Keiser v. Conagra Foods, Inc.
Filing
41
MEMORANDUM (Order to follow as separate docket entry). Signed by Honorable Matthew W. Brann on 10/27/14. (lg)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
LINDA KEISER,
Plaintiff
v.
CONAGRA FOODS, INC.,
Defendant.
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Case No. 4:13-cv-00159
(Judge Brann)
MEMORANDUM
October 27, 2014
Pending before this Court are two Motions for Summary Judgment on the
Amended Complaint (ECF No. 14), one filed by Plaintiff Linda Keiser (ECF No.
27) and the other filed by Defendant ConAgra Foods, Inc. (ECF No. 29).
Plaintiff’s Amended Complaint seeks a reversal of the decision by the Defendant to
deny benefits allegedly owed to her as the beneficiary under her husband’s
retirement plan, pursuant to § 501(a)(1)(B) of the Employee Retirement Income
Security Act, 29 U.S.C. § 1001, et seq. (hereinafter, “ERISA”).
After Defendant filed an Answer with affirmative defenses (ECF No. 19)
and discovery was concluded, the parties simultaneously filed Motions for
Summary Judgment on February 7, 2014 (ECF Nos. 27 and 29), both asserting that
they are entitled to summary judgment as a matter of law on Plaintiff’s Amended
1
Complaint. Pl.’s. Mot. Summ. J., Feb. 7, 2014, ECF No. 27; Def.’s Mot. Summ. J.,
Feb. 7, 2014, ECF No. 29. The matter has been fully briefed and is now ripe for
disposition.
In accordance with the following reasoning, Defendant’s Motion for
Summary Judgment is granted and Plaintiff’s Motion for Summary Judgment is
denied. Plaintiff’s claim for retirement benefits under ERISA § 502(a)(1)(B), 29
U.S.C. § 1001, et seq., is dismissed.
I. BACKGROUND
Plaintiff Linda Keiser was married to Marlin Keiser, a former employee of
Defendant ConAgra Foods, Inc. Def.’s Statement of Facts ¶ 2, February 7, 2014,
ECF No. 30 (hereinafter “Def.’s SOF”). By correspondence dated August 20,
2010, Defendant notified Marlin Keiser that he was entitled to a benefit from the
IHF coordinated Bargaining Pension Plan (hereinafter the “Plan”). Pl.’s Statement
of Facts ¶ 2, Ex. A, at 176, February 7, 2014, ECF No. 28 (hereinafter “Pl.’s
SOF”). Enclosed with this correspondence was a Benefit Notice and Election
Package (hereinafter the “Pension Election Documents”) prepared by Defendant
which described the options available to Mr. Keiser under the Plan and required
that he make a pension election within thirty days of receipt of the packet. Pl.’s
SOF ¶ 3, Ex. A, at 176-98. The Pension Election Documents further included a
2
document pertaining to “Information for Spouses” in order to assist employees in
understanding the impact on their spouses of choosing each particular option. Pl.’s
SOF ¶ 10, Ex. A, at 184-86. In addition to the Pension Election Documents, Mr.
Keiser was provided a copy of the Summary Plan Description (hereinafter the
“SPD”), which is a statutorily mandated summary of the Plan that must contain
certain categories of enumerated information. Pl.’s SOF ¶ 15-16, Ex. A, at 110-36;
ERISA § 102.
The Plan is a long document which describes the employees’ retirement
options in detail. Section 6.5 of the Plan describes the Refund Option, which is the
option at issue in this case. It says that a participant may elect to receive a live
annuity until his Normal Retirement Date (hereinafter his “NRD”). Then, at his
NRD, the participant can: (1) continue to receive the same life annuity; (2) receive
a reduced life annuity for his life and then at his death his beneficiary will receive
the Initial Death Benefit1 , minus payments the participant received during his
lifetime; or (3) he can receive a single lump sum payment equal to the Initial Death
Benefit. Def.’s SOF ¶ 6, Ex. A, at 32-33. This option was to take effect on the
participant’s NRD, which according to Section 2.20 of the Plan is the “first day of
1
The Initial Death Benefit is a single lump sum payment which equals the sum of the
payments that would be made to the participant starting at age 65 and for the rest of the
participant’s life, based on his average life expectancy.
