Senzarin v. Abbott Severance Pay Plan for Employees of Kos Pharmaceuticals ( 2010 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 10a0015n.06
No. 08-4306
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
Jan 11, 2010
AMY L. SENZARIN, ) LEONARD GREEN, Clerk
)
Plaintiff-Appellant, )
) ON APPEAL FROM THE UNITED
v. ) STATES DISTRICT COURT FOR
) THE NORTHERN DISTRICT OF
ABBOTT SEVERANCE PAY PLAN FOR ) OHIO
EMPLOYEES OF KOS PHARMACEUTICALS; )
DIVISIONAL VICE PRESIDENT, )
) OPINION
Defendants-Appellees. )
Before: KENNEDY and ROGERS, Circuit Judges; HOOD, District Judge.*
HOOD, District Judge. In this action brought under the Employee Retirement Income
Security Act, 29 U.S.C. §§ 1001 et seq., Plaintiff-Appellant Amy L. Senzarin contends that
Defendants Abbott Severance Pay Plan for Employees of Kos Pharmaceuticals and the Divisional
Vice President wrongfully denied her claim for severance benefits. Finding that Defendants’ denial
of Plaintiff’s claim was not arbitrary and capricious, the District Court upheld the denial of benefits.
For the reasons stated below, we AFFIRM the denial of Plaintiff’s claim for severance benefits.
I. FACTUAL AND PROCEDURAL BACKGROUND
*
The Honorable Joseph M. Hood, United States District Judge for the Eastern District of
Kentucky, sitting by designation.
Plaintiff was employed by Kos Pharmaceuticals (“Kos”) as a pharmaceutical sales territory
manager. On or about December 15, 2006, Abbott Laboratories (“Abbott”) acquired Kos. Kos
employees became employees of Abbott or one of its subsidiaries. In connection with its acquisition
of Kos, Abbott agreed to maintain and administer Kos’s severance plan, which was renamed the
Abbott Severance Pay Plan for Employees of Kos Pharmaceuticals (the “Plan”). The Plan was
administered by Abbott’s Divisional Vice President of Employee and Labor Relations.
By the Plan’s terms, a participant was entitled to benefits if, and only if, prior to December
16, 2007, his or her employment was: (1) involuntarily terminated, other than for cause; or (2)
voluntarily terminated for “good reason.” The Plan defined “good reason” to include:
any change of the Participant’s principal place of employment to a location more than
. . . in the case of Participants who are sales personnel, 50 miles from the
Participant’s principal residence immediately prior to December 15, 2006.
(Administrative Record, “AR,” at 40). The Plan did not define “principal place of employment,” as
used in defining “good reason.” The Plan Administrator’s eventual interpretation of “principal place
of employment,” along with the methodology used to calculate the mileage from the principal place
of employment to Plaintiff’s residence, are the basis of the dispute in this action.
On February 28, 2007, Abbott reassigned Plaintiff to the Mansfield, Ohio, territory. Plaintiff
resigned from her position as Territory Manager, effective May 1, 2007, citing the distance from her
residence to her assigned territory as the reason for her resignation. On April 2, 2007, Plaintiff
submitted a claim for benefits, claiming that she voluntarily terminated her position with “good
reason” because her principal place of employment was greater than fifty miles from her residence.
In support of her claim, Plaintiff included a territory analysis which detailed the driving distances,
using Mapquest, to the physicians’ offices she would be required to call on in her new territory.
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Plaintiff based her distance calculations on her “assigned targeted physicians and the frequency that
was required for each physician based upon the number of sales calls.” (AR at 53). Based upon
Plaintiff’s weighted calculations, her “principal place of employment” was more than fifty miles
from her residence. Neither the Plan nor the Plan Administrator disputed the accuracy of Plaintiff’s
calculations, however, the Plan Administrator did not adopt Plaintiff’s methodology in defining
“principal place of employment” or in calculating driving distances.
On May 21, 2007, Abbott’s Severance Committee denied Plaintiff’s claim for severance
benefits, finding that she had not terminated her employment with “good reason” because her
assigned territory was 46.7 or 48 miles from her principal residence.2 Plaintiff appealed the
Committee’s decision to the Plan Administrator. On March 10, 2008, the Plan Administrator denied
Plaintiff’s appeal, finding that because her principal residence was not more than fifty miles from
her principal place of employment, she had not voluntarily terminated her employment with “good
reason.”
