United States Court of Appeals
For the First Circuit
No. 06-1452
RACHELLE R. GREEN, BYRON R. RENFRO,
Plaintiffs, Appellants,
v.
EXXONMOBIL CORPORATION; JANET L. MADIGAN, in her
official capacity as Plan Administrator for ExxonMobil
Corporation; EXXONMOBIL LIFE INSURANCE PLAN,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ronald R. Lagueux, Senior U.S. District Judge]
Before
Boudin, Chief Judge,
Torruella, Circuit Judge,
and Schwarzer,* Senior District Judge.
Matthew T. Oliverio with whom Raymond A. Marcaccio, Christine
M. Curley and Oliverio & Marcaccio LLP were on brief for
appellants.
Adriene K. Dwyer, U.S. Department of Labor, Plan Benefits
Security Division, with whom Howard M. Radzely, Solicitor of Labor,
Timothy D. Hauser, Associate Solicitor, and Karen L. Handorf,
Counsel for Appellate and Special Litigation, were on brief for
Elaine L. Chao, Secretary of the United States Department of Labor,
Amicus Curiae.
*
Of the Northern District of California, sitting by
designation.
Neal J. McNamara with whom Nixon Peabody LLP was on brief for
appellees.
December 8, 2006
BOUDIN, Chief Judge. In April 1996, Dr. Robert Renfro
began working for Mobil Oil Corporation as a contract physician at
the Beaumont, Texas, oil refinery. In the fall of 2000, Dr. Renfro
sought a full-time, salaried position as a staff physician with
ExxonMobil Corporation. Dr. Renfro received a letter confirming
his appointment on January 15, 2001, began work on February 19, was
injured in a car accident on February 25 and died on February 26.
At the time of his death, Dr. Renfro was 57 years old,
divorced, and had two grown children. ExxonMobil's employee
benefits package ("the plan") included life insurance coverage, and
Dr. Renfro became a covered employee as of February 19 when he
began work. Under the plan, Dr. Renfro was automatically entitled
to 200 percent of his base salary (then $157,000 per year) and,
with a similar payment for basic accidental death coverage, his
heirs have now received $628,000 under the plan.
Under the plan, an employee could also elect additional
group life insurance ("GUL") and, in addition, further coverage
called voluntary accidental death and dismemberment ("VADD"). The
premiums, each dependent on the level of coverage selected, were
fairly modest; but the premiums had to be paid by the employee and
required an affirmative election. For GUL, election after 31 days
required a medical examination.
At the time of his death, Dr. Renfro had not yet received
the election forms; they had been placed in the mail outbox on
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February 26, 2001. ExxonMobil employed a multi-step process for
preparing and delivering the forms for new employees. According to
later evidence, it was not uncommon for there to be some delay in
furnishing them.
Just what elective benefits Dr. Renfro would have chosen,
if any, is unknown--although his children assert that the benefits
package was a primary motive in his choosing to become a full-time,
salaried employee of ExxonMobil. In all events, on February 26 and
27, 2001, after learning of Dr. Renfro's death, several ExxonMobil
employees purported retroactively to elect maximum GUL and VADD
coverage for Dr. Renfro.
Specifically, Kathy McCoy, a benefits services supervisor
at ExxonMobil, emailed company legal counsel Sherry Englande
stating that she wished to elect maximum optional GUL and VADD
benefits for Dr. Renfro. McCoy may or may not have spoken with
Elda Smith, the U.S. benefits manager for the company, but did not
copy Smith on the email to Englande. When Englande agreed with
McCoy's proposal, McCoy directed an employee in the Houston office
to enter maximum GUL and VADD coverage for Dr. Renfro as of
February 23, 2001.
On April 11, 2001, a benefits counselor in Houston sent
Dr. Renfro's heirs (his two children) a letter with an attachment
labeled "Estimate of Survivor Benefits," which stated that the
children would receive $628,000 for the basic coverage, $785,000
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for GUL benefits, and $1,256,000 for the VADD benefits. A
prominent disclaimer in the letter states: "In the event of any
inconsistency between the information contained in this statement
and the provisions of the plans, the plans, as well as any
applicable administrative regulations, will govern."
Not surprisingly, the plan's insurer for GUL and VADD
benefits, MetLife, rejected the request that it pay life insurance
claims for someone who had not elected coverage prior to a fatal
accident. At that point, ExxonMobil's plan administrator, Janet
Madigan, was consulted for the first time. Under the plan, she had
ultimate decision-making and interpretive authority.
Madigan consulted another ExxonMobil lawyer, who said
that only Madigan could approve a retroactive election. Madigan
then declined to do so. On May 10, 2001, a letter was mailed to
Dr. Renfro's children stating that, contrary to the earlier letter,
Dr. Renfro was not eligible for GUL and VADD benefits because he
had not signed an election form.