3
the calendar month coincident with or next following the Participant’s 65th
birthday.” Def.’s SOF ¶ 7, Ex. A, at 11. Section 6.1 elucidates further on the
Refund Option by stating that, “Prior to the date an Option elected pursuant to
Subsection 6.2, 6.3, 6.4 or 6.5 becomes effective the following conditions will
apply: (A) If the Participant dies prior to the effective date of any Option, the
Option will become void and no benefits will be payable under the Plan.” Def.’s
SOF ¶ 5, Ex. A, at 30.
The SPD that was provided to Mr. Keiser was generally consistent with the
language and meaning of the Refund Option as described in the Plan; however, it
made no mention of whether benefits would accrue to the participant’s beneficiary
in the event the participant died before his NRD. Pl.’s SOF ¶¶ 19-20, Ex. A, at 125.
In contrast, the Pension Election Documents, which were provided to
Plaintiff and her husband to help them understand their options under the Plan,
directly conflicted with the language and meaning of the description of the Refund
Option under the Plan. Pl.’s SOF ¶ 8, Ex. A, at 181. Unlike the Plan, the Pension
Election Documents stated that if the participant should die before his NRD, the
participant’s beneficiary would receive a lump sum payment equal to his Initial
Death Benefit. Pl.’s SOF ¶ 8, Ex. A, at 181. At the same time, the Pension
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Election Documents were explicit in explaining that “this document contains only
a summary of the pension payment options available to [the participant] and in the
event of any conflict between the official Plan documents and this Explanation of
Pension Election form, the Plan document shall govern.” Def.’s SOF ¶ 16, Ex. A,
at 180-82.
After meeting with Alice Satteson, the human relations representative for the
Defendant, Mr. Keiser elected the Refund Option and designated Plaintiff as his
beneficiary under the Plan. Pl.’s SOF ¶¶ 22, 25, Ex. A, at 202-15. As applied to
Mr. Keiser, the Refund Option provided for an Initial Death Benefit in the amount
of $67,442.31, a monthly payment up to age 65 in the amount of $475.65, and a
monthly payment after age 65 in the amount of $450.77. Pl.’s SOF ¶ 23, Ex. A, at
203.
It appears that Plaintiff and her husband relied primarily on the summary
Pension Election Documents when they selected the Refund Option under the Plan.
It is unclear whether they considered the SPD or the Plan at all in making their
decision. Defendants did pay Mr. Keiser’s monthly retirement benefits until his
death on December 31, 2010, at the age of 62. Pl.’s SOF ¶ 26-27.
Following Mr. Keiser’s death, Plaintiff called the Pension Center to apply
for benefits under the Plan. Pl.’s SOF ¶ 29, Ex. B. The Pension Center advised her
5
that all she would have to do was forward Mr. Keiser’s death certificate and a
check would be issued to her. Pl.’s SOF ¶ 30, Ex. B. Plaintiff made numerous calls
to the Pension Center and to Defendant’s headquarters where she was informed
that there were problems processing payment. Pl.’s SOF ¶ 31-37, Ex. B.
On January 27, 2010, Defendant sent a letter to Plaintiff which advised her
that no benefits were payable to her under the Refund Option since her husband
had passed away before 65, his NRD. Def.’s SOF ¶ 19, Ex. A, at 224. However,
Defendant later sent a superseding letter to Plaintiff on March 11, 2011 which
informed her that though no benefits were payable to her under the Refund Option
selected by her husband, it would pay her benefits under the default benefit
method, the Qualified 50% Joint and Survivor Annuity. Def.’s SOF ¶ 20-21, Ex. A,
at 233. This meant that Plaintiff would be eligible to receive a monthly benefit of
$223.30 throughout her lifetime, if she signed and returned the enclosed
documents. Def.’s SOF ¶ 23, Ex. A, at 233. Plaintiff chose not to sign the
documents. Def.’s SOF ¶ 24.
All of the foregoing facts are undisputed by Plaintiff and Defendant.
However, the parties dispute the implication of Defendant’s March 11, 2011
correspondence with Plaintiff, as well as the intention behind Defendant’s
modification of the SPD in 2013.
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Defendant’s March 11, 2011 letter to Plaintiff stated:
While reviewing Mr. Keiser’s paperwork, we determined that the
description of the Refund Option inadvertently indicated that the Initial
Death Benefit would be payable to his beneficiary if he was to pass away
prior to age 65 . . . . As a result, the Plan has made the determination to
pay you a monthly recurring benefit as if Mr. Keiser had elected the
Qualified 50% Joint and Survivor Annuity at the time of his retirement,
which is the Normal Form of Payment for married participants under the
Plan.
