Petition for Writ of Certiorari — Bonin v. American Airlines, Inc.

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Text

——= rc es STC '

84-131 io ar

No. -1 - NOY 21 1984

— SLEXANDER | SIEVAs,

—_—<—<—_<_—_—_——— LERK

lin

IN THE

Supreme Court of the United States

October Term, 1984

GEORGE W. BONIN

Petitioner

VS.

AMERICAN AIRLINES, INC. and

THE AMERICAN AIRLINES, INC. PILOT RETIREMENT PLAN

Respondents

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

KELLY D. McGEHEE ROBERT D. CONKEL

Attorney ai Law Attorney at Law

9330 LBJ Freeway, Suite 245 P.O. Box 31481

Dallas, Texas 75243 Dallas, Texas 75231

(214) 644-0595 (214) 231-7913

Counsel of Record

Attorneys for Petitioner

eee

Q\: yy

Questions Presented

I. Does an applicant for disability

benefits under an ERISA-based pension

plan have no right nor entitlement to an

independent adjudication of the con-

tinuing existence of a previously estab-

lished permanent disability when:

(a) He received disability retirement

pension benefits from 3-1-74 through

10-2-75;

(b) He was returned to work under a

one year "conditional" agreement;

work, he suffered a relapse into alco-

holism and was involved in an off-duty

incident, bringing embarrassment to

Company Respondent, who fired him for

such incident on March 18, 1976;

(a) Arbitrator decided the only ques-

tion before him, i.e. Petitioner was

fired for “just cause";

il.

ii.

(e) Plan Administrator denied Peti-

tioner's claim for continuing dis-

ability be .efits on basis that Peti-

tioner was discharged for reasons

"other than medical" and Plan provides

for entitlement only to a member who

"is terminated by reason of Disabil-

ity";

(f) Plan provides that "Administrator

shall be bound by determinations pur-

Suant to (collective bargaining)

Agreement... affecting such issues

as discharge of a Member... and

Administrator shall not administer the

Plan in any manner inconsistent with

such final determinations... ."?

Did the court of appeals make numer-

ous errors in affirming the district

court's denial of Petitioner's claim for

disability benefits, with the result that

one person, nor committee, nor any

body of authority had any duty to deter-

iii.

mine the actual existence (or non-

existence) of Petitioner's “disability”

at any time following his discharge,

notwithstanding the circumstances des-

Cribed above?

III. Were ERISA protections denied Peti-

tioner when Plan Administrator did not

undertake his fiduciary duties to act on

behalf of the Petitioner, i.e. to not

seek medical verification of the ciaim

nor to timely provide requested plan

documents?

IV. Was the Petitioner's rights to due

process denied when the Plan Administra-

tor failed to follow Plan terms for claim

procedures by:

(a) Not recognizing the pre-existing

medical condition that directly caused

the discharoe, and

(6b) Not developing the required medi-

cal verification of the claim?

iv.

V. Was Petitioner discharged (rather

than returned to disability status), as a

deliberate intention of the Respondents,

so as to not have to pay Petitioner life-

time disability benefits, thus resulting

in a direct interference with the rights

of the Petitioner, which rights are spe-

cifically protected by ERISA?

TABLE OF CONTENTS

QUESTIONS PFESE NCES A.ccccccccvevecs

Table OF CONCESNNCSrececcccccccecer

Table OF AUthOritieseeccecccccceces

OPINIONS Bel OW ccccccccccccccccsccces

JUCASGICELONe ccccccccccccccccecccece

Statement OF the CaSCrececcccccccece

l. Nature Of the Ca@S@Ceecececess

2. Relevant FactSeccccccccscceces

36 Proceedings in the Lower

Courts... eeeeeeeeeeeeeeeee eee

Reasons for Granting the Writ...

I. The decision below is at

variance with other Federal

Courts of Appeal decisions

On the SAME MACtCECecececeees

II. The Court below has so far

departed from the accepted

and usual course of judical

proceedings, as to call for

an exercise of this Court's

power Of SUPErViSLONseseceese

SURGE OBE Gis 00606606060 066666606066b8

Appendix:

Order of Dismissal. .cccccccessces

Opinion - Court of Appeals.......

Opinion - District Court......e..

Opinion - Court of Appeals....

Denial of Petition for Rehearing.

Page

VIW Ww

A22

A27

A33

vi.

Page

TABLE OF AUTHORITIES

CASES CITED:

Bayles v. Central States, Southwest

Areas Pension Fund, 602 F2d 97

(5th Ci fe 1979) cecccevecesesesess 29

Danti v. Lewis, 312 F2d 345, 384

(DB. Ce Circuit 1 96 2) ccccccccececcs 32

Dennard v. Richards Group, INnCe,

681F2d 306 (SthCir. 1982) eee. 31

Donovan v. Bierwirth, 680 F2d 263

(2nd Cir. 1982) cert. denied

459 U.S. 1069, 103 S. CT. 488,

L. Ed 2d 631 (1982)... eeeteeeeeeee 41

Fine v. Semet, 69S F2dad 1091 (llth

Cir. 1983) ccccccccceseesssesesese 38

Harm v. Bay Area Pipe Trades

Pension Plan Trust Fund, 701

F2d1301 (9th Cir. 1983) csceeeess 34

liayden v. Texas U.S. Chemical Co.,

681 F2d 1055 (5th Cir. 1982)....- 29

Hayden v. Texas U.S. Chemical Co.,

557F. Supp.382(E.D.Tx 1983).. 30

Horn v. Mullins 650 F2d 35 (4th

Cir. L981) cccccccccsesccsesescere 35

Hurn v. Retirement Trust of Plumb-

ing, Heating and Piping

Irdustry of Southern

California, 703 F2d 386 (9th

Ci Be 1983) cccccccccccccccsseseces 33

Maness ve. Williams 513 F2d 1264

(8th Ci fe 1975) cececccccccccceese 31

Miles v. New York State Teamsters

Conference Pension and Retire-

ment Fund Employee Pension Bene-

fit Plan, 698 F2d 593 (2nd Cir.

1983) -cccvccceccsccecves seseseere 34

——

—

vii.

Page

Morgan v. Mullins 643 F2d 1320 (8th

Ci ce ROE oceeee ee ceneannanenns 31

NLRB v. Amax Coal Co., 453 U.S.

322, 330, 101 S. Ct. 2789, 69 L

Ed2a 672 TaDSAD cocccccescecececes 43

Odom v. United Mine Workers of

America Health and Retirement

Fund, 687 F2d 843, (6th Cir.

8 a ee re ee 36

Offutt v. Prudential Insurance Com-

pany of America, 735 F2d $48

(Sth Cir. Qo) eer 32

Paris v. Profit Sharing Plan for

Empioyees of Howard B. Wolf,

Inc., 634 F2d 357, (Sth Cir.)

cert. denied, 454 U.S. 836, 102

-S Ct. 140, 70 L. Ed2d 117

60660666060 06006606606600008 29

Peckham v. Board of Trustees, 653

F2d424(1l0thCir. 1981)......... 33

Rehmar v. Smith 555 F2d 1362 (9th

Ci Ce OU Oe 60606606 Sesebaeeceences 32

Rhoten v. Central States Southeast

and Southwest Areas Pension

Fund, 717 F2d $88 (6th Cir.

Diva 60685666000 Gn000008 Gaeenecee 44

Richardson y. Central States South-

east and Southwest Areas Pension

Fund, 645 F2d 660 (8th Cir.

Rie FP eeessenceceosse eseeeeeeeeeeee 44

Rosen v. Hotel and Restaurant Em-

ployees and Bartenders Union of

Phila., Bucks, Montgomery and

Delaware Counties, P.A., 637 F2da

592 (3rd Cir. 1981) cert. denied

454 U.S. 898, 102 S. Ct. 398, 70

L. Ed2d 213 C2DS ad ceccccesscese o 37

Russell v. Massachusetts Mutual

Life Insurance Company, 722 F2da

482 (9th Cir. 1938 D eococeceeecese 43

titi eialile

viii.

Seafarers Pension Plan v. Sturgis,

630F 24218 (4thCir. 1980)..«+..

Wardle v. Central States, Southeast

and Southwest Areas Pension

Fund, 627 F2d 820 (7th Cir.

1980), cert. denied 454 U.S.

898, 102 S. Ct. 398, 70 IL. EBd2d

213 (LOB1L) cacceenecvcccccsecccess

Wolfe v. J. C. Per ney Company,

Inc., 710 F2da 388 (7th Cir.

1983) wccccccvecseces eeeeeeeeeeeee

RULE, STATUTORY PROVISION AND TEXT:

28 U.S.C. SlL2Z54( 1) cccccccccccscces **

29 U.S.C. SLI 2( a) cccccccccccceseses

29 U.S.C. SLOOL (D) cecccccccccccceses

29 U.S.C. §1104 (ERISA §404) .ccocees

29 U.S.C. SLL aD rccccccccccccscccese &

29 U.S.C. SLIL3F 2(C) cccccccccccseseses

120 Con. Rec. 15737 (1974) ceceeeeees

Page

IN THE

SUPREME COURT of the UNITED STATES

October Term, 1984

No.

GEORGE W.BONIN,

Petitioner,

vs.

AMERICAN AIRLINES, INC. and THE AMERICAN

AIRLINES, INC. PILOT RETIREMENT PLAN,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

POR THE FIFTH CIRCUIT

Petitioner prays that a writ of

certiorari issue to review the opinion

and judgment of the court of appeals of

the Fifth Circuit rendered in these pro-

ceedings on July 10, 1984, with Petition

for Rehearing denied on August 23, 1984.

Opinions Below

On January 29, 1979 the United States

District Court for the Northern District

of Texas entered an opinion approving

Respondents' Motion to Dismiss, for lack

of subject matter jurisdiction. It

appears at Al. The United States Court

of Appeals for the Fifth Circuit reversed

the decision of the District Court on

June 24, 1980, holding that the District

Court had subject matter jurisdiction

under Sec. 502(a) of ERISA, 29 U.S.C.

§1132(a), and remanded the case for fur-

ther proceedings. The opinion is report-

ed at 621 F. 2d 635. It appears at A2.

On May 17, 1983, the United States Dis-

trict Court for the Northern District of

Texas entered judgment, with opinion,

denying all Plaintiff's claims. The

opinion is recorded at 562 F. Supp. 896.

It appears at A22.

On July 10, 1984, the United States Court

of Appeals for the Fifth Circuit entered

judgment, with opinion, affirming the

decision of the District Court. This

Opinion is unreported and appears at A27.

