United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 11, 2005 Decided May 17, 2005
No. 04-7060
MARIAN R. WAGENER, ON BEHALF OF HERSELF
AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED AND
DONALD F. CHAMPOUX, ON BEHALF OF HIMSELF
AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED ,
APPELLANTS
v.
SBC PENSION BENEFIT PLAN - NON BARGAINED PROGRAM ,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 03cv00769)
Marc I. Machiz argued the cause for appellants. With him
on the briefs were Marka Peterson and Eli Gottesdiener.
John L. Carter argued the cause for appellee. With him on
the brief were Bruce A. Blefeld and C. Michael Buxton.
Before: EDWARDS, SENTELLE, and ROBERTS, Circuit
Judges.
Opinion for the Court filed by Circuit Judge EDWARDS.
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EDWARDS, Circuit Judge: The principal question in this
case is whether plaintiffs-appellants Marian Wagener and
Donald Champoux stated a claim upon which relief can be
granted in their complaint alleging that defendant-appellee, the
SBC Pension Benefit Plan-Nonbargained Program (“SBC Plan”
or “Plan”), impermissibly discriminated against plaintiffs and
other Plan participants in the administration of the SBC Plan.
We conclude that plaintiffs have indeed stated a claim under §
502(a)(1)(B) of the Employee Retirement Income Security Act
of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(1)(B) (2000).
Therefore, we reverse the District Court’s dismissal of plaintiffs’
claims.
According to their complaint, Wagener and Champoux
worked for companies that are affiliated with the Plan sponsor,
SBC Communications, Inc. (“SBC”). Wagener and Champoux
are both participants in the Plan and, in November 2000, they
retired pursuant to an enhanced benefit program that was
designed to encourage early retirement. The calculation of
benefits under the terms of this program depends in part on the
amount of a participant’s compensation between January 1,
1995 and December 31, 1999. The present dispute turns on how
to calculate plaintiffs’ compensation during this period.
According to the defendant, plaintiffs’ compensation between
January 1, 1995 and December 31, 1999 includes only the
amount of pay plaintiffs actually received during this period,
thus excluding a paycheck that Wagener and Champoux
received on January 5, 2000 for work they performed in 1999.
By contrast, Wagener and Champoux argue that their level of
compensation for benefit calculation purposes includes
compensation earned between January 1, 1995 and December
31, 1999, even though one paycheck for this period was received
at the beginning of the 2000 calendar year. They also allege that
other similarly situated Plan participants have been paid benefits
based on compensation earned, not received, in the base period,
3
thus confirming their entitlement to benefits under a non-
discrimination clause in the Plan.
We hold that Wagener and Champoux have alleged
sufficient facts to state a claim for denial of benefits under
ERISA, 29 U.S.C. § 1132(a)(1)(B), because their complaint
includes the allegation that Plan officials discriminated against
them vis-à-vis similarly situated Plan participants in
contravention of the Plan’s plain language. Any deference we
owe to discretionary decisions of Plan officials does not extend
to decisions that discriminate among Plan participants in
violation of the plain terms of the Plan. Therefore, we reverse
the District Court’s decision granting the Plan’s motion to
dismiss. We also vacate the District Court’s denial of the class-
certification motion filed by Wagener and Champoux, as that
motion is no longer moot in light of our disposition of this
appeal.
I. BACKGROUND
The following facts are taken from plaintiffs’ complaint, as
well as the exhibits attached to, and the documents incorporated
by reference in, that complaint. Because we are reviewing the
District Court’s decision to grant the SBC Plan’s motion to
dismiss for failure to state a claim, we assume that the facts
alleged in plaintiffs’ complaint are true. World Wide Minerals,
Ltd. v. Republic of Kazakhstan, 296 F.3d 1154, 1157 n.2 (D.C.
Cir. 2002).
The SBC Pension Benefit Plan – Nonbargained Program is
a defined benefit plan within the meaning of ERISA § 3(35), 29
U.S.C. § 1002(35), sponsored by SBC, which is the Plan
administrator and a named fiduciary of the Plan. Compl. ¶ 7,
3/27/03, reprinted in Joint Appendix (“J.A.”) 6, 12. The Benefit
Plan Committee (“Committee”) is also a named fiduciary of the
Plan and has primary responsibility for the review of benefit
claims under the Plan. Id. The Committee has delegated
4
administrative responsibility and authority to review claims to
the SBC Pension Plan Service Center (“Service Center”), which
services, administers, and operates the Plan on a day-to-day
basis. Id. Plaintiffs Wagener and Champoux were at all
relevant times participants in the Plan. Id. ¶¶ 5-6, J.A. 11.
