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ERISA Class Action Defense Cases–White v. Coca-Cola: Eleventh Circuit Affirms Summary Judgment In Favor Of Employer In ERISA Class Action Holding Plan Administrator’s Decision To Reduce Benefits Based On Social Security Benefits Was Reasonable

District Court Properly Granted Summary Judgment in Class Action Alleging Coca-Cola Violated ERISA by Interpreting Plan so as to Permit an Offset Based on Receipt of Social Security Benefits and to Recoup Overpayment of Benefits Eleventh Circuit Holds

Plaintiffs, participants in long term disability plan, filed a class action against their employer, Coca-Cola, in its capacity as sponsor and administrator of a benefits plan alleging violations of the Employee Retirement Income Security Act of 1974 (ERISA); specifically, the class action complaint challenged the plan administrators “reduction of benefits under a long-term-disability plan based on a participant’s receipt of Social Security disability benefits.” White v. Coca-Cola Co., ___ F.3d ___, 2008 WL 4149706, *1 (11th Cir. September 10, 2008). The class action “contest[ed] the plan administrator’s interpretation of both a provision that permits an offset for the receipt of other disability benefits and a provision that allows the plan to recoup overpayments of benefits.” Id. The parties filed cross-motions for summary judgment; the district court granted the defense motion and entered judgment in favor of Coca-Cola on the class action claims. Id. Based on this ruling, the district court denied as moot plaintiffs motion to certify the litigation as a class action. Id., at *4. The Eleventh Circuit affirmed.

We do not here summarize the terms of the plan, other than to note that it “grants the committee exclusive responsibility and discretionary authority ‘to construe the Plan and decide all questions arising under the Plan,’ including the authority ‘to determine the eligibility of Participants to receive benefits and the amount of benefits to which any Participant may be entitled under the Plan.’” White, at *1. We note also that the plan “works with” Social Security benefits received, and provides “for the recoupment of any overpayment of benefits.” Id., at *2. Procedurally, before filing the class action, one of the plaintiffs asked Coca-Cola to reconsider his benefits payments arguing, in part, “that, even if the plan permits the offset of his future benefits to account for his Social Security benefits, the plan and ERISA prohibit the recovery of an overpayment of his past benefits.” Id., at *3. The committee retained outside counsel, who concluded that the plan’s offset provision was ambiguous but that the committee could legally interpret the plan to permit an offset in the manner that it had: accordingly, the committee did not alter its interpretation of the plan. Id.

The Circuit Court began its analysis by summarizing the “which provides a six-step process ‘for use in judicially reviewing virtually all ERISA-plan benefit denials.’” White, at *4 (citing Williams v. BellSouth Telecommunications, Inc., 373 F.3d 1132, 1137-38 (11th Cir. 2004)). The Eleventh Circuit first addressed “whether Coca-Cola reasonably interpreted the offset provision.” White, at *4. We do not here discuss the Circuit Court’s analysis of this issue, which may be found at pages *5 through *9. At bottom, the Court found persuasive the fact that “The plan gives the committee discretion ‘to decide all questions arising under the Plan,’” id., at *7, and that “‘As long as a reasonable basis appears for [the] decision [of the Committee], it must be upheld as not being arbitrary or capricious, even if there is evidence that would support a contrary decision,’” id. (quoting Jett v. Blue Cross & Blue Shield of Ala., Inc., 890 F.2d 1137, 1140 (11th Cir. 1989)). In the end, the Eleventh Circuit concluded that Coca-Cola’s interpretation of the offset provision was reasonable and entitled to deference. In so holding, the Court rejected plaintiffs’ claim that “the committee operated under a conflict of interest.” See id., at *8-*9.

The Circuit Court then addressed “whether Coca-Cola correctly interpreted the recoupment provision.” White, at *4. Specifically, plaintiffs argued that “Coca-Cola cannot seek reimbursement of an overpayment of their benefits because Coca-Cola cannot establish that they were overpaid and the recoupment provision is unenforceable.” Id., at *9. The Eleventh Circuit disagreed, concluding that “[t]he interpretation of the recoupment provision by the committee is de novo correct.” Id. Accordingly, the Circuit Court affirmed summary judgment in favor of Coca-Cola. Id., at *10.

NOTE: The Circuit Court found it unnecessary to address plaintiffs’ other arguments, explaining at page *5: “Because the district court was correct to grant summary judgment in favor of Coca-Cola, the district court did not abuse its discretion in denying the motions of [plaintiffs] for discovery and class certification. The resolution of the merits of this controversy obviates any issue about these procedures.”

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