Ingram v. Terminal R.R. Ass'n of St. Louis Pension Plan for Nonschedule Emps.

• Decision Date: 23 October 2014
• Docket Number: Case No. 4:11CV1327 HEA
• Court: U.S. District Court — Eastern District of Missouri
• Parties: THEODORE F. INGRAM, Plaintiff, v. TERMINAL RAILROAD ASSOCIATION OF ST. LOUIS PENSION PLAN FOR NONSCHEDULE EMPLOYEES, Defendant.

THEODORE F. INGRAM, Plaintiff, v. TERMINAL RAILROAD ASSOCIATIONOF ST. LOUIS PENSION PLAN FOR NONSCHEDULE EMPLOYEES, Defendant.

Case No. 4:11CV1327 HEA

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

October 23, 2014

OPINION, MEMORANDUM AND ORDER

This matter is before the Court on Defendant's Motion for Summary Judgment on the Supplemented Administrative Record, [Doc. No. 47] and Plaintiff's Motion for Judgment on the Supplemental Administrative Record, [Doc. No. 51]. For the reasons set forth below, Defendant's Motion is granted and Plaintiff's Motion is denied.

Plaintiff brings this cause of action pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001, et seq., alleging that Defendant, sponsor of the pension plan to which Plaintiff was a participant, failed to properly calculate his pension benefits, and improperly calculated the offset to his retirement benefits because of benefits he received from another employer, UnionPacific. Plaintiff seeks recovery of the retirement benefits based on his calculations, prejudgment interest and attorney's fees and costs incurred in this action, pursuant to 29 U.S.C. § 1132(g).

Plaintiff and Defendant both filed motions for summary judgment, in which they argued that there were no genuine disputes of material fact and that they were each entitled to judgment as a matter of law. The Court denied the motions and allowed the parties time within which to supplement the record.

Currently before the Court is Plaintiff's Motion for Judgment on the Supplemented Administrative Record, [Doc. No. 51] and Defendant's Motion for Summary judgment on the Supplemented Administrative Record, [Doc. No. 47]. For the reasons set forth below, Defendant's Motion is granted and Plaintiff's Motion is denied.

Standard of Review

In Metropolitan Life Insurance Co. v. Glenn, 128 S.Ct. 2343, 2347-48 (2008), the Supreme Court acknowledged that in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111-13 (1998), the Court set out four principles as to the appropriate standard of judicial review under ERISA, § 1132(a)(1)(B), as follows: (1) A court should be "guided by principles of trust law," analogizing a plan administrator to a trustee and considering a benefit determination a fiduciary act,id., at 111-113; (2) trust law principles require de novo review unless a benefits plan provides otherwise, id., at 115; (3) where the plan so provides, by granting "the administrator or fiduciary discretionary authority to determine eligibility," "a deferential standard of review [is] appropriate," id., at 111; and (4) if the administrator or fiduciary having discretion "is operating under a conflict of interest, that conflict must be weighed as a 'facto[r] in determining whether there is an abuse of discretion,' " id., at 115. As the Supreme Court recently noted—

Firestone deference[,] ... by permitting an employer to grant primary interpretive authority over an ERISA plan to the plan administrator, preserves the 'careful balancing' on which ERISA is based. Deference promotes efficiency by encouraging resolution of benefits disputes through internal administrative proceedings rather than costly litigation. It also promotes predictability, as an employer can rely on the expertise of the plan administrator rather than worry about unexpected and inaccurate plan interpretations that might result from de novo judicial review.

Conkright v. Frommert, 559 U.S. 506, 517, 130 S.Ct. 1640, 176 L.Ed.2d 469 (2010). Thus, although we require "explicit discretion-granting language" in an ERISA plan contained in a group health and welfare insurance policy, the policy need not use the word "discretion." Hankins v. Standard Ins. Co., 677 F.3d 830, 835 (8th Cir.2012).

Prezioso v. Prudential Ins. Co. of America, 748 F.3d 797, 802-803 (8^th Cir. 2014).

The relevant provisions of the Plan at issue provide:

Standard of Review. The Plan Administrator shall perform its duties as the Plan Administrator in its sole discretion shall determine isappropriate in light of the reason and purpose for which the Plan is established and maintained. In particular, the interpretation of all plan provisions, and the determination of whether a Participant or Beneficiary is entitled to any benefit pursuant to the terms of the Plan, shall be exercised by the Plan Administrator in its sole discretion. Any construction of the terms of the Plan for which there is a rational basis that is adopted by the Plan Administrator shall be final and legally binding on all parties.

