Court Opinion

ID: 1015614
Source: CourtListenerOpinion
Date Created: 2013-07-04 21:36:02.472931+00
Date Added: 2024-06-11T15:12:39.037150
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 04-1347

DANNY O. SCHAFFER, on behalf of himself and
all others similarly situated,

                                             Plaintiff - Appellant,

     versus

WESTINGHOUSE SAVANNAH RIVER COMPANY,

                                              Defendant - Appellee.

Appeal from the United States District Court for the District of
South Carolina, at Aiken. Cameron McGowan Currie, District Judge.
(CA-02-799)

Argued:   February 1, 2005                 Decided:   March 11, 2005

Before WIDENER, MOTZ, and GREGORY, Circuit Judges.

Affirmed in part, vacated in part, and remanded by unpublished per
curiam opinion.

ARGUED: Marion Clyde Fairey, Jr., SPEIGHTS & RUNYAN, Hampton, South
Carolina, for Appellant.    Steven Mark Wynkoop, NELSON, MULLINS,
RILEY & SCARBOROUGH, Greenville, South Carolina, for Appellee. ON
BRIEF: Daniel A. Speights, SPEIGHTS & RUNYAN, Hampton, South
Carolina, for Appellant. Giles M. Schanen, Jr., NELSON, MULLINS,
RILEY & SCARBOROUGH, Greenville, South Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
2
PER CURIAM:

     Danny O. Schaffer brought this action against his employer,

Westinghouse Savannah River Co. (“WSRC”), alleging that the terms

of the company’s pension plan or promises made by the company

entitled him to certain pension benefits.        Alternatively, he

asserts that he was entitled to “appropriate     equitable relief”

under 29 U.S.C. § 1132(a)(3) (2000) because WSRC breached its

fiduciary duty under ERISA, 29 U.S.C. § 1025(a)(1) and (a)(2)

(2000), to provide him with accurate information about these

benefits.   The district court granted summary judgment to WSRC and

Schaffer appeals.   For the reasons set forth below, we affirm in

part, and vacate in part, and remand for further proceedings.

                                 I.

     Schaffer began working for Westinghouse Electric Corp. (“WEC”)

on May 20, 1970, at its Hampton, South Carolina, plant.   In early

1989, he moved to the Savannah River Site, a nuclear facility in

Georgia operated at the time by E.I. DuPont De Nemours & Co., with

the understanding that the Department of Energy would imminently

enter into a contract with WEC to operate the site.   On March 31,

1989, WSRC, then a wholly owned subsidiary of WEC, began operating

the Savannah River Site.    Schaffer claims, and for purposes of

summary judgment the district court assumed, that before he agreed

to move from the Hampton facility to the Savannah River Site and

                                 3
after he did so, management personnel informed him that his service

for pension purposes would include his years at both WEC and WSRC.

     WSRC administers the WSRC/Bechtel Savannah River, Inc. Pension

Plan (“Plan”), which is fully funded by the Department of Energy.

In June 1989, Schaffer received a letter from the “Manager of the

Benefits and Plans Section of the Human Resources Department” at

WSRC informing him that he had an “Adjusted Service Date of May 20,

1970,”   and   that    “[i]n      the   interest   of   expediency     [WSRC    has]

verified   your       employment        service    date(s)    with    your     prior

Westinghouse    Site(s)        and      [has]   adjusted     your    service    date

accordingly.”         In   1990    Schaffer     received     an   annual   benefits

statement from WSRC indicating that both his eligibility for a

pension and the amount of the pension he would receive were based

on his combined years of service to WEC and WSRC.                 As late as 2000,

his annual benefit statement continued to report that his “Adjusted

Service Date (for Pension eligibility)” was May 20, 1970, and that

his “Credited Service (for Pension calculation)” was based on his

combined years of service to WEC and WSRC.

     However, in November 2001, WSRC informed Schaffer that the

annual benefits statements it had been sending him since 1990 (i.e.

for 11 years) were inaccurate because his years at WEC should have

counted for pension eligibility only and not for calculating the

amount of his pension.            More than thirty employees had similarly

received annual statements reporting inflated pension values.                    One

                                           4
other WSRC employee, George Donald Benton, took early retirement in

reliance on the inflated estimates of his pension benefits.

     Schaffer and Benton filed contemporaneous suits against WSRC.

Schaffer raised three distinct and independent claims for relief.

