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LINDAHL v. AMERICAN TEL. & TEL. CO.

May 22, 1985

GEORGE W. LINDAHL, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
AMERICAN TELEPHONE & TELEGRAPH CO., E.H. CRABB, DR. J. MCCAHAN, S.J. HUSE, E. MAYFIELD, AND R.E. SAGEMAN, INDIVIDUALLY AND IN THEIR OFFICIAL CAPACITIES AS MEMBERS OF THE EMPLOYEE BENEFITS COMMITTEE OF AMERICAN TELEPHONE'S PLAN FOR EMPLOYEES' PENSIONS & DISABILITY BENEFITS, DEFENDANTS.



The opinion of the court was delivered by: Getzendanner, District Judge:

MEMORANDUM OPINION AND ORDER

This action under Sections 404, 405 and 406 of the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1104, 1105, and 1106, is before the court on the parties' cross-motions for summary judgment. Plaintiff George W. Lindahl alleges that defendant American Telephone and Telegraph Co., Long Lines Division, and individual members of Long Lines' Employee Benefits Committee ("EBC"), violated their fiduciary duties under ERISA by forcing the plaintiff into involuntary retirement. Defendants contend that plaintiff's claims are barred by ERISA's statute of limitations, that plaintiff is estopped from litigating the issue of fiduciary breach by virtue of a prior arbitration award in the defendant's favor, and that plaintiff can put forth no evidence to support his allegation that defendants acted arbitrarily and capriciously so as to violate their fiduciary duty. Defendants also seek to strike plaintiff's claim for punitive damages and to dismiss defendant Jermyn McCahan on the ground that he is not a fiduciary. Plaintiff, in turn, argues that the standard governing defendants' actions was whether they looked after his best interests as a pension plan beneficiary, and that he is entitled to partial summary judgment due to the committee's siding with the employer against him in a job disability dispute. Because the court finds for defendants on the limitations issue, it does not reach the other issues raised by the parties.

FACTS

Plaintiff George W. Lindahl was hired by AT & T Long Lines Division on or about October 7, 1948, until his involuntary retirement on January 22, 1977. Throughout this period, Lindahl was a participant in AT & T's Plan for Employees' Pensions & Disability Benefits. The responsibility for administering the plan was and is vested in the Employee Benefits Committee (EBC). Defendants Sylvester J. Huse, Ernest H. Crabb, and Edgar Mayfield, officers of Long Lines, were all members of the EBC at the time of plaintiff's forced retirement. Defendant Jermyn McCahan, Corporate Medical Director of Long Lines, was the medical advisor to the EBC and attended all their meetings.

In January 1976, plaintiff experienced a recurrence of ulcerated varicose veins from which he had suffered for several years, and which had necessitated several prolonged absences from work in the past. He was hospitalized from February 2 through February 17, 1976, under the care of Dr. Tom R. DeMeester. On March 11, 1976, DeMeester released plaintiff to return to work on March 22, 1976.

On March 19, 1976, Dr. Daniel E. Conrad, Medical Director for Long Lines' Central Region, examined plaintiff. Dr. Conrad had examined plaintiff previously in connection with his leg problems and concluded that plaintiff was medically unable to return to work. Conrad discussed this assessment with DeMeester and reexamined plaintiff on April 15, 1976, but reconfirmed his opinion and refused to allow plaintiff to return to work.

On September 2, 1976, DeMeester again examined Lindahl and reported to Conrad that Lindahl should be able to work. DeMeester reiterated this opinion by letter dated November 16, 1976. Conrad nonetheless continued to feel that plaintiff was unable to work, and discussed his opinion with McCahan. Together they arranged for plaintiff to be seen by Dr. Peter Nennhaus, a cardiovascular surgeon. Nennhaus indicated that Lindahl's disability was not at all serious and could easily be controlled by use of Kenalog ointment and a knee-high Kendrick stocking. Nennhaus regarded the Kendrick stocking as vastly superior to the Jobst brand Lindahl had been using and as equivalent to bed rest for curing ulcerated venous problems.

On January 20, 1977, Conrad reexamined plaintiff, and found that plaintiff still had unhealed ulcers. Since a year off of work with supposed bed rest and leg elevation had not fully healed Lindahl's condition, Conrad concluded that plaintiff's condition could not be expected to improve by use of the Kendrick stocking. Conrad therefore recommended to plaintiff's supervisor, Stanley Bushhouse, that plaintiff be involuntarily retired due to the likelihood of a recurrence in the near future. Bushhouse and his superiors furthered this recommendation to the EBC with the notice that both plaintiff and his personal physician disagreed with Conrad's opinion. The EBC, on February 8, 1977, voted to place plaintiff on involuntary retirement, notwithstanding his opposition.

Plaintiff was informed by Conrad of the involuntary retirement in late January. On January 28, 1977, the Union filed a grievance on plaintiff's behalf alleging that the company terminated him in violation of its collective bargaining agreement. After April 25, 1979, when the parties failed to reach agreement in informal grievance meetings, the Union demanded arbitration. Long Lines refused on the ground that the arbitration clause covered only dismissals and not retirements. In 1980, the Union filed suit to compel arbitration in federal district court. On September 9, 1980, Judge Hubert L. Will ordered the parties to arbitrate the issue of arbitrability. The parties proceeded to arbitration that summer, and this suit was filed the following January. On March 31, 1982, Arbitrator Zel S. Rice II determined that the dispute was not arbitrable, and rejected the Union's arguments that the EBC had violated ERISA through its actions.

Statute of Limitations

In Count I of plaintiff's complaint, which is the sole remaining count in this lawsuit*fn1, plaintiff seeks damages for the defendants' breach of fiduciary duty under ERISA. This claim is governed by the limitations period under section 413 of ERISA, 29 U.S.C. § 1113(a)(2):

  No action may be commenced under this subchapter
  with respect to a fiduciary breach of any
  responsibility, duty or obligation under this
  part . . . after the earlier of
    (1) six years after (A) the date of the last
    action which constituted a part of the breach or
    violation, . . . or

    (2) three years after the earliest date (A) on
    which the plaintiff had actual knowledge of the
    breach or violation. . . .

The present lawsuit was filed on January 26, 1982. Plaintiff testified at his deposition that he knew in January 1977 that the EBC would have final say over any company recommendation for involuntary retirement. Since the EBC's decision was rendered on February 8, 1977, it is obvious that more than three years passed from the date plaintiff actually learned of the facts comprising the alleged ERISA ...


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