### The Honorable Richard W. Goldberg, Judge, United States 1 

### Court of International Trade, sitting by designation.



# United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________ No. 96-3543

___________ Duane Hutchins; Marcia * Hutchins, individually * and as mother and natural * guardian of the minor * children of Duane Hutchins, * * Plaintiffs/Appellees, * * Appeal from the United States v. * District Court for the * District of Minnesota. Champion International * Corporation, Long Term * Disability Benefits Plan * for Salaried Employees #506 * (the "Plan"); Champion * International Corporation, * * Defendants/Appellants. *

___________ Submitted: March 14, 1997 Filed: April 10, 1997

___________ Before MAGILL, MURPHY, Circuit Judges, and Goldberg, Judge. 1

___________ MURPHY, Circuit Judge. Champion International Corporation amended its Long-Term Disability Ben efits Plan (plan) to exclude benefits to people who are incarcerate d after Duane Hutchins, a plan participant, pled guilty to burglary and was sentenced to prison. Hutchins brought

### The plan states that disability benefits are to provide 2 

### income to an employee who cannot work "as a result of" his or her disability. Hutchins was released from prison after judgment was 3 

### entered in his favor, and Champion has filed an affidavit stating that disability payments to Hutchins have been resumed.
-2- this action to recover benefits lost because of his incarceration. O n
cro ss-motions for summary judgment the district court ruled in favor o f Hutchins on the basis that the amendment was invalid because it had no t been appr oved in accordance with the procedure set out in the plan, an d Champion appeals. We reverse and remand.

Hutchi ns had been receiving benefits for total disability fro m Champion. At the tim e of his crime, he was totally disabled and received approximately $3,000 per month in benefits. After Hutchins went to prison , th e plan administrator amended Champion's disability plan to exclud e payments to those incarcerated; benefits resume upon release. Th e 2 amendment went into effect on March 1, 1995, and benefits were not paid fo r the last 21 months Hutchins was imprisoned. Champion providedhealth care 3 benefits to his dependants the entire time he was in prison, however. Hutchins does not argue that Champion could not properly amend it s program to exclude those who are incarcerated. His quarrel is with the wa y the amendment was passed. Hutchins believes that it should have bee n app roved by Champion's board of directors instead of the company's pla n ad ministrator, the company's pension and employee benefits committe e (PEBC). Hutchins also contends that his benefits had vested and therefor e should not have been terminated. Champion respo nds that there was nothing wrong with the proced ure used in adopting the amendment, the plan did not require the board of directors to approve this type of amendment, and the benefits had not vested.

### -3- The district court concluded that th e PEBC had abused its discretion in interpreting the amendment provision because no reasonable person could have interpreted the provision as it had. The amendment should have been approved b y the board. Hutchins' claim that his benefits had alread y vested became moot, and the court did not decide it.
Champi on appeals from the judgment, and we review the grant o f summary j udgment de novo. Kopp v. Samaritan Health Sys., Inc. , 13 F.3 d 264, 26 8-69 (8th Cir. 1993). Summary judgment is proper if there is n o issue of material fac t, and the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986). Both sides acknowledge that no material fact is in dispute.

I.
Champi on believes the district court erred by invalidating th e amendm ent. It claims that the approval of the amendment by the PEB C complied with the pro cedure set out in the plan. The plan gives the PEBC the discretion to interpret the amendment provision, and there was no abus e of that discretion. Champion contends the district court erred by applyin g its own interpretatio n of the plan, as opposed to reviewing the action of the PEBC under the correct standard.
The Employee Retirement Income Secur ity Act (ERISA) 29 U.S.C. § 1001 et. s eq., does not prohibit an employer from amending or terminating a welfare benefit plan at any time as long as its action is consistent with the rules of the plan. See Curtiss-Wright Corp. v. Schoonejongen , 514 U.S

. 73, 115 S. Ct. 1223, 1228 (1995).

### -4- We start with the terms of the plan itself. This disability pla n outlines an amendment process that differs depen ding on the content of the amendment. Champion's plan states: [t]he Company hereby reserves the right to amend or terminate the Plan at any time by action of its Board of Directors; provided, however any amendment which is not a substantive amendment shall be made on behalf of [the Company] by the [PEBC]. Akey issue in this case is what is meant by "substantive," and the plan does not define the term.

