Frances Walker v. Federal Express Corporation

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 12a0748n.06
No. 11-5201 FILED
UNITED STATES COURT OF APPEALS Jul 11, 2012
FOR THE SIXTH CIRCUIT LEONARD GREEN, Clerk
FRANCES WALKER,
Plaintiff-Appellant,
v. ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR THE
FEDERAL EXPRESS CORPORATION; WESTERN DISTRICT OF TENNESSEE
ADP BENEFIT SERVICES, D/B/A/ CLAIMS
SERVICES GROUP, INC.,
Defendants-Appellees.
/
BEFORE: SUHRHEINRICH, MOORE, and CLAY, Circuit Judges.
CLAY, Circuit Judge. Plaintiff Frances Walker, the wife of the now deceased Clyde
Walker, appeals the district court’s order granting summary judgment in favor of Defendants Federal
Express Corporation and ADP, Inc. Plaintiff filed her claim pursuant to the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. and 29 U.S.C. § 1132 et seq.,
seeking benefits as the beneficiary under the Federal Express Corporation’s ERISA insurance policy.
For the reasons discussed below, we AFFIRM the order of the district court.
No. 11-5201
BACKGROUND
I. Procedural History
Plaintiff filed her complaint in the United States District Court for the Western District of
Tennessee on December 17, 2009 on behalf of her deceased spouse, Clyde Walker (“Walker”),
alleging an ERISA violation pursuant to 29 U.S.C. § 1001 et seq. against Defendants Federal
Express Corporation (“FedEx”) and ADP, Inc. (“ADP”). On July 14, 2010, ADP filed a motion to
dismiss. Defendants FedEx and ADP independently filed motions for summary judgment on
October 1, 2010. The district court granted ADP’s summary judgment motion on November 19,
2010 on the basis that (1) ADP is not an ERISA fiduciary; and (2) that Plaintiff failed to state a
statutory claim under ERISA. The district court also granted FedEx’s motion for summary judgment
on January 4, 2011, finding that the provisions of ERISA under which Plaintiff sued did not provide
for individual relief and that ERISA did not impose a duty to provide individualized notification to
a plan participant of the right to convert a group life insurance to an individual policy. Plaintiff
timely filed her notice of appeal on February 2, 2011.
II. Facts
Plaintiff is a resident of Memphis, Tennessee and is the widow of Clyde Walker, a former
employee for Defendant FedEx. Walker was hired on November 17, 1983 and worked as a Senior
Supply clerk for FedEx from 1994 until his death on June 9, 2002. As an employee with FedEx,
Walker exercised his right to participate in the company’s group term life insurance policy. He
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enrolled in the company’s Basic Plan and the Optional Plan.1 After suffering a debilitating stroke,
Walker requested a personal leave of absence and was granted time off by FedEx starting on October
24, 2001. According to FedEx’s Employee Benefits Administration Department (“EBA”), “when
an employee is on a personal leave of absence, premiums for group health coverage and life
insurance coverage are no longer deducted from the employee’s paycheck, but must be remitted by
the employee to FedEx.” Walker continued to pay his life insurance premiums in accordance with
the EBA’s policy in order to maintain his group benefit coverage during his leave of absence.
FedEx terminated Walker’s employment on March 24, 2002 after Walker failed to return to
work from his illness. On April 17, 2002, Walker received a letter from FedEx’s EBA Department
advising him that he owed $391.20 for his insurance premium for health, life, and accidental death
and disability by May 3, 2002. The letter also stated that failure to make the required payment would
result in termination of Walker’s insurance coverage. Walker deposited a check in the mail to FedEx
for the allotted amount on or about April 19, 2002.
Walker’s release from FedEx also triggered his right to convert his FedEx group life
insurance coverage to an individual life insurance policy. The parties dispute whether ADP sent
Walker a Consolidated Omnibus Budget Reconciliation Act (COBRA) election notice packet.
FedEx stated in its answer to Plaintiff’s complaint that its records show two COBRA elections
1
The Basic Plan “provides coverage only to FedEx employees, with the entire participation
cost paid by FedEx.” (R.25: FedEx Mot. for Summ. J. ¶ 7.) The plan “provides life insurance
coverage in an amount equal to one and one-half times the employee’s basic annual salary up to a
maximum of $100,000.” (Id.) The Optional Plan “provides coverage to FedEx employees and their
eligible dependents, with the entire cost paid by the FedEx employee.” (Id. ¶ 8.) Both plans allow
eligible employees to convert the group life insurance policies to individual policies. (Id. ¶ 9.)
