Tulley v. Ethyl Corp.

• Decision Date: 02 December 1988
• Docket Number: No. 88-3071,88-3071
• Citation: 861 F.2d 120
• Parties: 10 Employee Benefits Ca 1699 Elizabeth R. TULLEY, Plaintiff-Appellee, v. ETHYL CORPORATION and the Retirement Income Plan for the Employees of Ethyl Corporation, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 120

861 F.2d 120

10 Employee Benefits Ca 1699

Elizabeth R. TULLEY, Plaintiff-Appellee, v. ETHYL CORPORATION and the Retirement Income Plan for the Employees of Ethyl Corporation, Defendants-Appellants.

No. 88-3071.

United States Court of Appeals Fifth Circuit.

Dec. 2, 1988.

J.G. Ritter, II, Richmond, Va., R. Patrick Vance, Elizabeth J. Futrell, New Orleans, La., Mark S. Dray, Richmond, Va., for defendants-appellants.

Roger M. Fritchie, Baton Rouge, La., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Louisiana.

Before RUBIN, HIGGINBOTHAM, and THORNBERRY, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

The parties dispute the amount of death benefits owed a surviving spouse under an employer's pre-retirement death benefits plan, and whether that plan is in compliance with the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Sec. 1055. We find that the employer miscalculated the benefits due to the surviving spouse under the plan, and hold that the plan, as it should have been applied, satisfies the requirements of ERISA.

I.

Ethyl Corporation's Employees Retirement Income Plan provides two actuarially-equivalent forms of death benefits for a retired participant's surviving spouse: a 50% Contingent Annuitant Option and a 100% Contingent Annuitant Option. Under the 50% Contingent Annuitant Option, upon the death of the participant, the surviving spouse or designated beneficiary receives 60 guaranteed monthly payments at 100% of the participant's level; thereafter, only the surviving spouse receives benefits, reduced to 50% of the participant's level. The 100% Contingent Annuitant Option maintains the first 60 months of guaranteed payment at the 100% level, but continues to pay the surviving spouse after the first 60 months at 100% of the participant's level. The election form on which a participant selects the 50% or 100% Contingent Annuitant Option states that the election "shall not become effective until [the participant] actually retire[s]."

Frederick T. Tulley was a long-time employee of Ethyl Corporation. On April 20, 1983, Tulley, who was seriously ill, chose to take early retirement, effective May 1, 1983, and, with the encouragement of Ethyl officials, elected the 100% Contingent Annuitant Option so that his wife could benefit from this post-retirement pension package. The parties stipulate that, under this option, if Tulley had died after he had retired, his surviving spouse would have received $741.51 per month for the remainder of her life, with the first 60 monthly payments guaranteed. In contrast, if Tulley had elected the 50% Contingent Annuitant Option, retired, and then died, his widow would have been entitled to receive $843 per month guaranteed for 60 months, and $421.50 per month for the remainder of her life.

Mr. Tulley died on April 30, 1983, the day before his retirement was to take effect. Under Ethyl's pension plan, this made Mrs. Tulley eligible only for the benefits payable to the surviving spouse of a participant who dies before retirement. The plan stipulates that the surviving spouse of a participant who dies before retirement shall receive monthly payments computed as if the participant had chosen the "50% Contingent Annuitant Option," retired, and then died, except that such benefits "shall be increased on an Actuarially Equivalent basis to allow for the elimination of the sixty (60) monthly payments guaranteed."

Ethyl determined that, under its pre-retirement-death-benefits plan, Mrs. Tulley was entitled to receive $425.64 per month for the remainder of her life. According to the affidavit of the manager of pensions for Ethyl Corporation, Ethyl reached this conclusion by ascertaining the value of a life annuity for Tulley with five years of guaranteed payments; converting that amount into the value of a single life annuity benefit with no guaranteed payments, which would pay $996.80 monthly; and then converting that amount into what it would provide if it were a 50% joint-and-survivor annuity, or $851.27 monthly; and finally dividing in half the annuity that would be payable in order to arrive at the 50% survivor's benefit, or $425.64 per month.

Mrs. Tulley challenged Ethyl's method of calculation as both inconsistent with the plan and violative of ERISA. The district court sustained her challenge on the statutory ground, holding that ERISA requires that the "pre-retirement death benefit payable to the surviving spouse of an employee who continues to work after becoming eligible for early retirement but who dies before retirement, shall be the 100% survivor annuity," and that the "death benefit be ... equal to 100% of the joint benefit that would have been payable had Mr. Tulley actually retired on the day before his death. That benefit ... would have been equivalent to the 100% Contingent Annuitant Option specified in the Plan, or the sum of $741 per month payable to Mrs. Tulley throughout the remainder of her life." ¹ Ethyl appeals the district court's judgment, asserting that the statute does not mandate a 100% survivor annuity for pre-retirement death benefits and that its method of calculating Mrs. Tulley's survivor annuity is consistent with the plan.

