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United States District Court, Northern District of California

May 12, 2003


The opinion of the court was delivered by: Susan Illston, United States District Judge


Summary judgment in favor of defendants and against plaintiff has been granted on the merits. Accordingly, judgment is hereby entered in favor of defendants and against plaintiff.


On February 28, 2003, this Court heard argument on defendants' motion for summary judgment and plaintiff's motion for summary judgment. Having carefully considered the arguments of counsel and the papers submitted, the Court hereby GRANTS defendants' motion and DENIES plaintiff's motion for the reasons set forth below.


Plaintiff brings this action, pursuant to § 502 of ERISA, asserting that defendants Caterpillar, Inc. ("Caterpillar") and Caterpillar, Inc. Non-Contributory Pension Plan ("Plan") violated ERISA. Plaintiff worked for in Caterpillar's Regional Distribution Center in Hayward, California, for 19 years as a warehouseman. Complaint ¶ 8. In April 1995, plaintiff injured his back at work, and was out on medical leave from July 1995 to July 1996, under the one year medical leave to which he was entitled. Complaint ¶ 9. At the end of this leave, plaintiff sought reinstatement at Caterpillar in a different capacity. Id.; Exhibit A to Declaration of Lisa T. Belenky in Support of Plaintiff's Motion for Summary Judgment. In mid October of 1996, Caterpillar determined that plaintiff was unable to work for them in any capacity, and terminated his employment. Complaint ¶ 10.

In 1997, plaintiff filed suit under the Americans with Disabilities Act ("ADA"), alleging that he was able to work and that Caterpillar failed to accommodate for his disability; in that action, Caterpillar countered that plaintiff was not a "qualified individual with a disability." Exh. B to Belenky Decl., Spencer v. Caterpillar Inc., No. C 97-1321 MMC (N.D.Cal, Aug. 16, 1999). On August 16, 1999, Judge Maxine Chesney granted summary judgment for defendant Caterpillar Inc. with respect to plaintiff's ADA discrimination and retaliation claims.*fn1 The Social Security Administration, twice in 1996, denied plaintiff's application for disability benefits, but in 1999 determined that plaintiff was totally disabled as he was unable to engage in any substantial gainful work existing in the national economy as of January 24, 1999. Exh. C to Belenky Decl.

Beginning in October, 1999, plaintiff through counsel began requesting forms necessary to apply for retirement disability benefits from the Caterpillar Pension Plan. In the course of several exchanges, Caterpillar informed plaintiff that as a former employee, he was not eligible for disability retirement benefits under Caterpillar's plan. Harrison Decl., Exhs. 15, 17-22. Ultimately, by letter dated March 1, 2001, Caterpillar rejected plaintiff's claim for retirement disability benefits on the basis that plaintiff had not been permanently and totally disabled while an employee of Caterpillar. Harrison Decl., Exh. 23.

Now before the Court are the parties' cross motions for summary judgment.


The Federal Rules of Civil Procedure provide for summary adjudication when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

In a motion for summary judgment, "[if] the moving party for summary judgment meets its initial burden of identifying for the court those portions of the materials on file that it believes demonstrate the absence of any genuine issues of material fact, the burden of production then shifts so that "the non-moving party must set forth, by affidavit or as otherwise provided in Rule 56, `specific facts showing that there is a genuine issue for trial.'" See T.W. Elec. Service, Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 317 (1986)).

In judging evidence at the summary judgment stage, the Court does not make credibility determinations or weigh conflicting evidence, and draws all inferences in the light most favorable to the non-moving party. See T.W. Electric, 809 F.2d at 630-31 (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348 (1986)); Ting v. United States, 927 F.2d 1504, 1509 (9th Cir. 1991). The evidence presented by the parties must be admissible. Fed.R.Civ.P. 56(e). Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. See Falls Riverway Realty, Inc. v. City of Niagara Falls, 754 F.2d 49 (2d Cir. 1985); Thornhill Publ'g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979). Hearsay statements found in affidavits are inadmissible. See, e.g., Fong v. American Airlines, Inc., 626 F.2d 759, 762-63 (9th Cir. 1980).


