Zirbel v. Ford Motor Co.

• Decision Date: 16 November 2020
• Docket Number: No. 20-1149,20-1149
• Citation: 980 F.3d 520
• Parties: Donna Jean ZIRBEL, Plaintiff-Appellant, v. FORD MOTOR COMPANY, as Sponsor and Plan Administrator for the Ford Motor Company General Retirement Plan, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

980 F.3d 520

Donna Jean ZIRBEL, Plaintiff-Appellant,

v.FORD MOTOR COMPANY, as Sponsor and Plan Administrator for the Ford Motor Company General Retirement Plan, Defendant-Appellee.

No. 20-1149

United States Court of Appeals, Sixth Circuit.

Argued: November 10, 2020

Decided and Filed: November 16, 2020

Rehearing En Banc Denied December 16, 2020

ARGUED: Katherine Wainright Shensky, WOOD KULL HERSCHFUS OBEE & KULL PC, Farmington Hills, Michigan, for Appellant. Karl G. Nelson, GIBSON, DUNN & CRUTCHER LLP, Dallas, Texas, for Appellee. ON BRIEF: Katherine Wainright Shensky, WOOD KULL HERSCHFUS OBEE & KULL PC, Farmington Hills, Michigan, for Appellant. Karl G. Nelson, GIBSON, DUNN & CRUTCHER LLP, Dallas, Texas, Julia Turner Baumhart, HARDY & PELTON, P.L.C., Birmingham, Michigan, for Appellee.

Before: SUTTON, THAPAR, and READLER, Circuit Judges.

SUTTON, Circuit Judge.

Donna Zirbel received a $351,000 retirement-benefits payment from Ford Motor Company. But the payment was two sizes too big. When Ford learned of the mistake, it asked for the extra money back. Zirbel refused. She sued Ford, seeking a declaration that she could keep the money. Ford stood by its decision. The district court granted summary judgment to Ford, requiring Zirbel to return the $243,000 in overpayments. We affirm.

I.

Donna's former husband, Carl Zirbel, retired from Ford in 1998 and participated in Ford's retirement plan. The plan offers monthly pension payments. "In the event of an error" in calculating a pension, the plan requires a beneficiary to "return[ ]" the "amount of the overpayment" to the fund "without limitation." R.25-37 at 2. But the committee that runs the plan has "discretionary authority to reduce any repayment amount." Id.

When Carl and Donna divorced in 2009, the divorce decree said that Donna would receive half of the marital portion of Carl's pension, the portion attributable to his work during their marriage. Donna contacted Ford to discuss her pension benefits. After some back and forth, she agreed to postpone drawing down the pension. Then in 2013, she contacted Ford and it offered a lump sum payment. She accepted a large sum in place of her future monthly benefits and a $351,690 retroactive payment to make up for the postponed monthly benefits.

After the government took its share of the retroactive payment through withholding taxes, Zirbel deposited the rest into her bank account. She eventually placed some of the windfall in her Investment Retirement Account, she invested some in mutual funds, she gave some to her children, and she paid more taxes.

Four years later, Ford audited Zirbel's benefits. It discovered that the retroactive pension payment mistakenly included benefits going back to 1998, when Carl retired, instead of 2009, when the two divorced. Zirbel thus received an extra ten years’ worth of monthly payments. The $351,690 payment should have been just $108,500, meaning she received $243,190 more than she should have.

Ford asked for the money back. Zirbel appealed, first to the third-party actuarial service that operates Ford's plan, then to the committee that oversees the pension plan. Each appeal failed. The committee invited Zirbel to apply for a hardship reduction, which would require full disclosure of her finances, including her other substantial retirement funds, her other investments, and her inheritance from her mother. Zirbel did not apply.

Zirbel sued Ford, seeking a declaration that she was entitled to keep the money. Ford counterclaimed, seeking restitution of the overpayment. The district court granted summary judgment to Ford.

II.

Decision of the plan committee . The first question is whether the plan committee permissibly required Zirbel to return the excess pension payments. It did.

When a benefits plan gives the committee that oversees it discretionary authority, as this one does, a federal court has no license to second-guess a plan's benefits decision unless it was arbitrary and capricious. Moon v. Unum Provident Corp. , 405 F.3d 373, 378 (6th Cir. 2005). So long as the decision results from "a deliberate, principled reasoning process" and relies on evidence in doing so, that usually does the trick. Baker v. United Mine Workers of Am. Health & Ret. Funds , 929 F.2d 1140, 1144 (6th Cir. 1991).

