John Paul, Jr. v. Detroit Edison Company

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 16a0123n.06
No. 15-1493
FILED
Mar 02, 2016
UNITED STATES COURT OF APPEALS
DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
JOHN R. PAUL, JR. )
)
Plaintiff-Appellee, )
)
v. )
ON APPEAL FROM THE
)
UNITED STATES DISTRICT
DETROIT EDISON COMPANY & MICHIGAN )
COURT FOR THE EASTERN
CONSOLIDATED GAS COMPANY PENSION )
DISTRICT OF MICHIGAN
PLAN )
)
Defendants-Appellants. )
BEFORE: BATCHELDER and GRIFFIN, Circuit Judges; CARR, District Judge.
ALICE M. BATCHELDER, Circuit Judge. In 2013, Appellee John Paul, Jr. (“Paul”)
filed suit as a pro se litigant against Detroit Edison Company (“DTE”) and Michigan
Consolidated Gas Company Pension Plan (“Michcon”), seeking relief from the reduction of his
benefits two years after his retirement. The district court granted summary judgment to Paul on
grounds of equitable estoppel. On appeal, DTE and Michcon raise three issues: (1) whether the
district court violated due process by relying on unsworn testimony given by Paul at the
summary judgment hearing; (2) whether the district court erred by not reviewing the pension
plan administrator’s record under an arbitrary and capricious standard; and (3) whether the

The Honorable James G. Carr, Senior United States District Judge for the Northern District of Ohio, sitting
by designation.
No. 15-1493
John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan
district court erred by finding that Paul proved sufficient facts to support a claim of equitable
estoppel. We find no error in the district court’s decision and therefore AFFIRM.
I.
Paul began working for DTE in 1984. From 1984 to 1988, he was employed as a
temporary employee, not as a regular employee and member of the union. In 1988, he became a
regular employee represented by the union, and became eligible for the company’s pension plan
for union workers. At the time of his retirement in 2009, Paul had worked for DTE for
23.970100 years, but he had accrued only 20.96645 years of credited service under the pension
plan. Thus, 3.00365 years of his employment should not have been counted toward his benefit
service years.
In 2009, when Paul began considering early retirement, he met with representatives from
Michcon in order to determine the benefits for which he was eligible. Michcon provided Paul
with a written “Pension Calculation Statement.” The calculations contained in this statement
were compiled for Michcon by Aon Hewitt, which served as the third-party administrator of the
plan. Each statement shown and discussed with Paul stated his benefit service years at
23.970100. As Paul stated in a letter to Michcon, “On 4 separate occasions Michcon provided
me with a [sic] pension statements[.] [O]n all of these statements all the dates were generated by
your staff and they all were the same.” Moreover, Paul was given explicit verbal assurances that
the calculations given to him were correct. During his meeting with a company representative to
sign the final pension plan papers, Paul specifically noted that he had worked part of his time as
a non-union employee and most of his time as a union employee. When he asked whether this
would make a difference in the calculation of his benefit level, he was assured that there was no
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John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan
problem and that the date on the written statements was correct.1 On the basis of these
calculations and assurances, Paul decided to retire early. His final day of employment was
June 30, 2009.
Written and spoken assurances notwithstanding, the Michcon “Pension Calculation
Statement” included an important disclaimer:
DTE Energy reserves the right to correct any errors. If it’s determined at
any time that the information provided on this statement conflicts with the benefit
defined by the MichCon Retirement Plan, the MichCon Retirement Plan will
prevail. Under the law, a plan must be operated in accordance with its terms.
This disclaimer appeared at the end of each copy of the statement given to Paul.
In 2011, two years after Paul’s retirement, Michcon discovered an error in the calculation
of Paul’s benefit service years. On December 27, 2011, Michcon notified Paul that his benefits
should have been calculated from the time that he joined the union employees under the pension
plan in 1988, not from the time that he began work for DTE as a temporary employee in 1984.
[Id.] In order to correct this error, Michcon reduced Paul’s monthly retirement benefits by
$54.42 and informed him that he would have to repay a lump sum of $14,429.36.
On February 3, 2012, Paul informed Michcon that he objected to their Pension Plan
Overpayment Notice of December 27, 2011. He explained that “[t]his oversight was a result of
Michcon’s neglect and if this was discovered at the time of my accepting your pension final offer
I WOULD NOT HAVE RETIRED, And [sic] worked the additional years to full retirement.”
