McGillivray v. The Wells Fargo & Company Salary Continuation Pay Plan
Filing
36
MEMORANDUM OPINION AND ORDER denying without prejudice 15 Defendant's Motion for Summary Judgment; denying without prejudice 24 Plaintiff's Motion for Summary Judgment. Defendant's decision to deny Plaintiff salary continuation benefits is REVERSED and the matter is REMANDED to the Plan for further proceedings consistent with this Order. (Written Opinion) Signed by Judge Susan Richard Nelson on 07/18/2017. (SMD)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Todd McGillivray,
Case No. 15-cv-4347 (SRN/LIB)
Plaintiff,
v.
MEMORANDUM OPINION
AND ORDER
The Wells Fargo & Company Salary
Continuation Pay Plan,
Defendant.
Katherine L. MacKinnon and Sarah J. Demers, Law Office of Katherine L. MacKinnon
PLLC, 2356 University Avenue West, Suite 230, St. Paul, Minnesota 55114, for Plaintiff.
Steven L. Severson, Faegre Baker Daniels LLP, 90 South Seventh Street, Suite 2200,
Minneapolis, Minnesota 55402, for Defendant.
SUSAN RICHARD NELSON, United States District Judge
I.
INTRODUCTION
This matter comes before the Court on the parties’ cross-motions for summary
judgment. (See Pl.’s Mot. for Summ. J. [Doc. No. 24]; Def.’s Mot. for Summ. J. [Doc. No.
15].) For the reasons that follow, the Court denies both motions without prejudice, and
remands the matter to Defendant for further proceedings.
II.
BACKGROUND
A.
The Parties
Plaintiff Todd McGillivray worked for Wells Fargo Insurance Services USA, Inc.
(“WFIS”) from 1990 until his position was terminated on May 3, 2014. (See Compl. [Doc.
No. 1] ¶¶ 2, 16.) At the time he was let go, McGillivray served as the Senior Commercial
Sales Executive in WFIS’s Virginia, Minnesota office. (See id. ¶ 2.) By all accounts,
McGillivray was a successful insurance salesman. In 2013, for instance, he was responsible
for $655,170 in revenue for WFIS—nearly 97% of the total amount generated by the
Virginia office. (See Lindevig Decl. [Doc. No. 18], Ex G at WF669.) McGillivray’s
success was reflected in his compensation, and in his final years with WFIS he routinely
received more than $200,000 in commissions.1
WFIS—a non-party to this suit—is an affiliate of Wells Fargo & Company (“Wells
Fargo”). As such, WFIS is a “Participating Employer” in the Wells Fargo & Company
Salary Continuation Pay Plan (the “Plan”). (See id., Ex D. §§ 2.1, 2.19, 3.1.) The Plan
serves to provide salary continuation pay—ranging from 1.5 to 16 months’ worth of
covered pay—to eligible participants who face job changes or displacements. (See id., Ex.
D, Art. I; Ex. E at 2, 8.) Such “Qualifying Events,” as defined by the Plan, include job loss,
material changes in work location, or a reduction in base pay. (See id., Ex. D §§ 2.23, 2.26.)
The Plan also provides for several types of “Disqualifying Events,” however, that render a
participant immediately ineligible for salary continuation pay. (See id. § 3.2.) As relevant
to this dispute, a Disqualifying Event occurs when:
[T]he Participating Employer enters into a corporate transaction with another
company (including a transaction where another company acquires all or any
portion of the assets, stock or operations of the Participating Employer), and
1
Under WFIS’s compensation structure, McGillivray received “variable incentive pay,”
meaning he did not earn a salary and was paid solely on a commission basis. (See
Lindevig Decl, Ex. B at 4-5.)
2
pursuant to the terms of the transaction, the Participant is either continuously
employed or offered continued employment with the other company whether
or not the Participant accepts or declines the offer.
(Id. § 3.2(e) (emphasis added).) The Plan Administrator has further defined an “offer of
continued employment” to exist where a job offer meets four minimum criteria:
1.
Recognition of service credit with Wells Fargo prior to the transfer
(the “Service Credit Requirement”);
2.
A benefit package that is similar to the benefit package provided by
Wells Fargo prior to the transfer (the “Benefits Requirement”);
3.
A work location that is comparable to the one the employee had with
Wells Fargo prior to the transfer (the “Work Location Requirement”);
and
4.
