WILLIAM G. YOUNG, District Judge.
George Vendura ("Vendura") began working for TRW Inc. ("TRW") in 1993. He subsequently went on disability leave due to a work-related injury and never returned to work. In 2002, Northrop Grumman Corporation ("Northrop") acquired TRW. When Vendura formally retired in 2013, the Northrop Grumman Space & Mission Systems Corp. Salaried Pension Plan Administrative Committee (the "Committee") — the group tasked with administering the Northrop Grumman Space & Mission Systems Corp. Salaried Pension Plan (the "Plan") — determined that Vendura ought receive credit for twelve years of so-called Benefit Service (that is to say, service for which he is eligible to receive benefits). Following an internal appeal, Vendura has filed suit under the Employee Retirement Income Security Act ("ERISA") claiming that he is entitled to twenty years of Benefit Service.
Vendura initiated the present suit on March 18, 2014 when he filed a complaint against Northrop, Northrop Grumman Aerospace Sector, Northrop Grumman Space & Mission Systems Corp., the Plan, the Committee, Denise Peppard, Tiffany McConnell, Michael Hardesty, Ken Bedingfield, and Jonathan Boxer (collectively, the "Defendants"). Compl., ECF No. 1.
At a motion hearing held on September 19, 2014, the Court dismissed all of Vendura's claims except for Count I (raised under 29 U.S.C. § 1132(a)(1)(B)),
The parties dispute which incarnation of the Plan governs Vendura's claim for retirement benefits.
At the time Vendura began seeking benefits in 2012, the most recent version of the Plan consisted of amendments and related documents that took effect in 2009. In relevant part, those documents read as follows:
Decl. Liza Tiglao-Smith Supp. Defs.' Mot. Dismiss ("Tiglao-Smith Decl."), Ex. A, Northrop Grumman Space & Mission Sys. Corp. Salaried Pension Plan ("2009 Plan") G-5, 85, ECF No. 13-2.
Admin. R. NG000046-47;
Vendura began working for TRW and became a participant in the Plan in 1993. Pl.'s Statement Material Facts Not in Dispute ("Pl.'s Facts") ¶ 1, ECF No. 48; Statement Undisputed Facts ("Defs.' Facts") ¶ 1, ECF No. 51. Sometime in the 1990s, Vendura suffered a work-related injury, leading him to go on medical leave starting June 10, 2000, after approximately seven years of active employment for TRW.
In 2002, Northrop acquired TRW — renaming the company Northrup Grumman Space & Mission Systems Corp. ("NGSMSC") — and assumed sponsorship of the Plan. Defs.' Facts ¶ 3. Northrop attempted to lay Vendura off in 2003; after Vendura challenged this termination, the parties entered into a Settlement Agreement and General Release (the "Settlement Agreement").
Admin. R. NG001050-51;
In May 2008, a Northrop human resources representative wrote to Vendura to tell him that his employment would be terminated because he had stopped accruing Benefit Service. Defs.' Facts ¶ 8. Vendura replied that this termination was forbidden by the Settlement Agreement. Admin. R. NG000438. After conferring with legal counsel, the Northrop human resources representative wrote back to Vendura and stated that "our legal counsel has confirmed that you do not have to retire by October 1, 2008. You will remain [an] active employee on long term disability . . . due to your settlement agreement dated 7/11/2003."
from Northrop that he was continuing to accrue Benefit Service and that he could elect a lump sum distribution of his pension, but the record does not show that anyone at Northrop ever sent this confirmation. Defs.' Facts ¶¶ 10-11.
In October 2012, Vendura received notice that his long term disability benefits would be exhausted on February 28, 2013, thus triggering one of the conditions in his Settlement Agreement for his termination. Defs.' Facts ¶ 12. Shortly thereafter, Vendura reached out to Northrop to learn how to apply for his pension.
