Torix v. Ball Corp., 86-2681

• Decision Date: 09 December 1988
• Docket Number: No. 86-2681,86-2681
• Parties: Harvey Jackson TORIX, Plaintiff-Appellant, v. BALL CORPORATION, an Indiana Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1428

862 F.2d 1428

Harvey Jackson TORIX, Plaintiff-Appellant, v. BALL CORPORATION, an Indiana Corporation, Defendant-Appellee.

No. 86-2681.

United States Court of Appeals Tenth Circuit.

Dec. 9, 1988.

Albert R. Matthews of Bonds, Matthews, Bonds & Hayes, Muskogee, Okl., for plaintiff-appellant.

Neil F. Layman, Tulsa, Okl., for defendant-appellee.

Before McKAY, ANDERSON, and BRORBY, Circuit Judges.

McKAY, Circuit Judge.

After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 34.1.8. The cause is therefore ordered submitted without oral argument.

I.

Plaintiff Harvey Jackson Torix appeals a judgment entered by the United States District Court for the Eastern District of Oklahoma in favor of defendant Ball Corporation following a non-jury trial. Mr. Torix had applied for, and been denied, disability benefits under a pension plan organized by the Corporation under the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Secs. 1001-1461 (1982). After unsatisfactorily pursuing administrative review of the denial, Mr. Torix filed this action. In reviewing the actions of the Plan's Pension and Insurance Committee, the district court concluded it must uphold the committee's decision unless plaintiff established that the committee had acted arbitrarily, in bad faith, or fraudulently in denying the claim. The court found that the action by the plan committee was "based on competent independent medical evidence and evaluation." Torix v. Ball, No. 85-226-C, slip op. at 4 (E.D.Okla. Oct. 8, 1986). Because plaintiff had not sustained his burden of showing the committee had proceeded improperly, the court granted judgment for defendants.

II.

The trial court made findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52. In this appeal only the trial court's conclusions of law are at issue. Questions of law are considered by the appellate court de novo. In re Ruti-Sweetwater, Inc., 836 F.2d 1263, 1266 (10th Cir.1988). Thus, this court applies the same standard of review as would be applied by the trial court in making its initial ruling. Boise City Farmers Co-op v. Palmer, 780 F.2d 860, 866 (10th Cir.1985).

III.

"The decision of the plan representatives to deny [disability] benefits will be upheld unless such decisions are '(1) arbitrary and capricious, (2) not supported by substantial evidence, or (3) erroneous on a question of law.' " Sage v. Automation, Inc. Pension Plan and Trust, 845 F.2d 885 (10th Cir.1988) (citing Peckham v. Board of Trustees of the Int'l Broth. of Painters and Allied Trade Unions, 653 F.2d 424, 426 (10th Cir.1981)). An administrator's decision is not arbitrary or capricious if it is a reasonable interpretation of the plan's terms and was made in good faith. Dockray v. Phelps Dodge Corp., 801 F.2d 1149, 1152 (9th Cir.1986). The key to this case, therefore, is a determination whether the committee's decision represented a reasonable and good faith interpretation of the plan's terms. Citing Oklahoma law, plaintiff urges that the committee's actions in construing the terms of the plan were arbitrary and capricious, because they did not take into account his age, limited educational background, and the unavailability of suitable employment in the area. ¹

Ball Corporation's Pension Plan was adopted pursuant to ERISA. Section 514(c)(1) of ERISA, 29 U.S.C. Sec. 1144(c)(1), provides that the act "shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan." The broad language of this chapter preempts all state laws concerning employment benefits. Peckham v. Board of Trustees of Int'l Broth. of Painters and Allied Traders Union, 719 F.2d 1063, 1065 (10th Cir.1983); accord Jung v. FMC Corp., 755 F.2d 708 (9th Cir.1985); Helms v. Monsanto Co., 728 F.2d 1416 (11th Cir.1984). Because "Congress intended to establish employee benefit plan regulations as an exclusive federal concern with federal law to apply exclusively even where ERISA furnishes no answer," In re White Farm Equipment Co., 788 F.2d 1186 (6th Cir.1986), Mr. Torix's reliance on Oklahoma law is misplaced in this case. Nevertheless, the principle he relies on in Oklahoma law is important here. As the Eleventh Circuit has so cogently noted:

