Filed: Feb. 14, 1997
Latest Update: Mar. 02, 2020
Summary: Opinions of the United 1997 Decisions States Court of Appeals for the Third Circuit 2-14-1997 DeWitt v. Penn Del Directory Precedential or Non-Precedential: Docket 96-7163 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1997 Recommended Citation "DeWitt v. Penn Del Directory" (1997). 1997 Decisions. Paper 39. http://digitalcommons.law.villanova.edu/thirdcircuit_1997/39 This decision is brought to you for free and open access by the Opinions of the United
Summary: Opinions of the United 1997 Decisions States Court of Appeals for the Third Circuit 2-14-1997 DeWitt v. Penn Del Directory Precedential or Non-Precedential: Docket 96-7163 Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1997 Recommended Citation "DeWitt v. Penn Del Directory" (1997). 1997 Decisions. Paper 39. http://digitalcommons.law.villanova.edu/thirdcircuit_1997/39 This decision is brought to you for free and open access by the Opinions of the United ..
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Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
2-14-1997
DeWitt v. Penn Del Directory
Precedential or Non-Precedential:
Docket 96-7163
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1997
Recommended Citation
"DeWitt v. Penn Del Directory" (1997). 1997 Decisions. Paper 39.
http://digitalcommons.law.villanova.edu/thirdcircuit_1997/39
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 96-7163
___________
CAROL DEWITT,
Appellant
v.
PENN-DEL DIRECTORY CORPORATION, a foreign corporation; NATIONAL
TELEPHONE DIRECTORY CORPORATION PROFIT SHARING PLAN;
NATIONAL TELEPHONE DIRECTOR CORPORATION PLAN
ADMINISTRATOR OF PROFIT SHARING PLAN
___________
Appeal from the United States District Court
for the District of Delaware
(D.C. Civ. No. 93-cv-00581)
___________
Argued
December 12, 1996
Before: BECKER, MANSMANN and LEWIS, Circuit Judges.
___________
(Filed February 14, 1997)
___________
John M. Stull, Esquire (ARGUED)
Suite 710
1220 North Market Street
P.O. Box 1947
Wilmington, DE 19899
COUNSEL FOR APPELLANT
Francis M. Milone, Esquire (ARGUED)
Lynn A. Collins, Esquire
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
COUNSEL FOR APPELLEES
___________
OPINION OF THE COURT
__________
1
MANSMANN, Circuit Judge.
Carol Dewitt appeals from the entry of summary judgment
against her in her action to recover benefits and for unlawful
termination intended to preclude attainment of her rights under
her profit sharing plan pursuant to sections 502(a)(1)(B) and 510
of the Employee Retirement Income Security Act (ERISA), 29 U.S.C.
§§ 1132(a)(1)(B). Dewitt sought benefits allegedly due her as a
participant of the National Telephone Directory Profit Sharing
Plan for the 1990 plan year.
We are asked to decide whether the Plan Administrator
acted arbitrarily and capriciously in denying additional accrued
benefits to Dewitt's account balance for the 1990 Plan year by
distributing Dewitt's benefits on an expedited basis, contrary to
the Plan's provisions. Because we believe that the Plan
Administrator's interpretation of the Plan and expedited
distribution of benefits controverts the plain language of the
Plan, we conclude that the Administrator acted arbitrarily and
capriciously. Accordingly, we will reverse the district court's
grant of summary judgment on this claim.
Dewitt also alleges that her employer terminated her on
pretextual grounds with the specific intent to deny her status as
a Plan participant as of the Valuation Date at the end of
December 1990. Because we agree with the district court that
Dewitt has not provided sufficient evidence of specific intent to
interfere with her benefits, we will affirm the district court's
grant of summary judgment in favor of her employer on Dewitt's
section 510 claim.
2
I.
During the ten years that Carol Dewitt was an employee
of Penn-Del Directory Corporation, she was a participant in the
National Telephone Directory Corporation Profit Sharing Plan, an
employee pension plan governed by ERISA and administered by the
National Telephone Directory Corporation, a New Jersey
corporation and sister corporation to Penn-Del. At the time of
her termination, Dewitt was 100% vested in her account under the
Plan.
