Thorpe v. Retirement Plan of Pillsbury Co., AFL-CIO-CLC

• Decision Date: 04 April 1996
• Docket Number: AFL-CIO-CLC,AFLCIO-CLC,95-4033,Nos. 95-4030,s. 95-4030
• Parties: , 20 Employee Benefits Cas. 1037, Pens. Plan Guide P 23918Z James T. THORPE, Plaintiff-Appellee/Cross-Appellant, v. RETIREMENT PLAN OF the PILLSBURY COMPANY and the American Federation of Grain Millers (); and Group Life and Health Insurance Plan for Hourly Employees Represented by the American Federation of Grain Millers (), Defendants-Appellants/Cross-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 439

80 F.3d 439

64 USLW 2655, 20 Employee Benefits Cas. 1037,

Pens. Plan Guide P 23918Z

James T. THORPE, Plaintiff-Appellee/Cross-Appellant, v. RETIREMENT PLAN OF the PILLSBURY COMPANY and the American

Federation of Grain Millers (AFL-CIO-CLC); and Group Life

and Health Insurance Plan for Hourly Employees Represented

by the American Federation of Grain Millers (AFLCIO-CLC),

Defendants-Appellants/Cross-Appellees.

Nos. 95-4030, 95-4033.

United States Court of Appeals, Tenth Circuit.

April 4, 1996.

Appeal from the United States District Court for the District of Utah (D.C. No. 94-CV-96); David K. Winder, Judge.

Charles B. Wolf, Vedder, Price, Kaufman & Kammaholz, Chicago, Illinois (George W. Pratt and Michael Patrick O'Brien, Jones, Waldo, Holbrook, Salt Lake City, Utah, and Ann M. Schlaffman, Vedder, Price, Kaufman & Kammaholz, Chicago, Illinois, with him on the brief), for Defendants-Appellants.

Stephen W. Cook, Stephan W. Cook, P.C., Salt Lake City, Utah, for Plaintiff-Appellee.

Before KELLY, BARRETT, and JONES, ¹ Circuit Judges.

PAUL KELLY, Jr., Circuit Judge.

Defendants, the retirement and welfare plans of Pillsbury Company ("Pillsbury") and the American Federation of Grain Workers (AFL-CIO-CLC) ("Union"), appeal the district court's order granting summary judgment in favor of Plaintiff James T. Thorpe on the issue of whether Plaintiff was entitled to early retirement benefits under Defendants' retirement and welfare plans. Plaintiff appeals the district court's order granting summary judgment in favor of Defendants on the issue of whether Defendants' actions constituted section 1024(b)(4) informational violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001-1371. Plaintiff also appeals the district court's dismissal of two other claims alleging violations of ERISA and its failure to award Plaintiff a reasonable attorney's fee and prejudgment interest. We exercise jurisdiction under 28 U.S.C. § 1291 and affirm on all issues.

Background

From 1966 until June 10, 1991, Plaintiff-Appellant James T. Thorpe was employed as a production worker at the Ogden, Utah plant of Pillsbury. During his tenure at Pillsbury, Plaintiff was represented by the American Federation of Grain Workers (AFL-CIO-CLC) ("Union") and participated in both the Retirement Plan, provided by Pillsbury and the Union, and the Group Life and Health Insurance Plan for Hourly Employees Represented ("Welfare Plan"), provided by the Union. The Welfare Plan supplements the Retirement Plan by providing insurance and medical benefits for those participants qualifying for normal, early or disability retirement under the Retirement Plan. Both the Retirement and Welfare Plans are "employee welfare benefit plan[s]" or "welfare plan[s]" as defined by ERISA and therefore are governed by ERISA. 1 Aplt.App. 10127. The Retirement Plan is administered by a six-member board ("Board"), three members of which are appointed by the Union and three by Pillsbury. See Id. at 10189.

The dispute in this case primarily involves the interpretation of 11.3 of the Retirement Plan, a provision which offers early retirement benefits for qualifying participants in the event of a Pillsbury "plant closure." Section 11.3 provides in pertinent part:

A Participant whose Continuous Service terminates as a result of a plant closure ... shall be entitled to receive a special early retirement benefit for life, if he has completed 25 or more years of Continuous Service at the time of the plant closure but has not attained his fifty-fifth birthday, with payments beginning on the first day of the calender month during which his Continuous Service terminates.

Id. at 10214.

