Stamper v. Total Petroleum

• Citation: 188 F.3d 1233
• Decision Date: 27 August 1999
• Docket Number: No. 98-3013,AFL-CIO,98-3013
• Parties: (10th Cir. 1999) PAUL H. STAMPER, et al., Plaintiffs-Appellants, v. TOTAL PETROLEUM, INC. RETIREMENT PLAN FOR HOURLY RATED EMPLOYEES WITH THE BARGAINING UNIT REPRESENTED BY LOCAL 642 OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS (), et al., Defendants-Appellees
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 1233

188 F.3d 1233 (10th Cir. 1999)

PAUL H. STAMPER, et al., Plaintiffs-Appellants, v. TOTAL PETROLEUM, INC. RETIREMENT PLAN FOR HOURLY RATED EMPLOYEES WITH THE BARGAINING UNIT REPRESENTED BY LOCAL 642 OF THE INTERNATIONAL UNION OF OPERATING ENGINEERS (AFL-CIO), et al., Defendants-Appellees.

No. 98-3013

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

August 27, 1999

Appeal from the United States District Court for the District of Kansas. D.C. No. 96-1418-WEB

[Copyrighted Material Omitted] Marc Rifkind (Thomas J. Hart, Slevin & Hart, Washington, D.C., and Charles Schwartz, Blake & Uhlig, Kansas City, Kansas with him on briefs), Slevin & Hart, Washington, D.C., for Plaintiffs-Appellants.

Jeffrey E. Goering (Lee Thompson with him on briefs), Triplett, Woolf & Garretson, LLC, Wichita, Kansas, for Defendants-Appellees.

Before EBEL, Circuit Judge,McWILLIAMS, Senior Circuit Judge, and MURPHY, Circuit Judge.

EBEL, Circuit Judge.

Plaintiffs-appellants ("appellants"), former employees of Total Petroleum ("Total"), sued Total, the pension plan it sponsored ("Plan"), and the Plan's fiduciaries (collectively "appellees") under the Employee Retirement Insurance Security Act of 1974 and its amendments ("ERISA") on the ground that Total unlawfully amended the Plan in a way that reduced the appellants' "accrued benefits." The district court granted appellees' motion for summary judgment and dismissed appellant's case. We now affirm.

BACKGROUND

The appellants are all former employees of Total at its facility in Arkansas City, Kansas, who were terminated in 1996 when Total closed its Arkansas City petroleum plant. At termination, appellants were all under the age of 55 years-old and "fully vested" participants in Total's Retirement Plan for Hourly-Rated Employees within the bargaining units represented by Local 642 of the International Union of Operating Engineers, AFL-CIO.

The Plan qualifies as an employee benefit plan under ERISA. See 29 U.S.C. § 1002(3). Total is the Plan sponsor within the meaning of 29 U.S.C. § 1002(16)(B), and a fiduciary of the Plan within the meaning of 29 U.S.C. § 1002(21)(A). Total effectuated the original Plan on April 1, 1978 ("1978 Plan").

Section 6.02 of the 1978 Plan stated: "In the event of termination¹ of service of any participant for any reason other than his death or retirement under the Plan, he shall be entitled, in lieu of any other benefits under the Plan, to his vested percentage in a deferred pension as determined under the terms of Section 6.03, [depending on the employee's age and years of service] . . . ." 1978 Plan § 6.02. Section 6.03 provides for a "deferred severance benefit" which is defined as "the participant's vested interest . . . in his 'accrued retirement income' determined at the date of his termination. The participant's 'accrued retirement income' shall consist of the amount of normal retirement income accrued for his credited service as defined in Section 4.02 to the date of termination of his service." Id. § 6.03. Section 6.04 outlined the payment method for "deferred severance benefits":

[M]onthly installments . . . of one-twelfth of the annual amount computed under Section 6.03 . . . shall commence on the first day of the month next following the member's attainment of his normal retirement date [defined in Section 3.01 as the first day of the month coincident with or next following the participant's sixty-fifth birthday]. Provided, however, any terminated participant may elect to receive his retirement income commencing on the first day of any month within the ten (10) year period immediately preceding his normal retirement date, which retirement income shall be actuarially reduced in accordance with the standard actuarial reduction tables used by the actuary to take into account the participant's younger age and earlier commencement of payment of benefits.

Id. § 6.04 (emphasis added). The 1978 Plan did not contain the "standard actuarial reduction tables" to be used nor did it explicitly state the actuarial assumptions that would be used to reduce benefits for early claims.

Finally, the 1978 Plan provided that Total could "without the assent of any other party hereto, amend this Plan at any time. Any such amendment shall be made by a written instrument executed by the Company on the order of its Board of Directors and shall become effective as of the date specified in such instrument." Id. § 13.01.

