Miller et al v. CBS Retirement Plan

Filing 31

MEMORANDUM DECISION & ORDER: For the reasons set forth above, defendant's motion for judgment on the pleadings is GRANTED. The Clerk of Court is hereby directed to close the motion at ECF No. 14, to terminate any remaining dates, and to close this case. (Signed by Judge Katherine B. Forrest on 3/7/2013) (mt)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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USDCSDNY
DOCUMENT
ELEC1RONICALLY FILED
DOC #:_ _ _ _ _ __
DATE Fll.FD:MAR

072013

TODD MILLER, et aI.,
Plaintiffs,

12 Civ. 3697 (KBF)
MEMORANDUM
DECISION & ORDER

-v-

CBS RETIREMENT PLAN,
Defendant.
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KATHERINE B. FORREST, District Judge:
The children of the late Marlin J. Miller ("Miller") commenced this Employee
Retirement Income Security Act ("ERISA") action in May 2012; the action was
transferred to the undersigned in December of that year. (CompI., ECF No.1;
Notice of Case Reassignment, ECF No. 29.) These plaintiffs allege that their father
intended to ensure that they would receive his retirement benefits after his death,
but that defendant CBS Retirement Plan thwarted their father's intentions.
The parties agree that plaintiffs' father was in fact entitled to the retirement
benefits here at issue several years before he began completing his election
paperwork, but by the time he commenced that process (December 2009), he was
only weeks away from his death (January 23,2010). However, defendant argues
that because plaintiffs' father died prior to February 1, 2010, the date upon which
he would have commenced receiving benefits, the terms of the benefit plan provide
that his wife will receive an annuity for her life, and his sons nothing.

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Defendant filed a Fed. R. Civ. P. 12(c) motion for judgment on the pleadings
on August 31,2012. (ECF No. 14.) For the reasons set forth below, defendant's
motion is GRANTED.
1. FACTUAL BACKGROUND

As discussed below, in the context of a motion pursuant to Rule 12(c), the
Court takes as true the plausible factual allegations of the complaint. Here, the
Court recites plaintiffs' assertions as drawn from their Complaint as well as the
Plan and related documents incorporated by reference.
Plaintiffs Todd M. Miller, Jay M. Miller, and Chad H. Miller, are the only
children of the late Marlin J. Miller. Miller was a longtime employee of Viaeom 1
and a participant in defendant's CBS Retirement Plan ("the Plan"), (CompI." 5,
11, 16.)
CBS sponsors the Plan (id. , 9), and the CBS Retirement Committee (the
"Committee") serves as Plan Administrator. (Id.) The Plan is a defined benefit plan
governed by ERISA and qualified pursuant to Section 401(a) of the Internal
Revenue Code. (Id.

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8.) As a result of various business combinations over the

years, the Plan includes participants who formerly worked for other companies and
who were covered by other pension plans. (Id. , 11). For instance, the Plan was at
one time known as the Viacom Pension Plan, and prior to that, as the Paramount
Communications, Inc. Retirement Plan. (Id.) Information regarding the Plan is
primarily provided to participants and beneficiaries through the CBS & YOU
Benefits Center ("Benefits Center"). (Id., 9.)
1

The former parent company of CBS Broadcasting, Inc.

2

Miller was an employee of Viacom. (ld.

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12.) He ceased working for Viacom

in 1995. (ld.) He qualified for retirement in May 2004. <Id.

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17.) It is undisputed

that on November 6, 2009, Plan representatives sent Miller a letter to advise him of
his eligibility for benefits. (ld.

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18.) Enclosed with this letter was a Participant

Information Form to facilitate Miller's preparation of his retirement application.
(Id.) Miller signed the Participant Information Form and returned it on or about
November 16, 2009. <Id.

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19.)

As of the late fall of 2009, Miller's health was rapidly failing. (Id.

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20.) On

December 7, 2009, several weeks after receiving the letter and the enclosed form,
Miller and his son, Todd (who had power of attorney), placed telephone calls to the
Benefits Center to initiate the process of selecting beneficiaries. (Id.

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21, 25.)

Plaintiff Todd Miller indicated that his father was ready to collect his benefits. (ld.
~

22.)
Upon inquiry as to his desired benefit commencement date, Miller informed

the representative that he wanted benefits to commence "just as soon as possible"
and, in response, the representative offered to "we can put the January [2010] date
down." (Id.

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23.) During this call, plaintiff Todd Miller asked the representative

what the ramifications would be if Miller died prior to benefits commencing. (Id.
~24.)

