Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-06011/USCOURTS-ca10-90-06011-0/pdf.json

Parties Involved:
Marion Laboratories, Inc.
Appellee
Jim L. Woolsey
Appellant

Document Text:

PUBLISH 

FILED 

United States Cout< ef Appeals 

Tenth Circuit 

UNITED STATES COURT OF APPEALS 

JUN 4 19Q1 

&OBERT L. HOECKER 

Clerk 

FOR THE TENTH CIRCUIT 

JIM L. WOOLSEY, ) 

) 

Plaintiff-Appellant, ) 

) 

v. ) 

) 

MARION LABORATORIES, INC.: MARION ) 

LABORATORIES, INC., Profit ) 

Sharing Plan, ) 

) 

Defendants-Appellees. ) 

No. 90-6011 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF OKLAHOMA 

(D.C. No. CIV-88-652-R) 

Steven M. Angel, Oklahoma City, Oklahoma, for Plaintiff-Appellant. 

Keith M. Pyburn, Jr. of McCalla, Thompson, Pyburn & Ridley, 

Oklahoma City, Oklahoma (Howard Shapiro and Heather G. Magier of 

McCalla, Thompson, Pyburn & Ridley, Oklahoma City, Oklahoma, and 

Page Dobson of Holloway, Dobson, Hudson and Bachman, Oklahoma 

City, Oklahoma, with him on the briefs), for Defendants-Appellees. 

Before MCKAY, ANDERSON, Circuit Judges, and BROWN,* District 

Judge. 

ANDERSON, Circuit Judge. 

Jim L. Woolsey brought this action in district court against 

Marion Laboratories, Inc. ("Marion"} and the Marion Laboratories, 

Inc. Profit Sharing Plan (the "Plan"), (collectively referred to 

as "defendants"), claiming that the form in which the Plan 

* Hon. Wesley E. Brown, United States District Judge for the 

District of Kansas, sitting by designation. 

Appellate Case: 90-6011 Document: 01019297907 Date Filed: 06/04/1991 Page: 1 
distributed his vested benefits violated 29 u.s.c. §§ 1132 and 

1140, part of the Employee Retirement Income and Security Act 

("ERISA"). On appeal, Woolsey, first, seeks reversal of the 

district court order granting summary judgment to the defendants 

and, second, claims that the district court erred in denying his 

motion to amend. We affirm. 

BACKGROUND 

Mr. Woolsey worked for Marion for over seventeen years until 

he resigned on November 11, 1985. Throughout Woolsey's employ, 

Marion maintained the Plan, subject to the provisions of ERISA, to 

pay benefits to eligible employees upon retirement, death, disability, or other separation from service. The Plan is funded 

with annual contributions from Marion, with all such monies, once 

contributed, belonging irrevocably to the Plan. The Plan 

Administrators, appointed by the Marion Board of Directors, also 

serve as officers of Marion. When Woolsey resigned, he was 100% 

vested in the Plan and was entitled to $234,631.82 in benefits. 

In a letter dated November 27, 1985, Marion asked Woolsey 

whether he preferred to receive the portion of his vested benefit 

allocated to the Marion Fund (a particular fund invested primarily 

in Marion stock) in cash, stock, a combination of the two or 

periodic cash installment payments. Woolsey requested 50% of his 

benefit to be paid in cash and the remaining 50% in Marion stock. 

After a claims review meeting on February 24, 1986, the 

Administrators exercised the discretion reserved to them under 

Section 7.1 of the Plan and denied Woolsey's request. They then 

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informed Woolsey of their decision and tendered checks to him for 

the full amount of his vested benefit. A short time later, a 

stock split occurred, significantly increasing the value of Marion 

stock. 

Woolsey returned the checks to Marion and requested that 

Marion issue a check for half of the amount due from the Marion 

Fund ($109,856.65) and requested a review of the Administrators' 

decision regarding the form of the other half of his benefit payment. Marion complied and issued the check, noting that Woolsey's 

request had been denied because of the "special circumstances surrounding [his] termination." R. Doc. 41, Exh. B-6. Subsequently 

Marion advised Woolsey that a hearing would be held on December 

15, 1986. 

