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Guyther v. Department of Labor Federal Credit Union

March 28, 2002


The opinion of the court was delivered by: James Robertson United States District Judge


Plaintiffs are former employees, or beneficiaries of deceased former employees, of the Department of Labor Federal Credit Union. In this suit, they accuse the Credit Union and certain of its officers of breaching fiduciary duties and violating the Employee Retirement Income Security Act (ERISA) in the operation of a retirement pension benefit plan between 1982 and 1998. The parties have filed cross motions for partial summary judgment, and the plaintiffs have moved for leave to amend their complaint a second time to add a new ERISA claim. For the reasons set forth below, defendants' motion for partial summary judgment will be granted, and both of plaintiffs' motions will be denied.


Target benefit plans require a minimum annual contribution (the "target" contribution) calculated to yield a defined benefit at retirement. Augustine Guyther, Paula Johnson

Meadows, Neomi Bane (now deceased), and June Johnson enrolled in the Credit Union's Target Benefit Plan when it was inaugurated on April 1, 1982, and made contributions for the duration of their employment. *fn1 Over the years, the Credit Union executed three sets of retroactive amendments. A 1985 plan agreement was approved on January 30, 1986. A 1989 plan agreement and a 1996 plan agreement were approved in August 1998.

The plan appears to have been the subject of sporadic employee complaints and a formal union grievance about failure to provide documentation and other procedural irregularities. Four employees eventually filed a civil complaint in this Court in 1998, Santos v. Department of Labor Federal Credit Union, No. 98-2982, and found materials in discovery (including reports by the Credit Union's own pension consultant and insurance agency) suggesting that the Credit Union was not making required contributions for all employees. That case settled.

After Santos, the plaintiffs in the current case requested an itemization of their contributions and payments to make up for claimed deficiencies. The Credit Union reviewed their claims and denied the requests. The plaintiffs then filed this suit, asserting breach of fiduciary duty against the Credit Union and Plan and breach of co-fiduciary duty against three named individual trustees and additional others unknown. They seek equitable relief in the form of an accounting and the appointment of an actuary, and they demand that the Credit Union make up for deficiencies in the amount of contributions that they assert should have been made under the terms of the plan.

The defendants responded initially by moving to dismiss for the plaintiffs' failure to exhaust their claims administratively. Communications Workers of Am. v. AT&T Co., 40 F.3d 426, 429, 431 (D.C. Cir. 1994). The plaintiffs then moved for partial summary judgment on liability and for equitable relief (an accounting and the appointment of an actuary) to assist in further proceedings, and the defendants cross-moved for partial summary judgment. Consideration of those motions was stayed while plaintiffs pursued administrative appeals, which they exhausted in the spring and summer of 2001.


I. Cross-Motions for Partial Summary Judgment

The Credit Union's Target Benefit Plan has always required employees to contribute 3% of their annual compensation to participate. Def. Ex. D at 1 (1982 plan); Def. Ex. E at 1 (1982 plan); Pl. Ex. 70 at 5 (1982 plan); Def. Ex. A at 12 (1985 plan); Def. Ex. B at 28 (1989 plan); Def. Ex. C at 31 (1996 plan). The core dispute in this case is whether those mandatory employee contributions are to be applied toward the annual target contribution, or whether the Credit Union is required under the plan agreements to pay the full target amount itself. The Credit Union has applied employees' 3% mandatory contributions toward the target contribution for twenty years, contributing its own money only where the 3% was insufficient to meet the target amount. The plaintiffs argue that this practice was impermissible under the 1982 and 1985 plan agreements and therefore that the defendants have violated 29 U.S.C. § 1054(g) by reducing accrued benefits and 29 U.S.C. § 1104 by discharging their duties in a way that benefits the Credit Union rather than acting for the sole benefit of participants and beneficiaries.

A. 1982 Plan

Resolution of the dispute about the 1982 plan agreement requires construction of the terms of a contract that neither party has been able to locate. The best evidence of the 1982 plan's provisions appears to be the 1982 and 1984 summary plan descriptions (SPDs) and a 1982 adoption agreement between the Credit Union and Travelers Insurance Company. SPDs often control over conflicting language in plan agreements anyway, because (it is thought) employees actually read the summaries. Mathews v. Sears Pension Plan, 144 F.3d 461, 466 (7th Cir. 1998); Chiles v. Ceridian Corp., 95 F.3d 1505, 1518-19 (10th Cir. 1996). Thus, even if the SPDs were not actually distributed to Credit Union employees in this case - an issue that is hotly disputed by the parties - they are still the best contemporaneous evidence of the terms of the contract and structure of the plan. *fn2

The absence of the 1982 plan agreement creates a second problem. The Credit Union's entire approach to this case is predicated on the assumption that its interpretations are entitled to deference under the terms of the plan agreements. It is true that the 1985 agreement authorizes the Credit Union to determine eligibility for benefits and to construe the terms of the plan in its capacity as Plan Administrator, Def. Ex. A at 7, § 3.02; see Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111-15 (1989), but the 1982 and 1984 SPDs and the adoption agreement do not specify the scope of the Credit Union's authority as administrator under the 1982 plan agreement. Def. Ex. D at 2; Def. Ex. E at 2. I am unwilling to accord deference to the Credit Union's interpretation of the 1982 plan ...

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