Jarosz et al v. American Axle & Manufacturing, Inc., Hourly-Rate Associates Pension Plan et al
Filing
76
DECISION AND ORDER GRANTING in part and DENYING in part Plaintiffs' 62 Motion for Summary Judgment; GRANTING in part and DENYING in part Defendants' 61 Motion for Summary Judgment; DISMISSING the actions brought by Gerald Dixon, Pat rick Higgins, and Donna Lichtenthal under Rule 25 (a) of the Federal Rules of Civil Procedure; DECLARING that subsection (c) of the "Deductions for Workers Compensation" provision of the Plan provides that no deductions may be applied to pe nsion payments due under the Plan for workers' compensation payments received from workers' compensation claims filed earlier than the date falling two years after a participant breaks seniority, as more fully explained herein; DIRECTING th e Defendants to calculate Plaintiffs' pension payments consistent with this Decision and Order and pay Plaintiffs the full benefits to which they are entitled under the Plan (retroactive and prospective), together with prejudgment interest at t he rate of 9% per annum. ADVISING Plaintiffs that any motion for attorneys fees under 29 U.S.C. § 1132 (g)(1) must be filed within 30 days of the entry date of this Decision and Order; DIRECTING Defendants to file their response thereto wi thin 14 days of the filing date of Plaintiffs' motion; ADVISING Plaintiffs that any reply must be filed within 7 days of the filing date of Defendants' response; DIRECTING the Clerk of Court to enter judgment consistent with this Decision and Order and then CLOSE this case. Signed by William M. Skretny, United States District Judge on 3/11/2019. (MEAL) - CLERK TO FOLLOW UP -
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
RICHARD JAROSZ, CAROLE ARCHAMBEAULT,
EUGENIA BELLERE, ROBERT BRANDON,
JOHN CZECH, GERALD DIXON, ROBIN GLOVER,
PATRICK HIGGINS, WALLACE JAROSZEWSKI,
TODD KENDZIERSKI, DONNA LICHTENTHAL,
MICHAEL LoGRASSO, WILLIAM McDONELL,
ROBERT OSBORNE, ANNE OSIKA,
KATHY PERKOVICH, TAMMY SANTANA,
GAIL SCHALBERG, WILLIAM SEVERINO,
JAMES SHORT, MICHAEL STOWELL,
KENNETH ZIOLKOWSKI, and SUSAN WISE,
Plaintiffs,
v.
DECISION AND ORDER
12-CV-39S
AMERICAN AXLE & MANUFACTURING, INC.,
HOURLY-RATE ASSOCIATES PENSION PLAN, and
AMERICAN AXLE & MANUFACTURING, INC.,
Defendants.
I. INTRODUCTION
In this action, the plaintiffs, each of whom is a qualified participant in the Defendant
American Axle & Manufacturing, Inc. Hourly-Rate Associates Pension Plan (“the Plan”),
allege that Defendants violated the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. §§ 1001 et seq. by reducing their pension payments due under the
Plan by the amount of certain workers’ compensation payments they received. They
also assert related causes of action.
Presently before this Court are the parties’ cross motions for summary judgment.
(Docket Nos. 61, 62.) For the reasons that follow, the motions are granted in part and
1
denied in part.
II. BACKGROUND
A. Facts1
1. The Plaintiffs
The plaintiffs were all members of The International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America (“UAW”) at the time they
retired from Defendant American Axle & Manufacturing, Inc. (“American Axle”).
(Plaintiffs’ Statement of Facts Not in Genuine Dispute (“Plaintiffs’ Statement”), Docket No.
62-9, ¶¶ 1, 46.)
Some plaintiffs previously worked for General Motors Corporation
(“GM”) before continuing on with American Axle after it bought two of GM’s plants in
March 1994—Bellere, Brandon, Czech, Glover, Jaroszewski, Lichtenthal, LoGrasso,
McDonell, Schalberg, Short, and Wise—while the others worked only for American Axle
after its purchase of the plants—Jarosz, Archambault, Dixon, Higgins, Kendzierski,
Osborne, Osika, Perkovich, Santana, Severino, Stowell, and Ziolkowski. 2
(Plaintiffs’
Statement, ¶¶ 3, 45; Defendants’ Statement of Undisputed Facts (“Defendants’
Statement”), Docket No. 61-68, ¶¶ 11, 12, 17, 18, 23, 32, 50, 61, 68, 75, 76, 82, 87, 88,
95, 101, 111, 121, 122, 127, 128, 133, 134, 139, 140, 147, 152, 153, 158, 167, 168, 176,
177.)