SBC altered the Plan’s benefit structure in 1997, but
preserved the pre-existing structure for certain employees,
including plaintiffs, who retained a “Grandfathered Benefit.”
See id. ¶¶ 11-12, J.A. 13; SBC Communications, Inc. Board of
Directors Resolutions Amending the Plan Effective 6/1/1997,
J.A. 788, 792. It is undisputed that the 1997 Plan amendment
has no bearing on the merits of this case.
In 1998, SBC began requiring some SBC-affiliated
companies that participated in the Plan to change the method
that they used to determine the Basic Compensation portion of
a Plan participant’s Pension Compensation, which ultimately
affected the amount of the participant’s benefits under the Plan.
Compl. ¶ 18, J.A. 15. Under the regime in place prior to 1998,
Basic Compensation was calculated based on a participant’s
Basic Rate of Pay over a specified period. Id. ¶ 15, J.A. 14.
Under this approach, Basic Compensation meant that a
participant would obtain credit for his or her full-time base pay
rate, whether or not she worked full time during that period. Id.
¶ 17, J.A. 14-15.
Beginning in 1998, SBC required some participating
companies to use “actual base pay” instead of Basic Rate of Pay
to determine an employee’s Basic Compensation under the Plan.
The purpose of this change, which was implemented through a
series of Plan amendments (“actual base pay amendments”), was
to allow participants to accrue pension credits only for work
they actually performed. Id. ¶¶ 18-19, J.A. 15-16. Under the
terms of an April 13, 1999 Plan amendment (“April 1999 actual
base pay amendment”), SBC switched SBC Management
Services, Inc., which employed plaintiffs Wagener and
5
Champoux, from the Basic Rate of Pay to the “actual base pay”
method for calculating employee participants’ Basic
Compensation, effective July 1, 1999. Id. ¶¶ 19-20, J.A. 16.
On June 14, 1999, SBC, acting as Plan administrator, sent
a written notice to Wagener, Champoux, and others, which
stated in relevant part:
“The [Plan] is being amended effective July 1, 1999 to
change the method that is used to calculate your pension
compensation, which may affect the amount of your benefit
. . . . The Basic Rate of Pay portion of Pension
Compensation will be replaced by Actual Base Pay. The
Basic Rate of Pay is your full time monthly Base Pay,
whether you worked it or not. The Actual Base Pay is the
base pay you actually receive.”
Id. ¶ 22, J.A. 17 (alterations in original); see also J.A. 89 (copy
of the notice attached as an exhibit to the complaint).
On January 4, 2000, actual base pay was defined in the
Plan, id. ¶ 24, J.A. 17, to mean “a Participant’s Compensation
that has actually been paid out by a Participating Company on
such Participant’s behalf and that has been identified by such
Participating Company as base pay.” Plan Amendment, 1/4/00,
J.A. 91, 93 (attached as exhibit to the complaint).
On September 20, 2000, as part of a company-wide
downsizing, SBC adopted a Plan amendment that added an
Enhanced Pension and Retirement Program (“EPR Program”) to
the Plan. The EPR Program was designed to encourage
thousands of employees of SBC and SBC-related companies to
take early retirement by offering them a larger retirement benefit
than they would have otherwise received. Compl. ¶ 8, J.A. 12.
The EPR Program provided that employees who decided to
retire under its terms would receive the largest of several
alternative benefits for which they were eligible. See id. ¶ 11,
J.A. 13.
6
Plaintiffs Wagener and Champoux were eligible for the
EPR Program, and they elected to retire under it. Their last day
of work was November 15, 2000. Id. ¶¶ 9-10, J.A. 13. For
Wagener and Champoux, the largest benefit available under the
EPR Program was the “Enhanced Grandfathered Benefit.” Id.
