Noorali Savani v. Washington Safety Management ( 2012 )

Filed: March 20, 2012
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1206
(1:06-cv-02805-MBS)
NOORALI SAM SAVANI,
Plaintiff - Appellant,
v.
WASHINGTON SAFETY MANAGEMENT SOLUTIONS, LLC, f/k/a
Westinghouse Safety Management Solutions, LLC; WESTINGHOUSE
SAFETY MANAGEMENT SOLUTIONS, LLC PENSION PLAN; PAUL HARPER,
as Trustee of Westinghouse Safety Management Solutions LLC
Pension Plan; LEO SAIN, as Trustee of Westinghouse Safety
Management Solutions LLC Pension Plan; PRES RAHE, as Trustee
of Westinghouse Safety Management Solutions LLC Pension
Plan; WASHINGTON SAFETY MANAGEMENT SOLUTIONS, LLC PENSION
PLAN; WASHINGTON GROUP INTERNATIONAL, INCORPORATED; RALPH
DISIBIO, as director of Washington Safety Management
Solutions LLC; PAUL GREFENSTETTE, as Director of Washington
Safety Management Solutions LLC; ROBERT PEDDE, as Director
of Washington Safety Management Solutions LLC; AMBROSE
SCHWALLIE, as Director of Washington Safety Management
Solutions LLC; ROGER ALLEN, as Members of the Administrative
Committee of Westinghouse Safety Management Solutions LLC
Pension Plan formerly Benefits Committee of Westinghouse
Safety Management Solutions LLC Pension Plan; JULIE BROWN,
as Members of the Administrative Committee of Westinghouse
Safety Management Solutions LLC Pension Plan formerly
Benefits Committee of Westinghouse Safety Management
Solutions LLC Pension Plan; DAVE HOLLAN, as Members of the
Administrative Committee of Westinghouse Safety Management
Solutions LLC Pension Plan formerly Benefits Committee of
Westinghouse Safety Management Solutions LLC Pension Plan;
DELOYD CAZIER, as Members of the Administrative Committee of
Westinghouse Safety Management Solutions LLC Pension Plan
formerly Benefits Committee of Westinghouse Safety
Management Solutions LLC Pension Plan; WSMS PENSION PLAN,
f/k/a Westinghouse Savannah River Company-Bechtel Savannah
River Inc Pension Plan, f/k/a Westinghouse Safety Management
Solutions, LLC Pension Plan, f/k/a Washington Safety
Management Solutions, LLC Pension Plan,
Defendants – Appellees,
and
WASHINGTON SAVANNAH RIVER COMPANY'S PENSION PLAN; WASHINGTON
SAVANNAH RIVER COMPANY, LLC, f/k/a Westinghouse Savannah
River Company LLC,
Defendants.
O R D E R
The Court amends its opinion filed March 20, 2012, as
follows:
On the cover sheet, district court information section --
the name of “Margaret B. Seymour, District Judge” is deleted and
is replaced by “Henry F. Floyd, District Judge.”
For the Court – By Direction
/s/ Patricia S. Connor
Clerk
2
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1206
NOORALI SAM SAVANI,
Plaintiff - Appellant,
v.