Jurisdiction

The judgment of the court of appeals was

entered on July 10, 1984 (A27) and re-

hearing was denied on August 23, 1984

(A33). The jurisdiction of this court is

invoked under 28 U.S.C. §1254(1).

Statement of tie Case

l. Nature of the Case

Petitioner filed this action pursuant to

Section 502(a) of the Employee Retirement

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

§1132(a), seeking to recover his bene-

fits, to enforce his rights and to

Clarify his rights to future benefits

under the terms of the American Airlines,

Inc. Pilot Retirement Benefit Plan. The

Petitioner seeks reinstatement to disabi-

ani ite tat ae as

lity status and filed a claim for the

continuing disability benefits following:

(a) his leaving disability status on

October 2, 1975 to return to work on a

one year conditional agreement, (b) his

relapse into depression and alcoholism

causing an off-duty incident, and (c)

which resulted in his discharge. Respon-

dents have denied any obligations to

reinstate the disability benefits since

he was discharged "for other than medical

reasons."

Petitioner's complaint asserts claims

against Respondents for breach of their

fiduciary duties as owed to Petitioner as

a claimant under an ERISA-based plan for

(a) not following Plan terms requiring

the Plan Administrator to medically

verify the disability claim, and (b) not

discharging the duties with respect to

the plan solely in the interest of the

participant nor discharging their duties

with the care, skill, prudence and dili-

gence required by a Plan Administrator -

fiduciary.

Jurisdiction is invoked under 29 U.S.C.

§1132(a), Sec. 502(a) of ERISA, granting

jurisdiction to a participant to recover

benefits due to him under the terms of

his Blan, to enforce his rights and to

clarify his rights to future benefits

under the Plan.

2. Relevant Pacts

Petitioner was employed by American Air-

lines, Inc. in October, 1964 and pro-

gressed from a flight engineer to the

position of Captain. In 1971, he suf-

fered mental problems, to wit, chronic

Gepressive neurosis and chronic alco-

holism. In 1973 he was removed from

flight status and granted sick leave. In

February, 1974 he applied and was granted

a disability pension by American who also

serves as the Plan Administrator. On

Cctober 2, 1975, Petitioner was required

to “conditional” sign a personal agree-

ment whereby he would be returned to

tlight status. The agreement had nume-

rous conditions and, in part, required:

", . « If at any time during this

period or subsequent period, if such

are deemed necessary, any conditions

as Outlined are not adhered to the

program will be terminated and appro-

priate action initiated."

Following Petitioner's return to active

tlight status, he was involved in an off-

auty incident on January 18, 1976, and by

letter dated March 18, 1976 was termi-

nated. At trial, the employee of Ameri-

can that decided how the Petitioner wés

to be terminated testified he had fully

investigated the case and Petitioner's

acts “were not those of a well man". The

same employee also testified Petitioner

was terminated because he was an embar-

_rassment to American Airlines.

During a hearing on April 20, 1976, Peti-

tioner requested investigation of Ameri-

can Airlines, Inc.'s refusal to allow him

to reestablish his eligibility for dis-

ability benefits. On April 27, 1976, the

company responded by letter saying:

". « eIf you wish to make application

for disability benefits, even now, I

see no bar to this. However, the

application could not be processed in

a Manner inconsistent with the facts

and the decision in this case." (i.e.

the discharge matter)

On May 19, 1976, Petitioner filed appli-

cation for continued payment of his dis-

ability benefits. On June 16, 1976, he

requested information about the claim and

was told by company letter dated June 18,

1976:

« « edue to the fact there is a

grievance pending on your termination.

- -" (there will be) “no action taken

on your application for disability

pension pending the outcome of the

appeal of the termination."

On November 30, 1976, Petitioner's coun-

sel requested information about his claim

and information concerning Plan claim

procecures. On December 20, 1976, the

company sent a letter stating that a

claim for benefits could not be made by a

"non-employee" and that no claim action

would be taken until completion of arbi-

tration of the discharge. In response to

a June 30, 1977 letter from Petitioner's

counsel asking for information about the

application, the company responded by

letter dated August 8, 1977 that:

» « euntil a final determination is

made on Mr. Bonin's discharge, a claim

for agisability benefits, which are

only payable to employees of the Con-

pany, cannot be reviewed or acted

upon." (emphasis added)

On Octeber 11, 1977, Petitioner's counsel

specifically requested applicable Plan

provisions and necessary documents so as

to determine Petitioner's rights. Appel-

lee, American Airlines, Inc., responded

by letter dated October 24, 1977 denying

the appropriate references and not re-

sponding to the request for documents.

This action was filed on March 9, 1978.

Petitioner was ordered by the District

Court to proceed with arbitration. The

District Court's Order stated he would

not be harmed. On September 28, 1981,

the Award of the System Board of Adjust-

ment determined that the Petitioner was

terminated for "just cause" by his

employer, but did not make any determi-

nation to disability payments under the

pension plan. On October 30, 1981, Peti-

tioner was advised by letter that his

application for disability benefits had

been denied due to Petitioner's having

been discharged for cause. At trial, the

witness representing American Airlines as

Administrator admitted the normal proce-

aure for processing a disability claim

was not used in Petitioner's case. The

normal procedure, as required by the

Pension Plan provisions, are to submit

the matter to American Airlines Medical

Department for determination if the ap-

plicant is disabled. If there isa dis-

agreement then the matter is to be sub-

mitted to arbitration. American has

never contested that Petitioner was and

is disabled, but contends the Petitioner

was not eligible for benefits because it

was determined by American that he should

be terminated for cause and not for medi-

cal reasons.

Stipulated facts in the pre-trial order,

dated December 14, 1982, include, "Mr.

Bonin is fully vested in the Pension Plan

and was first eligible to join the Re-

tirement Benefit Program on January l,

1966". An EBS-1 Form filed by American

before Petitioner wes terminated stated

disability pension benefits are fully

vested upon becoming disabled.

The reason for the off-cuty incident was

€@ reoccurrence cf the same condition for

which a disability pension had previously

been granted. The aisability pension is

fully contained in American's Pension

Plan and is not a separate Plan main-

tained by the employer. Petitioner's

disability renders him unable to continue

as a pilot due to required medication.

3. Proceedings in the Lower Courts

The original action was dismissed for

lack of jurisdiction. The Fifth Circuit

reversed the decision of the District

Court in an opinion dated June 24, 1980,

held the District Court had subject mat-

ter jurisdiction under Sec. 502(a) of

ERISA, 29 U.S.C. §1132(a), and remanded

the case for further proceedings. The

District Court suspended its own proceed-

ings until the arbitration process con-

cerning Petitioner's discharge was com-

pleted. After the arbitration, the Dis-

trict Court heard the case and issued its

opinion in favor of the Respondents. The

following sets forth his reasoning:

"In short a member of Defendant's

Pilot Retirement Benefit Plan is only

entitled to a disability benefit be-

fore retirement age when:

1) he or she is terminated as

a pilot because of a dis-

ability, and

2) he or she is also no longer

employed by Defendant.

Plaintiff was terminated by Defendant

for cause and not because of a dis-

ability. His proper forum for chal-

lenging his termination for cause was

the grievance and arbitration proce-

dures of his union and Defendant. As

Defenaant in its other capacity as

Plan Administrator must abide by the

outcome of the arbitration, its de-

cision to deny disability benefits was

correct and, of course, not arbitrary

and capricious."

Notwithstanding the Petitioner's remind-

ing the court of appeals that he was not

seeking a review of the Petitioner's dis-

charge, andwas only attempting to have a

fair adjudication of whether Petitioner

was disabled prior to his discharace and

whether he was entitled to a reinstate-

ment of his previous disability status

the court of appeals affirmed the deci-

sion of the District Court.

The court of appeals reasoning was

Similar to the District Court but found

an inapplicable provision in a later

revised plan to emphasize its point:

"Under the Pilot Retirement Benefit

Plan, disability benefits are due only

to a member who “is terminated by

reason of Disability.“ The Plan de-

fines “Disability” to comprise any

“illness or injury... which pre-

vents a Member from continuing to act

as an Active Pilot Employee in the

service of the Company, other thap

» « « (2) alcoholism showing no prog-

ress toward recovery after two years.

» «" (emphasis added).

It is important to note that the court of

appeals emphasized the “other than" pro-

vision concerning alcoholism. This pro-

vision was added to the plan effective

April 1, 1975,during the time the Peti-

tioner was receiving benefits. He re-

ceived disability benefits for alcoholism

until he was “conditionally” returned to

employment on October 2, 1975. Just as

significant is the fact that Article XVI

of the Plan, was pot amended effective

April 1, 1975. This article protects

Petitioner from being adversely affected

by the newly added “other than" provis-

ion. Article XVI of the Plan reads, in

part, as follows:

"Modification or Discontinuance

l. The company expects to continue

the Pilot Retirement Plan indefinite-

ly, but necessarily reserves the right

to modify, suspend or discontinue it

at any time, including but without

limiting the generality of the fore-

Goins modification, suspension or

iscontinuance in its entirety or with

respect to any feature thereof. How-

ever, any modification, suspension or

Sisontinuance shall not adversely

affect the benefits provided under the

Pilot Betirement Plan for any Member

or beneficiary as of the date of such

moscification, suspension or discon-

tinuance." (emphasis suppl ied)

The Supplement F portion of the

collective bargaining agreement which set

forth the agreed-upon changes to the

Retirement Plan, also shows the intent to

protect members of the plan on the effec-

tive date (April 1, 1975) of the amend-

ment, as follows:

"4. Apilot employee who was a member

of the Pilot Plan as it existed on the

Gay before the effective date of the

a ph ny pertaining to current nego~

tiations shall not lose any accrued

rights as a result of these amend-

ments".

——SSS 220

The court of appeals supported their

finding that Petitioner was suffering

from alcoholism and not depression (not-

withstanding medical testimony at the

trial to the contrary) when it quotec the

arbitrator's decision as follows:

"there cannot be the slightest doubt

that Captain Bonin's problem was alco-

holism ... It appears clear that

the Company has been patient in its

effort to have Captain Bonin benefit

from its alcohol control program, but

there has been no sustained improve-

ment. There is no doubt that just

cause for the termination has been

shown."

The court of appeals erred in relying

upon the arbitrator to determine Peti-

tioner's disability. It was not the

arbitrator's duty to determine Peti-

tioner's illness nor disability, it was

his sole duty to only determine whether

or not Petitioner was discharged “for

cause". It was the Plan Administrator

who had the duty to determine Peti-

tioner's disability - not the Arbitrator.