Def.’s SOF ¶ 21, Ex. A, at 233. Plaintiff contends that this was an attempt on the
part of the Defendant to coerce her into signing modified plan documents in which
she would have received a substantially lesser sum, without first notifying the
union. Pl.’s Mem. Supp. Summ. J. 3. Defendant, on the other hand, asserts that
rather than attempting to coerce Plaintiff, it was gratuitously offering to pay
Plaintiff benefits to which she was not entitled so that she would not be left emptyhanded. Def.’s Mem. Opp’n Summ. J. 15.
Additionally, Defendant issued a revised SPD in 2013 which stated, “You
should note that if you die before reaching age 65, no further payments will be
made; your beneficiary will not receive either a pension or a lump sum payment.”
Pl.’s SOF ¶ 21, Ex. A, at 153. Although neither party disputes the that this SPD
was in fact issued or the language contained within, they do dispute the
significance of its issuance.
It is unclear what argument Plaintiff is making in order to establish the
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relevance of this modification to the case at bar. However, Plaintiff appears to
imply that because the revised SPD added terms that were not included in the
original SPD provided to Mr. Keiser, it was made in bad faith by the Defendant.
Pl.’s Mem. Supp. Summ. J. 9. Defendant, on the other hand, argues that this
modification was simply an attempt to clarify the terms of the Plan and could not
have been made in bad faith because it accurately portrayed the options available to
participants under the Plan. Def.’s Mem. Opp’n Summ. J. 16.
Plaintiff filed her original Complaint with this Court on January 23, 2013,
alleging that she was entitled to an Initial Death Benefit under the terms of the Plan
in the amount of $67,442.31. ECF No. 1. Defendant moved to dismiss Plaintiff’s
Complaint on the grounds that she had not first exhausted her administrative
remedies. ECF No. 7. Soon thereafter, Plaintiff proceeded to assert her claim to
the ConAgra Foods Employee Benefits Administrative Committee (hereinafter the
“Committee”), to pursue the administrative process under the Plan. Def.’s SOF ¶
27, Ex. A, at 165. On July 30, 2013, the Committee sent a letter to Plaintiff to
inform her that her claim had been denied, noting that its decision was consistent
with past interpretations of the Refund Option. Def.’s SOF ¶ 31-32, Ex. A, at 247.
Subsequently, Plaintiff filed an Amended Complaint and following the conclusion
of discovery, Plaintiff and Defendant simultaneously filed Motions for Summary
8
Judgment, both of which are currently before this Court. ECF Nos. 27, 29.
II. DISCUSSION
A. Legal Standards
1.
Summary Judgment Standard
Summary judgment is appropriate where “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” where it “might affect
the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A dispute is “genuine” where “the evidence is such that
a reasonable jury,” giving credence to the evidence favoring the nonmovant and
making all inferences in the nonmovant’s favor, “could return a verdict for the
nonmoving party.” Id.
The burden of establishing the nonexistence of a “genuine issue” is on the
party moving for summary judgment. In re Bressman, 327 F.3d 229, 237 (3d Cir.
2003) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 331 (1986) (Brennan, J.,
dissenting)). The moving party may satisfy this burden by either (i) submitting
affirmative evidence that negates an essential element of the nonmoving party’s
claim; or (ii) demonstrating to the Court that the nonmoving party’s evidence is
insufficient to establish an essential element of the nonmoving party’s case. Id. at
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331.
Where the moving party’s motion is properly supported, the nonmoving
party, to avoid summary judgment in his opponent’s favor, must answer by setting
forth “genuine factual issues that properly can be resolved only by a finder of fact
because they may reasonably be resolved in favor of either party.” Anderson, 477
U.S. at 250. For movants and nonmovants alike, the assertion “that a fact cannot
be or is genuinely disputed must” be supported by “materials in the record” that go
beyond mere allegations, or by “showing that the materials cited do not establish
the absence or presence of a genuine dispute, or that an adverse party cannot
produce admissible evidence to support the fact.” FED. R. CIV. P. 56(c)(1); see also
Anderson, 477 U.S. at 248–50.
