Adams v. The Brink's Company

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-1744
JIMMY ADAMS; CHRISTOPHER BROOKS ADDINGTON;
MICHAEL ADKINS; JERRY BAIRD; MICHAEL A.
BLEDSOE; ROBERT BLEDSOE; KIM BOGGS; HARRY
BOONE; GLENDA BRADY; WILLIAM BREEDING; JOHN
BROWNING, JR.; JOHN BROWNING, SR.; BILLY
BULLION; BENNETT S. CANTRELL; BILLY CANTRELL;
FLOYD CANTRELL; FREDDIE CANTRELL; ISAAC W.
CANTRELL; JOHN W. CANTRELL; THELMER CANTRELL;
DONALD CHILDRESS; DONALD R. CLARK; GREG CLARK;
MICHAEL CLARK; RANDALL A. CLARK; JAMES E.
COOKE; CLAUDE COX; VERNUS A. CULBERTSON; TEDDY
DEAN; CARL T. DOTSON; DAVID ELAM; WILLIE M.
FALIN; FRANK FARMER; JOHNNY W. FARMER;
HEZEKIAH FRANKLIN; DAVID M. FREEMAN; LARRY
GILLIAM; ROY R. GILLIAM; EDWARD GRAHAM; DONALD
GREEAR; DENVER HALL; DANE HAMILTON; SCOTTY
HAMILTON; DANNY HAYES; CLEGG HESS; HOMER HILL;
THOMAS HILLMAN; RICHARD HUGHES; JERRY HYLTON;
GREG IRESON; ARTHUR W. JENKINS; ROGER J.
JONES; ROY JONES; DON KENNEDY; DAVID KING;
CHARLES LANE; RONALD LARGE; ATLON LAWSON;
RONNIE L. LAWSON; TIM LAWSON; JOHN LIVINGSTON;
ROBIN LOVELL; WOODROW LOVELL; DAVID G.
MCCONNELL; DWAYNE MCCONNELL; HENRY MCFADDEN;
GEORGE L. MEADE; HOLLY P. MEADE; IVAL MEADE;
RICKY MEADE; DANNY S. MOORE; ROGER D. MORGAN;
DONALD E. MULLINS; DONALD M. MULLINS; FRANKLIN
D. MULLINS; GARY MULLINS; JOHNNY R. MULLINS;
OTTIS MULLINS; RANDY MULLINS; RONNIE MULLINS;
GERALD NEWTON; CHARLES OSBORNE; JEFFREY PETRO;
HOMER PHIPPS; FREDDY POWERS; DENNIS RASNIC;
BOBBY REDMAN; LAWRENCE REEVES; CHARLES
RICHARDSON, JR.; DUSTY ROBINSON; JIMMY ROSE;
MITCHELL SALYERS; DENVER SANDERS; RICKY
SHELTON; RONNIE SLEMP; KENNETH SLUSS; DONALD
STAIR; ROBERT STAPLETON; JEFF SUMMERS; WILLIS
SURRETT, JR.; GARY SWINEY; DANNY TAYLOR; JUDY
THACKER; PHIL THACKER; WILLIE THACKER; JERRY
TIGNOR; RAY WATSON; BOBBY WHEELER; CLARENCE
WHISENHUNT; MIKE WHITAKER; JERRY WHITE; GARY
WILLIAMS; ARTHUR WILSON; RALPH WILSON, JR.;
DENVER WINEBARGER; ROBERT SMALLWOOD; WINSTON
RICHARDSON; MICHAEL HOPKINS; KENNETH MEADE;
TERRY MITCHELL; MICHAEL BOGGS; RAY TAYLOR;
JACK BLANTON; DONALD RATLIFF,
Plaintiffs - Appellants,
and
MARTIN JESSEE; JAMES W. RAY; SAM ADKINS;
DENNIS A. CANTRELL; JEFF FRANKLIN; TRENTON
MULLINS; DAVID MCCARTY,
Plaintiffs,
versus
THE BRINK’S COMPANY; PARAMONT COAL
CORPORATION; THE BRINK’S COMPANY PENSION-
RETIREMENT PLAN; ADMINISTRATIVE COMMITTEE FOR
THE BRINK’S COMPANY PENSION-RETIREMENT PLAN,
Defendants - Appellees.
No. 06-1770
JIMMY ADAMS; CHRISTOPHER BROOKS ADDINGTON;
MICHAEL ADKINS; JERRY BAIRD; MICHAEL A.
BLEDSOE; ROBERT BLEDSOE; KIM BOGGS; HARRY
BOONE; GLENDA BRADY; WILLIAM BREEDING; JOHN
BROWNING, JR.; JOHN BROWNING, SR.; BILLY
BULLION; BENNETT S. CANTRELL; BILLY CANTRELL;
FLOYD CANTRELL; FREDDIE CANTRELL; ISAAC W.
CANTRELL; JOHN W. CANTRELL; THELMER CANTRELL;
DONALD CHILDRESS; DONALD R. CLARK; GREG CLARK;
MICHAEL CLARK; RANDALL A. CLARK; JAMES E.
COOKE; CLAUDE COX; VERNUS A. CULBERTSON; TEDDY
DEAN; CARL T. DOTSON; DAVID ELAM; WILLIE M.
FALIN; FRANK FARMER; JOHNNY W. FARMER;
HEZEKIAH FRANKLIN; DAVID M. FREEMAN; LARRY
2
GILLIAM; ROY R. GILLIAM; EDWARD GRAHAM; DONALD
GREEAR; DENVER HALL; DANE HAMILTON; SCOTTY
HAMILTON; DANNY HAYES; CLEGG HESS; HOMER HILL;
THOMAS HILLMAN; RICHARD HUGHES; JERRY HYLTON;
GREG IRESON; ARTHUR W. JENKINS; ROGER J.
