Union Pacific R. Co. v. Beckham
| Decision Date | 26 February 1998 |
| Docket Number | 97-1791,Nos. 97-1783,s. 97-1783 |
| Citation | 138 F.3d 325 |
| Parties | 21 Employee Benefits Cas. 2712, Pens. Plan Guide (CCH) P 23940W UNION PACIFIC RAILROAD COMPANY; Missouri Pacific Railroad Company; Union Pacific Corporation; Missouri-Kansas-Texas System Pension Plan For Non-Agreement Employees, by Ursula Fairbairn, Barbara Schaefer, and James Young, in their capacity as the pension committee, Appellants, v. Bryan L. BECKHAM; Gary K. Bradshaw; William E. Dixon; Mike L. Eudy; Marshall W. Hales; Billy Joe Harmon; James M. Hentschel; Carl W. Holem; James D. Miller; Cecil Rhodes, Jr.; Paul J. Richter; Daniel A. Witte, Appellees, Wyatt Company, The; Towers Perrin, Interested Parties, Pension Plan For Salaried Employees of Union Pacific Corporation and Affiliates, Defendant, Secretary of Labor, Amicus Curiae, Bryan L. Beckham; Gary K. Bradshaw; William E. Dixon; Mike L. Eudy; Marshall W. Hales; Billy Joe Harmon; James M. Hentschel; Carl W. Holem; James D. Miller; Cecil Rhodes, Jr.; Paul J. Richter; Daniel A. Witte, Appellees, Union Pacific Corporation; Missouri-Kansas-Texas System Pension Plan For Non-Agreement Employees; Pension Committee of the MKT Plan; Named Fiduciary-Plan Administration of the UP Plan (The "UP Plan Administrator"), Appellants. UNION PACIFIC RAILROAD COMPANY; Missouri Pacific Railroad Company; Union Pacific Corporation; Missouri-Kansas-Texas System Pension Plan For Non-Agreement Employees, by Ursula Fairbairn, Barbara Schaefer, and James Young, in their capacity as the pension committee, Appellees, v. Bryan L. BECKHAM; Gary K. Bradshaw; William E. Dixon; Mike L. Eudy; Marshall W. Hales; Billy Joe Harmon; James M. Hentschel; Carl W. Holem; James D. Miller; Cecil Rhodes, Jr.; Paul J. Richter; Daniel A. Witte, Appellants, Wyatt Company, The; Towers Perrin, Interested Parties, Pension Plan For Salaried Employees of Union Pacific Corporation and Affiliates, for Salaried Employees of Union Pacific Corporation and Affiliates, Defendant, Secretary of Labor, Amicus Curiae, Bryan L. Beckham; Gary K. Bradshaw; William E. Dixon; |
| Court | U.S. Court of Appeals — Eighth Circuit |
Jay T. Smith, Washington, DC, argued, Michael S. Horne and Michael A. Carrier, Washington, DC, on the brief, for Appellants.
Katherine S. Kamen, Washington, DC, argued, Edward A. Scallet and Frank Cummings, Washington, DC, on the brief, for Appellees.
Before McMILLIAN, MAGILL, and MURPHY, Circuit Judges.
Employers and their employees have brought this interlocutory appeal and cross-appeal of the district court's grant of partial summary judgment on claims and cross-claims for declaratory relief regarding the employers' interpretations of their ERISA pension plans. The district court held that the employees' cross-claim challenges, filed in 1994, to the employers' 1988 interpretations of their plans were time-barred, but that the cross-claim challenge to a 1992 amendment to one of the employer's plans, which relied on the 1988 interpretation of its plan, was not time-barred. Because we find that all of the cross-claims in this matter are time-barred, we affirm in part and reverse in part.
Prior to 1988, the Missouri-Kansas-Texas Railroad Company (MKT) maintained a pension plan (the MKT Plan) for its employees. The MKT Plan provided for the payment of benefits to eligible MKT employees in accordance with the amount of "Credited Service" they accrued while employed by MKT. Under the MKT Plan, an eligible employee accrued "Credited Service" in accordance with the number of hours that the employee worked with MKT during a plan year.
In 1986, the Missouri Pacific Railroad Company (MPRR), a subsidiary of Union Pacific Company (UP), negotiated to acquire substantially all shares of stock in MKT. The Interstate Commerce Commission (ICC) approved the acquisition in May 1988, and on August 12, 1988, MPRR acquired substantially all shares of stock in MKT and assumed direct control over MKT's assets. Prior to the acquisition, UP maintained a pension plan (the UP Plan) for its employees which, like the MKT Plan, provided for the payment of benefits to eligible employees in accordance with the amount of "Credited Service" they accrued while employed by UP. Under the UP Plan, an employee accrued "Credited Service" in accordance with the number of hours that the employee worked with UP during a plan year.
