Court Opinion

ID: 1003492
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:26:56.717522+00
Date Added: 2024-06-11T15:27:11.233734
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

ROBERT FRIZ,                            
                 Plaintiff-Appellant,
                 v.
J&H MARSH & MCLENNAN,
INCORPORATED; J&H MARSH &                        No. 00-1940
MCLENNAN, INCORPORATED,
Acquisition Severance Pay Plan;
EDWARD P. PAZICKY, Plan
Administrator,
               Defendants-Appellees.
                                        
           Appeal from the United States District Court
            for the District of Maryland, at Baltimore.
                  Andre M. Davis, District Judge.
                       (CA-00-1173-AMD)

                      Argued: December 7, 2000

                      Decided: January 22, 2001

        Before WIDENER and KING, Circuit Judges, and
               HAMILTON, Senior Circuit Judge.

Affirmed by unpublished per curiam opinion. Judge King wrote a dis-
senting opinion.

                             COUNSEL

ARGUED: Francis Joseph Collins, KAHN, SMITH & COLLINS,
P.A., Baltimore, Maryland, for Appellant. William George Miossi,
2                 FRIZ v. J&H MARSH & MCLENNAN
WINSTON & STRAWN, Washington, D.C., for Appellees. ON
BRIEF: Christine C. Stein, WINSTON & STRAWN, Washington,
D.C., for Appellees.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                             OPINION

PER CURIAM:

   Robert Friz (Friz) appeals the district court’s entry of judgment in
favor of J&H Marsh & McLennan, Inc. (Marsh), an insurance broker-
age company, the J&H Marsh & McLennan, Inc. Acquisition Sever-
ance Pay Plan (the Marsh Severance Pay Plan or the Plan), and
Edward Pazicky (Pazicky), the administrator for the Plan. In the dis-
trict court, Friz sought review of Pazicky’s determination that he was
ineligible for enhanced severance benefits under the Plan, an
employee welfare benefit plan governed by the Employee Retirement
Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. For
the reasons stated below, we affirm.

                                   I

   In November 1998, Marsh & McLennan Companies, Inc. (MMC),
the parent of Marsh, acquired Sedgwick, Inc. (Sedgwick). As a result
of the acquisition, Sedgwick was merged into various subsidiaries of
MMC.

   On January 4, 1999, Marsh sent by email a memorandum (the
Broadcast Memo) to all Marsh employees in the United States
informing them that the acquisition of Sedgwick would result in cer-
tain staff reductions. Although the Broadcast Memo was sent to all
Marsh employees in the United States, Friz, a vice-president in
Marsh’s Baltimore, Maryland office at the time, contends he did not
                  FRIZ v. J&H MARSH & MCLENNAN                        3
receive it; in any event, Friz did have access to the memo from his
computer on Marsh’s Lotus Notes database.

   The Broadcast Memo explained that those employees laid off in
connection with the reduction-in-force would be eligible for sever-
ance benefits under a "Merger Severance Pay Plan." The Broadcast
Memo explained that, under the proposed Merger Severance Pay
Plan, separating employees would be eligible for one of two types of
severance benefits: basic or enhanced. According to the Broadcast
Memo, basic severance benefits consisted of two weeks base salary
paid in a lump sum to all employees terminated under the Merger
Severance Pay Plan. Enhanced severance benefits provided greater
benefits, but the Broadcast Memo indicated that the receipt of those
benefits was expressly contingent upon signing "a waiver and release
agreement in the form provided by the company that includes a spe-
cific clause on non-solicitation of both accounts and employees of the
company."

  The Marsh Severance Pay Plan went into effect on March 31, 1999
and terminated on December 31, 1999.1 The Plan provided that its
purpose was "to provide severance pay and benefits to eligible
[Marsh] employees" terminated as a result of the acquisition of Sedg-
wick. The Plan provided that eligible employees would be entitled to
one of two types of severance benefits, either basic or enhanced.