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packets were sent to Walker on April 30, 2002, and the other one was sent on May 1, 2002, which
included a Life Insurance Conversion Information form.2 Both packets were sent by First Class mail.
ADP sent two notices because Walker had two different addresses listed at the time of his
termination. The conversion form notified Walker that if he or his dependents wished to exercise
his right to conversion he must contact the EBA for an application and submit the appropriate
materials to the insurance company within thirty-one days after receipt of the conversion letter. The
conversion form also indicated that the deadline for applications could not be extended under any
circumstances. According to Defendants, Walker had thirty-one days from May 1, 2002 to submit
a conversion application to the EBA. Plaintiff stated that the family never received any information
from Defendants regarding the conversion notice or any other benefits for the decedent. Walker died
on June 9, 2002. Prior to his death, Walker did not convert his group policy to an individual life
insurance policy, or submit premium payments to either of FedEx’s insurance providers. As a result,
Walker’s beneficiaries did not receive any life insurance payment upon Walker’s death.
Walker’s step-daughter contacted FedEx’s EBA on June 27, 2002 to inquire about his
individual life insurance benefits. The EBA referred the matter to the appropriate insurance
companies. FedEx issued a refund check in the amount of $91.04 to Walker’s estate in July 2002
for the overpayment of his premiums from March 25, 2002 through May 31, 2002.
2
ADP and FedEx entered into a Professional Services Agreement (“PSA”) on May 1, 2000.
(Def. ADP Br. 4.) According to the PSA, FedEx contracted with ADP to “provide the initial COBRA
qualifying event notification. . . to employees and their dependants regarding COBRA continuation
coverage rights and detect and generate appropriate notifications, letters, confirmation statements,
coupons, etc. for FedEx benefit plans.” (Id.)
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On July 5, 2006, Plaintiff sent a letter to FedEx requesting decedent’s life insurance benefits
and also faxed a copy of the April 19, 2002 check in the amount of $391.20 that Walker had
submitted to FedEx. FedEx’s EBA responded in a letter dated July 9, 2007, stating that Walker or
his dependents failed to contact EBA concerning his life insurance benefits until late June 2002,
which was well past the thirty-one days allowed for conversion to an individual policy.
Plaintiff appealed the EBA’s decision pursuant to ERISA to FedEx’s Benefit Review
Committee on August 19, 2007. The Benefit Review Committee issued a decision on April 9, 2008
denying Plaintiff’s appeal. In its denial letter, the Committee stated that Walker failed to convert
his life insurance policy into an individual policy within thirty-one days following the conversion
notice. After this denial, Plaintiff made a request for all “monies owed, a copy of the Plan document,
the Summary Plan Description, any insurance policies or third party agreement, any brochures or
benefit statements and a summary of all benefits paid to Plaintiff and a written breakdown of the
benefits due and owing” pursuant to ERISA, 29 U.S.C.§ 1023 et seq.
DISCUSSION
I. Standard of Review
We review de novo a district court’s grant of summary judgment. Shields v. Gov’t Employees
Hosp. Ass’n, Inc., 450 F.3d 643, 646 (6th Cir. 2006). Summary judgment may be granted “if the
movant shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). We review the evidence in the light most
favorable to the plaintiff. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986).
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No. 11-5201
II. Plaintiff may not seek individual recovery under § 1132(a)(2)
Plaintiff asserts that she is entitled to the recovery of her husband’s life insurance benefits
because FedEx breached its fiduciary duty when it failed to provide documentation that it served a
COBRA packet to Walker containing a life insurance conversion form. Plaintiff further claims that
FedEx abused its discretion by providing an inadequate explanation as to why Walker did not receive
his notice of conversion form after his employment was terminated.
We reject Plaintiff’s argument on the basis that § 1132(a)(2) precludes Plaintiff from
recovering decedent’s life insurance benefits. According to the statute, “a civil action may be
brought by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under
section 1109 of this title.” Section 1109 states the following:
Any person who is a fiduciary with respect to a plan who breaches any of the
responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter
shall be personally liable to make good to such plan any losses to the plan resulting
from each such breach, and to restore to such plan any profits of such fiduciary which
have been made through use of assets of the plan by the fiduciary, and shall be
subject to such other equitable or remedial relief as the court may deem appropriate,
including removal of such fiduciary. . . .
29 U.S.C. §1109(a). The parties do not dispute that FedEx served as a fiduciary with respect to the
plan; however, § 1132(a)(2) bars Plaintiff’s recovery for individual relief in the form of payment for
the individual insurance policy and requires Plaintiff to allege injury with respect to the actual plan.
The Supreme Court stated as much in Massachusetts Mut. Life Ins. Co. v. Russell, when it held that
§ 1109(a) provides relief only for a plan and precludes recovery for individual participants. 473 U.S.
