1

The Honorable Roger L. Wollman stepped down as Chief Judge of the United

States Court of Appeals for the Eighth Circuit at the close of business on January 31,

2002. He has been succeeded by the Honorable David R. Hansen.

2

The Honorable Louis F. Oberdorfer, United States District Judge for the

District of Columbia, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 01-2783

___________

Rick Shelton, *

*

Appellant, *

* Appeal from the United States

v. * District Court for the

* Eastern District of Arkansas.

ContiGroup Companies, Inc., originally *

sued as Continental Grain Company, *

*

Appellee. *

___________

Submitted: January 14, 2002

Filed: April 1, 2002

___________

Before WOLLMAN,1

 Chief Judge, HANSEN, Circuit Judge, and OBERDORFER,2

District Judge.

___________

WOLLMAN, Chief Judge.
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Rick Shelton appeals from the district court’s grant of summary judgment to

the defendants in his action for long-term disability benefits. We reverse and remand

for further proceedings.

I.

Shelton was employed at the Wayne Farms LLC poultry processing complex

in Danville, Arkansas, beginning on May 18, 1987. Wayne Farms is a division of

ContiGroup Companies, Inc. (ContiGroup), formerly known as the Continental Grain

Company. While employed there, he participated in The Continental Grain Company

Long-Term Disability Benefit Plan (Plan) and The Salaried Retirement Plan (which

is not at issue in this appeal). Both plans are governed by the Employee Retirement

Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., and are funded

entirely by ContiGroup. The Plan’s administrator is the “Administrative Committee,”

a group appointed by ContiGroup’s Board of Directors. 

Section 2.2 of the Plan defines a “Participant” in the Plan as one “whose

participation in the Plan has not terminated.” Section 3.3 provides that a

“Participant’s participation in the Plan shall terminate” on “[t]he date the Participant’s

employment with the Employing Company is terminated (as determined by it) other

than by reason of Total Disability.” 

On August 28, 1987, Shelton injured his right knee while working at Wayne

Farms. He received medical treatment from time to time, including having two

surgeries on the knee. Ultimately, on November 13, 1996, Shelton was placed on

medical leave from Wayne Farms, with medical restrictions of “no prolonged

standing or walking indefinitely.” He received short-term disability benefits for the

prescribed period. On or about February 19, 1997, Shelton submitted an application

for long-term disability benefits under the Plan. This application was received and

processed by CIGNA, which had contracted with ContiGroup to process claims under

the Plan.
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On April 23, 1997, while CIGNA was processing Shelton’s claim, two Wayne

Farms employees, Danny Jones and Anita Vanravensway, went to the Plainview

Dairy Bar, a diner owned and operated by Shelton’s wife and her mother. Shelton

was behind the counter, and when Jones and Vanravensway entered, he stood up,

took their order, and accepted their payment. He then sat back down. [Shelton

contends that he was not being paid wages while he was at the dairy bar and that

taking Jones’s and Vanravensway’s order was all that he did while there.] Later that

day, Jones and Vanravensway reported that they had seen Shelton working at his

wife’s business, whereupon Wayne Farms immediately terminated Shelton’s

employment. The next day, Don Bull, manager of the Wayne Farms Danville

complex wrote Shelton a letter stating that Shelton had been terminated because “by

working and receiving other income from Plainview Dairy Bar, you are violating your

medical leave.” 

The same day that Shelton was terminated, Joellen West, a human resources

employee at the corporate offices of ContiGroup’s poultry group, sent an

intracompany e-mail to ContiGroup Benefits Administrator Frances Pages informing

her that Wayne Farms had fired Shelton and stating that she should stop processing

his application for long-term disability benefits. The Plan then notified CIGNA to

stop processing Shelton’s application.

The Administrative Committee did not provide Shelton with written notice of

the denial of his claim nor of his appeal rights, as required by the Plan. There is

nothing in the record to indicate that the Administrative Committee made any

decision regarding Shelton’s claim. An affidavit by Jessie Barsin, a member of the

Administrative Committee, states that Shelton’s claim was not processed because “the

LTD Plan was informed that he was no longer employed by Wayne Farms or

ContiGroup and informed he had been working while on medical leave and drawing

short-term disability benefits.” 
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Shelton sued, claiming that he was entitled to benefits under the Plan. He did

not claim that he was wrongfully terminated. The district court granted summary

judgment to ContiGroup, holding that Shelton ceased being a participant in the Plan

when he was terminated and thus was no longer eligible for benefits. 

II.

We review the district court’s grant of summary judgment de novo. Henerey

v. City of St. Charles, 200 F.3d 1128, 1131 (8th Cir. 1999). Summary judgment is

proper if the evidence, viewed in the light most favorable to the nonmoving party,

demonstrates that no genuine issue of material fact exists and that the moving party

is entitled to judgment as a matter of law. Id.; Fed. R. Civ. P. 56(c).

