Coleman Ex Rel. Estate of Coleman v. Champion International Corp. , 992 F.2d 530 ( 1993 )

United States Court of Appeals,
Fifth Circuit.
No. 92-4527
Summary Calendar.
Tony D. COLEMAN, as Sole Heir and Beneficiary of the Estate of Charlie D. Coleman,
Deceased, Plaintiff-Appellant, Cross-Appellee,
v.
CHAMPION INTERNATIONAL CORPORATION/CHAMPION FOREST PRODUCTS, et al.,
Defendant-Appellees, Cross-Appellants.
June 4, 1993.
Appeal from the United States District Court for the Eastern District of Texas.
Before HIGGINBOTHAM, SMITH, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
I. FACTS and BACKGROUND
This case, a suit for pension benefits, is controlled by ERISA. Tony Coleman ("Coleman")
brought suit to the recover proceeds of a pension plan, asserting that he was the beneficiary of Charlie
Coleman. Charlie Coleman, Coleman's father, worked at Southland Paper Mill, Inc. ("Southland")
from 1964 to 1978. St. Regis Paper Co. ("St. Regis") acquired Southland through merger in
December 1977, and Champion International Corp. ("Champion"), in turn acquired St. Regis through
merger in 1984.
Southland established a pension plan for its employees on January 1, 1954 entitled "The
Retirement Plan for Salaried Employees of Southland Paper Mills, Inc." (the "Plan"). The Plan was
amended periodically as mandated by federal law. Charlie Coleman was an active participant in the
Plan with Southland, and later, with St. Regis. After St. Regis acquired Southland, Plan participants
could elect to remain covered under the Plan or to shift their coverage to the qualified retirement plan
sponsored by St. Regis. Coleman chose to remain covered under the Plan. Benefits under the Plan
were payable in the form of a life annuity of $155.61 each month, beginning at age 65. Coleman was
divorced at the time that he terminated employment and he never remarried.
The Plan provides participants with several pension payout options. An employee who
terminates after becoming fully vested, but prior to age 65, can elect to start receiving his pension
payments ("pay status") any time after age 55. Such a choice reduces the amount of the annuity
payment to the actuarial equivalent of a life annuity beginning at age 65. The Plan further provides
that if a terminated vested employee dies before going into pay status, no pension is payable under
the Plan unless the employee has elected to be paid in the form of a joint and spousal survivor annuity.
This annuity provides benefits to the employee's surviving spouse after the employee's death.
The Plan provides those electing to go into pay status can receive other forms of payments
including: (1) various joint and survivor annuities providing for payments after one's death and (2)
an annuity for one's own lifetime, with payments guaranteed for a certain number of years (e.g. 5, 10,
15, 20), with the remaining guaranteed payments going to a designated beneficiary if the participant
dies before the relevant fixed period. Monthly benefits under these options are also adjusted to the
actuarial equivalent of a life annuity beginning at age 65.
In 1978 pension sponsors published the Revised Pension Summary Plan Description ("1978
SPD"). The 1978 SPD describes how terminated vested participants can elect to begin pension
payments as early as age 55. It further explains how a participant can opt for the various forms of
payment, e.g. how one might provide for his spouse or other designated beneficiary.
The 1978 SPD describes the "Lifetime Only Inco me" as the payment option providing the
largest monthly income; however, under this particular option the Plan does not pay any benefits
after the participant's death. The Lifetime Only Income option is the normal form of payment to Plan
participants, who are unmarried at the time of death, and the Plan pays all benefits under this
particular option unless the participant specifically requests otherwise.
Charlie Coleman attained age 55 on July 23, 1986 and died on March 22, 1987. At the time
of his death Coleman (1) was divorced and had not remarried, (2) had not elected to go into pay
status, (3) had not elected any form of optional payment, and (4) had not designated a joint pensioner
or beneficiary to receive benefits under one of the optional forms of payment after his death. The
Plan provided specifically that if an unmarried terminated vested participant, such as Charlie Coleman,
died before going into pay status, the Plan would not pay any pension benefits.1
Coleman initiated this suit against Champion to recover the full amount of his father's pension,
plus damages and attorney's fees. Coleman alleges that Champion failed to send Charlie Coleman
various required notices, including REA2 notices, and failed to send updated information reflecting
the changes in the company sponsoring and maintaining the Plan. Coleman also seeks a $100 per day
penalty for Champion's failure to provide him with Plan information on request. Coleman further
asserts that Champion's failures prevented Charlie Coleman from exercising his Plan rights and
exercising his options for receiving Plan benefits.