A base salary (or base pay rate) at least equal to the employee’s base
salary (or base pay rate) with Wells Fargo prior to the transfer (the
“Pay Requirement”).
(Lindevig Decl., Ex. F (the “Plan Interpretation”).)
B.
The USI Transaction
On January 22, 2014, WFIS entered into an Asset Purchase Agreement (“APA”)
with USI Insurance Services LLC (“USI”), pursuant to which USI agreed to acquire a
number of Wells Fargo’s insurance office locations. (Lindevig Decl., Ex. G at WF393.)
One of the forty-two offices originally covered by the deal was the Virginia, Minnesota
office where McGillivray worked. (See id. at WF517.) As part of the USI transaction,
WFIS negotiated terms that ensured USI would provide job offers to WFIS employees
whose positions would be eliminated as a result of the sale. (See id. at WF436.)
McGillivray was duly offered a position with USI by letter dated March 20, 2014.
(See generally Lindevig Decl., Ex. I.) The offer letter included an Employment Agreement
3
which outlined the new position’s responsibilities, compensation structure, and benefits.
(See id.) Although similar in some respects to McGillivray’s position and compensation
with WFIS, the USI Employment Agreement did contain several notable differences, the
materiality of which will be discussed below. First, although McGillivray would be entitled
to the same employee benefits as similarly situated USI employees, these benefits were both
less substantial and more costly than what McGillivray had received at WFIS.
(See
Lindevig Decl., Ex. I at WF154-55; Ex. O at WF75-76.) Indeed, by McGillivray’s own
calculations, the difference in cost alone was more than $600 per month. (See id., Ex. O at
WF75.) Second, although USI promised that McGillivray’s new position would be based at
an office with a “Comparable Commute” 2 to that required by his WFIS employment, it
could not provide definitive notice as to where that office would be located. (See id., Ex. I
at WF144.)
Third, USI retained the right to unilaterally change the terms of the
Employment Agreement. (See id. at WF154.) In contrast, McGillivray’s contract with
WFIS could not be changed without both parties’ consent. (See Demers Decl. [Doc. No.
27], Ex. 1 at WF218.)
The biggest difference between the USI and WFIS contracts, however, came in the
2
McGillivray’s offer letter defined “Comparable Commute” to mean “a commute from
your home address as scheduled in the Purchase Agreement (your ‘Home Address’) to
the work location of USI or one of its subsidiaries (your ‘New Work Location’) that
would not result in a Material Change of Work Location. ‘Material Change of Work
Location’ means that all of the following occur: (i) the distance between your New Work
Location and your last work location exceeds 20 miles (one way); (ii) the number of
miles between your Home Address and your New Work Location exceeds the number of
miles between your Home Address and your last work location (one way); and (iii) the
number of miles between your Home Address and your New Work Location exceeds 40
miles.” (Lindevig Decl., Ex. I at WF144 n.1.)
4
compensation structure, which for both companies was tied to commissions on sales. In
general, USI’s Employment Agreement provided for substantially lower commissions, as
illustrated in the following chart:
Sale Type
New Business
Renewal Business
Special Personal Lines
Surety Bonds
Commission at USI
40%
25%
40% new lines, 0% on
renewals
25%
Commission at WFIS
50%
27%
N/A
45%
(See Lindevig Decl., Ex. I at WF153, 169; Ex. O at WF74.) Further, USI required that
accounts be worth a minimum of $2,500 on property and casualty insurance business, and
$5,000 on employee benefits business, before the salesperson earned any commission at all.
(See id., Ex. I at WF153.) No such minimum threshold existed on commissions at WFIS.
(See id., Ex. O at WF74.) By McGillivray’s own estimate, more than 87% of his accounts
would have fallen below these threshold levels. (See id., Ex. O at WF71, 73.)
To offset these reductions in commission income, USI offered McGillivray two
substantial bonuses that were intended to make up the difference between his USI and
WFIS pay rates. The first bonus, termed the “Acquisition Bonus,” would be payable in
three equal installments of $55,017 (for a total of $165,051), spread over the first two years
of his employment with USI. (See id., Ex. I at WF155.) The second bonus, known as the
“Retention Bonus,” would be paid in two installments in McGillivray’s third and fourth
years at USI, and would be equal to 110% of his average “Net Commissions and Fees”3
3
The term “Net Commissions and Fees” refers to all commissions and fees received by
USI, less any commissions paid to third parties, not commissions paid to McGillivray.
