Filed: Jun. 21, 2017
Latest Update: Mar. 03, 2020
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 16-3064 _ PAUL FELKER; WILLIAM SCHRADER; MICHAEL MCCORMICK; ANTHONY M. KOZLOWSKI; WILLIAM T. DUNBAR; EDWARD R. MACIEJEWSKI; BRIAN J. KELSO; WILLIAM VANDERGRIFT; PAUL D. JENNINGS; DARRYL T. BRANT; FRED J. SOBOTINIC; ROBERT A. FORTE, JR; ANDREW R. GOSS; EDWIN J. ERIKSEN; ANTHONY C. REILLY; FRANK T. GANNON; JOHN P. GANNON; BRIAN D. BARROWCLIFF; LEO RUSHTON; DEONARINE JAWAHIR; CARL HOLDERER; ROBERT A. GRANGE; PAUL C. MILLER,
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 16-3064 _ PAUL FELKER; WILLIAM SCHRADER; MICHAEL MCCORMICK; ANTHONY M. KOZLOWSKI; WILLIAM T. DUNBAR; EDWARD R. MACIEJEWSKI; BRIAN J. KELSO; WILLIAM VANDERGRIFT; PAUL D. JENNINGS; DARRYL T. BRANT; FRED J. SOBOTINIC; ROBERT A. FORTE, JR; ANDREW R. GOSS; EDWIN J. ERIKSEN; ANTHONY C. REILLY; FRANK T. GANNON; JOHN P. GANNON; BRIAN D. BARROWCLIFF; LEO RUSHTON; DEONARINE JAWAHIR; CARL HOLDERER; ROBERT A. GRANGE; PAUL C. MILLER, ..
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 16-3064
_____________
PAUL FELKER; WILLIAM SCHRADER; MICHAEL MCCORMICK;
ANTHONY M. KOZLOWSKI; WILLIAM T. DUNBAR; EDWARD R.
MACIEJEWSKI; BRIAN J. KELSO; WILLIAM VANDERGRIFT; PAUL D.
JENNINGS; DARRYL T. BRANT; FRED J. SOBOTINIC; ROBERT A. FORTE, JR;
ANDREW R. GOSS; EDWIN J. ERIKSEN; ANTHONY C. REILLY;
FRANK T. GANNON; JOHN P. GANNON; BRIAN D. BARROWCLIFF;
LEO RUSHTON; DEONARINE JAWAHIR; CARL HOLDERER;
ROBERT A. GRANGE; PAUL C. MILLER,
Appellants
v.
USW LOCAL 10-901, USW LOCAL 10-901 (SU) AND USW LOCAL 10-901 (NE)
MARCUS HOOK REFINERY WORKERS INVOLUNTARY TERMINATION PLAN
_____________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(No. 2-13-cv-07101)
District Judge: Honorable Joel H. Slomsky
_____________
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
June 8, 2017
_____________
Before: CHAGARES, VANASKIE, and FUENTES, Circuit Judges.
(Filed: June 21, 2017)
____________
OPINION*
____________
CHAGARES, Circuit Judge
Plaintiffs Mobile Work Force Employees (“MWF Employees”), who are former
employees of Sunoco, Inc. (“Sunoco”), brought a benefits recovery suit under the
Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et. seq.,
against the defendant Marcus Hook Refinery Workers Involuntary Termination Plan (the
“Plan”). The Plan denied severance benefits to the MWF Employees after it determined
that they were not terminated in connection with the idling of Sunoco’s Marcus Hook
Refinery. The District Court granted summary judgment in favor of the Plan. The MWF
Employees appeal. We will affirm the determination of the District Court.
I.
The MWF Employees were maintenance employees assigned to perform duties at
two of Sunoco’s refineries: the Marcus Hook Refinery and the Philadelphia Refinery. In
2012, Sunoco decided to idle the main processing unit of the Marcus Hook Refinery.
Sunoco and USW Local 10-901, which represented the MWF Employees, thereafter
engaged in bargaining and entered into a Settlement Agreement in February 2012.