Champion filed a motion for summary judgment, arguing that Coleman did not have standing
under ERISA to bring this action because he is neither a "participant" nor a "beneficiary" as defined
by ERISA. Coleman responded with a cross-motion for summary judgment alleging that Champion
maliciously and wilfully violated ERISA participant notification requirements.
The district court held that Coleman had standing to bring the action under ERISA, but did
not have standing to seek t he $100 per day penalty for Champion's alleged failure to provide the
requested information. However, the district court granted Champion's motion for summary
judgment on grounds that (1) the REA notices did not have to be sent to employees who terminated
employment prior to 1984 and (2) the 1978 SPD had adequately notified Charlie Coleman both of
his right to begin receiving his pension as early as age 55, and of his right to designate a beneficiary
to receive payments after his death. Coleman appeals the district court's summary judgment in favor
of Champion. Champion cross-appeals the district court's holding that Coleman has standing to sue
under ERISA.
1
When he ceased employment in 1978, Charlie Coleman was 100 percent vested in the Plan.
The pension was payable to him either as a single life annuity of $155.61 per month at age 65, or
as early as age 55 in the actuarially-reduced amount of $80.92 per month.
2
Retirement Equity Act of 1984, Pub.L. No. 98-397, 1984 U.S.C.C.A.N. (98 Stat.) 1426
303(3)(2) (permitting an employee, who had terminated employment prior to August 23, 1984,
but who had not yet started to receive his pension, to provide his surviving spouse with a
pre-retirement pension in the event he died before starting to receive his pension). Because
Charlie Coleman was not married, such election was not available to him, and notice was
unnecessary. See also, Treas.Reg. § 1.401(a)-20 Q & A-25(a) (1988) (stating that an unmarried
participant is deemed to have waived this election).
II. STANDING ANALYSIS
We have recognized that standing is essential to the exercise of jurisdiction and is a "threshold
question ... [that] determin[es] the power of the court to entertain the suit." Warth v. Seldin, 422
U.S. 490, 498, 95 S. Ct. 2197, 2205, 45 L. Ed. 2d 343 (1975); U.S. v. One 18th Century Colombian
Monstrance, 797 F.2d 1370, 1374 (5th Cir.1986), cert. denied, 481 U.S. 1014, 107 S. Ct. 1889, 95
L. Ed. 2d 496 (1987). We now turn our attention to this question, and address each of Coleman's
asserted bases of standing.
1. Statutory Basis
Section 502(a) of ERISA, 29 U.S.C. 1132(a) (hereinafter, "§ 1132(a)"), ERISA's civil
enforcement provision, limits those who can maintain suits under the statute to "participants,"
"beneficiaries," or "fiduciaries".3 Coleman is not, and never has purported to be, a "participant,"4 or
"fiduciary"5 as defined by ERISA; therefore, if he is to establish standing under § 1132, he must
satisfy the statute's definition of "beneficiary."
ERISA defines "beneficiary" as "a person designated by a participant, or by the terms of any
employee benefit plan, who is or may become entitled to a benefit thereunder." ERISA § 3(8), 29
U.S.C. § 1002(8). Under this definition, Coleman is not a beneficiary. Charlie Coleman never
designated his son or anyone else as beneficiary of his Plan assets6; therefore, Coleman's assertion
3
The Secretary of Labor is authorized to bring suit in certain situations outlined in 29 U.S.C.
1132(a)(2), a(4), (a)(5), and (a)(6).
4
ERISA § 3(7), 29 U.S.C. § 1002(7) defines "participant" as any employee or former
employee of an employer, or any member or former member of an employee organization, who is
or may become eligible to receive a benefit of any type from an employee benefit plan which
covers employees of such employer or members of such organization, or whose beneficiaries may
be eligible to receive any such benefit.
5
ERISA § 3(21), 29 U.S.C. 1002(21) defines "fiduciary" as a person who (i) exercises any
discretionary authority or discretionary control respecting management of such plan or exercises
any authority or control respecting management or disposition of its assets, (ii) renders investment
advice for a fee or other compensation, direct or indirect, with respect to any moneys or other
property of such plan, or has any authority or responsibility to do so, or (iii) has any discretionary
authority or discretionary responsibility in the administration of such plan.
