Retirement Work Won’t Interrupt Benefits Plan

(CN) - Two mechanics who found retirement work as a traffic flagger and snow plow operator should be allowed to collect their pension benefits, the 9th Circuit ruled.

James Tapley and Michael Chapman both took early retirement in 2001 after spending most of their careers working as skilled mechanics in Alaska. They were members of the International Union of Operating Engineers, and were covered by the Employers Construction Industry Retirement Plan.

The plan allows members to work after retirement and still receive benefits, providing they do not work for more than 51 hours during any calendar month in a "job classification" in which the retiree was previously employed, or in the industry in which the employers participate.

Since the plan fails to define the term "job classification," however, Tapley and Chapman were left uninformed about whether their postretirement jobs as a flagger and snow blower, respectively, would leave them without retirement benefits.

After the plan's trustees determined that the pair's postretirement jobs were in the same "job classification" as their former jobs, Tapley and Chapman filed suit.

In Tapley's case, the trustees had looked at the official description for his job with the state of Alaska, which he described as "holding a sign" and "directing traffic," but which was described by a state-provided "Request for Referral" form as an "Equipment Operator." The job description included duties such as grounds routine maintenance, driving 1-ton pickup trucks and preparing the equipment for the crew.

The trustees found that many of the duties were similar to Tapley's previous duties working as a heavy duty mechanic, station mechanic, fabricator and welder. They ruled that his job as a flagger, therefore, was under the same job classification as his former covered employment.

U.S. District Judge H. Russell Holland in Anchorage upheld the trustees' decisions, but a three-judge panel of the 9th Circuit reversed Friday.

They found that the trustees chose to "emphasize any 'similar' and analogous' duties, skills and general competencies - many of which were listed in broad job abstracts - without properly considering how incidental they were, how seldom the duties were performed, or whether the skills Tapley developed during the many years of Covered Employment were ever used or required at all."

The only overlap between the two positions appeared to be driving a service truck and the associated maintenance of that truck, which is far from meaningful, especially considering Tapley's testimony that his main duty included holding a sign and directing traffic, according to the ruling.

Likewise, in Chapman's case, the trustees chose to focus on the fact that Chapman "drove a truck" in both his pre- and post-retirement jobs, and that his "preventative maintenance" duties as a snow plower had him using similar skills to which he used when he worked as a mechanic and service oiler during his covered employment, the court found.

The trustees failed to acknowledge the "significant difference in core skills used for each job," according to the ruling.

"Common sense strongly suggests that a position flagging traffic or plowing snow is not the same 'job classification' as a skilled mechanic repairing heavy equipment utilizing specialized skills acquired over a long career," Judge Raymond Dearie wrote for the panel. "These two positions have little in common beyond basic skills widely acquired through everyday experiences."

By construing the language in the plan to prevent Tapley and Chapman from retiring to unskilled jobs, the trustees effectively rewrote the plan to create a much broader category of "skills" that could be construed as being part of a retiree's former "job classification," the 9th Circuit found.

"Pension plan participants should be able to reasonably rely on plan terms in planning their retirement," Dearie wrote. "Yet the trustees' vague standard for interpreting the term 'job classification' left Tapley and Chapman in the dark about what was acceptable."

Earned retirement benefits cannot be taken away based on the "untethered interpretation" of the plan put forth by the trustees, the panel found.

"It is not for this court to proffer a reasonable interpretation of plan language, but instead to identify and reject any interpretation that is arbitrary, misfocused and contrary to the intent of those responsible for its terms," Dearie wrote. "We must do so here."

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