Court Opinion

ID: 3182038
Source: CourtListenerOpinion
Date Created: 2016-03-02 20:07:32.58979+00
Date Added: 2024-06-11T14:19:51.320318
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                               File Name: 16a0123n.06

                                                  No. 15-1493
                                                                                                        FILED
                                                                                                Mar 02, 2016
                              UNITED STATES COURT OF APPEALS
                                                                                            DEBORAH S. HUNT, Clerk
                                   FOR THE SIXTH CIRCUIT

JOHN R. PAUL, JR.                                                  )
                                                                   )
        Plaintiff-Appellee,                                        )
                                                                   )
v.                                                                 )
                                                                            ON APPEAL FROM THE
                                                                   )
                                                                            UNITED STATES DISTRICT
DETROIT EDISON COMPANY & MICHIGAN                                  )
                                                                            COURT FOR THE EASTERN
CONSOLIDATED GAS COMPANY PENSION                                   )
                                                                            DISTRICT OF MICHIGAN
PLAN                                                               )
                                                                   )
        Defendants-Appellants.                                     )

BEFORE:          BATCHELDER and GRIFFIN, Circuit Judges; CARR, District Judge.

        ALICE M. BATCHELDER, Circuit Judge. In 2013, Appellee John Paul, Jr. (“Paul”)

filed suit as a pro se litigant against Detroit Edison Company (“DTE”) and Michigan

Consolidated Gas Company Pension Plan (“Michcon”), seeking relief from the reduction of his

benefits two years after his retirement. The district court granted summary judgment to Paul on

grounds of equitable estoppel. On appeal, DTE and Michcon raise three issues: (1) whether the

district court violated due process by relying on unsworn testimony given by Paul at the

summary judgment hearing; (2) whether the district court erred by not reviewing the pension

plan administrator’s record under an arbitrary and capricious standard; and (3) whether the

        
         The Honorable James G. Carr, Senior United States District Judge for the Northern District of Ohio, sitting
by designation.
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

district court erred by finding that Paul proved sufficient facts to support a claim of equitable

estoppel. We find no error in the district court’s decision and therefore AFFIRM.

                                                      I.

        Paul began working for DTE in 1984. From 1984 to 1988, he was employed as a

temporary employee, not as a regular employee and member of the union. In 1988, he became a

regular employee represented by the union, and became eligible for the company’s pension plan

for union workers. At the time of his retirement in 2009, Paul had worked for DTE for

23.970100 years, but he had accrued only 20.96645 years of credited service under the pension

plan. Thus, 3.00365 years of his employment should not have been counted toward his benefit

service years.

        In 2009, when Paul began considering early retirement, he met with representatives from

Michcon in order to determine the benefits for which he was eligible. Michcon provided Paul

with a written “Pension Calculation Statement.” The calculations contained in this statement

were compiled for Michcon by Aon Hewitt, which served as the third-party administrator of the

plan.   Each statement shown and discussed with Paul stated his benefit service years at

23.970100. As Paul stated in a letter to Michcon, “On 4 separate occasions Michcon provided

me with a [sic] pension statements[.] [O]n all of these statements all the dates were generated by

your staff and they all were the same.” Moreover, Paul was given explicit verbal assurances that

the calculations given to him were correct. During his meeting with a company representative to

sign the final pension plan papers, Paul specifically noted that he had worked part of his time as

a non-union employee and most of his time as a union employee. When he asked whether this

would make a difference in the calculation of his benefit level, he was assured that there was no

                                                      -2-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

problem and that the date on the written statements was correct.1                   On the basis of these

calculations and assurances, Paul decided to retire early. His final day of employment was

June 30, 2009.

        Written and spoken assurances notwithstanding, the Michcon “Pension Calculation

Statement” included an important disclaimer:

                DTE Energy reserves the right to correct any errors. If it’s determined at
        any time that the information provided on this statement conflicts with the benefit
        defined by the MichCon Retirement Plan, the MichCon Retirement Plan will
        prevail. Under the law, a plan must be operated in accordance with its terms.

This disclaimer appeared at the end of each copy of the statement given to Paul.

        In 2011, two years after Paul’s retirement, Michcon discovered an error in the calculation

of Paul’s benefit service years. On December 27, 2011, Michcon notified Paul that his benefits

should have been calculated from the time that he joined the union employees under the pension

plan in 1988, not from the time that he began work for DTE as a temporary employee in 1984.