In reviewing Plaintiff’s appeal, the Plan Administrator recognized that the Plan did not define
“principal place of employment” for a sales employee and did not provide a methodology for
determining the distance from a participant’s principal residence to her principal place of
employment. The Plan gave discretion to the Plan Administrator to interpret the terms of the Plan.
(AR at 14). The Plan Administrator hired a third-party consultant, ZS Associates, to aid in
formulating a uniform method for determining the principal place of employment for sales
2
The consulting firm Abbott hired to calculate the distance between Plaintiff’s principal
residence and principal place of employment used the geographic center of her zip code as the
principal residence, resulting in a distance of 46.7 miles from her principal place of employment.
(AR 48, 67). The denial letters Plaintiff received state that the distance was calculated to be 48
miles. (AR 51, 62).
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employees and for calculating the distance from an employee’s principal place of employment to his
or her principal residence.
In order to accommodate the fact that sales employees do not work in a discrete location, the
Plan Administrator used a weighted average of where Plaintiff’s sales activities took place, termed
the “workload center,” to determine her principal place of employment. The workload center was
calculated by (1) assigning each physician within Plaintiff’s sales territory a workload value, defined
as the frequency of sales meetings times the volume of sales over a 12-month period; (2) providing
a workload total in each zip code included in the sales territory by adding the workload values for
all physicians in that zip code; and (3) finding the workload center through the weighted average of
all workload values for each zip code. (AR at 50).
The Plan Administrator next decided that the distance between the workload center and
Plaintiff’s principal residence should be determined by measuring the straight-line earth-arc distance
between the two points. The Plan Administrator reasoned that determining the distance “as the crow
flies,” as opposed to by driving miles, would create a “uniform and straightforward application of
the Plan’s terms,” whereas driving distance could vary depending on the route and method of
transportation. Using this method, the Plan Administrator determined that the distance between
Plaintiff’s workload center and her principal residence was 48 miles. Accordingly, the Plan
Administrator upheld the denial of Plaintiff’s claim for benefits, finding that the change in her sales
territory did not qualify for a “good reason” voluntary termination. Plaintiff timely filed the instant
appeal, essentially arguing that the Plan Administrator’s decision was arbitrary and capricious
because the methodology employed in making the decision was too complex and difficult to
understand.
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II. ANALYSIS
This Court reviews de novo the district court’s decision to uphold the denial of benefits.
Cooper v. Life Ins. Co. of N. Am., 486 F.3d 157, 164-65 (6th Cir. 2007). Because the Plan gave the
Plan Administrator discretion to interpret the terms of the Plan, the denial of benefits is reviewed to
determine if the decision was arbitrary and capricious. Firestone Tire & Rubber Co. v. Bruch, 489
U.S. 101 (1989); Cooper, 486 F.3d at 164-65.
The Plan states that the Plan Administrator “has the discretionary authority to interpret all
Plan provisions and to determine all issues arising under the Plan, including issues of eligibility,
coverage and benefits.” (AR at 14). Plaintiff concedes that the Plan Administrator had authority to
interpret the terms of the Plan; however, she argues, as she did before the district court, that the Plan
Administrator’s failure to interpret the terms of the Plan as an ordinary person would, renders the
denial of benefits arbitrary and capricious. Plaintiff bears the burden to demonstrate that the denial
of benefits was arbitrary and capricious. Rochow v. Life Ins. Co. of N. Am., 482 F.3d 860, 865 (6th
Cir. 2007).
Under the arbitrary and capricious standard of review, the Plan Administrator’s decision
should be upheld if it is “the result of a deliberate, principled reasoning process” and “supported by
substantial evidence.” Glenn v. MetLife, 461 F.3d 660, 666 (6th Cir. 2006), aff’d sub nom. Met. Life
Ins. Co. v. Glenn, 128 S. Ct. 2343 (2008). Where there exists any ambiguity in the terms of the Plan,
the Court must “grant plan administrators who are vested with discretion in determining eligibility
for benefits great leeway in interpreting ambiguous terms,” so long as that interpretation is rational.
Moos v. Square D Co., 72 F.3d 39, 42 (6th Cir. 1995). Even if the Court would not have come to
the same conclusion as the Plan Administrator, as long as there is a reasonable basis for the decision,
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it must be upheld. Moon v. Unum Provident Corp., 405 F.3d 373, 379 (6th Cir. 2005).
