Rusby Adams, Jr. v. Anheuser-Busch Companies, Inc.

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 14a0150p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
RUSBY ADAMS, JR.; LESLIE SCHELL; DANIEL ┐
STEWART; KEVIN JONES, individually and on behalf │
of all others similarly situated, │
│ No. 13-3149
Plaintiffs-Appellants,
│
>
│
v.
│
│
ANHEUSER-BUSCH COMPANIES, INC.; ANHEUSER- │
BUSCH COMPANIES PENSION PLAN; ANHEUSER- │
BUSCH COMPANIES PENSION PLAN APPEALS │
COMMITTEE, │
Defendants-Appellees. │
┘
Appeal from the United States District Court
for the Southern District of Ohio at Columbus
No. 2:10-cv-00826—James L. Graham, District Judge.
Argued: October 1, 2013
Decided and Filed: July 11, 2014
Before: DAUGHTREY, COLE, and WHITE, Circuit Judges.
_________________
COUNSEL
ARGUED: Scott J. Stitt, JAMES E. ARNOLD & ASSOCIATES, LPA, Columbus, Ohio, for
Appellants. Edward M. Crane, SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP,
Chicago, Illinois, for Appellees. ON BRIEF: Scott J. Stitt, Gerhardt A. Gosnell II, James E.
Arnold, JAMES E. ARNOLD & ASSOCIATES, LPA, Columbus, Ohio, for Appellants. Edward
M. Crane, Albert L. Hogan III, David R. Pehlke, SKADDEN, ARPS, SLATE, MEAGHER &
FLOM LLP, Chicago, Illinois, for Appellees.
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No. 13-3149 Adams, et al. v. Anheuser-Busch, et al. Page 2
_________________
OPINION
_________________
MARTHA CRAIG DAUGHTREY, Circuit Judge. Rusby Adams, Jr., Leslie Schell,
Daniel Stewart, and Kevin Jones are the named plaintiffs in this class-action suit against
defendants Anheuser-Busch Companies, Inc., the Anheuser-Busch Companies Pension Plan, and
the Anheuser-Busch Companies Pension Plan Appeals Committee (collectively, Anheuser-
Busch), in which they seek benefits under the terms of an employee-benefits plan governed by
the provisions of the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-1461
(ERISA). They now appeal the district court’s decision upholding the plan administrator’s
denial of their claims for benefits provided under Section 19.11(f) of the plan, which authorized
enhanced pension benefits for plan participants “whose employment with [an Anheuser-Busch
company] is involuntarily terminated within three (3) years after [a] Change in Control.” The
district court held that the plaintiffs had not been “involuntarily terminated” within the meaning
of Section 19.11(f) because they secured employment with a successor corporation. On appeal,
the plaintiffs contend that the district court misinterpreted the key provisions of the section and
ask us to overturn the resulting denial of benefits. For the reasons set out below, we conclude
that the district court’s reading of Section 19.11(f) of the plan was flawed and reverse.
FACTUAL AND PROCEDURAL BACKGROUND
The plaintiffs are former salaried employees of the Metal Container Corporation, a
subsidiary of defendant Anheuser-Busch that manufactured aluminum beverage containers for
Anheuser-Busch. While employed by Metal Container, each plaintiff participated in the
Anheuser-Busch Pension Plan, a qualifying defined-benefits plan for ERISA purposes. See
Adams v. Anheuser-Busch Cos., Inc., 917 F. Supp. 2d 697, 701 (S.D. Ohio 2013). The plan was
amended in 2000 to add a “change in control” provision in Section 19.11(f), which provided that
in the event of a change in control, the retirement benefits of a plan participant “whose
No. 13-3149 Adams, et al. v. Anheuser-Busch, et al. Page 3
employment with the Controlled Group1 is involuntarily terminated within three (3) years after
the Change in Control shall be determined by taking into account an additional five (5) years of
Credited Service and . . . an additional five (5) years of age.” This amendment to the plaintiffs’
retirement fund was apparently not motivated by sheer largesse on the part of Anheuser-Busch
but came on the heels of management’s recognition that the company’s retirement plan was over-
funded and might represent an attractive source of funds for a potential acquirer.
