Pratt v. Petroleum Production Management Inc. Employee Sav. Plan & Trust

Decision Date29 November 1990
Docket NumberNo. 88-2190,88-2190
Parties, 19 Fed.R.Serv.3d 49, 13 Employee Benefits Ca 1001 Clair B. PRATT, Plaintiff-Appellee, v. PETROLEUM PRODUCTION MANAGEMENT, INC. EMPLOYEE SAVINGS PLAN & TRUST, et al., Defendants-Appellants, Petroleum Production Management, Inc., Administrator; Reuben R. Paulsen, Trustee; and Frank E. Novy, Trustee, Defendants.
CourtU.S. Court of Appeals — Tenth Circuit

Timothy B. Mustaine (James M. Armstrong, with him on the brief), Foulston, Siefkin, Powers & Eberhardt, Wichita, Kan., for plaintiff-appellee.

Neil S. Sader (Thomas C. Brown, with him on the brief), Brown & Thiessen, P.C., Kansas City, Mo., for defendants-appellants.

Before BALDOCK, BARRETT and EBEL, Circuit Judges.

BALDOCK, Circuit Judge.

Plaintiff-appellee Clair B. Pratt brought this action against his employer's Employee Retirement Income Security Act (ERISA) pension plan, the plan's administrator (the corporate employer), and the plan's two trustees, alleging that the defendants used an improper valuation date when assessing the value of his vested interest in the Employer Contribution Account funded by employer securities. 1 Plaintiff sought judgment on three ERISA claims: 1) breach of contract against the plan, 29 U.S.C. Sec. 1132(a)(1)(B), 2) breach of fiduciary duty by the three plan fiduciaries (the corporate administrator and individual trustees), 29 U.S.C. Secs. 1109 & 1132(a)(2), and 3) attorney's fees against all defendants, 29 U.S.C. Sec. 1132(g)(1). See rec. vol. II, doc. 16 at 12-14.

I.

Plaintiff was terminated from his employment with the defendant company on February 28, 1986 due to a reduction in force. Under the terms of the plan, when he was terminated he was entitled to receive a "distribution of his vested interest in his Employer Contribution Account valued as of the Valuation Date next preceding the date of his separation from service." Plan Sec. 7.5, rec. vol. II, doc. 16, ex. A. The "Valuation Date" is defined as "the date on which the Trust Fund shall be valued and Accounts adjusted accordingly, which date shall be the last day of each Plan Year with respect to Employer securities and the last day of each month with respect to all other securities." Id. Sec. 2.24. In turn, the "Plan Year" is defined as "the 12 month period beginning on October 1 and ending on September 30 of each year." Id. Sec. 2.18(c).

Plaintiff separated from his employment on February 28, 1986. For the employer securities at issue, the valuation date next preceding plaintiff's separation was September 30, 1985, the last day of the plan year. On the valuation date of September 30, 1985, plaintiff's share in employer securities totaled $27,692.32. Between the valuation date and plaintiff's separation, however, the value of the plan's employer securities declined markedly. This resulted in several actions by the defendants.

First, on April 25, 1986, some eight weeks after plaintiff's separation, the plan was amended (retroactive to October 1, 1985) to include provisions which redefined the "Valuation Date" to "include any date that an Interim Evaluation Accounts is performed in accordance with [new] section 6.11." Amended Plan Sec. 2.24, rec. vol. I, doc. 14, ex. 1 (amend. no. 1), infra n. 13. New Sec. 6.11, which lacked a counterpart in the original plan, allowed for interim valuation when "necessary to account for a material change in the fair market value of the Fund." Amended Plan Sec. 6.11, rec. vol. I, doc. 14, ex. 1 (amend. no. 1), infra n. 12. Second, defendants ordered an interim valuation of the plan assets as of January 31, 1986, and determined that plaintiff's share in employer securities totaled $7,184.37, not $27,692.32. Defendants now claim Plan Sec. 11.8, 2 constitutes authority for the revaluation. Third, on November 26, 1986, the defendants formally denied the plaintiff's request for valuation in accordance with the original plan, expressly relying upon amended Sec. 2.24 and new Sec. 6.11 and claiming that these provisions were "in force for the year of ... termination."

