Court Opinion

ID: 22767
Source: CourtListenerOpinion
Date Created: 2010-04-25 08:02:23+00
Date Added: 2024-06-11T15:04:42.674352
License: Public Domain

UNITED STATES COURT OF APPEALS

                      FOR THE FIFTH CIRCUIT

                            No. 99-11147

 JAMES D McCALL; ET AL,

                                                        Plaintiffs,

 JAMES D McCALL; STANLEY R. COLLINS; E E BOWMAN; J WILLIAM HUFF;
MICHAEL N DANA; O J NORMAN; MURL C LINKE; JOSEPH R ROBERTS;
LAWRENCE S KISER; NORMAN D BREHM; WILLIAM S BRANCH; JEROME P
O’CONNOR; WILLIAM T DAVIDSON; BART A WIESLEY; W H TICEN; BETTY
TITCHENER, executrix of Gerald Titchener’s estate; and GEORGE D
STARIHA,

                                              Plaintiffs/Appellants,

                               VERSUS

 BURLINGTON NORTHERN/SANTA FE COMPANY f/k/a Burlington Northern
Railroad Co.; BURLINGTON NORTHERN RAILROAD COMPANY 1991 SEPARATION
PAY PLAN; TRUSTEES OF THE BURLINGTON NORTHERN RAILROAD COMPANY 1991
SEPARATION PAY PLAN; TRUSTEES OF THE BURLINGTON NORTHERN RAILROAD
COMPANY 1995 VOLUNTARY SEPARATION PLAN; BURLINGTON NORTHERN, INC.
PENSION PLAN; BURLINGTON NORTHERN THRIFT AND PROFIT SHARING PLAN;
TRUSTEES OF THE BURLINGTON NORTHERN THRIFT AND PROFIT SHARING PLAN;
ALAN W. SPEAKER; JEANNE MICHALSKI; and DONALD SCOTT,

                                              Defendants/Appellees.

          Appeal from the United States District Court
               for the Northern District of Texas
                          December 26, 2000

                                  1
Before KING,    Chief    Judge,    PARKER,   Circuit Judge,       and    KAZEN*,
District Judge.

ROBERT M. PARKER, Circuit Judge:

       Plaintiffs James D. McCall, Stanley R. Collins, E. E. Bowman,

J. William Huff, Michael N. Dana, O. J. Norman, Murl C. Linke,

Joseph R. Roberts, Lawrence S. Kiser, Norman D. Brehm, William S.

Branch, Jerome P. O’Connor, William T. Davidson, Bart A. Wiesley,

W. H. Ticen, Betty Titchener, and George D. Stariha appeal the

summary judgment entered for defendants (collectively referred to

“Burlington Northern”) on claims brought pursuant to the Employee

Retirement Income Security Act of 1974 (“ERISA”), as amended, 29

U.S.C. § 1001, et seq.      We affirm.

                   I. FACTS AND PROCEDURAL HISTORY

       In 1991, Burlington Northern determined that it was necessary

to reduce its workforce by 500 individuals.             Burlington Northern

first attempted to reach its targeted workforce level through a

voluntary   separation    pay     plan.   Donald   W.    Scott,    Burlington

Northern’s Senior Vice President of Human Resources, was charged

with   designing   and   implementing     the   1991   Burlington       Northern

Railroad Separation Pay Plan (“1991 Plan”).             Burlington Northern

employees with more than ten years of service and who were 55 years

of age or older, were eligible to participate in the 1991 plan.

The primary benefit offered by the 1991 Plan was a lump sum payment

  *
   District Judge of the Southern District of Texas, sitting by
designation.

                                      2
computed pursuant to the following formula: “2 weeks base salary

times years of service to a maximum of two times annual base

salary.”

     In Scott’s prior experience with voluntary separation pay

plans at Burlington Northern, employees seemed unwilling to take

advantage of the plans because they assumed that there might be

another, more generous pay plan adopted in the near future.      Scott

recommended adopting a plan that would be as generous as possible,

in order to accomplish the targeted voluntary workforce reduction

without    resorting   to   involuntary   layoffs.   Other   Burlington

Northern managers concurred.