Dr. Renfro's children protested the corrected benefits
determination, but ExxonMobil denied their appeal. The children
asserted that Dr. Renfro would have elected the additional coverage
if the forms had been timely provided to him. Dr. Renfro, they
said, not only had become a full-time employee partly to secure
benefits, but he had in fact requested benefit election forms from
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the company (a contention that ExxonMobil disputes). Madigan
declined to reconsider her decision.
The children eventually sued ExxonMobil, Madigan and the
plan in federal district court. Two claims under the Employee
Retirement Income Security Act of 1974 ("ERISA") were pressed at
trial: one for benefits due under the plan, 29 U.S.C. §
1132(a)(1)(B); the other for equitable relief on the ground that
the delay in furnishing the forms was a breach of fiduciary duty,
id. § 1132(a)(3). After a five-day bench trial, the district judge
rejected the children's claims. Green v. ExxonMobil Corp., 413 F.
Supp. 2d 103, 119 (D.R.I. 2006). They now appeal to this court.
The conventional standard of review of the district
court's decision is for clear error as to fact findings and de novo
on issues of law, Coady Corp. v. Toyota Motor Distribs., Inc., 361
F.3d 50, 54 (1st Cir. 2004), with some latitude in the latter case
for fact-specific law-application rulings. Id. at 57. Where the
plan administrator has discretionary authority to interpret and
apply the plan, as Madigan did in this case, such rulings are
themselves reviewed for arbitrariness. Firestone Tire & Rubber Co.
v. Bruch, 489 U.S. 101, 115 (1989); Glista v. Unum Life Ins. Co. of
Am., 378 F.3d 113, 126 (1st Cir. 2004).
In appealing from the district court decision, the
claimants offer four main arguments: that subordinate ExxonMobil
employees made a valid and binding election on behalf of Dr. Renfro
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which cannot be undone; that (alternatively) the company is
estopped from denying the election; that ExxonMobil was responsible
for any failure by Dr. Renfro to elect coverage; and that the
district court should have found a breach of fiduciary duty by
ExxonMobil. We consider these arguments in turn.
Under the plan, GUL and VADD benefits required an
election. It is a fair reading of the provisions dealing with the
life insurance component--which refer repeatedly to the "employee"
or "participant" electing coverage--that Dr. Renfro (or an assignee
of his interest) was the person to make the election; and, as an
election required the employee to undertake to pay the premiums,
this makes further sense.1
Nothing in the plan explicitly provides for someone else
(except an assignee) to make an election for the employee, let
alone to do so retroactively after an accident has occurred.
Further, under the plan, Madigan had the requisite authority to
interpret and apply the plan--a decision to which we ordinarily
defer unless it is unreasonable.2 Madigan's decision that McCoy
1
The signature line on the enrollment form for GUL and VADD
benefits requires the signature of "participant or assignee." The
plan permitted the employee under certain conditions to assign his
interest in the insurance; but it did not provide for anyone else
to act for the employee.
2
Firestone, 489 U.S. at 115; Glista, 378 F.3d at 125-26;
Gannon v. Metro. Life Ins. Co., 360 F.3d 211, 212-13 (1st Cir.
2004). In unusual cases less deference may be given where the plan
administrator has a conflict of interest, Wright v. R.R. Donnelley
& Sons Co. Group Benefits Plan, 402 F.3d 67, 74 (1st Cir. 2005),
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and other subordinates had no authority to make a retroactive
election for Dr. Renfro is far from unreasonable.
Conceivably, Madigan could have read the plan differently
without being unreasonable. Each side reads the plan as if it
mechanically dictated answers as to whether other employees could
act for Dr. Renfro or whether Madigan or others could excuse
omissions. To us, these are issues not explicitly addressed in the
plan. Filling such gaps is ordinarily within the province of an
administrator with discretionary authority.
Claimants say that the subordinates were, like Madigan,
"fiduciaries" under ERISA regulations; but whether they were or not
has little to do with whether they had authority under the plan to
elect post-accident benefits for Dr. Renfro. To say that someone
is a fiduciary suggests special obligations in the exercise of
authority (although the kind and degree may vary, SEC v. Chenery
Corp., 318 U.S. 80, 85-86 (1943) (Frankfurter, J.)). But authority
to act depends on the plan and background agency law.
Nor is such a ruling inconsistent with the claimants'
contention that some of the lower-level employees exercised
"discretion" in various matters concerning benefits. In all
likelihood some of them did. But this does not answer the question
whether their discretion extended to making a post-accident
but the fact that the plan will save money by an individual
decision does not standing alone preclude deference. Glista, 378
F.3d at 125-26.
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election for an employee who had not himself made one or committed
himself to pay premiums--certainly an eyebrow-raising event in the
administration of an ERISA plan.
