Court Opinion

ID: 4179675
Source: CourtListenerOpinion
Date Created: 2017-06-21 20:03:40.061353+00
Date Added: 2024-06-11T14:39:09.751852
License: Public Domain

NOT PRECEDENTIAL

                 UNITED STATES COURT OF APPEALS
                      FOR THE THIRD CIRCUIT
                           _____________

                                No. 16-3064
                               _____________

     PAUL FELKER; WILLIAM SCHRADER; MICHAEL MCCORMICK;
     ANTHONY M. KOZLOWSKI; WILLIAM T. DUNBAR; EDWARD R.
   MACIEJEWSKI; BRIAN J. KELSO; WILLIAM VANDERGRIFT; PAUL D.
JENNINGS; DARRYL T. BRANT; FRED J. SOBOTINIC; ROBERT A. FORTE, JR;
      ANDREW R. GOSS; EDWIN J. ERIKSEN; ANTHONY C. REILLY;
    FRANK T. GANNON; JOHN P. GANNON; BRIAN D. BARROWCLIFF;
       LEO RUSHTON; DEONARINE JAWAHIR; CARL HOLDERER;
               ROBERT A. GRANGE; PAUL C. MILLER,
                                             Appellants

                                      v.

 USW LOCAL 10-901, USW LOCAL 10-901 (SU) AND USW LOCAL 10-901 (NE)
MARCUS HOOK REFINERY WORKERS INVOLUNTARY TERMINATION PLAN
                          _____________

               On Appeal from the United States District Court
                  for the Eastern District of Pennsylvania
                             (No. 2-13-cv-07101)
                 District Judge: Honorable Joel H. Slomsky
                               _____________

              Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
                               June 8, 2017
                              _____________

       Before: CHAGARES, VANASKIE, and FUENTES, Circuit Judges.

                            (Filed: June 21, 2017)
                                      ____________

                                        OPINION*
                                      ____________

CHAGARES, Circuit Judge

       Plaintiffs Mobile Work Force Employees (“MWF Employees”), who are former

employees of Sunoco, Inc. (“Sunoco”), brought a benefits recovery suit under the

Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et. seq.,

against the defendant Marcus Hook Refinery Workers Involuntary Termination Plan (the

“Plan”). The Plan denied severance benefits to the MWF Employees after it determined

that they were not terminated in connection with the idling of Sunoco’s Marcus Hook

Refinery. The District Court granted summary judgment in favor of the Plan. The MWF

Employees appeal. We will affirm the determination of the District Court.

                                             I.

       The MWF Employees were maintenance employees assigned to perform duties at

two of Sunoco’s refineries: the Marcus Hook Refinery and the Philadelphia Refinery. In

2012, Sunoco decided to idle the main processing unit of the Marcus Hook Refinery.

Sunoco and USW Local 10-901, which represented the MWF Employees, thereafter

engaged in bargaining and entered into a Settlement Agreement in February 2012.

Pursuant to that Agreement, the MWF Employees would be “afforded the opportunity to

be assigned on a temporary basis to work at the Philadelphia Refinery and work until laid

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
                                             2
off from such temporary assignment as determined by management.” Appendix (“App.”)

930. Additionally, a severance benefit plan (the “Plan”) was established to “alleviate

financial hardships which may be experienced” by Sunoco employees in connection with

the idling of the [Marcus Hook] Refinery.” App. 908.

       Several of the Plan’s terms are implicated in this suit. For instance, the Plan

limited severance benefits to “those employees whose employment is terminated in

connection with [Sunoco’s] idling” of the main processing units of the Marcus Hook

Refinery. App. 908. The Plan provided that “[s]uch affected employees who express an

interest (preference) in terminating their employment with [Sunoco] and are accepted for

termination” would be eligible for severance benefits. App. 908. The Plan also

contained several eligibility exclusions. App. 909. Benefits under the Plan were to be

paid out of Sunoco’s assets, and the Plan Administrator was vested with “full

responsibility for interpreting and administering the terms and provisions of the Plan.”

App. 916.

       Following the idling of the main processing units at Marcus Hook Refinery, the

MWF Employees were assigned to the Philadelphia Refinery. In July 2012, Sunoco

entered into a Contribution Agreement to sell the Philadelphia Refinery to Philadelphia

Energy Solutions, LLC (“PES”), in which Sunoco was a minority owner. App. 1111.

Around the same time that the agreement between Sunoco and PES was being negotiated,

PES and Local 10-1, which represented the Philadelphia Refinery workers, entered into a

Memorandum of Understanding and Agreement (“MOU”) dated June 26, 2012. Pursuant

to that agreement, PES “agree[d] to hire all maintenance employees from the Marcus

                                             3
Hook mobile workforce who have been working temporarily at the Philadelphia

Refineries.” App. 1205.