     Included with the Summary Plan Description (“SPD”) was a

series of questions and answers designed to answer anticipated

employee questions about the 1991 Plan.       One of the questions and

answers (referred to as the “No Better Benefits Q&A”) was the

following:

     Q:     Will there be another opportunity to participate in
            a separation pay plan after this one?

     A:     The company is offering this plan in an effort to
            reduce its expenses due to business conditions. At
            this time, the company’s management has not decided
            whether there will be any additional voluntary
            separation plans. However, management has decided
            that if there are any additional plans, the
            benefits would not be as good as those contained in
            this plan.

     Plaintiffs are former employees of Burlington Northern who

accepted the 1991 Plan’s offer of compensation in return for

voluntarily ending their employment.      In 1995, Burlington Northern

                                    3
adopted an additional voluntary separation plan (“1995 Plan”) that

provided    better   benefits   than       those   in   the   1991    Plan.   In

particular, the 1995 Plan offered separation pay for eligible

employees equal to two years’ base salary.               Plaintiffs requested

benefits under the 1995 Plan based upon the No Better Benefits Q&A.

Burlington Northern denied the requests.            Plaintiffs brought suit

asserting claims for breach of fiduciary duty under ERISA, denial

of benefits in violation of ERISA, estoppel, and interference with

plan benefits under § 510 of ERISA, 29 U.S.C. § 1140.                The district

court entered summary judgment for Defendants and Plaintiffs timely

appealed.

                                II. ANALYSIS

     We review the district court’s grant of summary judgment de

novo, viewing all facts in the light most favorable to Plaintiffs.

Merritt-Campbell, Inc. v. RxP Prods., Inc., 164 F.3d 957, 961 (5th

Cir. 1999).

A.   Breach of Fiduciary Duty

     A plan participant may bring suit for breach of fiduciary duty

to obtain “appropriate equitable relief” to redress violations of

ERISA.     Varity Corp. v. Howe, 516 U.S. 489 (1996).                 Plaintiffs

alleged that three acts by Burlington Northern give rise to their

causes of action which the district court characterized as breach

                                       4
of fiduciary duty claims:1 (1) drafting and distributing the 1991

Plan Q&A section, (2) enacting the 1995 Plan, and (3) denying their

claims for benefits under the 1995 Plan.

      1.   Drafting the 1991 Plan

      Providing information to beneficiaries about likely future

plan benefits falls within ERISA’s statutory definition of a

fiduciary act.    Varity, 516 U.S. at 502-503.       When an ERISA plan

administrator    speaks   in   its   fiduciary   capacity   concerning   a

material aspect of the plan, it must speak truthfully.        Fischer v.

Philadelphia Elec. Co., 96 F.3d 1533, 1538 (3d Cir. 1996).2

  1
   On appeal, Plaintiffs do not identify the statutory basis for
some of their arguments. They assert that defendants are “bound”
by the No Better Benefits Q&A, but do not articulate that claim in
terms of ERISA’s protections.       We will analyze plaintiffs’
contentions within the framework of specific ERISA civil
enforcement provisions invoked by their pleadings and ruled on by
the district court.
  2
   The Fifth Circuit has not yet set out the boundaries of a
fiduciary’s legal obligation to truthfully inform employees about
possible future employee benefit plans.       Seven of our sister
circuits have held that there is no breach of fiduciary duty in
failing to inform beneficiaries about a future plan until and
unless that plan is under “serious consideration.” Bins v. Exxon
Co., 189 F.3d 929, 934-37 (9th Cir. 1999); Vartanian v. Monsanto
Co., 131 F.3d 264 (1st Cir. 1997); Hockett v. Sun Co., Inc., 109
F.3d 1515, 1522 (10th Cir. 1997); Muse v. IBM Corp., 103 F.3d 490,
493 (6th Cir. 1996); Fischer v. Philadelphia Elec. Co., 96 F.3d
1533 (3d Cir. 1996); Wilson v. Southwestern Bell Tel. Co., 55 F.3d
399, 405 (8th Cir. 1995); Barnes v. Lacy, 927 F.2d 539, 544 (11th
Cir. 1991). The Second Circuit, on the other hand, declined to
treat serious consideration as a “talismanic” indicator, but listed
it as one factor in the materiality inquiry. Ballone v. Eastman
Kodak Co., 109 F.3d 117, 122-23 (2d Cir. 1997). It is undisputed,
in this record, that the 1995 Plan was not conceived until several
years after Plaintiffs made their decision to retire. Finding the
question not properly presented, we decline the parties’ invitation

