United States District Court, E.D. Pennsylvania
PAUL L. FELKER, et al., Plaintiffs,
USW LOCAL 10-901, USW LOCAL 10-901 (SU) AND USW LOCAL 10-901 (NE) MARCUS HOOK REFINERY WORKERS INVOLUNTARY TERMINATION PLAN, Defendant.
JOEL H. SLOMSKY, District Judge.
Plaintiffs are former employees of Sunoco, Inc. ("Sunoco") and bring this case under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq., seeking benefits they claim are due to them under a severance plan established through negotiations with Sunoco. (Doc. No. 1 ¶¶ 1-3.) On May 1, 2014, following a pretrial conference, the Court ordered the parties to submit briefs on two issues that are endemic to this kind of ERISA case: (1) the applicable standard of review under ERISA and (2) whether discovery outside the administrative record should be permitted. (Doc. No. 10.) The parties have submitted their briefs and the Court held a hearing on these issues on June 20, 2014. (See Doc Nos. 12, 13, 14, 17, 19.)
The applicable standard of review and whether to permit discovery outside the administrative record are now ripe for decision. For reasons that follow, the Court will apply the arbitrary and capricious standard of review and permit Plaintiffs to conduct limited discovery only into whether the Plan Administrator had a conflict of interest.
During the relevant time period, Plaintiffs were employees of Sunoco, members of United Steel Workers Local 10-901 (the "Union"), and assigned to Sunoco's Marcus Hook Mobile Work Force (the "MWF"). (Doc. No. 1 ¶ 2.) The MWF consisted of maintenance workers employed at Sunoco's Marcus Hook Refinery who also worked at Sunoco's Philadelphia Refinery. (Doc. No. 13 at 3.) Defendant (the "Plan") is an employee welfare benefit and severance plan subject to the requirements of ERISA, 29 U.S.C. §§ 1001 et seq. (Doc. No. 1 ¶ 3.)
The Plan was established pursuant to an agreement between Sunoco and Plaintiffs' Union, and became effective on or about February 21, 2012. (Doc. No. 12 at 2.) According to a section of the Plan entitled "Background and Purpose of the Plan, " the Plan "is intended to alleviate financial hardships which may be experienced by employees of [Sunoco] whose employment is terminated in connection with [Sunoco's] idling of the main processing units at its Marcus Hook Refinery." (Doc. No. 1-1 at 3.) Benefits awarded under the Plan are paid out of Sunoco's assets. (Id. at 11.)
The Plan states that it will be administered as follows:
The Plan Administrator or his delegate has full responsibility for interpreting and administering the terms and provisions of the Plan. All interpretations, determinations and decisions of the Plan Administrator (or its delegate) in respect to any [matter] shall be final, conclusive and binding upon the Company, any employer, participants and all other persons claiming an interest in the Plan. The Plan Administrator is:
(Doc. No. 1-1 at 11.)
Sunoco designated its Chief Executive Officer ("CEO") to make decisions regarding the Plan. This designation was made in a resolution of the Board of Directors of Sunoco, dated November 4, 1993, which provides as follows:
[T]he Chief Executive Officer of this Corporation is hereby delegated full power and authority, in the name of and on behalf of this Corporation, to modify, amend, and terminate employee welfare benefit plans of this Corporation and to adopt new employee welfare benefit plans for this Corporation, and to sign such plans, insurance contracts, trust agreements, and other documents as he may deem necessary or desirable to make such modifications, amendments, terminations, and adoptions of such employee welfare benefit plans effective, provided that such modifications, amendments, terminations, and adoptions are, in his judgment, in the best interests of the Corporation.
(Doc. No. 19-1, Ex. A.)
On March 1, 2012, pursuant to the authority delegated to him in the November 4, 1993 Board Resolution, the CEO of Sunoco executed an Officer's Certificate appointing Vincent J. Brigandi as "Plan Administrator" of the Plan. (Doc. No. 19-1, Ex. B.) The Officer's Certificate provides that "the Plan Administrator may take all actions necessary to effectuate the intent of this Officer's Certificate." (Id.)
In September 2012, Sunoco sold its Philadelphia Refinery to Philadelphia Energy Solutions ("PES"). (Doc. No. 12 at 3.) On September 7, 2012, Plaintiffs were terminated by Sunoco. (Doc. No. 1 ¶ 12.) That same day, Plaintiffs were hired by PES to work at the Philadelphia Refinery under a Refining Contribution Agreement between Sunoco and PES. (Doc. No. 13 at 3.)
Despite not losing any work time as a result of the changeover, on October 22, 2012 Plaintiffs filed their claim for severance benefits under the Plan. (Doc. No. 1 ¶ 16.) They contend that they were involuntarily terminated by Sunoco because Sunoco idled the main processing units at its Marcus Hook Refinery (Id. ¶ 12), even though they were immediately transferred to the Philadelphia Refinery as part of the Refining Contribution Agreement between Sunoco and PES. Because of their termination from the Marcus Hook Refinery, Plaintiffs allege that they are due severance benefits under the terms of the Plan. (Id.)
Vincent Brigandi, as Plan Administrator, denied the claim. (Doc. No. 13-3, Exs. D, F.) In a letter dated January 22, 2013, Brigandi explained his decision:
Although the members of the MWF did terminate employment with Sunoco on September 7, 2012, such termination only occurred because of Sunoco's contribution of the assets of the Philadelphia Refinery to a joint venture with Philadelphia Energy Solutions (PES) for which PES is responsible for the operations of the Philadelphia Refinery. Members of the MWF were not terminated from employment in connection with the ...