Hartman v. Dana Holding Corporation et al
Filing
35
OPINION AND ORDER GRANTING IN PART and DENYING IN PART 22 MOTION for Summary Judgment filed by Elaine Hartman. The motion is granted as to Pla's statutory penalty claim, but denied as to her breach of fiduciary duty claims. Clerk DIRECTED to e nter judgment for the statutory penalty in the amount of $4,470 in favor of Pla and against Dfts. Dft's 24 MOTION for Summary Judgment filed by Weatherhead-UAW Combined Hourly Employee Pension Plan, Dana Holding Corporation is GRANTED as to the breach of fiduciary duty claims, but DENIED as to the statutory penalty claim. To the extent Pla is seeking attorney fees, she is to file a motion as outlined. Signed by Magistrate Judge Roger B Cosbey on 10/21/2013. (lns)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
ELAINE HARTMAN,
Plaintiff,
v.
DANA HOLDING CORPORATION and
WEATHERHEAD-UAW COMBINED
HOURLY EMPLOYEE PENSION PLAN,
and its successors,
Defendants.
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CAUSE NO. 1:12-CV-445
OPINION AND ORDER
I. INTRODUCTION
In April 2011, Plaintiff Elaine Hartman’s husband, Robert Hartman, passed away. Mr.
Hartman was a former employee of Weatherhead Company (“Weatherhead”), Dana Holding
Corporation’s (“Dana”) predecessor and, at the time of his death, was receiving a pension from
Weatherhead. After he died, Mrs. Hartman contacted Dana to inquire about her survivor annuity
and was told her husband had elected against it in 1979. Mrs. Hartman then requested the plan
document and summary plan description (“SPD”), together with her husband’s election form and
the spousal waiver form, in effect in 1979.
Months later, and after a series of unproductive communications with Dana staff, who
indicated that they were still looking for the 1979 plan documents, Mrs. Hartman brought this
suit against Dana and the Weatherhead-UAW Combined Hourly Employee Pension Plan1 under
1
Defendants assert that Mr. Hartman’s pension was actually with the Weatherhead Company Pension Plan
for Salaried Employees (Defs.’ Br. in Supp. of Mot. for Summ. J. (“Defs.’ Br. in Supp.”) 2 n.1), which Mrs. Hartman
does not dispute. As such, Dana Holding Corporation and the Weatherhead Pension Plan for Salaried Employees are
the proper Defendants here.
29 U.S.C. § 1132(a)(1)(A) and (c)(1), better known as § 502(a)(1)(A) and (c)(1) of the Employee
Retirement Income Security Act (“ERISA”), seeking statutory penalties against Dana for its
failure to provide the documents she requested as well as attorney’s fees.2 She further alleges
that Dana breached its fiduciary duty to her under 29 U.S.C. §§ 1132(a)(2) and 1109 and failed
to establish and maintain a reasonable claims procedure as required by 29 U.S.C. § 1133.
Both Mrs. Hartman and Defendants have now moved for summary judgment. (Docket #
22, 24.) Defendants primarily argue that Mrs. Hartman lacks standing to assert her claims and
that, even if she did have standing, ERISA does not impose a penalty for failure to provide what
they characterize as historical documents. (Docket # 25, 27, 34.) Mrs. Hartman asserts, among
other arguments, that she does have standing as a beneficiary with a colorable claim to benefits
and that ERISA requires production of the documents she sought if requested, thereby
warranting the imposition of a statutory penalty. (Docket # 23, 28, 29.)
For the following reasons, both Mrs. Hartman’s and Defendants’ motions for summary
judgment will be GRANTED IN PART and DENIED IN PART.
II. FACTUAL BACKGROUND
Robert Hartman worked for Weatherhead for over twenty-four years, until his early
retirement in 1976. (Hartman Aff. ¶ 3, Exs. 1, 2; see Schlievert Aff. Ex. A at 71, 73.3) As a
salaried employee, he participated in the Weatherhead Division Pension Plan for Salaried
2
Accordingly, subject matter jurisdiction arises under 28 U.S.C. § 1331. Jurisdiction of the undersigned
Magistrate Judge is based on 28 U.S.C. § 636(c), all parties consenting. (See Docket # 17.)
3
When citing to the exhibits to the Schlievert Affidavit, the Court cites to the page number at the bottom
right-hand corner, which provides “DEF ___.”
2
Employees (the “Plan”). (Holmes Aff. ¶ 3.4) In March 1978, Mr. Hartman received a letter from
Weatherhead regarding his deferred vested pension, which he could elect to receive once he
turned fifty-five years old. (Hartman Aff. Ex. 2; Schlievert Aff. Ex. A at 71.) The letter
informed Mr. Hartman of the following:
If you are married at the time your pension is to commence, it will be paid in a form
having the effect of a 50% joint and survivor annuity. This means that you will
receive a pension for life, but if you die leaving your spouse as a survivor, your
spouse will receive, for his or her lifetime, 50% of the pension to which you are
entitled.
You may elect to have your pension paid in a form other than that described above.
The other forms of payment available to you will be described in detail at the time
you elect to have your pension commence.
(Hartman Aff. Ex. 2; Schlievert Aff. Ex. A at 71.)
In 1979, Dana Corporation, which later became Dana Holding Corporation, purchased
Weatherhead. (Holmes Aff. ¶ 4.) Dana Limited, a subsidiary of Dana Holding Corporation,
now sponsors and administers the Plan. (Holmes Aff. ¶ 4.)