At the December hearing, the Administrators heard from 

Charlie Dalton, counsel for Marion, and two employees of Marion--

Norm Craig, a regional manager, and Steve Krohne, manager of 

personnel support services. They presented the following 

evidence: In July, Woolsey had been informed by Myrna West, his 

new district manager, that she did not care how he had sold 

pharmaceuticals in the past, but she wanted to run a "clean ship" 

from then on. Woolsey allegedly told her that she would not 

discover any unethical activities as she reviewed the books. In 

early September, West told Craig that she had discovered that 

Woolsey had been selling pharmaceuticals outside his designated 

area for some time. Craig and Krohne flew down to Oklahoma to 

talk with Woolsey and get more information about what may have 

happened. Craig stated that he did not intend to "nail" Woolsey 

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and, indeed, had a great deal of respect for Woolsey who had 

become a member of the Marion "M Club," "the most coveted 

[salesmanship] organization in th[e) company." R. Doc. 41, Exh. G 

at 22. Woolsey allegedly admitted to Craig that, after he had 

spoken with West, he had breached Marion policy and procedure by 

working outside the boundaries of his territory, essentially 

stealing sales from his coworkers, and adding samples and stock 

pharmaceuticals to regular orders in order to "sweeten the pot" 

and encourage pharmacists to place larger orders. Woolsey also 

allegedly admitted that he had falsely reported lost pharmacy 

orders to obtain the replacement drugs and to give large amounts 

of credit to his customers. Craig and Krohne stayed in Oklahoma 

for three days, talking with West, Woolsey and several other 

employees. They then returned to Kansas and reported their findings to the senior management at Marion. The Marion officials 

requested Woolsey to come to Kansas, presumably for further 

investigation and discussion. Woolsey then resigned and refused 

to go to Kansas. 

After presentation of this information, Woolsey and his attorney were allowed to enter the room and submit any information 

or arguments for reversal of the Administrators' prior decision 

regarding the form of payments to Woolsey. Woolsey's counsel 

argued that the acts taken by the Administrators were not in the 

best interests of the beneficiaries, that they had acted 

improperly because of an alleged conflict of interest and that any 

discipline for Woolsey's alleged misconduct should have been part 

of his termination proceedings, not part of his benefit payment 

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proceedings. He also argued that Woolsey had been deprived of a 

property right in his vested benefits and that an employee's 

conduct should serve as the basis for the Plan's vesting requirements, not for determining the form of vested payments. 

The Administrators subsequently informed Woolsey that they 

affirmed their prior decision that "special circumstances" existed 

justifying the denial of the stock distribution. Such 

circumstances included, but were not limited to, a number of 

Woolsey's abuses of company policy: pursuing and obtaining orders 

for Marion products outside his assigned territory; supplying 

customers with sample and stock pharmaceuticals to persuade them 

to increase or place an order with himself; writing unauthorized 

credits to pharmacies for "lost" product; and, obtaining additional product to "buy orders" from customers. In addition, 

they noted that Woolsey had been advised that he must discontinue 

such practices by his superior and had not. They stated: 

The Administrators believe that if they were to reward associates leaving under less than admirable conditions by 

granting them Marion stock, the stock price would likely 

decrease to the detriment of the remaining participants in 

the Plan, which would have not only an adverse monetary affect on the overall value of the Plan, but an adverse affect 

on associate morale as well. 

R. Doc. 41, Exh. B-10 at 2. 

The defendants admit that this is the first time that the 

Administrators have ever denied an otherwise eligible associate's 

request for payment of half of his benefits in stock. 

Woolsey filed his complaint on April 18, 1988 alleging that 

he had been denied his vested benefit rights in violation of 29 

u.s.c. § 1132 and that the Plan had discriminated against him in 

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violation of 29 u.s.c. § 1140. On March 31, 1989, the defendants 

filed a motion to dismiss, or in the alternative, for summary 

judgment. Both parties extensively briefed that motion. On 

September 16, 1989, nearly 17 months after the filing of the 

complaint, Woolsey filed a motion for leave to file an amended 

complaint adding new parties and another cause of action against 

the defendants for having failed to provide him with requested 

information regarding the denial of benefits and the appeal of 

that denial as required under ERISA. The district court denied 

that motion on October 13, 1989 because it would necessitate additional delay and expense to the parties and because "[n]o 

evidence is available now which Woolsey was not aware of or could 

have been aware of when the case was filed." R. Vol. I, Tab 64. 