Following this inquiry, the call disconnected. (Id.)
After the first call disconnected plaintiff and his father called back, reaching

a different representative. (ld.

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25.) In the second call, the representative advised

Miller-then unmarried-that were he to die prior to the commencement of Plan

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benefits, only a spouse would be eligible to receive a survivor benefit, in the form of
a Qualified Joint Survivor Annuity ("QJSA"). (ld.

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27.) Any non-spousal

beneficiary would only receive a benefit if Miller were to die after the Plan
commenced payment. (Id.) During that call, Miller and his son were told that the
cut-off for the January payment had passed and that the earliest benefit
commencement date would be February 1, 2010. (ld.

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28.)

The day after these two telephone calls with the Millers, the Benefits Center
issued a Benefit Notice and Election Package (the "December 10 Package.") (Id.
~30.)

The package included various forms which had to be completed prior to the

commencement of Miller's benefits. (Id.) There is no allegation that the Benefits
Center was told that Miller intended to marry; thus, the forms that were sent out
did not include certain information as to the benefits a spouse would receive that he
or she could then knowingly consent to waive.
Plaintiffs allege that in order to ensure that his sons would receive benefits
(and in light of his health condition), on December 11, 2009, Miller married his
girlfriend, Candyce Belanger. (Id.

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29.)

After receiving the December 10 Package, Miller filled out the forms. (Id.
~31.)

He selected the "10-Year Certain and Life Annuity". (ld.) He designated his

sons as beneficiaries (each with a 33 113 percent share). (ld.

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32.) In addition, his

now wife, Belanger, executed a verified spousal consent in which she waived her
right to have Miller's benefit paid in the form of a QJSA and acknowledged that she
might receive nothing under the Plan after her husband died. (Id.

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33.)

Finally, Miller signed a waiver of the statutory 30-day notice of plan election
period in which he acknowledged:
My benefit payments will begin as soon as administratively practicable after
this completed ... Form is received by the Plan-but no earlier than (1) the
first day of the month after the Completed ... Form is received by the Plan,
or (2) seven days after I receive these materials, whichever is later."

<:l.!l ~ 34 (emphasis added).) The participant information included with the
December 10 Package showed no information intended for a spouse and the pension
calculations were for an unmarried participant. (Declaration of Michael Arsenault
("Arsenault Decl."), dated August 29, 2012, Ex. 3 at 7.) The December 10 Package
also states that the commencement of benefits would be February 1, 2010. (ld. at
1.)

On December 18, 2009, plaintiff Todd Miller again called the Benefits Center.
(CompI.

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35.) He informed the Benefits Center that his father had now married

and that his spouse had executed the spousal consent form, and that he had made
his three sons his beneficiaries. (Id.) Plaintiffs allege that based on whatever
occurred during this conversation with the Benefits Center, they were satisfied that
the paperwork was in order and they sent it to the Benefits Center. (ld.

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36.)

Plaintiffs allege that the completed forms were received by the Plan's Benefits
Center on December 21, 2009. (ld.) According to plaintiffs, they believed that the
fact that the paperwork had been received by December 21 meant that payments of
benefits would commence on January 1, 2010. (Id.

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37.)

Instead, Miller was notified shortly thereafter that his forms were not in
proper form. Since Miller had initially told the Benefits Center that he was
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unmarried, the December 10 Packet did not include a calculation of the "relative
value" that the spouse would be relinquishing should she execute a consent (and
waive her rights to QJSA spousal payments). (Id.

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38.)

The Benefits Center sent Miller a new package with the spousal benefit
calculation included. (See Arsenault Decl. Ex. 5.) He received that package on
December 28,2009 (the "December 28 Package"), and executed the paperwork
again. (Id.

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40.) The December 28 Package indicated that the commencement date

for benefits was February 1, 2010. (See Arsenault Decl. Ex. 5 at 1.) The December
28 Package also showed that Miller's spouse would be entitled to a QJSA upon
Miller's death. (See Arsenault Decl. Ex. 5 at 3.)
The Benefits Center received the December 28 Package paperwork on
January 7,2010. (Comp1.:.

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41.) The Benefits Center determined that beneficiary

elections could not be made in fractions of one percent and sent Miller a letter
explaining its position on January 15, 2010. (ld.

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42.)

On January 23,2010, prior to the commencement of his benefits, Miller died.
The Benefits Center determined that, as Miller died prior to the disbursement of
benefits and the spousal waiver was invalid as a matter of law, the beneficiary
designations of the 10 Year Certain and Life Annuity were void and Belanger was
entitled to receive a QJSA spousal survivorship benefit instead. (Id.

