On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civ. No. 03-1117). District Judge: The Honorable Gary L. Lancaster.
The opinion of the court was delivered by: Becker, Circuit Judge.
Before: ALITO and BECKER, Circuit Judges, and SHADUR, District Judge.*fn1
Latrobe Area Hospital ("Latrobe") appeals from a judgment against it in a dispute over ERISA retirement benefits.*fn2 Latrobe denied early retirement benefits to plaintiff Joyce Vitale after determining that, because she was on long-term disability leave, she was not accruing benefits and so did not qualify for the early retirement incentive under the terms of the plan. After a bench trial, the District Court ruled in favor of Vitale, finding that Latrobe's decision to deny benefits was arbitrary and capricious. The District Court relied on the fact that two other employees, who were out on short-term disability leave at the relevant time, had received early retirement benefits; the Court determined that these other employees were similarly situated to Vitale and that the decision to deny her benefits was therefore arbitrary and capricious.
We will reverse. The plain language of Latrobe's retirement plan required Latrobe to deny benefits to Vitale. And its decision to do so, while granting benefits to two employees in what we find to be distinguishable circumstances, was not arbitrary and capricious.
I. Facts and Procedural History
Vitale worked as a food service aide at Latrobe until July 1, 1999, when she was severely injured in a car accident. Latrobe offers its employees ninety days of short-term disability leave, and Vitale used her full allowance. When this expired in September 1999, she went on long-term disability leave.
On February 28, 2000, Latrobe adopted an amendment to its ERISA retirement plan ("the Plan") to encourage early retirement. Under the amendment, early retirement benefits would be paid out of the Plan, which was then overfunded, allowing the hospital to reduce staffing costs, which are paid out of operating funds. In discussions prior to adopting the new benefit, the hospital decided that employees on long-term disability leave would not be eligible, because encouraging them to retire early would not achieve the goal of reducing active staff. On the other hand, employees on short-term disability leave would be eligible, because they still had an open position at the hospital. The language of the incentive plan, as it was adopted, allowed employees "currently accruing a benefit" and meeting other requirements to receive early retirement.
Vitale applied for early retirement in April 2000, while she was on long-term disability leave. She was informed that she had been denied benefits because, being on long-term disability leave, she was not "actively employed" at the time. Vitale was terminated from her job on August 6, 2000, because her employment had been "inactive" for twelve months.
She then brought this suit under 29 U.S.C. § 1132(a)(1)(B), alleging that Latrobe's denial of benefits was arbitrary and capricious. As evidence, she pointed to the fact that two other employees, Donna McCullough and Margaret Sommerville, were awarded early retirement benefits under the Plan even though they too were out on medical leave. Vitale argued that McCullough and Sommerville were similarly situated employees, and that it was arbitrary and capricious of Latrobe to grant them benefits while denying the same benefits to her. Latrobe's response was that McCullough and Sommerville, who were on short-term disability leave protected by the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq.("FMLA"), were not similarly situated to Vitale.
After a bench trial in July 2004, the District Court filed an opinion and order finding that the denial was arbitrary and capricious, and requiring Latrobe to award Vitale benefits under the Plan. Latrobe timely appealed.
The District Court had subject matter jurisdiction under 28 U.S.C. § 1331. This Court has appellate jurisdiction over the final judgment of the ...