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O'Shea v. UPS Retirement Plan

United States Court of Appeals, First Circuit

September 13, 2016

BRIAN O'SHEA, through his Executor Michael O'Shea; MICHAEL O'SHEA, in his personal capacity, on his own behalf as Plan Beneficiary, and on behalf of other Plan Beneficiaries, Meghan O'Shea, John O'Shea and Colleen O'Shea, Plaintiffs, Appellants,
v.
UPS RETIREMENT PLAN; UNITED PARCEL SERVICE OF AMERICA, INC.; UPS RETIREMENT PLAN ADMINISTRATIVE COMMITTEE, Defendants, Appellees, DOE DEFENDANTS 1, 2, AND 3, Defendants.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. William G. Young, U.S. District Judge]

          Stephen D. Rosenberg, with whom Caroline M. Fiore and The Wagner Law Group were on brief, for appellants.

          J. Timothy McDonald, with whom Megan S. Glowacki and Thompson Hine LLP were on brief, for appellees.

          Before Thompson, Circuit Judge, Souter, [*] Associate Justice, and Barron, Circuit Judge.

          THOMPSON, Circuit Judge.

         This suit, arising under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., presents the highly sympathetic case of a retiree whose death one week before his official retirement date, but after his final day of work, had the unexpected consequence of depriving his beneficiaries of ten years of payments under an annuity plan. Though we regret the heartbreaking outcome, after careful consideration, we must affirm.

         I.

         We begin with the facts, which are not in dispute. Brian O'Shea (O'Shea) worked for defendant-appellee United Parcel Service of America, Inc. (UPS) for 37 years.[1] As an employee of UPS, he participated in the UPS Retirement Plan (Plan). Unfortunately, in 2008, O'Shea was diagnosed with cancer. He became eligible for retirement in 2009, and decided to retire at the end of that year.

         O'Shea met with a UPS human resources (HR) supervisor to discuss the logistics of his retirement in December 2009. The HR supervisor informed him that he could maximize his time on payroll by taking his seven weeks of accrued vacation and personal time and, thus, delaying his official retirement date.[2] It is standard practice apparently for UPS to advise its employees that they can redeem their vacation time before officially retiring. Regrettably, the HR supervisor was not aware at the time that O'Shea was terminally ill.[3]

         O'Shea took the HR supervisor's advice. He submitted his retirement application on January 7, 2010, his last day of work, and indicated that his annuity starting date[4] would be March 1, 2010, the day after his official retirement date of February 28, 2010. He chose the "Single Life Annuity with 120-Month Guarantee" from a host of annuity payment plan options available under the Plan, and named his four children -- plaintiffs-appellants Michael O'Shea, Meghan O'Shea, John O'Shea, and Colleen O'Shea (collectively, the O'Sheas) -- as his beneficiaries. Under his selected annuity, "a reduced benefit [would] be paid to [O'Shea] for his lifetime, with a guarantee of 120 monthly payments."

         The application for retirement benefits, executed by O'Shea, provided, in pertinent part: "I will receive a monthly benefit for my lifetime with a guarantee of monthly payments for a period of 10 years. If I die within the 10-year guarantee period, my beneficiar[ies] will continue to receive my monthly benefit amount for the remainder of the guarantee period." The section of the application where O'Shea listed his beneficiaries' information provided: "If you die before the guarantee period ends, your designated beneficiar[ies] will receive payments for the remainder of the guarantee period." Nowhere in the retirement benefits application, and at no point during his consultation with the HR supervisor, was it made explicit that surviving to the annuity starting date (i.e., March 1, 2010, the day after his official retirement date) was a prerequisite to the ten-year payment guarantee. It seems that O'Shea was therefore unaware he risked forfeiting the ten years of guaranteed payments to his beneficiaries by delaying his retirement date, especially while terminally ill.

