Tasker v. Dhl Ret. Sav. Plan, 09-2661.

• Decision Date: 06 October 2010
• Docket Number: No. 09-2661.,09-2661.
• Citation: 621 F.3d 34
• Parties: Jeffrey R. TASKER, Plaintiff, Appellant, v. DHL RETIREMENT SAVINGS PLAN et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

621 F.3d 34

Jeffrey R. TASKER, Plaintiff, Appellant,

v.DHL RETIREMENT SAVINGS PLAN et al., Defendants, Appellees.

No. 09-2661.

United States Court of Appeals,First Circuit.

Heard Sept. 14, 2010.

Decided Oct. 6, 2010.

Robert S. Catapano-Friedman, with whom The Catapano-Friedman Law Firm was on brief, for appellant.

Jeremy P. Blumenfeld, with whom Allison N. Suflas and Morgan, Lewis & Bockius LLP were on brief, for appellees.

Before LIPEZ, SELYA and THOMPSON, Circuit Judges.

SELYA, Circuit Judge.

This appeal raises an issue of first impression at the federal appellate level concerning the workings of the anti-cutback rule of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1054(g), when viewed through the prism of a Treasury Department regulation, 26 C.F.R. § 1.411(d)-4. The issue arises in the context of plaintiff-appellant Jeffrey R. Tasker's claim that a group of related entities-DHL Retirement Savings Plan, DHL Retirement Pension Plan, Employee Benefits Committee of DPWN Holdings (USA), Inc., and the DHL Retirement Pension Plan Committee (collectively, the defendants)-violated the anti-cutback rule when they eliminated his unexercised option to transfer funds from his profit-sharing plan account to his retirement plan. Concluding, as we do, that the unambiguous language of the regulation allowed the defendants to eliminate the transfer option, we affirm the district court's dismissal of the claim.

I. BACKGROUND

Because this appeal follows the allowance of a motion to dismiss for failure to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b)(6), we draw the facts from the plaintiff's complaint. SEC v. Tambone, 597 F.3d 436, 438 (1st Cir.2010) (en banc).

The plaintiff toiled in the employ of Airborne Express, Inc. (Airborne) for more than three decades. In 2003, DHL Holdings (USA) Inc., now DPWN Holdings (USA), Inc., acquired Airborne. The plaintiff worked briefly for the acquirer (which, for ease in reference, we shall call DHL) and then retired in March of 2004.

While employed by Airborne, the plaintiff participated in both the company's profit-sharing and retirement plans. After he retired but before he began receiving benefits, Airborne's plans were merged into their DHL counterparts, namely, the DHL Savings Plan and the DHL Retirement Plan. Because the mergers themselves are not central to the issues on appeal, we refer throughout to the profit-sharing plan and the retirement plan, without further elaboration.

The retirement plan and the profit-sharing plan are both ERISA plans. The retirement plan is a defined benefit plan. See 29 U.S.C. § 1002(35). The benefit accruing to a participant under this plan is based on the participant's age, years of service, and average compensation. Section 4.01(A) of the retirement plan limns the relevant benefit formula:

.... [A] Participant's Accrued Benefit shall be entirely determined under the formulas of this Section 4.01(A) ...

Subject to the offset under paragraph C of this Section 4.01, a Participant's Accrued Benefit under this paragraph shall be determined under the formula (a times c) + (b times d) where the terms have the following meaning:

a = The number of years of the Participant's Years of Credited Service up to a maximum of 25 Years.

b = The number of years of the Participant's Years of Credited Service which exceeds 25 Years.

c = An amount equal to 2.0 percent of the Participant's Average Monthly Compensation.

d = An amount equal to 0.5 percent of the Participant's Average Monthly Compensation.

The benefit computed under this formula is subject to an offset, that is, a reduction based on the participant's account balance in the profit-sharing plan. The offset is spelled out in Section 4.01(C):

A Participant's benefit determined under paragraphs A and/or B above shall

be reduced by the Participant's Profit Sharing Plan Annuity Benefit, if any, as determined under this paragraph.... The annuity benefit derived from the Participant's nonforfeitable interest in the Participant's Profit Sharing Plan account balance shall mean a monthly Single Life Annuity (SLA) payable at the Participant's Normal Retirement Age. This monthly SLA shall be determined as the Actuarial Equivalent (without regard to any pre-retirement mortality) of the Participant's nonforfeitable Profit Sharing Plan account balance as of the Profit Sharing Plan Valuation Date immediately preceding the Participant's date of termination, assuming no future Employer contributions.