6
Appellant argues that if certain notices had been sent to Charlie Coleman, then Charlie
Coleman would have named appellant his beneficiary. This assertion is speculative at best, and
we do not agree that the mere possibility that one could potentially have been named beneficiary is
of beneficiary status rests upon the language and terms contained in the Plan.7
Section 4.2 of the Plan defines "beneficiary" as "any one or more of the persons comprising
the group consisting of the participant's spouse, the participant's descendants, the participant's parents
or the participant's heirs at law, ... or (b) the estate of such deceased participant ..." Coleman argues
that because he is Charlie Coleman's descendant, heir at law, and the representative of Charlie
Coleman's estate, under Plan Section 4.2, he is Charlie Coleman's beneficiary for purposes of § 1132.
We do not share appellant's view.
Plan Section 4.2 directs the Retirement Committee to designate a beneficiary from the
aforementioned group if (1) death benefits are payable at the time of the Plan participant's death; (2)
if the participant failed to specify an alternate payment option; and (3) if the participant failed to
name a beneficiary. Crucial t o this directive is that death benefits be "payable" at the time of the
participant's death. In this case no death benefits were payable at the time of Charlie Coleman's death.
The Plan provides specifically that if an unmarried, terminated participant such as Charlie
Coleman dies before beginning to receive his pension, no pension benefits are payable or owing. Plan
Section 2.5(a). Charlie Coleman elected to remain under the normal Lifetime Only Income payment
option. While this Plan option provides the greatest amount of monthly income, the Plan states
clearly that, under this option, at the time of the participant's death, all pension benefits cease.
Because no pension benefits were payable at the time of Charlie Coleman's death, the
Retirement Committee was not, and is not now, authorized to name a beneficiary from the list in
Section 4.2. As such, the terms of Plan Section 4.2 do not afford Coleman beneficiary status as
sufficient to confer status under § 1132. See, Keys v. Eastman Kodak Co., 739 F. Supp. 135
(W.D.N.Y.1990), aff'd, 923 F.2d 844 (2nd Cir.1990) (holding son, not designated beneficiary by
father, "stood no closer to beneficiary status than any other person"); Lerra v. Monsanto Co.,
521 F. Supp. 1257, 1263 (D.Mass.1981) (surviving spouse lacked standing when held not to be
beneficiary in absence of deceased's designation as such).
7
Appellant asserts that he is a "beneficiary" under Treasury Regulation 1.401-1, which states
that the term "beneficiary" includes "the estate of the employee, dependents of the employee,
persons who are the natural objects of the employee's bounty, and any persons designated by the
employee to share in the benefits of the plan after the death of the employee." This definition,
which is meant only to define the permissible scope of the term "beneficiary" for purposes of the
exclusive benefit rule in I.R.C. § 401(a), does not control this case. Beneficiary is defined both in
ERISA § 3(8) and in § 4.2 of the Plan; resort to Treasury Regulation 1.401-1 is inappropriate.
contemplated in § 1132. Coupled with the fact that Charlie Coleman did not name his son as his
beneficiary, this conclusion forecloses any statutory basis for Coleman's assertion of standing.
Appellant next asserts alternative, non-statutory bases to support his claim of beneficiary
status.
2. Fentron "Non-Enumerated Party" Analysis
Relying on Fentron Indus., Inc. v. National Shopmen Pension Fund, 674 F.2d 1300, 1304-05
(9th Cir.1982), Coleman argues that standing to bring an action under ERISA is not limited to the
list of parties enumerated in § 1132. The court in Fentron, looking to legislative history of ERISA,
held that § 1132's list of possible plaintiffs was not exclusive, and concluded that employers could
bring ERISA actions as well. Fentron employed a three-part analysis and held that in order to bring
an action, a plaintiff must: (1) suffer an injury in fact; (2) fall arguably within the zone of interests
protected by the statute; and (3) show that the statute itself does not preclude suit. Id. at 1305.
We have rejected the Fentron "non-enumerated party" standing concept previously, and do
so again today. "Where Congress has defined the parties who may bring a civil action founded on
ERISA, we are loathe to ignore the legislature's specificity. Moreover, our previous decisions8 have
hewed to a literal construction of § 1132(a)." Jamail, Inc. v. Carpenters Dist. Council of Houston
Pension & Welfare Trusts, 954 F.2d 299, 302 (5th Cir.1992), citing Hermann Hosp. v. MEBA
Medical & Benefits Plan, 845 F.2d 1286, 1289 (5th Cir.1988).