(See Lindevig Decl., Ex. I at WF151.) For example, although McGillivray was paid
5
earned over the second and third years of employment at USI.4 While the parties dispute
how much money McGillivray stood to gain from the Retention Bonus, it would
presumably have been several hundred thousand dollars. (See Def.’s Resp. [Doc. No. 30] at
18-19.)
The record indicates that McGillivray carefully considered the USI employment
offer, and ultimately concluded that it was “far less favorable to him than his employment
contract with [WFIS].” (See Compl. ¶ 15.) In particular, he calculated that, under the USI
commission structure, his income would decrease by more than $100,000 per year. (See
Lindevig Decl., Ex. O at WF75.) While McGillivray recognized that this decrease would be
partially offset by the two bonuses USI offered him, he felt that in the long-run the offer was
not favorable to him.
(See id.)
Accordingly, McGillivray declined to accept USI’s
employment offer. Perhaps because of this decision (although the record is silent on the
matter), USI ultimately decided against purchasing the Virginia office when the APA closed
$216,730.09 in commissions in his final year at WFIS, the Net Commissions and Fees
amount would have been $655,170—the amount of revenue McGillivray earned for
WFIS. (See Lindevig Decl., Ex. G at WF669.)
4
The USI Employment Agreement sets forth the following illustration of how the
Retention Bonus might operate:
By way of example, if the Closing Date [of the APA] is May 1, 2014 and
the Net Commissions and Fees are $900,000 for the twelve month period
beginning May 1, 2015 and ending on April 30, 2016 and $1,000,000 for
the twelve month period beginning May 1, 2016 and ending on April 30,
2017, Producer’s aggregate Retention Payment would be $1,045,000 (the
average of $1,000,000 and $900,000 equals $950,000, multiplied by 110%
equals $1,045,000).
(Lindevig Decl., Ex. I at WF155.)
6
on May 2, 2014. 5 (See Demers Decl., Ex. 7.)
C.
McGillivray’s Salary Continuation Benefits Claim
McGillivray’s employment with WFIS was terminated on May 3, 2014.
(See
Demers Decl., Ex. 1 at WF205.) On June 27, 2014, McGillivray wrote to the Plan,
informing them that his position was eliminated and requesting salary continuation benefits.
(See Lindevig Decl., Ex. K.) A Wells Fargo vice president, Jill Fowler, responded on
August 28, 2014, denying McGillivray’s claim. (See id., Ex. L.) She explained that the
Plan had determined that an offer of employment had been made to McGillivray by USI,
and that all affected WFIS employees had been informed via newsletter that if they did not
accept these offers of employment they would not be eligible for Plan benefits. The denial
letter stated in part:
You were employed as a Senior Sales Executive Commercial at the time you
were informed that [WFIS] entered into an agreement with [USI] to sell
certain [WFIS] offices, including the office where you had worked. This
agreement was effective May 3, 2014. Although you were offered continued
employment with USI, you did not respond to that offer and therefore, your
termination from Wells Fargo was also effective on May 3, 2014. . . . Since
[WFIS] entered into an agreement with [USI] to sell certain [WFIS] offices
and you were offered continued employment with USI, this is considered a
Disqualifying Event even though you did not respond to the offer of
continued employment.
(Id., Ex. L at WF78.)
McGillivray appealed the denial of his benefits claim to the Plan Appeals Committee
by letter dated October 13, 2014. (See generally id., Ex. O.) The detailed letter informed
the Committee that, in McGillivray’s view, he was entitled to salary continuation benefits
5
The Virginia office was one of two offices of the original forty-two covered by the APA
that was not ultimately purchased by USI. (See Demers Decl., Ex. 7.)
7
for at least two reasons: (1) no “corporate transaction” had occurred affecting his work
location, because the Virginia office was ultimately not included in the APA; and (2) even if
a corporate transaction had occurred, McGillivray had not received an “offer of continued
employment” because the USI position was not comparable to his WFIS position. (See id.,
Ex. O at WF73-76.) In support of the latter argument, McGillivray set forth several reasons
why, in his view, the USI position did not meet the four criteria set forth by the Plan in the
Plan Interpretation. (See id.)
The Plan Appeals Committee met in December 2014 to discuss McGillivray’s
appeal, and a final denial of benefits issued on December 11, 2014. (See Demers Decl., Ex.
