Dowling v. Pension Plan for Salaried Employees of Union Pacific Corp. & Affiliates

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________

No. 16-1977
_____________

JOHN E. DOWLING,
Appellant

v.

PENSION PLAN FOR SALARIED EMPLOYEES OF
UNION PACIFIC CORPORATION AND AFFILIATES;
ROY SCHROER, NAMED FIDUCIARY-PLAN
ADMINISTRATION OF THE PENSION PLAN FOR
SALARIED EMPLOYEES OF UNION PACIFIC
CORPORATION AND ITS AFFILIATES;
EDWIN A. WILLIS, DELEGATE OF THE NAMED
FIDUCIARY-PLAN ADMINISTRATION OF THE
PENSION PLAN FOR SALARIED EMPLOYEES OF
UNION PACIFIC CORPORATION AND AFFILIATES;
THE NORTHERN TRUST CO IN ITS CAPACITY AS
TRUSTEE OF THE PENSION PLAN FOR SALARIED
EMPLOYEES OF UNION PACIFIC CORP AND
AFFILIATES; ROY SCHROER, ADMINISTRATOR OF
THE SUPPLEMENTAL PENSION PLAN FOR OFFICERS
AND MANAGERS OF UNION PACIFIC CORPORATION
AND AFFILIATES; EDWIN WILLIS, DELEGATE OF
THE ADMINISTRATOR OF THE SUPPLEMENTAL
PENSION PLAN FOR OFFICERS AND MANAGERS OF
 UNION PACIFIC CORPORATION AND AFFILIATES;
UNION PACIFIC CORPORATION; SUPPLEMENTAL
PENSION PLAN FOR OFFICERS
AND MANAGERS OF UNION PACIFIC CORPORATION
AND ITS AFFILIATES
_____________

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civ. No. 5-14-cv-03926)
District Judge: Hon. John William Ditter, Jr.
______________

Argued January 18, 2017
______________

Before: AMBRO, HARDIMAN, and VANASKIE, Circuit
Judges

(Opinion Filed: September 15, 2017)

Oldrich Foucek, III
Kelly S. Watkins [ARGUED]
Norris McLaughlin & Marcus
515 West Hamilton Street
Suite 502
Allentown, PA 18101

Counsel for Appellant

2
Christopher T. Cognato
David S. Fryman [ARGUED]
Ballard Spahr
1735 Market Street
51st Floor
Philadelphia, PA 19103

Counsel for Appellees

___________

OPINION OF THE COURT
___________

VANASKIE, Circuit Judge.

Retirement plans can be complex documents that span
hundreds of pages with numerous peculiarities. But when do
a plan’s terms move from merely complex to ambiguous? That
is the question in this pension plan dispute. Former Union
Pacific employee John Dowling is covered by a 277-page
retirement plan composed of introductory material, 19 articles
of content, and various appendices—none of which explicitly
address Dowling’s precise situation. When Dowling retired,
the plan administrator interpreted the plan to provide Dowling
with a lower monthly payment than he expected. Dowling
challenged the administrator’s decision as contradicting the
plan’s plain language, but the District Court found the plan
ambiguous and the administrator’s interpretation reasonable.
Dowling appealed, and the dispute now centers on three issues:
the text of the plan, our standard of review, and whether a
conflict of interest alters the outcome. Because the plan’s
terminology, silence, and structure render it ambiguous, the

3
plan accords the plan administrator discretion to interpret
ambiguous plan terms, and the mere existence of a conflict of
interest is alone insufficient to raise skepticism of the plan
administrator’s decision, we will grant deference to the plan
administrator and affirm.

I.

Dowling was hired at age 41 by Appellee Union Pacific
Corporation in 1988, where he served in the high-ranking
position of Vice President for Corporate Development. Just
seven years later, Dowling’s life was dealt a severe blow when
he was diagnosed with multiple sclerosis.

By 1997, Union Pacific had determined that Dowling
possessed a “Total Disability,” because he was “unable to work
at any job.” (App. 153, 520.) That decision made Dowling
eligible for long-term disability benefits that he could receive
for the duration of his disability or until he reached age 65 in
2012, whichever came first.

When Dowling turned 65 in 2012, the long-term
disability benefits stopped, and he began to draw on his Union
Pacific retirement. His credited years of service for purposes
of calculating his pension benefit included the 15 years he
received disability benefits. Union Pacific’s plan administrator
interpreted the plan to require that Dowling’s pension be
calculated in accordance with what the administrator saw as
applicable to disabled plan participants: Instead of calculating
Dowling’s pension based on Dowling’s last ten years of actual
work—ending in 1997—the administrator operated as if
Dowling had worked and been paid his final base salary—
$208,000 per year— for his credited years of service, up until
his retirement in 2012, even though Dowling had not in reality

4
worked during that period. Under the administrator’s
interpretation, Dowling was entitled to a monthly pension
payment of $7,006.96.

Dowling objected to the calculation and filed a claim
via the plan’s administrative procedures, asking for a benefit
increase. He argued the plan required his pension payment to
be based on his ten years of income prior to 1997, when he
became disabled and stopped working, and not a hypothetical
income stream for the ten years prior to his 2012 formal
retirement date. If Dowling’s theory about the 1987 to 1997
window were correct, then Union Pacific would owe Dowling
a much higher monthly payment because during that earlier
period Dowling received significant performance bonuses on
top of his base salary.

Dowling lost his administrative claim, exhausted his
administrative remedies, and filed this action against Union
Pacific and the other Appellees in the Eastern District of
Pennsylvania. Dowling sought a declaratory judgment stating
his rights and liabilities, pursuant to ERISA. 29 U.S.C.
§ 1132(a)(1)(B). The District Court granted summary
judgment to Union Pacific, holding that the plan
administrator’s interpretation of the plan was not unreasonable,
and Dowling appealed.

II.

Dowling’s retirement is governed by Union Pacific’s
“Pension Plan for Salaried Employees.” The plan is a
substantial legal document: it opens with seven pages of
preliminary information, then continues across 133 pages of
content divided into 19 articles. At the back are 137 pages of
appendices, schedules, exhibits, and tables.