Pursuant to the Plan, "Employer Contributions" and
"Plan Forfeitures" are credited to the account of Plan
participants on a date referred to as the Valuation Date, defined
as the last business day of each December. Plan ¶¶ 5.01, 5.02,
6.02(c)-(d). The Plan requires, as a condition to receipt of
these benefits, that the Plan participant be employed as of the
Valuation Date. Plan ¶¶ 5.01, 5.02. In addition, the Plan
provides that each participant's account will be credited with
"Trust Income", i.e., the net increase or decrease in the fair
market value of trust assets as measured from the last Valuation
Date. Plan ¶ 6.02(e). Unlike the situation with Employer
Contributions and Plan Forfeitures, the receipt of Trust Income
is not conditioned upon the participant's employment on the
Valuation Date. In order to receive Trust Income, however, a
Plan participant must have a viable Plan account on the Valuation
Date. Plan ¶ 6.02(3).
3
On December 12, 1990, Dewitt was terminated from her
position as a sales representative, allegedly for mishandling an
account. At a meeting to discuss her termination, Penn-Del
Division Manager Victor Raad reviewed with Dewitt the incident
that precipitated her termination. Pension benefits were also
discussed. Although there is some dispute between Dewitt and
Raad regarding precisely what was said at this meeting on the
topic of Dewitt's benefits, both parties agree that Raad told
Dewitt that it takes approximately 30 to 90 days before Dewitt
would actually receive the distribution of the balance of her
Plan account. Affidavit of Victor Raad, Exhibit C at ¶9. Dewitt
asserts that this statement led her to believe that her
distribution check would not be processed until a date well
beyond the Valuation Date. Dewitt also maintains that Raad told
her that her account would include Employer Contributions, Plan
Forfeitures and Trust Income through the end of the 1990 Plan
year. To the contrary, in his affidavit, Raad states that no
discussion occurred regarding the nature of the benefits which
would be included in Dewitt's check. Ex. C at ¶8.
On December 14, 1990, Dewitt filled out a request for
distribution of her account balance. A check was issued two
weeks later, on December 28, 1990, for Dewitt's total account
balance in the amount of $75,520.88. Believing this figure to be
inaccurate because it did not contain any amounts representing
Employer Contributions, Plan Forfeitures or Trust Income, Dewitt
contacted Raad to discuss the amount. After her conversation
with Raad, Dewitt pursued an appeal pursuant to the
4
administrative process established by the Plan. Following the
denial of her appeal, Dewitt filed this action.
In her complaint, Dewitt asserted claims against her
former employer (Penn-Del), the Plan (National Telephone
Directory Corporation Profit Sharing Plan) and the Plan's
Administrator (National Telephone Directory Corp.) under ERISA
for recovery of benefits and for unlawful termination intended to
preclude attainment of her rights under the Plan. In Count I of
her complaint, Dewitt asserts that she had a right under the Plan
to receive the 1990 Plan year Employer Contributions, Plan
Forfeitures, and Trust Income allocable to her account. In this
Count, Dewitt alleges that defendants violated 29 U.S.C. §
1132(a)(1)(B), ERISA § 502(a)(1)(B). This section of ERISA
permits a plan participant or beneficiary to bring a civil action
"to recover benefits due to him under the terms of the plan." In
support of her section 502(a)(1)(B) claim, Dewitt asserts that
the defendants "arbitrarily and capriciously denied additional
accrued benefits to [her] account balance in the Plan for the
plan year 1990 by having her benefits paid on an expedited basis
by the Plan Administrator, contrary to Plan provisions."
Complaint ¶16, A. 64. Second, she asserts that "her account was
treated arbitrarily as indicated by the method used in another
former employee's Plan account payment. . . ." Id. Another
terminated employee, Stephen Byrne, received Employer
Contributions, Plan Forfeitures and Trust Income even though he
was not technically employed at the end of the Plan year. Dewitt
asserted that Penn-Del terminated Byrne on December 14, 1988, but
5
that the Plan recorded Byrne's termination date as January 3,
1989, thereby qualifying Byrne for his share of the previous
year's Employer Contributions and Plan Forfeitures. Complaint
¶16; Affidavit of Steven Byrne, A. 7.
In Count II of her Complaint, Dewitt asserts that Penn-
Del discharged her to prevent her from qualifying for the 1990
Employer Contributions, Plan Forfeitures and Trust Income
allocable to her account. In this Count, she asserts that her
termination violated 29 U.S.C. § 1140, ERISA § 510, which makes
it "unlawful to discharge . . . a participant . . . for the
purpose of interfering with the attainment of any right to which
such participant may become entitled under the Plan."