On December 11, 1989, after oral argument on the issue, the 

district court held that there was no evidence indicating that 

Marion and the Plan acted arbitrarily or capriciously in determining the form of benefit payments to Woolsey or that they had 

discriminated against him in order to prevent him from exercising 

his pension rights. R. Tab 68. Finding no genuine issue of material fact supporting Woolsey's claims, the district court granted 

defendants' motion for summary judgment. 

Woolsey now appeals both of the district court's holdings and 

reurges his arguments on appeal. 

SUMMARY JUDGMENT 

Woolsey contends that the district court erred in granting 

the defendants' motion for summary judgment and argues that there 

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are substantial factual disputes which should be litigated at 

trial. We disagree. 

On appeal from a summary judgment order, we apply the same 

standard employed by the district court in reviewing the 

Administrators' decision. Applied Genetics Int'l, Inc. v. First 

Affiliated Secur., Inc., 912 F.2d 1238, 1241 (lOth Cir. 1990); 

Jung v. FMC Corp., 755 F.2d 708, 710 (9th Cir. 1985). Thus, we 

will affirm if we determine that, viewing the facts in the light 

most favorable to the opposing party, there is no genuine issue of 

material fact in dispute and the moving party should prevail as a 

matter of law. Applied Genetics Int'l, Inc. v. First Affiliated 

Secur., Inc., 912 F.2d at 1241; Jung v. FMC Corp., 755 F.2d at 

710. 

Denial of Benefit Payment in Stock: § 1132 

Woolsey first challenges the trial court's grant of summary 

judgment regarding the Administrators' alleged violation of 29 

u.s.c. § 1132 in denying Woolsey's request for payment in Marion 

stock. The decisions of the administrators of a pension plan will 

be upheld unless they are arbitrary and capricious, not supported 

by substantial evidence or erroneous on a question of law. Pratt 

v. Petroleum Prod. Management, Inc. Employee Sav. Plan & Trust, 

920 F.2d 651, 657 (lOth Cir. 1990); Torix v. Ball Corp., 862 F.2d 

1428, 1429 (lOth Cir. 1988); Sage v. Automation, Inc. Pension Plan 

& Trust, 845 F.2d 885, 895 (lOth Cir. 1988). For claims brought 

under § 1132, this "deferential standard of review [is] appropriate when a trustee exercises discretionary powers. . • • [and] 'a 

court of equity will not interfere to control [trustees] in the 

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exercise of a discretion vested in them by the instrument under 

which they act.'" Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 

101, 111 (1989) (emphasis omitted) (quoting Nichols v. Eaton, 91 

u.s. 716, 724-25 (1875)); see Pratt v. Petroleum Prod. Management, 

Inc. Employee Sav. Plan & Trust, 920 F.2d at 658 (deference given 

to claim brought under § 1132 regarding trustee's discretionary 

decision regarding valuation of benefits); Cotter v. Eastern 

Conference of Teamsters Retirement Plan, 898 F.2d 424, 427 (4th 

Cir. 1990) (claims other than those for benefits eligibility 

brought under§ 1132 fall under the Bruch standard). 

The Plan before us expressly provides that, upon termination 

of employment, the full amount of an employee's pension benefits 

shall be distributed to the Member as the Plan Administrator, 

in his sole discretion, after consulting with the Member, 

shall determine and direct, either: 

(a) As a lump sum payment in cash or in kind, or part 

in cash and part in kind. 

(b) In annual installments over a period of 

years . • • • 

(c) Any combination of the foregoing. 

R. Doc. 41, Exh. A, § 7.1 at 30 (emphasis added). Furthermore, 

the Plan grants the Administrator "full and complete authority, 

responsibility, and control over the management, administration 

and operation of the Plan, including, but not limited to, the 

authority to •.• [m]ake appropriate determinations ••. of the 

distributions due Members under the Plan (and a]uthorize and 

direct payment of benefits." Id. § 13.3 at 50; see Pratt v. 

