James Ross v. Rail Car America ( 2002 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 00-2800
___________
James B. Ross, *
*
Plaintiff - Appellant, *
*
v. * Appeal from the United States
* District Court for the
Rail Car America Group Disability * District of Nebraska.
Income Plan; The Canada Life *
Assurance Company, *
*
Defendants - Appellees. *
___________
Submitted: March 15, 2001
Filed: April 9, 2002
___________
Before BYE and JOHN R. GIBSON, Circuit Judges, and FRANK,1 District Judge.
___________
JOHN R. GIBSON, Circuit Judge.
James Ross appeals from the district court’s2 entry of summary judgment in
favor of Canada Life Assurance Company on his amended complaint seeking relief
1
The Honorable Donovan W. Frank, United States District Judge for the
District of Minnesota, sitting by designation.
2
The Honorable Thomas M. Shanahan, United States District Judge for the
District of Nebraska.
under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-
1461 (1994 & Supp. V 1999). Ross had been receiving disability income benefits
pursuant to a group insurance policy issued to his employer by Canada Life. When
those benefits ceased, Ross brought this action against three entities: Canada Life;
Rail Car America, Inc., his employer;3 and Rail Car America Group Disability Income
Plan, the employee benefit plan established to provide disability income benefits to
Rail Car employees. Ross later voluntarily dismissed the action against Rail Car
America, Inc., and the district court entered summary judgment in favor of the Plan
and Canada Life.
Ross argues on appeal that the district court erred by determining that the Plan
was twice properly amended. The first amendment shortened the duration of his
benefits and the second reduced the amount of his monthly payment. Ross also
argues that the district court erred in finding that Canada Life was not the Plan
Administrator and therefore not liable for statutory damages for failing to provide
documents that he requested. Finally, Ross objects to evidentiary and attorney’s fee
rulings by the district court. We affirm the judgment entered by the district court.
I.
We review the district court’s grant of summary judgment de novo, viewing the
record in the light most favorable to Ross as the non-moving party. Woo v. Deluxe
Corp., 144 F.3d 1157, 1160 (8th Cir. 1998). Ross, who became disabled due to colon
cancer while he was employed at Rail Car, began receiving benefits under the Rail
Car Disability Income Plan in 1992. The Plan is an employee welfare benefit plan as
defined in 29 U.S.C. § 1002(1), and it provided benefits through a Canada Life
3
The district court noted that Ross was actually employed by American
Hydraulics, a company that later became a subsidiary of Rail Car America, Inc.
Although the record does not reveal when the corporate change occurred, it is clear
that Ross was a participant in the Rail Car America Group Disability Income Plan.
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insurance policy held by Rail Car. In April 1997, Canada Life determined that Ross
was no longer disabled and advised him that his benefits would cease at the end of
that month. He appealed the termination decision and Canada Life agreed to continue
paying benefits pending its investigation. After having no success in obtaining
medical information it requested from Ross, Canada Life suspended benefits
payments in December 1997. Ross then involved counsel in his efforts to resume
benefits, and Canada Life once again prepared to review its decision on appeal.
During the appeal period, Canada Life advised Ross through his counsel that
his benefits were being terminated for a new reason: he had exceeded the policy’s
maximum benefit period of sixty months. Canada Life also indicated that Ross had
been overpaid benefits because the policy called for its benefits to be reduced by any
Social Security disability payments he may have received, and he had failed to notify
Canada Life that he was receiving dependent disability benefits. In addition,
although his sixty months of benefits had been paid by May 1997, Canada Life
continued to make monthly payments through December of that year. Canada Life
requested no refund on these overpayments, but once again advised Ross that he had
the right to appeal its determination. His attorney challenged the process under which
the Canada Life policy had been amended before Ross became disabled (resulting in
the sixty-month maximum benefit period) and requested documents concerning the
amendment process. Canada Life did not respond, and Ross filed this action.
At various times during this more than year-long exchange of correspondence,
Ross and his attorney asked Canada Life to provide copies of Plan documents. In
response, Canada Life sent a copy of the insurance policy.
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The Plan, as already noted, paid disability income benefits through the Canada
Life insurance policy held by Rail Car.4 Indeed, the policy constituted the Plan’s only
asset. The Rail Car policy was a standard long-term group disability policy offered
by Canada Life for coverage of a policyholder’s employees. All full-time employees
of Rail Car were eligible for coverage, with the employee paying the premium by way
of a payroll deduction. Employees were first notified of the policy and its benefits
through employee meetings held in 1983, when Rail Car began offering the benefits.
