Overby v. NATIONAL ASS'N OF LETTER CARRIERS

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 20, 2009 Decided February 26, 2010

No. 09-7050

HALLINE OVERBY AND PAULETTE M. OVERBY,

APPELLEES

v.

NATIONAL ASSOCIATION OF LETTER CARRIERS, ET AL.,

APPELLANTS

Appeal from the United States District Court

for the District of Columbia

(No. 1:06-cv-01356)

John C. Hayes, Jr. argued the cause for appellants. With

him on the briefs was Kenneth J. Nichols.

Stephen R. Bruce argued the cause for appellees. With him

on the brief was Allison C. Pienta.

Before: SENTELLE, Chief Judge, ROGERS, Circuit Judge,

and EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Chief Judge SENTELLE.

SENTELLE, Chief Judge: Halline Overby, an annuitant in a

retirement trust fund operated by National Association of Letter

2

Carriers (NALC), and his wife Paulette Overby brought suit in

district court seeking a declaration that a purported amendment

to the trust plan which would have rendered Paulette Overby

ineligible to receive benefits under the plan as a surviving

spouse was not properly adopted and is therefore inoperative.

The district court found that the trustees of the plan had not

submitted the amendment to the fund’s actuaries for an

evaluation and estimate of its cost, as required by the governing

provisions of the plan, and therefore held that the amendment

was not properly adopted. NALC appeals, arguing that the

district court erred both in its findings of fact and in its

conclusions of law.1 Upon review, for the reasons more fully set

forth below, we hold that the district court committed no

reversible error in either its factual determinations or in its

conclusions of law. We therefore affirm the judgment of the

district court.

I. BACKGROUND

The National Association of Letter Carriers (NALC) is a

national labor union which sponsors a retirement plan, the

National Association of Letter Carriers Annuity Trust Fund

(ATF or plan). The ATF is a “qualifying plan” under the

Employee Retirement Income Security Act of 1974, 29 U.S.C.

§ 1001 et seq. (ERISA). The plan provides retirement annuities

for NALC’s national officers, national business agents, certain

branch officers, headquarters employees, and employees of

NALC’s health plan, though not postal carriers themselves. The

1

Unless the context indicates otherwise, “NALC” refers

collectively to the four defendant-appellants in this case: the National

Association of Letter Carriers, the National Association of Letter

Carriers Annuity Trust Fund, William H. Young, and the Board of

Trustees of the National Association of Letter Carriers Annuity Trust

Fund.

3

president of NALC serves as the plan administrator for the ATF,

and the board of trustees of NALC has oversight responsibilities

for the plan.

Appellee Halline Overby became a letter carrier in 1960.

He was elected president of his local union in 1969. Halline

Overby then joined NALC’s Board of Trustees in 1978. When

he joined the Board of Trustees, he also became a participant in

the ATF and has remained so ever since. Over his career of

working for NALC, he has been a trustee of the ATF, a member

of the Executive Council, and the Assistant Secretary Treasurer.

Halline Overby retired from NALC on October 22, 1990, and

began receiving his annuity payments on February 1, 1991. In

May of 1991, he married Paulette Overby, his co-plaintiff in the

district court and co-appellee before this court.

One provision of the plan provides a benefit to a surviving

spouse of a deceased annuitant, calculated at 60% of the benefits

of the deceased. When Mr. Overby experienced serious health

difficulties in the late 1990s, Mrs. Overby, concerned about her

own financial stability, inquired into life insurance and

survivorship benefits. NALC’s accounting office informed her

that she would not be eligible to receive surviving spouse

benefits because a purported amendment to the plan made in

1985 changed the definition of “surviving spouse.”

The parties agree that prior to the purported amendment, the

plan followed a “one-year-at-death” rule, under which the

surviving spouse was “one to whom the Annuitant was married

for at least one year immediately preceding the Annuitant’s

death, or is the parent of issue by such marriage.” Overby v.

Nat’l Ass’n of Letter Carriers, 601 F. Supp. 2d 101, 103 (D.D.C.

2009). In order to qualify as a surviving spouse under the

purported amendment, a claimant must be “one to whom the

Annuitant was married for at least the year immediately

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preceding and ending on the Annuitant’s annuity

commencement date.”2 Id. However, the parties dispute

whether the plan was effectively amended to replace the “one-

year-at-death” rule with the so-called “marriage-at-

commencement” methodology for determining who qualifies as

a surviving spouse.