JONES; ROY JONES; DON KENNEDY; DAVID KING;
CHARLES LANE; RONALD LARGE; ATLON LAWSON;
RONNIE L. LAWSON; TIM LAWSON; JOHN LIVINGSTON;
ROBIN LOVELL; WOODROW LOVELL; DAVID G.
MCCONNELL; DWAYNE MCCONNELL; HENRY MCFADDEN;
GEORGE L. MEADE; HOLLY P. MEADE; IVAL MEADE;
RICKY MEADE; DANNY S. MOORE; ROGER D. MORGAN;
DONALD E. MULLINS; DONALD M. MULLINS; FRANKLIN
D. MULLINS; GARY MULLINS; JOHNNY R. MULLINS;
OTTIS MULLINS; RANDY MULLINS; RONNIE MULLINS;
GERALD NEWTON; CHARLES OSBORNE; JEFFREY PETRO;
HOMER PHIPPS; FREDDY POWERS; DENNIS RASNIC;
BOBBY REDMAN; LAWRENCE REEVES; CHARLES
RICHARDSON, JR.; DUSTY ROBINSON; JIMMY ROSE;
MITCHELL SALYERS; DENVER SANDERS; RICKY
SHELTON; RONNIE SLEMP; KENNETH SLUSS; DONALD
STAIR; ROBERT STAPLETON; JEFF SUMMERS; WILLIS
SURRETT, JR.; GARY SWINEY; DANNY TAYLOR; JUDY
THACKER; PHIL THACKER; WILLIE THACKER; JERRY
TIGNOR; RAY WATSON; BOBBY WHEELER; CLARENCE
WHISENHUNT; MIKE WHITAKER; JERRY WHITE; GARY
WILLIAMS; ARTHUR WILSON; RALPH WILSON, JR.;
DENVER WINEBARGER; ROBERT SMALLWOOD; WINSTON
RICHARDSON; MICHAEL HOPKINS; KENNETH MEADE;
TERRY MITCHELL; MICHAEL BOGGS; RAY TAYLOR;
JACK BLANTON; DONALD RATLIFF,
Plaintiffs - Appellees,
and
MARTIN JESSEE; JAMES W. RAY; SAM ADKINS;
DENNIS A. CANTRELL; JEFF FRANKLIN; TRENTON
MULLINS; DAVID MCCARTY,
Plaintiffs,
versus
3
THE BRINK’S COMPANY; PARAMONT COAL
CORPORATION; THE BRINK’S COMPANY PENSION-
RETIREMENT PLAN; ADMINISTRATIVE COMMITTEE FOR
THE BRINK’S COMPANY PENSION-RETIREMENT PLAN,
Defendants - Appellants.
Appeals from the United States District Court for the Western
District of Virginia, at Big Stone Gap. Pamela Meade Sargent,
Magistrate Judge. (2:02-cv-00044-PMS)
Argued: September 27, 2007 Decided: January 11, 2008
Before WILLIAMS, Chief Judge, DUNCAN, Circuit Judge, and Raymond A.
JACKSON, United States District Judge for the Eastern District of
Virginia, sitting by designation.
Affirmed by unpublished opinion. Judge Jackson wrote the opinion,
in which Chief Judge Williams and Judge Duncan joined.
ARGUED: James A. Holifield, Jr., HOLIFIELD & ASSOCIATES, P.C.
Knoxville, Tennessee, for Appellants/Cross-Appellees. Robert
Martin Rolfe, HUNTON & WILLIAMS, Richmond, Virginia, for
Appellees/Cross-Appellants. ON BRIEF: William S. Lockett, Jr.,
KENNERLY, MONTGOMERY & FINLEY P.C., Knoxville, Tennessee, for
Appellants/Cross-Appellees. Elena E. Ellison, HUNTON & WILLIAMS,
Richmond, Virginia, for Appellees/Cross-Appellants.
Unpublished opinions are not binding precedent in this circuit.
4
JACKSON, District Judge:
Appellants petition for review of the final order of the
district court which disposed of most of Appellants’ claims,
denying additional pension benefits under the Pittston Plan.
Appellees cross-appeal the district court judgment with respect to
Christopher Brooks Addington, who succeeded on his breach of
fiduciary duty claim. For the reasons that follow, we affirm.
I.
Appellants are former employees of Paramont Coal Corporation
and current and/or former employees of the Pittston Company, a
subsidiary of the Brink’s Company. J.A. 101. In this action,
Appellants seek benefit accrual service credit under the Pittston
Plan for service with Paramont before Paramont’s pension plans were
merged into the Pittston Plan. (Appellees’ Br., 4.)
In July 1986, Pyxis Resources, then a subsidiary of The
Pittston Company (“Pittston”), acquired Paramont Coal Company
(“Paramont”). JA 2962. In 2003, Pittston changed its name to the
Brink’s Company and the Pension-Retirement Plan of the Pittston
Company and Its Subsidiaries changed its name to the Brink’s
Company Pension-Retirement Plan. JA 1798.
At the time of Paramont’s acquisition by Pyxis, Paramont
employees were participants in one of two identical defined-benefit
pension plans: (1) the Salaried Employees’ Pension Plan of Paramont
5
Coal Corporation or (2) the Hourly Employees’ Pension Plan of
Paramont Coal Corporation (collectively hereinafter referred to as
the “Paramont Plans”). JA 1394, 1398. The Paramont Plans provided
a maximum monthly retirement benefit of $350 for 20 years of
service with Paramont. JA 2962-2963. All Paramont employees,
regardless of their salary, earned the same retirement benefit for
the same years of service. JA 2963.
