United States Court of Appeals
For the First Circuit
Nos. 02-1968
02-2271
THOMAS F. TWOMEY,
Plaintiff, Appellant,
v.
DELTA AIRLINES PILOTS PENSION PLAN, and Leon A. Piper,Jr.,
Anthony Austin, W. M. Braham, David S. Bushy, Robert S.
Harkey, Raymond Valeika and Joan W. Vincenz,
Members of the Plan's Administrative Committee,
Defendants, Appellees/Cross-Appellants.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert E. Keeton, U.S. District Judge]
Before
Torruella, Circuit Judge,
Stahl, Senior Circuit Judge,
and Lipez, Circuit Judge.
Christopher J. Trombetta, with whom Richard J. Hindlian,
Damon M. Seligson and Holland & Knight LLP were on brief, for
appellant.
J. Timothy McDonald, with whom Lisa J. Wathey, Rogers & Hardin
LLP, Lisa J. Damon and Kent D.B. Sinclair were on brief, for
appellees/cross-appellants.
May 7, 2003
TORRUELLA, Circuit Judge. This case presents us with the
issue of whether a beneficiary of a pension plan can intentionally
evade receipt of his benefits and then force the pension plan to
pay him interest on the forgone benefits. Because we find that no
obligation to pay interest exists in such a situation, we affirm
the district court's grant of summary judgment in favor of
appellees.
I. Background
Appellant Thomas Twomey served as a pilot for Delta
Airlines for over twenty-eight years. Effective November 30, 1984,
Delta terminated him for falsifying the medical certificate
necessary to maintain his Federal Aviation Administration Public
Air Transport Captain's license. Twomey appealed his termination
to the System Board of Adjustment, which reduced his termination to
a suspension.
On July 26, 1986, Twomey turned 60, which meant that FAA
regulations prohibited him from flying as a Captain or Co-
Pilot/First Officer. On August 27, 1985, appellee Delta Airlines
Pilots Pension Plan ("Delta") sent to Twomey's home address a
package of information regarding his retirement benefits (the
"Plan"). On June 10, 1986, Delta sent an application for benefits
to that same address by certified mail. After three delivery
attempts, the package was returned unclaimed. In July of 1986,
Delta then sent the retirement package and application to an
-2-
alternate address. The package was signed for by someone other
than Twomey.
Twomey did not contact Delta for nine years. In 1995,
Twomey requested that Delta send an application for retirement
benefits to a New Hampshire address. The package was returned to
Delta marked "Box Closed." The IRS then advised Delta that an IRS
levy would attach to any retirement benefits payable to Twomey.
Later in 1996, Twomey inquired about his retirement benefits
through counsel, and Delta sent information to counsel in 1997.
In response to another inquiry from Twomey through
counsel in 1998, Delta notified Twomey that he would receive a
payment of monthly benefits retroactive to August 1, 1986 and that
he was eligible for prospective monthly benefits. Delta provided
another application which Twomey completed and returned on
February 17, 1999. The next day, Delta sent him a lump-sum payment
of over $1,071,567.95, and monthly benefit payments began effective
March, 1999.
Twomey was dissatisfied with the lump sum and wanted
interest and lost profits in the additional amount of $930,513. He
filed an appeal with the Administrative Subcommittee of Delta
Airlines ("the Subcommittee"), asking for 10% per annum interest
for the twelve years and seven months that the Plan was able to use
his pension benefits. Twomey explained that he did not apply for
benefits earlier because he wanted Delta to reinstate him as a
-3-
flight engineer. However, Delta had a "Two Step Down Bid" rule,
which precluded pilots who had reached age sixty from becoming
flight engineers. Delta required pilots to retire upon reaching
age sixty, but flight engineers could continue to serve in their
positions until age seventy. Twomey thought that if he filed the
forms for the retirement plan, he would be conceding that Delta's
policy was lawful.
The Subcommittee upheld the denial of Twomey's claim for
lost profits. He then appealed to the Administrative Committee
("the Committee"), which also upheld the denial of Twomey's claim.
The Committee found that (1) Twomey, not Delta, caused the delay in
the benefit payments, so Delta was not wrongfully or unjustly
enriched; (2) the terms of the Plan provide that benefit payments
and certain plan administrative expenses are the only items that
are authorized to be paid from the Plan; and (3) Section 502 of
ERISA does not provide for the payment of interest to a Plan
participant under any applicable circumstances.
Twomey then appealed to federal district court. The
district court granted summary judgment in favor of appellees,
finding that the Committee's decision was not arbitrary or
capricious. In addition, the court found that although the Plan
might be interpreted in a way that is at odds with the Committee's
interpretation, the Committee's interpretation did not approach the
-4-
level of unreasonableness necessary to allow the district court to
rule in favor of Twomey.