  Under the Plan, basic severance benefits consisted of two weeks
base salary, paid in a lump sum two weeks following termination. An
employee was eligible for enhanced severance benefits if the
employee signed "a Waiver and Release Agreement in a form pre-
pared by the Company ("Waiver and Release"), and such Waiver and
Release becomes effective by its terms."2 Thus, unlike the language
  1
    The parties seem to agree that the Plan, as contained in the record,
contains two documents, one entitled "J&H Marsh & McLennan, Inc.
Acquisition Severance Pay Plan Summary Plan Description," and the
other entitled, "J&H Marsh & McLennan, Inc. Amended Merger Sever-
ance Pay Plan." Unless we specify otherwise, when we refer to the Plan,
we are referring to the J&H Marsh & McLennan, Inc. Acquisition Sever-
ance Pay Plan Summary Plan Description.
  2
    The J&H Marsh & McLennan, Inc. Amended Merger Severance Pay
Plan employs similar but not identical language. It provides that an
4                 FRIZ v. J&H MARSH & MCLENNAN
contained in the Broadcast Memo, the Plan did not contain a specific
clause pertaining to the solicitation of both accounts and employees
of Marsh. Enhanced severance benefits were calculated by using a
seniority formula, with a minimum benefit consisting of four weeks
base salary, plus a $1,500 to $3,500 allowance for health benefits con-
tinuation, out-placement assistance, and other benefits.

   On January 31, 1999, Friz was selected for termination in conjunc-
tion with MMC’s acquisition of Sedgwick. On April 15, 1999, Friz
received written notification of his termination. At that time, he was
offered a "Change of Employment Status/Waiver and Release Agree-
ment" (the Agreement). The Agreement provided that in exchange for
$89,440 and other benefits, Friz would release any real or potential
claims against Marsh and forego his right to solicit certain customers
and employees of Marsh for one year.

   By the terms of the Agreement, Friz had a forty-five day period,
or until May 31, 1999, to consider its terms and accept it. Friz did not
sign the Agreement during the forty-five day period or any time there-
after, nor did he raise any questions or issues concerning the scope of
the Agreement during this period. Thus, under the Plan, he qualified
only for basic severance benefits, which he received in due course.
The record reflects that Friz chose not to accept the Agreement
because he intended to, and apparently did in fact, solicit Marsh’s cli-
ents.

   On October 28, 1999, Friz initiated an administrative appeal under
the Marsh Severance Pay Plan regarding his failure to qualify for
enhanced severance benefits. According to Friz, he was entitled to
enhanced severance benefits because the Plan did not condition the
receipt of enhanced severance benefits on the non-solicitation of both
accounts and employees of Marsh. After review, Pazicky denied
Friz’s claim for the following reasons: "(1) the Plan’s language
expressly provided that the terms of the Waiver and Release would
be prepared" by Marsh and "Friz failed to sign the Waiver and

employee will be eligible for enhanced severance benefits if the
employee signs "a Waiver and Release Agreement prepared by the Com-
pany."
                   FRIZ v. J&H MARSH & MCLENNAN                        5
Release" as prepared by Marsh; "(2) Friz failed to sign the Agreement
within the forty-five day period as required under the Plan; (3) the
non-solicit clause was reasonable in that it was narrowly drawn"; (4)
the Agreement offered generous compensation; and (5) "as early as
January 4, 1999, Friz, along with all other potential participants, had
been advised that the Waiver and Release would include a ‘specific
clause on non-solicitation of both accounts and employees’" of
Marsh.

   On March 14, 2000, in the Circuit Court for Baltimore City, Mary-
land, Friz filed a complaint against Marsh, the Marsh Severance Pay
Plan, and Pazicky to recover under ERISA the enhanced severance
benefits denied to him by Pazicky. After the case was removed to the
United States District Court for the District of Maryland in April
2000, Marsh, the Plan, and Pazicky filed a motion to dismiss, or in
the alternative, for summary judgment. After full briefing on the
motion and oral argument, the district court issued an order on June
27, 2000 granting the defendants’ motion and dismissing Friz’s com-
plaint with prejudice. The district court held that Pazicky’s interpreta-
tion of the Plan to deny Friz’s claim for enhanced severance benefits
was reasonable. Friz noted a timely appeal.

                                   II

   Decisions by plan administrators are generally reviewed de novo.
See Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 112
(1989). However, if the plan gives the plan administrator discretion-
ary authority to determine eligibility or to construe the terms of the
plan, our review of the plan administrator’s decision is for an abuse
of discretion. See Ellis v. Metro. Life Ins. Co., 126 F.3d 228, 232 (4th
Cir. 1997). Under this deferential standard, we will not disturb the
decision of the plan administrator if it is reasonable, even if we would
have reached a different conclusion independently. See id. Whether
a plan gives the plan administrator discretionary authority is a ques-
tion we review de novo. See id. at 233.

