ILANA DIAMOND ROVNER, Circuit Judge.
After being denied benefits under her employer's Severance Plan for Selected Employees ("Plan"), Judy Dabertin brought an action under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq. against her employer HCR Manor Care ("HCR"), the Plan, and the Plan's administrator and the committee appointed by HCR's Board of Directors to administer the Plan ("Committee") seeking district court review of the Committee's determination. The district court held that the Committee was arbitrary and capricious in denying Dabertin's claim for severance benefits. We affirm in all aspects save for one minor housekeeping matter which we remand for further consideration.
For over seventeen years, Judy Dabertin worked for Manor Care Inc. ("Manor Care"), a company that owns and operates skilled nursing facilities across the country. For at least some portion of those years, Dabertin worked as one of several vice presidents of operations. Over the course of that time she became accustomed to her duties as vice president. Those duties changed, however, when, in September 1998, Manor Care merged into a subsidiary of Health Care and Retirement Corporation. Paul Ormond, the designated President and Chief Executive Officer of the new organization, HCR, embarked on a plan to radically alter operations in the merged entity. As part of his plan, he required all vice presidents of operations, including Dabertin, to take on the additional role and title of general managers. As general managers, Ormond expected the executives to spend significantly more time in the facilities assigned to them and participate more directly in their day-to-day management. All of the vice presidents, including Dabertin, were required to perform all of the same functions they performed when they were solely vice presidents, but to those duties Ormond added new ones — those of a general
Dismayed by what she saw as her waning authority, on October 21, 1998, Dabertin gave notice to her supervisor, Keith Weikel, that she was leaving HCR. She made a claim for severance benefits under the Plan which had been adopted in preparation for the merger. That Plan designated thirty-nine officers, including Dabertin, as Plan participants. Under the terms of the Plan, employees were entitled to severance benefits in the following two circumstances:
(Sep.App. at 163).
The Plan defines "Good Reason" as "a significant reduction in the scope of a Participant's authority, position, title, functions, duties or responsibilities." (Sep.App. at 161). Dabertin submitted to HCR that she had "good reason" to terminate her employment with HCR because, among other things, the number of facilities, beds, direct reports, and construction projects assigned to her had decreased.
HCR claims, however, that prior to the merger, Ormond (the incoming president and CEO of the merged entity) discussed
Weikel denied Dabertin's claim for benefits and she appealed that denial to the Committee. On January 14, 1999, the Committee — comprised of Ormond and three others — met to consider Dabertin's claim for benefits. During the hour-long consideration of Dabertin's claim, Ormond relayed his pre-merger conversation with Bainum to the Committee, reiterating that it was his intention that the switch to the new hands-on approach would not constitute a reduction in the scope of a vice president's authority, position, title, functions, duties or responsibilities, and therefore would not trigger entitlement to benefits. The Committee interpreted the Plan consistently with Ormond's stated intention and denied Dabertin benefits, determining that "if a Participant continues to have a full range of operational, financial, administrative and other authority, functions, duties and responsibilities with respect to the business unit the Participant manages, the scope of the Participant's authority, duties, functions and responsibilities would not be affected." (Sep.App. at 231) (emphasis in original). It determined that in Dabertin's case, her duties, responsibilities, authority, title, position and functions had actually "significantly increased" since she, as well as the other vice presidents, "were expected to spend significantly more time in the facilities in their divisions, they were required to conduct operations reviews with the Regional Directors of Operations on every month on every center and they were required to be more involved in the day-to-day oversight of the centers in the areas of quality of care, staffing levels, accounts receivables, workers compensation and agency utilization." (Sep.App. at 233). Finally, the Committee reasoned that Dabertin's title and position were the same under the new operating scheme as the old: she was a vice president before the merger and remained a vice president after, and the additional title of general manager did not reduce her position within the company. To the contrary, the Committee found that Dabertin's position with Manor Care was enhanced by the fact that the company was approximately twice as large as it had been before the merger. In short, the Committee concluded that if Dabertin had lost any duties, responsibility, authority, etc., she had gained far more and was not entitled, therefore, to severance benefits under the plan.