II. Standard of Review
Twomey argues that the district court erred when it
reviewed the Committee determination under an arbitrary and
capricious standard, asserting that the court should have reviewed
the denial of his claim de novo. While we generally review
benefits determinations covered by the Employee Retirement Income
Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, de novo, we
review plans that "clearly grant[] discretionary authority to the
administrator" using "a deferential arbitrary and capricious
standard of judicial review." Terry v. Bayer Corp., 145 F.3d 28,
37 (1st Cir. 1998) (internal quotation marks and citations
omitted).
Courts have tussled with the question of what language
constitutes a clear grant of discretionary authority where the plan
does not specify who is given review power, "consistently [holding]
that there are no 'magic words' determining the scope of judicial
review of decisions to deny benefits." Bringham v. Sun Life of
Canada, 317 F.3d 72, 81 (1st Cir. 2003) (quoting Herzberger v.
Standard Ins. Co., 205 F.3d 327, 331 (7th Cir. 2000)). However, in
the case before us, we need not struggle; the language clearly
indicates that the Committee is to make eligibility determinations.
-5-
The Plan, effective January 1, 1985,1 states that "the
Administrative Committee shall have such duties and powers as may
be necessary to discharge its responsibilities under the Plan,
including . . . decid[ing] all questions of eligibility of any
Employee to participate in the Plan or to receive benefits under
it, its interpretation thereof in good faith to be final and
conclusive." § 11.02(b). The Plan also contains a catch-all
provision, giving the Committee the power "[t]o decide all
questions concerning the Plan." § 11.02(g).
Because the Plan language clearly gives discretionary
authority to the plan administrator, the district court correctly
applied an arbitrary and capricious standard of review. As we
conduct a de novo review of the district court decision, we also
will uphold the Committee's interpretation of the Plan and its
application of the Plan's terms to the facts of Twomey's claim as
long as the "factfinder's decision is plausible in light of the
record as a whole." Leahy v. Raytheon Co., 315 F.3d 11, 17 (1st
Cir. 2002). When reviewing a grant of summary judgment, the
arbitrary and capricious standard requires that we "ask whether the
aggregate evidence, viewed in the light most favorable to the non-
moving party, could support a rational determination that the plan
administrator acted arbitrarily in denying the claim for benefits."
Id. at 18.
1
All references to the "Plan" refer to the 1985 Plan.
-6-
III. Application of Law
After examining the Committee's decision, we find that
its determination that Twomey was not entitled to interest or lost
profits was not arbitrary or capricious. To begin, we find that
the evidence supports the Committee's rejection of his unjust
enrichment claim. Twomey knew the Plan was trying to contact him
in order to pay out his retirement benefits. He concedes that he
intentionally evaded payment. Absent a Plan provision granting him
benefits in such a circumstance, Twomey has no viable grounds in
equity on which to base his claim for additional remuneration; the
equities favor defendants. Twomey is simply seeking identical
relief through his attack on the Committee's interpretation of the
Plan, an invitation we refuse to accept. See Mauser v. Raytheon
Co. Pension Plan, 239 F.3d 51, 57-58 (1st Cir. 2001) (stating that
"we must exercise caution in creating new common law rules for
pension plans" and "should avoid creating duplicative remedies for
violations of ERISA's provisions").
Next, Twomey attacks the Committee's finding that, in
these circumstances, the terms of the Plan do not allow for the
payment of interest. Twomey offers two central arguments in
opposition to the Committee's interpretation of the Plan.2 First,
he argues that a straightforward reading of subsection 12.02
2
Twomey sprinkles throughout his brief a variety of other
challenges to the Committee's interpretation, all of which we find
groundless.
-7-
mandates the payment of the actuarial equivalent in present value
of, or interest on, his accrued retirement benefits:
SMALL PAYMENTS: In the event that any benefit
provided under the Plan is payable in an
amount which is the Actuarial Equivalent of
$3,500 or less and benefit payments have not
commenced, the Administrative Committee may
direct that a lump sum settlement that is the
Actuarial Equivalent in present value be paid
in lieu of any other benefit under the Plan;
but, if such value exceeds $3,500, then such
payment shall be made only if payments have
not commenced and the affected Participant, if
then living and his spouse (if any), so
consent. If the Participant is deceased, his
surviving spouse must consent to any
distribution exceeding $3,500.
Twomey's interpretation of subsection 12.02 is off-base. As Twomey
acknowledges, the inclusion of 12.02 is required by 29 U.S.C.
