Marolt v. Alliant Techsystems, Inc.

Decision Date13 July 1998
Docket NumberNo. 97-2817,97-2817
Citation146 F.3d 617
PartiesPens. Plan Guide (CCH) P 23,944 Mary Ellen MAROLT, Appellee, v. ALLIANT TECHSYSTEMS, INC.; Alliant Techsystems Pension and Retirement Administrative Committee; Mellon Bank, N.A., Appellants.
CourtU.S. Court of Appeals — Eighth Circuit

Stephen Paul Lucke, Minneapolis, MN, argued (Matthew E. Klein, on the brief), for appellants.

Charles R. Shreffler, Minneapolis, MN, argued (Jack E. Pierce, on the brief), for appellee.

Before RICHARD S. ARNOLD, JOHN R. GIBSON, and FAGG, Circuit Judges.

FAGG, Circuit Judge.

Alliant Techsystems, Inc. (Alliant Tech), the Alliant Techsystems Pension and Retirement Administrative Committee (PRAC), and Mellon Bank, N.A. (collectively Alliant) appeal the district court's order granting summary judgment for Mary Ellen Marolt, and denying Alliant's cross-motion for summary judgment, in this Employee Retirement Income Security Act (ERISA) lawsuit. We agree with the district court that the PRAC abused its discretion in rejecting Marolt's appeal concerning her retirement benefits, and we thus affirm.

The pertinent facts are undisputed. Marolt worked at Honeywell from 1980 to 1989. In September 1990 Honeywell spun off several divisions to create Alliant Tech, a subsidiary of Honeywell. In November 1990 Marolt took a temporary position with Alliant Tech. The following March, Marolt's supervisor offered Marolt a permanent position. The supervisor told Marolt she believed Marolt was entitled to "bridge" her break in service--that is, to date her employment with Alliant Tech from the start of her employment at Honeywell, which would increase Marolt's retirement benefits. After Marolt's supervisor discussed the matter with Alliant Tech's human resources department, she assured Marolt the break would be bridged, and Marolt accepted the permanent position. Marolt then formally applied for bridging to her Location Benefits Administrator (LBA), who approved the application in December 1991. Alliant Tech confirmed Marolt's bridging status several more times, both orally and in writing. In June 1994, however, Marolt's LBA informed Marolt she was not entitled to bridging after all because she had not been employed with Honeywell on the date of the Alliant Tech spin off. The PRAC denied Marolt's appeal of this decision without further explanation, saying only that it "recognize[d] that errors had been made in communicating credited service[ ] dates, but the correction to you was communicated properly. As a result, your request to bridge your credited service is denied." Marolt then brought this lawsuit under 29 U.S.C. § 1132(a)(1)(B) to clarify her rights to future benefits.

Alliant Tech's Summary Plan Description (SPD) contains the following relevant provisions:

If you leave Alliant Techsystems and later return, you have a break in service. You may be eligible to receive credit for your prior service, through a process called bridging, when you return to work.

It is your responsibility to initiate bridging of a break in service by contacting your Location Benefits Administrator (LBA). ...

If you left Alliant Techsystems (Honeywell) on or after February 1, 1976: Your service before the break will be counted if:

You were vested and had at least five years of credited service when your employment ended; or

You were not vested and were away from the company for less than five years; or

The length of time you were away from the company was less than your credited service at the time you left; or

Your total periods of credited service equal 20 years or more....

Notes: 1) Generally, credited service with Honeywell Inc. prior to our 9/28/90 spinoff is included in credited service with Alliant Techsystems.... 4) Temporary service prior to January 1, 1990, may count toward credited service. Your Location Benefits Administrator can provide details if needed.

It is undisputed that Marolt was vested under Honeywell's retirement plan, that Marolt had more than five years of credited service at Honeywell, and that Marolt left Honeywell after February 1, 1976. Thus, according to the SPD her "service before the break will be counted."