5
 Out of all this material, two key factors largely
determine the amount of a plan participant’s pension payment:
compensation and service. The compensation factor is called
“Final Average Compensation” and is defined as a plan
participant’s average monthly salary during his or her three
highest-earning years—the “high-three”—during the ten years
“immediately preceding . . . the last date on which [the plan
participant] is a Covered Employee.” (Plan § 2.35, App. 144.1)
The service factor is the participant’s “Credited Service,”
which refers to the amount of time a plan participant spent as a
“Covered Employee.” Thus, for the run-of-the-mill plan
participant, pension calculation is easy: it is based on the years
the individual spent at work, and his average paycheck during
his three highest-earning years of his final ten years of
employment.

But the plan treats a disabled participant differently. For
Credited Service, instead of stopping the accumulation of
service when the disabled participant stops work, as is the case
with the typical participant, the plan permits disabled
participants to accumulate service during their pre-retirement,
post-disability years, “as if” they remained Covered
Employees until their date of retirement—even though they
may have stopped working years earlier. (Plan §§ 4.02(c)(2),
6.05, App. 157, 178; see also Plan § 2.40(a)(5), App. 148

1
Plan § 2.35 states in pertinent part, “‘Final Average
Compensation’ shall mean the average of the Participant’s
monthly Compensation for the 36 consecutive calendar months
of highest Compensation within the 120-calendar month period
immediately preceding . . . the last date on which he is a
Covered Employee.” (Plan § 2.35, App. 144.)

6
(noting the “Hours of Service” credited to not-working
disabled participants).2)

2
Plan § 4.02(c)(2) states, “A Disabled Participant who
is a Covered Employee on his Disability Date shall be credited
with years of Credited Service as if he were a Covered
Employee from his Disability Date to the date on which he
ceases to be a Disabled Participant as set forth in Section 6.05.”
(Plan § 4.02(c)(2), App. 157.)

Plan § 6.05 states in pertinent part,

[A] Participant who has a Disability Date shall
continue to be credited with years of Vesting
Service and Credited Service (to the extent
provided in Section 4.02(c)(2)) while he remains
a Disabled Participant. A Disabled Participant
shall cease to be such if and when:

(a) he ceases to suffer from a Total
Disability;

(b) he ceases to receive benefits under
the Long Term Disability Plan of Union Pacific
Corporation;

(c) he dies; or

(d) he elects a Benefit Payment
Date. . . .

7
 For Final Average Compensation, the plan’s application
to disabled participants is less clear, with the confusion largely
centering on the plan’s use of the term “absence.” During an
“absence” from work, a plan participant is “deemed to have
received” for the duration of their absence “Compensation at
the base pay rate in effect” prior to the absence. (Plan
§ 2.18(a)(3)(C), App. 139.3) Thus, for purposes of pension

When a Disabled Participant ceases to be such,
he shall cease to be credited with years of
Vesting Service and Credited Service, and he
shall be entitled to a pension under the other
provisions of this Article (or Article VII),
applied as if his Separation from Service
occurred on the date he ceased to be a Disabled
Participant . . . .

(Plan § 6.05, App. 178.)
3
Plan § 2.18(a)(3)(C) states in pertinent part,

(C) During a period when an Employee
receives credit for Hours of Service under
Section 2.40 for a period of absence immediately
prior to which he is a Covered Employee and
which Hours of Service are counted in
determining his Credited Service under Section
4.02:

(i) the Employee, if employed on a
full-time basis at the start of the absence, shall be
deemed to have received Compensation at the

8
calculation, the rate of pay during an employee’s unpaid
absence is deemed to be their pay prior to the absence. But
does the definition of “absence” extend to time away from
work due to disability? The plan is not clear. The lengthy
definitions section does not define “absence.” (See Plan
§ 2.01-2.76, App. 131-54 (defining 76 terms, over 23 pages,
but providing no definition for “absence”).) The plan does
define two particular types of absences—absences for
temporary family medical leave, and temporary approved
absences, (Plan § 2.10, App. 134-35 (defining “Approved
Absence”); Plan § 2.10B, App. 135 (defining “Approved Non-
HCE Absence”)4)—and it references two more types of

base pay rate in effect for him as of the first day
of the month in which such period begins and
shall also be credited with any Compensation
described in (3)(A)(ii) through (iv), above, that
is actually paid to him during that period; . . . .

(Plan § 2.18(a)(3)(C), App. 139.)
4
Plan § 2.10 states,

“Approved Absence” shall mean the period
during which an Employee absents himself from
work without compensation (to the extent
evident in personnel records of the Employer or
the Affiliated Company), by reason of:

(a) a period of absence for personal or
other reasons, provided that such person returns
to work for the Employer or such Affiliated

9
 Company at such time as the Employer or such
Affiliated Company may reasonably require, or

(b) a family or medical leave within
the meaning of the Family and Medical Leave
Act of 1993, provided, however, that effective
for leaves of absence beginning on or after
January l, 1999, such person returns to work after
the family and medical leave at such time as the
Employer or Affiliated Company may
reasonably require.

In the authorization of an Approved Absence
under subsection (a) and in the requirements set
forth with respect to assuring the return of the
Employee to work within a reasonable time, the
Employer or an Affiliated Company shall treat
all Employees under similar circumstances in a
like manner.

(Plan § 2.10, App. 134-35.)

Plan § 2.10B states,

“Approved Non-HCE Absence” shall mean,
effective January 1, 2008, the period during
which an Employee who is not a Highly
Compensated Employee absents himself from
work without compensation (to the extent
evident in personnel records of the Employer or
Affiliated Company), by reason of a period of

10
“absences” in the “Hours of Service” section, which details
how much time should be credited in various scenarios. (Plan
§ 2.40(a)(4), App. 147-48 (listing as examples Approved
Absences, temporary lay-offs, military leave, and Approved
Non-HCE Absences) 5). A departure from work due to

absence for a purpose described in a leave of
absence policy of the Employer or an Affiliated
Company, but the duration of which is longer
than otherwise permitted under such policy, and
with the approval or at the requirement of the
Employer or such Affiliated Company, provided
that such person returns to work for the
Employer or such Affiliated Company at such
time as the Employer or such Affiliated
Company may reasonably require.