5.) In relevant entirety, the denial letter stated as follows:
As we understand the appeal, you believe your work location was not a part
of the agreement between Wells Fargo and USI, a company with which Wells
Fargo divested a portion of its operations. And, you believe the subsequent
offer from USI was not comparable, so you did not accept the terms.
In fact, your work location was included as a part of the divestiture
transaction agreement between Wells Fargo and USI by which USI acquired
such operations. You acknowledge, and the Committee has confirmed, that
you did receive an offer from USI. Therefore, you were not eligible for salary
continuation benefits . . . .
(See Lindevig Decl., Ex. P at WF54.)
The Appeals Committee also contended that
McGillivray had released any claims for salary continuation benefits by signing a settlement
agreement relating to a dispute between WFIS and McGillivray’s new employer, OtisMagie Insurance Agency, Inc. (“O-M”). (See id. at WF55.)
In light of the Plan’s denial of his benefits claim, McGillivray filed this lawsuit on
December 11, 2015, pursuant to 29 U.S.C. § 1132(a)(1)(B).
8
Discovery closed on
November 21, 2016, and the parties subsequently cross-moved for summary judgment in
March 2017. Oral argument was held on April 28, 2017, and the matter is now ripe for
disposition.
III.
DISCUSSION
A.
Standard of Review
1.
Summary Judgment
Summary judgment is appropriate if “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). A fact is “material” only if it may affect the outcome of the lawsuit.
TCF Nat’l Bank v. Mkt. Intelligence, Inc., 812 F.3d 701, 707 (8th Cir. 2016). Likewise, an
issue of material fact is “genuine” only if “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). The moving party bears the burden of establishing a lack of genuine issue of
fact, Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986), and the Court must view the
evidence and any reasonable inference in the light most favorable to the nonmoving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In responding
to a motion for summary judgment, however, the nonmoving party may not rest on mere
allegations or denials, but must “demonstrate on the record the existence of specific facts
which create a genuine issue for trial.” Krenik v. Cty. of Le Sueur, 47 F.3d 953, 957 (8th
Cir. 1995).
2.
Denial of Benefits
In general, a plan administrator’s decision to deny benefits is reviewed de novo. See
9
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). “Where the plan grants
the administrator or fiduciary ‘discretionary authority’ to determine eligibility for benefits,
however, the standard of review is relaxed, and abuse of discretion becomes the appropriate
benchmark.” Cooper v. Metro. Life Ins. Co., No. 16-3429, 2017 WL 2853729, at *4 (8th
Cir. July 5, 2017) (citation omitted). Here, the Plan grants the Plan Administrator “the full,
exclusive and discretionary authority to . . . determine all issues relating to eligibility for
benefits,” and the parties agree that this language is sufficient, on its face, to trigger the
abuse of discretion standard. (See Lindevig Decl., Ex. D at WF36; Pl.’s Mem. in Supp. of
Mot. for Summ. J. [Doc. No. 26] (“Pl.’s Mem.”) at 19; Def.’s Mem. in Supp. of Mot. for
Summ. J. Doc. No. 17] (“Def.’s Mem.”) at 12.) Cf. Cooper, 2017 WL 2853729, at *4;
Waldoch v. Medtronic, Inc., 757 F.3d 822, 829 (8th Cir. 2014). Under this standard, the
court will uphold a plan administrator’s decision so long as it is based upon a reasonable
interpretation of the Plan, and is supported by substantial evidence. See Hampton v.
Reliance Standard Life Ins. Co., 769 F.3d 597, 600 (8th Cir. 2014) (citing King v. Hartford
Life & Accident Ins. Co., 414 F.3d 994, 998-1000 (8th Cir. 2005) (en banc)). “A decision is
reasonable if a reasonable person could have reached a similar decision, given the evidence
before him, not that a reasonable person would have reached that decision.” Ingram v.
Terminal R.R. Ass’n of St. Louis Pension Plan for Nonschedule Emps., 812 F.3d 628, 634
(8th Cir. 2016) (emphasis original) (citation and quotation omitted).