"... [O]nly Congress is empowered to grant and extend the subject matter jurisdiction of the
federal judiciary, and ... courts are not to infer a grant of jurisdiction absent a clear legislative
mandate." Pressroom Unions-Printers League Income Security Fund v. Continental Assurance Co.,
700 F.2d 889, 892 (2d Cir.1983). Absent clear Congressional expression that non-enumerated parties
such as the appellant have standing to sue under ERISA, we decline to confer such standing.9
8
See, e.g., Yancy v. American Petrofina, Inc., 768 F.2d 707, 708 (5th Cir.1985) (denying
standing to plaintiff not meeting statutory definition of "participant"); Joseph v. New Orleans
Elec. Pension, 754 F.2d 628 (5th Cir.1985) (retirees electing lump sum retirement benefits in lieu
of monthly pension benefits held not "participants" and refused standing).
9
In so holding, we are not alone. The Fentron zone of interest analysis has been uniformly
rejected by other circuits considering this question. See, e.g., Giardono v. Jones, 867 F.2d 409,
3. Christopher "But For" Analysis
Coleman next argues that he has standing by way of the "but for" analysis articulated in
Christopher v. Mobil Oil Corp., 950 F.2d 1209 (5th Cir.1992). We do not agree. Christopher is
distinguishable from the present case and does not provide Coleman with standing to bring his suit
under ERISA.
In Christopher, certain employees brought suit against their employer, Mobil, for, among
other things, violations of ERISA. At trial, these employees alleged that Mobil induced them into
accepting early retirement and taking a lump sum pension payment, rather than the normal annuity
payment. The employees were induced to take this action, they alleged, through Mobil's use of
misinformation and manipulation in a scheme contrived to reduce Mobil's work force.
At issue in Christopher was whether the plaintiffs had standing under § 1132 as
"participants".10 The Supreme Court, in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109
S.Ct . 948, 103 L. Ed. 2d 80 (1989), held that the definition of "participant" in § 1132 referred to
"former employees who "have ... a reasonable expectation of returning to covered employment' or
who have a "co lorable claim' to vested benefits." Id. 489 U.S. at 118, 109 S. Ct. at 958. Mobil,
relying on Yancy v. American Petrofina, Inc., 768 F.2d 707 (5th Cir.1985), argued that because the
plaintiffs had received a lump sum all of the benefits to which they were entitled, the plaintiffs lacked
a colorable claim to vested benefits. Mobil also contended that the plaintiffs, because they had taken
early retirement, did not have a reasonable expectation of returning to covered employment. As such,
413 (7th Cir.1989); Grand Union Co. v. Food Employers Labor Relations Ass'n., 808 F.2d 66,
71 (D.C.Cir.1987); Dime Coal Co. v. Combs, 796 F.2d 394, 396 (11th Cir.1986); Whitworth
Bros. Storage Co. v. Central States Pension Fund, 794 F.2d 221, 228 (6th Cir.), cert. denied, 479
U.S. 1007, 107 S. Ct. 645, 93 L. Ed. 2d 701 (1986); International Ladies Garment Workers Union
v. Teamsters, 764 F.2d 147, 153-54 (3d Cir.1985); Pressroom Unions-Printers League Income
Security Fund v. Continental Assurance Co., 700 F.2d 889, 892 (2d Cir.), cert. dismissed, 463
U.S. 1233, 104 S. Ct. 26, 77 L. Ed. 2d 1449, cert. denied, 464 U.S. 845, 104 S. Ct. 148, 78
L. Ed. 2d 138 (1983).
In a recent case, the Ninth Circuit, while not deciding the issue, raised the question
of whether its Fentron decision even remains good law in the Ninth Circuit. See Cripps v.
Life Ins. Co. of North America, 980 F.2d 1261 (9th Cir.1992).
10
See supra note 2.
Mobil concluded, the former employees lacked standing.
The Christopher court distinguished Yancy however, and stated that the case before it fell
somewhere between Yancy and Ingersoll-Rand v. McClendon, 498 U.S. 133, 142-44, 111 S. Ct. 478,
485, 112 L. Ed. 2d 474 (1990) (construing ERISA § 510 as foreclosing any state law cause of action
for wrongful termination to prevent vesting of benefits). A wrongfully discharged employee under
§ 510, the court pointed out, would be a former employee lacking both a colorable claim for vested
benefits and (unless he requested reinstatement) a reasonable expectation of returning to employment.
Under this analysis, the plaintiff could look solely to ERISA for his remedy, yet he would be denied
standing under ERISA. Recognizing the inequity of such a scenario, the court stated:
It would be unusual if in that situation his ability to assert a claim at all turned on whether or
not his requested relief included reinstatement; it would seem more logical to say that but for
the employer's conduct alleged to be in violation of ERISA, the employee would be a current
employee with a reasonable expectation of receiving benefits, and the employer should not
be able through its own malfeasance to defeat the employee's standing.
