Opinion ID: 2787077
Heading Depth: 3
Heading Rank: 2

Heading: United’s Counterarguments Fail to Persuade.

Text: United makes several arguments to the contrary, none convincing. Its arguments can be grouped into four categories: (1) internal textual arguments (the text of the 1980 and 1987 Plans supports United); (2) external textual arguments (the text of documents other than the Plans supports United); (3) structural (the Plans address Early Retirees and TVPs in separate sections, and thus they treat differently these different kinds of participants); and (4) statutory (because ERISA sets a floor for benefits, we should interpret the Plans to provide only that floor absent a clear and express plan provision to the contrary). We address each in turn.
United’s argument from the Plans’ text is that § 5.03 entitles only “[a] Participant who retires on an Early Retirement Date” to benefits (emphasis added). They argue that “retire” means “retire from United,” because “‘Retirement Date’ expressly required ‘actual retirement’ from the Company with an immediate right to draw down a pension benefit.” Opening Br. at 14. (Recall that by definition all TVPs left United before they were old enough to retire from the company at age 59½ or 60.) But no definition in any plan defines “retire” or “Retirement Date” with reference to separation from United. Instead, both the 1980 and 1987 Plans (at § 1.31) define “Retirement Date” as the date of “actual retirement,” but not actual retirement from United. For support, United cites pages 1645 ¶ 18 and 1684 ¶ 27 of the Joint Appendix. Both citations lead to United’s statement of material facts in support of its motion for summary judgment, and that document in turn cites an expert 21 report by Nancy Keppelman (an ERISA lawyer) interpreting the Plans. Setting aside the problem of considering expert testimony on the interpretation of a pension plan, which is a purely legal question and not properly the subject of expert testimony, Nieves-Villanueva v. Soto-Rivera, 133 F.3d 92, 99 (1st Cir. 1997) (collecting circuit cases); Haberern v. Kaupp Vascular Surgeons Ltd. Defined Ben. Plan & Trust Agreement, 812 F. Supp. 1376, 1378 (E.D. Pa. 1992), the expert does not even support United’s interpretation of the meaning of “retire.” Keppelman writes, “The cross-reference [from § 7.02 to § 5.03] did not confer early retirement benefits on [TVP]s.” Keppelman Report 7, Jan. 24, 2012, ECF No. 154-14. It may be that “the cross reference” does not confer early retirement benefits, but § 7.01 explicitly does, and § 7.02 clarifies that the amount of the benefits conferred by § 7.01 “shall be determined in accordance with” § 5.03 (emphases added). By drafting an actuarial adjustment into the Plan, United is requiring the benefits to be calculated not in accordance with § 5.03, the exact opposite of the Plan’s requirements.
The extrinsic documents on which United relies further undermine its position. It posits that § 5.04(c) of the 1995 and 2002 Plans made explicit what had been true all along: TVPs who took their pensions before turning 65 would be entitled only to actuarially adjusted pensions. But even if it were permissible to look to the 1995 and 2002 Plans for guidance in interpreting the 1980 and 1987 Plans, the addition of § 5.04(c) more strongly supports the Employees’ position that, without the new language explicitly imposing an actuarial adjustment, there was no such adjustment before. United also points to certain summary plan descriptions (“SPDs”) to argue they clarify that actuarial 22 adjustments are required under the Plans. The 1987 and 1995 SPDs (which describe the 1980 and 1987 Plans, respectively) state that employees who took vested retirement benefits earlier than their normal retirement date would only be entitled to actuarially reduced benefits. United’s reliance on the SPDs poses two principal problems. First, the SPDs state that “[i]f the terms of the Plan document and the Trust agreement and of this summary are inconsistent, the terms of the Plan document and the Trust agreement will control.” United Refining Company, Pension Plan for Salaried Employees, Summary Plan Description 20 (Jan. 1 1987); United Refining Company, Pension Plan for Salaried Employees, Summary Plan Description 20 (Jan. 1 1995). When the SPD contains this sort of a disclaimer and the Plan is more favorable to beneficiaries than the SPD, the Plan controls. Sturges v. Hy-Vee Employee Ben. Plan & Trust, 991 F.2d 479, 480–81 (8th Cir. 1993) (per curiam); Glocker v. W.R. Grace & Co., 974 F.2d 540, 542–43 (4th Cir. 1992); McGee v. Equicor-Equitable HCA Corp., 953 F.2d 1192, 1201 (10th Cir. 1992). As discussed, the SPDs conflict with the Plans, as the Plans clearly do not contemplate actuarial adjustment. Second, United published employee handbooks in 1985, 1991, 1994, and 1998 that are wildly inconsistent on whether benefits are calculated with actuarial adjustment, and the Employees not implausibly characterize the handbooks as, by their own terms, SPDs. See, e.g., United Refining Company, Salaried Employee Handbook 110 (Apr. 1, 1994) (“The handbook contains Summary Plan Descriptions of the plans . . . .”). The 1985 handbook (published before Amendment 5 to the 1980 Plan removed its actuarial adjustment table) stated that pension benefits both for Early Retirees (people who retired directly from United after age 59½ or 60 and before age 65) and TVPs who took benefits 23 before their Normal Retirement Date would be actuarially reduced. The 1991 handbook contained no mention of actuarial adjustments for early receipt of benefits. The 1994 handbook stated of TVPs, “You can begin receiving benefits as early as age 60 with no reduction.” Id. at 84. The 1998 handbook is less quotable, but it includes a sample calculation for a person who retires (not necessarily a TVP) at age 59½ and does not include an actuarial adjustment for the participant’s age. Indeed, nowhere in the 1998 handbook is there any indication that anyone’s benefits might be actuarially reduced. These handbooks’ differences with each other and with the SPDs strengthen our conviction that the plain meaning of the Plans should control.
