Gosselink v. American Telephone & Telegraph Inc., 00-20887

• Decision Date: 07 November 2001
• Docket Number: No.00-20887,00-20887
• Parties: (5th Cir. 2001) JOHN A. GOSSELINK; PHILLIP W. TUTT; RICHARD E. SIMMS, on behalf of themselves individually and all others similarly situated, Plaintiffs - Appellants v. AMERICAN TELEPHONE & TELEGRAPH, INC., formerly known as American Telephone & Telegraph Company; Et Al, Defendants SBC COMMUNICATIONS, INC., formerly known as Southwestern Bell Corporation individually and as successor in interest to Bell Systems, Inc.; SOUTHWESTERN BELL YELLOW PAGES, INC.; THE SBC PENSION BENEFIT PLAN - BARGAINED PROGRAM, Defendants - Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

Page 722

272 F.3d 722 (5th Cir. 2001)

JOHN A. GOSSELINK; PHILLIP W. TUTT; RICHARD E. SIMMS, on behalf of themselves individually and all others similarly situated, Plaintiffs - Appellants v. AMERICAN TELEPHONE & TELEGRAPH, INC., formerly known as American Telephone & Telegraph Company; Et Al, Defendants

SBC COMMUNICATIONS, INC., formerly known as Southwestern Bell Corporation individually and as successor in interest to Bell Systems, Inc.; SOUTHWESTERN BELL YELLOW PAGES, INC.; THE SBC PENSION BENEFIT PLAN - BARGAINED PROGRAM, Defendants - Appellees

No.00-20887

UNITED STATES COURT OF APPEALS,

FIFTH CIRCUIT

November 7, 2001

[Copyrighted Material Omitted] Appeal from the United States District Court for the Southern District of Texas

Before EMILIO M. GARZA, PARKER, and DENNIS, Circuit Judges.

ROBERT M. PARKER, CIRCUIT JUDGE:

The Plaintiffs, John Gosselink, Phillip Tutt, and Richard Simms, on behalf of themselves and all others similarly situated ("Plaintiffs") appeal from the district court's judgment which denied class certification, dismissed Gosselinks's claim for increased pension benefits, dismissed Gosselink's claims for declaratory and injunctive relief, and dismissed their claims against AT&T as time barred. The issue on appeal is whether the Southwestern Bell Communications Benefit Plan Committee ("Plan Committee") interpreted specific plan language in a manner that is consistent with a fair reading of the plan as a whole. Because it did, we AFFIRM.

I. FACTS AND PROCEDURAL HISTORY

Plaintiffs Gosselink, Tutt, and Simms are retired Southwestern Bell Yellow Pages ("SWBYP") directory sales representatives who currently receive pension benefits from the Southwestern Bell pension benefit plan (the "Plan"). The dispute in this case arises from language in the Plan document.

The Plan was originally adopted in 1980 by AT&T. Sponsorship was transferred for administration to Southwestern Bell Communication's ("SBC") predecessor at the time of the divestiture of the regional telephone companies by AT&T in 1984. The design of the Plan was as follows.

Job salaries for employees were assigned to "Pension Bands" numbered from 101 through 135, and a pension benefit amount was assigned to each band.¹ The Pension Bands covered the entire salary range for Plan participants with fixed wages. In most cases, jobs were assigned to a Pension Band based upon the annual salary of an experienced employee set for that job as of August 9, 1980. A complete "Pension Band Conversion Table" containing the "Maximum Basic Rate of Pay for Job Titles and Classifications" was set forth in the 1980 plan. These wage rate tables were then updated annually by AT&T, and thereafter by SBC, to reflect the general wage increase agreed upon in collective bargaining.

The Plan also included a Monthly Benefit Table which provided dollar amounts for the basic monthly pension benefit for each Pension Band.² Thus, for the vast majority of employees, their monthly pension benefit could be calculated by multiplying the employee's years and months of service by the dollar amount shown in the Monthly Benefit Table for the Pension Band to which the employee's job title was assigned.

However, the Plan provided a different methodology for calculating the pension benefits for SWBYP directory sales representatives ("DSRs") because DSRs' compensation varied from year to year depending upon the commissions they earned. Under the Plan, all DSRs were assigned to Pension Band 135, the highest Pension Band. Then, for DSRs only, a special "multiplier" was applied to the benefit shown in the Monthly Benefit Table to calculate the monthly pension benefit of a particular DSR.

In fact, the multiplier was a fraction. The numerator was the average of an individual commission sales representatives's last three years of income. The denominator was the three-year average of the median maximum annual basic rate of pay related to Pension Band 135. This was also referred to as the "fixed average." Thus, an individual DSR's pension amount was calculated by multiplying the "employee's years of service" times the "Pension Band 135 Monthly Pension Amount" times the "multiplier." With respect to the pension formula for DSRs, the only dispute between the parties is how to calculate the denominator of the multiplier under the Plan language.