(Plan § 2.10B, App. 135.)
5
Plan § 2.40 states in pertinent part,

“Hour of Service” shall mean, . . .

(a) With respect to a Participant (other
than a Disabled Participant) whose Separation
from Service occurs prior to January 1, 1999 and
with respect to a Disabled Participant who ceases
to be such prior to January 1, 1999:

....

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disability is not one of the four examples of “absence” listed.
Additionally, a different subsection in the “Hours of Service”
section addresses the hours credited during “Total Disability”;
that subsection is directly below the “absences” subsection,
and does not mention “absences.” (Plan § 2.40(a)(5), App.
148.)

More generally, the plan grants the plan administrator
the authority “to determine all questions of . . . eligibility, . . .
to make factual determinations, . . . to construe and interpret
the provisions of the Plan, to correct defects and resolve
ambiguities therein, and to supply omissions thereto.” (Plan

(4) 10 Hours of Service for
each day on which the Employee is absent (A)
on an Approved Absence, (B) for temporary lay-
off on account of reduction in force provided
there is a return to work at the first available
opportunity, (C) for military service under leave
granted by the Employer or Affiliated Company
or required by law provided the Employee
returns to service with the Employer or Affiliated
Company within such period as his right to
reemployment is protected by law, or (D)
effective January 1, 2008, on an Approved Non-
HCE Absence.

(5) 10 Hours of Service for
each day of an Employee’s Total Disability.

(Plan § 2.40(a)(4)-(5), App. 147-48.)

12
§ 13.02(f), App. 242.6) The plan is funded entirely by Union
Pacific; contributions are neither required nor accepted from
plan participants. (Plan § 12.01-03, App. 232.7)

6
Plan § 13.02 states in pertinent part,

Authority and Responsibility of the Named
Fiduciary-Plan Administration. The Named
Fiduciary-Plan Administration shall be the Plan
“administrator” as such term is defined in section
3(16) of ERISA, and as such shall have the
following duties and responsibilities:

....

(f) to determine all questions of the
eligibility of Employees and of the status of
rights of Participants, Surviving Spouses,
Beneficiaries and Alternate Payees, to make
factual determinations, to construe and interpret
the provisions of the Plan, to correct defects and
resolve ambiguities therein, and to supply
omissions thereto; . . . .

(Plan § 13.02, App. 242.)
7
Plan §§ 12.01-03 states in pertinent part,

Sec. 12.01 Employer Contributions. Subject to
Section 12.06, the Employer shall contribute
such amounts as are necessary to satisfy the

13
 During the times relevant here, the plan’s designated
administrators, including Barbara Schaefer [Schaefer isn’t
listed as an Appellee], Roy Schroer, and Edwin A. Willis, were
also Union Pacific employees or officers. Schaefer and
Schroer each held the title of Vice President for Human
Resources, and Willis was Assistant Vice President for
Compensation and Benefits.

III.

The District Court had jurisdiction under 28 U.S.C.
§ 1331 and 29 U.S.C. § 1132(e). We have jurisdiction under
28 U.S.C. § 1291.

minimum funding standards required pursuant to
ERISA and section 412 of the Code, as from time
to time amended. . . . The Employer shall have
the right, but not the obligation, to contribute
such additional amounts as it, in its sole
discretion, deems desirable in any year. All
Employer contributions shall be paid to the
Trustee. . . . .

Sec. 12.02 Mandatory Participant Contributions.
No contributions shall be required of Participants
under the Plan.

Sec. 12.03 Voluntary Participant Contributions.
No contributions shall be accepted from any
Participant under the Plan.

(Plan §§ 12.01-03, App. 232.)

14
 IV.

Federal courts review the decisions of ERISA plan
administrators under standards derived from “principles of
trust law,” in that the plan document itself determines the
appropriate level of review. Conkright v. Frommert, 559 U.S.
506, 512 (2010) (quoting Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 111 (1989)). In the default scenario, a
plan administrator’s “denial of benefits . . . is to be reviewed
under a de novo standard.” Id. (quoting Firestone, 489 U.S. at
115). But if the plan document “gives the administrator or
fiduciary discretionary authority to determine eligibility for
benefits or to construe the terms of the plan,” then the Court
reviews the administrator’s decision on a more deferential
basis. Id. (quoting Firestone, 489 U.S. at 115).

This case falls in the latter scenario, because the Union
Pacific plan explicitly grants the administrator the ability to
determine benefit eligibility and to “construe and interpret” the
plan’s provisions. (Plan § 13.02(f), App. 242.) In such
circumstances, we will not set aside the administrator’s
interpretations of “unambiguous plan language” as long as
those interpretations are “reasonably consistent” with the
plan’s text, Fleisher v. Standard Ins. Co., 679 F.3d 116, 121
(3d Cir. 2012) (quoting Bill Gray Enters. v. Gourley, 248 F.3d
206, 218 (3d Cir. 2001)), and we will only disturb the
administrator’s interpretations of ambiguous plan language
when those interpretations are “arbitrary and capricious,” id.
(quoting McElroy v. SmithKline Beecham Health & Welfare
Benefits Tr. Plan, 340 F.3d 139, 143 (3d Cir. 2003)). Whether
plan language is ambiguous or unambiguous is itself a question
of law subject to our de novo review, with the definition of
ambiguity being language that is “subject to reasonable
alternative interpretations.” Id. (quoting Taylor v. Cont’l Grp.

15
Change in Control Severance Pay Plan, 933 F.2d 1227, 1233
(3d Cir. 1991)). Many cases will therefore turn, as this one
does, on whether a proffered interpretation of plan language is
“reasonable.”

Courts apply this deferential standard for at least two
good reasons. First, courts have an obligation to give effect to
the plan-drafter’s intentions, because “ERISA abounds with
the language and terminology of trust law,” Firestone, 489
U.S. at 110, and the hallmark purpose of trust law is “to
accomplish the settlor’s intentions,” Restatement (Third) of
Trusts, Foreword (Am. Law Inst. 2003). Here, since the plan-
drafter explicitly specified that the plan administrator should
possess the ability to interpret terms, we must be deferential
because the de novo alternative—examining each of the plan
administrator’s legal decisions anew—would undermine rather
than give effect to the drafter’s wishes.