Petroleum Prod. Management, Inc. Employee Sav. Plan & Trust, 920 

F.2d at 658 (authority to act under the Plan carries with it 

discretion to act). Thus, in determining whether the district 

court erred in granting summary judgment, we review the 

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Administrators' decision regarding the form of benefit payments 

under the arbitrary and capricious standard. 

Woolsey contends that he has been denied his vested pension 

benefits because the Plan denied his request for partial payment 

in stock. However, "ERISA does not mandate any specific mode of 

payment for retirement benefits." Oster v. Barco of Cal. 

Employees' Retirement Plan, 869 F.2d 1215, 1218 (9th Cir. 1988) 

(citing Pompano v. Michael Schiavone & Sons, Inc., 680 F.2d 911, 

914 (2d Cir.), cert. denied, 459 u.s. 1039 (1982)). Rather, ERISA 

guarantees only the right to receive the vested benefits. Alessi 

v. Raybestos-Manhattan, Inc., 451 U.S. 504, 512 (1981) (ERISA assures claim to protected benefit but not a particular amount or 

method for calculation). "Any right to ..• a particular method 

of payment must be found in the individual agreements." Fine v. 

Semet, 699 F.2d 1091, 1093 (11th Cir. 1983). No such right is 

established by the Plan in this case. 

The Plan does not guarantee payment of benefits in the method 

preferred by eligible participants. Instead, it expressly grants 

the Administrators sole discretion in determining the form of payment. Thus, despite Woolsey's valiant attempts to convince us 

otherwise, he did not have a right to payment in stock and the 

Administrators' decision to pay the entire vested amount in a lump 

sum did not deprive him of a vested benefit. 

Even so, we must now determine if the Administrators' reasons 

for denying Woolsey's request were so insufficient or unreasonable 

as to be arbitrary and capricious. Oster v. Barco of Cal. 

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Employees' Retirement Plan, 869 F.2d at 1218; Fine v. Semet, 699 

F.2d at 1095. 

Woolsey asserts several bases for his contention that the 

Administrators acted arbitrarily and capriciously. We deal with 

each in turn. First, he contends that ERISA prohibits the denial 

of benefits because of alleged wrongdoing during employment. In 

support of his argument, Woolsey cites to McLaughlin v. Lindemann, 

853 F.2d 1307 (5th Cir. 1988), United Metal Products Corp. v. 

National Bank of Detroit, 811 F.2d 297 (6th Cir. 1987), cert. 

dismissed, 485 u.s. 1017 (1988), and Guidry v. Sheet Metal Workers 

Nat'l Pension Fund, 493 u.s. 365 (1990). These cases, however, 

are vastly different than the one before us now. In each of those 

cases, the court held that ERISA's nonforfeiture and nonalienation 

sections, 29 u.s.c. §§ 1056(c), (d), prohibited the forfeiture, 

garnishment or offsetting of a participant's vested pension payments by his employer even though the participant had embezzled 

funds or committed fraud against his employer or had breached a 

fiduciary duty causing a loss to be suffered by the plan. 

Here, as discussed above, the Administrators have not used 

Woolsey's alleged misconduct in order to avoid paying him his 

rightful benefits. They have considered evidence of Woolsey's actions only in determining the form of those benefits. Other 

courts have held that fiduciaries exercising discretion as to the 

form of pension benefits may properly consider acts of the claimant which adversely effect the employer or which violate company 

policy. In Severs v. Allied Canst. Services, Inc., 795 F.2d 649 

(8th Cir. 1986), and Morse v. Stanley, 732 F.2d 1139, 1146 (2d 

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Cir. 1984), the circuit courts, under similar discretionary plan 

provisions, upheld the administrators' denial of a lump sum payment to employees leaving the company to work for a competitor. 

In Severs, the plan administrators, like the Administrators here, 

based their decision in part on their 

obligation to the remaining participants not to reward [a] 

former employee whose conduct may impair the Profit Sharing 

Plan's funding and valuation by reducing the amount of 

profits generated by Allied's business [and on the 

claimant's] failure to present facts which show extraordinary need or hardship that would justify a different 

determination under the circumstances • . . . 