[Id.] In order to correct this error, Michcon reduced Paul’s monthly retirement benefits by

$54.42 and informed him that he would have to repay a lump sum of $14,429.36.

        On February 3, 2012, Paul informed Michcon that he objected to their Pension Plan

Overpayment Notice of December 27, 2011. He explained that “[t]his oversight was a result of

Michcon’s neglect and if this was discovered at the time of my accepting your pension final offer

I WOULD NOT HAVE RETIRED, And [sic] worked the additional years to full retirement.”

He requested Michcon to accept responsibility for their original miscalculation and to reinstate

his original benefit amount.

        1
          The details of this meeting were summarized by Paul before the district court during the summary
judgment hearing. DTE and Michcon declared that they had no reason to dispute the fact of Paul’s meeting with a
company representative. They raised no objection to any of the facts presented by Paul regarding that meeting.
[R. 32 at Pg. ID#1132] DTE and Michcon now argue against the use of these facts, but as we explain at II. A. of
this opinion, their arguments fail.

                                                      -3-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

        On March 3, 2012, Paul sent a letter to the Department of Labor, explaining his dilemma

and requesting assistance.          And on June 13, 2012, the Employee Benefits Security

Administration (EBSA) sent a letter to DTE, instructing the company to inform Paul of the

reasons for its decision. In the meantime, DTE and Michcon had responded to Paul’s objection

letter, explained their rationale, denied responsibility, and referred him to the Qualified Plan

Appeals Committee (“Committee”). Paul filed an appeal with the Committee, and DTE and

Michcon informed the EBSA that his claim was under administrative review and appeal.

        In Paul’s appeal to the Committee, he requested that he be granted a complete restoration

of his original benefits or, alternatively, that he be reinstated in his employment with all seniority

and back pay benefits. The Committee upheld Michcon’s recalculation of Paul’s benefits, but

reversed Michcon’s decision to force Paul to repay the amount overpaid from 2009 to 2011. The

Committee explained that “[a]fter reviewing all of the circumstances of your situation, the

Committee determined that it would be more appropriate for the third-party who incorrectly

calculated your benefits to repay the excess benefits to the Plan.” This decision, however, was

contingent upon Paul’s commitment not to claim any portion of the Michcon “Special Lump

Sum Severance Benefit” to which he would otherwise be entitled. The Committee concluded its

decision by informing Paul of his right to file suit under ERISA Section 502(a) if he disagreed

with the outcome of the appeal.

        On August 30, 2013, Paul filed suit in state court. His complaint in its entirety read:

                Detroit Edison without my consent modified a retirement agreement
        2 years after the original agreement. In their modification they also violated
        Local 223/Local 80 retirement provisions in the labor agreement in force at the
        time of the original agreement. I am requesting that all monies owed me to [sic]
        be paid and any over payment be charged to the company contractor who made
        the error also all cost and damages in the amount of 25,000.00 US dollars.

                                                      -4-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

DTE and Michcon immediately removed to federal court and filed their answers and affirmative

defenses.    Michcon also filed a crossclaim for repayment of $14,439.36, which it claims

represents the amount by which Aon Hewitt miscalculated Paul’s original lump sum benefit

payment. In July 2014, both sides filed motions for summary judgment. Relying on Bloemker v.

Laborers’ Local 265 Pension Fund, 605 F.3d 436 (6th Cir. 2010), the district court found that

Paul had provided sufficient evidence to satisfy the elements of equitable estoppel. The district

court therefore granted Paul’s motion for summary judgment and denied DTE and Michcon’s

cross-motion and counterclaim. DTE and Michcon timely appealed.

                                                      II.

                                                      A.

        DTE and Michcon raise three issues in this appeal. First, DTE and Michcon assert that

the district court “unexpectedly and without notice, elicited new ‘evidence’ by engaging

Mr. Paul in an unsworn question-and-answer session without giving Defendants an opportunity

to rebut the evidence or notice that they should be prepared to do so.” They argue that this

constituted a violation of their due process rights because “a court may not consider unsworn

statements when ruling on a motion for summary judgment.” Dole v. Elliott Travel & Tours,

Inc., 942 F.2d 962, 968–69 (6th Cir. 1991). But there are two problems with their argument.