He requested Michcon to accept responsibility for their original miscalculation and to reinstate
his original benefit amount.
1
The details of this meeting were summarized by Paul before the district court during the summary
judgment hearing. DTE and Michcon declared that they had no reason to dispute the fact of Paul’s meeting with a
company representative. They raised no objection to any of the facts presented by Paul regarding that meeting.
[R. 32 at Pg. ID#1132] DTE and Michcon now argue against the use of these facts, but as we explain at II. A. of
this opinion, their arguments fail.
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On March 3, 2012, Paul sent a letter to the Department of Labor, explaining his dilemma
and requesting assistance. And on June 13, 2012, the Employee Benefits Security
Administration (EBSA) sent a letter to DTE, instructing the company to inform Paul of the
reasons for its decision. In the meantime, DTE and Michcon had responded to Paul’s objection
letter, explained their rationale, denied responsibility, and referred him to the Qualified Plan
Appeals Committee (“Committee”). Paul filed an appeal with the Committee, and DTE and
Michcon informed the EBSA that his claim was under administrative review and appeal.
In Paul’s appeal to the Committee, he requested that he be granted a complete restoration
of his original benefits or, alternatively, that he be reinstated in his employment with all seniority
and back pay benefits. The Committee upheld Michcon’s recalculation of Paul’s benefits, but
reversed Michcon’s decision to force Paul to repay the amount overpaid from 2009 to 2011. The
Committee explained that “[a]fter reviewing all of the circumstances of your situation, the
Committee determined that it would be more appropriate for the third-party who incorrectly
calculated your benefits to repay the excess benefits to the Plan.” This decision, however, was
contingent upon Paul’s commitment not to claim any portion of the Michcon “Special Lump
Sum Severance Benefit” to which he would otherwise be entitled. The Committee concluded its
decision by informing Paul of his right to file suit under ERISA Section 502(a) if he disagreed
with the outcome of the appeal.
On August 30, 2013, Paul filed suit in state court. His complaint in its entirety read:
Detroit Edison without my consent modified a retirement agreement
2 years after the original agreement. In their modification they also violated
Local 223/Local 80 retirement provisions in the labor agreement in force at the
time of the original agreement. I am requesting that all monies owed me to [sic]
be paid and any over payment be charged to the company contractor who made
the error also all cost and damages in the amount of 25,000.00 US dollars.
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John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan
DTE and Michcon immediately removed to federal court and filed their answers and affirmative
defenses. Michcon also filed a crossclaim for repayment of $14,439.36, which it claims
represents the amount by which Aon Hewitt miscalculated Paul’s original lump sum benefit
payment. In July 2014, both sides filed motions for summary judgment. Relying on Bloemker v.
Laborers’ Local 265 Pension Fund, 605 F.3d 436 (6th Cir. 2010), the district court found that
Paul had provided sufficient evidence to satisfy the elements of equitable estoppel. The district
court therefore granted Paul’s motion for summary judgment and denied DTE and Michcon’s
cross-motion and counterclaim. DTE and Michcon timely appealed.
II.
A.
DTE and Michcon raise three issues in this appeal. First, DTE and Michcon assert that
the district court “unexpectedly and without notice, elicited new ‘evidence’ by engaging
Mr. Paul in an unsworn question-and-answer session without giving Defendants an opportunity
to rebut the evidence or notice that they should be prepared to do so.” They argue that this
constituted a violation of their due process rights because “a court may not consider unsworn
statements when ruling on a motion for summary judgment.” Dole v. Elliott Travel & Tours,
Inc., 942 F.2d 962, 968–69 (6th Cir. 1991). But there are two problems with their argument.
