Derek Kramer v. Am. Electric Power Exec. Severance PlanDerek Kramer v. Am. Electric Power Exec. Severance Plan
MATHIS, Circuit Judge. This case looks like a standard claim under the Employee Retirement Income Security Act (“ERISA”) to recover benefits. But Derek Kramer wants to
On the merits, Kramer has not shown that the district court erred in finding that the decision denying Kramer benefits was not arbitrary and capricious. We thus affirm.
I.
In 2018, Kramer joined American Electric Power Service Corporation (“AEP”) as the vice president and chief digital officer of AEP Charge, the company’s new “innovation hub.” R. 21–1, PageID 139. Almost a year after hiring him, AEP offered Kramer the option to participate in the AEP Executive Severance Plan (the “Plan”). He accepted. The Plan provides eligible employees a severance payment based on their base salary and performance “due to an Involuntary Termination or a Good Reason Resignation.” Id. at 155.
In 2020, the company terminated Kramer’s employment. Two events led to that decision.
First, during an annual audit, AEP’s audit services department found that Kramer’s executive assistant charged personal expenses to her company credit card in violation of corporate policy. Audit department representatives called Kramer to discuss the charges. Kramer fоllowed up the same day to confirm that he spoke with his assistant and warned her about charging personal expenses to her company credit card. In the same audit the next year, the audit services department again flagged Kramer’s assistant because she had the third highest charges on a company credit card, including excessive business expenditures and prohibited personal charges, all of which Kramer had approved. AEP suspended Kramer while investigating the charges.
The second event leading tо Kramer’s termination involved his company-issued cell phone. Per company policy and as part of the investigation of the credit-card charges,
Campbell delivered the phone to AEP’s security manager, Michael Knorps, who connected it to forensic software to transfer the data. During the extraction process, Knorps observed the device spontaneously “reboot[] and beg[i]n wiping itself clean.” Id. at 182. Although he had significant information-technology and law-enforcement experience, Knorps had never seen this happen at AEP and suspeсted that Kramer had remotely wiped the phone. AEP contacted Kramer for an explanation, and he responded that he removed his personal Apple ID and iCloud account but did not intend to wipe the device. Based on further research, testing, and internal consulting, Knorps confirmed his suspicion that Kramer intentionally wiped the phone.
On October 2, 2020, AEP terminated Kramer. Kramer’s direct supervisor informed him that the termination was based on Kramer’s failure to tighten oversight of his assistant’s expenses. The next month, Kramer submittеd a formal claim for severance under the Plan.
In a January 19, 2021 letter, AEP’s chief human resources officer Julius Cox denied Kramer’s benefits claim, finding that the company terminated his employment “for Cause.” Id. at 146. Under the Plan, a participant terminated for cause is ineligible to receive benefits.
The letter identified two bases for Cox’s determination. First, Cox concluded that Kramer’s violations of company policies on “proper expense account behavior” qualified as
Kramer appealed the initial claim determinatiоn to the Plan’s appeal committee. The committee agreed with Cox’s findings and denied Kramer’s appeal. In its letter issuing the decision, the committee identified specific evidence in the administrative record supporting each of Cox’s findings.
Kramer brought an ERISA action against AEP and the Plan. He asserted claims for a denial of benefits under
Kramer moved to conduct discovery beyond the administrative record (i.e., the record of proceedings before Cox and the appeal committee). Acknowledging that our precedent limits discovery in ERISA denial-of-benefits actions to procedural claims, Kramer argued that the Supreme Court had implicitly abrogated that precedent, and that regardless, the district court should allow discovery into his procedural allegations. The magistrate judge granted discovery into the alleged “conflict of interest or bias” in the administrative process but otherwise denied additional discovery. R. 24, PageID 309. Kramer did not object to the magistrate judge’s order.