Severs v. Allied Const. Services, Inc., 795 F.2d at 650; see Morse 

v. Stanley, 732 F.2d at 1144, 1146. The courts held that since 

the plaintiffs would each receive their vested benefits in full, 

the Trustees did not act arbitrarily or in bad faith in denying 

them accelerated distributions. Severs v. Allied Const. Services, 

Inc., 795 F.2d at 651; Morse v. Stanley, 732 F.2d at 1144. 

Furthermore, ERISA requires that the Plan be administered 

with an eye solely to the best interests of all the beneficiaries. 

"[T]o award those departing employees with a financial windfall 

would in fact have preferred them at the expense of the entire 

trust." Morse v. Stanley, 732 F.2d at 1146. Thus, the 

Administrators properly considered Woolsey's misconduct in 

determining the effect payment of his benefits in stock would have 

had on the Plan and the remaining beneficiaries and their 

determination that such payment would be to the detriment of 

future beneficiaries was not arbitrary and capricious. 

Second, Woolsey argues that the Administrators acted 

arbitrarily in failing to comply with the 1982 Guidelines adopted 

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by the Plan to assist them in exercising their judgment in 

authorizing stock payments. Woolsey contends that those 

Guidelines establish the exclusive set of factors that the 

Administrators may consider and asserts that the Guidelines 

require the Administrators to pay all "long-term associates" in 

stock, if requested. The Guidelines state, in part: 

[The Administrators'] objective is to make sure that longterm associates currently terminating, as well as those 

terminating in the future will have available to them an 

adequate number of Marion shares should they request a stock 

distribution from their Marion Fund assets. • • • In the 

absence of special circumstances, the Plan Administrators 

will probably allow Plan Participants to have up to 50% of 

their Marion Fund assets distributed to them in Marion shares 

if they are early or normal retirees, disabled associates or 

deceased associates, or if they have become fully vested or 

have ten or more years of service. • . . Notwithstanding 

the foregoing guidelines, the Administrators, in all cases, 

will reserve discretion in determining which Participants may 

receive stock distributions and the amount thereof, taking 

into account the unique needs of any terminating Participant, 

the number of shares in the Marion Fund and other investments 

and cash or cash equivalents in the Marion fund. 

R. Doc. 41, Exh. B-7. Nothing in the Guidelines indicates that it 

is an exclusive list of factors for determining the manner of payment of benefits or that all "long-term associates" will 

automatically receive stock if they request such payment. Nor is 

the consideration of performance or misconduct during employment 

specifically excluded. Instead, the Guidelines expressly leave 

the ultimate payment decision in the Administrators' sole discretion and even suggest that other unlisted "special circumstances" 

may exist justifying the denial of a request for stock payment. 

Third, Woolsey contends that the Administrators acted 

arbitrarily and capriciously because they acted under a conflict 

of interest. He alleges that the Administrators, all stockholders 

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and participants in the Plan, operated as agents of Marion in 

order to punish him for his conduct during his employment rather 

than acting solely in the interest of the beneficiaries. He also 

claims that they knew a stock split was imminent and purposely 

denied him the benefit of the increased stock value to enhance 

their own position. He asserts that, under Firestone Tire & Rubber Co. v. Bruch, 489 u.s. 101 (1989), such a conflict of interest 

"is a basis for concluding that Defendants actions were arbitrary 

and capricious." Appellant's Brief at 22. We disagree. 

Bruch acknowledged that if an administrator or fiduciary 

operates under a conflict of interest, that conflict is a relevant 

factor in determining whether the administrator abused his discretion. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. at 115. 

Contrary to Woolsey's assertion, however, the fact that an 

Administrator serves dual roles as company employee and as a pension plan fiduciary does not conclusively or presumptively 

establish that the administrators of the plan have acted 

arbitrarily and capriciously. Newell v. Prudential Ins. Co. of 

America, 904 F.2d 644, 649-50 (11th Cir. 1990); De Nobel v. Vitro 

Corp., 885 F.2d 1180, 1191 (4th Cir. 1989); see Oster v. Barco of 

Cal. Employees' Retirement Plan, 869 F.2d at 1217, 1220; Morse v. 

Stanley, 732 F.2d at 1146. 

