YOUNG, District Judge.
Brian O'Shea ("O'Shea") worked as an employee of the United Parcel Service ("UPS") for nearly four decades. After falling ill, he elected to retire and chose a retirement plan that would guarantee monthly payments to his children for ten years. Although he stopped working on January 8, 2010, he was to remain an active employee of UPS until February 28 due to his accrual of vacation days. Unfortunately, O'Shea died on February 21, one week before the date on which his retirement annuity was slated to start. Under the terms of UPS's retirement plan (the "Plan"), the committee in charge of pension decisions denied O'Shea's children any retirement benefit payments on the ground that O'Shea was not actually retired at the time of his death. Following an internal appeal, O'Shea's son Michael (the "Plaintiff") now sues UPS, the UPS Retirement Plan, the UPS Retirement Plan Administrative Committee (the "Committee"), and three unnamed individuals (collectively, the "Defendants") in his personal capacity and as executor of O'Shea's estate, alleging violations of the Employee Retirement Income Security Act ("ERISA"). The parties agreed to resolve the suit at a case stated hearing.
This case began when the Plaintiff filed his complaint before this Court on February 20, 2014. Compl., ECF No. 1. The Defendants moved to dismiss Count II of the complaint (regarding an alleged breach of fiduciary duty) with prejudice on May 27, 2014. Mot. Dismiss Count II Compl. With Prejudice, ECF No. 12; Defs.' Mem. Supp. Mot. Dismiss Count II Compl. With Prejudice, ECF No. 13. The Defendants also filed their answers to the complaint
At that same hearing, the parties agreed to have Count I of the complaint—a claim for benefits under ERISA—resolved at a case stated hearing. Tr. 9:14-11:4, ECF No. 32; see also Joint Mot., ECF No. 36; Consent Parties, ECF No. 41. On November 6, 2014, the Defendants filed with this Court copies of the Plan, Notice Filing Plan Related Docs. Def. UPS Retirement Plan, Ex. A, UPS Retirement Plan ("UPS Plan"), ECF No. 39-1;
For the sake of convenience, all the relevant terms (and portions thereof) of the Plan that are discussed in this memorandum are reproduced here. The two most salient provisions are in bold.
UPS Plan 38, 44, 60, 62, 64, 82. There are also three relevant provisions in the Summary:
UPS Summary 20, 22.
O'Shea was an employee of UPS—and accordingly was a participant in the Plan—for thirty-seven years prior to his death. Pl.'s Facts ¶ 4. In 2008, he was diagnosed with cancer; he continued to work during this time, using vacation days when he had to miss work for treatment. Id. ¶ 6. He reached age fifty-five on August 25, 2009, thus allowing him to choose to retire early (though he did not do so at that time). Id. ¶ 4. By December 2009, he decided to elect retirement and met with Amy Madeira ("Madeira"), a human resources supervisor at UPS, for help in filling out his retirement
O'Shea submitted his retirement papers on January 7, 2010, which was also the last day he actually worked. Pls.' Facts ¶ 10; Pl.'s Mem. 2-3. In those papers, he named his "date of retirement" as February 28, 2010, and his "benefit start date" as March 1, 2010. UPS Admin. R. 86. O'Shea chose as his payment option the "Single Life Certain Annuity with 10-Year Payment Guarantee." UPS Admin. R. 87. Under the terms of the Plan, a retired employee who opts for this benefit receives lifetime monthly payments; if he dies after his Annuity Starting Date but before he has received 120 monthly payments, the remainder of those 120 payments will be sent to his designated beneficiaries. UPS Plan 62. In relevant part, O'Shea's retirement forms described this benefit as follows: ". . . I will receive a monthly benefit for my lifetime with a guarantee of monthly payments for a period of 10 years. If I die within the 10-year guarantee period, my beneficiary will continue to receive my monthly benefit amount for the remainder of the guarantee period." UPS Admin. R. 87. O'Shea named his four children as the beneficiaries. Defs.' Mem. 6. At the end of the retirement form, O'Shea signed his name to a statement "acknowledg[ing] that [he] ha[s] read this form entirely." UPS Admin. R. 95.