WASHINGTON SAFETY MANAGEMENT SOLUTIONS, LLC, f/k/a
Westinghouse Safety Management Solutions, LLC; WESTINGHOUSE
SAFETY MANAGEMENT SOLUTIONS, LLC PENSION PLAN; PAUL HARPER,
as Trustee of Westinghouse Safety Management Solutions LLC
Pension Plan; LEO SAIN, as Trustee of Westinghouse Safety
Management Solutions LLC Pension Plan; PRES RAHE, as Trustee
of Westinghouse Safety Management Solutions LLC Pension
Plan; WASHINGTON SAFETY MANAGEMENT SOLUTIONS, LLC PENSION
PLAN; WASHINGTON GROUP INTERNATIONAL, INCORPORATED; RALPH
DISIBIO, as director of Washington Safety Management
Solutions LLC; PAUL GREFENSTETTE, as Director of Washington
Safety Management Solutions LLC; ROBERT PEDDE, as Director
of Washington Safety Management Solutions LLC; AMBROSE
SCHWALLIE, as Director of Washington Safety Management
Solutions LLC; ROGER ALLEN, as Members of the Administrative
Committee of Westinghouse Safety Management Solutions LLC
Pension Plan formerly Benefits Committee of Westinghouse
Safety Management Solutions LLC Pension Plan; JULIE BROWN,
as Members of the Administrative Committee of Westinghouse
Safety Management Solutions LLC Pension Plan formerly
Benefits Committee of Westinghouse Safety Management
Solutions LLC Pension Plan; DAVE HOLLAN, as Members of the
Administrative Committee of Westinghouse Safety Management
Solutions LLC Pension Plan formerly Benefits Committee of
Westinghouse Safety Management Solutions LLC Pension Plan;
DELOYD CAZIER, as Members of the Administrative Committee of
Westinghouse Safety Management Solutions LLC Pension Plan
formerly Benefits Committee of Westinghouse Safety
Management Solutions LLC Pension Plan; WSMS PENSION PLAN,
f/k/a Westinghouse Savannah River Company-Bechtel Savannah
River Inc Pension Plan, f/k/a Westinghouse Safety Management
Solutions, LLC Pension Plan, f/k/a Washington Safety
Management Solutions, LLC Pension Plan,
Defendants – Appellees,
and
WASHINGTON SAVANNAH RIVER COMPANY'S PENSION PLAN; WASHINGTON
SAVANNAH RIVER COMPANY, LLC, f/k/a Westinghouse Savannah
River Company LLC,
Defendants.
Appeal from the United States District Court for the District of
South Carolina, at Aiken. Henry F. Floyd, District Judge.
(1:06-cv-02805-MBS)
Argued: January 26, 2012 Decided: March 20, 2012
Before WILKINSON, GREGORY, and KEENAN, Circuit Judges.
Reversed and remanded by unpublished per curiam opinion. Judge
Keenan wrote a dissenting opinion.
ARGUED: Stanley G. Jackson, JACKSON LAW OFFICES, PC, Augusta,
Georgia, for Appellant. H. Douglas Hinson, ALSTON & BIRD, LLP,
Atlanta, Georgia, for Appellees. ON BRIEF: Gray T. Culbreath,
COLLINS & LACY, PC, Columbia, South Carolina; Emily Seymour
Costin, ALSTON & BIRD, LLP, Washington, D.C., for Appellees.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Noorali “Sam” Savani brought this action under the Employee
Retirement Income Security Act (“ERISA”) § 502(a)(1)(B), 29
U.S.C. § 1132(a)(1)(B) (2006), claiming that the termination of
an early retirement pension supplement by Washington Safety
Management Solutions (“WSMS”) violated ERISA’s anti-cutback and
notice provisions. Because the plain language of the WSMS
pension plan (“the Plan”) includes the early retirement
supplement in its calculation of accrued benefits, we must
reverse the grant of summary judgment to WSMS and remand for
further proceedings consistent with this opinion.
I.
Savani was an employee of Westinghouse Savannah River
Company (“WSRC”) in 1997 when WSMS was formed. At its
inception, WSMS recruited a number of WSRC employees, including
Savani, to transfer to the newly formed company. WSMS held
meetings at which WSRC employees were informed of the employee
benefit plans available to newly transferred employees. From
the date of his transfer in 1997 until his retirement in 2005,
Savani participated in the Plan.
The Plan, prior to amendments, provided in relevant part:
“‘Accrued Benefit’ means, as of any date of determination, the
normal retirement Pension computed under Section 4.01(b) . . .
3
less the WSRC Plan offset as described in Section 4.13, plus any
applicable supplements as described in Section 4.12 . . . .”
