Petition for Writ of Certiorari — Moore v. Reynolds Metals Co. Retirement Program for Salaried Employees

. q 4 0’ ee TLE D U.S

—s NOV $3 1934

No. a. |

es Preserves STEVAS

1 CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1984

JUNE G. MOORE,

Petitioner,

vs.

REYNOLDS METAL COMPANY RETIREMENT

PROGRAM FOR SALARIED EMPLOYEES

Respondent.

On Writ of Certiorari to the United States Court of Appeals

For the Sixth Circuit

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

NORMAN I. BARRON

of

BRUMLEVE, DECAMP, WOOD &

BARRON

1420 Central Trust Tower

Cincinnati, Ohio 45202

(513) 721-1350

Attorneys for Petitioners

AS SE aT: aT TS

COUR INDEX PRESS, INC. — 215 E. Ninth Street, Cincinnati, Ohio 45202 — (513) 241-1450

os

aes me a En aw

QUESTIONS PRESENTED FOR REVIEW

WHETHER FEDERAL COURTS HAVE JURISDICTION

TO REVIEW THE SUBSTANTIVE PROVISIONS OF A

PENSION PLAN FOR ARBITRARINESS WHERE THE

PLAN WAS ENACTED UNILATERALLY BY THE COM-

PANY AND IS SOLELY ADMINISTERED BY THE COM-

PANY THROUGH ITS APPOINTEES.

Ill.

TABLE OF CONTENTS

Page

QUESTION PRESENTED FOR REVIEW ........... I

EE ee re 1

ES eee eee eee 1-2

Se ee ne 2

STATUTORY PROVISIONS INVOLVED ............ 2

Damameemeen GP Reem GABE 2... ic cee ce eee ceeee 3-4

REASONS FOR GRANTING THE WRIT ............ 5

THE DECISION BY THE SIXTH CIRCUIT CON-

FLICTS WITH THE DECISIONS OF THE

COURT OF APPEALS FOR THE DISTRICT OF

COLUMBIA CIRCUIT, THE THIRD CIRCUIT,

THE NINTH CIRCUIT, AND EVEN WITH A

PRIOR DECISION OF THE SIXTH CIRCUIT.

THE DECISION ALSO CONFLICTS WITH

PRIOR DECISIONS OF THIS COURT AND WITH

NUMEROUS DISTRICT COURT DECISIONS. .... 5

OEE eee oe eee ee ee ee 11

APPENDIX A — OPINION OF THE UNITED

STATES DISTRICT COURT FOR THE SOUTH-

* rer la-9a

APPENDIX B — DECISION OF THE UNITED

STATES COURT OF APPEALS FOR THE SIXTH

RS ee ee eee eee 10a-15a

IV.

AUTHORITIES CITED

Cases: Page

Blazquez v. New York City District Council, 462 F.

a Tae Ck See SEE bik wha ok Cea ea ences 9

Burroughs v. Board of Trustecs of the Pension Trust

Fund for Operating Engineers, 398 F.Supp. 168 (N.D.

Calif. 1975) affd. 543 F.2d 1128 (9th Cir. 1976),

cert. denied 429 U.S. 1096 (1977) .................. 9

Dudo vy. Schaffer, 551 F.Supp. 1330 (E.D. Pa. 1982)

OG. THE TOe OEE (ORG. TENSE oxic ec dive even ce 7

Fase v. Seafarer’s Welfare and Pension Plan, 432 F.

Supp. 1037 (E.D. N.Y. 1977) affd. 589 F.2d 112

ee re pare ney cnet an en 9

Gordon v. ICWU-PMA Benefit Plans, 616 F.2d 433

4 8 Re oe Pra eee ey eet Let ane oe 8

Hurn v. Retirement Trust Fund, 703 F.2d 386

(9th Cir. 1983) 9

Knauss v. Gorman, 583 F.2d 82 (3rd Cir. 1978) ........ 8

Kosty v. Lewis, 319 F.2d 744 (D.C. Cir. 1963) cert.

RE, ee Ae ee Ce ae i eee eS 7

Moore v. Reynolds Metals Co. Retirement Program For

Salaried Employees, 563 F.Supp. 1372 (S.D. Ohio

REO RO ee Me eae es he ON OLS. ~ erage 10

Music v. Western Conference of Teamsters Pension

Trust Fund, 660 F.2d 400 (9th Cir. 1981), vacated,

459 U.S. 810 (1982) (for reconsideration in light of

Robinson, 455 U.S. 562), on remand, 712 F.2d 413

Pee OE os Sane esicc hee et eae 9

NLRB v. Amax Coal Co., 453 U.S. 322 (1987)

Pete v. UMW Welfare and Retirement Fund, 517 F.2d i

Meee Cs GN SD is nce acevasescceseceisccces 7

Sellers v. O'Connell, 701 F.2d 575 (6th Cir. 1983) ...... 7

Struble v. New Jersey Brewery Employees’ Welfare

Trust Fund, 732 F.2d 325 (3d Cir. 1984) ............ 10

UMW Health and Retirement Fund v. Robinson, 455

oe Yo ee rer ore rT erery yr 5, 7, 9

Other Authorities:

i cae o sans nota ceeds Rava erees 2

et Tee G66 Se: eererrrrrrry Teer ye 6

Pe Se iikc -hceus baa kenntudwadessdnceeawes 10

29 U.S.C. §1104(a)(1)(A) and (B) ..............5. 2

SD TBE. GERM A PD o eb acd wecsccicussnes 2, 3, 10

a es te IN oc hdd a bigs ea Ss Ses oe 8

Restatement (Second) of Trusts, $170 (1957) .......... 10

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1984

JUNE G. MOORE,

Petitioner,

re ;

|

vs.

REYNOLDS METAL COMPANY RETIREMENT

PROGRAM FOR SALARIED EMPLOYEES,

Respondent.

