Virtue v. International Brotherhood of Teamsters Retirement and Family Protection Plan

Citations: 997 F. Supp. 2d 10; 57 Employee Benefits Cas. (BNA) 1641; 2013 U.S. Dist. LEXIS 157300; 2013 WL 5879499Docket: Civil Action No. 2012-0516

Court: District Court, District of Columbia; November 4, 2013; Federal District Court

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Plaintiff Daniel Virtue, a former employee of the International Brotherhood of Teamsters (IBT) and a local union president, filed a lawsuit seeking membership and benefits from the IBT Retirement and Family Protection Plan, a defined-benefit pension plan. He claims that a 2001 amendment to the Plan, which retroactively excluded part-time "stipend employees" like himself from participation, violated his rights under the Employee Retirement Income Security Act of 1974 (ERISA). Virtue argues that this amendment cut back his benefits without sufficient notice. However, the defendants contended that Virtue's claims were barred by the statute of limitations, which allows only three years for filing after discovering ineligibility for benefits. The court found that Virtue was clearly informed of his ineligibility well over three years before initiating the lawsuit. Consequently, the court granted the defendants' motion for summary judgment, dismissing Virtue's case. The background notes that the IBT is a large labor union with a mission to support local unions, and the Plan is intended for IBT employees rather than local union members. Prior to the amendment, employees needed to work at least 1,000 hours over a year to qualify for benefits. Although Virtue served in various stipend positions and believed he was eligible for the Plan, his appointment letters did not indicate pension coverage.

Virtue asserts he worked over 1,000 hours in his first year at IBT, qualifying him as a covered employee before Amendment 2001-C. In May 2002, the IBT informed him and others that they were classified as stipend employees, eligible only for travel-accident insurance, as per the Stipend Employee Policy. This position was reaffirmed in 2006 when his former wife's attorney inquired about Virtue's benefits, to which the IBT confirmed his limited coverage. Virtue did not contest this classification at the time. After his termination in 2009, he applied for benefits under the Plan, but his requests and subsequent appeals were denied. In April 2012, Virtue filed a lawsuit on behalf of himself and a class of similarly situated employees, claiming the 2001 Amendment and Stipend Employee Policy unlawfully reduced benefits in violation of ERISA provisions. He sought reformation of the Plan and a distribution of past benefits. In April 2013, the court denied class certification, deeming Virtue an inadequate representative due to his time-barred claim. The defendants now seek summary judgment based on this ruling. Summary judgment is warranted if there is no genuine dispute over material facts, with the non-movant’s evidence being presumed credible and all reasonable inferences drawn in their favor.

Virtue claims a breach of ERISA's anti-cutback rule, 29 U.S.C. 1054(g), arguing that Amendment 2001-C of the Plan improperly terminated accrued benefits for participants. He asserts that he was not notified of this amendment as required by 29 U.S.C. 1054(h). Virtue seeks enforcement under two ERISA provisions: 29 U.S.C. 1132(a)(3), to enjoin violations, and 29 U.S.C. 1132(a)(1)(B), to recover benefits due. He asserts eligibility for the Plan based on working over 1,000 hours in a year prior to the amendment. Virtue seeks nearly $500,000 in owed benefits. 

Defendants argue that Virtue lacks standing, claiming he does not present a "colorable claim" for benefits, which is necessary for ERISA participant status. They contend they will prevail on the merits. However, Virtue provides affidavits supporting his claim of vested rights before the amendment excluded him. The Court recognizes that the standard for a colorable claim is low, affirming Virtue’s standing to sue.

Additionally, Defendants argue that the claim is barred by the statute of limitations. The Court notes that it has previously ruled on this matter, suggesting adherence to the law-of-the-case doctrine, which maintains consistency in judicial decisions. Even if this doctrine did not apply, the Court would still conclude that the statute of limitations for Virtue's claims, which fall under non-fiduciary duties, should follow the most analogous state statute of limitations, commonly likened to breach-of-contract claims in ERISA cases.

