Hlinka v. Bethlehem Steel Corp.

BECKER, Circuit Judge,

concurring:

I agree with the bottom line of the majority’s opinion — that Hlinka is not entitled to relief — hence I join in the judgment. I write separately because I disagree with the majority’s approach to the applicability to this case of ERISA’s “full and fair review" provision, 29 U.S.C. § 1133 (1982). The majority has determined that there has been no violation of that provision without any discussion of the applicability of *288 § 1133 to early retirement plans, 1 because it finds no procedural unfairness relating to Hlinka’s opportunity to appear before the review committee. I think it important to make it clear not only that § 1133 applies to early retirement plans, and why, but also how § 1133 applies to the facts of this case.

At oral argument, counsel for appellees argued that the denial of benefits by the employer cannot be covered by the full and fair review provisions because these provisions only apply to accrued benefits. This argument, which the majority does not address, is incorrect. First, ERISA, in its definition section, defines “employee pension benefit plan” and “employee welfare benefit plan” very broadly. These definitions are clearly not limited to accrued benefit plans. See 29 U.S.C. §§ 1002 (1), (2), (23). Second, § 1133 provides that “every employee benefit plan shall” provide “full and fair review” (emphasis added). I believe that the breadth of the language in the definition and full and fair review sections demonstrates that early retirement benefits are covered by the full and fair review provisions. This conclusion is buttressed by the 1984 amendment to 29 U.S. C. § 1054(g) (Supp. II 1984), see Maj. Op. at n. 10, which explicitly provides protection for early retirement benefits in certain circumstances and therefore strongly implies that early retirement benefits fall within the general ambit of ERISA. Third, 29 C.F.R. § 2560.503 -l(a) (1987) provides that the full and fair review provisions apply to all plans described in 29 U.S.C. § 1003 , which broadly states that ERISA shall “apply to any employee benefit plan if it is established or maintained — (1) by any employer engaged in commerce or in any industry or activity affecting commerce.” 2 29 U.S.C. § 1003 (a). This 70/80 plan clearly satisfies § 1003(a). I therefore conclude that the full and fair review provisions must apply to early retirement benefit plans.

Most relevant to the facts of this case is the full and fair review provision’s requirement of a written articulation of “specific reasons” for the plan administrator’s denial of benefits. 29 U.S.C. § 1133 (1). Applying these principles to this case, I believe that Hlinka was deprived of a full and fair review of the denial of benefits, because the administrator failed to inform him of the specific reasons for the denial. In BSC’s letter to Hlinka notifying him of the denial of benefits, it merely stated that “accommodation under the 70/80 pension provision requires mutual conditions which do not exist in your case and, therefore, I regret that your request is denied.” The General Pension Board stated in its May 19, 1986, letter only that Hlinka was not “eligible” for 70/80 benefits, providing no further explanation, and in its July 15, 1986, letter only that “Bethlehem Steel has not indicated that it considers that your retirement would be in its interest nor has it approved an application for retirement under mutually satisfactory conditions as would be required for eligibility.”

At no time was Hlinka informed of the specific reason for the denial of benefits. If it were not for the subsequent expression of reasons provided by BSC in pretrial discovery, see discussion infra, I would remand this case to the General Pension Board for explanation of the specific reason for denial of Hlinka’s request for benefits. See also Groves v. Modified Retirement Plan for Hourly Paid Employees of Johns Mansville Corp., 803 F.2d 109 , 114 (3d Cir.1986) (district court’s holding that statement that disability was “insufficient to qualify” for benefits under the plan did not satisfy § 1133 specificity requirement upheld on appeal).

As the majority points out in footnote 7, BSC’s reason for denying Hlinka’s request for 70/80 benefits came to light during pretrial discovery. BSC denied Hlinka’s request for 70/80 benefits “because of his extensive and unique technological expertise related to the project to which he was assigned.” This statement clearly satisfies the specificity requirement of § 1133 (and *289 is consistent with any reasonable interpretation of “in its interest”) and therefore it would be a futile exercise to remand the case at this time. However, I would hold that, in future cases, the plan administrator is required to articulate specific reasons in any communication denying benefits under an early retirement provision like 2.6(d). 3

The requirement of an expression of specific reasons does not of itself inhibit the employer’s business judgment, although the plan may restrain the employer’s range of decisionmaking options, depending on the proper contract construction of the term “in its interest.” 4 The specific reasons requirement does, however, by the mere force of requiring articulation, play a role in ensuring that the employer will focus on its responsibility and will act with fidelity to the agreement and not for some impermissible reason, e.g., race or sex discrimination, and will facilitate judicial scrutiny of “full and fair review.” However, there is no such problem in this case, because the reason evinced would satisfy any reasonable construction of “in its interest.”

. It would appear that the majority thinks that the full and fair review provisions are applicable, because it considers the question whether the provisions were violated.

. Section 1003 also provides for exceptions to its broad coverage, but none of those exceptions are pertinent to this case. See 29 U.S.C. § 1003 (b).

. I note in this regard that I am troubled by the majority’s discussion in part III. In my view, in the absence of a statement of a specific reason for denial of benefits, a genuine issue of material fact will likely exist as to whether full and fair review was provided. I believe that in such situations in the future, the district court should deny a motion for summary judgment and should allow the plaintiff to proceed with discovery.

. For example, there may be agreements where that term will be properly construed to mean business interest or legitimate business interest.