In deciding whether an abuse of discretion has occurred, however, the Court must
take into consideration any conflicts of interest that may color the impartial judgment of the
plan administrator. See Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008) (citing
10
Firestone, 489 U.S. at 115). The Supreme Court has counseled that such a potentially
relevant conflict of interest may exist where, as here, the same entity is ultimately
responsible both for evaluating claims for benefits and for paying those claims that are
approved. See Glenn, 554 U.S. at 112. Other factors that courts have identified as relevant
to the abuse of discretion analysis include whether the administrator’s actions suggest
procedural unreasonableness; whether the plan has failed to assess all evidence presented to
it; and whether the administrator has improperly relied only on evidence favorable to a
denial of benefits. See, e.g., Glenn, 554 U.S. at 116-118; Chronister v. UNUM Life Ins. Co.
of Am., 563 F.3d 773, 777 (8th Cir. 2009). In all cases, however, the weight to be afforded
to these and other considerations will depend upon the evidence presented to the Court. See
Cooper, 2017 WL 2853729, at *4-5.
B.
The Sufficiency of the Record Before the Court
In their briefs and at oral argument, the parties have presented multiple issues that
they suggest are ripe for resolution by this Court. Among other matters, they raise questions
as to the proper weight to be afforded to the Plan’s inherent pecuniary conflict of interest;
whether McGillivray released any claims he might have for salary continuation benefits as
part of the O-M settlement agreement; whether the ultimate non-sale of the Virginia office
to USI still constituted a “corporate transaction” under the terms of the Plan; and, even if it
did, whether the position offered to McGillivray by USI was comparable to his WFIS
employment under the four criteria listed in the Plan Interpretation. Each of these issues has
received careful, detailed treatment.
An important threshold question for the Court, however, is whether the present
11
record is sufficient to allow the Court to conduct its statutorily mandated role of judicial
review. Of particular relevance, ERISA provides that all employee benefit plans must:
(1) provide adequate notice in writing to any participant or beneficiary whose
claim for benefits under the plan has been denied, setting forth the specific
reasons for such denial, written in a manner calculated to be understood by
the participant, and
(2) afford a reasonable opportunity to any participant whose claim for benefits
has been denied for a full and fair review by the appropriate named fiduciary
of the decision denying the claim.
29 U.S.C. § 1133. Interpreting this statutory mandate, the Department of Labor has issued
regulations setting forth several “minimum requirements” that must be met by plans in
reviewing claims for benefits. 29 C.F.R. § 2560.503-1(a). Most notably for purposes of
this matter, plans must provide claimants with “a reasonable opportunity to appeal an
adverse benefit determination to an appropriate named fiduciary of the plan, and under
which there will be a full and fair review of the claim and the adverse benefit
determination.” Id. § 2560.503-1(h)(1). Such an appeal is only “full and fair” if, among
other things, it “provides for a review that takes into account all comments, documents,
records, and other information submitted by the claimant relating to the claim, without
regard to whether such information was submitted or considered in the initial benefit
determination.” Id. § 2560.503-1(h)(2)(iv). The claim regulations further require the plan
administrator to set forth the “specific reason or reasons for the adverse determination,” and
provide “[r]eference to the specific plan provisions on which the benefit determination is
based.” Id. § 2560.503-1(j). The purpose of these requirements is both to ensure careful
consideration of claims on the merits, and to facilitate any necessary judicial review. See
12
Abram v. Cargill, Inc., 395 F.3d 882, 886 (8th Cir. 2005); Richardson v. Cent. States, Se. &
Sw. Areas Pension Fund, 645 F.2d 660, 665 (8th Cir. 1981).
Reinforcing the requirements of ERISA and the DOL claim regulations, the Eighth
Circuit (as well as several other courts) has held that claimants are entitled to more than
bare-bones, conclusory denials of claims or of appeals. Most notably, in Richardson v.
Central States, Southeast and Southwest Areas Pension Fund, the Eighth Circuit rejected as
inadequate an appeal decision that did little more than state that the appeals committee had
reviewed the claimant’s petition and found it to lack merit, citing to a single provision of the
plan as the proffered rationale. In the court’s view, the paucity of detail provided by the
committee fell “well short of the level of acceptability” required under ERISA. 645 F.2d at
665. What was required, the court declared, was “a written opinion that includes specific
reasons for the decision,” and “[b]ald-faced conclusions [did] not satisfy this requirement.”