The Paramont Plans remained in effect until January 1, 1989,
when the Paramont Plans merged into the Pittston Plan. JA 2963. The
Pittston Plan established a more generous benefit formula than the
Paramont Plans. The Pittston Plan calculated benefits by
multiplying a percentage of an average salary by the number of
years of “Benefit Accrual Service.” JA 176, 2964-65. Moreover, the
Pittston Plan imposed no cap on these benefits. JA 176, 2964-65.
Exhibit G to the Pittston Plan, entitled “Special Provisions
Applicable to Former Participants in the Pension Plans of Paramont
Coal Corporation,” states that the Paramont Plans shall be merged
into the Pittston Plan and that “in connection with such mergers,
the provisions of this Exhibit G shall apply, effective January 1,
1989, notwithstanding any provisions elsewhere in the Plan to the
contrary.”1 JA 315, 2963.
1
Exhibit G states in part: “The accrued pension benefit of
each Paramont Participant under the Plan in respect of periods of
service prior to January 1, 1989, shall be determined solely in
accordance with the provisions of the Paramont Plan in which he was
a participant, as in effect immediately prior to January 1, 1989,
6
Exhibit G further provides that vesting service under the
Paramont Plans would count as vesting service under the Pittston
Plan. JA 315. The district court found the language of Exhibit G
to be clear and unambiguous and concluded that it does not provide
for the inclusion of Appellants’ years of service with Paramont
prior to January 1, 1989, in the calculation of their retirement
benefits under the Pittston Plan. JA 2964. There is no dispute that
Appellants are receiving or are entitled to receive these
retirement benefits as calculated.
Appellants argue that Pittston intentionally deceived them by
saying, on numerous occasions beginning with Paramont’s acquisition
by Pyxis, that Paramont employees would receive benefit accrual
service credit for their years of service with Paramont prior to
January 1, 1989. (Appellants Br., 35.) However, based on the
evidence presented at trial, the district court found that Pittston
had not made misrepresentations.2 JA 3049.
based solely on his ‘Benefit Service’ (as defined in such Paramont
Plan) on December 31, 1988 or any earlier date on which the
Paramont Participant ceases to be an employee of Paramont Coal
Corporation...” JA 277-278,315.
2
The district court concluded that the evidence does not in
any way establish any concerted corporatewide effort to deceive
current and former Paramont employees and that Michael Quillen,
Kathy Fox, and Gerald Spindler did not tell plaintiffs that their
years of service with Paramont prior to January 1, 1989 would be
included in the calculation of their benefits under the Pittston
Plan. JA 3049.
7
Two years after the acquisition of Paramont, all Paramont
employees received a 1988 Employee Handbook that accurately stated
that each was covered for pension benefits by only the Paramont
Plans. JA 1296, 1308-20, 3047. Prior to the merger of the plans,
every Paramont employee received two notices that they would not
receive credit under the more lucrative Pittston Plan formula for
their years of service with Paramont prior to January 1, 1989. JA
3047. These notices came in a November 10, 1988 letter from Randy
Robinette, and a December 1988 article in the Paramont Pride, the
company newspaper. JA 1334-34.1, 1350, 3047.
More than a year after Paramont employees received these
accurate descriptions in 1988, Gerald Spindler, a Pittston Vice
President who performed no routine functions with regard to the
Pittston Plan, spoke at a meeting held at Clinch Valley College in
1990. JA 739, 769, 3009, 3065. The purpose of the meeting was to
explain to the union-free side of Pittston’s operation, which
included more than just Paramont employees, how they could be
affected by the new union contract. JA 739. A contract that settled
a Pittston-UMWA coal strike had been settled the day before the
commencement of the meeting. For the first time in the history of
Paramont, the union-free work force was affected by the language of
the contract. JA 739. At the meeting, Gerald Spindler, Scott
Perkins, and Donnie Ratliff discussed the value of the
Pittston/Paramont marriage, the management structure and growth
8
potential. JA 740. Spindler spoke about contracts, the commitment
to remain union-free, and the importance of the Pyxis group. JA
740. Spindler also answered questions on a variety of subjects, one
of them concerning the Pittston pension funds and Paramont years
counting in the benefit calculation. JA 741. Although the purpose
of the meeting did not specifically include discussing pension
benefits, Spindler made his planned remarks, and when an employee
subsequently inquired about their time of pension service, Spindler
answered, “nothing will change.” JA 741, 872, 3018. Spindler did
not explain or elaborate and the district court found that Spindler
made no misrepresentations. JA 872, 3018.
Additional accurate communications were distributed to all
Paramont employees after the Clinch Valley College meeting. JA
1340, 3047-3048. Also, numerous witnesses at trial testified that
they understood the relevant terms of the Pittston Plan. JA 3048.
However, over the years, a minority of employees received
annual benefit statements that occasionally incorrectly estimated
the amount of their projected pension benefits by including too
many years of benefit accrual service under the Pittston
calculation formula. JA 3049. Of the 836 annual benefit statements
sent to Plaintiffs, 8% incorrectly estimated future retirement
benefits. JA 2951, 3049. The annual benefit statements did not
indicate how the estimate had been calculated and did not state
that the employee’s years of service with Paramont prior to January
9
1, 1989 were included in the calculation of their benefits under
the Pittston Plan formula. JA 3057. Also, the annual benefit
statements cautioned that the figures were estimates. JA 3057.
Appellants instituted this action on December 19, 2001, in the
United States District court for the Eastern District of Tennessee
seeking legal, declaratory and equitable relief for various claims
against (1) Pittston, (2) Paramont, (3) the Pittston Plan, and (4)
the Administrative Committee for the Pittston Plan (“Administrative
Committee”). JA 99-107. Appellants asserted federal question
jurisdiction in the district court pursuant to the general
jurisdictional grant of 28 U.S.C. § 1331 and the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001et seq. JA 102.
