Roger G. Cocker v. Terminal Railroad Association of St . Louis Pension Plan for Nonschedule Employees

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15-2690
R OGER G. COCKER ,
Plaintiff-Appellee,
v.
T ERMINAL R AILROAD A SSOCIATION OF ST . LOUIS P ENSION
P LAN FOR NONSCHEDULE EMPLOYEES,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Southern District of Illinois.
No. 12 C 1239 — David R. Herndon, Judge.
____________________
A RGUED FEBRUARY 26, 2016 — D ECIDED MARCH 16, 2016
____________________
Before P OSNER , FLAUM, and E ASTERBROOK , Circuit Judges.
P OSNER , Circuit Judge. The plaintiff is a participant in a re-
tirement plan (we’ll call it the Terminal Plan) governed by
ERISA; the defendant is the plan. The plan document pro-
vides that “the retirement income benefit payable under this
Plan shall be offset by the amount of retirement income pay-
able under any other defined benefit plan … to the extent
that the benefit under such other plan or plans is based on

-- 1 of 5 --

2 No. 15-2690
Benefit Service taken into account in determining benefits
under this Plan.” The Terminal Plan based its calculation of
the plaintiff’s plan benefits on his total years of work, includ-
ing the years he’d spent working for Union Pacific Railroad.
So it made sense for the plan to subtract from the plaintiff’s
benefits under the Terminal Plan any benefits that Union Pa-
cific had already given him for his years of working for that
company.
The plan provides that if “the benefit under such another
plan is paid in a form other than the form of payment under
this Plan, including without limitation a single lump sum
cash payment made prior to retirement, the amount of such
offset shall be the dollar amount per month of the benefit
that would have been payable under such other plan in the
form of a Single Life Annuity commencing on the Partici-
pant’s Normal Retirement Date” (emphasis added). The ap-
peal revolves around the meaning of “payable” in the plan
document.
The plaintiff had taken early retirement from Union Pa-
cific in 2006. His normal retirement date would have been in
2019, and had he waited until then to retire he would have
received a retirement benefit of $2,311.73 a month. Instead
he chose to begin receiving his benefits in 2009, in the form
of a monthly benefit of $1,022.94. The two dollar figures are
actuarially identical, in the sense that the present value of
the two streams of money is the same because the smaller
monthly benefit is received for 111 months longer than the
larger one.
After retiring from Union Pacific the plaintiff went to
work for Terminal Railroad and became a participant in that
company’s retirement plan, the plan at issue in this case.

-- 2 of 5 --

No. 15-2690 3
When in 2010 he retired from Terminal Railroad, the Termi-
nal Plan’s administrator calculated the monthly benefit
owed him for his combined years of service to Terminal and
Union Pacific to be $3,725.02, from which the Terminal Plan
would deduct the monthly benefits payable under the Union
Pacific Plan. The question is whether the amount to be de-
ducted each month should be $2,311.73 or $1,022.94. The
plaintiff argued to the plan administrator for the smaller de-
duction; the administrator rejected the argument. So the
plaintiff sued the Terminal Plan under 29 U.S.C.
§ 1132(a)(1)(B). He won in the district court, precipitating the
Plan’s appeal to us.
The plan administrator was right. The actuarial equiva-
lence that we noted is the key to this conclusion. The month-
ly offset required by Terminal’s plan is the amount payable
under the prior employer’s plan. $2,311.73 was the maxi-
mum amount payable to the plaintiff per month under the
Union Pacific Plan but he lost nothing by choosing to receive
only $1,022.94, because as we said the expected value of a
stream of monthly receipts of that amount was equal to the
expected value of a stream of monthly receipts of $2,311.73
received for many fewer months. Allowing him to deduct
only $1,022.94 would have given him a larger Terminal pen-
sion and thus paradoxically have made him better off than if
he’d received his Union Pacific pension in larger monthly
payments for a shorter period, the paradox residing in the
fact that the value of his Union Pacific pension was inde-
pendent of the amount of his monthly benefits, owing to the
relation between that amount and the number of months.
Imagine two employees of Union Pacific, each entitled to
the same retirement benefit of $2,311.73 a month. Employee

-- 3 of 5 --

4 No. 15-2690
A chooses that monthly benefit to begin at his normal re-
tirement age, while Employee B chooses instead the actuari-
ally equivalent benefits stream of $1,022.94 a month to begin
now and thus continue for a longer period. Suppose A and B
retire from Union Pacific the same day, go to work for Ter-
minal Railroad the same day, are paid the same salary, retire
from Terminal the same day, and were it not for the deduc-
tion of their Union Pacific benefits would be entitled by the
Terminal Plan to the same monthly benefit of $4000. The
plaintiff’s position, echoed by the district court, is that A
would be entitled to a monthly retirement benefit from Ter-
minal’s plan of $1,688.27 ($4000 minus $2,311.73), while B
would be entitled to $2,977.06 ($4000 minus $1,022.94). That
is senseless given the above assumptions about their work
history, and is not required by the plan document. The plan
administrator permissibly interpreted “payable” to require
that the plan’s benefits be offset by the total value of the
benefits received by the employee under a different plan;
otherwise the plan would be conferring a windfall on an
employee who could vary the monthly payments that he re-
ceived under that other plan.
We are reinforced in this conclusion by language quoted
earlier in our opinion (if “the benefit under such another
plan is paid in a form other than the form of payment under
this Plan, … the amount of such offset shall be the dollar
amount per month of the benefit that would have been payable
under such other plan in the form of a Single Life Annuity
commencing on the Participant’s Normal Retirement Date”)
(emphasis added), and by a recent decision of the Eighth
Circuit in a virtually identical case, reaching the same result
as we do today. Ingram v. Terminal Railroad Association of St.

-- 4 of 5 --

No. 15-2690 5
Louis Pension Plan for Nonschedule Employees, 812 F.3d 628,
635 (8th Cir. 2016).
We are mindful of the plaintiff’s further argument that
the plan administrator had a conflict of interest. But that is
irrelevant, as we believe not only that the plan administrator
adopted a permissible interpretation of the plan document
but also that his interpretation was correct.
The judgment of the district court is reversed with in-
structions to dismiss the suit with prejudice.

-- 5 of 5 --