[U]nder ERISA's legislative scheme, this court is empowered to formulate rules of law to govern various aspects of the employee benefit field. As Congress pointed out, "[I]t is also intended that a body of law will be developed by the courts to deal with the issues involving rights and obligations under private welfare and pension plans." 120 Cong.Rec. 515, 751 (daily ed. Aug. 22, 1974). Yet, in formulating these laws courts must be guided by the general policies underlying ERISA ... Congress wanted to assure that those who participate in the plans actually receive the benefits they are entitled to and do not lose these as a result of unduly restrictive provisions or lack of sufficient funds. H.R.Rep. No. 93-807, 93rd Cong., 2d Sess. 3, reprinted in 1974 U.S. Code Cong. & Admin.News 4639, 4670, 4676-77.

Helms, 728 F.2d at 1420 (emphasis added).

Our circuit has not previously examined the precise issue presented herein, that is, what constitutes a reasonable interpretation of the plan's terms so as to survive scrutiny under an "arbitrary and capricious" review standard. We therefore turn for guidance to the persuasive analysis of the Eleventh Circuit in Helms v. Monsanto Co., 728 F.2d 1416 (11th Cir.1984).

In Helms, plaintiff sought review of a trial court judgment upholding a denial of disability benefits. Mr. Helms was a laboratory technician at a Monsanto chemical laboratory and a covered employee under Monsanto's Disability Income Plan. After developing vision problems, Mr. Helms was diagnosed as suffering from retinitis pigmentosa, an incurable eye disease. By 1980 the disease had progressed to the point that Mr. Helms could no longer work at Monsanto. ² He submitted a Claim for Disability Benefits which was denied on the basis that he was not totally and permanently disabled within the plan's definition. The plan provided, inter alia, that the employee be "totally disabled by reason of bodily injury or disease so as to be prevented thereby from engaging in any occupation or employment for remuneration or profit (as determined by the Corporation)." 728 F.2d at 1418.

An appeal of the denial resulted in a follow-up examination by a jointly selected physician-evaluator. The selected physician agreed with the diagnosis and concluded that Mr. Helms' condition would preclude employment requiring visual acuity. Nevertheless, in light of the express terms of the plan the physician concluded that Mr. Helms was not totally and permanently disabled from engaging in any occupation for remuneration or profit, and therefore was not disabled under the plan. ³ The district court concluded that the physician had not acted arbitrarily or capriciously in reaching his decision, and, therefore, Monsanto had properly denied Mr. Helms the benefits of the plan. The Eleventh Circuit reversed and remanded, stating:

Total disability under this type of provision is not considered to exist if the insured can follow any remunerative occupation, whether in his present vocation or another. The phrase should not be given an absolute and literal interpretation. It should not mean that the individual must be utterly helpless to be considered disabled. It must be a relative term which means that the individual is unable to engage in a remunerative occupation or to do work in some profitable employment or enterprise. Permanent disability is a question of fact that depends upon all the circumstances of a particular case.

Helms, 728 F.2d at 1420.

In determining plaintiff's entitlement to disability benefits under the provisions of the Monsanto disability plan, the Helms court needed to define the phrase "any occupation or employment for remuneration or profit." ⁴ The court discarded a literal reading of the plan's terms because it would render the plan "totally meaningless" if benefits could only be paid if the claimant had "no conscious life." ⁵ 728 F.2d at 1420. In order to reach a reasonable interpretation of the phrase, the court turned for guidance to analogous insurance and social security cases. ⁶

A useful concept developed in insurance and social security cases is that of gainful activity or employment. Referencing cases from our circuit which define this term, see Markham v. Califano, 601 F.2d 533, 534 (10th Cir.1979) (citing Hill v. Califano, No. 78-1235 (10th Cir. May 30, 1979)), the Helms court adopted our view that "gainful activity means performance of substantial services with reasonable regularity, either in competitive or self-employment." 728 F.2d at 1421. The court rejected a strict construction of the plan's terms "which would deny benefits to the disabled if he should engage in some minimal occupation, such as selling peanuts or pencils, which would yield only a pittance. The insured is not to be deemed 'able' merely because it is shown that he could perform some task." Id. 728 F.2d at 1421. The Helms court held that to bar recovery of disability benefits under an ERISA-covered plan, "the earnings possible must approach the dignity of a livelihood."...