After viewing the benefit calculations included in both retirement kits, Vendura challenged Northrop's calculations and filed claims demanding (inter alia) twenty years of Benefit Service and the ability to elect a lump sum distribution. Pl.'s Facts ¶ 14; Defs.' Facts ¶¶ 14-15. Vendura claimed that he was due twenty years of Benefit Service because he had received worker's compensation benefits until 2013. Defs.' Facts ¶ 17. He also requested copies of the Plan and the Summary Plan Description ("SPD"). Pl.'s Facts ¶ 36; Defs.' Facts ¶ 15. Northrop sent him the 2001 version of the SPD and the 1997, 2002, and 2009 versions of the Plan on May 2, 2013; approximately two weeks later, it sent the 1999 version of the Plan as well. Defs.' Facts ¶¶ 15-16. The portions of the Plan relevant to this case are excerpted above. The pertinent portions of the SPD read as follows:
Tiglao-Smith Decl., Ex. D, Summary Plan Description ("SPD") 4-5, ECF No. 13-5.
On June 13, 2013, the Committee responded to Vendura's claim letters. Defs.' Facts ¶ 18; Admin. R. NG000243-51. The Committee rejected Vendura's claim that he was entitled to twenty years of Benefit Service, stating that he was entitled to twelve years. Admin. R. NG000245. The Committee based this decision on Section 2.02(c) of the 2006 version of the Plan, which creates a sixty-month cap on the amount of Benefit Service a Participant can receive for long term disability leave beginning after January 1, 2000.
Following an internal appeal, the Committee issued a final decision rejecting Vendura's claims in a letter dated December 19, 2013. Pl.'s Facts ¶ 24, Defs.' Facts ¶ 20; Admin. R. NG000392-400. In the letter, the Committee essentially reiterated its earlier statements that Section 2.02(c) of the 2006 version of the Plan caps Vendura's Benefit Service accrued during disability leave at sixty months and that Vendura was not able to elect a lump sum payment. Admin. R. NG000396, NG000398-99. The Committee also expanded on its earlier statement that the Settlement Agreement and its provisions regarding Vendura's employment status were irrelevant to its determination, noting that the Plan awards Benefit Service "based on the type and duration of a participant's leave (rather than based on `active employment' status)."
The Committee also rejected an argument Vendura advanced regarding Section 2.02(b). This section states that Benefit Service accrual during leave for which worker's compensation is granted is capped at twelve months unless the Plan participant is eligible for long term disability benefits; Vendura argued that because he was eligible for long term disability benefits, the cap could not apply and thus he could receive Benefit Service credit for the full twenty years he requested.
As a threshold matter, the Court must decide what level of deference to grant to the Committee's decision to deny Vendura's claims. If a plan administrator (like the Committee in this case) is vested with discretion to interpret the Plan and to determine an applicant's eligibility for benefits, its decision "must be upheld unless it is arbitrary, capricious, or an abuse of discretion."
Vendura offers two arguments as to why the Court ought instead apply a de novo standard of review. First, he seems to argue that the Committee itself did not render the decision rejecting his claim and instead delegated that authority to some other party; because the Defendants did not adequately demonstrate that they had followed the proper procedures for delegation, he says, they are not entitled to arbitrary and capricious review.
Vendura's second argument hinges on the relationship between the Plan and the Settlement Agreement. "Where the administrator's determination of eligibility depends upon an interpretation of non-plan documents . . . [the court's] review is . . . de novo."
The Defendants offer two arguments against Vendura's position. First, they note that he far overstates the role of the Settlement Agreement in the Committee's final decision — indeed, rather than interpreting and relying on the Settlement Agreement, the Committee determined that the Settlement Agreement did not conflict with and did not alter the Committee's interpretation of the Plan's own language. Defs.' Opp'n 6 (citing Admin. R. NG000396). Second, they contend that even if the Committee relied on its interpretation of the Settlement Agreement, "de novo review would only be appropriate with respect to its interpretation of [the Settlement Agreement]."
In his reply, Vendura attempts to rebut each of these points. First, he claims that "it is impossible . . . not [to] recognize the central role that interpretation of the Settlement Agreement plays in this dispute over [his] pension benefits." Pl.'s Reply Defs.' Opp'n ("Pl.'s Reply") 2, ECF No. 59. Second, he claims that the Defendants misread First Circuit precedent, as the case they cite applies de novo review to the plan administrator's entire decision rather than just to the documents outside the Plan.
