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Bernal v. Randalls Food & Drugs, Inc.
March 24, 1998
Unpublished Opinion

Bernal v. Randalls Food & Drugs, Inc.

United States District Court, N.D. Texas.

Policarpo BERNAL Plaintiff,


RANDALL’S FOOD & DRUGS, INC. d/b/a Tom Thumb Food & Drugs, the Amended and Restated Randall’s Food Markets, Inc. Employee Safety Program, and the Injury Benefit Plan of Cullum Companies, Inc., and Tom Thumb Stores, Inc. Defendants.

No. CA 3–96–CV–3464–R.


March 24, 1998.



*1 Now before this Court is Defendants’ Motion for Summary Judgment. For the reasons stated below, the Motion is GRANTED.



Plaintiff Policarpo Bernal was employed by Defendant Tom Thumb Food & Drugs for fourteen years as a fork lift driver and order picker, which requires him to lift heavy packages. On April 12, 1993, Plaintiff suffered a herniated disc in his back while lifting empty pallets, but he did not report the injury to his supervisor until April 27. Consequently, Plaintiff received a constructive advice report, which is a form of disciplinary action, for his failure to report to work on April 25.

After being made aware of Plaintiff’s back injury, his supervisor sent him to a medical facility on April 28 for medical treatment. Randall’s Food Markets, Inc., which by now has taken over Tom Thumb, eventually referred Plaintiff to Dr. Bernie McCaskill, an orthopedist at Glen Lakes Orthopedic Clinic, who ordered Plaintiff released to full-time light duty work on January 3, 1994. As a result, Randall’s permitted Plaintiff to perform inventory work, scanning reclaimed products that were returned from Tom Thumb’s individual stores to its warehouse.

On June 10, 1994, Dr. McCaskill reported that Plaintiff had reached maximum medical improvement, meaning that further treatment was not necessary and would not improve or change Plaintiff’s medical condition. Bigham Dep. Vol. 1 at 42; Bigham Am. Aff. at 1.2 Dr. McCaskill then determined that Plaintiff had a permanent impairment rating of five percent to his whole body, thereby restricting Plaintiff to lifting no more than ten to fifteen pounds. Thus, Plaintiff could not return to his permanent position since it required lifting more than fifteen pounds. According to Randall’s, there was no available permanent position in the warehouse that satisfied Plaintiff’s lifting restriction, nor could it create one. Although Randall’s sometimes created light duty tasks, such as cleaning or checking a new order, to accommodate injured employees while they were subject to a medical restriction, such duties were not permanent positions. Plaintiff’s job of scanning reclaimed products was eventually eliminated in late 1993 or early 1994 because Randall’s determined that it was no longer an essential function of the company. Consequently, Plaintiff was terminated3 in July 1994 and was offered $4,500 as a lump sum settlement of welfare benefits under the Employee Retirement Income Security Act (“ERISA”) plan then in existence.

Plaintiff’s medical care and wage continuation benefits from April 28, 1993 to July 12, 1994 were paid by the Injury Benefits Plan of Cullum Companies, Inc. and Tom Thumb Stores, Inc. This ERISA plan was administered by Cullum Companies, Inc. (“Plan Administrator”). In August of 1992, Randall’s Food Markets, Inc. acquired Tom Thumb Food & Drugs and adopted its own ERISA plan in October 1993. The Cullum Plan was a distinct benefits plan from that of Randall’s and was administered separately. Bigham Am. Aff. at 2. The only physical remnant of the Cullum Plan today is the Summary Plan Description (“the Plan”) since the actual plan document was lost during the acquisition and reorganization of Tom Thumb. Both parties, however, apparently do not express any objection to interpreting the Summary Plan Description as if it was the actual plan.

*2 According to the Plan, an employee is eligible for welfare benefits only if he incurs an on-the-job injury and if he complies with reporting requirements of the injury, including completing an Associate’s Report of Injury Form within twenty-four hours.4 Once eligible, Randall’s would pay the injured employee weekly benefits equal to seventy-five percent of his hourly wage5 at the time of the injury for a maximum of three years. In addition, Randall’s would pay all medical bills from employer-approved medical providers incurred as a result of the injury, up to a maximum of $100,000. However, if Randall’s determines that the employee “will sustain some type of permanent disability, partial or total, the Employer may elect to pay [the employee] a lump sum payment in lieu of weekly benefits and future medical payments.” The Plan also provides Defendant Randall’s6 with the right to amend the Plan, in writing, and to terminate the Plan at any future time. Since it was Defendant’s standard procedure in administering the plan to offer lump sum settlement to an injured individual who has reached maximum medical improvement, the Plan Administrator offered Plaintiff a check for the lump sum payment of $45007 in lieu of weekly payments. Bigham Am. Aff. at 1. Although Plaintiff accepted the check, he never cashed it. Further, Plaintiff was simultaneously discharged because it was also Defendant’s standard practice to request an employee to resign once he incurs a physical inability that prevents him from performing the job for which he was hired. Evans Dep. at 10. At the time of Plaintiff’s termination, the Plan Administrator already had paid him $22,445 in wage continuation benefits and $13,968 in medical expenses. Plaintiff’s possible benefits remaining under the Plan include $36,991 in wage continuation benefits and $86,032 in medical expenses, totaling $123,023.

