Court Opinion

ID: 3064706
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:26:34.81516+00
Date Added: 2024-06-11T12:06:05.423221
License: Public Domain

FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

CLAYTON R. POORE; DOROTHY ANN         
TESKE; SHARON RIGGS; DENNIS
HAWKE; MERRIE LOU HAWKE; JOHN
ANDERSON; BARBARA ANDERSON;
ROBERT ELLEDGE; MARY ELLEDGE;
ROBERT POSCHWATTA, MARIE
                                           No. 05-36060
POSCHWATTA; JAMES GUNDIFF;
MARIE GUNDIFF; JERRY CUSICK;                 D.C. No.
SELMA CUSICK; HAROLD HUIRAS;             CV-03-00525-HA
LINDA HUIRAS; OWEN ENEVOLDSEN;             ORDER AND
and DONNA ENEVOLDSEN,                        OPINION
             Plaintiffs-Appellants,
               v.
SIMPSON PAPER COMPANY, a
Washington corporation,
              Defendant-Appellee.
                                      
       Appeal from the United States District Court
                for the District of Oregon
       Ancer L. Haggerty, District Judge, Presiding

                 Argued and Submitted
           December 5, 2007—Portland, Oregon

                    Filed May 21, 2009

  Before: Diarmuid F. O’Scannlain, Susan P. Graber, and
          Consuelo M. Callahan, Circuit Judges.

              Opinion by Judge O’Scannlain

                           6025
6028               POORE v. SIMPSON PAPER

                        COUNSEL

Thomas K. Doyle, Bennett, Hartman, Morris & Kaplan, Port-
land, Oregon, argued the cause for plaintiffs-appellants and
filed briefs.

Douglas S. Parker, Preston Gates & Ellis LLP, Anchorage,
Alaska, argued the cause for defendant-appellee and filed a
brief. Douglas S. Parker and Michael F. McCabe, Littler Men-
delson, Portland, Oregon, filed a supplemental brief.

Jay E. Sushelsky, AARP Foundation Litigation, Washington,
DC; Barbara A. Jones, AARP Foundation Litigation, Pasa-
dena, California; and Melvin R. Radowitz, AARP, Washing-
ton, DC, filed an amicus brief in support of plaintiff-
appellants’ petition for rehearing en banc for amicus curiae
AARP.

Monique Olivier,The Sturdevant Law Firm, San Francisco,
California filed an amicus brief in support of plain-
tiff-appellants’ petition for rehearing en banc for amicus
curiae California Employment Lawyers Association.

                          ORDER

  The opinion filed on September 22, 2008 and appearing at
544 F.3d 1062 (9th Cir. 2008), is withdrawn. Pursuant to Gen-
                    POORE v. SIMPSON PAPER                6029
eral Order 5.3.a, a new opinion is filed contemporaneously
with this order. With the withdrawal of the prior opinion, the
petition for rehearing en banc is denied as moot. Subsequent
petitions for rehearing and for rehearing en banc may be filed.

                         OPINION

O’SCANNLAIN, Circuit Judge:

  We must decide a dispute about retirement benefits.

                               I

   Simpson Paper Company (“Simpson”) owned and operated
the Evergreen Mill in West Linn, Oregon, from 1990 until
1996, when it closed for economic reasons. Plaintiffs are for-
mer workers in the mill, who retired at ages over 55 but under
65, and their dependent spouses (collectively referred to as
“early retirees” or “retirees”).

  The Association of Western Pulp and Paper Workers (“the
Union”) represented the hourly employees at the mill, includ-
ing the early retirees, from the 1970s through the time of the
mill’s closure. Three collective bargaining agreements
(“CBAs”) were in force during the time Simpson owned the
mill: 1990-93, 1993-95, and 1995-2001. Simpson and the
Union negotiated a closure agreement in 1996, which termi-
nated the 1995-2001 CBA.

