46 F.3d 1264 (2nd Cir. 1995), 642, Jordan v. Retirement Committee of Rensselaer Polytechnic Institute

Docket Nº:642, Docket 94-7550.
Citation:46 F.3d 1264
Party Name:Mark H. JORDAN, on behalf of himself and all others similarly situated, Plaintiff-Appellant, v. RETIREMENT COMMITTEE OF RENSSELAER POLYTECHNIC INSTITUTE, Contributory Retirement Plan at Rensselaer Polytechnic Institute, Rensselaer Polytechnic Institute, Defendants-Appellees.
Case Date:January 26, 1995
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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46 F.3d 1264 (2nd Cir. 1995)

Mark H. JORDAN, on behalf of himself and all others

similarly situated, Plaintiff-Appellant,



Contributory Retirement Plan at Rensselaer

Polytechnic Institute, Rensselaer

Polytechnic Institute,


No. 642, Docket 94-7550.

United States Court of Appeals, Second Circuit

January 26, 1995

Argued Nov. 9, 1994.

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[Copyrighted Material Omitted]

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Frederick B. Galt, Albany, NY (Herzog, Engstrom & Koplovitz, P.C., of counsel), for plaintiff-appellant.

John M. Freyer, Albany, NY (Bond, Schoeneck & King, Stephen C. Daley, of counsel), for defendants-appellees.

Before: FEINBERG, KEARSE and ALTIMARI, Circuit Judges.

FEINBERG, Circuit Judge:

Mark H. Jordan appeals from a May 1994 Judgment of the United States District Court for the Northern District of New York, entered in accordance with a Memorandum-Decision and Order of Magistrate Judge Ralph W. Smith, Jr. Jordan had sued Rensselaer Polytechnic Institute (RPI), the Contributory Retirement Plan at RPI (the Plan) and RPI's Retirement Committee (the Retirement Committee), which administers the Plan, under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Sec. 1132(a)(1)(B). Jordan's claim was dismissed on cross-motions for summary judgment. The appeal concerns the Retirement Committee's interpretation of a cost of living adjustment (COLA) provision in the Plan. The issues presented are whether the arbitrary and capricious standard should be applied to the Retirement Committee's interpretation of the COLA provision and, if so, whether the Retirement Committee's interpretation violated that standard. For reasons given below, we affirm the judgment of the district court.

I. Background

The relevant facts are not disputed. Plaintiff Jordan retired from his post as a professor at RPI in July 1977 and began receiving benefits under the Plan at that time. Since Jordan's retirement, the Board of Trustees of RPI has amended the Plan periodically to provide cost of living adjustments to Plan members or their beneficiaries. Each ad hoc COLA was less than the full amount of the corresponding rise in the Consumer Price Index (CPI) for the relevant period. The first amendment after Jordan's retirement applied to members who had retired before January 1, 1977 and thus did not affect Jordan. The second amendment became effective July 1, 1980 and provided members (including Jordan) a five percent increase in monthly payments. The third amendment, effective July 1, 1982, provided an additional increase of 3/10 percent for each year or fraction thereof from retirement to June 30, 1982.

  1. The 1988 COLA Provision

    The subject of this appeal is the interpretation of the fourth amendment to the Plan (Sec. 15.4) and its relationship to the preceding COLAs. Section 15.4 provides:

    15.4--Increase Effective July 1, 1988

    Monthly retirement benefits for retired Members age 62 or older on July 1, 1988

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    (and, if applicable, for beneficiaries of such Members), shall be increased (i) first by subsection a. and then by subsection b. for Members retired before July 1, 1983, and (ii) by subsection a. for Members retired on or after July 1, 1983. This increase shall only apply with respect to that portion of a Member's monthly retirement benefit invested in a Fixed Annuity, and to the extent the retired Member was actively employed to an age that would have qualified him for early retirement pursuant to Section 4.2. The effective date of the increase shall be July 1, 1988.