The Court agrees with the Defendants and thus applies arbitrary and capricious review to the Committee's interpretation of the terms of the Plan. The Defendants offer the more accurate portrayal of the role the Settlement Agreement played in the Committee's decision: while Vendura is correct that the Settlement Agreement contains provisions guaranteeing his employment status,
The core dispute in this case is whether the Committee properly assessed the amount of Benefit Service Vendura had accrued. Because ERISA stresses that the terms of the Plan control,
Vendura focuses his arguments on two parts of Article 2 of the 2006 version of the Plan, which in relevant part defines when a participant may accrue Benefit Service. First, he focuses on the portion of Section 2.02 stating that "[y]ears of Benefit Service of a Participant . . . shall be measured from the Participant's Employment Commencement Date to his Severance from Service Date." Pl.'s Mem. 12; Admin R. NG000273. He argues that because the Plan defines "Severance from Service Date" as "the date a participant ceases to be employed by the Controlled Group, whether due to quitting, retirement, discharge, or death," Section 2.02 means he accumulated benefit service until his severance from service in the form of his retirement date — that is to say, that he accumulated twenty years of service between his hiring in 1993 and his formal retirement in 2013.
Second, Vendura focuses on paragraph (b) of Section 2.02, which states that Benefit Service is accumulated when a Participant has:
Admin. R. NG000273. Vendura claims that he was injured in the course of his work and that he received workers' compensation — but because he was indisputably eligible for long term disability benefits, "the accrual of service time by this subparagraph is not subject to a temporal restriction." Pl.'s Mem. 13. Put differently, he argues that a Participant such as himself who receives workers' compensation and is also eligible for long term disability benefits may accrue Benefit Service indefinitely under this provision, as the twelve-month cap of Section 2.02(b) does not apply under those circumstances. Because there is no temporal restriction on accumulation of Benefit Service under this provision, he says, he ought receive Benefit Service credit for the entirety of the twenty years between 1993 and 2013.
The Defendants begin their argument by focusing on the portion of Section 2.02 stating that "the Years of Benefit Service of a Participant, which shall be measured from the Participant's Employment Commencement Date to his Severance from Service Date, shall be equal to the sum of . . . any calendar month in which" one of seven events occurs. Admin. R. NG000273. In contrast to Vendura's suggestion that the language about the Employment Commencement Date and Severance from Service Date grants Benefit Service, the Defendants argue that this wording instead "establish[es] the range of months within which a participant may accrue Benefit Service under Subparts (a)-(g)." Defs.' Mem. 11. This is a more common-sense reading of the Plan, they say, because Vendura's proposed reading would "render the majority of Section 2.02 obsolete" (since there would be no reason to lay out the events contemplated by subparts (a) through (g) if Participants received credit for the entire period between their hiring and severance from service).
Turning to the subparts of Section 2.02, the Defendants offer a reading of subparts (b) and (c) that cap at five years the amount of Benefit Service Vendura may receive for his time on disability leave. They argue that subpart (b)'s exception to the twelve-month cap on Benefit Service for Participants eligible for long term disability benefits does not allow for indefinite accrual of Benefit Service, as Vendura claims — rather, subparts (b) and (c) together create a system in which a Participant may obtain up to twelve months of credit during an absence from work if he receives workers' compensation but may obtain up to sixty months of credit if he is eligible for long term disability in addition to workers' compensation.
The Court rules that the Defendants have adequately shown that the Committee's interpretation of the plan was not arbitrary and capricious. Vendura's proposed reading of the text views various parts of Section 2.02 in isolation in a way that makes little sense when the provision is viewed as a whole. His interpretation of the term dealing with the Severance from Service Date, for instance, would render meaningless the seven subparts of Section 2.02 defining events that may grant Benefit Service credit. Similarly, his reading of subpart (b) as granting unlimited credit to Participants receiving workers' compensation and eligible for long term disability completely ignores subpart (c), which explicitly caps at sixty months the amount of credit that any participant eligible for disability leave (whether receiving workers' compensation or not) may receive. It would be absurd to read the Plan in such a way that two adjacent provisions essentially say the opposite thing (i.e., one saying that Participants on long term disability have a cap on their Benefit Service while the other says that no such cap exists).
The Defendants' reading harmonizes all of the disputed parts of Section 2.02. Reading the term regarding the Severance from Service Date as merely setting the outer bounds of the period during which Benefit Service may be accumulated allows subparts (a) through (g) to carry some additional meaning. Similarly, the Defendants' view of subparts (b) and (c) — that (b) caps the credit given to workers' compensation recipients at twelve months, which under (c) can be bumped up to sixty months if the Participant is eligible for long term disability — allows both subparts to have independent weight without conflicting.
