In the

United States Court of Appeals

For the Seventh Circuit ____________

Nos. 02-2765 & 02-3871

RICHARD B. HELFRICH and DANIEL B. NELSON,

Plaintiffs-Appellants,

v.

CARLE CLINIC ASSOCIATION, P.C.,

Defendant-Appellee.

____________

Appeals from the United States District Court

for the Central District of Illinois.

No. 99-2232—Michael P. McCuskey, Judge.

____________

ARGUED APRIL 18, 2003—DECIDED MAY 12, 2003

____________

Before EASTERBROOK, KANNE, and DIANE P.WOOD, Circuit

Judges.

EASTERBROOK, Circuit Judge. Carle Clinic Association

claims to be one of the nation’s largest medical-practice groups. See <http://carle.com>. Together with the

Carle Foundation, it operates several clinics plus the

hospital affiliated with the University of Illinois in

Urbana-Champaign. Carle promised employees (including physicians) a pension that could be as large as 50%

of average earnings. Doctors Richard Helfrich and Daniel

Nelson learned to their dismay, however, that the total

annual pension under Carle’s defined-benefit plan cannot

exceed $160,000. Paying more would cost the plan its “tax-
2 Nos. 02-2765 & 02-3871

qualified” status, which allows Carle to deduct pension

expenses and employees to defer until retirement all taxes

on the value of this fringe benefit. See 26 U.S.C. §§ 401(a),

415. The cap changes with the cost of living; $160,000

is close enough for current purposes. It is less than the

pension that Helfrich and Nelson believed had been promised, and when the plan refused to pay more they filed

this suit under §502(a) of the Employee Retirement Income Security Act, 29 U.S.C. §1132(a). Observing that the

plan’s terms explicitly restrict payouts to a level consistent

with retaining tax advantages, the district court granted

summary judgment for Carle. Later it ordered plaintiffs to

reimburse Carle for the legal expense it had incurred in

defending the suit.

Plaintiffs’ principal contention on appeal is that summaries Carle handed out to its employees override the terms

of the plan. Every pension plan must publish a summary

plan description, and conflicts between this document

and the plan itself are resolved in favor of the summary

plan description (unless it alerts the reader to look for

additional terms in the full plan). See, e.g., Mathews v.

Sears Pension Plan, 144 F.3d 461, 466 (7th Cir. 1998).

Plaintiffs want us to extend this rule to other descriptive

material. They did not make such an argument in the

district court (relying there on estoppel, which we discuss

below); and plaintiffs’ argument, like this whole suit,

reflects confusion between the employer and the plan,

which under ERISA is a separate trust. Plans can control

the contents of summary plan descriptions, which they

prepare (with, one hopes, a degree of care appropriate to

the reliance they engender and the legal consequences

they carry). Plans cannot control what miscellaneous

recruiters and personnel managers may say, nor does even

a large employer’s human-resources staff draft descriptions

with the precision that the plan itself will do—for the

employer knows that its staff can refer to the summary
Nos. 02-2765 & 02-3871 3

plan description. Because ERISA requires plans to prepare

summary plan descriptions, and because their content is

within the plan’s control, it makes sense to give these

documents legal effect when relied on. Employer-prepared

summaries, by contrast, have no footing in ERISA and could

not be enforced against the plan without disregarding the

boundary between two distinct entities: the plan and the

employer. Blurring that line is what plaintiffs hope to

achieve, and they have taken their own view to heart by

suing only the employer. Claims based on the plan (or the

summary plan description) must be enforced against the

plan, which is not a party. Yet Carle makes nothing of

this omission, and §1132(a) does not make federal jurisdiction depend on the plan’s inclusion as a defendant. It is

enough if the plaintiff is a plan participant and makes

a claim for benefits. Still, plaintiffs’ decision not to sue

the plan reveals their working assumption that the plan

and the employer are indistinguishable. ERISA does not

operate that way.

One summary plan description is in the record. This

document, dated October 1996, is 21 single-spaced pages.