134, 140–44 (1985). The Court explained that “[a] fair reading of the [ERISA] statute makes it
abundantly clear that its draftsmen were primarily concerned with the possible misuse of plan assets,
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No. 11-5201
and with remedies that would protect the entire plan, rather than with the rights of an individual
beneficiary.” Id. at 140. We continue to follow this precedent. See Bryant v. International Fruit
Prod. Co., 886 F.2d 132, 135 (6th Cir. 1989) (per curiam) (“the language regarding fiduciary duty
suits in section 1109 makes clear [that] ERISA contemplates that breaches of fiduciary duties injure
the plan, not individual beneficiaries, and any recovery thus goes to the plan”); Kuper v. Iovenko,
66 F.3d 1447, 1452–53 (6th Cir. 1995) (“ERISA does not permit recovery by an individual who
claims a breach of fiduciary duty. Instead, § 1109 contemplates that breaches of fiduciary duty injure
the plan, and, therefore any recovery under such a theory must go to the plan.”); Loren v. Blue Cross
& Blue Shield of Mich., 505 F.3d 598, 608 (6th Cir. 2007) (“Plaintiffs cannot bring suit under §
1132(a)(2) to recover personal damages for misconduct, but rather must seek recovery on behalf of
the plan.”).
Plaintiff’s reliance on LaRue v. Dewolff, Boberg and Associates, Inc., 552 U.S. 248 (2008),
is misplaced. In LaRue, the plaintiff participated in a defined contribution pension plan offered by
his employer, DeWolff, Boberg and Associates (“DeWolff”), which allowed him to direct
investments in accordance with the company’s policies and procedures. Id. at 250–51. The plaintiff
alleged that he instructed one of the DeWolff associates to make changes to his investments but the
associate failed to do so. As a result, the plaintiff “claimed that this omission ‘depleted’ his interest
in the Plan by approximately $150,000, and amounted to a breach of fiduciary duty under ERISA.”
Id. at 251. The Supreme Court found that DeWolff breached its fiduciary duty because the conduct
violated § 409(a), which relates to the “proper management, administration, and investment of fund
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No. 11-5201
assets,” and that provision authorizes recovery for “fiduciary breaches that impair the value of plan
assets in a participant’s individual account.” Id. at 253, 256.
The Supreme Court, however, limited the scope of its holding to only defined contribution
plans and did not disrupt the Court’s prior holding in Russell. The Court explained this distinction
by stating that “[f]or defined contribution plans . . . fiduciary misconduct need not threaten the
solvency of the entire plan” but rather “[w]hether a fiduciary breach diminishes plan assets payable
to all participants and beneficiaries, or only to persons tied to particular individual accounts [] creates
the kind of harms that concerned the draftsmen of § 409.” Id. at 255–56. The misconduct alleged
in LaRue is evident by the fact that the plaintiff’s employer failed to follow his investment directions,
when the employer was required to so.
The district court narrowly applied LaRue to only defined contribution pension plans and
concluded that since Plaintiff seeks recovery of life insurance benefits, her claim is beyond the scope
of LaRue. We agree. LaRue does not open the door for individual relief under the circumstances
presented in this case. Plaintiff’s complaint alleges that she is an aggrieved beneficiary under the
Plan, has suffered harm, and is qualified to bring the instant action seeking redress in this Court as
the only remedy under law pursuant to 29 U.S.C. § 1132(a). However, the record does not support
Plaintiff’s claim that Defendants violated their duty with respect to anything other than Plaintiff’s
individual claim. In addition, the record does not provide any facts that tend to show that any claim
besides Plaintiff’s was mishandled or that even if mishandling was found to have occurred, such
conduct reached beyond Plaintiff and caused plan wide injury. Under these circumstances, it is
difficult to characterize the remedy Plaintiff seeks as anything other than personal. Therefore,
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No. 11-5201
Plaintiff may not recover individualized benefits from FedEx and ADP for breach of fiduciary duty
based upon the plain language of ERISA and the relevant case law. We conclude that the grant of
summary judgment in favor of Defendants was appropriate.3
III. ADP is not a fiduciary under ERISA
Plaintiff also claims that the district court erroneously concluded that ADP is not a fiduciary
as defined by ERISA. Plaintiff argues that ADP acted as a fiduciary because it exercised
“management” and “control” over the ERISA plan by “providing biographical information on
benefits to the plan participants” and therefore owes a fiduciary duty.