Moreover, adopting the Defendants' reading allows the Court to sidestep several of the parties' additional conflicts over the relevant terms. The parties dispute, for example, the factual question of whether Vendura ever actually received workers' compensation benefits, as would be necessary for him to receive Benefit Service credit under either party's interpretation of Section 2.02(b).
Ultimately, then, the Court rules that the Committee was reasonable in interpreting the Plan such that Vendura received credit for seven years of Benefit Service under Section 2.02(a) for the time he worked before going on leave, plus an additional five years under Section 2.02(c) for the time he spent on disability leave.
In addition to his arguments regarding the language of the Plan itself, Vendura offers several other arguments as to why he should be credited with twenty years of Benefit Service. For the following reasons, the Court rejects these arguments.
Vendura argues that the terms of the Settlement Agreement mean that he is due twenty years of Benefit Service. Noting that (by its own language) the express terms of the Settlement Agreement supersede the Plan when any conflicts between the documents arise, he claims that the Settlement Agreement's guarantee of continued status as an employee (except in circumstances that indisputably did not arise until 2013) means that — regardless of the language of the Plan — he "was an employee for purposes of determining his years of benefit service for over twenty years." Pl.'s Mem. 16.
In response, the Defendants stress the term of the Settlement Agreement stating that Vendura "shall receive all benefits and rights to which he is entitled pursuant to all benefit plans for which he is eligible"; they claim that this language shows that "[t]he Settlement Agreement does not in any way expand [Vendura's] rights under any employee benefit plans." Defs.' Mem. 13. Bolstering this, they cite language from the Settlement Agreement that explicitly grants Benefit Service for the time Vendura spent on medical leave during his active employment but omits any mention of his disability leave that began in 2000, suggesting that the Settlement Agreement was not intended to grant Benefit Service credit beyond the date Vendura went on this permanent leave.
The Court agrees with the Defendants on this issue. No explicit terms of the Settlement Agreement grant Vendura any Benefit Service for time spent on disability leave, and its guarantee of continued employee status until retirement does not on its own give Vendura any right to Benefit Service credit during this period (per the construction of Article 2.02 above). Vendura's arguments on this issue thus rest on a misreading of the Settlement Agreement and the Plan itself. Accordingly, even reviewing the terms of the Settlement Agreement de novo, the Court rules that the Settlement Agreement does nothing to alter its construction of the Plan (and the resulting decision that Vendura is entitled only to twelve years of Benefit Service).
Vendura also argues that the SPD compels a ruling that he is entitled to twenty years of Benefit Service. Pl.'s Mem. 4; Pl.'s Opp'n 15. Specifically, he points to the portion of the SPD stating that "[f]or any period of absence from work due to disability beginning before January 1, 2000," credit is given for "any months in which you are eligible to receive TRW long-term disability benefits." SPD 5. He claims that because the Defendants represented that the SPD applied to his case and because his disability began before January 1, 2000, he ought be entitled to credit for the entire thirteen-year period during which he received long term disability benefits. Pl.'s Mem. 4.
In response, the Defendants note that the very next line of the SPD states that "[f]or any period of absence from work due to disability beginning on or after January 1, 2000, . . . [a participant] will be credited with service for any month in which [he is] eligible to receive TRW long-term disability benefits up to 60 months." Defs.' Mem. 9. While there is admittedly some ambiguity in the SPD regarding whether the January 2000 date refers to the disability onset date or the date on which the participant goes on disability leave, the Defendants note that the Plan itself is clear that the relevant date is the date the participant went on leave. Defs.' Mem. 17 (citing Admin. R. NG000206 (applying the sixty-month cap to participants who went on an "absence from work beginning on or after January 1, 2000 as a result of disability")). Because the Plan itself is clear, they say, it controls.
Again, the Court rules the Defendants' way on this issue. Given that the line immediately following the one upon which Vendura relies addresses the sixty-month cap, the only possible way Vendura could claim that the SPD entitles him to twenty years of Benefit Service is by arguing ambiguity. But the Defendants are right to note that even if the SPD is ambiguous, the Plan itself is not, and the Plan controls. Accordingly, the SPD cannot alter the Court's construction of the Plan above.
