470 F.3d 481 (2nd Cir. 2006), 04-5904, Tocker v. Philip Morris Companies, Inc.

Docket Nº:04-5904
Citation:470 F.3d 481
Party Name:Edward TOCKER, Plaintiff-Appellant, v. PHILIP MORRIS COMPANIES, INC., also known as Altria Group, Inc., Kraft Foods Inc., and General Foods Corp., Defendants-Appellees.
Case Date:November 22, 2006
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 481

470 F.3d 481 (2nd Cir. 2006)

Edward TOCKER, Plaintiff-Appellant,

v.

PHILIP MORRIS COMPANIES, INC., also known as Altria Group, Inc., Kraft Foods Inc., and General Foods Corp., Defendants-Appellees.

No. 04-5904

United States Court of Appeals, Second Circuit.

November 22, 2006.

Argued: December 2, 2005.

Plaintiff Edward Tocker appeals from the September 30, 2004 judgment of the United States District Court for the Southern District of New York (Robinson, J.), granting defendant Kraft's motion for summary judgment and denying plaintiff's motion for leave to amend his complaint. Tocker sued pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seg., challenging a denial of his claim for additional pension credits and also claiming a breach of fiduciary duty by his employer.

Page 482

William D. Frumkin, White Plains, NY, (Kathryn E. White, Sapir & Frumkin, LLP, White Plains, New York, of counsel), for Plaintiff-Appellant.

Michael J. Dimattia, New York, NY, (McGuire Woods LLP, New York, New York, of counsel), for Defendants-Appellees.

Page 483

Before CARDAMONE, LEVAL, and SACK, Circuit Judges.

CARDAMONE, Circuit Judge.

Plaintiff Edward Tocker (plaintiff or appellant) had been employed as a tax attorney for defendant General Foods1 for many years. When he learned in 1989 he was suffering from a serious, life-threatening illness, he discussed his circumstances with his employer's benefits administration manager. As a result, the benefits administration created a special package of benefits for him in 1990, which plaintiff accepted. In January 2002, 13 years later, Tocker, despite the doctor's prognosis, was still alive and applied for a pension benefit based on 34 years and four months of credit, from September 1967 until December 31, 2001, when he turned 65 years old. General Foods' benefits administration responded that under the 1990 special package and agreement, Tocker was eligible for service credit only for the 22 years and six months from September 1967 until March 1, 1990, because of a severance agreement he had signed as part of the benefits package. Plaintiff claimed he had not been told in 1990 that he was being terminated and would therefore be ineligible for pension benefits. He appealed the benefit administration's determination, and requested a review of his pension computation. The Kraft administrative committee upheld the denial of pension credit.

Tocker then filed suit pro se in the United States District Court for the Southern District of New York (Robinson, J.) against Kraft's parent company (Philip Morris Companies, Inc. a/k/a Altria Group, Inc.), Kraft Foods Inc., and General Foods Corp. (collectively defendants), alleging violations of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended2 , 29 U.S.C. § 1001 et seq. Although proceeding pro se in the district court, Tocker is now represented by counsel on this appeal. Giving deference to the administrative committee's finding that Tocker was terminated in March 1990, and to its interpretation of the General Foods Retirement Plan for U.S. Salaried Employees (General Foods Plan or Plan), the trial court granted defendants' motion for summary judgment.

Plaintiff appeals from the grant of summary judgment for defendants and from the denial of his motion to amend his complaint to add necessary parties dated September 30, 2004. The law has put in place a procedure to filter claims under ERISA. Where the administrators are given discretion under the terms of a benefit plan, as they are in this case, the gate to success on a claim is not the applicant's to open. Rather, the administrator's decision on a claim will be upheld if reasonable,

Page 484

and only overturned if found to be arbitrary. There lies the test we apply here.

BACKGROUND

A. Tocker's History with General Foods and the General Foods Plan

Plaintiff Tocker began his employment with General Foods as a tax analyst on September 11, 1967. A tax attorney and certified public accountant by training, he earned praise from his supervisors for making substantial contributions to the business, and eventually attained the position of assistant tax director for General Foods.

