Lee v. Union Elec. Co., 85-1502
| Decision Date | 02 July 1986 |
| Docket Number | No. 85-1502,85-1502 |
| Citation | 789 F.2d 1303 |
| Parties | 7 Employee Benefits Ca 1636 Bessielove LEE, Appellant, v. UNION ELECTRIC COMPANY, a Corporation, and Union Electric Retirement Plan, Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Kenneth J. Heinz, St. Louis, Mo., for appellant.
Francis X. Duda, St. Louis, Mo., for appellees.
Before LAY, Chief Judge, HENLEY, Senior Circuit Judge, and JOHN R. GIBSON, Circuit Judge.
Bessielove Lee, the widow of former Union Electric Company (the Company) employee Guy Lee, Jr. appeals from a district court 1 judgment denying her claim under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Secs. 1001-1381 (1982 & Supp. III 1984), for survivor annuity benefits from the Union Electric Retirement Plan (the Plan). Mrs. Lee claimed a right to survivor annuity benefits under the Plan or, in the alternative, damages equal to such benefits to compensate for the Company's failure to adequately inform Mr. Lee in the summary plan description of the need for such an election. The district court held that the terms of the Plan in effect at Mr. Lee's death in 1983 required him to affirmatively elect survivor benefits in order to provide annuity payments to his wife in the event of his death before retirement. Since Mr. Lee died before retirement without making this election, the court held, Mrs. Lee had no right to annuity payments. 2 The court also held that the company provided Mr. Lee adequate information on the need for an election in the summary plan description and pre-ERISA information packet and therefore was not liable for damages. Lee v. Union Electric, 606 F.Supp. 316, 317 (E.D.Mo.1985). On appeal, Mrs. Lee essentially reasserts her claims made before the district court. We affirm the court's judgment.
In this appeal we conclude (1) that the Plan in effect at Mr. Lee's death by its terms required him to affirmatively elect the Survivor Benefit Option, set forth in section 8.03 of the Plan, in order that his widow would receive survivor's annuity benefits on his death before retirement; and (2) that the summary plan description adequately explained the need for an election and therefore was not deficient under ERISA.
The 1974 Union Electric Retirement Plan provided that the regular method of retirement benefit payment, applicable automatically unless the employee otherwise elected, was a life annuity commencing on the employee's retirement date. 3 In the alternative, the employee could elect the Contingent Annuity Option under which the employee agreed to receive a reduced retirement income during his or her life, and designated an annuitant to receive, upon the employee's death, a life annuity amounting to 100, 75, 50 or 25 percent of the employee's pension benefits. The Contingent Annuity Option could not become effective before the latter of the employee's fifty-fifth birthday or two years after the date of the election. Union Electric Retirement Plan, Sec. 7.02 (effective Apr. 1, 1974). J.A. at 67.
On June 28, 1974, shortly before his fifty-third birthday, Mr. Lee received an information packet from the Company notifying him of his eligibility to elect the Contingent Annuity Option. The information packet contained a statement of Mr. Lee's Plan benefits; an explanatory booklet on the Contingent Annuity Option, which included examples of how the Option operated; a Notice of Election Form; a sample completed Notice of Election Form; and a form on which the employee could request further information or notify Union Electric of his or her interest in the Contingent Annuity Option.
A letter accompanying the packet explained that the Contingent Annuity Option permits employees to provide for a portion of their retirement income to be paid, after the employee's death, to the employee's chosen annuitant. Under this option, the employee would receive a smaller pension when he or she retired. The letter explained:
(b) You may elect the Option to be in effect as early as your 55th birthday and before you retire. If the Option is in effect and you die before you retire, and if your Contingent Annuitant survives you, she (he) would be paid a monthly pension for the remainder of her (his) life. Such monthly pension would be a percentage, as specified in your elected Option, of the pension that would have been paid to you if you had lived and retired on the first of the month following your death; * * *.
Letter from E.W. Nolle to Guy Lee, Jr. (June 28, 1974) (discussing Contingent Annuity Option). J.A. at 111. The letter also provided:
The decision to elect the Option or not is a matter of personal judgment to be based on your particular circumstances and objectives. The election and operation of the Option is a complex matter and you may want more information before you decide to elect it or not. If so, we will be glad to review it with you at your convenience.
