construction of a pension plan by its trustees is reasonable").
The EBC interpretation has the added benefit of deferring to common sense and forbidding those, like Kenyon, who continue to be employed by an AT&T subsidiary from simultaneously enjoying both the benefits of employment and the benefits of a pension. Preventing this type of "double-dipping," thus preserves AT&T Plan resources for true retirees and furthers the long-term, collective interests of the AT&T Plan and its participants.
Plaintiffs argue that the EBC interpretation undermines the valid purposes of the AT&T Plan by denying them bargained-for contractual rights. See Communications Workers of America, 828 F. Supp. at 77 (EBC interpretation "substantially change[s] the contractual landscape agreed upon by AT&T and Plaintiffs). Plaintiffs' argument presupposes that the EBC determination is not only incorrect, but arbitrary and capricious as well. To begin with, the EBC interpretation is not arbitrary or capricious, as discussed above. Nor does the EBC interpretation somehow thwart Plaintiffs' bargained-for expectation interest. What Plaintiffs bargained for, and what they received, is an EBC vested with discretion to interpret a complexly-worded document that admits to different, equally plausible interpretations. That the EBC and Plaintiffs disagree as to which of these interpretations is correct does not make the EBC's interpretation arbitrary, or alter the parties' contractual relationship in any way.
The decision in Communications Workers of American v. AT&T, 828 F. Supp. 73 (D.D.C. 1993), rev'd, 309 U.S. App. D.C. 170, 40 F.3d 426 (D.C.Cir. 1994), upon which Plaintiffs' rely, is not persuasive authority that the EBC's interpretation was arbitrary and capricious. The district court, interpreting the identical AT&T Plan, rejected the interpretation that the phrase "Associated or Allied Company" in Section 8 has a different, and broader, meaning than the term "Former Associated or Allied Term" used in Section 2. Id. at 74. NCR, the district court therefore reasoned, could not be an "Interchange Company," and the suspension provisions of Section 4 could not apply. Id. The D.C. Circuit reversed, holding that the district court failed to apply the appropriate standard of review under Firestone.
Applying Firestone, this Court may overturn the EBC's interpretation only if it was arbitrary and capricious. Therefore, while Plaintiffs offer a plausible alternate interpretation, they fail to carry their heavy burden of demonstrating that the EBC interpretation was irrational. Because the EBC based its interpretation on a rational reading of the plain language of the AT&T Plan, and the interpretation further Plan policies, the Court finds that it was not arbitrary and capricious.
F. The EBC's Determination that the AT&T/NCR Interchange Agreement was Effective on October 19, 1991
Plaintiffs argue that Kenyon's pension should not have been suspended because the NCR/AT&T Interchange Agreement was not finalized until December 11, 1991, or a month and a half after Kenyon began working for NCR. Plaintiffs further contend that the less formal interchange agreement that the parties entered into on September 18, 1991 cannot satisfy the Section 4 suspension requirements because "no rational reading of the phrase Interchange Agreement in the Plan can include an 'interchange letter of intent' for purposes of the suspension provisions of Section 4." (Plaintiffs' Brief in Opposition to Defendant's Motion for Summary Judgment at 18).
The September 18, 1991 agreement is an "interchange agreement" as the term is used in Section 4 of the AT&T Plan. The September 18, 1991 agreement manifests an intention by the parties to be bound by the agreement. (See Letter from Russ to McElwain of September 17, 1991, attached as Exhibit E to Stipulation, at 1) ("AT&T would like NCR's concurrence now to finalize the substance of this letter in a formal Interchange Agreement after the closing"). The September 18, 1991 agreement was therefore binding and enforceable. See Restatement (Second) of Contracts § 27 (1981) ("Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof . . . ."); Melo-Sonics Corp. v. Cropp, 342 F.2d 856, 859-60 (3d Cir. 1965) ("the formalization of the contract was merely putting into writing that which had already been agreed upon . . . by the parties"). The September 18, 1991 agreement provided for mutual recognition of service credit, among other things. The EBC, therefore, was not irrational in concluding that the September 18, 1991 agreement was an "Interchange Agreement" and that the suspension provisions of Section 4 applied.
Furthermore, the NCR/AT&T Interchange Agreement itself provides that it is retroactively effective as of September 20, 1991. Plaintiffs suggest no reason why parties cannot contract for retroactive effect, especially where, as here, potentially adverse tax consequences attach in the absence of a retroactive effective date. See Rev. Rul. 56-693 1956 2 C.B. 282 (pension plan loses 401(a) status if it permits participants to withdraw funds prior to severance of employment); IRS Gen. Couns. Mem. 39,824 (Aug. 15, 1990) (no severance when employee is reemployed by firm within a "controlled group" of companies). Accordingly, the EBC's determination that the NCR/AT&T Interchange Agreement was effective as of September 20, 1991 was not arbitrary and capricious either.
It is not the Court's function under Firestone's deferential standard of review to impose Plaintiffs' preferred interpretation of the Plan. Because the EBC's interpretation is consistent with the language of the Plan and furthers plan policies, the Court finds that its decision to suspend Mr. Kenyon's benefits was not arbitrary and capricious. Accordingly, the Court grants summary judgment in favor of Defendants as to Counts Three, Four and Six of Plaintiffs' Complaint insofar as they pertain to Plaintiff Robert Kenyon, dismisses the remainder of Counts Three, Four and Six of Plaintiffs' Complaint, because Plaintiffs have not exhausted administrative remedies, denies Plaintiffs' cross-motion for summary judgment, and dismisses Counts One, Two and Five of Plaintiffs' Complaint as moot.
An appropriate Order accompanies this Opinion.
Dated: October 24, 1995
WILLIAM G. BASSLER, U.S.D.J.
This matter having come before the Court on Defendants' motion for summary judgment; and
The Court having considered the submissions of counsel on behalf of the parties; and
For good cause shown;
It is on this 24th day of October, 1995 ORDERED that:
(1) summary judgment is granted in favor of Defendants as to Counts Three, Four and Six of Plaintiffs' Complaint insofar as they pertain to Plaintiff Robert Kenyon;
(2) the remainder of Counts Three, Four and Six of Plaintiffs' Complaint are dismissed for failure to exhaust administrative remedies;
(3) Plaintiffs' cross-motion for summary judgment is denied; and
(4) Counts One, Two and Five of Plaintiffs' Complaint are dismissed as moot.
WILLIAM G. BASSLER, U.S.D.J.