A. Defendants' Motion for Summary Judgment

1. Standard of review

Defendants assert that the standard of review is abuse of discretion, in which case the Court may not review or consider any evidence not submitted to the claims administrator; under an abuse of discretion standard, the Court's role is limited to determining if the decision being reviewed was supported by evidence in the administrative record. See Taft v. Equitable Life Assurance Society, 9 F.3d 1469, 1472 (9th Cir. 1993). Plaintiff asserts that the standard of review in this case is de novo, in which case the summary judgment standard outlined above is the one to follow. If the standard of review is de novo, then the district court may decide the case by summary judgment only if there are no genuine issues of material fact in dispute. See Tremain v. Bell Industries, 196 F.3d 970, 978 (9th Cir. 1999).

The Supreme Court has held that denials of disability benefits under ERISA are reviewed de novo by the district court "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). The Ninth Circuit held in Kearney v. Standard Insurance Co., 175 F.3d 1084, 1090 (9th Cir. 1998) that "district courts must review claims de novo unless the discretion to grant or deny claims is `unambiguously retained' by a plan administrator or fiduciary." Kearney,. Plaintiff does not dispute that defendant unambiguously maintained this discretion, but argues that, as Caterpillar is both the insurer and claims administrator for this plan, there is a conflict of interest, which therefore means that there should be a less deferential standard of review. Plaintiff states that Caterpillar's handling of his claim shows that the decision was influenced by a conflict of interest, and that therefore that decision is subject to de novo review, citing Lang v. Long-Term Disability Plan of Sponsor Applied Remote Tech., 125 F.3d 794, 798 (9th Cir. 1997). The Ninth Circuit in Tremain stated:

If, however, the plan administrator is also the insurer that conflict [of interest] must be weighed as a factor in determining whether there is an abuse of discretion. Our review in such a circumstance, although still for abuse of discretion, is less deferential. If, however, the program participant presents material probative evidence, beyond the mere fact of the apparent conflict, tending to show that the fiduciary's self-interest caused a breach of the administrator's fiduciary obligation to the beneficiary, a rebuttable presumption arises in favor of the participant. The plan then bears the burden of rebutting the presumption by producing evidence to show that the conflict of interest did not affect its decision to deny or terminate benefits. If the plan fails to carry this burden of rebutting the presumption, we review de novo its decision to deny benefits.
Tremain, 196 F.3d at 976 (internal citations omitted). Plaintiff maintains that he has submitted material probative evidence tending to show that the fiduciary's self-interest caused a breach of the administrator's obligation to him, that Caterpillar has not rebutted this presumption by producing evidence to show that the conflict did not affect its decision to deny or terminate benefits, and that therefore, the standard of review must be de novo.

On a summary judgment motion, the Court may consider evidence outside the administrative record in order to determine if a plan administrator's decision was affected by its conflict of interest. Tremain, 196 F.3d at 977. Plaintiff states that he has produced material probative evidence that Caterpillar's conflict caused it to act in bad faith, stating that this evidence consists of the following: 1) Caterpillar denied that plaintiff was eligible for a disability pension without explanation, failed to provide documentary support for its position, and refused to provide plaintiff with documents in response to his written requests as required by ERISA; 2) Caterpillar's denial of plaintiff's claim departed from its own interpretation of the meaning of "totally and permanently disabled" contained in the Pension Manual; and 3) during the administrative process, Caterpillar asserted that plaintiff was not disabled and was able to return to a regular work schedule in 1996, which plaintiff states repudiates the position that Caterpillar took when plaintiff sought to return to work after his surgery and in the ADA litigation.