Dabertin filed suit in the district court on March 15, 1999, claiming that HCR, the Plan, Manor Care, the Committee, and the Plan Administrator ("defendants") violated ERISA by refusing to pay her severance benefits, withholding certain documents related to the Plan, and breaching their fiduciary duties to Plan participants. In the alternative, she asserted claims for breach of contract and violation of the Illinois Wage Payment and Collection Act. Holding that ERISA preempted the state law claims, the district court entered summary judgment for the defendants on those claims as well as the ERISA claim that the defendants had wrongfully withheld Plan documents. Dabertin v. HCR Manor Care, Inc., 177 F.Supp.2d 829, 840-42 (N.D.Ill.2001) ("Dabertin
After the liability decision, the parties stipulated to the benefits calculation except for the calculation regarding the bonus that Dabertin argued she should receive. On March 25, 2003, the district court calculated Dabertin's bonus benefit amount and then on March 27, 2003, entered an order awarding Dabertin $785,150 in total benefits and $245,775 in prejudgment interest (R. at 113). On May 19, 2003 the court entered an order awarding Dabertin $270,671.08 in attorneys' fees and costs. (Sep.App. at 272).
The defendants timely appealed the district court's decision that the Committee was arbitrary and capricious (the December 19, 2002 order) as well as the order awarding fees and costs (the May 19, 2003 order). Dabertin cross-appealed, contesting the district court's calculation of the benefit amount (the March 27, 2003 order) and the court's earlier grant of summary judgment (the December 20, 2001 order) in Dabertin I.
Before addressing the merits, we must resolve the parties' dispute over the appropriate standard of review. Where an ERISA plan gives the plan administrator discretion to interpret the plan terms or determine benefits eligibility, a reviewing court employs the arbitrary and capricious standard. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Militello v. Cent. States, Southeast and Southwest Areas Pension Fund, 360 F.3d 681, 685 (7th Cir.2004). The district court determined, and neither party disputes on appeal, that the plan at issue here gives such discretion. See Dabertin I, 177 F.Supp.2d at 843-44. Consequently, we, like the district court, look only to see whether the Committee acted arbitrarily and capriciously in denying Dabertin benefits.
The facts regarding the changes to Dabertin's job are largely undisputed.
The question we face is whether these job alterations amounted to a "reduction in the scope of a Participant's authority, position, title, functions, duties or responsibilities" so as to trigger payment of benefits under the Plan. The Committee determined that the scope of Dabertin's employment had not changed as she had the same list of duties before and after the merger; she just had fewer facilities in which to perform them. (Sep.App. at 363). It also concluded that the additional tasks of "general manager" added to the scope of her duties. Id. Under the Committee's interpretation of the term "scope", if Dabertin had certain duties, responsibilities, and functions for 100 facilities before the merger, and had the same duties, responsibilities and functions for fifty facilities after the merger, she would not suffer a significant reduction in the scope of her duties, responsibilities or functions. The district court reasonably concluded that this definition of "scope" defied common sense and was not in accord with the ordinary and popular meaning of the term, and therefore was arbitrary and capricious. Id. at 865-66. In some cases, "simple common sense will require the court to pronounce an administrator's determination arbitrary and capricious." Hess, 274 F.3d at 461. This is just such a case.
The Committee's interpretation of a decrease in the scope of duties defies common sense. If HCR had added to each vice president's duties a new set of duties — emptying bedpans, delivering meals, and mopping floors — under HCR's interpretation of the Plan, these new duties would not have decreased the "scope" of the vice president's role at all. In fact, the scope of the vice president's duties would have increased. After all, they have not lost their title (they are still vice presidents, they have just added to that title the additional title of "janitor"). Likewise, they have not lost any of their prior duties; they simply have added a few new tasks. Common sense dictates otherwise. When the defendants took the Central Division away from Dabertin, they eliminated her authority for the Central Division, and the additional general manager tasks in no way compensated Dabertin for the loss of authority. Although the tasks assigned to a general manager are not as low in the corporate pecking order as those of a janitor, they are lower nevertheless. It is not Dabertin's loss of prestige alone, however, that bolsters our conclusion that HCR significantly reduced Dabertin's job. There is plenty of other evidence that she suffered a significant reduction in her authority, functions, duties and responsibilities. So much evidence, in fact, that any decision by the Committee otherwise would be arbitrary and capricious.