Indeed, in November 2008, InBev N.V., a Belgian corporation, acquired Anheuser-
Busch, including its subsidiary Metal Container, in a hostile takeover. Adams, 917 F. Supp. 2d at
701. The parties agree that this acquisition constituted a “change in control” of Anheuser-Busch
for purposes of Section 19. The plaintiffs continued working for Metal Container through
September 30, 2009, and the parties agree that through that date, the plaintiffs were still
employees of Anheuser-Busch’s Controlled Group for purposes of ERISA. On October 1, 2009,
however, InBev spun off four of the Metal Container plants in a sale to the Ball Corporation,
under an agreement that the plaintiffs would become employees of Ball and cease to be
participants in the Anheuser-Busch ERISA plan, although they would have similar pension
benefits at Ball. Adams, 917 F. Supp. 2d at 701. There is no dispute that once Ball purchased
Metal Container, the plaintiffs were no longer employed by a member of the Controlled Group of
the Anheuser-Busch companies.
As a result of the change in their employment, the plaintiffs made claims to the
Anheuser-Busch pension-plan administrator for recalculation of their future Anheuser-Busch
retirement benefits under Section 19.11(f) of Anheuser-Busch=s ERISA plan. They contended
that because their employment with an Anheuser-Busch-affiliated Controlled Group company
1
ERISA provides that “all employees of . . . businesses . . . which are under common control shall be
treated as employed by a single employer.” 29 U.S.C. § 1301(b)(1). In addition, the Act indicates that the
regulations relating to that provision “shall be consistent and coextensive with” the Treasury Department regulations
enacted under 26 U.S.C. § 414(c). See 29 U.S.C. § 1301(a)(14)(B). Those Treasury Department regulations define
“controlled group” as “any group of corporations which is . . . (A) A parent-subsidiary controlled
group . . . (B) A brother-sister controlled group . . . (C) A combined group . . . or (D) A life insurance controlled
group.” 26 C.F.R. § 1.1563-1, Treas. Reg. § 1563-1; see also 26 U.S.C. § 1563. In the context of the pension plan
at issue in this case, “Controlled Group” refers to “[t]he controlled group of corporations, trades and businesses
(within the meaning of sections 414(b) and (c) of the Code) of which the Company is a part, as determined from
time to time.” In essence, the controlled group in this case was the original “family” of Anheuser-Busch companies,
prior to the hostile takeover by InBev N.V.
No. 13-3149 Adams, et al. v. Anheuser-Busch, et al. Page 4
ended within three years of a change in control, they were entitled to enhanced benefits from
Anheuser-Busch at the time of their retirement, regardless of the fact that Ball guaranteed the
plaintiffs continued employment with substantially similar salary and benefits. Adams, 917 F.
Supp. 2d at 701. The plaintiffs were notified on December 23, 2009, that their claims were
denied because they had accepted employment with Ball and, therefore, had never experienced a
period of unemployment. Id. The plaintiffs appealed the denial. On June 17, 2010, the
Anheuser-Busch Pension Plans Appeals Committee denied the appeal.
The plaintiffs then filed suit in district court, asserting a claim under 29 U.S.C.
§ 1132(a)(1)(B) for enhanced retirement benefits and a claim under 29 U.S.C. § 1132(a)(2) for
breach of fiduciary duty. The district court granted the defendants’ motion to dismiss the
plaintiffs’ claims for breach of fiduciary duty and for benefits against defendants InBev and Jeff
Karrenbrock. Initially, the district court permitted the plaintiffs to proceed on their claim for
benefits against Anheuser-Busch, its ERISA plan, and the Pension Plan Appeals Committee, but
ultimately the court upheld the administrator’s decision denying the claim and entered judgment
for the defendants on the administrative record. In reaching this conclusion, the district court
held that the plan language at issue was ambiguous and, applying an arbitrary and capricious
standard of review, ruled that the plan administrator=s decision was reasonable. This appeal
followed.
