Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-13-04743/USCOURTS-ca3-13-04743-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

________________

Nos. 13-4633 & 13-4743

________________

JOHN COTTILLION; BEVERLY ELDRIGE,

on behalf of themselves and all others similarly situated,

Cross-Appellants in No. 13-4743

v.

UNITED REFINING COMPANY; UNITED REFINING

COMPANY PENSION PLAN FOR 

SALARIED EMPLOYEES;

UNITED REFINING COMPANY 

RETIREMENT COMMITTEE;

JOHN AND MARY DOES 1 TO 10

United Refining Company; United Refining

Company Pension Plan for Salaried Employees;

United Refining Company Retirement 

Committee,

Appellants in No. 13-4633

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2

________________

Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. Civil Action No. 1-09-cv-00140)

District Judge: Honorable Cathy Bissoon

________________

Argued October 1, 2014

Before: AMBRO, CHAGARES, 

and VANASKIE, Circuit Judges

(Filed: March 18, 2015)

Eugene D. Fowler, Esq.

Christopher J. Rillo, Esq. (Argued)

Diane M. Soubly, Esquire

Rillo Law Group

111 Pine Street, Suite 1400

San Francisco, CA 94111

Counsel for Appellants/Cross Appellees

Tybe A. Brett, Esq. (Argued)

Ellen M. Doyle, Esq.

Joel R. Hurt, Esq.

Feinstein, Doyle, Payne & Kravec

429 Forbes Avenue

Allegheny Building, 17th Floor

Pittsburgh, PA 15219

Counsel for Appellees/Cross Appellants

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Jessica R. Amunson, Esq.

Jenner & Block

1099 New York Avenue, Suite 900

Washington, DC 20001

Craig C. Martin, Esq.

Matthew J. Renaud, Esq.

Amanda S. Amert, Esq.

Jenner & Block

353 North Clark Street

Chicago, IL 60654

Janet M. Jacobson, Esq.

The American Benefits Council

1501 M Street, N.W., Suite 600

Washington, DC 20005

Scott J. Macey, President and CEO

Debra Davis, Vice President

The ERISA Industry Committee

1400 L Street, N.W.

Washington, DC 20005

Kat Comerford Todd, Esq.

Steven P. Lehotsky, Esq.

Warren Postman, Esquire

National Chamber Litigation Center, Inc.

1615 H Street, N.W.

Washington, DC 0062

Counsel for Amicus Appellants/Cross-Appellees

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Mary E. Signorille, Esq.

Anita Khushalani, Esq.

AARP/AARP Foundation Litigation

601 E Street, N.W.

Washington, DC 20049

Counsel for Amicus Appellees/Cross-Appellants

________________

OPINION

________________

AMBRO, Circuit Judge

The Employee Retirement Income Security Act of 

1974 (“ERISA”), a law meant to guarantee that employees 

will receive the retirement benefits they are promised, 

governs pension plans. We determine whether the calculation 

of retirement benefits that the United Refining Company and 

co-defendants (who appeal and are collectively referred to 

throughout this opinion as “United”) provided in a pension 

plan to a specific class of former employees (collectively, 

“Employees”) varied, as United argues, depending on how 

old they were when they elected to receive the benefits. 

Because United’s reading finds no support in the text of the 

plans, we affirm the rulings of the District Court.

I. Factual Background and Procedural History

John Cottillion worked at United for 29 years, from 

1960 until 1989. He was 54 years old when he quit, and his 

benefits had vested under “the 1980 Plan,” which is the 

version of United’s Pension Plan for Salaried Employees that 

applies to people whose benefits vested (i.e., became nonCase: 13-4743 Document: 003111907173 Page: 4 Date Filed: 03/18/2015
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forfeitable under ERISA) after 1980 but before 1987. 

Because his employment at United was long enough to vest 

benefits and he was too young on leaving United to receive 

those benefits, Cottillion belongs to the subset of former 

United employees involved in this lawsuit: “terminated vested 

participants” or “TVPs” in United’s pension plan. TVPs are 

distinct from Early Retirees, who are not a part of this 

litigation; the latter are people who retired directly from 

United at an age older than 591⁄2 or 60 (depending on the 

applicable Plan) but younger than 65.

When Cotillion left the company, United wrote a letter 

informing him that “[a]s a terminated Pension Plan 

participant with a vested interest, you are eligible for a 

deferred retirement benefit from the United Refining 

Company Pension Plan for Salary [sic] Employees.” The 

letter further stated that he “may elect to have [his] monthly 

retirement benefit begin at anytime [sic] after October, 1995,” 

the month in which Cottillion would turn 60, and that his 

“monthly retirement benefit will be $573.70 at age 60.” The 

letter did not state that the amount of Cottillion’s benefit 

depended on whether he elected to receive it at age 60 or 

later. TVPs under the 1987 Plan were likewise informed of 

their pension amounts and told they could receive them the 

month following their “591⁄2 birthday . . . without any 

reduction for early retirement.” E.g., Beverly Eldridge, 

Application for Commencement of Deferred Vested Benefits, 

Terminated Vested Participants (Jan. 9, 1997).