First, he alleged that the Plan documents required WSRC to credit

his years at WEC in calculating his WSRC pension benefits. Second,

he asserted that if the Plan documents did not require WSRC to

count his nineteen years at WEC in calculating his WSRC pension,

the doctrine of equitable or, more accurately, promissory, estoppel

required WSRC to do so because prior to adopting the Plan, WSRC had

promised Schaffer that it would credit his years at WEC.      Third,

Schaffer maintained that WSRC breached its fiduciary duty under

ERISA by sending him inaccurate benefits statements for eleven

years, entitling him to “appropriate equitable relief” under ERISA,

29 U.S.C. § 1132(a)(3).

     The district court limited discovery in this case because the

parties had access to discovery from Benton’s case.      The court

entered a discovery order requiring WSRC to provide Schaffer with

all Plan documents and any records regarding his participation in

the Plan or WEC’s pension plan and permitting the use of discovered

materials from the Benton case.   In the order, the district court

advised:

     The parties are encouraged to discuss whether further
     discovery should be had prior to filing of dispositive
     motions and to conduct such further discovery as they may
     agree is appropriate. While the court will not require

                                  5
     further participation in discovery prior to filing of the
     dispositive motions, it will consider the necessity for
     further discovery when it reviews those motions. To the
     extent a party seeks further discovery at that time, that
     party should attach appropriate documentation to
     demonstrate that the specific discovery is not only
     necessary to address the particular motion, but was
     requested and rejected prior to filing of the dispositive
     motions.

Despite   this   order,   Schaffer   did    not   file   his   first   set    of

interrogatories or first request for production until the day the

parties filed dispositive motions.

                                     II.

     Ruling on the parties’ cross motions for summary judgment, the

district court first addressed Schaffer’s belated request for

further discovery.        The court concluded that “[b]y failing to

comply with the court’s written directive regarding discovery,

Schaffer ha[d] waived any right to seek further discovery in

advance of resolution of the pending dispositive motions.”                   The

court also pointed out that some of the information Schaffer sought

“should have been within the discovery produced in accordance with”

the court’s discovery order, and, absent a timely motion to compel

production, the court would “assume[] that the production was made

as directed.”

     After   reviewing      the   Plan     documents     and   summary   plan

descriptions (“SPD”), the district court concluded that the Plan

                                      6
did not require WSRC to count Schaffer’s nineteen years at WEC in

calculating the amount of his WSRC pension.     The court

pointed out that Section 3.02(f) of both the 1989 and 1994 Plan

documents specifically states that

       An employee with service credited under a qualified
       retirement plan sponsored by either Westinghouse Electric
       Corporation or Bechtel Group [or their affiliates] shall
       be credited with that service for purposes of determining
       eligibility for certain benefits, but not for computing
       the amount of any benefit, as of his first date of
       employment by an Employer or Affiliated Employer.

Similarly, the 1992 SPD defines “credited service,” which is used

for “benefit accrual purposes,” as years worked for WSRC or Bechtel

Savannah River, Inc.     The court noted that the 1989 SPD states

nothing to the contrary and even “suggests that only employees of

WSRC    or Bechtel Savannah River, Inc. . . . accumulate” years of

service “used to calculate the amount of a pension benefit.”

Accordingly, the court concluded that Schaffer’s “strained, though

plausible” reading of other “selected and isolated provisions” of

the Plan could not “survive the clearly contradictory language [of

§ 3.02(f)] which unambiguously limits the purposes for which WEC

service may be considered.”

       The district court also rejected Schaffer’s claim that under

the doctrine of equitable or promissory estoppel, promises made to

him prior to the adoption of the Plan bound WSRC to calculate his

pension based on his combined years of service to WEC and WSRC.

The court reasoned that the oral assurances made to Schaffer before

                                  7
he moved to the Savannah River Site were too vague to constitute a

promise to count his nineteen years at WEC in calculating his WSRC

pension    because   the   comments   could   be   interpreted   merely     as

guaranteeing that his years at WEC would be counted to determine

his eligibility for a WSRC pension. Similarly, the court held that

the June 1989 letter Schaffer received from WSRC’s human resources

department informing him that he had an “Adjusted Service Date of

May 20, 1970” could be interpreted to mean merely that his years at

WEC would be counted in determining his eligibility for a pension.

The court also noted that the 1989 SPD, though issued by WSRC

before adopting the Plan, did not entitle Schaffer to the relief

sought because it did not state that          WSRC would count years of

service to WEC in calculating the value of a WSRC pension.