On November 15, 1996, Total amended the 1978 Plan retroactive to January 1, 1989 ("1996 Plan"). The 1996 Plan provided that a terminated employee "whose termination occurs on or after completion of 5 Years of Service shall have a fully nonforfeitable right to a Deferred Vested Benefit."² 1996 Plan § 4.06(a). The 1996 Plan stated that "the Participant's Deferred Vested Benefit shall be equal to his Accrued Benefit computed as of the date of his termination of employment." Id. § 4.06(c). Under the 1996 Plan, "Deferred Vested Benefits" were available to terminated employees who have completed at least five years of service (as under the 1978 Plan); and, as under the 1978 Plan, such benefits were to "commence as of the date that would have been [the employee's] Normal Retirement Date [defined in Section 4.02(b) as the first day of the month coincident with or next following the employee's attainment of age sixty-five]." Id. § 4.06(b). Further, like the 1978 Plan, the 1996 Plan permitted terminated employees to claim their "deferred vested benefits" any time in the ten years immediately preceding normal retirement age (i.e., any time between age 55 and age 65). See id. § 4.06(b). This provision is qualified as follows: "The Participant's Deferred Vested Benefit shall be reduced in accordance with the Actuarial Equivalent reduction factors as described in Section 10.10 if payments begin before what would have been the Participant's Normal Retirement Date [the first day of the month coincident with or next following the employee's attainment of age sixty-five]." Id. § 4.06(c). Thus, like the 1978 Plan, the amended plan contemplated payout of severance benefits at age 65, but permitted plan participants to elect to receive an actuarially reduced amount starting anytime after attaining the age of 55. However, unlike the 1978 Plan, the 1996 Plan specified the actuarial assumptions to be used in reducing such benefits:

Section 10.10 Actuarial Assumptions. Except as otherwise specifically required by law and provided herein, wherever the Plan calls for the computation of a present value, an actuarially equivalent value, or any other value requiring application of actuarial assumptions, an annual 5% rate of interest and the Basic UP-1984 Mortality Table set forward one year shall be used . . . .

Id. § 10.10.

It is these actuarial reduction assumptions that make up the crux of appellants' suit. The former Total employees filed a complaint against appellees in the United States District Court for the District of Kansas pursuant to 29 U.S.C §§ 1132(a)(1)(B) and 1132(a)(3) alleging that the amendments to the 1978 Plan violate 29 U.S.C. § 1054(g), 26 U.S.C. § 411(d)(6), and 26 U.S.C. § 401(a)(25). Appellants argue that the 1978 Plan violated provisions of the Internal Revenue Code ("Tax Code") and ERISA that require pension plans to specify actuarial assumptions to be used in reducing benefits, and that the 1996 amendments violate Tax Code and ERISA prohibitions against amending pension plans in a way that reduces an accrued benefit. Appellants therefore claim that the actuarial reduction factors in both plans should be stricken, and they should be entitled, at any time after age 55, to the unreduced benefit they would be entitled to at age 65.

The district court agreed with appellants that the 1978 Plan's discretionary actuarial reduction factors violated Tax Code and ERISA provisions, and that the 1996 amendments were likewise adopted in violation of the Tax Code and ERISA. However, the district court concluded that Total could cure deficiencies in the 1978 Plan by employing "reasonable" actuarial assumptions to calculate deferred severance benefits for plan participants wishing to collect prior to age 65. After a stipulation by the parties that "the actuarial assumptions specified in Section 10.10 of the [1996 Plan] are within the range of reasonable actuarial assumptions for determining actuarial equivalence," the district court granted summary judgment for appellees. For different reasons we AFFIRM.

DISCUSSION

I. Whether appellants are entitled to unreduced retirement benefits at age 55.

Because this case comes to us on appeal from the district court's summary judgment order our review is de novo. See Kaul v. Stephan, 83 F.3d 1208, 1212 (10th Cir. 1996). We examine the facts in the light most favorable to the appellants, and will affirm the district court's summary judgment order only if the record demonstrates that there is no genuine issue as to any material fact. See id.

The appellants' argument runs essentially as follows. First, they argue, the 1978 Plan's vague statement that appellants' "deferred severance benefits" would be "actuarially reduced in accordance with the standard actuarial reduction tables used by the actuary" if they elected to receive the benefits prior to reaching age 65 was unlawful under the Tax Code and ERISA, which both require that pension plan payouts be definitely determinable from the plain terms of the plan. Second, they continue, the amendments contained in the 1996 Plan, which cured the deficiency in the 1978 Plan by specifying the precise actuarial reduction figures and methods to be used, were also unlawful in light of "anti-cutback" provisions in the Tax Code and ERISA which make it impermissible to amend pension plans in a way that reduces recipients' accrued benefits. Thus, appellants contend that the reduction factors in both plans are unlawful and must be stricken, entitling them, at age 55, to the unreduced...