II.

Before we reach the merits of this appeal, we consider sua sponte the question of appellate jurisdiction. The civil docket sheet recording the district court's proceedings denotes in its left-hand column that the court granted relief to Mrs. Tulley on December 24, 1987, and that Ethyl filed a notice of appeal January 27, 1988. It would, therefore, appear that the notice of appeal was untimely filed, failing to meet the 30-day requirement of Federal Rule of Appellate Procedure 4(a)(1). ²

Directly following the inscription of the district court's judgment and the defendants' notice of appeal in the docket sheet, however, is the notation "dkt", and a date: the judgment, signed December 24, 1987, was apparently entered on the docket sheet at the district court clerk's office on December 29, and the defendants' notice of appeal, filed January 27, 1988, was entered on the docket sheet on January 28. In Harcon Barge Co., Inc. v. D & G Boat Rentals, Inc. ³ and, more recently, in United States v. Doyle, ⁴ this court held that the timeliness of a notice of appeal "is measured from the date of entry of the judgment on the entry sheet, not from its date of filing." The date of entry is evinced by the " 'Dkt', 'Dk't,' or 'Dkt'd' (i.e., 'docketed'), followed by the date of such entry." The district court's docket sheet in this case reveals that the order appealed from was not docketed until December 29, 1987, and the filing of the notice of appeal on January 27, 1988 was, therefore, within the 30-day requirement of F.R.A.P. 4(a)(1).

III.

Before we can decide whether Ethyl's plan conforms to the statutory requirements, we must decide what benefits the plan itself provides, a matter about which the parties disagree. Tulley's election of the 100% Contingent Annuitant Option was, by its terms, ineffective, because the election form provided that a participant's "election ... shall not become effective until [he] actually retire[s]." Instead, Mrs. Tulley's rights are governed by Article VII, section A, paragraph 2 of the Ethyl Retirement Income Plan, which spells out the method by which a surviving spouse's benefits are calculated when an employee eligible for early retirement dies before retirement:

[The] surviving spouse shall be entitled to a monthly allowance ... [which] shall be equal to the amount that would have been payable to the Contingent Annuitant (in this case the Surviving Spouse) had the member elected the 50% Contingent Annuitant Option and retired on the first day of the month following his date of death. Not withstanding the above, such allowance shall be increased on an Actuarially Equivalent basis to allow for the elimination of the sixty (60) [guaranteed] monthly payments.

Mrs. Tulley claims that Ethyl miscalculated her benefits under this provision.

Ethyl interprets this provision to permit it to compute Mrs. Tulley's benefits through a series of annuity conversions: converting Tulley's five-year certain and life annuity retirement benefit into a single life annuity, converting that annuity into a 50% qualified joint and survivor annuity, determining the monthly benefit to which Tulley would have been entitled under that annuity, and then taking one-half of that amount to arrive at the monthly payment due to Mrs. Tulley. Ethyl contends that the excision of the 60 guaranteed payments at the 100% level permits it to pay Mrs. Tulley at the 50% level for the remainder of her life using the amount payable under a 50% qualified joint and survivor annuity, and concludes that Mrs. Tulley's interest as the surviving spouse in this annuity amounts to $425.64 per month.

While we, of course, ordinarily defer to the construction propounded by the administrator of a pension plan, ⁵ the administrator's interpretation commands this respect only if it is not "arbitrary or capricious," ⁶ that is, only if the interpretation is reasonably deducible from the words used. Ethyl's method of calculation is so far removed from the realm of reasonableinterpretations of the plan that we are compelled to find it invalid.

The first sentence of the plan fixes a basic benefit: "the amount that would have been payable" had the employee elected the 50% Contingent Annuitant Option. The second sentence expressly provides for an increase in the amount of benefits to compensate the surviving spouse for the loss of 60 months of guaranteed benefits at the 100% level.

Ethyl's first mistake lies in its failure to follow the formula specifically prescribed in the plan. The plan unequivocally asserts that the surviving spouse be treated as though her deceased husband had (1) elected the 50% Contingent Annuitant Option, (2) retired, and (3) then died, with the...