The committee's request for its money back was neither wrong nor arbitrary nor capricious. That's what the plan says. "In the event of an error that results in an overpayment of benefits to a Member," the plan says, "the amount of the overpayment shall be returned to the Retirement Fund, without limitation, except the Committee shall have discretionary authority to reduce any repayment amount from a Member." R.1-2 at 120. Because of an "error," Zirbel received an "overpayment of benefits" in the "amount of" $243,190. The plan's text calls for repayment. The initial request for repayment indeed was required ("shall") by the plan's fiduciary duty to the other beneficiaries of the plan. Yes, the plan permits Ford to reduce a repayment or waive it altogether on hardship grounds. But Zirbel never applied for a waiver. And nothing requires Ford to provide a waiver on its own initiative. Decisions that respect a plan's terms aren't arbitrary or capricious. Zirnhelt v. Mich. Consol. Gas Co. , 526 F.3d 282, 286 (6th Cir. 2008).

Nor was there anything problematic about the process provided to Zirbel. The plan gave her several opportunities to appeal the decision, and she took each one. At the final stage, the committee reviewed the appeal record, examined Zirbel's exhibits, discussed the facts of the case, and denied the appeal. The committee also gave her an opportunity to apply for a hardship waiver. She opted not to make the application. Nothing about this process sunk to the level of arbitrariness or (to the extent there's a difference) capriciousness.

Zirbel insists that we should review Ford's decision with fresh eyes because a third-party operator, not the Ford plan committee, made the initial decision. Cf. Sanford v. Harvard Indus., Inc. , 262 F.3d 590, 597 (6th Cir. 2001). But the committee made the final decision, and that suffices. Univ. Hosps. of Cleveland v. S. Lorain Merchants Ass'n Health & Welfare Benefit Plan & Tr. , 441 F.3d 430, 434 (6th Cir. 2006).

Zirbel adds that the plan committee failed to discuss her expenditures when it decided whether to require repayment. But the members reviewed the entire appeal package, saw her arguments and the evidence, and came to a decision. A committee need not discuss aloud every point raised by a claimant to survive arbitrary-and-capricious review. The "[r]eason for [a]ppeal" identified by Zirbel at any rate turned on Ford's alleged incompetence, R.25-31 at 2, not her spending of the money. No less significantly, Ford invited Zirbel to apply for a financial hardship reduction, which would have permitted her attorney to press any "the money's gone" arguments. But she did not file one because she "did not believe it would be a hardship" to return the money, just that she was "entitled" to it. R.25-3 at 67.

Remedy . That Ford may demand repayment in federal court does not answer every question in these types of cases. Ford filed its counterclaim under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq., which allows it "to obtain ... appropriate equitable relief ... to enforce any provisions of this [Act] or the terms of the plan." 29 U.S.C. § 1132(a)(3)(B). That prompts this question: Does the judgment directing Zirbel to pay Ford $243,190 in restitution provide "equitable relief" as opposed to legal relief?

The United States Reports tells us that § 1132(a)(3)(B) authorizes "restitution in equity," not "restitution at law." Great-West Life & Annuity Ins. Co. v. Knudson , 534 U.S. 204, 213–14, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) ; see Sereboff v. Mid Atl. Med. Servs. , 547 U.S. 356, 362–63, 126 S.Ct. 1869, 164 L.Ed.2d 612 (2006). A court awards equitable restitution when it imposes a lien on "particular funds or property in the defendant's possession" but legal restitution when it holds the defendant liable for a sum of money. Knudson , 534 U.S. at 214, 122 S.Ct. 708.

Sometimes a wrongful possessor will argue that she no longer possesses the "particular funds" to which a lien once attached, preventing recovery in equity. The Supreme Court grappled with that problem in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan , 577 U.S. 136, 136 S.Ct. 651, 193 L.Ed.2d 556 (2016), which instructs us to follow the money. One possibility: The wrongful possessor spends the liened funds on "traceable items," say, a car or a house or an investment fund. Id. at 144–45, 136 S.Ct. 651. In that case, the lien attaches to the car or other item, preserving the plaintiff's ability to recover in equity. Another possibility: A party "complete[ly] dissipat[es]" a fund by spending it on nontraceable items, like food, and the lien dissolves. Id. at 145, 136 S.Ct. 651. The plaintiff can still recover from the defendant's general assets at law, just not in equity and just not under § 1132(a)(3)(B). But a possessor does not dissipate a fund by depositing the cash into an account containing the possessor's other assets. Any "commingling" of wrongfully possessed funds and rightfully possessed funds permits a lien on the commingled account. Id. at 149, 136 S.Ct. 651.

Under these principles, and so far as Zirbel has argued this case, the remedy in this case amounts to equitable restitution. The plan's reimbursement provision gave it a right to recover a particular fund: the overpayment. Hall v. Liberty Life Assur. Co. of Bos. , 595 F.3d 270, 275 (6th Cir. 2010). As soon as Zirbel received the overpayment, a lien attached, permitting the plan to seek equitable restitution in the amount of the $243,190.

Nothing from the receipt of those funds to the start of the lawsuit changed that calculation. Once she received the overpayment, she placed it into her...