Glenn A. COOMER; Christopher R. Stires; Lynnette Marie Stires; Diana Spang; Pete Reeme; Kathleen Reeme; Gary E. Berger; Roy K. Gerber; Jeffrey J. Custis; Michael Howcroft; Connie Brown Doherty; William D. Hozmann; Richard R. Beiting; James R. Faze; Lin A. Heinzelman; Scott Kinzer, Plaintiffs-Appellants, v. BETHESDA HOSPITAL, INC. and Bethesda Hospital Employee Pension Plan, Defendants-Appellees.
No. 02-3700
United States Court of Appeals, Sixth Circuit.
Argued: Dec. 17, 2003. Decided and Filed: June 1, 2004.
370 F.3d 499
BELL, Chief District Judge.
Daniel Jerome Buckley (argued and briefed), Mary C. Henkel (briefed), Margaret A. Nero Fechtel (briefed), Vorys, Sater, Seymour & Pease, Cincinnati, OH, for Appellees.
Before BATCHELDER and SUTTON, Circuit Judges; BELL, Chief District Judge.*
OPINION
BELL, Chief District Judge.
Participants in an employee pension plan have appealed the entry of summary judgment against them on their discrimination claims under the Employee Retirement Income Security Act of 1974 (“ERISA“),
I. BACKGROUND
Plaintiffs are 16 former employees of Defendant Bethesda Hospital, Inc. (the “Hospital“). The Hospital is the sponsor of the Bethesda Hospital Employee Pension Plan (the “Plan“), an employee pension plan governed by ERISA. Plaintiffs are all former participants1 in the Plan who had a vested right to pension benefits under the Plan when they separated from their employment at the Hospital.
The Plan is designed to pay monthly pension benefits when participants reach their normal retirement age of 65. The Plan also allows an early retirement benefit to retired employees at age 55 which may be taken as a monthly pension or in an actuarially reduced alternative form as provided under § 4.7. Section 4.7 allows for a lump sum distribution only if the actuarial equivalent of the benefit under the Plan is less than $5,000.
In 1992 Brian Rowan, an African-American Hospital employee who was under the age of forty, sought a lump sum distribution from his pension account so that he could attend medical school. At the time of his request the actuarial equivalent of his pension account was $6,645.22. In order to accommodate Rowan‘s request, the Bethesda Hospital, Inc. Board (“the Board“) amended the Plan to allow the lump sum distribution to Rowan. The amendment, adopted on August 11, 1992, provided as follows:
Section 4.7(f)(i) of the Plan is amended by adding the following to the end thereof:
In addition, Brian Rowan . . . may make the election above during 1992 notwithstanding the fact that his benefit under the Plan, determined as a lump sum actuarial equivalent, is $5,000 or more.
The Rowan distribution did not affect the benefits available to any other Plan participants.
On January 15, 1997, after learning about the distribution to Rowan, plaintiff Coomer requested a lump sum distribution of his pension benefits. At the time of his request Coomer‘s pension benefits had an actuarial equivalent of approximately $116,000. The Committee denied his request and advised him that he would be eligible for monthly payments of his benefit under the Plan beginning at any time after he attained age 55. Coomer appealed the Committee‘s decision. By letter dated April 17, 1997, James M. Connelly, Vice President and Chief Financial Officer of the Hospital, denied Coomer‘s second request for a lump sum settlement because the present value of Coomer‘s accrued benefit under the Plan exceeded $5,000. Connelly advised that “It is our underlying belief that the Plan should provide monthly retirement income to its participants and that lump sum payments should only be paid for diminimus [sic] amounts.”
On October 15, 1999, Coomer and 15 other participants in the Plan filed this action in the United States District Court for the Southern District of Ohio. The first count of the amended complaint, brought on behalf of all of the plaintiffs, alleges discrimination in violation of
II. ANALYSIS
A. Standard of Review
We review a district court‘s grant of summary judgment de novo. Rowan v. Lockheed Martin Energy Systems, Inc., 360 F.3d 544, 547 (6th Cir.2004). Summary judgment is proper where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.
