Pinney v. Aegon Cos. Pension Plan

• Decision Date: 09 March 2016
• Docket Number: No. 14-CV-125-LRR,14-CV-125-LRR
• Parties: R. JAN PINNEY, Plaintiff, v. AEGON COMPANIES PENSION PLAN, Defendant.
• Court: U.S. District Court — Northern District of Iowa

R. JAN PINNEY, Plaintiff, v. AEGON COMPANIES PENSION PLAN, Defendant.

No. 14-CV-125-LRR

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA CEDAR RAPIDS DIVISION

March 9, 2016

ORDER

TABLE OF CONTENTS

I. INTRODUCTION ....................................... 2

II. PROCEDURAL BACKGROUND ............................. 2

III. SUBJECT MATTER JURISDICTION ......................... 2

IV. FACTUAL BACKGROUND ................................ 3

A. Parties .......................................... 3

B. Overview of the Dispute .............................. 3

C. Relevant Provisions of the TA Plan ....................... 4

1. The 1970 TA Plan .............................. 5

2. The 1973 TA Plan .............................. 5

3. The 1976 TA Plan .............................. 6

4. The 1984 TA Plan .............................. 6

D. Claim and Appeal Process ............................. 7

V. STANDARD OF REVIEW ................................. 8

VI. ANALYSIS .......................................... 11

A. Whether the Plan's Decision was an Abuse of Discretion ........ 11

1. The Plan's decision ............................ 12

2. Contrary to the clear language of the Plan ............. 14

3. Conflict of interest ............................ 16

B. Statute of Limitations ............................... 18

1. The 1997-1998 correspondence .................... 18

2. The 1972 general agent agreement .................. 22

VII. CONCLUSION ....................................... 26

I. INTRODUCTION

The matters before the court are Defendant AEGON Companies Pension Plan's ("the Plan") Motion for Judgment on the Administrative Record ("Motion") (docket no. 60) and Plaintiff R. Jan Pinney's ("Pinney") Cross Motion for Judgment on the Administrative Record ("Cross Motion") (docket no. 61).

II. PROCEDURAL BACKGROUND

On March 4, 2014, Pinney filed the Complaint (docket no. 1) in the United States District Court for the Northern District of California. On August 25, 2014, Pinney filed an Amended Complaint (docket no. 18) on behalf of himself and a class of similarly situated individuals. Pinney seeks to recover benefits for himself and a proposed class of general agents under the Employment Retirement Income Security Act of 1974 ("ERISA"). On August 29, 2014, the Plan filed a Motion to Dismiss or in the Alternative to Transfer (docket no. 21). On November 20, 2014, the case was transferred to this court. See Case Transfer (docket no. 33). On November 21, 2014, the Plan filed an Answer (docket no. 36). On June 24, 2015, the Plan filed the Motion. On July 24, 2015, Pinney filed the Cross Motion. On August 14, 2015, the Plan filed a Reply ("Plan Reply") (docket no. 62). On August 21, 2015, Pinney filed a Reply ("Pinney Reply") (docket no. 63). The matters are fully submitted and ready for decision.

III. SUBJECT MATTER JURISDICTION

The court has federal question jurisdiction over Pinney's claim, which arises under ERISA, 29 U.S.C. § 1132(a)(1)(B). See 28 U.S.C. § 1331 ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.").

IV. FACTUAL BACKGROUND

A. Parties

Pinney is a citizen of California and resides in Roseville, California. In 1971, he became an employee of Occidental Life Insurance Company of California ("Occidental"), an affiliate of Transamerica Corporation ("Transamerica"), and thereby became a participant in Transamerica's employee benefit pension plan. The Plan is an employee benefit pension plan within the meaning of ERISA, 29 U.S.C. § 1002, and is administered in Iowa.

B. Overview of the Dispute

This case arises out of Pinney's claim that the Plan denied him pension benefits to which he is entitled. Between 1971 and 1997, Pinney worked for Transamerica under three different job classifications. In 1971, Pinney began working as an Assistant Branch Manager. The following year, in 1972, Pinney became a General Agent. In 1985, Pinney became a Branch Manager. Pinney continued working for Transamerica as a Branch Manager until 1997.¹ Over the course of his employment with Transamerica, Pinney participated in and accrued benefits under three different employee benefit pension plans. The first plan under which Pinney accrued benefits is the Retirement Plan for Salaried Employees of Transamerica Corporation ("TA Plan").² The second plan that Pinney accrued benefits under is the General Agents Plan ("GA Plan"). The third plan that he accrued benefits under is the Agents Plan.

