United States District Court, N.D. Alabama, Northwestern Division
January 28, 2015, Decided
For Stephen Finch, Plaintiff: James D Hughston, LEAD ATTORNEY, BLACK & HUGHSTON PC, Tuscumbia, AL.
For The Hillshire Brands Company, Hillshire Brands Severance Pay Plan, The Hillshire Brands Employee Benefits Administrative Committee, Defendants: Brian R Bostick, Katherine E Reeves, LEAD ATTORNEYS, OGLETREE DEAKINS NASH SMOAK & STEWART PC, Birmingham, AL.
C. LYNWOOD SMITH, JR, United States District Judge.
OPINION BY: C. LYNWOOD SMITH, JR
MEMORANDUM OPINION AND ORDER
Plaintiff, Stephen Finch, asserts a single claim for payment of severance benefits pursuant to the Employee Retirement Income Security Act of 1974 (" ERISA" ), 29 U.S.C. § 1001 et seq. He named the following defendants: (1) his former employer, The Hillshire Brands Company (" the Company" ); (2) Hillshire Brands Severance Pay Plan (" the Plan" ), an employee welfare benefit plan established by the Company to provide severance benefits to terminated employees; and (3) The Hillshire Brands Company Employee Benefits Administrative Committee (" the Administrative Committee" ), the Plan Administrator. The case presently is before the court on cross-motions for summary judgment -- one filed by plaintiff, and the other filed jointly by all defendants. Upon consideration of the motions, briefs, and evidentiary submissions, the court concludes that plaintiff's motion should be denied, and defendants' motion should be granted.
I. STANDARD OF REVIEW
The Eleventh Circuit has established " a six-step process 'for use in judicially reviewing virtually all ERISA-plan benefit denials'" : i.e.,
(1) Apply the de novo standard to determine whether the claim administrator's benefits-denial decision is " wrong" ( i.e., the court disagrees with the administrator's decision); if it is not, then end the inquiry and affirm the decision.
(2) If the administrator's decision in fact is " de novo wrong," then determine whether he was vested with discretion in reviewing claims; if not, end judicial inquiry and reverse the decision.
(3) If the administrator's decision is " de novo wrong" and he was vested with discretion in reviewing claims, then determine whether " reasonable" grounds supported it (hence, review his decision under the more deferential arbitrary and capricious standard).
(4) If no reasonable grounds exist, then end the inquiry and reverse the administrator's decision; if reasonable grounds do exist, then determine if he operated under a conflict of interest.
(5) If there is no conflict, then end the inquiry and affirm the decision.
(6) If there is a conflict of interest, then apply heightened arbitrary and capricious review to the decision to affirm or deny it.
White v. Coca-Cola Co., 542 F.3d 848, 853-54 (11th Cir. 2008) (citing Williams v. BellSouth Telecommunications, Inc., 373 F.3d 1132, 1137-38 (11th Cir. 2004)).
The sixth step of the Eleventh Circuit's formulation was called into question by the Supreme Court in Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008), where the Court observed that:
After the Court determined that the administrator of an ERISA plan operated under a conflict, it considered " 'how' [a] conflict . . . should 'be taken into account on judicial review of a discretionary benefit determination.'" Id. at 2350 (quoting MetLife v. Glenn, 552 U.S. 1161, 128 S.Ct. 1117, 169 L.Ed.2d 845 (2008) (mem.)). The Court concluded " that a conflict should 'be weighed as a factor in determining whether there is an abuse of discretion.'" Id. (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 957, 103 L.Ed.2d 80 (1989) (internal quotation marks omitted)). The Court explained that the consideration of a conflict as a factor did not require " a change in the standard of review" and criticized " special burden-of-proof rules, or other special procedural or evidentiary rules, focused narrowly upon the evaluator/payor conflict" that circuit courts had developed. Id. at 2351. The Court stated that " [b]enefits decisions" are too numerous in nature " to come up with a one-size-fits-all procedural system that is likely to promote fair and accurate review. Indeed, special procedural rules would create further complexity, adding time and expense to a process that may already be too costly for many of those who seek redress." Id.
White, 542 F.3d at 854 (alterations and emphasis in original).
Thus, if the court finds a conflict of interest, " the existence of [such] conflict . . . should merely be a factor for the district court to take into account when determining whether an administrator's decision was arbitrary and capricious," and " the burden remains on the plaintiff to show the decision was arbitrary; it is not the defendant's burden to prove its decision was not tainted by self-interest." Doyle v. Liberty Life Assurance Co. of Boston, 542 F.3d 1352, 1360 (11th Cir. 2008) (alteration and ellipses supplied).