After receiving the bad news, the Overbys brought the

instant action, seeking a declaration that, inter alia, “the alleged

1985 amendment to the survivor annuity rule was not adopted

in accordance with the Plan’s amendment procedures in Article

IX, Section I, as amended, and is therefore invalid.” Pls. Compl.

16. The district court received evidence on the requirements of

the plan and the purported adoption of the surviving spouse

amendment. Considering the evidence in the light of the

requirements of ERISA, the court held that the amendment had

not been properly adopted, that the amendment was therefore

ineffective, and that Paulette Overby would qualify as a

surviving spouse under the plan in its unamended form. Overby

v. Nat’l Ass’n of Letter Carriers, 601 F. Supp. 2d 101 (D.D.C.

2009). NALC appeals.

II. ANALYSIS

A. Amendment of the Plan

As the district court held, ERISA requires in 29 U.S.C.

§ 1102(b)(3) “that every employee benefit plan ‘provide a

procedure for amending such plan, and for identifying the

2

While there is a discrete exception qualifying spouses who

were married to the annuitant within the year before the

commencement of the annuity and for at least one year ending on or

before the annuitant’s death, that exception has no application to the

facts before us.

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persons who have authority to amend the plan.’” 601 F. Supp.

2d at 108 (quoting 29 U.S.C. § 1102(b)(3)). The statute is silent

as to the level of detail and as to the nature of procedural

requirements, but “[t]he provision requires . . . that there be an

amendment procedure.” Curtiss-Wright Corp. v.

Schoonejongen, 514 U.S. 73, 80 (1995) (emphasis in original).

The statutory scheme further “follows standard trust law

principles in dictating only that whatever level of specificity [an

employer] ultimately chooses, in an amendment procedure or

elsewhere, it is bound to that level.” Id. at 85. Therefore, as the

district court correctly held, “a proposed amendment not done

in accordance with a plan’s amendment procedure is ineffective

and does not amend a plan.” 601 F. Supp. 2d at 108 (citing,

inter alia, Curtiss-Wright Corp., 514 U.S. at 78).

As the statute requires, the ATF’s plan includes a formal

amendment procedure. That procedure includes the following

three requirements:

(1) The trustees must first submit the proposed

amendment to the Fund’s actuaries “for an evaluation and

estimate of its cost;”

(2) The trustees must then “adopt” the proposed

amendment; and

(3) NALC’s Executive Council must then “approve”

the proposed amendment.

Id. at 108. The district court held that on the evidence before it

the trustees had not met the first of those requirements; that is,

they had not submitted the proposed amendment to the fund’s

actuaries for an evaluation and estimate of its cost. The district

court therefore held that the amendment had not been validly

adopted, and that the effective definition of surviving spouse

6

would entitle Paulette Overby to that status should she survive

Halline while still married to him.

Appellants do not challenge the district court’s ruling as to

the nature of the amendment process required under the plan,

but challenge its conclusions on two principal bases. First, they

contend that the district court did not have sufficient evidence to

have reached the finding that the amendment was not submitted

to the actuaries, as required by the amendment process. Second,

they contend that even if the court had sufficient evidence for

the finding, it nonetheless erred in its conclusion that this

invalidated the amendment. Before considering appellants’

other assignments of error, we will dispose of these two

principal arguments in turn.

1. The Sufficiency of the Evidence

We note at the outset that an appellant seeking reversal of

a trial court’s findings of fact in a bench trial faces a daunting

task. Such findings, “whether based on oral or other evidence,

must not be set aside unless clearly erroneous, and the reviewing

court must give due regard to the trial court’s opportunity to

judge the witnesses’ credibility.” FED. R. CIV. P. 52(a)(6). We

further note that “[t]his standard applies to the inferences drawn

from findings of fact as well as to the findings themselves.”

Halberstam v. Welch, 705 F.2d 472, 486 (D.C. Cir. 1983).

Cases addressing the question of the sufficiency of evidence to

support a trial court’s findings are similar. We will determine

that the evidence is sufficient if a reasonable fact finder could

have reached the conclusion adopted by the trial court.

Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985)

(“If the district court’s account of the evidence is plausible in

light of the record viewed in its entirety, the court of appeals

may not reverse it . . . . Where there are two permissible views

of the evidence, the factfinder’s choice between them cannot be

7

clearly erroneous.”). Appellants have not met this standard.

Appellants argue that “the District Court based its finding

that the ‘married at commencement’ amendment was never

submitted for an actuarial cost review on the fact that the review

is not explicitly mentioned in either the April 19, 1985 trustee

meeting minutes or the contemporaneous notes of NALC’s

outside counsel, Jani Rachelson.” Appellants’ Br. 15. It is true

that one of the evidentiary bases relied upon by the trial court

was the undeniable fact that the submission of the proposed

amendment for the actuarial cost review was never mentioned

at all in the minutes of the meeting at which it was purportedly

adopted, or in the contemporaneous notes of the outside counsel.

However, it is not true that the absence of an “explicit” reference

is not evidence that it was never done. It is, of course, not direct

evidence, but that does not mean it is not evidence.

It is inherently difficult to prove a negative. See Elkins v.

United States, 364 U.S. 206, 218 (1960) (“[A]s a practical

matter it is never easy to prove a negative . . . .”). It was

plaintiffs’ task below to prove that something had not been

done. If that proof requires plaintiffs to produce direct evidence,

then plaintiffs’ burden can virtually never be carried. Rare will

be the case in which a plaintiff can offer witnesses who will

testify “I saw him not do it.” Thus, if direct evidence of

negatives were required, there would be little point in the law

requiring any person to do anything as the failure to do it could

rarely be proved. Therefore, we must expect negatives to be

proved by circumstantial evidence.

Where, as here, the law requires an act to be done, and the

person whom the law requires to act has maintained minutes of

the time during which the act should have been done, it is

certainly probative that the written record does not include a

recording of the required act. That evidence is even more

8

probative in this case, where the district court found that “[t]he

omission of [the] actuarial evaluation and estimation is telling

when juxtaposed against the next subparagraph of those same

minutes, in which it is recorded that before the trustees adopted”

another amendment at the same meeting, the opinion of the

actuaries had been obtained and the cost estimate produced by

the actuaries is set forth. Overby, 601 F. Supp. 2d at 109. The

district court further found it “telling” that the minutes of

another meeting in December of 1985 specifically records that

the fund’s actuaries undertook an actuarial evaluation of another

subject matter. Id. Thus, the district court’s opinion, id. at 106-

07, sets forth significantly more evidence than the appellants

admit to exist.

Though appellants contest the district court’s reliance on

Ms. Rachelson’s testimony, it is only after discussing the lack of

record evidence before the court for the submission of the

amendment to the actuaries and the conspicuous omission of

such an actuarial evaluation in the face of the fund’s apparent

practice with respect to other amendments that the district court

expressed additional reliance on the testimony of outside

counsel. As the district court put it, “[t]hat no actuarial

evaluation or estimation ever occurred with respect to the

‘marriage-at-commencement’ rule prior to its asserted

‘adoption’ is further established by the testimony [of the outside

counsel].” Id. at 109 (emphasis added).

Therefore, the issue before us has never been whether the

testimony of the outside counsel would be sufficient standing

alone, but whether the record evidence including corroboration

by her lack of memory is sufficient to support the district court’s

factual finding. While we are not implying that the court’s

findings would have been questionable in the absence of the

deferential standard, given the deferential standard, the record

is more than ample to support what the district court found and

9

the inferences it drew from the evidence before it. The trial

court’s findings were certainly not clearly erroneous.

2. The Effect of the Omission

Appellants next argue that a “procedural irregularity” in the

adoption of an amendment “cannot support a holding

invalidating it.” Appellants’ Br. 19. In appellants’ view,

“[c]ourts should not invalidate amendments to ERISA plans that

are adopted without strict adherence to plan amendment

procedures unless there is evidence of bad faith regarding the

amendment procedure, active concealment of the amendment

itself, or plaintiff’s detrimental reliance on the plan procedures.”

Id. Unfortunately for appellants, that is not the law.

The Supreme Court has told us that “ERISA . . . follows

standard trust law principles in dictating only that whatever level

of specificity a company ultimately chooses, in an amendment

procedure or elsewhere, it is bound to that level.” Curtiss-

Wright Corp. v. Schoonejongen, 514 U.S. 73, 85 (1995). While

arguably the Curtiss-Wright statement qualifies as dicta,

“carefully considered language of the Supreme Court, even if

technically dictum, generally must be treated as authoritative.”

