Capital Cities/ABC, Inc. v. Ratcliff
| Decision Date | 17 April 1998 |
| Docket Number | No. 97-3031,97-3031 |
| Citation | 141 F.3d 1405 |
| Parties | 22 Employee Benefits Cas. 1004, Pens. Plan Guide (CCH) P 23942D, 98 CJ C.A.R. 1957 CAPITAL CITIES/ABC, INC.; Kansas City Star Company; the Capital Cities Publishing Pension Plan; Ronald J. Doerfler, David J. Vondrak, Warren Salerno, in their capacity as Administrative Committee of the Capital Cities Publishing Pension Plan, and as Employee Benefits Committee of the Capital Cities/ABC, Inc. Savings & Investment Plan; the Capital Cities/ABC, Inc. Savings & Investment Plan; the Kansas City Star Company Group Insurance Plan; Robert C. Woodworth, Wesley R. Turner, James L. Payne, Dell Campbell, Arthur S. Brisbane, Ralph W. Rowe, R. Richard Good, Clark M. Lambert, H. Kent Simocosky, Peggy Ginther Rush, in their capacity as the Kansas City Star Company's Benefits Committee; The Kansas City Star Spending Account Program; Plaintiffs--Appellees, v. Rockie RATCLIFF, Ernie Arnote, and Paul Wooten, Defendants--Appellants, Robert G. HUTSELL, David E. Newman, Gordon S. Wright, Gilbert L. Mitchell, Bradley L. McElhaney, Michael K. Shepherd, Michael Shumacher, Janet Irwin, Cato Sims, Jr., Ronald D. Wright, Teresa A. Todd, Roger Gatschet, Kevin B. Clark, Paul Vincent, Rockie Ratcliff, Linda Inglehart, Ralph Smith, Ruth V. Cornett, Harvey A. Stephens, David Kirkpatrick, John C. Fox, Ernie Arnote, Pat Caskey, Roger W. Dean, Tom Hoover, Donald Miesner, Tom Palmer, Michael Piedmonte, Craig A. Robinson, Paul Trull, Paul Wooten, Plaintiffs-Appellants, v. The KANSAS CITY STAR COMPANY; Capital Cities Media, Inc.; Capital Cities/ABC, Inc.; Capital Cities Publishing Pension Plan; Capital Cities//ABC, Inc. Savings and Investment Plan; the Kansas City Star Company Employee Group Insurance Plan, and the Kansas City Star Company Spending Account Program, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Robert J. Bjerg, Seigfreid, Bingham, Levy, Selzer & Gee, P.C., Kansas City, MO (Rachel H. Baker, Seigfreid, Bingham, Levy, Selzer & Gee, P.C., Kansas City, MO; R. Frederick Walters and J. Brett Milbourn, Walters, Bender & Strohbehn, P.C., Kansas City, MO, with him on briefs) for Appellants.
Michael S. Horne, Covington & Burling, Washington, DC (Joseph R. Colantuono, Overland Park, KS; Jeffrey B. Coopersmith, Covington & Burling, Washington, DC, with him on brief) for Appellees.
Before ANDERSON, BALDOCK, and MURPHY, Circuit Judges.
These consolidated appeals arise under the Employment Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 ("ERISA"), and involve two groups of parties: those collectively known as "the Star" (Capital Cities/ABC, Inc., The Kansas City Star Company, the Star's four ERISA Plans and the ERISA Plans' claims committees, which had filed a declaratory judgment action against three newspaper carriers/delivery agents for the newspaper, the Kansas City Star ); and those collectively known as "the Carriers" (thirty-one Kansas City Star newspaper carriers/delivery agents, representing a class of such carriers, who had filed an action against the Star). The Carriers' action was transferred to the District of Kansas, where it was consolidated with the Star's declaratory judgment action. The district court granted summary judgment to the Star. At issue is whether the Carriers are eligible to receive benefits under the Star's four ERISA plans. We affirm the district court's conclusion that they are not. 1
Certain basic facts are undisputed. The Kansas City Star Company publishes the Kansas City Star newspaper. Until March 1990, it also published the Kansas City Times. The Star is a wholly-owned subsidiary of Capital Cities/ABC, Inc. The Carriers represent a class certified by the district court and consisting of "[a]ll persons who have been home delivery or single copy agents for the Kansas City Star Company pursuant to agency agreement since the delivery agent system was implemented by The Star in or about 1978." Capital Cities/ABC, Inc. v. Ratcliff, 953 F.Supp. 1228, 1230-31 (D.Kan.1997).
