McKnight v. Southern Life and Health Ins. Co.
| Decision Date | 30 April 1985 |
| Docket Number | 84-7719,Nos. 84-7511,s. 84-7511 |
| Citation | 758 F.2d 1566 |
| Parties | 6 Employee Benefits Ca 1707 Shellie P. McKNIGHT, Plaintiff-Appellee, v. SOUTHERN LIFE AND HEALTH INSURANCE COMPANY, a Corporation, and Southern Life and Health Insurance Company Revised Retirement Plan, Defendants-Appellants. Shellie P. McKNIGHT, Plaintiff-Appellant, v. SOUTHERN LIFE AND HEALTH INSURANCE COMPANY, a Corporation and Southern Life and Health Insurance Company Revised Retirement Plan, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Don P. Bennett, Herring & Bennett, Dothan, Ala., for Shellie P. mCknight.
L. Lister Hill, Capell, Howard, Knabe & Cobbs, J. Lister Hubbard, Montgomery, Ala., for Southern Life and Health Ins. Co., et al.
Appeal from the United States District Court for the Middle District of Alabama.
Before HENDERSON and HATCHETT, Circuit Judges, and ALLGOOD, * District Judge.
In this case, the district court determined that an employee was entitled to credit for isolated segments of service under a retirement plan pursuant to the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. Sec. 1001-1381. We affirm.
Southern Life and Health Insurance Company (Southern Life) employed Shellie P. McKnight during three isolated segments of time between December, 1951, and August, 1983, when he retired. The dates of McKnight's employment are as follows:
EMPLOYED TERMINATED
-------- ----------
December 31, 1951 August 21, 1961
February 22, 1965 March 10, 1969
March 29, 1971 August 1, 1983 1
Southern Life maintained a retirement benefit plan (plan) for its employees. Upon McKnight's retirement in 1983, the administrator of the plan determined that he was entitled to receive the pension benefit of $114.22 per month based upon his employment between March 29, 1971, and August 1, 1983.
McKnight filed suit under the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. Sec. 1001-1381 (West 1982), to challenge the plan administrator's failure to provide retirement benefits for his previous periods of employment. The district court entered summary judgment for McKnight and directed Southern Life to give McKnight retirement credit for all his time of service with the company.
We must decide whether McKnight's retirement plan should include credit for his two previous periods of employment which preceded his final uninterrupted 12 1/3-year term.
In deciding that McKnight was entitled to credit for his previous periods of employment, the district court considered various provisions of Southern Life's pension plan. Article III provides, in relevant part:
(1) CREDITED SERVICE: ... The credited service of a participant shall be determined as follows: (a) Each participant who was a 'Member' (as defined in the Former Plan) of the Former Plan prior to the ERISA effective date and whose 'Continuous Service' as defined in the Former Plan, had not been terminated prior to the ERISA effective date shall be credited with a number of years (including a proportionate allowance for completed months) of credited service equal to the number of years of 'Continuous Service' as defined in the Former Plan, which would have been credited to him immediately prior to the ERISA effective date pursuant to the Former Plan.
(b) Each Participant shall be credited with one year of Credited Service for each of his years of service as an eligible employee....
....
(d) A person who becomes a Former Participant pursuant to section 3(d) of Article II hereof and who thereafter again becomes a participant shall not be credited with a year of Credited Service, or any proportionate allowance for completed months, for any period described in (a) or (b) of this section (1) rendered prior to the time he became a former participant unless the number of his consecutive Breaks in Service is less than the number of his Years of Service completed prior to the commencement of the consecutive Breaks in Service. [Emphasis added.]
The district court interpreted these sections to mean that an employee who voluntarily leaves his employment and returns several years later shall not receive credit for his previous period of employment unless the employee's number of consecutive breaks in service is less than the number of his years of service prior to the beginning of the consecutive breaks in service. McKnight's first period of employment lasted approximately 9 1/2 years; his second term of employment lasted approximately 4 years. McKnight's number of breaks in service, 2, is less than the 13 1/2 years of service. Hence, the district court found that, according to the plan, McKnight was entitled to credit for previous service.
