Averhart v. US WEST Management Pension Plan

• Decision Date: 28 October 1994
• Docket Number: 92-1321 and 92-1375,Nos. 92-1317,s. 92-1317
• Citation: 46 F.3d 1480
• Parties: 18 Employee Benefits Cas. 2400, Pens. Plan Guide P 23903T Jesse M. AVERHART, Plaintiff-Appellant, v. US WEST MANAGEMENT PENSION PLAN, Defendant-Appellee. Joan M. SANDQUIST, and Theodore C. Sandquist, Plaintiffs-Appellants, v. US WEST MANAGEMENT PENSION PLAN, and John G. Shea, Defendants-Appellees. Martha J. SABELL, Jack G. Laird, Gerald Wuerker, and H. Vern White, Plaintiffs-Appellants, v. US WEST MANAGEMENT PENSION PLAN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1480

46 F.3d 1480

18 Employee Benefits Cas. 2400, Pens. Plan Guide P 23903T

Jesse M. AVERHART, Plaintiff-Appellant, v. US WEST MANAGEMENT PENSION PLAN, Defendant-Appellee.

Joan M. SANDQUIST, and Theodore C. Sandquist, Plaintiffs-Appellants, v. US WEST MANAGEMENT PENSION PLAN, and John G. Shea,

Defendants-Appellees.

Martha J. SABELL, Jack G. Laird, Gerald Wuerker, and H. Vern

White, Plaintiffs-Appellants, v. US WEST MANAGEMENT PENSION PLAN, Defendant-Appellee.

Nos. 92-1317, 92-1321 and 92-1375.

United States Court of Appeals, Tenth Circuit.

Oct. 28, 1994.

Order Denying Rehearing Feb. 21, 1995.

Timothy J. Parsons (David B. Seserman and Dean C. Heizer, with him on the brief) of Gorsuch, Kirgis, Campbell, Walker and Grover, Denver, CO, for plaintiffs-appellants.

D. Ward Kallstrom of Lillick & Charles, San Francisco, CA (Richard A. Belfanti of Lillick & Charles, San Francisco, CA, Dirk W. de Roos, Denver, CO, and Leon Marks of US WEST, Inc., with him on the brief), for defendant-appelleee US WEST Management Pension Plan.

Before TACHA, HOLLOWAY, and KELLY, Circuit Judges.

HOLLOWAY, Circuit Judge.

The plaintiffs/appellants in Averhart v. US WEST Management Pension Plan, No. 92-1317, Sandquist, et al. v. US WEST Management Pension Plan and John G. Shea, No. 92-1321, and Sabell, et al. v. US WEST Management Pension Plan, No. 92-1375, appeal from summary judgments in favor of defendants/appellees US WEST Management

Pension Plan (the Pension Plan) and John G. Shea. We decide these three appeals in this opinion. For reasons that follow, we affirm.

I

Plaintiffs are former employees of US WEST Communications, Inc., or its predecessors or affiliates. Some were of the manager level and some of the director level. They were participants in the Pension Plan. In March 1987, plaintiffs Averhart (No. 92-1317) and the Sandquists (No. 92-1321) took extended leaves of absence under a special severance pay plan in effect at that time--the Enhanced Management Transition Program (EMTP). ¹ Plaintiffs Sabell, Laird, Wuerker, and White (No. 92-1375) retired between May and October 1989 under no special retirement program.

In April 1989, US WEST implemented a voluntary severance program to reduce the number of director-level employees in the company--the US WEST Management Force Imbalance Guidelines Directors' Program Amendment (the Directors' Program). As an early retirement incentive, the Directors' Program offered certain director-level employees a choice of various severance pay options if they elected to retire or resign during 1989. This program was available only for directors.

On November 29, 1989, the US WEST board of directors adopted a resolution authorizing the Employees' Benefit Committee (EBC) to amend the Pension Plan, effective January 1, 1990, to provide certain special pension benefits to eligible employees who would elect between January 2 and January 31, 1990, to retire as of February 28, 1990. By its terms the amendment--dubbed the "5 + 5 amendment"--limited eligibility to "active employee[s] on the payroll as of February 28, 1990, with five or more years of term of employment as of February 28, 1990[.]" Averhart App. at 197. A principal benefit provided under the 5 + 5 amendment was an increase of five years in the age and term of employment attributed to eligible employees for purposes of calculating their pension benefits. The latter benefit was extended not only to eligible employees, as defined above, but also "employees who terminated during 1989 pursuant to any of the options offered in conjunction with the US WEST Director's Program." Averhart App. at 263.

Plaintiffs learned of the 5 + 5 amendment in late 1989 or early 1990 and then submitted claims for benefits thereunder. The Secretary of the EBC, defendant John G. Shea, denied the claims, citing the fact that plaintiffs were not active employees on the payroll as of February 28, 1990, and therefore did not qualify for benefits under the terms of the amendment.