The profit-sharing plan is a defined contribution plan. See 29 U.S.C. § 1002(34). A participant's benefit under this plan is computed with reference to his account balance, which may be taken as either a lump sum or an annuity. The account balance, in turn, is the product of all amounts contributed by the participant and left in the plan, net of gains or losses on his investments.

The plaintiff's remonstrance stems from the interlocking offset provision. When he retired in 2004, the retirement plan permitted a participant, prior to his election to begin receiving benefits, to transfer the balance from his profit-sharing plan account into the retirement plan. The corresponding provision of the profit-sharing plan enabled a participant to take full advantage of this option by transferring his account balance from that plan to the retirement plan. Such a transfer, when effected, would drop the participant's profit-sharing plan account balance to zero and, thus, avoid any offset. This transfer option was in place when DHL acquired Airborne. It was likewise in place when the plaintiff retired, in March of 2004, at age 57.

Upon his retirement, the plaintiff stated his intention to commence the receipt of his annuity benefit on October 1, 2008, that is, at age 62. His account balance in the profit-sharing plan at retirement was $370,388.22.

As he readied himself to leave the workplace, the plaintiff requested and received benefit information from DHL. The company furnished him with written estimates detailing the benefit options then available to him. These estimates included projected benefit levels based on the formula contained in Section 4.01(A) of the retirement plan, with an offset based on Section 4.01(C). Predicated on his years of service and average compensation, his accrued benefit was estimated to be $5,824.27 per month, which was reduced to $4,775.90 by a factor related to his decision to begin receiving benefits before age 65. The offset from his profit-sharing account, which was also affected by age-related factors, was estimated to be $4,588.00 per month. The amalgamation of these two numbers resulted in a projected annuity benefit of $187.90 per month. This estimate assumed that the plaintiff's profit-sharing account balance would remain intact and at his disposal.

DHL furnished the plaintiff with a separate estimate of what his benefit might be if he exercised the transfer option permitted under Section 7.11 of the retirement plan: $4,163.92 per month as a joint survivor annuity-a figure that contemplated emptying his profit-sharing account. This estimate, like the other estimate, made pellucid that it was merely a projection, not a final calculation or a guarantee.

At the time that he received these estimates, the plaintiff could have elected to transfer his profit-sharing plan account balance into the retirement plan account, but he eschewed that course. Moreover, he did not indicate at that time how he wished to receive his benefit.

Effective December 31, 2004, DHL amended the retirement plan to eliminate the transfer option and prohibit transfers of the kind previously permitted under Section 7.11. Without amending any other language in Section 7.11, the amendment stated that the retirement plan “shall not accept transfers of any Profit Sharing account balances after December 31, 2004.” DHL simultaneously amended Section 8.04C(3) of the profit-sharing plan to eliminate a participant's right to transfer funds to the retirement plan.

In 2008, the plaintiff tried to exercise the transfer option and begin the distribution of his benefit as adumbrated in the second estimate that he had received in 2004. In letters dated July 22 and August 28, 2008, the plan administrator informed him that the December 2004 amendments foreclosed his use of the transfer option (and, thus, effectively rendered the annuity benefit described in the second estimate unavailable). The letters explained what payments the plaintiff could expect: either an annuity of $2,200 per month (should he take his profit-sharing account in annuity form and combine it with his retirement annuity) ¹ or an annuity of $187 per month (which would leave the entire balance in his profit-sharing account intact). The profit-sharing balance was an important dictum; it had grown to $513,754.58 by this time. ² Either of the available alternatives was a far cry from the annuity benefit projected in the second estimate.

After unsuccessfully pursuing an administrative appeal, the plaintiff brought suit in the federal district court. He alleged a violation of ERISA's anti-cutback rule and sought an award of damages under 29 U.S.C. § 1132(a)(1)(B) (count 1). He also asserted related claims for breach of fiduciary duty (count 2) and injunctive and declaratory relief (count 3). The defendants moved to dismiss the complaint. The district court granted their motion in substantial part, rejecting the core claim that the defendants had violated the anti-cutback rule. Tasker v. DHL Ret. Sav. Plan, No. 09-cv-10198, 2009 WL 4669936, at *5 (D.Mass. Nov.20, 2009). The court did not dismiss the plaintiff's separate claim, embedded in count 1, that the defendants had improperly denied him the right to take his profit-sharing benefit in the form of an annuity. Id. Later, the plaintiff voluntarily dismissed that separate claim; the district court entered a final judgment; and this timely appeal ensued.

II. STANDARD OF REVIEW

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