Both sides offer their own definition of "substantive." Champio n argues i t means "substantial impact on the company," and since th e amendment denying benefits to anyone incarcerate d would have little effect
on the company, it was properly a matter for the PEBC. Hutchins interpret s substantive as meaning "of substance." Since the amendment would hav e changed the substance of the program by altering who could receiv e benefits, it was substantive and had to be appro ved by the board. Even if substantive means substantial, the amendment was substantial says Hutchins because it denied him benefits.
The plan provides the PEBC with the "sole, absolute and uncontr olled" discretion to adminis ter the plan and states that this includes the power to interpret its provisions. We therefore review the PEBC's interpretatio n of its pl an under an abuse of discretion standard. See Donaho v. FM C Corp. , 74 F.3d 894, 898 (8th Cir. 1996). Since the PEBC has been give n discretion to interpret the terms of the plan, we may not find th e interpretation invali d merely because we disagree with it, but only if it is unreas onable. Id. at 898-99. An interpretation is "reasonable if a reasonable person couldhave reached a similar decision, given the evidenc e before him." Id. at 899.

### -5- We have recognized five factors useful in determining whether a n interpretation of a welfare benefits plan is reasonable. Finley v. Specia l Agents Mut. Benefit Ass'n, Inc , 957 F.2d 617, 621 (8th Cir. 1992). Th e factors are 1) whether the interpretation is co nsistent with the goals of the plan; 2) whether the interpretation renders any language in the plan meanin gless or makes the plan internally inconsistent; 3) whether th e interpretation conflicts with ERISA; 4) whether the interpretation has bee n consistent; and 5) whether the interpretation is contrary to the clea r language of the plan. These factors present dis crete questions; they need not be examined in any particular order. See Lickteig v. Business Men's Assurance Co. of Am. , 61 F.3d 579, 584-85 (8th Cir. 1995).

The PEBC' s interpretation does not contradict the clear language of the plan. The words of the plan should be given their ordinary meaning. Wilson v. Prudential Ins. Co. of Am. , 97 F.3d 1010, 1013 (8th Cir. 1996). Ordinary meaning is determined by the dictionary definition of the word an d the context in which it is used. See, e.g. , Oxy USA, Inc. v. Hartford Ins

. Group , 58 F.3d 380, 3 82 (8th Cir. 1995). Hutchins contends "substantive"
mean s "of substance," and Champion does not dispute that this is on e meaning of the word. Champion points out, however, that "substantial" is another acceptable meaning of the word. Under an abuse of discretion standard we do not search for the best
or preferable interpretation of a plan term: it is sufficient if the PEBC' s interp retation is consistent with a commonly accepted definition. Se e Donoho 74 F.3d at 899. The primary definition of "substantive" in th e Americ an Heritage Dictionary 1791 (3d ed. 1992), is "substantial ; considerable," and this meaning is contained in other dictionaries as well

. E.g. , Webster's New Collegiate Dictionary 1161-62 (8th ed. 1976).

### -6- Int erpreting substantive as substantial is consistent with th e contex t of the provision. The provision defines the decision-makin g procedure within the company. A reasonable person could interpret th e provision as requiring substantial decisions to be made by the board o f directors, leaving others to the committee that administers the program. In general a board is involved with major or substantial decisions i n running a corporation, and leaves less important decisions to others. Cf. Edward Brodsky & M. Patricia Adamski, Law of Corporate Officers an d Directors § 1:02 (1984) (noting that boards cannot manage all the busines s of a large c ompany). The amendment would not appear to have had a substantial impact on Champion or the plan itself. Only a relatively smal l amount of benefits under the plan were involved, as Hutchins is the only participant affected and his benefits were discontinued only temporarily. There was no suggesti on that any member of the board or any person on the PEBC objected to the amendment.

The PEBC's interpretation meets the first Finley factor to tes t reasonableness since the interpretation does not appear to conflict with the goals of the plan . The goals are not set out in the plan itself, but Hutchins asserts one purpose was to ensure that the board act on amendment s that alter the substance of the program and that this goal was subverted by the act ion of the PEBC. His interpretation of the wording of th e amendment provision i s not unreasonable, but he is not the administrator. Champion delegated t o the PEBC broad discretion to manage and administer the plan, and that in cluded the sole power to interpret the provisions of the plan. Interpreting the amendment provision to require board actio n only on amendments with broad impact is not inconsistent with this generou s delegation of power or apparent plan goals.

