Noorali Savani v. Washington Safety Management

• Court: Court of Appeals for the Fourth Circuit
• Decided: March 20, 2012
• Docket: 11-1206
• Status: Unpublished

Opinion

Filed: March 20, 2012

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 11-1206 (1:06-cv-02805-MBS)

NOORALI SAM SAVANI,

Plaintiff - Appellant,

v.

WASHINGTON SAFETY MANAGEMENT SOLUTIONS, LLC, f/k/a Westinghouse Safety Management Solutions, LLC; WESTINGHOUSE SAFETY MANAGEMENT SOLUTIONS, LLC PENSION PLAN; PAUL HARPER, as Trustee of Westinghouse Safety Management Solutions LLC Pension Plan; LEO SAIN, as Trustee of Westinghouse Safety Management Solutions LLC Pension Plan; PRES RAHE, as Trustee of Westinghouse Safety Management Solutions LLC Pension Plan; WASHINGTON SAFETY MANAGEMENT SOLUTIONS, LLC PENSION PLAN; WASHINGTON GROUP INTERNATIONAL, INCORPORATED; RALPH DISIBIO, as director of Washington Safety Management Solutions LLC; PAUL GREFENSTETTE, as Director of Washington Safety Management Solutions LLC; ROBERT PEDDE, as Director of Washington Safety Management Solutions LLC; AMBROSE SCHWALLIE, as Director of Washington Safety Management Solutions LLC; ROGER ALLEN, as Members of the Administrative Committee of Westinghouse Safety Management Solutions LLC Pension Plan formerly Benefits Committee of Westinghouse Safety Management Solutions LLC Pension Plan; JULIE BROWN, as Members of the Administrative Committee of Westinghouse Safety Management Solutions LLC Pension Plan formerly Benefits Committee of Westinghouse Safety Management Solutions LLC Pension Plan; DAVE HOLLAN, as Members of the Administrative Committee of Westinghouse Safety Management Solutions LLC Pension Plan formerly Benefits Committee of Westinghouse Safety Management Solutions LLC Pension Plan; DELOYD CAZIER, as Members of the Administrative Committee of Westinghouse Safety Management Solutions LLC Pension Plan formerly Benefits Committee of Westinghouse Safety Management Solutions LLC Pension Plan; WSMS PENSION PLAN, f/k/a Westinghouse Savannah River Company-Bechtel Savannah River Inc Pension Plan, f/k/a Westinghouse Safety Management Solutions, LLC Pension Plan, f/k/a Washington Safety Management Solutions, LLC Pension Plan,

Defendants – Appellees,

and

WASHINGTON SAVANNAH RIVER COMPANY'S PENSION PLAN; WASHINGTON SAVANNAH RIVER COMPANY, LLC, f/k/a Westinghouse Savannah River Company LLC,

Defendants.

O R D E R

The Court amends its opinion filed March 20, 2012, as

follows:

On the cover sheet, district court information section --

the name of “Margaret B. Seymour, District Judge” is deleted and

is replaced by “Henry F. Floyd, District Judge.”

