Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit
8-16-2002
Eastman v. AT&T Inc
Precedential or Non-Precedential: Non-Precedential
Docket No. 01-3303
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Recommended Citation
"Eastman v. AT&T Inc" (2002). 2002 Decisions. Paper 515.
http://digitalcommons.law.villanova.edu/thirdcircuit_2002/515
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________
No. 01-3303
_______________
RICHARD EASTMAN; ROBERT GILL;
TED KARABINUS; JOHN PEARL;
GREGORY ROSS; and MARY JO SHERMAN,
Appellants
v.
AT&T, INC.; BENEFIT CLAIM AND APPEAL COMMITTEE;
EMPLOYEES’ BENEFITS COMMITTEE;
PENSION PLAN ADMINISTRATOR; and
JOHN DOE DEFENDANTS, ONE THROUGH THIRTEEN
Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 00-cv-05294)
District Judge: Honorable William H. Walls
Argued on March 22, 2002
Before: NYGAARD, ROTH and AMBRO, Circuit Judges
(Opinion filed: August 16, 2002)
Brian A. Powers, Esquire
Louis P. Malone,III, Esquire (Argued)
O’Donoghue & O’Donoghue
4748 Wesconsin Avenue, N.W.
Washington, DC 20016
Attorney for Appellants
David H. Ganz, Esquire
Christopher H. Mills (Argued)
Collier, Jacob & Mills
580 Howard Avenue
Corporate Park III
Somerset, NJ 08873
Attorneys for Appellees
OPINION
ROTH, Circuit Judge:
Section 404 of ERISA allows pension plan beneficiaries to sue plan
administrators for breach of fiduciary duty. When a claim for breach of fiduciary duty
under 404 is synonymous with a claim for benefits under a plan, however, the plaintiff
must exhaust remedies available under the plan before bringing a claim in federal court.
See Harrow v. Prudential Ins. Co., 279 F.3d 244 (3rd Cir. 2002). Plaintiffs in this case, a
class of current and former employees of AT&T vested in the company’s pension plan,
appeal from an order dismissing their lawsuit against the administrators of AT&T’s
pension plan. They claim the District Court erred when it found that their claim under
404 was a claim for benefits. For the reasons stated below, we find the District Court
correctly found that the plaintiffs’ lawsuit is a claim for benefits and will affirm its order
dismissing plaintiffs’ lawsuit.
Plaintiffs’ claims rest on allegations that the plan fiduciaries knowingly
miscalculated a type of pension benefit. Plaintiffs claim that the plan fiduciaries knew
that defendant AT&T was providing the plan with inaccurate data about the "pension
includable differentials" earned by the plaintiffs. Those "pension includable
differentials" were used to calculate the plaintiffs’ "supplemental monthly pension
benefits." Plaintiffs allege that the inaccurate "pension includable differentials" made
the plan miscalculate their "supplemental monthly pension benefits." This knowing
miscalculation of benefits, plaintiffs claim, is a breach of the fiduciaries’ duties under
404 to administer the plan with care, skill, prudence and diligence. See 29 U.S.C.
1104. As relief for these alleged violations of 404, plaintiffs request an injunction
ordering the appointment of a new fiduciary to administer the plan and repayment of any
underpaid benefits.
The District Court dismissed these claims on the basis of collateral estoppel. It
found that plaintiffs’ Second Complaint was virtually identical to their First Complaint,
which the District Court dismissed because it was a claim for benefits under the plan and
because plaintiffs had not exhausted plan remedies. On appeal, plaintiffs contend that
their Second Complaint is unlike their First Complaint because it is not a claim for
benefits. On that basis they argue that collateral estoppel should not apply and that they
should not be required to exhaust plan remedies before bringing suit. We are not
convinced.
The claims in plaintiffs’ Second Complaint are clearly claims for plan benefits.
Their entire lawsuit is based on allegations that the defendants knowingly miscalculated
benefits by using inaccurate "pension includable differentials." To evaluate those
allegations, a court would have to determine whether AT&T properly reported "pension
includable differentials," which would require it to interpret and apply the plan itself.
Because the resolution of the claim rests on an interpretation of the plan, the plaintiffs
have made a claim for benefits and must exhaust the plan remedies before coming to
federal court for relief. See Harrow 279 F.3d at 254 (stating that a claim for benefits is
one "where the resolution of the claim rests upon an interpretation and application of an
ERISA-regulated plan, rather than upon an interpretation of ERISA.").
Plaintiffs counter with several arguments. First, they claim that they are only
alleging that the defendants violated 404, not the terms of the plan. But, their claims
that the defendants violated 404 are inextricably linked to an interpretation of the plan.
Harrow thus requires us to find that plaintiffs have made a claim for plan benefits.
Plaintiffs also contend that their claim cannot be a claim for benefits because they are
requesting injunctive as well as monetary relief. But, the relief they seek does not alter
the fact that they are seeking benefits under the plan. It is the nature of claim, not the
type of relief, that defines a claim for benefits. Plaintiffs’ arguments are therefore
unavailing.
Because the plaintiffs’ have brought a claim for benefits, the District Court
correctly found that they have to exhaust plan remedies before bringing suit in federal
court. The District Court also correctly found that collateral estoppel barred the Second
Complaint. As a result, we will affirm.
_______________________
BY THE COURT:
/s/ Jane R. Roth
Circuit Judg