First, DTE and Michcon fail to make their argument with particularity. Although they assert that
new evidence was introduced and that the district court wrongly elicited and relied on unsworn
testimony at the summary judgment hearing, they fail to provide even a single example of what
new facts were introduced or how such facts were improperly relied on by the district court. As
we have held in numerous cases, “it is a settled appellate rule that issues adverted to in a
perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed
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waived.” United States v. Elder, 90 F.3d 1110, 1118 (6th Cir. 1996) (internal quotation marks
omitted). “It is not sufficient for a party to mention a possible argument in the most skeletal
way, leaving the court to . . . put flesh on its bones.” McPherson v. Kelsey, 125 F.3d 989, 995–
96 (6th Cir. 1997) (quoting Citizens Awareness Network, Inc. v. United States Nuclear
Regulatory Comm’n, 59 F.3d 284, 293–94 (1st Cir. 1995)). DTE and Michcon do not cite any
portion of the district court’s opinion that contains facts not properly in the record. They do not
cite any portion of the hearing where the judge counseled Paul or advocated for him. And they
do not cite any specific ways in which they were actually surprised by the facts contained in the
district court’s opinion. Nor do they offer any criteria for discerning which facts were
improperly considered.
Second, in reaching its decision, the district court relied on facts already established by
the record and known by DTE and Michcon. In the district court’s analysis of the case, it cited
to only two pages of the hearing transcript. At those points in the transcript, the judge asked Paul
to describe his reliance on the representations and calculations of DTE and Michcon, and then
asked DTE and Michcon to clarify how the benefits were calculated and who was responsible for
those calculations. A review of the record reveals that, prior to the summary judgment hearing,
it contained evidence of Paul’s reliance on the written and oral calculations and assurances that
he received from DTE and Michcon. In fact, the evidence of his reliance was submitted to the
district court by DTE and Michcon in an exhibit supporting their motion for summary judgment.
Furthermore, the district court asked DTE and Michcon’s counsel—not Paul—for clarification
regarding who was responsible for calculating Paul’s benefits. It is impossible for DTE and
Michcon to show that they lacked proper notice of the facts relied on by the district court when
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John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan
they were the ones who first submitted those facts to the district court and relied on those facts in
their argument.
B.
Next, DTE and Michcon assert that the district court erred by failing to apply an
arbitrary-and-capricious standard of review in its consideration of the Committee’s decision on
Paul’s appeal. We have previously held that “[g]enerally, federal courts review a plan
administrator’s decision to deny benefits de novo. But, where the plan administrator reserves
discretionary authority to determine eligibility and construe policy terms, the more deferential
arbitrary and capricious standard of review applies.” Schwalm v. Guardian Life Ins. Co., 626
F.3d 299, 308 (6th Cir. 2010) (internal citations omitted). Here, the nature of the administrator’s
discretionary authority under the plan is irrelevant because we are not reviewing the manner in
which the Committee calculated Paul’s eligibility or the conclusion to which the Committee
came. Rather, we are considering whether, the Committee’s determination and conclusion
notwithstanding, Paul should be given equitable relief.
C.
This brings us to the third and primary issue of this appeal, namely, whether Paul has
satisfied the heightened requirements for the application of equitable estoppel within the context
of ERISA. Our analysis of this issue is controlled by our precedent in Bloemker v. Laborers’
265 Pension Fund, 605 F.3d 436 (6th Cir. 2010). There, we stated that,
“Under our precedent, the elements of an equitable estoppel claim are: 1) conduct
or language amounting to a representation of material fact; 2) awareness of the
true facts by the party to be estopped; 3) an intention on the part of the party to be
estopped that the representation be acted on, or conduct toward the party asserting
the estoppel such that the latter has a right to believe that the former’s conduct is
so intended; 4) unawareness of the true facts by the party asserting the estoppel;
and 5) detrimental and justifiable reliance by the party asserting estoppel on the
representation.”
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Bloemker, 605 F.3d at 442. We expanded upon this standard to “hold that ERISA equitable
estoppel applies to pension plans where a plaintiff can demonstrate extraordinary circumstances
in addition to the traditional estoppel elements.” Id. at 442. These extraordinary circumstances
must include three things: “(1) a written representation; (2) plan provisions which, although
unambiguous, did not allow for individual calculation of benefits; and (3) extraordinary
circumstances in which the balance of equities strongly favors the application of estoppel.” Id.
at 444. These eight elements constitute a demanding standard for proving equitable estoppel in a
dispute over a pension plan, but if they are satisfied, equitable relief is appropriate.