“When opposing summary judgment, the non-movant may not rest upon
mere allegations, but rather must ‘identify those facts of record which would
contradict the facts identified by the movant.’” Port Auth. of N.Y. and N.J. v.
Affiliated FM Ins. Co., 311 F.3d 226, 233 (3d Cir. 2003). Furthermore, “[i]f a
party fails to properly support an assertion of fact or fails to properly address
another party’s assertion of fact as required by Rule 56(c), the court may . . .
consider the fact undisputed for purposes of the motion.” FED. R. CIV. P. 56(e)(2).
In deciding the merits of a party’s motion for summary judgment, the
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Court’s role is not to evaluate the evidence and decide the truth of the matter, but
to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249.
Credibility determinations are the province of the factfinder, not the district court.
BWM, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992).
2.
Standard of Review of the Plan Administrator’s Decision
29 U.S.C. § 1132(a)(1)(B) [ERISA § 502(a)(1)(B)] creates a civil cause of
action for a plan participant “to recover benefits due to him under the terms of his
plan, to enforce his rights under the terms of the plan, or to clarify his rights to
future benefits under the terms of the plan.” This means that in order to assert a
claim under this provision the participant must demonstrate that he has a legally
enforceable right to benefits under the plan and that the plan administrator
improperly denied those benefits. See Fleisher v. Standard Ins. Co., 679 F.3d 116,
120 (3d Cir. 2012) (citing Hooven v. Exxon Mobil Corp., 465 F.3d 366, 574 (3d
Cir. 2006)).
According to the Supreme Court, “a denial of benefits charged under
1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan
gives the administrator or fiduciary discretionary authority to determine eligibility
for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 115 (1989). A de novo review would require the court to
11
§
determine whether the administrator or fiduciary made a correct decision in
denying benefits. See Viera v. Life Ins. Co. of N. Am., 642 F.3d 407, 413 (3d Cir.
2011). Conversely, if the challenged plan expressly grants discretionary authority
to the administrator or fiduciary, “[t]rust principles make a deferential standard of
review appropriate”; in that case, the standard of review of the district court is
‘arbitrary and capricious.’ See Fleisher, 679 F.3d at 120 (citing Firestone Tire &
Rubber Co., 489 U.S. at 101).
“An administrator’s decision is arbitrary and capricious ‘if it is without
reason, unsupported by substantial evidence or erroneous as a matter of law.’ ”
Miller v. Am. Airlines, Inc., 632 F.3d 837, 845 (3d Cir. 2011) (quoting Abnathya v.
Hoffmann-La Roche, Inc., 2 F.3d 40, 45 (3d Cir. 1993)) (internal quotation marks
omitted). Under an arbitrary and capricious standard, courts must defer to the
decision of the administrator as long as it is “reasonably consistent with
unambiguous plan language.” Bill Gray Enters. v. Gourley, 248 F.3d 206, 218 (3d
Cir. 2001).
In the case at bar, the parties do not dispute that the Plan expressly gave the
administrator discretionary authority to interpret the Plan and make eligibility
determinations. The Plan states:
The [Committee] shall have full and complete authority, responsibility,
and control over the management, administration and operation of the
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Plan and Trust fund, including, but not limited to, the sole and absolute
discretion to: (i) construe and interpret the Plan; (ii) decide all questions
of eligibility to participate in the Plan; (iii) determine the amount,
manner and time of payment of any benefits to any Participant,
Beneficiary or other person. . .
Plaintiff agrees that this language within the Plan would ordinarily make an
arbitrary and capricious standard of review appropriate.
Plaintiff argues, however, that the Court should apply a heightened standard
of review because of certain enumerated procedural irregularities in the handling
by Defendant of Plaintiff’s administrative claim for benefits. She cites to Leonard
v. Educators Mut. Life Ins. Co. for the proposition that a heightened standard of
review under ERISA is warranted if there has been procedural irregularity, bias, or
unfairness in the review of a claimant’s application for benefits. See Leonard v.
Educators Mut. Life Ins. Co., 620 F.Supp.2d 654, 670 (E.D.Pa. 2007) (citing Pinto
v. Reliance Standard Life Ins. Co., 214 F.3d 377, 393 (3d Cir. 2000)). Examples of
such procedural irregularities would include: “(1) the insurer’s reversal of its
original determintaion without the examination of additional evidence; (2) a selfserving selectivity in the use of evidence; and (3) a bias in decision-making to the
benefit of the insurer.” Russell v. Paul Revere Life Ins. Co., 148 F.Supp.2d 392,
406 (D.Del. 2001) (interpreting and citing Pinto).