On Writ of Certiorari to the United States Court of Appeals

For the Sixth Circuit

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

PETITION

June G. Moore, Petitioner herein, respectfully prays that a

writ of certiorari issue to review the decision by the Court of

Appeals for the Sixth Circuit reversing a decision in favor of

the Petitioner rendered by the Federal District Court for the

Southern District of Ohio, Western Division.

OPINIONS BELOW

Decision by the United States District Court for the South-

ern District of Ohio in Case No. C-1-82-433, in favor of the

Petitioner was rendered on June 12, 1983, and is attached

hereto as Appendix A and reported at 563 F.Supp. 1372 (S.D.

Ohio 1983). Decision by the United States Court of Appeals

)

2

for the Sixth Circuit, in Case No. 83-3458, reversing the deci-

sion of the district couvt was decided and filed on August 10,

1984, and is attached hereto as Appendix B.

JURISDICTION

The decision of the United States Court of Appeals for the

Sixth Circuii n Case No. 83-3458 was entered on August 10,

1984.

The jurisdiction of this Court is founded upon 28 U.S.C.

§ 1254(1).

STATUTORY PROVISIONS INVOLVED

29 U.S.C. § 1104(a)(1)(A) and (B):

(a)(1) Subject to sections 1103(c) and (d), 1342, and

1344 of this title, a fiduciary shall discharge his duties

with respect to a plan solely in the interest of the par-

ticipants and beneficiaries and—

{a) for the exclusive purpose of:

(i) providing benefits to participants and their bene-

ficiaries; and

(ii) defraying reasonable expenses of administering

the plan;

(B) with the care, skill, prudence, and diligence under

the circumstances then prevailing that a prudent ma~

acting in a like capacity and familia with such matters

would use in the conduct of an enterprise of a like char-

acter and with like aims;

29 U.S.C. § 1132(a)(1)(B):

(a) acivil action may be brought—

(i) by a participant or beneficiary—

(B) to recover benefits due to him under the terms of

his plan, to enforce his rights under the terms of the

plan, or to clarify his rights to future benefits under the

terms of the plan;

3

STATEMENT OF THE CASE

Petitioner June Moore is the widow of Donald Moore who

had been employed by the Reynolds Metals Company (here-

inafter referred to as “Reynolds”) for 28 years at his death

on September 27, 1981, at the age of 52 from cancer. As a

salaried employee of Reynolds, he was a participant in the

Reynolds Metals Company Retirement Program for Salaried

Employees, the defendant below (hereinafter referred to as

“Retirement Program”). Donald Moore was not a union

member and the Retirement Program in which he was a

participant was formulated and implemented by Reynolds.

The Retirement Program provides under Article 6.3 for

death benefits to the surviving spouse of a participant who is

“permanently disabled” within the meaning of that term as

it is defined in Article 2.4 of the Retirement Program. To

be considered permanently disabled the Retirement Program

required a participant to be eligible for, and in receipt of,

benefits under the Disability Insurance provisions of the So-

cial Security Act. Donald Moore became afflicted with cancer

and applied for disability benefits under the Social Security

Act and although he was “disabled” for purposes of Social

Security, he died before completing the statutory waiting

period and consequently was not in receipt of any benefits

from Social Security when he died on September 27, 1981.

After Donald Moore died June Moore filed a claim with

the Administration Committee of the Retirement Program for

death benefits as the surviving spouse of a permanently dir

abled employee. Th‘s claim was denied solely because Don-

ald Moore was not im receipt of Social Security Disability

benefits at the time of his death and was therefore not per-

manently and totally disabled within the meaning of the Re-

tirement Program. After June Moore’s claim was rejected

by said Administration Committee she filed suit in the United

States District Court for the Southern District of Ohio, pur-

suant to 29 U.S.C. § 1132(a)(1)(B), to obtain the benefits

provided by the Retirement Program under Article 6.3. The

4

district court on stipulated facts and cross motions for sum-

mary judgment found that it had jurisdiction to review the

provisions of the Retirement Program for arbitrariness and

found that the denial of benefits to June Moore was arbitrary

and unreasonable. (Appendix A) The Retirement Program

appealed this decision to the United States Court of Appeals

for the Sixth Circuit which reversed and held that “federal

courts do not have authority to review the provisions of such

a plan” for reasonableness. (Appendix B at lla) The court of

appeals limited federal court re iew to the question of whether

the trustees’ actions in administering or interpreting a plan’s

provisions are arbitrary and capricious. (Appendix B)

5

REASONS FOR GRANTING THE WRIT

THE DECISION BY THE SIXTH CIRCUIT CON-

FLICTS WITH THE DECISIONS OF THE COURT OF

APPEALS FOR THE DISTRICT OF COLUMBIA

CIRCUIT, THE THIRD CIRCUIT, THE NINTH CIR-

CUIT, AND EVEN WITH A PRIOR DECISION OF

THE SIXTH CIRCUIT. THE DECISION ALSO CON-

FLICTS WITH PRIOR DECISIONS OF THIS COURT

AND WITH NUMEROUS DISTRICT COURT DECI-

SIONS.

THE ISSUE

FEDERAL COURTS DO HAVE JURISDICTION TO

REVIEW FOR ARBITRARINESS THE SUBSTANTIVE

PROVISIONS OF A PENSION PLAN ENACTED BY A

COMPANY WHERE THE COMPANY RETAINS THE

RIGHT TO AMEND AND ADMINISTER THE PLAN

THROUGH ITS APPOINTEES.

