Court Opinion

ID: 3021121
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:24:09.474473+00
Date Added: 2024-06-11T18:13:10.738192
License: Public Domain

United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                  _____________

                                  No. 97-2817MN
                                  _____________

Mary Ellen Marolt,                       *
                                         *
                  Appellee,              *
                                         *
      v.                                 *
                                         * Appeal from the United States
Alliant Techsystems, Inc.; Alliant       * District Court for the District
Techsystems Pension and Retirement       * of Minnesota.
Administrative Committee; Mellon         *
Bank, N.A.,                              *
                                         *
                  Appellants.            *
                                   _____________

                           Submitted: May 13, 1998
                               Filed: July 13, 1998
                                 _____________

Before RICHARD S. ARNOLD, JOHN R. GIBSON, and FAGG, Circuit Judges.
                           _____________

FAGG, Circuit Judge.

      Alliant Techsystems, Inc. (Alliant Tech), the Alliant Techsystems Pension and
Retirement Administrative Committee (PRAC), and Mellon Bank, N.A. (collectively
Alliant) appeal the district court’s order granting summary judgment for Mary Ellen
Marolt, and denying Alliant’s cross-motion for summary judgment, in this Employee
Retirement Income Security Act (ERISA) lawsuit. We agree with the district court that
the PRAC abused its discretion in rejecting Marolt’s appeal concerning her retirement
benefits, and we thus affirm.

        The pertinent facts are undisputed. Marolt worked at Honeywell from 1980 to
1989. In September 1990 Honeywell spun off several divisions to create Alliant Tech,
a subsidiary of Honeywell. In November 1990 Marolt took a temporary position with
Alliant Tech. The following March, Marolt’s supervisor offered Marolt a permanent
position. The supervisor told Marolt she believed Marolt was entitled to “bridge” her
break in service--that is, to date her employment with Alliant Tech from the start of her
employment at Honeywell, which would increase Marolt’s retirement benefits. After
Marolt’s supervisor discussed the matter with Alliant Tech’s human resources
department, she assured Marolt the break would be bridged, and Marolt accepted the
permanent position. Marolt then formally applied for bridging to her Location Benefits
Administrator (LBA), who approved the application in December 1991. Alliant Tech
confirmed Marolt’s bridging status several more times, both orally and in writing. In
June 1994, however, Marolt’s LBA informed Marolt she was not entitled to bridging
after all because she had not been employed with Honeywell on the date of the Alliant
Tech spin off. The PRAC denied Marolt’s appeal of this decision without further
explanation, saying only that it “recognize[d] that errors had been made in
communicating credited service[] dates, but the correction to you was communicated
properly. As a result, your request to bridge your credited service is denied.” Marolt
then brought this lawsuit under 29 U.S.C. § 1132(a)(1)(B) to clarify her rights to future
benefits.

      Alliant Tech’s Summary Plan Description (SPD) contains the following relevant
provisions:

      If you leave Alliant Techsystems and later return, you have a break in
      service. You may be eligible to receive credit for your prior service,
      through a process called bridging, when you return to work.

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      It is your responsibility to initiate bridging of a break in service by
      contacting your Location Benefits Administrator (LBA). . . .

      If you left Alliant Techsystems (Honeywell) on or after February 1,
      1976: Your service before the break will be counted if:

             You were vested and had at least five years of credited service
             when your employment ended; or

             You were not vested and were away from the company for less
             than five years; or

             The length of time you were away from the company was less than
             your credited service at the time you left; or

             Your total periods of credited service equal 20 years or more. . . .

      Notes: 1) Generally, credited service with Honeywell Inc. prior to our
      9/28/90 spinoff is included in credited service with Alliant Techsystems.
      . . . 4) Temporary service prior to January 1, 1990, may count toward
      credited service. Your Location Benefits Administrator can provide
      details if needed.

It is undisputed that Marolt was vested under Honeywell’s retirement plan, that Marolt
had more than five years of credited service at Honeywell, and that Marolt left
Honeywell after February 1, 1976. Thus, according to the SPD her “service before the
break will be counted.”

      Alliant Tech’s formal retirement plan document also addresses the bridging issue,
although it takes some digging to understand how. Section 1.1.12(a) of the formal plan
provides that “[s]ervice with Honeywell Inc. shall be considered service with [Alliant
Tech] to the extent described in Section 1.5.” Section 1.5 states that “service with
Honeywell Inc. shall be considered service with [Alliant Tech] for purposes of
determining Credited Service under Section 1.1.12 to the extent . . . such

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crediting is required under the Distribution Agreement . . . .” Section 1.5 does not refer
the reader to any particular part of the Distribution Agreement, a 115-page document
governing the Alliant Tech spin off. Nevertheless, on page seventy-four of that
document, subsection 8.03(d)(i) gives credit for service at Honeywell to “Transferred
Employees,” and on pages thirteen and fourteen “Transferred Employee” is defined to
include only those persons who were employed at Honeywell on the date of the spin off.
Marolt was not employed with Honeywell on that date. The district court concluded,
however, that the Distribution Agreement is not part of Alliant Tech’s ERISA plan.
With the Distribution Agreement out of the picture, the district court held the PRAC’s
decision was unreasonable because the SPD expressly provides for bridging in cases
like Marolt’s.

