Lindemann v. Mobil Oil Corp.

• Decision Date: 12 April 1996
• Docket Number: No. 95-2808,95-2808
• Citation: 79 F.3d 647
• Parties: Pens. Plan Guide P 23918V Diane L. LINDEMANN, Plaintiff-Appellant, v. MOBIL OIL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 647

79 F.3d 647

Pens. Plan Guide P 23918V

Diane L. LINDEMANN, Plaintiff-Appellant, v. MOBIL OIL CORPORATION, Defendant-Appellee.

No. 95-2808.

United States Court of Appeals,

Seventh Circuit.

Argued Feb. 16, 1996.

Decided March 27, 1996.

Rehearing Denied April 12, 1996.

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 94 C 5052, Ruben Castillo, Judge.

Frank p. Tighe, III (argued), Oak Brook, IL, for Plaintiff-Appellant.

Jeffrey M. Cross, Patrick J. Ahern (argued), Stephen A. Wood, Kelley, Drye & Warren, Chicago, IL, for Defendant-Appellee.

Before POSNER, Chief Judge, CUMMINGS and BAUER, Circuit Judges.

CUMMINGS, Circuit Judge.

This case involves the question whether a district court abused its discretion by requiring a plaintiff to exhaust her administrative remedies prior to filing a federal lawsuit alleging a violation of the Employee Retirement and Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1140. We hold that the decision was not an abuse of discretion and therefore affirm.

Background

At the time of her termination, Diane Lindemann had been employed by Mobil Oil Corporation ("Mobil") for roughly seventeen years. She had taken twenty-six "sick days" in the two years prior to her termination and was compensated for each under Mobil's employee benefits plan. On the morning of May 31, 1994, Lindemann called her supervisor to request that she be allowed to miss work that day. It is disputed whether she asked for a "sick day" or just for "the day off," but in any event the request was denied and she did not show up for work that day or the next. As a result, her employment was terminated by a letter dated June 6, 1994. The letter stated that she was "unable to fulfill the duties and responsibilities of [her] job" because of her failure to be at work regularly and on time.

On June 27, 1994, Lindemann filed a claim for benefits with Mobil in the following letter:

I feel I am entitled to severance pay with Mobil Oil Corp. With 17 years of dedicated service and always rated FP on performance appraisals, I have been under 2 doctors care and because I called in sick to my Supervisor on May 31 & June 1 which was beyond my control to avoid, my supervisor J. Lieb when I reported to work on June 2 & June 3 refused to talk to me and on June 6th terminated my employment with Mobil Oil. I asked to talk to an E.R. advisor but was refused a phone call & told me to call from home. I called Bob Harrop, E.R. advisor when I got home and asked him questions and he said he would call me back but never did. Please look into the situation and advice [sic] me.

On August 12, 1994, Mr. Harrop wrote to Lindemann to inform her that he had reviewed her claim and found that she was ineligible for separation benefits because she had been discharged "for cause." Lindemann filed a lawsuit against Mobil on August 18, 1994, alleging that she was terminated in violation of Section 510 of ERISA, 29 U.S.C. § 1140. That section provides that "[i]t shall be unlawful for any person to discharge ... a participant or beneficiary ... for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan." 29 U.S.C. § 1140. She sought reinstatement and the award of back pay as her remedy for the violation. ¹

After filing the lawsuit, Lindemann requested that Mobil review her original administrative claim. Mobil upheld the denial of her claim on initial review November 10, 1994, and again on final review November 29, 1994. Because the district court found that Lindemann's administrative claim had involved only her entitlement to severance pay, and not the ERISA violation alleged in her lawsuit, the court held that she had failed to exhaust her administrative remedies on her ERISA claim and thus granted Mobil summary judgment.

Discussion

We review the grant of a summary judgment de novo, viewing the facts alleged in the complaint and the legitimate inferences to be drawn therefrom in the light most favorable to the non-moving party. East Food & Liquor, Inc. v. United States, 50 F.3d 1405, 1410 (7th Cir.1995).

We agree with the district court that Lindemann failed to make an administrative claim that Mobil interfered with her right to short-term benefits by terminating her. Her only administrative claim, quoted in her letter above, makes no mention of Mobil wrongfully discharging her or interfering with her short-term benefits; it states only her belief that she was "entitled to severance pay" and that she wished someone to review that claim. Thus she did not exhaust her administrative remedies on the ERISA claim prior to pursuing that claim in federal court.

Lindemann makes two arguments why her failure to exhaust her administrative remedies should not bar her federal claim. First, she argues that we should carve out an exception to the exhaustion requirement for situations such as hers. She agrees that the exhaustion requirement makes sense where the plan participant is seeking to recover the actual benefits allegedly interfered with because there an administrator's interpretation of the plan is useful to a court reviewing the benefits claim. However, she argues that where the plaintiff's claim is for wrongful discharge and she is seeking only reinstatement and back pay, an administrator's interpretation of the plan is irrelevant and the exhaustion requirement is thus useless. In support of her argument, she points out that the Third, Ninth, and Tenth Circuits have created a distinction between claims for benefits, which require exhaustion, and claims based upon ERISA itself, which do not. See Held v. Manufacturers Hanover Leasing Corp., 912 F.2d 1197, 1205 (10th Cir.1990); Zipf v. American Tel. & Tel. Co., 799 F.2d 889, 893 (3d Cir.1986); Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir.1984).

However, Lindemann fails to note that an administrator's interpretation of a plan is not the only useful function served by the exhaustion requirement. Exhaustion also "enables plan fiduciaries to ... assemble a factual record which will assist a court in reviewing [their] actions." Makar v. Health Care Corp. of Mid-Atlantic, 872 F.2d 80, 83 (4th Cir.1989). Furthermore, Congress's apparent intent in mandating internal claims procedures found in ERISA was to minimize the number of frivolous lawsuits, promote a non-adversarial dispute resolution process, and decrease the cost and time of claims settlement. See 29 U.S.C. § 1133; 29 C.F.R. § 2560.503-1; see also Communications Workers of Amer. v. American Tel. & Tel., 40 F.3d 426, 432 (D.C.Cir.1994) ("Exhaustion may render subsequent judicial review unnecessary because a plan's own remedial procedures will resolve many claims."). Thus we have noted that exhaustion "support[s] the important public policy of encouraging private rather than judicial resolution of disputes under ERISA." Kross v. Western Elec. Co., 701 F.2d at 1246 (7th Cir.1983). These functions are served whether the plaintiff structures her claim to seek the actual...