Mr. Hartman turned fifty-five in May 1979 (see Hartman Aff. Ex. 1), and Weatherhead
sent him an election letter with a cover letter stating that a request for early commencement of
his pension was enclosed and instructing him to sign the original and return it to Weatherhead
(Hartman Aff. Ex. 3; Schlievert Aff. Ex. A at 65). The enclosed election letter provided the
following: “I understand that due to early commencement of my Deferred Vested Pension I will
receive $96.15 per month on a Life Only Basis. I understand that upon my death no further
payments will be made.” (Hartman Aff. Ex. 3; Schlievert Aff. Ex. A at 66.) Mr. Hartman
4
Holmes has two Affidavits of record; the first, dated August 5, 2013, is cited herein as “Holmes Aff. ¶
__,” and the second, dated September 6, 2013, is cited as “Holmes Aff. ¶ __, Sept. 6, 2013.”
3
subsequently signed this election form and returned it to Weatherhead. (Hartman Aff. Ex. 3;
Schlievert Aff. Ex. A at 59.) Elaine Hartman, Mr. Hartman’s wife, maintains that at all times
surrounding her husband’s election and receipt of his pension benefit, he consistently told her
that she would be entitled to a survivor annuity if she survived him.5 (Hartman Aff. ¶ 4.)
According to Mrs. Hartman, she never signed a spousal waiver. (Hartman Aff. ¶ 10.)
In April 2011, Mr. Hartman passed away. (Hartman Aff. ¶ 5.) Shortly thereafter, Mrs.
Hartman contacted Dana to inquire about her survivor annuity and, in response, received a letter
dated May 6, 2011, from Dana. (Hartman Aff. ¶¶ 5-6, Ex. 4; Schlievert Aff. Ex. A at 55.) The
letter informed Mrs. Hartman that Dana was confirming any benefits she or any other survivors
may be entitled to, which could take up to ten days, and instructed her to contact the Dana
Service Pension Center with any questions. (Hartman Aff. Ex. 4; Schlievert Aff. Ex. A at 55.)
Over three months later, Mrs. Hartman received a second letter from Dana, informing her that
her husband had been receiving a single life annuity pension with no further benefits payable
after death. (Hartman Aff. Ex. 5; Schlievert Aff. Ex. A at 56.)
On January 16, 2012, Mrs. Hartman and her attorney, Douglas Powers, called the Dana
Pension Service Center to inquire about her survivor annuity. (Hartman Aff. ¶ 11(a).) A
representative told them that the Dana Pension Service Center would look into the situation and
report back, but neither Mrs. Hartman nor Mr. Powers received any response by the end of
January. (Hartman Aff. ¶¶ 11(a)-(b).) Throughout the next three months, Mrs. Hartman or her
5
The potential survivor benefit for Mrs. Hartman, who is 81 years old, would be $48.07 a month. (Pl.’s
Mem. in Supp. of Her Mot. for Summ. J. (“Pl.’s Mem. in Supp.”) 1.) By choosing a life only annuity, Mr. Hartman
received an additional $10 per month for 31 years and 10 months, giving him $3,800 over what he otherwise would
have received in pension benefits during his lifetime. (Pl.’s Resp. to Defs.’ Mot. for Summ. J. 1; Defs.’ Reply In
Supp. of Its Mot. for Summ. J. 1 n.1.)
4
attorney spoke to staff from the Dana Pension Service Center multiple times, inquiring about her
survivor annuity and repeatedly requesting her husband’s election form, a spousal waiver form,
the Plan document, and the SPD in effect when Mr. Hartman made his election in 1979. (See
Hartman Aff. ¶¶ 11(b)-(i); Powers Aff. ¶¶ 3(a)-(d).) Some time after Mr. Powers called the Dana
Pension Service Center in April 2012 (see Hartman Aff. ¶ 11(g)), Mrs. Hartman received from
Dana a SPD for all Weatherhead benefits, including the Plan, which contained a handwritten
notation stating, “Effective April 15, 1986 - April 1, 1989” (Hartman Aff. ¶ 11(h), Ex. 6). This
SPD provided that before a participant with a spouse can elect to receive a pension with no
reduction for a survivor benefit, “federal law dictates that [the] spouse give written, witnessed
consent to that election.” (Hartman Aff. ¶ 11(h), Ex. 6 at 35.) By this point, Mrs. Hartman still
had not received her husband’s election form, any spousal waiver, or the Plan document or SPD
from 1979.
At the beginning of May, after yet another phone call from Mr. Powers, a Dana Pension
Service Center representative suggested that Mrs. Hartman send a formal appeal letter to the
Dana Appeals Board in Lincolnshire, Illinois, and provided him with an address. (Powers Aff. ¶
3(e).) Mr. Powers subsequently sent a formal appeal letter via certified mail to the Dana Pension
Center Appeals Board in Lincolnshire, Illinois, on May 15, 2012. (Powers Aff. ¶ 3(f); Hartman
Aff. Ex. 7.) The return receipt indicates that the letter was received on May 17, 2012. (Powers
Aff. ¶ 3(f); Hartman Aff. Ex. 7 at 10.) The appeal letter details Mrs. Hartman’s and Mr.
Powers’s communications with Dana and the Dana Pension Service Center and asserts that
Dana’s failure to provide 1979 Plan-related documents, including the Plan document, the SPD,
Mr. Hartman’s election form, and Mrs. Hartman’s spousal waiver form, exposed Dana to a per
5
diem statutory penalty. (Hartman Aff. Ex. 7 at 1-4.)
After another unproductive phone call to the Dana Pension Service Center at the end of
May inquiring about the appeals process (Powers Aff. ¶ 3(g)), Mr. Powers was informed on June
5, 2012, that there had been a delay in processing the appeal because it should have been sent to
Toledo, Ohio, rather than Lincolnshire, Illinois, and that a decision could take as long as ninety
days. (Powers Aff. ¶ 3(h).) Later that day, Mr. Powers received a call from Sylvester Holmes, a
member of the Dana corporate legal staff, who apologized for the delay in resolving Mrs.
Hartman’s claims. (Powers Aff. ¶ 3(i).) Mr. Holmes stated that he would email Mr. Hartman’s
election form to Mr. Powers and, after Mr. Powers reiterated the request for the relevant
documents in effect in 1979, represented that Dana could not locate these documents, but would
keep looking for them. (Powers Aff. ¶ 3(i); Holmes Aff. ¶ 7.)
