Moyle et al v. Liberty Mutual Retirement Benefit Plan et al
Filing
252
ORDER Granting 212 Defendants' Motion for Summary Judgment and Denying 213 Plaintiffs' Motion for Partial Summary Judgment. The Court Grants Defendants' motion for summary judgment on all causes of action in the third amended complaint; and Denies Plaintiffs' motion for summary judgment as to the second and fourth causes of action. Signed by Judge Gonzalo P. Curiel on 7/1/2013. (srm)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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GEOFFREY MOYLE, an individual;
PAULINE ARWOOD, an individual;
THOMAS ROLLASON, an
individual; and JEANNIE SANDERS,
an individual, on behalf of themselves,
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vs.
Plaintiff,
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LIBERTY MUTUAL RETIREMENT
BENEFIT PLAN; LIBERTY
MUTUAL RETIREMENT PLAN
RETIREMENT BOARD; LIBERTY
MUTUAL INSURANCE GROUP,
INC., a Massachusetts company;
LIBERTY MUTUAL INSURANCE
COMPANY, a Massachusetts
company,
CASE NO.10cv2179-GPC(MDD)
ORDER GRANTING
DEFENDANTS’ MOTION FOR
SUMMARY JUDGMENT AND
DENYING PLAINTIFFS’ MOTION
FOR PARTIAL SUMMARY
JUDGMENT
[Dkt. Nos. 212, 213.]
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Defendants.
Before the Court are the parties’ cross-motions for summary judgment, their
oppositions and their replies. On June 7, 2013, the Court held a hearing. (Dkt. No.
247.) Matthew Butler, Esq. and Andrew Myers, Esq. appeared on behalf of Plaintiffs
and Ashley Abel, Esq. and Jennifer Santa Maria, Esq. appeared on behalf of
Defendants. Based on the parties’ briefs, supporting documentation and applicable
law, the Court GRANTS Defendants’ motion for summary judgment; and DENIES
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1 Plaintiffs’ motion for partial summary judgment.
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Procedural Background
Prior to the filing of the instant case, on March 14, 2005, Plaintiff Geoffrey
4 Moyle (“Moyle”) filed a complaint in this Court against Golden Eagle Insurance
5 Corporation (“GEIC” or “New Eagle”) and Liberty Mutual Insurance Company
6 (“LMIC”).1 (Case No. 05cv507-DMS(WMC), Dkt. No. 1). On August 23, 2005,
7 Moyle filed a first amended complaint adding Defendant Liberty Mutual Retirement
8 Benefit Plan (“Plan”). On November 14, 2005, District Judge Dana Sabraw granted
9 Defendants’ motion to dismiss for failure to exhaust administrative remedies. (Id.,
10 Dkt. No. 32.) Plaintiff appealed and on August 23, 2007, the Ninth Circuit affirmed
11 the district court’s dismissal requiring Plaintiff to exhaust. Moyle v. Golden Eagle Ins.
12 Corp., 239 Fed. Appx. 362 (9th Cir. 2007).
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On January 26, 2008, Moyle filed a claim with Liberty Mutual. (Administrative
14 Record (“AR”) 783-86.) On July 18, 2008, Plaintiff Thomas Rollason filed a claim.
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Prior to the case filed in 2005, Plaintiff Moyle also filed two complaints in San
16 Diego Superior Court that were removed to this Court.
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On November 5, 2002, Plaintiff Moyle filed an action against GEIC, LMIC and
John Davis in San Diego Superior Court alleging eleven causes of action related to
18 employment and pension benefits due under the Plan. (Case No. 02cv2468-H(JAH).)
On December 16, 2002, the case was removed to this Court. (Id., Dkt. No. 1.) On
19 December 23, 2002, Defendants filed a motion for partial dismissal of Plaintiff’s
complaint arguing that the state law claims were preempted by ERISA as to the past
20 service credit under the Plan. (Id., Dkt. Nos. 7, 10.) Subsequently, Plaintiff filed a
notice of voluntary dismissal of action without prejudice. (Id., Dkt. No. 14.)
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On February 13, 2003, Plaintiff Moyle filed an action against Defendant GEIC,
22 LMIC and John Davis in San Diego Superior Court alleging ten causes of action
related to employment and past service credit under the Plan. (Case No. 03cv50923 IEG(JAH).) On March 13, 2003, Defendants removed the action to this Court. (Id.,
Dkt. No. 1.) On March 20, 2003, Golden Eagle and Liberty Mutual filed motions to
24 dismiss the complaint. (Id., Dkt. Nos. 5, 8.) On April 3, 2003, Plaintiff filed a motion
to remand. (Id., Dkt. No. 13.) On July 17, 2003, Judge Irma E. Gonzalez, United
25 States District Judge, issued an order denying Plaintiff’s motion to remand and granted
in part Golden Eagle and Liberty Mutual’s motions to dismiss. (Id., Dkt. No. 23.) The
26 Court concluded that the claims relating to the question of past service credit under the
Benefit Plan were preempted by ERISA. (Id.) Accordingly, the Court dismissed
27 Plaintiff’s state law claims without prejudice and granted leave to amend the complaint
to allege claims under ERISA. (Id.) On August 5, 2003, the Court granted Plaintiff’s
28 ex parte application to remand remaining causes of action to state court. (Id., Dkt. No.
25.)
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1 (AR 639-43.) On August 21, 2008, Plaintiff Pauline Arwood filed a claim. (AR 10162 20.) Lastly, on December 4, 2008, Plaintiff Jeannie Sanders filed her claim. (AR
3 1511-16.)
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On April 23, 2008, Moyle’s claim and subsequently Rollason, Arwood and
5 Sanders’ claims for benefits were initially denied by John R. St. Martin, Manager of
6 Pension and Savings, Benefits at Liberty Mutual. (AR 712-718 (“Moyle”); 590-96
7 (“Rollason”); 991-97 (“Arwood”); 1497-1503 (“Sanders”)).
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On June 20, 2008, Plaintiffs sought review of the initial decision and all four
9 claims were consolidated for purposes of the administrative appeal. (AR 426.) On
10 October 23, 2009, Plaintiffs’ appeals were denied by Helen Sayles, Senior Vice
11 President of HR & Administration, on behalf of the Retirement Board. (AR 436512 4414.)
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After having exhausted administrative remedies, on October 19, 2010, Plaintiffs
14 Moyle, Arwood, Rollason, and Sanders filed the instant class action complaint against
15 Defendants Liberty Mutual Retirement Benefit Plan (“Plan”); Liberty Mutual
16 Retirement Benefit Plan Retirement Board (“Board”); Liberty Mutual Group, Inc.
17 (“LMGI”); and Liberty Mutual Insurance Company (“LMIC”). (Dkt. No. 1.) On
18 October 21, 2010, Plaintiffs filed a first amended complaint. (Dkt. No. 3.) On April
19 25, 2011, District Judge Dana Sabraw denied Defendants’ motion to dismiss the second
20 and third claims; granted in part motion to dismiss improperly named Defendants;
21 denied Defendants’ motion to dismiss the first claim as to Plaintiff Moyle and granted
22 Defendants’ motion to strike demand for trial by jury. (Dkt. No. 18.) On September
23 14, 2011, the Court granted Plaintiffs’ motion for leave to file a second amended
24 complaint. (Dkt. No. 41.) On September 20, 2011, Plaintiffs filed a second amended
25 complaint. (Dkt. No. 47.)
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After briefing by the parties on Plaintiffs’ motion for class certification, on April
27 10, 2012, District Judge Sabraw certified the class as to the first, second, and fourth
28 causes of action to be:
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all former employees of Golden Eagle Insurance Company who are or
were employed by Liberty Mutual Group Inc. and/or Liberty Mutual
Insurance Company starting October 1, 1997, who participated or are
participating in the Liberty Mutual Retirement Benefit Plan, and who
were or will be denied credit for all years of service with Old Golden
Eagle for the purposes of calculating all benefits owed to them under
the Plan from October 1, 1997 to the present.
5 (Dkt. No. 113 at 19.)
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On April 24, 2012, Defendants filed a petition for permission to appeal the
7 Court’s order granting class certification to the Ninth Circuit. (Dkt. No. 120.) In the
8 meantime, the Court denied Defendants’ motion for reconsideration and granted their
9 motion for stay pending appeal. (Dkt. No. 126.) On July 11, 2012, the Ninth Circuit
10 denied Defendants’ petition for permission to appeal. (Dkt. No. 128.)
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On October 12, 2012, the case was transferred to the undersigned judge. (Dkt.
12 No. 174.) On October 17, 2012, Plaintiffs filed a third amended complaint against
13 Defendants Liberty Mutual Retirement Benefit Plan (“Plan”); Liberty Mutual
14 Retirement Benefit Plan Retirement Board (“Board”), the Plan administrator; Liberty
15 Mutual Group, Inc. (“LMGI”), the Plan sponsor; and Liberty Mutual Insurance
16 Company (“LMIC”), the entity that purchased OGE, and established GEIC and is a
17 subsidiary of LMGI. (Dkt. No. 178.) The third amended complaint alleges four causes
18 of action: payment of benefits under the Plan pursuant to 29 U.S.C. § 1132(a)(1)(B);
19 equitable relief under 29 U.S.C. § 1132(a)(3); violation of 29 C.F.R. § 2560.50320 1(h)(2)(i); and violation of 29 C.F.R. § 2520.102-3(l) and 29 C.F.R. § 2520.102-2(a).
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On January 3, 2013, Defendants filed a motion for summary judgment on all four
22 causes of action. (Dkt. No. 212.) On the same day, Plaintiffs filed a motion for partial
23 summary judgment on the second and fourth causes of action and on certain of
24 Defendants’ affirmative defenses. (Dkt. No. 213.) On March 8, 2013, both parties
25 filed their respective oppositions to the motions for summary judgment. (Dkt. Nos.
26 232, 233.) On April 5, 2013, replies by both parties were filed. (Dkt. Nos. 239, 241.)
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Factual Background
Plaintiffs Geoffrey Moyle, Pauline Arwood, Thomas Rollason, and Jeannie
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1 Sanders are four former employees of Golden Eagle Insurance Company (“Old Golden
2 Eagle” or “OGE”). (Dkt. No. 233-2, Undisputed Fact No. 2.) On January 31, 1997,
3 the Superior Court of San Diego County placed OGE into conservatorship proceedings
4 under the supervision of the California Insurance Commissioner. (Id., Undisputed Fact
5 No. 5.) The court approved the sale and transfer of certain OGE assets and liabilities
6 to LMIC on May 30, 1997. (Id.) On October 1, 1997, pursuant to a Rehabilitation
7 Agreement with the State-appointed conservator, LMIC purchased certain assets of
8 OGE and formed and incorporated a new entity, Golden Eagle Insurance Corporation,
9 (“New Golden Eagle” or “GEIC”), as a subsidiary of LMIC. (Id., Undisputed Fact No.
