Zirnhelt v. Michigan Consol. Gas Co.

Decision Date16 May 2008
Docket NumberNo. 06-2540.,No. 07-1172.,06-2540.,07-1172.
PartiesDiane M. ZIRNHELT, Plaintiff-Appellant/Cross-Appellee, v. MICHIGAN CONSOLIDATED GAS COMPANY, et al., Defendants-Appellees/Cross-Appellants.
CourtU.S. Court of Appeals — Sixth Circuit

ARGUED: Peter J. Zirnhelt, Zirnhelt & Bowron, Traverse City, Michigan, for Appellant. Michael A. Alaimo, Miller, Canfield, Paddock & Stone, Detroit, Michigan, for Appellees. ON BRIEF: Peter J. Zirnhelt, Zirnhelt & Bowron, Traverse City, Michigan, for Appellant. Michael A. Alaimo, Miller, Canfield, Paddock & Stone, Detroit, Michigan, for Appellees.

Before: MOORE, GILMAN, and SUTTON, Circuit Judges.

OPINION

SUTTON, Circuit Judge.

In this pension-benefits case, Diane Zirnhelt argues that the district court erred in (1) upholding the company's denial of benefits, (2) denying her motion to amend her complaint to add an equitable-estoppel claim, (3) dismissing her breach-of-fiduciary-duty claim and (4) awarding her just $10,500 based on the company's failure to provide her with pension plan documents in a timely manner. For its part, the company argues (in its cross appeal) that the district court should not have imposed any monetary penalty. We affirm.

I.

Born in March 1947, Diane Zirnhelt worked for Michigan Consolidated Gas from June 1965, when she was 18, to August 1977, when she was 30.

In 2000, when she was 53, Zirnhelt asked the company about her eligibility for pension benefits based on her earlier employment. In response, the company sent Zirnhelt a copy of the "Retirement Plan in effect as of the date [her employment] terminated" and told her that, "[i]n accordance with [the] Plan Document, ... Ms. Zirnhelt would have had to work until April, 1979 to have any Vested/Retirement Benefits" because the plan required 10 years of service, excluding those rendered before reaching the age of "the majority (21)." JA 684. Because Zirnhelt did not meet the plan's 10-years-of-service requirement, the company explained, she was not eligible for benefits.

In February 2004, Zirnhelt filed a complaint under ERISA against the company, the plan and the plan administrator in federal court, seeking (1) a declaration that she is entitled to benefits under the plan and (2) damages for the plan administrator's failure to provide her with requested plan documents in a timely manner. In accordance with a stipulated order, Zirnhelt exhausted her administrative remedies (without success), and the company provided Zirnhelt with the requested plan documents. In November 2005, Zirnhelt sought permission to amend her complaint to add an equitable-estoppel claim, but the court denied the motion, concluding that the amendment was futile because the estoppel claim "would not survive a motion to dismiss." JA 364. In July 2006, she filed a second complaint, which added a fiduciary-breach claim and which the court consolidated with the first complaint.

The court rejected Zirnhelt's benefits claim and dismissed her fiduciary-breach claim. At the same time, the court awarded Zirnhelt $10,500 based on the plan administrator's failure to provide her with several plan documents in a timely manner. Both sides appealed.

II.
A.

Zirnhelt claims that the district court erred in upholding the company's decision to deny her claim for pension benefits. In doing so, she concedes that our task (like the district court's task) is to determine whether the benefits committee's decision was arbitrary and capricious. See Crosby v. Rohm & Haas Co., 480 F.3d 423, 427 (6th Cir.2007).

The language of the plan supports the committee's decision. Article 11 of the plan says:

A participant who ceases to be a participant upon termination of his employment for any reason other than death or retirement ... shall have the following rights:

(A) If such participant shall have completed ten (10) Years of Service at the date of such termination of employment, he shall be entitled to [receive certain benefits].

(B) If such participant shall not have completed ten (10) Years of Service at the date of such termination of employment, he shall not be entitled to receive any annuity or any other distribution or payment under the Plan unless he is a contributing participant....

