Ahuja v. Ericsson, Inc.

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 07-1196

RITESH AHUJA,

Plaintiff - Appellant,

ERICSSON, INCORPORATED; ERICSSON STANDARD SEVERANCE PAY PLAN;
ERICSSON TOP CONTRIBUTOR ENHANCED SEVERANCE PAY PLAN OF 2004,

Defendants - Appellees.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Roger W. Titus, District Judge.
(8:05-cv-03423-RWT)

Argued: March 20, 2008 Decided: May 12, 2008

Before GREGORY and SHEDD, Circuit Judges, and William L. OSTEEN,
Jr., United States District Judge for the Middle District of North
Carolina, sitting by designation.

Affirmed in part, reversed in part, and remanded by unpublished
opinion. Judge Shedd wrote the opinion, in which Judge Gregory and
Judge Osteen joined.

ARGUED: Marc Jonathan Smith, SMITH, LEASE & GOLDSTEIN, L.L.C.,
Rockville, Maryland, for Appellant. Holly H. Williamson, AKIN,
GUMP, STRAUSS, HAUER & FELD, L.L.P., Houston, Texas, for Appellees.
ON BRIEF: Simon J. Garfield, AKIN, GUMP, STRAUSS, HAUER & FELD,
L.L.P., Houston, Texas, for Appellees.
Unpublished opinions are not binding precedent in this circuit.

2
SHEDD, Circuit Judge:

In this ERISA1 benefits action, Ritesh Ahuja appeals from the

district court’s grant of summary judgment in favor of Ericsson,

Inc. (“Ericsson”); Ericsson Standard Severance Pay Plan (the

“Standard Plan”); and Ericsson Top Contributor Enhanced Severance

Pay Plan of 2004 (the “Enhanced Plan”). As set forth below, we

affirm in part, reverse in part, and remand.

For approximately eight years, Ahuja was employed by Ericsson

and its predecessors, working for Ericsson’s wholly-owned

subsidiary Ericsson IP Infrastructure (“Ericsson IPI”) in its

Rockville, Maryland, office. During his employment with Ericsson

IPI, Ahuja held various high-level technical positions. As an

employee of Ericsson IPI, Ahuja participated in the Standard Plan,

which provided severance compensation, subject to certain

conditions, if he experienced a qualifying employment loss. In

addition, as an employee with particular technical knowledge, Ahuja

participated in the Enhanced Plan. This plan essentially served as

a retention tool used to provide Ericsson’s key employees with an

incentive to remain with Ericsson. Under the terms of the Enhanced

Plan, a participant would be entitled to a severance payment equal

1
Employee Retirement Income Security Act, 29 U.S.C. § 1001 et
seq.

3
to six months of his base salary in the event of a covered

employment loss. As relevant here, a covered employment loss is

defined as an involuntary termination “due to layoff or reduction-

in-force.” J.A. 70. The Enhanced Plan includes the following

provision:

Sale or Merger of Ericsson. Should all or any part of
Ericsson or its assets or business to which a participant
is assigned be sold, assigned, transferred, spun-off,
reorganized, or merged with another entity, the
participant will not be eligible for Enhanced Severance
Benefits under this Plan if he or she is offered
continuing employment with such entity regardless of
whether the participant accepts the offer of employment
and regardless of whether such offer is on comparable
terms and conditions as the employee’s current
employment.

J.A. 72 (“Paragraph 8b”).

In early 2005, Ericsson IPI closed its Rockville office and

consolidated its operations in its Raleigh, North Carolina,

location. Ericsson IPI offered Ahuja continued employment at its

Raleigh office, which he declined. As a result, Ericsson IPI

terminated Ahuja’s employment, effective June 17, 2005. Ahuja then

filed a claim for severance benefits, which the plan administrator

denied, citing Paragraph 8b. Ahuja appealed this decision to

Ericsson’s Plan Administrative Committee (the “Committee”), which

again denied Ahuja’s claim. The Committee concluded that the

exclusions of Paragraph 8b encompass a consolidation of two

geographically distinct Ericsson offices because such a

consolidation is a “reorganization” with another entity. The

4
Committee took the position that a geographically distinct office

qualifies as “another entity” by noting that nothing in Paragraph

8b requires that the entity be a “non-Ericsson entity.” J.A. 151.2

Ahuja filed suit under ERISA challenging the Committee’s

denial of benefits. The district court granted Ericsson’s motion

for summary judgment, finding that the Committee had acted within

its discretion in denying Ahuja’s claim pursuant to paragraph 8b.

The district court also rejected Ahuja’s claim for benefits under

the Standard Plan, concluding that he had not filed a claim for

these benefits with Ericsson.

Ahuja now appeals. There are no disputed material facts, and

we review de novo the district court’s grant of summary judgment

based on its legal conclusions. Garofolo v. Donald B. Heslep

Assocs., Inc., 405 F.3d 194, 198 (4th Cir. 2005). Additionally,

because Ericsson reserved full discretion to interpret the terms of

its plans and to adjudicate benefits claims, we would generally

review its denial of benefits for an abuse of discretion.

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111 (1989).3

Under this standard, a plan administrator’s decision “will not be

2
The Committee expressly declined to rule on any claim for
benefits under the Standard Plan, noting that Ahuja had not filed
a claim for these benefits.
3
Although Ericsson is both the sponsor and administrator of
its benefits plans, any conflict of interest it may have does not
rise to the level necessary to reduce the deference we owe its
determinations. Colucci v. AGFA Corp. Severance Pay Plan, 431 F.3d
170, 179 (4th Cir. 2005).