       We review de novo the district court’s grant of summary judgment for Marolt,
applying the familiar standard set forth in Federal Rule of Civil Procedure 56(c), and
viewing the factual record in the light most favorable to the losing party, Alliant. See
Barker v. Ceridian Corp., 122 F.3d 628, 632 (8th Cir. 1997). Because Alliant Tech’s
ERISA plan gives the PRAC discretionary authority to interpret and apply the plan’s
provisions, the district court reviewed the PRAC’s decision for abuse of discretion. See
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989); Donaho v. FMC
Corp., 74 F.3d 894, 898 (8th Cir. 1996). Under this standard of review, the PRAC’s
decision stands unless it was “without reason, unsupported by substantial evidence or
erroneous as a matter of law.” Donaho, 74 F.3d at 900 (internal quotations omitted).
“We review de novo a district court’s application of the deferential standard of review.”
Id. at 898.

       Alliant disagrees with the district court’s analysis. First, contrary to the district
court’s rejection of the Distribution Agreement, Alliant maintains the formal plan
document incorporates the Agreement, and under the Agreement’s relevant provisions
Marolt is disqualified from bridging. Second, contrary to the district court’s conclusion
that the SPD expressly entitles Marolt to bridging, Alliant contends the SPD is silent

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about bridging rights in Marolt’s particular circumstances--those of a former Honeywell
employee who was not employed with Honeywell on the date of the spin off. See
Jensen v. SIPCO, Inc., 38 F.3d 945, 952 (8th Cir. 1994) (observing that although “an
SPD provision prevails if it conflicts with a provision of a plan,” that rule “does not
apply when the plan document is specific and the SPD is silent on a particular matter”).
Emphasizing the word “[g]enerally” in note one to the SPD’s bridging provisions,
Alliant interprets those provisions as general rules only. According to Alliant, another
part of the SPD directs plan participants like Marolt to the formal plan document for the
specifics on bridging: “This SPD is not meant to cover every detail of the plan.
Complete details are in the plan document . . . .” Third, Alliant argues that the SPD
itself makes bridging available only to employees who “leave . . . and later return.”
Alliant interprets this phrase to mean that only those employees who left Honeywell and
came back to Honeywell, or who left Alliant Tech and came back to Alliant Tech, are
entitled to bridge. Under this interpretation of the SPD, employees like Marolt who left
Honeywell and came back to Alliant Tech did not “leave . . . and later return,” so the
SPD itself disqualifies persons in Marolt’s circumstances from bridging.

        Alliant does not explain how the SPD can both address Marolt’s particular
situation and remain silent about it at the same time. Also, Alliant’s view that the SPD’s
general reference to the formal plan--“[c]omplete details are in the plan document”--
requires employees to consult the formal document for details about bridging renders
meaningless the SPD’s specific direction to consult with and rely on the LBA for those
details, as Marolt did. If Alliant’s hindsight interpretation of the SPD were the
interpretation the PRAC formulated and applied when it decided Marolt’s case, we
would have to consider whether these inconsistencies make Alliant’s interpretation
unreasonable. See Finley v. Special Agents Mut. Benefit Ass’n, Inc., 957 F.2d 617, 621
(8th Cir. 1992).

       The fact is, the PRAC did not provide a rationale for its decision. The PRAC’s
failure in this regard was contrary to the ERISA statute, federal regulations, and this

                                           -5-
court’s longstanding precedent. See 29 U.S.C. § 1133(1) (1994); 29 C.F.R. §
2560.503-1(h)(3) (1997); Richardson v. Central States, Southeast & Southwest Areas
Pension Fund, 645 F.2d 660, 664, 665 (8th Cir. 1981). We will not permit ERISA
claimants denied the timely and specific explanation to which the law entitles them to
be sandbagged by after-the-fact plan interpretations devised for purposes of litigation.
The record shows Marolt’s LBA took away Marolt’s bridging based on the Distribution
Agreement. Because the PRAC affirmed the LBA without giving a different
explanation, we conclude the PRAC also based its decision on the Distribution
Agreement. Contrary to Alliant’s contention that “the PRAC implicitly and necessarily
interpreted” the SPD, the record shows no such thing, let alone that in deciding Marolt’s
appeal the PRAC construed particular words and phrases in the SPD as Alliant now
does. It is the PRAC’s interpretation to which we must defer if reasonable; we are free
to ignore ERISA plan interpretations that did not actually furnish the basis for a plan
administrator’s benefits decision. See Brumm v. Bert Bell NFL Retirement Plan, 995
F.2d 1433, 1437 (8th Cir. 1993).

