Anderson v. Pittsburgh-Des Moines Corp.

• Decision Date: 12 January 1990
• Docket Number: No. 89-3383,PITTSBURGH-DES,89-3383
• Parties: Raymond L. ANDERSON, Individually and On Behalf of All Others Similarly Situated, Appellant, v.MOINES CORPORATION and Retirement Plan for Salaried Employees of Pittsburgh-Des Moines Corporation, Appellees.
• Court: U.S. Court of Appeals — Third Circuit

Page 638

893 F.2d 638

Raymond L. ANDERSON, Individually and On Behalf of All

Others Similarly Situated, Appellant, v. PITTSBURGH-DES MOINES CORPORATION and Retirement Plan for

Salaried Employees of Pittsburgh-Des Moines

Corporation, Appellees.

No. 89-3383.

United States Court of Appeals, Third Circuit.

Argued Jan. 8, 1990.

Decided Jan. 12, 1990.

Roger H. Taft (Argued), Marcia H. Haller, MacDonald, Illig, Jones & Britton, Erie, Pa., for appellant.

James D. Morton (Argued), Buchanan Ingersoll, Professional Corp., Pittsburgh, Pa., for appellees.

Before GIBBONS, Chief Judge, SCIRICA, Circuit Judge, WALDMAN, ^* District Judge.

OPINION OF THE COURT

GIBBONS, Chief Judge:

Raymond L. Anderson, a retired salaried employee of the Pittsburgh-Des Moines Corporation ("PDM"), ¹ appeals dismissal by the district court of his ERISA claim and pendent state-law claims relating to denial of benefits under a pension plan administered by his former employer. He also appeals the district court's decision to exclude certain evidence at trial. We will reverse and remand.

I.

From December 4, 1944 to November 30, 1959, Anderson worked as an hourly employee at the Warren, Pennsylvania, plant of Hammond Iron Works, a Pennsylvania corporation. On the latter date, Hammond was acquired by and merged into PDM. Anderson continued to work as an hourly employee for PDM at the Warren plant until, on January 1, 1961, he was transferred to a salaried, supervisory job with PDM. He continued as a salaried employee from that date until his involuntary retirement from PDM, at age 54, on July 29, 1983.

During his time with Hammond, Anderson was a participant in the pension plan for Hammond hourly employees. After the merger, during the thirteen months he worked as an hourly employee of PDM, he was covered by PDM's plan for hourly employees, which, for purposes of computing pension benefits, gave full credit for continuous service as an hourly employee of Hammond. When he assumed his salaried position with PDM in 1961, Anderson became a participant in the Retirement Plan for Salaried Employees of Pittsburgh-Des Moines Corporation ("the Plan"). PDM and the Plan are the defendants and appellees in this case. The Plan, which began in 1941, was restated and amended several times; the version which governed Anderson's retirement was effective January 1, 1976 (the "1976 Plan").

When Anderson came to retire, PDM's Benefits Administrator informed him that for purposes of computing his pension benefits under the Plan, the period of his "Continuous Service" with "the Company" would include 50% of his thirteen months as an hourly employee of PDM but no credit at all for his previous employment as an hourly worker at Hammond. Anderson contended that he should receive 50% credit for his time as an hourly worker at Hammond as well. He urged that Hammond was a predecessor of PDM and that the expression "the Company" in the 1976 Plan included PDM's predecessors as well as PDM itself. He advanced this contention in an unsuccessful claim and appeal to PDM's Plan Administration Committee, thus exhausting his internal remedies.

He then brought suit in U.S. District Court under section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Sec. 1132(a)(1)(B) (1982). In Count I of the complaint Anderson sought additional pension benefits, as well as declaratory and injunctive relief from the alleged breach, by PDM and the Plan, of fiduciary duties and of duties to provide benefits, and alleged reduction of benefits due, all under ERISA. The remaining Counts, II through VI, presented pendent claims based on state law.

A bench trial was held on August 30 and 31, 1988. The judge excluded certain evidence, extrinsic to the Plan's own documents, which the plaintiff offered as bearing on PDM's understanding of the term "the Company" in Section 2.03 of the 1976 Plan. After trial, the court dismissed the ERISA claim by order of October 26, 1988, and entered judgment for the defendants on Count I; the accompanying memorandum simply incorporated PDM's proposed findings of fact and conclusions of law without change. Then by order entered April 27, 1989, in response to PDM's motion for judgment on the pleadings, the court declined jurisdiction of Counts II-VI, the pendent state-law claims, and dismissed them without prejudice, thus terminating the suit. From these two orders Anderson now appeals. He also appeals the rulings of the district court excluding some extrinsic evidence of PDM's own understanding and interpretation of the term "the Company" in the 1976 Plan.

II.

We must first determine the proper scope of review. A district court's review of the denial of pension benefits by a plan administrator is de novo, at least when, as here, the governing documents of the plan do not in terms vest the administrator with discretion in its interpretation. Firestone Tire & Rubber Co. v. Bruch, --- U.S. ----, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989), aff'g, 828 F.2d 134, 145 (3d Cir.1987). Under Bruch, review in the court of appeals is also de novo. Haeffele v. Hercules Inc., 839 F.2d 952, 957 (3d Cir.1988) ("Where, as here, the plan administrator has a financial interest in the outcome, the interpretation or construction of a plan is subject to de novo review by the district court, and by this court as well.") (citing Bruch, 828 F.2d at 145). We reject PDM's contention that appellate review by this court should use the "clearly erroneous" standard for findings of fact under Fed.R.Civ.P. 52(a).

III.

Exercising de novo review of the district court's dismissal of the ERISA claim, we then must determine whether its interpretation of the Plan's documents was correct as a matter of law. The contested portion of the 1976 Plan is section 2.03, which reads in relevant part:

2.03 Credited Service: The amount of the benefit payable to or on behalf of a Participant shall be determined on the basis of his Credited Service....

(a) ... Credited Service is referred to as Continuous Service and defined as "the period of time during which a Salaried Employee or Participant shall be continuously employed by the Company prior to his Normal Retirement Date....

["]In cases of transfer of an hourly paid non-supervisory shop employee or field employee to Salaried Employee status, fifty percent (50%) of the period of continuous employment of such employee as an hourly paid shop or field employee shall be included in determining his Continuous Service."

Appellees' Exhibit B at 23-24. The gravamen of Anderson's ERISA claims is that PDM, in administering the Plan, applied a misinterpretation of the term "the Company" in this passage, limiting it to PDM itself and wrongfully excluding companies such as Hammond which had merged into PDM. Thus, Anderson contends, PDM and the Plan for Salaried Employees violated their duties under ERISA, by refusing to provide him with benefits in an amount crediting him for 50% of his service as an hourly worker for Hammond.

The district court found that in this contract document the term "the Company" is unambiguous. It adopted PDM's own construction of the term and in its memorandum opinion of October 28, 1988 incorporated by reference PDM's proposed conclusion of law that "the Plan is unambiguous and there is no need to resort to extrinsic evidence in interpreting it." App. 51A. However, we find that the term "the Company" in the 1976 Plan is not unambiguous as a matter of...