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disturbed if it is reasonable, even if [the] court would have come

to a different conclusion independently.” Ellis v. Metropolitan

Life Ins. Co., 126 F.3d 228, 232 (4th Cir. 1997). However, in the

context of an interpretation of a plan’s language, we afford this

deference only if the language at issue is ambiguous. Kress v.

Food Employers Labor Relations Ass’n., 391 F.3d 563, 569 (4th Cir.

2004). Where, in contrast, the plan’s language is clear and

unambiguous, a plan administrator must construe the language as

written, and we owe no deference to contrary constructions.

Colucci, 431 F.3d at 176; Lockhart v. United Mine Workers of

America 1974 Pension Trust, 5 F.3d 74, 78 (4th Cir. 1993).

In this case, the principal issue before us is whether we must

defer to Ericsson’s construction of Paragraph 8b as excluding

Ahuja’s claim for Enhanced Plan severance benefits. As already

noted, this paragraph provides:

6
J.A. 72. Ericsson contends that this paragraph excludes Ahuja’s

benefits claim because the consolidation of its geographically

distinct offices constitutes a reorganization. Ericsson offers two

interpretations of Paragraph 8b to support its contentions.

First, Ericsson maintains that nothing in Paragraph 8b

requires that the reorganization of Ericsson be with another entity

and that the paragraph therefore covers internal reorganizations.

In making this argument, Ericsson asserts that the phrase “with

another entity” modifies only the immediately preceding term

“merged” and not the prior term “reorganized.” We find Ericsson’s

position unpersuasive.

We have long recognized that the meaning of a term cannot be

determined in isolation but that the term must be read in the

context in which it is used. See, e.g., Pinney v. Nokia, Inc., 402

F.3d 430, 454 (4th Cir. 2005). In context, the reorganization

referred to by Paragraph 8b clearly is a reorganization with

another entity. All of the terms surrounding “reorganized” require

the participation of another entity: “sold,” “assigned,”

“transferred,” “spun-off,” “merged.” Further, the title of

Paragraph 8b refers to the interaction of Ericsson and another

entity: “Sale or Merger of Ericsson.” Finally, the later reference

in Paragraph 8b to continuing employment “with such entity” assumes

the presence of another entity earlier in the paragraph; otherwise,

the later reference would be devoid of meaning. Thus, within the

7
context of Paragraph 8b, “reorganized” can mean only reorganized

with another entity.

Second, Ericsson asserts that even if Paragraph 8b requires

the presence of another entity, a geographically distinct office of

Ericsson itself constitutes “another entity.” This argument

likewise fails.

Because “entity” is undefined in the plan, it must be accorded

its plain and ordinary meaning. Bailey v. Blue Cross & Blue Shield

of Va., 67 F.3d 53, 57 (4th Cir. 1995). In addition, as noted

earlier, we must examine the term in the context in which it is

used. As Ahuja points out, both parties agree that an entity must

have an “independent and separate existence.” J.A. 46.

Furthermore, in the legal context, an entity is “an organization

(such as a business or a governmental unit) that has a legal

identity apart from its members.” Black’s Law Dictionary (8th ed.

2004). The plain meaning of “entity,” then, requires a discrete

and independent organization with its own identity. While Ericsson

IPI qualifies as an entity under this definition, a particular

office of Ericsson IPI does not.

The context in which “entity” is used lends support to this

meaning. Paragraph 8b uses the terms “sold,” “assigned,”

“transferred,” “spun-off,” “reorganized,” and “merged,” and these

terms are contained within a paragraph entitled “Sale or Merger of

Ericsson” (emphasis added). Thus, the entire thrust of Paragraph

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8b is directed toward a combination of “Ericsson” and “another

entity” -- not Ericsson and itself.4

We therefore conclude that Paragraph 8b is unambiguous and

does not embrace an internal reorganization of two Ericsson IPI

locations. Accordingly, Ericsson retained no deference to

interpret the paragraph’s terms, and it erred when it relied on

Paragraph 8b to deny Ahuja’s claim for severance benefits.

III

Lastly, we turn to two secondary issues. First, Ahuja claims

the district court erred in rejecting his claim for benefits under

the Standard Plan. However, we agree with the district court that

Ahuja may not raise this claim because he failed to file a claim

for these benefits with Ericsson and to pursue his administrative

remedies under the plan. See Gayle v. United Parcel Service, 401

F.3d 222, 226 (4th Cir. 2005). Second, Ahuja asserts that he is

entitled to recover his attorney’s fees pursuant to 29 U.S.C. §

1132(g). Because an award of attorney’s fees under ERISA is

committed to the discretion of the district court and may require

4
We note that Ericsson’s proposed definition of “entity” as
embracing a geographically distinct office of Ericsson IPI would
lead to arbitrary interpretations. For example, at argument
Ericsson contended that two Ericsson IPI offices which were
directly across the street from each other would not be separate
entities. Yet, under Ericsson’s own definition, these
geographically distinct offices would seemingly constitute
different entities.

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certain factual findings, see Carolina Care Plan, Inc. v. McKenzie,

467 F.3d 383 (4th Cir. 2006), we leave this issue for the district

court to consider on remand.

In accordance with the foregoing, we affirm the judgment

entered below as to Ahuja’s claims under the Standard Plan,

reverse the judgment and remand for entry of judgment in favor of

Ahuja as to his claims under the Enhanced Plan, and remand for

further proceedings consistent with this opinion.

AFFIRMED IN PART,
REVERSED IN PART,
AND REMANDED