10 6.) Article 5.1(c) of the Rehabilitation Agreement states:
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As to the employees of [OGE] who become employees of New Eagle
or another Subsidiary of LMIC by reason of the transactions
contemplated by this Agreement . . . [s]uch employees shall be
provided benefits which are at least comparable to those offered by
[OGE] and shall be credited for all prior years of service with [OGE]
. . . for purposes of eligibility, vesting and early retirement subsidies
under the LMIC Retirement Benefit Plan . . . provided, that such period
of service with [OGE] will not be credited for purposes of benefits
accruals under the LMIC Thrift Incentive Plan and Retirement Benefit
Plan . . . .
(Id., Undisputed Fact No. 7; AR 3035-36.) OGE did not offer a traditional defined
benefit pension plan to its employees. (Id., Undisputed Fact No. 9.) As former
employees of OGE, Plaintiffs had the opportunity to participate in a 401(k) Plan and
profit-sharing plan. (Id., Undisputed Fact No. 10.) OGE did not offer any other
retirement plans, such as a defined benefit pension plan funded by the employer with
benefit accruals based on years of service. (Id., Undisputed Fact No. 11.) OGE did not
contribute any assets to the Plan at issue in this case and Plaintiffs did not make any
contributions to the Plan. (Id., Undisputed Fact No. 12.)
Plaintiffs claim Defendants sought to retain Old Golden Eagle employees and
advised them that if they remained in their positions, they would be eligible to
participate in the Plan with credit for their years of service with Old Golden Eagle in
addition to their continued time of employment after the acquisition. While Defendants
argue that they stated that Old Golden Eagle employees would receive prior service
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1 credit for the years of service with Old Golden Eagle under the Plan for purposes of
2 eligibility, participation, vesting, early retirement benefits and spouse’s death benefits,
3 they did not expressly state one way or another whether Old Golden Eagle employees
4 would be credited for purposes of calculating pension benefit accrual under the Plan.
5 Plaintiffs remained in their positions after the acquisition and later retired. Upon
6 retirement, their pension benefits were calculated based only on their years of service
7 after the acquisition in October 1997. It is undisputed that years of service with Old
8 Golden Eagle were credited under the Plan for purposes of eligibility, participation,
9 vesting, retirement benefits and spouse’s death benefits. However, Plaintiffs and many
10 other Old Golden Eagle employees expected to receive credit also for purposes of
11 calculating their accrued retirement benefit. Therefore, Plaintiffs filed their lawsuit
12 alleging violations of the provisions of ERISA.
13 A.
Legal Standard for Motion for Summary Judgment
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Federal Rule of Civil Procedure 56 empowers the Court to enter summary
15 judgment on factually unsupported claims or defenses, and thereby “secure the just,
16 speedy and inexpensive determination of every action.” Celotex Corp. v. Catrett, 477
17 U.S. 317, 325, 327 (1986). Summary judgment is appropriate if the “pleadings,
18 depositions, answers to interrogatories, and admissions on file, together with the
19 affidavits, if any, show that there is no genuine issue as to any material fact and that the
20 moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A fact
21 is material when it affects the outcome of the case. Anderson v. Liberty Lobby, Inc.,
22 477 U.S. 242, 248 (1986).
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The moving party bears the initial burden of demonstrating the absence of any
24 genuine issues of material fact. Celotex Corp., 477 U.S. at 323. The moving party can
25 satisfy this burden by demonstrating that the nonmoving party failed to make a
26 showing sufficient to establish an element of his or her claim on which that party will
27 bear the burden of proof at trial. Id. at 322-23. If the moving party fails to bear the
28 initial burden, summary judgment must be denied and the court need not consider the
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1 nonmoving party’s evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60
2 (1970).
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Once the moving party has satisfied this burden, the nonmoving party cannot rest
4 on the mere allegations or denials of his pleading, but must “go beyond the pleadings
5 and by her own affidavits, or by the ‘depositions, answers to interrogatories, and
6 admissions on file’ designate ‘specific facts showing that there is a genuine issue for
7 trial.’” Celotex, 477 U.S. at 324. If the non-moving party fails to make a sufficient
8 showing of an element of its case, the moving party is entitled to judgment as a matter
9 of law. Id. at 325. “Where the record taken as a whole could not lead a rational trier
10 of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’”
11 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). In
12 making this determination, the court must “view[] the evidence in the light most
13 favorable to the nonmoving party.” Fontana v. Haskin, 262 F.3d 871, 876 (9th Cir.
14 2001). The Court does not engage in credibility determinations, weighing of evidence,
15 or drawing of legitimate inferences from the facts; these functions are for the trier of
16 fact. Anderson, 477 U.S. at 255.
17 B.
ERISA Standard of Review
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The United States Supreme Court has held that a denial of benefits is reviewed
19 de novo when the plan does not confer discretion on the administrator “to determine
20 eligibility for benefits or to construe the terms of the plan.” Firestone Tire & Rubber
21 Co. v. Bruch, 489 U.S. 101, 115 (1989). If de novo review applies, no further
22 preliminary analytical steps are required and the court proceeds to evaluate whether the
23 plan administrator correctly or incorrectly denied benefits without regard to whether
24 the administrator operated under a conflict of interest. Abatie v. Alta Health & Life
25 Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006). If a plan confers discretionary authority
26 as a matter of contractual agreement, then the standard of review shifts to an abuse of
27 discretion.
Firestone Tire & Rubber Co., 489 U.S. at 115.
The plan must
28 unambiguously provide discretion to the administrator. Id.
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1
Both parties do not dispute that the Plan grants the administrator discretion to
2 interpret the Plan. Defendants argue that an “abuse of discretion” standard applies
3 while Plaintiffs assert a “de novo” or a heightened deferential standard of review
4 applies as there is a substantial conflict of interest.
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In applying the abuse of discretion standard, the Court must reverse the
6 determinations of the plan administrator if they are arbitrary and capricious after
7 looking at the plain language of the plan. Canseco v. Constr. Laborers Pension Trust,
8 93 F.3d 600, 606 (9th Cir. 1996). “A plan administrator’s decision to deny benefits
9 must be upheld under the abuse of discretion standard if it is based upon a reasonable
10 interpretation of the plan’s terms and if it was made in good faith.” McDaniel v.
11 Chevron Corp., 203 F.3d 1099, 1113 (9th Cir. 2000). The question is not “whose
12 interpretation of the plan documents is most persuasive, but whether the . . .
13 interpretation is unreasonable.” Canseco, 93 F.3d at 606 (citations and internal
14 quotations omitted).
15
If a plan gives discretion to an administrator who is operating under a conflict
16 of interest, that conflict must be weighed as a ‘facto[r] in determining whether there is
17 an abuse of discretion.’” Firestone Tire & Rubber Co., 489 U.S. at 115; see
18 Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 108 (2008) (a conflict of interest
19 will be found where the “entity that administers the plan, such as an employer or an
20 insurance company, both determines whether an employee is eligible and pays benefits
21 out of its own pocket.”); Conkright v. Frommert, 130 S. Ct. 1640, 1646 (2010) (When
22 the terms of a plan grants discretionary authority to the plan administrator, a deferential
23 standard of review remains appropriate even in the face of a conflict.)
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In following the United States Supreme Court, the Ninth Circuit has held that the
25 “[a]buse of discretion review applies to a discretion-granting plan even if the
26 administrator has a conflict of interest.” Abatie, 458 F.3d at 965. When there is a
27 conflict of interest, such as when a plan administrator both administers the plan and
28 funds it, the Ninth Circuit held that the standard of review is an abuse of discretion
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1 review “but a review informed by the nature, extent, and effect on the decision-making
2 process of any conflict of interest that may appear in the record.” Id. at 967. “A
3 district court, when faced with all the facts and circumstances, must decide in each case
4 how much or how little to credit the plan administrator’s reason for denying . . .
5 coverage.” Id. at 968. For instance, if a conflict of interest involves evidence of
6 malice, self-dealing or parsimonious claims-granting history, the court may weigh a
7 conflict more heavily than a conflict of interest without evidence of malice or
8 self-dealing. Id. A court may weigh the conflict more heavily if there’s evidence that
9 the administrator has given “inconsistent reasons for denial . . . fails adequately to
10 investigate a claim or ask the plaintiff for necessary evidence . . . fails to credit a
11 claimant’s reliable evidence . . . or has repeatedly denied benefits to deserving
12 participants by interpreting plan terms incorrectly or by making decisions against the
13 weight of evidence in the record.” Id. at 968-69.
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However, if an administrator “engages in wholesale and flagrant violation of the
15 procedural requirements of ERISA and thus acts in utter disregard of the underlying
16 purpose of the plan as well”, the Court reviews de novo the administrator’s decision to
17 deny benefits. Abatie, 458 F.3d at 971; see also Gatti v. Reliance Standard Life Ins.
18 Co., 415 F.3d 978, 985 (9th Cir. 2005) (de novo review applies where the administrator
19 has a serious conflict of interest that the beneficiary can demonstrate with “material,
20 probative evidence, beyond the mere fact of an apparent conflict, tending to show that
21 the fiduciary’s self-interest caused a breach of the administrator’s fiduciary obligations
22 to the beneficiary.”)
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Here, while Plaintiffs agree that the Plan2 grants the administrator, Liberty
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The 2001 Plan provides:
Except as otherwise herein expressly provided, the Retirement Board
will have the exclusive right and discretionary authority, to the fullest
extent provided by law, to interpret the Plan, decide all questions of
eligibility, determine the amount, time, and manner of payment of any
Plan distribution; and decide any other matters arising hereunder in the
administration and operation of the Plan, and any interpretations or
decisions so made will be conclusive and binding on all persons having
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1 Mutual Retirement Benefit Plan Retirement Board, discretion to interpret the Plan, they
2 argue that there is a structural conflict of interest so a “de novo” or a heightened
3 deferential standard of review applies.
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In support of their argument that there was a structural conflict of interest such
5 that a de novo review applies, Plaintiffs assert that John R. St. Martin, a Liberty
6 employee who reported to Helen Sayles, denied the initial claim, and then Helen
7 Sayles, Liberty’s Director of Human Resources and a member of the Liberty Mutual
8 Board of Directors reviewed St. Martin’s denial and simply rubber stamped it. (Dkt.
9 No. 233-4, Butler Decl., Ex. 40, Sayles Depo. at 10:11-11:25.) In support, Plaintiffs
10 point to Sayles’ deposition where she states that “Mr. St. Martin prepared a draft of the
11 document for her review along with other documentation.” (Dkt. No. 235-20, Butler
12 Decl., Ex. 40, Sayles Depo. at 177:10-14.) This alone does not demonstrate Sayles
13 rubber stamped the initial denial.
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Plaintiffs also argue that there was a structural conflict of interest because both
15 St. Martin and Sayles were witnesses to the underlying facts of Plaintiffs’ claims. Both
16 were involved with the 1997 Benefit Enrollment meetings and they drafted various
17 Plan documents, including the Summary Plan Descriptions (“SPD”) and the Facilitator
18 Guide. Therefore, Plaintiffs argue that they were inherently biased when they reviewed
19 their own communications with employees to determine if their employer should pay
20 more money into the Plan. Defendants argue that Plaintiffs have not provided any
21 evidence they any financial interest or motivation to deny the claims. The Court
22 agrees. While Plaintiffs present general allegations that St. Martin and Sayles were
23 biased because of their positions at Liberty Mutual and/or the Board, Plaintiffs have
24 not provided any specific evidence to show that St. Martin and Sayles were influenced
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an interest in the Plan; provided, however, that all such interpretations
and decisions will be applied in a uniform and nondiscriminatory
manner to all Employees.
