Source: https://casetext.com/case/daniel-v-eaton-corp
Timestamp: 2019-06-20 05:19:59
Document Index: 351427346

Matched Legal Cases: ['§ 1132', '§ 502', '§ 1132', '§ 1144', '§ 1133', '§ 2560', '§ 2560', '§ 1132', '§ 1132', '§ 502']

Daniel v. Eaton Corp, 839 F.2d 263 | Casetext
Daniel v. Eaton Corp.
839 F.2d 263 (6th Cir. 1988)
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Danielv.Eaton Corp.
United States Court of Appeals, Sixth CircuitFeb 9, 1988
Decided February 9, 1988. On Motion for Reconsideration March 17, 1988.
John T. Ballantine, David A. Harris, Ogden, Robertson and Marshall, Louisville, Ky., Harry T. Quick, argued, Benesch, Friedlander, Coplan Aronoff, Cleveland, Ohio, for defendants-appellees.
Daniel filed suit on April 6, 1984, naming Eaton Corporation, Mellon Bank, Trustee under the plan and Richard T. Kennedy as defendants. The only basis of jurisdiction set forth in the complaint is section 502(e) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(e) (1982). Daniel recited his dispute with Eaton over credited service and alleged that after Eaton had denied his application for early retirement benefits, he submitted an appeal on September 1, 1983, to the Central Board of Administration, but that no action had been taken on his appeal. In the complaint, Daniel stated that Richard T. Kennedy "has been an administrator of Pension Plan A-1."
In Count I of the complaint Daniel sought recovery from Eaton and Mellon Bank of all past due benefits with interest, and an order requiring Eaton and Mellon "to instate" Daniel as a beneficiary with a monthly pension of $935 and all fringe benefits provided under the Plan. In Count II Daniel asked the court to require Eaton and Kennedy to pay him a penalty of $100 per day pursuant to § 502(c) of ERISA for failure to furnish a copy of the Plan within 30 days of his request. He also prayed for an award of attorney's fees and a jury trial.
Section 502(c), 29 U.S.C. § 1132(c), provides:
Any administrator (1) who fails to meet the requirements of paragraph (1) or (4) of section 1166 of this title with respect to a participant or beneficiary, or (2) who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court's discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper.
The complaint did not name either the Local Pension Committee or the Central Board of Administration as a defendant. In Barrett v. Thorofare Markets, 452 F. Supp. 880 (W.D.Pa. 1978), an action against the plaintiff's former employer for wrongful denial of early retirement benefits was dismissed on the employer's motion as having named the wrong party defendant. The court held that the pension committee was the only proper defendant against whom relief could be granted. The committee was responsible for administering and interpreting the plan and was solely responsible for a denial of benefits. Id. at 884. Unless an employer is shown to control administration of a plan, it is not a proper party defendant in an action concerning benefits. Boyer v. J.A. Majors Company Employees' Profit Sharing Plan, 481 F. Supp. 454, 457-58 (N.D.Ga. 1979). See also Foulke v. Bethlehem 1980 Salaried Pension Plan, 565 F. Supp. 882 (E.D.Pa. 1983) (employer's motion to dismiss denied because of evidence that it had taken an active part in administration of the plan).
We consider the Count I claim first. To the extent that Daniel sought recovery from Eaton for breach of contract or on the theory of promissory estoppel, such claims are preempted by ERISA, since these claims "arise from the administration of [the Plan]." Blakeman v. Mead Containers, 779 F.2d 1146, 1151 (6th Cir. 1985); Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1095 (9th Cir. 1985). With certain exceptions not material here, state law actions related to employee benefit plans are preempted by ERISA. Section 514(a), 29 U.S.C. § 1144(a). Common law causes of action are preempted whether the state laws are specifically designed to affect employee benefit plans or not. Pilot Life Insurance Co. v. Dedeaux, ___ U.S. ___, 107 S.Ct. 1549, 1553, 95 L.Ed.2d 39 (1987). ERISA embodies a comprehensive civil enforcement scheme with respect to claims for employment benefits which "represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefits plans." 107 S.Ct. at 1556. The preemption provision is integral to this scheme.
In view of Eaton's acceptance of responsibility for denial of Daniel's claim, the district court treated the entire action as one under ERISA and Eaton as the Plan's fiduciary acting through the Local Pension Committee and the Central Board of Administration. However, instead of reviewing the denial of benefits by the administrator under an arbitrary and capricious standard, the district court granted the parties' request for a trial de novo. This was error. A plan administrator has broad discretion in deciding questions of coverage and eligibility for benefits. This court has held repeatedly that the appropriate determination in reviewing the decision of a plan administrator with respect to a claim for benefits is whether the decision was arbitrary, capricious, made in bad faith or otherwise contrary to law. E.g., Adcock v. Firestone Tire and Rubber Co., 822 F.2d 623, 626 (6th Cir. 1987); Blakeman, 779 F.2d at 1149; Moore v. Reynolds Metals Co. Retirement Program, 740 F.2d 454, 457 (6th Cir. 1984). We have specifically rejected arguments that de novo review is proper. Adcock, 822 F.2d at 626; cf. Crews v. Central States, etc. Pension Fund, 788 F.2d 332, 336 (6th Cir. 1986).
Though designated as "trustee" in the Plan, Mellon Bank was actually only the depository of pension funds and the paying agent. It had no responsibility for determining entitlement to or amounts of benefits.