Going forward, the plan trustees were “obligated to set out in opinion form the rationale
supporting their decision so that [the claimant] could adequately prepare himself for any
further administrative review, as well as an appeal to the federal courts.” Id. The Eighth
Circuit’s holding in Richardson has been widely echoed by the other circuit courts. See,
e.g., Halpin v. W.W. Grainger, Inc., 962 F.2d 685, 693 (7th Cir. 1992) (“[A] claimant is
entitled by statute to a ‘full and fair review’ of a denial of benefits, and, in order to permit
such a review, the notice of decision must include specific reasons. This requirement
ensures that a full and fair review is conducted by the administrator, enables the claimant to
prepare adequately for appeal to the federal courts or further administrative review, and
makes it possible for the federal courts to perform the task, entrusted to them by ERISA, of
13
reviewing that denial.”) (internal citations omitted); see also Schadler v. Anthem Life Ins.
Co., 147 F.3d 388, 394 (5th Cir. 1998); Weaver v. Phoenix Home Life Mut. Ins. Co., 990
F.2d 154, 158 (4th Cir. 1993); White v. Jacobs Eng’g Grp. Long Term Disability Benefit
Plan, 896 F.2d 344, 350 (9th Cir. 1989).
In light of these regulatory and judicial guideposts, the Court cannot but conclude
that the Plan failed to discharge its duty to provide a “full and fair review” of McGillivray’s
claim appeal.
The record demonstrates that upon receiving the initial denial letter,
McGillivray crafted a thorough, detailed appeal setting forth several independent bases for
why he felt the denial was in error and he should be entitled to salary continuation benefits.
(See generally Lindevig Decl., Ex. O.) Among other arguments, McGillivray contended
that there was no Disqualifying Event under the terms of the Plan because there was no
“corporate transaction” affecting his office (which was not ultimately transferred to USI).
(See id. at WF73.) Even if there was a corporate transaction, however, McGillivray further
asserted that there was no “offer of continued employment,” as defined by the Plan
Interpretation. In particular, he argued that three of the four criteria delineated by that
interpretation—equal pay rate, similar benefits package, and a comparable work location—
were missing from the offer he received from USI. (See id. at WF74-76.) For each of these
arguments, McGillivray provided detailed factual support.
Because under the Plan, a Disqualifying Event requires both a corporate transaction
and an offer of continued employment meeting each of the four Plan Interpretation criteria,
it was incumbent upon the Plan Appeals Committee, in responding to McGillivray’s appeal,
to provide a clear explanation as to why it felt his arguments were unmeritorious. See
14
Richardson, 645 F.2d at 665. But the Plan did no such thing. While the appeal denial letter
correctly summarizes McGillivray’s belief that there was no corporate transaction and no
offer of continued employment under the terms of the Plan, it goes on to address these
arguments in only two brief, conclusory sentences:
In fact, your work location was included as part of the divestiture transaction
agreement between Wells Fargo and USI whereby USI acquired such
operations. You acknowledge, and the Committee has confirmed, that you
did receive an offer from USI. Therefore, you were not eligible for salary
continuation benefits . . . .
(Lindevig Decl., Ex. P at WF54 (emphasis added).)
Importantly, neither sentence provides the reasons underlying the Committee’s
decision, and the Committee’s conclusions themselves are patently non-responsive to
McGillivray’s arguments. Cf. Anderson v. Nationwide Mut. Ins. Co., 592 F. Supp. 2d 1113,
1128-29 (S.D. Iowa 2009) (“Because the notification does not set forth the relevant facts, it
does not contain sufficient detail by which [the plaintiff], or this Court, can surmise why the
administrator found [the plaintiff]’s evidence and arguments unpersuasive.”).
Most
pertinently, while the Committee is correct that McGillivray acknowledged receiving an
offer from USI, that fact alone does not mean that the offer was comparable under the four
Plan Interpretation criteria. Literally nowhere does the appeal denial letter discuss (or, for
that matter, even mention) these criteria, let alone set forth why the Committee felt that the
USI offer met their requirements. (See generally id. at WF54-55.) Without that inquiry, the
bare existence of an offer does nothing to demonstrate a Disqualifying Event for purposes of
the Plan. Cf. Anderson, 592 F. Supp. 2d at 1128 (rejecting as inadequate claim denial that
“[a]t no point . . . acknowledge[s], much less address[es]” the plaintiff’s arguments in favor
15
of his claim).
