Bartling v. Fruehauf Corp.
| Decision Date | 17 January 1995 |
| Docket Number | Nos. 93-3281,93-3324,s. 93-3281 |
| Citation | 29 F.3d 1062 |
| Parties | , 18 Employee Benefits Cas. 1772 Philip BARTLING; Lee E. Anthony; Jim Anon; David Armstrong; Carl Benefield; James Bushu; Don Capper; Howard Collingsworth; Ron Craig; Lloyd Daugherty; Nelson Deane; Jerry DeMent; Larry Donohue; Richard Dawson; Philip Edwards; Sam Egger; James Fairchild; William Einnell; Melvin Foster; Ernest Frazier; LaRue Gregory; Thedore Grinvalds; Robert Grubbs; John Geyer; Maxine Harris; Harry Hartzell; Don Headlee; Richard Hines; Darrel Holly; John Huffman; Dianne Jordan; Thomas Lease; Robert Lovell; Michael Mason; Rick May; Ronald McBee; Vaughn McKee; William Monroe; Rodger Myers; David Ogle; Larry Porter; Edward Pressnell; Betty Rooney; William Sark; Ed Smith; James Standard; John Steiger; Thomas Stevens; Walter Strange; James Vest; John Walters; Robert Wilkerson; Thomas Wilkins; Robert Wilson, Jr.; Stanley Woodhouse; Joseph Wren; William Zinkhorn; John Dotson; Linda Hartzell; Ronald C. Fitzwater; Caren S. LeMaster; Jon Powers; John Yeatts; Don Rigney, Sr.; Don Warfield; Frank Wildman; Helen J. Ream; Eugene C. Haerr, Jr.; Walter R. Egger; James Doyle; Carl White; Deborah Cooke; Marlin Reynolds; Robert Burk; John L. Connors; Merrie Lou Tindall; Roanna M. Griffith; and Carol S. Palmer, Plaintiffs-Appellants, Cross-Appellees, v. FRUEHAUF CORPORATION; Kelsey-Hayes Company; Retirement Committee of Fruehauf Corporation; Plan Administrator of Retirement Income Plan for Salaried Employees of Kelsey-Hayes Company; Retirement Income Plan for Salaried Employees of Kelsey-Hayes Company; and Kelsey-Hayes Company Separation Allowance Plan for Salaried Employees of Kelsey-Hayes Company, Defendants-Appellees, Cross-Appellants, Citibank, N.A.; Irving Trust Company, Trustee of Retirement Income Plan for Salaried Employees of Kelsey-Hayes Company, Defendants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Stephen A. Markus (argued and briefed), Ronald L. Kahn (briefed), Ulmer & Berne, Cleveland, OH, Ken C. Kotecha, Pennington & Kotecha, Springfield, OH, for Philip Bartling.
Jeffrey G. Heuer, Brian G. Shannon (briefed), Thomas H. Williams, Alexander Bradgon (argued), Jaffe, Raitt, Heuer & Weiss, Detroit, MI, for Fruehauf Corporation, Kelsey-Hayes Co. and Kelsey-Hayes Sep Plan.
Before: JONES and BATCHELDER, Circuit Judges; and GILMORE, Senior District Judge. *
Plaintiffs, 78 individual salaried non-bargaining unit employees of what used to be the SPECO Division of the Kelsey-Hayes Company ("Kelsey-Hayes"), brought this ERISA action against: Kelsey-Hayes; its parent, the Fruehauf Corporation ("Fruehauf"); its former employee benefit pension plan ("Pension Plan"); the Retirement Plan administrator, the Retirement Committee of Fruehauf Corporation ("Committee"); and Kelsey-Hayes's severance pay plan ("Separation Plan"). 1 The issues on appeal involve a pension plan administrator's duty to furnish certain documents upon the request of a plan participant, and the degree of deference a district court owes to an administrator regarding entitlement to severance pay benefits. The district court found in favor of Plaintiffs in part and in favor of Defendants in part. We affirm in part, reverse in part, and remand for further proceedings.
On October 27, 1986, the Committee announced that it would terminate the Pension Plan as of December 31, 1986, and institute a new plan as of January 1, 1987. On November 19, 1986, each of the plaintiffs received a letter stating his or her employment data that would be used to calculate his or her vested benefits upon the termination of the Plan. In December, Defendants presented a videotape describing the termination of the Plan; all of the plaintiffs were invited to see it. Additionally, Plaintiffs each received a booklet that discussed the Plan termination. Also in December 1986, the Pension Plan was amended.
On December 23, 1986, the SPECO Division of Kelsey-Hayes was incorporated as the SPECO Corporation. On December 31st, the Pension Plan terminated as planned.