Although AEP and the Plan produced some documents in response to Kramer’s discovery requests, it withheld nearly 300 documents based on the attorney-client privilege. Kramer moved to compel production, arguing that the fiduciary exception to the attorney-client privilege applied because of ERISA’s fiduciary requirements. AEP and the Plan maintained that the Plan was not subject to fiduciary requirements because it was a “top hat” plаn, as defined by ERISA.
AEP and the Plan then moved for summary judgment. The district court construed the motion as a motion for judgment on the administrative record. Applying an arbitrary-and-capricious standard of review, the district court found that both Cox and the committee offered a reasonable, evidence-based explanation for their conclusion that AEP terminated Kramеr’s employment for cause. Accordingly, the district court granted judgment in AEP and the Plan’s favor. Kramer appeals only the district court’s adjudication of his denial-of-benefits claim.
II.
On appeal, Kramer argues that the district court erred by: (1) limiting the scope of discovery for his ERISA denial-of-benefits claim; (2) striking Kramer’s jury-trial demand; and (3) granting judgment to AEP and the Plan. We address each argument in turn.
A.
Kramer makes two discovery-related challenges. First, he argues that the district court erred in denying his motion to compel AEP and the Plan to produce сertain documents that AEP and the Plan were subject to the attorney-client privilege. Second, he argues that he was entitled to “full discovery” on his ERISA denial-of-benefits claim.
We review the district court’s discovery rulings “for an abuse of discretion.” Louzon v. Ford Motor Co., 718 F.3d 556, 560 (6th Cir. 2013) (quotation omitted). “A district court abuses its discretion when it applies the incorrect legal standard, misapplies the correct legal standard, or relies upon clearly erroneous findings of fact.” State Farm Mut. Auto. Ins. Co. v. Angelo, 95 F.4th 419, 429 (6th Cir. 2024) (quotation omitted).
1.
Kramer’s first discovery challenge turns on whether he established an exception to AEP and the Plan’s assertion of the attorney-client privilege to withhold production of certain documents. Kramer purports to rely on the fiduciary exception to the privilege.
Trust law informs our “effort to interpret ERISA’s fiduciary duties.” Varity Corp. v. Howe, 516 U.S. 489, 497 (1996). Thus, in the ERISA context, a plan fiduciary “must make available to the beneficiary, upon request, any communications with an attorney that are intended to assist in the administration of the plan.” Moss, 495 F. App’x at 595 (quoting Bland v. Fiatallis N. Am., Inc., 401 F.3d 779, 787 (7th Cir. 2005)).
The fiduciary exception to the attorney-client privilege does not apply to the Plan if the Plan is an executive deferred-compensation plan, commonly referred to as a top-hat plan. Congress exempts top-hat plans from ERISA’s fiduciary requirements.
ERISA does not define deferred compensation. When a statute does not define a term, “we give the term its ordinary meaning,” Enriquez-Perdomo v. Newman, 54 F.4th 855, 863 (6th Cir. 2022) (internal quotation marks omitted), using “the traditional tools of statutory construction,” Loper Bright Enters. v. Raimondo, 603 U.S. 369, 403 (2024). Normally, “dictionaries are a good place to start” in determining a term’s ordinary meaning. United States v. Hill, 963 F.3d 528, 532 (6th Cir. 2020) (quotation omitted). Black’s Law Dictionary (12th ed.
The plain language of the Plan shows that AEP maintained it to provide deferred compensation. The Plan’s benefits include a severance payment equal to the participant’s annual base salary and maximum incentive bonus, immediate vesting of a portion of the participant’s restricted stock units, and a prorated share of “performance unit” awards. R. 21–1, Page ID 164. Under the Plan’s terms, AEP must pay those benefits—“to which a Participant is entitled” (i.e., as of the Plan’s effective date)—according to a payment schedule. Id. at 165–66. The payment schedule provides that AEP shall pay 50% of the total amount as of the first regular payroll date that coincides with or immediately follows the day six months after the termination, and the remaining balance in 13 equal bi-weekly installments on the later regular payroll dates. A Plаn participant can receive benefits only after he has resigned or been terminated, and at least one year will pass between the time they acquire the right to compensation and when the final installment becomes payable. Phrased differently, the Plan entitles participants to compensation that is or may be payable in a later year.
