Bergt v. the Retirement Plan for Pilots Employed by Markair
| Decision Date | 19 June 2002 |
| Docket Number | 9,99-36106 |
| Parties | NEIL BERGT,, v. THE RETIREMENT PLAN FOR PILOTS EMPLOYED BY MARKAIR, INC.,UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT |
| Court | U.S. Court of Appeals — Ninth Circuit |
Appeal from the United States District Court for the District of Alaska John W. Sedwick, District Judge, Presiding D.C. No. CV-A98-407 (JWS)
Ronald W. Goss, Ellis & Goss, P.L.L.C., Seattle, Washington for the appellant.
Rosemary Phillips, Pension Benefit Guaranty Corporation, Washington D.C., for the appellee.
Before: Barry G. Silverman and Arthur L. Alarcn, Circuit Judges, and Rudi M. Brewster,1 Senior District Judge.
Neil G. Bergt ("Bergt") appeals the lower court's summary judgment order denying him retirement benefits covered under the Employment Retirement Income Security Act, 29 U.S.C. 1001 et. seq. ("ERISA"). The central question in this case is how to interpret an ERISA plan when the provisions of the plan master document are more favorable than, and conflict with, the statements of the plan summary. This Circuit has provided little guidance on this issue. The lower court held these conflicting provisions, when considered together, created an ambiguity that allowed the court to consider extrinsic evidence to determine the meaning of the ERISA plan. We have jurisdiction pursuant to 28 U.S.C. 1291. We reverse.
Bergt, previously a pilot with MarkAir, Inc. ("the Company"), 2 served as its President and Chairman of the Board of Directors from 1975 to 1995. Beginning in 1976, Bergt participated in the company-sponsored profit-sharing plan and from 1984, he participated in the Employee Stock Ownership Plan ("ESOP"). In 1980, the Company created an ERISA retirement plan that allowed employees who were pilots, or former pilots, to participate. Section 3.03 of the retirement plan, however, excluded otherwise eligible employees who were "participants in any other pension, profit sharing, or retirement plan which is 'qualified' by the Internal Revenue Service and to which the Company is contractually obligated to contribute . . . ." The Company also issued a summary of the retirement plan, called a Summary Plan Document ("SPD"), that specified "if you are a member of another Company-sponsored retirement or profit sharing plan, you cannot be a member of this plan."
On March 22, 1996, Bergt filed a claim for benefits under the ERISA retirement plan. On April 28, 1998, the committee to oversee the administration of the retirement plan ("Committee") denied his request, claiming that he was ineligible based on Section 3.03 because he was a participant in the Company's profit-sharing plan. On June 30, 1998, Bergt petitioned the Committee for reconsideration. In denying his request, the Committee found that Section 3.03 of the retirement plan was ambiguous. Examining the SPD and extrinsic evidence, the Committee held the profit-sharing plan was " 'qualified' by the Internal Revenue Service" and constituted a plan "to which the Company was contractually obligated to contribute." In the alternative, the Committee ruled that the phrase, "which is 'qualified' by the Internal Revenue Service and to which the Company is contractually obligated to contribute," only modified "retirement plan," and did not modify "pension" or "profit sharing." Therefore, according to the Committee, an employee who participated in any profitsharing plan was excluded from participating in the retirement plan. Thus, the Committee found Berg ineligible to participate on both grounds.
Bergt appealed the Committee's decision to the United States District Court for the District of Alaska. Both parties filed summary judgment motions. Bergt argued the Committee abused its discretion because it interpreted the retirement plan contrary to its plain language. The district court denied Bergt's motion for summary judgment and granted summary judgment affirming the Committee, but for a different reason. First, the court found the profit sharing plan was not a binding obligation on the Company. The lower court then ruled that although the language in the plan master document was unambiguous, when viewed in light of the conflicting SPD, an ambiguity was created as to whether Bergt was eligible to participate in the retirement plan. Since the court found an ambiguity, it considered extrinsic evidence, concluding that Bergt was not eligible to participate in the retirement plan because the understanding of the parties was that an employee could not be a participant in both the retirement plan and a company-sponsored profit-sharing plan. Although the court reviewed the Committee's decision for an abuse of discretion, it noted that it would have granted summary judgment even if it had applied a de novo review.