Shortly after submitting his retirement forms, O'Shea also independently accepted UPS's Special Restructuring Program ("SRP"), which involved UPS giving select employees one year's worth of compensation in exchange for their leaving the company and executing a release of claims. Defs.' Mem. 6-7. O'Shea's SRP forms, which were submitted on February 12, 2010, acknowledged a separation date from the company of February 28, 2010—the same day as the date of retirement specified in his retirement forms. UPS Admin. R. 75, 76. In the general release, which was executed the same day he submitted the SRP form, O'Shea acknowledged that he was "releasing (i.e., giving up) all known and unknown claims, promises, causes of action, or similar rights of any type that I may presently have . . . against any Released Party . . . [including] claims I might have under . . . the Employee Retirement Income Security Act of 1974 (ERISA)." Id. at 81-82. In return for opting into the SRP, O'Shea received a one-time payment of $98,800 minus applicable withholding and taxes. Id. at 76.
On February 21, 2010—one week before his official retirement and annuity starting date—O'Shea succumbed to his illness. Pl.'s Mem. 3. Upon learning of his death, UPS cancelled the payment it had issued for the Annuity Starting Date of March 1. UPS Admin. R. 96. The Committee sent the Plaintiff a letter on March 23, 2010, telling him that it was denying any benefits under the Plan. Id. at 39; Pl.'s Facts ¶ 43. On April 23, 2010, the Plaintiff filed an appeal seeking the 120 monthly payments O'Shea was purportedly guaranteed under the Plan, and the Committee denied said appeal on June 1. UPS Admin. R. 22-23, 37-38; Pl.'s Facts ¶¶ 44-45. The Plaintiff filed a second appeal on July 27
The Plaintiff's second appeal focused on three related points. First, the appeal noted that when helping O'Shea fill out his retirement packet, Madeira never informed him that his designees would not receive the retirement benefit if O'Shea died before his formal retirement date. UPS Admin. R. 16-17. Second, the Plaintiff argued that Madeira encouraged O'Shea to delay his retirement date. Id. Third, the Plaintiff (both in his appeal letter and in a subsequent letter from his counsel containing additional information) emphasized language from the Plan stating that the payments he was seeking were "guaranteed." Id. at 17-20.
In its October 1 letter denying the Plaintiff's appeal, the Committee cited Section 5.6(a) of the Plan as a reason for the denial of benefits:
Id. at 8-9.
As a threshold matter, the Defendants note that their decision denying benefits should be reviewed under the arbitrary and capricious standard. Defs.' Mem. 11-12. They hinge this argument on language from Section 9.3 of the Plan granting the Committee "the `exclusive right to interpret the Plan'" and stating that "any interpretations or decisions by the Committee are `conclusive and binding.'" Id. at 12. Their brief then cites numerous cases in which the First Circuit ruled that very similar language in other retirement plans meant that the decisions of the committees overseeing those plans would be reviewed under the arbitrary and capricious standard. Id. at 12-13 (citing Leahy v. Raytheon Co., 315 F.3d 11, 15 (1st Cir.2002) (applying arbitrary and capricious standard when the plan in question included the phrases "exclusive right . . . to interpret the Plan" and "conclusive and binding")); Twomey v. Delta Airlines Pilots Pension Plan, 328 F.3d 27, 31 (1st Cir. 2003) (similar); Reeder v. Sun Life Assurance Co. of Can., Inc., 497 F.Supp.2d 125, 127-28 (D.Mass.2007) (Zobel, J.) (noting that a plan requiring that a claimant's proof be "satisfactory" to the administrator gave the administrator sufficient deference to trigger the arbitrary and capricious standard). If this standard applies, the Defendants argue, this Court must uphold the Committee's decision so long as that decision is "plausible in light of the record as a whole." Defs.' Mem. 13-14 (quoting Twomey, 328 F.3d at 31) (internal quotation marks omitted). This means that "[t]he Committee's decision does not have to be right; instead, the arbitrary and capricious standard simply asks whether the Committee's determination was reasonable." Id. at 14 (collecting D. Mass. cases) (internal quotation marks omitted).