B. The Non-Coomer Plaintiffs
Plaintiffs contend that the district court erred in dismissing all of the plaintiffs other than Coomer (“the non-Coomer plaintiffs“) for failure to exhaust administrative remedies.2
Every employee benefit plan covered by ERISA is required to “afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.”
Failure to exhaust administrative remedies is excused “where resorting to the plan‘s administrative procedure would simply be futile or the remedy inadequate.” Fallick, 162 F.3d at 419. “The standard for adjudging the futility of resorting to the administrative remedies provided by a plan is whether a clear and positive indication of futility can be made.” Id. A plaintiff must show that “it is certain that his claim will be denied on appeal, not merely that he doubts that an appeal will result in a different decision.” Id. (quoting Lindemann v. Mobil Oil Corp., 79 F.3d 647, 650 (7th Cir.1996)).
Plaintiffs in the case at bar contend that exhaustion of the administrative process should be excused in this case just as it was in Costantino v. TRW, Inc., 13 F.3d 969 (6th Cir.1994), because the Plan did not allow disbursements in excess of $5,000 and it can be inferred from the denial of Coomer‘s request for a lump sum distribution that the remaining plaintiffs’ claims would be denied as well. In Costantino we held that the district court did not abuse its discretion in excusing exhaustion in light of the district court‘s determination that the suit was directed to the legality of the amended plan rather than to a mere interpretation of it. Id. at 975. Moreover, we noted that requiring further administrative remedies would not have served any of the purposes of administrative exhaustion under the facts of that case. Id.
We reject the non-Coomer plaintiffs’ reliance on Costantino. In contrast to Costantino, there is no clear and positive indication in this case that pursuing administrative remedies would have been a futile act. What plaintiffs sought in this action was to be treated in the same manner as Rowan. In other words, they sought an amendment to the Plan that would allow an early lump sum distribution. Under the terms of the Plan, the Hospital Board has “the right to amend the Plan at any time to any extent deemed advisable,” as long as the amendment does not have the effect of decreasing any benefits accrued under the Plan before such amendment. Amendment of the Plan is a matter within the discretion of the Board.3 Plaintiffs have not alleged any factual basis for their claim of futility other than the denial of benefits to Coomer. The plaintiffs’ assertion that the Board would not have amended the Plan on behalf of any one of the 15 non-Coomer plaintiffs was not a foregone conclusion. The Hospital was never given an opportunity to determine whether the non-Coomer plaintiffs’ claims were de minimis or whether they involved special circumstances that might convince the Board to amend the Plan. As the district court properly noted, the very fact that the Board amended the Plan to accommodate Rowan‘s request demonstrates that, in certain circumstances, requests for lump
Because we find that the non-Coomer plaintiffs did not exhaust their administrative remedies and because they did not demonstrate clear and positive evidence of the futility of exhausting those remedies, we affirm the district court‘s dismissal of the non-Coomer plaintiffs.
C. Discrimination under ERISA § 510
According to plaintiffs,4 the district court erred when it determined that defendants’ failure to treat plaintiffs in the same manner they treated Brian Rowan did not violate
The district court determined that denial of Coomer‘s request for a distribution was not an “adverse action” or “prohibited conduct” as contemplated by § 510 because it did not interfere with a right to which plaintiffs were entitled. The district court also determined that amendment of the Plan to accommodate Rowan‘s request for a lump sum disbursement did not constitute an “adverse action” as contemplated by § 510.
Plaintiffs concede that they had no right under the Plan to a distribution because the actuarial equivalent of their benefits exceeded the $5,000 limit. Plaintiffs also concede that the Rowan amendment and the lump sum distribution to Rowan did not adversely affect their pension rights in any way. Plaintiffs contend, nevertheless, that the Rowan amendment was an “adverse action” under § 510 because it violated their right under the Plan to have the Plan administered in a non-discriminatory manner.