The decision of the Sixth Circuit denying jurisdiction to fed-

eral courts to review for arbitrariness the substantive provi-

sions of pension plans which have been unilaterally enacted

and administered by companies is in direct conflict with the

recent decision of this Court | : the case of UMW Health and

Retirement Fund v. Robinson, 455 U.S. 562 (1982). Robinson

did not involve a plan that had been unilaterally enacted by

the company but rather a plan that had been instituted

through the give and take of collective bargaining. The

UMW contended and this Court agreed that, if the provisions

of a plan have been bargained for between management and

labor, then arbitrariness and unreasonableness do not apply

and each party is entitled to the fruits of his bargaining. The

Respondent Robinson attempted to justify the jurisdiction

of the federal court through those cases in which trustees of

employee benefit trust funds, not the collective bargaining

agreement, fixed the eligibility rules and benefit levels. After

6.

considering this argument this Court could simply have over-

ruled that line of reasoning but instead it took great pains

to distinguish those cases on the grounds that “[t]he peti-

tioner trustees were not given ‘full authority’ to determine

eligibility requirements and benefit levels, for these were fixed

by the 1974 collective bargaining agreement.” Id. at 573.

The traditional fiduciary obligations of trustees, plan ad-

ministrators, and other fiduciaries under ERISA has been

confirmed by this Court, as follows:

Whatever may have remained implicit in Congress’

view of the employee benefit fund trustee under the

Act became explicit when Congress passed the Em-

ployee Retirement Income Security Act of 1974 (ERISA),

88 Stat. 829. ERISA essentially codified the strict fidu-

ciary standards that a § 303(c)(5) trustee must meet.

See 29 U.S.C. §§ 1002(1) and (2); H.R. Conf. Rep. No.

93-1280, pp. 296, 307 (1974).

NLRB v. Amax Coal Co., 453 U.S. 322, 332 (1981).

However, Amax Coal also indicates that while ERISA codi-

fies stendards that must be followed by the trustees, tradi-

tional rules of equity also bind the fiduciaries of a plan.

Given . . . Congress’ use of terms long established in the

courts of chancery, we must infer that Congress intended

to impose on trustees traditional fiduciary duties unless

Congress has unequivocally expressed an intent to the

contrary.

Id. at 330.

The Sixth Circuit's opinion below, which seemingly accepts

the strict standards of ERISA, clearly deprives federal courts

of jurisdiction to enforce traditional equitable obligations im-

posed on plan fiduciaries by Congress and this Court in Amax

Coal. The decision below by the Sixth Circuit clearly war-

rants the review of this Court because it would be strange if

Congress imposed traditional fiduciary obligations on plan

7

administrators but federal courts were powerless to enforce

them. See Dudo vy. Schaffer, 551 F.Supp. 1330 (E.D. Pa.

1982), affd., 720 F.2d 661 (3d Cir. 1983).

The decision below by the Sixth Circuit runs contrary to

decisions of other federal appellate and district courts. The

Court of Appeals for the District of Columbia Circuit in the

case of Pete v. UMW Welfare and Retirement Fund, 517

F.2d 1275 (D.C. Cir. 1975) (en banc), held that it had juris-

diction to determine whether or not a substantive provision

of a union pension plan which had been installed by the

union trustees was arbitrary and capricious. The court of ap-

peals further held that where the trustees of a coal miners’

pension fund have “full authority . . . with respect to ques-

tions of coverage and eligibility,” the role of the district court

“is limited to ascertaining whether the trustees’ broad discre-

tion has been abused by the adoption of arbitrary and ca-

pricious standards.” Id. at 1283. While the role of the lower

court may be “limited” to determining whether an arbitrary

or capric.ous standard has been adopted, the court of appeals

for the District of Columbia Circuit clearly states that district

courts have jurisdiction to make that determination. This

Court in Robinson, when commenting on the decision by the

Court of Appeals for the District of Columbia Circuit in Pete,

quoted with approval the decision of Kosty v. Lewis, 319 F.2d

747 (D.C. Cir. 1963) cert. denied, 375 U.S. 964 (1964),

which states that “the Trustees, like all fiduciaries, are subject

to judicial correction in a proper case upon a showing that

they have acted arbitrarily or capriciously towards one of the

persons to whom their trust obligations run.” 455 U.S. at 573.

Even the Sixth Circuit in the earlier case of Sellers vy. O’Con-

nell, 701 F.2d 575 (6th Cir. 1983), held that federal courts

have jurisdiction to review the reasonableness of pension pro-

visions established by the fund’s trustees. Although Sellers

was decided on different grounds, the Sixth Circuit also held

that:

Absent a clearer indication that Robinson governs trust

8

fund rules formulated by Trustees as well as those in-

cluded in collective bargaining agreements, we hold that

§ 186(e) provides jurisdiction over the present claim.

Id. at 577.

The Court of Appeals for the Third Circuit in Knauss v.

Gorman, 583 F.2d 82 (3rd Cir. 1978), also affirmed the right

of federal courts to review for reasonableness a provision in a

pension plan. In Knauss, the appellate court was concerned

with the possibility that federal courts would be inundated

with claims every time a beneficiary disagrees with the dis-

cretionary decision of the administrators of a pension plan.

The court considered that possibility but went on to say that:

However, where a settled requirement capriciously ex-

cludes employees from benefits, it is not the prudence of

the plan’s administrators which is at issue but the fair-

ness of its basic structure. Such an exclusion constitutes

a failure to conform to the “sole and exclusive benefit”

requirement, and thus may be reviewed in the federal

courts without doing violence to the congressional intent.

Id. at 86.

The sole and exclusive benefit requirement of § 302(c) (5)

of the Labor Management Relations Act, 29 U.S.C. § 186

(c)(5), uses the same language as ERISA Section 404(a)(1),

29 U.S.C. §1104(a)(1). The instant case is not a Section

302(c)(5) case but rather an ERISA case. However, courts

have generally applied the same standard of review under

ERISA and the Labor Management Relations Act since the

same words are used. Gordon v. ICWU-PMA Benefit Plans,

616 F.2d 433, 438 (9th Cir. 1980).

The Court of Appeals for the Ninth Circuit has held on

numerous occasions that federal district courts have jurisdic-

tio.. to review the decisions of plan fiduciaries since ERISA

imposes upon trustees the burden of fiduciary care which is

based on traditional equitable principles. Hence, if an eligi-

9

bility rule, which is unilaterally implemented by the trustee,

arbitrarily and unreasonably excludes a participant from bene-

fits, courts can act to correct this structural defect.