                                     5
     The district court determined that there was no genuine issue

of fact in the summary judgment record concerning whether the

statements contained in the No Better Benefit Q&A were truthful

when made.   Plaintiffs contend that the evidence raises a genuine

issue of material fact concerning the truthfulness of the statement

that management had made a decision regarding future benefits.

Specifically,   the   evidence   shows   that   Don    Scott,   Burlington

Northern’s Senior Vice President of Human Resources, made the

decision that Burlington Northern would not offer a future plan

with better benefits based on his understanding of the management

group’s intention that the 1991 Plan should be the last time a

voluntary separation plan would have to be offered for the purpose

of a voluntary workforce reduction.      Plaintiffs point to evidence

that Burlington Northern’s Executive Committee did not specifically

discuss or decide whether there were to be any future voluntary

separation plans and if so, whether or not the benefits would be

better than those offered in the 1991 Plan.           Plaintiffs take the

position that Scott’s decision was inaccurately characterized as

the management’s decision. Because it is undisputed that Scott was

the member of senior management charged with responsibility for

making decisions in the benefits area of the business and for

implementing them, we find no genuine issue of material fact

regarding the truth of the statement that management had made the

to adopt or reject the “serious consideration” test for the Fifth
Circuit.

                                   6
decision.    Cf. Fischer v. Philadelphia Elec. Co., 96 F.3d 1533,

1540 (3d Cir. 1996)(reciting the test for determining whether a

change has received “serious consideration,” and limiting “senior

management” to those individuals who have responsibility for the

benefits area     of    the   business,        and    who   will     ultimately      make

recommendations to the board regarding benefits operation).

       Because   we    conclude    that    the       No   Better    Benefit    Q&A    was

truthful when made, it cannot support a cause of action against

Burlington   Northern      for    breach       of    fiduciary     duty    based    on a

material misrepresentation.

       2.   Adopting the 1995 Plan

       Plaintiffs next contend that Burlington Northern breached its

fiduciary duty by adopting the 1995 Plan with significantly better

benefits than those contained in the 1991 Plan, relying on the rule

that   “clear    and    unambiguous       statements        in     the    summary    plan

description are binding.”          Wise v. El Paso Natural Gas Co., 986
F.2d 929, 938 (5th Cir. 1993).            An employer who adopts, amends or

terminates an employee benefit plan is not acting as a fiduciary.

Lockheed Corp. v. Spink, 517 U.S. 882, 889-90 (1996).                       Therefore,

Plaintiff has not stated a cause of action for breach of fiduciary

duty concerning the adoption of the 1995 plan.

       3.   Denial of Benefits Under the 1995 Plan

       Plaintiffs argue that Burlington Northern breached a fiduciary

duty owed to them by denying their claims for benefits under the

                                           7
1995 Plan.     When a beneficiary wants what was supposed to have been

distributed under a plan, the appropriate remedy is a claim for

denial of benefits under § 502(a)(1)(B) of ERISA rather than a

fiduciary duty claim brought pursuant to § 502(a)(3).        Corcoran v.

United HealthCare, Inc., 965 F.2d 1321, 1335 (5th Cir. 1992).        We

therefore reject Plaintiffs’ breach of fiduciary duty claim based

on denial of benefits.

B.       Denial of Benefits Under § 502(a)(1)(B).

         ERISA authorizes a civil action by a participant “to recover

benefits due to him under the terms of his plan.”           29 U.S.C. §

1132(a)(1)(B).          We   review       Burlington   Northern’s   plan

administrator’s interpretation of the plan for abuse of discretion,

based on language in both the 1991 and 1995 plans giving the plan

administrator discretion to review plan terms and decide claims for

benefits.3      Pierre v. Connecticut Gen. Life Ins. Co., 932 F.2d
1552, 1555-62 (5th Cir. 1991).        The plan administrator’s factual

determinations are likewise reviewable for abuse of discretion.