The Plan expressly outlines a procedure by which a claimant has sixty days to appeal a denial of benefits by writing to the Plan Administrator, who then has sixty days, up to a maximum of 120 days under special circumstances, to notify the claimant of a final decision. If the claimant is not satisfied with the final decision and desire to review the documents pertinent to the claim, then he can make such a request in writing to the Plan Administrator. In fact, under a section entitled “Statement of ERISA Rights,” the Plan explicitly states that the employee has “the right to have the Plan review and reconsider [his] claim.” It is undisputed that Plaintiff never utilized the appellate procedure as described in the Plan.

Rather, Plaintiff brought suit against Randall’s d/b/a Tom Thumb originally in state court on May 16, 1995, alleging wrongful discharge in violation of Section 451 of the Texas Labor Code. After Plaintiff amended his claims to include ERISA violations, Defendant removed the case to this Court on December 30, 1996. Plaintiff’s ERISA causes of action include: (1) failure to pay entitled welfare benefits in violation of section 502 of ERISA, 29 U.S.C. § 1132, (2) breach of fiduciary duty in violation of section 409, 29 U.S.C. § 1109, (3) interference with ERISA benefits in violation of section 510, 29 U.S.C. § 1140. By the time Plaintiff filed his Fifth Amended Complaint on July 25, 1997, Plaintiff had joined as defendants the Injury Benefit Plan of Cullum Companies, Inc. and Tom Thumb Stores, Inc., as well as the Amended and Restated Randall’s Food Markets, Inc. Employee Safety Program, which is the ERISA plan that purportedly succeeded the Cullum Plan.8

*3 On May 8, 1997, Defendants filed a motion for summary judgment9 on the following grounds: (1) Plaintiff’s failure to exhaust administrative remedies outlined in the Plan as a prerequisite to filing suit; (2) a lack of causal link between Plaintiff’s termination and the intent to interfere with his ERISA benefits; (3) a lack of nexus between the filing of a workers’ compensation claim and plaintiff’s discharge; (4) failure to name the plan, who is an essential party, as a defendant; and (5) the Plan Administrator’s decision to offer the $4500 lump sum payment must be upheld since it is not arbitrary and capricious. Because the first three grounds are dispositive, it is not necessary for the Court to reach grounds four and five in resolving Defendant’s motion for summary judgment.



A. Summary Judgment Standard

Rule 56(c) of the Federal Rules of Civil Procedure allows summary judgment only where there is no genuine issue as to any material fact and the moving party is entitled to summary judgment as a matter of law. FED. R. CIV. P. 56(c). All reasonable doubts and inferences must be decided in the light most favorable to the party opposing the motion. Thornbrough v. Columbus & Greenville R.R. Co., 760 F.2d 633, 640 (5th Cir.1985). Indeed, as long as there appears to be some evidentiary support for the disputed allegations, the motion must be denied. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Coke v. General Adjustments Bureau, 640 F.2d 584, 595 (5th Cir.1981) (en banc).

The party moving for summary judgment bears the initial burden of identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where the nonmoving party bears the burden of proof on a claim upon which summary judgment is sought, the moving party may discharge its summary judgment burden by showing that there is an absence of evidence to support the nonmoving party’s case. Id. at 325. Once the moving party satisfies this burden, the nonmoving party may then oppose the motion by going beyond the pleadings and by its own affidavits or by depositions, answers to interrogatories, and admissions on file to designate specific facts showing a genuine issue for trial. Id. at 324; Anderson, 477 U.S. at 256. Summary judgment will be granted against “a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

B. ERISA Preempts State Law Claims

Although neither party addressed the issue of federal law preemption, the Court must sua sponte raise the issue in light of the combined state and ERISA federal claims included in the Plaintiff’s complaint. ERISA, codified at 29 U.S.C. §§ 1001–1461 (1994), federally regulates private employee benefit plans, including both pension plans and welfare plans. District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 127, 113 S.Ct. 580, 121 L.Ed.2d 513 (1992); Rozzell v. Security Servs., Inc., 851 F.Supp. 804, 807 (N.D.Tex.1993); 837 F.Supp. 212, 213 (N.D.Tex.1993).

The central preemption determination is whether the state law relied upon in the well-pleaded complaint “relates to” an employee benefit plan. Ingersoll–Rand, 498 U.S. at 138; Rozzell, 38 F.3d at 821; Cefalu v. B.F. Goodrich Co., 871 F.2d 1290, 1292 (5th Cir.1989). A state law “relates to” an employee benefit plan “if it has a connection with or reference to such a plan.” Rozzell, 38 F.3d at 821 (quoting Shaw v. Delta Air Lines, 463 U.S. 85, 96–97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983)). A state law may “relate to” an employee benefit plan even if the law is not designed to affect the plan or does so even in an indirect manner. District of Columbia, 506 U.S. at 129–30; Rozzell, 38 F.3d at 821 (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987)). Therefore, causes of action that make specific reference to, and are premised on the existence of, an employee benefit plan necessarily “relate to” such a plan and are, as a result, preempted by ERISA. Samuel, 780 F.Supp. at 426.