Both GM and American Axle provided pension plans to their employees negotiated
as part of various collective bargaining agreements. (Plaintiffs’ Statement, ¶¶ 2, 4-12;
1 Unless otherwise noted, the facts are undisputed.
2 Plaintiffs Dixon, Higgins, and Lichtenthal are deceased.
Defendants’ Response, ¶ 45.)
2
(Defendants’ Statement, ¶¶ 67, 81, 100;
Defendants’ Response to Plaintiffs’ Statement of Facts Not in Genuine Dispute
(“Defendants’ Response”), Docket No. 66-1, ¶¶ 2, 4-12.) While the parties disagree as
to the relevance and impact of those agreements (see id.), they agree that the pension
plan at issue here is the “Restatement of the American Axle & Manufacturing, Inc. HourlyRate Associates Pension Plan” (again, “the Plan”), which is found in the record at docket
numbers 61-4 and 61-5. (Plaintiffs’ Statement, ¶ 13; Defendants’ Response, ¶¶ 13, 21.)
The parties further agree that the language of the Plan provision at issue—Deductions
for Workers Compensation—has not changed throughout the various agreements
between American Axle and the UAW between 1994 and 2008. (Plaintiffs’ Statement,
¶¶ 10, 14-16, 25; Defendants’ Response, ¶¶ 10, 14-16, 25.)
2. The Plan
There is no dispute that the Plan is an employee pension benefit and defined
benefit plan under ERISA. (Defendants’ Statement, ¶ 1; Plaintiffs’ Statement, ¶ 43.)
American Axle has been the sponsor and administrator of the Plan since 1994.
(Defendants’ Statement, ¶¶ 2, 3; Plaintiffs’ Statement of Disputed Facts (“Plaintiffs’
Response”), Docket No. 65-1, ¶ 3; Plaintiffs’ Statement, ¶¶ 27, 44; Defendants’
Response, ¶ 27.) American Axle delegated day-to-day administration of the Plan to GM
from 1994 to 1997, after which it undertook direct administration of the Plan itself.
(Plaintiffs’ Statement, ¶ 27; Defendants’ Response, ¶ 27.)
American Axle administers the Plan through a Management Benefits Committee
(“MBC”) and funds it with irrevocable contributions to a trust fund, which is managed by
a third-party trustee—SEI Private Trust Company.
3
(Defendants’ Statement, ¶¶ 4-6;
Plaintiffs’ Response, ¶ 4; Plaintiffs’ Statement, ¶ 22; Defendants’ Response, ¶ 22.) The
MBC is comprised of American Axle executives. (Plaintiffs’ Statement, ¶ 22; Defendants’
Response, ¶ 22.)
The Plan vests the MBC with
discretionary authority to determine all questions arising in the
administration, application and interpretation of the Plan
including the authority to correct any defect or reconcile any
inconsistency or ambiguity in the Plan and the authority to
determine a Participant’s, beneficiary’s or other individual’s
right to participate in the Plan, eligibility to receive a benefit
from the Plan, and the amount of that benefit.
(Defendants’ Statement, ¶ 4; Plaintiffs’ Response, ¶ 4; Plaintiffs’ Statement, ¶ 22;
Defendants’ Response, ¶ 22.)
At issue is the provision of the Plan that governs how receipt of workers’
compensation payments affects monthly benefits payable under the Plan. (Plaintiffs’
Statement, ¶ 17; Defendants’ Response, ¶ 17.) That provision provides as follows:
Deductions for Workers Compensation. In determining
the monthly benefits payable under this Plan, a deduction
shall be made unless prohibited by law, equivalent to all or
any part of Workers Compensation (including compromise or
redemption settlements) payable to such associate by reason
of any law of the United States, or any political subdivision
thereof, which has been or shall be enacted, provided that
such deductions shall be to the extent that such Workers
Compensation has been provided by premiums, taxes or
other payments paid by or at the expense of the Corporation,
except that no deduction shall be made for the following:
(a) Workers
Compensation
payments
specifically
allocated for hospitalization or medical expenses, fixed
statutory payments for the loss of any bodily member,
or 100% loss of use of any bodily member, or payments
for loss of industrial vision.
4
(b) Compromise or redemption settlements payable prior
to the date monthly pension benefits first become
payable.
(c) Workers Compensation payments paid under a claim
filed not later than two years after the breaking of
seniority.
(Defendants’ Statement, ¶ 8.)
The parties agree that for purposes of subsection (c), retirement constitutes a
break of seniority under the Plan. (Plaintiffs’ Statement, ¶ 18; Defendants’ Response, ¶
18.)