The Plaintiff does not appear to challenge this argument. Nowhere in his opening memorandum does he address the issue of the standard governing this Court's review of the Committee's decision. See Pl.'s Mem. Indeed, the Plaintiff's opposition to the Defendants' initial memorandum frames its argument around the arbitrary and capricious standard, e.g., Pl.'s Opp'n 2, 13, 14—though because any decision so unreasonable as to be deemed arbitrary and capricious would also necessarily fail under a less deferential standard of review as well, this does not constitute a direct concession that the arbitrary and capricious standard is the correct one to apply.
Ultimately, the Defendants are correct regarding the standard the Court must apply. Accordingly, the Court will analyze the Committee's decision using the deferential standard mandated by law.
The bulk of the parties' arguments centers around the text of the Plan itself and the relationship between Section 5.6 (the section stating that the spouse or domestic partner of someone who dies before their Annuity Starting Date may receive a Preretirement Annuity) and the remainder of the Plan, particularly Section 5.4 (which describes the retirement annuity option chosen by O'Shea). Given the intricacy of the parties' arguments (and the fact that the Plaintiff's arguments are not a model
The first part of the Plaintiff's argument regarding the text of the Plan focuses exclusively on the language of Section 5.6. He first claims that the Committee relied exclusively on Section 5.6 in rendering its denial, Pl.'s Mem. 5, and further argues that because ERISA requires plan administrators clearly to refer to plan provisions on which benefits decisions are based, the Committee's decision can only be supported by Section 5.6 and not by other parts of the Plan, id. at 7 (citing 29 C.F.R. § 2560.503-1(j); Glista v. Unum Life Ins. Co. of Am., 378 F.3d 113, 128-32 (1st Cir.2004); Tebo v. Sedgwick Claims Mgmt. Servs., Inc., 848 F.Supp.2d 39, 55 (D.Mass. 2012) (Saylor, J.)).
Examining Section 5.6, the Plaintiff notes that it does not refer in any way to the Single Life Annuity with 120-Month Guarantee retirement benefit as chosen by O'Shea, nor does it explicitly address situations in which a Plan participant elects retirement but dies before the first payment is issued; instead, it solely discusses the Preretirement Survivor Annuity. Id. at 5. He argues that the law mandated this provision's inclusion in the Plan because Congress was concerned about situations in which a surviving spouse was left destitute "simply because an employee entitled to a pension dies before electing retirement and triggering his retirement benefits"; because that factual circumstance does not inure here (considering that O'Shea had no spouse and had already elected his benefits), it was inappropriate for the Committee to rely on Section 5.6 to deny benefits to O'Shea's designees. See id. at 5-6. The Plaintiff further contends that Subsections 5.6(a)(i) and (ii)—two subsections concerning the timing of benefits that the Committee did not include in its decision—demonstrate that Section 5.6 as a whole is concerned with a participant reaching "earliest retirement age" rather than addressing the specific circumstances of O'Shea's election of retirement and subsequent death. Id. at 6-7.
After purporting to demonstrate why Section 5.6 viewed alone does not bar his receiving benefits, the Plaintiff then seeks to show that other provisions of the Plan address the circumstances of O'Shea's near-retirement and death and mandate that the Plaintiff receive payments. First, he cites Sections 4.1 and 4.3 of the Plan to show that the Plan requires a two-month gap between election of benefits and the Annuity Starting Date; he further cites Section 5.2(b)'s provision for early retirement benefits "commenc[ing] . . . at any time on or after [an employee] terminates employment" as consistent with this gap. Id. at 8-9. He then notes that despite mandating this gap between election and receipt of benefits, none of these three sections "state[] that the retirement benefit chosen by the participant is forfeited if the participant then dies during that gap in time." Id. at 9.
Next, the Plaintiff looks at Section 5.4, which describes the forms of retirement benefits—including the Single Life Certain Annuity with 10-Year Payment Guarantee selected by O'Shea. First, he observes that Section 5.4(b)'s requirement that an election be made within the three months preceding the Annuity Starting Date is consistent with the gap between election and receipt of benefits contemplated by Sections 4.1, 4.3, and 5.2, and states that this provision does not address the death of a participant during that gap. Id. at 9-10. The Plaintiff then turns to Section
Id. at 10-11 (internal citations omitted). The Plaintiff goes on to make similar arguments regarding the description of the Single Life Certain Annuity with 10-Year Payment Guarantee in O'Shea's retirement benefit application—discussed above in the fact section—focusing on the word "guarantee" and the failure to directly address death prior to the first annuity payment. Id. at 11-12. Put succinctly, the Plaintiff's reading of the Plan as a whole is as follows:
Pl.'s Opp'n 10.
