Second Circuit Upholds Termination of Retired Union Workers’ Benefits Due to Disqualifying Employment

In Spillane v. New York City Dist. Council of Carpenters, No. 23-247, 2024 WL 221816 (2d Cir. Jan. 22, 2024), Plaintiff-Appellant Patrick Brendan Spillane and his wife sued his union and the union’s pension and welfare funds under the LMRDA and ERISA after the funds terminated his benefits following a union trial where Spillane was found to be working as a carpenter for a non-union company. The district court dismissed his claims and Spillane appealed. The Second Circuit upheld the dismissal of the claims.

With respect to the LMRDA claim, the court found that Spillane failed to exhaust administrative remedies or to show that doing so would have been futile. As such, Spillane cannot institute legal or administrative proceedings against the Union or its officers.

With respect to the denial of benefits claim Plaintiff brought under ERISA § 502(a)(1)(B), the court found that it was time-barred based on the Plan’s limitation clause which provides that any action must be brought within 365 days from the date of notice of the adverse benefit determination. The court found the one-year limitations period to be reasonable and enforceable. Even if the claim was not time-barred, the welfare fund’s decision was not arbitrary or capricious. The plain language of the Summary Plan Description allows the funds to rely on the Union’s determination that Spillane’s job was disqualifying employment to decide to terminate his health care coverage.

With respect to the breach of fiduciary duties claim Plaintiff brought under ERISA § 502(a)(3), the court agreed with the district court that Plaintiff does not allege specific factual allegations to support his claim. And there is no separate basis for the breach of fiduciary duty claim differentiating it from the denial of benefits claim. Judgment affirmed.

In Fitzsimons v. New York City Dist. Council of Carpenters, No. 23-815, 2024 WL 221550 (2d Cir. Jan. 22, 2024), Plaintiff-Appellant Peter Fitzsimons and his family-member beneficiaries sued his union and the union’s pension and welfare funds under the LMRDA and ERISA after the funds terminated his benefits following a union trial where Fitzsimons was found to be working as a carpenter for a non-union company. The court upheld the dismissal of the ERISA claims against the funds because Fitzsimons did not exhaust administrative remedies and did not demonstrate that doing so would be futile. The court also found the LMRDA claim to be without merit.