Many of these allegations are disputed by Caterpillar. Caterpillar first contends that it did provide plaintiff an explanation of why he was not entitled to a disability pension. Caterpillar produced its January 10, 2000 letter to plaintiff which stated that he was not entitled to such a pension because he was not employed at Caterpillar at the time at which he became disabled. Exh. L to Belensky Decl. Caterpillar further states that while it did not send plaintiff Plan documents in a timely fashion, it did indeed send such documents to plaintiff. Caterpillar then states that the Pension Manual, to which plaintiff refers, does not show an inconsistency between its treatment of defendant and others, as Caterpillar did not reference or use the Pension Manual while it considered plaintiff's claim for a disability pension, but instead used the Plan documents and the Summary Plan Document ("SPD"). Finally, in their opposition to plaintiff's motion for summary judgment defendants state that their position in this case is not contrary to their position during the ADA litigation or when plaintiff sought to return to work after his surgery. Defendants state that in the ADA case they contended that plaintiff was not able to do the essential functions of a plant truck operator, but did not say whether plaintiff was totally and permanently disabled. As neither plaintiff nor defendants cite to the pleadings in the ADA litigation, the Court has no way of knowing whether plaintiff or defendants have presented the more accurate description of the respective positions in that litigation; therefore the Court will not consider this evidence.

The Court finds that Caterpillar did give plaintiff an explanation why his claim for a disability pension was denied, and that Caterpillar did not refuse to send plaintiff documents as required by ERISA. The Court also finds that plaintiff's statements that defendant did not use the Pension Manual is not evidence that rises to the level of material probative evidence tending to show that the fiduciary's self-interest caused a breach of the administrator's obligation to him. Finally, the Court finds that the alleged inconsistency of defendants' position in this case regarding plaintiff's disability as opposed to the position in the administrative record or the ADA litigation remains unclear. Consequently, plaintiff has not produced evidence which would tend to show that Caterpillar's self-interest caused a breach of its fiduciary obligations toward plaintiff.

Therefore, since Caterpillar had unambiguous discretion by the terms of its policy to deny benefits, under Firestone Tire and Rubber Co. v. Bruch and Kearney v. Standard Insurance Co., the standard of review by this Court for such denial of benefits is abuse of discretion. However, under Tremain, since Caterpillar was both the insurer and the plan administrator, that abuse of discretion standard of review is less deferential.

2. Application of standard of review

Under the abuse of discretion standard of review, Caterpillar's decision that plaintiff was not eligible for a disability pension should be reviewed under the arbitrary and capricious standard of review. The burden is on the plaintiff to show that defendants' actions were arbitrary and capricious.

The Non Contributory Pension Plan states, in relevant part:

An employee who prior to retirement pursuant to the preceding provisions of this section, becomes totally and permanently disabled on or after the effective date, and who, at the time such disability occurs, possesses fifteen (15) or more years of credited service, shall retire as of the first of the month following the occurrence of such disability.
Non-Contributory Pension Plan, p. 10, § 4.1(c), Exh. 1 to Harrison Declaration. Therefore, Caterpillar states that it is clear that there are two requirements to be eligible for a disability pension: 1) that the participant have accrued 15 years of credited service with the company; and 2) that the participant retires because he became totally and permanently disabled. Caterpillar further states that it is undisputed that plaintiff did not fulfill these requirements, as he was not an employee of Caterpillar at the time that he became totally and permanently disabled, and that his termination of employment with Caterpillar was not a result of him becoming totally and permanently disabled.

However, plaintiff asserts that the SPD is in conflict with this provision of the plan, and that the language of the SPD should have governed defendants' determination of plaintiff's disability pension. The SPD, addressed to "Caterpillar Hourly Payroll Employees at Hayward," states in the Disability Retirement Benefits section: "You can qualify for a disability pension if you become totally and permanently disabled and have at least 15 years of credited service at the time you become disabled." Summary Plan Description, p. 25, Exhibit 2 to Harrison Declaration. Plaintiff contends that the "you" in the SPD means that the provision allowing for a disability pension is addressed to all members of the Non Contributory Pension Plan, even those who are no longer employees at Caterpillar. In reply, Caterpillar states that this "interpretation of the SPD would mean that any former Caterpillar employee, who had worked for Caterpillar for more than 15 years, who was not disabled at the date of termination from Caterpillar, but became disabled years later, would receive a disability pension." Def. Reply at 16:5-8.

