Weir v. Federal Asset Disposition Ass'n , 123 F.3d 281 ( 1997 )

United States Court of Appeals,
Fifth Circuit.
No. 95-10877.
James E. WEIR, Individually and as Representatives of a Class of
all Former Employees of the Dallas Office of the Federal Asset
Disposition Association ("FADA"); William Ferguson, Individually
and as Representatives of a Class of all Former Employees of the
Dallas Office of the Federal Asset Disposition Association
("FADA"); Pamela Bender, Individually and as Representatives of a
Class of all Former Employees of the Dallas Office of the Federal
Asset Disposition Association ("FADA"); Shirley Albright; Eleanor
M. Bates; Melinda Benton; John B. Bills; Brenda S. Blume; Fred
A. Brown; Mozella L. Brown; William P. Clements; Edgar Allen
Cruthirds; Ronda R. Decker; Valerie M. Farmer; Karen S.
Fitzgerald; Jackie L. Flannagan; Toi B. Forswall; Yolanda
Franks; Lori Lee Frantz-Burgin; James Steve Gerhardt; Bonni K.
Gibson; Gwendolyn C. Giesen; Patricia Ann Golden; Priscilla
Gordon-Wright; Gregory Gormley; Janet Gormley; C. Kay Gough;
Deborah Hancock; Paul M. Harris; Susan Deneed Hasek; Lindsay
Beth Haynes; Laurie Lee Hilderbrand; Monette J. Howell; Mary
Beth Hunt; Patti D. Jackson; Mary E. Johnson; Sally Kibler;
Kimberly W. Kirkendoll; Kristi A. Knorpp; Craig Alan Koenig;
Kathleen G. Kovatch; R. Scot Lange; Shelly Lange; Britt Lemmons;
Stephen C. Massanelli; Jean Matney; Jimmy E. May; Isqa Lylah
Mclarty; Blair G. Mercer, Jr; Pamela F. Mitchell; James Weston
Moffett; Thomas M. Pacha; Thomas R. Phillips; Abdel-Ilah
Rahmoune; Cheryl D. Robinson; Pauline R. Roeder; Belinda Baxter
Rogers; Lawrence A. Rothrock; Justina M. Sansom; Kimberly A.
Saunooke; Yvonne E. Scobedo; Robert B. Shults; Craig B. Smith,
Dorothy E. Snodgrass; Sue J. Sparks; Richard R. Spies; Kenneth
Joseph Springfield; Tracey L. Talley; Gary W. Tallon; Connie
Thesman, Ms; Sandy Wagnor; Denise Enise Wall; Sherry Lynn
Watson; Genine A. Weiss; Bruce Wheeless; Debra S. Williams; V.
Kay Williams; Valerie A. Williams; Richard D. Wilson; Diane P.
Wood; Barry C. Wren; Thomas G. Zimmerman; Joseph Zorn,
Plaintiffs-Appellants,
v.
FEDERAL ASSET DISPOSITION ASSN; Steven A. Seelig, Individually
and as Director, FADA Oversight/Dissolution for the Resolution
Trust Corporation and in his capacity as Fiduciary of the Retention
Pay and Benefits Policies Issued by FADA; Federal Deposit
Insurance Corporation, as Receiver for Federal Asset Disposition
Association; The FADA Retention Pay And Benefits Policies,
Defendants-Appellees.
Sept. 25, 1997.
1
Appeal from the United States District Court for the Northern
District of Texas.
Before JOLLY, DUHÉ and EMILIO M. GARZA, Circuit Judges.
DUHÉ, Circuit Judge:
Appellants, eighty-three former employees of the Federal Asset
Disposition Association, filed a class action suit under the
Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001et seq., seeking benefits they claim are owed to them under their
employer's severance plans. The district court denied the
challenge. For reasons that follow, we affirm in part, reverse in
part, and remand.
I
The Federal Asset Disposition Association ("FADA") was a
federally-chartered savings and loan association wholly owned by
the Federal Savings and Loan Insurance Corporation ("FSLIC").
FADA's sole function was to assist the FSLIC in managing and
disposing the assets of failed thrifts that the FSLIC insured.