The district court found that ADP was not a fiduciary within the meaning of ERISA and
could not have breached a fiduciary duty to Plaintiff. The district court explained that the
“undisputed evidence shows that ADP’s role was limited to sending conversion notices” and
Plaintiff failed to provide evidence that ADP’s role involved more than performing administrative
duties. We agree with the district court that ADP is not a fiduciary under ERISA.
First, the statutory definition of a fiduciary defeats Plaintiff’s claim. ERISA defines a
fiduciary as follows:
3
The effect of any remedy would be to compel Defendants to pay benefits due under the terms
of the ERISA plan. Because the administrator used his discretional authority to deny benefits to
Plaintiff, we would review the denial of benefits under an arbitrary or capricious standard. Bennett
v. Kemper Nat’l Servs., Inc., 514 F.3d 547, 552 (6th Cir. 2008). Clearly Plaintiff cannot avoid the
arbitrary or capricious standard in reviewing the decision of the administrator by arguing around it.
See Varity Corp v. Howe, 516 U.S. 489, 513 (1998) (“characterizing a denial of benefits as a breach
of a fiduciary duty does not necessarily change the standard a court would apply when reviewing the
administrator’s decision to deny benefits”). The facts of this case do not support a conclusion that
the administrator’s opinion was arbitrary or capricious. Accordingly, dismissal is also warranted
under this additional basis.
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[A] person is a fiduciary with respect to a plan to the extent (i) he exercises any
discretionary authority or discretionary control respecting management of such plan
or exercises any authority or control respecting management or disposition of its
assets, (ii) he renders investment advice for a fee or other compensation, direct or
indirect, with respect to any moneys or other property of such plan, or has any
authority or responsibility to do so, or (iii) he has any discretionary authority or
discretionary responsibility in the administration of such plan. . . .
29 U.S.C. § 1002(21)(A). The fiduciary obligations imposed by ERISA are implicated only where
an employer acts in its fiduciary capacity. “ERISA defines fiduciary . . . in functional terms of
control and authority over [a] plan.” DeLuca v. Blue Cross Blue Shield of Michigan, 628 F.3d 743,
747 (6th Cir. 2010) (citation and internal quotation marks omitted). Thus, we examine the conduct
at issue to determine whether it constitutes ‘management’ or ‘administration’ of the plan, giving rise
to fiduciary concerns, or merely a business decision that has an effect on the ERISA plan not subject
to fiduciary standards.” Hunter v. Caliber System, Inc., 220 F.3d 702, 718 (6th Cir. 2000) (internal
quotation marks and alterations omitted).
Applying a functional analysis to this case, the record indicates that ADP had a limited role
in administering FedEx’s benefit plans and was not directly involved in Plaintiff’s dispute over the
decedent’s life insurance benefits. Plaintiff never contacted ADP but did contact FedEx to determine
the status of decedent’s life insurance policy. Furthermore, ADP never attempted to insert itself in
Plaintiff’s appeal process. Rather, Plaintiff followed FedEx’s appeal and review process and it was
the FedEx EBA who sent the rejection letter to Plaintiff’s beneficiary indicating that her appeal had
been denied.
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Additionally, the PSA between FedEx and ADP explicitly stated that ADP is not a fiduciary
under ERISA, nor did ADP have any authority to perform managerial functions with respect to the
plan. Section 6.05 of the PSA stated in pertinent part:
[FedEx] expressly acknowledges that contractor is not the “administrator” or “plan
administrator” as defined in section 3(16)(A) of ERISA and section 414(g) of the
internal revenue code of 1986, as amended (the“code”), respectively, nor is
contractor a “fiduciary” within the meaning of ERISA section 3(21), and [FedEx]
shall not request or otherwise [ADP] to act as such. [ADP] shall not exercise any
discretionary authority or discretionary control respecting management of any benefit
plan or management or disposition of any benefit plan assets.
(R.24–3: Ex A. PSA Agreement, 7.) Based on the terms of the agreement, ADP was not an ERISA
fiduciary because the agreement did not grant discretionary authority to ADP over the management
of the plan. ADP is also not a fiduciary because it did not perform a fiduciary function with respect
to any aspect of its involvement with the plan. We find persuasive the Department of Labor’s
Interpretive Bulletins Relating to ERISA in our analysis. According to the bulletin, a non-fiduciary
is defined as “a person who performs purely ministerial functions for an employee benefit plan
within a framework of policies, interpretations, rules, practices, and procedures made by other
persons . . . [and] such [a] person does not have discretionary authority or discretionary control
respecting management of the plan. . . .” 29 C.F.R. § 2509.75-8. Plaintiff argues that the
aforementioned tasks give rise to fiduciary responsibilities, but to the contrary, ADP’s duties, which
included mailing conversion notices and collecting biographical information, were purely ministerial
in nature. See Baxter v. C.A. Muer Corp., 941 F.2d 451, 455 (6th Cir. 1991) (per curiam) (noting
“that a person without the power to make plan policies or interpretations but who performs purely
ministerial functions such as processing claims, applying plan eligibility rules, communicating with
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No. 11-5201
employees, and calculating benefits, is not a fiduciary under ERISA”); see also Flacche v. Sun Life
Assur. Co. of Canada, 958 F.2d 730, 734 (6th Cir. 1992) (finding that the company performed “only
ministerial functions with respect to the plan” when the company merely paid claims but the
company did not demonstrate that it had “discretionary control over the management of plan assets
or administration of the plan”).