On September 6, 2002, Pittston filed a Motion for Summary
Judgment, which the district court granted in part and denied in
part by Memorandum Opinion and Order entered November 18, 2003. JA
497-504. On October 7, 2004, an Agreed Order was entered severing
the claims of five of the then 123 plaintiffs to be tried to the
court first. JA 505-507. The court entered its Findings of Fact and
Conclusions of Law and Judgment in the trial of these five
plaintiffs (“Initial Plaintiffs”) on June 3, 2005. JA 2960-3079. On
October 24, 2005, Pittston filed a Second Motion for Summary
Judgment, seeking entry of summary judgment on the claims of the
remaining 119 plaintiffs. The district court granted Pittston’s
10
Second Motion for Summary Judgment by Memorandum Opinion and Order
entered on March 17, 2006. JA 4667-4730. A Final Judgment was
entered on June 2, 2006, disposing of all claims before the
district court with the exception of the parties’ cross motions for
attorney’s fees. JA 4737-4740.
Appellants are appealing the final order of the district court
entered on June 2, 2006. Appellants timely filed a Notice of Appeal
with the district court on June 26, 2006, pursuant to Rules 3 and
4 of the Federal Rules of Appellate Procedure. JA 4741-4750.
Appellants filed an amended Notice of Appeal on July 7, 2006. JA
4753-4758. Accordingly, this Court has jurisdiction pursuant to 28
U.S.C. § 1291.
II.
On appeal, Appellants argue that the district court erred and
challenge its judgment on four grounds. On cross-appeal, Appellees
challenge the district courts judgment with respect to Christopher
Brooks Addington. We address each argument in turn below.
A.
Appellants first assert that certain Pittston employees were
fiduciaries of the Pittston Plan in accordance with the Supreme
Court’s decision in Varity Corporation v. Howe, 516 U.S. 489(1996). Specifically, Appellants aver that Gerald Spindler,
11
President of Pittston, acted as a fiduciary of the Pittston Plan
when he spoke to a group of employees at a company-wide meeting
regarding Plan benefits. Appellants also assert that Michael
Quillen was delegated fiduciary responsibilities by the
Administrative Committee and had apparent authority to speak on
behalf of the Plan. In addition, Appellants assert that Donald
Ratliff, Kathy Fox, Rhonda Miller and Eddie Needy were fiduciaries
of the Pittston Plan. The Court disagrees.
The United States Supreme Court has recognized the rights of
an individual participant to sue a person acting as a fiduciary
under an ERISA plan for breach of fiduciary duty, and to seek
relief pursuant to 29 U.S.C. § 1132(a)(3). Varity Corp., 516 U.S.
at 489. In order to establish a claim for breach of fiduciary duty
based on alleged misrepresentations, a plaintiff must show: 1) that
a defendant was a fiduciary of the ERISA plan, 2) that a defendant
breached its fiduciary responsibilities under the plan, and 3) that
the participant is in need of injunctive or other appropriate
equitable relief to remedy the violation or enforce the plan.
Griggs v. E.I. Dupont de Nemours & Co., 237 F.3d 371, 379-380 (4th
Cir. 2001)(“Griggs I”); Blair v. Young Phillips Corp., 235 F. Supp.
2d 465, 470 (M.D.N.C. 2002).
A “person is a fiduciary with respect to a plan,” and
therefore subject to ERISA fiduciary duties, “to the extent” that
he or she “exercises any discretionary authority or discretionary
12
control respecting management” of the plan, or “has any
discretionary authority or discretionary responsibility in the
administration” of the plan. Varity, 516 U.S. at 489 (quoting ERISA
§ 3(21)(A)). Fiduciary status is not an all-or-nothing concept. The
inclusion of the phrase “to the extent” in 29 U.S.C. § 1002(21)(A)
means a party is a fiduciary only as to the activities which bring
the person within the definition. Coleman v. Nationwide Life Ins.
Co., 969 F.2d 54, 60-61 (4th Cir. 1992). When determining whether
a party is a fiduciary, “a court must ask whether a person is a
fiduciary with respect to the particular activity at issue.” Id. A
court is required to examine the relevant documents to determine
whether the conduct at issue was within the formal allocation of
responsibilities under the plan documents and, if not, ascertain
whether, in fact, a party voluntarily assumed such responsibility
for the conduct at issue. Coleman, 969 F.2d at 61; Phelps v. C.T.
Enters., Inc., 394 F.3d 213, 219 (4th Cir. 2005).
In Varity, the Supreme Court concluded that based on the
factual context in which the statements were made as well as the
plan-related nature of the activity engaged in by those who had
plan-related authority to do so, there was sufficient support for
the legal conclusion that Varity was acting as a fiduciary. Varity,
516 U.S. at 503. The Court emphasized that “conveying information
about the likely future of plan benefits, thereby permitting
beneficiaries to make an informed choice about continued
13
participation, would seem to be an exercise of a power
‘appropriate’ to carrying out a plan purpose.” Id. at 502.
Moreover, the court noted that “other documents came from those
within the firm who had authority to communicate as fiduciaries
with plan beneficiaries.” Id. at 503. Contrary to Appellants’
assertions, the specific context for the Pittston Employees’
statements in this case significantly differ from that which the
Supreme Court recognized in Varity.
Pittston was both employer and administrator for the benefit
plan. However, not all of Pittston’s business activities involved
plan management or administration. See id. The district court held
that when the statements were made regarding employee benefits,
Pittston employees were not acting as “fiduciaries” as well as
“employers.” In reviewing this legal conclusion, we give deference
to the factual findings of the district court, recognizing its
comparative advantage in understanding the specific context in
which the events of this case arose. See id. The Court will examine
the specific factual context of the alleged misrepresentations to
determine whether each individual was a fiduciary.