FADA was not a welcome entity on the savings and loan
frontier. Almost from its inception in 1985, FADA came under
extensive legislative attack. In 1988, Congress initiated efforts
to abolish FADA, and in January 1989, Congress began consideration
of legislation that would become the Financial Institutions Reform,
Recovery, and Enforcement Act ("FIRREA"), 12 U.S.C. § 1811 et seq.,
which in all drafts included a provision to eliminate FADA.
Understandably, FADA employees were constantly concerned about job
security. In this context, FADA's Board of Directors adopted the
following ERISA-protected severance plans (collectively, the
2
"Plans"):
Policy No. 820: This policy, adopted 3 May 1988, provided
that employees terminated as a result of a reduction in force or
job elimination necessitated by business reasons would receive,
among other benefits, a lump sum separation payment at the time of
termination equal to between one-half (1/2) and two (2) months pay
depending on length of service.
First Addendum: This addendum, adopted on 29 September 1988,
supplemented Policy No. 820 and was also known as the Employee
Retention Plan. It provided that if FADA's charter was revoked or
withdrawn, or if FADA was dissolved by act of Congress, "each
employee who is in FADA's employ on the date of termination shall
be paid, in one lump-sum payment, an amount of money ("severance
benefit amount") equal to his or her then-current monthly salary,
for four months.... This is in addition to benefits provided by
[FADA] Policy No. 820."1
Second Addendum: This addendum, adopted on 2 May 1989,
supplemented Policy No. 820, as amended by the First Addendum.
According to the terms of the Second Addendum, the First Addendum
was to remain in full force and effect.2 The Second Addendum
1
The First Addendum also provided that "[p]rior to any
termination by Act of Congress, FADA shall prepay to the provider
of major medical insurance coverage for Association employees, a
prepayment on behalf of each employee equal to the monthly premium
normally paid by FADA to such provider for the insurance coverage
for that employee and his or her dependents for four months."
2
The Second Addendum provided that "[n]othing in this Addendum
is intended or shall be construed to change the application or
interpretation of FADA Personnel Policy No. 820 or the Addendum to
such Policy, dated September 29, 1988, and any payment of the
3
provided, in pertinent part, that any covered employee, as defined
therein, "who, between May 2, 1989 and the Expiration Date, is
given notice of termination of employment by FADA, for any reason
other than cause, shall be entitled to the Severance Benefits, ...
provided, however, that no Severance Benefits shall be payable
pursuant to this subparagraph if, prior to the giving of notice of
termination of employment by FADA: (i) a Sale shall have occurred,
and (ii) the Successor shall have made a Comparable Offer of
Employment to such employee[.]" So, in the event of a Sale,
severance benefits were payable under the Second Addendum only if
employees received notices of termination prior to receiving
comparable job offers.
In August 1989, Congress passed FIRREA in an effort to resolve
the burgeoning savings and loan crisis. FIRREA dissolved the
FSLIC, and it mandated that 100% of FADA's capital stock, which the
FSLIC had held, be transferred to the FSLIC Resolution Fund
("Fund"), see 12 U.S.C. § 1821a(a)(2)(A), which the Federal Deposit
Insurance Corporation ("FDIC") managed, see 12 U.S.C. §
1821a(a)(1). Moreover, FIRREA directed that FADA be liquidated
within 180 days of its passage. See FIRREA § 501(f), Pub.L. No.
101-73, 103 Stat. 183 (1989) (amended 1991). Overseeing these
liquidation efforts was Appellee Steven A. Seelig, Director of the
FDIC's Division of Liquidation. Seelig was also responsible for
administering the FADA severance plans. In February 1990, FADA was
Severance Benefits as defined in this Addendum shall not be in
derogation of any employee's right to the benefits described in
FADA Personnel Policy No. 820."
4
placed into receivership, and the Resolution Trust Corporation
("RTC"),3 an arm of the FDIC, was appointed FADA's receiver.
Seelig advised FADA management that two options were available
for FADA's liquidation: either a sale of FADA to a third party
purchaser or the merger of FADA into the RTC or the FDIC. In
pursuit of the first option, efforts were made to sell FADA to a
private entity, but those efforts were unsuccessful, and FADA
employees were so advised in November 1989. Appellants contend
that on the same or following day, they were also told they should
consider themselves in receipt of notice that FADA would close, and
that their jobs would terminate, on 31 December 1989. Appellees
disagree, maintaining they did not give notice of termination until
December 1989.