On January 30, 2002, United amended and restated the 

plan, backdated to January 1, 1995 (the “1995 Plan”), to 

comply with then-recent amendments to ERISA. The Internal 

Revenue Service informed United that certain changes needed 

to be made to the Plan before it could issue a letter 

confirming that the 1995 Plan would receive favorable tax 

treatment; in response, United amended the 1995 Plan, 

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effective January 1, 2002 (the “2002 Plan”). Both the 1995 

and 2002 Plans included a § 5.04(c), absent from the 1980 

and 1987 Plans, stating that the benefits of TVPs who receive 

pensions before age 65 would be “actuarially reduced to 

reflect the earlier starting date thereof.” Neither the 1995 

Plan nor the 2002 Plan applies to any employee-plaintiff in 

this case, but they are relevant because of what happened 

next.

In 2005, plan actuaries (professionals who perform a 

variety of services relating to implementing and maintaining 

ERISA plans) at the firm Towers Perrin informed Lawrence 

A. Loughlin, the plan administrator, that United had 

erroneously paid to TVPs vested under the 1980 and 1987 

Plans pensions that were not “actuarially reduced,” i.e., 

calculated in light of the TVP’s age. (The younger a 

beneficiary is, the longer she will receive benefits, and thus 

retirement plans often lower benefits for people who take 

them early so that the benefits are worth the same regardless 

when they begin to be paid.) Because operational deviations 

from the terms of ERISA-governed plans can jeopardize their 

favorable tax treatment, John Owsen, United’s (now 

deceased) longtime outside counsel for benefits matters, sent 

a letter to the IRS in November 2005 proposing to recoup the 

excess funds paid. Owsen’s letter followed the IRS’s 

voluntary correction program through which employers may 

notify the Service of proposals to fix mistakes in 

administering ERISA plans and receive assurance that the 

IRS will not disqualify a plan from favorable tax treatment. 

The letter cited and attached the 2002 version of § 5.04(c), 

but it did not call attention to the absence of this language in 

the 1980 and 1987 Plans. In March 2006 the IRS issued a 

“Compliance Statement,” which affirmed that the IRS “will 

not pursue the sanction of Plan disqualification on account of

the qualification failure described in the Submission,” but 

cautioned that it “does not express an opinion as to the 

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accuracy or acceptability of any . . . material submitted with 

the application” and “should not be construed as affecting the 

rights of any party under any other law, including” ERISA. 

In July and August 2005, after notification from 

Towers Perrin but before the IRS correspondence, United sent 

letters to TVPs who had not yet begun to receive benefits “to 

clarify when you can receive your pension from United 

Refining Company and under what terms.” This letter stated 

that if a TVP elected to receive retirement benefits before 

turning 65, the benefit would be reduced to reflect the early 

election date in accord with the following table:

Age Factor

64 89%

63 80%

62 72%

61 65%

60 59%

59 1⁄2 56%

About a year later, United sent letters to TVPs who 

were already receiving pensions. These letters stated, “The 

Plan document requires that all pension benefits paid to 

terminated vested participants PRIOR to their Normal 

Retirement Age of 65 years MUST be actuarially reduced to 

the earlier payment date” (emphasis in original). Indeed, 

some retirees were told that in two weeks from the date of the 

letter their monthly pension would be lowered “until the 

excess payments have been recovered, after which you will 

begin receiving the amount that should have been provided to 

you based on the correct calculation.” Others were told that 

in two weeks “your monthly pension benefit payment will 

stop and you will not receive any future payments. 

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Additionally, in order to recover excess payments, you should 

repay the Plan” the amount of money already paid that 

exceeded the actuarially reduced benefit. In Cottillion’s case, 

his pension of $506.58 per month was eliminated, and he was 

told he should pay the Plan $14,475. The letters represented 

that the reductions were necessary for the Plan to retain its 

favorable tax treatment under the Internal Revenue Code and 

that the statements in the letter were “based on the [IRS]’s 

published revenue procedures and Compliance Statement 

which the Plan Retirement Committee must follow.”

After receiving this letter, the Employees represent 

that Cottillion had a telephone conversation with Loughlin, 

the plan administrator and author of the letter, during which 

Cottillion complained about the reduction in pension benefits. 

Loughlin told him that the reduction corrected a mistake that 

had resulted in excessive payments. Several other aggrieved 

TVPs wrote to Loughlin, who replied by letter that the plan 

documents required the correction to maintain the plan’s 

favorable tax treatment. Some, but not all, who complained 

were informed that they could file a written appeal of 

Loughlin’s decision.

The Employees sued in the Western District of 

Pennsylvania alleging, as relevant here, that United’s actions 

deprived them of a benefit to which they were entitled under 

the Plan, in violation of 29 U.S.C. § 1132(a)(1)(B), and that 

they violated ERISA’s “anti-cutback” rule, 29 U.S.C. 

§ 1054(g), which prohibits employers from amending a plan 

in a way that reduces benefits accrued under a defined benefit 

plan (such as the Plans at issue here). Judge Sean 

McLaughlin denied United’s Motion to Dismiss and later 

granted the Employees’ Motion for Summary Judgment in 

part and denied United’s Motion for Summary Judgment, 

holding that United’s actions violated the anti-cutback rule. 

When Judge McLaughlin resigned to enter the business 

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world, the case was assigned to Judge Cathy Bissoon. She 

granted the Employees’ Motion for Class Certification, 

granted in part their Motion for Final Remedy (enjoining 

United from actuarially reducing Employees’ benefits and 

awarding damages to make whole those who had been 

receiving too little, but declining to order United to pay 

anything to TVPs who had not yet elected to receive 

benefits), and granted United’s Motion for Judgment on the 

Pleadings, dismissing with prejudice the Employees’ 

remaining counts because any relief would be duplicative. 

