McGowan v. Njr Service Corp.

Decision Date13 September 2005
Docket NumberNo. 04-3620.,04-3620.
Citation423 F.3d 241
PartiesJames M. McGOWAN, Sr., Appellant v. NJR SERVICE CORPORATION; New Jersey Natural Gas Company.
CourtU.S. Court of Appeals — Third Circuit

Samuel J. Halpern (Argued), West Orange, NJ, for Appellant.

Richard C. Mariani (Argued), Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Morristown, NJ, for Appellee New Jersey Natural Gas Company.

Before FUENTES, VAN ANTWERPEN and BECKER, Circuit Judges.

BECKER, Circuit Judge, concurring.

FUENTES, Circuit Judge, dissenting.


VAN ANTWERPEN, Circuit Judge.

Appellant James M. McGowan, Sr., was employed by Appellee New Jersey Natural Gas Company ("NJNG") for more than 27 years. He participated in NJNG's Plan for Retirement Allowances for Non-represented Employees ("the Plan") and initially designated his second wife, Rosemary, the "joint and survivor contingent beneficiary." On March 5, 2003, McGowan filed an action in the United States District Court for the District of New Jersey, seeking declaratory relief directing NJNG and the Plan to recognize: (1) Rosemary's purported waiver of her rights as beneficiary; and (2) McGowan's subsequent nomination of his present wife, Donna, as the new beneficiary.

Whether the administrators of a retirement plan that is covered by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001, et seq., are required to recognize an individual's waiver of her beneficiary interest under the plan is an issue of first impression in this Circuit, and there is a split among the courts of appeals that have considered the issue. The District Court below denied McGowan's motion for summary judgment and granted summary judgment in favor of NJNG. The court held that Plan administrators are not required to look beyond Plan documents to determine whether a waiver has been effectuated in a private agreement between the participant and his named beneficiary. For the reasons set forth below, we will affirm.1


McGowan was employed by NJNG from May 12, 1969, until his retirement on November 30, 1996. As of the date of his retirement, McGowan was married to his second wife, Rosemary Byrne. Shortly before his retirement, McGowan elected to receive his retirement benefits in the form of an "automatic surviving spouse option," creating a 50% survivor annuity for Rosemary. This election remained in effect when he began receiving benefits in 1996.

McGowan and Rosemary were divorced in Palm Beach County, Florida, on May 24, 1999. On July 23, 1998, prior to the formal entry of the divorce, they entered into a Marital Settlement Agreement, which was later incorporated into the final judgment of dissolution. The agreement stated that Rosemary "waives any and all rights, title, interest or claims ... to all bank accounts, life insurance policies and any right to the New Jersey Gas Company Employee Pension Plan of the Husband." (App. at A61.) Shortly after Rosemary signed this purported waiver, McGowan contacted the Plan to change the named survivor beneficiary. On July 27, 1998, Rosemary signed a form consenting to the election of McGowan's first wife, Shirley McGowan, as the replacement beneficiary.

In an August 6, 1998, letter, the Plan's benefits manager, Nancy Renner, informed McGowan that the Plan did not permit changes to his prior contingent beneficiary election once he started receiving benefit payments. Notwithstanding the Plan's denial of his initial request, McGowan sought to change beneficiaries again after his marriage to his current wife, Donna McGowan, on November 3, 2001. NJNG refused to recognize McGowan's nomination of Donna as the new contingent beneficiary and maintained that Rosemary was still the beneficiary under the Plan.

On February 25, 2002, McGowan filed an appeal with the Plan, which was denied by the Plan Claims Administration Committee on April 30, 2002. McGowan subsequently exhausted all administrative appeals and commenced the present action with a two-count Complaint in the United States District Court for the District of New Jersey on March 5, 2003. In Count I, McGowan sought a declaration directing NJNG to recognize Rosemary's waiver and the subsequent nomination of Donna as the new beneficiary. In Count II, McGowan sought the imposition of civil penalties against NJNG for allegedly failing to produce Plan documents within the time period designated by ERISA at 29 U.S.C. § 1132(c).

In its July 26, 2004, Order and Opinion, the District Court denied McGowan's Motion for Summary Judgment and granted NJNG's Cross-Motion for Summary Judgment. Appellant filed a timely Notice of Appeal with this Court on August 23, 2004.