Here, Plaintiff argues that there were numerous procedural irregularities in
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Defendant’s treatment of Plaintiff’s administrative claim for benefits. As stated
above, Plaintiff contends that Defendant’s modification of the SPD in 2013 was
made in bad faith because it added terms that were not included in the SPD
provided to Mr. Keiser when he made his plan election. Further, Plaintiff claims
that through its March 11, 2011 letter, which offered to pay Plaintiff benefits under
the default plan option, Defendant attempted to “unilaterally [make] the
determination to pay her benefits under a new plan which would pay her a
substantially lesser sum. Finally, Plaintiff argues that Defendant based its decision
to deny benefits on “self-serving selectivity in the use of evidence, namely the Plan
Document alone, even though they had the numerous summary documents for
review and consideration.”
In response, Defendant first argues that the line of cases relied upon by
Plaintiff, specifically Leonard and Pinto, have been overruled by the Supreme
Court in Met. Life Ins. Co. v. Glenn and therefore those cases are no longer good
law. 554 U.S. 105 (2008). Defendant argues that under Glenn, “in applying the
abuse of discretion standard2, a conflict of interest or procedural irregularity is just
‘one factor to be considered.’ ” Glenn, 554 U.S. at 117-19. According to
2
“[I]n the ERISA context, the arbitrary and capricious and abuse of discretion standards
of review are essentially identical.” Fleisher, 679 F.3d at 121 n.2.
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Defendant, this means that any procedural irregularity does not automatically
change the standard of review; it is to be considered only as a “tie-breaking factor”
in the event the case is close. Fleisher, 679 F.2d at 122 n.3. Defendant further
argues because the Committee’s interpretation of the Plan was correct, the issue is
not close and so does not require a tie-breaking factor; as such, Plaintiff’s
allegations of procedural irregularity are irrelevant.
In the alternative, Defendant argues that none of the procedural irregularities
asserted by Plaintiff affected the Committee’s decision, and that in order to be
relevant, an alleged procedural irregularity must have affected the administration
of the claim. Moreover, Defendant disputes the significance of the March 11, 2011
letter which was sent to Plaintiff, claiming that rather than an attempt to
unilaterally reduce her benefits, the letter was merely informing her that she would
not receive benefits under the Refund Option and instead offering to pay her under
a different option, “so that she would not be left empty-handed.” In addition,
Defendant claims that the 2013 modification of the SPD cannot be considered a
procedural irregularity because it accurately described the Refund Option that was
available through the Plan when Mr. Keiser selected his pension plan.
It is the Court’s view that Glenn controls in the present situation and any
procedural irregularity will be treated as just one factor in deciding whether
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Defendant abused its discretion, rather than automatically raising the standard of
review. Glenn explicitly deals only with conflicts of interest arising from the dual
role of an entity as an ERISA plan administrator and payer of plan benefits,
holding that a conflict of interest is only one factor to be considered in an abuse of
discretion analysis. See Glenn, 554 U.S. at 105-7. However, the case impliedly
extended that holding to procedural irregularities as well through its consideration
in the same manner of certain factors which “suggested procedural
unreasonableness.” Id. at 118 (determining whether MetLife abused its discretion
by considering various factors including that “MetLife had emphasized a certain
medical report that favored a denial of benefits, had deemphasized certain other
reports that suggested a contrary conclusion, and had failed to provide its
independent vocational and medical experts with all of the relevant evidence.”).
Moreover, subsequent cases have explicitly held that procedural irregularities are
treated similarly to conflicts of interests in this regard. See, e.g., Brangman v.
AstraZeneca, LP, 952 F.Supp.2d 728, 738 (E.D.Pa. 2013) (“Just as structural
conflicts factor into a court’s review, so too do procedural irregularities or other
evidence of bias.”); see also Shvartsman v. Long Term Disability Income Plan for
Choices Eligible Employees of Johnson & Johnson, No. 11-03643, 2012 WL
2118126 at * 11 (D.N.J. June 11, 2012) (finding that evidence of procedural
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abnormalities or other bias is to be considered a factor like a conflict of interest is
considered as stated in Glenn).