United appeals then-Judge McLaughlin’s summary 

judgment decision and Judge Bissoon’s order on remedies. 

The Employees cross-appeal the latter order and the award of 

judgment on the pleadings.

II. The District Court Properly Excused the 

Employees from Exhausting Plan Remedies.

United argues that it was entitled to summary 

judgment because the named plaintiffs failed to exhaust the 

remedies available to them under the Plan. See, e.g., Harrow 

v. Prudential Ins. Co. of Am., 279 F.3d 244, 249 (3d Cir. 

2002). The Employees do not dispute that ordinarily the 

named plaintiff in an ERISA class action must exhaust plan 

remedies before bringing suit and that Cottillion and Beverly 

Eldridge did not, but they argue that: (1) they were not 

required to exhaust remedies because of the nature of their 

claim; (2) exhaustion is an affirmative defense and United has 

not met its burden of persuasion on the issue; and (3) there is 

undisputed record evidence that exhaustion would have been 

futile.

While we review de novo the legal standard that a 

district court applies in determining whether an employee 

must exhaust plan remedies before coming to federal court, 

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the court’s ultimate decision whether to require a plaintiff to 

exhaust is committed to its sound discretion. Harrow, 279 

F.3d at 248; see also D’Amico v. CBS Corp., 297 F.3d 287, 

290 (3d Cir. 2002); Dishman v. UNUM Life Ins. Co. of Am., 

269 F.3d 974, 984 (9th Cir. 2001); Stevens v. EmployerTeamsters Joint Council No. 84 Pension Fund, 979 F.2d 444, 

459 (6th Cir. 1992); Springer v. Wal–Mart, 908 F.2d 897, 899 

(11th Cir.1990); Janowski v. Int’l Bhd. of Teamsters Local 

No. 710 Pension Fund, 673 F.2d 931, 935 (7th Cir. 1982), 

judgment vacated on other grounds, 463 U.S. 1222 (1983).

The Employees argue that the exhaustion requirement 

does not apply to their anti-cutback claim based on 29 U.S.C. 

§ 1054(g), as there is “a distinction . . . between claims based 

on pension rights created by contract, which must be 

[exhausted if the plan provides for remedies], and claims 

based on purely statutory rights created by ERISA, which 

may be asserted in federal court directly.” Delgrosso v. 

Spang & Co., 769 F.2d 928, 932 (3d Cir. 1985). We need not 

resolve whether in general the exhaustion requirement applies 

to an anti-cutback claim or whether this particular suit states 

“a simple contract claim artfully dressed in statutory 

clothing.” Drinkwater v. Metro. Life Ins. Co., 846 F.2d 821, 

826 (1st Cir. 1988). As discussed below, the District Court 

did not abuse its discretion in holding that exhaustion would 

prove futile.

The Employees misconstrue the futility exception to 

the exhaustion requirement when they argue that, because 

exhaustion is an affirmative defense, United bears the burden 

of proving that it would not be futile. True, “[t]he exhaustion 

requirement is a nonjurisdictional affirmative defense” for 

United. Metro. Life Ins. Co. v. Price, 501 F.3d 271, 280 (3d 

Cir. 2007). Yet futility is an exception to the exhaustion 

requirement, and “[a] party invoking this exception must 

provide a clear and positive showing of futility before the 

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District Court.” D’Amico, 297 F.3d at 293; accord Harrow, 

279 F.3d at 249. Therefore, this argument against dismissal 

for failure to exhaust also fails.

In any event, the District Court held that the 

Employees had shown exhaustion of their Plan remedies 

would have been futile. As we wrote in Harrow:

Whether to excuse exhaustion on futility 

grounds rests upon weighing several factors, 

including: (1) whether plaintiff diligently 

pursued administrative relief; (2) whether 

plaintiff acted reasonably in seeking immediate 

judicial review under the circumstances; (3) 

existence of a fixed policy denying benefits; (4) 

failure of the [defendant] to comply with its 

own internal administrative procedures; and (5) 

testimony of plan administrators that any 

administrative appeal was futile. Of course, all 

factors may not weigh equally. 

279 F.3d at 250.

The District Court excused the Employees from the 

exhaustion requirement because they showed that United had 

a fixed policy of denying benefits. Cottillion v. United Ref. 

Co., No. 1:09-cv-140, 2013 WL 1419705, at *14–*15 (W.D. 

Pa. Apr. 8, 2013). The Employees made this showing by 

supplying the District Court with extensive correspondence 

between Loughlin and aggrieved TVPs. Loughlin sent form 

letters out to all TVPs apprising them of the reduction in their 

benefits. When anyone wrote back to him to complain, 

Loughlin would reply that the change in benefits was 

mandated by the IRS. Many of the letters failed to inform 

recipients of the possibility of an appeal. There is no 

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evidence in the record that any TVP got anywhere by seeking 

further review from Loughlin, and that United continues to 

adhere to the position that TVPs are only entitled to 

actuarially reduced benefits further supports the inference that 

exhaustion was futile. At least one TVP (Frederick Hane) 

followed the instructions in Loughlin’s letter and the 1987 

Plan’s appeals procedures. But rather than demonstrate that 

the issues raised in Hane’s letter were considered an appeal of 

an earlier determination, Loughlin (on behalf of the 

retirement committee) treated Hane’s objections as 

“questions” and offered him no relief or opportunity for 

further review.

