Tate et al v. General Motors LLC
Filing
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ORDER granting 9 Motion to Dismiss. Signed by District Judge George Caram Steeh. (MBea)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
WILLIAM E. TATE, et al.,
Plaintiffs,
Case No. 11-CV-12028
v.
HON. GEORGE CARAM STEEH
GENERAL MOTORS LLC,
Defendant.
_____________________________________/
OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS (#9)
On May 9, 2011, plaintiffs filed this action, bringing claims for recovery of benefits
under ERISA §502(a)(1)(B), 29 U.S.C. §1132(a)(1)(B), and for civil penalties under ERISA
§502(c)(1), 29 U.S.C. §1132(c)(1), for defendant’s alleged failure to respond to document
requests within the 30 days provided by statute. On May 19, 2011, plaintiffs filed an
amended complaint asserting the same claims. On June 27, 2011, defendant filed a
motion to dismiss the amended complaint for failure to state a claim upon which relief can
be granted. The motion was fully briefed, and oral argument occurred at a hearing on
December 19, 2011. For the reasons that follow, the court grants defendant’s motion to
dismiss.
STANDARD
In deciding a motion to dismiss under Rule 12(b)(6), the court must construe the
complaint in favor of the plaintiff, accept the factual allegations as true, and determine
whether the allegations present plausible claims. Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 127 S. Ct. 1955, 1964-65 (2007). The pleading must provide "more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id.
at 1964-65. Although the complaint need not contain detailed factual allegations, its
"factual allegations must be enough to raise a right to relief above the speculative level[.]"
Ass’n of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007)
(citing Twombly, 127 S. Ct. at 1965). The court should first identify any conclusory
allegations and bare assertions that are not entitled to an assumption of truth, then
consider the factual allegations that are entitled to a presumption of truth and determine if
they plausibly suggest entitlement to relief. Ashcroft v. Iqbal,556 U.S. 662; 129 S.Ct. 1937,
1951 (2009).
ANALYSIS
Count I
Plaintiffs bring count I pursuant to ERISA §502(a)(1)(B), 29 U.S.C. §1132(a)(1)(B),
to recover additional benefits to which plaintiffs claim they are entitled under a provision of
the General Motors Executive Retirement Plan (“ERP”). The dispute in count I concerns
the interpretation of the following part of Article IV, Section II(g) of the ERP:
[F]or executive retirees who have a combined tax-qualified SRP plus nonqualified benefit under this Plan in excess of $100,000 per annum on a life
annuity basis, the amount of benefits under this Plan over the combined
$100,000 per annum threshold shall be reduced by 2/3rds.
The ERP was established by General Motors Corporation and is now administered
by General Motors LLC. The ERP is an unfunded, non-qualified employee pension benefit
plan that provides "deferred compensation for a select group of management or highly
compensated employees." Its purpose is to supplement benefits provided under GM's taxqualified benefit plans. It is a "top hat" plan. Top hat plans are exempt from certain
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provisions of ERISA and subject to others. Defendant reduced benefits under the ERP
through an amendment that included the provision at issue, in relation to the bankruptcy.
Defendant argues the unambiguous terms of the provision require that after a
combined pension threshold of $100,000 is reached, ERP benefits in excess of that
combined $100,000 are to be reduced by two-thirds. Plaintiffs argue the provision at issue
should be interpreted to mean only ERP benefits should be considered in determining the
$100,000 threshold. Defendant argues the words "combined" and "plus" in the provision
make plaintiffs’ interpretation implausible.
ERISA plan provisions should be interpreted "according to their plain meaning, in
an ordinary and popular sense." Perez v. Aetna Life Ins. Co., 150 F.3d 550, 556 (6th Cir.
1998). “In applying this plain meaning analysis, we ‘must give effect to the unambiguous
terms of an ERISA plan.’” Id., quoting Lake v. Met. Life Ins. Co., 73 F.3d 1372, 1379 (6th
Cir. 1996).
"Ambiguity requires two reasonable interpretations. Furthermore, mere
disagreement between the parties does not create ambiguity in the legal sense." Id. at 557,
n.7 (internal citation omitted).
Defendant argues count I fails to state a claim because the contract is unambiguous
and the only plausible interpretation is the one defendant gives to it. Defendant states the
reference to SRP in the provision is a reference to the General Motors Retirement Program
for Salaried Employees. Defendant argues the word "combined" in the first part of the
provision means both SRP and ERP benefits are to be added together in determining the
$100,000 threshold, and that the word "plus" also emphasizes addition is to be performed.
Defendant argues that once the combined $100,000 threshold is reached, ERP benefits
above that level are reduced by two-thirds. SRP benefits, unlike benefits under the ERP,
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are subject to ERISA's accrual requirements and cannot be reduced. Such limitations
provide the reason for the reduction of only the ERP benefits, even though both ERP
benefits and SRP benefits are mentioned in the provision. Defendant argues the second
clause in the provision reinforces the meaning of the first clause, stating that the two-thirds
reduction applies to the amount of benefits under the ERP over the "combined" $100,000
threshold.
Plaintiffs argue the first clause of the provision is a condition precedent and the
second clause is an operative action clause. Thus, plaintiffs assert the first clause provides
that the provision only applies to those retirees who have (1) a SRP benefit; and (2) an
annual ERP benefit in excess of $100,000. Plaintiffs argue the phrases "combined" and
"plus" mean the existence or presence of both benefits but do not require a mathematical
totaling of the plans. They argue the second clause then reduces the amount of ERP
benefits over $100,000 by two-thirds. Plaintiffs argue the "combined $100,000 per annum
threshold" just confirms that the condition precedent of the first clause has been met.
