Connecticut Independent Utility Workers Local 12924 et al v. Connecticut Natural Gas Inc et al
ORDER: Defendants' Motion 37 to Dismiss is GRANTED in part and DENIED in part. Signed by Judge Janet Bond Arterton on 06/14/2013. (Bonneau, J)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
CONNECTICUT INDEPENDENT UTILITY
WORKERS LOCAL 12924, et al.,
CONNETICUT NATURAL GAS CORPORATION,
UIL HOLDINGS CORPORATION, et al.,
Civil No. 3:12cv961 (JBA)
June 14, 2013
RULING ON DEFENDANTS’ MOTION TO DISMISS
On November 21, 2012, Plaintiffs Connecticut Utility Workers Local 12924,
Robert Eubanks, Emmerich Fellinger, Mark Whelden, and Martin Ritter (hereinafter
collectively, “the Union”), and Ronald Holmes, Rollin Cowels, Roosevelt Bright, Francis
Csekovsky, Robert Messenger, Peter Moschetto, Joan Polzun, and Carl Schaeffer
(hereinafter collectively, “the Plaintiff Retirees”) filed a Second Amended Verified
Complaint [Doc. # 35] against Defendants Connecticut Natural Corporation (“CNG”),
UIL Holdings Corporation (“UIL”), UIL Benefits Administration Committee, Angel
Bruno, Steven Favuzza, William Manniel, Diane Pivirotto, Joseph Thomas, Patricia
Cosgel, Christopher Malone, Richard Nasman, and John Prete (hereinafter collectively
“the Benefits Administration Committee”), UIL Holdings Corporation Retiree Health
Plan for Selected Employees, UIL Holdings Corporation Cafeteria Plan for Selected
Employees—Plan No. 531, and UIL Holdings Corporation Employee Health Plan—Plan
No. 532, alleging violations of the Labor–Management Relations Act, 29 U.S.C. § 185
(“LMRA”) and the Employee Retirement Income Security Act of 1974, 29 U.S.C.
§§ 1132(a)(1)(B) and (a)(3) (“ERISA”). Defendants now move [Doc. # 37] pursuant to
Federal Rule of Civil Procedure 12(b)(6) to dismiss all of Plaintiffs’ claims. For the
following reasons, Defendants’ motion to dismiss is granted in part and denied in part.
In 1991, CNG and the Union entered into a Collective Bargaining Agreement
(“CBA”), which set the maximum payments CNG would make toward retiree major
medical insurance premiums. (2d Am. Compl. [Doc. # 35] ¶ 46.) In 1994, CNG and the
Union renewed this agreement via a letter (the “Contract”) memorializing the parties’
understanding regarding the maximum premium payments:
In 1991, [CNG] and the Union negotiated a reduction of the lifetime
maximum from $1,000,000 to $250,000 on major medical, and also set
[CNG] maximum premium payments for retirees. [CNG] made the
following commitment; which we renew by this letter: If any employee’s
balance in his/her major medical maximum reaches a balance of $250,000,
and the premiums for medical insurance reach a level of $375 for single or
$750 for family coverage, the Company will hold discussions with the
Union for the purposes of reviewing both the lifetime maximum and the
(Contract, Ex. 1-A to 2d Am. Compl.; 2d Am. Compl. ¶ 47.) At first, CNG, UIL, and the
Benefits Administration Committee made the premium calculations as agreed to by the
parties, but at some point in time after the Contract was signed, CNG, UIL, and the
Benefits Administration Committee unilaterally changed the method of calculating the
maximum premium payments for retiree medical insurance policies, by reducing the
maximum premium payments or the ‘cap’ applied to various medical insurance policies
by varying percentages, such that the maximum premium payments made by CNG are
reduced and the amount of the premium that retirees must pay is increased. (2d Am.
Compl. ¶¶ 49–50, 52.) Defendants also unilaterally blended the dependent caps for
retiree health benefit plans (id. ¶ 69), though Plaintiffs were not notified of this change
until April 1, 2012 (id. ¶ 53).
CNG, UIL, and the Benefits Administration Committee formerly calculated
premium payments for retired and active employees separately, but at some point in time,
Defendants began pooling the two groups of employees together for the purpose of
calculating premium payments. (Id. ¶ 76.) Plaintiffs first learned of this change in
practice on April 1, 2012. (Id.) Since that time, Defendants have separated retired and
active employees into two pools, but continue to charge both groups the single pooled
rate, thereby increasing the premiums of active employees. (Id. ¶¶ 77–78.) As a result of
the changes, on May 4, 2012, June 7, 2012, and August 3, 2012, Plaintiffs submitted
ERISA document disclosure requests to the CNG Benefits Administrator, seeking the
most recent and previous summary plan descriptions, prior bargaining agreements, and
other instruments under which the benefits plans are operated. (Id. ¶ 83.) Defendants
replied to these requests by letter on June 1, 2012, and June 20, 2012, but have not
provided full responses to each of Plaintiffs’ request for documents and clarification. (Id.