First, DTE and Michcon fail to make their argument with particularity. Although they assert that

new evidence was introduced and that the district court wrongly elicited and relied on unsworn

testimony at the summary judgment hearing, they fail to provide even a single example of what

new facts were introduced or how such facts were improperly relied on by the district court. As

we have held in numerous cases, “it is a settled appellate rule that issues adverted to in a

perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed

                                                      -5-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

waived.” United States v. Elder, 90 F.3d 1110, 1118 (6th Cir. 1996) (internal quotation marks

omitted). “It is not sufficient for a party to mention a possible argument in the most skeletal

way, leaving the court to . . . put flesh on its bones.” McPherson v. Kelsey, 125 F.3d 989, 995–

96 (6th Cir. 1997) (quoting Citizens Awareness Network, Inc. v. United States Nuclear

Regulatory Comm’n, 59 F.3d 284, 293–94 (1st Cir. 1995)). DTE and Michcon do not cite any

portion of the district court’s opinion that contains facts not properly in the record. They do not

cite any portion of the hearing where the judge counseled Paul or advocated for him. And they

do not cite any specific ways in which they were actually surprised by the facts contained in the

district court’s opinion.      Nor do they offer any criteria for discerning which facts were

improperly considered.

        Second, in reaching its decision, the district court relied on facts already established by

the record and known by DTE and Michcon. In the district court’s analysis of the case, it cited

to only two pages of the hearing transcript. At those points in the transcript, the judge asked Paul

to describe his reliance on the representations and calculations of DTE and Michcon, and then

asked DTE and Michcon to clarify how the benefits were calculated and who was responsible for

those calculations. A review of the record reveals that, prior to the summary judgment hearing,

it contained evidence of Paul’s reliance on the written and oral calculations and assurances that

he received from DTE and Michcon. In fact, the evidence of his reliance was submitted to the

district court by DTE and Michcon in an exhibit supporting their motion for summary judgment.

Furthermore, the district court asked DTE and Michcon’s counsel—not Paul—for clarification

regarding who was responsible for calculating Paul’s benefits. It is impossible for DTE and

Michcon to show that they lacked proper notice of the facts relied on by the district court when

                                                      -6-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

they were the ones who first submitted those facts to the district court and relied on those facts in

their argument.

                                                      B.

        Next, DTE and Michcon assert that the district court erred by failing to apply an

arbitrary-and-capricious standard of review in its consideration of the Committee’s decision on

Paul’s appeal.      We have previously held that “[g]enerally, federal courts review a plan

administrator’s decision to deny benefits de novo. But, where the plan administrator reserves

discretionary authority to determine eligibility and construe policy terms, the more deferential

arbitrary and capricious standard of review applies.” Schwalm v. Guardian Life Ins. Co., 626

F.3d 299, 308 (6th Cir. 2010) (internal citations omitted). Here, the nature of the administrator’s

discretionary authority under the plan is irrelevant because we are not reviewing the manner in

which the Committee calculated Paul’s eligibility or the conclusion to which the Committee

came. Rather, we are considering whether, the Committee’s determination and conclusion

notwithstanding, Paul should be given equitable relief.

                                                      C.

        This brings us to the third and primary issue of this appeal, namely, whether Paul has

satisfied the heightened requirements for the application of equitable estoppel within the context

of ERISA. Our analysis of this issue is controlled by our precedent in Bloemker v. Laborers’

265 Pension Fund, 605 F.3d 436 (6th Cir. 2010). There, we stated that,

        “Under our precedent, the elements of an equitable estoppel claim are: 1) conduct
        or language amounting to a representation of material fact; 2) awareness of the
        true facts by the party to be estopped; 3) an intention on the part of the party to be
        estopped that the representation be acted on, or conduct toward the party asserting
        the estoppel such that the latter has a right to believe that the former’s conduct is
        so intended; 4) unawareness of the true facts by the party asserting the estoppel;
        and 5) detrimental and justifiable reliance by the party asserting estoppel on the
        representation.”

                                                      -7-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

Bloemker, 605 F.3d at 442. We expanded upon this standard to “hold that ERISA equitable

estoppel applies to pension plans where a plaintiff can demonstrate extraordinary circumstances

in addition to the traditional estoppel elements.” Id. at 442. These extraordinary circumstances

must include three things: “(1) a written representation; (2) plan provisions which, although

unambiguous, did not allow for individual calculation of benefits; and (3) extraordinary

circumstances in which the balance of equities strongly favors the application of estoppel.” Id.

at 444. These eight elements constitute a demanding standard for proving equitable estoppel in a

dispute over a pension plan, but if they are satisfied, equitable relief is appropriate.

