* Circuit Judge of the Ninth Circuit, sitting by designation. IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

99-30132

RICHARD L. WHITTAKER,

Plaintiff-Appellant

versus

BELLSOUTH TELECOMMUNICATIONS, INC.

CAREER ALTERNATIVE PLAN FOR MANAGEMENT

EMPLOYEES,

Defendant-Appellee,

Appeal from the United States District Court

for the Middle District of Louisiana

March 23, 2000

Before FARRIS * , WIENER, and STEWART, Circuit Judges

CARL E. STEWART, Circuit Judge:

This case involve s an appeal from the district court’s grant of summary judgment. For

reasons assigned below, we affirm.

Factual and Procedural Background

Richard Whittaker (“Whittaker”) was an employee of a subsidiary o f BellSouth

T elecommunications, Inc. (“BST”) and a member of the BST Career Alternative Plan for

management employees (“CAP”). CAP is an employees benefit plan governed under the Employee

Retirement Income Security Act of 1974 (“ERISA”) that provides a separation benefit for eligible2

management employees who voluntarily separate employment for the purpose of pursuing education,

teaching, or community service opportunities for a period not to exceed three y ears. In October

1995, Whittaker submitted an application for CAP benefits. Whittaker’s CAP application was denied

by Stephen Kirkmeier, his department head. Whittaker contends that he was told by Kirkmeier and

his district sales manager that his CAP benefits were denied because there was no employee surplus

of persons in his job position, and that the denial of his CAP benefits was a “business decision.”

Whittaker did not receive a written rejection of his benefits claim. In December 1995, Whittaker’s

attorney sent a letter to BST stating that Whittaker was making a “claim fo r CAP benefits.” The

letter also stated that Whittaker believed that he had received an oral denial of his init ial benefits claim

and that if BST found that Whittaker had already submitted a claim, the letter should be regarded as

an appeal. A human resource manager wrote a response to Whittaker’s letter on December 14, 1995

which stated that Whittaker’s “appeal” was being processed.

In January 1996, Whittaker received another letter from BST which stated that a t eam of

Human Resources Managers and the CAP coordinat or “found no evidence to support the claim.”

Whittaker states that this January review was conducted by the BST CAP Review committee. BST

maintains that the January review was only conducted by a CAP coordi nator. Prior to Whittaker’s

December “appeal” for CAP benefits and the January review of his CAP claim, in November 1995

Whittaker’s department offered him a Discretionary Terminatio n Allowance Plan (“DTAP”). In

February 1996, Whittaker accepted these DTAP benefits and signed a waiver which stated that he

would waive, discharge, and release all claims against BST.

In January 1997, Whittaker filed an action in federal di strict court under 29 U.S.C. §

1132(a)(1)(B) (“§ 1132(a)(1)(B)”) challenging BST’s denial of CAP benefits. On October 31, 1997

the district court entered an order that staye d t he proceedings until Whittaker exhausted his

administrative remedie s. In January 1999, the district court entered summary judgment for BST

finding t hat the administrator’s decision to deny Whittaker CAP benefits was not an abuse of3

discretion because Whittaker’s participation in the BST DTAP barred him from receiving BST CAP

benefits. Whittaker now appeals the district court’s rulings.

Discussion

We review a district court's grant of summary judgment de novo. Matsushita Elec. Indus.

Co. v. Zenith Radio Corp

., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); T odd

v. AIG Life Ins. Co. , 47 F.3d 1448, 1451 (5th Cir.1995). Summary judgment is appropriate if the

record discloses "that there is no genuine issue as to any material fact and the moving party is entitled

to a j udgment as a matter of law." Fed.R.Civ.P. 56(c). In making this determination, we must

evaluate the facts in the light most favorable to the non-moving party. M atsushita

, 475 U.S. at 587,

106 S.Ct. at 1356; Todd , 47 F.3d at 1451.

Moreover, when we are called to interpret an ERISA-covered policy in cases involving the

denial of benefits challen ged under § 1132(a)(1)(B), we construe the terms of the plan de novo

"unless the benefit plan gives the administrator or fiduciary discretion a ry authority to determine

eligibilit y for benefits or to construe the terms of the plan." F irestone Tire & Rubber Co. v. Bruch

,

489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989); Todd , 47 F.3d at 1451; Harms v.

Cavenham Forest Indus.