On December 22, 1994, in ruling on the defendants'
joint motion to dismiss, the district court dismissed Dewitt's
section 502(a)(1)(B) claim for Employer Contributions and Plan
Forfeitures, benefits which formed the bulk of her prayer for
relief, because the terms of Dewitt's Plan expressly required
that she be employed on December 31, 1990 in order to be eligible
to receive those benefits, and she was not.1 Dewitt v. Penn-Del
Directory Corporation, 872 F. Supp. 126 (D. Del. 1994) (Dewitt
I).
1. The court also dismissed DeWitt's section 510 claims
for interference with these same benefits as barred by the
applicable statute of limitations.
The court, however, declined to dismiss DeWitt's claims
for 1990 Trust Income pursuant to both section 502(a)(1)(B) and
510 because it concluded that DeWitt's complaint stated those
claims. See 872 F. Supp. at 136.
The court also denied a motion for summary judgment
filed by DeWitt.
6
On July 31, 1995, Dewitt moved for summary judgment on
those claims which survived dismissal in Dewitt I. As a result
of the district court's holdings in Dewitt I, only Dewitt's
claims for Trust Income pursuant to ERISA §§ 502(a)(1)(B) and
510, an amount between $1,400 and $2,200, were deemed viable by
the court. See 912 F. Supp. at 711. The defendants filed a
cross-motion for summary judgment asserting that Dewitt was not
entitled to Trust Income under ERISA § 502(a)(1)(B) because the
administration of the Plan was not arbitrary and capricious, and
that Dewitt was not entitled to Trust Income pursuant to ERISA §
510 because she had not met her burden of proving that Penn-Del
had specific intent to interfere with her benefits.
The district court held a hearing on these motions2 on
October 22, 1995. By order dated January 17, 1996, the district
court denied Dewitt's motion for summary judgment for Trust
Income based both upon the terms of the Plan and upon a breach of
fiduciary duty theory. Instead, the court granted the
defendants' motion for summary judgment for Trust Income pursuant
to ERISA § 502(a)(1)(B), based upon the reasonableness of the
Plan Administrator's interpretation of the Plan and the district
court's deferential standard of review of the Plan
Administrator's actions. The court also granted Penn-Del's
motion for summary judgment for Trust Income pursuant to section
2. In addition to the cross-motions for summary judgment,
DeWitt also filed a motion to compel discovery responses from the
defendants. Defendants moved to strike DeWitt's motion to compel
discovery responses. The court denied DeWitt's motion to compel
discovery and instead granted the defendants' motion to strike.
7
510 of ERISA, 28 U.S.C. § 1140. The district court found that
the facts as alleged by Dewitt were not sufficient to provide
circumstantial evidence of specific intent.3 On January 29,
1996, Dewitt filed a Motion for Clarification and Reargument of
3. DeWitt also sought summary judgment with respect to her
request for Employer Contributions and Plan Forfeitures on the
ground that the defendants breached their fiduciary duty by
making misleading statements to her. The district court had
previously found that DeWitt was not entitled to Employer
Contributions and Plan Forfeitures in DeWitt I, 872 F. Supp. at
130, based upon the court's findings that the Plan required, as a
condition to receipt of those benefits, employment as of the
Valuation Date. The court observed that in attempting to renew
her request for these benefits, DeWitt had changed her theory of
relief from the terms of the Plan (which did not provide for
those benefits), to her current argument that Employer
Contributions and Plan Forfeitures should be granted to her as
equitable relief for the Plan administrator's fiduciary breach
caused by Raad's alleged misrepresentation of her benefits. The
court concluded that DeWitt had failed to plead a breach of
fiduciary duty in her complaint and, in any event, had failed to
allege facts sufficient to establish an actionable claim for
breach of fiduciary duty and therefore denied DeWitt's motion for
summary judgment for Employer Contributions and Plan Forfeitures
on the fiduciary breach theory.
As an additional ground for recovery of the previously-
denied Employer Contributions and Plan Forfeitures, DeWitt also
argued that the Plan was administered in an arbitrary and
capricious fashion due to the disparity in treatment between her
and the other employee, Byrne. The court concluded that the
differential treatment of Byrne and DeWitt did not amount to an
arbitrary and capricious administration of the Plan because Byrne
and DeWitt were not similarly situated as presented to the Plan
Administrator for the purpose of distribution of benefits. See
912 F. Supp. at 722. We will not disturb these rulings on
appeal.