As a preliminary matter, Defendants have attached copies of the 1994 CBA and
the correspondence related to Plaintiffs’ ERISA document requests to their motion to
dismiss, and argue that the Court should consider these documents in ruling on the
motion. The Second Circuit has recognized that “when a plaintiff chooses not to attach
to the complaint or incorporate by reference a document upon which it solely relies and
which is integral to the complaint, the court may nevertheless take the document into
consideration in deciding the defendant’s motion to dismiss, without converting the
proceeding into one for summary judgment.” Int’l Audiotext Network, Inc. v. American
Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir. 1992). “Where a document is not incorporated by
reference, the court may never[the]less consider it where the complaint ‘relies heavily
upon its terms and effect,’ thereby rendering the document ‘integral’ to the complaint.”
DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010) (quoting Mangiafico v.
Blumenthal, 471 F.3d 391, 398 (2d Cir. 2006)).
“However, ‘even if a document is
“integral” to the complaint, it must be clear on the record that no dispute exists regarding
the authenticity or accuracy of the document. It must also be clear that there exist no
material disputed issues of fact regarding the relevance of the document.’” Id. (quoting
Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 2006)).
“To survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Although detailed allegations are not required, a claim will be found facially
plausible only if “the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556
U.S. at 678. Conclusory allegations are not sufficient. Id. at 678–79; see also Fed. R. Civ. P.
Plaintiffs object to the Court’s consideration of these documents at this stage in
the litigation, arguing that they did not incorporate by reference or rely on the CBA and
the correspondence in the Second Amended Verified Complaint, and that they therefore
should not be considered until after discovery has concluded. Though Plaintiffs make
general reference to a CBA in the Second Amended Verified Complaint (see 2d Am.
Compl. ¶ 46), at oral argument Plaintiffs’ counsel clarified that any such mention refers to
the 1994 letter and not to the CBA submitted by Defendants. Thus, the Court will not
consider the CBA in ruling on the pending motion. However, the Second Amended
Verified Complaint does make reference to the ERISA document request
correspondence. (See id. ¶¶ 83–84.) Therefore, the Court will deem these documents to
have been incorporated by reference into the Second Amended Verified Complaint. See
DiFolco, 622 F.3d at 112 (“Because DiFolco referred in her complaint to her e–mails to
Kaplan of August 23, 2005, and August 24, 2005, the District Court could deem them
incorporated in the complaint and therefore subject to consideration in its review of the
adequacy of the complaint.”).
Defendants argue that Plaintiffs lack standing to bring Counts One and Two,
which allege breach of contract pursuant to § 301 of the LMRA, because they did not
retire while the CBA was in force. Plaintiffs do not dispute that in order for a party to
demonstrate standing to sue under a collective bargaining agreement, it must be
established that he or she was a party to the collective bargaining agreement during the
term of the contract. See American Fed’n Grain Millers, AFL–CIO v. Int’l Multifoods
Corp., 116 F.3d 976, 979–80 (2d Cir. 1997). However, Plaintiffs argue that the operative
agreement in this dispute is the Contract, and contest Defendants’ description of that
agreement as a “side letter” to the CBA.
Plaintiffs assert that the Contract is an
independent agreement that is still in force and constitutes a collective bargaining
See Black’s Law Dictionary (9th ed. 2009) (a “collective–bargaining
agreement” is “[a] contract between an employer and a labor union regulating
employment conditions, wages, benefits, and grievances”).
The terms of the Contract, while referencing the 1991 CBA negotiations (“In
1991, the Company and the Union negotiated a reduction of the lifetime maximum from
$1,000,000 to $250,000 on major medical, and also set Company maximum premium
payments for retirees.”), do not specifically state that the letter is meant to be
incorporated into the CBA. Defendants argue that because the Contract purports to
“renew” the 1991 commitment to hold discussions with the Union, and because the letter
was sent within a month of the expiration of the 1991–1994 CBA, the Contract must be a
side letter to the 1994 CBA.
While the term “renew” does suggest that the 1991
agreement would have expired absent the Contract, it is not clear from the four corners of
the Contract that the previous 1991 agreement was a part of the 1991–1994 CBA, or that
the renewal of the promise to hold discussions with the Union was linked to the renewal
of the CBA in 1994. To consider the temporal relationship between the Contract and the
renewal of the CBA would entail a consideration of extrinsic evidence, which is an
analysis that is more appropriately undertaken after the parties have had the opportunity
to develop the record.