In addition, Woolsey fails to argue that a real conflict exists. Woolsey suggests only that Marion obtained some type of 

psychic benefit from punishing him for his misconduct. He does 

not contend, nor does the record support, a finding that Marion 

financially benefited in any way from the Administrators' choice 

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of distribution. Rather, while Marion makes contributions to the 

Plan's fund, the Plan has a nonreversion clause stating that "the 

Company shall not have any right, title, or interest in the 

contributions made by it under the Plan and no part of the Trust 

Fund shall revert to it or for its benefit." R. Doc. 41, Exh. A, 

§ 12.2 at 47. Thus, Marion incurs no direct expense as a result 

of favorable benefit payments to beneficiaries nor benefits from 

denials of payment. Instead, the retention of stock by the Plan 

solely enhances the viability of the Plan's fund and the denial of 

Woolsey's claim benefits only future beneficiaries, not Marion. 

See De Nobel v. Vitro Corp., 885 F.2d at 1191; Oster v. Barco of 

Cal. Employees' Retirement Plan, 869 F.2d at 1217. The 

Administrators' choice of payment, therefore, reflects proper 

fiduciary concern for the interests of the future participants, 

rather than a conflict of interest with Marion. See Morse v. 

Stanley, 732 F.2d at 1146. 

That the Administrators themselves may incidentally benefit 

by the retention of stock in the Marion Fund as future 

beneficiaries of the Plan similarly suggests no presumptive 

conflict of interest. Donovan v. Bierwirth, 680 F.2d 263, 271 (2d 

Cir.), cert. denied, 459 U.S. 1069 (1982); see Sage v. Automation, 

Inc. Pension Plan & Trust, 845 F.2d 885, 895 (lOth Cir. 1988). 

Upon review, we believe "this dispute is more properly characterized as one involving the trustee's balancing of interests between 

[a] present claimant[] ... and future claimants," Sage v. 

Automation, Inc. Pension Plan & Trust, 845 F.2d at 895, rather 

than a conflict between the Administrators and Woolsey. 

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Fourth, Woolsey contends that since the defendants had 

granted all prior claimants' requests for payment of pension 

benefits in Marion stock, they have acted arbitrarily and 

capriciously in denying his request. In determining whether the 

administrators acted arbitrarily and capriciously in denying a 

claimant's request for payment of his benefits in a lump sum, the 

Second Circuit stated that: 

Whether the [Administrators) had in the past granted acceleration to employees who requested it does not mean that 

they had donned a discretionary strait-jacket which held them 

bound to grant acceleration in all cases as a matter of 

course. On the contrary, the Plan gave them broad discretion 

to evaluate requests for accelerated distribution on a case 

by case basis. 

Morse v. Stanley, 732 F.2d at 1144; see Oster v. Barco of Cal. 

Employees' Retirement Plan, 869 F.2d at 1219; Denton v. First 

Nat'l Bank of Waco, Texas, 765 F.2d at 1300; Fine v. Semet, 699 

F.2d at 1094. Similarly, the Administrators' prior approval of 

benefit payments in stock do not automatically make their present 

decision arbitrary and capricious. 

Woolsey also argues that the decision of the Administrators 

should be overturned because it was not based on substantial 

evidence. He apparently argues that the evidence was insufficient 

because he was unable to refute or challenge Craig and Krohne's 

allegations of misconduct because he was not present during their 

presentation and because he did not know why his request had been 

denied prior to the hearing. 1 

1 These complaints fall flat in light of Woolsey's counsel's 

references at the hearing to Woolsey's conduct during employment 

and his arguments that any misconduct by his client should be 

reviewed solely in termination proceedings or as conditions to 

[footnote continued ••• ] 

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In determining whether the decision was supported by 

substantial evidence, we consider only the facts before the 

Administrators at the time of their decision. Perry v. Simplicity 

Engineering, 900 F.2d 963, 966 (6th Cir. 1990); Voliva v. Seafarers Pension Plan, 858 F.2d 195, 196 (4th Cir. 1988). But cf. Moon 

v. American Home Assur. Co., 888 F.2d 86, 89 (11th Cir. 1989). 

