Parker v. Union Planters Corp.

• Decision Date: 23 May 2002
• Docket Number: No. 01-2070 D/V (M1).,01-2070 D/V (M1).
• Citation: 203 F.Supp.2d 888
• Parties: John W. PARKER, Plaintiff, v. UNION PLANTERS CORPORATION, Defendant.
• Court: U.S. District Court — Western District of Tennessee

Page 888

203 F.Supp.2d 888

John W. PARKER, Plaintiff, v. UNION PLANTERS CORPORATION, Defendant.

No. 01-2070 D/V (M1).

United States District Court, W.D. Tennessee, Western Division.

May 23, 2002.

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COPYRIGHT MATERIAL OMITTED

Donald A. Donati, Esq., William B. Ryan, Donati Law Firm, LLP, Memphis, for John W. Parker, plaintiffs.

Herbert E. Gerson, Esq., Licia Michelle Williams, Ford & Harrison, LLP, Memphis, for Union Planters Corporation, defendants.

MEMORANDUM OPINION AND ORDER

DONALD, District Judge.

Before the Court are cross motions for summary judgment. The parties have responded to each other's motion, and then replied to each other's response. The Court heard argument on the motions on April 17, 2002. Having reviewed the parties' briefs and supporting documents, and having heard the oral arguments of counsel, the Court GRANTS Defendant's motion for judgment as to Plaintiff's ERISA Section 502 claim¹, and DENIES Plaintiff's motion for judgment on the same claim. In addition, the Court DENIES Defendant's motion for summary judgment as to Plaintiff's ERISA Section 510 claim.

I. Summary Judgment Is Not Available in ERISA Denial of Benefit Actions

This case arises from a dispute regarding the denial of retirement benefits. Plaintiff claims: (1) Defendant's denial of benefits constitutes a violation of ERISA Section 502, 29 U.S.C. § 1132(a)(1)(B); and (2) his firing for the purpose of interfering with the attainment of benefits violates ERISA Section 510, 29 U.S.C. § 1140.² In his motion, Plaintiff seeks summary judgment on his Section 502 claim. In its motion, Defendant seeks summary judgment on both of Plaintiff's claims.

The Court observes at the outset of this discussion that neither party seems to be aware of the procedure for resolving ERISA denial of benefits actions established in Wilkins v. Baptist Healthcare System, Inc., 150 F.3d 609 (6th Cir.1998).³ In response to "great confusion among the district courts as to the proper method of adjudicating proceedings brought under 29 U.S.C. § 1132(a)(1)(B)," the Sixth Circuit determined that the summary judgment procedures set forth in Rule 56 are inapplicable to ERISA actions. Id. at 617.⁴ The court then set forth guidelines for district courts to follow in adjudicating ERISA denial of benefit actions. As to the merits of the claim, the Wilkins court instructs the district court to conduct a de novo review based solely upon the administrative record and render findings of fact and conclusions of law accordingly.⁵ Id. at 619.

Thus, with respect to Plaintiff's ERISA Section 502 claim, both parties have improperly moved for summary judgment. Nonetheless, the Court will proceed as if their motions seek the affirmance or reversal of the plan administrator's denial of benefits decision. With respect to Plaintiff's Section 510 claim, Defendant properly moved for summary judgment. Consequently, the Court will apply the Rule 56 summary judgment standard in reaching a decision on that claim in Section III of this opinion.

II. Section 502 Claim

Pursuant to ERISA Section 502, a civil action may be brought by a participant or beneficiary "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 the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). Plaintiff asserts that his "benefits were vested upon the `Change in Control' which occurred upon the merger between Defendant and Leader Federal.'" (Am.Compl., ¶ 26.) Plaintiff claims that Defendant's "refusal ... to pay benefits under the [Supplemental Executive Retirement Plan ("SERP")] constitutes a violation of ERISA" Section 502. Id.

Under ERISA, the SERP constitutes a "top hat plan," as it is unfunded and maintained by Defendant primarily for the purpose of providing deferred compensation for a select group of management or highly-compensated employees. See 29 U.S.C. § 1051(2). Top hat plans "are expressly exempted from most of the substantive ERISA requirements normally employed to protect workers' interests in their plans." Goldstein v. Johnson & Johnson, 251 F.3d 433, 436 (3d Cir.2001); see also Wolcott v. Nationwide Mutual Insurance Co., 884 F.2d 245, 250 (6th Cir.1989); Fraver v. North Carolina Farm Bureau Mutual Ins. Co., 801 F.2d 675, 676-78 (4th Cir.1986). Therefore, the Court need only evaluate the denial of benefits under the terms of the SERP, rather than under any substantive provisions of ERISA.