Furthermore, assuming that the Contract was intended to create an agreement
independent of the CBA, there is no clear language in the letter that would suggest an
expiration date of the agreement. The only temporal language in the Contract is that
CNG agrees to hold discussions with the Union “[i]f any employee’s balance in his/her
major medical maximum reaches a balance of $250,000, and the premiums for medical
insurance reach a level of $375 for single or $750 for family coverage.” While this
language describes when CNG’s obligations under the Contract could be triggered, and
when a breach might occur, it does not by its plain terms indicate a specific date as a
temporal limitation on CNG’s duty to hold discussions with the Union. Therefore, based
on the information currently before the Court, Plaintiffs have alleged sufficient facts to
show that there was an unexpired contract under which they retired, and thus have
standing to bring Counts One and Two.
Defendants also argue that Counts One and Two should be dismissed because
they were filed after the statute of limitations expired. “When a federal statute does not
establish a period of limitations for actions brought to enforce it, the district court’s task
is to borrow the most suitable statute or other rule of timeliness from some other source.
Muto v. CBS Corp., 688 F.3d 53, 57 (2d Cir. 2012). “Because Congress did not provide a
statute of limitations for suits brought under § 301 [of the LMRA], this Court determines
the statute of limitations for the federal cause of action by looking at the most appropriate
state statute of limitations.” Local 802, Assoc. Musicians v. Parker Meridien Hotel, 145
F.3d 85, 87 (2d Cir. 1998). Under Connecticut law, an action for breach of contract is
subject to a six–year statute of limitations. See Conn. Gen. Stat. § 52-576(a). Defendants
argue that because the CBA expired on November 30, 1997, the statute of limitations on
any § 301 claim would have run by November 30, 2003, nearly nine years before this
action was filed. On its face, the Contract is not unambiguously linked to the expiration
date of the CBA. Therefore, for the purposes of this motion to dismiss, Plaintiffs have
alleged sufficient facts to show that the Contract is an independent agreement that is still
Nonetheless, Defendants argue that even if the Contract represents an
independent agreement, Plaintiffs’ breach of contract claim would have accrued at the
time of the alleged breach, rather than at the time Plaintiffs first became aware of this
breach, as Plaintiffs contend in their opposition. 2 (See Pls.’ Opp’n [Doc. # 41] at 8–10.)
Even if the Court were to conclude that Plaintiffs’ cause of action accrued at the time of
the breach, rather than at the time of discovery, there is nothing on the face of the
Complaint or in the documents properly before the Court that establishes when
Defendants first unilaterally changed the method for calculating premiums. Thus, at this
time, there are insufficient facts for the Court to determine when the Contract was first
breached. Because Defendants’ “statute of limitations argument is an affirmative defense
for which [they] bear the burden of proof,” United States v. Livecchi, No. 09-1979-cv,
“Even where a federal court borrows a state statute of limitations, federal law
governs the question of when a federal claim accrues.” M.D. v. Southington Bd. Of Educ.,
334 F.3d 217, 221 (2d Cir. 2003) (internal citations and quotation marks omitted).
“Under federal law, a cause of action generally accrues when the plaintiff knows or has
reason to know of the injury that is the basis of the action.” Id. (internal citations and
quotation marks omitted). Defendants argue that in a contract action, the cause of action
accrues at the time of breach, and not at the time of discovery, but the case they rely on in
support of that proposition is a Second Circuit case applying New York law to state–law
claims. See T&N PLC v. Fred S. James & Co. of New York, Inc., 29 F.3d 57 (2d. Cir. 1994).
Here, it would appear that Plaintiffs’ cause of action accrued at the time they knew or
should have known that Defendants had unilaterally changed the method for calculating
the premium caps, which the Second Amended Verified Complaint alleges was on April
1, 2012. Defendants argue that Plaintiffs must have been aware of the changed premium
calculations before that date because they paid the enhanced premiums for years.
However, this argument assumes facts not currently in the record at the motion to
2013 WL 1296464, at *6 (2d Cir. Apr. 2, 2013), Defendants’ motion to dismiss is denied
on this ground.
Counts One Through Four
In Counts One through Four of the Second Amended Verified Complaint,
Plaintiffs allege breach of contract in violation of § 301 of the LMRA (Counts One and
Two), and violation of the Retiree Health Plan pursuant to § 502 of ERISA (Counts Three
and Four).3 Defendants argue that each of these counts should be dismissed for failure to
state a claim for which relief can be granted because Plaintiffs fail to show that they had a
vested right in the set premium caps.
Defendants first argue that Plaintiffs cannot show that the maximum premium
contribution amount was reduced within the plain meaning of the Contract and the plan.