In addition to the broader arguments regarding interpretation of Section 5.6 and
In the event that the Court does not accept the Plaintiff's argument that the Plan clearly mandates the payment of benefits, he also argues that contract principles compel the Court to construe any lack of clarity in his favor. The lack of clarity he focuses on arises from the Plan's failure explicitly to say what happens to someone who has elected the Single Life Certain Annuity with 10-Year Payment Guarantee but dies before the Annuity Starting Date. Pl.'s Mem. 13-15. In the face of such ambiguity, he says, the Court should look to extrinsic evidence of the intent of the parties to determine the meaning of relevant contract terms. Id. at 13 (citing Smart v. Gillette Co. Long-Term, Disability Plan, 70 F.3d 173, 178 (1st Cir.1995)).
As to O'Shea's understanding, the Plaintiff contends that "[n]o reasonable interpretation of the circumstances presented by this case could allow for the possibility that Mr. O'Shea interpreted the Plan terms at issue here to call for the termination of . . . payments if . . . he passed away before the payments began." Id. at 14. Turning to evidence of the Defendants' intent, the Plaintiff looks at the wording of the Summary, focusing on the word "guarantee" and language providing that payments continue if a participant "die[s] before the 10-year guarantee ends." Id. Because ERISA requires all material terms to be included in the Summary, the Summary's failure to state that an elected benefit could be lost due to death before the Annuity Starting Date is "powerful evidence that [the Defendants] never actually intended the Plan to include such a limitation." Id. at 15; see also Pl.'s Opp'n 14-17. The Plaintiff makes a virtually identical argument based on the description of the Single Life Certain Annuity with 10-Year Payment Guarantee in O'Shea's retirement application as well. See Pl.'s Mem. 15-16. He also contends that UPS's standard practice of having employees use up vacation days before formally retiring "clearly reflects a belief on the part of the Defendants that under the Plan's terms retirement benefits, once elected, could not be forfeited by events occurring before the annuity payments commenced." Id. at 18.
In his memorandum in opposition to the Defendants' motion for judgment, the Plaintiff highlights one additional piece of extrinsic evidence of the Defendants' intent: the subsequent amendment of the Plan. Made effective starting on December 18, 2012 (nearly three years after O'Shea's death), the amendment allows survivors of a deceased employee to receive that person's chosen benefits if the decedent dies between the filing of his retirement application and the Annuity Starting Date. Defs.' Mem. 14 n. 65; UPS Plan 289-90. Given that the pre-amendment Plan did not explicitly state what happened when an employee died between his election of benefits and the Annuity Starting Date, the Plaintiff argues that "the Defendants always intended the Plan to allow payment of the annuity in these circumstances, and that the amendment was added to clear up any ambiguity that might exist in the Plan by making that explicit." Pl.'s Opp'n 14. The amendment would thus constitute extrinsic evidence of the Defendants' intent in forming the Plan as it existed at the time of O'Shea's death. Id.
In his opposition to the Defendants' motion for judgment, the Plaintiff argues for the first time that First Circuit precedent regarding retirement plan exclusions compels
The Plaintiff now looks to the First Circuit's statement that exclusions must be spelled out distinctly for support for his claim, arguing that the failure of the Plan in this case to explicitly set forth what happens when someone dies between the election and receipt of their chosen retirement benefits means that the Plan cannot be read to compel the denial of benefits in these circumstances. See Pl.'s Opp'n 4-5. Because Section 5.6 (the only section of the Plan directly to address death before the Annuity Starting Date) is a narrowly tailored provision designed to address Congress's concerns regarding the Preretirement Survivor Annuity and not the Single Life Annuity with 120-Month Guarantee, he says, under Colby the Defendants cannot invent linkages to other parts of the Plan in an attempt to show that Section 5.6 bars receipt of other kinds of benefits. See id. at 5-10.
