Clarke ex rel. Estate of Pickard v. Ford Motor Co.

• Decision Date: 27 October 2004
• Docket Number: No. 01-C-0961.,01-C-0961.
• Citation: 343 F.Supp.2d 714
• Parties: Penelope CLARKE, as personal representative of the Estate of Howard PICKARD, Plaintiff, v. FORD MOTOR COMPANY, and Ford General Retirement Plan, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

343 F.Supp.2d 714

Penelope CLARKE, as personal representative of the Estate of Howard PICKARD, Plaintiff, v. FORD MOTOR COMPANY, and Ford General Retirement Plan, Defendants.

No. 01-C-0961.

United States District Court, E.D. Wisconsin.

October 27, 2004.

Jordan M. Lewis, Minneapolis, MN, Michael Herbrand, Grafton, WI, for Plaintiff.

Nick Kotsonis, Milwaukee, WI, Neil L. Johnson, for Defendants.

DECISION AND ORDER

ADELMAN, District Judge.

Plaintiff Penelope Clarke, as the personal representative of her deceased father, Howard Pickard ("Pickard"), a former employee of Ford Motor Company and a participant in Ford's General Retirement Plan (collectively "Ford"), brings this class action¹ under the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiff alleges that Ford violated 29 U.S.C. § 1132(a)(1)(B) by failing to pay benefits owed to Pickard and class members, and that it breached its fiduciary duty in violation of 29 U.S.C. § 1132(a)(3) by failing to comply with various substantive provisions of ERISA and/or the regulations implementing them. Before me now are the parties' cross-motions for summary judgment on the issue of liability.

I. FACTUAL AND PROCEDURAL BACKGROUND

Pickard worked for Ford from January 25, 1954, to June 30, 1966, when he resigned to open a Ford dealership. On February 6, 1975, he reached age sixty-five and, in March 1975, became eligible to receive normal retirement benefits.² However, he did not then apply for benefits. The record does not disclose whether Ford notified Pickard of his right to receive benefits, but Ford's practice was to send a notice letter to employees eligible for benefits when they separated from Ford and when they reached retirement age.

Effective July 1, 1994, Ford eliminated its "age seventy rule," which provided that employees who separated from service prior to January 1, 1976, and did not apply for benefits until they were over seventy could not receive benefits. When it eliminated the rule, Ford sent a "benefits letter" through the Social Security Administration to 291 former employees including Pickard whom it believed might be affected by the change. The letter stated among other things:

Our records indicate that you separated from Company employment prior to January, 1976, and were entitled to a benefit from the General Retirement Plan (GRP). You presently are not receiving benefit payments.

If you have applied for and been denied a GRP benefit due to the age 70 requirement, or have never applied, we encourage you to immediately contact [Ford] to apply for your benefit.

(J.A. tab 4.)

As a result of the letter, 161 Ford retirees, including Pickard, applied for benefits. Ford began paying retirement benefits to these individuals as of the effective dates of their applications, which in Pickard's case was August 1, 1996. Plaintiff retained counsel for Pickard, who was eighty-six and in poor health, and counsel advised Ford that in his view Pickard was entitled to benefits retroactive to March 1975. Ford disagreed and declined to make payments to Pickard for the period prior to August 1, 1996.

Pickard died on August 2, 1997, and his counsel continued to correspond with Ford on behalf of plaintiff, Pickard's personal representative. Plaintiff subsequently appealed Ford's refusal to pay benefits retroactive to March 1975. On May 7, 1998, Ford denied plaintiff's appeal. Plaintiff then appealed to Ford's General Retirement Committee ("GRC"), and on June 21, 2000 the GRC rejected her appeal. Plaintiff then commenced the present action.

Additional facts will be stated in the course of the decision.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is required "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In evaluating a motion for summary judgment, the court must draw all inferences in a light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). However, it is "not required to draw every conceivable inference from the record — only those inferences that are reasonable." Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir.1991). When both parties have moved for summary judgment, both are required to show that no genuine issues of fact exist, taking the facts in the light most favorable to the party opposing each motion. If issues of fact exist, neither party is entitled to summary judgment. Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341, 349 (7th Cir.1983).