~~

43, 46.)

Thereafter, The Plan commenced monthly payments of $710.94 to Belanger; unless
plaintiffs prevail in this action, those payments will continue for her life. (ld. ~ 48;
see Arsenault Decl. Ex. 7 at 28.)

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Plaintiffs filed a claim for benefits in October 2010. (See Arsenault Decl. Ex.
7.) The Retirement Committee denied their claim on January 12, 2011. (See id. Ex.
8.) Citing § 8.1 of the Plan, the Committee stated that because Miller's benefit
commencement date was February 1, 2010, and he died prior to starting to receive
benefits, the 10-Year Certain Option was not payable. (See id. Ex. 8 at 2·3.) In
such a circumstance, the Plan provides that the only benefit payable is a QJSA. (Id.)
In addition, in its denial letter, the Committee stated that the December 18 spousal
waiver was invalid under federal law because the December 10 Package did not
contain a calculation of spousal benefits. (Id.)
Plaintiffs timely appealed the Committee's denial of their claim. In their
appeal, plaintiffs argued that Belanger had waived her spousal rights in the
December 10 Package. (CompI.
plaintiffs' appeal. (Id.

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48.) On May 13, 2011, the Committee denied

49.) Plaintiffs brought the instant action challenging this

determination on May 9,2012. (ECF No. 1.)
II. STANDARD OF REVIEW ON RULE 12(c) MOTION
"After the pleadings are closed-but early enough not to delay trial-a party
may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). The Court reviews
Rule 12(c) motions for judgment on the pleadings under the same standard as Rule
12(b)(6) motions to dismiss. Bank of N.Y. v. First Millennium, Inc., 607 F.3d 905,
922 (2d Cir.2010). Therefore, "[t]o survive a Rule 12(c) motion, the complaint 'must
contain sufficient factual matter, accepted as true, to state a claim to relief that is

7

plausible on its face.'" Id. (quoting Hayden v. Paterson, 594 F.3d 150, 160 (2d
Cir.2010»; see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
In addition, the Court need not convert a Rule 12(c) motion to a summary
judgment motion where it refers to certain material outside the pleadings. Instead,
"[w]here plaintiff has actual notice of all the information in the movant's papers and
has relied upon these documents in framing the complaint the necessity of
translating a Rule [12(c)] motion into one under Rule 56 [for summary judgment] is
largely dissipated." Cortec Indus. V. Sum Holding L.P., 949 F.2d 42,48 (2d Cir.
1991). The Court may consider any documents incorporated by reference into the
complaint or which the plaintiff relied upon in drafting the complaint. See Schnall
v. Marine Midland Bank, 225 F.3d 263,266 (2d Cir. 2000). This includes ERISA
plan documents. See, e.g., Steger v. Delta Airlines, Inc., 382 F.Supp.2d 382, 385
(E.D.N.Y. 2005)(considering the Plan in an employee benefits case).
III.THE PLAN AND PROVISIONS OF ERISA
Here, the Plan gives the administrator or a designated fiduciary, the
Retirement Committee, discretionary authority to determine eligibility for benefits.
(See Arsenault Decl. Ex. 1, Plan § 10.5.) When such discretionary authority has
been conferred, the law requires that this Court defer to the administrator's
ultimate conclusion unless it is arbitrary and capricious. See Pagan v. NYNEX
Pension Plan, 52 F.3d 438,441 (2d Cir. 1995); Kinstler v. First Reliance Standard
Life Ins. Co., 181 F.3d 243,249 (2d Cir. 1999). A court should not disturb an
administrator's decision unless it was unreasonable or without evidentiary support.

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Pagan, 52 F.3d at 442. Decisions may be upheld so long as they are on the
continuum of reasonableness. See Davis v. Commercial Bank of New York, 275
F.Supp.2d 418, 425 (S.D.N.Y. 2003).
The Plan here is clear that the administrator's discretionary authority
extends to the determination of all benefits and "to resolve all questions arising
from the administration, interpretation, and application of the Plan provisions,
either by general rules or particular decisions." (Arsenault Decl. Ex. 1, Plan §
10.5(b).)
The Plan provides that for an unmarried participant who elects a Period
Certain and Life Income Option ("Period Certain"), he or she can select one or more
beneficiaries to continue to receive payments for the remainder for the selected
Period Certain should the participant die. (ld. §§ 13, 15.) For a married
participant, selecting the Period Certain option and selecting a someone other than
the spouse as the beneficiary requires that the spouse execute a waiver. (Id. § 7.2.)
In the absence of a validly executed waiver, the Plan provides that the spouse shall
be considered the beneficiary upon the participant's death. (Id.) The Internal
Revenue Code ("IRC") requires that a spouse receive certain information prior to
executing a waiver. In particular, IRC § 417(a)(3) requires that a plan provide a
spouse with a written explanation as to what is being waived. Such explanation
must include, inter alia, the terms and conditions of the QJSA. Id. The IRS refers
to this as the "417(a)(3) explanation." Treas. Reg. § 1.417(a)(3)-1(a). The
corresponding regulations provide that the written explanation contain a "relative