The Plan further provided for early retirement benefits: “The
early retirement Pension shall be a deferred Pension beginning
on the first day following the Member’s Normal Retirement Date
and . . . shall be equal to his Accrued Benefit. However, the
Member may elect to receive an early retirement Pension
beginning before his Normal Retirement Date . . . .” Finally,
the Plan described supplemental benefits:
4.12 Supplemental Benefits
(a) If a Member who:
(i) otherwise satisfies the requirements
for a Pension under this Plan; and
(ii) has at least one year of service with
WSMS; and
(iii) transferred to the Plan from an
Affiliated Employer on or before
January 1, 1998 or transfers to the
Plan from WSRC; and
(iv) retires before his Normal Retirement
Age from active service on or after
October 1, 1998,
he shall be entitled to a monthly
supplement (which shall commence with
the first Pension payment made under
the Plan on account of such retirement
and the last payment shall be in the
month preceding the Member’s attainment
of Normal Retirement Age) equal to the
following: [omitted]
(b) If a Member who:
(i) otherwise satisfies the requirements
for a Pension under this Plan;
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(ii) has at least one year of service with
WSMS; and
(iii) transferred to the Plan from an
Affiliated Employer on or before
January 1, 1998 or transfers to the
Plan from WSRC; and
(iv) either retires from active service on
or after October 1 1998 or dies on or
after October 1, 1998 and immediately
prior to his death would be entitled to
or is receiving an early retirement
Pension under the Plan,
he shall be entitled to a $200 monthly
supplement commencing at his attainment
of Normal Retirement Age, which shall
continue after such Member’s death to
such Member’s spouse, if then living,
for such spouse’s lifetime.
On December 28, 2004, the Plan’s benefits committee 1 amended
the Plan to eliminate § 4.12(a), which granted a $700 monthly
benefit to Plan members electing to take early retirement on or
after January 1, 2005. The Plan’s actuary recommended this
amendment because of his concern that the Plan may fail
discrimination testing and jeopardize Plan beneficiaries’
favorable tax treatment. This action was not communicated to
Plan participants or beneficiaries for nearly seven months.
Contrary to the committee’s amendment, Savani received an
“Early Retirement Benefit Calculation Estimate” in early 2005
that included both § 4.12 supplements. Savani retired from WSMS
1
The benefits committee was vested with “all powers
necessary to discharge its duties,” including the power “[t]o
approve Plan amendments” under Article 7.01 of the Plan and the
“discretion to interpret the Plan” under Article 7.06.
5
on or about April 30, 2005, believing that he would be entitled
to a $700 per month supplement until he reached age sixty-five.
On July 29, 2005, WSMS mailed letters to employees who had
retired in 2005, or were eligible to do so, and to those who had
transferred from WSRC, stating that § 4.12(a) of the Plan had
been eliminated and they would no longer receive the $700
monthly supplement. However, Savani continued to receive
payments of the $700 benefit until June 8, 2006. At that time,
Savani received a letter from WSMS stating that he had
incorrectly received the $700 monthly benefit for thirteen
months and requesting reimbursement of $9,100 within twenty-two
days.
Savani originally filed a class action complaint in the
Court of Common Pleas for Aiken County, South Carolina. After
WSMS removed the action to federal court, Savani filed a first
amended class action complaint (“Amended Complaint”) alleging
four counts. The district court rightly dismissed count one of
Savani’s claim for benefits under ERISA for failure to exhaust
administrative remedies. 2
2
The district court also properly dismissed count two on
the grounds that a party may not request simultaneous relief
under both ERISA, § 502(a)(1)(B) and § 502(a)(3), Korotynska v.
Metro. Life Ins. Co., 474 F.3d 101, 107 (4th Cir. 2006), and
state law counts three (estoppel) and four (breach of fiduciary
duty) on the basis of preemption by ERISA, Griggs v. E.I. DuPont
De Nemours & Co., 237 F.3d 371, 378 (4th Cir. 2001).
6
Savani proceeded to exhaust his administrative remedies by
appealing to the Plan’s benefits committee. After the benefits
committee denied Savani’s request for benefits, the district
court reopened the case only as to count one, which the court
had previously construed as a claim for benefits under ERISA, 29
U.S.C. § 1132(a)(1)(B). On June 12, 2009, the parties filed
cross-motions for summary judgment. The district court granted
summary judgment in favor of WSMS, holding that the committee
did not abuse its discretion in denying Savani’s request for
benefits and that deletion of § 4.12(a) from the Plan did not
violate the anti-cutback or notice provisions of ERISA. On
March 3, 2011, Savani timely filed this appeal.
