White et al v. Chase, Jr.
Filing
22
District Judge Timothy S Hillman: ORDER entered adopting Report and Recommendations re 19 Report and Recommendations and granting in part and denying in part 15 Motion to Dismiss for Failure to State a Claim. (Castles, Martin)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETS
__________________________________________
)
EUGENE J. WHITE and SHAWN M. ROY,
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Individually and on Behalf of all Others
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Similarly Situated,
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Plaintiffs,
)
)
v.
)
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JEROME A. CHASE, JR., as he is the Trustee )
Of Framingham Ford Defined Benefit Pension )
Plan Trust Agreement, Adopted in 2002 and
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Again in 2004,
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Defendant.
)
__________________________________________)
CIVIL ACTION
No. 15-40013-TSH
ORDER
January 27, 2016
HILLMAN, D.J.
Background
Eugene J. White and Shawn M. Roy (“Plaintiffs”) have filed a First Amended Class
Action Complaint (Docket No. 13)(“Amended Complaint”) against Jerome A. Chase, Jr.
(“Defendant”), as Trustee of the Framingham Ford Defined Benefit Pension Plan Trust
Agreement, Adopted in 2002 and Again in 2004 (“Plan”), alleging claims for: (1) Improper,
Untimely and Inadequate Notice under ERISA Section 204(h), 29 U.S.C. § 1054(h)(“Section
1054(h)) (Count I), as the result of the Defendant terminating/amendment of the Plan without
proper notice; (2 ) violation of ERISA Section 402, 29 U.S.C. § 1102 (“Section 1102”), as the
result of Defendant implementing the Plan termination “without written Plan Document”; (3)
breach of fiduciary duty, in violation of ERISA Section 404, 29 U.S.C. § 1104 (Count III); and
(4) Intentional/Negligent Interference with Attainment of Benefits, in violation of ERISA
Section 510, 29 U.S.C. § 1140 (Count IV). In the Amended Complaint Plaintiffs request that the
Court: (1) declare that the Defendant’s termination of freezing of Plan benefits in 2007 violated
ERISA notice and documentation provisions and constituted a breach of fiduciary duty; (2)
declare that as a result of the Defendant’s failure to provide the proper ERISA notice and
documentation, the freeze of benefits under and termination of the Plan was not effective, and
will not become effective until Defendant complies with such requirements; (3) order Defendant
to pay interest and attorneys’ fees and expenses to Plaintiffs; and (4) award such other equitable
and remedial relief as deemed appropriate.
This matter was referred by this Court to Magistrate Judge Hennessy for ruling on
Defendant’s Motion To Dismiss First Amended Complaint (Docket No. 15). Magistrate Judge
Hennessy issued a Report and Recommendation, dated October 28, 2015 (“R&R”), which
recommends that this Court grant the motion to dismiss as to Counts III and IV of the Amended
Complaint, and deny the motion to dismiss as to Counts I and II of the Amended Complaint. The
Plaintiffs did not file an objection to the R&R; the Defendant has filed an objection to the R&R
to the extent that it recommends denying the motion to dismiss Counts I and II of the Amended
Complaint. Plaintiffs did not file a reply to Defendant’s objection.
No objection having been filed, the Court accepts and adopts the R&R to the extent that it
recommends that Counts III and IV of the Amended Complaint be dismissed. For the reasons set
forth below, Defendant’s motion to dismiss Counts I and II is denied.
Discussion
If a party objects to the recommendation of a magistrate judge, “the court must ‘make a
de novo determination of those portions of the report or specified proposed findings or
recommendations to which objection is made.’ 28 U.S.C. § 636(b)(1); see also Fed.R.Civ.P. 72.
As to all other matters, the court ‘may accept, reject, or modify, in whole or in part, the findings
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or recommendations made by the magistrate judge.’ 28 U.S.C. § 636(b)(1); see also Fed.R.Civ.P.