The parties filed cross-motions for summary judgment. After a hearing, 3 the district court determined that the relevant plan provisions in effect at the date of plaintiff's separation were unambiguous and clearly resulted in a valuation date of September 30, 1985. The court rejected defendants' contention that Plan Sec. 11.8 allowed an interim valuation date and adjustment of the accounts. Attaching significance to defendants' failure to cite Sec. 11.8 when denying benefits, the court noted that Sec. 2.24 defining "Valuation Date" did not reference Sec. 11.8 and concluded that the more-specific language of Sec. 7.5 controlled. The court decided that, while various Plan amendments might allow interim valuation, such amendments should not be applied retroactively because to do so would violate ERISA Sec. 204(g)(1) which provides that "the accrued benefit of a participant under a plan may not be decreased by an amendment of the plan." 29 U.S.C. Sec. 1054(g)(1). 4

The district court also decided that the defendant trustees had breached their fiduciary duty in applying the plan amendments retroactively to the plaintiff and revaluing his interest in the employer securities. According to the court, the defendants' actions "were arbitrary, capricious or based upon a mistake of law." Finally, plaintiff was awarded attorney's fees and costs apparently based upon the factors in Gordon v. United States Steel Corp., 724 F.2d 106, 109 (10th Cir.1983). The same day as the memorandum and order was entered, the district court entered a judgment granting plaintiff's motion for summary judgment and awarding "costs and attorney fees as detailed in [the] order."

II.

Before addressing the merits of the appeal, we must settle a few matters pertaining to our jurisdiction. 5 The notice of the appeal in this case provided: Clair B. Pratt,

Plaintiff,

vs.

Petroleum Production Management, Inc., Employee Savings Plan and Trust, et al.,

Defendants.

Notice is hereby given that Petroleum Production Management, Inc., Employee Savings Plan and Trust et al., defendants above named, hereby appeal....

Fed.R.App.P. 3(c) requires that the notice of appeal "shall specify the party or parties taking the appeal." In Torres v. Oakland Scavenger Co., 487 U.S. 312, 108 S.Ct. 2405, 101 L.Ed.2d 285 (1988), the Supreme Court affirmed a Ninth Circuit holding that " '[u]nless a party is named in the notice of appeal, the appellate court does not have jurisdiction over him.' " Id. at 314, 108 S.Ct. at 2407 (quoting unreported decision). "The failure to name a party in a notice of appeal ... constitutes a failure of that party to appeal." Id. The Court specifically rejected the argument "that the use of 'et al.' in the notice of appeal [is] sufficient to indicate [a party's] intention to appeal." Id. at 317, 108 S.Ct. at 2409. "The specificity requirement of Rule 3(c) is met only by some designation that gives fair notice of the specific individual or entity seeking to appeal." Id. at 318, 108 S.Ct. at 2409.

Torres requires "strict compliance" with the naming requirement of Rule 3(c) because the filing of a proper notice of appeal is mandatory and jurisdictional. Woosley v. Concorde Resources (In Re Woosley), 855 F.2d 687, 688 (10th Cir.1988). A "harmless error" analysis does not apply given "the nature of a jurisdictional requirement: a litigant's failure to clear a jurisdictional hurdle can never be 'harmless' or waived by a court." Torres, 487 U.S. at 317 n. 3, 108 S.Ct. at 2409 n. 3. We recently rejected an argument similar to the one made by defendants, that because the body of the notice of appeal contains the term "defendants," the notice should be deemed to include all of the defendants. In Laidley v. McClain, 914 F.2d 1386 (10th Cir.1990), only one of four plaintiffs was named in the notice of appeal and the caption also contained the troublesome "et al." designation. Id. at 1388 n. 1. In dismissing the appeals of the three unnamed plaintiffs for lack of jurisdiction, we said:

Although a statement that "plaintiffs hereby appeal," when combined with an "et al." designation to some of the plaintiffs, could be interpreted to mean that all of the plaintiffs intend to appeal, it could also be understood as designating less than all of the plaintiffs as appellants. Clearly, the specificity requirement of Rule 3(c) was intended to eliminate ambiguity as to the identity of the appellants. (citations omitted). Thus, the failure to specifically designate a party somewhere in the notice of appeal is a jurisdictional bar to that party's appeal.

Id. at 1389. We see no reason why the rationale of Laidley should not apply to this case which turns on the adequacy of the defendants' "et al." designation in the caption of the notice of appeal combined with the phrase "defendants above named, hereby appeal" contained in the body. Only the plan has appealed; the remaining defendants must be dismissed from the appeal for lack of jurisdiction.

Defendants urge us to follow Ford v. Nicks, 866 F.2d 865 (6th Cir.1989), which held that an "et al." designation in the caption combined with the phrase "defendants' [sic] appeal" in the body of the notice of appeal was sufficient to encompass the unnamed defendants. Unfortunately for defendants, the Sixth Circuit subsequently and en banc determined that Ford was inconsistent with Torres; naming the parties to the appeal is essential. See Minority Employees v. Tennessee Dep't of Employment Sec., 901 F.2d 1327, 1335 (6th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 210, 112 L.Ed.2d 170 (1990). In this circuit's most comprehensive analysis of Torres, we relied heavily on Minority Employees, indicating our agreement with the Sixth Circuit's more recent approach which specifically rejects Ford and requires naming. Laidley, 914 F.2d at 1389. We also relied upon Rosario-Torres v. Hernandez-Colon, 889 F.2d 314, 317 (1st...

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