     The district court found that “[t]he only documents which

clearly suggest the result Plaintiff seeks are the annual benefits

statements.” The court concluded that not even the earliest annual

benefit statement could constitute a binding pre-Plan promise as to

how benefits would be calculated because Schaffer did not receive

any statement until after the Plan was adopted, “which occurred no

later than the fall of 1989.”         Thus, the court found no estoppel

doctrine    required   WSRC   to   count   Schaffer’s   years    at   WEC   in

calculating his pension.

     The court explained, however, that “[t]he conclusion that

Schaffer cannot succeed under the terms of the Plan does not

                                      8
foreclose the possibility of all recovery. It remains possible for

Schaffer to obtain equitable relief for WSRC’s breach of its duty

to provide accurate information.”        Noting that “it is undisputed

that WSRC provided inaccurate annual benefits statements” and “that

the same mistake was made consistently over a period of years          and

as to many (if not all) similarly situated individuals,” the court

concluded that “Schaffer is entitled, as a matter of law, to a

ruling    that   WSRC   breached   its   fiduciary   duty   by   providing

inaccurate information” in violation of 29 U.S.C. § 1025 (a)(1) and

(a)(2).

     Relying on Varity Corp. v. Howe, 516 U.S. 489, 514-15 (1996),

and Griggs v. E.I. DuPont De Nemours & Co., 237 F.3d 371, 380 (4th

Cir. 2001), the court stated that it could only award a remedy for

the breach that was “truly equitable in nature” and “limited to

that necessary to remedy the breach of fiduciary duty.”          The court

rejected Schaffer’s request that the court order WSRC to pay him

the benefits estimated in his annual statements, explaining “[t]his

form of ‘specific performance’” could not be         “fairly” classified

as equitable relief and “[was] not, therefore, within the remedies

the court can grant for a breach of fiduciary duty.”             The court

similarly rejected Schaffer’s request that WSRC compensate him for

the increased costs he sustained by staying at WSRC rather than

transferring back to WEC, which he claims he would have done had he

                                     9
known WSRC would not credit his years at WEC in calculating his

pension benefits.

     Schaffer noted this appeal, arguing that the district court

erred in curtailing discovery, in concluding that neither the Plan

nor pre-Plan promises required WSRC to credit his years at WEC in

calculating his pension benefits, and in finding no equitable

remedy existed for WSRC’s breach of fiduciary duty.1

                               III.

     We review de novo the district court’s order granting summary

judgment.   Lone Star Steakhouse, Inc. & Saloon v. Alpha of Va.,

Inc., 43 F.3d 922, 928 (4th Cir. 1995).

     1
       After noting his appeal, Schaffer filed a motion asking the
district court to set aside its judgment that no equitable remedy
exists for WSRC’s breach of fiduciary duty under ERISA. Schaffer
relied on Hollingsworth v. Westinghouse Electric Corp. and
Westinghouse Savannah River Co., No. GD 99-18449 (Pa. Ct. of Common
Pleas Apr. 26, 2004). There, the court found that by 1991, WSRC
had learned that “because of the quirks of WEC’s qualified pension
plan,” employees who moved from WEC to WSRC “would receive less
money from their pensions because of their transfer to WSRC.” Id.
¶ 18. In response to this realization, WSRC created a plan, known
as the “delta plan,” to compensate employees for the shortfall in
their pensions. Schaffer contended that the district court should
order, as a proper equitable remedy, that he be permitted to
participate in this plan. The district court denied Schaffer’s
motion when WSRC agreed it would not argue claim preclusion if
Schaffer filed a separate lawsuit seeking benefits under the delta
plan. Schaffer argues on appeal that the district court erred in
denying his motion because the Hollingsworth factual findings
contradict assumptions underlying the district court’s conclusion
that no equitable remedy exists to cure WSRC’s breach of fiduciary
duty. We need not consider this argument because, as explained
within, WSRC has now conceded that, regardless of the Hollingsworth
findings, an equitable remedy for this breach does exist.

                                10
       We read the Plan documents and summary plan descriptions as

the district court did.           Accordingly, we hold the Plan does not

require WSRC to credit Schaffer’s nineteen years at WEC for pension

benefit accrual purposes.

       We also agree with the district court that Schaffer’s estoppel

claim must fail.           Only promises made prior to the adoption of a

Plan can give rise to a claim of equitable or promissory estoppel.

