Court Opinion

ID: 2981738
Source: CourtListenerOpinion
Date Created: 2015-09-22 19:48:28.583098+00
Date Added: 2024-06-11T15:44:24.120788
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                             File Name: 13a0384n.06

                                             No. 12-3910

                              UNITED STATES COURT OF APPEALS
                                   FOR THE SIXTH CIRCUIT

                                                                                  FILED
TERRY DURBIN,                                           )                      Apr 17, 2013
                                                        )                  DEBORAH S. HUNT, Clerk
       Plaintiff-Appellant,                             )
                                                        )
v.                                                      )        ON APPEAL FROM THE UNITED
                                                        )        STATES DISTRICT COURT FOR
COLUMBIA ENERGY GROUP PENSION                           )        THE SOUTHERN DISTRICT OF
PLAN,                                                   )        OHIO
                                                        )
       Defendant-Appellee.                              )
                                                        )        OPINION

Before: COOK, WHITE, DONALD, Circuit Judges.

       BERNICE B. DONALD, Circuit Judge. The underlying conflict in this case is whether Terry

Durbin affirmatively elected to have his pension calculated under the “Account Balance” method

or passively elected to use the default “Final Average Pay” method by doing nothing. Our task,

however, is simply to determine whether the NiSource Benefits Committee acted arbitrarily and

capriciously in determining that Durbin elected to use the Account Balance method. We hold that

it did not and, accordingly, affirm the decision of the district court.

                                                   I.

       Terry Durbin has worked for Columbia Energy Group (“Columbia Energy”) as a welder since

1981 and has participated in the Columbia Energy Group Pension Plan (the “Plan”) since the
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

beginning of his employment. NiSource, Inc. (“NiSource”) maintains the Plan for the benefit of the

employees of Columbia Energy and nine other subsidiaries of NiSource. NiSource appoints

members to the NiSource Benefits Committee (“Committee”), a body that administers the Plan,

vested with discretionary authority to interpret Plan documents “including . . . issues of fact and

questions of eligibility, benefits, status, and rights of participants.” Columbia Energy contributes

to the Plan through a trust fund (the “Trust”) that holds assets and pays benefits on behalf of the Plan.

        When Durbin signed up for the Plan, his benefits were calculated according to the Final

Average Pay (“FAP”) method.1 In 1999, NiSource and its subsidiaries amended the Plan to allow

employees to elect to have their future pension accruals determined according to the Account

Balance (“AB I”) method.2 In early 2000, Durbin attended a meeting in which NiSource personnel

explained the changes and distributed a document specifying the time frame and method for making

the election. Employees who wanted to participate in the AB I program had to place a telephone call

to “The Benefits Source” and make the election by April 30, 2000. Employees who did nothing

would continue in the default FAP program. Once made, the election was irrevocable.

        1
        Under the FAP method, pension benefits are calculated at the end of employment, by taking
one-third of the total compensation paid to the employee for the thirty-six months the employee
receives the most compensation, selected from the sixty months immediately preceding termination
of employment. Because benefits are calculated at the end of employment, there is no ongoing
individualized fund for employees enrolled in this program.
        2
        Under the AB I method, pension benefits accrue over time, according to a number of
variables, and the current balance is reflected in an account.

                                                  -2-
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

       The parties dispute whether Durbin elected to participate in the AB I program.3 Durbin

alleges that he indicated on a paper ballot form—which the representatives at the meeting explained

was “just for our records”—that he intended to continue his participation in the FAP program, but

neither party has a record of this paper ballot. Hewitt Associates (“Hewitt”), the Plan’s third-party

record-keeper, maintains the Plan’s electronic database records and shows that Durbin called The

Benefits Source telephone number four times on April 27, 2000. The record shows that he spoke

to Representative 16092 at 10:15 a.m. for general Plan information; he called again at 10:37 a.m.,

this time speaking to Representative 16085, and abandoned the call; he called Representative 24515

at 10:49 a.m. and was transferred to another team member; and he again spoke to Representative

16085 at 10:44 a.m. and elected to participate in the AB I program. These last two entries appear

in the record out of chronological order. Durbin averred in an affidavit that he did not place a call

for the purpose of electing to participate in the AB I program.

