Shields v. Reader's Digest Ass'n, Inc.

• Citation: 331 F.3d 536
• Decision Date: 09 June 2003
• Docket Number: No. 01-2118.,01-2118.
• Parties: Gayle D. SHIELDS, Plaintiff-Appellant, v. READER's DIGEST ASSOCIATION, INC.; Retirement Plan; Lisa Cribari; Clifford DuPree; John Gimblette; Barry Liebman; Gary Rich; George Scimone, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 536

331 F.3d 536

Gayle D. SHIELDS, Plaintiff-Appellant, v. READER's DIGEST ASSOCIATION, INC.; Retirement Plan; Lisa Cribari; Clifford DuPree; John Gimblette; Barry Liebman; Gary Rich; George Scimone, Defendants-Appellees.

No. 01-2118.

United States Court of Appeals, Sixth Circuit.

Submitted February 7, 2003.

Decided and Filed June 9, 2003.

COPYRIGHT MATERIAL OMITTED

Donald R. Bachand III (briefed), Sarah C. Arnold, Garratt & Bachand, Bloomfield Hills, MI, for Plaintiff-Appellant.

Kathleen McCree Lewis, Kevin M. Zielke, Dykema Gossett, Detroit, MI, Peter L. Simmons (briefed), Fried, Frank, Harris, Shriver & Jacobson, New York, NY, for Defendants-Appellees.

Before SILER and ROGERS, Circuit Judges; GWIN, District Judge.^*

OPINION

SILER, Circuit Judge.

Plaintiff Gayle D. Shields filed a cause of action in an effort to recover survivor benefits under her deceased husband's retirement plan. She brought her claims against QSP, Inc., the Reader's Digest Association, Inc. ("Reader's Digest"), the Reader's Digest Association, Inc. Retirement Plan (the "Plan"), and the individual members of the Employee Benefits Committee that administered the Plan at the time Plaintiff made her claim, namely, Lisa Cribari, Clifford DuPree, John Gimblette, Barry Liebman, Gary Rich and George Scimone (hereinafter, the Plan and the individual defendants of the Employee Benefits Committee will be collectively referred to as "Defendants").¹ Following a bench trial, the district court rejected Plaintiff's factual and legal challenges to the benefits election and waiver forms submitted by Plaintiff and her husband. On appeal, Plaintiff argues that the district court erred in its legal conclusion that the waiver form was not defective due to issues relating to the timeliness of its submission. We disagree and therefore AFFIRM the judgment of the district court.

I. BACKGROUND

Plaintiff is the widow of Joseph R. Shields ("Mr. Shields"), a former long-term employee of QSP, Inc., which is a subsidiary of Reader's Digest. The Plan, which is subject to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq., is a retirement plan for the benefit of employees and former employees of Reader's Digest and certain of its subsidiaries, including QSP. Mr. Shields retired from QSP as a participant in the Plan and hence was entitled to elect one of several pension benefit options, all of which are designed to be of equal actuarial value.

Under the Plan, the normal age of retirement is 65. An employee may elect to retire early, however, if he or she is (1) at least 60 years old or (2) at least 55 years old and his or her age plus his or her years of service equals 70. A participant electing early retirement may choose from any of the available benefit options, although the payment levels are actuarially adjusted to reflect the longer time period over which the benefits will be paid.

One option is a "life annuity benefit," under which the retiree typically receives a fixed monthly sum paid for the rest of his or her life, but a surviving spouse receives no benefits for the balance of the spouse's life.² Two other available pension options are "joint and survivor benefits." Under these options, the retiree receives a monthly payment for the duration of his or her life, and if the retiree predeceases his or her spouse, the surviving spouse receives continued benefits for the balance of the spouse's life.³ In accordance with federal law, see 29 U.S.C. § 1055(a)(1), the default pension option available to married retirees under the Plan is the "Qualified Joint and Survivor Annuity" ("QJSA"). Under the terms of this option, amortized benefits are paid directly to the eligible retiree and, upon his or her death, one half of the remaining benefits are paid to the surviving spouse for the duration of his or her life. Although Plan participants are entitled to choose any of the available options, certain elections require spousal consent. For example, to select the life annuity benefit, a married participant must submit a QJSA waiver form signed by his or her spouse and notarized by a notary public. By executing this form, the spouse consents to waiving survivor benefits in exchange for higher payments to the retiree during the retiree's lifetime.