By 15 December 1989, the FDIC or the RTC offered to Appellants
jobs comparable to those they had had at FADA. Some Appellants
rejected these offers; FADA therefore sent them "Notice of Job
Elimination" letters dated 21 December 1989, setting 5 January 1990
as their termination date. Appellees contend this letter was the
first and only formal notice of termination FADA gave. Those
Appellants who accepted the job offers began to work for the FDIC
or the RTC on 2 January 1990 and were never sent "Notice of Job
Elimination" letters.
In December 1989, Seelig, as Plan Administrator, determined
that Appellants were ineligible for severance benefits under the
3
Since these events occurred, the RTC has been succeeded by
the FDIC.
5
Plans. Appellants thereafter filed suit under ERISA against FADA,
Seelig, and the RTC (now the FDIC), seeking judicial review of
Seelig's decision. After a bench trial, the court affirmed
Seelig's decision. Appellants timely appeal.
II
We review a district court's factual findings for clear error
and its conclusions of law de novo. See Reeves v. AcroMed Corp.,
103 F.3d 442, 445 (5th Cir.1997) (citations omitted). Before
reaching the merits of this case, we must address two preliminary
issues.
A
First, Appellees contest the district court's application of
the de novo standard of review in its review of Seelig's
determination as to Appellants' ineligibility for severance
benefits. They insist the district court should have reviewed
Seelig's determination for abuse of discretion only. We disagree.
A reviewing court employs an abuse of discretion standard only when
an ERISA plan gives to the plan administrator discretionary
authority to construe the plan terms or to determine benefit
eligibility. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
101, 115, 109 S.Ct. 948, 956-57, 103 L.Ed.2d 80 (1989). Where, as
here, the ERISA plans confer upon the administrator no such
authority, the reviewing court must review the administrator's
conclusions de novo. See id.4 Following traditional principles of
4
Appellants agree the proper standard is de novo, but they
insist the district court, despite its statement to the contrary,
reviewed Seelig's determinations for abuse of discretion.
6
contract and trust law, therefore, a reviewing court must construe
a participant's claim " "as it would have any other contract
claim—by looking to the terms of the plan and other manifestations
of the parties' intent.' " Sunbeam-Oster Co., Inc. Group Benefits
Plan for Salaried and Non-Bargaining Hourly Employees v.
Whitehurst, 102 F.3d 1368, 1373 (5th Cir.1996) (quoting Bruch, 489
U.S. at 112-13, 109 S.Ct. at 955-56).
B
Next, Appellants argue that the Plans contain ambiguous terms
that should be construed against Appellees under the doctrine of
contra proferentem. This doctrine, which directs courts to resolve
contractual ambiguities in insurance contracts against the drafter,
has been held to apply to insurance contracts covered by ERISA.
See, e.g., Ramsey v. Colonial Life Ins. Co., 12 F.3d 472, 479 (5th
Cir.1994). Whether the doctrine can also direct the resolution of
ambiguity in severance plans covered by ERISA appears to be an
issue of first impression for this Court. We need not reach its
merits, however, because we conclude the district court correctly
found that the Plans, when examined in their entirety, are
susceptible to only one reasonable interpretation. That the
Appellants, however, fail to demonstrate that the court deferred to
Seelig's interpretations of the Plans. They assert only that the
court "ignored" testimony favorable to them. This argument,
however, does not carry the day, and, as the district court pointed
out, is not useful advocacy. The district court, as trier of fact,
is responsible for making credibility determinations. That it made
such determinations against Appellants is not proof that it applied
an abuse of discretion standard. Our review of the court's orders
and opinions reveals the court properly applied the de novo
standard. Indeed, the court stated it reached its conclusions
after a consideration of all the evidence.
7
parties may have interpreted the plans differently is of no moment.
Disagreement as to the meaning of a contract does not make it
ambiguous, nor does uncertainty or lack of clarity in the language
chosen by the parties. See D.E.W., Inc. v. Local 93, Laborers'
Int'l Union, 957 F.2d 196, 199 (5th Cir.1992). Where, as here,
"the written instrument is so worded that it can be given a certain
definite legal meaning or interpretation, then it is not ambiguous,
and this Court will construe the contract as a matter of law." Id.III
The first substantive issue before us is whether the district
court correctly found that Appellants are not entitled to severance
benefits under the Plans. The court reasoned that the Plans,
contrary to Appellants' position, do not constitute "Pay to Stay"
policies designed to reward solely the services and loyalties of
those employees who remained at FADA until its termination.
