Pearce v. Chrysler LLC Pension Plan
ORDER Adopting Report and Recommendation for Granting 72 Motion for Summary Judgment filed by Chrysler Group LLC Pension Plan, Denying 73 Motion for Summary Judgment filed by Randy D. Pearce re 87 Report and Recommendation. Signed by District Judge Sean F. Cox. (JMcC)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
Randy D. Pearce,
Case No. 10-14720
Hon. Sean F. Cox
Magistrate Stephanie Dawkins Davis
Chrysler LLC Pension Plan,
ORDER ADOPTING AND ACCEPTING
MAGISTRATE JUDGE’S REPORT AND RECOMMENDATION
Plaintiff Randy D. Pearce (“Plaintiff”) originally filed this ERISA action against
Defendant Chrysler LLC Pension Plan (“Defendant”) in Wayne County Circuit court. (Doc. #
1). Defendant subsequently removed the matter to this Court, based upon federal question
jurisdiction on November 29, 2010. The matter was referred to Magistrate Judge Michael
Hluchaniuk on April 6, 2011. (Doc. # 11). The parties had disputes concerning discovery and
the administrative record. Based on Magistrate Judge Hluchaniuk’s recommendation, this matter
was remanded to the administrator for further development of the record. (Doc. # 26, 30).
This case was later reopened after the administrative proceedings concluded. (Doc. #
33). On January 18, 2013, Plaintiff filed a motion for leave to amend the complaint and a motion
for judgment on the record. (Doc. # 38, 39). Plaintiff’s motion for leave to amend complaint
sought to include a claim for relief under ERISA § 502(a)(3), in addition to the claim already
brought under § 502(a)(1)(B). Plaintiff later filed an amended motion for leave to amend the
complaint. (Doc. # 50). These motions were referred to Magistrate Judge Hluchaniuk. (Doc. #
51). Defendant filed a response to Plaintiff’s motion for judgment on the record, which the
Magistrate Judge treated as Defendant’s motion for judgment on the record. (Doc. # 45, 55).
Magistrate Judge Hluchaniuk issued a Report and Recommendation (“R&R”), wherein
he recommended that Plaintiff’s motion for judgment on the record be denied, Defendant’s
motion for judgment on the record be granted, and Plaintiff’s motions for leave to amend be
denied. (Doc. # 55). These recommendations were adopted by the undersigned. (Doc. # 60).
Plaintiff appealed to the Sixth Circuit, which reversed in part.1 To the extent that the
Sixth Circuit disagreed with the decisions below, it concluded that there was a conflict between
the plan document and the summary plan description (“SPD”) and that Plaintiff’s motion for
leave to amend the complaint to add a claim under § 502(a)(3) was not futile. (Doc. # 64). As
such, the Sixth Circuit noted that the existence of a material conflict between the SPD and the
plan could support a claim for equitable relief. (Id. at Pg ID 1858-59, 1861-62).
This case was reversed and remanded as to the § 502(a)(3) issue. Sometime thereafter,
the parties filed cross-motions for summary judgment as to Plaintiff’s § 502(a)(3) claims. (Doc.
# 72, Def.’s Mo.; Doc. # 73, Pl.’s Mo.). These motions were referred to Magistrate Judge
Stephanie Dawkins Davis pursuant to 28 U.S.C. § 636(b)(1)(B). (Doc. # 76).
On February 14, 2017, Magistrate Judge Davis issued a Report and Recommendation
(“R&R), wherein she recommended that the Court DENY Plaintiff’s motion for summary
judgment and GRANT Defendant’s motion for summary judgment. (Doc. # 87, R&R). Plaintiff
filed objections to the R&R on March 8, 2017. (Doc. # 89, Pl.’s Objs.). Defendant responded to
As to Plaintiff’s claim under ERISA § 502(a)(1)(B), the Sixth Circuit held that “it is
clear that Pearce is not eligible for 30-and-Out benefits under terms of the Plan, and thus he
cannot recover under ERISA § 502(a)(1)(B).” (Doc. # 64 at Pg ID 1857).
Plaintiff’s objections on March 22, 2017. (Doc. # 90, Def.’s Resp.).
The Court finds Plaintiff’s objections to be improper and without merit. The Court shall
therefore ACCEPT AND ADOPT the R&R, DENY Plaintiff’s Motion for Summary Judgment
(Doc. # 89), and GRANT Defendant’s Motion for Summary Judgment (Doc. # 16).
Pursuant to Federal Rule of Civil Procedure 72(b), a party objecting to the recommended
disposition of a matter by a Magistrate Judge must file objections to the R&R within fourteen
(14) days after being served with a copy of the R&R. Fed. R. Civ. P. 72(b)(2). Objections must
“(A) specify the part of the order, proposed findings, recommendations, or report to which a
person objects; and (B) state the basis for the objection.” E.D. Mich. LR 72.1(d).