II. SCOPE OF THE RECORD UNDER REVIEW
Generally, " [r]eview of the plan administrator's denial of benefits is limited to consideration of the material available to the administrator at the time it made its decision." Blankenship v. Metropolitan Life Insurance Co., 644 F.3d 1350, 1354 (11th Cir. 2011) (citing Jett v. Blue Cross & Blue Shield of Alabama, Inc., 890 F.2d 1137, 1140 (11th Cir. 1989)) (alteration supplied). Here, in addition to the administrative record, plaintiff seeks to rely upon: (1) his affidavit;  (2) letters from the Company memorializing plaintiff's offer of employment in 2004, and his promotion to Director of Manufacturing in 2006;  (3) plaintiff's Performance Plan for Fiscal Year 2012;  (4) spreadsheets, Power Point presentations, and photographs plaintiff created to demonstrate his satisfaction of the objectives set forth in his May 2012 Performance Improvement Plan;  (5) handwritten notes from plaintiff's meetings with Plant Manager Damon Williams;  (6) the transcript of the deposition of Lena Koldras, the Company's Vice-President of Human Resources;  (7) an April 4, 2014 newspaper article discussing the closure of the Company's Florence, Alabama plant;  (8) the Charter of the Sara Lee Corporation Employee Benefits Administrative Committee;  (9) a May 29, 2014 e-mail from defendants' attorney to plaintiff's attorney;  and (10) a Sara Lee Foods Employee Benefits Enrollment Form. According to plaintiff, " where a conflict of interest occurs, as in the instant case, and a fair hearing has been denied to a plan participant, the Court may consider and review materials that go to the heart of the dispositive issues even though outside the technical administrative record." Doc. no. 40 (Plaintiff's Response to Defendants' Motion for Summary Judgment), at 10 (emphasis supplied).
Plaintiff is correct that some district courts have allowed plaintiffs in ERISA cases to submit evidence that was not part of the administrative record when " the evidence will be used to support a claim of procedural misconduct or bias" by the insurer. See, e.g., Bloom v. Hartford Life and Accident Insurance Co., 917 F.Supp.2d 1269, 1278 (S.D. Fla. 2013); Allen v. Life Insurance Co. of North America, 267 F.R.D. 407, 412 (N.D.Ga. 2009). In such cases, however, the evidence must actually relate to the alleged misconduct or bias; the plaintiff cannot obtain discovery related solely to the substantive merits of his claim. Bloom, 917 F.Supp.2d at 1278. For example, in Bloom, the court allowed the plaintiff to offer evidence regarding whether the insurer followed its own procedures during the claims administration process, including excerpts from the insurer's claims manual, an internal training guideline, and the deposition transcript from a representative of the insurer. Id. at 1279. Even so, the court did not allow plaintiff to submit additional medical records that bore on the ultimate issue of her disability and entitlement to benefits. Id.
In addition, in Adams v. Hartford Life and Accident Insurance Co., 589 F.Supp.2d 1366 (N.D.Ga. 2008), the district court stated:
Pursuant [to] the body of case law developed under ERISA, the court, at the very least, must examine " the facts as known to the administrator at the time the decision [to deny benefits] was made" to determine whether the administrator's decision was reasonable. See Glazer v. Reliance Standard Life Insurance Co., 524 F.3d 1241, 1246 (11th Cir. 2008). " To the extent those 'facts known' are not reflected in the papers in the claims file, nothing prohibits Plaintiff from conducting discovery as it pertains to [(1) examining whether an administrator fulfilled his or her fiduciary duties, (2) whether proper procedures were followed in compiling the record; (3) whether the record is complete; and (4) whether the administrator had a conflict of interest]." Lake v. Hartford Life & Accident Insurance Co., 218 F.R.D. 260, 261 (M.D. Fla. 2003) (citing Cerrito v. Liberty Life Assurance Co. of Boston, 209 F.R.D. 663, 664 (M.D. Fla. 2002)). In addition, if the administrator was acting under a conflict of interest when it made the plaintiff's benefit decision, the plaintiff has the right to conduct discovery into the surrounding circumstances to determine whether such a conflict affected the benefits decision. See Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105, 116, 128 S.Ct. 2343, 2351, 171 L.Ed.2d 299 (2008) (noting that the significance of an administrator's conflict of interest depends on the degree to which the circumstances suggest that the conflict affected the benefits decision).
Adams, 589 F.Supp.2d at 1366 (first alteration supplied, all other alterations in original) (footnote omitted).
Thus, the court will consider the additional evidence submitted by plaintiff, but only to the extent that it relates to determining whether the administrator acted under a conflict of interest when it made plaintiff's benefit decision, and whether plaintiff was provided a fair hearing at the administrative level. Even so, the court will not consider any additional evidence that relates solely to the issue of whether plaintiff was, in fact, entitled to severance benefits.