The court of appeals found the Plan Ad-

—

— — 7

— Se

| mMinistrator was “under no duty...

| indeed, was not permitted... to make

an independent inquiry into the cause for

Bonin's firing" since the plan provides

that “in administering the Plan, the

Administrator shall be bound by any de-

termination pursuant to the Agreement

between American Airlines and the Air

Line Pilots... affecting such issues

as discharge of a Member... The Ad-

ministrator shall not administer the Plan

in any manner inconsistent with a final

determination under such Agreements."

(Sec. 12.4 of Plan)

The Petitioner asks that a court place

the duty on the Plan Administrator to

determine the Petitioner's disability,

including a determination as to Peti-

tioner's disability before the discharge.

The Plan Administrator's fiduciary duty

to the Petitioner did not end when Peti-

tioner was discharged as the court of

appeals suggested in its opinion.

The court of appeals concluded that the

Arbitrator:

", « escrupulously avoided considering

Bonin's claim of entitlement to dis-

ability benefits, and did not intrude

into administration of the Plan "as

such." It was for the Plan Adminis-

trator to determine the effect of the

Board's findings on Bonin's claim to

benefits under the Plan, but the Plan

manifestly requires the Administrator

not to second-guess the Board's fact-

ual findings."

Petitioner never expected the Plan

Administrator to second-guess the Arbi-

trator's factual findings -

as to the discharge but the Plan Adminis-

trator not only had the right to deter-

mine the existence of Petitioner's dis-

ability, it had an obligation to do so.

The Plan required the Plan Administrator

to make that decision. The final line to

Sec. 12.4 of the Plan reads:

"Notwithstanding any other provision

of this Plan, neither the interpre-

tation of the Plan nor its administra-

tion shall as such be within the

jurisdiction of the Agreements" (of

the collective bargaining agreements).

(emphasis added)

The Plan Administrator, not the Arbitra-

tor, is to interpret and administer the

Plan. The court failed to place upon the

Plan Administrator its ERISA duty, as a

tiduciary, to determine Mr. Bonin's dis-

ability. The application for reinstate-

ment of disability was a separate and

distinct matter for the Plan Administra-

tor to review. Nevertheless, the court

of appeals concluded:

"In sum, at the time of his termina-

tion Bonin was not suffering from any

"disability" as that term is defined

in the Pilot Retirement Plan."

Before the Trial Court the representative

of the Plan Administrator was asked if it

had been decided Petitioner should be

terminated for a medical reason, would

that have changed Administrator's opinion

as to how the disability should have been

handled? The witness stated "You are not

terminated for medical reasons".

By allowing the Plan Administrator to not

look beyond the discharge issue permits

the Plan Administrator to avoid his duty

under ERISA and under the terms of the

Plan and not be required to determine the

existence of a continuing disability.

For the court not to recognize the co-

existence of two issues, (1) discharge

and (2) determination of disability, was

clearly a misapplication of fact and law.

Rightful or wrongful discharge deals with

employment status. Determination of dis-

ability is entirely different and deals

with pension status. Whether or not one

is entitled to a disability pension is

dependent upon whether or not the person

is disabled. The two issues are

separate, co-existing issues.

Both courts have held that the Plan Ad-

ministrator needed to only determine that

the Petitioner was discharged for reasons

“other than medical" or was not terni-

nated for disability. No further re-

quirements, indicate both courts, need be

considered, such as the facts and circum-

stances causing the discharge, the Peti-

tioner's prior disability, his readily

available medical history, the condi-

tional return to work, etc.. As a matter

of fact, neither court, in its opinion,

addressed these facts - they only re-

viewed the cold, hard language of the

plan that said, in essence, in order for

one to be eligible for a disability, he

had to be terminated for such disability.

Both courts reasoned that since the Peti-

tioner was discharged "for an off-duty

incident embarrassing to the company",

then he could not have been discharged

for disability. The facts presented at

trial show, and it was admitted at oral

argument before the court of appeals,

that Petitioner was terminated due toa

reoccurrence of the same disability for

which he had previously been granted a

disability pension.

The District Court quoted Plan Sec. 6.4,

which begins with these words:

"Disability.of a member. A Member

whose employment as an Active Pilot

Employee is terminated by reason of

Disability prior to Normal Retirement

Date shall be entitled to receive

Normal Retirement Benefits commencing

at the later of Normal Retirement Date

- « - If such Member does not continue

to be employed by the company, he or

she shall be entitled to receive a

Disability Retirement Benefit commenc-

ing ninety days after the later of the

commencement of such Disability. .."

The District Court determined that:

"In short a Member of Defendant's

Pilot Retirement Benefit Plan is only

entitled to a disability benefit be-

fore retirement age when:

1) he or she is terminated asa

pilot because of a dis7bil-

ity, and

2) he or she is also no longer

employed by Defendant.

Plaintiff was terminated by Defendant

for cause and not because of a dis-

ability."

affirming the District Court's

Opinion, the court of appeals took a

Similar line of reasoning when it deter-

mined that the plan prohibited the Ad-

ministrator from administering the Plan

in any manner inconsistent with a final

determination under such Agreements (the

Collective Bargaining Agreement). The

court of appeals concluded:

"It follows that the Plan Administra-

tor was under no duty - indeed, was

not permitted - to make an independent

inquiry into the cause for Bonin's

firing. . .. It was for the Plan

Administrator to determine the effect

of the Board's findings on Bonin's

claim to benefits under the Plan, but

the Plan manifestly requires the Ad-

ministrator not to second-guess the

Board's factual findings.”

It is should be noted that neither

court's opinion discussed the facts and

circumstances causing the discharge,the

conditional return to work by the Peti-

tioner, the short three month period of

return to work, nor the medical history

readily avéilable to the Plan Administra-

tor from his prior disability file. In

addition, neither court's opinion dis-

cussed ERISA's requirements involving the

Plan Administrator's fiduciary duty to

act “solely in the interest of the

participant" (ERISA Sec. 404, 29 U.S.

§1104), nor the participant's ERISA

rights to not have his entitlement to

benefits interferred with by a “dis-

charge". (ERISA Sec. 510, 29 U.S.C.

§1140) Further, neither the District

Court or Appellate Court considered the

Administrator's statement that one is not

terminated for medical reasons. The

District Court had determined that one

must be terminated as a pilot because of

a disability. However, the testimony was

that this could not in fact occur.

Without the facts and the law being fully

developed by either court, the partici-

pant was denied his full due process

rights and both courts have erred so

significantly that all Plan Participants

could be denied disability benefits by

the simple method of rehiring them, then

discharging them for “reasons other than

medical". This result would have a grave

impact on all pension plans in this

country that have similar disability

provisions.

Petitioner also claims that the $100 per

day fine should be assessed Respondents

for failure to provide Petitioner was

plan documents in a timely manner was

required by ERISA Sec. 502(c) or 29

U.S.C. §1132(c). within 30 days of the

request. Penalty is sought for period

November ll, 1977 until April 7, 1978.

Counsel had to be hired to obtain the

documents. The Plan Administrator testi-

fied the delay was based upon confusion

about the Petitioner's grievance, as well

as the changes in personnel and com-

plications arising from attempts to com-

ply with ERISA during that time. The

District Court determined (at A26) it did

not see any reason why the Defendant

should be punished. The court of appeals

(at A28) agreed with the District Court.

Both courts relieved the Plan Administra-

tor from a responsibility, notwithstand-

ing the fact the ERISA was already three

years old, the documents were readily

available, the fiduciary duty of the Plan

Administrator to discharge his duties

solely in the interest of participants

was in place and operational, and there

was substantial precedent to award such

fine in like circumstances.

REASONS FOR GRANTING THE WRIT

I. The decision below is at variance

with other Federal Courts of Appeal deci-

Sions on the same matter.

The court below erred in not finding, (1)

a fiduciary breach of duty by the Plan

Administrator, (2) an incorrect interpre-

tation of the Plan by the Plan Adminis-

trator, as well as (3) an arbitrary and

capricious decision of denial by the Plan

Administrator. At minimum, the case

should have been remanded to the Plan

Administrator for a disability determi-

nation based on the evidence in the file

or referred to American's Medical Depart-

ment. The court of appeals allowed the

administrator's decision to stand based

Simply on the words of the Plan, which

stated that an employee could receive

disability benefits only if he were

"terminated for disability". The Ad-

Ministrator testified this does not

occur. Failure to review the circunm-

stances or the proximate cause of the

termination was a failure of the court of

appeals to recognize the fiduciary duties

of ERISA and the considerable body of law

enunciated in vérious courts of appeals

decisions regarding the arbitrary and

capricious standard of review. Failure

of the court to recognize the significant

fiduciary duties placed upon a Plan Ad-

ministrator is a gross error of the Fifth

Circuit to recognize the entire purpose

of ERISA to protect the benefits of par-

ticipants in retirement programs and the

long history of this court and many court

of appeals decisions in recognizing the:

fiduciary duties of those entrusted with

the administration of pension plans. The

Fifth Circuit failed to take cognizance

of its own initial decision in this case

where it discussed the “agrieved em-

ployees being left without a remedy in

seeking to recover benefits", and the

ERISA statute's policy to “protect the

interest of participants in employee

benefit plans, ... by establishing

Standards of conduct, responsibility and

obligations for fiduciaries." (see Al3)

Due to the number of participants who

might lose their pension benefits as a

result of such irresponsible plan inter-

pretation and plan administration, this

Court should review the decisions of the

various courts of appeal and submit dis-

tinct guidelines with respect to the

interrelationship of the arbitrary and

capricious standard of review and the

fiduciary duties enunciated under ERISA,

Failure of this Court to render a deci-

sion encompassing these two principles of

law will result in continued confusion as

to a plan participant's rights and a Plan

Administrator's duties toward that par-

ticipant. The following court of appeals

cases show the confusion which reigns

among the circuits with respect to the

arbitrary and capricious standard,

The two cases relied on by the Fifth

Circuit in this area of the law are the

Paris and Bayles cases. Both cases held,

in essence, that the actions of the trus-

tees in the administration of the pension

plan must be sustained as a matter of law

uniess the plaintiff can prove suc! ac-

tivities have been arbitrary and capri-

cious. Paris vy Profit Sharing Plan for

Employees of Howard B Wolf, Inc., 634

F2d 357, 362 (Sth Cir.), cert. denied,

454 U.S. 836, 102 S.Ct. 140, 70 L.Ed 2a

117 (1981); Bayles wy Central Statssis

Southwest Areas Pension Fund, 602 F2d 97,

99, 100 n. 3(5th Cir. 1979). In the

Bayles decision the court set forth the

following factors to be considered in

applying the arbitrary and capricious

standard; (1) uniformity of construction,

(2) “fair reading" and reasonableness of

that readinc, and (3) unanticipated cost.