Rather, the court found, the award of severance benefits under the
Plans is conditional on the occurrence, or non-occurrence, of
certain events, as outlined in the Second Addendum. Finding that
such terms of the Second Addendum were not satisfied, the court
denied Appellants' claim for severance benefits under all the
Plans. Appellants challenge that finding for clear error. In
particular, Appellants challenge both the district court's decision
to read the Plans jointly rather than independently and the court's
factual findings under various terms in the Second Addendum.
We agree with Appellants that the Plans should be read
independent of one another. Language in the First Addendum and the
8
Second Addendum reveals that the three Plans provide benefits
independent of the limitations, restrictions, or conditions of each
other.5 Each successive addendum enhanced, rather than superseded,
the plan before it. In determining whether Appellants are entitled
to benefits, therefore, we must examine each plan separately.
A
We conclude the district court's denial of severance benefits
under unamended Policy No. 820 is not clear error. Policy No. 820
was not a "Pay to Stay" policy; rather, it stated that eligible
employees would receive benefits only if they were terminated as a
result of a reduction in force or job elimination necessitated by
business reasons. Appellants were terminated for neither of these
reasons; rather, those who were terminated were terminated because
they rejected the job offers extended by the FDIC or the RTC.
B
We conclude the court did commit clear error, however, in
denying benefits under the First Addendum, which was a "Pay to
Stay" policy. Appellees insist that benefits are due under the
First Addendum only in the event an employee has suffered a period
of unemployment after his or her termination by FADA. In support,
Appellees note that the First Addendum states its purpose is to
5
The First Addendum states that the benefits afforded under it
are "in addition to benefits provided by Association Policy No.
820." The Second Addendum states that "[n]othing in this Addendum
is intended or shall be construed to change the application or
interpretation of FADA Personnel Policy No. 820 or the Addendum to
such Policy, dated September 29, 1988, and any payment of the
Severance Benefits as defined in this Addendum shall not be in
derogation of any employee's right to the benefit described in FADA
Personnel Policy No. 820."
9
"provide assurance to personnel that if proposed legislation is
successful and FADA's charter is withdrawn, [such personnel] will
have a reasonable period of opportunity, with income, to pursue
other gainful employment." (emphasis added). Because Appellants
suffered no unemployment, Appellees maintain, they are therefore
not entitled to severance benefits under this plan. We disagree.
The paragraph from which Appellees extracted the sentence
states in full:
I. Purpose
An Employee Retention Plan, with appropriate incentives,
will provide assurance to personnel that if proposed
legislation is successful and FADA's charter is
withdrawn, they will have a reasonable period of
opportunity, with income, to pursue other gainful
employment. This plan's objective is to ensure that FADA
will retain the services of its employee base and not
lose personnel through attrition because of justifiable
concerns about the dissolution of FADA.
While the first sentence may support Appellees' position, the
second sentence does not. A plain-language reading indicates that
the purpose of the plan is to pay employees for staying with the
company.
This plain-language reading is buttressed by the entitlement
language of the plan itself. Unlike the Second Addendum, the First
Addendum does not define eligibility with respect to a job
termination. Rather, the First Addendum clearly states that "[i]n
the event of a termination of FADA by an act of Congress resulting
in revocation or withdrawal of FADA's charter or dissolution of the
Association[,] each employee who is in FADA's employ on the date of
termination shall be paid, in one lump-sum payment, an amount of
10
money ... equal to his or her then-current monthly salary, for four
months as set forth below." Contrary to Appellees' position,
nothing in this language indicates that payment of severance
benefits is contingent upon unemployment. In the absence of such
language, we will not construe eligibility to depend upon a period
of unemployment. See Bellino v. Schlumberger Tech., Inc., 944 F.2d
26, 31 (1st Cir.1991) ("Federal courts have established no hard and
fast rule that an individual must suffer a period of unemployment
to qualify for severance benefits under ERISA. Those courts that
have deemed unemployment a prerequisite to such benefits have
predicated their decisions on the particular terms of the ERISA
plan at issue and its application to the specific facts before
them."); Barnett v. Petro-Tex Chemical Corp., 893 F.2d 800, 809
(5th Cir.1990) (recognizing that period of unemployment is not
prerequisite for entitlement to termination pay and that each ERISA
case is controlled by language of policy itself). Under the First
Addendum, benefits are conditioned only upon FADA's statutory
termination. FIRREA mandated that FADA liquidate within 180 days
of its passage. See FIRREA § 501(f), Pub.L. No. 101-73, 103 Stat.
