Blank v. Bethlehem Steel Corp.

• Citation: 758 F. Supp. 697
• Decision Date: 09 February 1990
• Docket Number: No. 88-867-Civ-J-12.,88-867-Civ-J-12.
• Parties: Margaret C. BLANK, et al., Plaintiffs, v. BETHLEHEM STEEL CORPORATION, and Bethlehem 1985 Salaried Pension Plan, a foreign corporation, Defendants.
• Court: U.S. District Court — Middle District of Florida

758 F. Supp. 697

Margaret C. BLANK, et al., Plaintiffs, v. BETHLEHEM STEEL CORPORATION, and Bethlehem 1985 Salaried Pension Plan, a foreign corporation, Defendants.

No. 88-867-Civ-J-12.

United States District Court, M.D. Florida, Jacksonville Division.

February 9, 1990.

John F. MacLennan, Jacksonville, Fla., for plaintiffs.

Karr Tuttle Campbell, and Richard J. Omato, Seattle, Wash., E. Lanny Russell, Jacksonville, Fla., for defendants.

ORDER GRANTING SUMMARY JUDGMENT

MELTON, District Judge.

This cause is before the Court on defendants' Motion for Summary Judgment and/or Dismissal, filed herein on September 5, 1989. Plaintiffs responded with a memorandum in opposition to the motion, filed herein on September 29, 1989. Defendants submitted a reply memorandum, filed herein on October 26, 1989. The Court will grant defendants' motion.¹

This action involves the denial of plaintiffs' claims for retirement benefits under the terms of the Bethlehem 1985 Salaried Pension Plan ("the Plan"). Plaintiffs are former salaried employees of defendant Bethlehem Steel Corporation ("Bethlehem Steel") in its Buffalo Tank Division. As such, they were participants in the Plan. On August 26, 1986, Bethlehem Steel consummated the sale of its Buffalo Tank Division to Buffalo Tank Corporation. On that date, the parties agree, each plaintiff had at least twenty years of continuous service with Bethlehem Steel and had not reached the age of fifty-five years. None of the plaintiffs were offered transfers to another position with Bethlehem Steel. All went to work for Buffalo Tank Corporation, although one plaintiff, Robert Perry, has since been laid off by the successor corporation.

The Plan provides for a retirement benefit known as Rule-of-65 Retirement. The relevant portions of paragraph 2.7 state:

Any participant (i) who shall have had at least 20 years of continuous service as of his last day worked, (ii) who has not attained the age of 55 years, and (iii) whose combined age and years of continuous service shall equal 65 or more but less than 80, and

(a) whose continuous service is broken by reason of a layoff or disability, or

(b) whose continuous service is not broken and who is absent from work by reason of a layoff resulting from his election to be placed on layoff status as a result of a permanent shutdown of a plant, department or subdivision thereof, ...

and who has not been offered suitable long-term employment as such employment is determined in accordance with rules and regulations adopted by the General Pension Board, shall be eligible to retire on or after January 1, 1986, and shall upon his retirement (hereinafter "rule-of-65 retirement") be eligible for a pension; ....

Plaintiffs applied for these benefits. Their claims were denied and the appeals of their claims were denied. The Plan is governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. §§ 1001, et. seq., and the present action is brought pursuant to 29 U.S.C. § 1132.

Plaintiffs have two theories under which they are entitled to relief. Under one theory, the Rule-of-65 Retirement benefits are accrued benefits that the Plan cannot lawfully reduce. Under the other theory, the benefits are not accrued, but the action of the Plan's General Pension Board in denying benefits is, depending on the standard of review, either wrong as a de novo matter, or arbitrary and capricious.

Defendants move for summary judgment on the grounds that Rule-of-65 Retirement is an unaccrued benefit that the Board may lawfully eliminate. Defendants argue that the decision to make Rule-of-65 Retirement unavailable to plaintiffs was the exercise of discretion by the General Pension Board. This exercise of discretion, defendants urge, is reviewed by the arbitrary and capricious standard and it passes muster under that standard.

Whether Rule-of-65 Retirement benefits are accrued benefits or not is a question of law decided by the Court through construction of the relevant documents. See Roper v. Pullman Standard, 859 F.2d 1472, 1473-74 (11th Cir.1988). Whether the standard of review in this Court is the de novo standard or the arbitrary and capricious standard also is a question of law. See Baker v. Big Star Div., 893 F.2d 288, 290-92 (11th Cir.1989).² Whether the General Pension Board acted in an arbitrary and capricious manner is a question of law that rests on factual findings. See Jett v. Blue Cross & Blue Shield of Ala., 890 F.2d 1137, 1140-41 (11th Cir.1989) (Johnson, J., concurring and dissenting).