Second, giving deference pays heed to Congress’s
concern for not discouraging employers in their adoption of
ERISA plans. Existing federal statutes do not require
employers to offer employee-retirement plans, and when
Congress passed ERISA to make retirement programs fairer, it
also worked to reduce the burdens of its new regulations and
to keep in check disincentives that might discourage an
employer from offering a retirement plan at all—disincentives
such as high “administrative costs” and “litigation expenses.”
Conkright, 559 U.S. at 517 (quoting Varity Corp. v. Howe, 516
U.S. 489, 497 (1996)). To that end, the Supreme Court has
recognized that employers often commit the power of
interpretation to a plan administrator because doing so serves
the employer’s interests of efficiency, predictability, and
uniformity—interests ERISA seeks to protect. Id. Thus, when
a court pays deference to the administrator at the request of the

16
plan-drafter, the court acts in congruence with Congress’s
wishes.

V.

We now turn to the debate over the meaning of the
plan’s terms. Union Pacific argues the plan requires the
administrator, in light of Dowling’s status as a disabled
participant, to “deem” Dowling to have been paid his final base
salary from the moment he became totally disabled in 1997
until he retired in 2012, and then calculate his Final Average
Compensation from those deemed earnings based on the ten-
year window from 2002 to 2012. That is the approach the plan
administrator took and the District Court found reasonable.
Dowling, on the other hand, argues Union Pacific’s
interpretation involves too many interpretive gymnastics:
Dowling stopped working and earning a salary in 1997 and his
ten-year window must accordingly look backward from 1997,
even though he continued to accrue credited service until 2012.

We pass no judgment as to which proffered
interpretation is best, because at least three aspects of the plan
combine to make it ambiguous and each party’s interpretation
reasonable. The first aspect is the plan’s use of the word
“absence.” Is a person who is not at work due to a disability
“absent”? Union Pacific says yes; Dowling says no. If yes,
then Plan § 2.18(a)(3)(C)—which “deems” a participant to
have been paid during an “absence”—can reasonably be read
as requiring the administrator to deem disabled persons to be
paid their base salaries for the duration of their disability, up
until their retirement date, for purposes of calculating Final
Average Compensation. That would mean that Dowling
should be counted as earning his base salary up until 2012, as
the administrator found. But on the other hand, if time spent

17
not working due to disability is not an “absence,” then the
plan’s language favors Dowling and disabled participants are
not “deemed” to receive any pay at all after they leave work,
and the only reasonable approach would be to calculate Final
Average Compensation by looking backward from the date the
person became totally disabled and stopped working—1997 in
Dowling’s case.

The plan administrator adopted the former approach,
that missing work due to disability does in fact constitute an
“absence.” Dowling argues that the administrator went too far
in extending the definition of “absence” to cover indefinite
departures from work, and that only more limited short-term
departures should count.

Because “absence” is given no specialized meaning in
the plan’s definitions section, the word must be interpreted in
accordance with its generally prevailing meaning, Restatement
(Second) of Contracts § 202(3)(a) (Am. Law Inst. 1981)
(“Rules in Aid of Interpretation”),8 and its generally prevailing

8
A similar rule of construction is advisable under the
Restatement (Third) of Property, the recommended
restatement for trust-document interpretation. It recommends
that for courts seeking the drafter’s meaning of text in a trust
document, “words and phrases” should be “presumed to bear
their customary legal terminology” if the “drafter is a legal
professional or other person experienced in the use of legal
terminology” and there is no “[e]xtrinsic evidence” going to
the drafter’s subjective intention. Restatement (Third) of
Property: Wills and Other Donative Transfers § 10.2 cmt. e
(2003); see also Restatement (Third) of Trusts, Ch. 1 intro.

18
meaning is broad—it means nothing more specific than the
state of being “[n]ot present,” Absent, Oxford English
Dictionary (3d ed. 2009). While a person who misses one day
of work can surely be said to be “not present,” and thereby
“absent,” so can a person who endures an indefinite departure
from work, whether due to disability or some other reason.
Michael Jordan’s three-year hiatus from basketball was an
“absence,” according to the New York Times.9 Rick Moranis’s
18-year disappearance from film was an “absence” in the eyes
of the Hollywood Reporter.10 And Miles Davis’s five-year
departure from music in the 1970’s was an “absence” as well,
as told by National Public Radio.11 Thus, given that the
generally prevailing meaning of “absence” permits the word to
be used to refer to indefinite departures from the workplace,

note (referring readers to the Restatement (Third) of Property
for “general rules of interpretation and construction”).
9
Harvey Araton, Sports of the Times; Jordan, a Bit
Older, Comes Up Short, N.Y. Times (Oct. 31, 2001),
http://www.nytimes.com/2001/10/31/sports/sports-of-the-
times-jordan-a-bit-older-comes-up-short.html.
10
Ryan Parker, Rick Moranis Reveals Why He Turned
Down “Ghostbusters” Reboot: “It Makes No Sense to Me,”
Hollywood Reporter (Oct. 7, 2015),
http://www.hollywoodreporter.com/features/rick-moranis-
reveals-why-he-829779.
11
Fresh Air (NPR radio broadcast Apr. 1, 2016),
transcript excerpt available at
http://www.npr.org/2016/04/01/472580940/-miles-ahead-
shows-a-dissipated-davis-who-s-still-burning-hot.

19
we find the administrator’s use of the same word in the same
manner to be reasonable.

Dowling argues we must reject the administrator’s
interpretation of the word “absence,” because the plan requires
a specialized, narrower interpretation that applies only to
shorter departures from work. For authority, Dowling points
to Plan § 2.40. That section has separate subsections for time
spent in “Total Disability” and time spent in four specific types
of “absences.” (Plan § 2.40(4), (5), App. 148.) Dowling
suggests this separate treatment indicates the two terms are
mutually exclusive—time spent in “Total Disability” is not an
“absence,” and vice versa. But the plan’s text does not go so
far. Section 2.40 does not purport to define “absence”; it just
lays out four nonexclusive scenarios that fit the definition of
“absence.” Dowling’s argument is not without persuasive
force—to the contrary, it is a reasonable one. But it would be
a stretch to say his interpretation is the only reasonable
approach, to the exclusion of the plan administrator’s.