28 (AR 2162.)
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1 by their involvement in these meetings and/or drafting the various Plan documents.
2
Plaintiffs further contend that the investigation of their claims was one sided
3 because Defendants rejected Plaintiffs’ declaration, relying solely on declarations of
4 then current Liberty employees who made the misleading presentations. They allege
5 that every declaration obtained during the claim and appeal came solely from Human
6 Resources (“HR”) personnel working under St. Martin. Therefore, Defendants failed
7 to obtain a balanced view of what happened at the meetings. Defendants assert that
8 Sayles specifically addressed Plaintiffs’ affidavits in each of the denial letters, clearly
9 considering Plaintiffs’ perspectives but concluding that they did not outweigh the
10 overwhelming weight of contrary evidence. The denial decisions reveal that Sayles
11 considered Plaintiffs’ declarations. (AR 4371, 4381, 4391, 4411.) Plaintiffs’ argument
12 that the investigation was one-sided is without merit.
13
Plaintiffs have not demonstrated that a structural conflict of interest so serious
14 existed to warrant de novo review.
See Abatie, 458 F.3d at 971 (de novo review
15 applies to a plan that gives discretion to an administrator when the administrator
16 “engages in wholesale and flagrant violation of the procedural requirements of ERISA
17 and thus acts in utter disregard of the underlying purpose of the plan as well.”)
18
Plaintiffs also contend that there is a substantial conflict of interest because the
19 Plan pays all benefits which is funded entirely by Liberty.3 Plaintiffs cite generally to
20 the funding provisions in the 1987 and 2001 Plans showing that the Plan is entirely
21 funded by Liberty. (AR 2167-2173; 3562-3564.) Defendants argue that Sayles
22 testified that benefit payments are paid from group annuity contracts, not the assets of
23 Liberty Mutual. (Id., Sayles Depo. at 180:7-12.)
24
To determine whether there is a conflict of interest, the question is not where the
25 benefit payments are paid out of but who funds the Plan. Based on the record before
26 the Court, Liberty Mutual Insurance Company (“LMIC”) funds the plan. (AR 216727
3
In support, Plaintiffs cite to the deposition testimony of Helen Sayles, the Board
28 member who denied Plaintiffs their appeal, (Dkt. No. 233-2 at 154, AMF No. 154);
however, those pages of the depositions were not provided by Plaintiffs in their motion.
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1 2173; 3562-3564; 1662.) Liberty Mutual Retirement Plan Retirement Board (“Board”)
2 is the administrator of the Plan. While the same entity does not fund and also
3 determines ERISA benefits, it appears the employees of LMIC are also members of the
4 Board. Since there is an overlap between the two entities, the Court concludes that a
5 conflict of interest existed.
6
In sum, the Court concludes Plaintiffs have not shown that a structural conflict
7 existed to warrant de novo review. However, the Court concludes there was a conflict
8 of interest because of the close connection between the Board, who is the Plan
9 administrator, and LMIC, who funds the Plan. See Metropolitan Life Ins. Co., 554
10 U.S. at 108. Accordingly, the Court reviews the administrative record for an abuse of
11 discretion with the conflict of interest being weighed as a factor in determining whether
12 the Board member abused her discretion. See Abatie, 458 F.3d at 965.
13 C.
First Cause of Action - Determination of Terms of Plan and Clarification of
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Rights to Future Benefits under 29 U.S.C. § 1132(a)(1)(B)
15
1.
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Defendants argue that Plaintiffs’ claim under 29 U.S.C. § 1132(a)(1)(B) is
Statute of Limitations
17 time-barred under the four year statute of limitations governing claims for benefits.
18 They argue that Plaintiffs knew that they would not be receiving benefits for purposes
19 of benefit accruals well before October 19, 2006 and the instant lawsuit was not filed
20 until October 19, 2010. In opposition, Plaintiffs contend that their claims did not
21 accrue until final denial on October 23, 2009. They also maintain that their claims are
22 timely because courts toll any applicable statute of limitations while a participant
23 exhausts a Plan’s administrative process.
24
The Ninth Circuit has held that California’s four-year statute of limitations for
25 written contracts applies to ERISA claims for benefits under 29 U.S.C. §
26 1132(a)(1)(B). See Wetzel v. Lou Ehlers Cadillac Grp. Long Term Disability Ins.
27 Program, 222 F.3d 643, 648 (9th Cir. 2000). An ERISA claim accrues “either at the
28 time benefits are actually denied, or when the insured has reason to know that the claim
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1 has been denied.” Wise v. Verizon Commc’ns, Inc., 600 F.3d 1180, 1188 (9th Cir.
2 2010) (quoting Wetzel, 222 F.3d at 649). An insured has “reason to know” when “the
3 pension plan communicates ‘a clear and continuing repudiation’ of a claimant’s rights
4 under a plan, such that the claimant could not have reasonably believed but that his
5 benefits had been ‘finally denied.’” Chuck v. Hewlett Packard Co., 455 F.3d 1026,
6 1031 (9th Cir. 2006) (citations omitted). “A participant need not file a formal
7 application for benefits before having ‘reason to know’ that his claim has been finally
8 denied.” Id.
9
In Withrow, the plaintiff called the plan and subsequently wrote a letter to
10 inquire about an alleged underpayment of long-term disability benefits in October
11 1990. Withrow v. Halsey, 655 F.3d 1032, 1034 (9th Cir. 2011). Plaintiff received
12 monthly benefits reflecting the alleged miscalculated amount for nearly twelve years
13 and did not pursue her claim until May 2002. Id. at 1036-37. Her administrative
14 appeal was denied on January 14, 2004. Id. at 1036. The court of appeal held that
15 Plaintiff’s cause of action did not accrue earlier than the date her benefits were
16 “actually denied” on January 14, 2004. Id. at 1037-38. The court explained that
17 plaintiff called and then wrote two letters to the plan stating her concerns in 1990.
18 (Id.) The only evidence of the plan’s response was a handwritten notation by an
19 employee on one of the letters stating that someone had called plaintiff back and left
20 a message on her answering machine stating that the “original determination of salary
21 stays the same.” Id. at 1037. The court noted that it was unclear who made the call,
22 what exactly was said and whether Plaintiff was provided guidance about how to
23 submit her claim for review. Id. The court concluded that such a response did not
24 constitute “clear and continuing repudiation” of Plaintiff’s claim. Id. The court stated
25 that “[i]f such a response was sufficient to constitute a ‘clear and continuing
26 repudiation,’ then virtually any correspondence or communication with a plan
27 concerning the calculation or awarding of benefits could be interpreted as such.” Id.
28
In Wise, the plaintiff received four denial of claim notices as she proceeded
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1 through the Administrator’s internal review process. Wise v. Verizon Comms., Inc.,
2 600 F.3d 1180, 1188 (9th Cir. 2010). The first three letters told plaintiff that she could
3 seek further internal review of the adverse benefits determination and encouraged her
4 to submit any supplemental medical documentation. Id. The last letter, dated March
5 14, 2002, notified plaintiff that “all decisions of the [Claims Review Committee] are
6 final and did not indicate any further internal review was possible and notified her of
7 the first time her right to bring a civil enforcement action under 29 U.S.C. § 1132(a)
8 of ERISA, signaling the end of the internal review process.” Id. The Ninth Circuit
9 held that the plaintiff’s claim accrued, at the earliest, on March 14, 2002 with the
10 Claims Review Committee’s final denial notification. Id.
11
Here, Defendants assert that Plaintiffs “knew that they would never be receiving
12 benefits for purposes of benefit accruals” well before October 19, 2006. (Dkt. No. 21213 1 at 23.) Specifically, they contend that Moyle’s claims had been so clearly repudiated
14 that he filed his first of three lawsuits seeking pension benefits on November 5, 2002
15 and alleges in the third amended complaint that Liberty Mutual told Moyle on May 23,
16 2002 that Defendants would not provide Moyle any credit for the years of employment
17 and service with OGE. (Dkt. No. 178, TAC ¶ 43.) They also point to Moyle’s
18 testimony at his deposition he learned he would not be receiving credit for purposes of
19 benefit accruals which prompted him to confirm with Liberty Mutual that he was not
20 entitled to benefits in 2002. (Dkt. No. 212-24, Abel Decl., Ex. 10, Moyle Depo. 51:621 15.)
22
Plaintiffs argue nothing in the third amended complaint indicates he had been
23 provided sufficient information indicating his benefits had been “finally denied.” The
24 Court agrees. The allegation pointed to by Defendants does not sufficiently support
25 a finding that Defendants had communicated “a clear and continuing repudiation” of
26 Moyle’s rights such that he “could not have reasonably believed but that his benefits
27 had been finally denied.” See Chuck, 455 F.3d at1031.
28
Plaintiff Moyle testified that he learned in 2002 when he received a benefits
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[10cv2179-GPC(MDD)]
1 statement that he would not be receiving credit for time worked at OGE. This
2 prompted him to confirm with Liberty Mutual that he was not entitled to past service
3 credit. (Dkt. No. 212-24, Abel Decl., Ex. 10, Moyle Depo. at 51:6-15.) As to the other
4 three named Plaintiffs, Sanders states she learned employees would not be receiving
5 credit for accrual purposes around 2000 or 2001 when one of her co-workers retired.
6 (Dkt. No. 212-27, Abel Decl., Sanders Depo. at 67:8-68:8.) She also testified that she
7 knew that she would not be receiving past service credit at the time she retired in late
8 2004 and received her first pension check in 2005. (Id. at 77:13-24.) She did not do
9 anything about it because she “just thought it would be a useless battle.” (Id. at 78:310 6.)
11
Arwood testified that she called the benefits department in November 2001
12 asking about getting credit for her time with Old Golden Eagle and was told that she
13 would not be receiving such credit. (Dkt. No. 212-16, Abel Decl., Ex. 2, Arwood
14 Depo. at 78:2-21.) After she learned she would not be receiving these benefits, she did
15 not take any action. (Id. at 78:22-79:9.) Rollason testified he learned that he would not
16 be receiving benefits for his time with Old Golden Eagle when Arwood retired in 2001.
17 (Dkt. No. 212-25, Abel Decl., Rollason Depo. at 73:23-74:24.) He also spoke with
18 Laura Bond in GEIC’s human resources who informed him that Old Golden Eagle
19 employees would not get past service credit for purposes of benefits accrual. (Id. at
20 91:8-93:10.) It is not clear from the deposition when Rollason talked with Laura Bond,
21 whether in 2001 when Arwood retired, or 2007 when he retired. (Id. at 92:9-22.) He
22 testified that in 2001 he was alerted to the fact that Liberty was not giving them a
23 pension. (Id. at 92:19-22.)