On June 6, 2012, Mr. Holmes emailed a copy of Mr. Hartman’s election form, without
the cover letter, to Mr. Powers. (Powers Aff. ¶ 3(j), Ex. A; Holmes Aff. ¶ 8.) In August, as the
ninety-day decision period neared and then passed, Mr. Powers called the Dana Pension Service
Center three more times. (Powers Aff. ¶¶ 3(k)-(m).) During the last call, Mr. Powers was
advised that Dana had instructed its pension service center not to answer any more questions
about Mrs. Hartman’s claim. (Powers Aff. ¶ 3(m).)
Shortly thereafter, on September 7, 2012, Mr. Powers called Mr. Holmes, inquiring about
the status of Mrs. Hartman’s claim. (Powers Aff. ¶ 3(n).) Mr. Holmes stated that he considered
his June 6th email attaching Mr. Hartman’s election letter to have resolved her claim. (Powers
Aff. ¶ 3(n).) Mr. Powers then sent a letter on September 10, 2012, outlining the shortcomings he
perceived in Dana’s handling of Mrs. Hartman’s claims. (Powers Aff. ¶ 3(o); Compl. Ex. 8.)
6
When Mr. Powers called Mr. Holmes the following month, Mr. Holmes confirmed receipt of this
letter and reiterated that he considered the claim resolved. (Powers Aff. ¶ 3(p).)
Mrs. Hartman subsequently brought suit against Dana and the Plan in December 2012.
(Powers Aff. ¶ 4; see Docket # 1.) As part of the litigation, Mr. Powers served discovery
requests, to which Defendants responded on July 1, 2013, enclosing the 1986 Plan with the
explanation that it was the oldest copy of the pension plan that Dana could locate. (Powers Aff.
¶¶ 5-6, Ex. D; see Holmes Aff. ¶ 14, Ex. B.) On August 5, 2013, in response to Mrs. Hartman’s
motion for summary judgment, Mr. Holmes averred that, although Dana maintains an archive of
various plan documents and makes a good faith effort to retain them, it could not locate the exact
version of the Plan in effect when Mr. Hartman made his election in 1979, despite its good faith
efforts to locate these documents. (Holmes Aff. ¶ 13.) By way of explanation, Mr. Holmes
represented that Dana, through its third party administrator, administers plans for over 40,000
retired, deferred vested, and active participants, who are entitled to receive benefits in over fifty
plans that have been amended multiple times; as such, keeping track of all these plans and
versions is not easy, especially here, when the operative version of the plan relates to
approximately the same time Dana purchased Weatherhead. (Holmes Aff. ¶ 12.)
But on September 6, 2013, Mr. Holmes revealed that two days earlier Dana had located
the SPD in effect in May 1979 when Mr. Hartman signed his election form. (Holmes Aff. ¶¶ 5,
6, Sept. 6, 2013.) The SPD does not contain a provision requiring spousal consent; Mr. Holmes
represents that if the 1979 Plan included such a provision, it would have been required to be
mentioned in the SPD. (Holmes Aff. ¶ 7, Sept. 6, 2013.)
7
III. SUMMARY JUDGMENT STANDARD
Summary judgment may be granted only if there are no disputed genuine issues of
material fact. Payne v. Pauley, 337 F.3d 767, 770 (7th Cir. 2003). When ruling on a motion for
summary judgment, a court “may not make credibility determinations, weigh the evidence, or
decide which inferences to draw from the facts; these are jobs for a factfinder.” Id. The only
task in ruling on a motion for summary judgment is “to decide, based on the evidence of record,
whether there is any material dispute of fact that requires a trial.” Kodish v. Oakbrook Terrace
Fire Prot. Dist., 604 F.3d 490, 507 (7th Cir. 2010) (quoting Waldridge v. Am. Hoechst Corp., 24
F.3d 918, 920 (7th Cir. 1994)). If the evidence is such that a reasonable factfinder could return a
verdict in favor of the nonmoving party, summary judgment may not be granted. Payne, 337
F.3d at 770. A court must construe the record in the light most favorable to the nonmoving party
and avoid “the temptation to decide which party’s version of the facts is more likely true,” as
“summary judgment cannot be used to resolve swearing contests between litigants.” Id.
However, “a party opposing summary judgment may not rest on the pleadings, but must
affirmatively demonstrate that there is a genuine issue of material fact for trial.” Id. at 771.
“When cross-motions for summary judgment are filed, courts ‘look to the burden of proof
that each party would bear on an issue of trial; [courts] then require that party to go beyond the
pleadings and affirmatively to establish a genuine issue of material fact.’” M.O. v. Ind. Dep’t of
Educ., 635 F. Supp. 2d 847, 850 (N.D. Ind. 2009) (alteration in original) (quoting Santaella v.
Metro. Life Ins. Co., 123 F.3d 456, 461 (7th Cir. 1997)). For claims seeking benefits under an
ERISA plan, the plaintiff bears the burden of proving the claimant’s entitlement to the benefits
of insurance coverage, while the defendant insurer bears the burden of establishing the
8
claimant’s lack of entitlement. Diaz v. Prudential Ins. Co. of Am., 499 F.3d 640, 643 (7th Cir.
2007).
“The contention of one party that there are no issues of material fact sufficient to prevent
the entry of judgment in its favor does not bar that party from asserting that there are issues of
material fact sufficient to prevent the entry of judgment as a matter of law against it.” M.O., 635
F. Supp. 2d at 850 (citation omitted); see Zook v. Brown, 748 F.2d 1161, 1166 (7th Cir. 1984).
Cross-motions for summary judgment do not alter the respective burdens on cross-motions for
summary judgment. McKinney v. Cadleway Props., Inc., 548 F.3d 496, 504 (7th Cir. 2008).