The second aspect that contributes to the plan’s
ambiguity is its silence on how to calculate Final Average
Compensation specifically for disabled participants. The plan
has a default method of pension-plan calculation and an
exception to that default for disabled participants, in two
relevant respects: (1) the availability of a pension, and (2) the
calculation of credited service. Compare Plan § 4.02(a), App.
155 (laying out the “General Rule” for “Credited Service”),
and Plan § 6.01-03, App. 173-74 (laying out general rules for
retirement benefits), with Plan § 4.02(c)(2), App. 157
(providing special rules for disabled participants’ credited
service), and Plan § 6.05, App. 178 (providing special rules for
disability retirement benefits). The plan, however, leaves a
gaping hole as to whether the default-and-exception pattern

20
continues for calculation of the Final Average Compensation
for disabled participants. Given this gap, the plan
administrator faced a choice: (a) calculate Dowling’s Final
Average Compensation in line with the default scheme, even
though disabled participants are explicitly treated as sui generis
with respect to pension-availability and credited service, or (b)
calculate Dowling’s Final Average Compensation in line with
the two disabled-participant exceptions that treat his formal
retirement date like his final day of work, even though nothing
in the plan says to do as much. Given the silence, we cannot
say that either approach is unreasonable.

Dowling, however, argues the silence can only be read
in one way, to foreclose any deviation from the default scheme
of determining Final Average Compensation, because of the
expressio unius canon of construction: since the plan explicitly
provides an exception for disabled participants in two respects,
and says nothing explicit for the Final Average Compensation,
we must assume that the lack of explicit terms for the latter
scenario indicates that no such exception exists. That
argument might win the day if we were reviewing the plan de
novo, but the expressio unius canon cuts the opposite way
when we are paying deference to a plan administrator, because
when a plan administrator interprets a text that contains a
“mandate in one section and silence in another,” the silence
“often suggests . . . simply a decision not to mandate any
solution . . ., i.e., to leave the question” open to the reasonable
interpretation of the administrative decisionmaker. Van
Hollen, Jr. v. FEC, 811 F.3d 486, 493-95 (D.C. Cir. 2016)
(quoting Catawba Cty. v. EPA, 571 F.3d 20, 36 (D.C. Cir.
2009) (finding in the context of Chevron deference that the
expressio unius canon counsels against the court disturbing an
agency’s interpretation)). Such is the case here. Dowling’s

21
criticism of the plan administrator’s approach is again not
necessarily without merit, but when granting deference “we do
not demand the best interpretation, only a reasonable one,” id.
at 494, and the plan’s silence suggests the plan administrator’s
approach is not unreasonable.

The third aspect that renders the plan ambiguous is its
structure. See Zheng v. Gonzales, 422 F.3d 98, 114-16 (3d Cir.
2005) (looking to “text and structure” to determine ambiguity).
Here, the relevant plan terms are structured into several
“Articles,” three of which are relevant here: Article II provides
“Definitions,” Article IV describes the “Crediting of Service,”
and Article VI lays out “Retirement Benefits.” Across these
articles, the plan effectively provides two sets of rules, as noted
above: a default scheme for the typical participant, and
exceptions for disabled participants. The default scheme and
its exceptions are not neatly laid out in one article; they are
scattered across all three articles, with bits and pieces in
various sections and subsections, and the operation of it all
must be determined by cross-referencing the various articles,
sections, and subsections, and reading them together. It is quite
the legal task. This buckshot distribution of relevant terms
does little to clarify the disputes over the text and contributes
to our finding that the at-issue provisions are ambiguous.

We also take pause to note two counterintuitive aspects
of Dowling’s proposed interpretation. First, Dowling wants all
the benefits and none of the detriments of an artificial delay in
the date he left work. When it comes to Credited Service, he
is content that the administrator deemed him to have worked
an extra fifteen years of time, from 1997 to 2012, even though
he did not, but when it comes Final Average Compensation, he
disapproves of the administrator taking the same approach and
deeming him to have received a fictional salary over the same

22
unworked period. It should not be minimized how beneficial
the first aspect of this scheme was for Dowling: if he had not
received Credited Service for the same post-disability pre-
retirement period that he does not want to be deemed to have
been paid a salary, one estimate suggests his monthly payment
would be only about 75% of the current payment—an amount
that Dowling believes already too low. (App. 118-19 (Willis’s
1997 estimates of various scenarios).) The point is that
Dowling likes the fictional delay when it benefits him for
purposes of Credited Service, but dislikes it when it hurts him
on Final Average Compensation. In other words, Dowling
suggests that we read one provision two different ways, both
to his advantage. But there is nothing unreasonable about
harmonizing Credited Service with the calculation of Final
Average Compensation.

Additionally, for the typical disabled participant,
Dowling’s position is likely worse and the administrator’s
better. For an employee whose base salary is the near-total
source of income, the salary that employee receives in his or
her final year of work may often be the highest of his or her
career. For Dowling, however, that was not the case, due to
his high-ranking status and incentive bonuses that made up a
hefty portion of his overall compensation. Thus, by deeming
him to receive only his base salary and no bonus over the final
ten years of his Credited Service, Dowling was deprived of his
three actual highest-earning years. But for the typical
employee whose pay comes mainly or exclusively from salary,
with raises arriving in yearly step increases, it is Union
Pacific’s interpretation that is best. To illustrate, imagine an
employee who is paid a base salary, no bonus, and receives a
step-salary increase every year from Year 1 to Year 10. In
Year 10, the employee becomes totally disabled and leaves

23
work. In Year 20, he begins to draw on his pension. Under
Union Pacific’s theory, he should be deemed to have been paid
his Year 10 salary—his highest salary ever—from Years 10 to
20, his high-three will necessarily be equivalent to his Year 10
salary, and his pension payment will increase accordingly. But
under Dowling’s theory, the employee’s ten-year window
should be based off Years 1 through 10, and his high-three will
be Years 8, 9, and 10, resulting in an average salary that is
inevitably lower than what he was paid in Year 10, and what
he would have received under Union Pacific’s approach. We
suspect most employees are in situations closer to our
hypothetical employee’s than to Dowling’s, and would benefit
less from Dowling’s approach than the administrator’s. While
these counterintuitive aspects of Dowling’s position do not on
their own render it unreasonable, they lend support to the
reasonableness of the administrator’s interpretation.