24
While Defendants contend that these assertions demonstrate that Plaintiffs knew
25 they would not be receiving benefits for purposes of benefit accruals before October
26 19, 2006, “knowing” they would not receive benefits is not the standard. Defendants
27 must show a “clear and continuing repudiation” by Liberty such that Plaintiffs “could
28 not have reasonably believed but that his benefits had been ‘finally denied,’” See
- 15 -
[10cv2179-GPC(MDD)]
1 Chuck, 455 F.3d at 1031; Withrow, 655 F.3d at 1037. The telephone calls to Liberty
2 made by Arwood and Moyle, without any details as to who she talked to, and what was
3 actually stated, are not examples of a “clear and continuing repudiation” by Liberty.
4 See Withrow, 655 F.3d at 1037. As to Sanders, she had no communications with
5 Liberty about whether she would be receiving credit for accrual purposes. As to
6 Rollason, his deposition is not clear whether he spoke to Laura Bond in 2001 or 2007.
7 These facts do not constitute “clear and continuing repudiation” by Liberty. See id.
8
Accordingly, the Court concludes that the accrual did not occur until October 23,
9 2009 when their appeals were “actually denied.” Since Plaintiffs filed their complaint
10 on October 19, 2010, their complaint is timely pursuant to 29 U.S.C. § 1132(a)(1)(B).4
11
2.
12
“Laches is an equitable time limitation on a party’s right to bring suit, resting on
Laches
13 the maxim that ‘one who seeks the help of a court of equity must not sleep on his
14 rights.” Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 (9th Cir.
15 2002) (citing Boone v. Mech. Specialities Co., 609 F.2d 956, 958 (9th Cir. 1979)).
16 Laches is an equitable defense while statute of limitation is a creature of law. Id. at
17 835. While a distinct defense, “a laches determination is made with reference to the
18 limitations period for the analogous action at law.” Id. In the Ninth Circuit, when a
19 plaintiff has filed a complaint within the statute of limitations period, there is a strong
20 presumption that laches does not apply. Id. at 835-36; Tillamook County Smoker Inc.
21 v. Tillamook County Creamery Ass., 465 F.3d 1102, 1108 (9th Cir. 2006). The party
22 asserting laches must show that it suffered prejudice due to plaintiff’s unreasonable
23 delay in filing suit. Id. at 835.
24
“To prove laches, the ‘defendant must prove both an unreasonable delay by the
25 plaintiff and prejudice to itself.” Evergreen Safety Council v. RSA Network, Inc., 697
26 F.3d 1221, 1226 (9th Cir. 2012). “When evaluating the reasonableness of a delay, the
27
4
As the Court determines that the complaint is timely, the Court need not address
28 whether tolling applies while a plaintiff exhausts administrative remedies.
- 16 -
[10cv2179-GPC(MDD)]
1 evaluation period begins when the plaintiff knew (or should have known) of the
2 [potential cause of action], and ends with the initiation of the lawsuit in which the
3 defendant seeks to invoke the laches defense.” Id.; Trustees of the S. Cal. Bakery
4 Drivers Sec. Fund v. Middleton, 366 Fed. Appx. 810, 813 (9th Cir. 2010) (in ERISA
5 case, stating that, for laches defense, defendant “must show (1) inexcusable delay in
6 [plaintiff’s] assertion of a known right; and (2) prejudice to [defendant]”).
7
Defendants argue they will be prejudiced because since the relevant transaction
8 occurred over fifteen years ago, many of the witnesses had difficulty recalling relevant
9 facts. Also, John St. Martin, who denied Plaintiffs’ initial claims, passed away during
10 the litigation. Plaintiffs argue that the death of St. Martin is not prejudicial as he was
11 deposed and has provided numerous written declarations. As to evidentiary prejudice,
12 Defendants must “identify key witnesses or evidence whose ‘absence has resulted in
13 the [defendant’s] inability to present a full and fair defense on the merits.’” Adidas
14 America, Inc. v. Payless Shoesource, Inc., 529 F. Supp. 2d 1215, 1254 (D. Or. 2007)
15 (“[c]onclusory statement that there are missing witnesses, that witnesses’ memories
16 have lessened . . . are not sufficient to establish evidentiary prejudice”).
17
Here, Defendants have not shown that they have been prejudiced by the passage
18 of time. Their general allegations that many witnesses had difficulty recalling facts is
19 not sufficient. See Adidas America, Inc., 529 F. Supp. 2d at 1254. As to St. Martin,
20 no prejudice will result as he was deposed and wrote numerous declarations.
21 Accordingly, the Court concludes Defendants have not shown prejudice and the claim
22 is not barred by the doctrine of laches.
23
3.
24
Plaintiffs’ first cause of action arises under ERISA which authorizes participants
29 U.S.C. § 1132(a)(1)(B)
25 and beneficiaries of a pension plan to bring suit to recover the benefits to which they
26 are entitled to under the terms of that plan. 29 U.S.C. § 1132(a)(1)(B). The Court
27 must review the decision made by the administrator. See Benson v. Long Term
28 Disability Income Plan for Employees of Xerox, 108 F. Supp. 2d 1074, 1080 (9th Cir.
- 17 -
[10cv2179-GPC(MDD)]
1 1993).
2
Ordinarily, summary judgment is appropriate if there is no genuine issue as to
3 any material fact and the moving party is entitled to judgment as a matter of law. Fed.
4 R. Civ. P. 56. In ERISA actions, however, where the plaintiff is challenging the plan
5 administrator’s denial of benefits and the district has already determined that the abuse
6 of discretion standard of review applies, “a motion for summary judgment is merely the
7 conduit to bring the legal question before the district court and the usual tests of
8 summary judgment, such as whether a genuine dispute of material fact exists, do not
9 apply.” Bendixen v. Standard Ins. Co., 185 F.3d 939, 942 (9th Cir.1999). In such
10 cases, the district court must look to the plain language of the plan to determine
11 whether the plan administrator’s interpretation was arbitrary and capricious. See
12 Canseco, 93 F.3d at 606. The administrators are found to have abused their discretion
13 if they construed provisions of the plan in a way that clearly conflicts with the plain
14 language of the plan. See id. (internal citations omitted). Under the abuse of discretion
15 standard, the administrator’s decision will be upheld as long as there is “substantial
16 evidence to support the decision,” i.e., “relevant evidence [that] reasonable minds
17 might accept as adequate to support a conclusion even if it is possible to draw two
18 inconsistent conclusions from the evidence.” Snow v. Standard Ins. Co., 87 F.3d 327,
19 332 (9th Cir.1996), overruled on other grounds in Kearny v. Standard Ins. Co., 175
20 F.3d 1084 (9th Cir. 1999). In this case, the abuse of discretion standard will be viewed
21 with the conflict of interest being weighed as a factor in determining whether the Board
22 member abused her discretion. See Abatie, 458 F.3d at 965.
23
29 U.S.C. § 1132(a)(1)(B) provides that a plan participant may bring a civil
24 action “to recover benefits due him under the terms of the plan, to enforce his rights
25 under the terms of the plan, or to clarify his rights to future benefits under the terms of
26 the plan.” 29 U.S.C. § 1132(a)(1)(B).
27
In this case, Defendants argue that the Board reasonably interpreted the Plan
28 terms defining accrued retirement benefits in denying Plaintiffs’ claims for benefits.
- 18 -
[10cv2179-GPC(MDD)]
1 Plaintiffs argue that Defendants’ interpretation of the Plan was unreasonable.
2 Defendants and Plaintiffs differ in their interpretation of the 2001 Plan language. A
3 review of the Plan language reveals that Defendants’ interpretation of the plan is not
4 unreasonable.
5
Under the 2001 Plan, Article 1 provides DEFINITIONS of words and phrases
6 used in the Plan. (AR 2089.) Article 2 concerns PARTICIPATION AND SERVICE
7 and Article 3 concerns NORMAL RETIREMENT BENEFITS. (AR 2089, 2112,
8 2124.) “‘Accrued Benefit’ means, as any determination date, the Retirement Benefit
9 determined under Article 3 payable in the Normal Form beginning at a Participant’s
10 Normal Retirement Date . . . .” (AR 2089.) According to Article 3, Retirement
11 Benefits are based on “Years of Credited Service.” (AR 2124, 2125.) “Years of
12 Credited Service” is defined in Article 1.69(c) and means, “for Full Time Employees,
13 the period of the Participant’s service with the Employer following the Entry Date, as
14 determined below: (i) For purposes of determining Accrued Benefits under the Final
15 Average Pay formula set forth in Section 3.1(a), one Year of Credited Service shall be
16 credited for each 12 full calendar months of service, whether or not consecutive,
17 between his Entry Date and his Service Termination Date, except as provided below.
18 . . Anything in the Plan to the contrary notwithstanding, the following periods of time
19 shall not be included in determining Years of Credited Service . . . (B) any period of
20 time during which an Employee is not an Eligible Employee.” (AR 2110-11.)
21
Under Article 1.19, an Eligible Employee means an employee who “is employed
22 by a Participating Employer . . .” (AR 2096.) A Participating Employer is the
23 “Company and any other Affiliated Employer which adopts the Plan with the approval
24 of the Company. Each Participating Employer which adopts the Plan agrees to its
25 provisions.” (AR 2104.) The Company means Liberty Mutual Insurance Company.
26 (AR 2094.) An Affiliated Employer means “any corporation, trust, association, or
27 enterprise (other than the Company) which is (a) required to be considered, together
28 with the Company, as one employer pursuant to the provisions of Sections 414(b),
- 19 -
[10cv2179-GPC(MDD)]
1 414(c), 414(m) or 414(o) of the Code; or (b) which is designated an Affiliated
2 Employer by the Company. (AR 2090.)
3
In addition, Article 2.6(a) and (d) contain specific provisions for Golden Eagle
4 which provide:
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
(a) General. An individual’s employment service with an employer
prior to the date such employer becomes an Affiliated Employer shall
not be considered employment service with the Employer under this
Plan, unless otherwise provided by the Board of Directors, or unless
otherwise required by Department of Labor or Treasury regulations.
Similarly, an individual’s employment service with an employer who
is not an Affiliated Employer, or who ceases to be an Affiliated
Employer, shall not be considered employment service with the
Employer under this Plan, unless otherwise provided by the Board of
Directors, or unless otherwise required by Department of Labor or
Treasury regulations. Notwithstanding the foregoing:
(d) Golden Eagle. The following special rule applies to former
employees of Golden Eagle Insurance Company (“GEIC”) who became
employed by the Golden Eagle Insurance Corporation, a wholly owned
subsidiary of the company, on October 1, 1997, as a result of the
acquisition by the Company of the assets of GEIC. For purposes of
applying the eligibility and participation provisions of Article 2 and
the vesting provisions of Article 6, and for determining eligibility for
early retirement benefits under Section 45.1 and Spouse’s death
benefit under Section 7.3, such employees’ prior employment service
with GEIC shall be considered employment service with the Employer
under this Plan.
(Id. at 2120) (emphasis added).
The Administrator concluded that Old Eagle was never a Participating Employer
under the Plan and Plaintiffs were not actively employed by any Participating Employer
prior to October 1, 1997. (AR 4369; 4379; 4389; 4409.) She also found that Plaintiffs
could not have been Eligible Employees prior to October 1, 1997, and could not have
time before that date count toward Years of Credited Service under Plan Section
1.69(c). (AR 4369; 4379; 4389; 4409.) Lastly, Plaintiffs did not have a Year of
Credited Service under the Plan prior to October 1, 1997, the year in which New Eagle
became a Participating Employer, because they did not have any calendar month of
service with a Participating Employer. (AR 4369; 4379; 4389; 4409.)
