Sanford v. Harvard Industries Inc.

• Decision Date: 01 August 2001
• Docket Number: No. 00-1193,00-1193
• Citation: 262 F.3d 590
• Parties: (6th Cir. 2001) Danny L. Sanford and Comella Sanford, Plaintiffs-Appellees, v. Harvard Industries, Inc., Hayes-Albion Company, and Harvard Industries' Jackson Plant Hourly Rate Employees' Pension Plan, Defendants-Appellants. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 590

262 F.3d 590 (6th Cir. 2001)

Danny L. Sanford and Comella Sanford, Plaintiffs-Appellees, v. Harvard Industries, Inc., Hayes-Albion Company, and Harvard Industries' Jackson Plant Hourly Rate Employees' Pension Plan, Defendants-Appellants.

No. 00-1193

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: August 1, 2001

Decided and Filed: August 24, 2001

Appeal from the United States District Court for the Eastern District of Michigan at Ann Arbor, No. 96-60442, George C. Steeh, District Judge. [Copyrighted Material Omitted] Bruce G. Davis, Jeffrey N. Silveri, DYKEMA GOSSETT, Lansing, Michigan, for Appellants.

George J. Brannick, Jackson, Michigan, for Appellees.

Before: CLAY, GILMAN, and FARRIS, Circuit Judges. ^*

OPINION

GILMAN, Circuit Judge.

On July 14, 1995, Danny L. Sanford took early retirement from his employer, Harvard Industries, Inc., in order to secure certain health benefits under an expiring collective bargaining agreement (CBA). Harvard's Central Board of Administration (the Board) determined that Sanford qualified for early retirement and approved his benefits accordingly. Four months later, Harvard concluded that Sanford had been mistakenly granted early retirement. It therefore informed Sanford that he would have to return to work in order to qualify for retirement benefits, and that it was revoking the benefits he had started to receive under the old CBA. Sanford refused to return to work, and instead sued Harvard.

The district court sent the case back to the Board for a determination of whether Sanford was in fact qualified on July 14, 1995 for early retirement, and in the interim ordered Harvard to reinstate Sanford's benefits. Harvard appeals, arguing that the district court (1) erred by failing to accord deferential review to Harvard's decision regarding the status of Sanford's retirement benefits, (2) incorrectly concluded that Harvard violated ERISA's notice requirements, and (3)erred by ordering Harvard to reinstate Sanford's benefits pending a decision by the Board. For the reasons set forth below, we AFFIRM the judgment of the district court.

I. BACKGROUND

Sanford worked for Harvard and its predecessor, the Hayes-Albion Company, at the company's plant in Jackson, Michigan from September 2, 1964 until he retired on July 14, 1995. The CBA then in effect between Harvard and Local 327 of the UAW was set to expire on July 15, 1995. All eligible employees who retired before that date were entitled to employer-paid health insurance coverage for themselves and their dependents for the remainder of their lives. Employees who retired after that date were not entitled to lifetime health insurance coverage for their dependents.

Sanford applied for "thirty and out" early retirement on July 11, 1995 in order to secure the health insurance benefits for his wife, Comella Sanford. Employees who were less than 65 years old had to have accumulated 30 years of "credited service," rather than 30 years of chronological service, in order to qualify for early retirement. Such service credits were based in part on whether work was performed as an hourly or a salaried employee. Because Sanford was only 50 years old in 1995, he was required to have 30 years of credited service.

Barbara McKinnon, Harvard's Manager of Human Resources for Salaried Administration, and Audrey Van Buren, the Benefits Account Supervisor, were responsible for processing retirement applications at the Jackson plant. Harvard claims that 35 plant employees applied to retire before the changeover deadline on July 15, 1995, an unusually high number of applications to process at one time. McKinnon and Van Buren reviewed Sanford's early retirement application and approved it, as did the Board. Accordingly, Sanford retired on July 14, 1995, began receiving $439.63 per month in pension benefits, and received health insurance coverage for himself and his wife.

Harvard conducted an audit of its personnel files approximately four months after Sanford retired. It determined that McKinnon and Van Buren had mistakenly concluded that Sanford was eligible for early retirement. According to Harvard's calculation, Sanford had accumulated only 29.3 years of credited service. Harvard asserts that Sanford should not have received a full year of credited service as an hourly employee in 1964, 1970, 1971, and 1975 because he did not work at least 1,700 hours in those years as required by the Jackson Plant Hourly Rate Pension Plan (the plan). As such, Harvard contends that Sanford would never have been eligible to receive the early retirement benefits under the old CBA. Sanford contests Harvard's calculation of his credited service. In particular, he challenges Harvard's calculation of his service in 1989, the year in which he transferred from a salaried employee to an hourly employee, and 1995, the year that he was on workers' compensation leave for a substantial portion of the time.