Finally, in her motion DeWitt sought reconsideration of
the court's ruling that DeWitt's section 510 claims for Employer
Contributions and Plan Forfeitures were time barred. The
district court found untimely her request that it reconsider its
ruling in DeWitt I that DeWitt's claims for Employer
Contributions and Plan Forfeitures were time-barred because
DeWitt's motion for reconsideration was not filed within ten days
of the entry of judgment.
8
Order. On February 15, 1996, the court denied this motion. This
appeal followed.4
Dewitt raises numerous issues on appeal, many of which
we find to be without merit.5 Two principal issues remain which
we address.
II.
ERISA was "designed to promote the interests of
employees and their beneficiaries in employee benefit plans."
Shaw v. Delta Air Lines, 463 U.S. 85, 90 (1983). As we have
observed on many occasions, ERISA's concern is with the
administration of benefit plans and not with the precise design
of the plans themselves. Indeed, in enacting ERISA, Congress did
not impose a duty on employers to provide health care or other
4. The district court had jurisdiction pursuant to 28
U.S.C. § 1331 and 29 U.S.C. § 1132. We have jurisdiction
pursuant to 28 U.S.C. § 1291. When reviewing grants of summary
judgment our scope of review is plenary. We apply the same test
the district court should have applied initially. Goodman v.
Mead Johnson & Co.,
534 F.2d 566, 573 (3d Cir. 1976), cert.
denied,
429 U.S. 1038 (1977). The proper interpretation of the
Plan at issue is a question of law. Ulmer v. Harsco Corp.,
884
F.2d 98, 101-102 (3d Cir. 1989).
5. On appeal to us DeWitt asserts, inter alia, that she is
entitled to receive the Employer Contributions and Plan
Forfeitures applicable to her 1990 account balance as equitable
restitution based upon the Plan Administrator's fiduciary breach
and because such benefits were provided to the account of another
employee, Byrne. She also challenges the district court's
decision that her section 510 claims for these same benefits were
time-barred. Lastly, she contends that the district court abused
its discretion by denying Dewitt's motion to compel discovery
responses because Dewitt failed to comply with the requirements
of Rule 7.1.1 of the Local Rules of the United States District
Court for the District of Delaware. We have reviewed each of
these allegations and find that they are without merit.
9
benefits to their employees. In Hlinka v. Bethlehem Steel Corp.,
we observed that "ERISA is not a direction to employers as to
what benefits to grant their employees. Rather, ERISA is
concerned with the administration of an established plan and its
elements." 863 F.2d 279, 286 (3d Cir. 1988). See also Nazay v.
Miller,
949 F.2d 1323, 1329 (3d Cir. 1991) ("The clear emphasis
of the statute is to ensure the proper execution of plans once
established.").
Pursuant to ERISA, a plan administrator must act "in
accordance with the documents and instruments governing the plan
insofar as such documents and instruments are consistent" with
ERISA's statutory requirements. 29 U.S.C. § 1104(a)(1)(D), ERISA
§ 504 (a)(2)(D).6 Accordingly, ERISA plans are required to be in
writing. 29 U.S.C. § 1102(a)(1). They are to be administered by
fiduciaries who are obligated to comply with the terms of the
plan. Nazay, 949 F.2d at 1329.
The award of benefits under any ERISA plan is governed
in the first instance by the language of the plan itself. A plan
administrator may have discretion when interpreting the terms of
6. This provision provides:
(1) Subject to sections 1103 (c) and (d), 1342, and 1344 of
this title, a fiduciary shall discharge his duties with
respect to a plan solely in the interest of the
participants and beneficiaries and --
* * *
(D) in accordance with the documents and instruments governing
the plan insofar as such documents and instruments
are consistent with the provisions of this
subchapter and subchapter III of this chapter.
10
the plan; however, the interpretation may not controvert the
plain language of the document. Gaines v. Amalgamated Ins. Fund,
753 F.2d 288, 289 (3d Cir. 1985). We must uphold a plan
interpretation even if we disagree with it, so long as the
administrator's interpretation is rationally related to a valid
plan purpose and is not contrary to the plain language of the
plan.
Id. at 288. Dewitt argues that the Plan Administrator's
denial of additional benefits controverts the plain language of
the Plan.