The Contract states that CNG and the Union had negotiated the “maximum premium
payments for retirees,” and the Employee Benefits Handbook explains that “[t]he cap
represents the maximum amount the Company will contribute each year toward plan
costs, even if costs rise. . . . All such retired participants will have financial responsibility
for . . . any other applicable cost sharing (e.g. contributions, deductibles, coinsurance,
copayments) that the individual may require. That means that retirees’ cost sharing may
increase, while the Company’s maximum contribution will remain fixed,” (Employee
Benefits Handbook, Ex. 3 to 2d Am. Compl. at 17.) Defendants claim that by this
language, they agreed only to pay no more than the amount of the cap, and that the cap
represented merely a ceiling above which Defendants’ contributions would not rise,
At oral argument, Plaintiffs’ counsel clarified that Plaintiffs allege four breaches:
(1) Defendants imposed under-the-cap contributions, (2) Defendants increased Plaintiffs’
premiums, (3) Defendants blended dependent caps, and (4) Defendants pooled active and
retired employees without passing the savings along to plan members.
rather than a floor below which their contributions could not fall.
Defendants claim that the clear language of the plan explains that the plan participants
remain obligated to pay additional “contributions” which could increase the premiums
they are required to pay. Thus, Defendants argue, because they never agreed to pay the
full amount of the cap, Defendants would fulfill their contractual obligations by paying
any amount up to the cap, and therefore increasing Plaintiffs’ “under–the–cap”
contributions violated neither the Contract nor the plan.
In support of this argument, Defendants rely on case law interpreting the terms
“maximum” and “cap” as a ceiling, rather than a floor, on the amount owed, and the term
“contribution” as an employee’s contribution to an insurance premium, rather than an
out–of–pocket expense. See Bauer v. Kraft Foods Global, Inc., No. 11-cv-15 (BBC), 2012
WL 3962907, at *3 (W.D. Wis. Aug. 7, 2012) (“[E]mployee ‘contributions’ in the
insurance context are defined consistently as meaning the employee’s contribution to the
insurance premiums rather than any out of pocket expense.” (citing New York State Court
Officers Ass’n v. Hite, 851 F. Supp. 2d 575 (S.D.N.Y. 2012))). Plaintiffs do not dispute the
general interpretations of these terms. Rather, Plaintiffs argue that the Contract sets out
an implicit promise by CNG to pay all health insurance premiums up to the cap.
Otherwise, Plaintiffs argue, CNG’s promise to hold discussions with the Union if the
premium payments reached the cap would be meaningless, because it could simply
reduce its premium contribution to avoid ever triggering this obligation. Furthermore,
Plaintiffs dispute Defendants’ reading of the plan description.
Plaintiffs argue that
because the term “contribution” appears in a list with other out–of–pocket expenses, such
as “deductibles” and “copayments,” in this instance, the term should be interpreted to
mean an additional out–of–pocket expense, rather than an additional premium payment.
Based on this reading, the plan would not make plan participants responsible for under–
the–cap payments such as the ones imposed by Defendants.
Defendants also argue that Counts One through Four fail because Plaintiffs
cannot establish that they had a vested right to a fixed premium payment under the plan.
“Under ERISA, it is the general rule that an employee welfare benefit plan is not vested
and that an employer has the right to terminate or unilaterally to amend the plan at any
time.” Schonholz v. Long Island Jewish Med. Ctr, 87 F.3d 72, 77 (2d Cir. 1996). Cf. Grain
Millers, 116 F.3d at 979 (“The rule under section 301 is similar—after a CBA expires, an
employer generally is free to modify or terminate any retiree medical benefits that the
employer provided pursuant to that CBA.”). An employer’s agreement to vest welfare
benefits, however, binds that employer and will be enforced. Id.; see also Devlin v. Empire
Blue Cross & Blue Shield (Devlin II), 274 F.3d 76, 82 (2d Cir. 2001) (“[E]ven though
Empire is ‘generally free’ to modify its life insurance plan, if Empire promised vested
benefits, those benefits will be enforced.”) “If a plaintiff can point to ambiguous language
that is reasonably susceptible to interpretation as a promise to vest, that plaintiff is
entitled to get to a trial.” Peterson v. Windham Cmty. Mem’l Hosp., Inc., 803 F. Supp. 2d
96, 102 (D. Conn. 2011) (citing Devlin II, 274 F.3d at 83–85). Defendants argue that
Plaintiffs fail to point to any such language in the plan, and that the reservation of rights
clause is determinative of whether or not Plaintiffs’ benefits vested under the plan.