Objections are not “a second opportunity to present the argument already considered by
the Magistrate Judge.” Betancourt v. Ace Ins. Co. of Puerto Rico, 313 F. Supp. 2d 32, 34
(D.P.R. 2004). Moreover, the district court should not consider arguments that have not first
been presented to the magistrate judge. See Stonecrest Partners, LLC v. Bank of Hampton
Roads, 770 F. Supp. 2d 778, 785 (E.D.N.C. 2011).
“The district judge must determine de novo any part of the magistrate judge’s disposition
that has been properly objected to. The district judge may accept, reject, or modify the
recommended disposition; receive further evidence; or return the matter to the magistrate judge
with instructions.” Fed. R. Civ. P. 72(b)(3).
In her R&R, Magistrate Judge Davis determined that Plaintiff is not entitled to the
equitable remedies authorized by § 502(a)(3). First, the Magistrate Judge concluded that the
remedy of reformation is unavailable to Plaintiff because Plaintiff “has not offered any evidence
of an intent to deceive, which is required by Amara2.” (R&R at 20). Magistrate Judge Davis
noted that, aside from the conflict between the SPD and the plan documents, there is no evidence
that Defendant engaged in fraud or other inequitable conduct. Second, the Magistrate Judge
concluded that the remedy of estoppel is unavailable because Plaintiff is unable to establish the
following required elements: “(1) Pension Plan provisions that did not allow participants to
determine their eligibility for benefits; or (2) extraordinary circumstances.” (R&R at 27).
Finally, Magistrate Judge Davis concluded that Plaintiff waived any claim for surcharge and
that, in any event, surcharge is unavailable because Plaintiff cannot show harm caused by any
breach of fiduciary duty. (R&R at 34). Plaintiff has lodged six objections to the Magistrate
Objection # 1. Plaintiff’s first objection pertains to the issue of reformation.
Specifically, Plaintiff argues that the Magistrate Judge incorrectly concluded “that the violation
of ERISA is not ‘inequitable conduct’ (1) because it would automatically result in the participant
being entitled to reformation for any mistake in an SPD, and (2) because more is required under
Amara.” (Pl.’s Objs. at 7-8).
In making this argument, Plaintiff improperly asserts much of the same arguments
already advanced before, and rejected by, the Magistrate Judge. As evidence of fraud or similar
inequitable conduct, Plaintiff relies solely on the fact that a conflict exists between the SPD and
the plan documents. However, Magistrate Judge Davis has correctly noted that this theory
would result in a claimant being entitled to reformation every time a SPD conflicted with a Plan
Amara v. CIGNA Corp., 775 F.3d 510 (2d Cir. 2014).
document. And while Plaintiff disagrees with this, he fails to point a specific deficiency in the
Magistrate Judge’s reasoning. Moreover, to the extent that Plaintiff argues that “nothing in
Amara V states that ‘inequitable conduct’ cannot be found unless a deliberate intent is present,”
the Court is not persuaded (Pl.’s Objs. at 8). Notably, Plaintiff offers nothing to the contrary
(i.e., Plaintiff does not explain how inequitable conduct can be found where, as here, Plaintiff
has only pointed to evidence of a conflict/violation of ERISA). Moreover, the Court agrees with
the Magistrate Judge’s reasoned analysis as to this issue. As such, Plaintiff’s first objection is
Objection # 2. Plaintiff’s second objection pertains to the issue of estoppel. Plaintiff
argues that the Magistrate Judge incorrectly stated that Plaintiff did “not address the additional
elements set forth in Bloemker3 until his reply brief...” (Pl.’s Objs. at 2) (internal quotation
marks and citation omitted). The Court agrees with Plaintiff that the additional elements set
forth in Bloemker were addressed in his initial brief, and not just his reply brief. However, the
Court notes that Plaintiff’s initial discussion of these elements was cursory, at best. Moreover,
the fact that the Magistrate Judge indicated that Plaintiff failed to address these elements until his
reply brief is of no import, where, as here, the R&R still considered the arguments advanced by
Plaintiff as to these elements. Accordingly, Plaintiff’s objection is without merit and is
Objection # 3. In his third objection, Plaintiff advances several arguments as to why he
believes the Magistrate Judge was wrong in concluding that Plaintiff is not entitled to equitable
estoppel. First, Plaintiff argues the Magistrate Judge wrongly applied the additional elements of
Bloemker v. Laborer’s Local 265 Pension Fund, 605 F.3d 436 (6th Cir. 2010).