That being said, this Court must still inquire into whether any of the
Defendant’s actions would constitute procedural irregularities which must be
considered as factors in the Court’s decision as to whether Defendant acted in an
arbitrary and capricious manner. In doing so on these motions for summary
judgment, this Court is only allowed to determine matters of law; it is not entitled
to inquire into or decide factual disputes. See Anderson, 477 U.S. at 249.
First, Plaintiff claims that Defendant acted in bad faith by modifying the
SPD in 2013 to add an additional phrase which makes benefits unavailable to the
beneficiary in the event the participant died before his NRD. Even accepting
Plaintiff’s interpretation of Defendant’s motive, this would not be a procedural
irregularity because it has no bearing on the handling of Plaintiff’s administrative
claim. Kosiba v. Merck & Co., 384 F.3d 58, 66 (3d Cir. 2004) (“Our precedents
establish at least one more cause for heightened review: demonstrated procedural
irregularity, bias, or unfairness in the review of the claimant’s application for
benefits.”) (emphasis added). Plaintiff’s claim was decided entirely on the terms of
the Plan document, and the Committee actually considered but disregarded the
language of both the Pension Election Documents and the original SPD. The
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Committee did not consider the modified SPD in its decision, nor should it have,
given that a document issued two years after Mr. Keiser’s pension election is
irrelevant as to whether benefits should have been available to Plaintiff.
Second, Plaintiff argues that the letter she received from Defendant was
intended to coerce her into signing modified plan documents which would have
reduced the amount of money available to her substantially. If Defendant was in
fact attempting to coerce Plaintiff into changing her plan and receiving a smaller
benefit as she claims, this could amount to a procedural irregularity. Even though
Plaintiff never agreed to the offer sent by Defendant, she could have a credible
argument that Defendant’s denial of Plaintiff’s claim was in retaliation for her
refusal to agree to the new plan.
Finally, Plaintiff briefly argues that Defendant used only self-serving
evidence in denying Plaintiff’s claim because it considered only the Plan and not
the other summary documents from which Mr. Keiser based his pension election.
Given the facts on the record, this would not amount to a procedural irregularity.
The record clearly shows that Defendant did not refuse to consider the summary
documents; it simply made the determination that the Plan controlled over any
other conflicting documents. Further, this is not the type of situation contemplated
by Pinto when it described the irregularity and unfairness of considering only self18
serving evidence. In Pinto, the plan administrator credited one part of the advice
of a treating doctor but not his other advice; the court determined that it was
inconsistent treatment of the same authority in two separate instances. 214 F.3d at
394. Further, the plan administrator in Pinto failed to explain its rejection of the
doctor’s advice. Id. at 393-94.
Here, when the Defendant made its decision, it sent Plaintiff a letter that
provided significant detail as to why her claim for benefits was denied. In the
letter, Defendant specifically addressed the Pension Election Documents and
explained why it believed that contrary Plan language controls over the language
contained in these summary documents. Because it is clear that a self-serving
selectivity of evidence was not present here, the Court will not consider it as a
factor in weighing the standard of review.
Because of the single foregoing factual dispute, for the purposes of this
analysis the Court will apply the arbitrary and capricious standard of review and
consider Plaintiff’s interpretation of the letter as a factor in its determination as to
whether Defendant abused its discretion in denying Plaintiff’s claim for benefits.
B. Claim for Benefits Under ERISA § 502(a)(1)(B)
Having found that the arbitrary and capricious standard of review applies,
and taking into account certain potential procedural irregularities on the part of the
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Defendant, the Court now turns to Plaintiff’s claim for benefits under ERISA
§
501(a)(1)(B).
Plaintiff bases her claim on the Pension Election Documents, which were
summary documents given to employees by the Defendant purporting to synthesize
the information contained in the Plan. She argues that the Pension Election
Documents should control over the Plan, given the contradictory language and her
reliance on the summary documents. In doing so, she relies on a decision of the
United States Court of Appeals for the Third Circuit, Burstein v. Ret. Account Plan
for Emps. of Allegheny Heath Educ. & Research Found., 334 F.3d 365 (3d Cir.
2003), which, in a similar factual setting, unambiguously held that where the
language in an SPD conflicts with the plan language, the SPD will control.