Another argument the Plaintiff raises for the first time in his opposition memorandum relates to the meaning given by the Defendants to the term "Annuity Starting Date." This argument is strongly related to the purposivist reading of Section 5.6 discussed above. Here, the Plaintiff argues that the term "Annuity Starting Date" was only used in the Plan to comply with a statutory provision meant to cover preretirement survivor annuities; he contends that the Defendants' "current claim that the term has impact in other circumstances, such as the present matter, is a post hoc rationalization for their" denial of benefits. Id. at 11-12. Expanding on this claim, he argues that the use and meaning of "Annuity Starting Date" cannot "reach over to those sections" of the Plan describing the Single Life Annuity with 120-Month Guarantee, given the divergent purposes underlying those different sections. See id. at 12-13.
In contrast to the Plaintiff's kitchen sink approach, the Defendants offer one focused argument: particularly considering the deferential arbitrary and capricious standard, the Committee's decision regarding O'Shea's benefits arose from a reasonable and harmonious reading of various
In their memorandum in opposition to the Plaintiff's motion for judgment, the Defendants largely double down on their proffered reading of the Plan: an active employee who dies before the Annuity Starting Date receives only the Preretirement Survivor Annuity, while the survivors of an employee who has selected the Single Life Annuity with 120-Month Guarantee and dies after the Annuity Starting Date will receive the 120 monthly payments provided for by that option. See Defs.' Opp'n 7, 9, 13. Moreover, they stress First Circuit precedent commanding plan administrators to construct plan documents strictly, "even when such an approach may appear inequitable with respect to particular Participants or plaintiffs." Id. at 11-12 (citing Burnham v. Guardian Life Ins. Co. of Am., 873 F.2d 486, 490 (1st Cir.1989)).
The Defendants also address some of the Plaintiff's contentions regarding construction of the Plan. First, they note that his marshalling of extrinsic evidence of intent to attempt to remedy any perceived lack of clarity "is completely contrary to the arbitrary and capricious standard of review," as that standard only asks whether the Committee's reading was reasonable rather than the best possible option. Id. at 5. Because their reading is certainly reasonable, they say, the Plaintiff's argument regarding clarity is irrelevant.
Second, turning to the Plaintiff's contention that the Plan was required explicitly to state that the selected retirement benefit was forfeited if the employee died before reaching the Annuity Starting Date, the Defendants make two arguments. The first is that what is contemplated is not a forfeiture at all: because O'Shea was eligible to receive either the Preretirement Survivor Annuity or the Single Life Annuity with 120-Month Guarantee depending on his date of death, "the Plan provided a benefit for either qualifying scenario[, and n]o benefits were `forfeited.'" Id. at 12-13. The second is that this proposed reading renders the Annuity Starting Date irrelevant as it appears in Section 5.4 and instead pins the vesting of a benefit to some unnamed, unidentified date. Because the Plaintiff cannot and does not point to any language in the Plan suggesting that a participant becomes entitled to Single Life Annuity with 120-Month Guarantee payments at any point other than the Annuity
The Court rules that the Defendants have the better of the argument over the terms of the Plan. Indeed, their reading of the Plan is not just plausible—which is all that is needed to survive review under the arbitrary and capricious standard, as discussed above—but also strikes the Court as correct. In the Court's view, the most important provision of the Plan is the part of Section 5.4 stating that "[i]f the Participant dies after the Annuity Starting Date but before receiving 120 monthly payments, the monthly payments shall be paid to the Participant's Beneficiary." UPS Plan 62. Under the Plaintiff's proposed reading of the Plan (which, he claims, is the only reading of the Plan that is reasonable), monthly payments are guaranteed to a participant's beneficiaries even if the participant dies before the Annuity Starting Date—but this reading renders the first clause of this key phrase completely useless. It would be odd indeed for the architects of the Plan to include a clause discussing a participant's death after the Annuity Starting Date and before the receipt of 120 payments if the balance of the payments would still be due had the participant died before the Annuity Starting Date as well. Rather, the Defendants' view of this provision seems much more reasonable. The Court views this clause as setting a condition precedent for the guarantee of 120 payments—a condition that O'Shea tragically failed to satisfy.