“The motions are treated separately.” Id.; accord M.O., 635 F. Supp. 2d at 850.
IV. DISCUSSION
The parties’ motions for summary judgment raise the following three issues: (1) whether
Mrs. Hartman has standing to pursue her claims; (2) whether Dana is subject to a penalty under
ERISA § 502(c)(1) for its failure to timely produce documents; and (3) whether Dana breached
its fiduciary duty to Mrs. Hartman. Each of these issues will be addressed in turn.
A. Mrs. Hartman Has Standing as a Beneficiary
To bring her claims under ERISA, Mrs. Hartman must first establish that she has
standing to do so. Kamler v. H/N Telecomm. Servs., Inc., 305 F.3d 672, 678 (7th Cir. 2002).
Under ERISA, only a “participant” or a “beneficiary” is entitled to request plan documents under
29 U.S.C. § 1132(c)(1) and seek penalties for the failure of their production. Neuma, Inc. v.
AMP, Inc., 259 F.3d 864, 878 (7th Cir. 2001). Similarly, besides the Secretary of Labor, only a
participant, beneficiary, or fiduciary may sue for a breach of fiduciary duty under 29 U.S.C. §
1132(a)(2).
9
ERISA defines a “beneficiary” as “a person designated by a participant, or by the terms
of an employee benefit plan, who is or may become entitled to a benefit thereunder.” 29 U.S.C.
§ 1002(8). Claimants can demonstrate that they “may become entitled to a benefit,” and thus
qualify as beneficiaries, only if they can show that at the time they filed suit they had a
“colorable claim to vested benefits.” Neuma, Inc., 259 F.3d at 878 (citations omitted). The
Seventh Circuit Court of Appeals has noted that “[t]he requirement of a colorable claim is not a
stringent one,” Panaras v. Liquid Carbonic Indus. Corp., 74 F.3d 786, 790 (7th Cir. 1996), and
that “jurisdiction depends on an arguable claim, not on success,” Kennedy v. Conn. Gen. Life Ins.
Co., 924 F.2d 698, 700 (7th Cir. 1991); see Neuma, Inc., 259 F.3d at 878 (“Even in cases where
a plaintiff’s claim ultimately failed, the possibility of success was sufficient to establish
participant or beneficiary status.” (citation and internal quotation marks omitted)). The Seventh
Circuit has held that a plaintiff’s claim need only be nonfrivolous. Kamler, 305 F.3d at 678
(citation omitted).
Under the information available at the time she filed suit, Mrs. Hartman could have been
entitled to a survivor benefit by the terms of the 1979 Plan. See Sladek v. Bell Sys. Mgmt.
Pension Plan, 880 F.2d 972, 978 (7th Cir. 1989) (holding that a spouse who was not designated
by her husband as survivor annuitant was nevertheless a beneficiary because, absent her
husband’s election, she would have been a beneficiary designated by the plan). When Mr.
Hartman began his pension, the standard election for a married individual was a 50% joint and
survivor annuity. (Hartman Aff. Ex. 3 at 2; Schlievert Aff. Ex. A at 71.) Although Mr. Hartman
elected to take his pension on a life only basis with no survivor benefit (Hartman Aff. Ex. 2;
Schlievert Aff. Ex. A at 59), Mrs. Hartman did not consent to this election (Hartman Aff. ¶ 10).
10
Furthermore, Mrs. Hartman argues that Dana failed to fulfill the promise it made to her husband
in its March 1978 letter to explain to him the other available pension options before he elected a
single life annuity, thereby breaching its fiduciary duty to him and giving her a colorable claim
to benefits under the Plan. (Pl.’s Reply Br. 6-7; see Pl.’s Mem. in Supp. 2-3.)
Defendants argue that Mrs. Hartman’s consent is irrelevant because spousal consent was
not, in fact, required in 1979. (See Defs.’ Resp. to Pl.’s Mot. for Summ. J. (“Defs.’ Resp.”) 8;
Defs.’ Br. in Supp. 7.) But since Defendants did not produce the 1979 SPD until September
2013, it was possible under the information available at the time Mrs. Hartman filed suit in
December 2012 that the 1979 Plan, under which Mr. Hartman took his pension, required spousal
consent, which would have given Mrs. Hartman a claim to survivor benefits. Since Defendants
could not then locate the 1979 Plan document or SPD, they could only speculate that such a
requirement was not in that Plan based on the fact that the law did not require spousal consent
until 1984. Simply because the law did not require spousal consent, however, did not necessarily
mean that the 1979 Plan did not provide for it.
Furthermore, Mrs. Hartman’s argument that Dana breached its fiduciary duty to her
husband, resulting in his election against her survivor annuity, has “at least an arguable chance
of success” and “is not so bizarre or so out of line with existing precedent” that Mrs. Hartman
failed to meet “the low threshold of the colorable requirement.” Neuma, Inc., 259 F.3d at 879
(internal quotation marks and citations omitted). As such, it was possible under the information
available at the time Mrs. Hartman filed suit, that the 1979 Plan required spousal consent or that
Dana breached its fiduciary duty to Mr. Hartman. Thus, Mrs. Hartman has a colorable claim as a
beneficiary under the Plan and standing to pursue her ERISA claims.