U.S. v. Dorcely, 454 F.3d 366, 375 (D.C. Cir. 2006) (quotation

omitted). This is especially so here as the Supreme Court has

reiterated the same teaching in Inter-Modal Rail Employees

Ass’n v. Atchison, Topeka and Santa Fe Railway Co., 520 U.S.

510, 515-16 (1997) (“An employer may, of course, retain the

unfettered right to alter its promises, but to do so it must follow

the formal procedures set forth in the plan.”) (discussing ERISA

plans).

The clear implication of the Supreme Court’s language is

that there must be amendment procedures in a plan, and those

amendment procedures must be followed for the valid adoption

10

of an amendment. Our sibling circuits follow this view of the

law with near unanimity. In Coffin v. Bowater Inc., 501 F.3d 80,

91-92 (1st Cir. 2007), the First Circuit stated that “an ERISA

plan amendment must be in writing; it must be executed by a

party authorized to amend the plan; the language of the

amendment must clearly alert the parties that the plan is being

amended; and the amendment must meet any other requirements

laid out for such amendments in the plan’s governing

documents.”

Similarly, in Halliburton Co. Benefits Committee v. Graves,

463 F.3d 360, 371-72 (5th Cir. 2006), the Fifth Circuit opined

that “[i]n order to amend a welfare benefit plan governed by

ERISA, the employer must provide a procedure for amending

such plan, and for identifying the persons who have authority to

amend the plan. . . . [O]nly an amendment executed in

accordance with the plan’s procedures is effective.” (internal

citations and quotations omitted).

The Third Circuit in Depenbrock v. Cigna Corp., 389 F.3d

78, 82-83 (3d Cir. 2004), held that “an amendment is ineffective

if it is inconsistent with the governing instruments. . . . ERISA

specifies that a valid amendment can only be made in the

manner specified in the plan document.”

Other circuits have acted consistently. See Winterrowd v.

Am. Gen. Annuity Ins. Co., 321 F.3d 933, 937 (9th Cir. 2003)

(“Section 402 of ERISA requires employee benefit plans to

specify both an amendment procedure and a procedure for

identifying persons with authority to amend. These amendment

procedures, once set forth in a benefit plan, constrain the

employer from amending the plan by other means.”) (citation

omitted); Aramony v. United Way Replacement Benefit Plan,

191 F.3d 140, 148-49 (2d Cir. 1999) (looking to corporate

formalities to see whether a pension plan was amended); Miller

11

v. Coastal Corp., 978 F.2d 622, 624 (10th Cir. 1992) (“ERISA

requires all modifications to an employee benefit plan . . . to

conform to the formal amendment procedures . . . .”); Coleman

v. Nationwide Life Ins. Co., 969 F.2d 54, 58-59 (4th Cir. 1992)

(“[A]ny modification to a plan must be implemented in

conformity with the formal amendment procedures and must be

in writing.”); Confer v. Custom Eng’g Co., 952 F.2d 41, 43 (3d

Cir. 1991) (“Only a formal written amendment, executed in

accordance with the Plan’s own procedure for amendment,

could change the [ERISA medical] Plan.”); Albedyll v. Wi.

Porcelain Co. Revised Ret. Plan, 947 F.2d 246, 254-55 (7th Cir.

1991) (holding that an ERISA pension plan amendment was

invalid because it did not comply with the plan’s procedures for

amendment).

In the face of this otherwise unanimous array, appellants

ask us to follow what they call “the leading case on the proper

standard for determining whether an ERISA plan amendment

should be invalidated.” Appellants’ Br. 19. The case appellants

cite is Loskill v. Barnett Banks, Inc. Severance Pay Plan, 289

F.3d 734 (11th Cir. 2002). Concededly, that case appears to

have reasoned that bad faith was necessary for an invalidation

of an amendment adopted in disregard of the procedures

required by the plan. We cannot, however, see what makes it

“the leading case” when no other court has ever followed it.

Nor will we. Indeed, even the Eleventh Circuit seems to have

ignored the holding of Loskill. See Shaw v. Conn. Gen. Life Ins.