The Administrators' decision need not be the only logical one nor 

even the best one. It need only be sufficiently supported by 

facts within their knowledge to counter a claim that it was 

arbitrary or capricious. See Weir v. Anaconda Co., 773 F.2d 1073, 

1081 (lOth Cir. 1985); Denton v. First Nat'l Bank of Waco, Texas, 

765 F.2d 1295, 1304 (5th Cir. 1985) (reviewing court should 

evaluate only if reliance was reasonable, not necessarily correct). "We will not substitute our judgment for the judgment of 

the [Administrators] unless 'the actions of the [Administrators] 

are not grounded on any reasonable basis.'" Oster v. Barco of 

Cal. Employees' Retirement Plan, 869 F.2d at 1218 (emphasis in 

original) (quoting Elser v. !.A.M. Nat'l Pension Fund, 684 F.2d 

[ ... footnote continued] 

vesting of retirement benefits, not in determining the form of 

such benefits. Indeed, his counsel stated, "The conclusion that I 

have to make on what information has been furnished me both by 

letter and directly is that this is some sort of punishment for a 

purported job misbehavior." R. Doc. 41, Exh. Gat 56. In addition, the Administrators had previously informed Woolsey that they 

had denied his request "after serious consideration of the special 

circumstances surrounding [his] termination." R. Doc. 41, Exh. B6. Having such notice, we can only conclude that Woolsey and his 

attorney knew of the specific reasons for the denial of his 

request or at least had the opportunity at the hearing to question 

the Administrators about those reasons. They failed to do so and 

cannot now claim that they were unable to challenge any erroneous 

beliefs the Administrators may have held regarding Woolsey's 

employment. 

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648, 656 (9th Cir. 1982)). We find that the Administrators 

reasonably relied on the reports of the two Marion managers and 

the evidence presented at the hearing was sufficient to support 

the Administrators' determination that payment of Woolsey's 

benefits in stock would not be in the best interests of future 

Plan beneficiaries. 

Woolsey finally argues that the defendants violated the 

requirements of 29 u.s.c. § 1133 in failing to provide him with 

adequate notice and specific explanation for the denial of his 

request and claims that his hearing was unfair, unduly delayed and 

denied him fundamental due process. However, ERISA and the Plan 

only require such notice and review in cases where a plan 

participant is denied his benefit. The denial of requests for 

certain forms of benefits, rather than for the benefit itself, do 

not require notice or review under § 1133. Pompano v. Michael 

Schiavone & Sons, Inc., 680 F.2d 911, 916 (2d Cir. 1982) (cited 

with approval in Morse v. Stanley, 732 F.2d 1139, 1147 (2d Cir. 

1984)). 

In sum, Woolsey was entitled to the full value of his 

benefits. That is all ERISA protects. That is all the Plan 

grants him. Woolsey complains now because the stock he desired 

has substantially increased in value. However, he has no 

legitimate expectation in anything more than the value of his 

vested benefit at the time of valuation and has no right, 

statutory or contractual, to a windfall resulting from the 

subsequent increased value of the Marion stock. Woolsey has been 

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tendered the full amount of his vested benefit and is entitled to 

no more. 

We find that there is no material fact in dispute as to 

whether the defendants acted arbitrarily and capriciously in denying Woolsey's payment request and that, as a matter of law, the 

defendants should prevail. 

Discrimination: § 1140 

Woolsey argues that, in denying him his preferred form of 

payments, the defendants discriminated against him in violation of 

29 u.s.c. § 1140 and that the district court erred in granting 

summary judgment on this issue. He alleges that the defendants 

refused to grant his payment request, although granted to every 

other participant who had requested such payment, in order to 

"punish" him for his alleged wrongdoing during his employ. He 

suggests, without support, that § 1140 should be read broadly to 

reach conduct "where the employer interferes with a participant's 

election of a benefit." Appellant's Brief at 27 (emphasis added). 

We disagree. 

Section 1140 states, in relevant part, that: 

It shall be unlawful . . . to discharge, fine, suspend, 

expel, discipline, or discriminate against a participant or 

beneficiary • . • for the purpose of interfering with the 

attainment of any right to which such participant may become 

entitled under the plan [or this Act]. 