Appellants assert that Gerald Spindler was a fiduciary.
However, the evidence reveals that Spindler had no responsibilities
with respect to the Pittston plan. Spindler, in addition to
Quillen, Fox, Robinette, Miller and Needy possessed no
discretionary authority to alter the terms of the Pittston Plan or
14
to determine eligibility for benefits or the amount of benefits a
participant was entitled to under the Pittston plan. JA 3065.
Despite this, Appellants assert that when Spindler reassured
Paramont employees that their Paramont time would be used for
calculating benefit accrual service under the Pittston Plan he was
acting as a fiduciary. (Appellant’s Br., 38.) The Court disagrees.
In Varity, the Supreme Court focused on the purpose of the
meeting and the actions of the parties. Specifically, the Court
emphasized that offering beneficiaries detailed plan information in
order to help them decide whether to remain with the plan is
essentially an exercise of a power “appropriate” to carrying out an
important plan purpose. Moreover, in Varity the materials used at
the meeting came from those at the firm with authority to
communicate as fiduciaries with beneficiaries. Varity, 516 U.S. at
502. Here, the circumstances of the Clinch Valley College meeting
were different.
Unlike the meeting in Varity, the purpose of the Clinch Valley
College Meeting was not to offer beneficiaries detailed plan
information in order to help them decide whether to remain with the
plan. In fact, testimony in the district court reveals that
Spindler’s only communication regarding benefits was an answer to
a question at the end of a meeting. JA 741. In addition, the
evidence does not suggest that there were any benefit-related
materials used at the meeting that came from those at the firm with
15
authority to communicate as fiduciaries with beneficiaries. See
Varity, 516 U.S. at 502. The situation here can also be
distinguished from Griggs I because Griggs suffered a very specific
harm by relying on written documents from the Plan Administrator.
See Griggs I, 237 F.3d at 374. It is evident that Spindler
possessed no discretionary authority with respect to the Pittston
Plan; moreover, he never offered detailed plan information with the
intention of inducing a particular choice of plans. See Varity, 516
U.S. at 502.
Appellants also assert that Michael Quillen was delegated
fiduciary responsibilities by the Administrative Committee and that
he had apparent authority to speak on behalf of the Plan.
(Appellants’ Br., 39.) Appellants cite various documents and oral
statements in support of this assertion. (Appellants’ Br., 39-41.)
However, the district court found that Quillen possessed no
discretionary authority to alter the terms of the Pittston Plan or
determine eligibility for benefits. Based on the evidence
presented, this Court finds that this statement of fact is not
clearly erroneous. Quillen testified that he never had any
administrative responsibility, any control over, or any discretion
regarding the Pittston Plan. JA 2991. Also, the documents and oral
statements that Appellants cite to in order to establish that
Quillen had authority were contained when Quillen was President of
16
Paramont and trustee of the Paramont Plans before their merger into
the Pittston Plan. JA 2991.
Appellants additionally assert that Robinette, Ratliff, Fox,
Miller, and Needy were all fiduciaries of the Plan because ERISA
defines fiduciary status “functionally,” where virtually any
employee who communicates on benefits issues may be considered a
fiduciary. (Appellants’ Br., 41-42.) Appellants argue that the
local human resource managers were delegated actual authority to
answer questions regarding plan benefits. (Appellants’ Br., 42.)
Further, Appellants support their argument with the following
assertions: (1) Kathy Fox trained Paramont’s administrative
personnel on the Pittston Plan so they could explain benefits to
Paramont employees; (2) Donald Ratliff traveled to mine sites
explaining Pittston plan benefits; (3) Randy Robinette was
Paramont’s Director of Human Resources and, in this capacity, sent
various letters and memos to Paramont employees explaining the
effects of the Pittston-Paramont merger. (Appellants’ Br., 44.)
Appellants aver that the aforementioned facts reveal that these
persons were involved in the administration of the Plan and subject
to fiduciary obligations. (Appellants’ Br., 44.)
However, the district court found that Needy performed no
functions with regard to the Pittston Plan and based on the
evidence presented, the Court does not find this decision to be
clearly erroneous. The district court also found that Fox,
17
Robinette, and Miller performed certain administrative duties for
the Pittston Plan but lacked any discretionary authority to
determine the eligibility for benefits or the amount of benefits to
which a participant was entitled. JA 3065. Based on the evidence
presented, the Court finds that these individuals were not
fiduciaries.
Ministerial administrative acts are not fiduciary acts.
Healthsouth Rehab. Hosp. v. Am. Natl’ Red Cross, 101 F.3d 1005,
1009 (4th Cir. 1996) (stating that the limited role in processing
claims and reading a computer screen to determine who is covered by
a plan is not a fiduciary act). Even if Fox trained other employees
to explain Pittston Plan benefits and Ratliff and Robinette
explained plan benefits at mine sites and in writing, these actions
fail to constitute the exercise of “discretionary authority or
discretionary control respecting management” or administration of
the Pittston Plan. 29 U.S.C. § 1002(21)(A)(2007).
The Court agrees that an employer/plan administrator does not
exercise discretionary authority or control over the administration
of the plan merely when employees tell each other about plan
benefits. As in Coleman, the discretionary authority or
responsibility which is pivotal to the statutory definition of
“fiduciary” is allocated by the plan documents themselves. Coleman,
969 F.2d at 61. In examining the specific context of the alleged
misrepresentations, the Court finds it significant that the
18
Pittston Plan administrators clearly and accurately communicated
the plan benefits to the Paramont employees in writing. JA 307-
3048. Based on the record, none of the alleged statements of the
speakers deprived Appellants of any benefits to which they were
entitled under the terms of the plan. All of the Appellants will
receive the “contractually defined” benefits that their Plan
provided.