For the Court – By Direction

/s/ Patricia S. Connor Clerk

2 UNPUBLISHED

No. 11-1206

WASHINGTON SAFETY MANAGEMENT SOLUTIONS, LLC, f/k/a Westinghouse Safety Management Solutions, LLC; WESTINGHOUSE SAFETY MANAGEMENT SOLUTIONS, LLC PENSION PLAN; PAUL HARPER, as Trustee of Westinghouse Safety Management Solutions LLC Pension Plan; LEO SAIN, as Trustee of Westinghouse Safety Management Solutions LLC Pension Plan; PRES RAHE, as Trustee of Westinghouse Safety Management Solutions LLC Pension Plan; WASHINGTON SAFETY MANAGEMENT SOLUTIONS, LLC PENSION PLAN; WASHINGTON GROUP INTERNATIONAL, INCORPORATED; RALPH DISIBIO, as director of Washington Safety Management Solutions LLC; PAUL GREFENSTETTE, as Director of Washington Safety Management Solutions LLC; ROBERT PEDDE, as Director of Washington Safety Management Solutions LLC; AMBROSE SCHWALLIE, as Director of Washington Safety Management Solutions LLC; ROGER ALLEN, as Members of the Administrative Committee of Westinghouse Safety Management Solutions LLC Pension Plan formerly Benefits Committee of Westinghouse Safety Management Solutions LLC Pension Plan; JULIE BROWN, as Members of the Administrative Committee of Westinghouse Safety Management Solutions LLC Pension Plan formerly Benefits Committee of Westinghouse Safety Management Solutions LLC Pension Plan; DAVE HOLLAN, as Members of the Administrative Committee of Westinghouse Safety Management Solutions LLC Pension Plan formerly Benefits Committee of Westinghouse Safety Management Solutions LLC Pension Plan; DELOYD CAZIER, as Members of the Administrative Committee of Westinghouse Safety Management Solutions LLC Pension Plan formerly Benefits Committee of Westinghouse Safety Management Solutions LLC Pension Plan; WSMS PENSION PLAN, f/k/a Westinghouse Savannah River Company-Bechtel Savannah River Inc Pension Plan, f/k/a Westinghouse Safety Management Solutions, LLC Pension Plan, f/k/a Washington Safety Management Solutions, LLC Pension Plan,

WASHINGTON SAVANNAH RIVER COMPANY'S PENSION PLAN; WASHINGTON SAVANNAH RIVER COMPANY, LLC, f/k/a Westinghouse Savannah River Company LLC,

Appeal from the United States District Court for the District of South Carolina, at Aiken. Henry F. Floyd, District Judge. (1:06-cv-02805-MBS)

Argued: January 26, 2012 Decided: March 20, 2012

Before WILKINSON, GREGORY, and KEENAN, Circuit Judges.

Reversed and remanded by unpublished per curiam opinion. Judge Keenan wrote a dissenting opinion.

ARGUED: Stanley G. Jackson, JACKSON LAW OFFICES, PC, Augusta, Georgia, for Appellant. H. Douglas Hinson, ALSTON & BIRD, LLP, Atlanta, Georgia, for Appellees. ON BRIEF: Gray T. Culbreath, COLLINS & LACY, PC, Columbia, South Carolina; Emily Seymour Costin, ALSTON & BIRD, LLP, Washington, D.C., for Appellees.

Unpublished opinions are not binding precedent in this circuit.

2 PER CURIAM:

Noorali “Sam” Savani brought this action under the Employee

Retirement Income Security Act (“ERISA”) § 502(a)(1)(B), 29

U.S.C. § 1132(a)(1)(B) (2006), claiming that the termination of

an early retirement pension supplement by Washington Safety

Management Solutions (“WSMS”) violated ERISA’s anti-cutback and

notice provisions. Because the plain language of the WSMS

pension plan (“the Plan”) includes the early retirement

supplement in its calculation of accrued benefits, we must

reverse the grant of summary judgment to WSMS and remand for

further proceedings consistent with this opinion.

I.

Savani was an employee of Westinghouse Savannah River

Company (“WSRC”) in 1997 when WSMS was formed. At its

inception, WSMS recruited a number of WSRC employees, including

Savani, to transfer to the newly formed company. WSMS held

meetings at which WSRC employees were informed of the employee

benefit plans available to newly transferred employees. From

the date of his transfer in 1997 until his retirement in 2005,

Savani participated in the Plan.

The Plan, prior to amendments, provided in relevant part:

“‘Accrued Benefit’ means, as of any date of determination, the

normal retirement Pension computed under Section 4.01(b) . . .

3 less the WSRC Plan offset as described in Section 4.13, plus any

applicable supplements as described in Section 4.12 . . . .”