1. State law claim for wrongful discharge against the Plan

*5 The United States Supreme Court has held that the provisions of a workers’ compensation act are preempted to the extent they relate to ERISA plans. Mills, 851 F.Supp. at 807 (citing District of Columbia, 506 U.S. at 127). If the existence of a welfare plan is a critical factor in establishing liability under the state’s wrongful discharge law, then a cause of action relates not merely to welfare benefits, but to the essence of the welfare plan itself. See Ingersoll–Rand, 498 U.S. at 139–40 (holding that plaintiff’s wrongful discharge claim “related to” an ERISA plan since the court had to find that an ERISA plan existed and that the employer had a pension-defeating motive in terminating employment); Anderson, 11 F.3d at 1313 (holding that wrongful discharge cause of action related to an ERISA plan and was hence preempted since the existence of a pension plan was a critical factor in establishing liability).

A case based on similar facts is Mills v. Injury Benefits Plan of Schepps–Foremost, 851 F.Supp. 804 (N.D.Tex.1993), where an employee was injured in the course of his employment when he slipped and fell while making a delivery of milk. The employee, who was covered by an injury benefits plan pursuant to ERISA, reported the injury to his supervisor and completed an injury report. When the employee was later discharged, he filed suit against both the plan and the employer, alleging that they wrongfully terminated his employment in retaliation for having filed a workers’ compensation claim pursuant to Tex.Rev.Civ. Stat. Ann. Art. 8307c11 (Vernon Supp.1993). The defendants sought dismissal of plaintiff’s claim, arguing that the claim was preempted by ERISA. Broadly construing the “relate to” language contained in the ERISA preemption provision, the court concluded without much discussion that the plaintiff’s claim under Article 8307c against the plan was preempted by ERISA because it would have a direct effect on the plan.

Similarly, Plaintiff Bernal’s state law claim against the Plan must be dismissed. Plaintiff maintains that he was terminated because he filed a claim under the ERISA plan. Pl.’s Fifth Am. Compl. ¶¶ 28–29; Pl.’s Resp. Def.’s Mot. Summ. J. at 3. By Plaintiff’s own admission, his cause of action under Section 451 of the Texas Labor Code “relates to” an employee benefit plan because it has a direct effect on the Plan, and, more importantly, the existence of the Plan is essential to establishing liability under Texas’s wrongful discharge law. Moreover, Plaintiff alleges that his termination was premised on Defendants’ desire to avoid paying further benefits under the Plan. Id. The Supreme Court has expressly held that “ERISA explicitly and impliedly preempts a state common law claim that an employee was unlawfully discharged to prevent his attainment of benefits under a plan covered by ERISA.” Mills, 780 F.Supp. at 427 (citing Ingersoll–Rand, 498 U.S. at 138).

Clearly, Plaintiff’s state law claim falls within the ambit of Section 514 preemption provision. Therefore, Plaintiff’s claim under Tex. Lab.Code Ann. § 451 against the Plan must be dismissed as it is preempted by ERISA.

2. State law claim for wrongful discharge against the employer

*6 Unlike a state wrongful discharge claim against the Plan, there is a separate and independent claim against an employer for wrongful discharge in retaliation for filing a worker’s compensation claim pursuant to Tex. Labor Code Ann. § 451. See Mills, 851 F.Supp. at 807 n. 2 (noting that an employee’s claim against a former employer alleging retaliation and discharge under 8307c is not preempted by ERISA); Chatman v. Saks Fifth Ave. of Tex., Inc., 931 F.2d 1086, 1090 (5th Cir.1991) (referring to preemption of an 8307c claim by Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, and finding that the state law claim exists independently of the collective bargaining agreement). Further, a lawsuit in which reference to a benefit plan is indispensable to compute plaintiff’s damages is not necessarily preempted by ERISA. See Rozzell, 38 F.3d at 822. In fact, no ERISA cause of action lies when the loss of employee benefits is a mere consequence of, but not a motivating factor behind, the termination of employment. Samuel, 780 F.Supp. at 427; see Burks v. Amerada Hess Corp., 8 F.3d 301, 306 (5th Cir.1993) (holding that “[a] claim that unlawful termination resulted in loss of benefits is not preempted by ERISA”). Thus, to avoid ERISA preemption, the substance of a plaintiff’s claim must be limited to the state law retaliatory discharge cause of action. See Rozzell, 38 F.3d at 822; see also Rokohl v. Texaco, Inc., 77 F.3d 126, 127 (5th Cir.1996) (ERISA did not preempt where employee brought a wrongful discharge action alleging that he was terminated because he had epilepsy, not because he filed an ERISA claim); Burks, 8 F.3d at 304–05 (where plaintiff asserted separate claims for emotional distress arising from a wrongful termination and that arising from a denial of benefits, only the latter was preempted by ERISA); McGaskey v. Hospital Housekeeping Sys., 451.001 ....” Pl.’s Fifth Am. Compl. ¶ 43. Yet, the only claim thus far filed by Plaintiff is one for benefits under the ERISA plan. It is true that Section 451 may apply to a situation where an employee was fired before filing his claim for compensation, such as where the employee notified his employer of his injury and filed a report of the injury with the employer sufficient so as to constitute “instituting a proceeding” under Section 451. Gauthreaux v. Baylor Univ. Medical Ctr., 38 F.3d 776, 779–80 n. 6 (5th Cir.1994) (affirming district court’s characterization of plaintiff’s original petition as alleging wrongful discharge for filing a claim under defendant’s ERISA plan and not for filing a workers’ compensation claim).

*7 Assuming, arguendo, that Plaintiff had asserted an independent wrongful discharge claim arising from state law, Plaintiff has not proffered a single morsel of evidence that Randall’s termination of Plaintiff was motivated by retaliation for his filing a worker’s compensation claim. And it is not the Court’s duty to ferret the pleadings and discovery materials for such evidence when Plaintiff has failed to satisfy his summary judgment burden.