72. Kelly v. Cort Furniture, 717 F.Supp.2d 120, 123 (D.Mass. 2010).
The magistrate judge determined that Counts I and II, are, in essence, claims for benefits
and therefore, governed by Massachusetts six year statute of limitations applicable to contract
actions.1 He then determined that the statute of limitations did not begin to run until the cause of
action accrued, which occurred either on November 30, 2013 (when the alleged repudiation of
benefits occurred), or has yet to occur since the Plaintiffs have yet to apply for benefits and been
denied. He found that under either scenario, these claims are timely. Defendant asserts that the
Amended Complaint does not assert a claim for benefits or seek to recover benefits and
therefore, the magistrate judge erroneously determined that these claims are akin to a breach of
contract claim under Massachusetts law. Defendant argues that instead, in Counts I and II,
Plaintiffs allege only that Defendant breached his fiduciary duty by: (1) violating Section
1054(h)2 by failing to provide them notice of changes to the Plan in 2007; and (2) improperly
1
ERISA does not provide a statute of limitations for benefit claims; instead, such actions are governed by
the contract statute of limitations of the state in which the claim is brought. The most analogous statute of
limitations for ERISA benefit claims is Massachusetts six year statute of limitations applicable to contract actions.
See Riley v. Metro. Life Ins. Co., 744 F.3d 241, 244 (1st Cir.) cert. denied, 135 S. Ct. 94 (2014)( ERISA does not
provide statute of limitations with respect to actions for unpaid benefits from non-fiduciaries under its civil
enforcement provision; Federal courts “borrow the most closely analogous statute of limitations in the forum state.”
and most closely analogous statute of limitations is the six-year period Massachusetts applies to breach of contract
claims).
2
At the time of the alleged Plan amendment, Section 1054(h) provided, in relevant part, as follows:
(1) An applicable pension plan may not be amended so as to provide for a significant reduction in
the rate of future benefit accrual unless the plan administrator provides the notice described in
paragraph (2) to each applicable individual (and to each employee organization representing
applicable individuals) and to each employer who has an obligation to contribute to the plan.
(2) The notice required by paragraph (1) shall be written in a manner calculated to be understood
by the average plan participant and shall provide sufficient information (as determined in
accordance with regulations prescribed by the Secretary of the treasury) to allow applicable
individuals to understand the effect of the plan amendment.
….
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implementing the termination of the Plan, in violation of Section 1102. Defendant further argues
that given that these claims are for breach of fiduciary duty they must be dismissed for the same
reasons as Count III.
In their opposition to the Defendants’ motion to dismiss, the Plaintiffs cited to ERISA’s
“Limitations of Action” provision, 29 U.S.C. §1113, referring to it as the “critical statute in
question.” Pls’ Opp. To Def’s. Mot. To Dismiss Their First Amended Comp. (Docket No. 17), at
pp. 1-2. Section 1113 provides:
No action may be commenced under this subchapter with respect to a
fiduciary’s breach of any responsibility, duty or obligation under this part, or with
respect to a violation of this part, after the earlier of—
(1) six years after (A) the date of the last action which constituted a
party of the breach or violation, or (B) in the case of an omission the
latest date on which the fiduciary could have cured the breach or
violation, or
(6)(A) In the case of any egregious failure to meet any requirement of this subsection with respect
to any plan amendment, the provisions of the applicable pension plan shall be applied as if such
plan amendment entitled all applicable individuals to the greater of
(i) the benefits to which they would have been entitled without regard to such
amendment, or
(ii) the benefits under the plan with regard to such amendment.
(B) For purposes of subparagraph (A), there is an egregious failure to meet the requirements of
this subsection if such failure is within the control of the plan sponsor and is
(i) an intentional failure (including any failure to promptly provide the required
notice or information after the plan administrator discovers an unintentional
failure to meet the requirements of this subsection),
(ii) a failure to provide most of the individuals with most of the information they
are entitled to receive under this subsection, or
(iii) a failure which is determined to be egregious under regulations prescribed
by the Secretary of the Treasury.
29 U.S.C.A. § 1054 (West)
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(2) three years after the earliest date on which the plaintiff had actual
knowledge of the breach or violation,
Except that I the case of fraud or concealment, such action may be commenced not
later than six years after the date of discovery of such breach or violation.