Additionally, the employee's summary booklet, distributed by Southern Life, further supports the district court's determination. The summary booklet is intended to simplify and explain the company's retirement plan. Section 8 of the summary, which interprets Article III, section (1)(d) of the plan, states in relevant part:
8. Termination of Employment
If a participant has a break in service prior to completion of ten years of service for a reason other than normal retirement, he is subject to loss of this then accrued benefit. Such a former participant who may again become a participant can regain credit for previous years before the break commenced, provided that the total consecutive years counted as breaks in service are less then the previous years of service prior to commencement of the period of break in service.
McKnight worked approximately 9 1/2 years before he had his first break in service. After 3 1/2 years, he went back to work. He worked approximately 4 years before he had a second break in service which lasted approximately 2 years. He went back to Southern Life in March, 1971, and continued to work until his retirement in August, 1983. McKnight's break-in-service years totalled approximately 5 1/2 years; his previous years of service before the March 10, 1969, break in service totalled approximately 13 1/2 years. Because McKnight's years of employment exceeded his years of breaks in service, the district court determined that, under the summary booklet, McKnight should regain his credit for previous years of employment before March, 1971.
Although the plan and summary are worded differently, the result is the same. McKnight's years of service before his breaks in service exceed the number of breaks in service and the total number of years as breaks in service. Under either analysis, McKnight is entitled to credit for his years of employment prior to March, 1971. We agree with the district court's interpretation.
Whether Southern Life's pension plan complies with ERISA is not at issue; rather, the dispute involves an interpretation and application of the plan and summary.
Southern Life argues that according to Sharron v. Amalgamated Foods, 704 F.2d 562, 564 (11th Cir.1983), the plan administrator's decision must be sustained as a matter of law unless his decision was arbitrary or capricious. Southern Life contends that because the pension fund trustee's denial of McKnight's benefits was sound and consistent with the plan, this decision must be sustained.
The Sharron court upheld the plan administrator's decision to deny a truck driver's pension after twenty-five years of employment because of his subsequent break in service prior to retirement. Sharron unsuccessfully challenged the plan's reasonableness, as opposed to the arbitrariness of the administrator's decision.
In Sharron, the plan required, among other provisions, that the employee complete fifteen years of continuous service before being entitled to receive benefits. "Continuous service" was defined as the accumulated years of employment calculated from the employee's reemployment date following a break in service. Sharron, 704 F.2d at 565. Furthermore, the plan stated that a break in service occurred if, prior to retirement, an employee was not in covered employment for a period of three consecutive years after April 1, 1969. Because Sharron had terminated his employment with the company in 1973 for more than three years before he applied for retirement benefits, the court accepted the administrator's determination that Sharron did not meet the pension requirements because of the duration of his break in service.
Similarly, Southern Life suggests that the administrator's decision should be upheld as reasonable and sound. We do not agree. Like the administrator in Sharron, the district court applied a literal interpretation of the relevant provisions of Southern Life's pension plan, Article III, section (1)(d), and found that McKnight was entitled to employment credit. A subsequent analysis of the plan summary, section 8, which parallels Article III, section (1)(d) of the plan confirmed this result.
A comparison between the Sharron summary pamphlet and the Southern Life summary booklet merits discussion. Both summaries were designed to simplify and explain their respective pension plans. In Sharron, however, the booklet provided an additional four pages of hypothetical questions and answers to further aid the employee in understanding the plan. Sharron's situation was addressed and clearly explained. He, therefore, had a reliable document by which he could readily analyze the affect of his actions on his pension benefits. Hence, the district court properly upheld the administrator's decision to deny benefits. In Sharron, the summary booklet accurately and simply provided the employees with an understanding of the plan's meaning and application; such reliance is consistent with the purpose of the summary.
Likewise, Southern Life's summary booklet was subject to a reasonably clear and literal interpretation, although it was not supplemented with questions and answers demonstrating the plan's application. Following a literal interpretation of...
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