We review a district court's grant or denial of a motion for summary judgment de novo. Lang v. Long-term Disability Plan of Sponsor Applied Remote Tech., 125 F.3d 794, 797 (9th Cir. 1997). We also determine which standard of review to apply to a committee's decision de novo. Snow v. Standard Ins. Co., 87 F.3d 327, 331 (9th Cir. 1996). In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989), the Supreme Court said that when an ERISA plan grants discretionary authority to the plan administrator to determine plan eligibility, the court will ordinarily review a committee's decision to deny benefits for an abuse of discretion. In Kearney v. Standard Ins. Co., 175 F.3d 1084, 1090 (9th Cir. 1999), the Ninth Circuit held that the plan documents must grant this discretionary authority unambiguously; if the plan fails to do this, the district court must review a committee's decision de novo.
In this case, the retirement plan language unambiguously gives the Committee broad discretion to determine eligibility benefits. It grants the administrative committee the "power" and "duty" to "interpret the plan and to resolve ambiguities, inconsistencies and omissions" and to "decide on questions concerning the plan and the eligibility of any Employee . . . ." See Sandy v. Reliance Standard Life Ins. Co., 222 F.3d 1202, 1207 (9th Cir. 2000) ().
Even if a plan, however, provides this discretionary authority, warranting review for an abuse of discretion standard, the courts will apply a heightened standard of review if one of the plan administrators has a "serious" conflict of interest. Atwood v. Newmont Gold Co., 45 F.3d 1317, 1322-23 (9th Cir. 1995). Bergt maintains Committee member Kevin Cordell had a serious conflict of interest because he was both a beneficiary of the retirement plan and an administrator. Furthermore, according to Bergt, Laurence Rhodes, a former member of the retirement plan's administrative committee, said that Cordell told him that Bergt "was trying to get into the . . . [retirement plan], and . . . as long as [Cordell] had anything to say about it that would not happen." Also, members of the Committee admitted the underfunding of the retirement plan was a factor in their consideration of Bergt's claim.
This evidence fails to show a serious conflict. Cordell serving as an administrator while also being a beneficiary is not enough to show an actual conflict. Atwood, 45 F.3d at 132223. And it is not clear when Cordell made this statement to Rhodes, if he made it at all. Finally, considering the fact that the retirement plan was underfunded is not inconsistent with the Committee's duty to focus on how its decisions will affect other beneficiaries of the plan. See Lang, 125 F.3d at 798. Accordingly, the district court correctly reviewed the Committee's decision for an abuse of discretion.
To summarize, we review de novo whether, viewing facts most favorable to Bergt, the district court correctly held that no genuine issues of fact exist as to whether the Committee abused its discretion by denying Bergt benefits under the retirement plan.
SPD part of ERISA Plan
The lower court committed legal error when it determined that the Committee did not abuse its discretion when it refused Bergt benefits under the retirement plan. As a preliminary matter, we conclude the SPD is a plan document and should be considered when interpreting an ERISA plan. The ERISA statute requires the plan fiduciaries to act solely "in accordance with the documents and instruments governing the plan . . . ." 29 U.S.C. 1104(a)(1)(D) (emphasis added). Employers are required to provide participants with a copy of an SPD (not the plan master document) that describes the "circumstances which may result in disqualification, ineligibility, or denial or loss of benefits" and shall "be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan." 29 U.S.C. 1022(a)-(b). Furthermore, the SPD is the "statutorily established means of informing participants of the terms of the plan and its benefits" and the employee's primary source of information regarding employment benefits. Pisciotta v. Teledyne Indus., 91 F.3d 1326, 1329 (9th Cir. 1996), citing, Alday v. Container Corp. of America, 906 F.2d 660, 665 (11th Cir. 1990). For these reasons, we follow the other courts that have held that the SPD is part of the ERISA plan. Chiles v. Ceridian, 95 F.3d 1505, 1511 (10th Cir. 1996) (); Alday v. Container Corp. of America, 906 F.2d 660, 665-666 (11th Cir. 1990).
In this case, the ERISA plan contains two conflicting plan documents: the plan master document and the SPD. The provisions in...
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