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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1985
- **Citation:** 469 U.S. 1109

## Text

. 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.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_3267%3A1. Public record. Not legal advice.