Kramer resists the conclusion that AEP maintained the Plan to provide deferred compensation. Relying on Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1 (2004), Kramer argues that we should look to Section 409A of the Internal Revenue
The provisions that Kramer relies on do not help his cause. First, Section 409A does not define deferred compensation. Instead, that statute, as its title suggests, governs when an employee is taxed for deferred compensation under nonqualified deferred-compensation plans.
Kramer also argues that the Plan falls under an exception to deferred compensation in the Treasury regulations for some “separation pay plan[s].” See
Finally, Kramer argues we should avoid a broad interpretation of deferred compensation because it producеs an absurd result—namely, that the term would mean something different under Title I of ERISA than it would under the Internal Revenue Code. But it is not absurd for the same term to have different meanings in different statutes. See Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 237–38 (2012) (explaining that the absurdity doctrine applies only if no reasonable person could intend the outcome and the error was obviously technical or ministerial).
Because the Plan qualifies as a top-hat plan, the fiduciary exception to the attornеy-client privilege does not apply. As a result, the district court did not abuse its discretion in denying Kramer’s motion to compel AEP and the Plan to produce privileged documents.
2.
Kramer has waived appellate review of his argument about his request for “full discovery.” Kramer sought discovery beyond what was contained in the administrative record. The magistrate judge granted Kramer’s request in part. Specifically, the magistrate judge allowed Kramer to obtain discovery into his allegations of bias and prejudice in the administrativе process. Kramer did not object to the magistrate judge’s order.
Because Kramer did not object to the magistrate judge’s order, he may not challenge it on appeal. “A party may not assign as error a defect in the [magistrate judge’s] order not timely objected to.”
B.
Next, Kramer claims that he was entitled to a jury trial on his ERISA denial-of-benefits claim. He brought that claim under
The Seventh Amendment preserves the right to a jury trial “[i]n Suits at common law, where the value in controversy shall exceed twenty dollars[.]”
We have held that ERISA claims for denial-of-benefits claims are equitable in nature. Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 616 (6th Cir. 1998); Bair v. Gen. Motors Corp., 895 F.2d 1094, 1096–97 (6th Cir. 1990). Thus, Kramer was not entitled to a jury trial on his ERISA claim.
Kramer’s arguments to the contrary are unpersuasive. First, he argues that, because ERISA explicitly limits recovery to “equitable relief” in its other causes of action for plan participants but not in § 1132(a)(1)(B), this subpart must provide for legal relief. Seе
Second, Kramer tries to read our prior holdings about the jury-trial right in ERISA denial-of-benefits cases as dicta. But in those cases, we consciously considered whether § 1132(a)(1)(B) claims are triable by a jury and concluded that they are not. See Wright v. Spaulding, 939 F.3d 695, 697 (6th Cir. 2019); see, e.g., Bair, 895 F.2d at 1096–97. These are therefore holdings, and they are dispositive here.
Finally, Kramer argues that intervening Supreme Court precedent—namely, CIGNA Corporation v. Amara, 563 U.S. 421 (2011), and Montanile v. Board of Trustees of National Elevator Industry Health Benefit Plan, 577 U.S. 136 (2016)—have implicitly abrogated these precedents. Neither case addresses jury trials, however, and Montanile interprets a different ERISA cause of action altogethеr. See 577 U.S. at 139 (discussing
The district court did not err in striking Kramer’s jury demand.
C.
Finally, we consider the district court’s decision granting judgment to AEP and the Plan on the merits of Kramer’s denial-of-benefits claim. District courts review an ERISA denial-of-benefits claim de novo “unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). If the plan gives “the plan administrator such discretion, then a court must review the administrator’s denial of benefits under the arbitrary-and-capricious standard.” Shaw v. AT&T Umbrella Ben. Plan No. 1, 795 F.3d 538, 546 (6th Cir. 2015) (citation omitted).
