United States District Court, N.D. Illinois, Eastern Division
R. Wood United States District Judge.
Alan Carlson and Peter DeLuca have sued Defendants Northrop
Grumman Corporation and the Northrop Grumman Severance Plan,
challenging Defendants' failure to pay cash severance
benefits to which Plaintiffs allege they were entitled
pursuant to Defendants' ERISA-governed severance plan
(“ERISA Plan”). Now before this Court is
Defendants' motion for summary judgment on the standard
of review for the denial of Plaintiffs' claims for
benefits under the ERISA Plan. (Dkt. No. 167.) For the
reasons discussed below, the Court concludes that the
deferential, arbitrary and capricious standard of review
circumstances surrounding Plaintiffs' layoffs are
described in the Court's prior opinions for this case and
thus will not be repeated here. See Carlson v. Northrop
Grumman Corporation, et al., 196 F.Supp.3d 830, 833-34
(N.D. Ill. 2016); Carlson v. Northrop Grumman Corp.,
No. 13 C 2635, 2014 WL 5334038, at *1 (N.D. Ill. Oct. 20,
2014); Carlson v. Northrop Grumman Corp., No. 13 C
2635, 2014 WL 1299000, at *1 (N.D. Ill. Mar. 31, 2014). The
crux of the dispute between the parties at this stage of the
case is whether the ERISA Plan documents confer discretionary
authority on the Plan Administrator and the Corporate
Severance Plan Review Committee (“Committee') so as
to warrant an arbitrary and capricious standard of review
here. In particular, the interpretation of the Northrop
Grumman Service Plan adopted on December 15, 2011
(“Wrap Document”) (Dkt. No. 171) and the Northrop
Grumman Service Plan adopted on January 27, 2012
(“Component Document”) (Dkt. Nos. 166-5, 177-2)
is at issue.
Wrap Document generally outlines the ERISA Plan's
purpose, identifies its participants, delegates and describes
administrative responsibilities, and establishes the
procedure by which the ERISA Plan may be terminated or
amended. (Pls.' Resp. to Defs.' Local Rule 56.1
Statement of Facts ¶ 5, Dkt. No. 178.) It does not,
however, describe the specific severance benefits provided
under the ERISA Plan. (Id.) That responsibility is
carried out by the “Component Plan” documents.
(Wrap Document at 1, Dkt. No. 171.) The Wrap Document further
states that “[t]he specific terms of a Component Plan,
including, but not limited to the eligibility, participation
and benefits provisions, are as specified in the summary plan
description for the Component Plan.” (Id. at
2.) The Wrap Document also provides that:
[A]ll of the terms and provisions of each of the Component
Plans, as the same may be modified from time to time as
provided for each of the Component Plans, are incorporated
herein by reference and shall be of the same force and effect
under this document as if they were fully set forth herein.
(Id. at 1.) Among the Component Plans referenced in
the Wrap Document is the “Northrop Grumman Severance
Plan.” (Id. at 21.)
Component Document (titled “Northrop Grumman Severance
Plan”) sets out the specifics of what benefits the
Component Plan offers (a cash payment and an extension of
existing medical, dental, and vision coverages) and describes
eligibility criteria and conditions for receiving benefits,
among other things. (Component Document at 3-6, Dkt. No.
166-5.) The Component Document also outlines procedures for
making claims for benefits and for appealing such claims:
claims should be submitted to the Plan Administrator and, if
denied, should be appealed to the Committee. (Id. at
7-8.) Both the Wrap and the Component Documents also contain
provisions conferring discretionary authority on the Plan
Administrator and the Committee. (Wrap Document at 5, 7-9,
Dkt. No. 171; Component Document at 8, Dkt. No. 166-
the outlined procedures, Plaintiffs submitted their severance
benefits claims to the Plan Administrator. (Pls.' Resp.
to Defs.' Local Rule 56.1 Statement of Facts ¶ 14,
Dkt. No. 178.) Plaintiffs' claims were denied. The letter
accompanying the denial explained that under the Component
Plan, laid-off employees were only eligible for severance
benefits if they received a memorandum from the
Vice-President of Human Resources (or his or her designee)
designating the employees as eligible and that Plaintiffs had
not received such memoranda. (Id. ¶ 15.)
Plaintiffs appealed the denial of their claims to the
Committee. (Id. ¶ 16.) But the Committee also
denied Plaintiffs' claims as it determined that a
severance memorandum was required to receive the benefits and
that Northrop had the discretion to determine which employees
would receive such memoranda. (Id. ¶ 19.)
argue that the Court should grant their motion for summary
judgment and find that the Committee's interpretation of
the ERISA Plan and its denial of Plaintiffs' claim are
entitled to deference-in other words, that the “arbitrary
and capricious” standard of review applies.
judgment is appropriate when the record, viewed in the light
most favorable to the non-moving party, reveals that there is
no genuine issue as to any material fact and the moving party
is entitled to judgment as a matter of law. Fed.R.Civ.P.
56(a); Smith v. Hope School, 560 F.3d 694, 699 (7th
Cir. 2009). A genuine issue of material fact exists if a
reasonable jury could find in favor of the nonmoving party.
Insolia v. Philip Morris, Inc., 216 F.3d 596, 599
(7th Cir. 2000). In deciding a summary judgment motion, the
court must consider the record as a whole, in the light most
favorable to the non-moving party, and draw all reasonable
inferences in favor of the non-moving party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Bay
v. Cassens Transp. Co., 212 F.3d 969, 972 (7th Cir.
determinations under ERISA are reviewed by federal courts
de novo “unless the benefit plan gives the
administrator or fiduciary discretionary authority to
determine eligibility for benefits or to construe the terms
of the plan.” Sperandeo v. Lorillard Tobacco
Co., 460 F.3d 866, 870 (7th Cir. 2006) (quoting
Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
101, 115 (1989)). If such discretionary authority is given,
an arbitrary and capricious standard of review applies.
Id. The party asserting that the arbitrary and
capricious standard applies bears the burden of establishing
that the plan confers discretionary authority. Id.
The default standard of review is de novo and in
order to alter this default standard, the stipulation for
deferential review must be clear. Id.
interpretation of an ERISA-governed plan is controlled by
federal common law, which draws on general principles of
contract interpretation, at least to the extent those
principles are consistent with ERISA. Schultz v. Aviall,
Inc. Long Term Disability Plan, 670 F.3d 834, 838 (7th
Cir. 2012). Plan language is given its plain and ordinary
meaning. Id. Courts must read the plan as a whole,
considering separate provisions in light of one another and
in the context of the entire agreement. Id. All
language of a plan should be given effect without rendering
any term superfluous. Id.
as a threshold matter, courts have to identify the documents
that constitute the plan. Sperandeo, 460 F.3d at
870. Commonly, the terms of a plan must be inferred from a
series of documents none clearly labeled as “the
plan.” Health Cost Controls of Illinois, Inc. v.
Washington, 187 F.3d 703, 712 (7th Cir. 1999). ERISA
itself is not particularly helpful in delineating the
documents that constitute the plan. Sperandeo, 460
F.3d at ...