Claimants say that the subordinates did, apparently with
later consent by Madigan, elect medical benefits for Dr. Renfro.
After the accident a benefits employee approved PPO/Traditional
medical coverage (as opposed to the HMO option) for Dr. Renfro to
cover his medical care while he was on life support on February 25
and 26. But this does not prove that the subordinate had authority
to do this--Madigan said the subordinate did not--and it also
appears that PPO/Traditional coverage was the default option for
medical benefits.
Claimants also say that Madigan admitted that she herself
could have retroactively approved GUL and VADD benefits for Dr.
Renfro. Our reading of the transcript is otherwise. In any event,
imputing such power to Madigan or, with her consent, to
subordinates might be a possible reading of the plan; but again it
is not dictated by any language in the plan: at most it might have
been a reasonable construction which Madigan did not have to adopt.
In a second line of attack, complainants argue that
ExxonMobil did grant GUL and VADD benefits to Dr. Renfro, made the
lack of authority claim only belatedly and is now estopped from
denying coverage. They rely in particular on the April 11, 2001,
"Estimate of Survivor Benefits" letter already described, on
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supposed false explanations and efforts at concealing error by
ExxonMobil (which is required to explain its denial of benefits3),
and on our decision in Glista.
The benefits letter is labeled as an "Estimate of
Survivor Benefits" with the disclaimer already quoted that the plan
prevails over the estimate in the event of inconsistencies. The
plan, in our view, includes the administrator's reasonable
interpretation of it. The benefits letter clearly was not a
commitment or contract and created no obligation. See Perreca v.
Gluck, 295 F.3d 215, 225-26 (2d Cir. 2002) (statement of projected
benefits created no promissory estoppel).
Nor does Glista assist claimants. There, the plan
administrator denied a claim under one provision of a plan and
then, after litigation began, the company relied upon a different
provision never invoked by the administrator. Based on a variety
of factors, this court refused to consider the alternative ground.
Whatever the scope of Glista--and estoppel-like objections tend to
depend heavily on the facts, as Glista itself stressed, 378 F.3d at
130-31--ExxonMobil has not switched grounds during litigation.
Once Madigan was faced with the issue, she directed that
a letter be written which, dated May 10, 2001, stated that GUL and
3
Both the statute and the regulations require that denials be
specifically explained, 29 U.S.C. § 1133 (2000); 29 C.F.R. §
2560.503-1(g), (j) (2005) (the version in force at the time of the
denial was identical in relevant substance), and the ExxonMobil
plan itself had a similar provision.
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VADD benefits are provided under the plan "only after an employee
elects to participate in the coverages. Because your father had
not elected to participate before his accident, he was not covered
. . . ." That the letter described the earlier estimate letter as
a "miscommunication" hardly detracts from the clarity of Madigan's
explanation for the denial. Nor does any embarrassment on the part
of subordinates create an obligation where none existed.
Claimants' third argument is that ExxonMobil caused or
contributed to Dr. Renfro's failure to complete the election forms
by failing to provide them at the outset of his employment. The
claimants say that Dr. Renfro would have elected and agreed to pay
for GUL and VADD benefits at the maximum level if he had been
provided the forms before his death. We will assume this arguendo
even though no finding was made on this issue and the evidence for
the assumption is debatable.
Claimants then enlist decisions under ERISA in which
employee claims for benefits were upheld (or not dismissed for
failure to exhaust administrative remedies) where misfeasance or
misrepresentations by the company undercut or precluded coverage to
which the employee might otherwise have been entitled.4 Claimants
4
Principal circuit cases are Bowerman v. Wal-Mart Stores,
Inc., 226 F.3d 574, 586 (7th Cir. 2000); Swaback v Am. Info. Techs.
Corp., 103 F.3d 535, 542 (7th Cir. 1996); Epright v. Envt'l
Resources Mgmt., Inc. Health & Welfare Plan, 81 F.3d 335, 341 (3d
Cir. 1996); Conley v. Pitney Bowes, 34 F.3d 714, 717 (8th Cir.
1994).
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also invoke general contract doctrine, not necessarily binding but
informative in the ERISA context, Allen v. Adage, Inc., 967 F.2d
695, 698 (1st Cir. 1992), by which courts may excuse non-
performance of a condition precedent where caused by the other
party. Restatement (Second) of Contracts § 245 (1981); Swaback,
103 F.3d at 542.
Not unexpectedly the ERISA decisions that favor employee
claims in these circumstances coexist with others disallowing
estoppel and waiver arguments against ERISA plans.5 As usual,
unresolved tensions in doctrine arise as courts engage in the
normal case-by-case effort to flesh out the statute, results being
driven in part by the particular facts--which present a wide range
of different problems and circumstances.
The circuit cases favoring employees are almost all
egregious cases in which the company took wrongful affirmative
action or made misrepresentations that interfered with benefits.