The record also reveals that Mel West, an employee at the Jackson plant, filed a union grievance challenging Harvard's approval of Sanford's early retirement. This grievance prompted a meeting at the Jackson plant in late November of 1995 to discuss Sanford's retirement and benefits status. In attendance at this meeting were plan representatives from Harvard's corporate headquarters in Tampa, Florida, international union representatives, the local bargaining committee, and a majority if not all of the Board members. The Tampa office had already sent an official memorandum to McKinnon and Lee Ferree, the plant manager, informing them that they should advise Sanford that there was an error in calculating his retirement eligibility and that Harvard was therefore rescinding his benefits.

On November 28, 1995, McKinnon and Ferree met with Sanford to inform him of the personnel department's computing mistake. Harvard also told Sanford that he would no longer receive pension benefits under the plan and that he would need to work an additional 510 hours to qualify for early retirement. Sanford was informed, however, that he would be credited with pension credit and seniority for the entire time period between his mistaken retirement and his return to work, and that he would be compensated for any wage loss he might have incurred as a result of Harvard's error. Finally, Harvard told Sanford that he would be eligible for pension benefits once he had completed enough work to qualify for early retirement, but that his wife would not receive dependent health insurance coverage because the deadline for the old CBA had passed. Sanford received additional notices of Harvard's position through a follow-up telephone call on December 1, 1995 and in writing on December 21, 1995. Harvard nevertheless continued to pay Sanford his monthly pension benefit until September of 1997.

Sanford refused to return to work. Instead, he and his wife filed suit against Harvard on December 29, 1995 in a Michigan state court, seeking the reinstatement of his benefits. Harvard removed the case to the United States District Court for the Eastern District of Michigan based on preemption under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§1001-1461, and filed a counterclaim seeking reimbursement of the pension benefits erroneously paid. In May of 1996, Harvard filed its first motion for summary judgment, which the district court summarily denied based on the need for further discovery. Harvard then filed a second motion for summary judgment in March of 1997. The district court denied this summary judgment motion as well. It did so without prejudice because of pending bankruptcy proceedings against Harvard.

Sanford's case was then transferred to a different judge within the district and was reopened in 1999 after appropriate proceedings in the bankruptcy court. Harvard filed a renewed motion for summary judgment. The district court construed this motion as a motion for entry of judgment affirming Harvard's decision to deny Sanford's claim for benefits. As such, the district court concluded that a question of fact remained as to whether Sanford was entitled to the benefits. It therefore denied Harvard's motion on August 25, 1999.

After hearing testimony from the parties on October 13, 1999 and January 11, 2000, the district court determined that Harvard had rescinded Sanford's benefits in contravention of both ERISA requirements and the plan procedures, and that Harvard should therefore reinstate Sanford's benefits. Given the ambiguities in the administrative record regarding Sanford's eligibility for early retirement, however, the district court refrained from rendering a factual determination on this issue. It instead dismissed Harvard's counterclaim and remanded Sanford's benefits claim to the Board.

Harvard timely appealed the district court's judgment and order. It argues that the district court erred by reviewing the decision to rescind Sanford's benefits de novo rather than determining whether that decision was arbitrary and capricious under a more deferential standard of review. Furthermore, Harvard claims that several of the district court's factual findings are clearly erroneous.

II. ANALYSIS

A. Standard of review

We will not set aside the district court's findings of fact unless we conclude that they are clearly erroneous. See Davies v. Centennial Life Ins. Co., 128 F.3d 934, 938 (6th Cir. 1997). A district court's factual findings are clearly erroneous if, based on the entire record, we are "left with the definite and firm conviction that a mistake has been committed." Bartling v. Fruehauf Corp., 29 F.3d 1062, 1067 (6th Cir. 1994) (citations and internal quotation marks omitted). We review the district court's conclusions of law de novo. See Davies, 128 F.3d at 938. In particular, we determine de novo which standard of review should be applied when reviewing a plan administrator's decision governed by ERISA. See Whisman v. Robbins, 55 F.3d 1140, 1143...