11
B. A Statutory Penalty Will Be Imposed on Dana
ERISA contains a disclosure provision that requires a plan administrator to, “upon
written request of any participant or beneficiary, furnish a copy of the latest updated summary[ ]
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.” 29
U.S.C. § 1024(b)(4). Section 1132(c)(1)(B) gives teeth to this disclosure obligation, rendering a
noncompliant administrator liable for up to $110 per day for failing to produce requested plan
documents within 30 days of the request. Mondry v. Am. Family Mut. Ins., 557 F.3d 781, 793
(7th Cir. 2009); see 29 U.S.C. § 1132(c)(1)(B); 29 C.F.R. § 2575.502c-1 (increasing the per diem
penalty from $100 to $110). A penalty is not mandatory, and the amount, if any, is left to the
court’s discretion. Reddy v. Schellhorn, No. 05 C 639, 2006 WL 642647, at *3 (N.D. Ill. Mar. 8,
2006) (citing Fenster v. Tepfer & Spitz, Ltd., 301 F.3d 851, 858 (7th Cir. 2002); Ziaee v. Vest,
916 F.2d 1204, 1210 (7th Cir. 1990)).
To trigger this discretionary power to impose penalties, a beneficiary must establish that
the plan administrator “was required to make available the requested information, that the
[beneficiary] requested the information, and that the administrator failed to provide the
information.” Lowe v. SRA/IBM-MacMillan Pension Plan, No. 01 C 58, 2003 WL 1565841, at
*3 (N.D. Ill. Mar. 25, 2003) (citing Kleinhans v. Lisle Sav. Profit Sharing Trust, 810 F.2d 618,
622 (7th Cir. 1987)), aff’d sub nom. Lowe v. McGraw-Hill Cos., 361 F.3d 335 (7th Cir. 2004).
Touching on this first requirement, Defendants argue that the 1979 Plan documents Mrs.
Hartman requested are historical documents that Dana was not required make available under §
1024(b)(4). (Defs.’ Br. in Supp. 7-8; Defs.’ Resp. 9-11.) There is some case law suggesting that
12
outdated plan documents, such as old SPDs, annual reports, and modifications, fall outside the
category of documents that a plan administrator must provide under § 1024(b)(4). See Shields v.
Local 705, Int’l Bhd. of Teamsters Pension Plan, 188 F.3d 895, 903 (7th Cir. 1999); Jackson v.
E.J. Brach Corp., 937 F. Supp. 735, 739 (N.D. Ill. 1996). Indeed, § 1024(b)(4) seems to require
that only the latest SPD be provided upon request. 29 U.S.C. § 1024(b)(4); see Thompson v.
Cont’l Cas. Co., 602 F. Supp. 2d 943, 946 (N.D. Ill. 2009). But § 1024(b)(4) also requires that a
plan administrator furnish “other instruments under which the plan was established or operated.”
29 U.S.C. § 1024(b)(4). Although not defined in the statute, the Seventh Circuit has held that
this “other instruments” language “reaches only formal legal documents governing a plan.”
Ames v. Am. Nat’l Can Co., 170 F.3d 751, 758-59 (7th Cir. 1999).
When determining whether a plan document falls within the disclosure provision, courts
consider the purpose of this provision, see Hakim v. Accenture U.S. Pension Plan, 656 F. Supp.
2d 801, 824 (N.D. Ill. 2009); Davis v. Ret. Plan of Phibro Animal Health Corp. & Subsidiaries
& Affiliates, No. 08-cv-779-JPG, 2009 WL 1376245, at *3 (S.D. Ill. May 14, 2009), to ensure
that the individual knows exactly where she stands with respect to the plan, which includes
having the information necessary to determine her eligibility and understand her rights under the
plan and to ascertain the procedures she must follow to obtain benefits, Mondry, 557 F.3d at 793
(citations omitted). As such, outdated documents are generally not required to be provided
because they are normally not necessary to determine one’s rights under the current plan. Davis,
2009 WL 1376245, at *3.
The Seventh Circuit has nonetheless recognized that “a plan participant would be entitled
to outdated plan documents where a claims administrator expressly relied on such documents
13
because, under those circumstances, the participant would need to ‘have access to [the outdated
documents] in order to understand what the claims administrator [was] doing and to effectively
assert his rights under the plan.’” Hakim, 656 F. Supp. 2d at 824 (quoting Mondry, 557 F.3d at
800). These cases teach that a participant or beneficiary is entitled to outdated plan documents if
they contain information necessary for her to understand and assert her rights under the plan. Id.
at 825. Furthermore, an outdated plan or SPD that controls a beneficiary’s claim is
“undoubtedly an ‘instrument [ ] under which the plan [was] established or operated’ and
therefore subject to section 1024(b)(4)’s disclosure obligation.” Huss v. IBM Med. & Dental
Plan, 418 F. App’x 498, 509 (7th Cir. 2011) (unpublished); see also Bilello v. JP Morgan Chase
Ret. Plan, 649 F. Supp. 2d 142, 170 (S.D.N.Y. 2009) (“Applying ERISA § 104(b)(4), to the
extent that the 1989 Plan, the Pre-1989 Plan, or any other predecessor plan is still an ‘instrument[
] under which the [current] plan is . . . operated,’ the Plan Administrator was required to disclose
those documents.”).
Here, the 1979 Plan document and SPD are critical to Mrs. Hartman’s understanding of
her rights and eligibility. These documents control not only whether the Plan required spousal
consent to elect against a survivor annuity in 1979, but also what fiduciary duties the Plan owed
to Mr. Hartman before he made his election. Because the 1979 Plan document and SPD contain
information necessary for Mrs. Hartman to understand and assert her rights under the Plan and
control the determination of whether she is entitled to a survivor annuity, they qualify as “other
instruments under which the plan [was] established or operated,” thereby requiring Dana to
produce the documents within thirty days of her written request. See Huss, 418 F. App’x at 509;
Davis, 2009 WL 1376245, at *3.
14
And although Defendants rely heavily on Jackson, 937 F. Supp. at 739, for their
contention that Dana was not required to produce the 1979 Plan documents, this case is easily
distinguishable. In Jackson, the court refused to penalize an administrator for failing to provide
documents that had “no current application whatsoever.” Id. (emphasis added). Here, the 1979
Plan documents, while admittedly old, do have a current application. Indeed, the terms of the
1979 Plan documents dictate Mrs. Hartman’s current right and eligibility to a survivor annuity,
giving those documents a current application and subjecting them to disclosure. See Davis, 2009
WL 1376245, at *3 (holding that a prior plan was subject to disclosure under § 1024(b)(4) when
the plaintiff had to have access to the terms and conditions of a prior plan to calculate the amount
of benefits to which he was entitled).