The defendants, of course, must concede that by eliminating her responsibilities for the Central Division, Dabertin lost responsibility for beds, staff, facilities, and projects. They also concede that Dabertin did lose some duties, responsibilities, authority, position and functions in the Western Division as well. Combined Reply/ Responsive Brief of Defendants-Appellants/Cross-Appellees at 12. They dismisses these as insignificant based on the fact that Dabertin did not mention the loss in her initial application for benefits, but raised it for the first time on appeal to the Committee, and then "buried" the claim on
Dabertin II, 235 F.Supp.2d at 865 (internal citations omitted).
The defendants refer us to Collins v. Ralston Purina Co., 147 F.3d 592, 596 (7th Cir.1998) as evidence of this court's recognition of the possibility that an employee whose territory is reduced but who gains additional tasks does not necessarily suffer a substantial reduction in duties or authorities. In the first instance, the defendants contort the language and reasoning of Collins. The majority in Collins did not conclude that Collins' responsibilities and duties were not significantly reduced, but rather the opinion concluded that Collins' employer never actually re-assigned Collins' duties, nor did it even make an offer to do so. Id. at 600. Collins thought he saw the writing on the wall and quit before he could be re-assigned. In fact, the majority stated, "[w]ithout more we will assume the .. position offered to Collins would have meant a lesser job and fewer responsibilities." Id. In any case, the determination of what constitutes a substantial reduction in duties and responsibilities obviously varies greatly based on the specific facts of the particular case and the tasks allotted before and after a job re-assignment. After considering all of the evidence that the Committee had before it, including the functions, duties, and responsibilities Dabertin lost, as well as those she gained, we conclude, that under a common sense view of the changes in Dabertin's job assignments, the Committee arbitrarily and capriciously denied her benefits. There simply is no rational connection between the facts (the amount of authority, beds, budget, etc. that Dabertin lost) and the Committee's conclusion that HCR did not reduce the scope of her job. See Cozzie, 140 F.3d at 1109 ("The committee must articulate a rational connection between the facts found, the issue to be decided, and the choice made.")
This lack of rational connection is certainly enough to allow us to conclude
Id. at 867, n. 12. The district court reasoned that this language imposed requirements beyond those articulated in the Plan as the Plan does not reference the size of the business unit, there is no Plan language requiring a "significant adverse effect," or requiring such an effect on a Participant's status in the organization, reporting relationships or participation in major decisions, and the Plan says nothing about whether the changes to the Participants's job must be "degrading or humiliating."
The defendants argue that, in coming to this conclusion the district court conducted a de novo review. We must not, however, misconstrue the district court's careful consideration of the facts and proceedings of the Committee as de novo review. Unlike the district courts in the out-of-circuit cases cited by the defendants, the district court here did not re-weigh evidence (see Vlass v. Raytheon Employees Disability Trust, 244 F.3d 27, 32 (1st Cir.2001)), did not substitute its own weighing of the conflicting evidence for that of the Committee (see Bolling v. Eli Lilly & Co., 990 F.2d 1028, 1029 (8th Cir.1993)), nor did it simply reject the Committee's reasonable decision merely because it disagreed with the conclusion (see Fletcher-Merrit v. NorAm Energy Corp., 250 F.3d 1174, 1180 (8th Cir.2001)). What the district court did do was to consider the undisputed facts regarding the diminution of Dabertin's territory and
Furthermore, because it must have been clear to the district court that "it would be unreasonable for the plan administrator to deny the application on any ground," Hess, 274 F.3d at 464, the district court did not err by refusing to remand the case to the Committee for further reconsideration. Id.See also Miller v. United Welfare Fund, 72 F.3d 1066, 1071 (2d Cir.1995) (no remand necessary where "no new evidence could produce a reasonable conclusion permitting a denial of the claim.") The defendants state that it is "quite likely that the Committee could consider additional evidence that would produce a reasonable conclusion permitting denial of Ms. Dabertin's claim," (Appellants' Brief at 24), yet they fail to inform the court what that evidence might be or why the Committee did not consider it in the first place. It would be a terribly unfair and inefficient use of judicial resources to continue remanding a case to the Committee to dig up new evidence until it found just the right support for its decision to deny an employee her benefits. See Vega v. Nat'l Life Ins. Servs., Inc., 188 F.3d 287, 302 n. 13 (5th Cir.1999) (en banc) (parties must make their full records before coming to the federal courts as "allowing the case to oscillate between the courts and the administrative process prolongs a relatively small matter that, in the interest of both parties, should be quickly decided.") The district court appropriately concluded that a remand would serve no purpose. It did however, schedule further proceedings to determine the proper amount of damages.