DISCUSSION
“[I]n determining whether benefits [are] due under the Plan, the starting point is the
language of the Plan itself.” Farhner v. United Transp. Union Discipline Income Protection
Program, 645 F.3d 338, 343 (6th Cir. 2011). As noted above, Section 19.11(f) of the Anheuser-
Busch plan states that, in the event of a “change in control,” the retirement benefits of a plan
participant “whose employment with the Controlled Group is involuntarily terminated within
three (3) years after the Change in Control shall be determined by taking into account an
additional five (5) years of Credited Service and . . . an additional five (5) years of age.” In this
case, the administrator concluded that “Section 19.11(f) was intended to provide an enhanced
benefit to participants who suffer an actual termination or loss of employment.” The district
No. 13-3149 Adams, et al. v. Anheuser-Busch, et al. Page 5
court concluded both that the language of Section 19.11(f) was ambiguous and that the
administrator=s interpretation was reasonable:
[T]his interpretation views “with the Controlled Group” as simply clarifying that
it is the Controlled Group position which an employee has to lose in order to
qualify for benefits under Section 19.11(f), as opposed to being terminated from
some other job with a non-Controlled Group employer during the three-year
period. Under this interpretation, termination of an employment relationship with
the Controlled Group alone is not sufficient to constitute a termination of
employment.
Adams, 917 F. Supp. 2d at 711-12. The district court did not explain what it meant by
“terminated from some other job with a non-Controlled Group employer,” nor did it suggest that
this case presented that type of situation. See id.
The scope of the parties’ disagreement is narrow: they dispute only the meaning of the
phrase “involuntarily terminated.” The defendants argue “that the common understanding of the
phrase ‘involuntarily terminated’ requires an actual job loss, and that the plaintiffs’ jobs were not
‘involuntarily terminated’ because [the plaintiffs] continued to work uninterrupted in the same
positions with the purchaser of Metal Container.” Adams, 917 F. Supp. 2d at 711. In contrast,
the plaintiffs argue that “involuntarily terminated” must be read in the context of the broader
phrase, “whose employment with the Controlled Group is involuntarily terminated,” and that,
when read in that context, its meaning is unambiguous. Specifically, the plaintiffs contend that
their employment with Anheuser-Busch’s Controlled Group was involuntarily terminated on
October 1, 2009, because, although still employed by someone, their employment with the
Controlled Group was terminated, and the termination was “involuntary” because they did not
choose it. They argue that the defendants’ interpretation of the plan improperly ignores terms,
adds an eligibility requirement (job loss), and fails to recognize that the plan is a retirement plan,
not a severance or unemployment policy. As they note in their brief on appeal, “Section 19.11(f)
is not designed to ameliorate the loss of pay if a participant becomes unemployed, but instead
provides a substitute for the lost opportunity to earn service and age credit toward retirement
under the Plan, the very thing that was lost by the [plaintiffs] when they were terminated from
the Controlled Group.”
No. 13-3149 Adams, et al. v. Anheuser-Busch, et al. Page 6
Whether plan language is ambiguous is a legal question that we review de novo. Wulf v.
Quantum Chem. Corp., 26 F.3d 1368, 1376 (6th Cir. 1994) (citing Boyer v. Douglas Components
Corp., 986 F.2d 999, 1003 (6th Cir.1993)). If the plan’s terms are unambiguous, the
administrator must give effect to them according to their plain meaning. Perez v. Aetna Life Ins.
Co., 150 F.3d 550, 556 (6th Cir. 1998). Because “the administrator must adhere to the plain
meaning of its language as it would be construed by an ordinary person,” Korach v. Zurich Am.
Inc. Co., 587 F.3d 323, 332 (6th Cir. 2009), an interpretation of the plan contrary to its plain
language will be arbitrary and capricious. Moreover, extrinsic evidence may not be used “to
create an ambiguity” where none exists. United States v. Donovan, 348 F.3d 509, 512 (6th Cir.
2003). Thus, any ambiguity that invites an exercise of discretion “must be ‘apparent on the face
of the contract.’” Donovan, 348 F.3d at 512 (quoting Schachner v. Blue Cross & Blue Shield of
Ohio, 77 F.3d 889, 893 (6th Cir. 1996)). The mere fact that parties propose competing
interpretations of language in a Plan “does not dictate a finding that the provision is ambiguous.”
Shelby Cnty. Health Care Corp. v. The Majestic Star Casino LLC Grp. Health Benefit Plan,
581 F.3d 355, 370 (6th Cir. 2009). Rather, “the alternative interpretation . . . ‘must be a plausible
one.’” Id. (quoting Zirnhelt v. Mich. Consol. Gas Co., 526 F.3d 282, 287 (6th Cir. 2008)). Here,
a careful reading of the plan language demonstrates that the plaintiffs’ interpretation of Section
19.11(f) is the only plausible interpretation.