Pursuant to that Agreement, the MWF Employees would be “afforded the opportunity to
be assigned on a temporary basis to work at the Philadelphia Refinery and work until laid
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
2
off from such temporary assignment as determined by management.” Appendix (“App.”)
930. Additionally, a severance benefit plan (the “Plan”) was established to “alleviate
financial hardships which may be experienced” by Sunoco employees in connection with
the idling of the [Marcus Hook] Refinery.” App. 908.
Several of the Plan’s terms are implicated in this suit. For instance, the Plan
limited severance benefits to “those employees whose employment is terminated in
connection with [Sunoco’s] idling” of the main processing units of the Marcus Hook
Refinery. App. 908. The Plan provided that “[s]uch affected employees who express an
interest (preference) in terminating their employment with [Sunoco] and are accepted for
termination” would be eligible for severance benefits. App. 908. The Plan also
contained several eligibility exclusions. App. 909. Benefits under the Plan were to be
paid out of Sunoco’s assets, and the Plan Administrator was vested with “full
responsibility for interpreting and administering the terms and provisions of the Plan.”
App. 916.
Following the idling of the main processing units at Marcus Hook Refinery, the
MWF Employees were assigned to the Philadelphia Refinery. In July 2012, Sunoco
entered into a Contribution Agreement to sell the Philadelphia Refinery to Philadelphia
Energy Solutions, LLC (“PES”), in which Sunoco was a minority owner. App. 1111.
Around the same time that the agreement between Sunoco and PES was being negotiated,
PES and Local 10-1, which represented the Philadelphia Refinery workers, entered into a
Memorandum of Understanding and Agreement (“MOU”) dated June 26, 2012. Pursuant
to that agreement, PES “agree[d] to hire all maintenance employees from the Marcus
3
Hook mobile workforce who have been working temporarily at the Philadelphia
Refineries.” App. 1205.
Sunoco sold its Philadelphia Refinery to PES in September 2012. On September
7, 2012, the MWF Employees were terminated by Sunoco. That same day, PES hired the
MWF Employees to work at the Philadelphia Refinery pursuant to the terms of the
Contribution Agreement and the MOU. The MWF Employees were thus “immediately
re-employed by [PES]” as of the date of their termination as Sunoco employees. App.
1220.
On October 3, 2012, USW Local 10-901 sent a letter to Sunoco’s Vice President
of Labor Relations seeking severance benefits on behalf of the MWF Employees. App.
1237. A formal claim for benefits was sent to the Plan Administrator on October 22,
2012. App. 1217. The Plan Administrator, after gathering and considering relevant
information including the Plan documents, the Contribution Agreement, the MOU, and
the Settlement Agreement, App. 508, denied the requested benefits in January 2013. The
Plan Administrator determined that the MWF Employees “were not terminated from
employment in connection with the idling of the [Marcus Hook Refinery],” and therefore,
were not eligible for severance benefits under the Plan. App. 1295. The Plan
Administrator further concluded that although the MWF Employees were temporarily
assigned to the Philadelphia Refinery after the idling of the Marcus Hook refinery, they
were converted to permanent status after PES and Local 10-1 executed the MOU in June
2012. App. 1296. The MWF Employees appealed the Plan Administrator’s initial denial
4
of benefits, but did not submit any new information on appeal. The Plan Administrator,
after again considering the relevant evidence, upheld the denial of benefits.
Following the denial of benefits, the MWF Employees filed this suit in federal
court. The parties cross-moved for summary judgment. The District Court awarded
summary judgment to the Plan, concluding that the Plan Administrator’s “denial of
benefits was neither arbitrary nor capricious and was warranted under ERISA.” App. 7.
The MWF Employees filed this timely appeal.
II.
The District Court had jurisdiction pursuant to 29 U.S.C. § 1132(e) and 28 U.S.C.