183 (1989) (amended 1991). Eligible Appellants are thus entitled
to benefits under the First Addendum.6
6
Appellees maintain the Plans should be read jointly as one
policy. They suggest, therefore, that because a "Sale" of FADA
occurred, Appellants can find relief, if at all, only under the
Second Addendum. As we pointed out in note 5, supra, however, the
plain language of the Second Addendum belies Appellees' claim.
Moreover, under the section labeled "Scope", the Second Addendum
states that the supplemental severance benefits it offers "shall
not be available to any employee of FADA ... who is paid the
severance benefit amount described in the Addendum to FADA
11
C
We conclude the district court's denial of severance benefits
under the Second Addendum is not clear error.7 Unlike the First
Addendum, the Second Addendum is not a "Pay to Stay" policy. FADA
owes no severance benefits under the Second Addendum if, prior to
the time it gave notices of termination of employment, (i) a "Sale"
had occurred and (ii) FADA's "Successor" had made a "Comparable
Offer of Employment." Finding that a Sale had occurred and that
Comparable Offers of Employment were timely made, the district
court denied Appellants severance benefits. Appellants challenge
the court's findings.
Personnel Policy No. 820, dated September 29, 1988 [i.e., the First
Addendum]." In drafting the Second Addendum, therefore, FADA
anticipated that employees could be eligible for benefits under
both the First and Second Addendum. That a "Sale" of FADA occurred
thus does not a fortiori foreclose eligibility under the First
Addendum.
7
This Court recognizes that its conclusion that eligible
Appellants are entitled to benefits under the First Addendum may
foreclose entitlement to benefits under the Second Addendum, in
light of the following language:
III. Scope
The supplemental Severance Benefits described in Section
II above shall not be available to any employee of FADA
(i) who is paid the severance benefit amount described in
the Addendum to FADA personnel policy No. 820, dated
September 29, 1988 [the First Addendum], and (ii) for
whom FADA either has (A) made available for a four month
period ... major medical insurance coverage ... or (B)
has paid to the employee ... a lump sum amount equal to
[an insurance premium].... No employee shall be entitled
to receive the Severance Benefits described herein more
than once. (emphasis added).
We nevertheless will address the merits of the parties'
arguments regarding entitlement under the Second Addendum in
the event some Appellants would still qualify.
12
1
The Second Addendum defines "Sale" as, inter alia, (i) any
change in the direct or indirect beneficial ownership of more than
fifty percent (50%) of the capital stock of FADA effected by
transfer of issued and outstanding shares, issuance of additional
shares, or otherwise; or (ii) any transfer of the right to appoint
or elect Directors constituting a majority of the Board of
Directors of FADA. Upon passage of FIRREA, the FDIC acquired the
right to appoint all of FADA's directors. Seelig, as Plan
Administrator, thus determined that passage of FIRREA constituted
a Sale under subsection (ii).8 The district court agreed, and this
finding is not clear error.9
2
Although a Sale had occurred, eligible Appellants could still
receive benefits under the Second Addendum unless FADA's Successor
gave eligible Appellants "Comparable Offers of Employment" before
8
Appellants suggest that a "Sale" also occurred when, pursuant
to FIRREA, 100% of FADA's capital stock was transferred to the
Fund. We need not reach the merits of this issue. The terms of the
Second Addendum require only that a "Sale" have occurred. The
FDIC's acquisition of the right to appoint a majority of FADA's
Board of Directors effected a "Sale." That a "Sale" may also have
occurred upon transfer of 100% of FADA's capital stock is
inapposite.
9
Appellants complain that the passage of FIRREA cannot
constitute a "Sale" for purposes of the Second Addendum because
Seelig never communicated to them that any transaction or event
other than a sale of FADA to a private buyer qualified as a "Sale."
Seelig, however, was under no obligation under the Plans or
otherwise to so communicate. The plain language of the Second
Addendum stated what events constitute a "Sale." Appellants,
therefore, were adequately notified of the definition of "Sale"
upon receipt of a copy of the plan terms.