The Employee Benefits Handbook states:
Although the Company intends to continue the plans described in this
Benefit Handbook indefinitely, the Company reserve[s] the right to
change or end a plan for any reason, at any time. Any change or
amendment affecting union employees is, of course, subject to the terms
and provisions of the collectively bargained agreement.
(Employee Benefits Handbook at 128; see also id. at 145.) The Second Circuit has
recognized that “if an employer has not promised vested benefits in a SPD, and the
employer expressly reserves the right to terminate the plan in the SPD, benefits promised
in the SPD are not vested.” Grain Millers, 116 F.3d at 982. “This is true even if the same
plan document also contains language that could otherwise reasonably be construed as a
promise to vest.” Argay v. Nat’l Grid USA Serv. Co., No. 11-3698-cv, 2012 WL 5860518,
at *1 (2d Cir. Nov. 20, 2012) (citing Abbruscato v. Empire Blue Cross & Blue Shield, 274
F.3d 90, 94, 100 (2d Cir. 2001)). Thus, Defendants focus on this language to argue that
regardless of what Plaintiffs may point to in the plan documents or in the Contract,
Plaintiffs’ benefits could not have vested.
Plaintiffs contend, however, that because the reservation of rights clause is
“subject to the terms and provisions of the collectively bargained agreement,” and
because the Contract creates an implicit promise by CNG to pay all premium costs up to
the cap, they have alleged sufficient facts to withstand Defendants’ motion to dismiss.
Plaintiffs point to no case law that supports such a reading of the reservation of rights
clause. Furthermore, Plaintiffs’ briefing does not identify specific language that could be
reasonably interpreted as promising vested benefits. The only language Plaintiffs point to
is the renewed commitment in the Contract that
[i]f any employee’s balance in his/her major medical maximum reaches a
balance of $250,000, and the premiums for medical insurance reach a level
of $375 for single or $750 for family coverage, the Company will hold
discussions with the Union for the purposes of reviewing both the lifetime
maximum and the premium sharing.
Defendants argue that such language is easily distinguishable from language that has
previously been interpreted as creating vested benefits. For example, in Devlin II, the
Second Circuit found that the plaintiffs had raised a genuine issue of material fact as to
whether a plan created vested benefits where it stated that “retired employees, after
completion of twenty years of full–time permanent service and at least age 55 will be
insured.” Devlin II, 274 F.3d at 85 (emphasis in original). The Contract does not contain
any language similar to the “will be insured” phrase on which Devlin II relied.
Furthermore, Plaintiffs offer no case in which language similar to the language in
the Contract was found to be reasonably susceptible to the interpretation that it created
vested benefits. The fact that the Contract contains no obvious time limitation on CNG’s
obligation to enter into discussions with the Union does not convert it into a promise for
“The fact that the plan could be read to promise benefits for an
‘indefinite’ period does not mean a promise of ‘lifetime’ benefits as a matter of law. The
absence of duration language in a plan document does not create a binding obligation to
vest benefits.” Adams v. Tetley USA, Inc., 363 F. Supp. 2d 94, 104 (D. Conn. 2005). The
Contract makes no mention of the continuation of benefits. It contains only a promise to
hold discussions4 to review the premium caps if they are ever reached. While this
promise may assume that the plan will continue to exist, Defendants clearly reserved their
rights to terminate or amend the plan in the plan documents. Therefore, it does not
appear that there is any language that could reasonably be interpreted as creating vested
benefits. The Court thus grants Defendants’ motion to dismiss as to Counts One through
Defendants make much of Plaintiffs’ conflation of the term “discussions” with
the term “negotiations” in their briefing, but it appears that these terms can be used
interchangeably. See Pertec Computer, 284 N.L.R.B. 810, 817 (1987) (“I find that the term
‘discuss’ in the contract was not intended to connote a distinction other than the often
understood meaning, to negotiate or bargain.”) At oral argument, Plaintiffs’ counsel did
not immediately identify the failure to hold discussions as one of the breaches alleged in
the Second Amended Verified Complaint. However, when pressed, he stated that
Defendants breached the Contract by failing to negotiate.