§ 1331 as this action arises out of the denial of severance benefits under a plan subject to
ERISA, 29 U.S.C. §§ 1001 et. seq. We exercise appellate jurisdiction under 28 U.S.C.
§ 1291.
“We subject the District Court’s grant of summary judgment to plenary review,
and we apply the same standard that the lower court should have applied.” Smathers v.
Multi–Tool, Inc., 298 F.3d 191, 194 (3d Cir. 2002) (citing Farrell v. Planters Lifesavers
Co.,
206 F.3d 271, 278 (3d Cir. 2000)). Under that standard, summary judgment is
appropriate only if there “is no genuine issue as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In making this
determination, we must “view the facts in the light most favorable to the nonmoving
party and draw all inferences in that party’s favor.”
Farrell, 206 F.3d at 278.
5
III.
The MWF Employees raise several arguments on appeal. They first argue that the
Plan’s decision to deny benefits was arbitrary and capricious because it is contrary to the
Plan’s clear language. The MWF Employees further argue that the Plan’s decision to
treat them as permanent employees was unsupported by substantial evidence. They next
argue that the Plan’s decision was erroneous as a matter of law because it violated labor
laws. They finally argue that the District Court improperly excluded evidence pertaining
to the Plan Administrator’s decision and the effect of potential conflicts. We have
considered the MWF Employees’ arguments, and for the following reasons, we will
affirm the District Court’s judgment.
An administrator’s benefit-eligibility determination is reviewed under an arbitrary
and capricious standard if, as here, the Plan grants the administrator discretionary
authority to determine benefits or construe the terms of the plan. Jordan v. Federal Exp.
Corp., 116 F.3d 1005, 1009 n.8 (3d Cir.1997) (citing Firestone Tire & Rubber Co. v.
Bruch,
489 U.S. 101 (1989)). Under this “highly deferential” standard, an
administrator’s interpretation of a plan may be disturbed “only if it is without reason,
unsupported by substantial evidence or erroneous as a matter of law.” Courson v. Bert
Bell NFL Player Ret. Plan,
214 F.3d 136, 142 (3d Cir. 2000) (quoting Abnathya v.
Hoffmann-LaRoche, Inc.,
2 F.3d 40, 45 (3d Cir. 1993) (internal quotation marks
omitted). Our Court has specified several factors for courts to consider in determining
whether an interpretation of a plan is reasonable, including: “(1) whether the
interpretation is consistent with the goals of the Plan; (2) whether it renders any language
6
in the Plan meaningless or internally inconsistent; (3) whether it conflicts with the
substantive or procedural requirements of the ERISA statute; (4) whether the [relevant
entities have] interpreted the provision at issue consistently; and (5) whether the
interpretation is contrary to the clear language of the Plan.” Howley v. Mellon Fin.
Corp., 625 F.3d 788, 795 (3d Cir. 2010) (quoting Moench v. Robertson,
62 F.3d 553, 566
(3d Cir. 1995)).
Turning to that reasonableness analysis, the Plan’s goal was to “alleviate financial
hardships” employees might experience in connection with the idling of the Marcus Hook
Refinery. App. 908. Here, the MWF Employees had a smooth transition to PES
employment, and they did not experience any period of unemployment. They thus
suffered no financial hardship in connection with the idling of the Marcus Hook Refinery
and were awarded the same or better compensation as a result of the transfer to PES
employment. Under these circumstances, payment of severance benefits to the MWF
Employees would, in fact, be inconsistent with the Plan’s goal because it would provide a
windfall to employees who had never changed their jobs, were never out of work, and
were provided benefits and salary by PES. See, e.g., Bradwell v. GAF Corp., 954 F.2d
798, 801 (2d Cir. 1992) (“[I]n the context of the sale of a business where the buyer
retains the former owner’s employees, it would give a windfall to award severance pay to
employees who never changed their jobs and were never out of work.”). Thus, the Plan
Administrator’s interpretation is consistent with the Plan.
7
Further, the Plan Administrator’s interpretation does not render the language in the
Plan meaningless.1 Nor does the interpretation conflict with the requirements of ERISA.
