Kramer v. American Elec. Power Exec. Severance Plan, No. 24-3174, __ F.4th __, 2025 WL 444923 (6th Cir. Feb. 10, 2025) (Before Circuit Judges Cole, Mathis, and Bloomekatz)

Your ERISA Watch is short-staffed this week, so we won’t be providing our usual comprehensive coverage of all the week’s ERISA-related decisions. Instead, we are highlighting one published decision from the Sixth Circuit which addresses a smorgasbord of issues. On each issue plaintiff Derek Kramer attempted to push the envelope on established ERISA jurisprudence, but the Sixth Circuit would have none of it: “We reject Kramer’s request to change the rules.”

But first, some background. Kramer was hired in 2018 as the Vice President and Chief Digital Officer for American Electric Power. He did not last long; the company terminated him in 2020. During that time, he signed up for the company’s Executive Severance Plan.

Kramer submitted a claim for benefits under the plan when he was terminated. AEP denied his claim, contending that it had terminated him for cause, which under the plan rendered him ineligible for benefits. Specifically, AEP contended that Kramer had repeatedly approved his assistant’s use of a company credit card to charge personal expenses in violation of company policy. AEP also contended that Kramer had remotely wiped his company phone when it tried to investigate this charge.

When AEP denied his appeal, Kramer filed this action. The district court concluded that AEP was entitled to judgment because AEP “offered a reasonable explanation, based on evidence, for their conclusion that Mr. Kramer was terminated for Cause. As such, the adverse benefit determination was neither arbitrary nor capricious.” (Your ERISA Watch covered this decision in its February 14, 2024 edition.)

Along the way, the district court denied Kramer’s request for a jury trial (which we covered in our May 25, 2022 edition), and ruled that the plan was a top hat plan and thus not subject to the fiduciary exception to the attorney-client privilege (which we covered in our April 19, 2023 and August 23, 2023 editions).

Kramer appealed to the Sixth Circuit and raised a number of issues, arguing that the district court erred by “(1) limiting the scope of discovery for his ERISA denial-of-benefits claim; (2) striking [his] jury-trial demand; and (3) granting judgment to AEP and the Plan.”

Kramer made two discovery-related arguments. The first was that he was entitled to communications between AEP and its lawyers because of ERISA’s fiduciary exception to the attorney-client privilege. This exception, which the federal courts have borrowed from trust law, means that a plan fiduciary “must make available to the beneficiary, upon request, any communications with an attorney that are intended to assist in the administration of the plan,” thus trumping the standard privilege.

However, the fiduciary exception only applies if the plan at issue is subject to ERISA’s fiduciary requirements. AEP contended, and the district court agreed, that the severance plan was a top hat plan, i.e., an unfunded plan designed to provide deferred compensation to a select group of managers or highly paid employees. Such plans are exempt from ERISA’s fiduciary requirements.

The parties agreed that the plan was unfunded and was for highly paid employees such as Kramer, so the issue turned on whether the plan provided “deferred compensation.” Kramer contended that the courts should look to tax law in determining the meaning of this term, but the Sixth Circuit stated that the provisions cited by Kramer were not helpful in defining the term. Furthermore, while tax law definitions and regulations “may be useful for interpreting some ERISA provisions…that does not mean ERISA incorporates the entire legislative and regulatory scheme of the Internal Revenue Code.” In short, the court agreed with the district court that the plan provided “deferred compensation,” was not subject to ERISA’s fiduciary rules, and thus the fiduciary exception to the attorney-client privilege did not apply.

Kramer’s second discovery argument was that he should have been entitled to “full discovery,” i.e., discovery beyond the administrative record compiled by AEP in ruling on his benefit claim. Below, the magistrate judge who ruled on Kramer’s discovery motion rejected this argument, although the judge did allow him some discovery beyond the administrative record, specifically “discovery into his allegations of bias and prejudice in the administrative process.” However, the Sixth Circuit ruled that Kramer had waived any arguments that he was entitled to more than this by not objecting to the magistrate judge’s ruling.

Next, the Sixth Circuit addressed whether Kramer was entitled to a jury. Kramer argued that because ERISA contains a cause of action for equitable relief (29 U.S.C. § 1132(a)(3)), and his claim was not raised under that section (under 29 U.S.C. § 1132(a)(1)(B) instead), his claim must be one for legal relief, which allows for a jury. The Sixth Circuit noted that it had already held on more than one occasion that claims like Kramer’s, brought under § 1132(a)(1)(B), are equitable in nature and do not allow for trial by jury. Furthermore, these decisions were not dicta as Kramer contended.

Kramer argued that Supreme Court precedent, namely CIGNA Corp. v. Amara and Montanile v. Board of Trustees of Nat’l Elevator Industry Health Benefit Plan, had “implicitly abrogated these precedents.” However, the Sixth Circuit observed that neither case discussed the right to a jury, and ruled that Kramer’s interpretation of these cases could not be squared with the Sixth Circuit’s prior opinions: “[U]ndoing our precedent based on mere implication – and one that is not clear – would stretch Amara and Montanile too far.”

Finally, the Sixth Circuit reached the merits of the case. Kramer raised four arguments. First, he reiterated his discovery argument, but because the court had already ruled that he was not entitled to the discovery he sought, this argument failed on the merits as well.

Second, Kramer argued that the district court “violated the party-presentation principle by construing the dispositive motion as a motion for judgment on the administrative record, rather than a Rule 56 motion for summary judgment.” The Sixth Circuit disagreed, noting that it had previously decided in Wilkins v. Baptist Healthcare Sys., Inc. that Rule 56 was an inappropriate vehicle for deciding ERISA benefit cases. Furthermore, the district court properly limited itself to the administrative record and used the correct standard of review. Thus, “[o]nly the title – not the substance – of the dispositive motion” changed, which caused no prejudice and did not violate the party-presentation principle.

Third, Kramer argued that the district court erred by following the established procedures for adjudicating ERISA benefit cases previously set forth in Wilkins. Kramer contended that these procedures had been implicitly invalidated by the Supreme Court’s 2022 decision in United States v. Tsarnaev. The Sixth Circuit disagreed, stating that (1) Tsarnaev was not an ERISA case, (2) the rules prescribed by Wilkins were consistent with the Supreme Court’s decision in Firestone Tire & Rubber Co. v. Bruch, and (3) “[t]o the extent that Tsarnaev and Firestone are ‘in tension,’ as one of our colleagues has intimated…the Supreme Court, not this court, must resolve that tension. We must follow existing precedent.”

Fourth, and finally, Kramer argued that he had created a genuine dispute of fact under Rule 56 which precluded summary judgment below. The Sixth Circuit quickly disposed of this contention, reiterating that Rule 56 “does not apply to the adjudication of ERISA denial-of-benefits claims.”

Ultimately, the Sixth Circuit concluded that Kramer “failed to show that the denial of benefits was arbitrary and capricious.” The court emphasized AEP’s audit reports and affidavits, as well as evidence showing that Kramer failed to cooperate with AEP’s investigation, in ruling that substantial evidence supported AEP’s finding that Kramer’s termination was for cause.

In the end, none of Kramer’s long-shot challenges to the way courts adjudicate ERISA benefit cases in the Sixth Circuit paid off and the judgment against him was affirmed. It looks like the wisdom of his arguments will have to be addressed by either the Supreme Court or Congress.