Keiser v. Conagra Foods, Inc.

Citations: 57 F. Supp. 3d 399; 2014 U.S. Dist. LEXIS 152477; 2014 WL 5463868Docket: Case No. 4:13-cv-00159

Court: District Court, M.D. Pennsylvania; October 27, 2014; Federal District Court

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Two Motions for Summary Judgment have been filed regarding the Amended Complaint by Plaintiff Linda Reiser against Defendant Con-Agra Foods, Inc. Reiser seeks to reverse the Defendant's denial of retirement benefits as a beneficiary under her husband’s retirement plan, invoking § 502(a)(1)(B) of ERISA. The parties have completed discovery and submitted their motions, asserting entitlement to summary judgment.

The Court has reviewed the motions and grants the Defendant's Motion for Summary Judgment while denying the Plaintiff's. Consequently, Reiser's claim for retirement benefits is dismissed. 

The background reveals that Linda Reiser was married to Marlin Reiser, a former employee of Con-Agra. On August 20, 2010, Con-Agra informed Marlin Reiser of his entitlement to benefits from the IHF coordinated Bargaining Pension Plan, providing Pension Election Documents that detailed his options and required a decision within thirty days. These documents included guidance for spouses regarding the implications of the election choices and a Summary Plan Description that outlines the retirement options available.

Key to this case is Section 6.5 of the Plan, which describes the Refund Option. This allows a participant to choose a life annuity until their Normal Retirement Date (NRD), after which they have three options: continue the same annuity, opt for a reduced annuity with an Initial Death Benefit for the beneficiary, or take a lump sum payment equivalent to the Initial Death Benefit. The NRD is defined as the first day of the month following the participant’s 65th birthday.

Section 6.1 outlines the conditions of the Refund Option, specifying that if a participant dies before the effective date of any elected option, the option becomes void, and no benefits are payable. The Summary Plan Description (SPD) provided to Mr. Reiser was generally consistent with the Refund Option but did not clarify if benefits would go to a beneficiary if the participant died before his Normal Retirement Date (NRD). In contrast, Pension Election Documents given to Mr. Reiser and his wife indicated that a beneficiary would receive a lump sum payment equal to the Initial Death Benefit if the participant died before the NRD, conflicting with the Plan's language. These documents noted that they were summaries and that the official Plan documents would govern any conflicts.

Mr. Reiser elected the Refund Option, naming Plaintiff as his beneficiary, which included an Initial Death Benefit of $67,442.31 and monthly payments before and after age 65. It is suggested that the couple relied more on the Pension Election Documents than the SPD or the Plan itself when making their decision. After Mr. Reiser's death, Plaintiff contacted the Pension Center to apply for benefits and was initially told that payment would be issued upon providing a death certificate. However, subsequent communications indicated issues with processing her claim.

On January 27, 2010, Plaintiff was informed that no benefits were payable under the Refund Option as Mr. Reiser passed away before age 65, his NRD. A later letter sent on March 11, 2011, stated that while no benefits were available under the Refund Option, she would receive benefits under the Qualified 50% Joint and Survivor Annuity, offering her a monthly benefit of $223.30 if she signed the necessary documents, which she chose not to do. The facts related to these events are undisputed, but the parties disagree on the implications of the March 11, 2011 correspondence and the reasons behind the SPD's modification in 2013.

On March 11, 2011, the Defendant notified the Plaintiff that Mr. Reiser's Refund Option paperwork mistakenly suggested that the Initial Death Benefit would be payable to his beneficiary if he passed away before age 65. The Defendant decided to provide a monthly recurring benefit as if Mr. Reiser had selected the Qualified 50% Joint and Survivor Annuity, the standard payment form for married participants. The Plaintiff alleges this was an attempt to pressure her into signing modified plan documents that would result in significantly reduced benefits, without prior notification to the union. Conversely, the Defendant claims it was merely offering benefits that exceeded Plaintiff’s entitlement to prevent her from being left without compensation.

In 2013, the Defendant issued a revised Summary Plan Description (SPD) stating that if a participant dies before age 65, no payments would be made to the beneficiary. Both parties acknowledge the issuance of this SPD and its language but dispute its implications. The Plaintiff suggests that the modification, which introduced new terms not present in the original SPD, was made in bad faith. In contrast, the Defendant argues that the changes were intended to clarify the Plan's terms and were not executed in bad faith, as they accurately reflected available options.

