Mauser v. Raytheon Co.

• Decision Date: 01 August 2000
• Docket Number: No. 99-1895,99-1895
• Citation: 239 F.3d 51
• Parties: (1st Cir. 2001) GARY B. MAUSER, Plaintiff, Appellant/Cross-Appellee, v. RAYTHEON COMPANY PENSION PLAN FOR SALARIED EMPLOYEES; RAYTHEON COMPANY,Defendants, Appellees/Cross-Appellant. & 99-1896 Heard
• Court: U.S. Court of Appeals — First Circuit

Page 51

239 F.3d 51 (1st Cir. 2001)

GARY B. MAUSER, Plaintiff, Appellant/Cross-Appellee, v. RAYTHEON COMPANY PENSION PLAN FOR SALARIED EMPLOYEES; RAYTHEON COMPANY,Defendants, Appellees/Cross-Appellant.

No. 99-1895 & 99-1896

United States Court of Appeals For the First Circuit

Heard August 1, 2000

Decided February 2, 2001

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William J. Young, U.S. District Judge]

[Hon. Reginald C. Lindsay, U.S. District Judge] Ralph Somma, with whom Frank & Brelow, P.C. was on brief, for appellant.

Michael P. DeFanti, with whom Willard Krasnow, and Hinckley, Allen and Snyder LLP were on brief, for appellees.

Before Torruella, Chief Judge, Wallace,^* Senior Circuit Judge, and Boudin, Circuit Judge.

WALLACE, Circuit Judge.

Mauser appeals from the district court's summary judgment for Raytheon Company Pension Plan for Salaried Employees and Raytheon Company (together, Raytheon) as to his claims that (1) Raytheon arbitrarily and capriciously denied him pension benefits; (2) Raytheon should be estopped from denying him benefits; and (3) Raytheon violated its fiduciary obligations under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq. Mauser also contests the remedy and attorneys' fees awarded by the district court after trial on his fourth claim, which alleged that he detrimentally relied on a misleading summary plan description. Finally, Mauser asserts that the district court abused its discretion when, after trial, it did not allow Mauser to amend his complaint in order to bring a claim for statutory penalties under ERISA. In its cross-appeal, Raytheon argues that the district court erred in denying Raytheon's motion for summary judgment as to Mauser's claim of reliance on an inadequate summary plan description and in holding against Raytheon on that claim at trial. The district court had jurisdiction under 29 U.S.C. § 1132(e) and 28 U.S.C. § 1331. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm in part and reverse in part.

I

Mauser's first stint of employment for Raytheon began in September 1966 and ended on February 29, 1980. During this period, Mauser became completely vested in Raytheon's contributory defined benefit plan, which, at that time, calculated benefits using a participant's career average salary. After Mauser left Raytheon in 1980, he received a letter explaining his pension benefit: at age 65, he would receive $453.17 per month or, if he withdrew his contributions, $243.09 per month. Mauser withdrew his contributions by an application dated August 30, 1982.

Effective January 1, 1981, Raytheon made its plan non-contributory and changed its benefits formula to one based on a participant's final average salary, thereby significantly increasing retirement benefits for eligible employees. The plan was renamed "Raytheon Company Pension Plan for Salaried Employees" (Plan). Under the terms of the Plan, the new formula did not apply to Mauser because he was not an active employee on December 31, 1980, and did not fall within one of the exceptions.

During 1987, Mauser learned from current and former Raytheon employees of the favorable change to Raytheon's pension benefit formula. With this information in mind, Mauser states that he turned down a job at Westinghouse Company during February 1988, and in April 1988 he applied to Raytheon. Upon his re-hire at Raytheon, he received a copy of the current summary plan description (Plan Summary) which contained the following section:

If you leave Raytheon and later return

. . . .

[I]f you leave the company and are away longer than 12 months, you won't receive credit for the time you were away. Whether the service you had before you left will be counted depends on whether or not you were vested when you left, and on the length of time you were gone.

It will be counted when you have completed a year of service after you return if any of the following applies:

1. You were vested when you left

2. Your time away is less than the service you had before you left

3. You left after 1/1/85, and your time away is less than five years.

The district court found that Mauser read this statement and believed that his pre-1981 years of service would be taken into account when his pension was calculated under the new, final average salary formula.