Although we exercise plenary review over the court's
grant of summary judgment, our authority to review a plan
administrator's decision to deny benefits is significantly more
limited. In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,
110-12 (1989), the Supreme Court held that where an ERISA-
governed benefits plan grants discretionary authority to the plan
administrator to determine eligibility for benefits under the
plan, a court reviewing the plan administrator's actions should
apply the arbitrary and capricious standard of review. Thus, a
fiduciary's interpretation of a plan will not be disturbed if
reasonable.
Id. at 111; Heasley v. Belden & Blake Corp.,
2 F.3d
1249 (3d Cir. 1993). The Plan in this case contains a clause
granting discretion to the Plan Administrator, see Plan ¶
12.01(d);7 thus only if the Plan Administrator's decision to deny
7. Paragraph 12.01(d) provides:
(d) Powers of the Committee. The Committee is specifically
authorized and empowered, but not by way of limitation,
(1)To construe or interpret the provisions of the Plan whenever
necessary to carry out its intention and purpose.
11
Trust Income to Dewitt was arbitrary and capricious can we
overturn his decision.
Under the terms of Dewitt's Plan, entitlement to Trust
Income is contingent upon the existence of a viable account as of
the Valuation Date. Plan ¶ 6.02(e). Here, Dewitt did not have
an account on the Valuation Date because her act of requesting
distribution of her account balance, and the processing of that
request on December 28, 1996, had the effect of closing out her
account. Dewitt contends that under Paragraph 8.01, the Plan
Administrator was forbidden from paying out the account proceeds
until January 1, 1991. Paragraph 8.01, entitled "Distribution of
Benefit," provides for the timing of distribution of account
proceeds as follows:
8.01 Distribution of Benefit. Any Benefit of a
Participant that becomes payable under
Article 7 shall be paid in the form of a
single lump-sum cash distribution.
Distribution shall be made under this section
8.01 as soon as practicable after the end of
the calendar month in which termination of
employment occurs . . . . (Emphasis added.)
(..continued)
(2)To engage or employ such accountants, legal counsel, other
advisors, agents and such clerical, medical and
other services as may be required by Applicable
Law or as it may deem advisable to assist in the
administration of the Plan.
(3)To establish from time to time rules for the administration of
the Plan and the transaction of its business. The
determination of the Committee as to any disputed
question arising hereunder including, but without
limitation, questions of construction,
administration and interpretation shall be final
and conclusive upon all persons including, but not
by way of limitation, Employees, Participants and
Beneficiaries; their heirs, distributees and
personal representatives; and any other person
claiming an interest under the Plan.
12
The Plan Administrator argues that Paragraph 8.01's
mandatory language is reasonably construed to be directed at
protecting the Plan participant from "unreasonable delay" in
receipt of benefits. He relies on Paragraph 8.03 of the Plan
which directs the Trustee to make distributions "as soon as is
reasonably practicable" after receiving notice of the
distribution from the Plan committee. This provision of the Plan
provides:
8.03 Notice to Trustee.
The Committee shall notify the Trustee whenever any
Participant or Beneficiary is entitled to
receive a distribution under the Plan . . .
upon receipt of such notice from the
Committee, the Trustee will, as soon as is
reasonably practicable, distribute such
amount . . . . (Emphasis added).
The Plan Administrator argues that it was "reasonably
practicable" to make a distribution to Dewitt on December 28 and
that she could not complain because she received her distribution
earlier than she had expected or hoped. The Plan Administrator
argues that Dewitt failed to state a claim because she "requested
and received a distribution of her benefits prior to the last
business day of December," thereby forfeiting any interest in the
1990 Trust Income otherwise allocable to her account.
The district court agreed with this interpretation that
Paragraph 8.01 prevented the Plan from taking too long to pay out
benefits but contained no prohibition on paying early. The court
held, "It is not unreasonable to interpret Paragraph 8.01 as
setting the `subsequent month' rule for payment merely as a
13
mechanism to ensure prompt payment and avoid unreasonable delay
which may adversely effect the Plan participant." 912 F. Supp.
at 719. The court found that this interpretation was not
arbitrary and capricious, but rather, was grounded in the letter
and spirit of the provision. We disagree.
Even under our deferential standard of review, we
conclude that the Plan Administrator's interpretation of these
Plan provisions is unreasonable, because it disregards the
language of the Plan which expressly provides that "Distribution
shall be made . . . as soon as practicable after the end of the
calendar month in which termination of employment occurs. . . ."