The Plaintiff filed her original Complaint on January 23, 2013, claiming an Initial Death Benefit of $67,442.31 under the Plan. The Defendant moved to dismiss the Complaint, citing the Plaintiff's failure to exhaust administrative remedies. Following the dismissal, the Plaintiff pursued her claim through the ConAgra Foods Employee Benefits Administrative Committee, which denied her claim on July 30, 2013, referencing consistency with previous interpretations. The Plaintiff subsequently filed an Amended Complaint. Both parties have filed Motions for Summary Judgment, which are currently under consideration by the Court.

The legal standard for summary judgment requires the movant to demonstrate the absence of a genuine dispute regarding any material fact, with the burden of proof resting on the party seeking summary judgment. A fact is deemed material if it could affect the case's outcome under applicable law, and a genuine dispute exists if a reasonable jury could find for the nonmoving party based on the evidence presented.

The moving party can meet its burden for summary judgment by either providing affirmative evidence that negates an essential element of the nonmoving party's claim or showing that the nonmoving party's evidence is insufficient for that claim. If the motion is adequately supported, the nonmoving party must demonstrate genuine factual issues that could only be resolved by a factfinder. Assertions of fact must be backed by record materials beyond mere allegations. If a party fails to adequately support or address assertions of fact, the court may treat those facts as undisputed. The court's role is to determine whether there is a genuine issue for trial, not to assess the evidence's truthfulness, as credibility is for the factfinder.

In relation to claims under 29 U.S.C. § 1132(a)(1)(B) (ERISA § 502(a)(1)(B)), a plan participant must show a legally enforceable right to benefits and that the plan administrator improperly denied them. Generally, a denial of benefits is reviewed de novo unless the plan grants discretionary authority to the administrator, in which case the review standard is "arbitrary and capricious." An arbitrary and capricious decision lacks reason, is unsupported by substantial evidence, or is legally erroneous.

Under the arbitrary and capricious standard, courts defer to an administrator's decisions as long as they align with clear plan language. The Plan grants the administrator full authority to interpret eligibility and manage benefits. The plaintiff acknowledges this standard but contends that a heightened review should apply due to alleged procedural irregularities in the handling of her benefits claim. She cites Leonard v. Educators Mut. Life Ins. Co. to support her claim that procedural issues, bias, or unfairness warrant a stricter review under ERISA. Examples of such irregularities include an insurer reversing its decision without new evidence, selectively using evidence to its advantage, and bias favoring the insurer.

The plaintiff claims various procedural issues occurred, including the defendant's modification of the Summary Plan Description (SPD) in 2013, which she argues was made in bad faith by adding terms not disclosed during her initial plan election. She also alleges that a letter from the defendant offering benefits under a default plan option constituted an improper unilateral change to pay a significantly lower amount. Furthermore, the plaintiff asserts that the denial of benefits was based on a selective review of evidence, focusing solely on the Plan Document despite having other relevant summary documents available.

In response, the defendant argues that the legal precedents cited by the plaintiff, particularly Leonard and Pinto, have been effectively overruled by the Supreme Court's decision in Met. Life Ins. Co. v. Glenn, which challenges the relevance of those cases in this context.

Defendant asserts that, following the precedent set in Glenn, a conflict of interest or procedural irregularity is merely one factor to be evaluated under the abuse of discretion standard, rather than a determinant that alters the standard of review. The Defendant maintains that since the Committee's interpretation of the Plan was correct, the issue at hand is not close enough to necessitate a tie-breaking factor, rendering Plaintiff's claims of procedural irregularity irrelevant. Alternatively, Defendant contends that none of the procedural irregularities cited by Plaintiff influenced the Committee's decision-making process, emphasizing that only those irregularities that affect claim administration are pertinent. 

Defendant also downplays the significance of a March 11, 2011 letter sent to Plaintiff, arguing it was not an attempt to unilaterally reduce benefits but rather a communication informing her of her ineligibility for the Refund Option while offering an alternative benefit option. Furthermore, Defendant claims that a 2013 modification of the Summary Plan Description (SPD) is not a procedural irregularity since it accurately reflected the Refund Option available at the time Mr. Reiser selected his pension plan.