At that time, Rail Car gave each employee a copy of the Summary Plan Description
relating to the policy. Thereafter, each new employee was given a copy of the
Summary Plan Description after that employee completed ninety days of continuous
employment (the policy’s eligibility period).
In both 1990 and 1991, Canada Life informed Rail Car that employee
premiums would be increased. Charles Franklin, a Rail Car vice president who was
authorized by the company to act on its behalf as Plan Administrator, negotiated with
Canada Life to change the terms of the coverage so as to avoid premium increases.
In the fall of 1990, the policy was amended to reduce benefits from sixty-six percent
of an employee’s monthly earnings to sixty percent. In mid-1991, the policy was
again amended to reduce the maximum benefit period for claimants who were under
age 65 at the time they became disabled. Those benefits were originally available
until the claimant reached age 65, but following the amendment, benefits were
payable for a maximum of sixty months. As a result of these amendments, premiums
actually decreased by five cents per $100 of a participant’s income.
Franklin met individually with each Plan participant in June 1991, after both
amendments were negotiated, and provided each with a personalized memorandum
describing the changes and the premium formula to be effective July 1. In August
4
Although there is no indication that the Plan has ceased to exist, it no longer
provides benefits through a policy with Canada Life.
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1991, Franklin received copies of a new Summary Plan Description from Canada Life
that reflected the amendments. He forwarded copies to each of the Rail Car facilities
for distribution to participants. Ross denies having received a personalized
memorandum and does not recall receiving a copy of the revised Summary Plan
Description.
Because the Rail Car America Group Disability Income Plan is an employee
benefit plan as defined by 29 U.S.C. § 1002(1) and (3), it is required to be
“established and maintained pursuant to a written instrument,” 29 U.S.C. §
1102(a)(1). The district court determined that the policy and the Summary Plan
Description jointly constitute the Plan documents.5 The policy is a standard contract
of insurance setting forth eligibility requirements, benefit payments, and similar
information. It contains no mention of ERISA or its requirements. The Summary
Plan Description that was in place at the time Mr. Ross applied for benefits in 1992
provided general information about the policy. (“While it does not take the place of
the Group Policy and is not a contract of insurance, [this Summary Plan Description]
explains the essential features of the group plan.”) In addition, it provided
information about the Plan, as required by ERISA, including the Plan’s name, the
name and address of the policyholder, identification of the type of plan and type of
administration, and a statement of a participant’s ERISA rights. See 29 U.S.C. §
1022 (Supp. V 1999) (setting forth required contents of summary plan descriptions);
5
The district court’s determination was correct as a matter of law. Jensen v.
Sipco, Inc., 38 F.3d 945, 949 (8th Cir. 1994) (“[Summary plan descriptions] are
considered part of the ERISA plan documents.”). As the Supreme Court explained
in Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83 (1995), one of the
purposes of § 1102(a)(1)’s requirement that every employee benefit plan be
established and maintained through a written document is to enable participants and
beneficiaries to readily learn their rights and obligations. In this case, then, it follows
that both the Summary Plan Description and the policy constitute the Plan because
the former identifies the Plan Administrator and sets forth participants’ ERISA rights,
while the latter describes the benefits and amendment procedure.
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29 C.F.R. § 2520.102-3 (2000) (same). The Summary Plan Description identified the
Plan Administrator as Rail Car America and provided the company’s address and
phone number. It advised participants of their rights and protections under ERISA,
including the right to obtain Plan documents and other Plan information from the
Administrator.
The Summary Plan Description also notified participants that Canada Life was
responsible for the administration of claims, including the handling and processing
of claims forwarded to it by Rail Car. Canada Life was designated as the entity
authorized to make the final decision on all claims. Mr. Ross does not allege, and the
record contains no evidence, that Canada Life performed any functions beyond that
of claims administrator.
II.
Ross argues that summary judgment should not have been entered against him
on the first two counts of his amended complaint because the district court erred in
its conclusion that the policy was validly amended to reduce both the amount and the
duration of his benefits. Ross alleges that the policy was not properly amended
according to procedures articulated in the policy itself, and that Canada Life’s failure
to follow the procedure should invalidate the purported amendments.
A.