Plan, ¶8.01. A Plan participant reading this provision could
believe that it clearly prohibited distribution of an account
prior to the end of the calendar month in which the employee was
terminated. Dewitt was thus entitled to the Trust Income from
her account because the Plan Administrator acted in violation of
this Plan provision which prohibits the Plan Administrator from
making a final distribution prior to January 1, 1991, the month
following the calendar month in which Dewitt's termination of
employment occurred.
Accordingly, we conclude as a matter of law that the
Plan Administrator's interpretation of the Plan was inconsistent
with the plain language of the Plan and, therefore, there was no
reasonable basis for the Plan Administrator's denial of benefits.
We will reverse the judgment in favor of Penn-Del on Dewitt's
14
claim for Trust Income and direct that summary judgment be
entered in favor of Dewitt on this claim.8
III.
Section 510 of ERISA, 29 U.S.C. § 1140, provides:
§ 1140. Interference with protected rights
It shall be unlawful for any person to discharge, fine,
suspend, expel, discipline, or discriminate
against a participant or beneficiary for
exercising any right to which he is entitled
under the provisions of an employee benefit
plan. . . for the purpose of interfering with
the attainment of any right to which such
participant may become entitled under the
plan. . . .
Congress enacted section 510 primarily to prevent "unscrupulous
employers from discharging or harassing their employees in order
to keep them from obtaining vested pension benefits." Haberern
v. Kaupp Vascular Surgeons Ltd., 24 F.3d 1491, 1501 (3d Cir.
1994) (citations omitted).
In Count II of her complaint, Dewitt alleges that
"[t]he Company and Raad . . . discharged her from her employment
8. In her appeal DeWitt also argued that she was entitled
under ERISA § 502(a)(1)(B) to the Trust Income for the 1990 Plan
year based upon the Plan Administrator's fiduciary breach in
expediting payment in violation of the Plan's terms and an IRS
Notice Regulation requiring 30 to 90 notice days prior to
distribution. DeWitt asserts that the Plan Administrator
committed a fiduciary breach by "rushing payment in order to
remove [her] account from the books of the plan before the end of
the year." DeWitt contends she is also entitled to restitution
as an equitable remedy because of the misleading statement made
by Raad. Because we conclude that DeWitt is entitled to Trust
Income under the terms of her Plan, we do not reach the merits of
her claim that she is entitled to this same Trust Income based on
the theory of fiduciary breach. See Hein v. Federal Deposit
Insurance Corp., 88 F.3d 210 (3d Cir. 1996).
15
on a pretextual basis on December 12, 1990, with specific intent
to deny her status as a participant in the Plan prior to the end
of the calendar year and thereby specifically intended to deny
and interfere with the accrual of additional accrued benefit
amounts due her account, in violation of ERISA section 510, 29
U.S.C. § 1140." Complaint ¶24.
To establish a prima facie case under section 510 of
ERISA, Dewitt must demonstrate:
1. prohibited employer conduct;
2. taken for the purpose of interfering;
3. with the attainment of any right to which the employee may
become entitled.
Gavalik v. Continental Can Co., 812 F.2d 834, 852 (3d Cir.),
cert. denied,
484 U.S. 979 (1987), 29 U.S.C. § 1140. If Dewitt
succeeds in establishing each of these elements, a rebuttable
presumption is created that section 510 has been violated.
Gavalik, 812 F.2d at 853.
Interpreting section 510 of ERISA in Gavalik, we held
that in order to recover under section 510, a plaintiff need not
prove that "the sole reason for his [or her] termination was to
interfere with pension rights." Nonetheless, a plaintiff must
demonstrate that the defendant had the "specific intent" to
violate ERISA. 812 F.2d at 851. Proof of incidental loss of
benefits as a result of a termination will not constitute a
violation of section 510.
Id. (Citing Titsch v. Reliance Group,
Inc.,
548 F. Supp. 983, 985 (S.D.N.Y. 1982), aff'd,
742 F.2d 1441
(2d Cir. 1983) ("No ERISA cause of action [under § 510] lies
16
where the loss of . . . benefits [i]s a mere consequence of, but
not a motivating factor behind, a termination of employment.")).