Courts in this district apply the District of Columbia's three-year statute of limitations for breach-of-contract actions to ERISA benefits suits, as established in D.C. Code 12-301(7) and the case of Pettaway v. Teachers Ins. Annuity Ass’n of America. In pension benefit cases, a denial of benefits is treated similarly to a breach of contract claim. The statute of limitations begins when a plaintiff discovers, or should have discovered, the injury, following the discovery rule. In ERISA cases, this rule has evolved into the "clear repudiation" rule, whereby a claim accrues upon a clear denial of benefits, as clarified in Miller v. Fortis Benefits Ins. Co. 

Defendants argue that Virtue's claim is time-barred due to two clear repudiations: first, a May 2002 letter from the IBT stating that stipend employees were not entitled to benefits beyond travel-accident insurance, and second, a 2006 notification during Virtue's divorce proceedings confirming his ineligibility for the Plan. These events are undisputed. The court agrees with the defendants, determining that Virtue's claims are indeed time-barred, with the statute of limitations expiring no later than April 2009 following the clear repudiation communicated in the 2006 correspondence. Virtue acknowledged receiving and understanding this letter, which constituted a clear repudiation of his claim to benefits, triggering the statute of limitations as supported by prior case law.

In Daill v. Sheet Metal Workers’ Local 73 Pension Fund, the court determined that a plan's letter detailing an employee's ineligibility for a pension constituted a clear repudiation of the employee's claim. This precedent was supported by cases like Carey v. Int’l Bhd. of Elec. Workers Local 363 Pension Plan and Union Pac. R.R. Co. v. Beckham, which similarly identified clear repudiation through denials of benefit requests and explanations of plan changes. In the current matter, a letter from IBT in 2006 clarified that Virtue was a stipend employee and therefore ineligible for benefits under the Plan.

Virtue raised two objections not considered in a prior ruling. First, he argued that the Plan waived its statute-of-limitations defense by reviewing his eligibility for benefits in 2009. This assertion combines elements of waiver and equitable tolling. The court clarified that a statute-of-limitations defense is not jurisdictional and can be waived, but mere consideration of a claim does not amount to a waiver. In this case, Virtue sought to apply for benefits two years post-termination, and the Plan consistently denied his requests based on the reasons previously stated in the 2006 letter. 

Second, Virtue contended that the Plan's repudiation was not clear or consistent, claiming a lack of notice regarding Amendment 2001-C and the opportunity to appeal the denial. The court found each of Virtue's objections unpersuasive, emphasizing that responding to appeals does not equate to waiving the right to assert the statute-of-limitations defense. Even if the court were to consider equitable tolling during the administrative appeal, it would not benefit Virtue due to the established timeline of events.

Virtue initiated the administrative process in July 2009, after the statute of limitations had expired in April 2009, undermining his claim of diligent pursuit of rights and the existence of extraordinary circumstances for equitable tolling. His second argument, asserting that his claim to benefits was not clearly repudiated, was also unconvincing. The court clarified that clear repudiation and the discovery rule do not necessitate notice of a specific legal claim but rather start the statute of limitations when the harm is discovered—in this case, the denial of appropriate benefits. Virtue's claim was explicitly repudiated in 2006, and despite some courts considering continuous administrative review relevant, Virtue's claim was not under such review, as he waited over three years to invoke the administrative process. His delay was possibly influenced by his divorce proceedings, where contesting the benefits might have affected their division. The clarity of the initial denial in 2006 remained intact despite later requests for benefits, leading the court to conclude that Virtue should have been aware of the repudiation by April 2006, thus making his claim time-barred by April 2009. The court did not need to address whether a 2002 letter triggered the limitations period, as the undisputed facts confirmed the claim was time-barred. Consequently, the court granted the Defendant’s Motion for Summary Judgment.