Defendants argue that no provision in the Plan grants Plaintiffs past service
credit for purposes of benefit accruals for time worked at Old Golden Eagle.
- 20 -
[10cv2179-GPC(MDD)]
1 Moreover, they assert that Article 2.6(d) concerning Golden Eagle employees does not
2 reference Article 3 which concern benefits based on Years of Credited Service.
3
In opposition, Plaintiffs argue that Article 2.6(d), the provision that specifically
4 applies to Golden Eagle, provides that the employees’ time with OGE is considered
5 time with Liberty for eligibility, participation and vesting under Article 2 and 6. They
6 state that “participation credit” under 2.6(d) mandates past service credit with OGE
7 counts for the purposes of benefit accrual.5
8
Plaintiffs’ interpretation of the Plan is as follows: Plaintiffs contend that past
9 service credit is provided under Articles 1 and 2. Accrued Benefits are based on Years
10 of Credited Service in Article 1.69(c) which is to be determined by the Entry Date and
11 Service Termination Date. (Dkt. No. 233 at 30.) Entry Date is established in
12 “Participation Requirements” in Article 2.1(a).
Article 2.1(a) provides that an
13 employee becomes a Participant on the Entry Date following the latest of “i) the date
14 on which he completes one Eligibility Year of Service; . . iii) the date on which he first
15 performs an Hour of Service as an Eligible Employee.” (AR 2112.) Article 1.20 states
16 Eligibility Year of Service has the same meaning as Vesting Year of Service for full
17 time employees, which includes, under Article 2.6, time worked with OGE. (AR
18 2096.) An Eligible Employee is any employee employed by a Participating Employer.
19 According to Plaintiffs, they were Eligible Employees when working for OGE because
20 under Article 2.6(d), their OGE service is treated as Liberty service for eligibility.
21
Moreover, Article 1.49 defines Participant as “each Eligible Employee who
22 participates in the Plan in accordance with Article 2.” (AR 2103.) Plaintiffs are
23 Participants based on their OGE service under Article 2.6(d). Plaintiffs argue that they
24 became Eligible Employees and performed an Hour of Service upon their OGE date of
25 hire pursuant to Articles 2.1 and 2.6(d).
26
27
Plaintiffs asks the Court to expand the Plan’s definitions and provisions relating
5
The Court notes that contrary to Plaintiffs’ interpretation, Article 2.6(d) does not
28 state “participation credit” but only states “participation provisions of Article 2.” (AR
2120.) The two appear to be distinct.
- 21 -
[10cv2179-GPC(MDD)]
1 to accrued retirement benefits beyond their intended meaning. Plaintiffs argue that
2 Eligibility in a Plan equates to an Eligible Employee. Article 2 concerns Participation
3 and Service. As used in Article 2, Eligibility determines an “individual’s eligibility to
4 participate in the Plan.” Eligibility to participate in the Plan does not equate to being
5 an Eligible Employee for purposes of calculating accrued retirement benefits. Instead,
6 Article 3 covers pension benefits and defines how they are determined and calculated.
7 Article 2.6(d), upon which Plaintiffs rely, only addresses benefits under Article 2, 6,
8 and 7 and does not apply to Article 3.
9
The Court’s role is not to determine whose “interpretation of plan document is
10 most persuasive but whether the plan administrator’s interpretation is unreasonable.”
11 Martin v. Continental Cas. Co., 96 F. Supp. 2d 983, 989 (N.D. Cal. 2000) (citation
12 omitted). Based on a review of the Plan and the parties arguments and weighing the
13 conflict of interest, the Court concludes that the administrator’s interpretation of the
14 Plan was reasonable. Accordingly, the Court GRANTS Defendants’ motion for
15 summary judgment as to the first cause of action pursuant to 29 U.S.C. §
16 1132(a)(1)(B).6
17 D.
Second Cause of Action-Equitable Relief under 29 U.S.C. § 1132(a)(3)
18
Defendants argue that Plaintiffs’ § 1132(a)(3) claim fails because relief is
19 available to Plaintiffs under § 1132(a)(1)(B). Plaintiffs contend that § 1132(a)(3)
20 claims are not precluded by § 1132(a)(1)(B).
21
29 U.S.C. § 1132(a)(3) authorizes a “participant, beneficiary, or fiduciary (A)
22 to enjoin any act or practice which violates any provision of this subchapter or the
23 terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such
24 violations or (ii) to enforce any provisions of this subchapter or the terms of the
25
6
Plaintiffs also object because the administrator looked to extrinsic evidence to
26 support her decision. In response, Defendants contend that Plaintiffs submitted claims
based on what they were allegedly told at the time of the 1997 acquisition. Therefore,
27 the Board looked to documents and information created in 1997 to determine whether
there was any basis for Plaintiffs’ claims. Despite the fact that the administrator looked
28 to evidence outside the Plan to support her denial, the Court concludes her denial is
based on a reasonable interpretation of the Plan.
- 22 -
[10cv2179-GPC(MDD)]
1 plan[.]” 29 U.S.C. § 1132(a)(3).
2
The United States Supreme Court has characterized 29 U.S.C. § 1132(a)(3) as
3 a “catchall provision” that acts “as a safety net, offering appropriate equitable relief for
4 injuries caused by violations that [29 U.S.C. § 1132] does not elsewhere adequately
5 remedy.” Varity Corp. v. Howe, 516 U.S. 489, 512 (1996). The Ninth Circuit has
6 applied this holding that “[e]quitable relief under § 1132(a)(3) is not “appropriate”
7 because § 1132(a)(1) provides an adequate remedy.” Forsyth v. Humana, Inc., 114
8 F.3d 1467, 1475 (9th Cir. 1997); see Ford v. MCI Commc’ns Corp. Health and Welfare
9 Plan, 399 F.3d 1076, 1083 (9th Cir. 2005) (equitable relief not available as plaintiff
10 asserted specific claims under §§ 1132(a)(1)(B) and 1132(a)(2)), overruled on other
11 grounds by Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202 (9th Cir. 2011);
12 Rotondo v. Blue Cross of Idaho, 11cv493-EJL-CWD, 2012 WL 1664089, at *5 (D.
13 Idaho Mar. 2, 2012) (citing Ford, 399 F.3d at 1083). This applies whether plaintiff is
14 successful on his § 1132(a)(1)(B) claim or not. See Moss v. Unum Life Ins. Co., 495
15 Fed. Appx. 583, 589 (6th Cir. 2012).
16
Ninth Circuit authority also provides that “[i]n determining whether an action
17 for equitable relief is properly brought under ERISA, we look to the substance of the
18 remedy sought . . . rather than the label placed on that remedy.” Watkins v.
19 Westinghouse Hanford Co., 12 F.3d 1517, 1528 n. 5 (9th Cir.1993), cert. denied, 537
20 U.S. 1111 (2003) (citing Mertens v. Hewitt Ass., 508 U.S. 248, 254 (1993) ( “Although
21 they often dance around the word, what petitioners in fact seek is nothing other than
22 compensatory damages - monetary relief for all losses their plan sustained as a result
23 of the alleged breach of fiduciary duties. Money damages are, of course, the classic
24 form of legal relief.”)
25
“Appropriate equitable relief” does not authorize suits for money damages for
26 breach of fiduciary duty. Bast v. Prudential Ins. Co. of America, 150 F.3d 1003, 1010
27 (9th Cir. 1998) (citing Mertens v. Hewitt Assocs., 508 U.S. 248, 257-58 (1993)). In
28 Bast, the court held that an ERISA claim for restitution was a legal, not equitable
- 23 -
[10cv2179-GPC(MDD)]
1 remedy. The court affirmed the district court’s decision that to grant restitution to
2 plaintiffs would be equivalent to awarding them money damages. Bast, 150 F.3d at
3 1010; see Varity, 516 U.S. at 515 (plaintiff could not proceed under other subsections
4 of ERISA and § 1132(a)(3) was the only provision to provide a remedy and equitable
5 remedy was reinstatement, not money damages).
6
In addition, in Hoffman, a case in this district, the plaintiff brought a claim for
7 life insurance benefits under § 1132(a)(1)(B) as well as claims for the same life
8 insurance benefits on the theories of equitable estoppel and surcharge under §
9 1132(a)(3). The court held that the claims under §1132(a)(3) were barred by Varity
10 and dismissed those causes of action. Hoffman v. American Soc. For Technion-Israel
11 Inst. Of Tech., Inc., 09cv2482-BEN(KSC), 2012 WL 3647803, at *2 (S.D. Cal. Aug.
12 22, 2012). Hoffman sought life insurance benefits and also sought surcharge and
13 equitable estoppel as relief under § 1132(a)(3) for the same life insurance benefits.
14 (Case No. 09cv2482, Dkt. No. 55) (citing Biglands v. Raytheon Employee Savings and
15 Inv. Plan, 801 F. Supp. 2d 781, 787 (N.D. Ind. 2011) (“Plaintiff cannot seek a ‘legal’
16 remedy and call it an ‘equitable’ one just by labeling it a ‘surcharge,’ ‘constructive
17 trust’ and/or ‘injunction.’ The effect of any of these remedies would merely be to
18 compel the Defendant to pay benefits due under the terms of the ERISA plan all of
19 which is available under 1132(a)(1)(B).”). In response to Plaintiff’s argument, even
20 after Amara, the Court indicated that the holding in Varity remains and dismissed the
21 claims under § 1132(a)(3). Id. at *2.
22
Plaintiffs argue that the United States Supreme Court case in Amara allows them
23 to seek relief under § 1132(a)(1)(B) and §1132(a)(3). In Amara, the Supreme Court
24 held that the ERISA provision authorizing recovery of amounts due under an ERISA
25 plan did not give district court authority to reform the terms of a plan as a remedy under
26 § 1132(a)(1)(B); however, it would be authorized to reform the terms of the pension
27 plan under § 1132(a)(3). Cigna Corp. v. Amara, 131 S. Ct. 1866, 1878-80 (2011). In
28
- 24 -
[10cv2179-GPC(MDD)]
1 Amara, plaintiffs did not have a remedy under § 1132(a)(1)(B).7 It also did not address
2 whether equitable relief is available under § 1132(a)(3) if § 1132(a)(1) provides an
3 adequate remedy. Since Amara, the Ninth Circuit has not ruled on whether Amara
4 changed the nature of equitable remedies available under § 502(a)(3) in relation to
5 relief under § 502(a)(1)(B). One district court stated that Amara did not alter the ruling
6 announced in Varity. Roque v. Roofers’ Unions Welfare Trust Fund, No. 12C3788,
7 2013 WL 2242455, at *7 (N.D. Ill. May 21, 2013) (citing Biglands v. Raytheon
8 Employee Savings & Inv. Plan, 801 F. Supp. 2d 781, 786 (N.D. Ind. 2011)). In Roque,
9 the court dismissed the § 502(a)(3) claim because plaintiffs failed to show that relief
10 was unavailable under § 502(a)(1)(B)). The court also noted that a great majority of
11 circuits, including the Ninth Circuit, have interpreted Varity to hold that a claimant
12 whose injury creates a cause of action under § 1132(a)(1)(B) may not proceed with a
13 claim under § 1132(a)(3). Id. (citing Korotynska v. Metro. Life Ins. Co., 474 F.3d 101,
14 106 (4th Cir. 2006)).
