Opinion
Civil Action No. 3:98CV-539-S
January 22, 1999.
MEMORANDUM OPINION
This matter is before the court for consideration of the parties' opposing briefs concerning the decision of the ERISA Plan Administrator. At the October, 1998 scheduling conference, the parties agreed that the sole issue in this case is whether the Plan Administrator's decision denying the plaintiff's claim for benefits was arbitrary and capricious. The record before the administrator was submitted, and the parties thoroughly briefed the issue. The matter is now before the court for decision.
The plaintiff, L. Jane Brown (hereinafter "Brown"), was hired in September, 1996, by Providian Corporation to be the "primary field business analyst focusing on the AMS system." Record before the Plan Administrator ("Rec."), pg. 32. On June 10, 1997, at 5:30 p.m. Aegon N.V./Commonwealth General Corporation acquired Providian Corporation. CGC then had in place a Change in Control Plan ( the "Plan"), pursuant to ERISA. See Rec. pgs. 1-10.
The parties have not decoded the acronym "AMS" for us. The program was also known, apparently, as the "Leads System." This appears to have been a monitored incentive program for field agents to develop and sell to "leads" generated from a telemarketing program.
In its brief, Commonwealth General Corporation (hereinafter "CGC") states that "there is no dispute that Change in Control as defined in the Plan occurred on June 10, 1997, at 5:30 p.m., when Aegon N.V. acquired Providian Corporation." (Brief, pg. 3). In its Answer at ¶ 2, CGC denies that it is now doing business as Aegon Insurance Company, and admits that Commonwealth General Corporation is a successor to Providian. The precise business form of the entity known as "Aegon" is immaterial for our present purposes. For the sake of simplicity, we will refer only to CGC in the remainder of this opinion.
The Plan contained the following provision with respect to severance pay:
If, During the Change in Control Period, Providian or one of its Affiliates shall terminate your employment other than for Cause or Disability or you shall terminate your employment for Good Reason, Providian will provide you with the severance payments outlined below.
Rec., pg. 6. The Plan defined Good Reason:
For purposes of this Plan, Good Reason means any of the following:
. . . Providian or one of its Affiliates assigns you to any duties which result in diminution in any respect to your position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as in effect immediately prior to the Change in Control . . .
Rec., pg. 5. On October 2, 1997, Brown submitted a request for severance pay under the Plan, stating what she believed constituted Good Reason for terminating her employment.
As grounds for her decision to leave the company she stated that a diminution in her status and authority occurred when the number of users of the AMS system decreased almost 50% after a September 15, 1997 memorandum announced to field agents that participation in the Leads Program (now referred to as the Enhanced Leads Program) would no longer be mandatory. Rec., pg. 32; 35. She also contended that she did not perform key duties and responsibilities identified in the Providian job postings for Senior and Lead Business Analyst positions, such as analysis/design, project management, and business system consulting. Instead, she was required to assume duties which she contended are atypical of a business analyst, including working on "help desk" issues, and 24-hr. on-call rotation for mainframe support. Rec., pgs. 32-33.
Roger L. Smith ("Smith"), the Director of Employee Benefits and Plan Administrator, evaluated and denied Brown's request for severance pay. In making this determination, he considered and discussed 1) the information submitted by Brown, 2) an October 9, 1997 memorandum from Human Resources Consultant Terri Spivey who interviewed Brown's superiors and evaluated Brown's claim, at Smith's request, and 3) the Plan provisions. Rec., pgs. 101-102.
Brown retained counsel to assist her in appealing the October 31, 1997 denial of her request for severance pay. In her letter appealing the decision, it was noted that in August, 1997 Brown had been promoted to Lead Business Analyst, and that it was "her understanding" that she would thus "have less day-to-day support duties and would be involved in more strategic planning." Rec., pg. 103. Her assertion with regard to diminishment in position was reiterated, as well as her assertion that her duties and responsibilities were diminished. She offered no additional evidence in support of her appeal. Rec., pgs. 103-107. On March 25, 1998, Smith again denied the Brown's claim, having reviewed his prior decision and Brown's appeal. A complaint was filed in the Jefferson Circuit Court and was removed to this court.