It fully describes the cap required by statute as a condition of tax deferral. The three documents that plaintiffs

call “summaries” do not look remotely like summary

plan descriptions and must have been prepared by Carle

rather than by the plan. “Summary I” is a single-page

handout; “Summary II” is a brochure that covers all

of Carle’s fringe benefits in the equivalent of two lettersized pages; and “Summary III,” a section of Carle’s employee handbook, though longer (at 15 pages), covers many

topics in addition to the pension formula. None of the three

summaries alerts employees to the $160,000 cap on taxqualified plans, most likely because the latest of the three

dates from 1981. Ever since ERISA’s enactment in 1976, the

Carle plan has provided that benefits will not exceed what

tax-qualified plans can provide. Congress amended the
4 Nos. 02-2765 & 02-3871

Internal Revenue Code in 1986 to create the limit (originally $90,000 but lifted to $160,000 under a formula

enacted in 1991), and pre-1986 brochures were unlikely

to describe future legislation.

Now if a summary plan description from 1981 had

omitted mention of a rule (the plan’s provision that no

benefit costing the plan its tax-qualified status would

be paid) that had a potential to curtail retirement income, plaintiffs might have a better position. But the record does not contain any summary plan description preceding 1996. Plaintiffs complained at oral argument that

the district court had blocked their discovery into this

subject, but counsel admitted that he had not sought

documents of this kind. Instead plaintiffs noticed several

depositions of plan officials, and the district judge stopped

this process as burdensome because nothing that any

plan official could say about the handling of Helfrich’s or

Nelson’s demands for larger pensions would affect the

proper disposition of the suit, which depends on the

validity of the plan itself. Plaintiffs’ counsel then earned

the district judge’s enmity by noticing another set of

depositions, showing that he would do what he could to

evade the judge’s ruling. The judge did not abuse his

discretion in curtailing plaintiffs’ efforts to take depositions; and plaintiffs did not seek production of the kind

of documents that could assist them (or serve requests

for admissions about the nature and contents of earlier

summary plan descriptions). Maybe counsel knew that

there is no helpful document waiting to be found; Helfrich

was for a time chairman of Carle’s board and a member

of its pension committee, so his files may well contain

whatever relevant documents the plan distributed.

So the rule that summary plan descriptions, if relied

on, trump the plan itself does not assist plaintiffs. And,

as we have concluded that this rule should not be extended to documents prepared by the employer, it follows
Nos. 02-2765 & 02-3871 5

that the same contention under the banner of “estoppel”

fares no better. The doctrine that the summary plan

description prevails over the plan is a form of estoppel;

to establish the limits of this doctrine is to establish

the limits of estoppel. No matter what label applies, documents prepared by an employer do not supersede those

documents that establish the terms of a pension plan.

Whether, and to what extent, estoppel is available with

respect to welfare benefit plans under ERISA is an issue

on which the judiciary has not come to rest, compare

Frahm v. Equitable Life Assurance Society, 137 F.3d 955,

961 (7th Cir. 1998), with Shields v. Teamsters Pension

Plan, 188 F.3d 895 (7th Cir. 1999), but with respect to

pension plans (which by statute must be very formal) the

only variance that any court has allowed depends on the

plan’s own writings, such as summary plan descriptions.

See, e.g., Downs v. World Color Press, 214 F.3d 802, 805-06

(7th Cir. 2000); Krawczyk v. Harnischfeger Corp., 41 F.3d

276, 280 (7th Cir. 1994); Shields, 188 F.3d at 900 n.3. And

we cannot imagine a good claim of estoppel that would

require a plan to forfeit the tax benefits on which its

actuarial soundness relies. Plaintiffs’ position, if accepted,

would cost Carle, their co-workers, and themselves considerable sums in taxes. Helfrich estimated before the case

began that, under his position, Carle would need to contribute about $20 million extra to the plan; Carle also

would lose tax deductability of past and future contributions, costing it (and thus its physician-owners) millions

more. It is unclear whether plaintiffs would be winners;

that depends on whether the increase in pension benefits

would be enough to cover their tax obligations. Most other

current and former Carle employees—those not affected

by the cap because their annual earnings were less than

$320,000—would be certain to lose because they would

suffer tax consequences without offsetting gains. Overriding the plan’s terms to achieve that dubious end is not a

proper function of an equitable doctrine.
6 Nos. 02-2765 & 02-3871

One might imagine an argument that, although the

existing plan must respect the statutory rules for maintaining tax benefits, Carle should be obliged to create

another plan that is not tax-qualified and brings pensions

up to the promised level. Cf. Bartholet v. Reishauer A.G.