Probably the case most factually similar to the instant case

is Music v. Western Conference of Teamsters Pension Trust

Fund, 660 F.2d 400 (9th Cir. 1981), vacated, 459 U.S. 810

(1982) (for reconsideration in light of Robinson, 455 U.S.

562), on remand, 712 F.2d 413 (9th Cir. 1983). On remand,

the Ninth Circuit reaffirmed its prior decision in words which

are unequivocally opposed to the decision by the Sixth Circuit

below. Specifically, Music held that federal courts have juris-

diction to review the decisions of trustees where “the trustees’

actions in fashioning or applying those eligibility require-

ments do not have a reasonable basis or are arbitrary and

capricious.” 712 F.2d at 419 (emphasis added).

The Music Court considered and distinguished Robinson

on the grounds that it did not apply where changes in eligi-

bility rules could be made unilaterally by the fiduciaries. In

the later decision of Hurn v. Retirement Trust Fund, 703

F.2d 386 (9th Cir. 1983), the court distinguished Robinson in

the same manner as it had in Music and continued to rule

that federal courts do have jurisdiction to review the arbi-

trary acts of plan fiduciaries.

Various federal district courts have determined that federal

courts have jurisdiction to review for arbitrariness the sub-

stantive provisions of pension plans. Three of these decisions

are indistinguishable from the instant case: Burroughs v.

Board of Trustees of the Pension Trust Fund for Operating

Engineers, 398 F.Supp. 168 (N.D. Calif. 1975) affd 543 F.2d

1128 (9th Cir. 1976), cert. denied 429 U.S. 1096 (1977); Blaz-

quez v. New York City District Council, 463 F.Supp. 727

(S.D. N.Y. 1979); and Fase v. Seafarer’s Welfare and Pension

Plan, 432 F.Supp. 1037 (E.D. N.Y. 1977) affd. 589 F.2d 112

(2nd Cir. 1978). In all three of these cases the courts found

they had jurisdiction to review for arbitrariness the substan-

tive provisions of pensions and invalidated those substantive

10

provisions. The district court in the instant case did the same

thing. Moore v. Reynolds Metals Co. Retirement Program

For Salaried Employees, 563 F.Supp. 1372 ($.D. Ohio 1983).

Here, the decision by the Sixth Circuit, if allowed to stand,

would create the anomalous situ: tion of allowing district

courts in virtually every circuit but the Sixth to review the

cubstantive provisions of pension plans for arbitrariness. As

the average age of the population of our society continues to

creep higher, the provisions of these retirement plans assumes

ever greater importance to an increasingly larger segment of

the population. The importance of these plans to Congress

is exemplified by the imposition of fiduciary standards on plan

trustees and fiduciaries through 29 U.S.C. § 1104; the judicial

system has also recognized the importance of these plans by

holding that not only are the specific fiduciary obligations of

ERISA binding on plan fiduciaries but also the traditional

rules of equity as well. One of these traditional rules is that

a fiduciary owes an unswerving duty of complete loyalty to-

ward the individuals to whom his trust obligation runs. Re-

statement (Second) of Trusts, § 170 (1957). Section 1104 of

ERISA also imposes a duty of loyalty upon plan fiduciaries,

and the basis for granting jurisdiction to a federal court to

review for arbitrariness the substantive provisions of a pen-

sion plan arises out of the traditional rule of equity, and its

codified counterpart. See Struble v. New Jersey Brewery

Employees’ Welfare Trust Fund, 732 F.2d 325 (3rd Cir.

1984).

How can a fiduciary fulfill his duty of loyalty to a partici-

pant or act “solely in the interest of participants and bene-

ficiaries” while enacting or enforcing a provision of a pension

plan that is unreasonable and arbitrary? The simple answer

is that he cannot, and Congress has given participants in

qualified plans the right to the protection of the federal courts

under 29 U.S.C. § 1132(a)(1)(B) where he has been de-

prived of benefits to which he is entitled. It would seem of

paramount importance to reassure the millions of participants

in qualified plans which have been unilaterally enacted by

11

their employers, that the jurisdiction of federal courts extends

not simply to a review of the administrative acts of fiduciaries,

but also to a review of the substance of the plan provisions

that they enact. Where from the decisions cited herein, it is

clear that other courts of appeal have ruled that jurisdiction

should attach to allow federal courts to review the provisions

of qualified plans for arbitrariness and unreasonableness, then

it is also clear that the decision by the Sixth Circuit below

deviates from this accepted and usual course of judicial pro-

ceedings and calls for an exercise of this court’s power of

supervision.

CONCLUSION

For the foregoing reasons, the Court is respectfully urged

to grant the Petition, to issue the writ of Certiorari, to review

the decision of the Sixth Circuit below.

Respectfully submitted,

NORMAN I. BARRON

of

BRUMLEVE, DECAMP, WOOD &

BARRON

1420 Central Trust Tower

Cincinnati, Ohio 45202

(513) 721-1350

Attornev for Petitioners

APPENDIX A

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

No. C-1-82-433

JUNE G. MOORE,

Plaintiff,

vs.

REYNOLDS METALS COMPANY RETIREMENT

PROGRAM FOR SALARIED EMPLOYEES,

Defendant.

OPINION AND ORDER

(Filed June 1, 1983)

SPIEGEL, J.:

This matter came before the Court on cross-motions for

summary judgment (docs. 17, 19) and supplemental and

opposing memoranda (docs. 21, 22, 23). There being no

genuine issue as to any material fact, judgment is hereby

entered with respect to plaintiffs first cause of action for

defendant. With respect to plaintiff's second cause of action,

however, judgment is hereby entered for plaintiff.