Indeed, Plaintiff’s scenario mirrors that in two similar cases where the courts held that preemption was appropriate. In Hook v. Morison Milling Co., 38 F.3d 776 (5th Cir.1994), the plaintiff, who fell down a staircase at work and was injured, filed a wrongful discharge and negligence action against his employer in state district court. The plaintiff averred that he was wrongfully discharged in retaliation for filing a claim under his employer’s ERISA plan. The Fifth Circuit held that his state law wrongful discharge claim was dependent upon the existence of the ERISA plan and thus was preempted by ERISA. Id. at 780 (“allegations of retaliation for filing a claim under an ERISA plan necessarily assert a claim that is dependent upon the existence of such a plan”).

In Flowerette v. Heartland Healthcare Ctr., 903 F.Supp. 1042 (N.D.Tex.1995), the plaintiff sued her former employer in state court, alleging her termination was in retaliation for seeking workers’ compensation and other benefits to which she was entitled. Specifically, she asserted that she was discharged to prevent her from recovering employee benefits that she was entitled to recover. The court held that such allegation implicates and thus “relates to” ERISA, thereby warranting ERISA preemption. Id. at 1044–45, 1045 n. 4.

Accordingly, the Court finds that Plaintiff, having alleged that he was terminated to prevent his recovery of future benefits under an employee benefit plan, failed to assert a separate wrongful discharge claim under Section 451 against either the Plan or his employer. Therefore, pursuant to Section 514 of the ERISA statute, Plaintiff’s state law claims are preempted by ERISA and thereby dismissed. Holding otherwise would conflict with the express and carefully crafted enforcement provisions found in Sections 502(a)12 and 51013 of the ERISA statute. See Anderson, 11 F.3d at 1313–14, 1314 n. 3 (a state court’s interpretation of ERISA’s provisions runs contrary to Congress’ desire to establish a uniform federal law regulating pension and welfare plans); see also Ingersoll–Rand, 498 U.S. at 141 (“Section 514(a) was intended to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government”).

C. Failure to Exhaust Administrative Remedies is Fatal

Defendants contend that summary judgment is proper because Plaintiff, by circumventing the appeal procedures set forth in the Plan, failed to exhaust administrative remedies as judicially required prior to commencing a civil action under ERISA. Plaintiff, however, counters that Defendants should be estopped from asserting the exhaustion requirement because they denied him meaningful access to the internal review procedure. Specifically, Plaintiff argues that Defendants did not inform him that the $4500 lump sum payment was a determination of benefits under the ERISA plan and that he had a right to appeal this decision. Plaintiff avers that Defendants merely offered him $4500 when they terminated him, and they made no further offers or communications.

*8 All ERISA plans are required to provide a claims appeal procedure. Fallick v. Nationwide Mutual Ins. Co., 957 F.Supp. 1442, 1444 (S.D.Ohio 1997); see 29 U.S.C. § 1133. The provision governing the claims procedure under ERISA provides that every employee benefit plan shall “afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.” Id. § 1133(2); see also 29 C.F.R. § 2560.503–1 (1997) (outlining the minimum requirements for mandatory review procedures in ERISA cases). Although neither this provision nor any portion of the text of ERISA expressly mentions the exhaustion doctrine,14 it is well established that federal courts have the authority to require exhaustion of remedies in suits arising under ERISA. Smith v. Gencorp., Inc., 971 F.Supp. 1071, 1074 (N.D.Miss.1997); Fallick, 957 F.Supp. at 1444; Porter v. Atchison Topeka & Santa Fe Ry. Co., 768 F.Supp. 571, 575 (N.D.Tex.1991); see Hall v. National Gypsum Co., 105 F.3d 225, 231 (5th Cir.1997); Chailland v. Brown & Root, Inc., 45 F.3d 947, 950 (5th Cir.1995). In fact, relying upon Amato v. Bernard,15 618 F.2d 559 (9th Cir.1980), plus Congressional intent and well-settled principles of administrative law, the Fifth Circuit has adopted the common law rule that a plaintiff generally must exhaust administrative remedies afforded by an ERISA plan before suing to obtain benefits wrongfully denied. Chailland, 45 F.3d at 950 (citing Denton v. First Nat’l Bank, 765 F.2d 1295, 1300–03 (5th Cir.1985)). “The exhaustion of administrative remedies doctrine requires not that only administrative remedies selected by the complainant be first exhausted, but instead that all those prescribed administrative remedies which might provide appropriate relief be pursued prior to seeking relief in the federal courts.” Davis v. AIG Life Ins., 945 F.Supp. 961, 967 (S.D.Miss.1995). The decision as to whether to require a claimant to exhaust administrative remedies is a matter within the trial court’s discretion. Fallick, 957 F.Supp. at 1444; Porter, 768 F.Supp. at 575.

The primary purposes of the exhaustion requirement are to: (1) uphold Congress’ desire that ERISA trustees be responsible for their actions, not the federal courts; (2) provide a sufficiently clear record of administrative action if litigation should ensue; and (3) assure that any judicial review of fiduciary action (or inaction) is made under the arbitrary and capricious standard,16 not de novo. Denton, 765 F.2d at 1300; McGaskey v. Hospital Housekeeping Sys., 942 F.Supp. 1118, 1125 (S.D.Tex.1996). Moreover, the institution of administrative-claim procedures was intended by Congress “to help reduce the number of frivolous lawsuits under ERISA; to promote the consistent treatment of claims for benefits; to provide a nonadversarial method claims settlement; and to minimize the cost of claims settlement for all concerned.” Denton, 765 F.2d at 1301 (quoting Amato, 618 F.2d at 567).