Counts Five and Six
In Counts Five and Six of the Second Amended Verified Complaint, Plaintiffs
allege that Defendants breached their fiduciary duty in violation of ERISA by changing
the manner in which premium contributions were calculated. (See 2d Am. Compl. ¶¶
Defendants argue that these claims fail as a matter of law because the
modification of an ERISA welfare benefits plan is not a fiduciary act. The Supreme Court
has stated that “[p]lan sponsors who alter the terms of a plan do not fall into the category
of fiduciaries.” Lockheed Corp. v. Spink, 517 U.S. 882, 890 (1996); see also Hughes Aircraft
Co. v. Jacobson, 525 U.S. 432, 443–44 (1999) (“In general, an employer’s decision to
amend a pension plan concerns the composition or design of the plan itself and does not
implicate the employer’s fiduciary duties which consist of such actions as the
administration of the plan’s assets.”) “[E]mployers or other plan sponsors are generally
free under ERISA, for any reason at any time, to adopt modify, or terminate welfare
plans. When employers undertake those actions, they do not act as fiduciaries.” Spink,
517 U.S. at 890 (internal citations and quotation marks omitted). Thus, where benefits
are not vested, the imposition of or change in a benefits cap would not implicate fiduciary
duties under a plan. See Blake v. H–2A and H–2B Voluntary Employees’ Beneficiary Ass’n,
952 F. Supp. 927, 936 (D. Conn. 1997) (holding that plan sponsors did not act as
fiduciaries in amending the plan to include a benefits cap where benefits had not vested
and the plan included an express reservation of rights to amend, modify, or terminate the
Plaintiffs contend that the combined language of the plan and the Contract
indicates that benefits had vested. The Second Circuit has recognized that where benefits
are vested, a reduction in benefits may constitute “a breach of contractual promise to vest
such benefits.” Devlin II, 274 F.3d at 88. In Devlin II, the Second Circuit reasoned that
“[i]t therefore follows that Empire may have exercised discretionary authority with
respect to the plan, and Empire’s unilateral reduction in benefits and its communications
about this reduction may have violated the plan documents and, in turn, ERISA
§ 404(a)(1)(D).” Id. However, the plan language in this case is distinguishable from the
language at issue in Devlin II, and could not be interpreted as promising vested benefits.
Because Plaintiffs benefits were not vested, Defendants’ actions in changing the method
of calculating the premium contribution did not implicate their fiduciary duties under
ERISA. See Adams, 363 F. Supp. 2d at 108 (citing Devlin II, 274 F.3d at 88). The Court
therefore grants Defendants’ motion to dismiss Counts Five and Six.
Counts Seven and Eight
In Counts Seven and Eight, Plaintiffs allege that Defendants breached their
fiduciary duty in failing to notify Plaintiffs of a material modification to the plan. (See 2d
Am. Compl. ¶¶ 134–53.) Defendants argue that these claims should be dismissed because
the calculation examples and SPD provided to Plaintiffs (see Exs. 2 and 3 to 2d Am.
Compl.) were sufficient to inform Plaintiffs of the cost sharing features of the plan.
However, Defendants do not cite to any language in the plan documents that notified
Plaintiffs of a change in the premium calculation, even if the new calculation was
described in those documents. The documents also do not appear to give any indication
that Defendants had blended the active and retired employee premiums. Plaintiffs have
alleged that they received notice of these changes via alternate channels, and not from the
plan documents. Therefore, it appears that Plaintiffs have alleged sufficient facts to show
that they received insufficient notice of the changes to the premium calculations.
Defendants also argue that even if the Court were to find that the information
provided to plan participants was insufficient, Plaintiffs claims should be dismissed
because they have not established “likely prejudice.” “In order to maintain a breach of
fiduciary duty claim based on failure to provide an SPD, a plaintiff must make a showing
of ‘likely prejudice,’ meaning that he or she ‘was likely to have been harmed’ where no
SPD has been distributed.” Peterson, 803 F. Supp. 2d at 107 (quoting Weinreb v. Hosp. for
Joint Diseases Orthopaedic Inst., 404 F.3d 167, 171 (2d Cir. 2005)). Defendants argue that
because they had the absolute right to amend, modify, or terminate the plan, Plaintiffs
could not have been prejudiced by any lack of notice of the changes implemented by
Defendants. However, Plaintiffs maintain that they can establish likely prejudice because
Defendants’ failure to notify them of the changes to the premium contributions robbed
them of the opportunity to bargain regarding those changes, an opportunity they had
arguably been promised as a part of the Contract. Because Plaintiffs have claimed that
they lost the opportunity to bargain for a more favorable plan as a result of Defendants’
failure to notify them of plan changes, they have alleged sufficient facts to establish likely
prejudice and to state a claim for relief on Counts Seven and Eight. Cf. Peterson, 803 F.
Supp. 2d at 107 (“By demonstrating that he forewent other job opportunities because he
had not seen the SPDs and accordingly did not know that his retirement health benefits
could be terminated, Peterson has demonstrated a genuine issue of material fact as to
whether he was likely to have been harmed by the failure to provide SPDs.” (internal
citations and quotation marks omitted)). Defendants’ motion to dismiss is therefore
denied with respect to Counts Seven and Eight.