Plaintiffs appealed Shea's decision to the EBC at large. The Committee denied the appeals on the ground that plaintiffs did not "meet the eligibility requirement of the [5 + 5 amendment that] you must have been an active employee on the payroll as of February 28, 1990 or on a leave of absence which guaranteed reinstatement." Averhart App. at 272; Sandquist App. at 309; Sabell App. at 308 (emphasis in original).

II

In 1991, plaintiffs filed their suits under 29 U.S.C. Sec. 1132(a)(1)(B), for determinations that they were eligible for benefits under the 5 + 5 amendment. Plaintiffs alleged that US WEST had made certain pre-severance representations which plaintiffs relied on in deciding to retire and which therefore operated to estop the EBC from denying plaintiffs' benefit claims. ² Plaintiffs further claimed that the EBC had acted arbitrarily and capriciously in denying their claims and that they were entitled to recovery of attorneys' Upon completion of discovery the parties filed cross-motions for summary judgment, including a "Joint Stipulation of Facts and Exhibits In Support of Cross-Motions for Summary Judgment." Averhart Supp.App. at 1; Sabell App. at 33. ³ The district court granted defendants' motions while denying those of plaintiffs, setting forth the bases for its rulings in a combined Opinion and Order in the Averhart/Sandquist cases and a separate Opinion and Order in the Sabell case. Averhart App. at 155; Sabell App. at 162.

fees and costs incurred in bringing suit. The Sandquists also sought civil penalties from defendant Shea for his alleged failure to make a timely response to their written requests for certain documents relating to their retirement.

First, the court held that plaintiffs' promissory estoppel theory is barred by ERISA's preemption provisions. In support, the court cited our ruling that " 'ERISA's express requirement that the written terms of a benefit plan shall govern forecloses the argument that Congress intended for ERISA to incorporate state law notions of promissory estoppel.' " Averhart App. at 160 (quoting Straub v. Western Union Telegraph Co., 851 F.2d 1262, 1265-66 (10th Cir.1988), and citing Peckham v. Gem State Mut. of Utah, 964 F.2d 1043, 1050 (10th Cir.1992)); Sabell App. at 166 (quoting Straub, 851 F.2d at 1265-66).

Second, the court rejected plaintiffs' claim that the EBC had arbitrarily and capriciously denied their request for 5 + 5 benefits. The court found the committee's ruling was supported by the requirement in the 5 + 5 amendment that participants be "active employee[s] on the payroll as of February 28, 1991 or on a leave of absence with guaranteed reemployment." (Emphasis in original.)

Third, as to the company's extension of 5 + 5 benefits to director-level employees who had left the payroll under the Directors' Program, the court held this decision to be a matter of plan design beyond the scope of the EBC's fiduciary responsibilities and therefore unreviewable, citing Fletcher v. Kroger Co., 942 F.2d 1137, 1139-40 (7th Cir.1991).

Fourth, the court rejected as unsupported by the evidence the Sabell plaintiffs' claim that the 5 + 5 amendment was not properly approved by the US WEST Board of Directors. The court noted that assuming arguendo no proper approval had been given, the entire 5 + 5 amendment would be invalid and no one--including plaintiffs--would be entitled to benefits thereunder.

Fifth, the court denied the Sandquist plaintiffs' claim for civil penalties from defendant Shea for his alleged failure to make a timely response to their written requests for documents. The court held that Mr. Shea did not appear to be a plan "administrator" subject to civil penalties under 29 U.S.C. Sec. 1132(c); that no evidence indicated either bad faith by Shea or prejudice to the Sandquists; and that in any event Shea was not personally responsible for any delay in providing the relevant materials to the Sandquists.

Finally, exercising its discretion under 29 U.S.C. Sec. 1132(g)(1), the court denied plaintiffs' claims for attorneys' fees and costs. Due to its denial of plaintiffs' summary judgment motions and the factors outlined in Downie v. Independent Drivers Ass'n Pension Plan, 945 F.2d 1171, 1172-73 (10th Cir.1991), the court concluded that each party should bear its own fees and costs. That ruling is not challenged on appeal.

III

In reviewing a grant of summary judgment, we apply a de novo standard of review to the district court's conclusions of law. Awbrey v. Pennzoil Co., 961 F.2d 928, 930 (10th Cir.1992). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby Because the Plan gave the EBC discretion to make the rulings in question, ⁴ the district court properly reviewed the rulings under the arbitrary and capricious test. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989). The district court's holding that the ruling by the EBC was not arbitrary and capricious is a legal conclusion and our review of the court's ruling, although not the underlying administrative decision, is plenary. Sandoval v. Aetna Life & Casualty Ins. Co., 967 F.2d 377, 380 (10th Cir.1992). The EBC's actions will not be set aside if based on "a reasonable interpretation of the plan's terms and ... made in good faith." Torix v. Ball Corp., 862 F.2d 1428, 1429 (10th Cir.1988).

Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

IV

A Plaintiffs' Promissory Estoppel Claims

As noted, the district court held that plaintiffs could not state a claim for promissory estoppel because " 'ERISA's express requirement that the written terms of a benefit plan shall govern forecloses the argument that Congress...