The Department of Labor interpretive bulletins also define the term “fiduciary.” According
to the bulletin, a person who confers only “administrative functions” such as “advising participants
of their rights and options under the plan” are not fiduciaries because they have “no power to make
any decisions as to plan policy, interpretation, practices or procedures.” 29 C.F.R. § 2509.75-8 D-2.
Because the ERISA plan did not grant discretionary authority or control over the plan and ADP
performed only ministerial duties with respect to the ERISA plan, the district court properly found
that ADP is not an ERISA fiduciary.
IV. ERISA does not require FedEx or ADP to notify individuals of their life
insurance conversion rights
Lastly, Plaintiff argues that ERISA requires Defendants to notify individuals of their life
insurance conversion rights.
The district court found that ERISA does not require post-termination notice of life insurance
conversion rights. Neither the district court nor any of the parties direct us to case law in this Circuit;
instead, they rely on statutory language and cases from other circuits. What is clear, however, and
therefore controlling in our opinion is the fact that ERISA does not contain any provision that
requires a plan administrator to provide notice to plan participants other than a summary plan
description and information of the benefits plan as discussed under 29 U.S.C. §§ 1021(a)(1) and
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No. 11-5201
1022. see Cf. Maxa v. Alden Life Ins. Co., 972 F.2d 980, 986 (8th Cir. 1992) (noting that “fiduciaries
should be able to rely upon the detailed and uniform guidance ERISA provides with regard to
disclosure requirements rather than bearing the practically impossible burden of anticipating, and
comprehensively addressing, the individualized concerns of thousands of employees, especially
without notice of those concerns”). Plaintiff does not argue that she never received a copy of the
summary plan description or other statutorily required information and the record indicates that
Plaintiff had copies of the summary plan description for her review.
Furthermore, Defendants notified Plaintiff’s husband Walker on two separate occasions of
his conversion rights. Defendants placed in the mail conversion notices to the last known addresses
of Walker. ADP’s affidavit of its administrative record verified Walker’s addresses as well as the
exact date and time that the conversion notices were printed, collated, and shipped to Plaintiff.
While we acknowledge Plaintiff’s argument that Walker never received the conversion information,
Defendants had no reason to believe that Walker’s addresses were not accurate given that he received
other correspondence from FedEx at the same address, and the check for payment from Walker to
FedEx also had the same address.
Walker did not take the additional required steps of formally converting the policy and
therefore any claim for its life insurance benefits must be denied. Since Defendants satisfied the
minimal requirements under ERISA, and also provided sufficient notification to Walker of his right
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No. 11-5201
to convert his insurance policy, the district court did not err in granting summary judgment on this
claim.4
CONCLUSION
We conclude that Plaintiff may not seek individual recovery of her husband’s life insurance
benefits under § 1132(a)(2). We further find that ADP did not act as a fiduciary with respect to
Plaintiff’s life insurance plan inasmuch as ADP did not have discretionary authority or control over
the plan. Finally, ERISA does not require individualized notification of an employee’s conversion
rights and Defendants provided Walker a copy of the summary plan as well as two separate
notifications of his right to convert the life insurance policy.
For these reasons, we AFFIRM the order of the district court.
4
Both Defendants raised two additional arguments, neither of which were decided by the
district court. The first argument was whether the breach of fiduciary claim was barred by the
applicable statute of limitations. This issue was not fully developed by the parties and the record is
incomplete as to the dates of the filing of appeals to the plan administrator. Therefore, it would be
inappropriate for this Court to make a speculative finding concerning the tolling of the statute of
limitations and the presence of extenuating circumstances. ADP also argues that Plaintiff’s claims
should be dismissed for failure to join indispensable parties. Inasmuch as neither claim was ruled
upon by the district court, we decline to rule upon these issues on appeal. See generally Adrian
Energy Assoc. v. Michigan Public Serv. Com’n, 481 F.3d 414, 420 (6th Cir. 2007).
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