Id. at 1221, citing Amalgamated Clothing & Textile Workers Union, AFL-CIO v. Murdock, 861 F.2d
1406 (9th Cir.1988) (emphasis in original).
The court held that in situations akin to § 510 violations, where the standing question and
merits are "unavoidably intertwined," "whether a plaintiff has standing to assert ERISA rights may
depend upon whether he can establish a discharge or some other conduct in violation of ERISA, but
for which he would have standing." Id. at 1222. The court was careful, however, to contrast that
situation with the one in which the alleged violation, such as the one in the present case, was not one
that "in and of itself divested aggrieved parties of their status as covered employees able to sue." Id.
Christopher clearly poses a different scenario than the one we face today. In Christopher,
this court restored ERISA standing to individuals who had standing but were divested of that
standing through the ERISA violations of their employer. The employees alleged that they had been
wrongfully induced to retire, and but for the ERISA violation, would have continued their
employment and plan participation, thereby retaining status to sue under ERISA.
In the present case, Coleman never had standing to sue under ERISA since he was neither a
Plan participant nor a beneficiary. Thus, even if the Coleman's allegations of ERISA improprieties
were true, those violations could not be said to have divested the him of his status to sue. As such,
Christopher does not help the appellant.
Murdock Equity Analysis
Like Christopher, Amalgamated Clothing & Textile Workers Union, AFL-CIO v. Murdock
also fails to provide Coleman with standing to sue under ERISA. In Murdock, an employee benefit
plan fiduciary breached his duty of loyalty to the plan when he contrived an elaborate scheme to profit
on certain "greenmail" stock transactions and pension plan manipulations. The fiduciary, Murdock,
invested plan assets in companies in which he personally held substantial shares of stock. Using the
leverage he gained through control of the plan shares, Murdock forced the companies to repurchase
the plan stock at a premium. These transactions netted the plan millions of dollars.
Murdock obtained this money by causing the plan to be amended, and then taking steps to
terminate the plan and have its surplus assets distributed to him. The amendment to the plan provided
that any surplus held by the plan would revert to the sponsor, and through a series of transactions,
Murdock moved into the role of plan sponsor. He then terminated the plan by paying the participants
and beneficiaries the amounts actuarially due them.
The question before the court was whether the participants and beneficiaries, having received
all the benefits due them, had standing to seek a constructive trust remedy. Murdock challenged the
plaintiffs' standing, citing Kuntz v. Reese, 785 F.2d 1410, 1411-12 (9th Cir.), cert. denied, 479 U.S.
916, 107 S. Ct. 318, 93 L. Ed. 2d 291 (1986), for the proposition that plan participants and
beneficiaries have no standing to seek monetary damages for breach of fiduciary duty after they
receive their contractually defined and vested benefits from an ERISA plan.
The Murdock court distinguished Kuntz and found that the participants and beneficiaries did
have standing to seek a constructive trust remedy because ill-gotten profits can be held in constructive
trust for participants and beneficiaries, and can be construed as equitably vested benefits under an
ERISA plan. Murdock, 861 F.2d at 1419. Critical to the court's holding was the fact that the
fiduciary engaged in a scheme to personally profit from the breach of his duty of loyalty. Id. at 1418.
The plan amendments provided that any surplus plan profits reverted to the plan sponsor; therefore,
any profits which would have been returned to the plan would have automatically passed to Murdock.
The court held that such an outcome would run counter to the goals of ERISA, and stated that
It would be ironic if the very acts of benefit payment and plan termination that allegedly
resulted in a fiduciary personally obtaining ill-gotten profits should also serve to deny plan
beneficiaries standing to seek a constructive trust on those profits to redress the fiduciaries'
alleged breach of the duty of loyalty.
Id.
The Murdock court granted standing because it was the "only means available to give effect
to the goals of ERISA." Id. at 1411. Moreover, the court stressed that its grant of standing was
limited to the specific type of scenario before it.
The situation before us today is very different from that in Murdock. Coleman never has been
a participant in or beneficiary of the Plan, he does not assert any action on the part of Champion to
personally profit by its alleged activities, and he has not shown that granting him standing would be
the "only means available to give effect to the goals of ERISA." Murdock simply does not apply to
Coleman's situation; as such, Coleman's reliance on Murdock as a basis for standing is misplaced.
III. CONCLUSION
Because we find that Coleman did not have standing to bring this action under ERISA, we
do not reach the merits of his claim. We therefore AFFIRM the judgment below; however, we do
so on different grounds than those relied on by the lower court.