¶ 11, J.A. 13. The “Enhanced Grandfathered Benefit” calculated
participants’ benefits as if they were five years older and had
worked five years longer for a SBC company than they actually
had. See SBC Pension Benefit Plan Nonbargained Program, As
Restated Effective 2/1/95 (incorporating EPR amendments)
(“SBC Plan” or “Plan”), J.A. 254, 262. Except for that
enhancement, the Plan amendments creating the EPR Program
explicitly provided that “the Enhanced Grandfathered Benefit
shall be a benefit calculated in the same manner as the
Grandfathered Benefit would be calculated . . . under the current
[Plan].” Id.
The present dispute emanates from the Committee’s
calculation of plaintiffs’ benefits under the EPR Program. To
calculate the “Enhanced Grandfathered Benefit” under the EPR
Program, the Committee must first determine a participant’s
“Adjusted Career Income,” which is a function of, among other
things, the participant’s “Average Annual Compensation” for
the period from January 1, 1995 through December 31, 1999.
Compl. ¶ 12, J.A. 14. As the term was used in the portion of the
Plan providing for the Grandfathered Benefit at the time that the
EPR Program was adopted, “Average Annual Compensation”
meant “‘a Participant’s Pension Compensation [which included
Basic Compensation plus other forms of compensation] during
the Averaging Period, divided by five years.’” Id. ¶ 13, J.A. 14;
see also J.A. 257 (copy of the SBC Plan). Thus, with regard to
plaintiffs and other individuals eligible for the “Enhanced
Grandfathered Benefit,” “Average Annual Compensation” was
their total Pension Compensation between January 1, 1995 and
December 31, 1999 – the relevant “Averaging Period” – divided
by five.
7
On September 6, 2001, plaintiff Champoux wrote the SBC
Pension Plan Service Center, complaining that one full pay
period from 1999 had been excluded from the Averaging Period
used to calculate his Pension Compensation. He stated:
“Since SBC paid the management employees on a semi-
monthly basis, the total number of payments necessary for
a full year compensation is 24. As you will note in the
[attached table regarding the calculation of Champoux’s
benefits], the total number of payments . . . for the year
1999 is only 23. All years except 1999 have 24
payments. . . . If SBC believes it is appropriate to exclude
some compensation from within the total base period
compensation, then it should also exclude the applicable
time period from the averaging calculation.”
Id. ¶ 31, J.A. 21 (emphasis added by complaint omitted). On
December 7, 2001, the Service Center denied Champoux’s
request, stating that, because the April 1999 actual base pay
amendment changed the method used to calculate Pension
Compensation from Basic Rate of Pay to actual base pay
effective July 1, 1999, one of the paychecks Champoux received
in July 1999 was not included in the calculation of his Pension
Compensation. See id. ¶¶ 32-33, J.A. 22.
In February 2002, Champoux appealed this denial to the
Plan’s Benefit Plan Committee. The Committee wrote
Champoux in May 2002, informing him that his appeal had been
denied. The denial letter did not endorse the position taken by
the Service Center in its December 2001 letter to Champoux.
Instead, the Committee explained:
“What actually happened was that the [April 1999 actual
base pay] amendment caused a delay in the recognition of
pay, so that the pay you received for the period ended
December 31, 1999 was recognized as pay in the calendar
year 2000 (because it was paid on January 5, 2000); prior to
8
the amendment, pay received for the period ended
December 31, 1999 would have been recognized in 1999.
Therefore, as a result of the amendment, twenty-three pay
periods were included in 1999 pay instead of twenty-four.
It was the accounting change to actual base pay in 1999 that
resulted in what appeared to you to be discrepancy in your
pension calculation.”
Id. ¶ 37, J.A. 25 (emphasis added by complaint omitted).
The Committee reached this decision notwithstanding that
it had previously endorsed a contrary interpretation of the actual
base pay amendments for Grandfathered retirees who were not
participants in the EPR Program. Specifically, the plaintiffs’
complaint alleges that
between January 1, 1998 and today, the Plan has
consistently administered the Grandfathered Benefit for all
retirees – except the Enhanced Grandfathered Benefit for
EPR retirees – by including all pay periods as part of
“Average Annual Compensation” for the year in which they
were earned, notwithstanding the [actual base pay
amendments], and notwithstanding the fact that one full pay
period was not received until after the end of the Averaging
Period.
Id. ¶ 25, J.A. 18-19.
Champoux submitted two appeals of the Benefit
Committee’s decision, which were denied in August 2002 and
October 2002. See id. ¶¶ 39-42, J.A. 26-28.
