930 F. 2d 28 - Lasseter Ca Lf v. Administrative Committee of the Kaiser Aluminum Salaried Employees Retirement Plan

No. 88-15213.

United States Court of Appeals, Ninth Circuit.

Before BEEZER and KOZINSKI, Circuit Judges and KLEINFELD*, District Judge.

MEMORANDUM**

This is a review of a summary judgment denying employees' ERISA claim against a retirement plan. Kaiser Aluminum & Chemical Corporation spun off its agricultural chemicals division, selling it to the management of the division, and financed their purchase of it. The employees claimed they were entitled to early retirement without reductions based upon age, but the plan took the position that this benefit did not apply to them, because the corporate reorganization did not take away their jobs. The district court found no ERISA violation. We affirm.

The district judge granted the defendants' motion for summary judgment and to strike the claims for compensatory and punitive damages. In his written decision, he found as follows:

The clause in question, a Full Early Retirement ("FER") provision, provided that an employee whose age and years of service totalled 70 or more could retire early with full benefits. But under the 42nd amendment to the Plan, enacted in 1977, a participant was disqualified from participation in FER if he or she was offered a suitable position by an organization that acquired the assets of a division or stock of a subsidiary of Kaiser.

In 1985, Kaiser sold the division for which plaintiffs worked. Although plaintiffs were offered jobs by the acquiring concern with similar or better salary, location, functions, title, and position grade, plaintiffs sought early retirement under the above clause. Their claims were denied on the ground that suitable employment was available with the acquiring company.

The district judge found that the denial of benefits to plaintiffs based on the 42nd amendment did not deprive them of any benefits they would have received without it. Both before and after the 42nd amendment, full early retirement would not have been available to the plaintiffs. He found that because the plan trustees' determination of ineligibility for full early retirement was not "arbitrary and capricious" and was a "reasonable interpretation," it had to be upheld under Hancock v. Montgomery Ward Long Term Disability Trust, 787 F.2d 1302 (9th Cir.1986), and Atkinson v. Sheet Metal Workers' Trust Funds, 833 F.2d 864 (9th Cir.1987).

As an alternative ground for its decision, the district court rejected the plaintiffs' contention that the 42nd amendment violated 29 U.S.C. section 1054(g) by curtailing an accrued benefit. The court found that the right to Full Early Retirement was "ancillary" rather than "accrued," as that distinction is drawn in Shaw v. International Association of Machinists and Aerospace Workers Pension Plan, 750 F.2d 1458 (9th Cir.), cert. denied, 471 U.S. 1137 (1985). Shaw quoted with approval legislative history to the effect that "accrued benefits do not include such items as the value of the right to receive benefits commencing at an age before normal retirement age." See Id. at 1463. Thus, even if the 42nd amendment to the plan did curtail full early retirement, the district court found that the change was not a decrease in an "accrued benefit" as the term was used in the statute. (Because the 42nd amendment preceded the 1984 statutory amendment of 29 U.S.C. Sec. 1054(g) by several years, the decision was properly made under the old version of the statute, and the law construing the old version, not the present version of Sec. 1054(g).)

The district judge found insufficient evidence to establish a genuine issue of material fact as to discrimination or estoppel, and the judge wrote that "[t]he central fact remains that plaintiffs were not eligible for FER before or after the enactment of the 42nd amendment."

The district court had jurisdiction under 29 U.S.C. Sec. 1132(e), and we have jurisdiction under 28 U.S.C. Sec. 1291. We review the summary judgment de novo. Shaw, 750 F.2d 1458, at 1460. We review the trial court's denial of a continuance under Federal Rule of Civil Procedure 56(f) for abuse of discretion. Continental Maritime v. Pacific Coast Metal Trades, 817 F.2d 1391, 1395 (9th Cir.1987).

Though the appellants claim error in denying a Rule 56(f) motion for continuance, they really did not make a Rule 56(f) motion. Instead they asked the district court to rule on the summary judgment motion if the ruling would be favorable, but to delay ruling and allow them to make additional submissions if the ruling would be unfavorable. They did not state reasons why they could not present the facts essential to their opposition, as Rule 56(f) requires. Discovery had already been extensive and voluminous. Rule 56(f) does not obligate a trial judge to give a litigant two chances to obtain a ruling, one with the evidence already on hand, and another with additional evidence if the ruling disappoints the litigant. The rule says "cannot," not "prefers not to." The district judge acted within his discretion in denying the relief sought.