Although Plaintiffs have loosely asserted that the Plan disregarded the lump sum limitation for Rowan, but denied a similar request by Coomer, the evidence of record confirms that the Committee uniformly interpreted and applied the $5,000 limitation to all who requested a lump sum distribution. The undisputed facts reveal that Rowan obtained a distribution not because the Committee disregarded the lump sum limitation when it administered the Plan, but because the Board amended the Plan specifically to permit Rowan to take a lump sum distribution in excess of $5,000.6 Amendment of the Plan was not an administrative act undertaken by the Committee, but was instead a discretionary act within the prerogative of the Hospital Board. As we noted in Musto v. American General Corp., 861 F.2d 897 (6th Cir.1988), “[t]here is a world of difference between administering a welfare plan in accordance with its terms and deciding what those terms are to be.” Id. at 911. We agree with the district court that the Hospital‘s amendment of the Plan on behalf of Rowan, and its refusal to amend the Plan on behalf of Coomer, did not violate the anti-discrimination provisions of the Plan. The Rowan amendment accordingly does not constitute an adverse action or an interference with a right to which Plaintiffs were entitled under the Plan.
This brings us to the core issue presented on appeal, which is whether an employer‘s amendment of a Plan to accommodate one participant and its refusal to amend the Plan to accommodate another participant constitutes discrimination in violation of
We begin with an analysis of what ERISA is and is not designed to do. “ERISA was enacted to promote the interests of employees and their beneficiaries in employee benefit plans, and to protect contractually defined benefits.” Black & Decker Disability Plan v. Nord, 538 U.S. 822, 830, 123 S.Ct. 1965, 155 L.Ed.2d 1034 (2003) (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989)). With respect to pension plans, ERISA imposes participation, funding, and vesting requirements and establishes rules concerning reporting, disclosure, and fiduciary responsibility. Shaw v. Delta Air Lines, 463 U.S. 85, 91, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983) (citing
“Nothing in ERISA requires employers to establish employee benefits plans. Nor does ERISA mandate what kind of benefits employers must provide if they choose to have such a plan.” Lockheed Corp. v. Spink, 517 U.S. 882, 887, 116 S.Ct. 1783, 135 L.Ed.2d 153 (1996). “ERISA does not mandate that employers provide any particular benefits, and does not not itself proscribe discrimination in the provision of employee benefits.” Shaw, 463 U.S. at 91. [N]either Congress nor the courts are involved in either the decision to establish a plan or in the decision concerning which benefits a plan should provide. In particular, courts have no authority to decide which benefits employers must confer upon their employees; these are decisions which are more appropriately influenced by forces in the marketplace and, when appropriate, by federal legislation.
Musto, 861 F.2d at 911 (quoting Moore v. Reynolds Metals Co. Retirement Program, 740 F.2d 454, 456 (6th Cir.1984)). “Employers or other plan sponsors are generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans.” Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78, 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995). This rule applies equally to pension benefit plans. Lockheed Corp., 517 U.S. at 890. The Supreme Court has recently reaffirmed that “employers have large leeway to design disability and other welfare plans as they see fit.” Black & Decker, 538 U.S. at 833.
The “large leeway” granted to employers in the design of pension plans applies equally to their modification or amendment of those plans. When an employer adopts, modifies or terminates a pension plan its actions are analogous to that of settlor of a trust rather than that of trustee or fiduciary. Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 443-44, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999). Amending a plan is not an act of plan “management” or “administration,” and is
Against this backdrop we consider the purpose of
Nothing in
In McGath v. Auto-Body North Shore, 7 F.3d 665 (7th Cir.1993), the plaintiff alleged that his employer intended to interfere with his pension rights by amending the plan to exclude him and by bending the plan‘s eligibility requirements to permit other employees entry, while he was held to the exacting letter of the plan‘s terms. Id. at 669. Although McGath had not been fired, suspended, or disciplined by his employer, he contended that he was nevertheless the victim of a subtle form of discrimination in violation of § 510. The Seventh Circuit held that even if it assumed the truth of these allegations, § 510 did not provide McGath any relief. Id. at 668-70. “Because the employer, as the settlor of the plan, had the right to change the plan‘s terms, Mr. McGath cannot claim that the alleged discriminatory injury flows from the plan amendments.” Id. at 670. Neither could he state a claim under § 510 by showing that others were treated more favorably:
Because the plan must be administered according to its terms, he cannot complain because he is held to those terms; this is true even if the rules were bent for another individual. ERISA § 510
affords protection from discrimination that interferes “with the attainment of any right to which such participant may become entitled under the plan.” Mr. McGath does not have a right to treatment that is contrary to the terms of the plan, even if those terms are breached for others.
