Opinion ID: 1034431
Heading Depth: 3
Heading Rank: 1

Heading: Benefits Under ERISA1

Text: Plaintiffs’ first claim is for denial of benefits. Under ERISA § 502(a)(1), “[a] civil action may be brought by a participant or beneficiary . . . to recover benefits due to him under the terms of his plan . . . .” 29 U.S.C. § 1132(a)(1)(B). Plaintiffs essentially allege that they were entitled to receive severance pay under the terms of the Plan, and that USEC did not have the discretion to refuse to pay severance benefits to workers who were fired during an involuntary reduction in force. 1 The district court and the parties frame this argument in terms of whether Plaintiffs are “participants” within the plan, but this discussion is better understood as a simple claim for benefits. Under ERISA, a participant is “any employee . . . who is or may become eligible to receive a benefit of any type from an employee benefit plan . . . .” 29 U.S.C. § 1002(7). As the Supreme Court has held, this means that a “participant” is one with a colorable claim to benefits. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117–18 (1989). The distinction between a participant and a beneficiary, while sometimes glossed over in the case law, appears to be that a beneficiary is one who has received or will receive benefits, while a participant is merely someone who might be eligible for them. Id. The Plan summary also elides the distinction, stating that “[i]f you are an eligible employee (as identified above), you will become a ‘Participant’ in the Plan, and therefore entitled to receive benefits from the Plan.” (R. 26, Second Amended Complaint, Exh. A, Feb. 21, 2012, at 1.) However, for the reasons discussed infra, the terms of the Plan itself foreclose Plaintiffs’ claim for benefits regardless of whether they are found to be participants or not. 4 No. 12-4374 “When interpreting ERISA plan provisions, general principles of contract law apply; unambiguous terms are given their ‘plain meaning in an ordinary and popular sense.’” Lipker v. AK Steel Corp., 698 F.3d 923, 928 (6th Cir. 2012) (quoting Farhner v. United Transp. Union Discipline Income Protection Program, 645 F.3d 338, 343 (6th Cir. 2011)). Under the Plan, the summary provisions state: You may be eligible for severance benefits under the Plan, including severance pay, if you are a salaried employee, as defined by the Company, who is voluntarily or involuntarily terminated for reasons other than cause and solely as a result of a Reduction in Force. You may also be eligible for severance benefits under the Plan, including termination pay, if (i) you are a salaried employee who has received long term disability benefits from the Company for 24 months, (ii) the Company determines, in its discretion, that you are totally disabled, and (iii) you are voluntarily or involuntarily terminated for reasons other than cause as a result of a Reduction in Force. The Company has the sole discretionary authority to determine who is eligible for severance benefits. If you are an eligible employee (as identified above), you will become a Participant in the Plan, and therefore entitled to receive benefits from the Plan, only if you elect to participate by signing and returning the General Release as described herein. (R. 26, Second Amended Complaint, Exh. A, Feb. 21, 2012, at 1 (emphasis in original).) Therefore, the plain language of the Plan states that USEC had discretion as to who received severance benefits. In addition, Plaintiffs concede that the Plan gives USEC discretion to determine an employee’s eligibility for severance benefits. And there is no question that employers are permitted to set up plans that give them complete discretion over whether or not to award severance benefits. See, e.g., Gravelle v. Bank One Corp., 333 F. App’x 955, 959–60 (6th Cir. 2009). Next, Plaintiffs rely heavily on an employee handbook called “Termination of Employment” (“HR document”), published by USEC’s human resources administration. Plaintiffs allege that this document modifies the discretion afforded to USEC’s determinations of eligibility for benefits. 