Plaintiff in this diversity action alleges defendant’s breach

of contract with respect to death benefits from a retirement

plan and seeks a declaration of rights and an award of bene-

fits under that plan. The stipulation of facts filed by the

parties (doc. 16) establishes the following.

la

2a

Plaintiff June Moore is the widow of Donald C. Moore, an

employee of Reynolds Metal Company (Reynolds) who died

September 27, 1981 at the age of fifty-two. At the time of

his death he had worked for Reynolds for twenty-eight years.

Decedent was a participant in the Reynolds Metal Company

Retirement Program for Salaried Employees (Retirement Pro-

gram), a defined benefits pension plan qualified by the In-

ternal Revenue Service.

Decedent was placed on sick leave status May 15, 1981

and remained on that status until his death September 27,

1981. Although he applied for disability insurance benefits

under the Social Security Act, decedent never received

monthly cash benefits under the Act because he died before

completing the statutory waiting period under the Act.

Plaintiff filed her first claim with the Administration Com-

mittee of the Retirement Program June 20, 1982, alleging

she was entitled to benefits under Article VI, Section 6.1(b)

as the surviving spouse of Donald Moore. That claim was

denied for the reason that plaintiff did not qualify for sur-

vivor’s benefits because Donald Moore died before reaching

age sixty-five. Plaintiff then filed a second claim June 8,

1982, alleging her entitlement to benefits as the surviving

spouse of a totally and permanently disabled participant who

had completed at least ten years of service with Reynolds.

This claim was denied because at the time of his death Don-

ald Moore was not “totally and permanently disabled” as de-

fined by Article II, Section 2.4 of the Retirement Program

and, therefore, his surviving spouse was not eligible for sur-

vivor benefits under Article VI, Section 6.3.

Plaintiff has exhausted all administrative appeals under the

Program with respéct to both claims.

We agree with the plaintiff that public policy requires that

pension and benefits plans be construed, where possible, to

avoid the forfeiture of rights which an employee, through

years of service, has earned. Hoefel v. Atlas Tack Co., 581

F.2d 1, 6 (1st Cir. 1978), cert. denied, 440 U.S. 913. Never-

3a

theless, in liberally construing pension and benefits plans, we

are bound by the standard for court review of a denial of

pension benefits which is whether the denial is arbitrary, ca-

pricious, or in bad faith. Van Gunten v. Central States, South-

west Areas Pension Fund, 672 F.2d 586 (6th Cir. 1982).

These two principles require the Court to examine closely

the language of the pension and benefits plan in question, and

construe ambiguities in favor of the beneficiary of the plan.

However, they do not permit the Court to read additional

provisions into the plan or to torture the plain language of

a plan into something other than its obvious meaning so that

the Court can reach what seems to it to be a fairer or more

reasonable result. So long as the language of the plan is

unambiguous, we are obliged to review a denial of benefits in

accord with that language.

Plaintiff's first cause of action is based upon Article VI, Sec-

tion 6.1(d) which provides:

Commencing with his Normal Retirement Date, the Sur-

viving Spouse of an Employee shall, in the event of the

Employee's death prior to becoming a Pensioner, re-

ceive a retirement benefit equal to 50% of the benefit to

which the Employee would have been entitled in ac-

cordance with Section 3.1 as if he had retired on the

first day of the month during which he dies."

“Normal Retirement Date” is defined at Article I, Section

1.1(t) as age sixty-five. The clear meaning of Section 6.1(b)

is thus that the surviving spouse of an employee who con-

tinued to work after reaching age sixty-five is, upon the death

of the employee, automatically entitled to one/half of the

benefits to which the employee would have been entitled

had he retired upon reaching sixty-five? Donald Moore

'The Reynolds Retirement Program as amended and restated Jan-

uary 1, 1975 with additional amendments incorporated through July 1,

1979 is attached as an exhibit to the stipulation of facts (doc. 16).

2 This automatic entitlement, however, does not occur if the em-

4a

did not reach sixty-five and, therefore, was not entitled to

any benefits. Logically then, his surviving spouse, whose

right to benefits is strictly derivative, is not entitled to bene-

fits under Article VI, Section 6.1(b). We can find no other

construction of this provision consistent with its unambiguous

language. See e.g., Wyzik v. Employee Benefits Plan of Crane

Co., 512 F. Supp. 1222 (D.Mass. 1981), app. dismissed, 633

F.2d 348 (1st Cir. 1981).

As there is no disputed issue of fact with respect to plain-

tiff’s first cause of action and as the language of Article VI,

Section 6.1(b) upon which that claim is based is unambig-

uous, we conclude that defendant is entitled to judgment as

a matter of law with respect to plaintiff's first claim.

Plaintiff's second cause of action is based upon Article VI,

Section 6.3 which provides:

If a Disabled Participant to whom Section 5.2 applies

dies after completing at least ten (10) Years of Service

but before electing to receive a retirement benefit pur-

suant to Section 5.2, his surviving spouse, if any, shall

be entitled to rece*ve benefits hereunder if he has been

disabled for at least six (6) months at the time of his

death. [The remainder of the section describes the bene-

fit to be awarded. ]

Section 5.2 provides that an employee who became disabled

after January 1, 1981 and is terminated because of “total and

permanent disability” as defined in Section 2.4 and who has

completed 24 months of service is eligible for certain retire-

ment benefits. Section 2.4 provides that an employee is totally

and permanently disabled “as of the date he is considered

eligible for, and in’ receipt of benefits under the Disability

Insurance Provision of the Social Security Act” (emphasis

added ).

ployee who works past age sixty-five elects in writing not to have his

spouse covered.

eee ows

5a

Plaiatiff’s claim to benefits is derivative and thus if Donald

Moore was not entitled to benefits under the terms of the

Program, then plaintiff cannot receive benefits as his sur-

viving spouse. It is undisputed that Donald Moore had ap-

plied to the Social Security Administration for disability

benefits but that he “never received, nor was eligible to re-

ceive monthly cash [disability] benefits . . . because he died

before he completed the statutory waiting period under the

Social Security Act” (doc. 16, p. 4).