*9 Exceptions to the exhaustion requirement, however, exist where the available administrative remedies either are unavailable or wholly inappropriate to the relief sought, or where the attempt to exhaust such remedies would be a patently futile course of action. Davis, 945 F.Supp. at 967 (citing Hessbrook v. Lennon, 777 F.2d 999, 1003 (5th Cir.1985)); see Fallick, 957 F.Supp. 1444. The appeal procedures are not inadequate simply because they are administered by the trustees themselves, rather than some “neutral arbitrator.” Denton, 765 F.2d at 1303 (quoting Amato, 618 F.2d at 567). To come under the futility exception, a plaintiff must make a clear showing that the plan administrator exhibits personal bias or harbors bitterness or hostility for the claimant. Id. at 1302–03 n. 11; Brown v. Star Enter., 881 F.Supp. 257, 259 (E.D.Tex.1995). The plaintiff must also show certainty that his claim will be denied on appeal, not merely that he doubts that appeal will result in a different decision. Fallick, 957 F.Supp. at 1456 (citation omitted). None of the exceptions are at issue in this case since Plaintiff does not contend that any of them applies. Thus, the Court will now address whether each of the ERISA claims asserted by Plaintiff mandates exhaustion of administrative remedies.

1. Exhaustion is required for a denial of benefits

Section 502 of ERISA allows an action to be brought “to recover benefits due [the employee] under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” 29 U.S.C. § 1132(a). It is clearly established that the doctrine of exhaustion of remedies is applicable to the denial of benefits by plan trustees. Denton, 765 F.2d at 1297; see Medina v. Anthem Life Ins. Co., 983 F.2d 29, 32–33 (5th Cir.1993) (dismissing claim for additional ERISA benefits because of a failure to exhaust administrative remedies).

Plaintiff does not contest the fact that he failed to comply with the appeals procedure set forth in the Plan. He never submitted a written statement to the Plan Administrator, disputing the denial of future benefits. As a result, the Plan Administrator did not have an opportunity to review Plaintiff’s reasons for his dissatisfaction with the $4500 lump sum payment, or to reconsider its decision to offer a lump sum.

Although Plaintiff complains that Defendant denied him meaningful access to the internal review process, the Fifth Circuit has concluded that being uninformed does not excuse a plaintiff from exhausting administrative remedies. In Meza v. General Battery Corp., 908 F.2d 1262 (5th Cir.1990), an employee brought suit against his former employer to recover occupational pension benefits. The district court dismissed the employee’s claim without prejudice because he had not exhausted mandatory administrative remedies. On appeal, he argued that because he was never provided with a summary of the pension plan as required by ERISA, he had no notice of the applicable administrative procedures and should not be bound by them. The Fifth Circuit rejected his argument. Id. at 1278–79. The court first noted that ERISA provided explicit disclosure provisions to ensure “the effectiveness of communication of plan contents to employees.” Id. at 1278 (citation omitted). But the Fifth Circuit then held:

*10 ERISA’s disclosure provisions clearly indicate Congress’s concern that individual employees be informed of the administrative procedures involved in obtaining pension benefits. It does not follow, however, that Congress intended to excuse individual claimants from exhausting their administrative remedies in those cases where they were never informed of the applicable administrative procedures17.

Id. at 1279; see McGaskey, 942 F.Supp. at 1126 (dismissing plaintiff’s ERISA claims after rejecting her argument that she had no notice of applicable administrative review procedures because she was not given a copy of the plan). However, a plaintiff would still have a judicial remedy if the employer’s failure to provide him with pension plan information prejudiced him in his efforts to obtain benefits to which he is otherwise entitled. Id. at 1279; see Porter, 768 F.Supp. at 575–76 (holding that plaintiffs failed to show they were prejudiced by the failure to receive a summary plan description). But see Curry v. Contract Fabricators Inc. Profit Sharing Plan, 891 F.2d 842, 846 (11th Cir.1990) (without finding prejudice, court held that plan administrator’s refusal to provide plan documents denied claimant meaningful access to administrative remedies and excused claimant from exhaustion requirement).

As in Meza, there is no evidence that Plaintiff requested plan information from Randall’s or the Plan Administrator. Nor is there any evidence that Defendant ever attempted to shield any information regarding Plaintiff’s rights under the Plan. Furthermore, Plaintiff has not claimed that any failure on the part of Defendants to provide him with plan information has prejudiced his ability to obtain plan benefits. In fact, if Plaintiff possessed a copy of the Summary Plan Description, he is presumed to know of his appeal rights. See Denton, 765 F.2d at 1302 (“There was not question that [Plaintiff] was fully aware of his appeal rights from his Plan description provided to him ....”). Although neither Plaintiff nor Defendants have proffered any evidence that Plaintiff actually received or did not receive a copy of the Summary Plan Description, such evidentiary deficiency is not fatal since the Meza court has ruled that failure to provide plan information does not excuse the exhaustion requirement unless prejudice can be shown, and prejudice has not been illustrated in this case.