The plan itself does not define “involuntarily terminated.” When the terms of an ERISA
plan are undefined, traditional principles of contract interpretation require a plan administrator to
“interpret the provisions [of the plan] according to their plain meaning in an ordinary and
popular sense.” Williams v. Int=l Paper Co., 227 F.3d 706, 711 (6th Cir. 2000); see, e.g., Kovach,
587 F.3d at 333 (applying the dictionary definition of “accidental” to determine its ordinary
meaning). Webster’s Dictionary defines “involuntary” as “done contrary to or without choice”;
“compulsory”; “not subject to control of the will.” Webster’s New Collegiate Dictionary
(1975). “Terminate” means “to bring to an end.” Id. Thus, when something that belongs to
someone “is involuntarily terminated,” it ends either without the consent of the person to whom
the thing belonged or contrary to that person’s will.
As the plaintiffs point out, the phrase “involuntarily terminated” has meaning only when
it is considered in light of the item it modifies. Excised from the rest of the text in Section
No. 13-3149 Adams, et al. v. Anheuser-Busch, et al. Page 7
19.11(f), “involuntarily terminated” is an adjectival phrase that could describe, among other
things, a person who is fired from a job, a marriage that one spouse seeks to end by filing for
divorce, a lawsuit that a court dismisses against a plaintiff’s wishes, custody rights that a court
terminates without the parents’ consent, or possession of a house or car that a bank seizes when a
person defaults on a loan. In Section 19.11(f), the adjectival phrase “involuntarily terminated”
describes “employment.” In fact, it describes a specific type of employment: “employment with
the Controlled Group.” It is only because of the phrase “employment with the Controlled
Group” that the reader knows that “involuntarily terminated” does not describe a marriage, a
lawsuit, parental rights, or property rights. Thus, the phrase “involuntarily terminated” cannot be
interpreted in isolation from the full phrase of which it is a part: “whose employment with the
Controlled Group is involuntarily terminated.”
Given the fact that “involuntarily terminated” has meaning only when the thing that is
being involuntarily terminated is identified, and given that the phrase at issue in Section 19.11(f)
identifies the thing being terminated as “employment with the Controlled Group,” it is clear that
when each term in the provision is understood according to its ordinary meaning, and no term is
ignored, eligibility for enhanced pension benefits pursuant to Section 19.11(f) requires
satisfaction of five elements: (1) that the recipient be a plan participant (2) whose employment
with the Controlled Group (3) is involuntarily terminated (4) within three years after (5) a change
in control.
The plaintiffs satisfy each of these elements: (1) the plaintiffs were plan participants
(2) whose employment with the Controlled Group (specifically, Metal Container) (3) ended
when Ball acquired Metal Container without the plaintiffs’ consent and for reasons beyond the
plaintiffs’ control (4) on October 1, 2009, which was less than three years after (5) InBev
acquired Anheuser-Busch on November 18, 2008, an event which constituted a change in
control. Thus, when each of the terms in Section 19.11(f) is given its ordinary meaning, the
phrase “whose employment with the Controlled Group is involuntarily terminated” is
unambiguous and has only one plausible interpretation. It requires only that the individual’s
employment with the Controlled Group be involuntarily terminated, not that the individual
experience a job loss or some otherwise undefined period of unemployment. Applying that
provision to this case, we conclude that the plaintiffs’ employment with the Controlled Group
No. 13-3149 Adams, et al. v. Anheuser-Busch, et al. Page 8
was “involuntarily terminated” when Anheuser-Busch sold Metal Container to Ball and the
plaintiffs became Ball employees. The plan administrator’s decision to the contrary was
therefore arbitrary and capricious.
On appeal, the defendants devote a good deal of argument to a rehash of extrinsic
evidence in the administrative record that they say supports the district court’s determination that
the language in Section 19.11(f) is ambiguous and the court’s interpretation of the provision in
their favor. Because we hold that the language at issue is not ambiguous, we need not address
that argument here.
CONCLUSION
For the reasons set out above, we conclude that the district court erred in upholding the
plan administrator’s interpretation of Anheuser-Busch’s pension-benefit plan provision at issue
in this case. When each term in Section 19.11(f) is read in light of its ordinary meaning, and no
term is rendered superfluous, the provision’s meaning is susceptible of only one interpretation
and is, therefore, unambiguous. Accordingly, we REVERSE the judgment of the district court
and REMAND the case for entry of judgment in favor of the plaintiffs.