Alliant Tech's formal retirement plan document also addresses the bridging issue, although it takes some digging to understand how. Section 1.1.12(a) of the formal plan provides that "[s]ervice with Honeywell Inc. shall be considered service with [Alliant Tech] to the extent described in Section 1.5." Section 1.5 states that "service with Honeywell Inc. shall be considered service with [Alliant Tech] for purposes of determining Credited Service under Section 1.1.12 to the extent ... such crediting is required under the Distribution Agreement...." Section 1.5 does not refer the reader to any particular part of the Distribution Agreement, a 115-page document governing the Alliant Tech spin off. Nevertheless, on page seventy-four of that document, subsection 8.03(d)(i) gives credit for service at Honeywell to "Transferred Employees," and on pages thirteen and fourteen "Transferred Employee" is defined to include only those persons who were employed at Honeywell on the date of the spin off. Marolt was not employed with Honeywell on that date. The district court concluded, however, that the Distribution Agreement is not part of Alliant Tech's ERISA plan. With the Distribution Agreement out of the picture, the district court held the PRAC's decision was unreasonable because the SPD expressly provides for bridging in cases like Marolt's.

We review de novo the district court's grant of summary judgment for Marolt, applying the familiar standard set forth in Federal Rule of Civil Procedure 56(c), and viewing the factual record in the light most favorable to the losing party, Alliant. See Barker v. Ceridian Corp., 122 F.3d 628, 632 (8th Cir.1997). Because Alliant Tech's ERISA plan gives the PRAC discretionary authority to interpret and apply the plan's provisions, the district court reviewed the PRAC's decision for abuse of discretion. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Donaho v. FMC Corp., 74 F.3d 894, 898 (8th Cir.1996). Under this standard of review, the PRAC's decision stands unless it was "without reason, unsupported by substantial evidence or erroneous as a matter of law." Donaho, 74 F.3d at 900 (internal quotations omitted). "We review de novo a district court's application of the deferential standard of review." Id. at 898.

Alliant disagrees with the district court's analysis. First, contrary to the district court's rejection of the Distribution Agreement, Alliant maintains the formal plan document incorporates the Agreement, and under the Agreement's relevant provisions Marolt is disqualified from bridging. Second, contrary to the district court's conclusion that the SPD expressly entitles Marolt to bridging, Alliant contends the SPD is silent about bridging rights in Marolt's particular circumstances--those of a former Honeywell employee who was not employed with Honeywell on the date of the spin off. See Jensen v. SIPCO, Inc., 38 F.3d 945, 952 (8th Cir.1994) (observing that although "an SPD provision prevails if it conflicts with a provision of a plan," that rule "does not apply when the plan document is specific and the SPD is silent on a particular matter"). Emphasizing the word "[g]enerally" in note one to the SPD's bridging provisions, Alliant interprets those provisions as general rules only. According to Alliant, another part of the SPD directs plan participants like Marolt to the formal plan document for the specifics on bridging: "This SPD is not meant to cover every detail of the plan. Complete details are in the plan document...." Third, Alliant argues that the SPD itself makes bridging available only to employees who "leave ... and later return." Alliant interprets this phrase to mean that only those employees who left Honeywell and came back to Honeywell, or who left Alliant Tech and came back to Alliant Tech, are entitled to bridge. Under this interpretation of the SPD, employees like Marolt who left Honeywell and came back to Alliant Tech did not "leave ... and later return," so the SPD itself disqualifies persons in Marolt's circumstances from bridging.

Alliant does not explain how the SPD can both address Marolt's particular situation and remain silent about it at the same time. Also, Alliant's view that the SPD's general reference to the formal plan--"[c]omplete details are in the plan document"--requires employees to consult the formal document for details about bridging renders meaningless the SPD's specific direction to consult with and rely on the LBA for those details, as Marolt did. If Alliant's hindsight interpretation of the SPD were the interpretation the PRAC formulated and applied when it decided Marolt's case, we would have to consider whether these inconsistencies make Alliant's interpretation unreasonable. See Finley v. Special Agents Mut. Benefit Ass'n, Inc., 957 F.2d 617, 621 (8th Cir.1992).

The fact is, the PRAC did not provide a rationale for its decision. The PRAC's failure in this regard was contrary to the ERISA statute...

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