Plaintiff, however, argues that the Administration Com-

mittee has the power to interpret the Program (Article X,

Section 9.1(a)) and to resolve all questions as to the eligi-

bility of any person to receive benefits under the Program,

Article XI, Section 9.1(a), (c). Because the Committee has

the power to interpret, plaintiff reasons that the denial of

henefits solely because her decedent had not satisfied the

statutory waiting period under the Social Security Act was

arbitrary and capricious. In essence plaintiff admits that

Donald Moore was not permanently and totally disabled as

defined by the Program but argues that enforcement of a

required waiting period is arbitrary and capricious where a

pensioner or the surviving spouse of that pensioner meets

all other requirements as specified in the Retirement Program.

Defendant's response is that the Supreme Court'’s ruling in

United Mine Workers of America Health & Retirement Funds

v. Robinson, 455 U.S. 562 (1982) prevents a court from re-

viewing the provisions of a pension and benefits plan for

reasonableness. Robinson involved a pension and_ benefits

trust fund financed by contributions from members of the

Bituminous Coal Operators’ Association. A 1974 collective

bargaining agreement between the United Mine Workers of

America and the Association increased health benefits for

widows of coal miners whose husbands died before December

6, 1974 and who were receiving pensions when they died,

but did not increase health benefits for widows whose hus-

bands died before December 6, 1974 and who were still work-

6a

ing at the time they died although eligible for pensions.

Widows in the latter group brought a class action under sec-

tion 302 of the Labor Management Relations Act (LMRA),

Section 302(c)(5) of the LMRA provides that employee

benefit trust funds collectively bargained for be maintained

“for the sole and exclusive benefit of the employees . . . and

their families and dependents.” The Supreme Court held

that section 302 does not authorize federal courts to review

for reasonableness the provisions of a collective bargaining

agreement allocating health benefits among potential bene-

ficiaries of an employee benefit trust fund. This holding was

based upon the Court’s reading of the plain meaning and

legislative history of section 302(c)(5).

We do not find Robinson dispositive. The Court's exclu-

sive focus on section 302(c)(5) limits Robinson’s preceden-

tial value to cases brought pursuant to section 302 of the

LMRA. Furthermore, the Court held that a federal court

was not authorized to review the provisions for reasonable-

ness but it did not hold that a federal court was precluded

from reviewing the enforcement of those provisions in par-

ticular cases for arbitrary and capricious results.

The Reynolds Retirement Program is not the result of col-

lective bargaining (Stipulation of Facts, doc. 16). Nor is sec-

tion 302 a part of this case, for it was brought under our

diversity jurisdiction and in no way involves the LMRA.

Accordingly, we are obliged to look elsewhere for guidance.

Several pre-Robinson cases, although admittedly brought

pursuant to section 302 of the LMRA, are useful in deciding

whether a denial of pension benefits based solely on the un-

avoidable inability to satisfy a specified waiting period is

arbitrary. In Fase v. Seafarers Welfare and Penion Plan, 432

F. Supp. 1037 (E.D. N.Y. 1977), the Court held that the

7a

withholding of pension benefits for the three-year period in

which it took the Social Security Administration to determine

that the plaintiff was disabled was arbitrary. The Court

wrote:

the purpose of such plans to pay benefits to employees

of contributing employers. If any denial would be un-

related to that purpose, we think a denial based on delay

in the Social Security Administration would be. If any

denial would be arbitrary and capricious, this must be it.

432 F. Supp. at 1042, relying on Haynes v. Lewis, 298

F. Supp. 331 (D. D.C. 1969); Pete v. United Mine

Workers of America Welfare and Retirement Fund of

1950, 517 F.2d 1275 (D.C. Cir. 1975); Lee v. Nesbitt

453 F.2d 1309 (9th Cir. 1971); Burroughs v. Board of

Trustees of the Pension Trust Fund for Operating En-

gineers, 398 F. Supp. 168 (N.D. Cal. 1975), affd 542

F.2d 1128 (9th Cir. 1976).

The Ninth Circuit reached a similar conclusion in Music v.

Western Conference of Teamsters Pension Trust Fund, 660

F.2d 400 (9th Cir. 1981), judgment vacated and remanded,

51 U.S.L.W. 3252 (Oct. 4, 1982). The Court held that the

requirement that an employee become eligible for federal So-

cial Security disability benefits, which requires a five month

statutory waiting period, in order to be eligible for disability

pension benefits under the union’s plan was arbitrary and

capricious and thus a structual defect prohibited by section

302 cf the LMRA. The Ninth Circuit was silent on the

section 302 issue and accordingly we find it appropriate to

look to Music despite the Supreme Court's remand for re-

consideration in light of Robinson. We do not find that

renand destructive of Music's value in cases challenging ac-

tions taken under pension plans not subject to the LMRA.

Plaintiff has also suggested that the regulations of The

Pension Benefit Guarantee Corporation established under

8a

the Employment Retirement Insurance Security Act, 29 U.S.C.

§ 1301 et seq., are instructive in indicating how waiting

periods should be reviewed. PBGC Regulations § 2605.6(a),

governing benefits in the event of termination of the plan,

states that benefits under the plan are nonforfeitable if at the

date of the termination of the plan a participant has “satisfied

all of the conditions required of him . . . except the submis-

sion of a formal application, retirement, or completion of a

required waiting period.” Of course these regulations apply

only to the PBGC and not to trustees of other plans. Never-

theless we find that the purpose of the regulation is to prevent

the inequitable forfeiture of benefits for which an employee

has worked.