In August, 1982 the Fifth Circuit remand-

ed the case of £&. DB Hayden wa Texas

U.S. Chemical Co., 681 F2d 1053 (Sth Cir.

1982) back to the District Court in order

to determine if ERISA applied. In addi-

tion, it cited the Paris and Bayles cases

when it said:

"If the company's decision is found to

be susceptible to legal challenge,

that decision must be reviewed for

arbitrariness or capriciousness”. (at

p.- 1058)

In February, 1983 District Court Judge

Joe J. Fisher found in the Hayden case,

557 F. Supp 382 (E.D. Tx 1983) that ERISA

applied, that the actions of the employer

were arbitrary and capricious, and the

plan administrators did not act in good

faith in deciding the claim for disabil-

ity benefits. In his decision he ex-

pressed his grave concern over the Fifth

Circuit's requirement of meeting the

“arbitrary and capricious" standard:

"It allows an employer to breach his

employees' compensation contract with

impunity, so long as the employer does

not do so in an “arbitrary or capri-

cious" manner. The administrator may

be stupid, or simply ignorant, or ill-

advised on the meaning of the con-

tract. No matter. He may breach and

breach against, yet the employee can-

not enforce his rights. ... He can

enforce those valued rights, however,

if and only if he can prove the con-

tract's breach to be “arbitrary and

capricious". This is an absurd re-

quirement.

By injecting the nebulous terms "arbi-

trary and capricious" into the analy-

sis of contracts, the court retards

the rational resolution of dispute.

Basic contract concepts in terms do

not, of course, convey absolute pre-

cise meaning. But they carry substan-

tially more meaning than the slippery

concept of “arbitrary and capricious."

Requiring that "standard" of review

makes for a paucity of legal analysis.

It substitutes conclusionary phrases

for specific supporting factual deter- —

minations. (at p. 389 and 390)."

In July, 1982 the Fifth Circuit decided

Dennard vs Richards Group. Inc. 681 F2d

306 (Sth Cir. 1982). Here, again, the

court relied on Paris and Bayles, but

found them to not be totally applicable.

The court discussece cther circuits’

opinions:

"Federal Courts have applied the arbi-

trary and capricious standard both to

| ambigious and unambigious terms. A

rational and reasonable interpretation

of a Plan may still be arbitrary and

capricious if contrary to the plain

meaning of the Plan. "Where the trus~-

tees impose a standard not required by

the pension plan itself, this court

i has stated that such action would

result in an unwarranted end arbitrary

construction of the Plan“. Morgan v-

| Nullins, 643 F2d at 1321 (8th Cir.

1981), quoting Maness v. Williams, 513

F2d at 1267 (8th Cir. 1975).

The Seventh Circuit, in applying the

arbitrary and capricious yardstick,

has stated that this standard appar-

ently originated with the District of

Columbia Circuit's formulation of

"whether the trustees have acted arbi-

trarily, capriciously, or in bad

faith; that is, is the decision of

the trustees supported by substantial

evidence or have they made an erron-

eous decision on a question of law."

Wardle vy Central States, Southeast

and Southwest Areas Pension Fund, 627

F2d at 823. (at p.314)

The Wardle case contained the "“substan-

tial evidence" and the "erroneous deci-

sion on a questions of law" standards

from Danti we Lewis, 312 F2d 345, 348

(D.C. Circuit 1962) and the Rehbmar wa

Smith decision, 555 F2d, 1362, 1371 (9th

Cir. 1976). The Wardle case was denied

certiorari, 449 U.S. 1112, 101 S. Ct.

992, 66 Le Ed. 2nd 841 (1981).

In avery recent case, Offutt we Pruden-

tial Insurance Company of America, 735

F2d 946 (Sth Cir. 1984) the Fifth Circuit

determined that the "substantial evi-

dence" standard could not be used in that

Circuit because of prior decisions of

other panels in said circuit (Paris and

Bayles), although the court said that the

same result would have occurred (at p.

950).

The Tenth Circuit opinion of Peckham ve

Board of Trustees, 653 F2d 424, (10th

Cir. 1981) found:

"A decision to deny benefits under a

plan covered by ERISA will be over-

turned when (1) arbitrary and capri-

cious, (2) not supported by substan-

tial evidence, or (3) erroneous on a

question of law." (at p. 426)

In the Ninth Circuit, in Hurn w Retire-

ment Trust of Plumbings Heating ang

Piping Industry of Southern California,

703 F2d 386 (9th Cir. 1983) the Court

introduces the "structural defect" test

where an employee can show violation of

the “arbitrary and capricious, unsupport-

ed by substantial evidence, instituted in

bad faith, or erroneous on question of

law" standards, by establishing the ex-

clusion of a large number of employees

from benefits for no apparent reason.

The court indicated that the "structural

defect" test is not limited to group

violation, as "the test extends to rules

that arbitrarily exclude individual em-

ployees from their chance at benefits. .

- Rules that deny individual employee's

benefits for reasons irrational on their

face are also inconsistent with the trus-

tees' obligation to administer the trust

in the “sole and exclusive benefit" of

all employees." (at p. 390).

Also in the Ninth Circuit, Harp wy Bay

Ares Pipe Trades Pension Plan Trust Fund,

701 F2d 1301 (9th Cir. 1983) tied ERISA

section 404 (fiduciary responsibility)

into the "structural defect" test, anc

shifted the burden to the trustees to

show a rational connection between their

rules and the fund's purposes.

In the Second Circuit, in Miles wy New

York State Teamsters Conference Pension

anc Betirement Fund Employee Pension

Benefit Plan, 698 F2d 593 (2nd Cir. 1983)

the court expanded on the Maness (supra)

decision:

“Where the trustees of a planimposea

standard not required by the plan's

provisions, or interpret the plan ina

Manner inconsistent with its plain

words, or by their interpretation"

render some provisions of the plan

Superfluous, their actions may well be

found to be arbitrary and capricious."

(at p. 599).

In the Fourth Circuit, Horn vz Mullins

650 F2d 35 (4th Cir. 1981) the court

cited the 1962 Danti case (supra) and

found that the “critical factor in this

case is the date of disability determined

» « « after careful consideration of the

conflicting evidence." (at p. 37). This

case can be compared to the instant case,

where the Fifth Circuit found that it was

not necessary to determine when the Peti-

tioner's disability commenced and yet

there was “substantial evidence" to prove

that the date of disability was well

BEST AVAILABLE COPY

EDITOR'S NOTE

THE FOLLOWING PAGES WERE POOR

HARD COPY AT THE TIME OF FILMING.

IF AND WHEN A BETTER COPY CAN BE

OBTAINED, A NEW FICHE WILL BE

ISSUED.

before the term. ation date of the Peti-

tioner.

In another Fourth Circuit case, Seafarers

Pension Plan vy. Sturgis, 630 F2d 218 (4th

Cir. 1980) the court found the trustees'

mechanical application of the break in

service rules resulted in the denial of

the claimant's pension claim and thus

held that to be “arbitrary and capri-

cious". Again, this is quite similar to

the instant case where the plan adminis-

trator "mechanically" determined that the

Petitioner was terminated "for reasons

other than medical" and, therefore, could

not have been disabled at the time of his

discharae.

In the Sixth Circuit, Odom vy. United Mine

Workers of America Health and Retirement

Fund, 687 F2d 843, (6th Cir. 1982) found

that a pre-existing condition was aggra-

vated by an accident on the job. The

trustees had held that the pre-exisiting

condition made the claimant ineligible

for disability pension. The court of

appeals found that the evidence over-

whelmingly established that the accident

Gig contribute to his disability. (at p.

847). Again, similar to the instant °

case, the Petitioner had a “pre-existing

condition" (i.e. prior to his termination

of employment) but the Fifth Circuit did

not find the need t> review the fact that

the Petitioner's termination was caused

by his pre-existing disability.

In the Third Circuit, Rosen vw Hotel and

Restaurant Employees and Bartenders Union

of Phila, Bucks. Montgomery and Delaware

Counties, PAs, 637 F2d 592 (3rd Cir.

1981), certiorari denied, 454 U.S. 898,

102 Ss. Ct. 398, 70 L Ed. 2d 213 (1981).

The court cited Rebmar, supra, wherein

both courts agreed:

"Although this is a limited standard

of review, “it leads neither to abdi-

cation of traditional judicial control

of fiduciaries nor to excessive judi-

cial intervention in trust operations,

in harmony with federal labor noli-

cies". Rebmar y. Smith, 555 F2d 1362,

1371 (9th Cir. Tove). (at p. 596)

In the Eleventh Circuit, Fine y. Semet,

699 F2d 1091 (llth Cir. 1983), the court

held:

"Although the agreement is thus couch-

ed in terms of absolute discretion,

this court has held that such broad

grants of discretion do not give trus-

fees unbounded and absolute authority

in administering employee welfare

blans." (at p. 1093) (emphasis added)

The court below failed to even discuss

the Plan Administrator's duties as a

fiduciary under ERISA, notwithstanding

considerable discussion in briefs as well

as oral argument. The court of appeals

in its initial decision determined that

this case was subject to ERISA juris-

diction but in its second decision it

failed to address the pertinent ERISA

provisions applicable to the administra-

tion of the Plan other than to say the

Plan Administrator did not breach a fidu-

ciary duty towarn Petitioner of a poten-

tial loss of benefits.

The Plan Administrator was a ficuciary,

even though it also was the Petitioner's

employer at the time. There was a “con-

flict of interest", but this was to be

protected by the fiduciary duties as

imposed by ERISA. These duties should

have been fully developed as they applied

to the Petitioner's cet of circumstances

(i.e. a “conditional” return to employ-

ment and the effect of his inability to

complete the terms of that “conditional

agreement", the unnecessary delays in

provicing the Petitioner with copies of

necessary documents, the delays asso-

ciated with the determination of “just

cause" discharge, the failure of the Plan

Administrator to review the readily

available medical evidence, and the bald-

faced conclusion as to his non-eligibili-

ty to disability benefits without speci-

fic reasons, etc..

Other Federal Court of Appeal decisions

have set forth the stancards for ficu-

ciéries administering ERISA-based plans.