### -7- The PEBC' s interpretation does not render the provision of the plan meaningless, and it is therefore consistent with the second Finley factor. Hutchins complains that there is no limit on the PEBC's ability to amend the plan without board approval if it can determine whether an amendment is substantial. The PEBC is limited to making reasonable interpretations of t he plan, however. While there could be cases in which it would b e difficult to determine if an amendment had a substantial impact on the pla n
or Ch ampion, this is not one of them. As noted, the amount of benefit s involved is relativel y small from the overall perspective. Under various dictionary definitions the amendment could reasonably be interpreted i n
more than one way. It is enough that the administrator's interpretation of "substantive" was permissible under some of the definitions.
Finally, the PEBC's action does not violate the third or fourt h Finley factors: the PEBC's interpretation does not conflict with ERISA, and there is no evidence that the PEBC has interpreted the provisio n inconsistently. ERISA does not require the board of directors of a compan y to approve changes to a welfare benefit plan, and it allows a plan to be modified or terminated at any time. Hutchins argued below that there is
no evidence the PEBC has ever interpreted the provision before, and he doe s not c laim on appeal the PEBC interpreted the plan inconsistently. Se e Finley , 957 F.2d at 621 (claimant must show the interpretation wa s inconsistent).

In short , the PEBC's interpretation of the plan was reasonable an d the amendment denying benefits to those incarcerated was validly adopted.

II.

### -8-

Hutchins also claims that because his benefits were vested, it was imprope r for Champion to have discontinued them. The district court did not reach this issue because it found the amendment invalid, but both sides briefed and a rgued it on appeal and there are no disputed facts. The issue ca n therefore be decided as a matter of law, and we exercise our discretion to resolve it. See Talley v. United States Postal Serv. , 720 F.2d 505, 508 (8th Cir. 1983)(an is sue may be decided without remand when the facts are undisputed).
ERISA does not require that welfare benefits vest, and the burden is
on the claimant to show that his welfare benefits had vested under th e terms of the plan. See Howe v. Varity Corp. , 896 F.2d 1107, 1109 (8th Cir

. 1990). Hutchins points to the following provisi on of the plan as evidence that his benefits had vested: 12.3 Title to Assets - No Participant or beneficiary shall have an y right to or interest in any assets of the Plan upon termination of his or her employment or otherwise, except as provided from time to time under this Plan, and then only to the extent of the benefits payable under the Plan to such Participant or out of the assets of the Plan.
He contends that because he was receiving benefits as a totally disabled participant, section 12.3 of the plan ensures that the benefits cannot be taken away until he i s no longer disabled or turns 65. He cites Howe for the proposition that benefits vest for a disability occurring prior to a plan's attempted termination.
Champion argues that benefits are not vested unless a plan expl icitly provides for it. Its plan explicitly states that benefits can b e terminated at any tim e. The amendment could therefore properly terminate benefits w hile Hutchins was in prison. Section 12.3 indicates that a part icipant has no right or interest in the plan's assets "except a s provided . . . under this Plan" and

### In light of this disposition, the standing issue involving 4 

### Marcia Hutchins, Duane Hutchins' ex-wife and a named plaintiff, is moot.
-9- Hutchins has not identified any provision of the plan which could create a vested right.

Hutchins' benefits did not vest under the terms of the plan. Th e plan s pecifically provided Champion with the authority to terminate o r modify it. In the ab sence of contrary language in the plan, Hutchins did not hav e a right to vested benefits. Howe does not control as Hutchin s claims, because the p lan there differed. The Howe plan contained language that limited the ability of the administrator to terminate or amen d benefits once a participant was already entitled to receive them. Howe 89 6 F.2d at 1 109-10. There is no similar limitation on Champion's right t o terminate or modify its plan, and in fact section 1.3 of the plan indicate s that benefits "shall be subject to the provisions of this Plan as amended and restated."

III.

Since we find no abuse of discretion on the part of the pla n adminis trator and no vested right to receive benefits, we reverse an d remand for entry of judgment in favor of Champion. 4

A true copy:

Attest:

CLERK: U.S. COURT OF APPEALS, EIGHTH CIRCUIT.