II.
A.
This Court reviews de novo a district court’s ruling on a
motion for summary judgment. United McGill Corp. v. Stinnett,
154 F.3d 168, 170 (4th Cir. 1998). However, in an appeal under
ERISA, the Court must use the same standard that governed the
district court’s review of a plan administrator’s decision.
Williams v. Metro. Life Ins. Co., 609 F.3d 622, 629-30 (4th Cir.
2010). Although ERISA is silent on the standard of review for
benefit denials challenged under § 1132(a)(1)(B), a de novo
standard applies “unless the benefit plan gives the
7
administrator or fiduciary discretionary authority to determine
eligibility for benefits or to construe the terms of the plan,”
in which case we review the decision for abuse of discretion.
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989).
The Plan at issue gives broad authority to the committee,
granting it “total and complete discretion to interpret the
Plan.” However, “even as an ERISA plan confers discretion on
its administrator to interpret the plan, the administrator is
not free to alter the terms of the plan or to construe
unambiguous terms other than as written.” Colucci v. Agfa Corp.
Severance Pay Plan, 431 F.3d 170, 176 (4th Cir. 2005), abrogated
on other grounds by Champion v. Black & Decker (U.S.), Inc., 550
F.3d 353 (4th Cir. 2008). “An administrator’s discretion never
includes the authority ‘to read out unambiguous provisions’
contained in an ERISA plan, and to do so constitutes an abuse of
discretion.” Blackshear v. Reliance Standard Life Ins. Co., 509
F.3d 634, 639 (4th Cir. 2007) (quoting Colucci, 431 F.3d at
176).
While the Plan’s grant of authority requires us to evaluate
the committee’s decision under an abuse-of-discretion standard,
we have held that the abuse-of-discretion standard under ERISA
is less deferential to administrators than the arbitrary and
capricious standard. Evans v. Eaton Corp. Long Term Disability
Plan, 514 F.3d 315, 322 (4th Cir. 2008). A reviewing court will
8
reverse or remand an ERISA administrator’s discretionary
decision if it is not reasonable, although not necessarily
irrational, if it is not the result of a deliberate, principled
reasoning process supported by substantial evidence, or if it
does not reflect careful attention to the language of the plan
and ERISA itself. Id. (citing Firestone, 489 U.S. at 109-11;
Booth v. Wal-Mart Stores, Inc., 201 F.3d 335, 341-42 (4th Cir.
2000); Bernstein v. CapitalCare, Inc., 70 F.3d 783, 788 (4th
Cir. 1995)).
B.
Savani alleges that the committee’s deletion of § 4.12(a)
from the Plan violated ERISA’s anti-cutback statute and notice
requirements and that the amended Plan’s elimination of the $700
early retirement benefit should be unenforceable against him.
In denying Savani’s request for benefits, the committee found
that the anti-cutback statute was not violated because the $700
benefit was not an “accrued benefit” within the meaning of
ERISA. Our decision turns on whether the $700 benefit was
included in the “accrued benefit” as defined by the Plan, ERISA,
and applicable regulations. Because the plain, unambiguous
language of the WSMS Plan contemplates inclusion of both § 4.12
supplements in its definition of “accrued benefit,” the
committee abused its discretion in denying Savani’s request for
benefits.
9
ERISA’s anti-cutback statute provides that “[t]he accrued
benefit of a participant under a plan may not be decreased by an
amendment of the plan . . . .” 29 U.S.C. § 1054(g)(1) (2010).
To determine whether WSMS violated this provision, we must
determine what benefits may be accrued. ERISA defines “accrued
benefit” as “. . . the employee’s accrued benefit determined
under the plan and . . . expressed in the form of an annual
benefit commencing at normal retirement age . . . .” 26 U.S.C.
§ 411(a)(7)(A)(i) (2010). We have recognized that this
definition is “a signpost, directing us to look at the terms of
the plan at issue.” Bd. of Trs. of the Sheet Metal Workers’
Nat’l Pension Fund v. Comm’r, 318 F.3d 599, 602-03 (4th Cir.