Consequently, to recover under section 510, the
employee must show that the employer made a conscious decision to
interfere with the employee's attainment of pension eligibility
or additional benefits. Gavalik, 812 F.2d at 860. We have
recognized that in most cases, however, "smoking gun" evidence of
specific intent to discriminate does not exist. As a result, the
evidentiary burden in these cases may also be satisfied by the
introduction of circumstantial evidence.
Id. at 851 (citing
Maxfield v. Sinclair Int'l,
766 F.2d 788, 791 (3d Cir. 1985),
cert. denied,
474 U.S. 1057 (1986)). Dewitt asserts that she
has indeed established such a circumstantial case "by combining
the factors of her termination, expedited distribution as
compared with the plain terms of the Plan, the comparable
situation of Steven Byrne, and the misleading statements made by
Raad." We address each factor alone and in combination.
We begin our analysis with Dewitt's proffer of her
termination on December 12, two weeks prior to the Valuation
Date.9 In Turner v. Schering-Plough Corp., we observed that
"where the only evidence that an employer specifically intended
to violate ERISA is the employee's lost opportunity to accrue
additional benefits, the employee has not put forth evidence
sufficient to separate that intent from the myriad of other
9. DeWitt acknowledges that the mere fact that she was
terminated near the end of the year, standing alone, would be
insufficient to support a section 510 claim.
17
possible reasons for which an employer might have discharged
him." Turner, 901 F.2d 335, 347 (3d Cir. 1990) (quoting Clark v.
Resistoflex Co.,
854 F.2d 762, 771 (5th Cir. 1988)). This kind
of deprivation occurs every time an ERISA employer discharges an
employee and is not alone probative of an intent to interfere
with pension rights. Accordingly, a prima facie case requires
additional evidence suggesting that pension interference was a
motivating factor.
With respect to the expedited distribution of benefits,
there is nothing in the record to suggest that the prompt payment
of Dewitt's benefits by the Plan Administrator was made in order
to avoid paying her amounts which would be due on December 31,
1990, and that this was done by the Plan Administrator to achieve
some benefit for the employer. We observe as we did in Turner,
supra, that "the record contains no evidence that the savings to
the employer resulting from [the plaintiff's] termination were of
sufficient size that they may be realistically viewed as a
motivating factor." See
Turner, 901 F.2d at 347.10 Here, too,
the savings to Penn-Del and its Plan were not sufficiently
significant to be a motivating factor.
10. Indeed, the expedited distribution of DeWitt's account
balance did not result in any additional savings to her employer
or to the Plan in terms of DeWitt's entitlement to the Employer
Contributions and Plan Forfeitures allocable to her account. Due
to the fact that DeWitt was terminated on December 12, 1990,
under the terms of her Plan, she was no longer eligible to
receive these benefits in any event. Plan ¶¶5.01, 5.02 and
6.02(c)-(d).
With respect to the Trust Income allocable to her
account, the distribution of DeWitt's account prior to January 1,
1991, resulted in a savings of approximately $1,400-$2,200.
18
Likewise, we are not persuaded that Raad's alleged
misrepresentation regarding the timing for distribution of
benefits gives rise to an inference of specific intent to
interfere with Dewitt's benefits. Significantly, Raad's alleged
statements could not have affected Dewitt's receipt of Employer
Contributions or Plan Forfeitures which, under the terms of the
Plan, are available only to those employed on the Plan's
Valuation Date. Plan ¶¶5.01, 5.02. As well, as we pointed out
above, these statements could not affect Dewitt's entitlement to
the Trust Income allocable to her account pursuant to Paragraph
8.01 of her Plan.
Lastly, we agree with the district court that the
manner in which Byrne's benefits were handled by the Plan
Administrator are not relevant. Even assuming that the Plans for
Dewitt and Byrne were identical, and the record does not inform
us one way or the other, Dewitt's employer had elected to make
Byrne's termination effective on January 3, 1989, but fired
Dewitt on December 12, 1990. Because Dewitt was an at-will
employee, her employer could terminate her employment, for any
reason and on any date the employer chose. Thus, "[e]ach former
employee's respective position relative to the Valuation Date
renders the differential treatment of their benefits proper."
See 912 F. Supp. at 720.
Because we agree with the district court that all of
these facts, taken together, do not constitute sufficient
evidence of an intent to interfere with benefits, we will affirm
19
the court's grant of summary judgment in Penn-Del's favor on this
claim.