VI.

Finally, Dowling makes an argument that a conflict of
interest requires us to look more skeptically at the
administrator’s decision. ERISA plan administrators are
fiduciaries, and “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’” the administrator’s benefits decision
should stand. Firestone, 489 U.S. at 115 (quoting Restatement
(Second) of Trusts § 187, cmt. d (Am. Law. Inst. 1959)). A
conflict “clear[ly]” exists when the employer “both funds the
plan and evaluates the claims,” because “[i]n such a
circumstance, ‘every dollar provided in benefits is a dollar
spent by . . . the employer; and every dollar saved . . . is a dollar
in [the employer’s] pocket.’” Metro. Life Ins. Co. v. Glenn,
554 U.S. 105, 112 (2008) (quoting Bruch v. Firestone Tire &

24
Rubber Co., 828 F.2d 134, 144 (3d Cir. 1987), aff’d in part,
rev’d in part on other grounds, 489 U.S. 101 (1989)).

The mere existence of a conflict is not determinative,
however, and a conflict on its own does not change our
standard of review “from deferential to de novo.” Id. at 115.
A conflict is just another “factor,” and “Firestone means what
the word ‘factor’ implies, namely, that when judges review the
lawfulness of benefit denials, they will often take account of
several different considerations of which a conflict of interest
is one.” Id. at 117. The conflict may “act as a tiebreaker when
the other factors are closely balanced,” or it may mean little at
all, depending on the other factors at play. Id. Also, the
circumstances of the conflict itself may render it more or less
significant, depending on whether those “circumstances
suggest a higher likelihood” that the conflict actually affected
the benefits decision. Id. For example, if “an insurance
company administrator has a history of biased claims
administration,” then it is more likely the conflict affected the
benefits decision, and the court may grant less deference to the
plan administrator. Id. On the other hand, if “the administrator
has taken active steps to reduce potential bias and to promote
accuracy . . . by walling off claims administrators from those
interested in firm finances, or by imposing management checks
that penalize inaccurate decisionmaking irrespective of whom
the inaccuracy benefits,” then the conflict may be said to have
been unlikely to infect the administrator’s decision, and may
be of “vanishing” significance. Id.

The Supreme Court exemplified this only-a-factor
approach in the Glenn case. Id. at 118. The Glenn
administrator-company was subject to a conflict, and evidence
also showed it (1) refused to honor the government’s findings
as to disability while encouraging the plan participant to pursue

25
government disability benefits, (2) emphasized medical reports
that disfavored the claimant while deemphasizing reports
cutting in the claimant’s favor, and (3) failed to provide the
pro-claimant reports to medical experts. Id. On these facts the
Sixth Circuit refused to enforce the administrator’s decision
and the Supreme Court affirmed—yet the Court took care to
note that the conflict of interest alone probably would not have
warranted overriding the administrator’s decision, and that the
additional bad facts were crucial. Id. (suggesting the Sixth
Circuit “would not have found the conflict alone
determinative”).

Since Glenn, we have only been willing to disturb an
administrator’s decision based on a conflict of interest if
evidence either suggests the conflict actually infected the
decisionmaking or if the conflict is one last straw that calls a
benefits determination into question. For an example of the
last-straw scenario, in Miller v. American Airlines, Inc., we
refused to uphold a benefits determination where the airline
operated under a conflict of interest and also (1) doubled back
on an initial factual finding that the plan participant was
disabled, (2) considered extra factors not called for in the plan,
(3) failed to comply with ERISA’s notice requirements, and (4)
failed to fully evaluate an earlier diagnosis. 632 F.3d 837, 855-
56 (3d Cir. 2011). We gave “significant weight” to the four
factors other than the conflict and only “slight weight” to the
conflict itself. Id. at 855-56. By comparison, in Fleisher v.
Standard Insurance Co., there was a conflict, but the plan-
beneficiary presented no evidence at all that the conflict
actually infected the administrator’s decisionmaking, and we
were still willing to apply deference and affirm, without
requesting additional factfinding. 679 F.3d at 122 n.3 (3d Cir.
2012) (finding no evidence the conflict “affect[ed] the analysis

26
of [the] claim”); cf. id. at 130 (Garth, J., dissenting) (noting that
the majority found no need to remand for additional
factfinding).

Dowling’s case is more like Fleisher than Miller or
Glenn, because we know very little about the Union Pacific
administrator’s conflict. A conflict does exist—Union Pacific
both funds and administers the plan—but that is about all we
know. Dowling has highlighted no evidence suggesting Union
Pacific has any sort of negative history of failing to properly
exercise its fiduciary responsibilities, and Union Pacific has
put forward nothing indicating that it took steps to wall off the
plan administrator from the company’s financial
decisionmaking or incentivize its staff to make accurate
benefits determinations instead of reducing costs. We do have
the job titles of the relevant individuals—Willis worked in
“Compensation and Benefits” and Schroer and Schaefer were
in “Human Resources”—but titles alone do not tell us much.

The one fact that Dowling says cuts in his favor is an
early flip-flop by Union Pacific that he analogizes to the
problematic reversal in Miller. In 1995, Willis and Dowling
corresponded, and Willis told Dowling that Union Pacific
would calculate Dowling’s Final Average Compensation the
way Dowling now believes to be correct. Then a year later, in
1996, Willis wrote Dowling again and reversed his initial
position, calculating that Dowling’s pension should be what
Union Pacific later finally adopted in 2013. But again,
Dowling has presented the Court with nothing more than the
bare fact of this reversal; no evidence suggests Willis’s
motivation was ulterior, or anything other than a desire to
correct what he saw as an errant calculation.