Id.

         This Circuit employs a two-step analysis for determining

whether a plan administrator abused its discretion in denying a

participant plan benefits. Rhorer v. Raytheon Eng’rs and Const’rs,

     3
   The 1991 and 1995 plan SPDs both provide that the plan
administrator is “[r]esponsible for the general administration of
the plan, including interpretation and communication of the plan,
[and] the determination and right of any person to benefits and the
payment of benefits.”

                                      8
Inc., 181 F.3d 634, 639 (5th Cir. 1999).         First we must determine

the legally correct interpretation of the plan and whether the

administrator’s   interpretation   accords   with     the   proper   legal

interpretation.     Id.    If the administrator’s construction is

legally sound, then no abuse of discretion occurred and the inquiry

ends.   Id.   But if the court concludes that the administrator has

not given the plan the legally correct interpretation, the court

must then determine whether the administrator’s interpretation

constitutes an abuse of discretion.        Id.     A decision is not an

abuse of discretion if a reasonable person could have reached a

similar decision, given the evidence before him.        Cash v. Wal-Mart

Group Health Plan, 107 F.3d 637, 641 (8th Cir. 1997).

     In examining the proper interpretation of the 1991 Plan, we

are guided by three rules.    First, the SPD is binding and if there

is conflict between the SPD and the terms of the plan itself, the

SPD controls.   Rhorer, 181 F.3d at 640.   Second, any ambiguities in

the SPD must be resolved in the employee’s favor.            Id. at 641.

Third, the SPD must be read as a whole.    Hansen v. Continental Ins.

Co., 940 F.2d 971, 981 (5th Cir. 1991).           It would be error to

attend only to one paragraph, page, or portion of the summary.        Id.

     The Burlington Northern plan administrator determined that

Plaintiffs were not due the enhanced benefits under the terms of

the 1991 and 1995 plans.     Plaintiffs were not active employees in

1995 and do not argue that they were eligible under the plain terms

                                   9
of the 1995 Plan for benefits arising from voluntary separation

from Burlington Northern employment in 1995.        Instead, they argue

that the Plan Administrator abused its discretion in failing to

interpret the statement “management has decided that if there are

any additional plans, the benefits would not be as good as those

contained in this plan” to mean “if there are ever any plans with

benefits better than the current plan, you will be entitled to

benefits under that plan.”

     While Burlington Northern is bound by statements in the Plan

documents, they are not bound by silence.     Wise, 986 F.2d at 938.

Contractual vesting is a narrow doctrine.             Id.   To prevail,

Plaintiff must assert strong prohibitory or granting language. Id.

The 1991 Plan is silent as to any potential remedy for the

violation of the alleged promise never to offer a better plan.

Therefore, there is no binding obligation to pay 1995 Plan benefits

to Plaintiffs.

     Moreover,   Plaintiffs’   proposed     reading     relies   on   the

assumption that management has committed itself never to change the

decision announced in the Q&A.     That interpretation is belied by

the statement, appearing two pages earlier in the same SPD, that

“[t]he Company reserves the right to amend and/or terminate this

plan at any time for any purpose.”     It is clear that ERISA allows

an employer to amend its beneficiary plan without explicitly

reserving that right in its SPD.      Id. at 936.    The combined force

                                 10
of ERISA’s statutory allowance of plan amendments and Burlington

Northern’s reservation of that right in the 1991 Plan forces us to

conclude that the plan administrator’s interpretation of the 1991

Plan   was   legally   correct.     Therefore,    we   find   no   abuse   of

discretion in the denial of Plaintiffs’ claims for benefits under

the 1995 Plan.