The arbitrary and capricious standard of review is applied to these cases in order to avoid "excessive judicial interference with plan administration." Cook v. Pension Plan for Salaried Employees, 801 F.2d 865, 870 (6th Cir. 1986) (quoting Miles v. New York State Teamsters Conference Pension and Retirement Fund Employee Pension Benefit Plan, 698 F.2d 593, 599 (2d Cir.), cert. denied, 464 U.S. 829, 104 S.Ct. 105, 78 L.Ed.2d 108 (1983)). As Judge Engel pointed out in Cook, this deferential standard is applied "in the interest of efficient pension administration." 801 F.2d at 871. Each application for benefits implicates the rights of other members of a plan, and the plan administrator views each case from this perspective. By upholding the decisions of an administrator that are rational in light of the plan's provisions and thus not arbitrary or capricious, the courts contribute to consistency and fairness in plan administration.
The district court's agreement to the parties' request for a de novo trial was apparently grounded on the fact that the Central Board of Administration failed to render a decision on Daniel's appeal. Daniel sufficiently exhausted his administrative remedies by filing an appeal. However, the failure of the Central Board of Administration to act on his appeal did not give rise to a de novo action. Regulations of the Secretary of Labor promulgated pursuant to section 503 of ERISA, 29 U.S.C. § 1133, contain the following provisions:
29 C.F.R. § 2560.503-1(h)(1)(i).
29 C.F.R. § 2560.503-1(h)(4).
The Supreme Court stated in Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 144, 105 S.Ct. 3085, 3091, 87 L.Ed.2d 96 (1985), that this latter provision "enables a claimant to bring a civil action to have the merits of his application determined, just as he may bring an action to challenge an outright denial of benefits." When a review body fails to act and the claim is deemed denied on review, "[a] claimant's appropriate recourse is then to seek review of the denial by the district court." Folke v. Schaffer, 616 F. Supp. 1322, 1330 (D.Del. 1985). However, the standard of review is no different whether the appeal is actually denied or is deemed denied. The role of the district court is the same in either event. That role was described by the court in Wardle v. Central States, Southeast and Southwest Areas Pension Fund, 627 F.2d 820, 824 (7th Cir. 1980), cert. denied, 449 U.S. 1112, 101 S.Ct. 922, 66 L.Ed.2d 841 (1981), as follows:
A federal court is to focus on the evidence before the trustees at the time of their final decision and is not to hold a de novo factual hearing on the question of the applicant's eligibility. Phillips v. Kennedy, 542 F.2d 52, 54 (8th Cir. 1976). As a general matter a court should not resolve the eligibility question on the basis of evidence never presented to a pension fund's trustees but should remand to the trustees for a new determination. See id. at 55 n. 10; Sturgill v. Lewis, 372 F.2d 400 (D.C. Cir. 1966); Pickett v. UMW Health Retirement Funds, 467 F. Supp. 2 (E.D.Tenn. 1978); Ruth v. Lewis, 166 F. Supp. 346, 349 (D.D.C. 1958).
Daniel argues on appeal that the district court erred in denying his demand for a jury and in admitting into evidence an unauthenticated copy of the collective bargaining agreement in force between Shuler and UAW at the time of Daniel's 1953-54 layoffs and return to work. Having determined that Daniel's common law claims were preempted by ERISA, we conclude that the district court properly denied Daniel's demand for a jury. Although there may be actions under ERISA in which a jury trial is proper, in actions for recovery of benefits under section 502, "there is no right to a jury trial." Crews, 788 F.2d at 338; Foulke, 565 F. Supp. at 883.
The claim under Count II and the prayer for an attorney's fee were addressed to the district court's discretion. Section 502(c) provides that the administrator "may in the court's discretion" be liable to a plan participant or beneficiary "in the amount of up to $100 a day" for failure or refusal to comply with a request for information that the administrator is required to furnish. 29 U.S.C. § 1132(c). Section 502(g) provides that a district court "in its discretion may allow a reasonable attorney's fee" in any action under the subchapter of ERISA which includes section 502, 29 U.S.C. § 1132(g).
The district court awarded Daniel $25 per day for 278 days ($6,950) for Eaton's failure to supply a copy of the Plan as he had requested. Eaton has not appealed this award, but Daniel maintains that he was entitled to the full amount authorized by the statute — $100 per day. The district court accepted Eaton's explanation that the failure to respond to Daniel's request was not deliberate, but resulted from neglect or misfeasance. Further, the record casts doubt on any claim of prejudice to Daniel by reason of the delay. The complaint was filed before the Plan was furnished, and after receiving the copy, the complaint was not amended. From this it appears that Daniel and his attorney had sufficient information to proceed without the copy. Obviously, Eaton should have responded promptly, and the district court assessed a penalty for Eaton's failure to do so. We cannot say that the district court abused its discretion in making an award that was below the statutory minimum.
Except for the award under § 502(c), which is affirmed, the judgment of the district court is vacated and the case is remanded for further proceedings consistent with this opinion. Eaton will bear the costs of this appeal.
The appellees have filed a document styled, "Motion for Reconsideration and BRIEF in Support of Appellee" in which they request the court to reconsider its original decision filed February 9, 1988, and issue an order remanding this case to the district court with directions to enter judgment in favor of Eaton Corporation. Upon consideration of the motion and brief, the court concludes that it neither overlooked nor misconstrued any issue in this case and, accordingly, the motion is denied. The fact that the district court applied a standard requiring greater deference to the administrator's determination than that directed to be applied by this court's decision is not determinative. The district court must apply the prescribed standard to a proper administrative record and its first duty on remand is to determine whether such a record exists, and if so, whether that record was before it upon the original submission.