After the ICC approved the acquisition, but before MPRR's direct control, MKT and UP provided the MKT employees with the option either to accept a voluntary severance package from MKT and terminate their employment prior to the acquisition date or to become employed, as of the acquisition date, by UP. UP explained in explicit terms to the MKT employees that if they opted to become UP employees, then they would cease to accumulate "Credited Service" under the MKT Plan as of the acquisition date. UP also clearly explained that once the MKT employees commenced working for UP, they would begin accumulating "Credited Service" under the UP Plan but would not receive any "Credited Service" under the UP Plan for their pre-acquisition MKT service.
To specifically demonstrate the effects of the acquisition on the MKT employees' pension benefits under the MKT Plan and the UP Plan, UP distributed "fact sheets" to the MKT employees and held three open meetings where the employees were permitted to ask questions about the effect of the acquisition on the various plan benefits. Each fact sheet asserted that prior MKT service would not be used to determine a former MKT employee's accrual of "Credited Service" under the UP Plan. In addition, each fact sheet provided an example illustrating that post-acquisition UP service would not be used to determine an employee's accrual of "Credited Service" under the MKT Plan.
Rather than accepting the severance offer, several former MKT employees, including Bryan L. Beckham, Gary K. Bradshaw, William E. Dixon, Mike L. Eudy, Marshall W. Hales, Billy Joe Harmon, James M. Hentschel, Carl W. Holem, James D. Miller, Cecil Rhodes, Jr., Paul J. Richter, and Daniel A. Witte (collectively, the claimants), ceased employment with MKT and accepted employment with UP. The claimants concede that they received the UP fact sheets and that, as of August 1988, they were aware that "after the UP/MKT merger, [they] would cease earning Credited Service under the MKT Plan, and that [they] would not receive Credited Service under the UP Plan for [their] MKT employment." Witte Aff. p 3, reprinted in III J.A. at 849-50.
On September 24, 1992, the UP Plan was amended to offer a voluntary early retirement incentive program (VERIP) to UP employees who had acquired at least four years of continuous "Credited Service" with UP as of December 31, 1992. Consistent with its benefits accrual policy adopted and explained to the claimants in 1988, UP refused to consider former MKT employees' pre-acquisition service with MKT when determining their eligibility for the VERIP. The VERIP expired in December 1992.
In 1993, the claimants sought legal advice concerning UP's refusal to count pre-acquisition MKT service as "Credited Service" under the UP Plan and post-acquisition UP service as "Credited Service" under the MKT Plan. Prior to this time, the claimants assumed either that UP's determinations concerning "Credited Service" were proper interpretations of the plans or that UP intended to change the plans to bring about this result. See id. p 4, reprinted in III J.A. at 850. In March 1994, however, the claimants wrote a letter to UP threatening litigation concerning the refusal to consider post-acquisition UP service when calculating benefits under the MKT Plan. UP referred the letter to the Pension Committee of the MKT Plan (MKT Plan Committee), which deemed the claimants' letter to be a request for benefits. On March 31, 1994, the MKT Plan Committee denied the claimants' request for benefits, asserting that UP service did not count as "Credited Service" under the MKT Plan.
On April 1, 1994, UP, Union Pacific Railroad Company, MPRR, and the MKT Plan filed a class action complaint for declaratory judgment under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461, against the claimants. In their complaint, plaintiffs sought a determination that their construction of the MKT Plan and their refusal to count post-acquisition UP employment as "Credited Service" under the MKT Plan was neither arbitrary, capricious, nor an abuse of discretion. The claimants counterclaimed pursuant to 29 U.S.C. § 1132(a)(1)(B) and (3), naming UP, the MKT Plan, the MKT Plan Committee, the UP Plan, and the UP Plan Administrator as counterclaim defendants (collectively, the UP Parties). In their counterclaim, the claimants sought remedies under ERISA relating to the UP Parties' construction and implementation of the UP Plan, the MKT Plan, and the VERIP. After amending their counterclaim, the claimants alleged four causes of action (counts I-IV) against the UP Parties relating to their refusal to count post-acquisition UP service as "Credited Service" under the MKT Plan, one cause of action (count V) against the UP Parties relating to their refusal to count pre-acquisition MKT service as "Credited Service" under the UP Plan, and one cause of action (count VI) against the UP Parties relating to their refusal to count pre-acquisition MKT service as "Credited Service" when determining eligibility for the VERIP. 1
The UP Parties moved to dismiss or stay the counterclaims because the claimants had failed to...
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