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DeWitt v. Penn-Del Directory Corp.

February 14, 1997

CAROL DEWITT, APPELLANT

v.

PENN-DEL DIRECTORY CORPORATION, A FOREIGN CORPORATION; NATIONAL TELEPHONE DIRECTORY CORPORATION PROFIT SHARING PLAN; NATIONAL TELEPHONE DIRECTOR CORPORATION PLAN ADMINISTRATOR OF PROFIT SHARING PLAN



Appeal from the United States District Court for the District of Delaware (D.C. Civ. No. 93-cv-00581)

Before: BECKER, MANSMANN and LEWIS, Circuit Judges.

MANSMANN, Circuit Judge.

Argued December 12, 1996

Filed February 14, 1997)

OPINION OF THE COURT

Carol Dewitt appeals from the entry of summary judgment against her in her action to recover benefits and for unlawful termination intended to preclude attainment of her rights under her profit sharing plan pursuant to sections 502(a)(1)(B) and 510 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132(a)(1)(B). Dewitt sought benefits allegedly due her as a participant of the National Telephone Directory Profit Sharing Plan for the 1990 plan year.

We are asked to decide whether the Plan Administrator acted arbitrarily and capriciously in denying additional accrued benefits to Dewitt's account balance for the 1990 Plan year by distributing Dewitt's benefits on an expedited basis, contrary to the Plan's provisions. Because we believe that the Plan Administrator's interpretation of the Plan and expedited distribution of benefits controverts the plain language of the Plan, we conclude that the Administrator acted arbitrarily and capriciously. Accordingly, we will reverse the district court's grant of summary judgment on this claim.

Dewitt also alleges that her employer terminated her on pretextual grounds with the specific intent to deny her status as a Plan participant as of the Valuation Date at the end of December 1990. Because we agree with the district court that Dewitt has not provided sufficient evidence of specific intent to interfere with her benefits, we will affirm the district court's grant of summary judgment in favor of her employer on Dewitt's section 510 claim.

I.

During the ten years that Carol Dewitt was an employee of Penn-Del Directory Corporation, she was a participant in the National Telephone Directory Corporation Profit Sharing Plan, an employee pension plan governed by ERISA and administered by the National Telephone Directory Corporation, a New Jersey corporation and sister corporation to Penn-Del. At the time of her termination, Dewitt was 100% vested in her account under the Plan.

Pursuant to the Plan, "Employer Contributions" and "Plan Forfeitures" are credited to the account of Plan participants on a date referred to as the Valuation Date, defined as the last business day of each December. Plan Para(s) 5.01, 5.02, 6.02(c)-(d). The Plan requires, as a condition to receipt of these benefits, that the Plan participant be employed as of the Valuation Date. Plan Para(s) 5.01, 5.02. In addition, the Plan provides that each participant's account will be credited with "Trust Income", i.e., the net increase or decrease in the fair market value of trust assets as measured from the last Valuation Date. Plan Para(s) 6.02(e). Unlike the situation with Employer Contributions and Plan Forfeitures, the receipt of Trust Income is not conditioned upon the participant's employment on the Valuation Date. In order to receive Trust Income, however, a Plan participant must have a viable Plan account on the Valuation Date. Plan Para(s) 6.02(3).

On December 12, 1990, Dewitt was terminated from her position as a sales representative, allegedly for mishandling an account. At a meeting to discuss her termination, Penn-Del Division Manager Victor Raad reviewed with Dewitt the incident that precipitated her termination. Pension benefits were also discussed. Although there is some dispute between Dewitt and Raad regarding precisely what was said at this meeting on the topic of Dewitt's benefits, both parties agree that Raad told Dewitt that it takes approximately 30 to 90 days before Dewitt would actually receive the distribution of the balance of her Plan account. Affidavit of Victor Raad, Exhibit C at Para(s) 9. Dewitt asserts that this statement led her to believe that her distribution check would not be processed until a date well beyond the Valuation Date. Dewitt also maintains that Raad told her that her account would include Employer Contributions, Plan Forfeitures and Trust Income through the end of the 1990 Plan year. To the contrary, in his affidavit, Raad states that no discussion occurred regarding the nature of the benefits which would be included in Dewitt's check. Ex. C at Para(s) 8.