In July of 1997, Pinney stepped down from his position as a Branch Manager and the TA Plan estimated his benefits, informing Pinney he would receive "employee"pension credit only for the period when he had worked as a Branch Manager, from 1985 to 1997. Pinney apparently questioned this determination.³ On June 23, 1998, the TA Plan sent Pinney a letter (the "1998 Letter") informing him that it had made a mistake in calculating his benefits, and that Pinney was also entitled to benefit service under the TA Plan from 1971 to 1972 when he worked as an Assistant Branch Manager.⁴ The 1998 Letter did not mention the period from 1972 to 1985 when Pinney worked as a General Agent.

In July of 1999, AEGON acquired Transamerica. On January 1, 2001, the TA Plan and its liabilities were acquired by the Plan. Pinney was scheduled to begin receiving benefits for his time with Transamerica on January 1, 2012. In mid-2011, Pinney requested a pension quote. The Plan informed Pinney that he had accrued benefits under the TA Plan from 1971 to 1972, under the GA Plan from 1972 to 1985, under the Agents Plan from 1985 until 1992 and under the TA Plan from 1985 to 1997. Pinney's benefit calculations were $5,631.18 per month from the TA Plan, $399.76 per month from the GA Plan and $318.91 per month from the Agents Plan. The Plan did not credit Pinney under the TA Plan for the thirteen years he worked as a General Agent, from May 14, 1972 through May 28, 1985.

C. Relevant Provisions of the TA Plan

The TA Plan has undergone several amendments since Pinney first began working at Transamerica in 1971. The versions in effect when Pinney worked as a General Agentfrom 1972 to 1985 are the 1970 TA Plan, the 1973 TA Plan, the 1976 TA Plan and the 1984 TA Plan. The TA Plan was designed as a defined-benefit pension plan. Participants accrue service credits based on their time spent working for Transamerica and, once they reach retirement age, receive payments based upon their accrued service credits and their average compensation. The provisions from the relevant versions of the TA Plan are explained below.

1. The 1970 TA Plan

The 1970 TA Plan was in effect when Pinney first became a General Agent at Transamerica in 1972. Under this plan, accrued service credits are based on the product of one percent of the participant's monthly salary and the "number of years and fractions of years of Credited Service, up to a maximum of 25 years, rendered by the Participant to the Computation Date." AR at 2265. "Credited Service" is defined as "the period of a Participant's Continuous Service which may be used for the purpose of computing benefits to which he is entitled under the Plan." Id. at 2255. "Continuous Service" is defined as "continuous employment on a full-time salaried basis with the Company or with any Affiliate or former Affiliate." Id. at 2254. A "Participant" eligible for benefits under the 1970 TA Plan is any person who is considered an "Employee." Id. "Employee" is defined as "any person in the regular employ of the Company on a permanent full-time salaried basis, whose contract of employment does not exclude him from participation under the Plan." Id. at 2253. The 1970 TA Plan does not define "permanent full-time salaried basis."

2. The 1973 TA Plan

The 1973 TA Plan is similar to the 1970 TA Plan. Accrued service credits are based on the same formula—the combination of one percent of the Participant's monthly salary and the "number of years and complete months of Credited Service, up to a maximum of 25 years, rendered by the Participant up to the Computation Date." Id. at2346. "Credited Service" is defined as "equal to [the Participant's] years and months of Continuous Service." Id. at 2339. "Continuous Service" is defined as "continuous employment on a full-time salaried basis with the Company or with any Affiliate or former Affiliate." Id. at 2338. A "Participant" eligible for benefits under the 1973 TA Plan is any person who is considered an "Employee." Id. at 2337. The definition of "Employee" remains almost identical to the 1970 TA Plan: "any person in the regular employ of the Company on its United States payroll, on a permanent full-time salaried basis, whose contract of employment does not exclude him from participation under the Plan." Id. Like the 1970 Plan, the 1973 TA Plan also does not define "permanent full-time salaried basis."

3. The 1976 TA Plan

Although the 1976 TA Plan employs the same formula as its predecessors to determine the amount of accrued service credits, it departs from the language of the earlier plans in other areas. See id. at 2309. Most significantly, it divides the definition of "Employee" into two components—"Active Employee" and "Inactive Employee." Id. at 2303. An "Active Employee" is defined as "any person, in the regular employ of a Company on its United States payroll, on a salaried basis . . . whose contract of employment does not exclude him from participation under the Plan." Id. at 2300. "Inactive Employee" has several definitions. The definition relevant to this dispute is "any person who is not an Active Employee but who has entered into an agency contract with an Affiliate, provided that his service is recognized as covered service under another pension plan of a U.S. Affiliate." Id. at 2304. In order to accrue service credits under the 1976 TA Plan, a person must be considered an "Active Employee." See id. at 2302.

4. The 1984 TA Plan

Under the 1984 TA Plan, Transamerica...