Counts Nine and Ten
In Counts Nine and Ten of the Second Amended Verified Complaint, Plaintiffs
allege ERISA promissory estoppel. (See 2d Am. Compl. ¶¶ 154–73.) To succeed on their
promissory estoppel claims, Plaintiffs “must prove (1) a promise, (2) reliance on the
promise, (3) injury caused by the reliance, and (4) an injustice if the promise is not
enforced, and must adduce facts sufficient to satisfy an ‘extraordinary circumstances’
requirement as well.” Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101, 109 (2d Cir.
“In order to satisfy the ‘extraordinary circumstance’ requirement of ERISA
estoppel, a plaintiff must demonstrate that the surrounding circumstances are beyond
those required to satisfy the ordinary elements of estoppel; he or she must show that the
employer used the promise to intentionally induce a particular behavior on plaintiff’s part
only to renege on that promise after inducing the sought after behavior.” Peterson, 803 F.
Supp. 2d at 105 (internal citations and quotation marks omitted). Defendants argue that
Counts Nine and Ten should be dismissed because Plaintiffs have established neither a
promise to vest benefits nor “extraordinary circumstances” as a result of reliance on that
Plaintiffs have not established that the terms of the plan documents or the
Contract could be plausibly interpreted as promising vested benefits such that Defendants
agreed to pay all expenses up to the premium cap in perpetuity. Therefore, Plaintiffs
cannot establish the first element of their ERISA estoppel claim. See id. at 106 (“Without
written language that can reasonably be interpreted as a promise to provide lifetime
benefits, as discussed above, Peterson’s estoppel claim must necessarily fail.”); Adams, 363
F. Supp. 2d at 110 (“Plaintiffs’ claim fails on the first element because they can point to no
language in any SPD or any informal communication from Tetley that reasonably could
be construed as a promise of lifetime benefits.”). Therefore, Defendants’ motion to
dismiss Counts Nine and Ten is granted.
In Count Eleven of the Second Amended Verified Complaint, Plaintiffs allege that
Defendants breached their fiduciary duty by charging active employees excessive
(See 2d Am. Compl. ¶¶ 174–80.)
In support of their argument that
Defendants’ blending of the caps for active and retired employees constituted a breach of
fiduciary duty, Plaintiffs rely on Toussaint v. JJ Wesier & Co., No. 04 Civ. 2592 (MBM),
2005 WL 356834 (S.D.N.Y. Feb. 13, 2005), for the proposition that charging participants
excessive premium payments would constitute a breach of fiduciary duty. In Toussaint,
the court addressed only whether the plaintiff had alleged sufficient facts to show that the
defendants were fiduciaries in that they performed more than ministerial functions in
administering the plan, and whether the plaintiff’s claims sounded in fraud such that they
would be subject to the heightened pleading standard of Federal Rule of Civil Procedure
9(b). The specific issue of whether or not such an allegation could constitute a fiduciary
breach was not before the court, but it appears from the ruling that the court assumed for
the purposes of the opinion that charging excessive premiums could constitute a breach
of fiduciary duty. In response to these claims Defendants reiterate their arguments that
amendments to the structure of a non–vested welfare benefit plan do not implicate
ERISA’s fiduciary duties. However, a decision to charge excessive premiums could
plausibly implicate the management of plan funds—in that the plan was collecting
additional premiums for profit, rather than in the best interest of the plan participants—
as opposed to a simple change in the structure of the plan, and therefore, accepting all
facts in the Second Amended Verified Complaint as true, it appears that Plaintiffs have
alleged sufficient facts to state a claim for fiduciary breach based on Defendants’ decision
to charge excessive premiums. Thus, the Court denies Defendants’ motion to dismiss as
to Count Eleven.
Counts Twelve Through Fourteen
In Counts Twelve through Fourteen of the Second Amended Verified Complaint,
Plaintiffs allege that Defendants violated § 104(b)(4) of ERISA by failing to fully respond
to several information requests. Defendants first claim that Plaintiffs cannot name
Defendants CNG and UI in these counts because they are not plan “administrators,” and
as such, they are not subject to the provisions of § 104(b)(4). Plaintiffs do not appear to
dispute that only the plan administrator can be named in these counts, but they argue
that they have alleged that CNG and UI are plan administrators (see 2d Am. Compl. ¶¶
29–30), and therefore dismissal at this stage would be improper. Defendants do no more
than argue that only the Committee is an administrator of the plan; they point to no
deficiencies in Plaintiffs’ allegations that would require the Court’s conclusion that CNG
and UI were not administrators as a matter of law. Furthermore, the Employee Benefits
Handbook states that CNG is the plan sponsor and administrator.