13
FADA gave them notices of termination of employment. The parties
dispute which entity became FADA's Successor and when notices of
termination were given.
The Second Addendum defines "Successor" as any person or
entity that has acquired (i) the direct or indirect beneficial
ownership of more than 50% of FADA's capital stock; or (ii) the
right to appoint or elect Directors constituting a majority of
FADA's Board of Directors. Under the second definition, the FDIC
is clearly a Successor to FADA; upon passage of FIRREA, the FDIC
had authority to appoint all of FADA's directors. Appellants
insist, however, that the Fund, because it acquired 100% of FADA's
capital stock upon passage of FIRREA, see 12 U.S.C. §
1821a(a)(2)(A), is also a Successor under the first definition. We
disagree.
To be a Successor under the first definition, an entity must
acquire beneficial ownership of more than 50% of FADA's capital
stock. The Second Addendum does not define "beneficial ownership."
We thus seek guidance from securities law, which defines
"beneficial owner" for purposes of 15 U.S.C. §§ 78m(d) & (g), as
follows:
For the purposes of section 13(d) and 13(g) of the [Securities
and Exchange Act of 1934, 15 U.S.C. § 78 et seq.] a beneficial
owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares:
(1) Voting power which includes the power to vote, or to direct the
voting of, such security; and/or
(2) Investment power which includes the power to dispose, or to
direct the disposition of, such security.
14
17 C.F.R. § 240.13d-3(a). A beneficial owner, therefore, has
voting and/or investment power over the securities it purports to
own. The Fund had no such ownership interests; indeed, it was
merely an accounting creation, not a legal entity, that existed on
paper only. Beneficial ownership of FADA's capital stock belonged
to the FDIC, which had exclusive statutory authority to manage the
Fund. See 12 U.S.C. § 1821a(a)(1). Such authority included the
right to dispose of and to vote, or to direct the voting of, FADA's
corporate stock.
The district court found that the FDIC, either on its own or
through the RTC, gave Comparable Offers of Employment to
Appellants. Appellants do not challenge that finding on appeal.
They do challenge, however, whether such offers were extended
before FADA gave notices of termination of employment.
3
Appellants contend they received notices of termination of
employment in mid-November 1989, which is when they were also
informed that FADA would not be sold to a private buyer and that
FADA would likely close by year's end. The district court found
otherwise, weighing the testimony before it in favor of Appellees,
who maintain that notices of termination were not distributed until
21 December 1989. This finding is not clear error. Alternatively,
Appellants argue that passage of FIRREA constituted notice of
termination of employment. The district court disagreed, and we
affirm. FIRREA mandated only that FADA terminate; it did not also
announce that its passage constituted effective notice to FADA
15
employees of their termination of employment.
IV
Citing various omissions or misrepresentations they allege
Appellees made in connection with the interpretation and
implementation of the Plans, Appellants next claim that FADA and
Seelig violated fiduciary duties owed to Appellants. The district
court found otherwise, explaining that Appellees never amended the
Plans and neither misrepresented nor misled Appellants with respect
to the Plans. The court found that, in fact, Appellees made
sincere efforts to interpret and implement the Plans and to inform
Appellants of their interpretations. This finding is not clear
error.
Appellants next beseech this Court to estop Appellees from
denying them severance benefits, claiming that "[a]ll of FADA's
communications with them, including its policies, memos, and other
statements," modified the Plans and led them to believe they were
entitled to severance benefits if they stayed until FADA's
termination. It is unclear to what "other statements" Appellants
refer. To the extent Appellants' claim is based on FADA's
purported oral communications, we reject it. An estoppel cause of
action is not cognizable under ERISA in suits seeking to enforce
rights to benefits based on purported oral modifications of plan
terms. See, e.g., Rodrigue v. Western and Southern Life Ins. Co.,
948 F.2d 969, 971 (5th Cir.1991); Cefalu v. B.F. Goodrich Co., 871
F.2d 1290, 1297 (5th Cir.1989) (concluding that oral agreements or
modifications to ERISA plan are contrary to express provisions of
16
ERISA); Degan v. Ford Motor Co., 869 F.2d 889, 895 (5th Cir.1989)
(declining to create federal common law in this area, reasoning
that this power extends only to areas that federal law preempts but
does not address and noting that Congress has addressed the
question of amendment in 29 U.S.C. § 1102(a)(1), which expressly
requires that every employee benefit plan be established and
maintained pursuant to a written instrument).