§ 1053(e)(1),3 which requires a plan participant to consent before
being cashed-out where the present value of the benefit is over
$3,500 (raised to $5,000 in 1997). Subsection 1053(e)(1) prevents
a pension plan from forcing a participant to cash-out without her
consent; it does not allow a plan participant to choose to be
cashed-out. Plan section 12.02 allows the Plan to cash-out
beneficiaries owed less than $3,500, by paying participants a lump
sum, consisting of the amount the participant would have received
3
"If the present value of any nonforfeitable benefit with respect
to a participant in a plan exceeds $3,500, the plan shall provide
that such benefit may not be immediately distributed without the
consent of the participant." 29 U.S.C. § 1053(e)(1).
-8-
had the plan paid the beneficiary according to the payment
schedule.
Statutory section 1053 and Plan section 12.02 simply do
not apply to Twomey's situation because the Plan did not cash-out
Twomey. Instead, the lump-sum Twomey requested was merely the
retroactive payment of his accumulated benefits. We agree with the
Committee that § 12.02 is not applicable.
Second, Twomey argues that the Committee erred by failing
to apply section 12.05 of the Plan, which states:
MISSING PERSONS: If the Administrative
Committee is unable, within three years after
the Normal Retirement Date of a Participant,
to authorize benefit payments because the
identity or whereabout of such person cannot
be ascertained, the Administrative Committee
shall direct that such benefit and all other
benefits with respect to such person shall be
forfeited; provided, if such Participant re-
appears and claims such benefit, such benefit
shall be reinstated as payable at his Normal
Retirement Date.
Twomey argues that the use of "payable at his Normal Retirement
Date" in the above provision indicates that the Plan must pay
interest on, or the Actuarial Equivalent in present value of, the
retroactive benefit. The Committee did not act arbitrarily or
capriciously in denying Twomey's reading of this provision. There
is no indication that interest or the Actuarial Equivalent is
intended by the phrase "Normal Retirement Date." We agree with the
Committee that the disputed phrase can reasonably be read to mean
that if a missing claimant reappears, he may begin receiving the
-9-
monthly payments to which he would have been entitled had he
applied before his Normal Retirement Date. Without that
"reinstated as payable" language, the Plan would require that the
payments be made beginning as of the application date, resulting in
the claimant losing the retroactive benefits.4 Admittedly, there
is more than one reasonable reading of the Plan provision. In such
a situation, we defer to the interpretation of the plan
Administrator.
IV. Attorney's Fees
Appellees argue that the district court erred by not
awarding attorney's fees pursuant to 29 U.S.C. § 1132(g)(1), which
allows courts, at their discretion, to award attorney's fees and
costs to either party. To guide its discretion, courts in the
First Circuit apply a five-factor test. Cottrill v. Sparrol,
Johnson & Ursillo, Inc., 100 F.3d 220, 225 (1st Cir. 1996). This
test is a "flexible one. . . . [N]ot every factor must be
considered in each case, . . . and [] no one [factor] should be
dispositive." Gray v. New England Tel. and Tel. Co., 239 F.2d 251,
258 (1st Cir. 1986). The five factors include
4
The Committee's final ground for denying Twomey interest is that
section 502 of ERISA does not provide for the payment of interest
to a plan participant. To the extent that Twomey contested this
determination, he has waived his right to appeal by failing to put
forth a developed argument. See FDIC v. LeBlanc, 85 F.3d 815, 820
(1st Cir. 1996) (stating that "issues averted to in a perfunctory
manner, unaccompanied by some effort at developed argumentation,
[will be] deemed waived for purposes of appeal") (internal
quotation marks and citation omitted).
-10-
(1) the degree of bad faith or culpability of
a losing party; (2) the ability of such party
to personally satisfy an award of fees; (3)
whether such an award would deter other
persons acting under similar circumstances;
(4) the amount of benefit to the action as
conferred upon the members of the pension
plan; and (5) the relative merits of the
parties' positions.
Id. at 257-58. If the district court applies the correct standard,
we will review the grant or denial of attorney's fees in ERISA
cases "solely for abuse of discretion." Cottrill, 100 F.3d at 223,
227. "Consequently, we will disturb such rulings only if the
record persuades us that the trial court indulged a serious lapse
in judgment." Id. at 223 (quotation marks and citation omitted).
The record does not indicate that the district court
abused its discretion. The court used the correct standard of
review, did not find that Twomey acted in bad faith, and found that
the Plan was susceptible to readings at odds with that of the
Committee. In addition, the district court found that an award of
attorney's fees might deter plaintiffs with claims of merit from
filing suit. While we might have balanced the factors slightly
differently, "[a]bsent a mistake of law or a clear error in
judgment -- neither of which is evident here -- we must defer to
the trial court's first-hand knowledge and to its battlefield
determination that the specific facts of this case do not warrant
a fee award." Cottrill, 100 F.3d at 227.
-11-
V. Conclusion
The judgment of the district court is affirmed.5 Costs
are taxed against appellant.
5
We find that discovery is not needed to resolve Twomey's claims.
-12-