IV.
For the foregoing reasons we will reverse the district
court's entry of summary judgment against DeWitt on the claim for
Trust Income pursuant to section 502(a)(1)(B) of ERISA. We will
affirm the judgment of the district court on DeWitt's section 510
claim and in all other respects.
CAROL DEWITT, APPELLANT V. PENN-DEL DIRECTORY CORPORATION, A
FOREIGN CORPORATION; NATIONAL TELEPHONE DIRECTORY CORPORATION
PROFIT SHARING PLAN; NATIONAL TELEPHONE DIRECTOR CORPORATION PLAN
ADMINISTRATOR OF PROFIT SHARING PLAN, NO. 96-7163
BECKER, CIRCUIT JUDGE, CONCURRING IN PART, DISSENTING IN PART:
Although I join in parts I and III of the majority's
opinion, I cannot agree with the conclusion that the majority
reaches in part II as to the proper interpretation of the ERISA
plan at issue. Unlike the majority, I do not believe that the
plan administrator acted arbitrarily or capriciously in
interpreting the plan to allow the distribution of benefits in
the same month in which the termination of employment occurs.
I.
The relevant provisions of the ERISA plan at issue are
Paragraphs 8.01 and 8.03, both of which are excerpted in the
majority opinion. The plain language of the two paragraphs does
20
not, as the majority contends, lead ineluctably to a single
interpretation. Rather, when read together, the two paragraphs
are ambiguous. On the one hand, Paragraph 8.01 requires that
distribution of benefits be made "as soon as practicable after
the end of the calendar month in which . . . termination of
employment occurs . . . ." On the other hand, Paragraph 8.03
requires that, when he is notified that a beneficiary is due
benefits, the Trustee of the plan will distribute the benefits
"as soon as is reasonably practicable." Paragraph 8.03 goes no
further in describing when the distribution is to be made.
Therefore, assuming that a beneficiary is entitled to a
distribution, there is the possibility of conflicting demands on
the Trustee. If, as was the case here, it was reasonably
practicable for the Trustee to distribute the benefits before the
end of the calendar month in which the termination occurred, is
the Trustee to wait for the month to end, as Paragraph 8.01
suggests, or, is the Trustee to distribute the benefits when they
are ready, as Paragraph 8.03 suggests?
In my view, given the ambiguity inherent in Paragraphs
8.01 and 8.03, the plan administrator did not act arbitrarily or
capriciously in interpreting the plan to mean that distribution
of benefits would occur in this case as soon as reasonably
practicable. Certainly, the language itself allows for this as
one possible reading of the plan. This is especially so because
it is sound policy and makes good sense to encourage plan
administrators to distribute benefits due beneficiaries sooner
rather than later. More often than not, beneficiaries need their
21
benefits immediately; delaying distribution might be highly
detrimental.11 Requiring the plan administrator to wait to
distribute the benefits until the end of the calendar month in
which the termination of employment occurs would inject
unnecessary delay into a process that should function
expeditiously.
In sum, I cannot fault the plan administrator for
expediting the distribution of DeWitt's benefits in this case.12
I would therefore affirm the judgment of the district court in
all respects.
11
Although she did not communicate her need to her employer,
DeWitt's own situation provides an example. DeWitt stated in her
deposition that she needed her distribution almost immediately.
She did not know how long she would be out of a job, and she
wanted to help her son, who had just entered college, with his
tuition.
12
I am troubled by Raad's failure to inform DeWitt that if
she were to wait until after the Valuation Date to fill out a
request for a distribution of her benefits she would be ensured
of receiving a greater distribution. However, as the majority
notes supra in footnotes 3 and 5, DeWitt failed to allege facts
sufficient to show that Raad stood in a fiduciary relationship to
her. Moreover, even assuming such a fiduciary relationship, Raad
did not have a duty to inform DeWitt that waiting to request a
distribution might be beneficial; DeWitt did not allege that she
made known to Raad any facts that would create such a duty. See
In re Unisys Corp. Retiree Medical Benefit "ERISA" Litig.,
57
F.3d 1255, 1261-67 (3d Cir. 1995) (describing the scope of the
affirmative fiduciary duty to provide ERISA beneficiaries with
information about the ERISA plan); Bixler v. Central Pa.
Teamsters Health & Welfare Fund,
12 F.3d 1292, 1301-03 (3d Cir.
1993) (same).
22