        Sunoco sold its Philadelphia Refinery to PES in September 2012. On September

7, 2012, the MWF Employees were terminated by Sunoco. That same day, PES hired the

MWF Employees to work at the Philadelphia Refinery pursuant to the terms of the

Contribution Agreement and the MOU. The MWF Employees were thus “immediately

re-employed by [PES]” as of the date of their termination as Sunoco employees. App.

1220.

        On October 3, 2012, USW Local 10-901 sent a letter to Sunoco’s Vice President

of Labor Relations seeking severance benefits on behalf of the MWF Employees. App.

1237. A formal claim for benefits was sent to the Plan Administrator on October 22,

2012. App. 1217. The Plan Administrator, after gathering and considering relevant

information including the Plan documents, the Contribution Agreement, the MOU, and

the Settlement Agreement, App. 508, denied the requested benefits in January 2013. The

Plan Administrator determined that the MWF Employees “were not terminated from

employment in connection with the idling of the [Marcus Hook Refinery],” and therefore,

were not eligible for severance benefits under the Plan. App. 1295. The Plan

Administrator further concluded that although the MWF Employees were temporarily

assigned to the Philadelphia Refinery after the idling of the Marcus Hook refinery, they

were converted to permanent status after PES and Local 10-1 executed the MOU in June

2012. App. 1296. The MWF Employees appealed the Plan Administrator’s initial denial

                                            4
of benefits, but did not submit any new information on appeal. The Plan Administrator,

after again considering the relevant evidence, upheld the denial of benefits.

       Following the denial of benefits, the MWF Employees filed this suit in federal

court. The parties cross-moved for summary judgment. The District Court awarded

summary judgment to the Plan, concluding that the Plan Administrator’s “denial of

benefits was neither arbitrary nor capricious and was warranted under ERISA.” App. 7.

       The MWF Employees filed this timely appeal.

                                             II.

       The District Court had jurisdiction pursuant to 29 U.S.C. § 1132(e) and 28 U.S.C.

§ 1331 as this action arises out of the denial of severance benefits under a plan subject to

ERISA, 29 U.S.C. §§ 1001 et. seq. We exercise appellate jurisdiction under 28 U.S.C.

§ 1291.

       “We subject the District Court’s grant of summary judgment to plenary review,

and we apply the same standard that the lower court should have applied.” Smathers v.

Multi–Tool, Inc., 298 F.3d 191, 194 (3d Cir. 2002) (citing Farrell v. Planters Lifesavers

Co., 206 F.3d 271, 278 (3d Cir. 2000)). Under that standard, summary judgment is

appropriate only if there “is no genuine issue as to any material fact and the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In making this

determination, we must “view the facts in the light most favorable to the nonmoving

party and draw all inferences in that party’s favor.” Farrell, 206 F.3d at 278.

                                              5
                                            III.

       The MWF Employees raise several arguments on appeal. They first argue that the

Plan’s decision to deny benefits was arbitrary and capricious because it is contrary to the

Plan’s clear language. The MWF Employees further argue that the Plan’s decision to

treat them as permanent employees was unsupported by substantial evidence. They next

argue that the Plan’s decision was erroneous as a matter of law because it violated labor

laws. They finally argue that the District Court improperly excluded evidence pertaining

to the Plan Administrator’s decision and the effect of potential conflicts. We have

considered the MWF Employees’ arguments, and for the following reasons, we will

affirm the District Court’s judgment.

       An administrator’s benefit-eligibility determination is reviewed under an arbitrary

and capricious standard if, as here, the Plan grants the administrator discretionary

authority to determine benefits or construe the terms of the plan. Jordan v. Federal Exp.

Corp., 116 F.3d 1005, 1009 n.8 (3d Cir.1997) (citing Firestone Tire & Rubber Co. v.

Bruch, 489 U.S. 101 (1989)). Under this “highly deferential” standard, an

administrator’s interpretation of a plan may be disturbed “only if it is without reason,

unsupported by substantial evidence or erroneous as a matter of law.” Courson v. Bert

Bell NFL Player Ret. Plan, 214 F.3d 136, 142 (3d Cir. 2000) (quoting Abnathya v.

Hoffmann-LaRoche, Inc., 2 F.3d 40, 45 (3d Cir. 1993) (internal quotation marks

omitted). Our Court has specified several factors for courts to consider in determining

whether an interpretation of a plan is reasonable, including: “(1) whether the

interpretation is consistent with the goals of the Plan; (2) whether it renders any language

                                             6
in the Plan meaningless or internally inconsistent; (3) whether it conflicts with the

substantive or procedural requirements of the ERISA statute; (4) whether the [relevant

entities have] interpreted the provision at issue consistently; and (5) whether the

interpretation is contrary to the clear language of the Plan.” Howley v. Mellon Fin.

Corp., 625 F.3d 788, 795 (3d Cir. 2010) (quoting Moench v. Robertson, 62 F.3d 553, 566

(3d Cir. 1995)).