Many of the day-to-day administrative functions of the Plan are handled by an outside servicing company, William M. Mercer, Inc. ("Mercer"), which performs the actuarial benefit calculations, processes the benefit paperwork, and fields telephone inquiries. In order to receive benefits, a retiring employee must notify the Plan of his or her intent to retire and request the appropriate paperwork from Mercer. Mercer then makes the necessary calculations to determine the benefits owed to the employee and sends the appropriate paperwork to the employee.

On December 9, 1997, Mercer sent Mr. Shields a letter indicating the different benefit options available to him if he were to retire as of January 1, 1998. The letter stated that the default pension payment for a married participant is the QJSA, and that a different benefit option may require spousal consent. The letter specifically stated that to select a payment other than the QJSA, "the election must be made prior to benefits commencing but not earlier than 90 days before your benefit payments can begin." Accompanying the letter were the many necessary forms that required completion and return, as well as a chart indicating the different payments Mr. Shields and Plaintiff would receive each month under each of the available options.

On January 1, 1998, at the age of 62, Mr. Shields retired from QSP after more than thirty years of service. As an early retiree, he could have deferred receiving pension payments until the age of 65. In other words, the Plan would accept Mr. Shields's decision to begin receiving pension benefits at any time during this approximately three-year window and would begin payments at the next available date after the required paperwork was submitted.

Mr. Shields submitted his retirement forms — all dated January 21, 1998 — to Mercer. Among the forms returned were an option election form specifying his selection of the life annuity benefit, and a QJSA waiver form bearing the signature "Gayle D. Shields," terminating the Plaintiff's rights under the default QJSA option. On approximately January 22, 1998, the Plan approved payment of benefits to Mr. Shields retroactive to January 1, 1998 — the date of his retirement. This retroactive payment covered the time period of January 1, 1998 to January 15, 1998, and was in the amount of $1,234.75. The Plan also arranged for regular processing of benefits to begin on February 15, with each check thereafter to be issued on the 15th of each month in the amount of $2,469.49. In a letter dated February 9, 1998, Mercer advised Mr. Shields that his checks would be paid accordingly. In total, only six monthly checks were issued to Mr. Shields prior to his death representing a total payment of $16,051.69 in benefits.⁴

Mr. Shields died on May 17, 1998. Following his death, Plaintiff sought surviving spouse benefits from the Plan. The Plan, however, denied the claim. Following this denial, Plaintiff's former attorney, Benjamin Hoffiz, sent correspondence to the Plan suggesting that Plaintiff's signature on the waiver form had been forged by Mr. Shields. Despite the serious nature of this accusation, Hoffiz submitted no evidence to support this assertion.⁵ The Plan again reviewed the file and again denied Plaintiff's request for survivor benefits. The Plan's denial was based on what the Plan believed to be a validly signed election of benefits form and a properly signed and notarized QJSA waiver from the Plaintiff. Unable to convince the Plan that Mr. Shields committed forgery, Hoffiz filed a state lawsuit on behalf of Plaintiff. Plaintiff's case was removed to federal court because of the existence of a federal question under 29 U.S.C. § 1132, and jurisdiction was established pursuant to 28 U.S.C. § 1331.

After sitting as the trier of fact, the district court held that the Plan did not act arbitrarily or capriciously in rejecting Plaintiff's allegations that her signature on the QJSA waiver form had been forged. In so holding, the court issued detailed factual findings that reflect careful deliberation of the extensive evidence submitted during trial. It was the district court's conclusion that "the Plaintiff did not present any credible evidence to challenge the authenticity of the disputed form." The court also rejected Plaintiff's legal challenges to the validity of the waiver form. Specifically, the court held that as a matter of law, "the waiver was not defective due to issues relating to the timeliness of its submission." Accordingly, the court found that Plaintiff had waived her right to receive any survivor benefits under the Plan.

II. STANDARD OF REVIEW

A challenge to an ERISA plan's denial of benefits is reviewed de novo "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). If a plan grants such discretionary authority, the plan administrator's decision to deny benefits is reviewed under the deferential "arbitrary and capricious" standard of review. See Perez v. Aetna Life Ins. Co., 150 F.3d 550, 555 (6th Cir.1998) (en banc), cert. denied, 531 U.S. 814, 121 S.Ct. 49, 148 L.Ed.2d 18 (2000). A decision is not arbitrary or capricious if it "is rational in light of the plan's provisions." Yeager v. Reliance Standard Life Ins. Co., 88 F.3d 376, 381 (6th Cir.1996) (quoting Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 984 (6th Cir.1991)). This standard "is the least demanding form of judicial review of administrative action. When it is possible to offer a reasoned...