The Court agrees that the Glenn decision governs this case, highlighting that procedural irregularities are to be weighed as one factor in determining whether Defendant abused its discretion, rather than automatically elevating the standard of review. Glenn specifically addresses conflicts of interest related to an entity's dual role as ERISA plan administrator and benefits payer and suggests that similar considerations extend to procedural irregularities, especially when they indicate procedural unreasonableness. Subsequent rulings have reinforced that procedural irregularities are treated similarly to conflicts of interest in the context of abuse of discretion reviews, and evidence of such irregularities can be considered alongside structural conflicts.

The Court must evaluate whether the Defendant's actions constitute procedural irregularities that could indicate arbitrary and capricious behavior. In summary judgment motions, the Court is limited to legal matters and cannot resolve factual disputes. The Plaintiff alleges that the Defendant acted in bad faith by modifying the Summary Plan Description (SPD) in 2013, which made benefits unavailable if the participant died before their Normal Retirement Date (NRD). However, this modification is deemed irrelevant to the handling of the Plaintiff's claim, as the Committee based its decision solely on the Plan document and disregarded the modified SPD.

Additionally, the Plaintiff claims the Defendant attempted to coerce her into signing modified plan documents that would reduce her benefits. This could suggest procedural irregularity, as the Plaintiff might argue that the denial of her claim was retaliatory for her refusal to accept the new plan. 

Lastly, the Plaintiff contends that the Defendant relied solely on self-serving evidence by only considering the Plan and not other summary documents related to Mr. Reiser’s pension election. However, the Court finds that the Defendant did not ignore these documents but determined that the Plan's terms took precedence. This situation does not resemble the precedent set in Pinto, where the plan administrator inconsistently treated medical advice. In this case, the Defendant provided a detailed explanation for the denial of Plaintiff's benefits, addressing the Pension Election Documents and clarifying why the Plan language prevailed. The Court concludes that there was no evidence of self-serving selectivity and will not factor this into the review standard.

The Court will apply the arbitrary and capricious standard of review to evaluate whether the Defendant abused its discretion in denying the Plaintiff's claim for benefits under ERISA § 502(a)(1)(B). The Plaintiff's claim is based on the Pension Election Documents, which she argues should take precedence over the Plan due to contradictory language and her reliance on these summary documents. She cites the Third Circuit's decision in Burstein v. Ret. Account Plan for Emps. of Allegheny Health Educ. Research Found., which held that when a summary plan description (SPD) conflicts with the plan language, the SPD controls.

In contrast, the Defendant relies on the Plan's language and the Supreme Court's ruling in CIGNA Corp. v. Amara, which determined that disclosures in the SPD are not enforceable as terms of the plan under ERISA § 502(a)(1)(B). The Plaintiff argues that CIGNA is not applicable to her case as it did not address conflicting terms in summary documents. She asserts that Burstein's precedent is relevant, noting a similar case where conflicting terms affected employee benefits during a bankruptcy. However, she acknowledges that Burstein is no longer controlling after the CIGNA decision, which involved issues related to a shift in pension plan structure affecting employees.

The plaintiffs contended that the Summary Plan Description (SPD) for the new cash balance plan was misleading, as it did not clarify that a participant’s opening balance might not match the value of their accrued benefits. While the SPD stated that benefits from a prior pension plan were converted to an opening account balance and that the final benefits could not be less than those from the old plan, the district court granted benefits based on a different legal theory, asserting that CIGNA had violated its disclosure obligations and reformed the plan accordingly. The Supreme Court, however, rejected the notion that the SPD constitutes enforceable plan terms that override the official Plan language, emphasizing that the disclosures required under ERISA § 102(a) do not imply that the SPD information forms part of the plan. The Court highlighted the distinct roles of the plan administrator and the plan sponsor, indicating that administrators should not have the power to alter plan terms through summaries. Consequently, the Plan language was deemed controlling, and any conflicting or misleading terms in the SPD could not be incorporated into the Plan. The Court concluded that the Committee did not abuse its discretion in its decision-making process despite potential procedural irregularities, leading to the dismissal of the plaintiff's claim for retirement benefits under ERISA § 502(a)(1)(B). Additionally, the Initial Death Benefit is defined as a lump sum payment equivalent to the total of payments starting at age 65 and continuing for the participant's life expectancy. The standards of review for arbitrary and capricious and abuse of discretion are essentially the same in the ERISA context.