   In this case, there is really no question that Pazicky possessed dis-
cretionary authority to determine Friz’s entitlement to enhanced sev-
erance benefits under the Plan. The parties essentially do not dispute
6                      FRIZ v. J&H MARSH & MCLENNAN
this, and the Plan’s language is crystal clear on this point.3 Therefore,
we must determine if Pazicky exercised his discretion reasonably. See
id. at 232.

  In assessing the reasonableness of a plan administrator’s decision,
we may consider, but are not limited to, such factors as:

        (1) the language of the plan; (2) the purposes and goals of
        the plan; (3) the adequacy of the materials considered to
        make the decision and the degree to which they support it;
        (4) whether the fiduciary’s interpretation was consistent
        with other provisions in the plan and with earlier interpreta-
        tions of the plan; (5) whether the decisionmaking process
        was reasoned and principled; (6) whether the decision was
        consistent with the procedural and substantive requirements
        of ERISA; (7) any external standard relevant to the exercise
        of discretion; and (8) the fiduciary’s motives and any con-
        flict of interest it may have.

Booth v. Wal-Mart Stores, Inc., 201 F.3d 335, 342-43 (4th Cir. 2000).

   Applying these factors, we conclude that Pazicky’s decision deny-
ing Friz enhanced severance benefits was reasonable. First, his deci-
sion was consistent with the language of the Plan. The Plan provided
that eligibility for enhanced severance benefits was contingent upon
an employee executing a "Waiver and Release Agreement in a form
prepared" by Marsh. Marsh prepared a "Waiver and Release Agree-
ment" and presented it to Friz for execution. In the Agreement, Friz
was asked to, in exchange for $89,440 and other benefits, release
Marsh from liability, waive any real or potential claims against
    3
     On this point, the Plan provides:
        The Plan Administrator shall have the responsibility and the dis-
        cretionary authority to interpret the terms of this Plan, to deter-
        mine eligibility for benefits, and to determine the amount of such
        benefits. The Plan Administrator may award additional benefits
        under this Plan at his sole discretion. The interpretation and
        determinations of the Plan Administrator shall be final and bind-
        ing unless determined by a court of competent jurisdiction to be
        arbitrary and capricious.
                    FRIZ v. J&H MARSH & MCLENNAN                           7
Marsh, and waive his right to solicit certain customers and employees
of Marsh for one year. As a consequence of his failure to execute the
Agreement, Friz was only entitled to basic severance benefits, which
he received.4

   Second, Pazicky’s decision was consistent with the purposes and
goals of the Plan. The purpose of the Plan was "to provide severance
pay and benefits to eligible [Marsh] employees" terminated as a result
of the acquisition of Sedgwick, and the Plan provided that eligible
employees would be entitled to one of two types of benefits, either
basic or enhanced. In accordance with the terms of the Plan, Friz
received the benefits to which he was entitled, thus fulfilling the pur-
poses and goals of the Plan.

   Third, the materials considered by Pazicky in reaching his decision,
primarily the Plan and the Agreement, were adequate and fully sup-
port the reasonableness of his decision.5

  Fourth, Friz does not argue and the record does not reflect that the
provisions of the Plan have been inconsistently applied to the Marsh
employees terminated in 1999 as a result of the Marsh-Sedgwick
merger. Indeed, it appears that no employee who elected not to exe-
cute the Agreement received enhanced severance.

   Fifth, Pazicky’s decisionmaking process was reasoned and princi-
pled. In his decision, Pazicky reviewed the Plan’s language in a rea-
  4
     We note that Pazicky was under the mistaken belief that the Plan
required Friz to execute the Agreement by May 31, 1999 to secure
enhanced severance benefits. Rather, the Agreement, and not the Plan,
contained the forty-five day provision.
   5
     Secondarily, Pazicky considered the Broadcast Memo, expressing the
view that, through it, Friz was on notice that the Agreement would con-
tain a specific provision containing a waiver of the right to solicit clients
and employees of Marsh. Friz contends that Pazicky erred when he con-
sidered the Broadcast Memo in rendering his decision. We need not
address this argument because, in rendering his decision, Pazicky primar-
ily considered the Plan and the Agreement, not the Broadcast Memo.
Thus, Pazicky’s consideration of the Broadcast Memo does not under-
mine the reasonableness of his decision.
8                  FRIZ v. J&H MARSH & MCLENNAN
sonable manner and applied that interpretation to Friz. In addition,
there is no dispute that, administratively, Friz had an opportunity to
litigate his claim.