       On April 27, 2000, Hewitt mailed Durbin a confirmation letter regarding his election to

participate in the AB I program. The administrative record also includes numerous documents

exchanged between the Plan and Durbin over the next decade. Documents entitled “Columbia

Retirement Plan Account Balance Option Account Statement” showing the annual account balance

for the previous year were sent to Durbin for each year from 2004 to 2010. Durbin signed three

different forms entitled “Plan Account Balance Option Preretirement Death Beneficiary Designation

       3
        While the parties do not discuss which method is more financially beneficial overall, Durbin
avers that he intended to work at Columbia Energy until his retirement, so he understood that the
FAP method would be in his best interest.

                                                -3-
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

Form,” each time designating his wife as his beneficiary. The option to designate was only available

to AB I participants; FAP benefits automatically go to the spouse of a deceased participant. The

record also shows that Durbin was sent documents entitled “Summary Plan Descriptions” that would

have been specific to the AB I program.

       In 2010, Durbin began to make plans for his retirement and contacted Hewitt because he

thought the amounts shown on his online account balance appeared low. Hewitt told him that he

enrolled in the AB I program in 2000 via telephone.

       In August 2010, Durbin, through counsel, filed a formal request for a determination by the

Committee of his right to have his benefit calculated under the FAP program. The Committee wrote

a letter denying the request on grounds that Durbin had elected to participate in the AB I program

in lieu of the FAP program. With the letter, it included a “screen shot” copy of the telephone record

from April 27, 2000, and copies of the various forms exchanged over the years, each of which

showed that Durbin participated in the AB I program. Durbin indicated his intention to appeal and

asked why the last two entries in the telephone record were out of chronological order. The

Committee responded that it could not determine with certainty why the calls were logged out of

order, but that it may be due to the fact that the call was internally transferred to the same

representative involved in the abandoned phone call.

       In December 2010, Durbin filed a formal appeal with the Committee. He argued that he

indicated his desire to remain in the FAP program on a paper ballot form at the 2000 meeting, that

                                                -4-
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

the electronic records were inaccurate because the calls were logged out of chronological order, and

that he had believed that the references to the “Account Balance Option” on his annual statements

were only references to the size of his account in the FAP option. He also alleged that Beth Aman,

a NiSource human resources employee who had been at the 2000 meeting, had offered to help him

find information, but that someone at NiSource told her to “leave it alone.”

        In response to these assertions, the Committee conducted an investigation. A representative

spoke with Ms. Aman, who reported that she did not recall anything specific about Durbin’s election.

The representative also contacted Hewitt about the paper ballot and other records. Hewitt responded

that it did not have the paper ballot; it only maintained electronic records; that Durbin’s records were

similar to those of other pension benefit participants; and that its standard process is to send people

such as Durbin the “Account Balance Pension Option Summary Plan Description,” though it could

not affirmatively say whether it sent one to Durbin. Finally, the representative reviewed records of

employees similarly situated to Durbin and found that there were no anomalies in Durbin’s record.

The Committee upheld its prior determination that Durbin was an AB I participant, explaining in a

letter dated May 14, 2011, that there was no indication that the records were inaccurate and that,

while data entry errors are not impossible, Durbin had the opportunity to object to any error when

he received the confirmation letter. The Committee wrote that it believed that Durbin would have

objected to any error given his statements that at the time he understood the difference between the

two programs. The Committee also noted that the documents and forms exchanged should have

sufficiently alerted Durbin if there had been an error because the differences in the programs were

                                                 -5-
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

adequately explained at the 2000 meeting and in subsequent literature. It concluded that Durbin did

make the AB I election in 2000 and that it would continue to calculate his benefits accordingly.