We begin our discussion of this issue by analyzing the ERISA provision that
authorizes this cause of action. Remarkably, this case went from complaint through
judgment without any mention of what statutory provision that might be.6 Ross
6
The pre-trial order recites the contested issues in the case, including
“[w]hether Canada Life can be held liable for any purported breach by Rail Car as a
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asserts in his opening brief to this court that this is a claim for benefits under 29
U.S.C. § 1132(a)(1) (section 502(a)(1) of ERISA), but it is not. Although his ultimate
goal is to continue receiving disability income benefits from Canada Life, section
502(a)(1)(B) authorizes a participant to bring an action to recover benefits, enforce
rights, or clarify rights to future benefits under the terms of the plan. Ross is not
seeking to obtain benefits under the terms of the Plan. Rather, he is seeking to reform
the Plan by obtaining a declaration that the purported 1990 and 1991 amendments are
void. Section 502(a)(1)(B) does not authorize such a claim. See O’Brien v. Sperry
Univac, 458 F. Supp. 1179, 1180 (D.D.C. 1978) (holding that suit seeking to have
portion of “plan declared void because the summary plan description appears to alter
the terms of the original plan . . . is not a claim under the ‘terms of the plan’”);
Guthrie v. Dow Chem. Co., 445 F. Supp. 311, 314-15 (S.D. Tex. 1978) (holding that
plaintiffs who seek to have a portion of plan declared illegal for constitutional and
ERISA violations do not state claim under section 502(a)(1)(B)); but see Int’l Ass’n
of Bridge, Structural & Ornamental Iron Workers Local No. 111 v. Douglas, 646 F.2d
1211, 1214 (7th Cir. 1981) (holding that union may bring section 502(a)(1)(B) claim
against trustees of multi-employer trust fund for alleged violations of ERISA and
Labor Management Relations Act in amending eligibility rules for welfare benefits,
because the action seeks to clarify members’ rights to future benefits if union would
withdraw from plan).
Ross’s choice of defendants provides another indication that this is not a
section 502(a)(1)(B) claim. Although he named the Plan, Rail Car, and Canada Life
as defendants, he later voluntarily dismissed Rail Car as a party defendant. It appears
co-fiduciary.” This issue is foreclosed by Lockheed Corp. v. Spink, 517 U.S. 882,
889-90 (1996), where the Supreme Court held that a plan sponsor does not act as a
fiduciary when it amends a plan. See also Voyk v. Bhd. of Locomotive Eng’rs, 198
F.3d 599, 605 (6th Cir. 1999); Walling v. Brady, 125 F.3d 114, 117-18 (3d Cir.
1997). Accordingly, if Rail Car was not acting as a fiduciary, Canada Life cannot be
held liable as a co-fiduciary.
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as though the Plan was never more than a nominal party in the district court
proceedings. In its ruling on Ross’s and Canada Life’s cross motions for summary
judgment, the district court stated:
Through an apparent abundance of caution, Ross named Rail Car
America Group Disability Income Plan as a defendant to this action.
However, because both Rail Car (the plaintiff’s employer and Plan
administrator) and Canada Life (the Plan’s claims administrator) are no
longer defendants to this action, the court will dismiss any remaining
allegations against Rail Car America Group Disability Income Plan as
moot.
The Plan did not file a brief on appeal because, as counsel wrote in a letter to the
Clerk of Court, “the Plan was merely a nominal defendant in the lower court action
and is likewise a nominal appellee.”
The employee benefit plan itself is ordinarily liable for benefits payable under
the terms of the plan and is thus the primary defendant in a section 502(a)(1)(B)
action. Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1490 (7th Cir. 1996)
(“The appropriate defendant for a denial of benefits claim would be the Plan. . . .”);
Gelardi v. Pertec Computer Corp., 761 F.2d 1323, 1324 (9th Cir. 1985); see also 29
U.S.C. § 1132(d)(2) (“Any money judgment under this subchapter against an
employee benefit plan shall be enforceable only against the plan as an entity and shall
not be enforceable against any other person unless liability against such person is
established in his individual capacity under this subchapter.”); cf. Everhart v.
Allmerica Fin. Life Ins. Co., 275 F.3d 751, 754 (9th Cir. 2001) (recognizing line of
cases allowing a claimant to bring an action to recover benefits against a plan
administrator, but finding no authority for such a claim to be brought against the
plan’s insurer) (citing cases).
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The two counts which seek to invalidate the amendments can only be
characterized as arising under 29 U.S.C. § 1132(a)(3), section 502(a)(3) of ERISA.
