Court Opinion

ID: 8982268
Source: CourtListenerOpinion
Date Created: 2022-11-27 11:32:12.539531+00
Date Added: 2024-06-11T17:10:42.834810
License: Public Domain

SLOVITER, Circuit Judge,
dissenting.
I agree with the majority’s opinion as to all issues except those covered in Part IV. I respectfully disagree with the majority’s holding that the plaintiffs’ ERISA claim based on the denial by Edgewater Steel (Company) of the employees’ 70/80 retirement benefits cannot proceed.
I begin my analysis of the issues raised as to 70/80 retirement with the Supreme Court’s decision in Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). The Firestone plan, like the Edgewater plan, was administered by the employer. The plan authorized severance benefits for employees released because of “a reduction in work force.” Id. 109 S.Ct. at 951. Firestone sold five of its plants as going concerns to another company. Firestone employees who had been rehired by the purchasing company sought severance benefits under the Firestone plan which were denied to them on the ground that the sale did not constitute a reduction in work force. The issue on appeal and before the Supreme Court was the appropriate standard of review to be applied by a court reviewing the denial of benefits.
The Supreme Court recognized that “the validity of a claim to benefits under an ERISA plan is likely to turn on the inter-' pretation of terms in the plan at issue. Id. at 956. Noting that under the law of trusts, “courts construe terms in trust agreements without deferring to either party’s interpretation,” id. at 955, the Court held that “a denial of benefits challenged under [29 U.S.C.] § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Id. at 956. The Court held this standard of review applies regardless of whether the plan is funded or unfunded, and regardless of whether the administrator or fiduciary is operating under a possible or actual conflict of interest, although that conflict is a factor that must be weighed in determining whether there was an abuse of discretion. Id.
In this case, the district court held that the Edgewater plan provides the administrator with discretion, applied the arbitrary and capricious standard of review, rather than de novo review, to the decision of the administrator to deny benefits, and found that the decision denying benefits was arbitrary and capricious. In contrast, the majority states that “the plan administrator and the Pension Board had no choice but to deny benefits.” Maj. Op. at 919. If this is so, then we are obliged under Firestone to apply a de novo standard of review to the provisions of the plan, and apparently the majority agrees.
Exercising the appropriate de novo standard, I believe it is clear that the Company’s pension plan evidences an undertaking by the Company, as an employer, to give an employee who sought to retire under the 70/80 program and who met the age and service requirements an individualized determination as to whether the particular retirement would be in the “interest” of the Company. The majority acknowledges that the employer did not do so in this case. Instead, Rosati and Kutzmark, the “top management of Edgewater”, made a decision that mutual agreements under the 70/80 plan were too expensive to the Company, and thus “the company had adopted a policy of denying all applications for 70/80 retirement.” Maj. Op. at 917. Therefore, Edgewater effectively nullified the provision in the plan providing for a *92670/80 benefit when it was in the mutual interest of the employee and the Company.
The majority does not deny that Edge-water effectively amended the plan to eliminate individualized consideration of the employees’ applications for 70/80 retirement. Instead, it concludes that “Edge-water’s failure to give individual attention to the Employees’ requests was without consequence on this record.” Maj. Op. at 919. I believe that in reaching this conclusion, the majority’s approach to unofficially amended plans is inconsistent with our recent opinion in Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155 (3d Cir.1990).
In Hozier, we adopted the position taken by several other circuits that section 402(a)(1) of ERISA, which requires that “[ejvery employee benefit plan shall be established and maintained pursuant to a written instrument,” 29 U.S.C. § 1102(a)(1), precludes oral modifications to a plan to either increase or decrease benefits. Hozier, 908 F.2d at 1163. We held that when an employer does not reduce to writing an oral modification to an ERISA plan and thus fails to follow the ERISA requirements applicable to plan amendments, we must proceed as if the unamended plan was still in effect at the time the benefits were denied. Although the plan at issue in Ho-zier was a welfare plan in contrast to the pension plan at issue here, we made it clear that oral amendments to pension plans are precluded as well. Id., 908 F.2d at 1163. See also Pizlo v. Bethlehem Steel Corp., 884 F.2d 116, 120 (4th Cir.1989) (no oral modification of pension plan), Degan v. Ford Motor Co., 869 F.2d 889, 895 (5th Cir.1989) (same); Nachwalter v. Christie, 805 F.2d 956-60 (11th Cir.1986) (same).
Under the Hozier holding, the plaintiffs are entitled to consideration of their applications for 70/80 retirement under the pre-amendment terms of the Edgewater plan, which in this ease requires an individualized consideration of whether it was in the “interest” of the Company to permit the three employees in question to retire with 70/80 benefits under section 2.6(c) of the Plan. The majority treats the negative decision by the employer as effectively unre-viewable, subject only to a good faith standard, despite the fact that the employer did not make an individualized determination. The majority believes this result is compelled by our decision in Hlinka v. Bethlehem Steel Corp., 863 F.2d 279 (3d Cir.1988).
Hlinka, a salaried senior research fellow, unsuccessfully sought early retirement under the 70/80 pension provided by Bethlehem Steel. His request was denied because his continued employment was in Bethlehem Steel’s interest “because of [Hlinka’s] extensive and unique technological expertise related to the project to which he was assigned.” Id. at 284 n. 7. Significantly, in Hlinka we noted that during the period from 1983 to 1986, the year in which Hlinka requested 70/80 benefits, more than 1,000 employees were granted 70/80 benefits under the same mutual interest provision that Hlinka sought to invoke. Id. at 286. While I agree that our precedent supports giving broad leeway to an employer’s decision that its interest require retention of a particular employee, I see nothing in our precedent, or indeed in any case law cited by the majority, for the proposition that similar leeway must be given to the employer’s decision that no employee’s retirement would be in its interest when that decision has been made pursuant to an. unofficial amendment to the plan which is unauthorized under ERISA and violates the provisions of the plan itself.1