As to the second requirement—that Mrs. Hartman requested the information—the statute
requires that a request for documents be made in writing to the plan administrator. See 29 U.S.C.
§ 1024(b)(4). Defendants apparently do not dispute that Mrs. Hartman properly made a request
to the Plan administrator. (See Defs.’ Resp. 9-11 (addressing Mrs. Hartman’s statutory penalty
claim and never disputing her assertion in her supporting brief that she made a proper request to
the plan administrator).) Moreover, both parties appear to agree that, despite several verbal
requests, Mrs. Hartman made her first written request for the documents on May 15, 2012, which
Dana received on May 17, 2012. (Pl.’s Mem. in Supp. 9 (“But the date, as far as a written
request, should be measured as of the receipt of the May 15 Letter on May 17, 2012.”); Defs.’
Resp. 10 (“Plaintiff acknowledges that the Defendants first received her written request for
documents on May 17, 2012.”).) Dana subsequently had thirty days within which to produce the
1979 Plan documents, which it did not do. As such, Dana is exposed to a statutory penalty from
15
June 16, 2012—thirty days after it received Mrs. Hartman’s initial request—until it produced the
requested documents.
Dana’s production of these documents, however, was complicated by its inability to
locate them. (See Holmes Aff. ¶¶ 13-14.) To review, after Dana received Mrs. Hartman’s
request for the 1979 Plan documents on May 17, 2012, Mr. Holmes, a member of Dana’s
corporate legal staff, called Mr. Powers on June 5, 2012, informing him that Dana could not
locate these documents, but would keeping looking for them. (Holmes Aff. ¶ 7.) Mr. Holmes
also sent Mr. Powers an email the following day, enclosing Mr. Hartman’s election form and
reiterating that Dana would send a copy of the Weatherhead plan in effect in 1979 as soon as it
was able to retrieve it from its archive storage facility. (Holmes Aff. ¶ 9, Ex. A.) Over a year
later, on July 1, 2013, and in response to Mrs. Hartman’s discovery requests, Dana produced the
1986 Plan—actually entitled the Dana Corporation, Weatherhead Division Pension Plan for
Salaried Employees—indicating that it was the oldest copy of the pension plan it could locate.
(Hartman Aff. Ex. D; Schlievert Aff. ¶ 4, Ex. B.)
Defendants contend that Dana responded promptly to Mrs. Hartman’s May 17th written
request for documents, informing her on June 5th that they could not locate the documents, but
would keep looking, and sending her husband’s election form on June 6th, thus providing all the
documents it could locate less than three weeks after receiving her written request. (Defs.’ Resp.
10-11.) They further assert that the statutory penalty should not apply to documents that Dana
misplaced or lost because its failure to produce these documents “results from matters
reasonably beyond the control of the administrator,” thus falling into § 1132(c)(1)’s exception,
and not the result of bad faith. (Defs.’ Br. in Supp. 8; Defs.’ Resp. 11.)
16
To support this position, Defendants once again rely on Jackson, quoting its statement
that “the nonexistence of an out-dated document, or in some instances the misplacing of such a
document,” falls into § 1132(c)(1)’s exception for matters reasonably beyond the administrator’s
control, “especially when there is no evidence of bad faith on the part of the plan administrator.”
(Defs.’ Br. in Supp. 8; Defs.’ Resp. 11 (quoting Jackson, 937 F. Supp. at 739).) But, as already
noted, Jackson dealt with outdated plan documents that had “no current application whatsoever,”
which is not the case here. Although a penalty may be inappropriate where the nonexistent or
misplaced document has no current application, “a court may impose a penalty on a plan
administrator for failure to provide a nonexistent document to a [beneficiary] where the
document must be kept pursuant to ERISA.” Ward v. Maloney, 386 F. Supp. 2d 607, 613
(M.D.N.C. 2005) (emphasis in original). The Court has already determined that the 1979 Plan
documents are within the scope of § 1024(b)(4), and, thus, Dana can be penalized for failing to
timely provide those documents. See id.
But “[t]he purpose of ERISA’s penalty provision is ‘not so much to penalize as to induce
plan administrators to respond in a timely manner to a participant’s request for information.’”
Hite v. Biomet, Inc., 38 F. Supp. 2d 720, 735 (N.D. Ind. 1999) (quoting Winchester v. Pension
Comm. of Michael Reese Health Plan, Inc. Pension Plan, 942 F.2d 1190, 1193 (7th Cir. 1991)).
As such, in deciding whether to impose a penalty under § 1132(c)(1), courts consider the
conduct and intent of the administrator in not providing the documents, the length of the delay,
the number of requests made and documents withheld, any prejudice or harm to the requestor,
the requestor’s need to hire a lawyer and engage in litigation, and the administrator’s failure to
keep the requestor informed of difficulties in locating documents. See Mondry v. Am. Family
17
Mut. Ins. Co., No. 06-cv-320-bbc, 2010 WL 3730910, at *8 (W.D. Wis. Sept. 20, 2010) (citing
Lowe, 361 F.3d at 338), aff’d, 497 F. App’x 603 (7th Cir. 2012) (unpublished); Reddy, 2006 WL
642647, at *3; Hite, 38 F. Supp. 2d at 735; Jackson, 937 F. Supp. at 741. Accordingly, any bad
faith on behalf of Dana, of which Defendants contend there is no evidence, is just one factor for
the Court to take into account.
