Perrino v. Southern Bell Telephone & Telegraph, No. 98-5189

• Decision Date: 20 April 2000
• Docket Number: No. 98-5189
• Citation: 209 F.3d 1309
• Parties: (11th Cir. 2000) Angelo PERRINO, Stephen Placido, Edna Shepard, Arthur Wilson, Plaintiffs-Appellants, v. SOUTHERN BELL TELEPHONE & TELEGRAPH CO., Defendant-Appellee,
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1309

209 F.3d 1309 (11th Cir. 2000)

Angelo PERRINO, Stephen Placido, Edna Shepard, Arthur Wilson, Plaintiffs-Appellants, v. SOUTHERN BELL TELEPHONE & TELEGRAPH CO., Defendant-Appellee,

No. 98-5189.

United States Court of Appeals,

Eleventh Circuit.

April 20, 2000.

[Copyrighted Material Omitted] Appeal from the United States District Court for the Southern District of Florida. (No. 88-06602-CV-NCR), Norman C. Roettger,Jr., Judge.

Before BIRCH and MARCUS, Circuit Judges, and MILLS^*, Senior District Judge.

MARCUS, Circuit Judge:

This appeal concerns whether plaintiffs who bring a federal suit based on claims arising under the Employee Retirement Income Security Act of 1974 ("ERISA") are required to exhaust available administrative remedies when their employer fails to comply with all of ERISA's procedural requirements for establishing a reasonable claims procedure, 29 U.S.C. 1133; 29 C.F.R. 2560.503-1. In this case, the district court granted summary judgment to BellSouth Telecommunications, Inc. on the ERISA claims of four plaintiffs, Angelo Perrino, Stephen Placido, Edna Shepard, and Arthur Wilson, who failed to exhaust a grievance and arbitration procedure contained in the company's collective bargaining agreement. The plaintiffs had sought a termination pay allowance based on a provision of the agreement-a provision which constituted, as BellSouth concedes, an ERISA welfare benefits plan. We conclude that because the grievance and arbitration procedure afforded the plaintiffs access to an administrative scheme from which they could have received an adequate legal remedy for their ERISA claims, plaintiffs were required to exhaust this scheme prior to filing suit in federal court. Accordingly, we affirm the judgment of the district court.

I.

The facts of this case are straightforward. Angelo Perrino, Stephen Placido, Edna Shepard, and Arthur Wilson ("Appellants") are four former employees of BellSouth Communications Inc. ("Appellee") who became disabled during the course of their employment with BellSouth in the 1980's.¹ At the time, BellSouth maintained a Sickness and Accident Disability Benefit Plan (the "STD" plan) which provided short-term disability benefits to employees for up to one year. After a year, BellSouth would remove a disabled employee from the company payroll and the ex-employee then would become eligible for long-term, disability-related pension benefits. In this case, all of the named Appellants received both short-term and long-term, disability-related pension benefits from BellSouth.²

At the time of Appellants' employment, BellSouth did not maintain a formal ERISA plan. Instead, the terms and conditions of Appellants' employment were governed solely by the collective bargaining agreement ("Agreement") between Bell South and their union, Communication Workers of America ("Union"). Article 8.07A2 of the Agreement contains a termination pay provision, the subject of this litigation. The provision allows certain classes of employees, for example, laid-off workers, to receive a termination pay allowance separate and apart from the short-term and long-term disability benefits received by Appellants. The provision reads in part:

8.07 Employment Termination Allowance

A. Basis of Payment. A termination allowance shall be paid to a regular or temporary employee whose service is terminated under any of the conditions outlined below; moreover, service pension eligibility will not be a factor in determining whether an employee is eligible for a termination allowance, except as described in 8.06A2.

...

2. As an inducement proposed, or agreed to, by the Company to an employee to resign because of inability or unadaptability to perform properly the duties of the job as distinguished from misconduct.

For purposes of this litigation, BellSouth concedes that these termination pay provisions constitute an employee welfare benefit plan under ERISA.³

The Agreement also specifies a grievance and arbitration procedure for resolving any disputes as to "the true intent and meaning" of the Agreement or disputes "adversely affect[ing] the rights of any employee" such as a dispute over the eligibility of disabled ex-employees to receive termination pay allowances.⁴ Previously, BellSouth has been involved in several grievance proceedings with ex-employees who sought termination allowance pay, including two cases which proceeded to arbitration. According to the terms of the Agreement, a person has sixty days, from the last occurrence on which the grievance is based, to present a grievance for review.