On March 25, 2003, the district court determined the amount of Dabertin's severance bonus benefit and on March 27, 2003, it entered an order calculating the full amount of Dabertin's severance benefits and prejudgment interest, awarding Dabertin $785,150 in benefits and $245,775 in prejudgment interest. Dabertin disputes the calculation the district court made in its March 25, 2003 order calculating the bonus benefit. Under the terms of Article IV(B) of the Plan, employees who were entitled to severance benefits under the Plan were also entitled to their bonus under the following provision:
The district court agreed with HCR that the Plan language "such calendar year" was ambiguous. As the district court noted, because the word "such" in this context means "aforementioned" (See Black's Law Dictionary, 1432 (6th Ed.1990) ("Identical with, being the same as what has been mentioned ... referring to the last antecedent")), that phrase must refer to a prior discussion of a calendar year. There is no prior mention of a calendar year in Article IV(B) however. The district court concluded that the inconsistency could be resolved by interpreting "calendar year" to mean "fiscal year." The district court bolstered its conclusion that this was the right result by looking at how HCR intended to compensate its employees. "It doesn't make sense," the district court reasoned, "to employ the calendar year in the severance bonus benefit calculation, in view of the clear intent of the clause to allocate and fairly compensate a severed participant for the portion of the fiscal year that the participant worked." (R. at 111). Because HCR had paid bonuses to employees for the fiscal year ending May 31, 1998, calculating the bonus based on a calendar year would mean that Dabertin and other participants who ended their employment with HCR in 1998 would receive two bonuses for the period between January 1, 1998 and May 31, 1998. On the flip side, participants who ended their employment with HCR during 1999 would not receive any bonus for the work they did between June 1, 1998 and December 31, 1998. Using this linguistic and logical approach, the district court determined that the Committee properly calculated Dabertin's bonus. Id.
Again, we must give great deference to the Committee's interpretation of its plan, including its interpretation of the ambiguous language in the Plan. Firestone Tire, 489 U.S. at 115, 109 S.Ct. 948. In that vein, we cannot merely apply federal common law principles of contract interpretation, but rather must view the contractual ambiguity through a lens that gives broad discretion to the plan administrator to interpret the plan. See Ross v. Ind. St. Teacher's Assoc. Ins. Trust, 159 F.3d 1001, 1011 (7th Cir.1998). Under this standard, we find that the Committee was not arbitrary and capricious in interpreting the Plan language to determine that Dabertin's bonus should be calculated based on the number of days she had worked in the fiscal year beginning June 1, 1998.
This conclusion, unfortunately, does not resolve the bonus issue entirely, as there remains a mathematical mystery that plagues the defendants' calculations.
Because we affirm the district court's decision that Dabertin was entitled to severance benefits pursuant to the Article 1.8(i) "Good Reason" claim under the Plan, we need not address Dabertin's other claims regarding the breach of fiduciary duty and the use of heightened scrutiny and turn instead to the district court's award of attorneys' fees and costs.
We review the district court's award of attorneys' fees and costs only for an abuse of discretion. Hess, 274 F.3d at 464. HCR does not dispute that Dabertin would be entitled to fees if she prevailed, they argue only that Dabertin is not entitled to fees if she is not a prevailing party. Because we affirm the district court's conclusion that Dabertin prevailed in her claim for benefits under the Plan, we also affirm the district court's award of attorneys' fees and costs pursuant to the terms of that Plan.
In sum, because the district court did not err in finding that the Committee was arbitrary and capricious in denying benefits to Dabertin, we affirm the court's judgment on all matters save for the calculation of Dabertin's benefit under Article IV(B) of the Plan. We vacate the district court's judgments of March 25 and March 27, and remand for recalculation of the bonus benefit amount in accord with this opinion. Appellee shall recover her cost of appeal.
AFFIRMED IN PART, VACATED AND REMANDED IN PART.