       Having exhausted his administrative remedies, Durbin brought this claim under the

Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a)(1)(B), for a declaration

that he is entitled to have his benefit calculated under the FAP program. Both parties moved for

judgment as a matter of law on the administrative record. The district court applied the arbitrary and

capricious standard of review and determined that the Committee’s decision was reasonable because

the evidence that Durbin elected to participate in the AB I program outweighed evidence to the

contrary. The court denied Durbin’s motion and granted the Plan’s motion. Durbin now appeals.

                                                  II.

       Durbin claims that the district court erred by granting summary judgment to the Plan because

the Committee’s decision was not based on a principled process or supported by substantial

evidence. According to Durbin, the Committee ignored his affidavits and assertions, improperly

evaluated the telephone records, and improperly relied on records of the various forms and

documents. He also claims that the Committee’s decision was infected by a conflict of interest that

is evident from the Committee’s desire to save money and from it’s failure to investigate his

conversation with Ms. Aman.

       We review a district court’s grant of summary judgment in an ERISA action de novo,

“applying the same standard of review to the administrator's action as required by the district court.”

                                                 -6-
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

Bidwell v. Univ. Med. Ctr., Inc., 685 F.3d 613, 616 (6th Cir. 2012). Summary judgment is

appropriate where the pleadings and affidavits show that there is no genuine issue of material fact

and one party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). In an ERISA case,

the relevant genuine issue of material fact is whether the administrator’s decision was appropriate,

in light of the applicable standard of review. See Farhner v. United Transp. Union Discipline

Income Protection Program, 645 F.3d 338, 342 (6th Cir. 2011) (asking whether there was any

“genuine issue of material fact as to whether the Plan Administrator’s actions were arbitrary and

capricious”). In determining whether the Committee erred by denying Durbin’s request to have his

benefits calculated under the FAP program, we consider only the administrative record available to

the Committee. Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 986 (6th Cir. 1991).

A. Standard of Review

        Where a plan administrator has denied benefits, we use the deferential “arbitrary and

capricious” standard so long as the administrator has “discretionary authority to determine eligibility

for benefits or to construe the terms” of the plan. Farhner, 645 F.3d at 342 (internal quotation marks

omitted); see also Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). The parties

agree that the Plan vests the Committee, the Plan administrator, with such discretion. If we had any

doubt on the matter, it is resolved by language in the Plan documents giving the Committee

discretion “to interpret the Plan documents and documents related to the Plan’s operation (including

. . . issues of fact and questions of eligibility, benefits, status, and rights of participants.).” This is

                                                   -7-
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

very similar to language that we held granted sufficient discretion to invoke arbitrary and capricious

review in Farhner, 645 F.3d at 342.

       Arbitrary and capricious review is the “least demanding form of judicial review of

administrative action.” Id. (internal quotation marks omitted). We must uphold the administrator’s

decision as a matter of law if the administrator used a principled reasoning process and if the

decision is supported by substantial evidence. Balmert v. Reliance Standard Life. Ins. Co., 601 F.3d
497, 501 (6th Cir. 2010); see also Davis v. Kent. Fin. Cos. Ret. Plan, 887 F.2d 689, 693 (6th Cir.

1989) (“When it is possible to offer a reasoned explanation, based on the evidence, for a particular

outcome, that outcome is not arbitrary or capricious.”). Evidence is substantial if “a reasonable mind

might accept [it] as adequate to support a conclusion.” Hurse v. Hartford Life & Accident Ins. Co.,

77 F. App’x 310, 318 (6th Cir. 2003).

       Arbitrary and capricious review, however, is “tempered” if the administrator is under a

conflict of interest. Univ. Hosps. v. Emerson Elec. Co., 202 F.3d 839, 846, 846 n.4 (6th Cir. 2000)