27
 Comparing Willis’s reversal to the problematic reversal
in Miller also shows just how far Willis’s reversal is from
warranting a skeptical take on Union Pacific’s conflict. Three
factors in Miller suggested the reversal was motivated not by a
desire to correct an error, but instead by an ulterior cost-cutting
motivation that might be attributed to the conflict: First, the
Miller reversal came on a factual question—whether the
claimant was disabled—even though no new evidence had
been received. 632 F.3d at 841-42, 855-56. Here the reversal
was on a purely legal question—how the plan’s complex terms
should be properly interpreted. Second, in Miller the initial
decision resulted in the claimant actually receiving benefits,
and the reversal cut off the flow of those benefits. Id. Here,
the initial determination was preliminary and advisory, the
reversal came a year later, and no benefits flowed for another
17 years. Third, in Miller the reversal was one of four factors,
not including the conflict, that together undermined the Court’s
trust in the administrator, the most notable factor being the
administrator’s consideration of information not permitted by
the plan document, which may have on its own been evidence
of an arbitrary and capricious benefits determination. Id. at
855-56, 856 n.5. Here, by comparison, Willis’s reversal is the
only factor—not one of four—that Dowling has marshaled to
support his argument that the conflict affected the
administrator’s determination. Without more, there is little
indication that the conflict played a role, and its bare existence
is not enough to justify disturbing the plan administrator’s
otherwise reasonable decision.

VII.

For the foregoing reasons we will affirm the District
Court’s decision sustaining the plan administrator’s calculation
of Dowling’s pension benefit.

28
 John Dowling v. Pension Plan for Salaried Emp., et al.
No. 16-1977
_________________________________________________

Ambro, Circuit Judge, dissenting

My colleagues see ambiguity in this case; I do not. John
Dowling’s complaint is simple: Union Pacific’s Pension Plan
provides a straightforward method for calculating the pension
benefits of disabled former employees that the Plan
administrator didn’t follow. If Dowling is correct, no amount
of deference can justify the administrator’s decision. I believe
he is.

As the majority notes, the amount of a Plan
Participant’s1 pension benefits depends on two key figures:
1) the Participant’s Credited Service; and 2) his Final Average
Compensation. Plan § 5.01(a) (setting out the “Benefit
Formula”). Dowling does not contest the Plan administrator’s
calculation of his Credited Service. He argues only that the
administrator miscalculated his Final Average Compensation
and thus arrived at an incorrect pension benefit amount when
he applied the Benefit Formula. Accordingly, this case turns on
a single question: Should the Plan administrator have
calculated Dowling’s Final Average Compensation by looking
to the pay Dowling received during the ten years before he
became disabled or the pay he received during the ten years
before he retired? Section 2.35 makes clear that the answer is
the former.

1
Union Pacific’s Pension Plan capitalizes defined terms. In
order to keep better track of them, I adopt that convention as
well. See, e.g., Plan § 2.54 (defining “Participant”). There’s no
dispute that Dowling is a Participant.
 The Plan provides that “‘Final Average Compensation’
shall mean the average of the Participant’s monthly
Compensation for the 36 consecutive calendar months of the
highest Compensation within the 120-calendar month period
immediately preceding . . . the last date on which he is a
Covered Employee . . . .” Plan § 2.35 (underscore in original).
Put even more simply, Final Average Compensation is the best
three consecutive years of pay an employee received in the ten
years before he ceased to be a “Covered Employee.” So, to
answer our question above, we need to know whether
Dowling’s last day as a Covered Employee was the day before
he started his period of disability on February 1, 1997, or just
before he formally retired on October 1, 2012.
Again the answer is simple: Dowling was no longer a
Covered Employee once his disability (multiple sclerosis)
caused him to leave permanently in 1997. Admittedly, arriving
at this answer requires working through a few of the Plan’s key
terms. This requires attention at each step, but the steps are not
hard to follow.
All agree that Dowling became a Disabled Participant
on February 1, 1997. See J.A. 37; Plan § 2.25. A Disabled
Participant is a Participant who suffers from a Total Disability
and has had a “Separation from Service due to such Total
Disability.” Plan §§ 2.25, 2.26. The day these events occur is
called the “Disability Date,” and no one disputes that
Dowling’s Disability Date is February 1, 1997. Plan § 2.25;
J.A. 37. A Separation from Service occurs when an
“Employee[’s] . . . Total Disability . . . causes him to cease to
be an Employee[.]” Plan § 2.67, so there’s no question
Dowling was no longer an Employee after his Separation from
Service on his Disability Date in 1997. And a Covered
Employee must be, at the very least, an “Employee.” See Plan
§ 2.21(“‘Covered Employee’ shall mean each Employee in the
employ of an Employer . . . .”).

2
 Paring things down, we’re left with the following:
Dowling became a Disabled Participant when his Total
Disability and Separation from Service terminated his status as
an Employee; only an Employee may be a Covered Employee,
so he ceased to be a Covered Employee at the same time; and
all of this happened on February 1, 1997.
With this information in hand, we can return to Section
2.35’s definition of Final Average Compensation. It instructs
us to look to the “120-calendar month period immediately
preceding . . . the last date on which [the Participant] is a
Covered Employee . . . [,]” Plan § 2.35 (emphasis added)—i.e.,
the ten years between February 1, 1987 and February 1, 1997.
The Plan administrator failed to follow these instructions,
looking instead to the ten years preceding October 1, 2012,
when Dowling was no longer working and had ceased to be a
Covered Employee. Accordingly, the administrator’s
calculation of Dowling’s Final Average Compensation was
incorrect.
My colleagues, however, don’t see it this way. They
focus on whether Dowling’s period of disability (from
February 1997 to October 2012) counted as an “absence” per
§ 2.18(a)(3)(C). In my view, their construction of that word,
though creative, is beside the point.
Section 2.18 provides that “for a period of absence
immediately prior to which [a Participant] is a Covered
Employee . . . [, he] shall be deemed to have received
Compensation at the base pay in effect for him” before the
period of absence began. Plan § 2.18(a)(3)(C)(i). Because
Dowling’s period of disability could arguably qualify as an
“absence,” the contention goes, he is deemed to have received
Compensation in the amount of his base pay from February 1,
1997 to October 1, 2012.