Finally, Vendura argues that the 2008 communications from the Northrop human resources representative ought estop the Defendants from now claiming that he is entitled to only twelve years of Benefit Service (seven for his active service plus five accrued during his disability leave).
The Defendants offer two primary reasons why the 2008 communication ought not equitably estop them from arguing their present position. Looking to the First Circuit precedent cited by Vendura, they note that equitable estoppel claims have two elements: "(1) the first party must make a definite misrepresentation of fact with reason to believe the second party will rely on it, and (2) the second party must reasonably rely on that representation to its detriment."
The Court rules for the Defendants on this point. They are correct that neither the Settlement Agreement nor the 2008 communication makes any misrepresentation of fact. As discussed above, the Settlement Agreement does not have any bearing on Benefit Service accrual under the Plan, and the 2008 communication merely repeats the guarantee of continued employment status without addressing Benefit Service in any way. There is a possible argument that Vendura could have interpreted the 2008 communication to imply that he was accruing Benefit Service, given that the letters he sent the human resources representative beforehand asked about this accrual,
Considering all of these arguments regarding the terms of the Plan and evidence outside the Plan, the Court rules for the Defendants and finds that Vendura is entitled to twelve years of Benefit Service (seven for his active employment plus five accrued during his disability leave) rather than the twenty years of credit he seeks.
An ancillary dispute in this case involves Vendura's eligibility to elect a lump sum distribution of his pension. The parties do not dispute the relevant term of the Plan, which states that a Participant may elect the lump sum if (among other things) he is still accruing Benefit Service.
One other issue pertaining to the lump sum question merits discussion. Vendura notes that in August 2000, shortly after he first went on disability leave, he received a letter from Northrop stating that he was "eligible for . . . a lump sum payment as of March 1, 2013." Admin. R. NG000446. He contends that this statement means that the Defendants thought he would still be accruing Benefit Service into 2013, linking this with his equitable estoppel claim regarding his Benefit Service. Pl.'s Mem. 17 n.14; Pl.'s Opp'n 16. This argument, however, rests on a clear misreading of the letter. The letter did not say that he was able to
The Defendants also argue that the only proper defendants to a 29 U.S.C. § 1132(a)(1)(B) claim such as this are the Plan and the Committee, meaning that the Court ought dismiss Northrop, its corporate subsidiaries, and the individually named defendants. Defs.' Mem. 20 (citing
Vendura properly points out that the Defendants overstate the holding of the First Circuit case underlying their argument. Pl.'s Opp'n 18. While the Defendants cite the case for the proposition that only the Plan and the body administering the Plan are proper parties, that case arose out of a plaintiff's attempt to sue a third party that provided administrative assistance for his employer's pension plan.
Applying these statements to the facts at hand, four of the named defendants — Denise Peppard, Tiffany McConnell, Michael Hardesty, and Ken Bedingfield — are the present members of the Committee. Admin. R. NG000382. The 2009 version of the Plan, in turn, states that "the Administrative Committee and each of its members are `named fiduciaries' of the Plan under ERISA for all purposes other than investment matters." 2009 Plan 76. Given that the cited First Circuit precedent grounds the language on which the Defendants rely in the fact that the defendant at issue there was not a fiduciary of the plan, it appears that these four individuals are properly included in this case.
The fifth individually named defendant, Jonathan Boxer, presents a murkier question. Vendura alleged in his complaint that Boxer is "a senior legal counsel with one or more of the Defendants who made discretionary decisions related to Plan determinations at issue in this litigation, and therefore is a fiduciary for purposes of the Plan." Compl. ¶ 9. The record does not appear to contain any evidence of the role Boxer plays or played in the administration of the Plan, suggesting that Boxer may not be a proper defendant. Given that the Court's ruling on the merits renders this question largely academic, however, it declines to make a holding on this point.
For the foregoing reasons, the Court GRANTS the Defendants' motion for judgment, ECF No. 49, and DENIES Vendura's motion for judgment, ECF No. 46.
As far as Section 2.03 is concerned, the 2009 version of the Plan relies on the 1999 and 2006 versions of the Plan to define Vendura's substantive rights — and it is beyond dispute that these versions of the Plan do appear in the record.
Section 16.01, meanwhile, is a procedural provision discussing the degree of discretion vested in the Committee. Procedural issues of this sort ought be governed by the version of the Plan in place at the time the Committee evaluated Vendura's claim.