In an effort to interpret ERISA’s fiduciary duties, “courts
may have to take account of competing congressional purposes, such
as Congress’ desire to offer employees enhanced protection for
their benefits, on the one hand, and, on the other, its desire not
to create a system that is so complex that administrative costs, or
litigation expenses, unduly discourage employers from offering
welfare benefit plans in the first place.” Varity, 516 U.S. at 497.
In resolving this issue, the Court is sensitive to these competing
purposes.
B.
Appellants contend that Pittston and other fiduciaries
breached their fiduciary duty to Appellants by misrepresenting that
their years of service under the Paramont retirement plans would be
included in the calculation of benefit accrual service under the
Pittston Pension Plan. (Appellants’ Br., 45.) Appellants cite to
the Varity holding to support the proposition that misleading plan
19
beneficiaries violates a fiduciary duty imposed upon plan
administrators by ERISA. Id. However, the district court found that
no misrepresentations were made to any Appellant, with the
exception of Christopher Brooks Addington. The Court concurs with
this factual conclusion.
Findings of fact by a trial court shall not be set aside
unless clearly erroneous. Fed. R. Civ. P. 52(a). Anderson v.
Bessemer City, 470 U.S. 564, 573 (1985). “[A] finding is ‘clearly
erroneous’ when although there is evidence to support it, the
reviewing court on the entire evidence is left with a definite and
firm conviction that a mistake has been committed.” United States
v. United States Gypsum Co., 333 U.S. 364, 394-395 (1948).
With the exception of Addington, the district court found that
the Pittston Plan administrators clearly and accurately
communicated the plan benefits to the Paramont employees in
writing.3 JA 3047-3048. Based on the evidence presented at trial,
3
Specifically, the district court made the following findings:
“...the uncontradicted evidence shows that, in the fall of 1988,
prior to the merger of the Paramont Plans into the Pittston Plan,
every then-current employee of Paramont received notice on at least
two occasions that they would receive credit for their years of
service with Paramont prior to January 1, 1989, in the calculation
of their retirement benefits under the Pittston Plan. These notices
came in the form of Robinette’s 11-10-88 Letter, (Exhibit 3), and
the Paramont Pride Article, (Exhibit 26). Further, a number of
other accurate communications were distributed to Paramont
employees after the merger of the Paramont Plans into the Pittston
Plan on January 1, 1989. Miller’s 4-10-90 Letter was distributed to
all Paramont employees. Miller’s 4-10-90 Letter states that
Paramont employees’ pension benefits consisted of two parts, “your
pension benefits from the Paramont Plan through December 31, 1988,
20
the Court agrees that there was no concerted corporate wide effort
to purposefully deceive Paramont employees with regard to their
plan coverage for pension benefits. Likewise, there was no
concerted effort to deceive employees about how their pension
benefits would be calculated under the Pittston Plan after the
merger of the Paramont Plans into it. Because the facts here
distinguish this case from Varity, in order for Appellants to
succeed with their breach of fiduciary duty claim based on alleged
misrepresentations, they must prove that specific
and your pension benefit from the Pittston Plan from January 1,
1989.” Perkins’s 5-15-90 Letter also was distributed to all
Paramont employees. Attached to Perkins’s 5-15-90 Letter was a
sample pension benefits calculation. This sample calculation used
a hypothetical individual who had 14 years prior service with
Paramont and eight years service under the Pittston Plan. The
sample did not include the employee’s time with Paramont in the
calculation of benefits under the Pittston Plan, but instead used
only the eight years of service under the Pittston Plan. JA 3048.
With the exception of the five plaintiffs, Quillen and Rennie,
every other witness who testified in this case stated that they
understood at the time of the merger of the Paramont Plans into the
Pittston Plan that Paramont employees’ service from only January 1,
1989, forward would be used to calculate their retirement benefits
under the Pittston Plan. These witnesses included upper level
management with Pittston and Pittston Coal, management personnel
with Paramont and Pyxis, Pittston and Pittston Coal human resources
personnel, and individuals in the local human resources departments
responsible for answering Paramont employee inquiries. JA 3048.
Also, while there was evidence that there were errors in the
calculation of retirement benefits provided to Paramont employees
through Pittston’s Annual Benefit Statements beginning as early as
1991, this evidence also reveals that of the 836 Annual Benefit
Statements sent to the plaintiffs in this case, only eight percent
contained an incorrect calculation of their retirement benefits.
Also, of the 132 original plaintiffs in this case, the evidence
shows that only 16 received one or more incorrect Annual Benefit
Statements.
21
misrepresentations were made to them individually. However, because
the Court determines that the named individuals were not
fiduciaries of the Pittston Plan, the Court will not further
address the merits of Appellants’ misrepresentation claims.
Therefore, the Court affirms the district court’s holding that
there were not misrepresentations by fiduciaries. Because this
Court finds that there has been no breach or violation of fiduciary
duty the statute of limitations issue is moot and will not be
addressed.4
C.
Appellants aver that the district court erred in dismissing
Appellants’ claims for benefits under ERISA § 502(a)(1)(B).5
4
Although the Court determines that Appellees did not breach
their fiduciary duty with respect to Addington, the Court will
still discuss the statute of limitations issue because Appellees
seek to recover the mistaken overpayment issued to him. According
to 29 U.S.C. § 1113, “No action may be commenced under this
subchapter with respect to a fiduciary’s breach of any
responsibility, duty, or obligation under this part, or with
respect to a violation of this part, after the earlier of – (1) six
years after (A) the date of the last action which constituted a
part of the breach or violation, or (B) in the case of an omission,
the latest date on which the fiduciary could have cured the breach
or violation, or (2) three years after the earliest date on which
the plaintiff had actual knowledge of the breach or violation.”