, 984 F.2d 686, 688 ( 5 th Cir.1993). In the present case, the BST CAP

provisions on plan administration state that the CAP Review committee has “been delegated the sole

and complete discretionary authority to resolve benefit claim appeals under BST CAP.” Therefore,

under the plain language of the plan itself the plan administrator had discretionary authority, and thus

the administrator’s decision should be reviewed under the abuse of discretion standard.

Application of the abuse of discretion standard may involve a two-step process. W ildbur v.

ARCO Chemical Co

, 974 F.2d 631, 637 (5 th Cir. 1992). First, the court must determine if the plan

administrator’s interpretation of th e plan was legally correct. I d. Second, if the administrator’s

interpretation of the plan was n ot legally correct the court should then determine whether the

administrator’s decision was an abuse of discretion. I d. In determining whether the plan

administrator’s interpretation of the plan was legally correct a court must consider: 1) whether the4

administrator gave the plan a uniform construction, 2) whether the interpretation is consistent with

a fair reading of the plan, and 3) any unanticipated costs resulting from different interpretations of the

plan. Id. at 638.

Our review of the record reveals that the BST CAP administrators gave CAP a legally correct

interpretation. First, BST CAP provisions specifically provide that “managers are not eligible for

participation in BST CAP if

. . . they separate from the participating company under the provisions

of the DTAP or any other management severance plan.” Whittaker argues that this provision should

not be dispositive in his case because he did not accept the DTAP benefits until after he had applied

for CAP benefits and been rejected. However, CAP does not specifically state that an employee will

o nly be disqualified from CAP if they accept DTAP benefits b efore applying for CAP. Instead it

appears that any acceptance of DTAP benefits disqual ifies an employee from CAP benefits.

Whittaker has presented no evidence to indicate that this DTAP exclusion was not applied to other

employees. Furthermore, this interpretation is a fair reading of the plan, because CAP is meant to

give BST employees the opportuni ty to voluntarily leave BST to pursue further education, teaching,

or community service not in excess of three years. Thus, acceptance of termination of employment

under DTAP would be inconsistent with these CAP goals.

Whittaker further argues, however, that the district court should not have decided whether

the adminis t rat o rs abused their discretion based on his acceptance of DTAP benefits. Instead

Whittaker asserts that during the init ial claim process he was told in his various interactions with BST

representatives that his CAP benefits had been denied because he was not in a job position that had

a surplus of employees. Furthermore, Whittaker was told that losing a trained person in his position

might make his division unable of meeting its commitments and business needs. As such, Whittaker

contends that these original reasons given by BST were not legally correct interpretations of CAP.

However, even if we were to limit our review to the original reasoning given by BST, the plan

administrators nonetheless gave a legally correct interpretation of the plan. First, the plan was given

uniform construction. Although Whittaker argues that three other employees in his same position1 Whittaker also challenges the district court’s order to stay the pro ceedings until hi s

administrative remedies were exhausted. Our review of the record reveals Whittaker exhausted his

administrative remedies before filing his suit in federal district court. A plaintiff may exhaust their

administrative remedies by first filing a claim for benefits and then appealing denial of that claim. S ee Hagaer v. Nationsbank

, 167 F.3d 245, 248 (5 th Cir. 1999). In the instant case, Whittaker applied for

CAP benefits directly to his supervisor. In Whittaker’s December 5 letter, he stated that the letter

should be treated as an appeal if BST had received Whittaker’s first claim for CAP benefits. Before

sending the letter, Whittaker was verbally denied the CAP benefits by his supervisor. Additionally,

BST’s init

ial response from the December let ter stated that Whittaker’s “appeal” was being

pro cessed. Thus, under these circumstances, the district court erred when it ruled that Whittaker

failed to exhaust his administrative remedies. Nonetheless, we find the error harmless because, as

established above, Whittaker’s acceptance of DTAP benefits barred him from claiming benefits under

CAP.

5 were given CAP benefits, nevertheless, BST demonstrated that two of those employees were not in

the same job position as Whittaker. Furthermore, the other employee had been given CAP benefits

befo re BST knew that losing employees in Whittaker’s division might prevent the division from

meeting its yearly goals. Therefore, both the DTAP reasoning and the business needs reasoning put

forth by BST were legally correct interpretations of the plan. Thus, the plan administrators did not

abuse their discretion in denying Whittaker CAP benefits. 1

Conclusion

We AFFIRM the district court’s grant of summary judgment. AFFIRMED.