With regard to this appeal, the material facts relating to
plaintiff Wagener’s claim for benefits are virtually identical to
those relating to Champoux. She also sought additional benefits
from the SBC Plan and, like Champoux, she was informed that
her benefits had been calculated by excluding one full pay
period from 1999 from the calculation of her Pension
9
Compensation. Wagener’s claim for additional benefits was
also denied by both the Service Center, and, on appeal, by the
Committee. See id. ¶¶ 43-48, J.A. 29-32.
Wagener and Champoux allege a number of facts that they
assert demonstrate that the Committee’s decision to deny their
claims for additional benefits was influenced by a conflict of
interest. Specifically, the complaint alleges that the plaintiffs’
“correct interpretation of the Plan” would cost SBC roughly $30
million plus interest in additional contributions to what is
already an underfunded Plan. Id. ¶ 58, J.A. 38. According to
plaintiffs, “On information and belief, the members of the
Benefit Plan Committee are officers and employees of SBC and
its affiliates whose jobs and prospects for raises and promotions
are affected, and/or are seen by them to be affected, by decisions
interpreting the plan in a manner disadvantageous to SBC,
especially one which would cost SBC some $30 million plus
interest.” Id. The complaint further alleges that this conflict of
interest has influenced not only the Committee’s ultimate
interpretation of the Plan, but also other matters relating to the
Committee’s handling of plaintiffs’ requests regarding their
benefits, including (1) the Committee’s refusal to provide
plaintiffs with documents relating to their benefit claims, (2) the
Committee’s failure to provide plaintiffs with a reasoned basis
for its decisions denying their claims for additional benefits, and
(3) the Committee’s October 2001 adoption of an after-the-fact
Plan amendment to make it appear that the disparate treatment
of EPR Grandfathered retirees vis-à-vis similarly situated non-
EPR Grandfathered retirees had a textual basis when in fact the
discriminatory treatment had been ongoing prior to the
promulgation of the amendment. Id. ¶¶ 59-60, J.A. 38-39.
Having fully exhausted the internal claims procedures of the
Plan, id. ¶ 49, J.A. 32, plaintiffs Wagener and Champoux filed
suit against the SBC Plan in District Court in March 2003. In
Count Two of their complaint, plaintiffs sought, on behalf of
10
themselves and a class of similarly situated participants and
beneficiaries, additional benefits under ERISA, 29 U.S.C. §
1132(a)(1)(B), which authorizes individuals, inter alia, to bring
civil actions to recover benefits due to them under the terms of
their pension plan. Plaintiffs filed a motion for class
certification concurrent with the filing of their complaint. In
addition, in Count One of their complaint, plaintiffs sought
additional disclosures of documents relating to their individual
claims, as authorized by ERISA § 503, 29 U.S.C. § 1133, and its
accompanying regulations. Plaintiffs’ complaint also included
two additional counts, which are not at issue here.
In May 2003, the SBC Plan moved to dismiss plaintiffs’
complaint for failure to state a claim upon which relief can be
granted under Rule 12(b)(6) of the Federal Rules of Civil
Procedure. Plaintiff Wagener then moved for summary
judgment on the document disclosure claim.
The District Court granted the motion to dismiss the
complaint and denied Wagener’s motion for summary judgment.
Wagener v. SBC Pension Benefit Plan-Nonbargained Program,
Civ. A. No. 03-00769 (D.D.C. Mar. 29, 2004), reprinted in J.A.
1021. The District Court stated:
The central question presented is whether the defendant
Pension Benefit Plan was required to include a payment
made on January 5, 2000, in the calculation of each
plaintiff’s “Average Annual Compensation.” The
defendant’s Benefit Plan Committee, which interpreted the
plan and calculated the benefits, decided that the Plan did
not authorize inclusion of the January 5, 2000, payment
because it was received after December 31, 1999, the end
of each plaintiff’s “Averaging Period.” The Court finds
that the Committee’s interpretation of the plan is
reasonable, and since that is all that is required due to the
substantial-deference owed to the Committee’s decision,
that is the end of the matter.