After the district court decision, and after the initial round of briefs in this case, the Supreme Court addressed the standard of judicial review of benefit determinations by plan administrators in Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989). District courts must construe terms in the plans de novo, without deference to plan administrators' interpretations, id. at 112, and review deferentially for abuse of discretion only when the plan administrators exercise discretion conferred upon them by the terms of the plan. Id. at 111.

Consistent with established principles of trust law, we hold that a denial of benefits challenged under Sec. 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.

Bruch at 115. Our old "arbitrary and capricious" standard is no longer the law, except where such discretion has been delegated to the plan administrators by the plan document, Madden v. ITT Long Term Disability Plan, 914 F.2d 1279 (9th Cir.1990), cert. denied, 112 L.Ed.2d 1051 (1991), so appellants' argument for a more demanding standard based upon Kaiser's financial interest and special circumstances no longer is necessary to obtain the more demanding standard. Bruch applies to this case even though it came down after the district court decision. See Orozco v. United Air Lines, Inc., 887 F.2d 949, 954 (9th Cir.1989).

Because Bruch makes it essential that we consider the scope of interpretive authority delegated by the plan, we must grant the unopposed motion to augment the record. The language explicitly confers interpretive authority:

The Retirement Committee shall have responsibility, power, and authority ... to determine questions arising in the administration, interpretation and application of the Plan.

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The decision on review with respect to an appeal under said claims procedure shall be final, binding, and conclusive upon the Retirement Committee, the Plan, and all persons affected thereby.

This language, like that in Madden, probably "gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Bruch, 489 U.S. at 115. The committee's construction of plan terms is not really at issue, though, as the next paragraph explains, and its only relevance to the dispute before us was in deciding that three of the plaintiffs were offered suitable positions, a question clearly committed to its discretion by this language.

Plaintiffs concede that when the agricultural chemicals division was spun off in 1985, the plan language precluded them from receiving full early retirement if they went to work for the acquiring company or were offered suitable jobs with it. This makes the scope of review of the committee's construction of plan terms irrelevant. We have no occasion to determine, under any standard, whether the plan committee misconstrued the plan in deciding that persons offered suitable positions in the plant under the new ownership were not eligible for full early retirement, because all parties concede that the plan so provided.

Because three of the plaintiffs sought review within the plan administrative procedure, the rest must be deemed to have waived any claim that the positions offered to them were not "suitable." Amato v. Bernard, 618 F.2d 559, 566-568 (9th Cir.1980). Appellants do not argue that the committee abused its discretion as to the three applicants who sought review, nor did they show futility as to the others. The administrative committee operated according to guidelines for determination of "suitable employment" for Full Early Retirement eligibility, which provided as follows:

The committee will be presented these decisions after the management has offered an employee a position that is available and the employee makes application for a full early pension on the grounds the position offered is not a suitable opening for him.

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When an affected participant applies for Full Early Retirement benefits on the basis that the position(s) offered him by management are unsuitable, he must state the specific reasons why he believes such position(s) to be unsuitable.

The committee must investigate each case and determine the reasonableness of each assignment after consideration of nine factors, including permanence of the position, effect on salary, reasonableness of the position for someone with the particular employee's experience and education, location, demands of the position relative to the particular employee's health, future career expectations relative to the particular employee's years of career expectation, and others.

Plaintiffs contend, not that the plan document entitled them by its terms to full early retirement, but rather that the plan summaries distributed to them misled them by not disclosing the 1977 and 1983 amendments to the plan documents, which amendments plainly excluded them. A plan summary "shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan," and a "summary of any material modification" must be written in like manner and furnished. 29 U.S.C. Sec. 1022(a)(1). But the summary does not have to warn of every particular circumstance which may have some effect on benefits. Stahl v. Tony's Building Materials, Inc., 875 F.2d 1404, 1406-1409 (9th Cir.1989).