Whether an estoppel cause of action is cognizable under ERISA
for written statements that purport to amend plan terms,10 however,
is an issue not squarely addressed by this Court.11 We have
considerable doubt as to whether such an action exists in the
instant case. We need not resolve this issue, however, because
even assuming, arguendo, that Appellants' estoppel action does
exist, we conclude it nonetheless fails. To recover benefits under
an equitable estoppel theory, an ERISA beneficiary must establish
a material misrepresentation, reasonable and detrimental reliance
upon the representation, and extraordinary circumstances. In re
Unisys Corp. Retiree Medical Benefit "ERISA" Litig., 58 F.3d 896,
907 (3d Cir.1995) (citations omitted) (reaching estoppel claim
based on alleged misrepresentations in summary plan descriptions).
The district court rejected Appellants' estoppel claim, finding
that Appellants failed to show that Appellees made material
10
We note, in any event, that the district court rejected
Appellants' argument that memoranda issued by Seelig and FADA
modified the Plans.
11
This Court was faced with this precise issue in Izzarelli v.
Rexene Products Co., 24 F.3d 1506, 1517 (5th Cir.1994), but
declined to reach it.
17
misrepresentations.12 We agree. Moreover, even assuming, arguendo,
that Appellants established material misrepresentations, we
conclude Appellants have failed to demonstrate their reasonable
reliance on such. Where, as here, a plan participant is in
possession of a written document notifying her of the conditional
nature of benefits, her "reliance on employer representations
regarding benefits may never be "reasonable.' " Id. at 908.
V
Appellants next challenge the district court's dismissal of
their compensatory and punitive damages claims against Seelig in
his individual capacity. The district court based its decision on
Supreme Court precedent holding that a plan fiduciary cannot be
held personally liable, under ERISA's remedial provisions, to plan
beneficiaries for extracontractual compensatory or punitive damages
arising from an allegedly wrongful denial of benefits. See Mertens
v. Hewitt Assoc., 508 U.S. 248, 255-58, 113 S.Ct. 2063, 2068-70,
124 L.Ed.2d 161 (1993) (holding that ERISA § 502(a)(3), 29 U.S.C.
§ 1132(a)(3), which allows plan beneficiary to bring action to
obtain "appropriate equitable relief" for violations of either
ERISA or ERISA-qualified plan, does not allow such beneficiary to
sue plan fiduciary in his or her individual capacity for
extracontractual damages, which are "the classic form of legal
relief" (emphasis in original)); Massachusetts Mut. Life Ins. Co.
v. Russell, 473 U.S. 134, 144, 105 S.Ct. 3085, 3091, 87 L.Ed.2d 9612
The district court reached Appellants' estoppel claim without
discussing whether it exists in the first instance.
18
(1985) (holding that ERISA § 502(a)(1), 29 U.S.C. § 1132(a)(1),
which allows plan beneficiary to bring action for fiduciary breach,
does not allow such beneficiary to sue plan fiduciary in his or her
individual capacity for extracontractual damages).
Pointing to the Supreme Court's recent decision in Varity v.
Howe, --- U.S. ----, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996),
Appellants insist that both Mertens and Russell have been
overruled. Appellants read Varity as holding that plan
participants, under ERISA § 502(a)(3), can now recover
extracontractual damages as a form of "appropriate equitable
relief" from a plan fiduciary in his or her individual capacity.
Appellants' reading is incorrect. Varity held nothing more than
that ERISA § 502(a)(3) authorizes plan beneficiaries to bring a
lawsuit on their own behalf for injunctive relief for a fiduciary
breach. See id. at ----, 116 S.Ct. at 1077-79. Varity did not
hold, as Appellants believe, that ERISA plan beneficiaries can sue
plan fiduciaries for extracontractual relief for damages arising
from a fiduciary breach. Indeed, the issue before the Varity Court
was whether plan beneficiaries had a cause of action under ERISA §
502(a)(3) for injunctive relief. The district court's dismissal of
Appellants' damages claims against Seelig is therefore proper.
VI
For the foregoing reasons, we AFFIRM IN PART, REVERSE IN PART,
and REMAND for proceedings consistent with this opinion.
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