11
Id., J.A. 1021. The District Court further concluded that the
plaintiffs’ other claims were derivative of the benefit claim and
thus dismissed them as well. Id., J.A. 1022. In a separate order
issued the same day, the District Court denied plaintiffs’ motion
for class certification as moot in light of its decision granting the
SBC Plan’s motion to dismiss. Wagener v. SBC Pension Benefit
Plan-Nonbargained Program, Civ. A. No. 03-00769 (D.D.C.
Mar. 29, 2004), reprinted in J.A. 1023. Plaintiffs appeal the
dismissal of their claim for additional benefits under §
1132(a)(1)(B) and the dismissal of their motion for class
certification as moot; Plaintiff Wagener also appeals the District
Court’s dismissal of the document disclosure claim (Count One)
and the denial of her motion for summary judgment on that
claim.
II. ANALYSIS
A. Standard of Review
We review de novo the District Court’s dismissal of
plaintiffs’ complaint for failure to state a claim, accepting the
factual allegations made in the complaint as true and giving
plaintiffs the benefit of all inferences that can reasonably be
drawn from their allegations. Kaempe v. Myers, 367 F.3d 958,
963 (D.C. Cir. 2004). We are constrained to reverse the District
Court’s decision unless it appears beyond doubt that Wagener
and Champoux can prove no set of facts in support of their
claims that would entitle them to relief. Id. (citing Conley v.
Gibson, 355 U.S. 41, 45-46 (1957)).
B. The Level of Deference Owed the Committee’s
Interpretation
Before analyzing the specific facts of this case, we consider
the level of deference owed to the Committee’s interpretation of
the SBC Plan. In Firestone Tire & Rubber Co. v. Bruch, 489
12
U.S. 101, 115 (1989), the Supreme Court held that “a denial of
benefits challenged under [29 U.S.C.] § 1132(a)(1)(B) is to be
reviewed under a de novo standard unless the benefit plan gives
the administrator or fiduciary discretionary authority to
determine eligibility for benefits or to construe the terms of the
plan.” In this latter category of cases, the standard of review –
variously described by the Court as “arbitrary and capricious”
and “abuse of discretion” review – is plainly deferential. See id.
at 111-15. This court has defined the Firestone deferential
standard as one of “reasonableness.” Block v. Pitney Bowes,
Inc., 952 F.2d 1450, 1452, 1454 (D.C. Cir. 1992).
In this case, Wagener and Champoux concede that the terms
of the SBC Plan give the Committee discretionary authority to
construe the Plan. See Appellants’ Br. at 23. Nevertheless,
plaintiffs argue that this court should apply heightened scrutiny
to the Committee’s interpretation of the SBC Plan, because they
maintain that they have pleaded facts demonstrating that
members of the Benefit Plan Committee had conflicts of
interest. Plaintiffs find support for this position in Firestone,
where the Court indicated that, “[o]f course, if a benefit plan
gives discretion to an administrator or fiduciary who is operating
under a conflict of interest, that conflict must be weighed as a
‘facto[r] in determining whether there is an abuse of
discretion.’” Firestone, 489 U.S. at 115 (alteration in original)
(quoting RESTATEMENT (SECOND) OF TRUSTS § 187 (1959)).
The Firestone Court’s “opaque direction about how courts
should review discretionary benefits denials by potentially
conflicted [plan] fiduciaries” in ERISA cases has “bedeviled the
federal courts” ever since. Pinto v. Reliance Standard Life Ins.
Co., 214 F.3d 377, 378 (3d Cir. 2000). Pinto identified three
approaches that federal appellate courts have taken in reviewing
decisions of conflicted plan administrators that otherwise would
be subject to only arbitrary and capricious or abuse of discretion
review under Firestone: (1) shifting the burden to require
13
conflicted administrators to prove that their interpretation was
not motivated by self-interest when that interpretation was
apparently reasonable but would not survive de novo review; (2)
reviewing decisions of administrators who have been influenced
by a conflict of interest de novo; and (3) employing a sliding-
scale approach, which accords different degrees of deference
depending on the apparent seriousness of the conflict. See id. at
390-92 (collecting cases). Pinto embraced the sliding-scale
approach, which it identified as the majority position. See id. at
379, 392-93.