The Plan further provided for early retirement benefits: “The

early retirement Pension shall be a deferred Pension beginning

on the first day following the Member’s Normal Retirement Date

and . . . shall be equal to his Accrued Benefit. However, the

Member may elect to receive an early retirement Pension

beginning before his Normal Retirement Date . . . .” Finally,

the Plan described supplemental benefits:

4.12 Supplemental Benefits (a) If a Member who: (i) otherwise satisfies the requirements for a Pension under this Plan; and (ii) has at least one year of service with WSMS; and (iii) transferred to the Plan from an Affiliated Employer on or before January 1, 1998 or transfers to the Plan from WSRC; and (iv) retires before his Normal Retirement Age from active service on or after October 1, 1998, he shall be entitled to a monthly supplement (which shall commence with the first Pension payment made under the Plan on account of such retirement and the last payment shall be in the month preceding the Member’s attainment of Normal Retirement Age) equal to the following: [omitted] (b) If a Member who: (i) otherwise satisfies the requirements for a Pension under this Plan;

4 (ii) has at least one year of service with WSMS; and (iii) transferred to the Plan from an Affiliated Employer on or before January 1, 1998 or transfers to the Plan from WSRC; and (iv) either retires from active service on or after October 1 1998 or dies on or after October 1, 1998 and immediately prior to his death would be entitled to or is receiving an early retirement Pension under the Plan, he shall be entitled to a $200 monthly supplement commencing at his attainment of Normal Retirement Age, which shall continue after such Member’s death to such Member’s spouse, if then living, for such spouse’s lifetime. On December 28, 2004, the Plan’s benefits committee 1 amended

the Plan to eliminate § 4.12(a), which granted a $700 monthly

benefit to Plan members electing to take early retirement on or

after January 1, 2005. The Plan’s actuary recommended this

amendment because of his concern that the Plan may fail

discrimination testing and jeopardize Plan beneficiaries’

favorable tax treatment. This action was not communicated to

Plan participants or beneficiaries for nearly seven months.

Contrary to the committee’s amendment, Savani received an

“Early Retirement Benefit Calculation Estimate” in early 2005

that included both § 4.12 supplements. Savani retired from WSMS

1 The benefits committee was vested with “all powers necessary to discharge its duties,” including the power “[t]o approve Plan amendments” under Article 7.01 of the Plan and the “discretion to interpret the Plan” under Article 7.06.

5 on or about April 30, 2005, believing that he would be entitled

to a $700 per month supplement until he reached age sixty-five.

On July 29, 2005, WSMS mailed letters to employees who had

retired in 2005, or were eligible to do so, and to those who had

transferred from WSRC, stating that § 4.12(a) of the Plan had

been eliminated and they would no longer receive the $700

monthly supplement. However, Savani continued to receive

payments of the $700 benefit until June 8, 2006. At that time,

Savani received a letter from WSMS stating that he had

incorrectly received the $700 monthly benefit for thirteen

months and requesting reimbursement of $9,100 within twenty-two

days.

Savani originally filed a class action complaint in the

Court of Common Pleas for Aiken County, South Carolina. After

WSMS removed the action to federal court, Savani filed a first

amended class action complaint (“Amended Complaint”) alleging

four counts. The district court rightly dismissed count one of

Savani’s claim for benefits under ERISA for failure to exhaust

administrative remedies. 2

2 The district court also properly dismissed count two on the grounds that a party may not request simultaneous relief under both ERISA, § 502(a)(1)(B) and § 502(a)(3), Korotynska v. Metro. Life Ins. Co., 474 F.3d 101, 107 (4th Cir. 2006), and state law counts three (estoppel) and four (breach of fiduciary duty) on the basis of preemption by ERISA, Griggs v. E.I. DuPont De Nemours & Co., 237 F.3d 371, 378 (4th Cir. 2001).

6 Savani proceeded to exhaust his administrative remedies by

appealing to the Plan’s benefits committee. After the benefits

committee denied Savani’s request for benefits, the district

court reopened the case only as to count one, which the court

had previously construed as a claim for benefits under ERISA, 29

U.S.C. § 1132(a)(1)(B). On June 12, 2009, the parties filed

cross-motions for summary judgment. The district court granted

summary judgment in favor of WSMS, holding that the committee

did not abuse its discretion in denying Savani’s request for

benefits and that deletion of § 4.12(a) from the Plan did not

violate the anti-cutback or notice provisions of ERISA. On

March 3, 2011, Savani timely filed this appeal.