Paul satisfies both the original five estoppel elements and the additional three elements
for the ERISA context. First, DTE and Michcon, made repeated material representations to Paul,
in both word and deed, by issuing written statements to him and by having a representative meet
with him to answer his questions and to formalize his retirement. This is directly parallel to the
representations made by the Union in Bloemker. In both cases, the pension plan administrator
issued written statements to the prospective retirees, certifying that their monthly payments
would stay at a certain level. These are material representations made by the party to be
estopped. See Bloemker, 605 F.3d at 442.
Second, as Bloemker states, this element “requires the plaintiff to demonstrate that the
defendant’s actions contained an element of fraud, either intended deception or such gross
negligence as to amount to constructive fraud.” Id. at 443 (quoting Crosby v. Rohm & Haas,
Co., 480 F.3d 423, 431 (6th Cir. 2007)) (internal quotation marks and citations omitted). Once
again, Paul’s situation closely parallels the facts of Bloemker. In that case, after having
established Bloemker’s retirement benefit level, the Union discovered that “a computer
programming error” had thrown off their calculation and that his proper benefit level was
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$509.78 per month less than their original calculation. Id. at 439. Here, in similar fashion, after
giving repeated written and oral assurances to Paul that his retirement benefit was properly
calculated, DTE and Michcon have concluded that Paul’s monthly payment must be reduced by
$54.42 and that he owes them a full repayment of $17,776.35, which equals the combined
amount of their monthly and lump sum overpayments to him. This is a gross miscalculation for
which they must bear responsibility. They were the only ones in a position to know the true
facts, they assumed that they knew the true facts, they failed to ascertain the true facts when Paul
specifically asked if the calculations were correct, and they repeatedly assured Paul that they
knew the true facts. Just as we held in Bloemker, this amounts to constructive fraud and satisfies
the second element of equitable estoppel.
Third, DTE and Michcon invited Paul to act in response to their representations. In fact,
DTE and Michcon were actively inviting employees to consider early retirement by offering new
incentives and modifications to the pension plan. Moreover, in his individualized dealings with
DTE and Michcon regarding his own retirement, Paul had every right to believe that the repeated
representations made to him were inviting him to retire. See id. at 442–43. The assurances given
by DTE and Michcon would not make any sense unless they were backed by the understanding
and intention that Paul would act upon them and retire.
Fourth, Paul was completely unaware that there was an error in his benefits calculation,
he had no reason to believe that there was an error, and he had no way of double-checking the
calculation to find an error. See id. As with Bloemker, so also with Paul—it would have been
impossible for him “to determine the amount of pension benefit owed to him because of the
complex actuarial calculations required to determine the amount and his lack of knowledge of
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relevant actuarial assumptions.” Haviland v. Metropolitan Life Ins. Co., 730 F.3d 563, 569
(6th Cir. 2013).
Fifth, Paul detrimentally relied on the representations that were made to him. He suffered
appreciable economic damages and would not have accepted the early retirement offer if his
benefits had been properly represented to him. See id. His reliance was reasonable for the same
reasons that Bloemker’s reliance was reasonable. See Bloemker, 605 F.3d at 443.
Paul also satisfies the three additional elements prescribed in Bloemker. First, there was a
written representation from DTE and Michcon to Paul regarding his benefit levels. In fact, there
were multiple written representations, all of which indicated that his date of hire was 1984, not
1988. Second, even though the plan provisions were unambiguous insofar as they allowed for
DTE and Michcon to make corrections to benefit calculations, Paul—like Bloemker—was
unable “to determine his correct pension benefit given the complexity of the actuarial
calculations and his lack of knowledge about the relevant actuarial assumptions.” See Bloemker,
605 F.3d at 443. Third, the balance of equities favors Paul since he suffered substantial
economic damages. Comparing this case to Bloemker, Paul’s lump sum repayment would
actually be $3,000 more than Bloemker’s. And as Paul emphatically indicated, he would not
have retired if he had known that his benefits would be reduced to such a level.
III.
Quite simply, we find that this case directly parallels Bloemker. Although equitable
estoppel is a rare remedy in an ERISA context, Paul’s case presents the same extraordinary
circumstances that we addressed in Bloemker. Therefore, we AFFIRM the judgment of the
district court granting summary judgment to Paul and denying DTE and Michcon’s cross-motion
for summary judgment and counterclaim for repayment.
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John R. Paul, Jr. v. Detroit Edison Co. & Michigan Consol. Gas Co. Pension Plan
GRIFFIN, Circuit Judge, dissenting.