       Turning to that reasonableness analysis, the Plan’s goal was to “alleviate financial

hardships” employees might experience in connection with the idling of the Marcus Hook

Refinery. App. 908. Here, the MWF Employees had a smooth transition to PES

employment, and they did not experience any period of unemployment. They thus

suffered no financial hardship in connection with the idling of the Marcus Hook Refinery

and were awarded the same or better compensation as a result of the transfer to PES

employment. Under these circumstances, payment of severance benefits to the MWF

Employees would, in fact, be inconsistent with the Plan’s goal because it would provide a

windfall to employees who had never changed their jobs, were never out of work, and

were provided benefits and salary by PES. See, e.g., Bradwell v. GAF Corp., 954 F.2d

798, 801 (2d Cir. 1992) (“[I]n the context of the sale of a business where the buyer

retains the former owner’s employees, it would give a windfall to award severance pay to

employees who never changed their jobs and were never out of work.”). Thus, the Plan

Administrator’s interpretation is consistent with the Plan.

                                              7
       Further, the Plan Administrator’s interpretation does not render the language in the

Plan meaningless.1 Nor does the interpretation conflict with the requirements of ERISA.

The MWF Employees argue that there was a structural conflict of interest because

benefits would be paid out of Sunoco’s assets, and the Plan Administrator was tasked

with adjudicating both the initial claim and the appeal. However, as the District Court

concluded, there were sufficient safeguards in place to comply with ERISA’s

requirements, such as the fact that the Plan Administrator understood his fiduciary role

and reviewed appeals as if they were new claims. App. 27-29.

       Finally, the Administrator’s interpretation is consistent with the clear language of

the Plan, which was intended to benefit only those negatively affected by the idling of the

Marcus Hook Refinery. As we have discussed, the MOU and Contribution Agreement

supported the Plan Administrator’s determination that the MWF Employees were

permanent employees of the Philadelphia Refinery. In light of this evidence, it was

reasonable for the Plan Administrator to determine that the MWF Employees did not

1
  The Plan specified that several categories of employees were ineligible for benefits.
App. 909. The MWF Employees argue that they do not fall into any of these categories
because there was an explicit exception for “employees who are part of the Mobile Force,
as designated by [Sunoco] in its sole discretion, and who are transferred to a position at
[Sunoco’s] Philadelphia Refinery for a limited period of time.” App. 909. This argument
is misplaced, however, because it ignores that the MWF Employees’ status was converted
to permanent assignment in the summer of 2012 after Sunoco and PES entered into the
Contribution Agreement. The provisions of the Plan applying to employees of the
“Philadelphia Refinery for a limited period of time” therefore have no applicability to the
MWF Employees and are not rendered meaningless by the Plan Administrator’s
interpretation.

                                             8
meet the threshold eligibility requirements under the Plan. Accordingly, the Plan

Administrator’s denial of benefits was not arbitrary or capricious.

       The MWF Employees relatedly argue that substantial evidence did not support the

conclusion that they were permanently transferred to the Philadelphia Refinery. For the

reasons discussed above, ample evidence supported this determination.

       The MWF Employees next argue that the Plan’s denial of benefits unilaterally

deprived them of a collectively bargained benefit in violation of the National Labor

Relations Act. In support, the MWF Employees argue that the Plan Administrator knew

that they were not represented in the bargaining with PES that gave rise to the MOU

recognizing their status as permanent employees. We regard the MWF Employees’

reliance on labor laws as misplaced as they have not asserted a claim for the violation of

federal labor laws. In any event, any purported denial of a collectively bargained benefit

is irrelevant to whether the MWF Employees were permanently assigned to the

Philadelphia Refinery for the purposes of applying the written terms of the Plan. See In

re Unisys Corp. Retiree Med. Ben. ERISA Litig., 58 F.3d 896, 902 (3d Cir. 1995) (“The

written terms of the plan documents control and cannot be modified or superseded by the

employer’s oral undertakings.”).

       The MWF Employees finally contend that the District Court improperly excluded

evidence, including Sunoco’s bargaining notes, a Termination Agreement between

Sunoco and Local 10-1, and a statement made under oath by the President of Local 10-1.

The District Court limited its review to the administrative record and any documents that

could have bearing on potential conflicts of interest. We perceive no error in this

                                             9
determination. See Fleisher v. Standard Ins. Co., 679 F.3d 116, 121 (3d Cir. 2012)

(“When reviewing an administrator’s factual determinations, we consider only the

‘evidence that was before the administrator when he made the decision being reviewed.’”

(citing Mitchell v. Eastman Kodak Co., 113 F.3d 433, 440 (3d Cir. 1997)); see also

Kosiba v. Merck & Co., 384 F.3d 58, 67 n.5 (3d Cir. 2004) (“[I]n general, the record for

arbitrary-and-capricious review of ERISA benefits denial is the record made before the

plan administrator, and cannot be supplemented during litigation.”). Accordingly, the

MWF Employees are not entitled to relief on this ground.

                                                IV.

      For the foregoing reasons, we will affirm the District Court’s order granting

summary judgment in favor of the Plan.

                                           10