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Gridley v. Cleveland Pneumatic Co.

filed: February 4, 1991.

GLADYS M. GRIDLEY, APPELLEE
v.
CLEVELAND PNEUMATIC COMPANY, A SUBSIDIARY OF PNEUMO CORPORATION, A SUBSIDIARY OF IC INDUSTRIES; MARJORIE ANN SMITH, INDIVIDUALLY AND AS MANAGER OF EMPLOYEE BENEFITS AND SERVICES; PATRICIA BORAH, INDIVIDUALLY AND AS EMPLOYEE BENEFITS ADMINISTRATOR; JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY; CLEVELAND PNEUMATIC COMPANY, A SUBSIDIARY OF PNEUMO CORPORATION, APPELLANT



On Appeal from the United States District Court for the Middle District of Pennsylvania; D.C. Civil No. 88-00908.

Mansmann, Alito and Garth, Circuit Judges.

Author: Alito

ALITO, Circuit Judge

Opinion OF THE COURT

This case concerns a dispute between the Cleveland Pneumatic Company ("Cleveland") and Gladys M. Gridley, the wife of a former Cleveland employee, Joseph Gridley, regarding Mrs. Gridley's entitlement to increased life insurance benefits provided by an amendment to the company's group life insurance plan that took effect after Mr. Gridley ceased active work due to terminal cancer. The district court held that Mrs. Gridley was not entitled to the increased benefits under the terms of the group life policy because Mr. Gridley was never "actively at work" following the date when the increased benefits took effect, as required by the policy terms. The court held, however, that Cleveland was obligated under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et. seq. , to pay Mrs. Gridley the increased benefits. The court concluded that a beneficiary may recover benefits due under a summary plan description (see 29 U.S.C. § 1022) and that a brochure that was distributed to Cleveland employees at about the time of the new amendment and that generally surveyed employee benefits constituted a summary plan description of the company's life insurance plan. Because this brochure omitted the "actively at work" requirement and contained language that the court believed was inconsistent with this requirement, the court held that Cleveland was obligated to pay Mrs. Gridley the increased benefits.

We conclude that the brochure in question was not a summary plan description and that, even if it were, Mrs. Gridley would not be entitled to recover the increased benefits. Accordingly, we will reverse.

I.

Joseph Gridley began work for Cleveland on May 17, 1985 at an annual salary of $33,500. A few years earlier, Mr. Gridley had been afflicted with lung and brain cancer, but at the time of his employment by Cleveland there was no sign of recurrence. When Mr. Gridley began work, Cleveland gave him a variety of materials describing employee benefits. A glossy brochure containing five fold-out panels and entitled "Employee Benefits Summary" (Plaintiff's Exhibit 15) ("P15") provided an overview of the company's benefit plans. (For convenience, we will refer to this document as the "overview brochure" or the "earlier overview brochure.") The Introduction to this overview brochure (P15) stated that "this brochure highlights the major provisions of each of the [company's benefit] plans" and that it had been prepared "for use as a 'quick' reference source of information about [the] benefit plans." The Introduction added: "you may refer to your summary plan descriptions or the official plan documents for more details" (emphasis added). In addition, the Introduction warned that "in the event of any conflict between this brochure and the plan documents, provisions of the plan documents will apply." On the fold-out panels following the Introduction, the overview brochure (P15) provided a brief description of the company's benefits regarding medical and dental care, income protection, survivors' security, pensions, and other matters such as vacations, holidays, education reimbursements, funeral leave, military training, and jury duty.

In addition to this overview brochure (P15), Mr. Gridley received several documents that clearly constituted summary plan descriptions within the meaning of ERISA. Plaintiff's Exhibit 20 ("P20"), entitled "Summary Plan Description - Salary Continuance Plan," described the salary benefits initially available for employees who became unable to work due to illness or disability. Similarly, Defendant's Exhibit C-1 ("D-C1"), entitled "Summary Plan Description - Long-Term Disability Plan," summarized the disability benefits available to company employees after the salary continuance benefits were exhausted. These documents contained the information required by the relevant provision of ERISA, 29 U.S.C. § 1022, such as "[the] name and type of administration of the plan," "the name and address of the person designated as agent for the service of legal process," "the name and address of the administrator," "the names, titles and addresses of any trustee or trustees," "the procedures to be followed in presenting claims for benefits," "and the remedies available under the plan for the redress of claims" that are denied.

With respect to the group insurance plan, which provided life, health, and other insurance benefits, Cleveland did not give Mr. Gridley any document entitled a "summary plan description," but instead furnished a certificate, entitled "Your Group Insurance Plan" ("P14"), that was prepared by the underwriter, John Hancock Mutual Life Insurance Company ("John Hancock"). (For convenience we will refer to this document as the "certificate.") This certificate (P14) was not drafted to serve as a summary plan description, and although the certificate included a lengthy description of the terms of the group insurance policy, it lacked most of the other information required by ERISA.

Both the certificate (P14) and the group insurance policy itself contained provisions specifying that an employee became eligible for an increase in insurance benefits only if he was "actually" or "actively" at work after the increase took effect.*fn1 The group insurance policy stated that an employee "shall not be entitled to any increase in insurance or any additional benefits for which he may be eligible until he actually returns to work." Likewise, the certificate (P14) stated (emphasis added):

ACTIVELY AT WORK REQUIREMENT.

If you are not actively at work on the date an increase in benefits would become effective under the Schedules shown herein, such increase will not become effective until the date you return to active work.

The certificate (P14) defined "actively at work" to mean that the employee must be able to perform "all of the usual and customary duties of his occupation on a regular, full-time basis."*fn2

Unlike the group insurance policy and the certificate (P14), the overview brochure (P15) did not mention the "actively at work" requirement but stated that employees were "eligible to participate in [the company's] life insurance plans on [their] first day of employment with the Company."

Under the life insurance policy, Cleveland paid for basic life insurance coverage for its employees. This basic coverage equalled 150% of their annual salaries rounded to the next higher thousand. Thus, for Mr. Gridley, this basic coverage amounted to $51,000. Cleveland employees could also purchase additional life insurance equal to 50% or 100% of their annual salaries rounded to the next higher thousand. Mr. Gridley elected supplemental life insurance equal to 50% of his salary rounded to the next higher thousand -- or $17,000. Thus his total life insurance coverage equalled $68,000. When he applied ...


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