C.     Estoppel

       Plaintiffs allege that Burlington Northern is estopped from

denying their claims for benefits under the 1995 Plan.                     The

district court held that Plaintiffs’ estoppel cause of action is

not cognizable because when a party seeks to recover benefits owed

under an ERISA plan, state law estoppel claims are preempted by

ERISA.   Transitional Hosps. Corp. v. Blue Cross and Blue Shield of

Texas, Inc., 164 F.3d 952, 954 (5th Cir. 1999).                 On appeal,

Plaintiffs contend that they are asserting “ERISA estoppel,” citing

Curcio v. John Hancock Mut. Life Ins. Co., 33 F.3d 226, 235-38 (3d

Cir. 1994).    The Fifth Circuit has never adopted “ERISA estoppel,”

and has in fact expressed doubt as to whether a cause of action for

estoppel is cognizable under ERISA based upon written statements.

Weir v. Federal Asset Disposition Ass’n, 123 F.3d 281, 290 (5th

Cir. 1997).

       We need not consider the availability of ERISA estoppel

because, even if we assume the cause of action is available to

Plaintiffs,    they    cannot   establish   the   elements    necessary    to

                                     11
prevail: (1) a material misrepresentation, (2) reasonable and

detrimental reliance upon the representation, and (3) extraordinary

circumstances.          Id.    Having     already      concluded    that   Burlington

Northern’s representations, which were true when made are not

material misrepresentations, we affirm the district court’s grant

of summary judgment on Plaintiffs’ estoppel claim.

D.     Interference with Attainment of Benefits

       Plaintiffs alleged a claim for interference with the receipt

of plan benefits in violation of ERISA § 510, 29 U.S.C. § 1140.

The claim is premised on the allegation that the 1991 Plan SPD

contained misrepresentations intentionally calculated to cause

Plaintiffs to leave their employment, thus giving up compensation

and benefits they otherwise would have earned had they continued

working. Section 510 of ERISA prohibits employers from discharging

employees for the purpose of interfering with their attainment of

any right to which they are entitled under an employee benefit

plan.    Id.; Perdue v. Burger King Corp., 7 F.3d 1251, 1255 (5th

Cir.    1993).         Plaintiffs     contend       that     Burlington    Northern’s

statement in the No Better Benefits Q&A caused them to resign when

they    would    not    have    otherwise       done    so    and   therefore   their

resignations should not be considered voluntary.                     The success of

this    claim    depends       upon   a   finding      that    Burlington   Northern

misrepresented the truth in the No Better Benefit Q&A.                            The

district court held that there is no genuine issue of material fact

                                           12
concerning whether Burlington Northern misrepresented present facts

when they made the statements in question.   We agree and therefore

affirm the district court’s grant of summary judgment.

                         III. CONCLUSION

     Based on the foregoing, we affirm the summary judgment in

favor of Burlington Northern.

     AFFIRMED.

                                13
KAZEN, District Judge, dissenting:

      As the majority opinion reflects, Burlington Northern designed

the 1991 Separation Pay Plan (“the Plan”) to entice as many

employees as possible to accept voluntary separation. To that end,

the Summary Plan Description (“SPD”) explicitly stated that:

     “The company is offering this Plan in an effort to reduce its
expenses due to business conditions. At this time, the company’s
management has not decided whether there will be any additional
voluntary separation plans. However, management has decided that
if there are any additional plans, the benefits would not be as
good as those contained in this plan.”

The   majority     concludes    that   in    making      this   representation,

Burlington Northern did not breach its fiduciary duty as an ERISA

plan administrator because the statements were true when made.

That holding initially was made by the district court as a matter

of law in a summary judgment proceeding.           I believe that there is

a genuine fact dispute on this issue.             The evidence is that Don

Scott alone made the quoted decision that there would be no better

benefits in the future.        There is also evidence that all important

decisions   were     to   be   reviewed     by   other     members   of   senior

management. In deposition testimony, Scott recalled a presentation

about the Plan to senior management in which he explained “that

what we were trying to do was to offer a comfort to employees that

if they took this benefit, that it was going to be the best

available, that there wasn’t going to be another plan immediately

behind it of a higher value.”           On the other hand, the district

                                       14
court acknowledged testimony of other members of the management

team “that they did not discuss, review, or approve the verbiage”

included in the 1991 Plan.        Nevertheless, the district court held,

and   the   majority     apparently       agrees,     that   Scott’s    unilateral

decision can truthfully be labeled as a decision by “management”

under the test that a plan need be considered only by “those

members of senior management with responsibility for the benefits

area of the business, and who would ultimately make recommendations

to the board regarding benefits operations.”