The Plan grants its administrator discretion to make eligibility determinations and to construe the Plan. Therefore, the district court correctly applied the arbitrary-and-capricious standard. That “standard is extremely deferential.” McClain v. Eaton Corp. Disability Plan, 740 F.3d 1059, 1064 (6th Cir. 2014) (quotation omitted). “[W]e review de novo the district court’s finding that the administrator’s denial was not arbitrary and capricious.” Shaw, 795 F.3d at 547 (citation omitted).
Kramer has failed to show that the denial of benefits was arbitrary and capricious. An administrator’s decision is not arbitrary or capricious “if it is the result of a deliberate, principled reasoning process[,] supported by substantial evidence,” Bennett v. Kemper Nat’l Servs., Inc., 514 F.3d 547, 552 (6th Cir. 2008) (quotation omitted), and “rational in light of the plan’s
That Kramer disagrees with the administrator’s findings does not make them arbitrary or capricious. See Shields v. Reader’s Dig. Ass’n, 331 F.3d 536, 541 (6th Cir. 2003) (“When it is possible to offer a reasoned explanation, based on the evidence, for a particular outcome, that outcome is not arbitrary or capricious.” (quotation omitted)).
Kramer argues that the district court erred in four ways. None is persuasive.
First, Kramer argues that we should reverse the district court’s decision because he did not receive the discovery to which hе believes he was entitled. But, as we explained above, the district court did not err in denying Kramer’s motion to compel AEP and the Plan to produce documents subject to the attorney-client privilege. And Kramer waived any challenge to the denial of his motion for full discovery.
Second, Kramer claims the district court violated the party-presentation principle by construing the dispositive motion as a motion for judgment on the administrative record, rather than a Rule 56 motion for summary judgment. Under the party-presentation princiрle, courts rely on the parties to frame the issues for decision and normally decide only the questions
This is one of those circumstances. In Wilkins, we rejected applying Rule 56 in ERISA denial-of-benefits actions because the summary-judgment standard is “designed to screen out cases not needing a full factual hearing,” so “apply[ing] Rule 56 aftеr a full factual hearing has already occurred before an ERISA administrator [would be] pointless.” 150 F.3d at 619. The district court understood this and properly used the arbitrary-and-capricious standard rather than the Rule 56 standard. And consistent with Wilkins, the parties did not present, and the district court did not consider, any evidence beyond the administrative record. See id. Only the title—not the substance—of the dispositive motion indicated that AEP and the Plan moved for summary judgment under Rule 56. Thus, the district court’s decision to construe AEP and the Plan’s motion as a motion fоr judgment on the administrative record did not violate the party-presentation principle.
Third, Kramer argues that the district court should not have followed the procedures governing the review of denial-of-benefits claims that we adopted in Wilkins because, according to Kramer, the Supreme Court implicitly abrogated Wilkins in United States v. Tsarnaev, 595 U.S. 302 (2022).
In Tsarnaev, the Supreme Court considered whether the First Circuit’s rules could cabin the discretion that district courts are entitled to when conducting jury selection under Supreme Court precedent. 595 U.S. at 312–13. The Court opinеd that lower courts cannot issue “supervisory” rules that conflict with a constitutional provision, federal statute, federal rule of procedure, or Supreme Court standards. Id. at 315–16. And it held that the First Circuit erred by “supplant[ing] the district court’s broad discretion to manage voir dire by prescribing specific lines of questioning, and thereby circumvent[ing] a well-established standard of review.” Id. at 317.
Fourth, Kramer argues that he created a genuine dispute of fact that should have precluded summary judgment under Rule 56. Because Rule 56 does not apply to the adjudication of ERISA denial-of-benefits claims, this argument is meritless.
III.
For these reasons, we AFFIRM the district court’s judgment.