15
The Court also notes that in the prior case, 05cv507-DMS(WMC), District Judge
16 Dana Sabraw dismissed Plaintiff’s claim for breach of fiduciary duty under §
17 1132(a)(3) because he sought the same relief as the first cause of action for clarification
18 of future benefits under § 1132(a)(1)(B). Moyle asserted a claim under § 1132(a)(1)(B)
19 for claims under the Plan and a breach of fiduciary duty claim under 29 U.S.C. §
20 1132(a)(3). (Case No. 05cv507-DMS(WMC), Dkt. No. 12, FAC.) While Plaintiff
21 attempted to distinguish the two claims, Judge Sabraw concluded that the relief sought
22 was the same: “an award of past service credits under his retirement plan for prior
23 service with Golden Eagle.” (Id., Dkt. No. 32 at 9.) The Court held that since Plaintiff
24 had an adequate remedy under § 1132(a)(1)(B), he could not avail himself to
25
26
7
On remand by the United States Supreme Court, the district court in Amara, in
a footnote, noted that the concern regarding the holding in Varity that relief is not
27 available under § 502(a)(3) where the same relief is available under § 502(a)(1)(B),
was “obviated when the Supreme Court held that . . . relief could not be ordered under
28 502(a)(1)(B). See Amara III, 131 S. Ct. at 1878.” Amara v. Cigna Corp., –F. Supp.
2d–, 2012 WL 6649587, *4 n. 2 (D. Conn. Dec. 20, 2012).
- 25 -
[10cv2179-GPC(MDD)]
1 alternative remedies under § 1132(a)(3). Id. On appeal, the Ninth Circuit held that the
2 district court did not err in dismissing the claim under § 1132(a)(3) as Moyle had an
3 adequate relief under 29 U.S.C. § 1132(a)(1). Moyle v. Golden Eagle Ins. Corp., 239
4 Fed. Appx. 362, 364 (9th Cir. 2007).
5
In the third amended complaint, Plaintiffs construe their claim under §
6 1132(a)(3) to allege equitable forms of relief. It seeks to reform the plan in accordance
7 with the representations made by Defendants. The third amended complaint states
8 Defendants should “provide complete credit for years they were employed by Old
9 Golden Eagle for purposes of benefits under the Plan. Once reformed, the Plan can be
10 enforced via 29 U.S.C. § 1132(a)(1)(B).” (Dkt. No. 178, TAC ¶ 83.) They also seek
11 surcharge8 “in the amount equal to the unpaid benefits.” (Id.) Plaintiffs also generally
12 seek relief in the form of equitable estoppel and restitution. (Id. ¶ 84.) Although
13 couched in terms of equitable relief, in essence, Plaintiffs seeks monetary relief for
14 their denial of past service credit benefits under the Plan. See Watkins, 12 F.3d at
15 1528 n. 5 (court is required to look at the substance of the remedy). Accordingly, the
16 Court GRANTS Defendants’ motion for summary judgment and DENIES Plaintiffs’
17 motion for summary judgment on the second cause of action pursuant to 29 U.S.C. §
18 1132(a)(3).9
19 E.
Third Cause of Action - 29 C.F.R. § 2560.503-1(h)(2)(i)
20
In the third cause of action,10 Plaintiffs allege that they requested copies of all
21 Plan documents and the administrative record for the claim, including all documents
22 concerning Plaintiffs’ contentions that they were to be provided credit for employment
23 time at Old Golden Eagle for benefits determination under the Plan pursuant to 29
24
25
26
8
Surcharge is an equitable remedy that seeks a monetary remedy against a
trustee. Amara, 131 S. Ct at 1880.
9
The Court need not address Defendants’ statute of limitations argument in light
27 of the Court’s ruling.
28
10
Plaintiffs bring this claim on behalf of themselves as individuals and not as a
class. (Dkt. No. 178, TAC ¶ 86.)
- 26 -
[10cv2179-GPC(MDD)]
1 C.F.R. § 2560.503-1(h)(2)(iii) and 29 C.F.R. § 2560.503-1(m)(8). (TAC ¶¶ 51, 87.)
2
As a matter of law, Defendants contend that summary judgment should be
3 granted on the third cause of action because statutory penalties are not available for
4 violations of these regulations. In opposition, Plaintiffs argue that penalties under 29
5 U.S.C. § 1132(c)(1) applies to the regulations. The cases that Plaintiffs cite to support
6 their argument are not persuasive as they concern cases under § 1132(c)(1) and not the
7 implementing regulations.
8
29 U.S.C. § 1132(c)(1), provides:
9
Any administrator (A) who fails to meet the requirements of paragraph
(1) or (4) of section 1166 of this title, section 1021(e)(1) of this title or
section 1021(f), or section 1025(a) of this title with respect to a
participant or beneficiary, or (B) who fails or refuses to comply with
a request for any information which such administrator is required by
this subchapter to furnish to a participant or beneficiary (unless such
failure or refusal results from matters reasonably beyond the control of
the administrator) by mailing the material requested to the last known
address of the requesting participant or beneficiary within 30 days after
such request may in the court’s discretion be personally liable to such
participant or beneficiary in the amount of up to $ 100 a day from the
date of such failure or refusal, and the court may in its discretion order
such other relief as it deems proper.
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29 U.S.C. § 1132(c)(1). The maximum penalty has been increased to $110 per day.
29 C.F.R. § 2575.502c–1.
The full and fair review regulations, 29 C.F.R. § 2560.503-1(h)(2)(iii) provide:
(h) Appeal of adverse benefit determinations-(1) In general. Every employee benefit plan shall establish and
maintain a procedure by which a claimant shall have a reasonable
opportunity to appeal an adverse benefit determination to an
appropriate named fiduciary of the plan, and under which there will be
a full and fair review of the claim and the adverse benefit
determination.
(2) Full and fair review. Except as provided in paragraphs (h)(3) and
(h)(4) of this section, the claims procedures of a plan will not be
deemed to provide a claimant with a reasonable opportunity for a full
and fair review of a claim and adverse benefit determination unless the
claims procedures-(iii) Provide that a claimant shall be provided, upon request and free of
charge, reasonable access to, and copies of, all documents, records, and
other information relevant to the claimant’s claim for benefits. Whether
a document, record, or other information is relevant to a claim for
benefits shall be determined by reference to paragraph (m)(8) of this
- 27 -
[10cv2179-GPC(MDD)]
1
2
3
4
5
6
7
8
9
section;
29 C.F.R. § 2560.503-1(h)(2)(iii). Paragraph (m)(8) provides:
A document, record, or other information shall be considered
“relevant” to a claimant’s claim if such document, record, or other
information
(i) Was relied upon in making the benefit determination;
(ii) Was submitted, considered, or generated in the course of making
the benefit determination, without regard to whether such document,
record, or other information was relied upon in making the benefit
determination;
(iii) Demonstrates compliance with the administrative processes and
safeguards required pursuant to paragraph (b)(5) of this section in
making the benefit determination; or . . . .
10 29 C.F.R. § 2560.503-1(m)(8).
11
In Sgro v. Danone Waters of N. Am., Inc., 532 F.3d 940, 944-46 (9th Cir. 2008),
12 the Ninth Circuit, in dicta, noted that 29 C.F.R. § 2560.503-1(h)(2)(iii) “gives Sgro a
13 cause of action to sue a plan ‘administrator’ who doesn’t comply with a ‘request for
14 . . . information.’ 29 U.S.C. § 1132(c)(1).” Id. at 945. The Court did not apply the
15 statute since the complaint did not state which defendant was asked for the record. Id.
16
Sgro also held that only the plan administrator is subject to the provisions of section
17 1132(c)(1). Id. at 945. Here, Plaintiffs allege this claim against the Retirement Board
18 and the Plan. The Board, as administrator, is the only Defendant subject to this
19 provision. Thus, the Court GRANTS Defendants’ motion for summary judgment as
20 to the third cause of action as to the Plan.
21
In Bielenberg, the district court held that ERISA civil penalties section, 29
22 U.S.C. § 1132(c)(1), was not applicable to violations of regulations pertaining to
23 violations of 29 U.S.C. § 1133. Bielenberg v. ODS Health Plan, Inc., 744 F. Supp. 2d
24 1130, 1143 (D. Or. 2010). The court explained that the penalty provision imposes
25 penalty against a plan administrator who“fails to meet the requirements of [29 USC §
26 1166(1) or (4), 1021(e)(1), 1021(f), or 1025(a)] with respect to a participant or
27 beneficiary” or “fails or refuses to comply with a request for any information which
28 such administrator is required by this subchapter to furnish to a participant or
- 28 -
[10cv2179-GPC(MDD)]
1 beneficiary (unless such failure or refusal results from matters reasonably beyond the
2 control of the administrator).” 29 U.S.C. § 1132(c)(1). § 1132(c)(1) does not
3 specifically list 29 C.F.R. § 2560.503-1(h)(2)(iii) as a provision subject to penalty. It
4 also stated that it was persuaded by the reasoning by three other circuits that have held
5 that § 1132(c) may not be used to impose civil liability for a violation of 29 U.S.C. §
6 1133(c) and implementing regulations, including 29 C.F.R. § 2560.503-1(h)(2)(iii).
7 Id. at 1144-45. The Bielenberg court stated,
8
9
10
11
12
13
14
15
16
17
18
the Third, Sixth, Seventh, and Eighth Circuits have held that 29 USC
§ 1132(c) may not be used to impose civil liability for the violation of
29 USC § 1133 or regulations implemented pursuant thereto. Brown
v. J.B. Hunt Transport Servs., Inc., 586 F.3d 1079, 1089 (8th Cir.
2009) (“[W]e agree with our sister circuits that a plan administrator
may not be penalized under § 1132(c) for a violation of the regulations
to § 1133”) (citing cases); Wilczynski v. Lumbermens Mut. Cas. Co.,
93 F.3d 397, 405–06 (7th Cir. 1996). These cases reason that the
underlying regulation (29 CFR § 2560.503–1(h)) speaks only to the
obligations of benefit plans (as opposed to plan administrators) and is
based on a statute (29 USC § 1133) which pertains only to claims for
benefits. As with the regulation at issue in Brown, the statutory
authority for 29 CFR § 2560.503–1(h)(2)(iii) is 29 USC § 1133 which
pertains to “claims for benefits.” Similarly, as did the regulations at
issue in Wilczynski, the regulation at issue here “speaks only to the
obligations of benefit plans” and, therefore, “section 1132(c) cannot be
used to impose civil liability for the violation of section 1133 alleged.”
Wilczynski, 93 F.3d at 406.
19 Id. at 1143-44. While the Bielenberg court acknowledged Sgro, it concluded that the
20 issue was never reached and found the other circuits’ reasoning persuasive. See also
21 Konty v. Liberty Life Assur. Co. of Boston, 12cv467-KI, 2012 WL 5363545, at *4 (D.
22 Or. Oct. 30, 2012) (after considering the cases, the court determined that violation of
23 29 C.F.R. § 2560.503-1(j) cannot trigger penalties under section 1132 because the
24 documents called for in the regulation do not fall within the list of documents listed by
25 § 1132).