The failure of Hane’s appeal, the existence of a fixed 

policy denying benefits as evidenced by the correspondence 

between Loughlin and the many TVPs with letters in the 

record, and the absence of any evidence before us to suggest 

that an appeal from Loughlin’s letter was anything other than 

time wasted, lead us to conclude that the District Court did 

not abuse its discretion in applying the futility exception to 

the exhaustion requirement. Thus we continue.

III. The Plans Unambiguously Afforded TVPs 

Retirement Benefits Without Actuarial Reduction.

The 1980 and 1987 Plans gave the plan administrator 

discretion in interpreting their terms. Thus, in evaluating the 

Employees’ benefits-due claim, we review Loughlin’s 

interpretation under a deferential standard and will uphold it 

unless it is arbitrary and capricious. Firestone Tire & Rubber 

Co. v. Bruch, 489 U.S. 101, 111 (1989); Fleisher v. Standard 

Ins. Co., 679 F.3d 116, 120–21 & n.2 (3d Cir. 2012). 

However, the parties dispute the standard of review for the 

Employees’ claim that Loughlin’s interpretation of the Plan 

adopted in his letters to TVPs (that the Plan provided only 

actuarially adjusted benefits, contrary to United’s earlier 

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representations) violated the anti-cutback rule. The 

Employees urge that the District Court correctly deferred to 

Loughlin’s first interpretation of the Plans—that they 

provided benefits in the same dollar amount to TVPs who 

elected to receive them before age 65 as to those who began 

receiving them at age 65 or later—and correctly did not defer 

to the second one as the “reinterpretation” was really a sub 

rosa plan amendment to reduce accrued benefits in violation 

of the anti-cutback rule. United argues that under Conkright 

v. Frommert, 559 U.S. 506 (2010), Loughlin’s final 

interpretation—the one allowing reduction of benefits—is 

entitled to deference.

We need not determine who has the better of this 

argument. As we shall see, no amount of deference can 

rescue Loughlin’s second interpretation from its flat 

contradiction with the terms of the 1980 and 1987 Plans. We 

therefore assume without deciding that the deferential 

arbitrary and capricious standard applies, under which a 

“court may overturn a decision of the Plan administrator only 

if it is without reason, unsupported by the evidence or 

erroneous as a matter of law.” Mitchell v. Eastman Kodak 

Co., 113 F.3d 433, 439 (3d Cir. 1997) (internal quotation 

marks omitted) (quoting Abnathya v. Hoffmann–LaRoche, 

Inc., 2 F.3d 40, 45 (3d Cir.1993)), abrogated on other 

grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 

(2008). Even under that standard, an administrator’s 

“interpretation may not controvert the plain language of the 

document.” Dewitt v. Penn-Del Directory Corp., 106 F.3d 

514, 520 (3d Cir. 1997).

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A. The Plans’ Texts Support the Employees’ 

Position.

To determine whether Loughlin’s second interpretation 

contradicts the actual words of the 1980 and 1987 Plans, we 

quote the relevant provisions.

Article VII of the 1980 Plan reads:

7.01 Required Service for Vesting

If a Participant’s employment shall terminate prior to 

his Normal Retirement Date [age 65, § 4.01] or an 

Early Retirement Date [age 60, § 4.02], for any reason 

other than death, he shall be entitled to a deferred 

vested Retirement Income if he is credited with at least 

ten . . . years of Vesting Service at the time of his 

employment termination. . . .

7.02 Amount and Commencement of Deferred 

Vested Retirement Income

The amount and time of commencement of a deferred 

vested Retirement Income to a Participant who 

satisfies the requirements of Section 7.01 shall be 

determined in accordance with the provisions of 

Section 5.03, based on the Participant’s Benefit 

Service and Average Compensation at the time of 

employment termination. . . .

Section 5.03 provides:

A Participant who retires on an Early Retirement Date 

may elect to receive one of the following:

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(a) His Accrued Retirement Income computed as of his 

Early Retirement Date commencing at the end of the 

month in which his Normal Retirement Date would 

have occurred.

(b) A reduced amount of Retirement Income to begin 

at the end of the month in which his Early Retirement 

Date occurs, computed so as to be a percentage of the 

benefit provided for him under paragraph (a) of this 

Section 5.03, in accordance with the following table:

Number of Years Prior to 

Normal Retirement Date 

(Interpolate if not a 

Whole Number)

Percentage

0 100.0%

1 100.0%

2 100.0%

3 100.0%

4 93.3%

5 86.7%

On October 27, 1988, United put in place 

“Amendment 5” to the 1980 Plan, effective July 1, 1987. 

Amendment 5, which applies to all class members covered by 

the 1980 Plan, in relevant part rewrites § 5.03 of the 1980 

Plan to read in its entirety:

A Participant who retires on an Early Retirement Date 

will receive his Accrued Retirement Income computed 

as of his Early Retirement Date commencing at the end 

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of the month in which his Early Retirement Date 

occurs. 

“Accrued Retirement Income . . . as of any particular 

date” is defined under § 5.02 as an amount to be computed in 

accordance with § 5.01, which lays out the method of 

calculation for the “annual rate of Retirement Income.” 

Section 5.01 describes the method of calculation as (roughly 

speaking) a percentage of average compensation multiplied 

by time of service with United, with qualifications and 

complications not at issue in this appeal.

To summarize, per § 7.02 a TVP gets retirement 

income in accordance with § 5.03, which states that a 

participant who retires is entitled to “Accrued Retirement 

Income,” which is calculated under § 5.01 with respect to a 

participant’s average compensation and length of service with 

the company.