As a salaried employee, plaintiff participated in the General Foods Plan, a retirement and pension plan. The General Foods benefits program also included plans for general disability, long-term disability benefits, medical benefits, dental benefits, life insurance, employee thrift investment, vacation, and mortality payments. The General Foods Plan was a separate legal entity from its sponsoring employer, General Foods. Its successor, the Kraft Plan, continues to be a separate entity from the employer corporations, Kraft Foods North America, Inc., and Philip Morris Companies, Inc., now Altria Group, Inc. The plan was administered by an appointed administrative committee consisting of five to seven General Foods employees, and by its terms reserved discretion to the administrative committee to make conclusive determinations and interpretations on all questions arising under the plan.

The employer distributed a summary plan description (SPD) to all its employees as required by ERISA, 29 U.S.C. § 1021(a)(1). The SPD included information with regard to each of the various plans, including the retirement plan, that constituted the General Foods benefits program. Although the SPD was silent with respect to what discretion was granted the pension board and the administrative committee, it did state

The governing documents in all cases will be the insurance contracts, the official texts of the plans and the trust agreements, whichever are applicable. While it is the intent of General Foods to continue the benefits described in this book, the right to change, modify or discontinue them, without notice, is reserved to the extent permitted by law.

B. Tocker's Diagnosis and Benefit Arrangement

In January 1989 Tocker was diagnosed with a malignant brain tumor and underwent radiation and chemotherapy treatments. His doctors told him he had six to 18 months to live. Tocker disclosed his condition and discussed his benefits options with his supervisor, Edward Bloom, and the General Foods benefits administration manager, Robert D. Varone. In the normal course, Tocker would have had two options: (1) continue his employment with General Foods and be placed on long-term disability, which would provide him with 60 percent of his base salary each month while he remained disabled, or (2) terminate, through the workforce reduction program, his employment with General Foods and receive an immediate lump-sum payment totaling 22 months pay plus payment for unused vacation time. Typically these two options -- long-term disability and workforce reduction lump-sum payments -- were mutually exclusive. Long-term disability employees were not eligible for the kind of lump-sum payments available under the workforce reduction program, and terminated employees receiving lump-sum payments through the workforce reduction program were not eligible for long-term disability.

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Plaintiff's supervisor, Edward Bloom, wrote an unsolicited letter to managers at General Foods on Tocker's behalf, praising Tocker's contributions to the corporation over the years, explaining that he was having a difficult time choosing between the two options of either long-term disability or a lump-sum payment, and urging the corporation and the administrative committee to do something to help him. General Foods responded by presenting Tocker with a new choice, the just referred to special benefits package--one not typically available--by which Tocker could receive a lump-sum bonus payment through the workforce reduction program, effective March 1, 1990, and thereafter receive long-term disability benefits as well.

Robert Varone outlined the terms of the benefits arrangement for Tocker in a letter dated February 27, 1990 and in a revised and finalized copy of the letter dated March 14, 1990. These letters detailed the actions to be taken with respect to Tocker's benefits. The letters stated: "You will be put on medical leave effective 1/29/90 through 2/27/90. You will report to work 2/28/90 and be terminated with Workforce Reduction . . . 3/1/90." Varone explained the benefits due to Tocker as follows:

BENEFITS

1. Retiree . . . Retiree medical will be in effect beginning 3/1/90 at a monthly cost of $13 • • • •

2. Active . . . All other active benefits will terminate 3/1/90.

3. Life Insurance -- Conversion . . . You have completed a preliminary term insurance application requesting conversion of $232,000 life insurance cancelling as a result of your termination.

4. Retirement . . . You have elected a 10-year certain option to begin at age 55 (1/1/92). The amounts you will receive from the qualified and APA (non-qualified) plan each month are indicated below.

Tocker agreed to this arrangement, signing a number of documents in early 1990 in which he elected benefits consistent with those outlined in Varone's March 14 letter. These documents indicated that plaintiff was being terminated effective March 1, 1990. He signed a workforce reduction program election of separation options form, in which he elected "lump sum in full" and agreed "that this election of separation option is irrevocable." He signed also a retirement/termination election form that stated: "My employment having been terminated, I hereby make the following election." When filling out a conversion of group term life insurance form that asked the date his employment ended, Tocker responded: "Month 3 day 1 Year 90. " Tocker never worked after that date. According to plaintiff, even though he signed the forms indicating he was terminated, he did not believe he was actually being terminated. Tocker had not been previously identified as a candidate for...

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