The plan summaries issued by Kaiser never suggested that employees would qualify for full early retirement in the circumstances which materialized, and the plan amendments making them plainly ineligible for this benefit changed nothing which the employees could reasonably have expected based on the plan summaries. Nor did the amendments eliminate an eligibility for full early retirement which previously existed for similarly situated employees.

The 1976 summary provided for retirement with full pension between ages 62 and 65, and for full early retirement at age 55 with 10 or more years of service, or if age and years of service totaled at least 70. The summary said:

Approval of the Plan committee is required (to make sure requirements have been met). Also, your employment must have been terminated for one of these reasons:

1. A plant or department--or a major portion thereof--has been shut down permanently.

2. Your position has been eliminated by technological changes or personnel realignment and no suitable openings are available in other positions.

3. A condition of health prevents you from fully and satisfactorily performing the duties of your position, even though you are not totally and permanently disabled. A qualified physician, named by the Plan committee, must certify to this partial disability. (a participant who is totally and permanently disabled is not eligible for a full early pension).

A revised summary was published effective January 1, 1982. It was materially similar, except that the "shut down" reason was supplemented with the phrase "and no suitable openings are available in other positions." Now the first of the three conditions read:

1. A plant or department--or a major portion thereof--has been shut down permanently, and no suitable openings are available in other positions.

A summary cannot say everything, or it ceases to be a summary. This one would not lead a reasonable person to believe that if his part of the company was sold, but operations continued, and his job continued, he could nevertheless elect full early retirement. Even if the 1976 summary could give rise to that inference, which we do not think is reasonable, the 1982 revision said that the absence of other "suitable openings" was a condition of full early retirement. That was close enough to be reasonably informative of the plan as amended. The plan provision said:

The transfer of all or part of the assets of, or the merger, consolidation or reorganization of, an Employer to or with another organization or the transfer of all or part of the stock of an Employer to another organization, and (i) such Participant does not accept employment with such other organization or one of its affiliates or such Participant accepts employment with such organization or one of its affiliates but such employment is terminated within 90 days thereafter, and (ii) there are no suitable openings available in other positions....

Obviously this plan language is not "written in a manner calculated to be understood by the average plan participant." 29 U.S.C. Sec. 1022(a)(1). Turning this into understandable prose would add considerably to the length and complexity. Yet augmenting the plan summary would not enable the employees to change their conduct to obtain full early retirement, since there is no evidence, and it would be quite unlikely, that all the employees of a division being sold could demonstrate unavailability of suitable positions, or avoid retirement altogether by persuading Kaiser to expand its work force in the plants retained and place all the agricultural and chemical workers into new jobs doing other things. A reader of the plan summary was informed in plain English that if his department was shut down, but suitable positions were available, he could not obtain full early retirement.

The summary language may be ambiguous about what happens if the plant or department is not shut down, but is sold, and thus is no longer part of Kaiser, but it does not suggest to employees that if that happened they could obtain full early retirement. The general structure of the summary is in a form saying to the employee, you cannot obtain full early retirement unless you satisfy the rule of 70, obtain committee approval, and "your employment must have been terminated" for one of three reasons. Sale of a plant, with continuation of employment, is not listed as one of the three reasons, and is not implied, since ordinary English does not suggest that continuation of employment in the same place with a new owner is "termination." That word is usually used to suggest dismissal, as by reduction in force, or firing of an employee. See American Heritage Dictionary, "Terminate" (2d College ed. 1985) ("To discontinue the employment of: terminated 300 workers."). If an employee heard a rumor that the plant might be sold and wondered whether he could keep working yet collect full early retirement, he could request a copy of the plan document, or address an inquiry to the plan administrator.

The employees in this case suffered disruption of the reasonable expectation that their Kaiser jobs would go on, and their pension plans would go on, for the duration of their working lives. People expect the parameters of their working lives to remain stable, so that their choices, not the impersonal choices of others, determine their futures. ERISA protects some but not all of these sorts of expectations. In this case, though, in the circumstances and at the times the events occurred, we do not find a statutory category entitling the appellants to the relief they sought.

AFFIRMED.