The opinion of the court was delivered by: D. Brooks Smith, District Judge.
Plaintiff L. Eugene Daniels is a former management employee
of defendant Anchor Hocking Corporation's ("Anchor") Shenango
China Division. He began his career with Shenango China in
1964, and while employed there saw several changes in
management. In 1979, defendant Anchor acquired Shenango China,
and continued to employ plaintiff as the Vice President of
In June 1982, Anchor transferred plaintiff to a new position.
In 1983, Anchor again changed plaintiff's title and reduced his
salary by 21.6%. Defendant characterizes this change as a
demotion; plaintiff contends that his reduction in salary was
part of a company-wide scheme to eliminate overhead in upper
and middle management. On August 31, 1985, Anchor terminated
The case is now before the Court on defendant's motion for
summary judgment. Plaintiff contests this motion for summary
judgment by claiming that there are genuine disputes as to
material facts that preclude granting summary judgment.
Defendants respond that the only disputed facts are not
material to the ultimate question of plaintiff's eligibility
for severance benefits. We agree and therefore grant
Rule 56 of the Federal Rules of Civil Procedure allows a
party to obtain summary judgment upon a showing that there are
no genuine issues of material fact and that the moving party is
entitled to summary judgment as a matter of law. Fed.R.Civ.P.
56(c). Summary judgment is not "regarded as a disfavored
procedural shortcut but rather as an integral part of the
Federal Rules . . ." Celotex Corp. v. Catrett, 477 U.S. 317,
327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986). When
reviewing a motion for summary judgment, we must view the
evidence in the light most favorable to the nonmoving party.
Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir.
1983). However, the nonmoving party must produce more than a
mere scintilla of evidence to avoid summary judgment. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 262, 106 S.Ct. 2505,
2517, 91 L.Ed.2d 202 (1986). Indeed, Rule 56(c) states that the
nonmoving party "must set forth facts showing that there is a
genuine issue for trial." Moreover, "the mere existence of some
alleged factual dispute between the parties will not defeat an
otherwise properly supported motion for summary judgment; the
requirement is that there be a genuine issue of material fact."
Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. The substantive
law governing the case controls which facts are material. Ibid.
Similarly, "the determination of whether a given factual
dispute requires submission to a jury must be guided by the
substantive evidentiary standards that apply to the case." Id.
477 U.S. at 255, 106 S.Ct. at 2514. With these principles in
mind, we turn to the merits of the instant case.
The threshold issue which confronts us concerns the standard
of review. In Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the Supreme Court
held that a denial of benefits "is to be reviewed under a de
novo standard of review unless the benefit plan gives the
administrator or fiduciary discretionary authority to determine
eligibility for benefits or to construe the terms of the plan."
Id. at 115, 109 S.Ct. at 956. The Supreme Court did not,
however, specifically articulate the standard of review to be
applied by courts reviewing decisions made under discretionary
plans. After Bruch, this court held that "[i]n the event a plan
gives an administrator or fiduciary discretion to determine
eligibility or construe uncertain terms, an arbitrary and
capricious standard will apply." Adamo v. Anchor Hocking Corp.,
720 F. Supp. 491, 499 (W.D.Pa. 1989). See also Stoetzner v. U.S.
Steel Corp., 897 F.2d 115, 119 (3d Cir. 1990) (holding that
where a plan grants an administrator discretion in making
eligibility determination, a court must review that
determination under the arbitrary and capricious standard.)
We find plaintiff's argument untenable for several reasons.
First, plaintiff has not provided the Court with any
explanation as to how the arbitrary and capricious standard is
different from the abuse of discretion standard. Nor does
plaintiff provide the Court with any statement of the
analytical framework mandated by either standard of review.
Instead, plaintiff perfunctorily asserts, without citation or
explanation, that the arbitrary and capricious standard is
narrower than the abuse of discretion standard. Defense counsel
has also failed to squarely address this issue; he simply
relies on this Court's statement in Adamo that the decision
must be reviewed under the arbitrary and capricious standard.
The briefs and arguments in this case have not convinced the
Court that there is a meaningful difference between the
arbitrary and capricious standard and the abuse of discretion
standard. However, because of its importance, we consider it
necessary to address this issue at length.
Unfortunately even in the post-Bruch cases which discuss the
standard of review, there is little explication of the
analytical framework to be employed when applying the arbitrary
and capricious standard as compared to the abuse of discretion
standard. Indeed, there is even a line of cases from the
Eleventh Circuit under which the labels "abuse of discretion"
and "arbitrary and capricious" are used interchangeably.
Anderson v. Blue Cross & Blue Shield of Alabama, 907 F.2d 1072,
1075 n. 2 (11th Cir. 1990); Brown v. Blue Cross & Blue Shield,
898 F.2d 1556, 1558 n. 1 (11th Cir. 1990), cert. denied, ___
U.S. ___, 111 S.Ct. 712, 112 L.Ed.2d 701, (1991); Jett v. Blue
Cross & Blue Shield, 890 F.2d 1137, 1139 (11th Cir. 1989).
However, this view is not universally held.
According to the United States Court of Appeals for the
Seventh Circuit, a court reviewing a denial of benefits must
employ the arbitrary and capricious standard even if the plan
administrator operates under a conflict of interest. Rizzo v.
Caterpillar, Inc., 914 F.2d 1003, 1008 and n. 2 (7th Cir.
1990). In contrast, the Fourth Circuit has held that Bruch
mandates the total abandonment of the arbitrary and capricious
standard regardless of the existence of a conflict of interest.
DeNobel v. Vitro Corp., 885 F.2d 1180, 1185-1186 (4th Cir.
1989). Thus, no consensus has emerged from the post-Bruch cases
as to the applicable standard of review where a plan grants
discretion to an administrator who is operating under a
conflict of interest. Nor do these divergent precedents provide
any clear explanation of the differences between the arbitrary
and capricious and the abuse of discretion standards of review.
Without a statement from the Court of Appeals for the Third
Circuit, or any clear consensus among the other Courts of
Appeals, we write on a clean slate. We disagree with
plaintiff's contention, and we decline to follow the Fourth
Circuit's conclusion, that the Supreme Court's opinion in
Bruch can be read as a wholesale rejection of the arbitrary and
In Bruch, the Supreme Court stated that comparison between
the Labor Management Relations Act and ERISA "shows that the
wholesale importation of the arbitrary and capricious standard
into ERISA is unwarranted." 489 U.S. at 109, 109 S.Ct. at 953
(emphasis in the original). The Court then held that de novo
review is appropriate in the absence of plan language granting
discretion to the administrator. The Court did not identify the
standard to be applied in plans that vest discretion in the
plan administrator. Instead, the actual language of the opinion
referred to the proper standard for nondiscretionary plans. We
do not believe that the Supreme Court intended the wholesale
rejection of the arbitrary and capricious standard. The Bruch
opinion simply does not compel this conclusion. See Rizzo v.
Caterpillar, Inc., 914 F.2d at 1008 and n. 2. (noting that the