The first two issues, then, are readily resolvable on summary judgment. The final issue also is susceptible to summary judgment in this case because the material issues of fact are not in dispute. The Court, of course, gives plaintiffs the benefit of every reasonable inference to be drawn from the evidence. See Spence v. Zimmerman, 873 F.2d 256, 257 (11th Cir. 1989). In the usual instance, "there is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a trier of fact to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-51, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (citations omitted). Because the conclusion concerning the arbitrary and capricious standard is committed to the Court and the record does not suggest factual issues that turn on credibility questions or reveal conflicts that are resolvable only through trial testimony, summary judgment is an appropriate vehicle to resolve the issue.

ACCRUED OR UNACCRUED BENEFIT

The Plan, as reflected in the previously quoted portion, confers Rule-of-65 Retirement benefits in two relevant instances. Under paragraph 2.07(a), a break in continuous service occasioned by a layoff triggers the benefit for an employee who otherwise qualifies as to age and service. Under paragraph 2.07(b), no break in continuous service is necessary, but the otherwise eligible employee must have elected to be placed on layoff status following the permanent shutdown of a plant. Additionally, in order to complete the eligibility requirements of Rule-of-65 benefits, an employee who reaches the requisite age and service combination must not have been offered suitable long-term employment.

Defendants urge that they did not violate ERISA by eliminating Rule-of-65 Retirement benefits because those benefits were not accrued and therefore subject to discontinuation. Plaintiffs maintain that the benefits are accrued. This distinction is central because "the fiduciary provisions of ERISA are not implicated in the sale of a business merely because the terms of sale will affect contingent and non-vested future retirement benefits." Phillips v. Amoco Oil Co., 799 F.2d 1464, 1471 (11th Cir.1986), cert. denied, 481 U.S. 1016, 107 S.Ct. 1893, 95 L.Ed.2d 500 (1987).

ERISA imposes no obligation to pay benefits before an employee reaches normal retirement age. Fine v. Semet, 699 F.2d 1091, 1093 (11th Cir.1983). "The accrued benefits secured by ERISA do not encompass unfunded, contingent early retirement benefits or severance benefits." Sutton v. Weirton Steel Div., 724 F.2d 406, 410 (4th Cir.1983), cert. denied, 467 U.S. 1205, 104 S.Ct. 2387, 81 L.Ed.2d 345 (1984); see Blessitt v. Retirement Plan for Employees of Dixie Engine Co., 848 F.2d 1164, 1173 n. 21 (11th Cir.1988) (en banc) ("The prerequisites for entitlement to early retirement benefits and normal pension benefits are discreet and distinguishable."); Phillips, 799 F.2d at 1471 (fiduciary duty not breached by elimination of contingent and nonvested future retirement benefits, citing Sutton with approval). The contingent nature of the Rule-of-65 Retirement benefits is plain from the condition that eligibility be preceded by plant shutdown, layoff or disability. Cf. Roper, 859 F.2d at 1473-74. Termination of the benefits, then, does not violate the ERISA prohibition against the termination of accrued benefits.³Cf. Hlinka v. Bethlehem Steel Corp., 863 F.2d 279, 283-85 (3d Cir.1988) (interpreting the Plan under consideration here and holding that 70/80 retirement benefit is not an accrued benefit).

Plaintiffs have urged the authority of Amato v. Western Union International, Inc., 773 F.2d 1402 (2d Cir.1985), cert. dismissed, 474 U.S. 1113, 106 S.Ct. 1167, 89 L.Ed.2d 288 (1986), in support of their assertion that the Rule-of-65 Retirement benefits are accrued. That case, however, does not address the issue present in this case. The issue in Amato was stated as "whether an employer may terminate a plan's unreduced, funded early retirement benefits that are not contingent on an external event." Id. at 1413 (emphasis added). The caveat in this statement, intended by the court to distinguish its case from Sutton, likewise distinguishes Amato from this case.⁴See also Ashenbaugh v. Crucible Inc., 1975 Salaried Retirement Plan, 854 F.2d 1516, 1525-27 (3d Cir.1988) (Amato is not consistent with Sutton line of cases).

STANDARD OF REVIEW

Having concluded that ERISA has not been per se violated by the adoption of rules that eliminated plaintiffs' eligibility for Rule-of-65 Retirement benefits, the Court must review the decision of the General Pension Board to deny benefits. The parties disagree on the standard of review to apply. Plaintiffs assert review must be done de novo; defendants propose use of the arbitrary and capricious standard. The resolution of this dispute lies in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), and its young progeny.

In Firestone, the Supreme Court established de novo judicial review of an ERISA benefits denial decision "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Id. 109 S.Ct. at 956. The gist of Eleventh Circuit cases inter...