On December 14, 1990, Dewitt filled out a request for distribution of her account balance. A check was issued two weeks later, on December 28, 1990, for Dewitt's total account balance in the amount of $75,520.88. Believing this figure to be inaccurate because it did not contain any amounts representing Employer Contributions, Plan Forfeitures or Trust Income, Dewitt contacted Raad to discuss the amount. After her conversation with Raad, Dewitt pursued an appeal pursuant to the administrative process established by the Plan. Following the denial of her appeal, Dewitt filed this action. In her complaint, Dewitt asserted claims against her former employer (Penn-Del), the Plan (National Telephone Directory Corporation Profit Sharing Plan) and the Plan's Administrator (National Telephone Directory Corp.) under ERISA for recovery of benefits and for unlawful termination intended to preclude attainment of her rights under the Plan. In Count I of her complaint, Dewitt asserts that she had a right under the Plan to receive the 1990 Plan year Employer Contributions, Plan Forfeitures, and Trust Income allocable to her account. In this Count, Dewitt alleges that defendants violated 29 U.S.C. Section(s) 1132(a)(1)(B), ERISA Section(s) 502(a)(1)(B). This section of ERISA permits a plan participant or beneficiary to bring a civil action "to recover benefits due to him under the terms of the plan." In support of her section 502(a)(1)(B) claim, Dewitt asserts that the defendants "arbitrarily and capriciously denied additional accrued benefits to [her] account balance in the Plan for the plan year 1990 by having her benefits paid on an expedited basis by the Plan Administrator, contrary to Plan provisions." Complaint Para(s) 16, A. 64. Second, she asserts that "her account was treated arbitrarily as indicated by the method used in another former employee's Plan account payment. . . ." Id. Another terminated employee, Stephen Byrne, received Employer Contributions, Plan Forfeitures and Trust Income even though he was not technically employed at the end of the Plan year. Dewitt asserted that Penn-Del terminated Byrne on December 14, 1988, but that the Plan recorded Byrne's termination date as January 3, 1989, thereby qualifying Byrne for his share of the previous year's Employer Contributions and Plan Forfeitures. Complaint Para(s) 16; Affidavit of Steven Byrne, A. 7.

In Count II of her Complaint, Dewitt asserts that Penn-Del discharged her to prevent her from qualifying for the 1990 Employer Contributions, Plan Forfeitures and Trust Income allocable to her account. In this Count, she asserts that her termination violated 29 U.S.C. Section(s) 1140, ERISA Section(s) 510, which makes it "unlawful to discharge . . . a participant . . . for the purpose of interfering with the attainment of any right to which such participant may become entitled under the Plan." On December 22, 1994, in ruling on the defendants' joint motion to dismiss, the district court dismissed Dewitt's section 502(a)(1)(B) claim for Employer Contributions and Plan Forfeitures, benefits which formed the bulk of her prayer for relief, because the terms of Dewitt's Plan expressly required that she be employed on December 31, 1990 in order to be eligible to receive those benefits, and she was not. *fn1 Dewitt v. Penn-Del Directory Corporation, 872 F. Supp. 126 (D. Del. 1994) (Dewitt I).

On July 31, 1995, Dewitt moved for summary judgment on those claims which survived dismissal in Dewitt I. As a result of the district court's holdings in Dewitt I, only Dewitt's claims for Trust Income pursuant to ERISA Section(s) 502(a)(1)(B) and 510, an amount between $1,400 and $2,200, were deemed viable by the court. See 912 F. Supp. at 711. The defendants filed a cross-motion for summary judgment asserting that Dewitt was not entitled to Trust Income under ERISA Section(s) 502(a)(1)(B) because the administration of the Plan was not arbitrary and capricious, and that Dewitt was not entitled to Trust Income pursuant to ERISA Section(s) 510 because she had not met her burden of proving that Penn-Del had specific intent to interfere with her benefits.

The district court held a hearing on these motions *fn2 on October 22, 1995. By order dated January 17, 1996, the district court denied Dewitt's motion for summary judgment for Trust Income based both upon the terms of the Plan and upon a breach of fiduciary duty theory. Instead, the court granted the defendants' motion for summary judgment for Trust Income pursuant to ERISA Section(s) 502(a)(1)(B), based upon the reasonableness of the Plan Administrator's interpretation of the Plan and the district court's deferential standard of review of the Plan Administrator's actions. The court also granted Penn-Del's motion for summary judgment for Trust Income pursuant to section 510 of ERISA, 28 U.S.C. Section(s) 1140. The district court found that the facts as alleged by Dewitt were not sufficient to provide ...


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