2003). 3
Under the Plan, the definition of “accrued benefit”
contemplates the possibility that the $700 supplement can be
included in the total accrued benefit calculation. Plan § 1.01
3
In Sheet Metal Workers’, we also held that the only
textual limitation imposed by ERISA on the definition of
“accrued benefit” was that it must be “expressed in the form of
an annual benefit commencing at normal retirement age.” 318
F.3d at 602. However, we did not discuss the definition of
“accrued benefit” in the context of early retirement benefits
which, by their definition, cannot commence at normal retirement
age. While we have held that unfunded, contingent early
retirement benefits or severance payments are not secured by
ERISA itself, see Pierce v. Security Trust Life Ins. Co., 979
F.2d 23 (4th Cir. 1992), the drafters of a retirement plan may
choose to define any benefits as accrued or vested, and thereby
trigger ERISA’s protections.
10
defines “accrued benefit” as the “normal retirement Pension
. . . less the WSRC offset . . . plus any applicable supplements
as described in § 4.12 . . . .” Simply put, prior to the Plan’s
amendment, a beneficiary’s accrued benefit was calculated by an
equation; the accrued benefit equaled the retiree’s pension,
less a defined offset, plus applicable § 4.12 supplements.
WSMS argues that the Plan’s use of the qualifier
“applicable” allowed the benefits committee to delete the $700
supplement without violating ERISA. ERISA administrators have
discretion to interpret terms that are ambiguous in the sense
that they give rise to at least two different, but reasonable,
interpretations. Colucci, 431 F.3d at 176. Further, we may not
upset the benefit committee’s interpretation of the Plan unless
it was an abuse of discretion. WSMS concedes that the term
“applicable” could reasonably be interpreted as imposing only
the eligibility factors contained in § 4.12. Still, it contends
that the term “applicable” is ambiguous, and the benefits
committee was given discretion to resolve this ambiguity by
reasonably interpreting it as categorically excluding the $700
supplement from the accrued benefits equation.
However, ignoring the plain language of the Plan’s terms
was not within the committee’s discretion. Before the December
2004 amendment, § 4.12 included exactly two supplements: the
$700 early retirement benefit described in § 4.12(a) and the
11
$200 lifetime supplement described in § 4.12(b). The Plan
explicitly defines “accrued benefit” as including “applicable
supplements.” The plurality of that term, when considered in
light of the fact that only two supplements were included in
§ 4.12, mandates that each of the supplements was capable of
being “applicable” under some circumstance. Any interpretation
to the contrary, including that of the benefits committee, is
inconsistent with the plain language of the plan. Because there
is no reasonable alternative interpretation of the term
“applicable,” it is not ambiguous. The committee did not have
discretion to read out this unambiguous provision of the Plan,
and therefore abused its discretion in finding that the $700
supplement could never be applicable and in denying Savani’s
claim.
It should be noted that our holding is based on the
specific language of the WSMS Pension Plan. Stand-alone,
ancillary welfare benefits generally are not independently
protected by ERISA. See Pierce, 979 F.2d 23. Here, however,
the Plan plainly incorporated both supplements into its
definition of “accrued benefit.” Regardless of their
classification as accrued or ancillary, welfare or pension
benefits, the supplements’ inclusion in the plain terms of the
Plan’s accrued benefit calculation necessarily meant that any
12
change to the amount or existence of a § 4.12 supplement
constituted a change to an “accrued benefit.”
III.
The focus of both the district court’s decision and the
appeal was the characterization of the supplements as accrued
benefits. On that issue, we hold that the Plan’s clear terms
include the § 4.12(a) supplement in the definition of accrued
benefits. We therefore reverse the district court’s grant of
summary judgment to WSMS and remand the case for further
proceedings consistent with this opinion.
REVERSED AND REMANDED
13
BARBARA MILANO KEENAN, Circuit Judge, dissenting:
I would affirm the judgment of the district court for the
reasons well-articulated in its very thorough opinion.
Accordingly, I respectfully dissent.
14