On June 10, 1991, Pillsbury sold its Ogden, Utah facility to Cargill, Inc. ("Cargill"), discontinued its operations at the facility and laid off its employees; that very day, Cargill took over operation of the facility, answering phones, accepting deliveries and hiring new employees, one of whom was Plaintiff. Actual production under Cargill management began the next day. Sometime after Plaintiff joined Cargill, he and two other former Pillsbury employees (who were not employed by Cargill), all believing they were entitled to early retirement benefits under 11.3, filed claims with the Union. To resolve these claims, Pillsbury and the Union entered into a "Settlement Agreement and General Release" ("Settlement Agreement"), 1 Aplt.App. 10302, which was formalized as the "Amendment to the Retirement Plan of the Pillsbury Company and the American Federation of Grain Millers" ("Amendment"), id. at 10265. The Settlement Agreement and Amendment amended the Retirement Plan to provide special benefits to employees who had 25 years of experience with Pillsbury and were under the age of 55 (collectively known "Special Early Retirees"): (i) Special Early Retirees not offered employment by Cargill were entitled to pension and retiree health benefits as if they had attained the age of 55 on June 10, 1991, the date on which Pillsbury's ownership of the plant ended; (ii) Special Early Retirees who were offered employment by Cargill, such as Plaintiff, were to receive pension benefits commencing at the age of 55 and a $10,000 lump sum payment. Id. at 10266, 10302 p 2. Special Early Retirees opting to participate in the Settlement Agreement were required to sign a general release in favor of Pillsbury. Id. at 10302 p 5.

Plaintiff refused to sign the release and instead, filed a claim with the Board requesting early retirement benefits under 11.3. The Board denied Plaintiff's claim after determining that the Ogden, Utah plant in fact had not closed. Plaintiff filed suit seeking review of the Board's decision and alleging numerous ERISA violations. The district court granted Plaintiff's motion for summary judgment on the issue of whether the Ogden plant had closed; dismissed as moot Plaintiff's second claim, alleging that an amendment to the Retirement Plan violated ERISA by decreasing his accrued benefits; dismissed as moot Plaintiff's third claim, alleging that the Retirement and Welfare Plans violated ERISA by allowing different treatment for similarly situated employees; granted Defendants' motion for summary judgment on the issue of whether Defendants' actions constituted informational violations of ERISA; and denied Plaintiff's motion for attorney's fees and costs. This appeal, together with various cross-appeals, followed.

Discussion

A. Standard of Review

1. Summary Judgment

We review de novo the district court's grant of summary judgment, applying the same standard employed by the district court under Fed.R.Civ.P. 56. Blue Circle Cement, Inc. v. Board of County Comm'rs, 27 F.3d 1499, 1503 (10th Cir.1994). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In reviewing a party's motion for summary judgment, the court construes all facts and reasonable inferences in the light most favorable to the nonmoving party. Headrick v. Rockwell International Corp., 24 F.3d 1272, 1275 (10th Cir.1994).

2. Denial of ERISA Benefits.

We review de novo a denial of benefits under an ERISA plan "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, 956-57, 103 L.Ed.2d 80 (1989). If a benefit plan does give an administrator discretionary authority to construe doubtful provisions of the plan itself, the administrator's "decision must be upheld unless it was arbitrary and capricious, not supported by substantial evidence or erroneous on a question of law." Millensifer v. Retirement Plan, 968 F.2d 1005, 1009 (10th Cir.1992) (quoting Woolsey v. Marion Lab., Inc., 934 F.2d 1452, 1457 (10th Cir.1991)). If an administrator or fiduciary empowered to interpret the plan "is operating under a conflict of interest, that conflict must be weighed as a 'facto[r] in determining whether there is an abuse of discretion.' " Bruch, 489 U.S. at 115, 109 S.Ct. at 957 (quoting Restatement (Second) of Trusts 187, comment d (1959)).

In this case, we need not determine whether the Retirement Plan bestows upon the Board discretionary authority sufficient to warrant deferential review under Bruch. We conclude that the Board's actions, including its interpretation of the plant closure provision and its denial of early retirement benefits to Plaintiff, were arbitrary and capricious and therefore fail even under the most deferential standard.

B. Denial of Benefits

In January 1994, the Board voted to deny Plaintiff's claim for benefits under 11.3. The Board unanimously agreed that Plaintiff was ineligible for early retirement benefits under 11.3 because Pillsbury's Ogden plant had not closed. 1 Aplt.App. ex. G at 10316, ex. I at 10320. Defendants refer to the definitions of "close" and "closure" in numerous dictionaries to argue that because the Ogden plant was not "brought to an end" or "shut up," closure did not occur. See Aplt. Br. at 15-16. According to Defendants, the Ogden plant could not have been "closed" unless operations were permanently shut down and the plant dismantled. We find this argument totally unpersuasive.

It is true that the June 10, 1991 transfer of ownership of the Ogden plant from Pillsbury to Cargill only slightly impacted normal operations. Phones were answered in the usual manner, and the plant accepted deliveries. 2 Aplt.App. 10444. All employees received normal wages for their work on June 10, 1991, the day on which Pillsbury's proprietary interest in the Ogden plan came to an end. Id. Production fully resumed on June 11, 1991 under the management and direction of Cargill....