The explanatory booklet further described the Contingent Annuity Option. The booklet stated that the Option had to be in effect in order for a contingent annuitant to receive monthly payments upon the employee's death prior to retirement. Under the heading "What If I Die Before I Retire" the booklet stated:
If the Option is in effect and you die before you retire, a monthly payment, starting as of the first of the month after your death, would be made to your "Contingent Annuitant" if she (he) is still living. The monthly payment would continue for the life of your "Contingent Annuitant" and would amount to the percentage, as elected by you, of the pension that would have been paid to you if you had lived and retired on the first of the month following your death. (See Example III attached.)
Union Electric Retirement Plan Explanatory Booklet, Contingent Annuity Option (Emphasis in original). J.A. at 119. The examples provided in the booklet included illustrations in which the employee died before retirement. Id. J.A. at 125.
The district court found that Mr. Lee did not respond to this mailing. The Company sent a follow up letter with the same information. Again that letter stressed the importance of the election and invited Mr. Lee to seek further information from the Company. The letter contained a self-addressed envelope and urged Mr. Lee to use it to indicate his election or his interest in the Option. Again, the district court found, Mr. Lee did not respond.
The Company notified its employees by mail in October 1975 of proposed changes in the Plan to bring it into conformity with ERISA. A copy of this letter was found among Mr. Lee's personal effects after his death. The letter summarized the proposed changes in the Plan. The following segment is relevant:
The payment of retirement income provisions will be amended to provide that the normal form of annuity payment will be a qualified spouse benefit with the 50% Contingent Annuity Option in effect at retirement, provided the employee is married prior to the initial date of commencement of benefit payments. All other provisions now contained in the Plan which define the terms and conditions of the Contingent Annuity Option will be continued. It will be amended, however, to provide that a participant may elect, upon proper notice to the Company, to receive his benefits under the life annuity option of the Plan without a spouse benefit.
Letter from P.J. Potts to Executive, Supervisory, Administrative, Professional, Confidential, and other Non-Union Employees (Oct. 29, 1975) (emphasis in original). J.A. at 137, 139.
The changes became effective January 1, 1976 and the Company distributed an amended Plan booklet. Article VIII of the amended Plan stated the retirement income options. Section 8.01 stated that the normal method of retirement income payment to a retired employee with a qualified spouse would be a 50% Contingent Annuity Option with the employee's spouse named as the contingent annuitant. The normal method of payment for an employee without a qualified spouse remained a life annuity. Employees could elect not to be paid under the normal payment plan.
Section 8.02 of the Plan established the regular payment terms. It specifically distinguished between payment terms on death after retirement, and on death before retirement:
Regular Payments. The first payment of an employee's retirement income will be made on his retirement date * * *. Subsequent payments will be made monthly thereafter, ceasing with the last payment preceding death of the employee; provided, however, if the deceased retired employee retired under the normal form of payment of a 50% Contingent Annuity Option or had elected the Contingent Annuity Option in accordance with Section 8.03 and it was in effect, monthly payments will be made to the Contingent Annuitant starting the month following the death of the retired employee and will continue until the death of the Contingent Annuitant. Upon the death of an employee prior to retirement, and if the deceased employee had elected the Contingent Annuity Option and it was in effect, monthly payments will be made to the Contingent Annuitant starting the month following the death of the employee, and will continue until the death of the Contingent Annuitant.
Union Electric Retirement Plan Sec. 8.02, at 17 (effective Jan. 1, 1976) (emphasis added). J.A. at 142. The change to a survivor annuity plan as the normal method of retirement benefit payment brought the Plan into conformity with 29 U.S.C. Sec. 1055(a) (1982). The last sentence of section 8.02, dealing with payments on death before retirement, makes clear the need for an affirmative election to provide annuity benefits to the spouse of an employee who dies before retirement.
Section 8.03 of the Plan explained the Contingent Annuity Option, which the employees could elect to become effective as early as...
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