In Rosen, supra the court found a fidu-

ciary breach when the pension fund trus-

tee failed to notify the pensioner of his

employer's failure to contribute to the

fund as required by the pension agree-

ment. The court cited ERISA Sec. 404,

29, U.S.C. §1104 where the fiduciary is

required to:

"bischarge his duties with respect to

a plan solely in the interest of the

participants and their beneficiaries

and

(A) for the exclusive purpose of:

(i) providing benefits to partici-

bents and their beneficiaries;

and

‘ii) defraying reasonable expenses of

administering the plan;

(B) with the cares, skill. prusence

ang diligence under the circun-

stances then prevailing that a

prudent man acting in a like

capacity and familiar with such

matters would use in the conduct

ef an enterprise of a like char-

acter and with like aims;..."

(at p. 599) (emphasis added)

The court further showed the legislative

intent of the drafters of ERISA with

respect to this ficuciary obligation. The

court continued:

"The Chairman of the Senate Committee

on Labor and Public Welfare, providing

a context for these standards, empha-

sized the need for a uniform body of

federal law founded on the prirciples

of common law trusts:

The legislation ‘FRISA) imposes strict

fiduciary obligations on those who

have discretion or responsibility re-

specting the... handling... of.

+ « Plan assets; .. . and to provide

effective remedies of breaches of

trust.

120 Cong. Rec. 15737 (1974) (Comments

of Sen. Williams when irtroducing the

Conference Report), reprinted in,

(1974) U.S. Code Congr. & Ad. News

5177, 5186. This language indicates

that in applying the fiduciary stan-

cards of ERISA, courts are to be sen-

sitive to the need for uniformity in

the interpretation of pension trus-

tee's obligations.” (at p. 599) (en-

phasis added)

In Donovan ww Bierwirth, 680 F2d 263 (2nd

Cir. 1982), certiorari denied 459 U.S.

1069, 103 S. Ct. 488, 74 L. Ed. 2d 631

(1982), the court discussed ERISA section

404 and the duties of officers of corpo-

rations who also happen to be trustees of

its pension plan and the need for discus-

sions that must be made with an eye

Single to the interest of the partici-

pants and beneficiaries. (at p. 271)

In a footnote, the court quoted Justice

Frankfurter in a decision of this court,

as follows:

"However, as Justice Frankfurter ob-

served in a famous passage, “to say

that a man is a fiduciary only becins

analysis; it gives direction to fur-

ther inquiry. To whom is he a fidu-

ciary? What obligations does he owe as

a fiduciary?" SEC vw Chenery Corp.

318 U.S. 80, 85-86, 63 S. Ct. 454,

458, 87 L. Ed. 626 (1943). The fidu-

Ciary oblications of the trustee to

the participants and beneficiaries of

the plan are those of 4 trustee of an

express trust - the highest known to

the law. Restatement of Trusts 2d

Sec. 2, comment b (1959)." (at p. 272)

In Hurn, supra the court referred to this

court's addressing the issue of the Taft-

Hartley provisions paralleling the ERISA

‘provisions and that the trustees must

meet the requirements of each. In its

iain

| 43

decision, at p. 388 it quoted Supreme

Court case, NLRB vw Amax Coal Co., 453

U.S. 322, 330, 101 S. Ct. 2789, 2794, 69

Le Ed. 2d 672 (1981):

"Each trustee bears an “unwavering

duty of complete loyalty” to employ-

ees, id. at 329, 101 S. Ct. at 2974, °

and this duty “to trust beneficiaries

must overcome any loyalty to the in-

terest of the party that appointed

him," id. at 334, 101 S. Ct. at 2796."

In Bussell vy Massachusetts Mutual Life

Insurance Company, 722 F2d 482 (9th Cir.

1983) the court held that processing

Claims in a perfunctory or arbitrary

manner or in bad faith, or without the

exercise of reasonable care, constituted

a breach of fiduciary duty under ERISA

(at 489). The court found ERISA to be a

remedial statute enacted “to protect.

- « ebenefit plans and their benefici-

aries... . by establishing standards

of conduct, responsibility and obligation

for fiduciaries of employee benefit

plans, and providing for appropriate

remedies, sanctions and ready access to

the Federal courts. (29 U.S.C. §1001(b)",

and therefore:

"In light of this explicit congressio-

nal policy, we find that ERISA regu-

lates fiduciary conduct not only in

the care and management of plan as-

sets, but also in the handling and

disposition of claims... Under the

standard conduct required by ERISA, a

fiduciary must process claims in good

faith, and in a fair and diligent

manner." (at p. 488)

In Rhoten vy. Central States Southeast and

Southwest Areas Pension Fund, 717 F2d 988

(6th Cir. 1983) the court imposed fidu-

ciary responsibility upon Plan Adminis-

trators for failing to advise the clai-

mant of the consequences of his choice of

benefits. In Bichardson vy Central

States Southeast and Southwest Areas

Pension Fund, 645 F2d 660 (8th Cir. 1981)

the court concluded that the trustees

were obligated to set out in opinion form

the rational supporting their dGecision so

that Richardson could adequately prepare

himself for any further administrative

review, as well as an appeal to the

Federal Courts. The court continued:

"The statute and regulations were

intended to help claimants process

their claims efficiently and fairly;

they were not intended to be used by

the Fund as a smoke screen to shield

itself from legitimate claims... We

read the statutes and the regulations

to require the board of trustees to

issue a written opinion that includes

specific_reasons for the decision.

Bald-faced conclusions do not satisfy

this requirements." (at p. 665).

In Wolfe vez Je Cc. Penney Company, Ince,

710 F2d 388 (7th Cir. 1983) the court

cites the Richardson case and stated that

the requirement of specifying the perti-

nent plan provision for denial, may be,

ina particular case, essential for the

participant to fully apprehend the reason

for the Genial and to know what deficien-

cy in his application must be overcome.

Wolfe was advised that he was not entitl-

ed to disability benefits because he was

"terminated because of substandard job

performance" (at p. 391). The court

concluded that the reason given for de-

nial was not a "reason" but a conclusion.

(at p. 392)

A summary of the conflict of the lower

courts should be of assistance. The

Fifth Circuit holds the Administrator's

decision must be sustained unless the

Plaintiff can prove the Administrator's

Gecision was “arbitrary and capricious".

The Eleventh Circuit has found the Fifth

Circuit's decisions are binding on their

decisions.

The Seventh Circuit added to the arbi-

trary and capricious standard the words

“or in bad faith; that is, is the deci-

Sion of the fiduciary supported by sub-

stantial evidence or have they made an

erroneous decision on a question of law".

The Sixth Circuit also follows the

Seventh Circuit decisions. The Fourth

Circuit follows the "substantial evi-

dence" decision of the Seventh Circuit

and finds "critical factors" affecting

mine Wi nth en sh nt 4 aaa aia

their cases, while criticizing "mechani-

cal application" of Plan language.

The Eighth Circuit holds the trustees

imposing a standard not required by the

Plan itself calls for a “unwarranted and

arbitrary construction of the Plan". The '°

Second Circuit follows the Eighth Circuit

decisions.

The Ninth and Tenth Circuit follow the

Seventh Circuit, but both the Ninth and

Tenth Circuit added the “structural de-

fect" test where benefits cannot be de-

nied for reasons irrational on their face

and inconsistent with thé trustees obli-

gation to administer the trust “for the

sole and exclusive benefit" of employees.

The Ninth Circuit has thus shifted the

burden of proof to the trustees to show a

rational connection between their rules

and the fund's purposes. The Third Cir-

cuit has followed the Ninth Circuit deci-

sions.

Applying the standards being used by all

Circuits (other than the Fifth and

Eleventh) the Petitioner's ERISA rights

would have been considered and he shoulda

have prevailed in his litigation. The

fiduciary standards imposed between the

cl eoukte are conflicting.

Not only do these conflicting court of

appeals decisions not provice a uniform

standard of review for fiduciary actions,

Petitioner further submits that the Fifth

Circuit has not applied the proper stan-

dard according to Federal Statutes.

ERISA expressly designated that the fidu-

Ciaries owe their highest degree of care

and a duty to participants so as to not

frustrate the intention of Congress to

provice and protect pension benefits.

The Fifth Circuit has been reluctant to

accept the standards of other circuits,

i.e. to determine if the Administrator's

decision was based upon "“substantiel

evidence" or was in "bad faith" or if an

error on a question of law or if a

"structural defect" caused a denial of

benefits. ERISA has not properly been

followed by the Fifth Circuit and thus

the burden of proof is still on the clai--

mant to provide evidence of “arbitrary

and capricious" actions of the Adminis-

trator. It is submitted ERISA has shift-

ed that burden to the Administrator to

proof that the Administrator has acted

“solely in the interest of the partici-

pants". This occurs when the participant

alleges a breach of the fiduciary auty

and submits proof it occurred (in this

case failina to follow normal procedures

and considering all facts and circum-

stances). A fiduciary by federal law is

required to carry out his duties with the

care, skill and prudence owed by a trus-

tee, under a high degree of care. It is

submitted the true test required is not

that of arbitrary and capricious, but

that required by ERISA, In this case the

fiduciary breach was (1) failing to

follow normal procedures, (2) failing to

consider all relevant facts and circum-

stances and (3) failing to inform of a

potential loss of benefits.

There is a clear need for uniformity

among Circuits so as to fully recognize

and equally apply ERISA. This case is a

prime example of the miscarriage of jus-

tice that occurs when a fiduciary is

allowed, without regard to fiduciary

responsibility to mechanically deny 4

bona fice valid claim for benefits. In

this case the employer decided how Peti-

tioner was to be terminated. The employ-

er coulda have decided to use medical

reasons as Opposed tc a termination for

cause. Can a fiduciary, that knows what

occurred and all of the facts and circum-

stances, totally disregard the truth and

thus pick one form of termination which

results in a benefit to the employer (not

having to pay the pension) as opposed to

the form that results in payment of the

benefit? It is respectfully submitted

that ERISA and the fiduciary standards °

imposed preclude this from occurring. The

courts in the various circuits are in

conflict in their current holdings.

II. The Court below has so far departed

from the accepted and usual course of

judicial proceedings. as to call for an

exercise of this court's power of super-

hen.

The Petitioner spent much of his working

life under the belief he would be entitl-

ed to the protection of the disability

provision of his pension plan. The deci-

Sion below excludes him from a proper

judicial review of his disability denial.