The MWF Employees argue that there was a structural conflict of interest because
benefits would be paid out of Sunoco’s assets, and the Plan Administrator was tasked
with adjudicating both the initial claim and the appeal. However, as the District Court
concluded, there were sufficient safeguards in place to comply with ERISA’s
requirements, such as the fact that the Plan Administrator understood his fiduciary role
and reviewed appeals as if they were new claims. App. 27-29.
Finally, the Administrator’s interpretation is consistent with the clear language of
the Plan, which was intended to benefit only those negatively affected by the idling of the
Marcus Hook Refinery. As we have discussed, the MOU and Contribution Agreement
supported the Plan Administrator’s determination that the MWF Employees were
permanent employees of the Philadelphia Refinery. In light of this evidence, it was
reasonable for the Plan Administrator to determine that the MWF Employees did not
1
The Plan specified that several categories of employees were ineligible for benefits.
App. 909. The MWF Employees argue that they do not fall into any of these categories
because there was an explicit exception for “employees who are part of the Mobile Force,
as designated by [Sunoco] in its sole discretion, and who are transferred to a position at
[Sunoco’s] Philadelphia Refinery for a limited period of time.” App. 909. This argument
is misplaced, however, because it ignores that the MWF Employees’ status was converted
to permanent assignment in the summer of 2012 after Sunoco and PES entered into the
Contribution Agreement. The provisions of the Plan applying to employees of the
“Philadelphia Refinery for a limited period of time” therefore have no applicability to the
MWF Employees and are not rendered meaningless by the Plan Administrator’s
interpretation.
8
meet the threshold eligibility requirements under the Plan. Accordingly, the Plan
Administrator’s denial of benefits was not arbitrary or capricious.
The MWF Employees relatedly argue that substantial evidence did not support the
conclusion that they were permanently transferred to the Philadelphia Refinery. For the
reasons discussed above, ample evidence supported this determination.
The MWF Employees next argue that the Plan’s denial of benefits unilaterally
deprived them of a collectively bargained benefit in violation of the National Labor
Relations Act. In support, the MWF Employees argue that the Plan Administrator knew
that they were not represented in the bargaining with PES that gave rise to the MOU
recognizing their status as permanent employees. We regard the MWF Employees’
reliance on labor laws as misplaced as they have not asserted a claim for the violation of
federal labor laws. In any event, any purported denial of a collectively bargained benefit
is irrelevant to whether the MWF Employees were permanently assigned to the
Philadelphia Refinery for the purposes of applying the written terms of the Plan. See In
re Unisys Corp. Retiree Med. Ben. ERISA Litig., 58 F.3d 896, 902 (3d Cir. 1995) (“The
written terms of the plan documents control and cannot be modified or superseded by the
employer’s oral undertakings.”).
The MWF Employees finally contend that the District Court improperly excluded
evidence, including Sunoco’s bargaining notes, a Termination Agreement between
Sunoco and Local 10-1, and a statement made under oath by the President of Local 10-1.
The District Court limited its review to the administrative record and any documents that
could have bearing on potential conflicts of interest. We perceive no error in this
9
determination. See Fleisher v. Standard Ins. Co., 679 F.3d 116, 121 (3d Cir. 2012)
(“When reviewing an administrator’s factual determinations, we consider only the
‘evidence that was before the administrator when he made the decision being reviewed.’”
(citing Mitchell v. Eastman Kodak Co.,
113 F.3d 433, 440 (3d Cir. 1997)); see also
Kosiba v. Merck & Co.,
384 F.3d 58, 67 n.5 (3d Cir. 2004) (“[I]n general, the record for
arbitrary-and-capricious review of ERISA benefits denial is the record made before the
plan administrator, and cannot be supplemented during litigation.”). Accordingly, the
MWF Employees are not entitled to relief on this ground.
IV.
For the foregoing reasons, we will affirm the District Court’s order granting
summary judgment in favor of the Plan.
10