The 1987 Plan is quite similar as it concerns this 

appeal. Article VII provides:

7.01 Required Service for Vesting.

If a Participant’s employment shall terminate prior to 

his Normal Retirement Date for any reason other than 

death, he shall be entitled to a deferred vested 

Retirement Income if he is credited with at least five 

. . . years of Vesting Service at the time of his 

employment termination. . . . 

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7.02 Amount and Commencement of Deferred 

Vested Retirement Income.

The amount of a deferred vested Retirement Income to 

a Participant who satisfies the requirements of Section 

7.01 shall be determined in accordance with the 

provisions of Section 5.03, based on the Participant’s 

Benefit Service and Average Compensation at the time 

of employment termination. . . . 

Section 5.03 provides:

Early Retirement Annual Accrued Retirement Income.

A Participant who retires on an Early Retirement Date 

will receive his Accrued Retirement Income computed 

as of his Early Retirement Date commencing at the end 

of the month in which his Early Retirement Date 

occurs. 

“Accrued Retirement Income” is the amount specified 

in § 5.02, which, as in the 1980 Plan, is the “amount 

computed in accordance with Section 5.01,” which in turn 

provides a formula roughly based on a percentage of average 

compensation multiplied by the employee’s tenure at United. 

The Early Retirement Date under the 1987 Plan 

initially occurred the month after an employee turned 60, but 

it was lowered effective February 1, 1996, to age 591⁄2.

A straightforward reading of the 1980 and 1987 Plans, 

consistent with United’s early interpretations of these Plans, 

leads to the conclusion that TVPs were entitled to pensions in 

an amount that did not include an actuarial adjustment for the 

number of years younger than 65 that they were when they 

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retired. Under both plans, § 7.02 tells us that a TVP gets 

retirement income in accord with § 5.03, which states that a 

retiree is entitled to “Accrued Retirement Income,” which is 

calculated under § 5.01 with respect to a participant’s average 

compensation and length of service with the company. Not 

one of these provisions treats TVPs differently from people 

who retire directly from United, and no provision requires 

actuarial adjustment (read reduction) for taking retirement 

benefits early. Loughlin’s second interpretation conflicted 

with the plain meaning of the terms of the Plans and thus 

denied the Employees benefits due them in violation of 

§ 1132(a)(1)(B), notwithstanding the Plans’ conferral on him 

of discretion to interpret Plan provisions. Epright v. Envtl. 

Res. Mgmt., Inc. Health & Welfare Plan, 81 F.3d 335, 342–43 

(3d Cir. 1996) (“By imposing a requirement which is 

extrinsic to the Plan[s], [Defendants have] acted arbitrarily 

and capriciously.”).

The second interpretation also violated the anticutback rule, which occurs when an “accrued benefit” is 

eliminated or reduced by a “plan amendment.” 29 U.S.C. 

§ 1054(g)(1). “There is no question but that a standard early 

retirement benefit, provided exclusively upon the satisfaction 

of certain age and/or service requirements, is an accrued 

benefit that is protected by” § 1054(g).1 Bellas v. CBS, Inc., 

 

1 The statute reads: 

(g) Decrease of accrued benefits through amendment 

of plan

(1) The accrued benefit of a participant under a 

plan may not be decreased by an amendment of 

the plan, other than an amendment described in 

section 1082(d)(2) or 1441 of this title [neither 

of which applies in our case].

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221 F.3d 517, 524 (3d Cir. 2000). Sections 7.01 and 7.02 of 

both Plans provide precisely the early retirement benefits 

described in Bellas and are thus “accrued benefits.” 

United argues, however, that the early retirement 

benefits are not “accrued benefits” because § 5.01 of both 

Plans provide calculations for “[t]he annual rate of 

Retirement Income payable to a Participant who retires on or 

after his Normal Retirement Date.” (emphasis added). Thus, 

according to United, anyone who retires before his normal 

retirement date has no accrued retirement benefits. What this 

argument ignores is the combined effect of §§ 7.01, 5.03, 

5.02, and 5.01. Section 7.01 vests retirement income in 

TVPs; § 5.03 directs the administrator to calculate TVPs’ 

Accrued Retirement Income as of the date of early retirement, 

while § 5.02 states that the amount of Accrued Retirement 

Income is computed “in accordance with Section 5.01.” In 

other words, §§ 5.01, 5.02, and 5.03 provide the method for 

computing TVPs’ benefits, while § 7.01 actually confers the 

benefits, making them “accrued” within the meaning of 

ERISA.

Our Court’s “view of what constitutes an ‘amendment’ 

to a pension plan has been construed broadly to protect 

 

(2) For purposes of paragraph (1), a plan 

amendment which has the effect of—

(A) eliminating or reducing an early 

retirement benefit or a retirement-type 

subsidy (as defined in regulations), or

(B) eliminating an optional form of 

benefit,

with respect to benefits attributable to service 

before the amendment shall be treated as 

reducing accrued benefits. 29 U.S.C. § 1054.

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pension recipients.” Battoni v. IBEW Local Union No. 102 

Employee Pension Plan, 594 F.3d 230, 234 (3d Cir. 2010). 

“An erroneous interpretation of a plan provision that results in 

the improper denial of benefits to a plan participant may be 

construed as an ‘amendment’ for the purposes of” § 1054(g). 