On June 5, 1987, Kelsey-Hayes and the Committee filed documents relating to the termination of the Pension Plan with the Internal Revenue Service and the Pension Benefit Guarantee Corporation. These documents revealed that the company and the Committee intended to have approximately $29 million in Pension Plan assets revert to Kelsey-Hayes. 2 Also on June 5, Kelsey-Hayes sent benefit commitment letters to all Pension Plan participants, which described the monthly benefit to which the participant was entitled, and how that benefit amount had been calculated. The letter invited participants to contact a representative, Bill Schnorenberg, with their questions. Later that month, Schnorenberg held an informational meeting for SPECO employees, not only to discuss the termination of the Plan, but also to discuss the pending sale of SPECO to Grabill Aerospace Industries, Ltd. ("Grabill").
On July 13, 1987, Ronald L. Kahn, counsel for 52 of the plaintiffs, sent a letter to the Committee requesting various documents that he claimed were needed to determine whether the plaintiffs were receiving everything to which they were entitled. The documents requested included:
(1) the Pension Plan;
(2) the December 1986 amendment to the Plan;
(3) the most recent favorable letter issued by the IRS relating to the tax-qualified status of the Plan;
(4) filings with the IRS and the PBGC relating to the Pension Plan;
(5) the Plan's "Form 5500" (Annual Return/Report of Employee Benefit Plan) for the past three years;
(6) actuarial reports of the Plan for the past three years;
(7) the latest version of the Summary Plan Description with respect to the Pension Plan;
(8) benefit computations made in connection with the Pension Plan termination for each of the 52 then represented by counsel;
(9) the specification sheet being used in connection with the termination to solicit bids from insurance companies; and
(10) provisions in the purchase agreement with Grabill relating to pension and welfare benefits.
On August 6, 1987, Grabill purchased SPECO as planned. On August 31, Kahn sent a follow-up letter, now on behalf of 64 of the plaintiffs. On September 11, 1987, Fruehauf furnished items 1, 2, 3, 4, 5, and 7, 3 and informed Kahn that the benefit computations (item 8) would be furnished only upon receipt of authorizations from individual participants.
On October 1, 1987, now representing 74 of the plaintiffs, Kahn sent 71 authorization forms to Fruehauf, renewed the prior request for information not yet provided, rephrased his request for item 6 as a request for "actuarial reports and valuations," J.A. at 158 (emphasis added), and asked for one additional document--the operative plan document in effect prior to January 1, 1985 (item 11). On October 29, 1987, now on behalf of all 78 of the plaintiffs, Kahn sent Fruehauf the remaining seven authorization forms, and reminded Fruehauf of the outstanding document requests. On the same date, Fruehauf sent counsel 71 of the individual benefit computations.
In a telephone conversation on November 11, 1987, Fruehauf told Kahn that it would not furnish items 6, 9, 10, and 11. Kahn asked for benefit computation worksheets showing how the 78 individual benefit calculations were derived (item 12). On November 17, 1987, Fruehauf informed Kahn that the calculations were computer generated, and so no such worksheets existed. At the same time, Fruehauf sent the remaining seven benefit computations.
On April 29, 1988, Plaintiffs initiated the present suit. Plaintiffs sought, inter alia, to obtain severance benefits allegedly due under the Separation Plan, and to obtain a $100 per participant/per document/per day penalty pursuant to ERISA Sec. 502(c)(1), 29 U.S.C. Sec. 1132(c)(1), for Defendants' alleged failure to comply in a timely manner with Plaintiffs' information requests, in violation of the disclosure requirements of ERISA Sec. 104(b)(4), 29 U.S.C. Sec. 1024(b)(4). 4
On March 12, 1990, the district court awarded summary judgment in favor of Defendant on the severance benefits issue. The court held that, under Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), it was obliged to defer to the Separation Plan administrator's decision to deny severance pay benefits unless this decision were arbitrary and capricious. In the present case, the administrator determined that no severance pay was due upon the sale of SPECO where the employees continued to work at the same jobs, under the same supervisors, in the same office, and even for the same employer--SPECO Corporation--as before. Because the court found that the administrator's determination was not arbitrary or capricious, the court rejected Plaintiffs' claim.
On February 10, 1993, based on a set of stipulated facts and oral argument, the court announced its findings of facts and conclusions of law pertaining to the disclosure issue. The court concluded that Defendants were required under ERISA to disclose, within 30 days of Plaintiffs' requests, items 1, 2, 4, 5, 7, 8, and 11, but Defendants were not obliged to disclose items 6, 9, 10, and 12. The court regarded item 3 as part of item 4. As for item 8, the court held that Defendants should have released the benefit computations to Kahn without waiting for written authorization from the participants.
The court found as a matter of fact that Defendants' failure to disclose was not the result of bad faith and, because the parties ultimately agreed that Plaintiffs' pension benefits were correctly calculated, did not result in any prejudice to Plaintiffs. However the court found, as a matter of law, that bad faith and prejudice were not essential predicates for imposing statutory penalties for the failure to disclose; rather they were...
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