NJNG's retirement plan is an "employee welfare benefit plan" within the meaning of ERISA, 29 U.S.C. § 1002(1). The District Court thus had federal question jurisdiction over the instant dispute pursuant to 28 U.S.C. § 1331. See also 29 U.S.C. § 1132(a)(1)(B) (a plan participant has the right to bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under terms of the plan"). Pursuant to 28 U.S.C. § 1291, this Court has appellate jurisdiction over the District Court's final order ruling on the parties' cross-motions for summary judgment.

"The standard of review in an appeal from an order resolving cross-motions for summary judgment is plenary." Cantor v. Perelman, 414 F.3d 430, 434 n. 2 (3d Cir.2005) (citing Int'l Union, United Mine Workers of Am. v. Racho Trucking Co., 897 F.2d 1248, 1252 (3d Cir.1990)). In reviewing the propriety of a summary judgment ruling, we apply the same standard that the District Court should have applied. Bucks County Dep't of Mental Health/Mental Retardation v. Pennsylvania, 379 F.3d 61, 65 (3d Cir.2004). Under Fed.R.Civ.P. 56(c), summary judgment should be granted where 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 a judgment as a matter of law." See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The material facts of this case are not in dispute, and the issue presented is purely legal: whether NJNG should be compelled to recognize Rosemary's waiver of her rights as a beneficiary under the Plan.

With respect to McGowan's claim that NJNG failed to provide Plan documents in a timely manner, we review the District Court's denial of civil penalties under 29 U.S.C. § 1132(c) for abuse of discretion. See Bruch v. Firestone Tire & Rubber Co., 828 F.2d 134, 153 (3d Cir.1987), rev'd in part on other grounds, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989).

A. Waiver of Benefits Under ERISA

As noted, there is a circuit split on the issue of whether administrators of an ERISA plan are required to recognize a beneficiary's waiver of his or her benefits. The majority of circuits that have addressed this issue have held that such waivers are valid under certain circumstances. See, e.g., Altobelli v. Int'l Bus. Mach. Corp., 77 F.3d 78 (4th Cir.1996); Mohamed v. Kerr, 53 F.3d 911 (8th Cir. 1995); Brandon v. Travelers Ins. Co., 18 F.3d 1321 (5th Cir.1994); Metro. Life Ins. Co. v. Hanslip, 939 F.2d 904 (10th Cir. 1991); Fox Valley & Vicinity Constr. Workers Pension Fund v. Brown, 897 F.2d 275 (7th Cir.1990) (en banc). Only two courts of appeals have disagreed, holding that plan administrators need not look beyond the documents on file with the plan to determine whether there has been a valid waiver effectuated in outside private documents. Krishna v. Colgate Palmolive Co., 7 F.3d 11 (2d Cir.1993); McMillan v. Parrott, 913 F.2d 310 (6th Cir.1990).2

"ERISA is an intricate, comprehensive statute." Boggs v. Boggs, 520 U.S. 833, 841, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997). It is so designed in order to protect "the interests of participants in employee benefit plans and their beneficiaries[.]" 29 U.S.C. § 1001(b); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). The majority approach is largely based on the premise that, despite the comprehensive nature of the statute, there are "gaps" that may be filled by reliance on federal common law. See, e.g., Altobelli, 77 F.3d at 80; Brandon, 18 F.3d at 1325; Fox Valley, 897 F.2d at 278; Lyman Lumber Co. v. Hill, 877 F.2d 692, 693 (8th Cir.1989); see also Heasley v. Belden & Blake Corp., 2 F.3d 1249, 1257 n. 8 (3d Cir.1993) ("Firestone authorizes the federal courts to develop federal common law to fill gaps left by ERISA." (citing Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 110, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989))).

According to the majority approach, because ERISA does not explicitly address "waiver" by a beneficiary, we may turn to federal common law to determine whether, and under what circumstances, an individual may validly waive her benefits in an ERISA plan. See Altobelli, 77 F.3d at 81; Brandon, 18 F.3d at 1326; Fox Valley, 897 F.2d at 281; Lyman Lumber, 877 F.2d at 693. Under the federal common law that has developed, an individual's waiver is valid if, "upon reading the language in the divorce decree, a reasonable person would have understood that she was waiving her beneficiary interest. . . ." Clift v. Clift, 210 F.3d 268, 271-72 (5th Cir.2000); see also Mohamed, 53 F.3d at 914-15 ("a property settlement agreement entered into pursuant to a dissolution may divest former spouses of beneficiary rights in each other's [ERISA benefits], if the agreement makes it clear that the former spouses so intend."). Moreover, "any waiver must be voluntarily made in good faith." Clift, 210 F.3d at 272.

We disagree with McGowan's argument that the situation presented by this case is not resolved...

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