26
The Court finds the reasoning and analysis in Bielenberg persuasive. Plaintiffs
27 may not seek 29 U.S.C. § 1132 penalties for violations of 29 C.F.R. § 2560.50328 1(h)(2)(iii). Accordingly, as a matter of law, the Court GRANTS Defendants’ motion
- 29 -
[10cv2179-GPC(MDD)]
1 for summary judgment as to the third cause of action under 29 C.F.R. § 2560.5032 1(h)(2)(iii).
3 F.
Fourth Cause of Action - Violation of 29 C.F.R. § 2520.102-3(l) and 29
4
C.F.R. § 2520.102-2(a) against all Defendants
5
Plaintiffs allege violations of the ERISA regulations, 29 C.F.R. §§ 2520.102-3(l)
6 and 2520.102-2(a), against all Defendants11 on the theory that the summary plan
7 descriptions (“SPDs”) did not appropriately disclose the fact that although prior years
8 of service with Old Golden Eagle would be included for purposes of eligibility,
9 vesting, early retirement and spousal benefits, they would not be included in the
10 calculation of the pension benefit.12 They also argue that the SPDs were required to
11 provide examples of benefit calculations specifically for participants who were former
12 employees of Old Golden Eagle. Lastly, they maintain that the SPDs should have
13 explained that no transitioning employee would accrue retirement benefits for any work
14
11
The Plan administrator is responsible for publishing and distributing the SPDs.
15 29 U.S.C. § 1024(b)(1). Defendants LMGI, LMIC and the Plan move for summary
judgment arguing they are improper defendants. Plaintiffs do not oppose. LMGI,
16 LMIC and the Plan are not the plan administrators. Therefore, the Court GRANTS
Defendants LMGI, LMIC and the Plan’s motion for summary judgment as not being
17 the proper Defendants under this cause of action.
18
19
20
21
22
23
24
25
26
27
28
12
The Court notes that the fourth cause of action alleges only a violation of the
implementing regulations concerning SPDs. Then, in their moving brief, Plaintiffs’
heading on the fourth cause of action states “Plaintiffs are Entitled to Equitable Relief
under 502(a)(3) Because Defendants Breached Their Fiduciary Duty by Failing to
Provide Compliant SPDs.” (Dkt. No 213-1 at 34.) The fourth cause of action in the
third amended complaint does not allege breach of fiduciary duty or a cause of action
under § 502(a)(3). It does seek equitable relief in the form of reformation and
surcharge. Furthermore, the discussion that follows in Plaintiffs’ brief on the fourth
cause of action is based on violation of the statute, 29 U.S.C. § 1022, not the standard
for breach of fiduciary duty. (Id. at 34-42.) It is not clear what legal theory Plaintiffs
seek relief.
If a claim is not properly alleged in the complaint, it is not properly before the
Court. Pickern v. Pier 1 Imports, Inc., 457 F.3d 963, 968-69 (9th Cir. 2006) (affirming
district court’s ruling that complaint failed to comply with notice pleading requirements
of Rule 8 because plaintiff raised issues in response to a motion for summary judgment
that went beyond the allegations in the complaint); see also Wasco Prods., Inc. v.
Southwall Techs., Inc., 435 F.3d 989, 992 (9th Cir. 2005) (plaintiff could not raise
claim for the first time in opposition to a summary judgment motion if it was not
alleged in the complaint). Despite the shortcomings in the third amended complaint,
Defendants do not object to these allegations. Therefore, the Court will address the
merits of Plaintiffs’ allegations.
- 30 -
[10cv2179-GPC(MDD)]
1 done prior to the date the takeover was consummated: October 1, 1997. Defendants
2 argue that the SPDs were compliant.
3
The purpose of the SPDs is to provide a brief restatement of the plan. Stahl v.
4 Tony’s Bldg. Materials, Inc., 875 F.2d 1404, 1409 (9th Cir. 1989). 29 U.S.C. § 1022(a)
5 provides that the “summary plan description . . . shall be written in a manner calculated
6 to be understood by the average plan participant, and shall be sufficiently accurate and
7 comprehensive to reasonably apprise such participants and beneficiaries of their rights
8 and obligations under the plan.” 29 U.S.C. § 1022(a). It also states that the SPDs must
9 contain “circumstances which may result in disqualification, ineligibility, or denial or
10 loss of benefits.” 29 U.S.C. § 1022(b).
11
The implementing regulation, 29 C.F.R. § 2520.102-3(1), also requires that SPDs
12 contain a “statement clearly identifying circumstances which may result in
13 disqualification, ineligibility, or denial, loss, forfeiture, suspension, offset, reduction,
14 or recovery.” 29 C.F.R. § 2520.102-3(l). 29 C.F.R. § 2520.102-2(a) further provides
15 the “summary plan description shall be written in a manner calculated to be understood
16 by the average plan participant and shall be sufficiently comprehensive to apprise the
17 plan’s participants and beneficiaries of their rights and obligations under the plan.”
18 29 C.F.R. § 2520.102-2(a).
19
29 U.S.C. § 1022(b) has been interpreted to mean that the SPD “must be specific
20 enough to enable the ordinary employee to sense when there is a danger that benefits
21 could be lost or diminished.” Stahl, 875 F.2d at 1408. An ERISA fiduciary has an
22 obligation to convey complete and accurate information material to the beneficiary’s
23 circumstance, even when a beneficiary has not specifically asked for the information.
24 Bins v. Exxon Co. U.S.A., 189 F.3d 929, 939 (9th Cir. 1999).
25
The 1998 and 2000 versions of the SPDs concerning vesting, calculation of
26 benefits and years of credited service restated similar provisions from the Plan with no
27 reference to Golden Eagle. It contained provisions concerning “eligibility,” “vesting,”
28 “years of credited service,” and how to calculate pension benefits. (AR 2351, 2352,
- 31 -
[10cv2179-GPC(MDD)]
1 2354, 2356.) Under “years of credited service,” the SPD stated that full time
2 employees do not receive credit during any period “you were not an eligible
3 employee.” (AR 2356.) Moreover, the SPD stated that the “amount of the benefit
4 depends on your years of service with the Company, and your pay.” (AR 2351.)
5
In 2001, Defendant amended and restated the Liberty Mutual Retirement Benefit
6 Plan. In 2001, the SPD stated,
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Past service credit with certain employers who either became part of
the Liberty Mutual Group and adopted the Retirement Plan, or from
whom you are directly hired into the Liberty Mutual Group, is credited
for eligibility, vesting, early retirement and spouse’s benefits purposes
as defined below, subject to the Plan’s break in service rules, for: . . .
Golden Eagle Insurance Corporation employees who were employed
as of October 1, 1997 for service with Golden Eagle Insurance Co.
(AR 2412.) The SPD also addressed pension benefits for acquired corporations with
pe-existing pension plans and explained the circumstances where former employees of
these latter acquired corporations may receive credit for service with prior employers
for purposes of benefit accrual. (AR 2417-23.) In 2009, the word “solely” was added
to the SPD and stated “[p]ast service credit . . .is credited solely for eligibility, vesting,
early retirement and spouse’s benefit purposes below . . . .” (AR 3150) (emphasis
added).
The annual SPDs were mailed to Plan participants. The 2001 - 2008 SPDs state
that past service credit with Old Golden Eagle “is credited for eligibility, vesting, early
retirement, and spouse’s benefits purposes.” (AR 2412, 2444, 2476, 2510, 2545, 2582,
2619, 2658.) Defendants provided SPDs in 1998 and 2000-2008. (AR 2350-69
(1998); AR 2370-91 (2000); AR 2392-2420 (2001); AR 2425-55 (2002); AR 2456-88
(2003); AR 2489-2522 (2004); AR 2423-57 (2005); AR 2558-94 (2006); (AR 25952631 (2007); AR 2632-75 (2008).)
Defendants argue that they did not violate the disclosure statute because
Plaintiffs could not be disqualified or ineligible for benefits they were never qualified
or eligible for. Plaintiffs allege that the SPDs violate ERISA and its regulations by
omitting that past service credit will not be credited for benefit accrual. Specifically,
- 32 -
[10cv2179-GPC(MDD)]
1 they contend that the failure to state and omitting past service credit is considered a
2 circumstance concerning disqualification and ineligibility and Defendants materially
3 misled employees regarding past service credit by omitting that OGE employees were
4 ineligible or disqualified for past service credit for pension benefit accrual.
5
Here, the Plan and the SPD provide similar language concerning eligibility and
6 participation in the Plan. Both also do not affirmatively state that prior years of service
7 at OGE do not count for benefit accrual purposes. No discrepancy or conflict exist
8 between the Plan and the SPD.
9
Plaintiffs have not provided any legal authority that failure to include language
10 that past service credit with a prior employer does not count towards benefit accrual
11 purposes, when such benefits were not offered by the prior employer, constitutes
12 disqualification or ineligibility and a violation of § 1022(a). The employees at OGE
13 did not participate in a defined benefit pension plan. (AR 3066.) It was only when
14 they began working at GEIC, on October 1, 1997, that they began receiving this added
15 benefit to participate in a defined benefit pension plan. Therefore, the fact that they
16 were not informed that their past service credit with OGE would not count towards
17 benefit accrual under the defined benefit pension plan cannot constitute disqualification
18 or ineligibility as contemplated under the statute. Accordingly, Plaintiffs have not
19 demonstrated a violation of 29 U.S.C. § 1022(a) and 29 C.F.R. § 2520.102-3(l).
20
Plaintiffs cite to cases that are not supportive to the facts of their case. For
21 example, Plaintiffs cite to Vasquez where the factual background is similar to the
22 instant case but the legal issue is different. Vazquez v. Cargill, Inc., 509 F. Supp. 2d
23 903 (C.D. Cal. 2007). Vazquez concerned a discrepancy between the Plan document
24 and the SPD. Id. In that case, the plaintiffs worked at the same oil facility for many
25 years. Hunt-Wesson owned the factory for years until it was acquired by Cargill,
26 Incorporated. Id. at 905. The plaintiffs contend that when Cargill acquired the facility
27 and employed them, it promised they would receive pension benefits for their years of
28 service for both Hunt-Wesson and Cargill. They also argued that the SPD stated that
- 33 -
[10cv2179-GPC(MDD)]
1 they would receive pension benefits for their years of service at Hunt-Wesson. Id.
2 Defendants argued that Plaintiffs were not entitled to past years of service at Hunt3 Wesson because the Plan document expressly excluded prior years of service. Id. In
4 looking at the discrepancy between the Plan document and the SPD, the court held that
5 the SPD controlled and concluded that Plaintiffs were entitled to receive pension
6 benefits for their years of service at Hunt-Wesson. Id. Unlike Vazquez, a conflict
7 does not exist between the Plan and the SPD. In fact, the Plan and SPD both do not
8 state that past service credit at OGE will not be credited for purposes of benefit accrual.
9
10
Vazquez does not hold that such an omission is a violation of ERISA.
