Court Opinion

ID: 2747336
Source: CourtListenerOpinion
Date Created: 2014-10-31 16:01:11.45946+00
Date Added: 2024-06-11T11:25:44.393644
License: Public Domain

Case: 13-13875   Date Filed: 10/31/2014   Page: 1 of 7

                                                         [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                             No. 13-13875
                       ________________________

                   D.C. Docket No. 1:11-cv-20489-JLK

JAMES A. BACON

                                                               Plaintiff-Appellee,

                                  versus

STIEFEL LABORATORIES, INC., et al.,

                                                       Defendants-Appellants.

                       ________________________

                Appeal from the United States District Court
                    for the Southern District of Florida
                      ________________________

                            (October 31, 2014)

Before MARTIN, JULIE CARNES and ANDERSON, Circuit Judges.

PER CURIAM:
              Case: 13-13875     Date Filed: 10/31/2014    Page: 2 of 7

      In this case, we have had the benefit of oral argument, and have carefully

considered the briefs and the relevant parts of the record. We conclude that the

district court erred when it held that the Plan Administrator “had no reasonable

basis for determining that Plaintiff put his shares to the Company,” (Docket 155 at

8), and thus the district court erred when it held that the Plan Administrator’s

decision was arbitrary and capricious. Quite the contrary, we conclude that there

was ample basis in the administrative record to support the Plan Administrator’s

decision.

      In July 2009, Bacon filed a putative class action against Stiefel Laboratories,

Inc. (“SLI” or “Company”) and individual defendants alleging violations of

securities laws and breach of fiduciary duties. Bacon withdrew from the class

action upon belief that he had exercised neither the pre-2009 “put” option nor the

post-2009 Automatic-Put Form (“Auto-Put Form”). He then filed an individual

action against the same defendants and subsequently the parties stipulated to

submit a single issue to the ESBP administrator (“Plan Administrator”) to exhaust

all administrative remedies pursuant to ERISA. The Plan Administrator

considered the single issue of “whether . . . Bacon exercised his right, in or about

January 2009, to put his 25.386449 shares of SLI common stock that he received

as a distribution from the [ESBP] to SLI.”

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               Case: 13-13875     Date Filed: 10/31/2014    Page: 3 of 7

      The evidence in the administrative record is as follows. Plaintiff was a

participant in the Company’s employee stock bonus plan (the “Plan”), was eligible

at the relevant time in January, 2009, to receive a distribution of the Company’s

stock in his Plan account, and was eligible to exercise his “put” right to sell that

stock to the Company. As the district court acknowledged:

      On January 20, 2009, Plaintiff submitted the old distribution election
      form … electing to have a distribution of his shares sent to his
      retirement account at Fidelity Investments …. Plaintiff included with
      the form a handwritten note indicating that he wanted to exercise his
      put right. Plaintiff also sent an email to SLI employee Suni Buria the
      following day that asked her to confirm receipt of the paperwork he
      mailed for his “election.” Then on February 13, 2009, SLI purchased
      his shares at $16,469 per share. SLI sent $83,617.88 in cash to
      plaintiff and a promissory note for $334,471.53 to his Fidelity
      retirement account.

Docket 155 at 4 (footnotes omitted). Prior to January 1, 2009, the committee

charged with administering the Plan had established a procedure by which Plan

participants could exercise their “put” rights. The procedure involved submission

of a standardized Distribution Form which requested that the Plan distribute shares

to the participant. The participant would then endorse and notarize the stock

certificates, or otherwise indicate by an accompanying writing his intention to

“put” the shares, and send them back to the Company. As of January 1, 2009,

however, the committee rolled out a new procedure, using an Auto-Put Form that

eliminated the need for mailing back and forth the stock certificates. The single

form allowed a participant to simultaneously request both a distribution and a
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“put” or sale of his shares. Because the events relevant in this case occurred in

January and February 2009, the Auto-Put procedures were applicable.

      The first step in a review of a Plan Administrator’s decision (by either the

district court or this court) is to apply a de novo standard to determine whether the

Plan Administrator’s decision is “wrong.” If the Plan Administrator’s decision is

not wrong, then it is due to be affirmed. Blankenship v. Metropolitan Life Ins.

Co., 644 F.3d 1350, 1355 (11th Cir. 2011). We conclude that the Plan

Administrator’s decision in this case was not wrong, and therefore it was due to be

affirmed. Accordingly, the judgment of the district court must be reversed.