   The first CBA incorporated by reference a benefit booklet,
as follows: “Subject to all the provisions of the Benefit Plan
Booklet the Company will provide for each eligible employee
and each eligible dependent the coverages agreed to in its
labor agreement dated November 27, 1990.” The incorporated
booklet provided that early retirees could continue medical
coverage that existed at the time of retirement and that they
6030                 POORE v. SIMPSON PAPER
could “change coverage at the annual open enrollment on the
same basis as active employees.” The booklet further pro-
vided that such coverage would continue until the retiree
“bec[ame] eligible for Medicare, attain[ed] age 65, or until . . .
death, whichever occurs first.” A similar extension period was
provided for continuation of medical coverage for the retirees’
spouses. During the time that such coverages continued, the
cost was “paid on the same basis as active employees.”
Finally, the benefits booklet specifically reserved to Simpson
the “right to alter, amend, delete, cancel or otherwise change”
the welfare plan benefits “at any time, subject to negotiation
with the Union.” (Emphasis added.)

   The latter two CBAs likewise incorporated the benefits
booklet. Such contracts stated that, “[u]nless otherwise speci-
fied, all participants covered by the health care plans will be
subject to the same level of contributions as active employees
and to the same health care plan provision changes which take
effect from time to time.” Though there were slight changes
to the benefits booklet over the years, the benefits Simpson
provided therein remained substantially the same.

  Simpson’s closure agreement, negotiated with the Union,
provided that

       [e]mployees who are curtailed as a result of the
    closure and begin receiving their Simpson pension
    benefits as of the first of the month immediately fol-
    lowing curtailment, will be eligible for retiree medi-
    cal coverage in accordance with the provisions of the
    Benefits Plan Booklet.

Then-active employees received a “Termination Checklist” at
meetings just before the closure. It contained essentially the
same provision just quoted. Neither the closure agreement nor
the information given to employees who remained employed
until closure referenced early retiree or dependent spouse ben-
efits for those who already had retired.
                     POORE v. SIMPSON PAPER                   6031
   In 2002, Simpson notified all retirees that it intended to
phase out, and eventually to eliminate, retirement health bene-
fits. On July 1, 2004, it carried out such intention and stopped
providing retirement health benefits. The present action fol-
lowed.

  The early retirees assert that Simpson breached its duties
under the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1132, by terminating health benefits
without having obtained the Union’s agreement or having bar-
gained to impasse. They also assert breach of contract claims
under the Labor Management Relations Act (“LMRA”), 29
U.S.C. § 185(a), arguing Simpson violated its obligations
under the CBAs. The district court granted summary judg-
ment to Simpson, concluding that the early retirees have no
vested right to the benefits they seek. This timely appeal fol-
lowed.

                                II

  The parties do not question our jurisdiction; however, we
have an “independent obligation” to ensure that such exists.
Hernandez v. Campbell, 204 F.3d 861, 865 (9th Cir. 2000)
(per curiam).

                                A

   [1] To establish standing to sue under ERISA, the early
retirees must show that they are plan “participants.” Burrey v.
Pac. Gas & Elec. Co., 159 F.3d 388, 392 (9th Cir. 1998).
ERISA defines a “participant” as “any employee or former
employee of an employer . . . who is or may become eligible
to receive a benefit of any type from an employee benefit plan
. . . .” 29 U.S.C. § 1002(7). In Firestone Tire & Rubber Co.
v. Bruch, 489 U.S. 101, 117 (1989), the Supreme Court held
that former employees satisfy this definition if they have “ ‘a
reasonable expectation of returning to covered employment’
or . . . ‘a colorable claim’ to vested benefits.” Id. at 117 (quot-
6032                POORE v. SIMPSON PAPER
ing Kuntz v. Reese, 785 F.2d 1410, 1411 (9th Cir. 1986),
(abrogated on other grounds by Kayes v. Pac. Lumber Co., 51
F.3d. 1449, 1454 (9th Cir. 1995)).

   [2] The Supreme Court recently clarified this point in
LaRue v. DeWolff, Boberg & Associates, 128 S. Ct. 1020,
1026 n.6 (2008), stating that a “plan ‘participant,’ as defined
by . . . 29 U.S.C. § 1002(7), may include a former employee
with a colorable claim for benefits.” In support of this propo-
sition, the opinion cites Harzewski v. Guidant Corp., 489 F.3d
799 (7th Cir. 2007), a case which notes that the Firestone Tire
Court “glossed ‘benefit’ in section 1002(7) as ‘vested bene-
fit,’ which has caused the lower courts a good deal of angst.”
Id. at 806. “But in context,” the Seventh Circuit continued, “it
is apparent that all the Court meant was that the former
employee had to have an entitlement — had to show that had
it not been for the trustees’ breach of their fiduciary duty he
would have been entitled to greater benefits than he received.”
Id.

