Opinion ID: 186441
Heading Depth: 2
Heading Rank: 3

Heading: The Reasonableness of the Committee's Interpretation

Text: 40 On the merits, the disposition of the parties' dispute in this case turns on a construction of § 4.2 of the SBC Plan, which governs benefit calculations for Grandfathered participants in the EPR Program. Under § 4.2, benefits for EPR Grandfathered retirees depend on, among other things, a participant's Average Annual Compensation for the period from January 1, 1995, through December 31, 1999. SBC Plan § 4.2, J.A. 262. Wagener and Champoux contend that, in calculating Average Annual Compensation, the Plan erroneously excluded one pay period from 1999 on the mistaken assumption that the plaintiffs could receive credit only for compensation actually received, not earned, in 1999. 41 As noted above, the Plan defined Average Annual Compensation to mean the Participant's Pension Compensation during the Averaging Period, divided by five years. Id. § 4.2.1(b)(3), J.A. 257. Pension Compensation, in turn, was based on a participant's Basic Compensation. See id., § 2.66, J.A. 259. Prior to the actual base pay amendments, Basic Compensation for participants such as plaintiffs had been defined as a participant's Basic Rate of Pay, as determined by his Participating Company, over a specified period. Id. § 2.8, J.A. 258. However, the actual base pay amendments substituted actual base pay for Basic Rate of Pay in determining Basic Compensation. See Plan Amendment 4/13/1999, J.A. 71, 73. Thus, due to the actual base pay amendments, Average Annual Compensation was calculated based on a participant's actual base pay, as determined by his Participating Company, over a specified period, during the Averaging Period, divided by five years. The question presented here then is whether the Committee reasonably interpreted actual base pay . . . during the Averaging Period to mean pay actually received during the Averaging Period, as opposed to pay actually earned during the Averaging Period. 42 If this were the only relevant provision in the Plan, we would be hard pressed to hold that the Committee's interpretation was unreasonable. An interpretation of actual base pay . . . during the Averaging Period to mean pay actually received is not itself unreasonable. There is nothing in the plain language of actual base pay that clearly indicates whether the term is intended to refer to pay actually earned or pay actually received. In other words, this language, without more, reasonably supports either construction. 43 This is not the end of the analysis however, because § 4.2 includes another clause that is crucial for the purposes of this appeal. Specifically, § 4.2 states that, except for the five-year enhancement to the participant's age and length of service,  the Enhanced Grandfathered Benefit shall be a benefit calculated in the same manner as the Grandfathered Benefit would be calculated . . . under the current [Plan].  SBC Plan § 4.2, J.A. 262. Plaintiffs allege that the Committee clearly violated this equal-treatment clause: 44 the Plan has consistently administered the Grandfathered Benefit for all retirees—except for the Enhanced Grandfathered Benefit for EPR retirees—by including all pay periods as part of Average Annual Compensation for the year in which they were earned notwithstanding [the actual base pay amendments], and notwithstanding the fact that one full pay period was not received until after the end of the Averaging Period. 45 Compl. ¶ 25, J.A. 18-19. In other words, plaintiffs contend that, while Plan officials have interpreted actual base pay to mean pay actually received for the EPR Program Grandfathered participants, they have interpreted actual base pay to mean pay actually earned for other Grandfathered participants, notwithstanding the plain language of § 4.2 mandating that the benefits for the two groups of participants be calculated in the same manner (except for the enhancement for EPR Program participants). 46 Applying even the most deferential standard of review, we hold that plaintiffs' allegations clearly state a claim for which relief can be granted. As plaintiffs justly contend, it is patently unreasonable for the Committee and other Plan officials who are authorized to administer the Plan to interpret the Plan in a manner that discriminates against plaintiffs in direct contravention of the Plan's plain language. See Fuller v. CBT Corp., 905 F.2d 1055, 1058-60 (7th Cir.1990) (concluding that evidence of disparate treatment in benefit decisions precluded summary judgment for an ERISA plan's trustees, even applying ordinary abuse of discretion review, where the governing document contained an express requirement of uniform treatment); cf. Air Transport Ass'n of Am., Inc. v. FAA, 291 F.3d 49, 53 (D.C.Cir.2002) (explaining that, while agency interpretations of their own regulations must be afforded substantial deference, the court will not defer if an alternative conclusion is compelled by the regulation's plain language). 47 The SBC Plan does not argue that it would be reasonable for the Committee, or other Plan fiduciaries with responsibility for construing and administering the Plan, to adopt Plan interpretations that directly contravene the plain meaning of the Plan's governing provisions. See Appellee's Br. at 20, 25; see also Recording of Oral Argument at 28:08-23 (acknowledgment by the Plan's counsel that, notwithstanding its discretion, the Committee does not have the authority to discriminate between similarly situated Plan participants). Rather, the Plan asserts that, [i]f true, Plaintiffs' allegations would establish only that the Plan's recordkeeper, which performs such ministerial functions as the mathematical calculation of pension benefits, mistakenly paid certain Plan participants more than they were entitled to under the Plan. Appellee's Br. at 25. This argument is meritless, because it completely ignores the substance of plaintiffs' complaint. 48 In their complaint, Wagener and Champoux specifically allege that SBC and Plan officials interpreted the actual base pay amendments in a manner that was more favorable to non-EPR Grandfathered participants than to EPR Grandfathered participants. See Compl. ¶¶ 25-28, J.A. 18-20 (quote at ¶ 25, J.A. 18). In other words, plaintiffs allege that the differential treatment accorded non-EPR Grandfathered participants and EPR Grandfathered participants was the result of deliberate decisions made by officials responsible for the administration of the Plan, not to ministerial errors. The Plan's suggestion to the contrary in its brief to this court surely does not negate plaintiffs' well pleaded complaint. 49 In short, plaintiffs' complaint asserts that Plan officials have administered the Plan in a manner that treats EPR and non-EPR Grandfathered retirees differently, notwithstanding the Plan's unmistakable command to treat these two groups similarly except for the benefit enhancement EPR participants receive. Treating this allegation as true, plaintiffs have stated a claim upon which relief can be granted. As noted above, even under a deferential standard of review, Plan fiduciaries cannot claim deference for an interpretation of the Plan that discriminates against plaintiffs in a manner that contradicts the Plan's plain language. We therefore reverse the District Court's judgment dismissing plaintiffs' action for additional benefits under § 1132(a)(1)(B) and remand the case for further proceedings consistent with this opinion. 50