(noting that we should be especially vigilant where the plan sponsor bears all the risk of paying the

claim and also appoints the administrator who makes benefit decisions); see also Metro. Life Ins. Co.

v. Glenn, 554 U.S. 105, 112 (2008) (noting that a conflict exists where the administrator is

responsible for both determining eligibility as well as paying benefits). When a conflict exists we

must consider it as a factor in our review. Univ. Hosps., 202 F.3d at 846; see also Farhner, 645 F.3d

at 342. Durbin argues that a conflict exists because NiSource funds the Plan's benefits through its

subsidiaries while NiSource’s Chief Executive Officer appoints members to the Committee.

                                                -8-
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

Columbia Energy argues that there is no conflict because Plan funds are held in the Trust and

because NiSource subsidiaries, not NiSource itself, fund the Trust. We have never addressed

whether a for-profit company may avoid a conflict by holding pension funds in a trust. See Klein

v. Cent. States, Se. & Sw. Areas Health & Welfare Plan, 346 F. App’x 1, 5 (6th Cir. 2009)

(concluding that a non-profit board of trustees was not under a conflict where it both administered

and funded the plan because the trustees did not receive a financial benefit). See also Durakovic v.

Bldg. Serv. 32 BJ Pension Fund, 609 F.3d 133, 139 (2d Cir. 2010) (noting that the existence of a

trust is not determinative of whether a conflict exists); Burke v. Pitney Bowes Inc. Long-Term

Disability Plan, 544 F.3d 1016, 1026-27 (9th Cir. 2008) (holding that “even when a plan’s benefits

are paid out of a trust, a structural conflict of interest exists”); but see White v. Coca-Cola Co., 542
F.3d 848, 858 (11th Cir. 2008) (holding that no conflict exists where benefits are paid through a trust

funded through periodic contributions such that the provider incurs no immediate expense from

benefit payments). We need not determine whether the tempered standard applies here, however,

because Durbin's claim fails under either standard. Thus, we assume arguendo that one exists and

review the record for any evidence that a conflict of interest influenced the plan administrator’s

decision. Evans v. UnumProvident Corp., 434 F.3d 866, 876 (6th Cir. 2006).

B. Burden of Proof

        In ERISA actions, the claimant bears the burden of proving that the administrator’s decision

denying benefits was arbitrary and capricious; if the claimant cannot meet this burden, we must

sustain the administrator’s decision as a matter of law. Farhner, 645 F.3d at 343. Nevertheless,

                                                 -9-
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

Durbin argues that this case presents unique circumstances justifying a shift in the burden or proof.

This is a legal question that we review de novo. Moore v. Lafayette Life Ins. Co., 458 F.3d 416, 438

(6th Cir. 2006).

       Durbin argues that because the Committee is the sole custodian of the relevant evidence and

because he would have to prove a negative to show that he did not elect to participate in the AB I

program, fairness demands that the burden should shift to the Committee to prove that he made the

election. Durbin misunderstands our role. We do not make independent factual findings of whether

he made the election; we merely determine whether the Committee acted in a principled way in

making its own factual findings, which must be supported by substantial evidence. See Balmert, 601
F.3d at 501. We consider this argument only to the extent that these circumstances could justify

shifting the burden to the Committee to prove that it did not act arbitrarily and capriciously in

rendering its decision.

       Durbin cites several ERISA cases in which the burden was shifted to the administrator, but

these cases do not suggest that the burden must shift here. Two of the cases involve the issue of who

bears the burden of proving a legal question. See Shelby Cnty. Health Care Corp. v. Majestic Star

Casino, 581 F.3d 355, 367 (6th Cir. 2009) (administrator bears the burden of proving that deferential

review applies); Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 F. App’x 949, 957 (6th

Cir. 2004) (administrator bears the burden of proving that default rules should not apply). In the

third, we placed the burden on the administrator to show that an item was excluded from coverage.