Benefits Handbook at 126.) Thus, the Court will reserve judgment as to whether CNG
and UI are plan administrators until the record can be more fully developed via
Defendants also argue that they have fully responded to Plaintiffs’ document
requests, and that even if they had not, Plaintiffs have failed to allege sufficient facts to
show that the documents requested are subject to disclosure under § 104(b)(4).5
As discussed above, Plaintiffs argue that the document requests and responses
were not incorporate by reference in the Second Amended Verified Complaint and as
However, based on Plaintiffs’ August 3, 2012 letter (see Document Requests, Ex. B to
Defs.’ Mem. Supp.), Plaintiffs appear to have been requesting additional documents even
after Defendants’ last correspondence with them on June 20, 2012 (see id. (“[P]lease
provide me with the name of the plan applicable to active employees of CNG who are
members of Local 12924, and the applicable plan documents and summary plan
documents.”)). Thus, Plaintiffs have alleged sufficient facts to establish that there are still
document requests to which Defendants have not responded.
The Second Circuit has recognized that § 104(b)(4) creates only a limited
disclosure requirement on the part of plan administrators. See Bd. of Trustees of the
CWA/ITU Negotiated Pension Plan v. Weinstein, 107 F.3d 139, 147 (2d Cir. 1997)
(“Congress intentionally fashioned § 104(b)(4) to limit the categories of documents that
administrators must disclose on demand of plan participants[;] we think it inappropriate
to infer an unlimited disclosure obligation on the basis of general provisions that say
nothing about disclosure.”). Specifically, § 104(b)(4) provides that a plan administrator
must provide the “latest updated summary plan description, plan description, and the
latest annual report, any terminal report, the bargaining agreement, trust agreement,
contract, or other instruments under which the plan is established or operated.”
Second Circuit has interpreted “other instruments” to mean “formal documents that
govern the plan, not  all documents by means of which the plan conducts operations.”
Weinstein, 107 F.3d at 143. Defendants object that none of the categories of documents
requested by Plaintiffs fall into this category.
such, should not be considered by the Court in ruling on the motion to dismiss. Because
the Second Amended Verified Complaint describes the specific letters and numbered
document requests to which Defendants purportedly failed to respond, the Court will
consider these documents in evaluating Defendants’ motion to dismiss.
Specifically, Defendants claim that they were not required to provide calculation
worksheets or outdated plan descriptions. See Bilello v. JPMorgan Chase Retirement Plan,
649 F. Supp. 2d 142, 169–70 (S.D.N.Y. 2009) (“A calculation worksheet is not a formal
document governing a plan, but rather is an instrument by means of which the plan
conducts operations. . . . Defendants [are] not . . . required to provide any SPDs besides
the latest updated summary plan description.” (internal citations and quotation marks
omitted)); see also Jackson v. E.J. Brach Corp., 937 F. Supp. 735, 739 (N.D. Il. 1996) (“We
begin with plaintiffs’ requests for out–dated documents, such as old SPDs, annual reports
We are not convinced that section 502(c) requires a plan
administrator to provide such documents. . . . Outdated reports, summaries and
modifications . . . do not fall into either category [of documents required to be
produced].”). It would appear that any requests for calculation worksheets or outdated
SPDs are not cognizable pursuant to § 104(b)(4). However, in Bilello, the district court
held that the defendants were required to disclose any formal plan documents from the
previous plan periods that were still being used to administer the plan in effect at the time
that suit was filed. See id. at 170 (“The defendants’ motion to dismiss Counts 10 and 11,
therefore, is granted except for that portion of these claims which encompasses any
formal plan documents from the period before 2002 which were still being used to
operate the plan that was in effect in 2007.”).
Thus, to the extent that Plaintiffs’ claims in Counts Twelve to Fourteen refer to
Defendants’ failure to produce calculation worksheets or outdated SPDs, they are not
actionable. However, without a full record of what was disclosed, the Court cannot
determine whether Defendants fully complied with Plaintiffs’ document requests with
respect to any formal documents from previous plan periods that were being used to
administer the plan in effect in 2012. Thus, with respect to these claims, the Court denies
Defendants’ motion to dismiss Counts Twelve, Thirteen, and Fourteen.
For the foregoing reasons, Defendants’ Motion [Doc. # 37] to Dismiss is
GRANTED with respect to Counts One, Two, Three, Four, Five, Six, Nine, and Ten, and
DENIED with respect to Counts Seven, Eight, and Eleven, and with respect to Counts
Twelve, Thirteen, and Fourteen to the extent that they refer to Defendants’ failure to
provide formal documents from previous plan periods that were being used to administer
the plan in 2012.
IT IS SO ORDERED.
Janet Bond Arterton, U.S.D.J.
Dated at New Haven, Connecticut this 14th day of June, 2013.
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