Conversely, Defendant rests its case on the Plan language, citing to a recent
Supreme Court case, Cigna Corp. v. Amara, -- U.S. --, 131 S. Ct. 1866 (2011),
which, inter alia, held that disclosures set forth in the SPD could not be enforced
pursuant to ERISA § 502(a)(1)(B) as terms of the plan itself. In response, Plaintiff
contends that Cigna is inapplicable to the case at bar because in that decision the
Supreme Court was not dealing with summary plan documents which contained
conflicting terms as in the present matter. Rather, she argues, the Supreme Court
was deciding whether the district court had applied the correct legal standard in
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determining whether notice violations regarding changes to the Plan itself had
caused its employees sufficient injury to warrant relief.
Plaintiff is correct in stating that Burstein was factually similar to the current
situation. In that case, former employees of a then-bankrupt company brought an
action pursuant to ERISA seeking to recover benefits under their retirement plan.
The SPD given to the employees and the Plan Document contained directly
conflicting terms regarding how and when the employee’s retirement account was
funded and therefore directly impacted how much money the employees received
when the employer went bankrupt. The Third Circuit held that the SPD would
govern over contradictory or conflicting terms in the Plan because “[i]t is of no
effect to publish and distribute a plan summary booklet designed to simplify and
explain a voluminous and complicated document, and then proclaim that any
inconsistencies will be governed by the plan. Unfairness will flow to the employee
for reasonably relying on the summary booklet.” Id. at 378 (quoting McKnight v. S.
Life & Health Ins. Co., 758 F.2d 1566, 1570 (11th Cir. 1985)).
However, Burstein is no longer good law on the issue of which document
controls the availability of benefits, given the Supreme Court’s ensuing decision in
Cigna. Cigna involved a situation where the company was converting its
traditional defined benefit pension plan into a “cash balance” retirement plan and
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the plaintiffs were employees who were negatively affected by this conversion. See
Amara v. Cigna Corp., 534 F.Supp.2d 288, 295 (D.Conn. 2008). Among other
things, they argued that the SPD issued to describe the new cash balance plan was
misleading by failing to inform employees that under the new plan a participant’s
opening balance would not always be equivalent to the value of the participant’s
currently accrued benefit; it did, however, tell participants that “[i]f you
participated in the Pension Plan before [the conversion date], your old plan benefits
were converted to an opening account balance in this Plan. Your final Plan
benefits cannot be less than your old plan benefits [before the date of conversion].”
Id. at 303, 310-11. The district court ultimately awarded benefits to the employees
based on a different legal theory, namely, that Cigna had violated its disclosure
obligations and in granting legal relief the court reformed the plan to conform to
the explanations in the SPD. See Cigna, 131 S.Ct. at 1868.
However, in rejecting the primary basis for the district court’s decision, the
Supreme Court simultaneously rejected the theory that the SPD creates enforceable
plan terms which prevail over Plan language. See id. (“Nor can the Court accept
the Solicitor General’s alternative rationale: that the District Court enforced the
summary plan descriptions and that they are plan terms. That reading cannot be
squared with ERISA § 102(a), which obliges plan administrators to furnish
22
summary plan descriptions, but does not suggest that information about the plan
provided by those disclosures is itself part of the plan.”). In so doing, the court
relied on the distinction, whether theoretical or actual, between the plan
administrator and the plan sponsor, stating that “there is no reason to believe that
the statute intends to mix the responsibilities by giving the administrator the power
to set plan terms indirectly in the summaries. . . .” Id. at 1869.
Though Cigna did not involve identical facts as here or in Burstein, its
holding was comprehensive regarding any situation in which a plaintiff argues for
benefits based on language in the SPD that are not explicitly granted by the plan.
Ultimately, the Plan language controls and conflicting, contradictory, or misleading
terms in an SPD (or other summary document) cannot be incorporated into the
terms of the Plan itself. As such, this Court cannot say that the Committee abused
its discretion, even taking into account the potential procedural irregularities, when
it acted in accordance with governing law.
III. CONCLUSION
For the foregoing reasons, Defendant’s Motion for Summary Judgment is
granted and Defendant’s Motion for Summary Judgment is denied. Plaintiff’s
claim for retirement benefits under ERISA § 502(a)(1)(B), 29 U.S.C. § 1001, et
seq., is hereby dismissed.
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An appropriate Order follows.
BY THE COURT:
s/ Matthew W. Brann
Matthew W. Brann
United States District Judge
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