      The quoted language is taken from the opinion in Fischer v.

Philadelphia Electric Company, 96 F.3d 1533, 1540 (3rd Cir. 1996).

That case dealt with the common scenario of complaints by employees

that their employer was actually giving “serious consideration” to

a retirement plan while either denying or failing to disclose that

circumstance to the employees.             The Fischer court was concerned

with when a future plan is under “serious consideration.”                  Fischer

recognized that typically only the Board of Directors can actually

implement changes in a benefit package, but concluded that for the

“serious consideration” test, it is only necessary that the plan is

being considered by those members of senior management responsible

for making recommendations to the Board.

      In    my   view,   there   is   a    qualitative       distinction   between

determining      whether   someone    in       high   management   is   “seriously

considering” a future plan and determining whether a company

actually has made an important unequivocal decision about a feature

                                          15
of   an    already    promulgated        plan.     In   the    face   of    deposition

testimony by senior management members that they never even saw,

much less discussed, the SPD language quoted above, it cannot be

said as a matter of law that “management has decided” that no

future     plan    would     have     better    benefits.      The    truth   of   that

representation should be decided by the fact finder.

      I also disagree that the plaintiffs cannot sue to recover

benefits due under the 1991 Plan.                   As stated in the majority

opinion, the SPD is binding and controls over any conflict with the

Plan itself.       Further, any ambiguities in the SPD must be resolved

in   the    employees’       favor.       The    majority     holds   that    although

Burlington Northern is bound by statements in the Plan documents,

it   is     “not     bound      by    silence,”     citing     Wise    v.     El   Paso

Natural Gas Co., 986 F.2d 929 (5th Cir. 1993).                             The precise

language from the Wise opinion is: “While clear and unambiguous

statements in the summary plan description are binding, the same is

not true of silence.”                Id. at 938.     The instant case does not

involve silence but rather a clear and unambiguous statement,

namely that no future plan would have better benefits.                              The

majority states that because the Plan is silent as to a potential

remedy, it is somehow unenforceable.                 The remedy is provided by

statute     itself,        29   U.S.C.     §1132(a).          The     majority     also

characterizes the plaintiffs’ argument as being that management had

committed “never to change the decision announced in the Q & A” and

that this assumption was belied by other language giving the

                                           16
Company the right to amend and/or terminate the Plan at any time

for any purpose.     Plaintiffs do not dispute Burlington Northern’s

right to    amend   the   1991    Plan,    but   Burlington   Northern    never

attempted to exercise that right.           Moreover, the plaintiffs do not

contend    that   Burlington     Northern    could    never   again    design   a

voluntary separation plan.         Indeed, the disputed language in the

SPD specifically left open the option of future plans.                What is at

issue is a positive, unequivocal statement that “management has

decided that if there are any additional plans, the benefits would

not be as good as those contained in this plan.”                 The majority

again relies on Wise for the proposition that “contractual vesting

is a narrow doctrine.” 986 F.2d at 938.          In Wise, the company had

issued SPDs as early as 1977 but in 1985 issued new SPDs which, for

the first time, explicitly stated that the company had the right to

alter, amend, or otherwise change the plan.             In October 1985, the

company announced that it would continue previous benefits only for

employees who retired before March 1, 1986, and anyone retiring

after that day would forfeit company-paid coverage.               Id. at 933.

The litigation was brought by employees who retired after the

cutoff date of March 1, 1986, contending that their rights in

previous plans had somehow vested earlier.             Wise was specifically

concerned only with “employees who had not retired as of the date

of the disputed change.”         Id. at 936.         Under the instant plan,

employees could elect to participate between June 17 and August 1,

1991.   If these plaintiffs had attempted to participate after that

                                      17
time, or if the company had attempted to amend the Plan sometime

before the   plaintiffs   made   their   election,   there   might   be a

legitimate issue of vesting rights.      As it is, however, there was

no amendment to the Plan at any time, and there is no doubt that

the plaintiffs voluntarily left their employment while the language

at issue was in effect.

     For the foregoing reasons, I respectfully dissent.

                                  18