See Healthsouth Rehabilitation Hospital v. Am. Nat’l Red Cross, 101

F.3d 1005, 1011 (4th Cir. 1996). As the district court recognized,

the annual statements constituted the only representations made by

WSRC       to   Schaffer    promising   to   credit   his   years   at   WEC   in

calculating his pension benefits, and Schaffer did not receive

these statements until after WSRC adopted the Plan.2                Therefore,

       2
       Schaffer argues that a genuine dispute of fact exists as to
whether WSRC adopted the Plan before it sent him his first annual
statement. This argument fails. “[E]ven where the evidence is
likely to be within the possession of the defendant, as long as the
plaintiff has had a full opportunity to conduct discovery,” a
plaintiff cannot defeat the grant of summary judgment by resting
“upon mere allegation or denials of his pleading, but must set
forth specific facts showing that there is a genuine issue for
trial.”   Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57
(1986).   The district court’s discovery order required WSRC to
provide Schaffer with the relevant information and gave the parties
an opportunity to seek further discovery. If Schaffer thought the
discovery order insufficient, he should have filed a timely request
for further discovery; if he thought WSRC failed to comply with the
order, he should have filed a timely motion to compel.       He did
neither.   The district court did not abuse its discretion by
denying Schaffer’s untimely request for further discovery -- even
if the potentially discoverable information was relevant to a
dispositive motion. See Lone Star Steakhouse, 43 F.3d at 928-29.
We also note that at oral argument WSRC represented that it
produced in discovery all evidence it had pertaining to the

                                        11
the district court correctly concluded that the annual statements

could not give rise to relief under the doctrine of equitable or

promissory estoppel.

     But just because Schaffer’s first two theories for relief fail

does not necessarily mean he is not entitled to any relief.     The

district court determined that WSRC breached its fiduciary duty

under ERISA, 29 U.S.C. §      1025(a)(1) and (a)(2), to provide

Schaffer with accurate information regarding his pension.      WSRC

does not appeal that determination. By statute a court may “enjoin

any act or practice which violates any provision of [ERISA]   or the

terms of the plan” or award Schaffer “other appropriate equitable

relief (i) to redress such violations or (ii) to enforce any

provisions of this subchapter or the terms of the plan.”   29 U.S.C.

§ 1132(a)(3).

     The district court correctly ruled that requiring WSRC to

credit Schaffer’s years at WEC in calculating his pension benefits

would not be an equitable remedy because it would put him in a

better position than he would have been in had the breach never

occurred.

     However, we disagree with the district court’s conclusion

that, as a result, no equitable remedy exists for WSRC’s breach.

Indeed, at oral argument, WSRC expressly conceded that it was

adoption of the Plan; thus we have no reason to believe remanding
the claim for further discovery would have any effect on the
ultimate resolution of Schaffer’s estoppel claim.

                                12
within a court’s equitable powers to require WSRC to provide

Schaffer with a pension equivalent to that which he would have

received if WSRC had not sent him the inaccurate annual statements

and he had returned to WEC upon realizing the true method by which

WSRC would calculate his pension benefits.     Because the record

lacks any basis for determining whether this equitable remedy is an

“appropriate” one,   we must remand that question to the district

court.   In making its determination, the court should consider

whether the pension Schaffer would have received had he returned to

WEC would have been greater than the combined value of the pension

he will receive from WSRC for his fifteen plus years of service at

the Savannah River Site and the pension he will receive from WEC

for his nineteen years at the Hampton facility.3

                               IV.

     For the reasons set forth above, we affirm the judgment of the

district court except as to its conclusion that no equitable remedy

exists for WSRC’s breach of fiduciary duty; with respect to that

     3
         The Hollingsworth court found that some employees who
transferred from WEC to WSRC would receive smaller pensions than
they would have if they had stayed at WEC because “the WEC pension
plan tended to reward longevity of employment once it was achieved
and did so by increasing the employer’s annual contributions as an
employee . . . neared retirement age, whereas the WSRC pension plan
called for level employer contributions, without regard to
longevity.” Hollingsworth, No. GD 99-18449, at ¶¶ 18-19. At oral
argument, WSRC insisted that this holds true only for employees who
are higher paid than Schaffer. We leave it to the district court
to resolve this issue.

                                13
issue only, we vacate the judgment of the district court and remand

for further proceedings consistent with this opinion.

                  AFFIRMED IN PART, VACATED IN PART, AND REMANDED

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