Hein v. F.D.I.C., 88 F.3d 210, 216 (3d Cir. 1996).2 

The critical question in this case, in light of the

absence of a formal plan amendment, is whether Loughlin’s 

“interpretation of the Plan improperly denied accrued benefits 

to” the Employees. Id. at 216–17. The answer is yes. In 

1988, United’s understanding of the Plans accorded with the 

plain reading of the Plans that we have discussed above. By 

2005, United had reinterpreted the Plans and decided that 

they required actuarial adjustments to the amounts paid to 

TVPs who took early retirement. This incorrect interpretation 

resulted in the improper denial of TVPs’ accrued early 

retirement benefits and thus violated ERISA’s anti-cutback 

rule.

 

2 Some Circuits have taken a narrower view of the meaning of 

“amendment” than Hein—see Richardson v. Pension Plan of 

Bethlehem Steel Corp., 112 F.3d 982, 987 (9th Cir. 1997); 

Dooley v. Am. Airlines, Inc., 797 F.2d 1447, 1451–53 (7th 

Cir. 1986)—but, as the Second Circuit has noted, a Treasury 

Regulation interpreting the provision of the Internal Revenue 

Code that implements 29 U.S.C. § 1054(g) supports our 

Court’s view and is entitled to deference under Chevron, 

U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 

(1984). Kirkendall v. Halliburton, Inc., 707 F.3d 173, 183 

(2d Cir. 2013) (discussing Limitations on Availability of 

Benefits, 53 Fed. Reg. 26,050-01, 26,064 (July 11, 1988) 

(codified at 26 C.F.R. § 1.411(d)–4)).

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B. United’s Counterarguments Fail to Persuade.

United makes several arguments to the contrary, none 

convincing. Its arguments can be grouped into four 

categories: (1) internal textual arguments (the text of the 1980 

and 1987 Plans supports United); (2) external textual 

arguments (the text of documents other than the Plans 

supports United); (3) structural (the Plans address Early 

Retirees and TVPs in separate sections, and thus they treat 

differently these different kinds of participants); and (4) 

statutory (because ERISA sets a floor for benefits, we should 

interpret the Plans to provide only that floor absent a clear 

and express plan provision to the contrary). We address each 

in turn.

1. The Internal Textual Argument

United’s argument from the Plans’ text is that § 5.03 

entitles only “[a] Participant who retires on an Early 

Retirement Date” to benefits (emphasis added). They argue 

that “retire” means “retire from United,” because 

“‘Retirement Date’ expressly required ‘actual retirement’ 

from the Company with an immediate right to draw down a 

pension benefit.” Opening Br. at 14. (Recall that by 

definition all TVPs left United before they were old enough 

to retire from the company at age 591⁄2 or 60.) But no 

definition in any plan defines “retire” or “Retirement Date” 

with reference to separation from United. Instead, both the 

1980 and 1987 Plans (at § 1.31) define “Retirement Date” as 

the date of “actual retirement,” but not actual retirement from 

United. 

For support, United cites pages 1645 ¶ 18 and 1684 

¶ 27 of the Joint Appendix. Both citations lead to United’s 

statement of material facts in support of its motion for 

summary judgment, and that document in turn cites an expert 

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report by Nancy Keppelman (an ERISA lawyer) interpreting 

the Plans. Setting aside the problem of considering expert 

testimony on the interpretation of a pension plan, which is a 

purely legal question and not properly the subject of expert 

testimony, Nieves-Villanueva v. Soto-Rivera, 133 F.3d 92, 99 

(1st Cir. 1997) (collecting circuit cases); Haberern v. Kaupp 

Vascular Surgeons Ltd. Defined Ben. Plan & Trust 

Agreement, 812 F. Supp. 1376, 1378 (E.D. Pa. 1992), the 

expert does not even support United’s interpretation of the 

meaning of “retire.” Keppelman writes, “The cross-reference 

[from § 7.02 to § 5.03] did not confer early retirement 

benefits on [TVP]s.” Keppelman Report 7, Jan. 24, 2012, 

ECF No. 154-14. It may be that “the cross reference” does 

not confer early retirement benefits, but § 7.01 explicitly 

does, and § 7.02 clarifies that the amount of the benefits 

conferred by § 7.01 “shall be determined in accordance with” 

§ 5.03 (emphases added). By drafting an actuarial adjustment 

into the Plan, United is requiring the benefits to be calculated 

not in accordance with § 5.03, the exact opposite of the Plan’s 

requirements.

2. The External Textual Argument

The extrinsic documents on which United relies further 

undermine its position. It posits that § 5.04(c) of the 1995 

and 2002 Plans made explicit what had been true all along: 

TVPs who took their pensions before turning 65 would be 

entitled only to actuarially adjusted pensions. But even if it 

were permissible to look to the 1995 and 2002 Plans for 

guidance in interpreting the 1980 and 1987 Plans, the addition 

of § 5.04(c) more strongly supports the Employees’ position 

that, without the new language explicitly imposing an 

actuarial adjustment, there was no such adjustment before. 

United also points to certain summary plan 

descriptions (“SPDs”) to argue they clarify that actuarial 

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adjustments are required under the Plans. The 1987 and 1995 

SPDs (which describe the 1980 and 1987 Plans, respectively) 

state that employees who took vested retirement benefits 

earlier than their normal retirement date would only be 

entitled to actuarially reduced benefits. 

