefit plan" within the meaning of ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A). ( Id. ) The written Plan Document sets forth the applicable provisions governing benefits, eligibility, coverage, limitations and administration of the Plan. ( Id. ¶ 10.)
A group of six Trustees-three of whom the Local Union No. 150 of the International Brotherhood of Electrical Workers (the "Union") appoints and three of whom the National Electrical Contractors Association (the "Association") appoints-administer the Plan pursuant to a Trust Agreement. ( See R. 17, Schrieber Decl. at Ex. 1, the Plan § 1.2.) The Plan Document and the Trust Agreement give the Trustees discretion to interpret the terms of the Plan and administer benefits. (Def. L.R. 56.1 Stmt. ¶¶ 11-12.) Specifically, the Trust Agreement grants the Trustees the power "[t]o determine all questions arising under the Plan and this Trust, including the power to determine the rights or eligibility of persons who are or may become entitled to Plan benefits and the amount of their respective benefits, and to remedy ambiguities, inconsistencies, or omissions...." ( Id. ¶ 11.) In addition, the Plan Document provides that "[t]o the extent permitted by law, any interpretation of the Plan and any decision on any matter within the Trustees' discretion made by them in good faith is binding on all persons." ( Id. ¶ 12.)
B. Rehabilitation Plan under the Pension Protection Act of 2006
In October 2010, the Trustees adopted a rehabilitation plan pursuant to the Pension Protection Act of 2006, 26 U.S.C. § 432(b). Congress enacted the Pension Protection Act, Pub. L. No. 109-280, 120 Stat. 780 (2006), to address a "pension underfunding crisis" that had resulted from a "perfect storm" of low interest rates, a decline in the stock market, and an increasing number of retirees. See The Pension Underfunding Crisis: How Effective Have Reforms Been? Hearing before the H. Comm. on Education and the Workforce, 108th Cong. 2 (2003) (statement of Rep. John A. Boehner, Chairman, H. Comm. on Education and the Workforce). The Act, among other things, sets funding requirements that pension plans must meet every year. See 26 U.S.C. § 432(b). A plan that fails to meet these requirements receives a status of either "endangered" or "critical" depending on the estimated funding shortfall. Id.
For a plan in "critical" status, the plan sponsor must adopt a rehabilitation plan designed to improve the plan's funding and allow it to emerge from "critical" status within ten years. Id. § 432(e). This rehabilitation plan "may include reductions in plan expenditures (including plan mergers and consolidations), reductions in future benefit accruals or increases in contributions, if agreed to by the bargaining parties, or any combination of such actions." Id. § 432(e)(3)(A)(i). The plan also may reduce "adjustable benefits, " including "disability benefits not yet in pay status, " if the plan sponsor deems the reductions appropriate. Id. § 432(e)(8)(A)(i), (iv)(I).
On September 28, 2010, the Plan's actuary certified that the Plan was in "critical" status for the plan-year beginning July 1, 2010. (Def. L.R. 56.1 Stmt. ¶ 13; see also Schreiber Decl. at Ex. 7.) Pursuant to the Pension Protection Act, the Trustees adopted a Rehabilitation Plan to improve the Plan's funding status on October 4, 2010. (Def. L.R. 56.1 Stmt. ¶¶ 14-15); see also 26 U.S.C. § 432(a). Among other things, the Rehabilitation Plan reduced the amount of disability pensions not in pay status as of January 1, 2011 by eliminating the disability pension subsidy. (Def. L.R. 56.1 Stmt. ¶¶ 14-16.) Previously, a participant eligible to receive a disability pension would receive an unreduced pension regardless of his age at the time his employment terminated. ( See Schreiber Decl. at Ex. 3.) Under the Rehabilitation Plan, if a participant's employment terminated due to a disability before age 63, the Plan would reduce his pension benefits by 0.417% for each month (5% per year) that he retired before the participant's 63rd birthday, up to a total reduction of 60%. ( See Def. L.R. 56.1 Stmt. ¶¶ 15; see also Schreiber Decl. at Ex. 3.)
In October 2010, the Trustees provided all participants, including Plaintiff, a Notice of Critical Status and a Notice of Reduction in Adjustable Benefits. (Def. L.R. 56.1 Stmt. ¶ 15; see also Schreiber Decl. at Exs. 3, 7.) The Notice of Critical Status informed participants that the Plan's actuary had certified to the U.S. Department of Treasury that the Plan was in "critical status" for the plan-year beginning July 1, 2010, and as a result, federal law permitted the Trustees to reduce or even eliminate "adjustable benefits"-including disability benefits not yet in pay status-to improve the Plan's funding. (Schreiber Decl. at Ex. 7.) The Notice of Reduction in Adjustable Benefits explained the various changes in benefits to which the Trustees, the Union, and the employers sponsoring the Plan had agreed. ( Id. at Ex. 3.) The Notice of Reduction in Adjustable Benefits provided that the changes "will be ...