Woolsey has presented no actionable claim under this section. 

First, as discussed above, he has not been deprived of a vested 

right. West v. Greyhound Corp., 813 F.2d 951, 955 (9th Cir. 1987) 

(no violation of § 1140 where employees not denied vested 

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benefits); see Gavalik v. Continental Can Co., 812 F.2d 834, 852 

(3d Cir.) (employer must interfere with attainment of right to 

which employee may become entitled), cert. denied, 484 U.S. 979 

(1987). Second, the Administrators' denial has not effected 

Woolsey's employment situation. Section 1140 was 

designed to protect the employment relationship against actions designed to interfere with, or discriminate against, 

the attainment of a pension right. . • . Simply put, 

[§ 1140] was designed to protect the employment relationship 

which gives rise to an individual's pension rights. West v. 

Butler, 621 F.2d 240, 245 (6th Cir. 1980). This means that a 

fundamental prerequisite to a [§ 1140] action is an allegation that the employer-employee relationship • . • was 

changed in some discriminatory or wrongful way. 

Deeming v. American Standard, Inc., 905 F.2d 1124, 1127 (7th Cir. 

1990) (emphasis in original) (footnote omitted). No such 

interference occurred in this case. Woolsey admits that he 

voluntarily resigned from employment and that the Administrators 

denied his request for stock payment only after such termination. 

Since Woolsey has failed to state any facts that would support a § 1140 claim, the district court order of summary judgment 

was correct. 

DENIAL OF MOTION TO AMEND COMPLAINT 

Woolsey contends that the district court erred in denying his 

motion to amend his original complaint pursuant to Federal Rule of 

Civil Procedure 15(a). We disagree. 

The decision to grant leave to amend a complaint, after the 

permissive period, is within the trial court's discretion, Fed. R. 

Civ. P. 15(a), and will not be disturbed absent an abuse of that 

discretion. Las Vegas Ice and Cold Storage Co. v. Far West Bank, 

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893 F.2d 1182, 1185 (lOth Cir. 1990); State Distributors, Inc. v. 

Glenmore Distilleries Co., 738 F.2d 405, 416 (lOth Cir. 1984). 

Woolsey argues that "motions (to amend] are to be denied only 

when the delay in seeking amendment is motivated by bad faith or 

is prejudicial to defendants." Appellant's Brief at 18. Thus, he 

contends that since the defendants have not been prejudiced, the 

court's denial constituted error. While prejudice may be one 

ground justifying a denial of leave to amend, such a showing is 

not necessary. Indeed, "[u)ntimeliness alone may be a sufficient 

basis for denial of leave to amend. . • . [P)rejudice to the opposing party need not also be shown." Las Vegas Ice and Cold 

Storage Co. v. Far West Bank, 893 F.2d at 1185; see First City 

Bank v. Air Capitol Aircraft Sales, Inc., 820 F.2d 1127, 1132-33 

(lOth Cir. 1987). 

Woolsey filed his motion to amend nearly 17 months after the 

filing of the original complaint. Because the motion was 

untimely, the court acted within its discretion in denying the 

motion. In addition, Woolsey offered no explanation for the 

delay, another factor supporting a denial of leave to amend. Las 

Vegas Ice and Cold Storage Co. v. Far West Bank, 893 F.2d at 1185. 

Instead, Woolsey's counsel simply noted that, "in researching 

another matter [he] ha[d] identified an additional cause of action 

under ERISA." R. Tab 58. 

Furthermore, the court specifically noted that no new 

evidence that was unavailable at the original filing had come to 

Woolsey's attention. "Where the party seeking amendment knows or 

should have known of the facts upon which the proposed amendment 

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is based but fails to include them in the original complaint, the 

motion to amend is subject to denial." Las Vegas Ice and Cold 

Storage Co. v. Far West Bank, 893 F.2d at 1185 (quoting State 

Distributors, Inc. v. Glenmora Distilleries, Co., 738 F.2d at 

416). 

Given the untimely filing of the motion and the lack of new 

information justifying the delay in adding a new claim, we find 

that the district court acted within its discretion in denying 

Woolsey's motion to amend. 

In accordance with the foregoing, we AFFIRM. 

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