Plaintiff maintains that, even though the first page of the SPD states that it is for employees of Caterpillar, the SPD is also addressed to former employees, stating, for instance that it also explains deferred pension benefits, for which only former employees are eligible. Plaintiff also states that ERISA requires that SPDs be written for both "participants and beneficiaries," citing ERISA § 102, 29 U.S.C. § 1022. However, the SPD, read together with the Plan document, would tell any current or former employee of Caterpillar that one is only able to receive a disability pension if one became totally and permanently disabled while employed at Caterpillar. Therefore, the language of the SPD is not enough for plaintiff to overcome the arbitrary and capricious standard of review.

Furthermore, this Court finds that it was not unreasonable for defendants to find that plaintiff was not totally and permanently disabled at the date of his termination from Caterpillar. "Totally and permanently disabled" is defined as "suffering from a disability which resulted from injury or disease, whether occupational or non-occupational, which completely and permanently prevents the disabled person from engaging in any employment or occupational remuneration or profit." Non-Contributory Pension Plan p. 8 § 3.8, Exhibit 1 to Harrison Decl. Plaintiff's employment at Caterpillar ended in October of 1996. In April of 1996, plaintiff's doctor, Dr. Robert Chow, reported that plaintiff would be able to return to work on April 29, 1996. See Exhibit 3 to Harrison Decl. On May 16, 1996, Dr. Chow wrote that plaintiff was fit to return to work, with the restriction that he avoid lifting anything over 50 pounds. See Exhibit 4 to Harrison Decl. On June 24, 1996, plaintiff wrote to the supervisor of Caterpillar's Hayward facility, asking to return to work. See Exhibit 5 to Harrison Decl. On June 27, 1996, plaintiff applied for Social Security Disability Insurance benefits, and his application was denied on August 2, 1996 and again upon appeal on October 29, 1996. Beginning on April 19, 1996, and continuing through November 28, 1996, plaintiff participated in a vocational rehabilitation program; a vocational rehabilitation specialist in this program reported on September 27, 1996, that plaintiff had the basic qualifications to secure employment as a warehouse manager or assistant manager, but needed further training so that he could present himself well to an employer. The Social Security Administration later found plaintiff to be disabled as of January 24, 1999, more than two years after plaintiff's employment with Caterpillar had ended. While plaintiff asserts that the doctors' statements about his ability to return to work should not be relied upon by this Court as those reports were for the purpose of determining his status under California's worker compensation law, this does not detract from the relevance of those statements to this analysis.

Therefore, as the Court finds that defendants' actions toward plaintiff were not arbitrary and capricious, this Court GRANTS defendants' motion for summary judgment.

B. Plaintiff's Motion for Summary Judgment

As the Court has granted defendants' motion for summary judgment, plaintiff's motion for summary judgment is DENIED as moot. As part of his motion for summary judgment, plaintiff requested penalties of up to $110 per day for each violation of ERISA's document provision requirements: failure to provide Plan documents in response to his written request; failure to update the SPD as required by ERISA; and failure to furnish him with the updated SPD as required by ERISA. ERISA § 502(c)(1), 29 U.S.C. § 1132(c)(1), and 29 C.F.R. § 2575.502c-1. The imposition of such penalties is left to the sound discretion of the Court. Because the Court finds that there was no bad faith on the part of defendants in their delay in providing these documents to plaintiff, and that plaintiff was not prejudiced by this delay, the Court DENIES plaintiff's requested penalties.


For the foregoing reasons, the Court GRANTS defendants' motion for summary judgment and DENIES plaintiff's motion for summary judgment.


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