In Wilkins, it was common for plaintiff’s employer to underreport his earning
11 to the pension fund and the plaintiff alleged that he did not receive all the retirement
12 benefits he was entitled to. Wilkins v. Mason Tenders Dist. Council Pension Fund, 445
13 F.3d 572, 584 (2d Cir. 2006) (administrator violated SPD disclosure requirement by
14 omitting the policy to require participants to show some proof of covered employment
15 as a condition to receiving benefits.). While ERISA does not prevent the Pension Fund
16 from requiring Plaintiff to produce some proof that he performed work for which he
17 did not receive credit before it awards him additional benefit, the court concluded that
18 notice should have been included in the Fund’s SPD. Id. The court held that “we hold
19 that where it is the policy of a fund to require participants to produce records of
20 covered employment in the event of employer underreporting, particularly where the
21 fund has a demonstrated history of underreporting, the fund’s failure to mention that
22 policy in its SPD is a violation of 29 U.S.C. § 1022(b) and its regulations.” Id. at 585.
23 In Wilkins, the plaintiff was harmed by failing to be informed that he needed to provide
24 proof of his employment, such as keeping his pay stubs.
25
Unlike Vazquez or Wilkins, Plaintiffs have not demonstrated they have been
26 harmed by Defendants’ failure to state they would not get past service credit for their
27 time worked at OGE. Even if the SPD were faulty and the proper language was
28 provided in the SPDs that limited their pension benefit accrual to when they started
- 34 -
[10cv2179-GPC(MDD)]
1 work on October 1, 1997, Plaintiffs would still be in the same position as they are now.
2 Under the current SPD, Plaintiffs did not receive pension benefits based on their years
3 of service while at OGE. Even with a corrected SPD, Plaintiffs still would not receive
4 pension benefits based on their years of service. They have not been denied benefits
5 or been harmed based on the alleged faulty SPD.13
6
Plaintiffs also assert that Defendants violated 29 U.S.C. § 1024(b)(1)14 by failing
7 to provide participants with a Summary of Material Modifications (“SMM”) or an
8 amended SPD to notify plan participants of material changes or modifications within
9 210 days of the end of the plan year. Defendants do not dispute this fact and admit that
10 no SMM, and within 210 days of the acquisition, no SPD were prepared for the
11 addition of about 1,166 OGE employees added to the already existing18,000 employees
12 in the plan because it was not deemed material. (Dkt. No. 212-3, Connolly Decl. ¶¶ 36,
13 37; Dkt. No. 212-23, Abel Decl., Ex. 9, MacWilliams Depo. at 57:2-58:5.)
14
29 U.S.C. § 1024(b)(1) and 29 C.F.R. § 2520.104b-3 require that a material
15 modification be furnished to each participant within 210 days after the close of the plan
16 year in which the modification or change was adopted. The Ninth Circuit and many
17
13
While the Ninth Circuit has not definitively held whether a plaintiff must
18 demonstrate reliance on the SPD to his or her detriment, other courts have. See GroszSalomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1162 (9th Cir. 2001); see also
19 Senkier v. Hartford Life & Acc. Ins. Co., 948 F.2d 1050, 1051 (7th Cir. 1991) (must
demonstrate reliance on SPD concerning conflict between SPD and Plan); Ruotolo v.
20 Sherwin-William Co., 622 F.Supp. 546, 550 (D.C. Conn. 1985) (plaintiff is entitled to
recover only if he can establish that he lost disability benefits as a result of his reliance
21 on deficiencies in summary plan description); Govoni v. Bricklayers, Masons &
Plasterers Int’l Union, 732 F.2d 250, 252-53 (1st Cir. 1984) (to procure relief under §
22 1022, the participant must “show some significant reliance upon, or possible prejudice
flowing from, the faulty plan description.”).
23
Defendants argue that Plaintiffs have not shown that they relied on the SPDs.
Plaintiffs argue that reliance can be presumed or inferred based on the facts. Plaintiffs
24 Rollason and Arwood stated that they did not rely on an SPD or Plan document. (Dkt.
No. 212-25, Abel Decl., Ex. 11, Rollason Depo. at 100:21-24; Dkt. No. 212-16, Abel
25 Decl., Ex. 2, Arwood Depo. at 66:23-67:3.) Arwood testified that her basis for
believing she would get past service credit was based on the one employee meeting she
26 attended on 54th Street. (Dkt. No. 212-16, Arwood Depo. at 66:23-67:3.) Based on
the record, it does not appear that Plaintiffs have alleged or shown they relied on the
27 alleged faulty SPD.
28
14
The Court notes that this allegation was not alleged in the third amended
complaint. (Dkt. No. 178.)
- 35 -
[10cv2179-GPC(MDD)]
1 other circuits have not addressed what constitutes a “material modification” to justify
2 the issuance of an SMM or amended SPD.
3
Here, Plaintiffs received the SPDs in 1998 and 2000 but the SPDs were based
4 on the preexisting 1987 Plan. The 1987 and 2001 Plans have similar provisions
5 concerning Definitions, Participation and Service, and Normal Retirement Benefits.
6 (AR 3490, 2079.) In 2001, Article 2.6(d) was added to address the addition of OGE
7 employees. (AR 2120.) It is not clear whether the requirements of 29 U.S.C. §
8 1024(b)(1) and 29 C.F.R. § 2520.104b-3 apply to the instant case. As to the existing
9 Plan participants of Liberty Mutual, the addition of OGE to the Plan was probably not
10 a material modification from the prior plan since it did not affect their benefits. As to
11 the new participants, the OGE employees, it is not clear whether being added as a new
12 participant is considered a “material modification” as contemplated under the statute.
13 Accordingly, Plaintiffs’ contention is not persuasive.
14
Plaintiffs also allege that the SPDs failed to provide examples of benefit
15 calculations for participants who were former employees of OGE and cite to Layaou
16 v. Xerox Corp., 238 F.3d 205 (2d Cir. 2001) where the Second Circuit held the SPD
17 was inadequate because it failed to include that future benefits would be offset by
18 appreciated value of their prior distributions and did not give any examples of
19 calculating their benefits. Id. at 213. Defendants contend that Plaintiffs have
20 overreached their interpretation of Layaou and cite to another Second Circuit case of
21 McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 197 (2d Cir. 2007). In that case,
22 the court stated we “do not consider the dicta in the Layaou opinion to signify that
23 ERISA imposes a blanket requirement under which a Summary Plan Description
24 invariably must describe the method of calculating an actuarial reduction or must use
25 a clarifying example to illustrate how a benefit is actuarially reduced when a participant
26 who has vested rights to receive a particular plan benefit chooses to receive payments
27 before reaching normal retirement age.” Id. at 197. Layaou concerned a situation
28 where calculating benefit was important because the benefits were reduced based on
- 36 -
[10cv2179-GPC(MDD)]
1 the work history of the employee. Here, there are no issues as to the different methods
2 of calculating benefits. There was no reduction in pension benefits that needed to be
3 calculated to provide employees with notice. In fact, Plaintiffs were provided with
4 added pension benefits which began on the date of the changeover on October 1, 1997.
5 Therefore, Plaintiffs’ argument that the SPD must describe the method of benefit
6 calculation is without merit.
7
Third, Plaintiffs assert the SPDs “should have explained that no transitioning
8 employee would accrue retirement benefits for any work done prior to the date the
9 takeover was consummated: October 1, 1997.” (Dkt. No. 213 at 34.) Defendants
10 maintain that such information would decrease clarity and simplicity because October
11 1, 1997 was not the beginning date for every transitioning OGE employee. For
12 example, Moyle worked at Liberty Mutual prior to working at OGE. (Dkt. No. 232-27,
13 Abel Decl., Ex. 20, Moyle Depo. at 22:14-23:1.) Therefore, the”break in service” rules
14 applied to Moyle. (AR 2352-53.)
15
The date of October 1, 1997 and the mention of OGE first appeared in the 2001
16 SPD. There, it specifically stated that employees employed as of October 1, 1997
17 would receive past service credit for “eligibility, vesting, early retirement and spouse’s
18 benefits purposes.” (AR 2412.) This provision provides similar language as the Plan
19 and provides sufficient notice that past service credit would be limited to certain
20 circumstances.
21
As to the fourth cause of action, the Court GRANTS Defendants’ motion for
22 summary judgment and DENIES Plaintiffs’ motion for summary judgment.
23 G.
Plaintiffs’ Motion for Summary Adjudication on Defendants’ Affirmative
24
Defense
25
In their motion for partial summary judgment, Plaintiffs move for summary
26 judgment on Defendants’ Third Affirmative Defense regarding reliance; Seventeenth
27 and Forty Third Affirmative Defenses arguing that Plaintiffs cannot obtain equitable
28 relief of surcharge, restitution and reformation. Since the Court GRANTS Defendants’
- 37 -
[10cv2179-GPC(MDD)]
1 motion for summary judgment and DENIES Plaintiffs’ motion for summary judgment
2 on the second and fourth cause of action, the Court denies as MOOT Plaintiffs’ motion
3 for summary judgment on Defendants’ third, seventeenth and forty third affirmative
4 defenses.
5 H.
Evidentiary Objections
6
Plaintiffs filed objections to Defendants’ evidence in opposition to Plaintiffs’
7 motion for summary judgment. (Dkt. No 239-1.) Plaintiffs also filed objections to
8 Defendants’ evidence in support of Plaintiffs’ opposition to Defendants’ motion for
9 summary judgment. (Dkt. No. 233-1.) The Court notes Plaintiffs’ objections. To the
10 extent that the evidence is proper under the Federal Rules of Evidence, the Court
11 considered the evidence. To the extent that the evidence is not proper, the Court did
12 not consider them.
13 I.
Request for Judicial Notice
14
Plaintiffs filed a request for judicial notice as to three documents: Ex. 71,
15 Reporter’s Transcript of Proceedings, Insurance Commissioner of the State of
16 California vs. Golden Eagle Insurance Company, et al. (CON004711-4889). Ex. 72,
17 Reporter’s Transcript of Proceedings, Geoff Moyle v. Golden Eagle Ins. Corp., et al.
18 (Case No. 05CV0507-DMS) dated Friday, November 4, 2005; Ex. 74, Order
19 Approving Sale of Golden Eagle To Liberty Mutual Insurance Company After
20 Evidentiary Hearing and Waiver of Insurance Code Sec. 1012 Hearing Rights,
21 Insurance Commissioner of the State of California vs. Golden Eagle Insurance
22 Company, et al. (CON003741-3743). (Dkt. NO. 233-3.) No opposition has been filed.
23 The Court finds these documents appropriate for judicial notice and GRANTS
24 Plaintiffs’ request for judicial notice.
25 / / / /
26 / / / /
27 / / / /
28 / / / /
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[10cv2179-GPC(MDD)]
1
2
Conclusion
Based on the above, the Court GRANTS Defendants’ motion for summary
3 judgment on all causes of action in the third amended complaint; and DENIES
4 Plaintiffs’ motion for summary judgment as to the second and fourth causes of action.
5
IT IS SO ORDERED.
6
7 DATED: July 1, 2013
8
9
HON. GONZALO P. CURIEL
United States District Judge
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[10cv2179-GPC(MDD)]
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