A. The Hillshire Brands Company Severance Pay Plan
The Hillshire Brands Company was known as the Sara Lee Corporation until sometime during 2012, when a corporate transition occurred. The Hillshire Brands Company (" Hillshire Brands" or " the Company" ) adopted the Hillshire Brands Severance Pay Plan (" the Plan" ) on December 31, 2012, to provide severance benefits to eligible employees whose employment with the Company was involuntarily terminated. Severance benefits were to be awarded, according to a pre-set formula, to " a participant who involuntarily terminates employment with the company for a reason other than for proper cause (as defined below), and who executes and does not revoke a proper release provided by the company . . . ." 
[A] termination for " proper cause" shall include (but shall not be limited to) termination for any willful or grossly negligent breach of the participant's duties as an employee of the company and termination for fraud, embezzlement or any other similar dishonest conduct, violation of the company's rules of conduct or unsatisfactory performance.
The Company maintains " sole discretion to determine whether a termination is for 'proper cause.'"  It also has " discretionary authority to construe and interpret the provisions of the plan and make factual determinations thereunder, including the power to determine the rights or eligibility of employees as participants and the amounts of their benefits under the plan, and to remedy ambiguities, inconsistencies, or omissions." 
The Plan includes the following requirements for filing a claim for benefits:
It is not necessary that a participant apply for benefits under the plan. However, if a participant wishes to file a claim for benefits, such claim must be in writing and filed with the company within 90 days after the date such participant should have received such benefits. If a claim is denied, the company will furnish the claimant with written notice of its decision, setting forth the specific reasons for the denial, references to the plan provisions on which the denial is based, additional information necessary to perfect the claim, if any, and a description of the procedure for review of the denial. A claimant may request a review of the denial of a claim for benefits by filing a written application with the company within 60 days after he receives notice of the denial. Such a claimant is entitled to review pertinent plan documents and submit written issues and comments to the company. The company, within a reasonable time after it receives a request for review, will furnish the claimant with written notice of its decision, setting forth the specific reasons for the decision and references to the pertinent plan provisions on which the decision is based. If the claimant subsequently wishes to file a claim against the plan, any legal action must be filed within 90 days after the company's final decision.
The Plan also states the following with regard to its administration by the Company:
The plan is administered by the company. The company, from time to time, may adopt such rules and regulations as may be necessary or desirable for the proper and efficient administration of the plan and as are consistent with the terms of the plan. The company, from time to time, may also appoint such individuals to act as the company's representatives as the company considers necessary or desirable for the effective administration of the plan. In administering the plan, the company shall have the discretionary authority to construe and interpret the provisions of the plan and make factual determinations thereunder, including the authority to determine the eligibility of employees and the amount of benefits payable under the plan. Any notice or document required to be given or filed with the company will be properly given or filed if delivered or mailed, by registered mail, postage prepaid, to the company headquarters at its then-current mailing address.
The Company's Board of Directors, by resolution, delegated the authority to serve as Plan Administrator to the Sara Lee Corporation Employee Benefits Administrative Committee, which later became the Hillshire Brands Employee Benefits Administrative Committee (" the Administrative Committee" ). The Administrative Committee is comprised of three individuals: (1) the Company's Executive Vice President of Human Resources; (2) the Executive Vice President and Chief Financial Officer; and (3) the General Counsel and Corporate Secretary. The Administrative Committee was vested with
discretionary authority to administer each Plan according to its terms, to interpret each Plan, to resolve questions and ambiguities arising under each Plan, to make final and binding decisions on all questions arising under the Plans, and to enforce the terms of the Plans. In addition, the [Administrative] Committee has the authority to delegate any of its authority and responsibility under the Plans in writing to others. The [Administrative] Committee is to act in accordance with the standard of care prescribed by Section 404 of ERISA (including any regulations thereunder). In particular, the [Administrative] Committee is to act solely in the interests of participants and beneficiaries, for the exclusive purpose of providing them with benefits and defraying reasonable expenses of administering the Plans, acting with the care, skill and diligence of a prudent man familiar with such matters.
The Administrative Committee, in fact, delegated the authority to make initial benefit claim decisions under the Plan to " any employee of the Company serving in a Director-level or above position in the Company's Human Resources or Global Benefits group."  The Administrative Committee also established an ERISA Appeal Committee (" the Appeal Committee" ), which was delegated " the discretionary authority to review appeals of decisions denying benefits under [the Plan] and to render final decisions with respect to such appeals."  The Appeal Committee consists of " those individuals appointed from time to time by the Company employee serving as the Executive Vice President, Human Resources."  During all times relevant to this litigation, those individuals were Lena Koldras, Chris Haller, Alison Rhoten, Matt Magerko, ...