        Paul satisfies both the original five estoppel elements and the additional three elements

for the ERISA context. First, DTE and Michcon, made repeated material representations to Paul,

in both word and deed, by issuing written statements to him and by having a representative meet

with him to answer his questions and to formalize his retirement. This is directly parallel to the

representations made by the Union in Bloemker. In both cases, the pension plan administrator

issued written statements to the prospective retirees, certifying that their monthly payments

would stay at a certain level. These are material representations made by the party to be

estopped. See Bloemker, 605 F.3d at 442.

        Second, as Bloemker states, this element “requires the plaintiff to demonstrate that the

defendant’s actions contained an element of fraud, either intended deception or such gross

negligence as to amount to constructive fraud.” Id. at 443 (quoting Crosby v. Rohm & Haas,

Co., 480 F.3d 423, 431 (6th Cir. 2007)) (internal quotation marks and citations omitted). Once

again, Paul’s situation closely parallels the facts of Bloemker.                  In that case, after having

established Bloemker’s retirement benefit level, the Union discovered that “a computer

programming error” had thrown off their calculation and that his proper benefit level was

                                                      -8-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

$509.78 per month less than their original calculation. Id. at 439. Here, in similar fashion, after

giving repeated written and oral assurances to Paul that his retirement benefit was properly

calculated, DTE and Michcon have concluded that Paul’s monthly payment must be reduced by

$54.42 and that he owes them a full repayment of $17,776.35, which equals the combined

amount of their monthly and lump sum overpayments to him. This is a gross miscalculation for

which they must bear responsibility. They were the only ones in a position to know the true

facts, they assumed that they knew the true facts, they failed to ascertain the true facts when Paul

specifically asked if the calculations were correct, and they repeatedly assured Paul that they

knew the true facts. Just as we held in Bloemker, this amounts to constructive fraud and satisfies

the second element of equitable estoppel.

        Third, DTE and Michcon invited Paul to act in response to their representations. In fact,

DTE and Michcon were actively inviting employees to consider early retirement by offering new

incentives and modifications to the pension plan. Moreover, in his individualized dealings with

DTE and Michcon regarding his own retirement, Paul had every right to believe that the repeated

representations made to him were inviting him to retire. See id. at 442–43. The assurances given

by DTE and Michcon would not make any sense unless they were backed by the understanding

and intention that Paul would act upon them and retire.

        Fourth, Paul was completely unaware that there was an error in his benefits calculation,

he had no reason to believe that there was an error, and he had no way of double-checking the

calculation to find an error. See id. As with Bloemker, so also with Paul—it would have been

impossible for him “to determine the amount of pension benefit owed to him because of the

complex actuarial calculations required to determine the amount and his lack of knowledge of

                                                      -9-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

relevant actuarial assumptions.” Haviland v. Metropolitan Life Ins. Co., 730 F.3d 563, 569

(6th Cir. 2013).

        Fifth, Paul detrimentally relied on the representations that were made to him. He suffered

appreciable economic damages and would not have accepted the early retirement offer if his

benefits had been properly represented to him. See id. His reliance was reasonable for the same

reasons that Bloemker’s reliance was reasonable. See Bloemker, 605 F.3d at 443.

        Paul also satisfies the three additional elements prescribed in Bloemker. First, there was a

written representation from DTE and Michcon to Paul regarding his benefit levels. In fact, there

were multiple written representations, all of which indicated that his date of hire was 1984, not

1988. Second, even though the plan provisions were unambiguous insofar as they allowed for

DTE and Michcon to make corrections to benefit calculations, Paul—like Bloemker—was

unable “to determine his correct pension benefit given the complexity of the actuarial

calculations and his lack of knowledge about the relevant actuarial assumptions.” See Bloemker,

605 F.3d at 443.       Third, the balance of equities favors Paul since he suffered substantial

economic damages. Comparing this case to Bloemker, Paul’s lump sum repayment would

actually be $3,000 more than Bloemker’s. And as Paul emphatically indicated, he would not

have retired if he had known that his benefits would be reduced to such a level.

                                                     III.

        Quite simply, we find that this case directly parallels Bloemker. Although equitable

estoppel is a rare remedy in an ERISA context, Paul’s case presents the same extraordinary

circumstances that we addressed in Bloemker. Therefore, we AFFIRM the judgment of the

district court granting summary judgment to Paul and denying DTE and Michcon’s cross-motion

for summary judgment and counterclaim for repayment.