As the district court spelled out in a thorough, well-written opinion, the Plan Administrator’s
decision to deny benefits was not arbitrary and capricious. The Plan did not define the term
“principal place of employment” and did not provide a methodology for determining the distance
from a Plan participant’s principal place of employment to his or her principal residence. The Plan
Administrator hired ZS Associates to formulate a method that could consistently be used to
determine a sales employee’s principal place of employment - a difficult task, given that sales
employees travel throughout their assigned territory and do not have a brick and mortar principal
place of employment. The Plan Administrator then adopted the method, known as the “workload
center,” developed by ZS Associates. While the workload center concept is a somewhat complex
method for determining a sales employee’s principal place of employment, it is “the result of a
deliberate, principled reasoning process” and “supported by substantial evidence.” Glenn, 461 F.3d
at 666. The workload center approach uses the location of each physician called on, the number of
sales calls per year, and the volume of sales to each physician to determine Plaintiff’s principal place
of employment. This method provides a well-reasoned basis for making a complex determination,
and is far from arbitrary.
Similarly, the Plan Administrator’s use of straight line earth-arc distance to calculate the
miles between Plaintiff’s workload center and her principal residence was not arbitrary or
capricious. Using straight line distance removes numerous variables from the mileage calculation,
including different routes, various methods of transportation, road construction or closure, and
personal preference. Straight line earth-arc distance provides a reasoned method for calculating the
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miles between Plaintiff’s workload center and her principal residence.3
Plaintiff suggests that the Plan Administrator should have used Mapquest to calculate the
distance. While Plaintiff supplied the Plan Administrator with an alternative method of calculation,
that method introduces the very ambiguities that using the straight line earth-arc method eliminates.
Furthermore, this Court “must accept a plan administrator’s rational interpretation of a plan even in
the face of an equally rational interpretation offered by the participants.” Morgan v. SKF USA, Inc.,
385 F.3d 989, 992 (6th Cir. 2004).4
Plaintiff cites Shelby County Health Care Corp. v. Southern Council of Industrial Workers
Health and Welfare Trust Fund, 203 F.3d 926, 933-34 (6th Cir. 2000), as support for her contention
that the Plan Administrator’s use of the workload center concept and the use of straight line earth-arc
distance were both arbitrary and capricious interpretations of the Plan’s terms. The Plan
Administrator’s interpretations of these terms are consistent with the plain meaning that could be
assigned to them by an ordinary person (even though they are not the only such interpretations), so
3
In different contexts, other courts have found it appropriate to use the straight line method
or “as the crow flies” in measuring distance between two points. Sprow v. Hartford Ins. Co., 594
F.2d 412, 417-18 (5th Cir. 1979) (holding that 100-mile distance under former Fed. R. Civ. P. 4(f)
is to be measured “as the crow flies”); United States ex rel. Sheehy v. Johnson, 12 App.D.C. 92, 1898
WL 15581, 6 (D.C. Cir. Jan. 4, 1898) (holding, regarding statutory interpretation, “We must take it
to be the general rule, that, unless some other mode of measurement is prescribed or indicated,
distance is always to be measured in a straight line, on a horizontal plane.”); Schwartz v. Marriott
Hotel Services, Inc., 186 F. Supp. 2d 245, 251 (E.D. N.Y. 2002) (noting that 100-mile travel rule of
Rule 45 is measured by straight line); cf. United States v. Johnson, 46 F.3d 1166 (D.C. Cir. 1995)
(joining other circuits and holding that under 21 U.S.C. § 860(a), “a person may be convicted of
possessing with intent to distribute crack cocaine within 1000 feet of a school even if the distance
by street is over 1000 feet, as long as the straight line distance between the site of the possession with
intent to distribute and the school is within 1000 feet”).
4
This conclusion is limited to the facts of this case. For example, if a participant employee
serviced an area along the Mississippi River where there are limited crossing points, use of the
straight-line earth-arc method might be arbitrary and capricious.
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the plan administrator’s decision is not arbitrary or capricious. Here, we have at least two possible
plain meanings – as measured “as the crow flies” or as measured using any road or the shortest road
on the quickest route. The most uniform of these would be the one selected by the Plan
Administrator – as the crow flies. Selection of this interpretation is not arbitrary or capricious.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the Plan Administrator’s decision to deny Plaintiff’s
claim for benefits.
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