A. Standard of Review

In Firestone Tire and Rubber Co. v. Bruch, the Supreme Court held that "a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan," in which case the appropriate standard is arbitrary and capricious. 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). The Sixth Circuit has interpreted Bruch to "require that the plan's grant of discretionary authority to the administrator be `express.'" Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 380 (6th Cir.1996) (citing Perry v. Simplicity Eng'g., 900 F.2d 963, 965 (6th Cir.1990)).

Defendant argues that the Court should apply the arbitrary and capricious standard of review to the plan administrator's decision because the SERP expressly grants discretionary authority to the administrator. (Mem. in Supp. of Def.'s Mot. for Summ. Judg., pp. 23-25.) Plaintiff argues that the Court should apply a de novo standard of review. (Pl.'s Mem. in Reply to Def.'s Resp. to Pl.'s Mot. for Partial Summ. Judg., pp. 16-17.) Plaintiff urges the Court to rely on a Third Circuit decision holding that denial of benefits under a top hat plan is always subject to de novo review. Id. at 16. Alternatively, Plaintiff argues that he is entitled to de novo review because he was denied the procedural protections set forth in his SERP and those provided under ERISA. Id. at 17.

The Court will apply a de novo standard of review, but for different reasons than those asserted by Plaintiff. Simply put, the language in the SERP does not grant the plan administrator the type of discretion required to trigger the more deferential standard of review.

Article III, Section 3.2 of the SERP states, in relevant part:

General Powers of Administration. Employer is hereby designated as a fiduciary under the Agreement. Employer, as fiduciary, shall have authority to control, interpret and manage the operation and administration of the Agreement.

(emphasis added). After a careful review of Sixth Circuit caselaw on this issue, the Court has determined that the language in the SERP is most similar to the plan language analyzed in the cases of Borda v. Hardy, Lewis, Pollard & Page, P.C., 138 F.3d 1062 (6th Cir.1998), and Chiera v. John Hancock Mutual Life Ins. Co., 3 Fed.Appx. 384 (6th Cir.2001)⁶.

Article II, Section 2.6 of the plan in Borda provided: "The Administrator shall have the power to make determinations with respect to all questions arising in connection with the administration, interpretation, and application of the Plan..." 138 F.3d at 1066. The Sixth Circuit held that this plan contained "a broad grant of discretionary authority to determine eligibility for benefits and to construe the terms of the plan," which warranted arbitrary and capricious review. Id. at 1066, 1068. In Chiera, the relevant language of that plan provided: "The Plan Administrator has authority to control and manage the operation and administration of the Plan ..." 3 Fed.Appx. at 388. The court held that de novo was the appropriate standard of review because the benefit plan did not grant sufficient discretionary authority to the administrator. Id.

The SERP in this case provides that the plan administrator "shall have authority to control, interpret and manage the operation and administration of the Agreement." Clearly, this plan grants some discretion to the administrator, but it is not as clear that it is sufficient to trigger the more deferential review. Like in Borda, the administrator in this case has been given discretion to interpret the plan. Like in Chiera, however, that discretion has been limited to the operation and administration of the plan. The language in the SERP, therefore, falls squarely between the language in the plans analyzed in those two cases. Rather than engaging in grammatical gymnastics in order to determine whether the grant of discretion in the SERP is closer by degree to that in Borda or Chiera, the Court will look to other Sixth Circuit cases for guidance.

The Sixth Circuit applied the arbitrary and capricious standard of review in Benham v. Disability Portion of the Life and Disability Plan, 2001 WL 223850 (6th Cir. 2001), Yeager, 88 F.3d at 376, and Miller v. Metropolitan Life Ins. Co., 925 F.2d 979 (6th Cir.1991). Each of those cases involved the denial or termination of disability benefits, and in each case, the court found that the plan administrator had been granted the discretion to determine whether there was sufficient proof that the participant was disabled. Benham, at 281; Yeager, 88 F.3d at 380-81; Miller, 925 F.2d at 983.

Analysis of those cases reveals that there is a qualitative difference between determining the sufficiency of a claim that a participant is disabled, and determining whether, under the defined terms of a contract, a participant is eligible for benefits. The former involves a subjective judgment as to the sufficiency and veracity of the claim presented, whereas the latter involves objective contractual interpretation. Under Supreme Court and Sixth Circuit precedent, that difference dictates which standard of review to apply. When the plan itself has granted the administrator the discretion to subjectively evaluate the sufficiency of a claim for benefits, the administrator's decision should be given some...