Similarly reasonable is the Committee's reading of Section 5.6, which provides for payments to a participant's spouse if the participant dies before the Annuity Starting Date. While this provision admittedly does not state explicitly that this spousal payment is the exclusive benefit available when death occurs before the Annuity Starting Date, it is fairly inferable from the structure of the provision and the Plan viewed as a whole. Moreover, because the arbitrary and capricious standard requires this Court to defer to a plausible interpretation of the Plan, the Court is bound to accept the Defendants' proffered reading.
The Court must also reject the Plaintiff's additional arguments regarding construction of the Plan. His suggestion that any lack of clarity must be resolved in his favor runs directly counter to the arbitrary and capricious standard, which requires not that the Plan be clear but merely that the Defendants' reading of the Plan (even if it is ambiguous) be reasonable. Given that the Court has already ruled their reading correct, this argument regarding clarity must fail. Similarly, the Plaintiff's purposivist reading of the term "Annuity Starting Date" carries no water. Perhaps it is true that this term was mandated by Congress for the purpose of addressing factual circumstances different than those in the case at bar—but that does not really matter. So long as the term is clearly defined, which is indeed the case, its origins have little bearing on how the Court should approach the Defendants' interpretation of that term. Lastly, the Court does not agree with the Plaintiff that Colby compels a finding in his favor. While that case does state that exclusions from coverage must be spelled out explicitly, what is happening in this case is not really an exclusion from coverage. Indeed, O'Shea was included within the scope of the Plan—he just did not receive the benefit he wanted. The logic of Colby thus does not affect the instant case.
The Court does not render this decision with pleasure. It is undeniably tragic that O'Shea's untimely death means that his children will not receive the benefits that
In addition to the debate over the language of the Plan, the parties also address a few extrinsic issues. The first stems from the statements made by Madeira during her consultation with O'Shea regarding using up vacation days before formally retiring—and, relatedly, the absence of statements regarding the possibility that O'Shea's children would not receive benefits were he to die before the Annuity Starting Date. As discussed above, the Plaintiff only formally relies on this evidence as extrinsic proof of UPS's intent in designing the Plan, see Pl.'s Mem. 17-18, though he also peppers his briefing with references to O'Shea's reliance on Madeira's comments, see, e.g., id. at 2-3. The Defendants stress, however, that O'Shea's meeting with Madeira is wholly irrelevant to the Committee's interpretation of the Plan's terms—which, given that this Court has already dismissed the Plaintiff's claims regarding breach of fiduciary duty, means that Madeira's statements are irrelevant to the entire question now before the Court. Defs.' Opp'n 17-18. Moreover, they note that the Committee did review Madeira's comments and found that they were consistent with its interpretation of the Plan, so even if her meeting with O'Shea were relevant, it would not change the outcome of this case. Id. at 18. The Defendants are correct on this point—only the terms of the Plan itself are material to this case. Because the Court has already ruled that the terms of the Plan compel a ruling for the Defendants, it will not address this point any further.
Second, the Plaintiff raises in his opposition memorandum the argument that the Committee was a conflicted decisionmaker. Pl.'s Opp'n 17-19. Specifically, he observes that "[t]he Plan is sponsored and funded by UPS . . . and the Plan is administered by a committee appointed by it." Id. at 18 (citing UPS Plan 36, 82). He then quotes language from this Court's decision in Colby stating that:
Id. at 18 (second and third alteration in original) (quoting Colby, 603 F.Supp.2d at 236) (internal quotation marks omitted). In addition to what he portrays as the inadequacy of the Committee's interpretation of the Plan, the Plaintiff now says that the Committee's purportedly conflicted status ought serve as another nail in the coffin of their decision denying O'Shea's children benefits. Id. at 18-19. Because this matter was only raised in the opposition memorandum, the Defendants have not had an opportunity to address this issue. Ultimately, even assuming simply
For these reasons, the Court GRANTS the Defendants' motion for judgment, ECF No. 46, and DENIES the Plaintiff's motion for judgment, ECF No. 43.