                                                     -10-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

        GRIFFIN, Circuit Judge, dissenting.

        Although I join the majority regarding the first two issues, I respectfully disagree that

defendants’ actions constituted constructive fraud as a matter of law. Summary judgment is not

warranted because there are genuine issues of material fact. I would reverse and remand for

further proceedings.

        I respectfully take issue with the majority’s application of equitable estoppel’s second

element under Bloemker v. Laborers’ Local 265 Pension Fund, the “awareness of the true facts

by the party to be estopped.” 605 F.3d 436, 442 (6th Cir. 2010). This element “requires the

plaintiff to demonstrate that the defendant’s actions contained an element of fraud, either

intended deception or such gross negligence as to amount to constructive fraud.” Id. at 443

(citations and alterations omitted). We have also held that when the party to whom estoppel is to

be applied “ma[kes] an honest mistake” in calculating benefits, it is only “guilty of misfeasance,

not the malfeasance that estoppel requires.” Crosby v. Rohm & Hass Co., 480 F.3d 423, 431

(6th Cir. 2007) (emphasis added); accord Stark v. Mars, Inc., 518 F. App’x 477, 482 (6th Cir.

2013); Solomon v. Med. Mut. of Ohio, 411 F. App’x 788, 794 (6th Cir. 2011).

        The majority concludes the facts here are indistinguishable from those in Bloemker.

After all, both involve union employees who retired based on a calculation of retirement benefits

by a third-party administrator, and when those calculations turned out to be wrong, the

employers sought to reduce benefits and recover overpayments. However, although the facts of

our case and Bloemker are indistinguishable, the procedural posture—and more specifically, the

remedy upon remand—is very different.

        In Bloemker, our court reversed the grant of a motion to dismiss in favor of the defendant

and remanded for further proceedings. 605 F.3d at 444. In doing so, we held that Bloemker’s

                                                     -11-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

complaint sufficiently alleged “constructive fraud” by claiming that the defendants “were aware

of the true facts and that they intended for Bloemker to rely upon their representations.” Id. at

443. Importantly, we assumed the truth of this allegation given that it was before us on a motion

to dismiss. Id. And all Bloemker needed to do at that stage was allege “enough fact[s] to raise a

reasonable expectation that discovery [would] reveal evidence of” his claims. Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 556 (2007).              The remedy was a remand for further proceedings,

including the possibility of a trial on disputed issues of material fact.

        Here, rather than holding that plaintiff’s complaint alleged facts sufficient to survive a

motion to dismiss, the district court granted summary judgment in plaintiff’s favor. On the

second element, the district court reasoned that the representative’s assurances regarding the

correctness of his credited years of service were “so grossly negligent as to amount to

constructive fraud upon Plaintiff,” and that the representative’s “failure to properly investigate

the concern raised by Plaintiff was not an honest mistake but was precisely the sort of

malfeasance that may give rise to constructive fraud.” In agreeing, the majority concludes

defendants must “bear responsibility” for these misrepresentations because they were the “only

ones in a position to know the true facts,” “assumed that they knew the true facts,” “failed to

ascertain the true facts” when questioned by Paul, and “repeatedly assured Paul that they knew

the true facts.”

        However, a reasonable trier of fact could arrive at an alternative verdict—defendants’

reliance on Aon Hewitt, while perhaps negligent, did not rise to the level of gross negligence so

as to constitute constructive fraud upon Paul. There is no record evidence that defendants had

reason to know Aon Hewitt made a miscalculation, that they unreasonably relied upon Aon

Hewitt’s certifications that Paul’s benefit service years were what it purported them to be, or that

                                                     -12-
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan

the representative acted with such disregard to Paul that his actions constituted gross negligence.

Defendants’ awareness of the true facts is material and in dispute—a reasonable person could

conclude their conduct was not grossly negligent.              When reasonable persons “might reach

different conclusions” as to whether there is negligent conduct, our legal system “emphasize[s]

the appropriateness of leaving the question to the [trier of fact].” Bailey v. Central Vermont Ry.,

319 U.S. 350, 353 (1943). See also Wendrow v. Mich. Dep’t of Human Servs., 534 F. App’x

516, 531 (6th Cir. 2013) (applying Michigan law). Following trial, the trier of fact should decide

what the facts are and what they support. Summary judgment under these circumstances is not

warranted.

        I join the majority opinion in its resolution of the other issues.

                                                     -13-