Court Opinion

ID: 4210356
Source: CourtListenerOpinion
Date Created: 2017-10-10 17:01:23.036631+00
Date Added: 2024-06-11T14:41:37.691049
License: Public Domain

Case: 17-11709   Date Filed: 10/10/2017   Page: 1 of 7

                                                           [DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT
                         ________________________

                               No. 17-11709
                           Non-Argument Calendar
                         ________________________

                     D.C. Docket No. 3:15-cv-00075-WSD

MICHAEL E. BAUMAN,
by and through Michael E. Sumner, Conservator,

                                                             Plaintiff-Appellant,

                                    versus

PUBLIX SUPER MARKETS, INC. EMPLOYEE STOCK OWNERSHIP PLAN,
PUBLIX SUPER MARKETS, INC.,
as Plan Administrator,

                                                          Defendants-Appellees.

                         ________________________

                  Appeal from the United States District Court
                     for the Northern District of Georgia
                        ________________________

                              (October 10, 2017)

Before HULL, WILSON, and ANDERSON, Circuit Judges.

PER CURIAM:
                Case: 17-11709       Date Filed: 10/10/2017       Page: 2 of 7

       Michael Sumner, on behalf of Michael Bauman, brought suit against Publix

challenging their denial of a claim for the reinstatement of retirement benefits

under ERISA in the Northern District of Georgia. The district court upheld

Publix’s denial of the claim on summary judgment. Bauman timely appealed.

       We review the district court’s grant of summary judgment de novo. Carter v.

Galloway, 352, F.3d 1346, 1348 (11th Cir. 2003). We review a district court’s

affirmance of a plan administrator’s ERISA benefits decision by “applying the

same legal standards that governed the district court’s decision.” Blankenship v.

Metro. Life. Ins. Co., 644 F.3d 1350, 1354 (11th Cir. 2011). We affirm the district

court’s grant of summary judgment.

                                       I. Background

       Michael Bauman is a fifty-six year old man with developmental disabilities.

He was adjudged incompetent by the Coweta County Probate Court. Bauman

worked for Publix at his local Newnan, Georgia store for seventeen years. In 2010,

Michael Sumner was appointed as Michael’s conservator. Sumner then had a letter

hand-delivered to the Publix store in Newnan, Georgia, at which Bauman worked,

stating Sumner was appointed conservator for Bauman and requested that future

payroll payments be direct deposited in a specific checking account. 1 Letters of

conservatorship were attached to the letter. Four days later, Bauman filled out a

1
 Publix has no record of Sumner’s letter, and it is unknown to whom at the store the letter was
delivered.
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direct deposit authorization form for the account listed in Sumner’s letter, although

Bauman did not indicate on the form that the account was a conservatorship

account or that Sumner was incompetent or that a court-appointed conservator was

required to manage his property. Publix began depositing Bauman’s paychecks

into the designated account.

      Bauman stopped working at Publix in March 2013. He wrote to Publix’s

Retirement Department electing to cash out his ESOP stock benefits. In May,

Publix sent Bauman a check for $78,509, the value of his stock benefits. Within a

month or two, Bauman lost the full amount in an internet scam. Publix’s ESOP

states that “no distribution shall be made of the benefit to which a Participant or

beneficiary is entitled if the Plan Administrator has actual knowledge that such

Participant or beneficiary is legally incompetent.”

      A year later, Sumner learned about the disbursement to Bauman and

informed Publix that the distribution should have been made to him, rather than to

Bauman. Publix responded that it had no prior knowledge of the conservatorship or

Bauman’s incompetence. Sumner requested that Publix reinstate Bauman’s

account because the money had been distributed to Bauman rather than to Sumner.

Publix reviewed its decision and denied Sumner’s request. This lawsuit followed.

                                 II. ERISA Review

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      The standard we apply to reviewing a decision to affirm or reverse a plan

administrator’s ERISA decision is:

             (1) Apply the de novo standard to determine whether the
             claim administrator’s benefits-denial decision is “wrong”
             (i.e., the court disagrees with the administrator’s
             decision); if it is not, then end the inquiry and affirm the
             decision.