The parties agree that review by this court is limited to a determination whether Smith's decision was arbitrary and capricious, based upon the record which was before him. Peruzzi v. Summa Medical Plan, 137 F.3d 431, 433 (6th Cir. 1998). "[T]he conflict of interest inherent in self-funded plans does not alter the standard of review, but `should be taken into account as a factor in determining whether the . . . decision was arbitrary and capricious.'" Peruzzi, 137 F.3d at 433, quoting, Davis v. Kentucky Fin. Cos. Retirement Plan, 887 F.2d 689, 694 (6th Cir. 1989).
In the denial letter of October 31, 1997, Smith referred to the information obtained from Brown's superiors:
In your explanation of your claim, you indicate that your position was diminished because of the policy change to have the Agents use of AMS be voluntary for most agents rather than mandatory. You indicate that this decreased the number of Agents using AMS from 2200 to 1124. Rich and Mark confirm that the number of users has decreased because of this policy change, but they indicate that regardless of the number of users, the AMS system will still be in place on a going forward basis. They indicate that your responsibilities have not changed with respect to AMS. You are still held accountable for the same standards and measurements. Based on this management input, I do not consider this to be a diminution of your position.
You indicate that you had to assume duties which are not typical of a business analyst and that the responsibilities that you are supposed to perform have become almost non-existent. Rich and Mark indicate that your [sic] were asked to develop the specifications for a system. They state that the development of system specifications is a part of your responsibilities as a Lead Business Analyst. In addition, you continued to perform production support as you did prior to June 10, 1997, the effective date of the merger of Providian and AEGON. Based on this management input, I do not consider this to be a diminution of your position.
Rec., pgs. 101-102. Smith's letter accurately reflects the information conveyed to him from Brown's superiors, via the report from the Human Resources Consultant. The consultant's report further explains that:
. . . the [AMS] system will stay in place going forward. This means that Jane's responsibilities have not diminished, but will grow as new development and enhancements are expected in merging this in a new operating environment. This means that Jane's objectives have not changed . . .
Rec., pg. 99. This information indicates that the changed number of users under the newly implemented Enhanced Leads Program is simply not indicative of the viability of the AMS system. The report indicates that the system was in a process of change, development and expected growth. It was unequivocally stated that "the system will stay in place going forward" (emphasis ours), and that Brown "would still be held accountable for the same standards and measurements if she stayed in the position." Rec., pg. 99.
The Plan ensured for Brown that her position, authority, and responsibilities would not be diminished. Brown seeks to show diminishment by arguing that the impact or value of her work was lessened because fewer agents participated in the program. This is a conclusory, qualitative statement offered by Brown regarding the way in which she perceived her job after the program was no longer mandatory for agents. Her superiors, however, asserted that her objectives had not changed and that she remained accountable for the same standards and measurements. Smith did not act arbitrarily and capriciously in relying upon the representations as to the nature of the work expected of Brown at that time and in the future, despite Brown's perception that her performance of these same responsibilities was less meaningful. Further, the report indicated that Brown remained valuable in her position and, in fact, had been promoted:
According to Rich and Mark, Jane was asked to develop the specifications for a system, a skill of a Lead Business Analyst. Mark had recently promoted Jane to Lead from Senior because her skills were so valuable to the organization and reflective of a Lead vs. a Senior. Mark intentionally moved Jane to a Lead as to position her for the next step, Team Leader.
Rec., pg. 99.
Brown urged in her request for benefits that
"Generally, persons at my level are consulted on multi-system, multi-department problems. Those problems would require intense analysis and analytical tools (such as process and data models). Nothing I have done recently requires this level of analysis.