United’s reliance on the SPDs poses two principal 

problems. First, the SPDs state that “[i]f the terms of the Plan 

document and the Trust agreement and of this summary are 

inconsistent, the terms of the Plan document and the Trust 

agreement will control.” United Refining Company, Pension 

Plan for Salaried Employees, Summary Plan Description 20 

(Jan. 1 1987); United Refining Company, Pension Plan for 

Salaried Employees, Summary Plan Description 20 (Jan. 1 

1995). When the SPD contains this sort of a disclaimer and 

the Plan is more favorable to beneficiaries than the SPD, the 

Plan controls. Sturges v. Hy-Vee Employee Ben. Plan & 

Trust, 991 F.2d 479, 480–81 (8th Cir. 1993) (per curiam); 

Glocker v. W.R. Grace & Co., 974 F.2d 540, 542–43 (4th Cir. 

1992); McGee v. Equicor-Equitable HCA Corp., 953 F.2d 

1192, 1201 (10th Cir. 1992). As discussed, the SPDs conflict 

with the Plans, as the Plans clearly do not contemplate 

actuarial adjustment. 

Second, United published employee handbooks in 

1985, 1991, 1994, and 1998 that are wildly inconsistent on 

whether benefits are calculated with actuarial adjustment, and 

the Employees not implausibly characterize the handbooks as, 

by their own terms, SPDs. See, e.g., United Refining 

Company, Salaried Employee Handbook 110 (Apr. 1, 1994) 

(“The handbook contains Summary Plan Descriptions of the 

plans . . . .”). The 1985 handbook (published before 

Amendment 5 to the 1980 Plan removed its actuarial 

adjustment table) stated that pension benefits both for Early 

Retirees (people who retired directly from United after age 

591⁄2 or 60 and before age 65) and TVPs who took benefits 

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before their Normal Retirement Date would be actuarially 

reduced. The 1991 handbook contained no mention of 

actuarial adjustments for early receipt of benefits. The 1994 

handbook stated of TVPs, “You can begin receiving benefits 

as early as age 60 with no reduction.” Id. at 84. The 1998 

handbook is less quotable, but it includes a sample calculation 

for a person who retires (not necessarily a TVP) at age 591⁄2 

and does not include an actuarial adjustment for the 

participant’s age. Indeed, nowhere in the 1998 handbook is 

there any indication that anyone’s benefits might be 

actuarially reduced. These handbooks’ differences with each 

other and with the SPDs strengthen our conviction that the 

plain meaning of the Plans should control. 

3. The Structural Argument

United’s structural argument is stronger, but not strong 

enough. It relies on expert reports from an actuary (Ian 

Altman) and an ERISA lawyer (Keppelman), who point out 

that Article 5 of the Plans addresses benefits for Early 

Retirees—those who retire from United directly before 

turning 65—while Article 7 addresses benefits for TVPs. If 

the plans intended to treat the two categories of participants 

similarly, why devote a separate section to each group? The 

question, though provocative, does not overcome the 

indisputable facts that the TVP section explicitly informs 

readers that TVPs’ benefits are to be calculated “in 

accordance with” Article 5 and that nothing in either the 1980 

Plan or the 1987 Plan refers to actuarial adjustments for 

people who elect to receive their pensions early. The 

structure and language of the plan could be read to suggest 

that without Article 7 TVPs would be entitled to nothing 

more than ERISA’s statutory floor, but with Article 7 they are 

entitled to what Article 7 provides, which is benefits 

calculated in accordance with Article 5.

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4. The Statutory Argument

United’s statutory argument fares no better. ERISA 

§ 206(a) does provide that TVPs are entitled to “no less than” 

an actuarially reduced benefit. 29 U.S.C. § 1056(a). But for 

the reasons stated above, these Plans expressly provided 

TVPs with more than the statutory floor. Imposing a 

requirement that a plan be even clearer than the one in this 

litigation would be unreasonable. The case United relies 

on—McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184 (2d 

Cir. 2007)—only exposes its argument’s weakness. In 

McCarthy, when a TVP took payment early, the

benefit was actuarially reduced from the amount 

that would have been paid at age 65 in two 

respects. First, to reflect the time value of 

money, the Master Retirement Plan reduced the 

benefit by a 6.75 percent discount rate for each 

year prior to the age of 65 that payments began. 

Second, the benefit was reduced by a mortality 

factor to adjust actuarially for the possibility 

that a participant might not live to the age of 65.

Id. at 189. These explicit provisions are the opposite of what 

we find in United’s Plans; far from a reference to actuarial 

adjustment or silence that could arguably be understood only 

to provide the minimum pension allowed under ERISA, the 

1980 and 1987 Plans set out a detailed scheme for calculating 

TVPs’ benefits, one that expressly omits any actuarial 

adjustment.

IV. United Forfeited Any Objection to the District 

Court’s Interest Rate.

United next argues that, even if we hold that it owes 

the Employees benefits without actuarial adjustment (as we 

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do), the District Court erred in its final order on remedies 

when it ordered United to pay interest at 7.5% on the 

Employees’ damages. The Court ordered this amount of 

interest based on the 2002 Plan, which set 7.5% as the rate of 

interest for actuarial calculations and on the basis of United’s 

IRS submission, which laid out the company’s plan to recoup 

excess payments to TVPs at 7.5% interest. Cottillion v. 

United Ref. Co., No. 1:09-cv-140, 2013 WL 5936368, at *9 

(W.D. Pa. Nov. 5, 2013). United asserts that because certain 

sections of the Plan that entitle participants to lump sum 

payments state that the interest rate in those contexts is the 

30-year Treasury rate, the interest here should be 3.7%. 