   Sixth, Pazicky’s decision was consistent with the procedural and
substantive requirements of ERISA. As noted above, Pazicky’s deci-
sion was consistent with the language of the Plan. Further, Friz was
fully aware of his rights and obligations under the Plan. To receive
basic severance benefits, he had to do nothing; to receive enhanced
severance benefits, he had to execute the "Waiver and Release Agree-
ment" prepared by Marsh. He chose the former.

   With regard to factor seven, any external standard relevant to the
exercise of discretion, and factor eight, the fiduciary’s motives and
any conflict of interest it may have, Friz contends that Pazicky, as an
employee of Marsh, acted under a conflict of interest. A plan adminis-
trator’s "conflict of interest, in addition to serving as a factor in the
reasonableness inquiry, may operate to reduce the deference given to
a discretionary decision" of that plan administrator. Booth, 201 F.3d
at 343 n.2. A conflict of interest reduces the deference to the degree
necessary to "neutralize any untoward influence resulting from that
conflict." Doe v. Group Hospitalization & Medical Servs., 3 F.3d 80,
87 (4th Cir. 1993). In other words, "[t]he more incentive for the
administrator or fiduciary to benefit itself by a certain interpretation
of benefit eligibility or other plan terms, the more objectively reason-
able the administrator or fiduciary’s decision must be and the more
substantial the evidence must be to support it." Ellis, 126 F.3d at 233.

   In this case, even if Friz could demonstrate a conflict of interest,
our review would be confined to determining whether Pazicky’s deci-
sion was objectively reasonable. See Elliott v. Sara Lee Corp., 190
F.3d 601, 605 (4th Cir. 1999). Applying this standard, for essentially
the same reasons set forth above, we conclude that Pazicky’s decision
was objectively reasonable as a matter of law.

                                   III

   In summary, our consideration of the Booth factors leads to the
inescapable conclusion that Pazicky’s decision denying Friz enhanced
                  FRIZ v. J&H MARSH & MCLENNAN                        9
severance benefits was reasonable. Accordingly, we affirm the judg-
ment of the district court.

                                                           AFFIRMED

KING, Circuit Judge, dissenting:

   The ultimate issue in this case is simple: Does a "Waiver and
Release Agreement" reasonably encompass a non-solicitation clause?
It plainly does not, and I respectfully dissent.

                                   I.

   This issue arises in the context of a plan administrator’s construc-
tion of an ERISA benefit plan.1 By its terms, the Plan provided, inter
alia, that an employee would be eligible for enhanced severance bene-
fits if he signed "a Waiver and Release Agreement in a form prepared
by the Company[.]" The district court granted judgment to Marsh,
determining that Friz could be required to execute a Waiver and
Release Agreement containing a non-solicitation clause. I disagree,
and I would reverse.

                                   II.

                                   A.

   As the majority observes, we accord substantial deference to a plan
administrator’s eligibility determination when the plan vests the
administrator with discretionary authority to construe it. See Ellis v.
Metro. Life Ins. Co., 126 F.3d 228, 232 (4th Cir. 1997). To pass mus-
ter, however, Pazicky’s construction of the Plan must be objectively
reasonable. See id.2 I am convinced that Pazicky’s decision to deny
  1
     The ERISA plan to be construed is the J&H Marsh & McLennan, Inc.
Acquisition Severance Pay Plan (the "Plan"), as exclusively set forth in
the Summary Plan Description.
   2
     Where, however, a conflict exists between the interests of the plan
administrator and the employee, the deference accorded the administrator
is reduced to "the extent necessary to counteract any influence unduly
10                  FRIZ v. J&H MARSH & MCLENNAN
Friz enhanced benefits was, as a matter of law, unreasonable and
inconsistent with the plain and unambiguous provisions of the Plan.

                                     B.

