Lorenzen v. EMPLOYEES RETIREMENT PLAN, Civ. A. No. 88-C-50.
| Decision Date | 29 November 1988 |
| Docket Number | Civ. A. No. 88-C-50. |
| Citation | 699 F. Supp. 1367 |
| Court | U.S. District Court — Eastern District of Wisconsin |
| Parties | Delvina E. LORENZEN, Plaintiff, v. EMPLOYEES RETIREMENT PLAN OF the SPERRY AND HUTCHINSON COMPANY, INC. a/k/a Employees Retirement Plan of the S & H Group, Inc. and S & H Group, Inc., Defendants. |
James W. Hammes, Cramer, Multhauf & Curran, Waukesha, Wis., for plaintiff.
Paul E. Prentiss, Michael, Best & Friedrich, Milwaukee, Wis., for defendants.
DECISION AND ORDER
Proving perhaps, as Thomas Mann wrote, that a man's dying is more the survivors' affair than his own, this unfortunate case, brought by the widow of Warren Lorenzen, shows how important it is to die at the right time.
This case, under a pension plan governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., was originally filed in the circuit court for Waukesha County, Wisconsin. It was properly removed to this court by the defendants. Cross-motions for summary judgment are pending.
The facts, which are undisputed, show that Delvina E. Lorenzen is the widow of Warren Lorenzen, a 37-year employee of The Sperry and Hutchinson Company, Inc. Mr. Lorenzen began his employment with S & H in 1950 and worked past his retirement age until his death on June 27, 1987.
The S & H employees' retirement plan provides benefits to participants in the plan and their beneficiaries who meet the various eligibility requirements. A retirement benefit is payable to eligible participants who retire from active service during the calendar month coincident with or following their 65th birthday or on the first day of any month thereafter. Because he was born on January 19, 1922, Mr. Lorenzen's normal retirement date would have been February 1, 1987. Mr. Lorenzen, however, remained on the job at the request of his colleagues to see a new project to its completion. He postponed his retirement to June 30, 1987.
Pursuant to his request, Mr. Lorenzen's accrued retirement benefit was calculated as a single cash lump sum equal to the actuarial equivalent of his accrued benefit as of his postponed retirement date. He elected to receive his benefits in a lump sum. Before he could choose the lump sum method, S & H required that he contact a tax accountant concerning the tax consequences of a lump sum payment. Also, in order to choose a lump sum payment, he needed to obtain the consent of his wife, Delvina Lorenzen. She executed a spousal consent form provided to her by S & H.
Had Warren Lorenzen survived to his postponed retirement date, his lump sum payment would have been $191,730.10. However, on June 15, 1987, he suffered cardiac arrest. His life was being indefinitely sustained by life-support system. On June 27, 1987, three days prior to the date upon which he was to receive his benefit payment of $191,730.10, his physicians advised his wife that she should request that the life-support system be disconnected. She made that request, and shortly thereafter Mr. Lorenzen died.
Because he died three days prior to his postponed retirement date, the benefits payable under the plan to his beneficiary were calculated under provisions governing preretirement death benefits. Under those calculations, S & H states that Mrs. Lorenzen is to receive $88,561.26.
In its motion for summary judgment, the Plan argues that the decision of the trustees regarding the amount of the payment is compelled by the undisputed facts and the language of the plan itself; the decision is therefore not arbitrary or capricious and must not be disturbed. Mrs. Lorenzen, on the other hand, argues that she is entitled to summary judgment awarding her the lump sum payment her husband was entitled to. She contends that neither the plan language nor the spousal consent form adequately informed her of the possible effects of her consent, in violation of 29 U.S.C. § 1055(c)(3)(A). She further contends that the plan is contrary to the intention of Congress in protecting surviving spouses and that the court has power to fashion an equitable remedy to keep within the purpose and intent of ERISA.
In examining a decision of a plan administrator, the court's role is to determine whether the decision is arbitrary and capricious. If not, the decision will be sustained. The arbitrary and capricious standard is the least demanding form of judicial review. In Pokratz v. Jones Dairy Farm, 771 F.2d 206, 209 (7th Cir.1985), the court stated:
Although it is an overstatement to say that a decision is not arbitrary or capricious whenever a court can review the reasons stated for the decision without a loud guffaw, it is not much of an overstatement.
Upon looking at this case, I certainly do not guffaw. I do, however, gasp, and for purposes of a legal standard, a gasp is as good as a guffaw.
Apparently, according to the affidavit of Huel G. Wheeler, Benefits Supervisor, the final decision of the plan administrators is that Delvina Lorenzen is entitled to a lump sum payment of $88,561.26. By letter dated July 13, 1987, Wheeler had originally informed Lorenzen that she was entitled to either a $863.84 monthly benefit or a lump sum payment of $90,421.05.
Mrs. Lorenzen argues that the decision of the administrators is arbitrary and capricious because the spousal consent form, which she signed, does not comply with the requirements of ERISA. Under 29 U.S.C. § 1055(b)(1)(C)(i), the consent must be in writing, the beneficiary must be designated, the consent must acknowledge the effect of the participant's election of certain benefits, and the spouse's signature must be notarized. The consent form which Delvina Lorenzen signed does not say anything whatsoever about the effect of the election of a lump sum payment on her benefits should her husband die before the payment is made.
I believe that the effect of the lump sum payment, especially when a particularly adverse result can occur, should have been made clear to the Lorenzens. However, the consent form may not be the only place for the information.
The election of a lump sum payment affects retirement benefits, not pre-retirement death benefits. If Warren Lorenzen had not elected to receive a lump sum payment and had made no other election, upon retirement his benefits would have been calculated under section 4.6.3 of the plan, "Option 2—Joint and Survivor." That means that upon his retirement, he would have received a monthly payment; upon his death after his retirement, his wife would have received 50% of that payment. What Delvina Lorenzen did by signing the consent form was to make it possible for her husband to receive a lump sum, rather than monthly payments. She then gave up her right to survivor's monthly retirement payments as well. While it is true that the spousal consent form she signed did not, as required by ERISA, point out the effect of her consent, that is not the major problem here.
Before I proceed to that problem, however, I must indicate that my conclusion that Warren Lorenzen would have received benefits under option 2 (joint and survivor benefits) comes from my...
To continue reading
Request your trial
-
Lorenzen v. Employees Retirement Plan of Sperry and Hutchinson Co., Inc.
...a loss of retirement benefits. The district judge granted summary judgment for Mrs. Lorenzen, awarding her some $192,000, 699 F.Supp. 1367 (E.D.Wis. 1988), and the plan appeals. Mrs. Lorenzen cross-appeals, seeking prejudgment The complaint named the employer, which is the administrator of ......