Moreover, it seems reasonable to infer that Plaintiff knew the existence of an ERISA plan provided by his employer since it was through this Plan that his medical expenses and wage continuation benefits were paid during the time that he was injured. It seems un reasonable that, as suggested by Plaintiff, he did not know that the lump sum offer of $4500 was a determination of benefits under the Plan when it was given simultaneously of Plaintiff’s termination and after a determination that he had reached maximum medical improvement. The Court is not sure what he thought the payment was since Plaintiff does not proffer any alternative possibilities as to why he was offered the $4500. Instead of seeking legal counsel to discuss the matter with the Plan Administrator and request any further information, Plaintiff sought one to sue the Plan and his employer, thereby undermining the policies underlying the exhaustion requirement. Consequently, Plaintiff’s claim for denial of benefits is dismissed until such time as Plaintiff has complied with the exhaustion-of-administrative-remedies requirement.

2. Exhaustion is required for a breach of fiduciary claim under Section 409

*11 Section 409 of ERISA sets forth the basis for liability for breach of fiduciary duty, stating:

Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary ....

29 U.S.C. § 1109(a). As with a denial of benefits, the Fifth Circuit likewise has imposed the exhaustion requirement on suits for an administrator’s breach of fiduciary duties under ERISA. See Simmons v. Wilcox, 911 F.2d 1077, 1081 (5th Cir.1990); see also McGaskey, 942 F.Supp. at 1126 (mandating exhaustion for breach of fiduciary claim); Porter, 768 F.Supp. at 576 (same). In Simmons, the court rejected the argument that, in a case alleging fiduciary breach, exhaustion was “a meaningless exercise, requiring the defendant-fiduciary to adjudicate the legal consequences of its own fraud and breach of contract.” Simmons, 911 F.2d at 1081 (quoting Drinkwater v. Metropolitan Life Ins. Co., 846 F.2d 821, 825 (1st Cir.), cert. denied, 488 U.S. 909, 109 S.Ct. 261, 102 L.Ed.2d 249 (1988)). Reasoning that any improper denial of benefits also constitutes a breach of fiduciary duty under ERISA, the court concluded that the exhaustion requirement would be rendered meaningless if plaintiffs could avoid it simply by recharacterizing their claims for benefits as claims for breach of fiduciary duty. Id.; see also Fallick, 957 F.Supp. at 1457 (“The mere fact that the same conduct resulting in an alleged deprivation of benefits can also be ... the basis for a claim for breach of fiduciary duty ... does not mean that administrative exhaustion does not apply”).

Accordingly, Plaintiff’s claim for breach of fiduciary duty under Section 409 is dismissed until such time as Plaintiff has complied with the exhaustion-of-administrative-remedies requirement.

3. Exhaustion is not required for Section 510 claim for interference of benefits

Unlike actions for benefits under Section 502 and for breach of fiduciary duty under Section 409, the circuits are split with regard to the applicability of the exhaustion requirement for an ERISA Section 510 claim.18 The relevant portion of Section 510 provides:

It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan ....

29 U.S.C. § 1140. The Fifth Circuit, in particular, has refused to institute the exhaustion requisite on a Section 510 cause of action. See Chailland v. Brown & Root, Inc., 45 F.3d 947, 950 (5th Cir.1995); see also Smith v. Gencorp, Inc., 971 F.Supp. 1071, 1074–75 (N.D.Miss.1997) (requiring exhaustion for wrongful discharge under Section 510 would be futile). Courts applying the exhaustion requirement to ERISA claims generally presuppose that the grievance upon which the lawsuit is based arises from some action of a plan covered by ERISA, and that the plan is capable of providing the relief sought by the plaintiff. Id. But the Chailland court determined that neither of these conditions are present in a suit alleging wrongful discharge or interference of benefits under Section 510. First, termination is an action by the employer rather than plan and thus does not involve any action of a plan covered by ERISA. Id. Second, the ERISA plan is not capable of providing the remedy that the plaintiff seeks. Id. Unlike a claim for benefits brought pursuant to a benefits plan, a Section 510 claim asserts a statutory right, which plan fiduciaries have not expertise in interpreting. Chailland v. Brown & Root, Inc., No. 93–0434, 1993 WL 278305, at *2 (E.D.La. July 21, 1993), aff’d, 45 F.3d 951 (5th Cir.1995). Therefore, to remit such a claim to the Plan “would make absolutely no sense and would be a hollow act of utter futility.” Chailland, 45 F.3d at 951.

*12 Keeping in line with the Fifth Circuit, the Court does not mandate Plaintiff to exhaust administrative remedies prior to commencing an action under Section 510. Furthermore, imposing the exhaustion requirement in this case is particularly inappropriate since Randall’s Summary Plan Description only references situations involving a denial of claims for benefits. Defendants have failed to cite any plan provisions setting forth a remedy or appeal procedure for wrongful discharge. The Court, thus, will now address whether a dispute of material fact exists as to the viability of Plaintiff’s Section 510 cause of action.

D. Plaintiff Has Not Established a Prima Facie Case Under Section 510

Defendants contend that Plaintiff cannot prevail on his ERISA claim under Section 510 because Plaintiff failed to demonstrate that he was discharged with the specific intent of interfering with his ERISA benefits. Plaintiff, on the other hand, asserts that the specific intent is reflected by the fact that Randall’s offered the $4500 in order to satisfy all obligations under the ERISA plan and to avoid paying future employee benefits, although Plaintiff was still able to perform the essential functions of his job. The Court finds no summary judgment evidence to support Plaintiff’s argument.