(Zürich), 953 F.2d 1073 (7th Cir. 1992). Yet although

plaintiffs hint at such an argument they do not make it

expressly—perhaps because it has no footing in the three

“summaries” on which they rely. These documents describe

two plans: the non-contributory defined-benefit plan at

issue here, and a defined-contribution plan in which

employees could elect to participate. An argument for

creating still a third plan, limited to Carle’s best-paid

physicians, has no support in the documentation. Moreover,

because plaintiffs have not made this argument explicit,

Carle was not put on notice of the need to discuss its

effects. Would such a plan limited to well-paid employees

jeopardize the tax benefits for the rest? Would it have

other adverse consequences? These are subjects that we

need not explore given plaintiffs’ sketchy argument. And

if the contention were cast as a demand for cash from

Carle without a plan, it is hard to see why employers

should insure their employees against legislative change.

But for the amendments to the tax code, even the unguarded language of the “summaries” would have held.

Many people are disappointed, and their fortunes affected,

by statutory change; this does not imply that some private

party must step in to undo the effects of the legislation. The

“summaries” described extant pension plans; they did

not include promises to protect employees from the transition effects of statutory change.

As for attorneys’ fees: the district court did not abuse

its discretion in concluding that Carle, the prevailing party, is entitled to recompense under 29 U.S.C. §1132(g)(1),

which says that “the court in its discretion may allow a

reasonable attorney’s fee and costs of action to either
Nos. 02-2765 & 02-3871 7

party.” Nor did the district judge err in concluding that fees

in the range of $160,000 are reasonable, given the stakes

of the case: a loss would have cost Carle $20 million or

more and had awful tax consequences for many current

and former employees. Carle retained ERISA specialists to

protect its interests; this was a prudent step. (Plaintiffs

stress that they hired less expensive lawyers. The difference shows. You get what you pay for.)

Unfortunately, however, the district judge did not exercise the billing judgment that is essential in all fee-shifting

cases. Carle sought compensation for all legal time and

expenses racked up during the suit’s pendency. That

included, for example, about $885 billed to Carle for the

expense of preparing a press release describing the suit

and $95 for the time one lawyer devoted to preparing an

application for admission to the bar of the United States

District Court for the Central District of Illinois. Press

releases are not part of a legal defense (even if the client

elects to have the drafting done by lawyers), and admission

to the local bar would have a benefit outlasting this

case. Time devoted to exploration of insurance issues

also should not be shifted to the plaintiffs; it is no concern

of this litigation how things happen behind the scenes

in the event the plaintiffs prevail. The district court should

eliminate these items on remand and review the remaining charges to see whether fee-shifting is appropriate

with respect to each kind of service rendered. Carle is

entitled to recover the cost of legal defense (including the

cost of preparing a budget, a normal incident in any

substantial suit), but not legal expenses that do not

produce a defense against the plaintiffs’ claims. On balance,

however, the tab will go up—for although a few items

must be subtracted, the cost of defending Carle on this

appeal must be added. When fees have been awarded in the

district court on the authority of a fee-shifting statute,

the costs of appellate work are automatically shifted.
8 Nos. 02-2765 & 02-3871

Commissioner of INS v. Jean, 496 U.S. 154 (1990). The

district court should determine, and award, the legal fees

that Carle incurred in defending its judgment.

The decision on the merits is affirmed. The award of

attorneys’ fees is vacated, and that subject is remanded

for further proceedings consistent with this opinion.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—5-12-03