Bauman Ex Rel. Sumner v. Publix Super Markets, Inc. Employee Stock Ownership Plan
710 F. App'x 833
| 11th Cir. | 2017Background
- Michael Bauman, adjudicated incompetent, worked 17 years for Publix; Michael Sumner was appointed conservator in 2010.
- Sumner hand-delivered a letter (with conservatorship papers) to the Publix store where Bauman worked and requested direct deposit to a specified account.
- Bauman completed a direct-deposit form (not indicating conservatorship) and Publix deposited paychecks into that account.
- Bauman left Publix in March 2013 and elected to cash out ESOP benefits; Publix sent Bauman a $78,509 check, which Bauman later lost in a scam.
- Sumner later notified Publix that the distribution should have been made to him as conservator; Publix’s Retirement Department had no record or actual knowledge of the conservatorship and denied reinstatement.
- District court granted summary judgment for Publix; Eleventh Circuit reviews de novo and affirms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Publix had "actual knowledge" of Bauman's incompetence so distribution violated the Plan | Sumner: delivering conservatorship letter to the store put Publix on actual notice because Publix administers the plan and any store employee can notify the company | Publix: "actual knowledge" requires the Retirement Department (the plan office) to have factual awareness; store receipt of the letter did not suffice | Court: Held actual knowledge requires the Retirement Department to be aware; no evidence it had notice, so administrator's decision was de novo correct |
| Whether administrator's denial was arbitrary given administrator discretion and conflict of interest | Sumner: Publix both administers and funds benefits (conflict) so denial may be arbitrary | Publix: even with conflict, investigation revealed no records of conservatorship; reasonable grounds supported denial | Court: Administrator had discretion; investigation provided reasonable grounds; though a conflict existed, plaintiff failed to show the decision was arbitrary; affirm |
Key Cases Cited
- Blankenship v. Metro. Life Ins. Co., 644 F.3d 1350 (11th Cir. 2011) (sets multi-step ERISA review framework and discusses effect of administrator conflict of interest)
- Carter v. Galloway, 352 F.3d 1346 (11th Cir. 2003) (summary judgment reviewed de novo)