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value" of the optional form of benefit compared to the QJSA. Treas. Reg.
§1.417(a)(3)-1(c)(1)(iv). The relative value must give the participant and the spouse
a "numerical comparison" of the relative values between the optional benefit (here,
the Period Certain option) and the value of the QJSA. Treas. Reg. §1·417(a)(3)·
1(c) (2)(i).
The Plan also provides that in order for a designated beneficiary to receive
benefits under the Period Certain option, the participant must have started to
receive payments prior to his or her death. CllL. § 8.1.) Thus, pursuant to the Plan,
if a participant dies before having started to receive payments, the designated
beneficiaries are not entitled to the benefit. (Id.) In such a situation, the Plan
provides that only person who would be entitled to receive benefits would be the
spouse. (Id.)
Consistent with both ERISA (§205(a» and the Internal Revenue Code §
417(a)(3), Sections 8.1 and 8.2 of Article VIII of the Plan provide that if the
participant dies prior to any payments having commenced, a surviving spouse is
entitled to receive a QJSA equal to half of what the Participant would have received
under the Plan. (Arsenault Decl. Ex. 1 at 44, Plan Art. VIII, §§ 8.1, 8.2.)
IV. DISCUSSION
Plaintiffs' claim is premised on the December 18 spousal waiver being valid.

If it were valid, so the argument goes, the correct paperwork was received on
December 21, and Miller should have commenced receiving payments prior to his
death.

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Plaintiffs' arguments ignore several crucial and, indeed, dispositive points.
First, as set forth above, federal law requires that a spousal waiver contain an
express waiver of 50% of the QJSA benefit. See Internal Revenue Code §417(a)(2).
In the absence of such an express waiver, had the Plan nonetheless proceeded to
pay Miller and then his sons, his spouse might well have a valid claim against the
Plan. Id. The Committee has the discretionary authority to make determinations
as to Plan benefits and interpretation; determining that the spousal consent form
was improperly executed is squarely within the bounds of that discretion. It is
perfectly reasonable, and certainly not arbitrary and capricious for this legal
provision to be interpreted as requiring inclusion of a calculation of the relative
value of the relinquished benefit.
Second, the record is also clear and undisputed that the December 10
Package did not contain the required "numerical comparison" of relative values
between the Period Certain option and the QJSA. This is a violation of federal law.
The Committee's decision to deem the spousal waiver invalid since it was non­
compliant with federal law has evidentiary support and cannot be arbitrary nor
CaprICIouS.
Third, it is well within the discretion of the Plan and the Committee
interpreting the Plan to provide that if a participant dies prior to receiving benefits
then the Period Certain option is not available. The Plan so provides and that is
what happened here. Again, the determination of benefits was based upon existing
provisions of the Plan and as such cannot be said to be arbitrary and capricious.

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Fourth, plaintiffs' arguments are premised upon a view of the facts in which
defendant was simply trying to "run out the clock" on Miller-and intentionally
impede his ability to start receiving benefits on January 1, 2010, prior to his death,
This argument ignores that both the December 10 Package and the December 28
Package clearly stated that Miller's benefits would commence on February 1, 2010. 2
(Arsenault Dec!. Exs. 3-6 (consisting of package documents),)
CONCLUSION
For the reasons set forth above, defendant's motion for judgment on the
pleadings is GRANTED. The Clerk of Court is hereby directed to close the motion
at ECF No. 14, to terminate any remaining dates, and to close this case.
SO ORDERED.
Dated:

New York, New York
March 7, 2013

KATHERINE B. FORREST

United States District Judge

The Court has considered and rejected plaintiffs arguments that estoppel dictates a decision in
their favor. As the evidentiary record demonstrates, it was apparent on the face of the December 10
Package that benefits would commence on February 1; so too with the December 28 Package. Thus,
even if there was a promise (and even construed most favorably for plaintiffs does not support the
Benefit Center's representative as having made a promise), there certainly was no justifiable
reliance. In addition, the information needed for a legally valid spousal waiver was concededly not
included; this also precludes any estoppel claim.
2

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