Instead, my efforts have been directed towards production support. I have worked on many help desk issues (Appendix C) and have even been placed in the 24-hour on-call rotation for mainframe support (Appendix D). Again, if you refer to the job postings, you will notice that production support is not mentioned. That is because production support is usually handled by more junior individuals.
Rec., pg. 33. Her references to job postings and generalities about employees "at my level" are of no import in this evaluation. The focus of the analysis by Smith was properly on what Brown's actual responsibilities were before the change in control and after, and whether she suffered a diminishment thereby. Brown's expectations about what the parameters should have been for her position are simply not the benchmark by which diminishment is judged. Brown does not dispute that she had been required to provide production support in the past. In fact, her appeal from the October denial of benefits makes this point clear:
When Ms. Brown was hired to become a Business Analyst, her job required her to define requirements of the system (e.g., what the system needs to do); to design the system; and thereafter to resolve issues that might arise within the system. In August, 1997 she was promoted to a Lead Business Analyst. Her understanding at the time of her promotion was that she would have less day-to-day support duties and would be involved in more strategic planning. This was Ms. Brown's goal when becoming employed by Providian.
Rec., pg. 103 (emphasis ours). The Plan did not ensure that Brown's envisioned career path would be realized. Rather, its purpose was to protect that status which existed at the time of the change in control. According to Brown's superiors, she had both production support and design responsibilities:
According to Rich and Mark, Jane was asked to develop the specifications for a system, a skill of a Lead Business Analyst . . . Finally, production support was a part of Jane's responsibilities prior to 6/10/97 and didn't change after 6/10/97. Generally, Jane provides support for the front line person, although she occasionally fills the front line role herself. Jane was primarily used as a consultant in this situation, to guide others in getting to the right answer.
Rec., pgs. 99-100.
Brown took umbrage at having been placed on 24-hr. call for mainframe support, contending that this is a junior level function and not listed as a duty in the job posting. As noted earlier, the job posting giving rise to Brown's expectations is not our concern here. The Plan does not ensure that Brown will not be required to perform other responsibilities in the performance of her job. Clearly, call for mainframe support was a production support function. She was required to provide production support prior to the change in control. The fact that she had not previously performed this particular task does not matter in this analysis. Brown viewed this task as diminishing because she stated that it is generally a junior level type of function. There is no evidence that Brown was stripped of her Lead Business Analyst position and placed in a more junior position, however. Rather, her services were needed on call, in addition to her continuing responsibilities as a Lead Business Analyst.
Finally, Brown's assertion that she would garner less respect in the IT community because she had been included in the 24-hr. on-call rotation is expressed as a conclusory, qualitative, personal opinion regarding how she would be perceived by others in the community. Her opinion is based upon her perception that the introduction of a junior level task which she had not been previously asked to perform (although it is production support) was degrading to her status as Lead Business Analyst. We conclude that Smith did not act arbitrarily and capriciously in declining to accept Brown's perception as true. His decision in this regard was based upon the clear statement that Brown was asked to perform functions as Lead Business Analyst, such as developing specifications for a system, as well as continue to perform duties in production support.
Brown's appeal did not raise any new matters with respect to her purported "Good Reason" for terminating her employment. On March 25, 1998, Smith reaffirmed his earlier decision to deny Brown benefits under the Plan. Smith noted that he considered the information listed in the October 31, 1997 denial of benefits letter as well as the December 18, 1997 appeal filed by Brown's counsel. In the March 25, 1998 letter Smith restated the arguments with respect to diminishment, and restated that his decision, as more fully explained in the October letter, was based upon information supplied by management. Smith was given no reason on appeal to further elaborate on or change his original, detailed decision. We conclude that Smith's March 25, 1998 denial of Brown's appeal was not made arbitrarily and capriciously.
For the reasons set forth herein above we will order that judgment is granted in favor of CGC. A separate order will be entered herein this date in accordance with this opinion.