II.

A.

This Court reviews de novo a district court’s ruling on a

motion for summary judgment. United McGill Corp. v. Stinnett,

154 F.3d 168, 170 (4th Cir. 1998). However, in an appeal under

ERISA, the Court must use the same standard that governed the

district court’s review of a plan administrator’s decision.

Williams v. Metro. Life Ins. Co., 609 F.3d 622, 629-30 (4th Cir.

2010). Although ERISA is silent on the standard of review for

benefit denials challenged under § 1132(a)(1)(B), a de novo

standard applies “unless the benefit plan gives the

7 administrator or fiduciary discretionary authority to determine

eligibility for benefits or to construe the terms of the plan,”

in which case we review the decision for abuse of discretion.

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989).

The Plan at issue gives broad authority to the committee,

granting it “total and complete discretion to interpret the

Plan.” However, “even as an ERISA plan confers discretion on

its administrator to interpret the plan, the administrator is

not free to alter the terms of the plan or to construe

unambiguous terms other than as written.” Colucci v. Agfa Corp.

Severance Pay Plan, 431 F.3d 170, 176 (4th Cir. 2005), abrogated

on other grounds by Champion v. Black & Decker (U.S.), Inc., 550

F.3d 353 (4th Cir. 2008). “An administrator’s discretion never

includes the authority ‘to read out unambiguous provisions’

contained in an ERISA plan, and to do so constitutes an abuse of

discretion.” Blackshear v. Reliance Standard Life Ins. Co., 509

F.3d 634, 639 (4th Cir. 2007) (quoting Colucci, 431 F.3d at

176).

While the Plan’s grant of authority requires us to evaluate

the committee’s decision under an abuse-of-discretion standard,

we have held that the abuse-of-discretion standard under ERISA

is less deferential to administrators than the arbitrary and

capricious standard. Evans v. Eaton Corp. Long Term Disability

Plan, 514 F.3d 315, 322 (4th Cir. 2008). A reviewing court will

8 reverse or remand an ERISA administrator’s discretionary

decision if it is not reasonable, although not necessarily

irrational, if it is not the result of a deliberate, principled

reasoning process supported by substantial evidence, or if it

does not reflect careful attention to the language of the plan

and ERISA itself. Id. (citing Firestone, 489 U.S. at 109-11;

Booth v. Wal-Mart Stores, Inc., 201 F.3d 335, 341-42 (4th Cir.

2000); Bernstein v. CapitalCare, Inc., 70 F.3d 783, 788 (4th

Cir. 1995)).

B.

Savani alleges that the committee’s deletion of § 4.12(a)

from the Plan violated ERISA’s anti-cutback statute and notice

requirements and that the amended Plan’s elimination of the $700

early retirement benefit should be unenforceable against him.

In denying Savani’s request for benefits, the committee found

that the anti-cutback statute was not violated because the $700

benefit was not an “accrued benefit” within the meaning of

ERISA. Our decision turns on whether the $700 benefit was

included in the “accrued benefit” as defined by the Plan, ERISA,

and applicable regulations. Because the plain, unambiguous

language of the WSMS Plan contemplates inclusion of both § 4.12

supplements in its definition of “accrued benefit,” the

committee abused its discretion in denying Savani’s request for

benefits.

9 ERISA’s anti-cutback statute provides that “[t]he accrued

benefit of a participant under a plan may not be decreased by an

amendment of the plan . . . .” 29 U.S.C. § 1054(g)(1) (2010).

To determine whether WSMS violated this provision, we must

determine what benefits may be accrued. ERISA defines “accrued

benefit” as “. . . the employee’s accrued benefit determined

under the plan and . . . expressed in the form of an annual

benefit commencing at normal retirement age . . . .” 26 U.S.C.

§ 411(a)(7)(A)(i) (2010). We have recognized that this

definition is “a signpost, directing us to look at the terms of

the plan at issue.” Bd. of Trs. of the Sheet Metal Workers’

Nat’l Pension Fund v. Comm’r, 318 F.3d 599, 602-03 (4th Cir.