It is this provision which authorizes a participant to bring an action to enjoin any act
which violates either a provision of ERISA Title I (Protection of Employee Benefit
Rights, 29 U.S.C. §§ 1001-1191c) or the terms of the plan, or to obtain other
appropriate equitable relief to enforce any provisions of Title I or the terms of the
plan. Ross argues that Canada Life’s ability to amend the policy is circumscribed by
the amendment procedure set forth in the policy itself pursuant to 29 U.S.C. §
1102(b)(3) (section 402(b)(3) of ERISA), and that Canada Life violated the
prescribed procedure when it failed to attach signed amendments to the policy and
failed to obtain Rail Car’s signature on the amendments. Although he ultimately
seeks a restoration of full benefits, the vehicle for that requested relief is invalidation
of the amendments. As such, Ross seeks equitable relief to enforce a provision of
Title I, namely section 402(b)(3) of ERISA.7
B.
The district court determined that the Plan was amended in conformity with the
policy’s provisions and that the amendments were therefore valid, citing section
402(b)(3) of ERISA and the seminal case of Curtiss-Wright Corp. v. Schoonejongen,
514 U.S. 73, 78 (1995). We review the district court’s interpretation of ERISA under
7
In making this statement, we are mindful of the Supreme Court’s narrow
reading of equitable relief available under 29 U.S.C. § 1132(a)(3), most recently
repeated in Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, ___, 122
S. Ct. 708, 712 (2002) (explaining that “equitable relief” as used in § 1132(a)(3)
means something less than all relief, instead referring to categories of relief typically
available in equity). In order to obtain complete relief, a successful plaintiff may
need to assert claims against both a plan and its sponsor and/or administrator and/or
issuer of an insurance policy that provides benefits under the plan, asserting claims
under §§ 1132(a)(1)(B) and (a)(3).
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a de novo standard. Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins.
Program, 222 F.3d 643, 646 (9th Cir. 2000) (en banc).
Ross does not dispute that the Rail Car Plan was susceptible to amendment.
As the Supreme Court laid out in Curtiss-Wright, a section 402(b)(3) analysis of the
validity of an amendment requires two things: the plan must set forth who is
authorized to amend the plan and how amendments are to be effectuated. 514 U.S.
at 78-80. The parties and the district court addressed the issue as though Canada Life
had the authority to amend it. However, that authority resided with Rail Car.
As the Summary Plan Description made clear, Rail Car America was the Plan’s
sponsor: it was the policyholder and it established this disability income plan for its
employees. See 29 U.S.C. § 1002(16)(B) (“The term ‘plan sponsor’ means . . . the
employer in the case of an employee benefit plan established or maintained by a
single employer. . . .”). As such, Rail Car had the unilateral right to amend the policy
that provided insurance under the Plan. “Employers or other plan sponsors are
generally free under ERISA, for any reason at any time, to adopt, modify, or terminate
welfare plans.” Curtiss-Wright, 514 U.S. at 78; accord Ravenscraft v. Hy-Vee
Employee Benefit Plan & Trust, 85 F.3d 398, 401 (8th Cir. 1996). Thus, the answer
to the “who” question was Rail Car and not Canada Life.
Determining “how” the plan can be amended is shorthand for satisfying section
402(b)(3)’s requirement that a plan have “a procedure for identifying the persons who
have authority to amend the plan.” Curtiss-Wright, 514 U.S. at 78. Here, the policy
answers the “how” question by pointing to a particular way in which the amendment
process is carried out. The change must: 1) be in writing; 2) be attached to the policy;
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3) bear the original or reproduced signatures of Canada Life’s president, chief
actuary, or secretary; and 4) bear the signature of its registrar or assistant registrar.8
Ross devotes a substantial part of his brief to arguing that the amendments are
void under section 402(b)(3) because Canada Life cannot prove that it followed this
designated procedure. Specifically, he finds fault with the district court’s conclusion
that the amendments were attached to the policy and bore the requisite signatures.
Under Ross’s theory, the 1990 and 1991 amendments were void because Canada Life
did not produce original amendment pages (with original signatures by one of the
listed Canada Life officers and its registrar or assistant registrar) attached to the
original policy. Ross grounds his theory on ERISA’s goal of enabling employees to
determine their rights and obligations under a plan by examining the plan documents.
We are not persuaded that the district court erred.
First, Ross urges a statutory goal that the Supreme Court has rejected under
section 402(b)(3). In Curtiss-Wright, plaintiffs argued that section 402(b)(3) was
enacted to ensure that every plan has an amendment procedure and to enable
participants and beneficiaries to examine a single plan document for the purpose of
ascertaining their rights and obligations. 514 U.S. at 83. The Court agreed as to the
first purpose but disagreed as to the second, whose statutory sanctuary it declared to
be section 402(a)(1) (“Every employee benefit plan shall provide a procedure for
establishing and carrying out a funding policy and method consistent with the
objectives of the plan and the requirements of this subchapter. . . .”). The Court
described the goal of section 402(b)(3) as ensuring that each plan is amendable,
giving such amendments their due, and making amendments stand out and be
distinguishable from other communications. 514 U.S. at 82.