As discussed, the decision below involved

a substantial departure from due process

and fundamental fairness in final adjudi-

cation of rights that were protected by

ERISA. The court upheld a denial of

benefits thus stripping Petitioner of

property rights in his pension fund with-

out the benefit of the protecticns of

Federal statutory enactments and the

protections of the court from the arbi-

trary and capricious decisions of his

Plan Administrator. The court ignored a

number of issues raised by Petitioners in

their appellate brief that precluded the

decision rendered. The court also made

findings on the basis of non-applicable

plan language and made erroneous conclu-

Sions accordingly. The decision failed

to account for pertinent facts that

showea that the Petitioner was entitled

to disability benefits before he returned

to'work under the “conditional” agree-

ment, was disabled for the three months

he worked under that conditional agree-

Re etl hom

i li

ment, was disabled when he was discharg-

ed, and is still disabled today.

Conclusion

For the reasons set forth above, it is

respectfully submitted that this petition

for certiorari should be granted to re-

view the opinion and judgment of the

court of appeals.

Respectfully submitted,

Kelly D. McGehee Robert D. Conkel

9330 LBJ Suite 245 P. O. Box 31481

Dallas, Texas 75243 Dallas, Texas 75231

Al - Appendix - Order of Dismissal

APPENDIX

Order of Dismissal

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

CIVIL ACTION NO.

CA 3-78-0280-C

GEORGE W. BONIN

Vv.

AMERICAN AIRLINES, INC. and THE

AMERICAN AIRLINES, INC.

PILOT RETIREMENT PLAN

The Court being of the opinion that

Defendants' Motion to dismiss should be

entered and;

Plaintiff,

IT IS THEREFORE ORDERED, ADJ UDGED AND

DECREED that the above entitled and

numbered suit, wherein GEORGE W. BONIN is

be and the same is hereby

dismissed.

This 29th day of January, 1979.

W. M. TAYLOR, SR.

UNITED STATES DISTRICT JUDGE

A2 - Appendix - Opinion - Court of Appeals

APPENDIX

Opinion of the Court of Appeals

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 79-1590

GEORGE W. BONIN,

Appellant,

AMERICAN AIRLINES, INC. and THE

ANERICAN AIRLINES, INC.

PILOT RETIREMENT PLAN,

- Appellees.

APPEAL FROM THE UNITED STATES

DISTRICT COURT FOR THE NORTHERN DISTRICT

OF TEXAS

(CIVIL NO. CA 3-78-0280-C)

Argued June 24, 1980

Before: WISDOM, TATE and SAM D. JOHNSON

Circuit Judges.

Kelly D. McGehee

Kelly D. McGehee, Inc.

9330 LBJ Freeway, Suite 245

Dallas, Texas 75243

Robert D. Conkel

P, O. Box 31481

Dallas, Texas 75231

Counsel for Appellant

4s Pee ea ‘.

ee ene ee ee |

A3 - Appendix - Opinion - Court of Appeals

OPINION OF THE COURT

TATE, Circuit Judge.

The plaintiff files this action pur-

Suant to the Employee Retirement Income

Security Act of 1974 (ERISA), 29

U.S.C.§§1101, et seg, seeking primarily

to recover his benefits, to enforce his

rights, and to clarify his rights to

future benefits under the terms of the

American Airlines, Inc. Filot Retirement

Benefit Plan. The sole issue presented

by this appeal is whether the District

Court properly dismissed the complaint

for lack of subject matter jurisdiction

because the wrongfulness of plaintiff's

discharge had not yet been decided by

arbitration under the Railway Labor Act,

45 U.S.C. §§151 et seg. This case pre-

sents a jurisdictional issue of first

impression in this Circuit, the res-

olution of which necessitates examination

of the scope and interplay of ERISA and

A4 - Appendix - Opinion - Court of Appeals

the Railway Labor Act. We conclude that

the District Court in this case has been

conferred jurisdiction over plaintiff's

pension claim under Section 502(a) of

FRISA [29 U.S.C. §1132(a)] ]/ -- if only

ultimately to decide in its discretion

that the claim is premature and that no

relief at this time can be granted; ac-

cordingly, we remand for further proceed-

ings not inconsistent with this opinion.

Contex Facts

The plaintiff, George Bonin, was em-

ployed since 1964 by American Airlines

where he progressed from the position of

flight engineer to that of captain.

oe eee ee ee

l/ Section 502(a) permits a partici-

pant or a beneficiary of a pension plan

to sue, and Section (e)(1) [29 U.S.C.

§1132(e)(1)] gives the District Court

jurisdiction of such suits. A potential

ERISA plaintiff is granted a wide choice

of Federal Court venue, liberal service

of process rules, and relief from the

jurisdictional amount requirement. See

29 U.S.C. §1132(e)(2) and 290U.S.C.

§1132(f£).

A5 - Appendix - Opinion - Court of Appeals

After an off-duty incident at his Irving,

Texas apartment on January 18, 1976, the

plaintiff was dismissed from the service

of American Airlines.

On May 18, 1976, Mr. Bonin, through

his representative, the Allied Pilots

Association, applied to have his dis-

charge arbitrated by the Pilot's System

Board of Adjustment, pursuant to the

collective bargaining agreement between

American Airlines and the airline pilots

in the service of American Airlines as

represented by the Allied Pilots Associa-

4 Rabe RSL. le

tion. The discharge grievance has been

docketed but apparently due to the Plain-

tiff's failure to prosecute his claim, an

arbitration proceeding has not yet been

scheduled.

On May 29, 1976, Mr. Bonin applied

for disability benefits under the Ameri-

can Airlines, Inc. Pilot Retirement Plan.

iene ici cin seston

A6 - Appendix - Opinion - Court or Appeals

Section 12.4 of this Retirement Plan

provides:

Effect of Certain Determinations under

other Agreement. In administer-

ing the Plan, the Administrator shall

be bound by any determination pursuant

to the Agreements between American

Airlines and the Air Line Pilots in

the service of American Airlines as

represented by Allied Pilots Associa-

tion, effective January 14, 1976 and

April 1, 1977, as applicable, affect-

ing such issues as discharge of a

fember or group of Members. The Ad-

Ministrator shall not administerthe

Plan in any manner inconsistent with a

final determination under such Agree-

ments. Notwithstanding any other pro-

vision neither the interpretation of

the Plap nor its administration shall

as such be within the jurisdiction of

such Agreements.

Record con Appeal at 40 (emphasis sup-

plied).

The Plan Administrator has steadfastly

adhered to the position (and repeatedly

informed the plaintiff to this effect)

that no action on plaintiff's disability

claim could be made until there was a

resolution by the Pilots' System Board of

Adjustment of his pending discharge grie-

vance.

A7 - Appendix - Opinion - Court of Appeals

The plaintiff thereafter brought this

Suit under ERISA that seeks to recover

not only the pension benefits allegedly

owed him under the plan [29 U.S.C.

§1132(a)(1)(B)], but also certain statu-

torily prescribed penalties arising from '

the defendants' alleged refusal to supply

the plaintiff with specific documents

relating to the plan (Summary Plan De-

scription and the latest annual report of

the plan)2/ and attorney's fees.3/ Addi-

tionally, the plaintiff's complaint al-

leges the breach of

2/ Section 502(c) of ERISA, 29 U.S.C.

§1132(c), empowers a District Court in

its discretion to impose a fine of up to

$100 per day on “[a]ny administrator who

fails or refuses to comply with a request

for any information which such adminis-

trator is required... to furnish toa

participant or beneficiary (unless such

failure or refusal results from matters

reasonably beyond the control of the

administrator) by mailing the material

requested to... the requesting parti-

Cipant or beneficiary within 30 days

after such request. . ." The time limits

have been extended under certain circum-

stances. See 29 C.F.R. §§2520 ,194-5 to

~-104-6(1976).

A8 - Appendix - Opinion - Court of Appeals

See generally Miller & Dorenfeld, ERISA:

Adequate Summary Plan Descriptions, 14

Hou. L. Rev. 835 (1977).

3/ Subsection (g) of §502 also en-

powers the District Court in its discre-

tion to impose reasonable attorney's fees

Or costs on either party. 29 U.S.C.

§1132(g).

_——

defendants' fiduciary duty4/ and the

breach of the defendants' statutory duty

not to interfere in any manner with

plaintiff's rights under the

—_——- =~

4/ ERISA [29 U.S.C. §1104(a)(1)]

requires that:

a fiduciary shall discharge his duties

with respect to a plan solely in the

interest of the participants and benefi-

ciaries and--

(A) for the exclusive purpose of:

(i) providing benefits to parti-

Cipants and their beneficiaries;

and

(ii) defraying reasonable ex-

penses of administering the plan;

(B) with the care, skill, prudence,

and diligence under the circumstances

then prevailing that a prudent man

acting in a like capacity and familiar

with such matters would use in the

conduct of an enterprise of a like

character and with like aims;

the plan so as to minimize the risk of

large losses, unless under the circum-

A9 - Appendix - Opinion - Court of Appeals

stances it is clearly prudent not to

do so; and

(D) in accordance with the documents

and instruments governing the plan

insofar as such documents and instru-

ments are consistent with the pro-

visions of this title.

Retirement Plan and under ERISA.5/ Para-

graphs 10 and 11 of plaintiff's complaint

respectively; Record on Appeal at 7-8.

5/. Section 510 of ERISA, 29 U.S.C.

§1140, reads:

It shall be unlawful for any

person to discharge, fine, suspend,

expel, discipline, or discriminate

against a participant or beneficiary .

- « for the purpose of interfering

with the attainment of any right to

which such participant may become

entitled under the plan, this sub-

chapter, or the Welfare and Pension

Plans Disclosure Act... . The pro-

visions of section 1132 of this title

shall be applicable in the enforcement

of this section.

Section 5ll, zZ9 U.S.C. §1141, pro-

vides:

It shail be unlawful for any

person through the use of fraud,

force, violence, or threat of the use

of force or violence, to restrain,

coerce, intimidate, or attempt to

restrain, coerce, or intimidate any

participant or beneficiary for the

purpose of interferring with or pre-

Al0 - Appendix - Opinion - Court of Appeals

venting the exercise of any right to

which he is or may become entitied

under the plan, this subchapter, sec-

tion 1202 of this title, or the Wel-

fare and Pension Plans Disclosure Act.

Any person who willfully violates this

section shall be fined $10,000 or

imprisoned for not more than one year,

or both.

ee ee

The Railway Labor Act

The Railway Labor Act establishes

mandatory procedures for the resolution

of disputes within its coverage. The Act

recognizes two kinds of disputes, delin-

eated by the Supreme Court as "major" and

"minor" disputes. A major dispute con-

cerns the formation of a collective bar-

caining agreement cr the substantial

alteration or amendment of an already

existing collective bargaining agreement.