Because the evidence reveals that Addington did not know that the
letter contained any misrepresentation until the Fall of 1999 and
the case was filed in December of 2001, Addington’s claim was filed
less than three years after he learned of the misrepresentation.
5
ERISA § 502(a)states: “A civil action may be brought -(1) by
a participant or beneficiary -(B)to recover benefits due to him
under the terms of his plan to enforce his rights under the terms
22
Appellants urge the Court to consider the Pittston Plan as a whole
when determining whether or not the Plan is ambiguous. (Appellants’
Br., 65.) Furthermore, Appellants argue that Exhibit G is ambiguous
because there is nothing in Exhibit G that excludes benefit service
with Paramont in the calculation of benefits under the Pittston
Plan. (Appellants’ Br., 65.) Again, the Court disagrees.
The Paramont Plans were merged into the Pittston Plan
effective January 1, 1989. However, before it was effective, there
was an amendment of the Pittston Plan to add Exhibit G. Exhibit G
states in part that the accrued pension benefit in respect of
periods of service prior to January 1, 1989, “shall be determined
solely in accordance with the provisions of the Paramont Plan in
which he was a Participant, as in effect immediately prior to
January 1, 1989, based solely on his ‘Benefit Service’ (as defined
in such Paramont Plan) on December 31, 1988 or any earlier date on
which the Paramont Participant ceases to be an employee of Paramont
Coal Corporation...” JA 315, 2964. Exhibit G also states that
vesting service under the Paramont Plans would count as vesting
service under the Pittston Plan. JA 315.
The Court finds that the language of Exhibit G is clear and
unambiguous. Paramont employee retirement benefits for periods of
service prior to January 1, 1989, the date of the plan merger, are
of the plan, or to clarify his rights to future benefits under the
terms of the plan. 29 U.S.C. § 1132(a)(1)(B).”
23
to be determined by the Paramont Plan. Also, Article IV of the Plan
provides further guidance by stating that “the commencement dates
for the benefit accrual computation periods for Employees of
specified employers is included in Exhibit M.” JA 170. Exhibit M
presents a chart that displays the benefit accrual period start
date based on an employee’s company. Based on an examination of the
Pittston Plan as a whole, the district court correctly awarded
summary judgment to Pittston on Plaintiffs’ § 502(a)(1)(B) claims.
The language of the plan is not ambiguous.
III.
A.
On cross-appeal, Appellees assert that the district court
wrongly held that the Administrative Committee’s mistaken
overcalculation of pension benefits breached a fiduciary duty to
Addington. (Appellees’ Br., 69.) Appellees do not contest that the
Administrative Committee is a Pittston Plan fiduciary. However,
they assert that there is no evidence that it breached any
fiduciary duty to Addington when it sent him a letter overstating
the amount of his pension benefits and overpaying him for five
years. (Appellees’ Br., 69.) The Court disagrees and holds that
Pittston did violate its fiduciary duty to Addington because
Pittston had an “unyielding duty of loyalty to the beneficiary.”
Griggs I, 237 F.3d at 380. The Court finds that Pittston’s
24
fiduciary duty “encompass[es] more than merely a duty to refrain
from intentionally misleading a beneficiary,” but also includes a
duty “not to misinform employees through material
misrepresentations.” Id.The lack of intent to deceive does not insulate the
Administrative Committee from liability based on the
misrepresentation to Addington. Under ERISA, a fiduciary has a duty
to provide beneficiaries with accurate information. See id.;
Faircloth, 91 F.3d 648, 656 (4th Cir. 1996). Moreover, in Krohn v.
Huron Mem’l Hosp., the Sixth Circuit stated that “a fiduciary
breaches its duties by materially misleading plan participants,
regardless of whether the fiduciary’s statements or omissions were
made negligently or intentionally.” 173 F.3d 542, 547 (6th Cir.
1999).
The Court finds that the Administrative Committee breached its
duty of loyalty and care by sending inaccurate communications to
Addington. Parsley was a ministerial employee who calculated
pensions according to the terms of the Pittston Plan. JA 3039. The
Administrative Committee’s 1-27-95 Letter to Addington did not
contain accurate information concerning Addington’s monthly pension
benefits under the Pittston Plan. By relying on Parsley’s incorrect
calculation, the Administrative Committee’s subsequent
misrepresentation clearly violated its fiduciary duty to
communicate accurately with a plan beneficiary.
25
B.
Appellees argue that the district court clearly erred when it
found that Addington relied on the mistaken calculation in deciding
to retire early. The district court found that had Addington “been
given accurate information concerning the amount of his monthly
pension benefits, he would not have taken early retirement.” JA
3191-3192. The Court does not find this determination to be clearly
erroneous.
Appellees argue that no equitable relief is appropriate in
this case. They state that Addington could not have relied on the
information contained in the Administrative Committee’s 1-27-95
letter because it was received after he took early retirement.
(Appellants’ Br., 74.) Contrary to this assertion, the district
court found that Addington’s benefits were not approved until the
Administrative Committee sent out the 1-27-95 letter which states,
“The Administrative Committee has approved your application for
early retirement benefits...” JA 3191. Addington testified that,
if he had been given accurate information concerning the amount of
his monthly pension benefits, he would not have taken early
retirement. JA 3192. Although Appellees dismiss this claim as
inaccurate and self-serving, the district court did not doubt
Addington’s credibility and it is quite possible that Addington was
waiting on the approval letter to finalize his decision. Based on
the facts, the Court is not left with a definite and firm
26
conviction that a mistake has been committed in determining that
Addington relied on the mistaken calculation. See United States v.
United States Gypsum Co., 333 U.S. 364, 394-395 (1948).
C.