On August 5, 1988, Appellants filed a class action suit against BellSouth under 301 of the Labor-Management Relations Act ("LMRA"), 29 U.S.C. 185, and 502 of the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. 1132. Appellants alleged that they were entitled to termination pay pursuant to the collective bargaining agreement in effect during the tenure of their employment with BellSouth and sought injunctive, declaratory, and compensatory relief. Appellants also sought a judgment that the termination pay provisions of the Agreement constituted an employee welfare benefit plan under ERISA and that they were entitled to benefits thereunder. Appellants asserted, based largely on a BellSouth memorandum from Assistant BellSouth VP Joe Walling, that disabled workers, at the time of Appellants' disability-related terminations, were eligible for the termination pay allowances in addition to disability-related pension benefits.⁵

On April 14, 1989, Appellants amended their complaint to assert an additional theory of recovery, claiming that BellSouth had changed its interpretation of the termination pay provisions after Appellants had filed this suit for termination allowance benefits. Specifically, Appellants contended that BellSouth secretly tried to rescind Walling's interpretive memorandum after they had filed suit, an act which constituted a breach of BellSouth's fiduciary obligations under ERISA. Appellants then sought a permanent injunction requiring BellSouth to administer the plan in accordance with its prior interpretation of the termination pay provisions.

On June 30, 1992, BellSouth filed a motion for summary judgment. It argued that the Agreement never has allowed disabled workers to receive termination pay allowances. Moreover, BellSouth contended that Appellants' claims were barred in federal court by their failure to exhaust available administrative remedies prior to filing suit. Specifically, BellSouth argued that Appellants had not filed grievances pursuant to the Agreement under which they were seeking termination pay. On July 9, 1998, the district court entered summary judgment in favor of BellSouth on this basis.

Prior to filing suit, only one of the Appellants, Angelo Perrino, actually requested a termination pay allowance from BellSouth. Perrino's request was made on January 29, 1988, four years after he was terminated by BellSouth, and was denied on March 7, 1988. In its letter denying Perrino the termination pay allowance, BellSouth informed Perrino that the Agreement did not authorize termination allowance payments to ex-employees with long-term disabilities, but that if he had made a timely request for a termination pay allowance, Perrino would have been able to invoke the Agreement's grievance and arbitration procedure to challenge the denial of the pay allowance.

Before the district court, Appellants claimed that because the Agreement did not adhere to all of the procedural requirements of ERISA, they need not have resorted to the Agreement's administrative process for handling employment-related grievances. Appellants also argued that the grievance and arbitration procedure specified in the Agreement only applied to disputes or controversies between the Union and the Company, and that arbitration only can occur upon written request of either the Union or BellSouth. In response, BellSouth observed that the plain language of Article 21.01 of the Agreement grants an "employee" or "group of employees" the right to file "any" grievance, including grievances over the denial of termination pay allowances, with or without Union involvement, and that BellSouth has been involved in several such grievance and arbitration procedures with ex-employees over denials of termination pay allowances.

In granting BellSouth summary judgment on Appellants' claims, the district court concluded that Appellants had failed to exhaust available administrative remedies in the form of the Agreement's grievance and arbitration procedure. The district court made several pertinent factual findings in connection to its ruling. First, the district court determined that despite its technical noncompliance with ERISA regulations, "the Agreement sets forth with sufficient clarity the provisions for termination pay and the grievance procedures to be followed," and that despite this clarity, Appellants failed to file grievances for termination pay allowances. Second, the district court found that Appellants' failure to exhaust this administrative scheme was not due to a lack of knowledge about the scheme or a lack of access to the scheme. The district court observed:

[T]here has been no evidence that the plaintiffs did not have access to the agreement or that the defendant failed to provide a copy upon request from the plaintiffs. When plaintiff Perrino made his request for termination pay, he cited the provisions of the Collective Bargaining Agreement. Consequently, he was well aware of the grievance procedures in the Bargaining Agreement.

Finally, the district court determined based on record evidence that the Agreement's grievance and arbitration procedure previously had been employed by similarly-situated ex-employees to challenge the denial of termination pay allowances. The district court explained that "former employees of defendant have availed themselves of the grievance procedure in...