Bloemker because they “are only applicable when the plan language is ambiguous...” (Pl.’s
Objs. at 10, 13). Next, Plaintiff goes on to argue that each of the basic elements of estoppel are
satisfied here. (Id. at 14). And finally, Plaintiff argues that even if the Bloemker elements were
required, he has established each of the additional elements.
The problem with Plaintiff’s third objection is that is essentially a recitation of the same
arguments advanced before the Magistrate Judge. These are not proper objections. Moreover,
Magistrate Judge Davis has properly resolved these issues. First, the Magistrate Judge explained
Prior to Bloemker, estoppel could not be applied to unambiguous pension plan
provisions. Id. In Bloemker, the Court expanded the application of estoppel to
unambiguous pension plan provisions where the plaintiff can demonstrate the
traditional elements of estoppel, including that the defendant engaged in
intentional deception or such gross negligence as to amount to constructive fraud,
plus (1) a written representation; (2) plan provisions which, although
unambiguous, did not allow for an individual calculation of a benefit; and (3)
extraordinary circumstances in which the balance of equities strongly favor the
application of estoppel. Id. at 444.
(R&R at 20-21). Magistrate Judge Davis further noted that “districts in this Circuit continue to
apply Bloemker post-Amara...” (Id. at 26) (emphasis in original).
Plaintiff’s remaining arguments–that the additional Bloemker elements are satisfied here
because: (1) the SPD did not allow Plaintiff to calculate his eligibility; and (2) because
extraordinary circumstances exist since Plaintiff lost benefits he had already earned due to his
reliance on the SPD–have already been rejected by the Magistrate Judge:
[P]laintiff is not eligible for the relief of estoppel because he does not have any
evidence to support the additional Bloemker elements required: (1) Pension Plan
provisions that did not allow participants to determine their eligibility for
benefits; or (2) extraordinary circumstances. Plaintiff cannot show that the
Pension Plan language did not allow him to determine whether he was eligible for
an Early Retirement Supplement. As explained by Judge Cleland in Alquahwagi,
‘the plaintiff in Bloemker made a life-altering decision based on a specific,
written representation certifying a certain entitlement, the plaintiff had no real
reason to doubt that representation, and the plan administrator demanded a
remittence of over $11,000.” Id. In the view of the undersigned, while plaintiff
had a reasonable interpretation of his benefit based on the lack of clarity of the
SPD, this is not the same as a specific representation by defendant regarding the
calculation of his benefits. While plaintiff was given documents pertaining to the
buy-out and the SPD, nothing suggested that if he were terminated from his
employment, he would, in fact, be eligible for the 30 and out benefit. (Dkt. 73-5).
Moreover, the Sixth Circuit has recently affirmed that mere reliance on
misinformation is not sufficient to satisfy the Bloemker “extraordinary
circumstances” requirement. Donati v. Ford Motor Co., Gen. Ret. Plan, Ret.
Comm., 821 F.3d 667, 675 (6th Cir. 2016) (The Court rejected plaintiff’s
argument that she “expended considerable energy evaluating her situation,
discussing with Ford representatives what her options were, and ensuring that
paperwork would be completed accurately to ensure her pension would be paid
out properly” even though she had been told that the payout would be
$230,361.49) (citing Haviland v. Metropolitan Life Insurance Co., 730 F.3d 563,
567, 569 (6th Cir. 2013) (circumstances were not extraordinary when “MetLife
falsely promised that [the plaintiffs’] continuing life insurance benefits would not
be reduced for the rest of their lives, when in fact their benefits were reduced to
$10,000,” and “these false promises affected the plaintiffs’ retirement and estate
planning decisions.”). Thus, plaintiff’s claim for relief under a theory of estoppel
(R&R at 27-29) (emphasis in original). Plaintiff fails to point to a specific deficiency in the
Magistrate Judge’s reasoning. Because the Court agrees that Plaintiff must meet the additional
Bloemker elements in order to for him to be eligible for equitable estoppel, and because the
Court agrees with the Magistrate Judge’s determination that Plaintiff has failed to do so,
Plaintiff’s third objection is overruled.
Objection # 4. In his fourth objection, Plaintiff argues that the Magistrate Judge
incorrectly reports that Plaintiff’s amended complaint did not plead surcharge. (Pl.’s Objs. at
17). This objection is without merit because it disregards that Magistrate Judge Davis still
explained why the remedy of surcharge is unavailable to Plaintiff despite the fact that it was not
properly alleged in the complaint. Specifically, the Magistrate Judge explained that:
Here, as noted above, plaintiff conceded at oral argument that the plan is not a fiduciary.