JA 537-38. Zirnhelt does not contend that she was a "contributing participant." That leaves the question whether she had "ten (10) Years of Service at the date of [her] termination of employment." To answer that question, we look to Article 2, which defines "Years of Service" as:

The sum of

(a) an employee's Years of Prior Service,

(b) each 12-month period, beginning after December 31, 1974 on an employee's Anniversary Date, during which the employee shall have completed 1,000 or more Hours of Employment with one or more participating employers, associate companies and predecessor companies, and

(c) a proportional Year of Service for any period of less than 12 months between December 31, 1974 and an employee's first Anniversary Date thereafter, such proportional Year of Service to be determined under uniform rules adopted by the Committee in accordance with regulations,

but excluding any Years of Service completed before an employee attains age 22.

JA 489.

Because Zirnhelt did not turn 22 until March 1969, she needed ten years of service from that date forward to qualify for pension benefits under the plan. Unfortunately for Zirnhelt, she worked just eight years and five months beyond that date—until August 1977—meaning that she did not have "ten (10) Years of Service at the date of [her] termination." Because the benefits committee followed the language of the plan in denying Zirnhelt's claim for benefits, its decision necessarily was not arbitrary and capricious. See McDonald v. W.-S. Life Ins. Co., 347 F.3d 161, 169 (6th Cir.2003).

That is all well and good, Zirnhelt responds, so long as the committee relied on the right version of the plan. But that is not the case, she claims: The company gave her a different copy of the plan, one that defined "Years of Service" as:

The sum of

(a) an employee's Years of Prior Service,

(b) each 12-month period, beginning after December 31, 1974 on an employee's Anniversary Date, during which the employee shall have completed 1,000 or more Hours of Employment with one or more participating employers, associate companies and predecessor companies, and

(c) a proportional Year of Service for any period of less than 12 months between December 31, 1974 and an employee's first Anniversary Date thereafter, such proportional Year of Service to be determined under uniform rules adopted by the Committee in accordance with regulations, but excluding any Years of Service completed before an employee attains age 22.

JA 29 (emphasis added). Unlike the company's version of the plan, Zirnhelt's copy of the plan places the age-22 clause within subsection (c) and, according to Zirnhelt, confines the limitation to that clause.

The committee did not exceed its discretion in rejecting this argument and in relying on the company's version of the plan. No one within the company could verify Zirnhelt's version of the plan, and indeed, according to the committee, Zirnhelt's version appeared to have been altered by someone outside the company. As the committee explained, Martha Klyce, the individual in the company's benefits department who allegedly provided Zirnhelt with the copy in question, stated in her affidavit that "the copy of the Retirement Plan that [she] provided [Zirnhelt's attorney] is not the one attached to [Zirnhelt's] Complaint" and that she did not recognize Zirnhelt's version "as a document that has ever been used in the administration of the Retirement Plan." JA 731.

But even if we were to credit Zirnhelt's version of the plan, that would not help her. The only difference between the competing versions of the plan is the placement of the age-22 clause, not its wording. Zirnhelt claims that the placement of the age-22 clause directly at the end of subsection (c), as opposed to on the next line of the page, means that it must apply only to that clause. While that is one possibility it is not the only possibility. And the problem with Zirnhelt's possibility is that it makes no identifiable sense. Subsection (c) permits employees to obtain credit for "proportional" years of service and gives the committee authority to create uniform rules for computing them. Why that subsection, and that subsection alone, would limit eligibility to full "Years of Service" earned after age 22 is never explained. Nor can we think of any tenable reason why the age-22 clause would apply only to this subsection, as opposed to all three of them. Nor for that matter could Zirnhelt—at least as evidenced by her appellate briefs and by her inability to give an explanation for this proposed construction of the plan at oral argument. Nor does ERISA provide any basis for drawing such a distinction. In 1977, ERISA provided that a plan, "[i]n computing the period of service under the plan for purposes of determining the nonforfeitable percentage" of benefits to which a participant is entitled, may "disregard[] years of service before age 22," yet never said anything about applying such a restriction just to the calculation of proportional years of service. 29 U.S.C. § 1053(b)(1)(A) (1977), amended by Pub.L. No. 98-397, 98 Stat. 1426 (1984) (amending § 1053(b)(1)(A) "by striking out '22' and inserting in lieu thereof '18'").

In challenging a benefits committee's interpretation of pension plan language, a claimant does not gain traction simply by proposing another interpretation—any interpretation—of the plan. To be worthy of credence and to show material ambiguity in the language of a plan, the competing interpretation must be a plausible one—something Zirnhelt's proposed interpretation is not. See McDonald, 347 F.3d at 169 (requiring an interpretation of a plan to be "rational" in order for a court...

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