The plaintiffs in this case maintain that they have pleaded
adequate facts to demonstrate that the disputed decisions of the
Committee warrant no deference, because they were tainted by
conflicts of interest. On the record here, we need not determine
(1) whether plaintiffs have pleaded adequate facts to suggest that
the Committee operated under a conflict of interest under
Firestone or, (2) assuming plaintiffs have pleaded sufficient
facts, what the appropriate standard of review should be. As
explained below, if we accept plaintiffs’ allegations as true, it is
clear that the officials responsible for administering the Plan
construed the Plan in a manner that discriminated against
plaintiffs in violation of the Plan’s plain terms. An
interpretation of the Plan that rests on impermissible
discrimination is clearly unreasonable and, therefore, it fails
whether we apply de novo review or a deferential standard of
review. See Springfield, Inc. v. Buckles, 292 F.3d 813, 818
(D.C. Cir. 2002) (declining to decide which standard of review
to apply to an agency interpretation of a statute, when the court
would have upheld the agency’s interpretation under either of
the two possible alternative standards).
C. The Reasonableness of the Committee’s Interpretation
On the merits, the disposition of the parties’ dispute in this
case turns on a construction of § 4.2 of the SBC Plan, which
governs benefit calculations for Grandfathered participants in
14
the EPR Program. Under § 4.2, benefits for EPR Grandfathered
retirees depend on, among other things, a participant’s “Average
Annual Compensation for the period from January 1, 1995,
through December 31, 1999.” SBC Plan § 4.2, J.A. 262.
Wagener and Champoux contend that, in calculating “Average
Annual Compensation,” the Plan erroneously excluded one pay
period from 1999 on the mistaken assumption that the plaintiffs
could receive credit only for compensation actually received, not
earned, in 1999.
As noted above, the Plan defined “Average Annual
Compensation” to mean “the Participant’s Pension
Compensation during the Averaging Period, divided by five
years.” Id. § 4.2.1(b)(3), J.A. 257. Pension Compensation, in
turn, was based on a participant’s Basic Compensation. See id.,
§ 2.66, J.A. 259. Prior to the actual base pay amendments, Basic
Compensation for participants such as plaintiffs had been
defined as a participant’s “Basic Rate of Pay, as determined by
his Participating Company, over a specified period.” Id. § 2.8,
J.A. 258. However, the actual base pay amendments substituted
actual base pay for Basic Rate of Pay in determining Basic
Compensation. See Plan Amendment 4/13/1999, J.A. 71, 73.
Thus, due to the actual base pay amendments, “Average Annual
Compensation” was calculated based on a participant’s “actual
base pay, as determined by his Participating Company, over a
specified period, during the Averaging Period, divided by five
years.” The question presented here then is whether the
Committee reasonably interpreted “actual base pay . . . during
the Averaging Period” to mean pay actually received during the
Averaging Period, as opposed to pay actually earned during the
Averaging Period.
If this were the only relevant provision in the Plan, we
would be hard pressed to hold that the Committee’s
interpretation was unreasonable. An interpretation of “actual
base pay . . . during the Averaging Period” to mean pay actually
15
received is not itself unreasonable. There is nothing in the plain
language of “actual base pay” that clearly indicates whether the
term is intended to refer to pay actually earned or pay actually
received. In other words, this language, without more,
reasonably supports either construction.
This is not the end of the analysis however, because § 4.2
includes another clause that is crucial for the purposes of this
appeal. Specifically, § 4.2 states that, except for the five-year
enhancement to the participant’s age and length of service, “the
Enhanced Grandfathered Benefit shall be a benefit calculated
in the same manner as the Grandfathered Benefit would be
calculated . . . under the current [Plan].” SBC Plan § 4.2, J.A.
262. Plaintiffs allege that the Committee clearly violated this
equal-treatment clause:
the Plan has consistently administered the Grandfathered
Benefit for all retirees – except for the Enhanced
Grandfathered Benefit for EPR retirees – by including all
pay periods as part of “Average Annual Compensation” for
the year in which they were earned notwithstanding [the
actual base pay amendments], and notwithstanding the fact
that one full pay period was not received until after the end
of the Averaging Period.
Compl. ¶ 25, J.A. 18-19. In other words, plaintiffs contend that,
while Plan officials have interpreted “actual base pay” to mean
pay actually received for the EPR Program Grandfathered
participants, they have interpreted “actual base pay” to mean pay
actually earned for other Grandfathered participants,
notwithstanding the plain language of § 4.2 mandating that the
benefits for the two groups of participants be calculated in the
same manner (except for the “enhancement” for EPR Program
participants).