3
 But as I show above, whatever Compensation Dowling
was deemed to have received after February 1997 per § 2.18 is
irrelevant to the calculation of his Final Average
Compensation. This is because § 2.35 tells us to look to the
period “preceding . . . the last date on which [the Participant]
is a Covered Employee[,]”—February 1, 1997. Plan § 2.35
(emphasis added). While, Section 2.18 tells us what Dowling
was “deemed” to have received after he left work in 1997,
§ 2.35 is clear that Final Average Compensation depends on
what he was paid before he became disabled that year.2
Section 2.18 thus does not justify the Plan
administrator’s calculation of Dowling’s Final Average
Compensation by looking to the period between October 2002
and October 2012. One justification Union Pacific offers (but
on which the majority rightly declines to rely) lies in § 6.05.
Under that section, certain Plan provisions apply to a Disabled
Participant “as if his Separation from Service occurred on the
date he ceases to be a Disabled Participant[.]” Plan § 6.05. If
this language applied to the sections relevant to calculating the
Final Average Compensation, which all appear in the Plan’s

2
A careful reader might ask why § 2.18(a)(3)(C) would
provide a rule for Compensation “deemed” received during an
absence when § 2.35 calculates Final Average Compensation
on the basis of the Compensation received before a Disabled
Participant stops working. The answer is that the question
before us is only one of many addressed by the Plan’s 277
pages and 19 articles. Compensation deemed received by
Disabled Participants per § 2.18(a)(3)(C) may be relevant to
any number of other issues not before us. Indeed, the parties
direct us to one: § 5.01(c)(2)(B) relies on the Compensation a
Participant is deemed to have received during a period of
disability to offset the Participant’s pension benefits against his
Social Security benefits. Plan § 5.01(c)(2)(B).

4
Article II, the Plan administrator’s choice would be vindicated.
But § 6.05 makes clear that it only applies to “the other
provisions of this Article [i.e., Article VI] (or Article VII)[,]”
leaving unaffected the sections of Article II discussed above.
How my colleagues get around this is by providing a
more imaginative explanation for why the Plan administrator
was not bound by § 2.35: The Plan is silent on whether there
exists a special rule for calculating the Final Average
Compensation of Disabled Participants, so the Plan
administrator was free to craft one. Maj. Op. at 20-21. To
justify this innovative approach, they note that the Plan has
special rules to calculate Disabled Participants’ years of
Credited Service as well as the date their benefits become
available that differ from the rules applicable to other
Participants. Id. at 17. Thus they conclude that “[t]he plan . . .
leaves a gaping hole as to whether a default-and-exception
pattern continues for calculation of the Final Average
Compensation for disabled participants.” Id. at 17–18. I find
this conclusion dubious for two reasons.
First, I see no gaping hole. The special rule for Disabled
Participants the majority seeks is provided in the sections
discussed above. For the typical employee, calculating the
Final Average Compensation is easy because the ten years
preceding retirement will be his last ten years of employment.
Id. at 5–6. But this is not so for a Disabled Participant. His
Separation from Service occurs not at retirement but on his
Disability Date, see §§ 2.25, 2.26; formal retirement might
come years later. For this reason, the Plan carefully describes
when an employee who becomes disabled ceases to be a
Covered Employee. See Plan §§ 2.21, 2.25, 2.26 & 2.67.
Because the rule for disabled former employees is contained in
the definitions of Disabled Participant, Covered Employee, and
other terms discussed above, there is no need for an alternative
definition of Final Average Compensation for Disabled

5
Participants in § 2.35. All the work is done by the Plan’s
definitions establishing who is a Covered Employee and when.

Second, my colleagues’ approach proves too much. In
their view, the Plan failed to specify how to calculate a
Disabled Participant’s Final Average Compensation. So rather
than follow the default rule provided for all Participants, the
Plan administrator was free to make one up. That can’t be right.
If a Plan administrator may depart from a general rule
whenever a more specific one might have been, but is not,
provided, what’s to stop him from simply denying Disabled
Participants their pensions entirely? Given that Dowling had
not been working for over ten years, why deem him to have
received any Compensation at all? Couldn’t the Plan
administrator have decided that Dowling’s Final Average
Compensation was zero dollars?
Presumably the response would be no, as such a rule
would not be reasonable. And here, I believe, is the heart of the
majority’s mistake. The Plan administrator credited Dowling
with years of service during his period of disability and
calculated his Final Average Compensation with respect to
those same years. This, my colleagues believe, is a reasonable
way to design a pension program: looking to the same years to
calculate a Participant’s Credited Service and Final Average
Compensation is “good policy.”3

3
Although it should not bear on the outcome of this appeal, I
am also not convinced the administrator’s decision necessarily
represented good policy. Despite the majority’s skepticism, it
makes sense that Disabled Participants continue to receive
Credited Service even after their Final Average Compensation
is fixed the day they leave work. A significant portion of
Dowling’s pre-disability compensation was incentive and

6
 But we are not asked to opine whether the administrator
has imagined a reasonable way to allocate pension benefits.
Instead, we must decide whether his calculation of Dowling’s
Final Average Compensation was “reasonably consistent with
[the Plan’s] unambiguous text[.]” See Fleisher v. Standard Ins.
Co., 679 F.3d 116, 121 (3d Cir. 2012). It was not, and thus I
respectfully dissent.

merit pay. (His average total annual compensation from 1993
to 1995 was $365,848, but his annual base pay during that
period was $208,000.) Once disabled, of course Dowling
received no incentive or merit pay; instead, the administrator
“deemed” him to have received only his base pay.
Accordingly, if the Plan looked to any period of disability in
order to calculate the Final Average Compensation, pension
benefits would not reflect the true economic value of
employees during their working years. Participants like
Dowling who received a large portion of their compensation in
the form of merit and incentive pay would be short-changed.
At the same time, because pension benefits often take many
years to vest, if a Disabled Participant received no Credited
Service during a period of disability, he could forfeit
substantial pension benefits through no fault of his own. Thus
it is reasonable to calculate a Disabled Participant’s Final
Average Compensation based on what he earned when actually
working and yet award him Credited Service during his
disability to avoid a forfeiture of benefits.

7