             (2) If the administrator’s decision in fact is “de novo
             wrong,” then determine whether he was invested with
             discretion in reviewing claims; if not, end juridical
             inquiry and reverse the decision.

             (3) If the administrator’s decision is “de novo wrong” and
             he was vested with discretion in reviewing claims, then
             determine whether “reasonable” grounds supported it
             (hence, review his decision under the more deferential
             arbitrary and capricious standard).

             (4) If no reasonable grounds exist, then end the inquiry
             and reverse the administrator’s decision; if reasonable
             grounds do exist, then determine if he operated under a
             conflict of interest.

             (5) If there is no conflict, then end the inquiry and affirm
             the decision.

             (6) If there is a conflict, the conflict should merely be a
             factor for the court to take into account when determining
             whether an administrator’s decision was arbitrary and
             capricious.

Blankenship, 644 F.3d at 1355.

      Where a conflict of interest exists, the plaintiff bears the burden of showing

that the decision was arbitrary. Id. “A pertinent conflict of interest exists where the

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ERISA plan administrator both makes eligibility decisions and pays awarded

benefits out of its own funds.” Id.

                                      III. Discussion

      The dispute in this case comes down to whether the Plan Administrator had

“actual knowledge” that Bauman was incompetent. If they did, then distributing his

ESOP payment to him was in violation of their Plan. If not, then distributing the

money was the correct decision under the Plan. Bauman argues that the letter

Sumner delivered to the Publix where Bauman worked was sufficient to provide

notice to Publix that Bauman was incompetent. Publix replies that the Plan

required that retirement benefits information be sent to Publix’s Retirement

Department in Lakeland (where employees were told to send retirement

information), and that they never received notice that Bauman was incompetent.

      Bauman does not actually contend that Sumner’s letter was sent to Publix’s

Retirement Department in Lakeland; however, he contends that the delivery of the

letter to the Publix store where Bauman worked was sufficient to inform Publix

that Bauman was incompetent. Bauman argues that because Publix is the Plan

Administrator, informing any Publix employee is sufficient to provide Publix with

actual notice of Bauman’s incompetency.

      Under this logic, because Sumner had the letters of conservatorship attached

to his letter to the Publix where Bauman worked, Publix became actually aware of

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Bauman’s incompetency. However, this would impute to Publix knowledge of

everything that goes on in any of their over 1,100 stores. This would be a

tremendous burden to place on Publix. We hold that actual notice means that

Publix’s Retirement Department became factually aware of Bauman’s

incompetence. Because Bauman points to no evidence that Publix’s Retirement

Department had actual notice of Bauman’s incompetency, the claim

administrator’s decision was de novo correct.

       Moreover, even if the decision were not correct, the administrator

undisputedly had discretion in reviewing claims, and there were reasonable

grounds supporting the denial of reinstatement of benefits. The claims

administrator investigated the claim and found no evidence Publix had knowledge

of Bauman’s conservatorship.2 This investigation provided reasonable grounds to

deny the claim.

       Bauman argues that Publix has a conflict of interest, which must be a factor

in determining whether the administrator’s decision was arbitrary and capricious.

Publix both administers the plan and pays awarded benefits, so this is a conflict of

interest that we must take into account. Blankenship, 644 F.3d at 1355. However,

this conflict is merely a factor in our analysis, and the plaintiff bears the burden of

2
  The claims administrator who investigated the claim could find—either in the Retirement
Department or in the Payroll Department—no records or other information or communication
indicating that Bauman had a conservator.
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showing that the decision was arbitrary. Id. Here, there is no evidence that the

claims administrator’s decision was arbitrary; on the contrary, the evidence

demonstrates that the denial of the claim was based on an investigation that

revealed that Publix did not have actual notice of Bauman’s incompetency. Thus,

even if the Publix Retirement Department’s decision were not correct, and even

though there was a conflict of interest, the decision was not arbitrary and

capricious.

      For the foregoing reasons, the district court’s grant of summary judgment is

AFFIRMED.

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