   In assessing Pazicky’s decision to deny Friz his enhanced benefits,
we must confine our analysis to the terms of the written Plan as it was
presented to the employees (the Plan’s prospective beneficiaries).
While the Plan expressly conditioned receipt of enhanced benefits on
the signing of "a Waiver and Release Agreement in a form prepared
by the Company," it did not further define the agreement, and it con-
tained no reference to a non-solicitation clause.

   Marsh insists that it had, by means of its so-called Broadcast Memo
of January 4, 1999, ante at 2-3, informed its employees that the
Waiver and Release Agreement would "includ[e] a specific clause on
non-solicitation of both accounts and employees of the company."
While Friz denies receiving the Broadcast Memo, this point is a red
herring. Put simply, neither this fugitive document nor its contents
were embodied in the written Plan. An ERISA plan may be construed
only by its written terms, without reference to unincorporated ancil-
lary documents. See 29 U.S.C. § 1104(a)(1)(D) (establishing the duty
of plan fiduciaries to act solely "in accordance with the documents
and instruments governing the plan.").

   Although Marsh was entitled to amend the Plan — and to incorpo-
rate into it a non-solicitation provision — it did not do so. Because
Marsh did not so amend the Plan, Pazicky could not rely on the
Broadcast Memo in determining the scope of the Waiver and Release
Agreement. Likewise, in evaluating the reasonableness of Pazicky’s
construction, we must limit our analysis to the contents of the Plan
itself.

resulting from the conflict." Ellis, 126 F.3d at 233. While Pazicky faced
a serious conflict of interest in this case — since his expansive interpreta-
tion of waiver and release would necessarily accrue to his employer’s
benefit — we need not resolve the precise scope of any deference owed,
as Pazicky’s construction of the Plan was patently unreasonable.
                     FRIZ v. J&H MARSH & MCLENNAN                            11
                                      C.

   Construing the Plan to encompass a non-solicitation provision per-
verts the plain meaning of the terms "waiver" and "release," consid-
ered either separately or in combination. For example, Black’s Law
Dictionary defines "waiver" as "[t]he voluntary relinquishment or
abandonment . . . of a legal right or advantage." Black’s Law Dictio-
nary 1574 (7th ed. 1999). Similarly, that text defines "release" as
"[t]he relinquishment or concession of a right, title, or claim." Id. at
1292.

   In this circumstance, it would have been reasonable to expect the
Waiver and Release Agreement to cover all claims Friz could raise
against Marsh, such as discrimination claims or compensation dis-
putes, arising from his employment or termination. Presumably,
Friz’s execution of such an agreement would be valuable to Marsh,
sparing the company the uncertainty and expense of potential law-
suits. While Marsh would also derive considerable value from a non-
solicitation agreement, such a provision involves a distinct type of
forbearance on the part of Friz. Whereas a waiver and release would
preclude former employees from pursuing claims against Marsh — in
particular, claims arising out of (past) events — a non-solicitation
agreement inhibits the employee from engaging in (future) business
conduct.3
  3
   Indeed, the draft Waiver and Release Agreement prepared by Marsh
implicitly regarded the waiver and release as entirely distinct from the
non-solicitation clause. The unexecuted agreement provided in part:
      In exchange for providing you with the above referenced pay-
      ments . . ., you agree to waive all claims against the Company
      and release and discharge the Company from liability for any
      claims or damages that you may have against it as of the date of
      this Agreement, whether known or unknown to you. This waiver
      and release includes, but is not limited to, any claims arising
      under any federal, state or local law or ordinance . . . .
J.A. 37-38 (emphasis added). The prohibition against solicitation fol-
lowed in a separate clause:
      You also agree that for the one year period following termina-
      tion, you will not, directly or indirectly, solicit, divert, or take
12                 FRIZ v. J&H MARSH & MCLENNAN
                                  III.

   Under the Plan’s terms, Marsh retained control over the specific
form of the Waiver and Release Agreement. Marsh was entitled to
prepare the agreement, but it was nonetheless constrained by the
essential nature of a waiver and release. When Marsh inserted the
non-solicitation clause into the Waiver and Release Agreement, it
added an invalid condition to which Friz could not reasonably be
held.

  I believe the district court erred in its disposition of Friz’s claim,
and I respectfully dissent.

     away, in whole or in part, any clients or prospects of the Com-
     pany . . . .
J.A. 38 (emphasis added). Thus, the agreement itself treated the waiver
and release as a discrete provision, to which the non-solicitation clause
was simply appended.