United’s structural argument is stronger, but not strong enough. It relies on expert reports from an actuary (Ian Altman) and an ERISA lawyer (Keppelman), who point out that Article 5 of the Plans addresses benefits for Early Retirees—those who retire from United directly before turning 65—while Article 7 addresses benefits for TVPs. If the plans intended to treat the two categories of participants similarly, why devote a separate section to each group? The question, though provocative, does not overcome the indisputable facts that the TVP section explicitly informs readers that TVPs’ benefits are to be calculated “in accordance with” Article 5 and that nothing in either the 1980 Plan or the 1987 Plan refers to actuarial adjustments for people who elect to receive their pensions early. The structure and language of the plan could be read to suggest that without Article 7 TVPs would be entitled to nothing more than ERISA’s statutory floor, but with Article 7 they are entitled to what Article 7 provides, which is benefits calculated in accordance with Article 5. 24
United’s statutory argument fares no better. ERISA § 206(a) does provide that TVPs are entitled to “no less than” an actuarially reduced benefit. 29 U.S.C. § 1056(a). But for the reasons stated above, these Plans expressly provided TVPs with more than the statutory floor. Imposing a requirement that a plan be even clearer than the one in this litigation would be unreasonable. The case United relies on—McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184 (2d Cir. 2007)—only exposes its argument’s weakness. In McCarthy, when a TVP took payment early, the benefit was actuarially reduced from the amount that would have been paid at age 65 in two respects. First, to reflect the time value of money, the Master Retirement Plan reduced the benefit by a 6.75 percent discount rate for each year prior to the age of 65 that payments began. Second, the benefit was reduced by a mortality factor to adjust actuarially for the possibility that a participant might not live to the age of 65. Id. at 189. These explicit provisions are the opposite of what we find in United’s Plans; far from a reference to actuarial adjustment or silence that could arguably be understood only to provide the minimum pension allowed under ERISA, the 1980 and 1987 Plans set out a detailed scheme for calculating TVPs’ benefits, one that expressly omits any actuarial adjustment. IV. United Forfeited Any Objection to the District Court’s Interest Rate. United next argues that, even if we hold that it owes the Employees benefits without actuarial adjustment (as we 25 do), the District Court erred in its final order on remedies when it ordered United to pay interest at 7.5% on the Employees’ damages. The Court ordered this amount of interest based on the 2002 Plan, which set 7.5% as the rate of interest for actuarial calculations and on the basis of United’s IRS submission, which laid out the company’s plan to recoup excess payments to TVPs at 7.5% interest. Cottillion v. United Ref. Co., No. 1:09-cv-140, 2013 WL 5936368, at  (W.D. Pa. Nov. 5, 2013). United asserts that because certain sections of the Plan that entitle participants to lump sum payments state that the interest rate in those contexts is the 30-year Treasury rate, the interest here should be 3.7%. We need not rule on this objection because it is raised for the first time in United’s reply brief and hence is waived. Kirschbaum v. WRGSB Assocs., 243 F.3d 145, 151 & n.1 (3d Cir. 2001). Moreover, although reasonable objections could be made to the District Court’s choice of an interest rate, United’s proposed rate has no better grounding in the Plan documents (the sections that specify the 30-year Treasury rate apply only to lump sum payments in the event the Plan is terminated or in the case of employees with very small pension entitlements). And because there is some evidence that the Plan provided 7.5% as a default rate, the District Court’s order was not clearly erroneous.