In 1995, Plaintiff Gosselink, a DSR, obtained a pension calculation from Southwestern Bell. Believing his calculated pension to be too low, he sought out an explanation. However, Gosselink never received an explanation to his liking. Thus, he filed an administrative complaint. SBC denied his complaint.³ Gosselink filed further administrative appeals, which were all denied.

In 1997, the Plaintiffs filed suit against the various defendants in this case: SBC, as Plan Administrator; the former employer, SWBYP; the Plan itself, SBS Pension Benefit Plan; and the former administrator, AT&T Corp. Plaintiffs asserted various claims, on behalf of themselves and a putative class, for violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B)⁴,(a)(2), and (a)(3). The gist of Plaintiffs' claims was that the plan administrator had wrongfully interpreted the plain language of the Plan with respect to the calculation of the denominator portion of the special multiplier. Plaintiffs alleged that the incorrect interpretation reduced their monthly pension benefits.

On August 4, 1999, the district court dismissed Plaintiffs' claims against AT&T on statute of limitations grounds.⁵ On August 9, 1999, the District Court granted summary judgment dismissing all of Plaintiffs Tutt and Simms' claims because they had not exhausted their administrative remedies. On the same day, the district court denied Plaintiffs' motion for class certification, reasoning that the class lacked numerosity because of Plaintiffs' failure to show that each purported class member had exhausted his/her administrative remedies. Subsequently, the district court granted summary judgment to the remaining Defendants on all of Gosselink's claims. The district court held that Gosselink's ERISA claims for declaratory and injunctive relief could not be maintained under Varity Corp. v. Howe, 516 U.S. 489 (1996) because the claim for pension benefits under section 1132(a)(1)(B) afforded him an adequate avenue for legal redress. It then dismissed Gosselink's section 1132(a)(1)(B) claim for increased pension benefits, holding that, as a matter of law, the Plan administrator's interpretation of the relevant plan language was legally correct and not an abuse of discretion.

II. STANDARD OF REVIEW

The district court's decision to grant summary judgment on Gosselink's claim for recovery of pension benefits is the central issue on appeal. We review the district court's grant of summary judgment on this claim de novo, applying the well-known standards specified in Rule 56(c) which were applied by the district court.McClendon v. City of Columbia, 258 F.3d 432, 435 (5th Cir. 2001).

When an ERISA benefits plan provides the plan administrator with discretionary authority to construe the terms of the Plan, the plan administrator's denial of benefits is reviewed for abuse of discretion. Barhan v. Ry-Ron Inc., 121 F.3d 198, 201 (5th Cir. 1997)(citing Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). Here, the Plan vests the administrator with this authority. Therefore, we review de novo the district court's holding on whether the plan administrator abused its discretion. Threadgill v. Prudential Securities Group, Inc., 145 F.3d 286, 292 (5th Cir. 1998); Tolson v. Avondale Industries, Inc., 141 F.3d 604, 608 (5th Cir. 1998).

III. DISCUSSION

A. Applicability of the Wildbur Two-Step

It should go without saying that eligibility for benefits "under any ERISA plan is governed in the first instance by the plain meaning of the plan language." Threadgill, 145 F.3d at 292. However, in this Circuit, we have often applied a two-part test when reviewing a plan administrator's denial of benefits: First, a court must determine the legally correct interpretation of the plan. If the administrator did not give the plan the legally correct interpretation, the court must then determine whether the administrator's decision was an abuse of discretion. In answering the first question, i.e., whether the administrator's interpretation of the plan was legally correct, a court must consider: (1) whether the administrator has given the plan a uniform construction, (2) whether the interpretation is consistent with a fair reading of the plan, and (3) any unanticipated costs resulting from different interpretations of the plan. Wildbur v. ARCO Chemical Co., 974 F.2d 631, 637-638 (citations omitted).

If a court concludes that the administrator's interpretation is legally incorrect, the court must then determine whether the administrator abused his discretion. Three factors are important in this analysis: (1) the internal consistency of the plan under the administrator's interpretation, (2) any relevant regulations formulated by the appropriate administrative agencies, and (3) the factual background of the determination and any inferences of lack of good faith. Id. "Only if the court determines that the administrator did not give the plan the legally incorrect interpretation, must the court then determine whether the administrator's decision was an abuse of discretion." Tolson, 141 F.3d at 608.

Plaintiffs contend that the Defendants' interpretation of the Plan violates the plain meaning of the language governing the calculation of pension benefits for DSRs. As such, Plaintiffs argue that the court should not employ the two-step test as set forth in Wildbur. Plaintiffs suggest that rigid adherence to theWildbur approach could produce the anomalous finding that a Plan administrator's interpretation which directly violates the plain meaning of the plan language is not an abuse of...