8
The policy does not require Rail Car’s signature on amendments, contrary to
Ross’s assertion.
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The undisputed facts confirm that the copy of the policy Canada Life sent to
Ross easily satisfied the goals of section 402(b)(3). The amendments were
incorporated in the policy and were restated in their entirety so as to delete the
superceded provisions. The document was consecutively paginated and each page
listed an effective date. In sum, the amended policy was clear and concise. We fail
to see how a document fashioned in the manner Ross suggests would achieve these
goals. His counsel conceded at oral argument that he had never requested to see the
original policy with the amendments attached, nor did he dispute the reliability of the
copy he received.
In reality, the essence of Ross’s entire claim in counts one and two is an
evidentiary one. He objects to the district court’s conclusions as to the admissibility
of affidavits concerning Canada Life’s procedures and he challenges the foundation
laid for the authenticity of documents. We are well satisfied that the district court did
not abuse its discretion with respect to these evidentiary issues. He also objects to the
district court’s consideration of evidence outside of the administrative record, but the
limitation he urges does not apply in a de novo review of the district court’s
interpretation of ERISA. Cf. Donatelli v. Home Ins. Co., 992 F.2d 763, 765 (8th Cir.
1993) (in case involving review of fiduciary’s denial of benefits, district court may
allow introduction of evidence outside the administrative record if standard of review
is de novo).
We affirm the entry of summary judgment on counts one and two of Ross’s
amended complaint because the 1990 and 1991 amendments were validly enacted.
Because of our decision, we do not reach the issue of the district court’s alternative
holding that even an improper amendment would be valid because Ross introduced
no evidence of bad faith, active concealment, or detrimental reliance that would
justify the relief he seeks.
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III.
Ross asserts that the district court erred by entering summary judgment in favor
of Canada Life on counts three and four of his amended complaint, in which he seeks
relief under 29 U.S.C. § 1132(c) (section 502(c) of ERISA) for Canada Life’s alleged
failure to provide him with Plan documents upon written request.9 Ross twice asked
Canada Life to provide documents on which it was relying to support the validity of
the 1990 and 1991 amendments, and in reply he was sent a copy of the insurance
policy. He did not receive any change forms reflecting the amendments in response
to these requests, but after he filed suit Canada Life produced more than 1,000 pages
of documents that it had not provided earlier, including a change form for each
amendment.
Section 502(c) of ERISA allows the district court to impose a discretionary
$100 per day fine on a plan administrator who fails to provide copies of certain plan
documents to participants and beneficiaries. The district court entered summary
judgment on counts three and four because it determined that Canada Life is not the
Plan Administrator. Ross argues that this is in error because the Summary Plan
Description is inherently ambiguous as to the identity of the Administrator, and
because Canada Life served as claims administrator and was the repository of the
Plan documents and thus should be held to be the de facto Plan Administrator.
Ross’s arguments cannot stand in the face of the uncontroverted facts, ERISA,
and settled case law. The Summary Plan Description unambiguously identifies Rail
Car as the Plan Administrator. Canada Life admits that it had control over claims
under the policy, but assuming that function did not transform it into the Plan
9
Section 502(a)(1)(A) of ERISA authorizes a cause of action for the relief
requested in section 502(c). Specific mention of this claim was included in the pre-
trial order.
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Administrator. ERISA specifically makes the Plan Administrator responsible for
providing the Plan documents Ross requested, see 29 U.S.C. § 1024(b), and the
Summary Plan Description directed that all requests for Plan documents be made in
writing to the Plan Administrator.
In his effort to gain a reversal, Ross sets forth diametrically opposing
arguments. He first says that Canada Life should have provided him with all of the
Plan documents he requested because we should hold that Canada Life was the Plan
Administrator. He then says that Canada Life should not have sent the documents
that it did send because that left Ross with the impression that it was the Plan
Administrator. These arguments are hardly consistent, comprehensible, or
persuasive. We affirm the district court’s entry of summary judgment on counts three
and four of the amended complaint.
IV.
We have considered Ross’s other arguments and find them to be without merit.
Accordingly, we affirm the judgment of the district court.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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