The conclusory nature of the Appeals Committee’s decision, coupled with its
complete lack of detail, renders it inadequate under the requirements of 29 C.F.R. §
2560.503-1 and Richardson. Even the most prescient plaintiff would be unable, based on
the letter alone, to approach a civil action with confidence that he actually understood why
his claim had been denied. Just as importantly, no district court could conduct a reasoned
review of the Appeals Committee’s decision-making for purposes of abuse of discretion
review, because there is no indication as to which factors or documents the committee
actually considered, why it found McGillivray’s arguments lacking, or what principles
formed the basis of its decision. Any decision of the court would be based purely on
speculation or on the post hoc arguments of the Plan’s lawyers, which do not provide a
sound basis for a ruling. See Marolt v. Alliant Techsystems, Inc., 146 F.3d 617, 620 (8th
Cir. 1998) (“We will not permit ERISA claimants denied the timely and specific
explanation to which the law entitles them to be sandbagged by after-the-fact plan
interpretations devised for purposes of litigation.”); Short v. Cent. States, Se. & Sw. Areas
Pension Fund, 729 F.2d 567, 575 (8th Cir. 1984) (“A post hoc attempt to furnish a rationale
for a denial of . . . benefits in order to avoid reversal on appeal, and thus meaningful review,
[is not acceptable].”). As the Supreme Court has recently noted, “courts cannot exercise
their duty of substantial-evidence review unless they are advised of the consideration
underlying the action under review.” T-Mobile S., LLC v. City of Roswell, 135 S. Ct. 808,
815 (2015) (internal brackets and citation omitted).
Because the Plan failed to comply with the requirements of 29 U.S.C. § 1133 and 29
16
C.F.R. § 2560.503-1, its denial of benefits was an abuse of discretion and must be reversed.6
See Wiwel v. IBM Med. & Dental Benefit Plans for Regular Full-Time & Part-Time Emps.,
No. 5:15-cv-504-FL, 2017 WL 1184066, at *(E.D.N.C. Mar. 29, 2017). Under Eighth
Circuit precedent, however, the “appropriate remedy for a violation of 29 U.S.C. § 1133[]
and the Claims Regulation is [generally] not an award of benefits by the court, but rather a
remand to the plan administrator so that the claimant gets the benefit of a full and fair
review.” Grasso Enters., LLC v. Express Scripts, Inc., 809 F.3d 1033, 1039 (8th Cir. 2016)
(citation and quotation omitted). Accordingly, the Court will remand the matter to the Plan
for the limited purpose of allowing it to clarify or reconsider its decision to deny
McGillivray’s claim for benefits. See Wiwel, 2017 WL 1184066, at *9. In doing so, the
Plan should address each of McGillivray’s arguments in favor of his claim and, if it still
chooses to deny benefits, provide a detailed explanation of the reasoning underlying that
decision. See 29 C.F.R. § 2560.503-1(g), (j). “Should procedural deficiencies noted in this
order persist in [a] future action for administrative review, an award of benefits may be
warranted.” Wiwel, 2017 WL 1184066, at *9.
6
The Court notes that the Plan has half-heartedly argued that McGillivray released his
claim for salary continuation pay when he signed the O-M settlement agreement. (See
Def.’s Mem. at 20-22.) Seemingly, this action would obviate the need for a careful
consideration by the Plan of the substantive merits of McGillivray’s benefits claim.
However, even a cursory review of the settlement language makes clear that the release
contained an exception for “any rights or entitlements of McGillivray . . . by virtue of
[his] former employment with Wells Fargo, to retirement or other benefits, including any
health benefits or extended rights under health insurance or other benefit policies . . . .”
(See Lindevig Decl., Ex. J at WF357.) In light of this plain language, the Court observes
that the Plan prudently did not raise this argument at the motion hearing. In any event,
the Court finds that the O-M settlement did not constitute a release of McGillivray’s
claim to benefits under the Plan, and thus the agreement does not affect its analysis of the
sufficiency of the Plan’s benefits denial procedures.
17
IV.
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS HEREBY
ORDERED that:
1.
Plaintiff’s Motion for Summary Judgment [Doc. No. 24] is DENIED without
prejudice;
2.
Defendant’s Motion for Summary Judgment [Doc. No. 15] is DENIED
without prejudice; and
3.
Defendant’s decision to deny Plaintiff salary continuation benefits is
REVERSED and the matter is REMANDED to the Plan for further
proceedings consistent with this Order.
Dated: July 18, 2017
s/Susan Richard Nelson
SUSAN RICHARD NELSON
United States District Judge
18
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