Matthews v. E.I. du Pont de Nemours and Company et al

Filing 47

MEMORANDUM regarding issues raised in summary judgment arguments (see Memorandum for further details). Signed by Judge Richard G. Andrews on 12/7/2015. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

MARK MATHEWS,
Plaintiff,
v.

Civil Action No. 14-1455-RGA

E.I. DU PONT DE NEMOURS AND
COMPANY and HEWITT
ASSOCIATES LLC,
Defendants.

MEMORANDUM
This is an BRISA case. There are three issues.
The parties agree that the first two are reviewed under the "arbitrary and capricious"
standard. (D.I. 37, p.12; D.I. 39, p.15).
The first issue involves calculating how much service Plaintiff has. As I understand it,
the Plan does not state how to calculate service for a "partial year." The Plan Administrator uses,
and has apparently consistently used for a long period of time, a simplifying assumption, that is,
that a year has 360 days, and that each month has 30 days. This is not an accurate assumption.
That does not mean, however, that it is irrational. First, its impact is de minimis.· For example,
Plaintiff states· that as a result of this, his monthly pension is reduced by $1.14. Second, even in
the age of calculators and spread sheets, simplification has a value. Numbers get entered
wrongly, and that sort of error is reduced by limiting the number of decimal points and digits that
have to be entered. Third, while Plaintiff says this simplification gives a windfall.to DuPont, I do

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not think that is the case. I believe whether the simplification benefits or harms a retiree depends
mostly upon whether one of the months of the partial yearis February. If it is, the retiree gains,
because he or she gets a credit of 1112 when the actual credit (in a non-leap year) should be
28/365; if it is not, the retiree either barely gains or loses, because he or she gets a credit of 1112
when the actual non-leap year credit should be either 30/365 or 31/365. Thus, overall, these
gains or losses should average out. I thus think the simplification formula is, overall, neutral. I
cannot say that the Administrator abused its discretion in using the 360-days-in-a-year formula.
The second issue involves calculating Plaintiffs "primary social security benefit."
Plaintiff sets forth the relevant language from the Plan. (D.I. 41, p.8). It seems to me the
interpretation that the Administrator gives to the language is not only not an abuse of discretion,
but is the orily reasonable reading of the language. The quoted language addresses two issues.
One is which social security benefits qualify. The second is how that amount will be determined.
On the second issue, a number of alteniatives are provided. On the first, however, there is a
limitation that only social security benefits for which "service" is recognized count. That
limitation applies no matter which alternative is used to make the calculation. Thus, the
Administrator did not abuse its discretion in not including Plaintiffs 1966-73 earnings in
calculating the "primary social security benefit," because DuPont did not pay FICA taxes on the
1966-73 earnings. Plaintiff raises in his Reply Brief another concern, stating that DuPont did not
use his 2013 earnings in making the calculation. (D.I. 41, p.7). He cites to pages in the record
that indeed appear not to include 2013 earnings. (D.I. 26-7 at 54-57 [R.429-32]). I cannot tell
whether Plaintiff has a point here. I therefore request that the parties meet-and-confer and advise
me what the results are using his actual earnings from DuPont including 2013. If there is a
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dispute, the parties should provide calculations that I can follow to see why they come to a
different result.
The third involves the Cooper formula. The parties agree that the formula (which is
embodied in the Family Court order) is: AB x 50% x Months in Plan during marriage/Months in
Plan= QDRO payment to ex-wife. (D.I. 37, Exh. A, p.3). The parties also agree that AB=
$9,893.84, and that "Months in Plan during marriage"= 236. 1 The parties disagree whether
"Months in Plan" should be 487 or 439. Plaintiff says 487.4, which represents the actual number
of months he was in the plan (D.I. 37, p.14); Defendants say439 because for the last 72 months,
the plan provided pension benefits that were 1/3 of what they had been, and Defendants say it
should be weighted proportionately. Under Plaintiffs calculation, the formula results in a
"QDRO" offset of$2,397.28; under Defendants' calculation, the formula results in an offset of
$2,659.39. (D.I. 46, p.2). The difference is $262.11. 2
There is some dispute about what the standard of review is on this issue. (D.I. 37, p.11;
D.I. 39, p.12). In essence, Third Circuit law is that interpretation of the QDRO is reviewed de

nova, but construction of the pension plan is reviewed for abuse of discretion. See Hullett v.
Towers, Perrin, Forster & Crosby, Inc., 38 F.3d 107, 114-15 (3d Cir. 1994).
I have spent a lot of time trying to figure my way through the mass of calculations in the
record, including those proffered by Plaintiff. I think the problem that is identified by Plaintiff is

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Plaintiff does his calculations with more precision than DuPont. I do not believe that
the Administrator abuses its discretion when it rounds off numbers.
2

This is not so much a dispute between Plaintiff and DuPont as it is between Plaintiff and
his ex-wife, since, if Plaintiff is right~ his pension will be increased by $262.11 per month, and
his ex-wife's benefit will be decreased by $262.11 per month.