We do not challenge the necessity of drawing lines in de-

termining who is to receive pension benefits under a given

plan. Those lines can and should be drawn by the persons

responsible for the plan. However, the Court is entitled to

review the application of those guidelines to a particular case

and to order an award of benefits where the denial is arbi-

trary or capricious. In the instant case had Donald Moore

lived two months longer than he did he would have begun

to receive disability benefits from the Social Security Adminis-

tration. In other words, if his disease process had been

slightly less devastating and death less rapid his spouse would

have been entitled to the benefits which she is now not re-

ceiving. We note further that Donald Moore worked almost

thirty years for Reynolds. This is clearly one of those cases

in which a particular employee falls between the cracks.

The Administration Committee of the Retirement Program

has an obligation as fiduciaries to mae cecisions in light of

all the circumstancés of each particular case. We find it is

arbitrary and capricious under all of the circumstances of

the present case to deny benefits to plaintiff as the surviving

spouse of a permanently and totally disabled individual where

the decedent has met all of the requirements established by

the Retirement Program except for a statutory waiting period.

9a

Accordingly, we declare that plaintiff June Moore is en-

titled to receive benefits under Article VI, Section 6.3 as the

surviving spouse of a totally and permanently disabled em-

ployee of Reynolds.

We conclude, therefore, that plaintiff's motion tor summary

judgment is well-taken with respect to her second cause of

action and hereby order that judgment be entered on be-

half of the plaintiff and against defendant with respect to

that cause of action.

SO ORDERED.

/s/ S. ARTHUR SPIEGEL

United States District Judge

10a

APPENDIX B

RECOMMENDED FOR FULL TEXT PUBLICATION

See, Sixth Circuit Rule 24

No. 83-3458

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

June G. Moore,

Plaintiff-Appellee,

On Appeat from the

United States District

ReyNotps Metrat Company Re-| Court for the South-

TIREMENT PROGRAM For SALARIED} ern District of Ohio.

EMPLOYEES,

Defendant-Appellant.

V.

Decided and Filed August 10, 1984

Before: Encet and Krupansky, Circuit Judges; and

CrLEBREZZE, Senior Circuit Judge.

CELEBREZzE, Senior Circuit Judge. June G. Moore ( plaintiff-

appellee) brought this action under the Employee Retirement

Income Security Act (ERISA) to recover survivor's disability

benefits from the Reynolds Metals Company Retirement Pro-

gram (defendant-appellant) (Retirement rogram). Moore

alleged that a provision in a defined beaefit pension plan

requiring a five month waiting period before a participant

could be declared totally and permanently disabled and, thus,

eligible for disability benefits, was arbitrary and capricious."

1 Moore also alleged that she was entitled to benefits as the surviving

lla

The district court agreed and granted summary judgment in

favor of Mocre. Because federal courts do not have authority

to review the provisions of such a plan, we reverse.

The facts are uncontested. Moore’s husband, Mr. Donald

Moore, was a salaried employee of the Reynolds Aluminum

Company for twenty-eight years and was a participant in the

Retirement Program, a plan subject to ERISA. The Retire-

ment Program, a plan which called for no employee contribu-

tion, was established unilaterally by Reynolds Aluminum

Company. The Retirement Program’s provisions specify the

circumstances under which death benefits to the surviving

spouse of a “totally and permanently disabled” individual

may be awarded. Article VI, Section 6.3 of the Retirement

Program provided in pertinent part at the time of Mr. Moore’s

death:

If a disabled participant to whom Section 5.2 applies

dies after completing at least ten (10) years of service

but before electing to receive a retirement benefit pur-

suant to Section 5.2, his Surviving Spouse, if any, shall

be entitled to receive a benefit hereunder. (emphasis

added ).

Section 5.2 applies only to a participant who is “totally and

permanently disabled” as defined in Section 2.4 of the Re-

tirement Program. Section 2.4 provides:

Total and Permanent Disability. For the purposes of

the Program, an Employee shall be deemed to be totally

and permanently disabled as of the date he is considered

eligible for, and in receipt of, benefits under the Disa-

bility Insurance provisions of the Social Security Act.

(emphasis added).

In order to be eligible for benefits under the disability insur-

spouse of a participant in the Retirement Program who died prior to

his normal retirement date. This claim was dismissed and is not before

the court on appeal.

12a

ance provisions of the Social Security Act, the potential recipi-

ent must meet all of the requirements specified in 42 U.S.C.

Sec. 423, which includes completion of a five-month waiting

period. 42 U.S.C. Sec. 423(c)(2). Accordingly, a beneficiary

of the Retirement Program becomes eligible for disability

benefits only upon completing a five-month waiting period

following commencement of the disability.

Mr. Moore became afflicted with cancer and was placed on

sick leave status on May 15, 1981; he died on September 27,

1981. After her husband’s death, Moore applied for benefits

as a surviving spouse of a totally and permanently disabled

participant of the Retirement Program who had completed at

least ten years of service with Reynolds Aluminum Company.”

Because he did not complete the five-month waiting period,

Mr. Moore was not “totally and permanently disabled” as

defined by the Retirement Program and, therefore, his wife's

application for survivor's disability benefits was denied.

June Moore was successful in persuading the district court

to declare the five month waiting period arbitrary and ca-

pricious. The sole issue on appeal is whether a federal court

may review for reasonableness the provisions of a retirement

program established pursuant to the requirements of ERISA,

even though the program was not established pursuant to a

collective bargaining agreement.