Any interpretation of the Plan or other action of the Plan Administrator made in good faith in its sole discretion shall be subject to review only if such an interpretation or other action is without a rational basis. Any review of a final decision or action of the Plan Administrator shall be based only on such evidence presented to or considered by the Plan Administrator at the time it made the decision that is the subject of the review. Any Employer that adopts and maintains this Plan, and any Employee who performs services for an Employer that are or may be compensated for in part by benefits payable pursuant to this Plan, hereby consents to actions of the Plan Administrator made in its sole discretion and agrees to the narrow standard of review prescribed in this section.

The Plan language clearly gives the administrator discretion, thus, the standard of review ordinarily would be under an arbitrary and capricious analysis. Plaintiff, however, argues procedural irregularities render the de novo standard inappropriate. Plaintiff claims that there was no effective delegation of discretionary authority to the plan administrator because there was no publication of Kerry Paubel as the plan administrator, despite the fact that Paubel was designated as the administrator by resolution of the Board of Directors of Terminal Railroad Association dated February 20, 2002. In support of his position, Plaintiffrelies on Jobe v. Medical Life Ins. Co., 598 F. 3d 478, 479 (8^th Cir. 2010). In Jobe, Plaintiff successfully argued that the de novo standard should be applied because the Plan itself did not afford the administrator discretion, rather, the delegation of discretionary authority was only conferred in the Plan Summary Description. As such, the Court found that the administrator was not properly given discretion to interpret the plan. This ruling does not run contrary to the current matter. The plan herein specifically details the administrator's discretionary authority. Jobe is therefore inapposite. \

The Court agrees with Defendant that Plaintiff has failed to demonstrate how the failure to disclose the administrator would render the customary standard of review inapplicable. Plaintiff does not establish any prejudice by reason of the failure to publish the administrator, nor does Plaintiff identify how this technical failure negates the Administrator's delegated discretion which is fully articulated in the Plan.

Plaintiff also claims Paubel engaged in a material procedural irregularity.

Minor procedural defects in the review process do not carry significant weight in [the court's] review of a plan administrator's decision to deny benefits. See Trs. of Electricians' Salary Deferral Plan v. Wright, 688 F.3d 922, 927 (8th Cir.2012). To alter the standard of review or affect [the court's] review under the abuse-of-discretion standard, a procedural irregularity must rise to the level of a " 'serious breach of the plan trustee's fiduciary duty to the plan beneficiary.' " Menz v. Procter & Gamble Health Care Plan,520 F.3d 865, 869 (8th Cir.2008) (quoting Buttram v. Cent. States, Se. & Sw. Areas Health & Welfare Fund, 76 F.3d 896, 900 (8th Cir. 1996)). The procedural error must leave "the court with serious doubts as to whether the result reached was the product of an arbitrary decision or the plan administrator's whim." Buttram, 76 F.3d at 900; see also Wright, 688 F.3d at 927.

Waldoch v. Medtronic, Inc. 757 F.3d 822, 830-831 (8^th Cir 2014)(footnote omitted).

Plaintiff claims that Paubel acted with a material conflict of interest as the Chief Financial Officer of the Railroad. "Where a fiduciary both evaluates claims for benefits and pays benefits claims, the court still applies the deferential abuse-of-discretion standard, but the fiduciary's conflict of interest is one factor to be considered in the review. Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 112, 115-18, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008)." Hampton v. Reliance Standard Life Ins. Co., ___ F.3d ___, 2014 WL 4977397 (8^th Cir. 2014).

In support of this argument, Plaintiff cites Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008). Glenn, however, dealt with an administrator who both evaluates the claim and pays benefits. Such is not the situation in the present case. The mere fact that Mr. Paubel is the Chief Financial Officer in no way equates with an administrator who also pays benefits. See Anderson v. U.S. Bancorp, 484 F.3d 1027, 1032-1033 (8^th Cir. 2007)

We believe that the mere fact of the cited employment relationship is not sufficient to support a finding of a conflict of interest. See Brandis v. Kaiser Aluminum & Chem. Corp., 47 F.3d 947, 950 (8th Cir. 1995) (employee can serve a dual role as employee and plan fiduciary) (citing 29 U.S.C. § 1108(c)(3)); see also Barnhart v. UNUM Life Ins. Co., 179 F.3d 583, 588 (8th Cir.1999) ("ERISA itself contemplated the use of fiduciaries who might not be entirely neutral"). Further, the Committee members dual status does not present the type of personal conflict of interest which has been found to warrant consideration of less deferential review. See, e.g., Armstrong v. Aetna Life Ins. Co., 128 F.3d 1263, 1265 (8th Cir.1997) (claim reviewers paid incentives and bonuses based upon criteria that included "claim savings").

Id. Plaintiff has presented no evidence that Paubel's employment with the Railroad caused a conflict of interest with...