A minor dispute, on the other hand, in-

volves the interpretation of an existing

labor management contract. Elgin, Joliet

& Eastern Railway Co. v. Burley, 325 U.S.

71ll, 723, 65 S.Ct. 1282, 1289-90 (1944),

rehearing granted, 326 U.S. 801, 66 S.Ct.

at 6 Et A

All - Appendix - Opinion - Court of Appeals

86 (1945),modified, 327 U.S. 661, 66

S.Ct.721.

The Act as extended in 1936 to air

carriers [45 U.S.C. §184] requires air

carriers and their employees, acting

through their representatives, to estab-

lish system baards of adjustment for the

resolution of disputes between an air

carrier and its employees over the inter-

pretation and application of the parties'

collective bargaining agreement.6/

6/ 45 U.S.C. §184 relevantly pro-

vides:

_-—-

The disputes between an employee

or group of employees anda carrier or

carriers by air growing out of grie-

vances, or out of the interpretation

Or application of agreements concern-

ing rates of pay, rules, or working

conditions . .. shall be handled in

the usual manner up to and including

the chief operating officer of the

carrier designated to handle such

disputes; but, failing to reach an

adjustment in this manner, the dis-

putes may be referred by petition of

the parties or by either party to an

appropriate adjustment board, as here-

inafter provided, with a full state-

ment of the facts and supporting data

bearing upon the disputes.

Al2 - Appendix - Opinion - Court of Appeals

See International Association of Mach-

inists v. Central Airlines, Inc., 372

U.S. 682, 83 S.Ct. 956 (1963). These

boards of adjustment are the “mandatory,

exclusive, and comprehensive system for

resolving grievance disputes." Loco-

motive Engineers v. Louisville & Nash-

ville R. Co., 373 U.S. 33, 83 S.Ct. 1059,

1062 (1963).

re ee i Re ee ee ae

Employee Retirement Income Security Act

of 1974

The dramatic modern explosion of em-

ployee pension plans prompted Congress to

enact ERISA, "Prior to the enactment of

[ERISA], aggrieved employees were often

left without a remedy in seeking to re-

cever benetits allegedly due them under a4

pension plan. - - Or to correct breaches

of duty by fiduciaries in their manage-

ment of Pensicn funds." Martin v.

Bankers Trust Co., 417 F. Supp. 923, 924

(Wi.D. Va. 1976), aff'd, 565 F. 2d Sess.

reprinted in [1974] U.S. Code Cong. & Ad.

News at P. 4639. The statute itself

contains a succinct unequivocal statement

of lecislative intent:

Al3 - Appendix - Opinion - Court of Appeals

it is hereby declared to be the

policy of this Act to protect inter-

state commerce and the interests of

participants in employee benefit plans

and their beneficiaries, by requiring

the disclosure and reporting to parti-

cipants and beneficiaries of financial

and other information with respect

thereto, by establishing standards of

conduct, responsibility, and obliga-

tion for fiduciaries of employee bene- .

fit plans, and by providing for appro-

priate remedies, sanctions, and ready

access to the Federal Courts. 29

U.S.C. §1001(b).

Subject Matter Jurisdiction

Despite its express provision allowing

suits over the coverage and application

of pension plans to be brought in Federal

Court, ERISA was not intended to, nor did

it, preempt the mandatory arbitration

provisions of the Railway Labor Act. Air

Line Pilots Ass'n. v. Northwest Airlines,

Ince, 444 F. Supp. 1138, 1141 (D.D.C.

1978), aff'd in parts rev'd in part, No.

78-1285 & No. 78-1383, _..... F.2d

(D.C. Cire, filed February 20, 1980),

[1980] 68 LAB. L. REP. (C.C.H.) §11,841.

This conclusion is supported by the ex-

Al4 - Appendix - Opinion - Court of Appeals

press statutory provision that ERISA

should not be interpreted as displacing

any pre-existing federal legislation.72/

Among the laws in effect at the time of

the ERISA enactment was the Railway Labor

Act.

Therefore, as the plaintiff recog-

nizes, his discharge grievance is govern-

ed entirely by the collective bargaining

agreement and subject to the jurisdiction

of the System Board of Adjustment by the

Railway Labor Act.

This preliminary conclusion, however, )

does not terminate our present inguiry.

The resolution of the discharge issue

may, as the availability and/or amount of

the retirement benefits available to this

i/ Nothing in this subchapter shall

be construed to alter, amend, modify,

invalicate, impair, or supersede any

law of the United States (except as

proviced in sections 1031 and 1137(b)

of this title) or any rule or regu-

lations issued under any such law. 29

U.S.C. §1144(d). The above statutory )

exceptions are inapplicable to the .

present case.

AlS - Appendix - Opinion - Court of Appeals

plaintiff under this pension plan. How-

ever, a forecast of the ultimate success

of plaintiff's ERISA claim does not con-

trol the threshold determination of

Federal Court subject matter juris-

diction.

Under Section 12.4 of the plan the

determination as to the wrongfulness of

the discharge will be final and binding

to the extent it controls the aveilabil-

ity or computation of benefits under the

pension plan (the degree to which, if

any, should be determined by the District

Court in the first instance), since

"(t]he Administrator shall not administer

the Plan in any manner inconsistent with

a final determination" under the collec-

tive bargaining agreement. There is

presently no final determination of the

discharge matter that could potentially

affect plaintiff's right to disability

benefits. Section 12.4 of the Retirement

Al6 - Appendix - Opinion - Court of Appeals

Plan does not require the Plan Adminis~-

trator to defer action on Mr. Bonin's

pension claim until a final determination

is made by the Pilots' System Board of

Adjustment regarding the arbitration of

the plaintiff's discharge; it merely

reguires the Plan Administrator not to

ez@minister the pension plan inconsistent-

ly therewith.

Cur holding that the District Court

has jurisdiction over plaintiff's pension

Claim under Section 502(a) of ERISA is

supperted by a recent Gecision of the

District of Columbia Circuit Court of

Appeals. In Aix Linge Pilots Ass'm YW

Northwest Airlines, Ince supra, the

parties agreed és part of their pension

plan that the adjustment board would hear

allecisputes arising out of the applica-

tion and interpretation of the pension

plan. The District Court dismissed the

pension claim for lack of subject matter

BO Aes AL AL een Sa

Al7 - Appendix - Opinion - Court of Appeals

jurisdiction, since the pension dispute

under the particular circumstances had to

be submitted to binding arbitration under

the Railway Labor Act because the pension

issue concerned the interpretation and

application of a collective bargaining

agreement. The Court of Appeals affirmed

the dismissal so far as the action re-

lated to the application and interpreta-

tion of the pension plan, but reversed

the dismissal to the extent that the

complaint alleged violations of ERISA

that were independent of the coverage and

meaning of the pension plan (é€.q., the

breach ot fiduciary and disclosure re-

quirements) .8/

8/ The aefendants' reliance on De La

Rosa Sanchez vz Eastern Airlines.

Incer, 574 F2G 29 (lst Cir. 1978), as

Support for the proposition that the

plaintiff is required to submit his

disability claim to binding arbitra-

tion under the Railway Labor Act is

misplaced. In Sanchez the plaintiff

sought an Eastern Airlines pension and

a disability pension from Caribair (a

carrier intecrated into the Eastern

Al& - Appendix - Opinion - Court of Appeals

system). The collective bargaining

agreement between Eastern and the Air

Line Pilots Association controlled the

former Caribair's pilots' rights to

disability pensions. Therefore, the

terms of a collective bargaining

agreement were necessarily at issue in

determining the plaintiff's right to

benefits. In the case at bar, the

pension plan is not maintained pur-

Suant to a collective bargaining

agreement.

mm me ee eee

In this case the plaintiff has

similarly presented the independent

claims of breach of fiduciary and dis-

closure requirements, and the District

Court under the Airline Pilots Ass'm Ww

Northwest Airlines rationale woulda clear-

ly retain jurisdiction over these inde-

pendent statutory claims ever if plain-

tiff's pension claim had to be submittecé

to be binding arbitration.

Eowever, the plan before us signifi-

cantly provides that "neither the inter-

pretation of the Plan nor its administra-

tion shall as such be within the juris-

diction" of the collective bargaining

Al9 - Appendix - Opinion - Court of Appeals

agreement. Congress by enactment of ERISA

endorsed in effect two alterrative me-

thods of administering pension plan

claims for employers whose collective

bargaining disputes are governed by the

Railwey Labor Act: (1) arbitration of

employ2e pension claims or (2) indepen-

dent administration of claims by the

pension plan administrator with a federal

right or review pursuant to ERISA:

The wost that can be gathered from. .

- [EPISA's] background is that Con-

gress did not wish to require all

benefit plans to offer an arbitral

remedy, nor did it desire to make it

possible for any collective bargaining

agreement, no matter in what industry

or business, to make arbitration com-

pulsory.

Air Line Pilots Ass'n. v. Northwest Air-

Lines, InG.e SBUBER, .... Fu2?d at

[1980] 88 LAB. L. REP. (C.C.H.) §11841 at

23,452 (emphasis in original). Since the

pensien plan in this case is not main-

tained pursuant to a collective bar-

gaining agreement, the District Court has

jurisdiction of plaintiff's pension claim

under ERISA,

At this time, however, we express no

preference as to the various alternatives

A20 - Appendix - Opinion - Court of Appeals

(suggested by the jurisprudence) avail-

able to the District Court in proceeding

with the pension dispute on its merits:

l. The District Court could award

the lower of the pension rights ‘as

between disability and discharge for

cause subject to the employer's right

of recoupment should the arbitration

proceeding ultimately result in the

plaintiff's reinstatement. See

Kulchin v. Spear Box Company, Inc.

Retirement Plan, 451 F. Supp. 306, 312

(S.D.N. Y. 1S78).

2. The District Court could award

the higher disability pension rights

subject to the employer's right of

recoupment should the arbitrator order

the plaintiff reinstated or decide the

plaintiff was discharged for cause.

id.

30 The District Court could suspend

its own proceedings until the comple-

tion of the arbitral process. Air

Line Pilots Ass'n. v. Northwest Air-

lines, Inc., Supra, —_.. F.2d at

par nel ears r [1980] 88 LAB. L. REP.

(C.C.H.) §11,841 at 23,453.

With the benefit of the fuller factual

Gevelopment that will result from this

remand, the District Court in its discre-

tion can choose the most appropriate

alternative.

Sent eat

A21 - Appendix - Opinion - Court of Appeals

Summary

In summary, we hold that the District

Court has subject matter jurisdiction

under Section 502(a) of ERISA [29 U.S.C.