Thus, the question becomes whether plaintiff can pursue a breach of fiduciary duty claim
against [Defendant] under the theory espoused in Harris Trust, supra. In the view of the
undersigned, plaintiff cannot do so.
In Crosby, the Sixth Circuit found Harris Trust to be inapposite because the plaintiff was
not seeking restitution to the plan of assets wrongfully conveyed to a third party, to have
constructive trust imposed on assets so conveyed, or a disgorgement of profits made by a
third party on ill-gotten assets. Crosby, at 595-596. Plaintiff seeks no such relief here,
(R&R at 32-33) (emphasis in original). Plaintiff does not object to the Magistrate Judge’s
conclusion that Defendant cannot pursue a surcharge claim under the theory advanced in Harris
Trust. As such, Plaintiff’s fourth objection is overruled.
Objection # 5. In his fifth objection, Plaintiff appears to take issue with the Magistrate
Judge’s analysis as to causation in relation with the surcharge claim. As an initial matter, the
Court notes that Magistrate Judge Davis determined that Plaintiff’s surcharge claim fails for two
reasons: (1) Plaintiff cannot pursue a claim for surcharge under Harris Trust; and, alternatively,
(2) Plaintiff cannot show harm caused by any breach of fiduciary duty. Plaintiff’s objection only
pertains to the second reason advanced by the Magistrate Judge. Accordingly, Plaintiff fails to
advance any argument against the Magistrate Judge’s conclusion that the surcharge claim fails
because Plaintiff cannot pursue it under the theory outlined in Harris Trust. The Court could
therefore overrule Plaintiff’s fifth objection on this basis. However, the Court shall still address
the remaining arguments advanced by Plaintiff.
With respect to causation, Magistrate Judge Davis stated that:
Plaintiff alleges that he was harmed by the language of the SPD because he did
not receive an Early Retirement Supplement. Defendant counter[s] that the harm,
if any, that plaintiff suffered was not caused by the SPD language, but rather by
plaintiff’s misconduct which lead to his discharge. Although plaintiff alleges that
he was concerned about Chrysler LLC’s financial condition, plaintiff’s concern is
not what led to his termination of employment. Plaintiff was not laid-off.
Plaintiff was not terminated because of a reduction in the workforce. Rather,
plaintiff was terminated because ... his misconduct related to the improper use of
the Chrysler LLC vehicles. The undersigned agrees with defendant that
plaintiff’s misconduct, leading to his termination, caused him to not receive an
Early Retirement Supplement, not the language in the SPD. Plaintiff therefore
cannot show harm caused by any breach of fiduciary duty and his surcharge claim
also fails for this reason.
(R&R at 34). In his objection, Plaintiff explains why he believes that his reliance upon the
mistake in the SPD caused his damages. (Pl.’s Objs. at 18-24). In so doing, however, Plaintiff
fails to point to any specific deficiency in the Magistrate Judge’s reasoning. Moreover, the
Court agrees with the Magistrate Judge’s resolution of this issue. As such, Plaintiff’s fifth
objection is overruled.
Objection # 6. In his final objection, Plaintiff takes issue with the Magistrate Judge’s
conclusion that “plaintiff’s claim under ERISA § 502(a)(1)(B) was already determined to be
without merit by the Sixth Circuit, as discussed above. Thus, this count of the First Amended
Complaint can be dismissed without further analysis.” (R&R at n. 1). Plaintiff concedes that the
Sixth Circuit “sustained the dismissal of an ERISA § 502(a)(1)(B) claim as stated in Plaintiff’s
Complaint,” however he argues that the Sixth Circuit “also ruled that Plaintiff should be allowed
to file an Amended Complaint.” (Pl.’s Objs. at 24). Plaintiff argues that Plaintiff’s Amended
Complaint follows the Amara procedure for seeking equitable reformation, by seeking equitable
reformation in Count I, and by seeking benefits under the reformed language of the Plan in
Count II. (Id.). Plaintiff further argues that “[p]revailing upon Count II is dependent upon
prevailing upon Count I.” (Id.). Plaintiff fails to support this proposition with any substantive
analysis or authority. Plaintiff’s sixth objection is overruled.
CONCLUSION & ORDER
For the foregoing reasons, the Court shall ADOPT AND ACCEPT the February 14,
2017 Report and Recommendation. Accordingly, Plaintiff’s Motion for Summary Judgment is
DENIED and Defendant’s Motion for Summary Judgment is GRANTED.
IT IS SO ORDERED.
s/Sean F. Cox
Sean F. Cox
United States District Judge
Dated: March 27, 2017
I hereby certify that a copy of the foregoing document was served upon counsel of record on
March 27, 2017, by electronic and/or ordinary mail.
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