Butler v. Encyclopedia Brittanica, Inc.

• Decision Date: 20 December 1994
• Docket Number: 94-1418,Nos. 94-1271,s. 94-1271
• Citation: 41 F.3d 285
• Parties: -7034, 18 Employee Benefits Cas. 2589, Pens. Plan Guide P 23903B Nicolette Anne BUTLER, Plaintiff-Appellee, v. ENCYCLOPEDIA BRITTANICA, INC., a New York Corporation, and Equitable Life Assurance Society of the United States, Defendants-Appellees, and Anthony J. Cotini, Defendant-Appellant. Nicolette Anne BUTLER, Plaintiff-Appellee, v. ENCYCLOPEDIA BRITTANICA, INC., a New York Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 285

41 F.3d 285

74 A.F.T.R.2d 94-7034, 18 Employee Benefits

Cas. 2589,

Pens. Plan Guide P 23903B

Nicolette Anne BUTLER, Plaintiff-Appellee, v. ENCYCLOPEDIA BRITTANICA, INC., a New York Corporation, and Equitable Life Assurance Society of the United

States, Defendants-Appellees,

and

Anthony J. Cotini, Defendant-Appellant.

Nicolette Anne BUTLER, Plaintiff-Appellee, v. ENCYCLOPEDIA BRITTANICA, INC., a New York Corporation,

Defendant-Appellant.

Nos. 94-1271, 94-1418.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 8, 1994.

Decided Nov. 23, 1994.

Rehearing and Suggestion for Rehearing En Banc Denied Dec.

20, 1994. ^*

John J. Casey, Chicago, IL (argued), for Nicolette Anne Butler.

Marcia E. Goodman (argued), Joan E. Brophy, Joyce L. Meyer, Mayer, Brown & Platt, Chicago, IL, for Encyclopaedia Brittanica, Inc.

Shelley R. Smith, Ronald N. Lorenzini, Jr., Kemp, Grzelakowski & Lorenzini, Oak Brook, IL, for Equitable Life Assur. Soc. of U.S.

George N. Vurdelja, Jr. (argued), Griswold L. Ware, Vurdelja & Associates, Chicago, IL, for Anthony J. Cotini.

Before COFFEY and ROVNER, Circuit Judges, and FOREMAN, District Judge. ^**

FOREMAN, District Judge.

This action was brought under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. Secs. 1001-1461, to determine the proper distribution of pension and savings plan benefits accumulated by an employee of the Encyclopedia Brittanica company who is now deceased. The district court's decision awarding all of these benefits to the decedent's daughter is affirmed in part and reversed in part.

I. FACTS

Celia Cotini was an employee of Encyclopedia Brittanica and a participant in the company's Pension Plan and Savings Plan, both of which are governed by ERISA. Prior to her death, she had filed beneficiary designation forms that purported to designate her daughter, Nicolette Butler, as the beneficiary under both plans. Part of each form contained a "Spouse's Waiver of Primary Beneficiary Designation" which stated that Celia Cotini's spouse, Anthony Cotini, consented to the designation of a different primary beneficiary. ¹

For purposes of the summary judgment motions submitted to the district court, Anthony Cotini admitted that his signature on the forms was authentic. However, he argues that the forms are invalid because his signature was not witnessed by a plan representative or a notary public as required by ERISA. A notary public's signature appears on the documents, but Cotini contends that he was never physically present before the notary and, therefore, the notary did not actually witness him signing the documents. He further asserted that he did not read the forms carefully when he signed them.

The notary, Louise Joslyn, stated that she does not know Anthony Cotini and had no recollection as to whether he had personally appeared before her to sign the documents. Joslyn stated that her general practice is to see the person actually sign a document before she will notarize it. However, she stated that she sometimes notarized documents without the signing party being present, particularly when an employee asked her to notarize a document that the employee claimed was signed by the employee's spouse.

After Celia Cotini's death, Encyclopedia Brittanica paid the Savings Plan benefits to Nicolette Butler based upon the beneficiary designation form for that plan. However, the company determined that Butler was not entitled to benefits under the Pension Plan. The company stated that because Celia Cotini had died before she retired, the Pension Plan provided a "preretirement spouse's death benefit" rather than a retirement benefit. Under the terms of the plan, Encyclopedia Brittanica determined that only Anthony Cotini, as the surviving spouse, was eligible for the spouse's death benefit.

Butler filed a complaint seeking a declaratory judgment of her rights under the pension and savings plans and an injunction to prevent Encyclopedia Brittanica from paying any of the benefits under either plan to Anthony Cotini. Cotini filed a counterclaim against Butler and a cross-claim against Encyclopedia Brittanica for the Savings Plan benefits.