Caffey v. Unum Life Ins. Co., 302 F.3d 576, 580 (6th Cir. 2002). Durbin also cites several opinions

                                               - 10 -
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

noting that it is difficult to prove a negative, but these cases do not suggest that this is an adequate

justification for shifting the burden in an ERISA case. See, e.g., Ariz. Free Enter. Club’s Freedom

Club PAC v. Bennett, 131 S. Ct. 2806, 2823 (2011) (campaign finance claims); Harrow Prods., Inc.

v. Liberty Mut. Ins. Co., 64 F.3d 1015, 1020 (6th Cir. 1995) (explaining why the burden is normally

on the policy holder in an insurance case by noting that it is difficult to prove a negative).

        We see nothing in Durbin’s arguments, nor anywhere else, that could justify shifting the

burden to the Committee. Any problematic factual situation presented by the fact that the Committee

has more ready access to the record-keeping body is already captured by the arbitrary and capricious

standard because we must review whether the Committee used a principled reasoning process. See

Belmert, 601 F.3d at 501. Nor do we shift the burden of proof every time there is a shift in factual

circumstances. In fact, Durbin’s own arguments undermine the suggestion that we should shift the

burden here because in doing so we would require the Committee to itself prove a negative — that

it did not act arbitrarily and capriciously. The burden of proof thus remains on Durbin.

                                                  III.

        The Committee explained its decision to calculate Durbin’s benefits under the AB I plan and

the evidence it relied upon in a letter to Durbin’s counsel dated May 14, 2011. First, it considered

the electronic records maintained by Hewitt, and it investigated Durbin’s file for any anomalies as

compared to similarly situated employees. These records, including the phone log from April 27,

2000, show that Durbin elected to participate in the AB I program and that there was no record of

                                                 - 11 -
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

the paper ballot from the 2000 meeting. Second, it considered Durbin’s statements that he did not

make the election and his suggestion that the phone log entry was in error. The Committee had

previously investigated the phone log, and, though it acknowledged that errors are possible, it did

not believe the fact that two entries appear out of chronological order suggests that the

representatives entered the election of the wrong participant. The Committee explained that if the

entry had been in error, it believed that Durbin would have noted the error when he received the

confirmation letter, especially given his affidavit indicating that he understood the differences

between the two programs. Third, the Committee considered the annual statements referencing the

“Account Balance Benefit Option,” the beneficiary designation forms for the “Account Balance

Option,” and Durbin’s statement that he had not understood these documents. Because the plans had

been adequately explained in various staff meetings, the Committee believed that the record

accurately reflected Durbin’s election. The Committee also noted that the beneficiary forms would

not have been used if Durbin were in the FAP program because the benefit automatically goes to a

surviving spouse. Finally, the Committee considered Durbin’s statements regarding the assistance

Ms. Aman allegedly gave him. In its own investigation, the Committee found that Ms. Aman was

not able to recall anything to assist the determination. Considering all of this evidence together, the

Committee concluded that Durbin had elected to participate in the AB I program and that to allow

him to switch to the FAP program after a decade of hindsight would be unfair.

       This process was reasoned and took into account all available evidence. The committee

investigated Durbin’s assertions that he did not make the election and found only evidence indicating

                                                - 12 -
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

the opposite. While Durbin correctly notes that the Committee did not simply take Durbin’s

assertions as fact, the Committee acted reasonably in evaluating whether these claims were true in

light of its own records. Indeed, we expect the Plan to “establish a uniform administrative scheme,

[with] a set of standard procedures to guide processing of claims and disbursement of benefits.”

Kennedy v. DuPont Savings & Inv. Plan, 555 U.S. 285, 875 (2009). This would make little sense

if the Plan was required to completely disregard its own records when a participant asserts the

opposite. The absence of the paper ballot indicates nothing as, by Durbin’s own admission,

participants could only make an election via telephone.