The legislative history of Section 510 of ERISA reveals that its prohibitions “were aimed primarily at preventing unscrupulous employers from discharging or harassing their employees in order to keep them from obtaining vested pension rights [and welfare benefits].” Van Zant v. Todd Shipyards Corp., 847 F.Supp. 69, 72 (S.D.Tex.1994) (citing Varhola v. Doe, 820 F.2d 809, 816 (6th Cir.1987)). The ultimate inquiry in a Section 510 case is whether the employer had the specific intent to interfere with the employee’s ERISA rights. Clark v. Coats & Clark, Inc., 990 F.2d 1217, 1222 (11th Cir.1993) (citation omitted); see Rogers v. International Marine Terminals, 87 F.3d 755, 761 (5th Cir.1996) (specific discriminatory intent required); Hines v. Massachusetts Mutual Life Ins. Co., 43 F.3d 207, 209 (5th Cir.1995) (same); McGann v. H & H Music Co., 946 F.2d 401, 404 (5th Cir.1991), cert. denied, 506 U.S. 981, 113 S.Ct. 482, 121 L.Ed.2d 387 (1992) (same). A plaintiff is not required to prove that interference with ERISA rights was the sole reason for the discharge, but he must show more than the incidental loss of benefits as a result of a discharge. Id. at 1222–23 (citation omitted); see Van Zant, 847 F.Supp. at 73 (plaintiffs only have to show that interference with their ERISA rights was a motivating factor in their termination). This burden can be met by proffering direct proof of discrimination or by satisfying the scheme for circumstantial evidence established by McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802–05, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). Clark, 990 F.2d at 1223.

Evidence is direct when it is sufficient to prove discrimination without inference or presumption. Id. (citation omitted). Since Plaintiff cannot produce direct evidence of intentional interference under Section 510, he must utilize the Title VII burden-shifting scheme to establish a prima facie case. To establish a prima facie case under Section 510, an employee must show: (1) prohibited employer conduct (2) taken for the purpose of interfering (3) with the attainment of any right to which the employee may become entitled. Van Zant, 847 F.Supp. at 72 (citation omitted); see Rogers, 87 F.3d at 761 (requiring a showing of specific intent to interfere with employee’s attainment of any right to which he may have become entitled); McGann, 946 F.2d at 404 (same). If the plaintiff makes out a prima facie case, a presumption of discrimination is created, and the defendant must articulate a legitimate nondiscriminatory reason for its conduct. Clark, 990 F.2d at 1223; Carlos v. White Consol. Indus., Inc., 986 F.2d 970, 981 (5th Cir.1993) (quoting Clark v. Resistoflex, 854 F.2d 762, 771 (5th Cir.1988)). While Plaintiff is entitled to have reasonable inferences drawn in his favor, the inferences to be drawn “must be rational and reasonable, not idle, speculative, or conjectural.” Unida, 986 F.2d 970, 980 (5th Cir.1993) (citation omitted). To infer that Randall’s intended to interfere with Plaintiff’s entitlement to ERISA benefits from the evidence proffered by Plaintiff in support of his claim would, in the Court’s view, be speculative.



Plaintiff does not have any actionable state law claims as alleged in his complaint because ERISA preempts any state claims relating to employee benefit plans. Plaintiff’s failure to exhaust administrative remedies as judicially required precludes his claims for denial of benefits under Section 502 and breach of fiduciary duty under Section 409 of ERISA until such time as Plaintiff has complied with the exhaustion requisite. Finally, Plaintiff has failed to establish a prima facie case for his Section 510 claim for wrongful discharge. For the reasons stated above, Defendants’ Motion for Summary Judgment is GRANTED. It is so ORDERED.



Unless otherwise indicated, the following undisputed facts are taken from Plaintiff’s Fifth Amended Complaint, Defendants’ Motion for Summary Judgment, Plaintiff’s Response to Defendants’ Motion for Summary Judgment, Defendants’ Reply to Plaintiff’s Response, and Plaintiff’s Supplemental Response.


It would expedite the resolution of this motion for summary judgment had both parties divided their summary judgment evidence, including depositions and affidavits, with numbered tabs. Moreover, Plaintiff, in particular, failed to even include the front page of each deposition, which has the deponent’s name, to alert the Court to whose deposition was to follow. In fact, the Court had to tab and label Plaintiff’s exhibits for him in order to make sense of them. The parties’ submission of the summary judgment evidence was significantly sloppy, not to mention the careless and poor manner in which the arguments were briefed. The Court is making the parties aware of such sloppiness so that they can ensure that it does not occur again.


Although the parties disagree about whether Plaintiff was terminated or was asked to resign, this factual dispute is immaterial to the Court’s analysis in resolving this motion for summary judgment.


In fact, Randall’s may terminate the employee’s benefits for failure to timely report the injury. The Plan at 2.


The hourly wage is based on a forty-hour week or such shorter time as the employee actually worked, on the average, during the previous four weeks. The Plan at 1–2.


At the time that Plaintiff was injured, Randall’s had already acquired Tom Thumb. As a result, for the sake of simplicity, the Court will refer to Randall’s and Tom Thumb singularly as the “Defendant” although they purportedly have separate and distinct ERISA benefits plans.


