Lynn v. CSX Transp., Inc., 95-2240

• Decision Date: 24 May 1996
• Docket Number: No. 95-2240,95-2240
• Parties: -2249, 64 USLW 2775, 20 Employee Benefits Cas. 1234, Pens. Plan Guide P 23921X William E. LYNN, Plaintiff-Appellant, v. CSX TRANSPORTATION, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 970

84 F.3d 970

77 A.F.T.R.2d 96-2249, 64 USLW 2775,

20 Employee Benefits Cas. 1234,

Pens. Plan Guide P 23921X

William E. LYNN, Plaintiff-Appellant, v. CSX TRANSPORTATION, INC., et al., Defendants-Appellees.

No. 95-2240.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 11, 1996.

Decided May 24, 1996.

Charles D. Boutwell (argued), McCullough, Campbell & Lane, Chicago, IL, for Plaintiff-Appellant.

Paul V. Esposito, Douglas A. Lindsay, Lewis, Overbeck & Furman, Chicago, IL, Robert M. Rolfe (argued), J. G. Ritter, II, John E. Holleran, Hunton & Williams, Richmond, VA, for Defendants-Appellees.

Lawrence Brewster, Department of Labor, Plan Benefits Security Division, Washington, DC, for Robert B. Reich, amicus curiae.

Before ESCHBACH, COFFEY, and EVANS, Circuit Judges.

TERENCE T. EVANS, Circuit Judge.

This case arises under the Employee Retirement Income Security Act. What William Lynn, the appellant, has at stake is the amount of his monthly pension check. At stake for the increasing number of companies offering early retirement programs to their employees is the immunity from suit they think they are contracting for as part of the deal. More specifically, this case presents the question of whether a release from liability signed by an employee in exchange for participation in an early retirement program is void in light of the anti-alienation provision of ERISA. With the question in mind, we turn to the facts.

Lynn worked for CSX Transportation and its predecessors for most of his adult life. He began working for the C & O Railroad ¹ in February of 1953 as a contract worker--a unionized employee working under a collective bargaining agreement. In May of that year he took a military leave of absence and entered the armed forces. In May of 1955, after being honorably discharged from the service, he went back to work at the company. From his return to the company until 1972, Lynn again worked on a contract basis, and was compensated with a daily or hourly rate of pay. In 1972, he was promoted to the position of assistant trainmaster, a nonunion job for which he earned monthly compensation. ² He continued as assistant trainmaster until 1987, when he retired under the company's early retirement program.

In order to participate in the early retirement program, Lynn signed a "voluntary resignation agreement." Under the agreement, Lynn's pension is governed by the terms of the company's 1987 pension plan. The 1987 plan provides a schedule according to which the amount of the pension payments due a plan participant is calculated. The schedule takes into account the retiree's age and years of "credited service" to the company. "Credited service," as defined by the plan, does not necessarily mean the total time a retiree was employed by the company. Rather, the term is used to describe the amount of time during which a person was both an employee of the company and a participant in the plan. The agreement provided that Lynn would receive an additional five years of service credit and an additional five years of age credit for purposes of the pension calculation. The agreement also included a release, which Lynn signed, agreeing to release the company from:

any and all claims, demands, and legal proceedings of whatsoever kind or nature arising under any pertinent federal, state, local laws, ordinances or administrative decisions which I or my heirs or my personal representatives may now have or may now or hereafter assert against the Company growing out of or resulting from my employment and/or resignation of employment with the Company, whether now known or unknown, including, but not limited to: all claims of any nature regarding age, race, sex, national origin, religion, handicap discrimination, or labor protective provisions or conditions; wrongful discharge; or a breach of contract whether express or implied.

After the agreement was signed, the company's pension plan calculated the actual amount of Lynn's pension benefits. The plan based this calculation on Lynn's employment with the company plus the "five and five" early retirement provision. The plan found that Lynn's participation in the plan began when he became employed in a non-contract position paying monthly compensation. This occurred in 1972, when he was promoted to assistant trainmaster.