Applying even the most deferential standard of review, we
hold that plaintiffs’ allegations clearly state a claim for which
16
relief can be granted. As plaintiffs justly contend, it is patently
unreasonable for the Committee and other Plan officials who are
authorized to administer the Plan to interpret the Plan in a
manner that discriminates against plaintiffs in direct
contravention of the Plan’s plain language. See Fuller v. CBT
Corp., 905 F.2d 1055, 1058-60 (7th Cir. 1990) (concluding that
evidence of disparate treatment in benefit decisions precluded
summary judgment for an ERISA plan’s trustees, even applying
ordinary abuse of discretion review, where the governing
document contained “an express requirement of uniform
treatment”); cf. Air Transport Ass’n of Am., Inc. v. FAA, 291
F.3d 49, 53 (D.C. Cir. 2002) (explaining that, while agency
interpretations of their own regulations “must be afforded
substantial deference,” the court will not defer if an alternative
conclusion is compelled by the regulation’s plain language).
The SBC Plan does not argue that it would be reasonable
for the Committee, or other Plan fiduciaries with responsibility
for construing and administering the Plan, to adopt Plan
interpretations that directly contravene the plain meaning of the
Plan’s governing provisions. See Appellee’s Br. at 20, 25; see
also Recording of Oral Argument at 28:08-23 (acknowledgment
by the Plan’s counsel that, notwithstanding its discretion, the
Committee does not have the authority to discriminate between
similarly situated Plan participants). Rather, the Plan asserts
that, “[i]f true, Plaintiffs’ allegations would establish only that
the Plan’s recordkeeper, which performs such ministerial
functions as the mathematical calculation of pension benefits,
mistakenly paid certain Plan participants more than they were
entitled to under the Plan.” Appellee’s Br. at 25. This argument
is meritless, because it completely ignores the substance of
plaintiffs’ complaint.
In their complaint, Wagener and Champoux specifically
allege that “SBC and Plan officials interpreted” the actual base
pay amendments in a manner that was more favorable to non-
17
EPR Grandfathered participants than to EPR Grandfathered
participants. See Compl. ¶¶ 25-28, J.A. 18-20 (quote at ¶ 25,
J.A. 18). In other words, plaintiffs allege that the differential
treatment accorded non-EPR Grandfathered participants and
EPR Grandfathered participants was the result of deliberate
decisions made by officials responsible for the administration of
the Plan, not to ministerial errors. The Plan’s suggestion to the
contrary in its brief to this court surely does not negate
plaintiffs’ well pleaded complaint.
In short, plaintiffs’ complaint asserts that Plan officials have
administered the Plan in a manner that treats EPR and non-EPR
Grandfathered retirees differently, notwithstanding the Plan’s
unmistakable command to treat these two groups similarly
except for the benefit enhancement EPR participants receive.
Treating this allegation as true, plaintiffs have stated a claim
upon which relief can be granted. As noted above, even under
a deferential standard of review, Plan fiduciaries cannot claim
deference for an interpretation of the Plan that discriminates
against plaintiffs in a manner that contradicts the Plan’s plain
language. We therefore reverse the District Court’s judgment
dismissing plaintiffs’ action for additional benefits under §
1132(a)(1)(B) and remand the case for further proceedings
consistent with this opinion.
*****
We also vacate the District Court’s order denying plaintiffs’
motion for class certification, as that motion is no longer moot.
Likewise, we reverse the District Court’s judgment granting the
Plan’s motion to dismiss plaintiffs’ document disclosure claim.
That decision was based on the trial court’s conclusion that
plaintiffs’ document disclosure claim could not survive absent
their claim for additional benefits, a judgment that we reverse
with this decision.
18
Finally, we vacate the District Court’s denial of Wagener’s
motion for summary judgment on her document production
claim. We express no view on the merits of this claim, for we
believe that this matter should be addressed by the District Court
in the first instance in light of our decision.
III. CONCLUSION
The District Court’s grant of the SBC Plan’s motion to
dismiss is hereby reversed with regard to Counts One and Two
of the plaintiffs’ complaint, and the District Court’s denial of
plaintiffs’ motions for class certification and for summary
judgment are hereby vacated. The case is remanded for further
proceedings consistent with this opinion.
So ordered.