We note initially that an employer has no affirmative duty

to provide employees with a pension plan. H. Rep. No. 93-807,

93rd Cong., 2d Sess. (1974), reprinted in [1974] U.S. Code

Cong. and Ad. News, 4670, 4677. In enacting ERISA, Con-

gress continued its reliance on voluntary action by employers

by granting substantial tax advantages for the creation of

2 Mr. Moore had applied for Social Security Disability Insurance,

but as both parties acknowledge, he never received benefits, nor was

he eligible for benefits, because he died before completing the statutory

five-month waiting period.

13a

qualified retirement programs. Id. Neither Congress nor the

courts are involved in either the decision to establish a plan

or in the decision concerning which benefits a plan should

provide. In particular, courts have no authority to decide

which benefits employers must confer upon their employees;

these are decisions which are more appropriately influenced

by forces in the marketplace and, when appropriate, by fed-

eral legislation. Absent a violation of federal or state law,

a federal court may not modify a substantive provision of a

pension plan.* United Mine Workers of America Health and

Retirement Funds v. Robinson, 455 U.S. 562 (1982).

Moore argues that Robinson does not apply because the

plan in that case was established pursuant to a collective bar-

gaining agreement whereas the plan involved in this case

was created unilaterally by the employer.* We find the logic

of Robinson persuasive in either context:

3The danger of judicial interference in the decision concerning

which benefits to provide is exemplified by this case. Perhaps the

decision to include the waiting period was made due to financial con-

siderations. Clearly, a company such as Reynolds Aluminum is en-

titled to determine without judicial interference the amount of money

it desires or can afford to appropriate for disability benefits. This is

especially reasonable in light of the fact that Reynolds Aluminum

Company provides all funding for the Retirement Program; participants

make no contribution. Similarly, Reynolds Aluminum Company may

have made the philosophical decision to confer benefits upon those

who would be forced to bear the expense of a long term disability.

This type of decision is also reasonable and within a company’s pre-

rogative. A company’s reason for treating a class of beneficiaries

differently is not always readily ascertainable. For this reason, a

court should be hesitant to substitute its judgment for that of the

company.

4 Moore argues that this court’s decision in Sellers v. O’Connell,

701 F.2d 575 (6th Cir. 1983), precludes application of Robinson. The

pension fund in Sellers was established pursuant to a collective bar-

gaining agreement. Subsequent to its creation, the fund’s trustees

passed a resolution which was not part of the collective bargaining

14a

“(Blecause finite contributions must be allocated among

potential beneficiaries, inevitably financial and actuarial

considerations sometimes will provide the only justifi-

cations for an eligibility condition that discriminates

between different classes of potential applicants for

benefits.”

United Mine Workers of America Health and Retirement

Funds v. Robinson, 455 U.S. 562, 575 (1982). Accordingly,

an employer is free to choose which benefits to include in a

retirement program so long as the stringent requirements of

ERISA are met and no other law or policy is violated.

In contrast, once a plan is established and is governed by

the requirements of ERISA, courts may review a decision by

trustees to deny benefits. Rhoton v. Central States, Southeast

and Southwest Areas Pension Fund, 717 F.2d 988 (6th Cir.

1983); Van Gunten v. Central States, Southeast and South-

west Areas Pension Fund, 672 F.2d 586 (6th Cir. 1982). Such

review, however, is limited to a determination of whether the

trustees’ actions in administering or interpreting a plan’s pro-

visions are arbitrary and capricious. Courts may review the

trustees’ administration of a pension plan because Congress

has imposed a fiduciary duty upon trustees to administer such

pact and this court permitted review of the resolution to determine

whether it was arbitrary or capricious. Sellers is distinguishable from

the case at bar because it focused on the trustees’ application of the

fund’s provisions. Clearly, a court may review the administration of a

pension fund to determine whether the provisions are applied in an

arbitrary or capricious manner. However, review of a plan's provisions

for reasonableness is improper.

Similarly, Moore contends that the Ninth Circuit has been willing

to review a denial of benefits for arbitrariness. E.g., Harm v. Bay

Area Pipe Trades Pension Plan Trust Fund, 701 F.2d 1301 (9th Cir.

1983); Music v. Western Conference of Teamsters Pension Trust Fund,

712 F.2d 413 (9th Cir. 1983). This assertion is correct. The distinction

that Moore has failed to appreciate is simply that, while courts may

review the trustees’ administration of a plan, courts may not modify

the clear and plain language of the plan itself.

15a

plans for the sole and exclusive benefit of the beneficiaries.

29 U.S.C. Sec. 1104. See H. Rep. No. 93-533, 93rd Cong., 2d

Sess. (1974), reprinted in [1974] U. S. Code Cong. and Ad.

News, 4639, 4649. Courts, however, have not been authorized

by Congress to impose upon employers the court’s subjective

beliefs concerning the relative value of benefits which em-

ployers have chosen voluntarily to confer upon employees.

In summary, judicial interference into the establishment of

pension plan provisions is unwarranted.5 Such interference

would serve only to discourage employers from creating vol-

untarily pension plans. Although Congress sought to estab-

lish minimum standards for pension plans to assure that em-

ployees would not be denied benefits arbitrarily, it recognized

that if standards were too stringent, the creation of new pen-

sion plans would be discouraged. See Holliday v. Xerox Cor-

poration, 732 F.2d 548 (6th Cir. 1984). Thus, Congress

struck a balance by providing for judicial review of trustees’

administrative decisions while declining to dictate to em-

ployers the type of benefits which must be included in volun-

tarily established retirement plans. The district court modi-

fied impermissibly the plain language of the pension plan.

Accordingly, the district court’s judgment is reversed.

5 This lawsuit involves no allegation that the Retirement Program’s

trustees acted arbitrarily in denying benefits to Moore. Furthermore,

Moore has not alleged that the trustees breached the fiduciary duty

imposed upon them by ERISA, see 29 U.S.C. Sec. 1101, or that the

challenged provision is vague and ambiguous. Instead, Moore attacks

the propriety of a benefit which the employer voluntarily chose to

confer upon salaried employees.