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that having a simple formula to determine what is the fairest division of his pension is not
necessarily satisfactory. There are multiple vari~bles that contribute to the formula. Two that are
problematic are that (1) DuPont changed the pension calculation in 2007, essentially reducing it
by two-thirds, and (2) Plaintiff's salary kept going up, so that his "Average Monthly Pay'' or
"High Three" also kept going up. The net result of the changes in these variables is that the
formula embodied in the QDRO does not work very well.
I have been playing around with numbers trying to understand the problem here. Let's
assume the following: P worked for D for 24, 27, or 36 years. After 24 years, DuPont reduced
the pension plan by 2/3. He was paid $120,000 per year for 24 years. For the 27 and 36 year
careers, his last three years, he was paid either $120,000 or $240,000. He and his wife divorced
after the first 12 years. Thus, we can "run the numbers" for what his "average monthly pay''
would be under each scenario, and using both his formula and D's formula for computing the
QDR0.3
Ex. 1 is 24 years, P formula. Ex. 2 is 24 years, D formula. Ex. 3 is 27 years, last three
years, $120,000, P formula. Ex. 4 is 27 years, last three years, $240,000, P formula. Bxs. 5 and
6 are Bxs. 3 and 4 but with D's formula. Ex. 7 is 36 years, last three years, $120,000, P formula.
Ex. 8 is 36 years, last three years, $240,000, P formula. Bxs. 9 and 10 are Bxs. 7 and 8 but with
D's formula. The results:

1.

2.
3.

Years
24
24
27

High 3 Formula
120K P
120K D
120K P

Pension total
3,600
3,600
3,750

3

QDRO
$900
$900
$833.33

Pension to Plaintiff
$2700
$2700
$2916.67

I am making various simplifying assumptions (i.e., ignoring social security) and unlikely
assumptions (the dramatic increase in salary the last three years in some examples).

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4.
5.
6.
7.
8.
9.
10.

L

27
27
27
36
36
36
36

240K
120K
240K
120K
240K
120K
240K

P
D
D
P
P
D
D

7,500
3,750
7.500
4,200
8,400
4,200
8,400

$1,666.67
$900
$1,800
$700
$1,400
$900
$1,800

$5,833.33
$2850
$5,700
$3,500
$7,000
$3,300
$6,600

There are two results in this table that are irrational. They are examples 3 and 7, both of which
use Plaintiffs formula, and result in the QDRO decreasing as Plaintiffs service continues to
increase. The net result of this exercise is that I am convinced that DuPont's method of
implementing the QDRO is truer to what Delaware law intends and requires. The QDRO was
entered about twenty years ago. I doubt that the parties to the divorce or the Family Court had
any inkling that DuPont's pension system would change as it did eight years ago. Family Court
seems to have some discretion how to implement the Cooper formula. See, e.g., Simms v.

Greene-Simms, 22 A.3d 727, 732 (Del. Fam. Ct. 2009). I imagine if Family Court had ·
·jurisdiction to revise the order (and I express no opinion whether it does or does not), it might
easily do so. I am not, however, Family Court, and I cannot modify its Order. Neither can
DuPont. DuPont argues that Plaintiff"prioritizes literalism over logic." (D.I. 39, p.14). That is
true, and I think DuPont is essentially conceding that the usual understanding of the formula, as
stated in the Family Court order, supports Plaintiffs position. DuPont, however, has discretion
to interpret the Plan. What DuPont has done here occurs at the border between interpretation of
the Court order (to which I owe its decision no deference) and its interpretation of the Plan (to
which I owe it substantial deference). I think DuPont's interpretation, which weights service
time in a reasonable manner taking into account the drastic change to the plan, is within the
umbrella of its discretionary decision-making. I thus think that the critical decision, for purposes

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of my review, is one that is not an abuse of discretion. I will therefore grant DuPont summary
judgment on the third issue.
I do not understand why Hewitt Associates LLC is a Defendant on Count I. The Count is

captioned "Recovery of Plan Benefits." Any recovery of plan benefits is going to come from
DuPont, not Hewitt. Plaintiff did not explicitly move for summary judgnient against Hewitt in
his Opening Brief. It is also not clear from the text of Count I (D.I. 19, iii! 49-53) that Plaintiff
has any claim against Hewitt. Since I see nothing that supports Plaintiff's argument that Hewitt
is a proper defendant in Count I, I will grant summary judgment in the alternative for Hewitt on
Count I.
Further, in connection with the text of Count 1, the last paragraph does not seem to be
addressed in the briefing. While going through the record, I think I have seen that there seems to
be some dispute about whose choice it was that Plaintiff has not begun receiving benefits. Thus,
were I to have ruled in Plaintiff's favor on the issues already discussed, the last paragraph of
Count I would nevertheless seem to be a poor candidate for summary judgment.
A separate order is being entered.

~~71 'lDrSate

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