The $4500 was based on the standard workers’ compensation calculation and impairment rating times weeks of wages. Based on a seventy-five percent injury rate, five percent impairment rate, and three weeks of wages, the calculation was 75% of the benefits times 15, which amounted to $5,715. The $4500 lump sum payment was a beginning offer that was loosely based on this final amount after a review of Plaintiff’s entire medical file and consideration of other similarly situated individuals subject to Defendant’s ERISA plan. Bigham Dep. at 81–82; Def.’s Br. Supp. Mot. Summ. J. at 5.


There is apparently a confusion as to who is the proper party since the Cullum Plan no longer exists, thereby eliminating Cullum Companies as the Plan Administrator. Defendant contends that Randall’s ERISA plan is not a successor of the Cullum Plan, but rather a separate and distinct plan, and that Randall’s is the current Plan Administrator. For reasons stated subsequently, this distinction is immaterial for the purposes of resolving this motion for summary judgment.


Defendants subsequently filed an identical motion for summary judgment on January 21, 1998 pursuant to the Court’s order for filing dispositve motions under the joint motion submission procedures. Plaintiff’s response and Defendant’s reply were also unvarying from those previously filed in connection with Defendant’s initial motion for summary judgment.


Subtitle A embodies the Texas Workers’ Compensation Act, codified at TEX. LAB. CODE ANN. § 401 et seq.


Texas Revised Civil Statutes Article 8307c was repealed and recodified in §§ 451.001.003 of the Texas Labor Code, effective September 1, 1993. This recodification did not change the substantive law. Burfield v. Brown, Moore & Flint, Inc., 51 F.3d 583, 585 (5th Cir.1995).


The pertinent portion of Section 502(a) provides:

A civil action may be brought–––

(1) by a participant or beneficiary–––

(A) for the relief provided for in subsection (c) of this section, or

(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan ....

(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan ....

29 U.S.C. § 1132(a).


Section 510 provides:

It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan ....The provisions of section 1132 of this title shall be applicable in the enforcement of this section.

29 U.S.C. § 1140.


Because exhaustion is not required by ERISA, it is not a prerequisite to the Court’s jurisdiction. Chailland v. Brown & Root, Inc., 45 F.3d 947, 950 n. 6 (5th Cir.1995) (citation omitted).


Amato v. Bernard is the seminal case in mandating exhaustion of administrative remedies prior to commencing an ERISA action in federal court.


Arbitrary and capricious is no longer the applicable standard of review for a plan administrator’s denial of ERISA benefits. See Meza, 908 F.2d at 1280 n. 22; Jordan v. Cameron Iron Works, Inc., 900 F.2d 53, 56 n. 1 (5th Cir.1990) (arbitrary and capricious standard used in Denton v. First Nat’l Bank is no longer proper in light of Firestone v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989)); Batchelor v. International Bhd. of Elec. Workers Local 861 Pension & Retirement Fund, 877 F.2d 441, 442 (5th Cir.1989) (denial of benefits challenged under ERISA is reviewed under a de novo standard but if administrator has discretionary authority, the reviewing court should apply an abuse of discretion standard). But the Fifth Circuit has indicated that the distinction between “arbitrary and capricious” and “abuse of discretion” may not be so significant:

Although our pre-Firestone decisions generally employed an “arbitrary and capricious” vernacular, after Firestone we have usually described this more deferential alternative to de novo review as review under an “abuse of discretion” standard. Nevertheless, both this court and district courts in this circuit have continued to use both terms to describe the same differential standard of review. Although we employ in this opinion what we describe as the abuse of discretion standard, we detect only a semantic, not a substantive, difference in this label and the “arbitrary and capricious” label used in this case by the magistrate judge and district court.

Wildbur v. ARCO Chemical Co., 974 F.2d 631, 635 n. 7 (5th Cir.1992) (citations omitted).


ERISA permits private enforcement of its disclosure provisions, and provides that a plan administrator who fails or refuses to comply with an employee’s request for plan information can be held personally liable to the employee for up to $100 for each day after the date of the refusal. 29 U.S.C. § 1132(b) & (c). These statutory remedies are directed more at ensuring the availability of plan information than at suspending the force of the plan’s administrative requirements. Meza, 908 F.2d at 1279 n. 21.


For example, the Third, Ninth, and Tenth Circuits do not require exhaustion. See Zipf v. American Tel. & Tel. Co., 799 F.2d 889, 891–94 (3d Cir.1986); Amaro v. Continental Can Co., 724 F.2d 747, 750–52 (9th Cir.1984); Held v. Manufacturers Hanover Leasing Corp., 912 F.2d 1197, 1204–05 (10th Cir.1990). The Seventh Circuit, on the other hand, vests district courts with discretion to require exhaustion. Kross v. Western Elec. Co., 701 F.2d 1238, 1243–45 (7th Cir.1983). The Eleventh Circuit apparently requires it. See Mason v. Continental Group, Inc., 763 F.2d 1219, 1225–27 (11th Cir.1985), cert. denied, 474 U.S. 1087, 106 S.Ct. 863, 88 L.Ed.2d 902 (1986). In Mason, which is the sole instance in which a circuit court mandated exhaustion of remedies, the pension plan incorporated into its terms the collective bargaining agreement between the employer and the former employee’s union, and thus provided an administrative mechanism for resolving the wrongful termination claims. Id. at 1226.

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