In an effort to show the absence of bad faith and that its failure to timely produce the
1979 Plan documents was reasonably beyond its control, Dana explains that it administers plans
for over 40,000 participants, has over fifty plans under which these participants receive benefits,
all of which have been amended multiple times, and that the 1979 Plan documents relate to
approximately the same time that it purchased Weatherhead. (Holmes Aff. ¶ 12.) But Dana’s
explanations are insufficient to establish that its failure to timely produce the 1979 documents
was reasonably beyond its control. Keeping track of over fifty plans and their amendments is
undoubtedly not easy, but the number of these plans, the likely differences between them, and
the over 40,000 participants and their beneficiaries these plans affect, highlight the importance of
maintaining these plan documents such that every participant and beneficiary can obtain the plan
applicable to their claim to determine and understand their rights and eligibility.
Moreover, although Dana maintains that it made a good faith effort to timely locate the
1979 Plan documents in response to Mrs. Hartman’s request (Holmes Aff. ¶ 13), it offers no
details regarding the search it purportedly undertook to locate these documents, such as who
searched for them and who those persons spoke to, the nature and scope of the search, how long
the search lasted, or when the search occurred. Furthermore, Dana actually located the 1979
SPD in September 2013 “in an unmarked box in [Dana’s] file room,” leading to the reasonable
18
inference that Dana did not, in fact, conduct a thorough search at the time Mrs. Hartman made
her request.
As to whether to impose a statutory penalty, the prejudice and harm to Mrs. Hartman
from Dana’s failure to timely produce the 1979 Plan documents is not insignificant. Mrs.
Hartman needed these documents to determine her right or eligibility to a survivor annuity or
what fiduciary duties the Plan owed to her husband in explaining the pension options available to
him, either of which could feasibly result in a successful claim to benefits under the Plan.
Furthermore, it took Dana more than fourteen months to produce the 1979 SPD, and it has yet to
produce the 1979 Plan document. Mrs. Hartman had to hire a lawyer and engage in
litigation—indeed, she only received Mr. Hartman’s election form in response to her attorney’s
request and did not receive the 1979 SPD until after she filed a motion for summary
judgment—which is another factor supporting imposition of a statutory penalty. Mondry, 2010
WL 3730910, at *8.
Finally, although Mr. Holmes initially informed Mrs. Hartman in June 2012 that Dana
was having difficulty locating the 1979 Plan documents, but would keeping looking for them and
send them when they were found, Dana provided no more information about its search efforts, or
its continued difficulties locating these documents, until almost a year later, in July 2013, when it
produced the 1986 Plan documents in response to Mrs. Hartman’s discovery requests and
indicated that this was the oldest plan document it could locate. As such, Dana failed to keep
Mrs. Hartman informed about its continued difficulties locating the 1979 Plan documents for
almost an entire year after her written request, further suggesting that the imposition of a
statutory penalty is appropriate. Id. Ultimately, Dana found a copy of the 1979 SPD in its own
19
file room, and thus the SPD apparently was in Dana’s possession this entire time. For all of
these reasons, an award of a statutory penalty against Dana is merited.
Having determined that a statutory penalty is indeed warranted, it remains to determine
the size of that penalty. As stated earlier, the Court is entitled to award up to $110 per day. 29
C.F.R. § 2575.502c-1. In cases the Court has reviewed, generally district courts have assessed
penalties ranging from less than $10 a day, where no bad faith or prejudice was shown, up to
$100 a day, where the administrator acted in bad faith, with aggregate penalties up to $35,000.
Pierce v. Visteon Corp., No. 1:05-cv-1325, 2013 WL 3225832, at *21-22 (S.D. Ind. June 25,
2013) (collecting cases); Killian v. Concert Health Plan, No. 07 C 4755, 2010 WL 5316041, at
*3 (N.D. Ill. Dec. 17, 2010) (collecting cases); Pisek v. Kindred Healthcare, Inc., Disability Ins.
Plan, 633 F. Supp. 2d 659, 668 (S.D. Ind. 2007); Reddy, 2006 WL 642647, at *4; Lowe, 2003
WL 1565841, at *3; Blazejewski v. William E. Gibson Money Purchase Pension Plan & Trust,
No. 97 C 5466, 1999 WL 1044892, at *4 (N.D. Ill. Nov. 10, 1999); Jackson, 937 F. Supp. at 742
(collecting cases); Kascewicz, 837 F. Supp. at 1323-24 (collecting cases).
Here, although Mrs. Hartman encountered numerous delays and poor communication
from Dana, there is no evidence suggesting that Dana acted in bad faith. It provided Mr.
Hartman’s election form within three weeks of Mrs. Hartman’s first written request, and kept
searching, at least to some extent, for the other Plan documents, as demonstrated through its
belated location of the 1979 SPD. And other than having to file this action, there is no indication
that Mrs. Hartman was actually harmed by Dana’s failure to timely produce the Plan documents.
Accordingly, on this record, the Court concludes that a modest statutory penalty of $10 per day
is appropriate. See Killian, 2010 WL 5316041, at *3 (awarding $10 per day after articulating
20
that under the facts and circumstances of the case the penalty should be “modest”); Reddy, 2006
WL 642647, at *4 (awarding a “modest” penalty of $20 per day where plaintiff was “put to the
trouble and frustration of making repeated requests for the [p]lan”); Blazejewski, 1999 WL
1044892, at *4 (awarding $10 per day where outside of filing a lawsuit, the plaintiff was not
injured).
As to the duration of the per diem penalty, a statutory penalty typically runs from thirty
days after the request was made until the beneficiary receives the requested information. See
Hess v. Hartford Life & Accident Ins. Co., 91 F. Supp. 2d 1215, 1225 (C.D. Ill. 2000). But if the
1979 Plan document is in fact lost, Dana will never be able to produce it. Allowing the statutory
penalty to run indefinitely would not serve the purpose of the statute—to induce plan
administrators to respond in a timely manner to an appropriate request for information. Hite, 38
F. Supp. 2d at 735. Accordingly, in cases where the requested documents were never produced,
courts have chosen other ending dates, such as the entry of the order imposing the statutory
penalty, see Jackson, 937 F. Supp. at 742; Scarso v. Briks, 909 F. Supp. 211, 215 (S.D.N.Y.