Because Edgewater never made an individualized determination as to whether retirement for the particular employees would be in its interests, and because a post hoc determination by it is not realistically feasible, a factfinder must decide whether an individualized determination made at that time would have been favorable to the employees. The majority states that it is undisputed that the Company *927wanted all of the employees to remain and that even if given individual attention these employees would have been denied 70/80 retirement. In effect then, the majority holds summary judgment should be granted for the defendants on the 70/80 retirement issue.
I believe that a fair examination of the record for evidence of the employer’s interest vis-a-vis retention of each of the employees in question does not support that result. The record fails to satisfy the rigorous requirements for the grant of summary judgment. Any doubt as to the existence of a genuine issue should be resolved against the moving party. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1608-09, 26 L.Ed.2d 142 (1970). The inquiry is particularly difficult where liability turns on a party’s state of mind. Williams v. Borough of West Chester, 891 F.2d 458, 460 (3d Cir.1989); see also Stepanischen v. Merchants Despatch Transp. Corp., 722 F.2d 922, 928 (1st Cir.1983) (in cases where the state of mind of one of the parties is crucial to the outcome of the case, resort to summary judgment is vested with more than the usual difficulty and under the circumstances jury judgments are typically thought to be of special importance).
The majority apparently relies on the depositions of Kutzmark and Rosati, in which both stated that it was not in Edge-water’s interest to have these employees retire. Maj. Op. at 915; App. at 169, 266. Yet, in a memo written immediately subsequent to a meeting with Dallas, Rosati stated that he told Dallas that Edgewater would not grant her request and that “although she didn’t ask, the reason is that we are not planning to do it for anybody else.” App. at 210, 238. Plainly then, in light of Rosati’s contemporaneous writing showing that Edgewater did not give Dallas individualized consideration and was not going to give any 70/80 mutual interest benefits, a factfinder might not credit Rosati’s after-the-fact testimony that on an individualized determination, the Company would have reached the same result.- As this court has recently suggested, a reasonable factfinder would be entitled to treat skeptically the present testimony of management officials “who either are or were employees of defendants themselves.” Hozier, 908 F.2d at 1166.
Indeed, the district court, after reviewing the depositions, concluded that “there may have existed a mutual interest in having the plaintiffs retire.” Memorandum Op. at 14 (July 25, 1989). Certainly, the depositions of the plaintiffs show a genuine issue of material fact on the dispositive issue.
Plaintiff Dallas, who was the director of employee benefits, was outspoken to Company management in her disagreement with the Company’s direction that she counsel employees that the special payment was not an accrued benefit. See App. at 443-44. Thus, although Dallas was not slated to be part of the work force reduction, the disagreement as to the Company’s tactics may have led Edgewater, were it faced with the need to make an individualized determination as to Dallas, to permit her to retire and replace her with a more amenable director.
The district court noted that Wagner, a superintendent, testified that Edgewater eliminated all but two of the superintendents “and replaced them with the newly created hot and cold superintendents.” Wagner was one of the two remaining superintendents, and the other was about to retire. The district court stated that “Wagner may have been the next superintendent in line to be eliminated.” Memorandum Op. at 15. Further, Wagner testified that to entice other superintendents to retire, Edgewater gave them 70/80 benefits. A factfinder could determine that without the ineffective amendment to the plan, Edgewater might have found that it was in its interest also to grant Wagner 70/80 benefits.
Finally, Berger testified that Rosati had cut his salary and appeared to be trying to lay the groundwork to terminate him by attempting to place in his file a letter stating that he was.not properly performing his job. App. at 372-74. The district court believed that it may have been in Edge-*928water’s interest to have Berger retire. Memorandum Op. at 15.
I do not suggest that the record ineluctably points to one conclusion or another as to the interests of the Company, but merely that there is a genuine issue for trial which precludes the majority’s decision that summary judgment on the issue should have been granted. See Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986).
The purpose behind ERISA is clear. It “was enacted to ‘promote the interests of employees and their beneficiaries in employee benefit plans’ ... and ‘to protect contractually defined benefits.’ ” Bruch, 109 S.Ct. at 955 (citations omitted). Congress created disclosure provisions to ensure that “ ‘the individual participant knows exactly where he stands with respect to the plan.’ ” Id. at 958 (citing H.R. Rep. No. 93-533, p. 11 (1973), reprinted in 1974 U.S.Code Cong. & Admin.News 4639). Section 402(a)(1), which mandates that the plan be written, was designed to ensure that “ ‘every employee may, on examining the plan documents, determine exactly what his rights and obligations are under the plan.’ ” Hozier, 908 F.2d at 1163 (citing H.Rep. No. 1280, 93d Cong., 2d Sess. 297, reprinted in, 1974 U.S.Code Cong. & Admin.News 5038, 5077-78).
I believe that the majority’s decision, which effectively allows Edgewater to amend its plan by an unwritten policy, is inconsistent with ERISA. Its determination that this was without consequence in this case overlooks the record evidence and permissible inferences therefrom which could lead a factfinder to determine that it would have been in Edgewater’s interest to have permitted these employees to retire, if Edgewater had been acting pursuant to the terms of the plan as reduced to writing at that time. Thus, I dissent from the majority’s disposition of the claims for 70/80 retirement benefits.

. The Plan provides that: "[w]hile the Company expects and intends to continue the Plan, the Company may amend the Plan at any time and from time to time by resolution outlining the changes to be made_” Noncontributory Pension Plan for Salaried Employees of Edgewater Steel Company § 14.1 (1985), Supp.App. at 43.