    1. Year of Retirement Increase

    Retirement prior to July 1, 1984 2.21%

    Retirement on or after July 1, 1984 and prior to July 1, 1985 1.67%

    Retirement on or after July 1, 1985 and prior to July 1, 1986 1.01%

    Retirement on or after July 1, 1986 and prior to July 1, 1988 0.52%

    b. An amount equal to two-thirds ( 2/3) of inflationary increases (indexed to the "Consumer Price Index") above three (3) percent for calendar years prior to 1983, but in no event greater than 75 percent of the average salary increase for active Institute employees during the relevant period nor less than five (5) dollars per month.

    Section 15.4 had its genesis in a report issued in April 1988 by a Special Advisory Committee on Fringe Benefits set up by then-RPI President Stanley Landgraf (the Landgraf Committee). The Landgraf Committee's report proposed, as a formula for calculating future COLAs, an increase in monthly payments by a percentage equal to two-thirds of the annual increase in the CPI in excess of three percent (the Landgraf Formula). For instance, if the CPI increased by nine percent in a given year, Plan members would receive a four percent increase in monthly payments, that is, two-thirds of the six percent increase greater than three percent. By resolution of May 21, 1988, the Board of Trustees of RPI approved application of the Landgraf Formula to cover cost of living increases over the period from the previous increase (effective July 1, 1982) to 1988. This decision led to what is now Sec. 15.4.a, which lists specific COLAs for employees who retired before July 1, 1988. Section 15.4.a assigns percentage increases according to year of retirement. Members, such as Jordan, who retired prior to July 1, 1984 received an increase in monthly benefits of 2.21%.

    In June 1988, RPI's new president, Roland Schmitt, reconvened the Landgraf Committee (now called the Fringe Benefits Committee), which thereafter recommended that the Landgraf Formula be extended back to all years of retirement for pre-1983 retirees. Accordingly, on December 14, 1988, the Board of Trustees adopted what is now Sec. 15.4.b.

  2. The Retirement Committee's Discretion

    At the time Sec. 15.4.b was adopted, the Plan provided that the Retirement Committee (not to be confused with the Fringe Benefits Committee) would administer the Plan. Section 10.1 of the Plan stated:

    The Retirement Committee shall pass upon all questions concerning the application or interpretation of the provisions of the Plan.

    In February 1989, the Supreme Court decided Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), which held that "a denial of benefits challenged under [ERISA] is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Id. at 115, 109 S.Ct. at 956-57.

    Informed by Bruch, the RPI Board of Trustees amended the Plan, effective July 1989, to provide:


    a. Notwithstanding any other provision in the Plan, and to the full extent permitted by ERISA and the Internal Revenue Code, the Retirement Committee shall have exclusive authority and discretion to construe any uncertain or disputed term or provision in the Plan, including, but not limited to, the following:

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    (i) determining whether any individual is eligible for any benefits under this Plan;

    (ii) determining the amount of benefits, if any, an individual is entitled to under this Plan;

    (iii) interpreting all of the provisions of this Plan; and

    (iv) interpreting all of the terms used in this Plan.

    b. The Retirement Committee's exercise of discretionary authority to construe the terms of the Plan, and all its determinations and interpretations, shall

    (i) be binding upon any individual claiming benefits under this Plan, including, but not limited to, the Member, the Member's estate, any beneficiary of the Member, and any alternate payee under a qualified domestic relations order as defined in Section 414(p) of the Internal Revenue Code;

    (ii) be given deference in all courts of law, to the greatest extent allowed by applicable law; and

    (iii) not be overturned or set aside by any court of law unless found to be arbitrary and capricious, or made in bad faith.

    The crux of the present dispute concerns interpretation of Sec. 15.4.b (sometimes referred to hereafter as subsection (b)). The Retirement Committee contends that subsection (b) effectively modifies earlier increases so that "each eligible retiree [would] hav[e] ... his or her benefit reflect the ... recommended formula for all years from retirement through June 30, 1988." To obtain that result, the Retirement Committee first calculated what the increase in each retiree's monthly benefits would have been if the Landgraf Formula had been applied...

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