Co., 353 F.3d 1276, 1283 (11th Cir. 2003) (invalidating a

purported amendment to an ERISA-covered disability plan

because of lack of compliance with plan amendment procedures

without any discussion of bad faith, active concealment, or

detrimental reliance). The Supreme Court’s guidance on the

necessity of amendment procedures drives us toward a

conclusion that those procedures should not be ignored.

Likewise, the near unanimous conclusions of our fellow circuits

12

weighs heavily against the novel construction sought by

appellants. Appellants give us no reason why we should treat

the written procedures of the plan so lightly, nor can we think of

any. An amendment procedure is there to be followed. It is

there to give fair notice to the beneficiary under the plan. We

have already upheld the district court’s finding that it was not

followed in this case. In short, we adopt the near unanimous

view of the other circuits that a failure to follow the amendment

procedures of a plan invalidates an amendment without regard

to a showing of bad faith. We therefore uphold the conclusion

of the district court that the effect of the failure in this case

renders the amendment invalid.

3. Appellants’ Other Arguments

Appellants offer three other arguments, none of which

warrant reversal. Appellants first argue that “[l]ack of an

actuarial cost review was not a central theory of the Overbys’

case.” Appellants’ Br. 18. They assert that “the plaintiffs did

not rely heavily on the theory that a lack of actuarial cost review

made the amendment invalid.” Id. (emphasis added). They

argue in a single paragraph that the Overbys’ “main theory” was

that no vote on the amendment took place at all. While this is at

least arguably true, it is without legal effect. While it is no

doubt true that the complaint and the evidence of a plaintiff must

be sufficient to put defendants on notice of any theory of

recovery upon which the plaintiff is relying, this does not

preclude the possibility of plaintiffs arguing alternative theories,

nor the possibility of the court’s relying upon a “lesser”

alternative in its decision. Appellants offer no authority for a

contrary position, nor have we independently found any. The

complaint, the discovery, the evidence at trial, and the complete

record established in the district court taken together — indeed

taken separately — provided defendants with ample notice that

plaintiffs sought to have the amendment invalidated because of

13

the trustees’ failure to follow the plan’s amendment procedure

in the adoption of the disputed amendment.

More specifically, the Overbys asked for discovery on the

actuarial review. Appellants’ counsel admitted on appeal that

these requests for admissions were in the record and that the

actuarial review came up in testimony as well. See Trial Tr. at

130. It is abundantly clear that appellants were on notice that

this argument was before the district court and could have

presented evidence at trial that NALC complied with the

amendment procedures if any such evidence existed. We have

no precedent for requiring any more.

Appellants further offer two brief arguments. They first

contend that the amendment to the plan was necessary to comply

with a change in the law required by an amendment to the

governing statute effected in the Retirement Equity Act of 1984.

That amendment required plans qualifying under ERISA to

include a “married at commencement” eligibility requirement.

Again, this is inarguably true. See Retirement Equity Act of

1984, Pub. L. No. 98-397, 98 Stat. 1426. This amendment did

not, however, require the deletion of pre-existing “one year at

death” language, nor free the trustees from complying with the

amendment procedures required by the plan. Whether the

resulting invalidity of the amendment means that the two

methods of qualification must coexist or that the amended

statute mandates further amendment to the plan is not before us.

Appellants are no doubt correct that such coexistence will

increase the financial burden on the plan. That well illustrates

a problem that could have been addressed by the submission of

the proposed amendment for review by the actuaries as required

by the amendment procedures of the plan.

Last, appellants argue that the district court should have

narrowly tailored the relief ordered in the judgment. That is,

14

they contend that the court should have limited the effect of its

findings and holdings to the claims of the Overbys, leaving the

questions of the validity of the amendment to other annuitants

for later cases. We cannot conclude that the court erred in

granting the relief it provided. The district court performed its

Article III function. The judge decided the case before her. The

precise breadth and strength of the preclusive effect of that

judgment on later litigants can await cases in which that

preclusive effect is at issue.

CONCLUSION

We conclude that the district court’s factual finding that the

proposed amendment was not submitted to the actuaries for a

cost review is not clearly erroneous. Because an ERISA plan is

held to whatever level of specificity it has adopted, the failure of

NALC ATF to follow its own amendment procedures means that

the amendment was not adopted. For the reasons set forth

above, the judgment of the district court is therefore affirmed.

So ordered.