         The retirement benefits application did explain, however, that the summarized benefit plan designations would be paid "subject to the terms of the Plan." Section 5.4(d)(iii) of the Plan, which describes the "Single Life Annuity with 120-Payment Guarantee" selected by O'Shea, clarifies that "[i]f the Participant dies after the Annuity Starting Date but before receiving 120 monthly payments, the monthly payments shall be paid to the Participant's Beneficiary . . . ." (emphasis added). The only provision of the Plan that explicitly provides for a retirement benefit if a participant dies prior to their annuity starting date is Section 5.6, which states: "If a vested Participant dies prior to his Annuity Starting Date, his Spouse or Domestic Partner will be entitled to receive a Preretirement Survivor Annuity . . . ."[5] (emphasis added).

         After submitting his application for retirement benefits, O'Shea was invited to participate in UPS's Special Restructuring Program (SRP), which incentivized early retirement by offering one year's compensation to select employees in exchange for signing a release of claims and retiring. O'Shea met with his attorney on February 12, 2010. The same day, he accepted the SRP and executed the release of claims. In return, O'Shea received a single, pre-tax payment of $98, 800.

         The release, which is only a few paragraphs long, defined the "Released Parties" broadly as UPS and "all related companies, " including "employee benefit programs (and the trustees, administrators, fiduciaries, and insurers of such programs)." The released claims included "all known and unknown claims, promises, [and] causes of action . . . that [O'Shea] may presently have . . . against any Released Party." It did not bar claims that accrued after execution of the agreement. But the release made clear that O'Shea was "releasing [c]laims that [he] may not know about."

         O'Shea passed away on February 21, 2010, one week before his official retirement date, and eight days before his annuity starting date. About a month later, defendant-appellee UPS Retirement Plan Administrative Committee (the Committee) -- the Plan's claims administrator -- sent the O'Sheas a letter denying them payments under the annuity plan. The Committee explained that only O'Shea's spouse, if he had one, would be able to recover under the Plan.[6]

         The O'Sheas appealed this decision, believing that the ten years of annuity payments were guaranteed to them regardless of when their father died. In particular, they argued that nothing in the Plan "explains what happens if you select the 'Single Life Certain Annuity With 10-Year Payment Guarantee' . . . and you die before you retire (without a spouse or partner)."

         The Committee denied the appeal on June 1, 2010. Relying on Section 5.6 of the Plan, the denial letter explained that the annuity payments were only guaranteed if O'Shea survived to his annuity starting date, and that O'Shea's death as an active UPS employee triggered the "Preretirement Survivor Annuity" (payable only to spouses or domestic partners) in lieu of the "Single Life Annuity with 120-Month Guarantee."[7]

         The O'Sheas filed a second administrative appeal, this time with the help of counsel, arguing that UPS breached its fiduciary duty to their father. Specifically, the O'Sheas asserted that their father was talked into delaying his retirement date, that the consequences of the delay were not made clear to him, and that UPS had misrepresented to him that his payments were "guaranteed." On October 1, 2010, the Committee once again denied the appeal. This time the Committee highlighted language in the retirement application ("if I die within the 10-year guarantee period"), in addition to Section 5.6, noting that the application itself "clearly informed [] O'Shea that the only payments to beneficiaries were if he died within the 10-year guarantee period." The Committee also explained that any breach of fiduciary duty or misrepresentation claim had been released by their father when he decided to participate in UPS's SRP.

         The O'Sheas then filed suit in district court, seeking recovery of the ten years of annuity payments allegedly "guaranteed" under the Plan. Their complaint included two counts: a claim for benefits under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), and a claim for equitable relief under ERISA § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B). The equitable claim was based on alleged misrepresentations made to O'Shea when he selected his retirement benefits.

         UPS first moved to dismiss the O'Sheas' equitable claim, arguing that the claim: (1) was barred by the release O'Shea executed under the terms of the SRP; (2) was barred by the statute of limitations for breach of fiduciary duty claims under ERISA, 29 U.S.C. § 1113(2); and (3) was precluded by the O'Sheas' ability "to avail themselves of other remedies." Ruling from the bench, the district court granted the motion, concluding that any alleged misrepresentations were made before O'Shea selected his retirement benefits and, therefore, any potential claim based on those misrepresentations would have been released under ...


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