On cross-motions for summary judgment, the district court held in favor of Butler under both plans. Butler v. Encyclopaedia Brittanica, Inc., 843 F.Supp. 387 (N.D.Ill.1994). Brittanica and Cotini have appealed the district court's decision with respect to the Pension Plan. Cotini also appeals the adverse ruling on the Savings Plan. ²

II. ANALYSIS

A district court's review of a denial of benefits under an ERISA plan is de novo unless the plan gives the administrator discretion to interpret plan terms or determine benefits eligibility. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989). There is no dispute that Encyclopedia Brittanica had such discretion in this case. Thus, the administrator's decision is reviewed under an arbitrary and capricious standard. Loyola Univ. of Chicago v. Humana Ins. Co., 996 F.2d 895, 898 (7th Cir.1993) ("In the event that the administrator's discretion is unrestrained or limited only by the requirement of good faith, the arbitrary and capricious standard of review is proper."). We review the district court's order granting a motion for summary judgment under a de novo standard. Kreutzer v. A.O. Smith Corp., 951 F.2d 739, 743 (7th Cir.1991).

A. Butler's Entitlement to Pension Plan Benefits

Encyclopedia Brittanica's Pension Plan provides three basic types of benefits: Article VI provides the "Normal Retirement Benefit" for employees who terminate their employment on or after attaining normal retirement age; Article VII provides an "Early Retirement Benefit" for employees who terminate their employment on or after attaining early retirement age but before attaining the normal retirement age; and Article X provides "Pre-Retirement Death Benefits" in the case where an employee dies before he or she begins receiving retirement benefits. Celia Cotini died at age 65 while still employed by Encyclopedia Brittanica. Therefore, Article X provides the applicable benefit.

In denying Butler's claim, Encyclopedia Brittanica found that the preretirement death benefit in section 10.2 of the pension plan is available only to a surviving spouse, and the plan did not allow an employee or spouse to waive this benefit in favor of another beneficiary. The district court rejected this interpretation, finding that waiver was clearly allowed under Article XI of the plan. We find that the district court's construction was certainly plausible. However, a review of the Pension Plan as a whole shows that Encyclopedia Brittanica's interpretation is equally permissible and, therefore, not arbitrary and capricious.

Article X provides, in pertinent part, as follows:

10.1. General. If a Member dies before a Benefit Commencement Date ..., there shall be no death benefits payable except those specified in this Article X.

10.2. Pre-Retirement 100% Spouse's Death Benefit.

(a) Entitlement. A Pre-Retirement 100% Spouse's Death Benefit will be payable if a Member dies before a Benefit Commencement Date, is survived by his Eligible Spouse, and--

. . . . .

(2) dies while employed by an Employer or an Affiliate, provided he has attained Early Retirement Age or Normal Retirement Age, ...

. . . . .

There shall be no reduction in a Member's Accrued Benefit on account of death benefit coverage under this Section.

(b) Amount. The amount of the monthly benefit payable to the surviving Eligible Spouse is the amount of the hypothetical monthly early retirement benefit which would have been payable during the life of the Member if the Member had retired on the first day of the month following the month in which he died and his retirement benefit was payable in the form of the Five-Year Certain Joint and Survivor's Annuity described in subsection 11.5(c), with 100% of the amount payable to the Member continued to the Eligible Spouse....

(c) Commencement and Payment. Such death benefit shall be payable as of the first day of the calendar month following the month in which the Member died, and shall be payable monthly for the remainder of the Eligible Spouse's Life, but in no case shall fewer than 60 monthly payments be made. Notwithstanding the preceding sentence, if the lump sum Actuarial Equivalent of the Eligible Spouse's death benefit is $3,500 or less, the Plan Administration Committee shall pay such lump sum amount to the Eligible Spouse in lieu of the Pre-Retirement 100% Spouse's Death Benefit.

. . . . .

10.3 Pre-Retirement 50% Spouse's Death Benefit.

(a) Entitlement. A Pre-Retirement 50% Spouse's Death Benefit will be payable if a Member dies after he has completed five years of Vesting Service or has attained Normal Retirement Age and before his death qualifies his Eligible Spouse for a death benefit under Section 10.2, and if the Member is survived by his Eligible Spouse, regardless of whether the Member is employed by an Employer at the time of his death.

. . . . .

10.4 Pre-Retirement Single Sum Death Benefit.

(a) Entitlement. A Pre-Retirement Single Sum Benefit shall be payable to the Beneficiary of a Member upon the Member's death unless either the Pre-Retirement Spouse's Death Benefit described in either Section 10.2 or Section 10.3 is payable or a single sum distribution was elected by a Member under subsection 8.3(b).

(b) Amount. The Pre-Retirement Single Sum Death Benefit shall be the Member's Accumulated Contributions on the date as of which the benefit is payable.

(c) Payment. The Pre-Retirement Single Sum Death Benefit shall be paid to the Beneficiary as soon as administratively practicable following the Plan Administration Committee's receipt of proof of the Member's death.

Section 10.2 obviously is the applicable provision here because Celia Cotini died after reaching normal retirement age but while still employed by Encyclopedia Brittanica. The...