Defendant responds that plaintiffs' interpretation renders many of the words in the
provision meaningless, which runs afoul of basic principles of contract interpretation
requiring that terms be interpreted so as to render none nugatory. Significantly, plaintiffs'
interpretation reads "combined" and "plus" out of the provision. The phrase "combined
$100,000 per annum threshold" simply cannot be read as meaning $100,000 in just ERP
benefits. The word "combined" is clearly a qualifier on the $100,000 per annum threshold.
In giving “combined” meaning in the provision, plaintiffs' interpretation fails.
Plaintiffs attempt to create enough ambiguity to survive the motion to dismiss by
arguing the four corners of the plan document do not provide a definition of SRP. Plaintiffs
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note that the plan which defendant argues is referred to by the term “SRP,” the General
Motors Retirement Program for Salaried Employees, is defined in the ERP as the
"Retirement Program." However, plaintiffs’ interpretation of the provision does not rely on
the definition of SRP.
Plaintiffs claim only ERP benefits should be considered in
determining the $100,000 threshold and the court finds that claim fails. The definition of
SRP does not change that result. Plaintiffs also note that the ERP requires that the ERP
“shall at all times be maintained, considered, and administered as a non-qualified plan that
is wholly separate and distinct from the Retirement Program and the [Savings-Stock
Purchase Program].” The court does not find this provision gives plaintiffs’ interpretation
plausibility, or detracts from defendant’s interpretation. The court therefore does not find
these arguments preclude dismissal of count I. Because plaintiffs’ interpretation of the plan
provision is implausible, count I of plaintiffs’ amended complaint is DISMISSED.1
Count II
In count II, plaintiffs assert a claim for civil penalties under ERISA §502(c)(1), 29
U.S.C. §1132(c)(1), due to GM's failure to respond to a document request within 30 days.
On November 22, 2010, plaintiffs Tate and Schmidt requested certain ERP-related
documents from GM. In a letter dated February 8, 2011, and received by plaintiffs Tate
and Schmidt on February 10, 2011, GM responded to the document request. The
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Defendant also argues that documents (including the Executive Compensation
Committee’s minutes regarding its resolution to amend the provision at issue, GM’s sale
agreement, and GM’s secured credit agreement), support its interpretation of the plan
provision. Because the court finds plaintiffs’ interpretation of the provision is implausible
and the provision is unambiguous, the court need not consider the documents
submitted by defendant on this issue.
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response was received 80 days after submitting the request and 50 days after the 30-day
time period for responding. Plaintiffs also allege the response was highly redacted.
Defendant argues plaintiffs’ claim fails because GM complied with the alternate
reporting and disclosure regulation applicable to top hot plans. Defendant relies on 29
C.F.R. §2520.104-23, which provides an alternate method of compliance with the reporting
and disclosure provisions of ERISA.
The regulation provides that a top hat plan
administrator who files a statement with the Secretary of Labor as described in the
regulation “shall be deemed to satisfy the reporting and disclosure provisions of part I of
title I of the Act." By complying with the alternative compliance regulation, defendant
argues it was not required to furnish the information in the manner requested and thus
plaintiffs’ claim should be dismissed. Defendant argues the court may take judicial notice
of the statement on file with the Department of Labor when ruling on this Rule 12(b)(6)
motion. See Belmonte v. Examination Mgmt. Servs., Inc., Case No. 05-3206, 2007 WL
551578, *1 n.2 (N.D. Ill. Feb. 16, 2007) (taking judicial notice of top hat plan statement filed
with Department of Labor when ruling on motion to dismiss).
Plaintiffs argue the records produced show that "General Motors Corporation" filed
documents per the alternative reporting provision, not "General Motors LLC", and therefore
defendant cannot rely upon reporting by the previous legal entity. Plaintiffs fail to cite any
legal authority in support of this proposition.
Under the sale agreement in the bankruptcy, defendant acquired all registrations
made available by or under the authority of a government agency. See The Amended and
Restated Master Sale and Purchase Agreement §2.2(a)(xi), dated June 26, 2009, Docket
No. 2968, available at www.motorsliquidationdocket.com (In re: General Motors Corp.,
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Case No. 09-50026, U.S. Bankruptcy Court for the Southern District of New York.)2 As
such, defendant may rely on the reporting. At the hearing, plaintiffs failed to provide a
reason why defendant may not rely upon the former entity’s statement in light of the sale
agreement’s transfer of all registrations. Count II of plaintiffs’ amended complaint is
therefore DISMISSED.
CONCLUSION
For the reasons set forth above, defendant’s motion to dismiss is GRANTED.
Dated: December 27, 2011
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
December 27, 2011, by electronic and/or ordinary mail.
s/Josephine Chaffee
Deputy Clerk
2
The sale agreement is a public court document that this court may consider on a
motion to dismiss. See New England Health Care Emp. Pension Fund v. Ernst &
Young, LLP, 336 F.3d 495, 501 (6th Cir. 2003) (“A court that is ruling on a Rule 12(b)(6)
motion may consider materials in addition to the complaint if such materials are public
records or are otherwise appropriate for the taking of judicial notice.”), abrogated by
Merck & Co., Inc. v. Reynolds, 130 S.Ct. 1784 (2010).
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