   We are satisfied that LaRue remedied the “angst” noted by
the Seventh Circuit by loosening the requirement that the
claimed benefits be “vested,” at least insofar as vested means
permanently fixed and unalterable. This understanding is sup-
ported by two Supreme Court decisions decided between
Firestone Tire and LaRue.

   Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73
(1995), involved a health plan for former employees, who had
no unalterable rights in the plan. See id. at 75 (noting that the
plan was maintained “voluntarily,” rather than out of obliga-
tion); see also id. at 78 (because ERISA does not establish
any minimum vesting requirements for health plans, “that [the
employer] amended its plan to deprive respondents of health
benefits is not a cognizable complaint under ERISA.”) How-
ever, the plan in Curtiss-Wright included the following lan-
guage: “ ‘The Company reserves the right at any time and
from time to time to modify or amend, in whole or in part,
                     POORE v. SIMPSON PAPER                   6033
any or all of the provisions of the Plan.’ ” Id. at 77. Some for-
mer employees sued under 29 U.S.C. § 1132, the civil
enforcement provision of ERISA, claiming that the plan did
not contain an amendment procedure as required by ERISA
and that a purported amendment was thus void ab initio. The
Court determined that the provision for amendment by “[t]he
Company” stated such a procedure, and remanded for a deter-
mination of whether it had been followed by the employer. Id.
at 85.

   [3] The decision in Inter-Modal Rail Employees Ass’n v.
Atchison, Topeka & Santa Fe Railway, 520 U.S. 510 (1997),
is also instructive. There, the Court held that the protections
of 29 U.S.C. § 1140 extend to those with non-vested rights.
Critically, the Court noted, Congress used the term “plan” in
the statute — a term used to denote both those that must vest
and those that do not vest unless by contract. If Congress had
intended to limit § 1140’s protection to holders of vested
rights, it could have spoken in terms of “pension plan[s],”
which must vest, or of “nonforfeitable” rights. Id. at 514-15
(quoting 29 U.S.C. § 1002 (defining terms used in ERISA)).
Likewise, as is the situation here, if Congress intended to limit
the right to sue under § 1132 to vested right-holders, it would
have said so instead of granting it to “participant[s]” (a
defined term which includes both vested and non-vested per-
sons).

   In its supplemental briefing, Simpson Paper argues that
Curtiss-Wright and Inter-Modal are inapplicable because they
do not address § 1132. But this argument fails to recognize
that civil suits by participants necessarily arise out of that sec-
tion. Nor does Simpson Paper explain why “participants”
should be read to find jurisdiction over claims made under
certain sections of ERISA, but not others. Moreover, the dis-
pute here — essentially a claim that, contrary to the plan,
Simpson Paper stopped paying benefits — is quite similar to
the dispute in Curtiss-Wright.
6034                POORE v. SIMPSON PAPER
   [4] We are satisfied that the early retirees need not show
that their benefits are vested in the way that pension benefits
are vested. Under LaRue, they have shown enough.

                               B

   [5] The retirees also assert breach of contract claims under
the LMRA. The LMRA confers federal jurisdiction over
“[s]uits for violation of contracts between an employer and a
labor organization representing employees in an industry
affecting commerce.” 29 U.S.C. § 185(a). As a general rule,
where the contract at issue has expired, the parties are “re-
leased . . . from their respective contractual obligations” and
any dispute between them cannot be said to arise under the
contract. Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 206
(1991). An exception to this general rule exists, however,
where the parties’ dispute concerns a “right that accrued or
vested under the agreement, or where, under normal princi-
ples of contract interpretation, the disputed contractual right
survives expiration of the remainder of the agreement.” Id.;
see also Nolde Bros. v. Local No. 358, Bakery & Confection-
ery Workers Union, 430 U.S. 243, 249 (1977) (“[T]here is . . .
no reason why parties could not if they so chose agree to the
accrual of rights during the term of an agreement and their
realization after the agreement had expired. . . . The dispute
therefore, although arising after the expiration of the
collective-bargaining contract, clearly arises under that con-
tract.” (citation, footnote, and internal quotation marks omit-
ted)).