Plaintiffs argue that their claims are timely because the applicable statute of limitations was
tolled by fraud or concealment and therefore, the statute of limitations did not start to run until
November 30, 2013. At the conclusion of their opposition, Plaintiffs make a passing reference to
a six year statute of limitations for contract claims and make a somewhat vague and undeveloped
argument that a claim for benefits can be “inferred” from the facts asserted in the Amended
Complaint. However, I do not read Counts I and II as asserting claims for benefits. Instead, they
assert claims only for violation of Section 1054(h)’s notice requirement and Section 1102’s
requirement of a written instrument. Furthermore, given the gravamen of Plaintiffs’ argument, I
find that they agree with the Defendants that the statute of limitations is that applicable to claims
for breach of fiduciary duty.3
The issue then becomes when did the statute of limitations accrue, and whether Plaintiffs
are correct that their claims are timely in any event as the result of Defendant’s fraudulent
concealment. I agree with the magistrate judge that Plaintiffs have not adequately pled
fraudulent concealment. See R&R, at pp. 8-10. The questions of when Plaintiffs’ claims accrued
3
Courts addressing claims brought pursuant to Section 1054(h) have tended treated them as non-fiduciary
claims where there is a corresponding claim for benefits, although there does not appear to be a clear consensus as to
the analogous state law limitation period. See e.g. Romer v. Allstate Corp., 404 F.3d 212 (3d Cir. 2005)(Where
Section 1054(h) claims is intrinsic to plaintiff’s Section 1054(g) claim which involves complex issues of statutory
interpretation, Court will apply Pennsylvania’s catch all limitations period; Court does not decide what period of
limitations would apply if plaintiff asserts independent Section 1054(h) claim); Hakim v. Accenture United States
Pension Plan, 656 F.Supp.2d 801 (N.D.Ill. 2009)(where plaintiff brings Section 1054(h) claims seeking
recalculation of benefits due, most analogous statute of limitations is state statute of limitation for written contracts);
see also Calder v. SBC Pension Ben.Plan, 549 F.Supp.2d 824 (W.D.Tex. 2008)(noting that a Section 1054(h) may
be pled either as a breach of fiduciary claim for failure to provide notice or a benefits claim for erroneous
application of amendments to plaintiff; Court determined in instant case, claim was one for benefits).
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is a question of fact which cannot be resolved on this record. More specifically, as to Counts I
and II, Plaintiffs’ claims accrued on the day that they knew or should have known that an
amendment to the Plan had an effect that triggered the notice requirement under Section
1954(h), or compliance with Section 1102. See Romero, 404 F.3d at 225 (would make no sense
for “notice” claim to accrue before plaintiff knew or should have known that an amendment has
the effect which triggers notice requirement; consequently, federal discovery rule applies to
determine date of accrual). Therefore, Defendant’s motion to dismiss Counts I and II must be
denied.
Because I find that the Amended Complaint cannot fairly be read to assert claims for
benefits under Counts I and II, I am not at this time adopting the reasoning of the magistrate
judge in finding that those claims are timely. That being said, since the Amended Complaint
alleges that Plaintiffs never received notice of the 2007 Plan amendment, they never received
copies of the Summary Plan Description, and the amendments were implemented without written
“Plan Document,” the Court cannot find at this stage of the proceedings that the claims are time
barred, regardless of what limitations period applies. Instead, the Court will reconsider this issue
on summary judgment on a more factually developed record.4
Defendant also objects to the magistrate judge’s recommendation to deny dismissal of
Count I on the merits. I agree with the magistrate judge’s conclusion that for purposes of
Defendant’s motion to dismiss, Plaintiffs have stated a plausible claim for violation of Section
4
To the extent that the R&R can be read to make a factual findings that an alleged repudiation of benefits
and/or the very existence of the Plan first occurred or was made known to plaintiffs on November 30, 2013, or that
no application for benefits to had been made and/or formally denied to date, those factual findings were made in the
context of presuming the facts in favor of the Plaintiffs for purposes of the Defendant’s motion to dismiss. For that
reasons, such factual findings are not in any way binding on either party going forward.
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1054(h). See R&R, at pp. 13-14. At the same time, based on the Plaintiffs’ allegations, the Court
is skeptical whether this claim can survive a motion for summary judgment.
Conclusion
For the foregoing reasons, the Report and Reccomendation of the Magistrate Judge dated
October 28, 2015 is accepted and adopted as to the dismissal of Counts III and IV of the
Amended Complaint. Defendant’s motion to dismiss Counts I and II is denied, for the reasons
provided herein.
/s/ Timothy S. Hillman
TIMOTHY S. HILLMAN
DISTRICT JUDGE
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