§1132(a}] over plaintiff's pension claim

under this pension plan that expressly

states its independence from the collec-

tive bargaining agreement. Accordingly,

we reverse and remand for fuller factual

Gevelopment and for further proceedings

not inconsistent with this opinion.

A22 - Appendix - Opinion - District Court

Opinion of the District Court

IN THE UNITED STATES DISTRICT COURT

For the Northern District of Texas

Dallas Division

CIVIL ACTION

NO. CA 3-78-0280-C

GEORGE W. BONIN,

AMERICAN AIRLINES, INC., and THE

AMERICAN AIRLINES, INC.

PILOT RETIREMENT PLAN

FILED MAY 17, 1983

OPINION |

Plaintiff has sued under the Employee

Retirement Income Security Act of 1974

(ERISA), 29 U.S.C. §1001 et seq. for

disability benefits denied to him by

- Defendant and a discretionary penalty of

up to $100 per day that may be awarded

for failure of a plan administrator to

furnish information that ERISA mandates

be furnished. See 29 U.S.C. §1132.

This Court once dismissed this civil

action fer lack of subject matter juris-

A23 - Appendix - Opinion - District Court

diction. The Fifth Circuit reversed at

621 F.2d 635 (1980) and at page 640 gave

this Court three options upon remand.

The Court chose the third option and

stayed this civil action until the con-

Clusion of arbitral proceedings between

Plaintiff's union and the Defendant.

Those proceedings have been completed

with a finding that Plaintiff was dis-

charged with just cause by Defendant. To

this Court's knowledge, that decision has

not been directly challenged by Plaintiff

Or his union in any court.

Ordinarily, the standard of review of

a decision of a plan administrator is

whether or not the decision was arbitrary

and capricious?

Dennard_yv. Richards Groups, Inca, 681 F2d

306 (5 Cir. 1982). As the Fifth Circuit

recognized at p. 636 of its opinion in

this case, Defendant as plan administra-

tor for the plan covering Plaintiff,

A24 - Appendix - Opinion - District Court

cannot take any action inconsistent with

a final determination as to any issues

such as discharge made under the pro-

cedures of the collective bargaining

agreements of Plaintiff's union and De-

fendant.

That plan also provides, in pertinent

part, in Section 6.4 that:

Disability of a Member. A Member

whose employment as an Active Pilot

Employee is terminated by reason of

Disability prior to Normal Retirement

Date shall be entitled to receive

Normal Retirement Benefits commencing

at the later of Normal Retirement Date

and an applicable Late Retirement Date

(or, to the extent permitted by Sec-

tion 6.2 or 6.5, respectively, Early

Retirement Benefits or Deferred Vested

Retirement Benefits commencing prior

thereto). If such Member does not

continue to be employed by the Con-

pany, he or she shall be entitled to

receive a Disability Retirement Bene-

fit commencing 90 days after the later

of the commencement of such Disability

and the expiration of such Member's

paid sick leave and vacation time

accrued as a Pilot Employee, and

ending on the earlier of the date such

Disability ceases to exist and the

date of commencement of such Member's

Retirement Benefits. A Member shall

be deemed to cease to be an Active

Pilot Employee on the date his or her

A25 - Appendix - Opinion - District Court

Disahility Retirement Benefit

commences.

In short a Member of Defendant's Pilot

Retirement Benefit Plan is only entitled

to a disability benefit before retirement

age when:

1) he or she is terminated as a pilot -

because of a disability, and

2) he or she is also no longer employed

by Defendant.

Plaintiff was terminated by Defendant for

cause and not because of a disability. His

proper forum for challenging his termination

for cause was the gtievence ant arbitration

procedures of his union and Defendant. As

Defendant in its other capacity as plan

administrator must abide by the outcome of

the arbitration, its decision to deny dis-

ability benefits was correct and, of course,

not arbitrary and capricious.

Plaintiff's, other claim is for a fine of

up to $100 per day for Defendant's failure

to provide him with plan documents as pro-

vided for in Section 502(c) of ERISA, 29

U.S.C. §1132(c). Such fines are dis-

A26 - Appendix - Opinion - District Court

cretionary with the court. This court will

exercise its discretion and not fine the

Defendant for any tardiness by Defendant.

Paris vw Profit Sharing Plan, 634 F.2d 357

(5 Cir. 1981), cert. den. 454 U.S. 836

(1981). Also, it appears that Defendant

misconceived its duty to furnish documents

to Plaintiff because of Defendant's employ-

ees confusiom over what was then a recently

enacted law. Defendant can be at most

charged with nonfeasance, not purposeful

mal feasancee So, in this instance, the

Court does net see any reason why Defendant

should be punished,

Plaintiff has, as corollary courts, re-

quested attorneys' fees and punitive

damages. As he has not prevailed on his

main counts, these issues will not be dis-

cussed nor damages awarded and judgment will

be awarded to Defendant.

W. M. TAYLOR, SR.

UNITED STATES DISTRICT JUDGE

MAY 17, 1983

A27 - Appendix - Court of Appeals

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 83-1513

GEORGE W. BONIN,

Appellant,

AMERICAN AIRLINES, INC. and THE

AMERICAN AIRLINES, INC.

PILOT RETIREMENT PLAN,

Appellees.

Appeal from the Unitec States

District Court for the Northern District

of Texas

July 10, 1984

Before Garza, Garwood and Higginbotham

Circuit Judges,

Higginbotham, Circuit Judge:*

George W. Bonin, a pilot discharged by

American Airlines as a result of his

alcoholism, appeals the judgment of the

District Court denying his claim to dis-

ability retirement benefits under the

Employee Retirement Income Security Act

of 1974 (ERISA), 29 U.S.C. §1001 et seq.

American Airlines's System Board of

A28 - Appendix - Court of Appeals

Adjustment]/ found that Bonin had been

charged for “just cause," and the admini-

strator of the Pilot Retirement Benefit

Plan thereupon denied Bonin's application

for disability benefits on the ground

that an employee who has been terminated

for just cause has no entitlement to

disability benefits2/ The District Court

upheld the correctness of this deter-

mination, and Bonin appeals.3/ We affirm.

1/ The Board, which arbitrates grievances

brought by pilots against the airline, con-

sists of two members appointed by the Com-

pany, Two nembers appointed by the Allied

Pilots Association, Bonin's union, and a

neutral member who serves as chairman.

2/ Bonin's entitlement to normal pension

benefits based on his years of service with

American is not in dispute,

*Local Rule 47.5 provides: “The publication

of opinions that have no precedential value

and merely decide particular cases on the

basis of well-settled principles of law

imposes needless expense on the public and

burdens on the legal profession." Pursuant

to that Rule, the court has determined that

this opinion should not be published.

3/ Bonin also appeals from the District

Court's refusal to assess penalties against

American for its tardiness in turning over

copies of retirement plan documents. See 29

U.S.C. §1132(c). We preceive no abuse of

discretion.

A29 - Appendix - Court of Appeals

Though Bonin was paid temporary disabil-

ity benefits during an earlier work ab-

sence caused by alcoholism and related

problems, such benefits did not thereby

become “vested,” as that term is used in

ERISA, and nonforfeitable upon his return

to work. Purther, we find no merit in

Bonin's contention that the employer and

plan administrator breached a fiduciary

duty to him by failing to warn him that

misconduct following his return to work

could lead to his discharge rether than a

return to @isability status.

Under the Pilot Retirement Benefit

Plan, disability benefits are due only to

a member who “is terminated by reason of

Disability.” The Plan defines “Dis-

ability" to comprise any “illness or

injury... which prevents a Nember from

continuing to act as an Active Pilot

Employee in the service of the Company,

ether. than... (2) alcoholism showing

A30 ~ Appendix - Court of Appeals

no progress toward recovery after two

years..." (emphasis added).

Bonin asserted before the System Board

of Adjustment that he was suffering from

& severe mental disorder at the time of

his discharge, and that the incidents

leading to his termination were the re-

sult of sickness rather than alcoholism.

The Board found, however, that

there cannot be the slightest doubt

that Captain Bonin's problem was alco-

holism... It appears clear that the

Company has been patient in its effort

to have Captain Bonin benefit from its

alcohol control program, but there has

been no sustained improvement. There

is no doubt that just cause for the

termination has been shown.

Bonin argues that the administrator of

the Pilot Retirement Benefit Plan,

Owing a fiduciary duty to the Plan's

members was obliged to make an inde-

pendent determination of whether or

not Bonin wés disabled at the time of

his termination. The plan explicity

provides, however, that "[i]Jn adminis-

tering the Plan, the Administrator

Shall be bound by any determination

pursuant to the Agreement between

American Airlines and the Air Line

Pilots. . . affecting such issues as

Gischarge of a Member... The Ad-

Ministrator shall not administer the

Plan in any manner inconsistent with a

A31 - Appendix - Court of Appeals

final determination under such Agree-

ments." It follows that the Plan

Administrator was under no duty--

indeed, was not permitted--to make an

independent inquiry into the cause for

Bonin's firing.

Bonin charges that giving such binding

effect to the Board's findings violates

the declaration in the Plan tnat "neither

the interpretation of the Plan nor its

administration shall as such be within

the jurisdiction of such Agreements [re-

specting pilot discharges]." We dis-

agree. The Board scrupulously avoiued

considering Bonin's claim of entitlement

to disability benefits, and did not

intrude into administration of the Plan

"as such." It was far the Plan Adminis-

trator to determine the effect of the

Board's findings on Bonin's claim to

benefits under the plan, but the Plan

manifestly requires the Administrator not

to second-guess the Board's factual find-

ings.

A32 - Appendix - Court of Appeals

In sum, at the time of his termination

Bonin was not suffering from any "dis-

ability" as that term is defined in the

Pilot Retirement Benefit Plan. Conse-

quently, the denial of his claim for

disability benefits was proper.

AFFIRMED.

A33 - Appendix - Court of Appeals

Denial of Petition for Rehearing

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 83-1513

GEORGE W. BONIN,

Appellant,

AMERICAN AIRLINES, INC. and THE

AMERICAN AIRLINES, INC.

PILOT RETIREMENT PLAN,

Appellees.

Appeal from the United States

District Court for the Northern District

of Texas

ON PETITION FOR REHEARING

August 23, 1984

Before Garza, Garwood and Higginbotham

Circuit Judges.

Per Curiam:

It is ORDERED that the petition for re-

hearing filed in the above entitled and

numbered cause be and the same is hereby

denied.

ENTERED FOR THE COURT:

PAT S. HIGGINBOTHAM

UNITED STATES CIRCUIT JUDGE

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