1996), the defendant’s filing of its answer, see Kascewicz v. Citibank, 837 F. Supp. 1312, 1324
(S.D.N.Y. 1993), or the death of the administrator, see Colarusso v. Transcapital Fiscal Sys.
Inc., 227 F. Supp. 2d 243, 262-63 (D. N.J. 2002).
Here, Dana did, ultimately, produce the 1979 SPD, which ostensibly is dispositive as to
whether the 1979 Plan required spousal consent. That is, Mrs. Hartman does not dispute Mr.
Holmes’s representation that the SPD would have contained a provision requiring spousal
consent if the 1979 Plan document actually contained such a provision. Thus, the reason that
Mrs. Hartman initially sought the 1979 Plan documents has now been put to rest—the 1979 Plan
21
apparently did not require the spouse of a participant to consent to a participant’s decision to
receive his or her pension benefits on a life only basis. For that reason, September 6, 2013—the
date Dana produced the 1979 SPD—will be the ending date for the $10 per diem statutory
penalty.
In sum, a statutory penalty will be imposed from June 16, 2012 (thirty days after Dana
received Mrs. Hartman’s initial written request), to September 6, 2013 (the date Dana produced
the 1979 SPD), at a per diem amount of $10, equating to an aggregate amount of $4,470.
Therefore, Mrs. Hartman’s motion for summary judgment as to her statutory penalty claim will
be GRANTED, and Defendants’ motion for summary judgment on this claim will therefore be
DENIED.
C. The Plan-wide Injunctive Relief Mrs. Hartman Seeks Is Excessive
Besides her statutory penalty claim, Mrs. Hartman also advances a claim under §
1132(a)(2), arguing that Dana breached its fiduciary duty to her by failing to provide her
accurate and complete information or to establish and maintain a reasonable claims procedure.
(See Pl.’s Mem. in Supp. 14-24.) Section 1132(a)(2) authorizes plan participants or beneficiaries
(among others) to bring civil actions against fiduciaries for appropriate relief under 29 U.S.C. §
1109. Chesemore v. Alliance Holdings, Inc., __ F. Supp. 2d __, 2013 WL 2445036, at *6 (W.D.
Wis. June 4, 2013) (citing 29 U.S.C. § 1132(a)(2)). In turn, § 1109(a) provides that a fiduciary
who breaches any of its duties shall be, among other penalties, “subject to other equitable or
remedial relief as the court may deem appropriate . . . .” 29 U.S.C. § 1109(a). The Seventh
Circuit has explained that this “other equitable or remedial relief” language “grants courts the
power to shape an award so as to make the injured plan whole while at the same time
22
apportioning the damages equitably between the wrongdoers.” Chesemore, 2013 WL 2445036,
at *6 (quoting Free v. Briody, 732 F.2d 1331, 1337 (7th Cir. 1984)). As such, under §
1132(a)(2), a plan participant or beneficiary may commence a civil action for appropriate relief
under § 1109(a) only in a representative capacity on behalf of the plan, not in her own behalf.
Kenseth v. Dean Health Plan, Inc., 610 F.3d 452, 481-82 (7th Cir. 2010).
Here, Mrs. Hartman properly seeks plan-wide relief under § 1109, asking the Court to
impose “a mandatory injunction requiring Dana to compile all plan documents and summary
plan descriptions related to the pension benefits of all of its current participants, beneficiaries,
and retirees, place them in a central location that will enable Dana to respond timely to future
request[s] for documents . . . and report to the Court within a reasonable time after the date of its
Order that Dana has complied with it or explain why Dana is not able to do so.” (Pl.’s Mem. in
Supp. 24-25.) This injunctive relief, however, far outweighs the harm that Mrs. Hartman, or the
Plan, suffered, which is problematic because any award the Court gives must make the injured
plan whole while simultaneously apportioning the damages equitably between the wrongdoers.
Chesemore, 2013 WL 2445036, at *6 (quoting Free, 732 F.2d at 1337).
Not all of Dana’s plan participants—by Dana’s calculations, over 40,000—and their
beneficiaries were injured by Dana’s purported failure to retain the 1979 Plan documents or by
the run around that Mrs. Hartman received from the Dana Pension Service Center. Rather, only
a very small subset of individuals were injured by these actions—Mrs. Hartman and other
spouses whose rights are dependent upon the provisions of the 1979 Plan. As such, ordering
Dana to compile all of its plan documents and SPDs and place them in a central location, and
then report to the Court that it has done so, far exceeds what is necessary to make Mrs. Hartman,
23
and other spouses like her, whole. Furthermore, ordering such extensive injunctive relief would
not apportion the damages equitably between the wrongdoers in this case. See id.
Therefore, even if Dana breached its fiduciary duties to Mrs. Hartman by failing to
provide her complete and accurate information or to maintain a reasonable claims procedure, the
relief she seeks is disproportionate to the harm she, and the Plan as a whole, suffered. As such,
Mrs. Hartman’s motion for summary judgment will be DENIED as to her breach of fiduciary
duty claims, while Defendants’ motion for summary judgment will be GRANTED as to these
claims.
V. CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for Summary Judgment (Docket # 22) is
GRANTED as to her statutory penalty claim, but DENIED as to her breach of fiduciary duty
claims. The Clerk is DIRECTED to enter a judgment for the statutory penalty in the amount of
$4,470 in favor of Plaintiff and against Defendants. Defendants’ Motion for Summary Judgment
(Docket # 24) is GRANTED as to the breach of fiduciary duty claims, but DENIED as to the
statutory penalty claim.
To the extent Mrs. Hartman is seeking attorney fees, she is to file a motion in accordance
with Federal Rule of Civil Procedure 54(d)(2), and it will brief out in accordance with Local
Rule 7-1(d)(2).
SO ORDERED.
Enter for the 21st day of October, 2013.
S/Roger B. Cosbey
Roger B. Cosbey,
United States Magistrate Judge
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