Because the Court determines that Addington relied and
continues to rely on the mistaken calculation and subsequent
payment by the Administrative Committee, it is necessary to
determine the appropriate remedy in this situation. Appellees do
not ask that Addington return the overpayment before receiving any
future plan payments. (Appellee’s Br., 76.) However, Appellees
contend that any rescission remedy should require Addington to
repay the overpaid pension benefits by offsetting any overpayment
against any past payment due Addington. The Court disagrees.
The district court ordered that the Pittston Plan rescind
Addington’s election to retire early and raise his benefit to the
$1256.00 monthly benefit he would have earned had he worked until
his normal retirement date of November 1, 1997. JA 3196. Appellees
contend that Addington has received an overpayment because he
received $2,140.43 monthly from January 1995 until January 2000. JA
3059. However, the district court stated that it would be
“unreasonable and inequitable” to order Addington to return “any of
the early retirement he received.” JA 3193, 3205. The Court agrees
that partial rescission was proper in this case.
27
Although Appellees argue that the facts in this case do not
justify partial rescission as necessary or equitable, this Court
finds that the district court properly weighed the equities in its
decision not to order Addington to repay incorrectly calculated
pension payments. The evidence does not suggest that the mistaken
pension distribution was caused by Addington but rather was the
result of the Administrative Committee’s miscalculations. See
Phillips v. Maritime Association - I.L.A. Local Pension Plan, 194
F. Supp. 2d 549, 555 (E.D. Tex. 2001)(stating that while fault does
not necessarily preclude restitution, a party’s culpability is an
appropriate equitable consideration). To punish Addington by
forcing him to repay pension benefits that he received as the
result of a mistake made by the Administrative Committee is
contrary to the primary purpose of ERISA, which is to protect plan
participants. The Court intends to restore Addington, as much as
possible, to the position he would have been in had the mistake
never been made without inflicting unnecessary injury on an
innocent beneficiary.
The Supreme Court and this Court have expressly authorized
federal courts to develop a federal common law of rights and
obligations under ERISA-regulated plans. Provident Life & Acc. Ins.
Co. v. Waller, 906 F.2d 985, 990 (4th Cir. 1990). In Varity, the
Supreme Court recognized that courts will keep in mind the special
nature and purpose of employee benefit plans in fashioning
28
‘appropriate’ equitable relief. Varity, 516 U.S. at 515. Federal
common-law restitution is to be used to further the purposes of
ERISA and is governed by general equitable principles. Luby v.
Teamsters Health, Welfare, and Pension Trust Funds, 944 F.2d 1176(3rd Cir. 1991).
In Griggs I, this Court determined that reinstatement of
employment is an appropriate equitable remedy when an employee had
been induced to accept early retirement based on incomplete or
inaccurate information for which the plan administrator could be
held responsible. 237 F.3d at 385. However, based on Addington’s
situation, rescission of Addington’s election to take early
retirement and reinstatement to his former position is not
appropriate or possible. Here, Addington took early retirement
effectI’ve January 1, 1995 and has been out of the work force for
approximately 12 years. Addington is currently 72 years old and
Pittston has sold all of its coal mining operations. JA 3192.
However, it does appear equitable and appropriate for the court to
order that Addington be allowed to rescind his election for early
retirement benefits and to reinstate him to the benefits he would
be entitled to under the Pittston Plan if he had continued to work
until his normal retirement date of November 1, 1997, which would
be $1,256.00.
Normally, equitable rescission involves a restoration of the
parties to the status quo as it existed before the rescinded
29
transaction. See Printer v. Dahl, 486 U.S. 622, 642 n.18
(1988)(noting that equitable rescission provides for restoration of
the status quo). However, this Court in Griggs II stated that “the
complete-restoration requirement is a general one that is subject
to certain exceptions” and also stated that courts of equity may
order rescission “where the equities of the situation so demanded.”
Griggs v. E.I. DuPont de Nemours & Co., 385 F.3d 440, 448-49 (4th
Cir. 2004)(“Griggs II”). Further, the Court stated that the
formulation of the exception is somewhat broad to give federal
courts the flexibility to appropriately balance the interests of
participants and beneficiaries of ERISA plans against the interests
and obligations of employers and fiduciaries. Id. at 449.
Additionally, the Court stated that “a rule generally requiring
full restoration of benefits to accompany a grant of rescission
protects the financial integrity of ERISA plans, while permitting
an exception to this rule when the equities of the situation
demand[,] provides a necessary incentive for ERISA fiduciaries to
take seriously their obligations to protect the interests of the
participants and beneficiaries.” Id. The Court finds that when
applying this rule and the potential exception to the facts, it
would be unreasonable and inequitable to order Addington to return
any of the early retirement benefits he received or to offset the
overpayment against any future payment in order to rescind his
early retirement election.
30
The responsibility for the miscalculation of Addington’s early
retirement benefits lies with the Pittston Plan and with the
Pittston employees who were entrusted with the task of computing
his benefits. Because of Appellees’ mistakes, Addington and his
wife detrimentally relied on a stated monthly early retirement
payment and have lived according to this fixed monthly standard for
many years. See Kaliszewski v. Sheet Metal Workers’ National
Pension Fund, No. 03-216E, 2005 WL 2297309, at *8 (W.D. Pa., July
19, 2005)(highlighting the significant equitable concerns regarding
the nine-year duration and extent of Plaintiff’s reliance on the
Fund’s erroneous pension information and benefit payments, as to,
e.g., lifestyle and financial planning in denying Defendant’s
motion for summary judgment). Thus, the equities of the situation
demand an exception to the full restoration rule in order to
protect Addington and provide a necessary incentive for Pittston to
ensure that they are protecting the interests of future
participants and beneficiaries. The Court affirms the district
court finding that Addington does not have to repay the overpaid
pension benefits.
For the reasons stated herein, the judgment of the district
court is
AFFIRMED.
31