       We have our doubts whether the plan document’s reference to the Distribution
Agreement sufficed to incorporate the Agreement’s relevant provisions in the formal
plan. See Rinard v. Eastern Co., 978 F.2d 265, 269 n.3 (6th Cir. 1992) (requiring,
among other criteria, that the “terms of the incorporated document . . . be known or
easily available to the contracting parties”). Because the record does not establish that
the Distribution Agreement was unavailable to Marolt, however, we will assume the
provisions of the Agreement involved here are part of Alliant Tech’s formal plan. We
may, of course, affirm the district court on any ground supported by the record. See
Hall v. LHACO, Inc., 140 F.3d 1190, 1193-94 (8th Cir. 1998). Although the SPD does
not mention the transferred employee restriction, we reject Alliant’s view that the SPD
is silent on the “particular matter” at issue here, Jensen, 38 F.3d at 952, which is
bridging. On that subject, the SPD recites a number of criteria that clearly and
unambiguously entitle Marolt to bridge her break in service. Those are binding. See
id. Just as clearly, the Distribution Agreement rules out bridging for Marolt. When

                                          -6-
summary plan description provisions conflict with formal plan provisions, the summary
plan provisions prevail as a matter of law. See Barker, 122 F.3d at 633; Jensen, 38 F.3d
at 952. Thus, it was an abuse of discretion for the PRAC to reject Marolt’s bridging
request based on Distribution Agreement provisions incorporated in the formal plan.
See Donaho, 74 F.3d at 900 (plan administrator abuses discretion when its decision is
legally erroneous). This case well illustrates the reason for the Barker and Jensen rule.
A plan document required by law to be plainspoken for the benefit of “average plan
participant[s],” 29 U.S.C. § 1022(a)(1) (1994), and furnished to participants, see id. §
1024(b)(1), says one thing, and an obscure passage in a transactional document only
lawyers will read and understand says something else. The accessible provisions
govern because “[a]dequate disclosure to employees is one of ERISA’s major
purposes.” Barker, 122 F.3d at 633.

        Alliant contends Marolt must prove she relied on the SPD to her detriment. We
disagree. We have indeed held that “to secure relief on the basis of a faulty summary
plan description, the claimant must show some significant reliance on, or possible
prejudice flowing from the summary,” Maxa v. John Alden Life Ins. Co., 972 F.2d 980,
984 (8th Cir. 1992) (alteration and internal quotations omitted), but Marolt does not
contend Alliant Tech’s SPD is faulty. A faulty summary plan description is one that
fails to meet “the requirements of ERISA and its attendant regulations.” Id. Marolt
says in her brief the SPD “meets the requirements of ERISA.” Relying on Anderson
v. Alpha Portland Indus., Inc., 836 F.2d 1512, 1520 (8th Cir. 1988), however, Alliant
argues that by claiming the SPD and the formal plan conflict, Marolt necessarily
contends the SPD is faulty. Although one or two sentences lifted out of context appear
to support Alliant’s argument, Anderson does not so hold.

       At issue in Anderson was whether the parties to a collective bargaining agreement
(CBA) that included a welfare plan intended benefits under the plan to terminate when
the CBA expired. See id. at 1513. Contending the parties intended to confer vested
lifetime benefits, see id., the claimants in Anderson pointed to a provision

                                          -7-
of their SPD, which read: “Coverage will continue for the remainder of your life.”
Because substantial contrary evidence drawn from the CBA showed no intent to vest
benefits, the district court ruled against the claimants despite the SPD’s language, and
we affirmed. See id. at 1519. The claimants also argued they were entitled to recover
under provisions of ERISA that require SPDs to “apprise . . . participants and
beneficiaries of their rights and obligations under the plan” and to disclose
“circumstances which may result in disqualification, ineligibility, or denial or loss of
benefits,” 29 U.S.C. §§ 1022(a)(1), (b). See Anderson, 836 F.2d at 1519-20. At the
same time, the claimants maintained they did not have to show they relied on their SPD
because they did not consider the SPD “faulty.” We rejected this self-contradictory
argument. See id. at 1520. Anderson stands for the unremarkable proposition that an
ERISA plaintiff who claims a summary plan description violates 29 U.S.C. § 1022
necessarily contends the summary description is faulty. Marolt makes no such claim.

      We affirm the district court.

      A true copy.

             Attest:

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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