Mauser asserts that in reliance on his reading of the Plan Summary, he "rejected a more lucrative offer of employment with Westinghouse Company, made improvements on his home, provided his daughter a lavish wedding, did not make alternate or additional retirement income plans, agreed his wife did not need to obtain employment with a promise of future pension benefits, and remained in the employ of Raytheon."

In 1990, Mauser received a personal statement of benefits from Raytheon; he realized that it did not include any credit for his pre-1981 years of service. Mauser orally requested a corrected statement, which he did not receive. However, Mauser did not make clear to Raytheon his belief that his prior years of service would be included in calculating his benefits. The benefits statements from 1991 through 1994 all failed to include credit for pre-1981 service, and Mauser continued, unsuccessfully, to make verbal requests for a corrected statement. Beginning in November of 1994, Mauser made a more intense, written effort to ascertain the scope of his benefits. Early in 1995 Raytheon informed Mauser that his pre-1981 years of service would not be used in calculating his pension. Mauser then hired an attorney and has consistently maintained that he is entitled to a calculation of benefits under the new formula that takes into account both his first and second periods of employment with Raytheon.

Mauser brought four claims against Raytheon. First, he alleged that Raytheon's administration of benefits was arbitrary and capricious because Raytheon had granted credit to one employee for his pre-1981 years of service. (This claim also included allegations, not raised on appeal, that Raytheon had arbitrarily and capriciously misinterpreted the Plan.) Next, Mauser alleged that Raytheon should be estopped from denying him credit for his pre-1981 years of service because Raytheon had purposefully misrepresented its position regarding break-in-service employees (estoppel claim). In addition, Mauser's complaint asserted that Raytheon's actions amounted to a breach of its fiduciary duty under ERISA (fiduciary duty claim). These three claims -- capricious denial, estoppel, and fiduciary duty -- were resolved in Raytheon's favor on its motion for summary judgment. See Mauser v. Raytheon Co. Pension Plan for Salaried Employees, 31 F.Supp.2d 168 (D. Mass. 1998).

A bench trial was held on Mauser's final claim that Raytheon's Plan Summary violated ERISA's disclosure requirements. The district court concluded that the Plan Summary was inadequate and that there was "some" "thin" reliance. It held that Mauser would be allowed to redeposit his withdrawn contributions; however, the new formula would not be applied to include the pre-1981 years of service. Mauser requested attorneys' fees in the amount of $156,201, but the court, after taking into account various factors, awarded only $35,000 in fees. After trial, Mauser asked the district court to allow him to amend his complaint to include a claim for statutory penalties against Raytheon for refusing to provide benefit information in violation of 29 U.S.C. §1132(c). The district court denied this request to amend.

II

At the heart of this appeal is Mauser's claim that Raytheon is bound by the Plan Summary to credit his pre-1981 years of service under its favorable, final average salary formula. One of ERISA's civil enforcement provisions provides that a participant may bring an action "(A) to enjoin any act or practice which violates any provision of this subchapter . . . or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan." 29 U.S.C. § 1132(a)(3). Mauser asserts that he is entitled to "other appropriate equitable relief" because the Plan Summary violated ERISA's disclosure provision, which provides:

(a) A summary plan description of any employee benefit plan shall be furnished to participants and beneficiaries . . . . The summary plan description shall include the information described in subsection (b) of this section, shall be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan. . . .

(b) The summary plan description shall contain the following information: . . . the plan's requirements respecting eligibility for participation and benefits; . . . circumstances which may result in disqualification ineligibility, or denial or loss of benefits . . . .

29 U.S.C. § 1022; see Govoni v. Bricklayers, Masons and Plasterers Int'l Union of Am., Local No. 5 Pension Fund, 732 F.2d 250, 252 (1st Cir. 1984). We have recognized that a Plan Summary that violates this provision will be binding on a plan administrator. However, we have also held, drawing on common law principles of estoppel, that such relief is only appropriate if the participant demonstrates significant or reasonable reliance on the Plan Summary. Bachelder v. Communications Satellite Corp., 837 F.2d 519, 523 (1st Cir. 1988). It is not enough to show a "mere expectation" that certain benefits will materialize; action must have been taken in reliance on reasonable expectations formed after reading the Plan Summary. Seeid. at 523 n. 6.

Raytheon asserts both that the Plan Summary did not violate ERISA's disclosure provision and that Mauser has failed to show significant or reasonable reliance on the Plan Summary.

A.

In...