“ERISA provides a plan beneficiary with the right to judicial review of a

benefits determination.” Woo v. Deluxe Corp., 144 F.3d 1157, 1160 (8th Cir. 1998);

see 29 U.S.C. § 1132(a). It is undisputed that the Plan gives the administrator

discretionary authority to determine eligibility for benefits, so we would ordinarily

review the administrator’s decision for an abuse of discretion. See Woo, 144 F.3d at

1160. “This deferential standard reflects our general hesitancy to interfere with the

administration of a benefits plan.” Layes v. Mead Corp., 132 F.3d 1246, 1250 (8th

Cir. 1998). Under this standard, a reviewing court should consider only the evidence

before the plan administrator when the claim was denied. Id. at 1251. We may apply

a less deferential standard of review if the plaintiff presents “material, probative

evidence demonstrating that (1) a palpable conflict of interest or a serious procedural

irregularity existed, which (2) caused a serious breach of the plan administrator’s

fiduciary duty” to the plaintiff. Woo, 144 F.3d at 1160. An alleged conflict or

procedural irregularity must have some connection to the substantive decision

reached. Id. at 1161. A claimant must offer evidence that “gives rise to serious

doubts as to whether the result reached was the product of an arbitrary decision or the

plan administrator’s whim” for us to apply the less deferential standard. Layes, 132

F.3d at 1250 (internal quotation marks omitted). 
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Shelton argues that the district court should have applied a less deferential

standard of review to the administrator’s decision because of the conflict of interest

created by ContiGroup’s both funding and administering the Plan and because of the

procedural irregularities that occurred in the processing of his claim. It appears from

the record, however, that Shelton did not ask the district court to apply a less

deferential standard. Normally, we do not consider arguments first raised on appeal.

See Colonial Ins. Co. of Cal. v. Spirco Envtl., Inc., 137 F.3d 560, 561 (8th Cir. 1998).

We need not determine whether a less deferential standard should be applied in this

case, however, because we conclude that the administrator abused its discretion by

allowing company officials to make a decision that the Plan reserves to the

Administrative Committee.

In determining whether the administrator’s decision constituted an abuse of

discretion, we apply five factors: (1) whether the administrator’s interpretation is

consistent with the goals of the Plan; (2) whether the interpretation renders any

language in the Plan meaningless or internally inconsistent; (3) whether the

administrator’s interpretation conflicts with the substantive or procedural

requirements of the ERISA statute; (4) whether the administrator has interpreted the

relevant terms consistently; and (5) whether the interpretation is contrary to the clear

language of the Plan. Cash v. Wal-Mart Group Health Plan, 107 F.3d 637, 641 (8th

Cir. 1997). 

We conclude that in deciding that Shelton was no longer a participant in the

Plan because he was no longer a ContiGroup employee, the administrator failed to

give effect to the requirements of the Plan in their entirety.

Section 2.18 of the Plan provides:

“Totally Disabled” or “Total Disability” shall mean, (a) during the

first 30 months of any period of continuous disability requiring the
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regular care of a licensed physician, that the Participant is unable,

because of accidental bodily injury or sickness (whether occupational or

non-occupational), to perform any and every duty of his occupation with

the Employing Companies and is not gainfully employed in any other

occupation; and thereafter, during the remainder of such continuous

period of disability, that the Participant is unable, because of the same

accidental bodily injury or sickness, to engage in any gainful occupation

or profession for which he is reasonably fitted by education, training or

experience, and is not gainfully employed. All determinations as to

whether or not a Participant is or continues to be Totally Disabled shall

be made by the Administrative Committee.

Section 2.18 contains two standards for the definition of “Total Disability:” (1)

that the claimant cannot engage in gainful employment and (2) that the claimant is not

in fact gainfully employed. The final clause of the section states that only the

Administrative Committee may make a determination of a claimant’s eligibility under

these standards. When it fired Shelton for working at the Plainview Dairy Bar,

ContiGroup in essence made a determination under this provision that he was

gainfully employed and so was not “Totally Disabled” under the Plan. If ContiGroup

were allowed to fire a claimant for being otherwise gainfully employed, the final

clause of section 2.18 would be rendered meaningless, for under ContiGroup’s

interpretation of the Plan, ContiGroup employees are empowered to make decisions

regarding a claimant’s eligibility under the definition of “Total Disability” set forth

in section 2.18 by terminating the claimant and thus rendering the claim moot. 

As indicated earlier, section 3.3.1 states that an employee’s participation in the

Plan ends when the employer terminates that employee, other than for total disability.

Read in isolation, this provision prevents ContiGroup from removing an employee

from the Plan for being disabled but allows ContiGroup to remove an employee for

not being disabled. The Plan should not be read in a manner that would render

nugatory the requirement that the Administrative Committee determine whether a

claimant is gainfully employed at the time the determination of the claimant’s
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eligibility for long-term disability benefits is being made. In other words, once a

claim for long-term disability benefits is filed, the Administrative Committee is the

only body with the authority to make that determination. By failing to make that

determination, the Administrative Committee abdicated its duty imposed upon it by

section 2.18 and perforce abused is discretion. 

We are not saying, as Shelton would have us do, that employers may not fire

any at-will employee who has filed a long-term disability claim. Our holding is

limited to the provisions of ContiGroup’s Plan, which provides that certain decisions

are committed to the Administrative Committee, including the determination

regarding a claimant’s ability to work and whether or not the claimant is in fact

working. By filing a claim, Shelton was entitled to have those decisions made only

by the Administrative Committee. 

Because the Administrative Committee’s failure to fulfill its duty constituted

an abuse of discretion, ContiGroup was not entitled to summary judgment.

Accordingly, on remand the district court should remand the case to the

Administrative Committee for a decision on the merits of Shelton’s claim, including

a determination of whether, as he contends, Shelton was not in fact gainfully

employed at the dairy bar on April 23, 1997.

The judgment is reversed, and the case is remanded to the district court for

further proceedings not inconsistent with this opinion. 

 A true copy.

Attest:

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