The Star offers to certain of its employees four separate ERISA plans: two employee pension plans and two employee welfare benefit plans. The pension plans are the Capital Cities/ABC, Inc. Savings & Investment Plan (the "Savings Plan") and the Capital Cities Publishing Pension Plan (the "Pension Plan"). The employee welfare benefit plans are the Kansas City Star Company Group Insurance Plan (the "Group Insurance Plan") and the Kansas City Star Spending Account Program (the "Spending Account Program"). A single committee comprised of Capital Cities officers and directors serves as the administrator of both the Savings Plan and the Pension Plan. A single committee comprised of Star officers and directors administers the coverage of the Group Insurance Plans and the Spending Account Program.
From 1880 until 1977, the Star's newspapers were delivered by independent newspaper carriers who bought papers from the Star at a wholesale rate and then resold them at a retail rate to customers. There is no dispute that those carriers were independent The Agent is and will continue to be a self-employed independent contractor and not an employee or servant of The Star....
contractors with complete control over the delivery of papers. In September 1977, shortly after Capital Cities acquired the Star, the Star notified its carriers that it planned to change its newspaper delivery system. It terminated all existing contracts with its carriers, and replaced them with "Agency Agreements" pursuant to which the carriers became delivery agents. These Agency Agreements, which are critical to this case, provide in pertinent part as follows:
It is expressly understood and agreed between the parties that The Agent will not be treated by The Star as an employee for federal, state, or local tax purposes....
It is further expressly understood that, as an independent contractor, The Agent will not receive, and has no claim to, any benefits or other compensation currently paid by The Star to its employees or hereafter declared by The Star for the benefit of its employees. The Agent's compensation under this Agreement shall consist, in its entirety, of the fees set forth in paragraph 8 below.
Appellants' J.A. Vol. 1 at 135-37. Paragraph 8 in turn provided for a series of fees to be paid by the Star to the delivery agent, including a delivery fee for each newspaper delivered, a delivery service incentive fee, a collection incentive fee, and a solicitation incentive fee.
In 1991, the Internal Revenue Service began examining the Star's delivery agent system, and a subsequent audit resulted in the IRS's issuance of a Technical Advice Memorandum which concluded that many of the Carriers were common law employees of the Star. 2 A group of the Carriers then formally requested ERISA benefits under the Star's four ERISA plans. The Plans' claims committees eventually issued decisions denying the Carriers' claims for benefits under the four Plans.
The Star then filed its declaratory judgment action against three of the Carriers and the class they represent, seeking the following declaratory relief: that the Carriers were bound by their Agency Agreements which stated they would receive no benefits under the Plans; that the Carriers were not employees under the Plans; that the Carriers were estopped from pursuing claims for benefits; and that the decisions of the claims committees denying benefits should be upheld. The Carriers followed with their own class action suit, which was consolidated with the Star's action for declaratory relief.
The Star filed a motion for partial summary judgment, arguing that the Carriers were not eligible for benefits under the terms of the Plans and that the Carriers were bound by their Agency Agreements which provided that they were independent contractors and would not be entitled to any employee benefits. The Carriers also filed a motion for partial summary judgment, arguing that they were common law employees of the Star. The court granted the Star's motion for summary judgment and this appeal followed.
We review de novo the judgment of the district court granting summary judgment, applying the same standard as did the district court. Chiles v. Ceridian Corp., 95 F.3d 1505, 1510 (10th Cir.1996). Summary judgment is proper where "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). We, as usual, construe the facts and all reasonable inferences therefrom in the light most favorable to the part opposing summary judgment. Chiles, 95 F.3d at 1510.
A court must review the decision denying benefits under an ERISA plan de novo "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, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989); see also McGraw v. The Prudential Ins. Co., 137 F.3d 1253, 1258 (10th Cir.1998). Finding no language in the Plans conferring discretionary authority on the administrators to determine entitlement to benefits, the district court applied a de novo standard. The parties agree that the same de novo standard applies on appeal.
The district court held that the Plans' committees correctly denied benefits to the Carriers on two bases: the Agency Agreements foreclosed their right to benefits and the terms of the four Plans evinced an intent to exclude the Carriers. We agree with the district court on both grounds.
Relying on Boren v. Southwestern Bell Tel. Co., 933 F.2d 891 (10th Cir.1991), the district court held that:
[T]he Carriers contractually agreed prior to commencing employment with The Star that they would not be entitled to benefits. The Agency Agreements define the relationship of the parties. The...
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