See note 4, above.6 Of course, an outright refusal of ExxonMobil
5
City of Hope Nat'l Med. Ctr. v. Healthplus, Inc., 156 F.3d
223, 230 n.9 (1st Cir. 1998); Law v. Ernst & Young, 956 F.2d 364,
369 (1st Cir. 1992); see also Lauder v. First Unum Life Ins. Co.,
284 F.3d 375, 381 (2d Cir. 2002) (describing the circuits'
positions on waiver in ERISA cases).
6
Newman-Waters v. Blue Cross/Blue Shield of Tenn., No. 1:04-
CV-132, 2005 WL 1263026, at *22-23 (E.D. Tenn. May 27, 2005) may be
the case most helpful to the claimants; but even if it was
correctly decided (which is open to debate), the evidence as to
frustration of intent was stronger and the remedy granted less
extreme.
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to provide forms for an extended period could well constitute
improper behavior; but in this case the only issue is whether a
failure to provide the forms on the day of employment or within a
week thereafter was so improper as to excuse the need for an
election.
Nothing in the plan or any representation by the company
specified a fixed date for supplying the election documents to Dr.
Renfro, nor does anything suggest that the delay in his case was
deliberate or extraordinary. Claimants point out that Dr. Renfro
had only 31 days to elect GUL coverage free of a medical
examination (after that an examination was required). But when the
car accident occurred, only seven days had elapsed and the forms
were about to be sent well within the 31-day period.
In a perfect universe, Dr. Renfro would perhaps have
received the forms before he began work, but perfection is not a
feasible standard of care. Dr. Renfro was never promised that
enhanced life insurance coverage would necessarily be in force on
the first day of work, nor was he inaccurately told that he had
coverage when he did not. In sum, we agree with the district court
that Dr. Renfro was not deprived by ExxonMobil of benefits due him
under the plan and recoverable under 29 U.S.C. § 1132(a)(1).
This leaves for our consideration claimants' alternative
statutory claim, namely, 29 U.S.C. § 1132(a)(3) ("section (a)(3)"),
which provides that a civil action may be brought
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by a participant, beneficiary, or fiduciary
(A) to enjoin any act or practice which
violates any provision of this subchapter or
the terms of the plan, or (B) to obtain other
appropriate equitable relief (i) to redress
such violations or (ii) to enforce any
provisions of this subchapter or the terms of
the plan.
Whether and when this provision provides an employee or
his beneficiary a cause of action to recover damages for plan
misconduct is the subject of more than one controversy.7 The
Secretary of Labor has filed with us an amicus brief, urging a
broad construction of section (a)(3), adding that given the
district court findings she is "extremely skeptical" that a breach
of fiduciary duty occurred in this case.
We have no occasion to address the broader controversy
about the scope of section (a)(3). The claimants' argument is that
those who administered the plan had a general fiduciary duty to Dr.
Renfro and violated it by not assuring that he had the necessary
election forms at the start of his employment. We will assume,
again arguendo, that a fiduciary duty was owed by at least some of
those involved. Watson v. Deaconess Waltham Hosp., 298 F.3d 102,
111 n.12 (1st Cir. 2002).
7
Circuits disagree on whether Varity Corp. v. Howe, 516 U.S.
489, 514-15 (1996), allows simultaneous claims under section
(a)(1)(b) and section (a)(3). Compare, e.g., Tolson v. Avondale
Indus., Inc., 141 F.3d 604, 610 (5th Cir. 1998), with Devlin v.
Empire Blue Cross & Blue Shield, 274 F.3d 76, 89 (2d Cir. 2001),
cert. denied, 537 U.S. 1170 (2003). Also in dispute is what forms
of relief can be "equitable." See, e.g., Sereboff v. Mid Atlantic
Med. Servs. Inc., 126 S. Ct. 1869 (2006).
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A fiduciary owes a special duty of loyalty not applicable
in ordinary relationships, 29 U.S.C. § 1104(a)(1); but there is no
claim here of deliberate wrongdoing or disloyalty. As for a duty
of care, a fiduciary is expected to act with reasonable diligence,
id. § 1104(a)(1)(B); but, for reasons already indicated, sending
the forms within a week or so after employment--where no promise or
plan deadline was violated--does not in the present circumstances
even arguably comprise unreasonable conduct. Compare Blatt v.
Marshall & Lassman, 812 F.2d 810, 813 (2d Cir. 1987) (18-month
delay in executing necessary forms).
Life is filled with small events and choices that have
large consequences; but hindsight is not the test of
reasonableness. If Dr. Renfro had chosen to begin work at the
start of January 2001, his children's recovery could have been
larger; if he had chosen March, his children could have received
nothing. We will not disturb the district court's decision.
Affirmed.
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