III. DENIAL OF BENEFITS CLAIM

A. Standard of Review

Plaintiff argues that I should review Ford's denial of benefits under a de novo standard, while defendant contends that the more deferential "arbitrary and capricious" standard is proper. If Ford's denial of benefits was based on an interpretation of a statute or regulation, I review it de novo. Stang v. Clifton Gunderson Health Care Plan, 71 F.Supp.2d 926, 932 (W.D.Wis.1999). If the denial was based on a construction of the plan, I review it de novo unless the plan conferred discretion, in which case I review it under the arbitrary and capricious standard. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989).

The record makes clear that Ford's decision was based in part on its understanding of ERISA. In its May 7, 1998 letter denying plaintiff's request for retroactive benefits, Ford justified the denial on the ground that "Pickard terminated employment prior to the effective date of ERISA's minimum vesting requirements." (J.A. tab 17.) However, the record also contains evidence that Ford's decision was based on its understanding of its retirement plan. In a number of communications, Ford indicated that under its interpretation of the plan applying for benefits was a condition of eligibility to receive them. On April 26, 1997, Ford stated that benefits "are effective the first day of the month following the signed application." (Id. tab 9.) On July 31, 1997, Ford advised that "benefits shall not be payable for any periods prior to the date of application." (Id. tab 10.) On March 12, 1998, Ford denied plaintiff's initial appeal stating that Pickard was eligible to receive benefits "upon filing an application." (Id. tab 16.) On November 5, 1999, Ford informed plaintiff that "the Plan does not permit a payment under these circumstances." (Id. tab 21 at 3.) The minutes of the GRC's June 21, 2000 meeting state that the "application rules applied to this participant and do not provide retroactive reimbursement." (Id. tab 28.) Finally, on June 29, 2000, Ford notified plaintiff of the GRC's decision, stating that "[u]nder the terms of the retirement plan, there are no provisions that require commencement of benefits without application to terminated employees." (Id. tab 29.)

Thus, Ford denied plaintiff's request for retroactive benefits based both on its view of ERISA and on its interpretation of its plan. Insofar as Ford's decision was based on ERISA, I will review it de novo. To the extent that the decision was based on Ford's interpretation of the plan, to ascertain the correct standard of review I must determine whether the plan conferred discretion. However, I must first decide which of several Ford plans to analyze: the 1965 plan, which was in effect when Pickard separated from Ford; the 1973 plan, which was in effect when he reached age sixty-five; or the 1995 plan, which was in effect when he applied for benefits. Ford takes no position on which plan applies, stating that all three confer discretion and make application a condition of eligibility. Plaintiff takes no position on whether the 1965 or 1973 plan applies but argues that the 1995 plan does not apply because it was enacted after Pickard's right to benefits vested.

I conclude that the 1965 plan controls. Plans or plan amendments that take effect after an employee has terminated employment generally do not affect the employee's right to benefits. Pratt v. Petroleum Prod. Mgmt., Inc. Employee Sav. Plan & Trust, 920 F.2d 651, 661 (10th Cir.1990) (stating that an employee is entitled to benefits in accordance with the terms of the plan as of the date of termination from employment); see also Wal-Mart Stores, Inc. Associates' Health & Welfare Plan v. Wells, 213 F.3d 398, 403 (7th Cir.2000) (holding that plan amendment which took effect after benefits were received was inapplicable). Pickard terminated employment in 1966, at which time the 1965 plan was in effect. Thus, I will analyze the case under the 1965 plan.

As previously indicated, if Ford's denial of benefits was based on its construction of its plan and the plan conferred discretion, Ford's decision may be set aside only if it was arbitrary and capricious. Firestone Tire & Rubber Co., 489 U.S. at 115, 109 S.Ct. 948; see also Perlman v. Swiss Bank Corp. Comprehensive Disability Protection Plan, 195 F.3d 975, 981 (7th Cir.1999). No "magic words" are required to confer discretion. Herzberger v. Standard Ins. Co., 205 F.3d 327, 331 (7th Cir.2000). It is sufficient if the plan authorizes the plan administrator "to construe and interpret the Plan." Fuller v. CBT Corp., 905 F.2d 1055, 1058 (7th Cir.1990); see also Exbom v. Central States, S.E. & S.W. Areas Health & Welfare Fund, 900 F.2d 1138, 1142-43 (7th Cir.1990) (stating that a plan that gives a trustee power to construe its provisions confers discretion). The 1965 plan states that the GRC "shall administer the benefit structure of the Plan, and to this end may construe the Plan." (J.A. tab 1 at F00354.) Ford argues that such language conferred discretion on it. I agree. The language stating that Ford "may construe the Plan" was sufficient to...