We need not rule on this objection because it is raised 

for the first time in United’s reply brief and hence is waived. 

Kirschbaum v. WRGSB Assocs., 243 F.3d 145, 151 & n.1 (3d 

Cir. 2001). Moreover, although reasonable objections could 

be made to the District Court’s choice of an interest rate, 

United’s proposed rate has no better grounding in the Plan 

documents (the sections that specify the 30-year Treasury rate 

apply only to lump sum payments in the event the Plan is 

terminated or in the case of employees with very small 

pension entitlements). And because there is some evidence 

that the Plan provided 7.5% as a default rate, the District 

Court’s order was not clearly erroneous.

V. The Employees Are Not Entitled to More Relief 

Than the District Court Ordered.

When the District Court entered its final order on 

remedies, it concluded that class members who had not yet 

elected to receive their benefits were entitled only to an 

option to start receiving properly computed benefits at the 

appropriate age under the Plan (or immediately if they were 

older than 591⁄2 or 60, depending on the Plan). If they were 

older than 591⁄2 or 60, they were not entitled to receive 

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damages in the amount of benefits they would have received 

had they elected to receive (properly computed) benefits as 

early as possible plus interest. According to the District 

Court, that relief would be “entirely speculative.” Cottillion, 

2013 WL 5936368 at *8. 

The Employees claim that “there is no economic 

incentive for a [TVP] to delay commencing an unreduced 

monthly benefit past his Early Retirement Date.” Employees’ 

Response and Cross-Appeal at 62. They are mistaken. In 

fact, they do not dispute that entitlement to benefits requires 

“actual retirement.” 1980 Plan § 1.31; 1987 Plan § 1.31. 

Because retirement benefits are generally less than salary, 

there is an incentive to keep working and to continue to be 

paid for full-time work instead of electing to receive pension 

benefits conditioned on retirement.

The Employees advance three other theories to argue 

that that the District Court’s injunction should be modified to 

allow TVPs to receive the payments to which they would 

have been entitled absent the reinterpretation—namely, unjust 

enrichment, surcharge, and restitution. All of these rationales 

suffer from the same flaw: the Employees failed to prove in 

the District Court that class members would have taken 

unreduced pension benefits early.

The Employees do not seek remand to prove on an 

individual basis that those eligible for unreduced early 

retirement benefits who have not yet elected to take them (or 

who only took them after turning 65) would have taken them 

earlier but for United’s new interpretation of the Plan. In a 

footnote, the Employees suggest that “the court could order 

retroactive benefits using a utilization factor based on an 

assumption that individual class members would have 

delayed commencing an unreduced benefit by the average of 

such delays prior to the cutback, as proposed by [their] 

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expert.” Employees’ Response Br. and Cross-Appeal at 65 

n.20. However this suggestion would play out, the injured 

class members suffered individualized damages, and this sort 

of aggregate proceeding violates the ordinary rule that “a 

class action cannot be certified in a way that . . . masks 

individual issues.” Carrera v. Bayer Corp., 727 F.3d 300, 

307 (3d Cir. 2013); see also Wal-Mart Stores, Inc. v. Dukes, 

131 S. Ct. 2541, 2561 (2011) (rejecting as “abridging a 

substantive right” the extrapolation of class-based damages 

from a sample of the class).

The Employees’ final argument readily fails. They 

contend that the District Court should not have dismissed the 

remaining counts of their complaint as duplicative of the anticutback claim because it failed to award them full relief on 

the anti-cutback count. In other words, they claim that the 

order granting judgment on the pleadings to United should be 

reversed for the same reasons that they contend the damages 

awarded were inadequate. But because the Employees have 

received the full remedy to which they are entitled, anything 

more would indeed be duplicative. Thus, the District Court’s 

decision was proper.

VI. United’s Pending Motions

There remain two motions pending: United’s Motion 

for Stay of District Court Judgment and its Motion to Strike 

Part H of the Employees’ Brief. The Motion to Stay is denied 

as moot in light of our disposition of the appeal.

Part H of the Employees’ Fourth Step Brief responds 

to arguments that, they say, were improperly raised in 

United’s Second Step Brief. United is correct that the 

Employees should not have responded to these arguments by 

way of a reply brief, but should have either moved for leave 

to file a sur-reply or moved to strike United’s arguments. See 

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Fed. R. App. P. 28.1(c)(4); USX Corp. v. Liberty Mut. Ins. 

Co., 444 F.3d 192, 201–02 (3d Cir. 2006). The Motion is 

granted insofar as it attacks all but the last paragraph of Part 

H, which responds to a letter by United informing us of a 

non-precedential opinion that the Employees (rightly) argue is 

irrelevant (like all the other cases brought to our attention by 

United’s six 28(j) letters). For these reasons, all but the last 

paragraph of Part H is stricken as an impermissible sur-reply 

filed without leave.

* * * * *

United provided detailed pension plans that clearly 

explained how to calculate payments owed to those who, like 

the Employees here, earned accrued benefits and left United 

before they were eligible to receive them. The Plans’ method 

of calculation did not include an actuarial adjustment for 

participants who took benefits before turning 65, and ERISA 

forbids United from drafting those reductions into the Plans 

whether by amendment, “interpretation,” or otherwise. 

United must pay the Employees what it promised, and thus 

the careful and thorough judgments of the District Court are 

affirmed.

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