       Nor do we conclude that the Committee was unreasonable in finding that the chronological

anomaly in the phone log was not evidence of an error in identity. The log itself shows four entries

in the following order: Durbin called Representative 16092 at 10:15 a.m. for general Plan

information, he called Representative 16085 at 10:37 a.m. and abandoned the call, he called

Representative 24515 at 10:49 a.m. and was transferred to another team member, and he again spoke

to Representative 16085 at 10:44 a.m. and elected to participate in the AB I program. An error in

identity would be especially odd considering the requirement that participants provide personal

information, such as a social security number and a “PIN” number, before making an election.

       We also disagree with Durbin’s suggestion that the Committee should not have considered

the confirmation letter, account statements, or beneficiary designation forms. It was reasonable for

the Committee to rely on electronic records showing that a confirmation letter was mailed and on

Hewitt’s standard process for mailing documents to evaluate the truth of Durbin’s assertions. Durbin

                                               - 13 -
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

argues that such records do not prove that he received the letter, but neither does he affirmatively

deny receiving it. He also argues that it would not have mattered if he had objected immediately

because the plan documents state that an election was irrevocable. However, an objection made

when Durbin was put on notice rather than his objection made over a decade later certainly would

have been more believable, which was the relevant issue. As for Durbin’s arguments that he cannot

have been expected to understand the account statements or beneficiary designation forms, we

conclude that the Committee acted reasonably in concluding that these documents put Durbin on

notice of any error in light of the fact that staff verbally explained the programs and the fact that

Durbin made statements that understood the programs. The Committee’s reliance on these records

was neither unprincipled nor unreasonable.

       Finally, we turn to the conflict of interest factor. Under our case law, a purported conflict

only affects our analysis if the plaintiff provides “significant evidence” that the conflict motivated

the decision at issue. Cooper v. Life Ins. Co. of N. Am., 486 F.3d 157, 165 (6th Cir. 2007). Durbin

presents two pieces of evidence: 1) that NiSource converted to the AB I plan in the first place to save

money and 2) that the Committee failed to investigate Durbin’s conversation with Ms. Aman. The

fact that NiSource offered the AB I program option in order to save money is merely a suggestion

that a conflict exists and that we should look for evidence that this influenced the Committee’s

decision. The allegation about Ms. Aman is more serious. According to Durbin, he contacted Ms.

Aman, the human resources staff member who attended the 2000 meeting, and she initially offered

to help him, but later told him that she had been instructed to “leave it alone.” It is not clear what

                                                - 14 -
No. 12-3910
Durbin v. Columbia Energy Group Pension Plan

kind of help Ms. Aman allegedly promised to provide, but the Committee reports asking her what

she remembered about her interactions with Durbin and she did not recall anything helpful. In light

of the Committee’s other actions, this does not indicate that the Committee’s decision was motivated

by a conflict of interest. As the Supreme Court has noted, where the administrator has taken steps

“to promote accuracy,” a conflict weighs less heavily. See Metro. Life Ins. Co., 554 U.S. at 117.

Such is the case here. In addition to reviewing its records and investigating Durbin’s assertions, the

Committee also investigated the accuracy of the records of Durbin’s election by looking for

anomalies as compared to similarly situated employees. These efforts at accuracy outweigh the

suggestion that Ms. Aman was told to stay out of the situation. We conclude that the Committee’s

decision to calculate Durbin’s benefits under the AB I program was reasoned and supported by

substantial evidence.

       There is no genuine issue of material fact as to whether the Committee’s decision was

appropriate, and the decision was not arbitrary and capricious. Accordingly, we must sustain the

Committee’s decision as a matter of law. See Farhner, 645 F.3d at 343.

                                                 IV.

       For the foregoing reasons, we affirm the district court’s decision upholding the Committee’s

determination that Durbin elected to participate in the AB I program and is not entitled to have his

pension benefits calculated under the FAP program.

                                                - 15 -