Id. (footnote omitted).
Similarly, in Haberern v. Kaupp Vascular Surgeons Ltd. Defined Benefit Pension Plan, 24 F.3d 1491 (3rd Cir.1994), Haberern alleged that the employer‘s amendment to the plan that eliminated life insurance benefits for individuals over age 56, a change which affected only him, and the simultaneous tripling of the face amount of the life insurance policies for two other employees, violated
We hold that
Accordingly, we affirm the district court‘s entry of summary judgment in favor of the Plan and the Hospital on Plaintiffs’
D. Age Discrimination under the ADEA
According to Coomer, the district court erred in entering summary judgment on his ADEA claim because, contrary to the district court‘s determinations, there were issues of fact as to whether he made out a prima facie case of age discrimination and whether the articulated reason for not making the requested lump sum to Coomer was pretextual.
It is unlawful under the ADEA for an employer “to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual‘s age.”
To establish a prima facie case of age discrimination under the ADEA, a plaintiff must come forward with evidence
The district court held that defendants were entitled to summary judgment on Coomer‘s ADEA claim because Coomer was not similarly situated to Rowan and because Coomer could not show that the Hospital‘s proffered reason for treating Coomer differently was pretextual. Because we find that Coomer failed to produce any evidence that would suggest that the reason for the disparate treatment was pretextual, we will not address the issue of whether Coomer made out a prima facie case of age discrimination.
In Manzer v. Diamond Shamrock Chem. Co., 29 F.3d 1078 (6th Cir.1994), we explained what evidence a plaintiff must adduce in order to show that an employer‘s alleged legitimate reason for its adverse action against the plaintiff was a mere pretext:
To make a submissible case on the credibility of his employer‘s explanation, the plaintiff is required to show by a preponderance of the evidence either (1) that the proffered reasons had no basis in fact, (2) that the proffered reasons did not actually motivate his discharge, or (3) that they were insufficient to motivate discharge.
Id. at 1084. See also Hedrick, 355 F.3d at 460. Summary judgment is appropriate when the plaintiff fails to produce evidence from which a jury could reasonably conclude that the employer‘s reasons were pretextual. Wixson v. Dowagiac Nursing Home, 87 F.3d 164, 171 (6th Cir.1996).
The Hospital produced evidence that it amended the Plan to allow a lump sum distribution to Rowan because the amount above the allowable lump sum was de minimis, and because they supported Rowan‘s use of the funds. The Hospital explained that it placed a cap on the lump sum settlement under the Plan because it was concerned that if an employee took a large lump sum distribution, that employee might spend the monies and still look to the Hospital for long-term retirement benefits. Rowan‘s lump sum settlement was not for a large amount and did not raise those concerns. In addition, the Hospital explained that its decision to amend the Plan in favor of Rowan was influenced by the fact that Rowan was an African-American and he planned to use the lump sum distribution to complete his medical education to become an orthopedic surgeon. The Hospital noted that there was a shortage of African-American orthopedic surgeons, and the Hospital hoped that Rowan would eventually return to the Hospital to practice medicine. By contrast, Coomer‘s pension had an actuarial equivalent of approximately $116,000, a far larger amount than Rowan‘s, and Coomer did not advise the Hospital of any special circumstances to support his request.
The factors cited by the Hospital were reasonable factors for differentiating between Rowan and Coomer in the amend-
III. CONCLUSION
For all of the reasons set forth above, we AFFIRM the district court‘s grant of summary judgment in favor of Bethesda Hospital, Inc. and the Bethesda Hospital Employee Pension Plan.
Kurt RENFRO; William Southworth; Richard Peterson; James Fitchuk, individually and as Class Representatives on behalf of other persons similarly situated, Plaintiffs-Appellants, v. INDIANA MICHIGAN POWER COMPANY, d/b/a American Electric Power, Defendant-Appellee.
No. 02-2342
United States Court of Appeals, Sixth Circuit.
Argued: Feb. 4, 2004. Decided and Filed: June 2, 2004.
Notes
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, this title, section 3001 [29 USCS § 1201], or the Welfare and Pension Plans Disclosure Act, or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this title, or the Welfare and Pension Plans Disclosure Act.