Lynn first contested the calculation of his pension in 1994, seven years after he retired. He claimed he should have received credit for the almost 20-year period during which he was a contract worker. He asked that the plan review his benefit calculation. The plan took a look at the situation but stood by its initial determination. Lynn filed an administrative appeal, which was denied, and he then filed a complaint under ERISA ³ in the United States District Court for the Northern District of Illinois. In his complaint, Lynn argued that the calculation of his pension benefits should have included the years 1953 to 1972, and, for the first time, he also said he should have been given pension credit for his two years of military service. The company filed a motion for summary judgment.

Looking to the plain language of the plan documents, the district court upheld the plan's determination that Lynn's credited service began in 1972. The court declined, however, to reach the merits of Lynn's claim for military service benefits, finding that this was a "contestable claim" barred by the release provision of the resignation agreement. Summary judgment was entered in favor of CSX on both counts, and Lynn appealed.

We review a district court's grant of summary judgment de novo. Smith v. Shawnee Library System, 60 F.3d 317, 320 (7th Cir.1995). In performing this review, we must look not only to the language of the 1987 plan, but to those prior plans in effect during Lynn's lengthy period of employment with the company. This is necessary because, with certain inapplicable exceptions, a new plan may not take away benefits which an employee holds under an existing plan. 29 U.S.C. § 1053. There are, therefore, three successive pension plans, and several amendments, involved here. The plans are generally referred to according to their effective dates as the 1952 plan, the 1983 plan, and the 1987 plan.

The 1952 plan was open to all employees who were paid monthly compensation. In 1964, the plan was amended to exclude contract workers, though there was a grandfather clause for those contract workers who were already participating. The plan was again amended in 1968 to limit eligibility to those who were already participants. The 1983 and 1987 plans were open only to noncontract employees receiving monthly or annual compensation. All of the plans also contained military service clauses. These clauses differed only slightly between plans, and stated that a plan participant who left the company to enter the armed forces would receive pension credit for the period of military service if the participant returned to the company within 90 days of discharge from the military. These clauses ensured that employees who were plan participants were not penalized for serving in the armed forces.

Lynn argues that the district court erred in finding him ineligible for plan participation prior to his promotion in 1972. Whether he was eligible to participate in the plan before 1972 is purely a question of contract interpretation particularly suited for adjudication on a motion for summary judgment.

We start, obviously, with the plain language of the contract. In this case, that means looking to the plan documents. The 1952 plan defines those eligible to participate as those employees receiving "Compensation." "Compensation" is defined as "remuneration paid on a regular monthly or annual basis, excluding ... wages or other remuneration paid on an hourly, daily, piecework, or mileage basis." The 1983 and 1987 plans limit participation to nonunion salaried employees, and expressly state that "a Participant who immediately prior to his Participation Commencement Date was an employee of the Company, but did not receive Compensation while so employed" will not receive pension credit for the prior period of employment. "Compensation" is defined in these plans as payment "on a regular salary basis" for work "that is not under the scope of a Labor agreement." No real "interpretation" is required to see that, according to the plain language of the plan documents, Lynn was not eligible to participate in the plan until he was promoted to assistant trainmaster in 1972. It's not even a close call. The plain language of the plans makes it crystal clear that credited service is only accrued while an employee is a plan participant.

Despite the plain language of the plan documents, Lynn contends that the district court erred in entering summary judgment against him on this issue. He bases this claim on a letter sent to employees of Chessie and Seaboard by John Collinson, president of Chessie System Railroads, in February of 1983. The letter referred to what became known as the 1983 plan, and informed employees that:

[a]fter considerable study, Chessie and Seaboard have decided to adopt the same employee benefit program. While both railroads have made some adjustments, please be assured that you continue to have excellent employee benefits.

You are urged to review the attached highlights in detail, since they include some of the more significant changes. Specifics of the new plans are in the summary descriptions, also attached. They should be inserted in your blue benefits notebook for ready reference.

Lynn argues that this letter supports his claim for additional benefits. The argument runs like this: prior to this letter, Seaboard contract workers earning nonmonthly compensation were eligible to participate in the Seaboard plan; the letter from the president of the company said that Chessie and Seaboard were going to adopt "the same" employee benefit plan; the letter therefore...