Ross v. Weyerhaeuser Company et al

Filing 62

ORDER by Judge Frank H. Seay denying 47 Motion for Summary Judgment. ; denying as moot 54 (see also Doc. No. 53, part 2) Motion to Stay (trl, Chambers)

IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF OKLAHOMA
EDDIE ROSS,
Plaintiff,
v.
WEYERHAEUSER COMPANY, a foreign
corporation registered to do
business in the State of Oklahoma
and THE WEYERHAEUSER COMPANY
RETIREMENT PLAN FOR HOURLY RATED
EMPLOYEES and THE WEYERHAEUSER
COMPANY RETIREMENT PLAN FOR
SALARIED EMPLOYEES and THE
VANGUARD GROUP, INC., d/b/a
VANGUARD PARTICIPANT SERVICES,
Defendants.

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OPINION AND ORDER
On January 23, 2012, Plaintiff, Eddie Ross, filed his Amended
Complaint (Dkt. No. 26) seeking relief pursuant to the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001,
et seq. Plaintiff initiated his ERISA claims following the Court’s
issuance of its Opinion and Order (Dkt. No. 25) wherein it held
that Plaintiff’s breach of contract and fraud claims were preempted
by ERISA.

Plaintiff was granted leave to recast his claims under

ERISA and he did so through the filing of his Amended Complaint.1

1

Another Amended Complaint, entitled “First Amended
Complaint,” was filed by Plaintiff on July 19, 2012. This First
Amended Complaint (Dkt. No. 44) essentially repeats the
allegations and claims asserted in the Amended Complaint (Dkt.
No. 26) with the clarification of the proper “Vanguard” defendant
as The Vanguard Group, Inc., d/b/a Vanguard Participant Services.
Vanguard Fiduciary Trust Company, named in the Amended Complaint,
was omitted from the First Amended Complaint and dismissed from
1

In

the

First

Amended

Complaint,

Plaintiff

contends

his

employment with Weyerhaeuser Company (“Weyerhaeuser”) began in 1973
as an electrician with plant maintenance responsibilities. In this
position, Plaintiff was classified as an hourly employee and
received an enhanced hourly rate for overtime work pursuant to the
terms

of

the

collective

Plaintiff’s union.

bargaining

between

Weyerhaeuser

and

In October of 1999, Plaintiff’s supervisor,

Billy Pierce (“Pierce”), approached Plaintiff to determine if
Plaintiff would be interested in taking a salaried position as a
maintenance supervisor at the Wright City plywood manufacturing
operation.

Plaintiff contends he was hesitant to accept this

salaried position because he would be foregoing the extensive
overtime

compensation

he

could

earn

as

an

hourly

employee.

Plaintiff asserts that as an incentive for taking the salaried
position,

Pierce

promised

that

“if

Plaintiff

would

take

the

proffered position and there remain until his employment came to an
end, all of his years of service (all the way back to 1971) would
be credited to the Salaried Plan when he applied for his retirement
benefits, rather than being split between the Hourly Plan and the
Salaried Plan.”

First Amended Complaint, ¶ 6.

Pierce informed

Plaintiff that the pension plan for salaried employees would be of
substantial benefit to Plaintiff.

In reliance upon Pierce’s

representations and promises, Plaintiff transferred to the salaried
position at the Wright City plant and remained there until the
plywood manufacturing operation shut down in 2005.

As a salaried

employee, Plaintiff was not eligible for a transfer.

Thus,

Plaintiff’s employment with Weyerhaeuser terminated in 2005.
Plaintiff applied for his retirement benefits on November 5,

the case. See Joint Stipulation for Dismissal (Dkt. No. 48)
(dismissing Defendant Vanguard Fiduciary Trust Company).
2

2010. Retirement benefits for hourly employees are governed by the
Weyerhaeuser Company Retirement Plan for Hourly Rated Employees
(“Hourly Plan”).

Retirement benefits for salaried employees are

governed by the Weyerhaeuser Company Retirement Plan for Salaried
Employees (“Salaried Plan”).

Both plans are administered by the

Defendant, Vanguard Group, Inc. d/b/a Vanguard Participant Services
(“Vanguard”). In processing Plaintiff’s request for retirement
benefits, Vanguard did not credit all of Plaintiff’s years of
service to the Salaried Plan as promised by Pierce back in 1999
when Plaintiff accepted the salaried position.

Rather, Vanguard

allocated Plaintiff’s years of service between the Hourly and
Salaried Plans, resulting in Plaintiff being awarded retirement
benefits based on 26 years of hourly service and 6 ½ years of
salaried service.

See Vanguard Denial Letter (Exhibit 24 to

Plaintiff’s Response to Motion for Summary Judgment).

Plaintiff

contends this allocation results in retirement benefits that are
significantly less than if calculated as promised and represented
by Weyerhaeuser, through Pierce, under a strictly salaried status.
Faced with this reduced retirement benefit, Plaintiff brings this
action against Weyerhaeuser and Vanguard under ERISA.
Now before the Court for its consideration is the Motion for
Summary Judgment (Dkt. No.47) filed on behalf of Defendants,
Weyerhaeuser Company, the Weyerhaeuser Company Retirement Plan For
Hourly Rated Employees, the Weyerhaeuser Company Retirement Plan
For

Salaried

Employees,

and

the

Vanguard Participant Services.

Vanguard

Group,

Inc.,

d/b/a

The Defendants contend summary

judgment in their favor is appropriate because Plaintiff has failed
to exhaust his administrative remedies prior to instituting this
ERISA action.

In response, Plaintiff admits he did not fully

exhaust his administrative remedies under the plans at issue, but
he contends such exhaustion is not required under the facts of this
3

case.