Moreover, under the six-step analysis set forth in Blankenship, even if we

concluded that the Plan Administrator’s decision were de novo wrong, the Plan

Administrator here was vested with discretion, which means that even if we had

concluded that the Plan Administrator’s decision were wrong, we nevertheless

would be required to affirm that decision if there were reasonable grounds

supporting it. 1 Levinson v. Reliance Standard Life Ins. Co., 245 F.3d 1321, 1325

(11th Cir. 2001). In other words, we would review the decision under the

deferential arbitrary and capricious standard.

      Although plaintiff in this case did not execute the actual form (the Auto-Put

Form) which was being used at the time to accomplish a simultaneous distribution

1
      There was no conflict of interest on the part of the Plan Administrator.
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              Case: 13-13875     Date Filed: 10/31/2014    Page: 5 of 7

of Company stock to a participant and an exercise by the participant of his “put”

right to sell the stock to the Company, the overwhelming evidence in the

administrative record reflects that the substance of the actions contemplated by the

Auto-Put Form did occur in this case. By executing and submitting the

Distribution Form, plaintiff requested a distribution of the Company’s stock in his

account. And by submitting simultaneously his handwritten letter requesting that

his stock be “put” for sale to the Company, plaintiff was in substance exercising

his “put” right to sell the stock to the Company and authorizing the Plan

Administrator to take the steps necessary to accomplish same. Following those

instructions from Bacon, the Company actually implemented the sale of stock and

made payment to him. Bacon accepted the payment and, for about two years,

never notified the company of any perceived problem with the sale. Indeed, the

overwhelming evidence indicates that both parties to the transaction treated the

“put” as having been exercised and the sale of the stock as having been

consummated.

      We readily reject plaintiff’s argument on appeal that the only way the “put”

right could be exercised is by signing the Auto-Put Form. Plaintiff has pointed to

no provision of the Plan itself or of any authorized rules with respect to the Plan

that require that the exercise of a “put” right be accomplished solely by executing

the Auto-Put Form. Nor is there any other evidence in the record indicating that

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                   Case: 13-13875       Date Filed: 10/31/2014       Page: 6 of 7

execution of the Auto-Put Form is the only way to exercise the “put” right. 2 Even

if there were any ambiguity in that regard, either in the Plan itself or in authorized

rules with respect to the Plan, the Plan Administrator had full discretion to interpret

the terms and provisions of the Plan, and her decision obviously interpreted the

Plan not to require such strict compliance with formalities. Cf. Griffis v. Delta

Family-Care Disability, 723 F.2d 822, 823 (11th Cir. 1984). In other words, the

Plan Administrator’s decision clearly rejects any interpretation of the Plan that

would require, for the exercise of a “put” right, the execution of the Auto-Put

Form.

          In summary, the overwhelming evidence indicates that the plaintiff not only

intended to exercise his “put” right, but also that he actually did so to the

satisfaction of both parties to the transaction and in a manner entirely consistent

with authorized rules and procedures governing the Plan. Thus the Plan

Administrator’s interpretation of the rules governing the Plan falls comfortably

within the Plan Administrator’s discretion, and the Plan Administrator’s findings

of fact are amply supported in the administrative record. 3

2
          To the contrary, the record contains examples of the exercise of a “put” option by simple
letter.
3
        We reject without need for further discussion plaintiff’s argument on appeal that we
cannot consider plaintiff’s testimony with respect to his handwritten note. Plaintiff is factually
wrong in his contention that the Plan Administrator based no reliance on this. To the contrary,
the Plan Administrator expressly relied upon the depositions of plaintiff stating and explaining
that he had exercised his “put” right. The plaintiff’s testimony about his handwritten letter is the
clearest indication in his testimony that he did exercise his “put” right, and his testimony in that
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                Case: 13-13875       Date Filed: 10/31/2014       Page: 7 of 7

       For the foregoing reasons, the judgment of the district court is reversed, and

the decision of the Plan Administrator – that plaintiff did exercise his “put” right

and did sell his shares of the Company stock – is sustained. This case is remanded

for further proceedings not inconsistent with this opinion.

       REVERSED and REMANDED.

regard is the testimony to which the Plan Administrator was most plausibly referring. We also
reject as wholly without merit plaintiff’s suggestion that his deposition testimony was ambiguous
with respect to the content of his handwritten letter. Plaintiff’s testimony was clear that his
handwritten letter included a request to “put” his stock for sale to the Company. Other arguments
by plaintiff on appeal are rejected without need for discussion.

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