   [6] The retirees here have stated at least a colorable claim
that they have a right to benefits which survived the expira-
tion of the remainder of the agreement. Although the claim
may fail on the merits, it need not be meritorious to establish
subject-matter jurisdiction. It need only be non-frivolous. See,
e.g., Oneida Indian Nation v. County of Oneida, 414 U.S.
661, 666 (1974) (dismissal for lack of subject-matter jurisdic-
tion appropriate when the purported federal claim is “so
                     POORE v. SIMPSON PAPER                  6035
insubstantial, implausible, foreclosed by prior decisions of
[the Supreme] Court, or otherwise completely devoid of merit
as not to involve a federal controversy.”). Accordingly, juris-
diction under the LMRA exists.

                               III

                                A

   [7] Retirees assert that they have nonforfeitable rights,
while Simpson Paper claims that it could terminate the bene-
fits at any time. Neither is correct. The plan document states
that it may be modified “subject to negotiation with the
Union.” Retirees have argued, as an alternative theory, that
there was never any negotiation with the Union. The contrac-
tual term is ambiguous: it could mean negotiation to impasse,
see 29 U.S.C. § 158(a)(5) & (d), or something less. Because
resolving the ambiguity requires consideration of disputed
facts, the grant of summary judgment was inappropriate. And,
of course, the retirees are entitled to try their claim under sec-
tion 301 of the LMRA to a jury.

   [8] We have noted that the retirees’ claim is similar to the
claim made in Curtiss-Wright. Although they did not cite 29
U.S.C. § 1102, the statute at issue in that case, they were not
required to. There, it was asserted that, in violation of that
section, the employer had failed to create an amendment pro-
cedure. Failure to cite § 1102 is not fatal in this case, which
at its heart involves an assertion that Simpson Paper simply
did not follow the terms of the plan documents.

                                B

   Retirees assert that Simpson Paper violated its fiduciary
responsibilities by not advising them of the possibility of plan
termination during their exit interviews. In support, they rely
on Mullins v. Pfizer, Inc., 23 F.3d 663 (2nd Cir. 1994) and
Pocchia v. NYNEX Corp., 81 F.3d 275 (2nd Cir. 1996). How-
6036                     POORE v. SIMPSON PAPER
ever, these cases do not support their theory. Both cases
involved potential changes in early retirement benefits which
were under active and serious consideration by the company.
In Mullins, the employer stoutly denied that any changes in
early retirement plans were being considered. The court held
that affirmative material misrepresentations about whether an
increase in early retirement benefits was under consideration
was actionable. Pocchia extended Mullins to state that an
employer need not disclose proposed changes before they are
adopted. Pocchia, 81 F.3d at 278.1

   [9] Here, there is no evidence in the record to suggest that
Simpson Paper was considering changes in retiree benefits at
the time that representations were made to the early retirees.
Indeed, the possibility of plan termination had already been
disclosed in the plan documents. Under the early retirees’ pre-
ferred legal theory, their claim fails, and they assert no other.
Any further argument about Simpson Paper’s alleged failure
to act “solely in the interest of the participants and beneficia-
ries,” 29 U.S.C. § 1104(a), is accordingly waived.

                                      C

   [10] “An ERISA beneficiary may recover benefits under an
equitable estoppel theory upon establishing a material misrep-
resentation, reasonable and detrimental reliance upon the rep-
resentation and extraordinary circumstances.” Pisciotta v.
Teledyne Indus., Inc., 91 F.3d 1326, 1331 (9th Cir. 1996) (per
curiam) (citing In Re Unisys Corp. Retiree Med. Benefit
“ERISA” Litig., 58 F.3d 896, 907 (3d Cir. 1995)). The retirees
have offered no argument to counter the district court’s con-
clusion that no exceptional circumstances were present. Their
estoppel claim accordingly must fail as well.
   1
     It is the law of this circuit that “when a plan participant inquires about
potential plan changes, an employer-fiduciary has a duty to provide com-
plete and truthful information about any such changes then under serious
consideration.” Bins v. Exxon Co. U.S.A., 220 F.3d 1042, 1045 (9th Cir.
2000) (en banc).
                   POORE v. SIMPSON PAPER               6037
                             IV

   [11] The remaining contentions of both sides are without
merit. Because it is unclear whether Simpson Paper negoti-
ated as required by the CBA, we reverse in part the grant of
summary judgment in its favor and remand. We affirm the
grant of summary judgment as to the early retirees’ claims of
breach of fiduciary duty and estoppel. Each party shall bear
its own costs on appeal.

 AFFIRMED IN PART; REVERSED IN PART;
REMANDED.