Although I join the majority regarding the first two issues, I respectfully disagree that
defendants’ actions constituted constructive fraud as a matter of law. Summary judgment is not
warranted because there are genuine issues of material fact. I would reverse and remand for
further proceedings.
I respectfully take issue with the majority’s application of equitable estoppel’s second
element under Bloemker v. Laborers’ Local 265 Pension Fund, the “awareness of the true facts
by the party to be estopped.” 605 F.3d 436, 442 (6th Cir. 2010). This element “requires the
plaintiff to demonstrate that the defendant’s actions contained an element of fraud, either
intended deception or such gross negligence as to amount to constructive fraud.” Id. at 443(citations and alterations omitted). We have also held that when the party to whom estoppel is to
be applied “ma[kes] an honest mistake” in calculating benefits, it is only “guilty of misfeasance,
not the malfeasance that estoppel requires.” Crosby v. Rohm & Hass Co., 480 F.3d 423, 431
(6th Cir. 2007) (emphasis added); accord Stark v. Mars, Inc., 518 F. App’x 477, 482 (6th Cir.
2013); Solomon v. Med. Mut. of Ohio, 411 F. App’x 788, 794 (6th Cir. 2011).
The majority concludes the facts here are indistinguishable from those in Bloemker.
After all, both involve union employees who retired based on a calculation of retirement benefits
by a third-party administrator, and when those calculations turned out to be wrong, the
employers sought to reduce benefits and recover overpayments. However, although the facts of
our case and Bloemker are indistinguishable, the procedural posture—and more specifically, the
remedy upon remand—is very different.
In Bloemker, our court reversed the grant of a motion to dismiss in favor of the defendant
and remanded for further proceedings. 605 F.3d at 444. In doing so, we held that Bloemker’s
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complaint sufficiently alleged “constructive fraud” by claiming that the defendants “were aware
of the true facts and that they intended for Bloemker to rely upon their representations.” Id. at
443. Importantly, we assumed the truth of this allegation given that it was before us on a motion
to dismiss. Id. And all Bloemker needed to do at that stage was allege “enough fact[s] to raise a
reasonable expectation that discovery [would] reveal evidence of” his claims. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 556 (2007). The remedy was a remand for further proceedings,
including the possibility of a trial on disputed issues of material fact.
Here, rather than holding that plaintiff’s complaint alleged facts sufficient to survive a
motion to dismiss, the district court granted summary judgment in plaintiff’s favor. On the
second element, the district court reasoned that the representative’s assurances regarding the
correctness of his credited years of service were “so grossly negligent as to amount to
constructive fraud upon Plaintiff,” and that the representative’s “failure to properly investigate
the concern raised by Plaintiff was not an honest mistake but was precisely the sort of
malfeasance that may give rise to constructive fraud.” In agreeing, the majority concludes
defendants must “bear responsibility” for these misrepresentations because they were the “only
ones in a position to know the true facts,” “assumed that they knew the true facts,” “failed to
ascertain the true facts” when questioned by Paul, and “repeatedly assured Paul that they knew
the true facts.”
However, a reasonable trier of fact could arrive at an alternative verdict—defendants’
reliance on Aon Hewitt, while perhaps negligent, did not rise to the level of gross negligence so
as to constitute constructive fraud upon Paul. There is no record evidence that defendants had
reason to know Aon Hewitt made a miscalculation, that they unreasonably relied upon Aon
Hewitt’s certifications that Paul’s benefit service years were what it purported them to be, or that
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the representative acted with such disregard to Paul that his actions constituted gross negligence.
Defendants’ awareness of the true facts is material and in dispute—a reasonable person could
conclude their conduct was not grossly negligent. When reasonable persons “might reach
different conclusions” as to whether there is negligent conduct, our legal system “emphasize[s]
the appropriateness of leaving the question to the [trier of fact].” Bailey v. Central Vermont Ry.,
319 U.S. 350, 353 (1943). See also Wendrow v. Mich. Dep’t of Human Servs., 534 F. App’x
516, 531 (6th Cir. 2013) (applying Michigan law). Following trial, the trier of fact should decide
what the facts are and what they support. Summary judgment under these circumstances is not
warranted.
I join the majority opinion in its resolution of the other issues.
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