2003). 3

Under the Plan, the definition of “accrued benefit”

contemplates the possibility that the $700 supplement can be

included in the total accrued benefit calculation. Plan § 1.01

3 In Sheet Metal Workers’, we also held that the only textual limitation imposed by ERISA on the definition of “accrued benefit” was that it must be “expressed in the form of an annual benefit commencing at normal retirement age.” 318 F.3d at 602. However, we did not discuss the definition of “accrued benefit” in the context of early retirement benefits which, by their definition, cannot commence at normal retirement age. While we have held that unfunded, contingent early retirement benefits or severance payments are not secured by ERISA itself, see Pierce v. Security Trust Life Ins. Co., 979 F.2d 23 (4th Cir. 1992), the drafters of a retirement plan may choose to define any benefits as accrued or vested, and thereby trigger ERISA’s protections.

10 defines “accrued benefit” as the “normal retirement Pension

. . . less the WSRC offset . . . plus any applicable supplements

as described in § 4.12 . . . .” Simply put, prior to the Plan’s

amendment, a beneficiary’s accrued benefit was calculated by an

equation; the accrued benefit equaled the retiree’s pension,

less a defined offset, plus applicable § 4.12 supplements.

WSMS argues that the Plan’s use of the qualifier

“applicable” allowed the benefits committee to delete the $700

supplement without violating ERISA. ERISA administrators have

discretion to interpret terms that are ambiguous in the sense

that they give rise to at least two different, but reasonable,

interpretations. Colucci, 431 F.3d at 176. Further, we may not

upset the benefit committee’s interpretation of the Plan unless

it was an abuse of discretion. WSMS concedes that the term

“applicable” could reasonably be interpreted as imposing only

the eligibility factors contained in § 4.12. Still, it contends

that the term “applicable” is ambiguous, and the benefits

committee was given discretion to resolve this ambiguity by

reasonably interpreting it as categorically excluding the $700

supplement from the accrued benefits equation.

However, ignoring the plain language of the Plan’s terms

was not within the committee’s discretion. Before the December

2004 amendment, § 4.12 included exactly two supplements: the

$700 early retirement benefit described in § 4.12(a) and the

11 $200 lifetime supplement described in § 4.12(b). The Plan

explicitly defines “accrued benefit” as including “applicable

supplements.” The plurality of that term, when considered in

light of the fact that only two supplements were included in

§ 4.12, mandates that each of the supplements was capable of

being “applicable” under some circumstance. Any interpretation

to the contrary, including that of the benefits committee, is

inconsistent with the plain language of the plan. Because there

is no reasonable alternative interpretation of the term

“applicable,” it is not ambiguous. The committee did not have

discretion to read out this unambiguous provision of the Plan,

and therefore abused its discretion in finding that the $700

supplement could never be applicable and in denying Savani’s

claim.

It should be noted that our holding is based on the

specific language of the WSMS Pension Plan. Stand-alone,

ancillary welfare benefits generally are not independently

protected by ERISA. See Pierce, 979 F.2d 23. Here, however,

the Plan plainly incorporated both supplements into its

definition of “accrued benefit.” Regardless of their

classification as accrued or ancillary, welfare or pension

benefits, the supplements’ inclusion in the plain terms of the

Plan’s accrued benefit calculation necessarily meant that any

12 change to the amount or existence of a § 4.12 supplement

constituted a change to an “accrued benefit.”

III.

The focus of both the district court’s decision and the

appeal was the characterization of the supplements as accrued

benefits. On that issue, we hold that the Plan’s clear terms

include the § 4.12(a) supplement in the definition of accrued

benefits. We therefore reverse the district court’s grant of

summary judgment to WSMS and remand the case for further

proceedings consistent with this opinion.

REVERSED AND REMANDED

13 BARBARA MILANO KEENAN, Circuit Judge, dissenting:

I would affirm the judgment of the district court for the

reasons well-articulated in its very thorough opinion.

Accordingly, I respectfully dissent.