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CCH® PENSION — 10/19/09

Multiemployer plan wrongfully suspended retiree's benefits after misreading ERISA's "trade or craft" rule

A multiemployer pension plan violated ERISA when it suspended a retired meat cutter's monthly benefit after he obtained employment as a baked goods independent distributor, the U.S. Court of Appeals in St. Louis (CA-8) has ruled in Eisenrich v. Minneapolis Retail Meat Cutters and Food Handlers Pension Plan. The determination of whether two jobs are included within the same "trade or craft" under ERISA §203 must be based on the specific skills actually used by the retiree in the two jobs, and not the general classification of the two jobs.

Common industry or job

ERISA §203(a)(3)(B)(ii) permits a multiemployer pension plan to suspend the benefits of a retiree when that retiree takes a job "in the same industry, in the same trade or craft, and the same geographic area" covered by the plan. The retiree conceded that his new job was in an industry and a geographic area covered by the plan. However, the retiree successfully argued before the district court that his new job was not in the same "trade or craft" as his old one. The plan appealed.

On appeal, the plan argued that "trade or craft" refers to the skills typically performed by current employees within a certain occupation, and not to the skills performed by a specific retiree. Modern meat cutters, the plan said, use merchandising and retailing skills (e.g., stocking shelves, ordering products) that overlap with the skills used by an independent distributor like the retiree.

Functional approach

The appellate court rejected that argument. While the statute is ambiguous as to the meaning of "trade or craft," the applicable ERISA regulations (see ERISA Reg. §2530.203-3(c)(2)(ii)) require a "functional" approach to making the determination, including a focus on the skills used by the specific retiree. In this case, the retiree's meat-cutting job focused on cutting, grinding and wrapping meat, while his job as a baked goods distributor involved driving a delivery truck, delivering baked goods, and stocking shelves. The new job required the use of different skills by the retiree and under ERISA was not in the same "trade or craft." Thus the plan's interpretation was erroneous as a matter of law (as well as an abuse of its discretion to interpret terms of the plan).

In one victory for the plan, the appellate court reversed the district court's award of attorney's fees to the retiree.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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