5 No. 12-4374 However, even if this Court accepts Plaintiffs’ contention that the HR document was incorporated by reference into the terms of the Plan—a question that the district court noted has not been satisfactorily resolved—the HR document does not help Plaintiffs’ argument. The HR document states that “[s]everance pay benefits are not payable when an employee is employed by or receives an offer of employment where continuity of employment with credit for prior length of service is preserved under substantially equal conditions of employment.” Here, Plaintiffs continued at the same jobs, in the same facility, on the same project, without any period of unemployment, just under a different employer. Therefore the jobs were “substantially equal,” and under the HR document, the Plan had the discretion to determine that Plaintiffs were not entitled to benefits. Plaintiffs allege that even if USEC had the discretion to distinguish between employees who received substantially equivalent offers of employment and those who did not, several members of the putative class were denied benefits despite having received jobs at Fluor that were not equivalent. As the district court found, Plaintiffs’ allegations of unequal employment benefits are based entirely on benefits, such as pensions, rather than responsibilities and employment duties. But the plan never mentions benefits, only credit for prior length of service, which is accounted for as a matter of salary, position, and responsibilities. And while other forms of workplace protections define terms like “equivalent position,”2 the plan does not have a definition for “substantially equal conditions of 2 For example, under the Family Medical Leave Act, 29 U.S.C. § 2601 et seq., an “equivalent position” is defined as “one that is virtually identical to the employee’s former position in terms of pay, benefits and working conditions, including privileges, perquisites and status. It must involve the same or substantially similar duties and responsibilities, which must entail substantially equivalent skill, effort, responsibility, and authority.” 29 C.F.R. § 825.215(a). 6 No. 12-4374 employment,” and we will uphold any definition supplied by the plan so long as it is not arbitrary or capricious. Shelby Cnty. Health Care Corp., 203 F.3d at 933; Easterly v. Philips Electronics N. Am. Corp., 37 F. App’x 166, 168 (6th Cir. 2002) (“The parties agree Philips’s decision to deny benefits under the [p]lan is subject to the ‘arbitrary and capricious’ standard of review. ‘A decision is not arbitrary and capricious if it is based on a reasonable interpretation of the plan.’”) (quoting Shelby Cnty. Health Care Corp., 203 F.3d at 933). USEC made a reasonable distinction between employees who were picked up by Fluor and those who were not, and was reasonable in using that distinction in determining whom to award severance pay. That decision was supported by the plain language of the Plan and by the terms of the HR document. Accordingly, the judgment of the district court must be affirmed. Plaintiffs also claim that they are entitled to benefits under ERISA § 502(a)(3), which entitles participants or beneficiaries of the Plan to obtain other equitable relief. However, that provision is a remedial rather than substantive expansion of § 502(a)(1)(B). See Varity Corp. v. Howe, 516 U.S. 489, 512 (1996). It exists so that a court has other remedies at its disposal but does not expand the causes of action available to plaintiffs under ERISA. See Mertens v. Hewitt Assocs., 508 U.S. 248, 253–54 (1993). Accordingly, because Plaintiffs have failed to state a claim under ERISA § 502(a)(1(B), they cannot avail themselves of the equitable remedies available in § 502(a)(3). Finally, Plaintiffs argue that they are entitled to equitable estoppel under § 502(a)(3). They argue that this is not an attempt to expand the causes of action permitted under ERISA, but instead, an alternative remedial approach that this Court could adopt. But this argument does not address the fact that they have no claim against USEC, because they were not deprived of a benefit to which they 7 No. 12-4374 were entitled. While “equitable estoppel may be a viable theory in ERISA cases,” Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 456 (6th Cir. 2007)(quoting Sprague v. Gen. Motors Corp., 133 F.3d 388, 403 (6th Cir. 1998) (en banc) (internal quotation marks omitted), Plaintiffs have failed to state a case for it. Under an ERISA plan, a Plaintiff seeking equitable estoppel must plead five elements: a representation of a material fact, awareness by the defendant of the true facts, intent by the defendant to act upon that misrepresentation, unawareness by plaintiff of the true fact, and justifiable reliance by plaintiff on the mispresentation. Id. In this case, Plaintiffs have not shown any misrepresentation, and even had they shown as much during the reduction in force, “[w]hen a party seeks to estop the application of an unambiguous plan provision, he by necessity argues that he reasonably and justifiably relied on a representation that was inconsistent with the clear terms of the plan.” Id. (citation omitted). Plaintiffs have not pleaded facts that suggest there was any such reliance. They only claim reliance on the HR document, but the terms of that document are not inconsistent with the terms of the Plan as interpreted by USEC. Accordingly, Plaintiffs fail to state a claim for equitable estoppel.