Plaintiff

relies

on

four

alleged

exceptions

to

the

exhaustion requirement: (1) the plans at issue waive exhaustion, or
deem it fulfilled, when a claim denial is not appealed; (2)
statutory violations by the plan fiduciaries; (3) futility; and (4)
fraud,

interference

with

claims

process,

independently discharge fiduciary duties.
the

respective

Defendants’

arguments

request

for

of

the

summary

and

failure

to

Having fully considered

parties,

judgment

the

must

Court
be

finds

denied

as

Plaintiff has satisfied the first of his asserted exceptions to
exhaustion, i.e., the relevant language of the subject plans waives
exhaustion, or deems it fulfilled, in the situation of a non-appeal
from the decision of the Claims Administrator.2
Although not an explicit requirement under ERISA’s statutory
scheme, “exhaustion of administrative . . . remedies is an implicit
prerequisite to seeking judicial relief.”

Whitehead v. Okla. Gas

& Elec. Co., 187 F.3d 1184, 1190 (10th Cir. 1999).

Exhaustion of

administrative remedies is required even if the plan at issue does
not require exhaustion “because ERISA exhaustion is a judicial, not
contractual, doctrine.”
exhaustion

doctrine

Id.

“This proposition derives from the

permeating

all

judicial

review

of

administrative agency action, and aligns with ERISA’s overall
structure of placing primary responsibility for claim resolution on
fund trustees.”

Id. (quotation omitted).

Certain exceptions to the exhaustion requirement have been
recognized.

When an appeal in the review process would be futile

or the remedy in the benefit plan is inadequate, exhaustion is

2

For purposes of complete review, and after having fully
considered the arguments and authorities presented by the
parties, the Court finds the record does not support Plaintiff’s
other asserted exceptions to the exhaustion requirement.
4

excused.

McGraw v. Prudential Ins. Co., 137 F.3d 1253, 1263 (10th

Cir. 1998).

Exhaustion is likewise not required where the plan at

issue extends permission to file a lawsuit without pursuing further
internal

administrative

remedies.

See

Walters

v.

Odyssey

Healthcare Management Long-Term Disability Plan, 2011 WL 2714065,
* 3 (D. Ariz. 2011)(recognizing an exception to ERISA exhaustion
requirement under circumstances of ignored claims where the plan
language grants permission to file suit “prior to pursuing any
other

internal

administrative

remedies”).

Under

such

circumstances, the plan’s waiver excuses the plaintiff’s failure to
fully

exhaust

Recognition

of

his
such

administrative
an

exception

remedies.
is

consistent

Id.

at

with

*

2.

ERISA’s

underlying exhaustion objective of assuring finality resulting from
the initial claims resolution process.
Here, both the Salaried and the Hourly Plans contain the
following “waiver” provision:
(g) Decision is Final and Binding
In the case of a claim that is not appealed to
the Claims Committee in a timely manner by the
claimant,
the
decision
of
the
Claims
Administrator
shall
be
the
final
and
conclusive administrative review proceeding
under the Plan, and the decision of the Claims
Administrator shall be given legal deference
(in like manner to the standard stated in the
following sentence) in any subsequent legal
proceeding.
In the case of a denied claim
that is appealed in a timely manner by the
claimant,
the
decision
by
the
Appeals
Committee shall be the final and conclusive
administrative review proceeding under the
Plan, and unless the decision is subsequently
held to be arbitrary, capricious or an abuse
of the discretion granted by this Plan to the
Appeals Committee, the decision of the Appeals
Committee shall be given legal deference in
5

any subsequent legal proceeding.
Hourly Plan, p. 76, ¶ 10.4(g) (Exhibit 5 to Plaintiff’s Response to
Motion for Summary Judgment) and Salaried Plan, p. 106, ¶ 10.4(g)
(Exhibit 7 to Plaintiff’s Response to Motion for Summary Judgment).
Plaintiff contends this separate, clear, and unambiguous provision
mandates that an adverse claim decision, which has not been
appealed to the Appeals Committee, is to be construed as “the final
and conclusive administrative review proceeding under the Plan” for
purposes of this subsequent legal proceeding brought by Plaintiff
under ERISA.

The Court agrees.

This provision clearly provides

that an adverse claim decision by the Claims Administrator that has
not been appealed to the Appeals Committee is to be considered a
final and conclusive administrative review proceeding, which is the
equivalent of a fully appealed decision rendered by the Appeals
Committee.3

Under the facts at hand, Plaintiff has satisfied the

exhaustion requirement based on Vanguard’s January 13, 2011, denial
of his claim to have his benefit calculation made by crediting his
earned credit service solely under the Salaried Plan. See Vanguard
Denial Letter (Exhibit 24 to Plaintiff’s Response to Motion for
Summary Judgment).

Framed against the plain language of the Plans

at issue, this decision by Vanguard, the Claims Administrator, is
afforded

the

finality

that

satisfies

ERISA’s

exhaustion

requirement.
Based

on

the

foregoing

reasons,

the

Motion

for

Summary

Judgment (Dkt. No.47) filed on behalf of Defendants is denied.

3

As argued by Plaintiff, it is immaterial whether this
provision is classified as a “waiver” of the exhaustion
requirement or one that deems exhaustion to have been satisfied.
Application of the provision results in a finding that the
decision of the Claims Administrator is “the final and conclusive
administrative review proceeding under the Plan.”
6

Plaintiff’s Alternative Motion to Stay Proceedings (Dkt. No. 53) is
denied as moot.
It is so ordered this 27th day of November, 2012.

7