3. Defendants’ Decision to Deduct Workers’ Compensation Payments from
Pension Payments
Each plaintiff filed a workers’ compensation claim before they retired from
American Axle. (Plaintiffs’ Statement, ¶ 47.) And each plaintiff, at one point or another,
received his or her resulting workers’ compensation payments and his or her pension
payments simultaneously without any offset. (Plaintiffs’ Statement, ¶ 48.)
In December 2005, Plaintiff Susan Wise began receiving monthly pension
payments under the Plan. (Defendants’ Statement, ¶ 190.) At that same time, Wise
was also receiving workers’ compensation payments from a claim that she filed before
she retired from American Axle. (Defendants’ Statement, ¶ 185.)
About seven months later, on July 10, 2006, American Axle sent Wise a letter
indicating that it would begin offsetting her monthly pension payment by the full amount
of her monthly workers’ compensation payment in line with the “Deductions for Workers
Compensation” provision set forth above. 3 (Defendants’ Statement, ¶ 191; Letter to
3 American Axle also demanded the return of $8,366 that it believed it had overpaid Wise since December
5
Susan Wise, Docket No. 61-37.) The letter did not inform Wise of her right to appeal
American Axle’s decision or describe the available appeal procedures.
(Plaintiffs’
Statement, ¶ 30; Defendants’ Response, ¶ 30; Letter to Susan Wise, Docket No. 61-37.)
Because Wise’s monthly workers’ compensation payment exceeded her monthly
pension payment, she received no pension payments under the Plan, but she continued
to receive all other benefits available to her, such as health, dental, vision, and life
insurance.
(Defendants’ Statement, ¶¶ 191, 192.)
When Wise’s workers’
compensation case was closed in 2007 and she stopped receiving monthly workers’
compensation payments, American Axle reinstated the full amount of her monthly pension
payments under the Plan. (Defendants’ Statement, ¶¶ 193, 194; Plaintiffs’ Statement, ¶
31.)
As a result of Wise’s case, the UAW became aware in August 2006 that American
Axle was interpreting the “Deductions for Workers Compensation” provision to require an
offset for workers’ compensation payments received from workers’ compensation claims
filed before a Plan participant retired. (Defendants’ Statement, ¶ 196.) Before that time,
American Axle had never applied such an offset.
In early 2009, American Axle audited all Plan participants to identify those who
were receiving monthly pension payments and workers’ compensation payments from
claims filed before their retirement (i.e., prior to the breaking of seniority). (Defendants’
Statement, ¶ 197.) It then notified the UAW on March 12, 2009, that, effective April 1,
1, 2005. (Letter to Susan Wise, Docket No. 61-37.)
Statement, ¶ 30.)
6
Wise returned these payments.
(Plaintiffs’
2009, it would begin offsetting pension payments in the amount of workers’ compensation
payments under the “Deductions for Workers Compensation” provision of the Plan.
(Defendants’ Statement, ¶ 198.)
Thereafter, on March 23, 2009, American Axle sent letters to each plaintiff (and
others) notifying them that, effective April 1, 2009, their pension payments under the Plan
would be offset by the amount of any workers’ compensation payments they received.
(Defendants’ Statement, ¶ 199; Plaintiffs’ Statement, ¶ 35.)
The letter sent to lead
plaintiff Richard Jarosz is illustrative of the form letter American Axle sent to each plaintiff:
DEAR RICHARD JAROSZ:
You have been identified as currently receiving Worker’s Compensation
benefits. This information was provided by the Workers Compensation
Department and verified by Sedgwick that you are in receipt of such
Workers Compensation benefits and are not currently receiving Extended
Disability benefits.
Per [sic] Article V Section 5.2 of the American Axle & Manufacturing, Inc.
Hourly-rate Associate Pension Plan reads in relevant part regarding
“Deduction for Workers Compensation.[”] In determining the monthly
benefits payable under this Plan, a deduction shall be made . . . equivalent
to all or any part of Workers Compensation payable to such associate . . .
provided that such deductions shall be to the extent that such Workers
Compensation has been provided by premiums, taxes or other payments
paid by or at the expense of the Corporation . . . ”
Effective 4/1/2009, the full off-set of your Workers’ Compensation was
applied and your AAM pension payment will be $0.00. You are currently
receiving $400.00 gross benefit payment each week for Workers
Compensation. This converts to $1733.33 per month, which exceeds your
gross AAM monthly pension benefit of $511.93.
Once you are no longer receiving Workers Compensation benefit
payments, your monthly AAM pension benefits will be reinstated.
If you have any questions, you may contact Maureen Van Riper, Workers
Compensation Manager, at (313) 758-4934.
7
Sincerely yours,
AMERICAN AXLE & MANUFACTURING, INC.
DEFINED BENEFIT PENSION ADMINISTRATION
(Letter to Richard Jarosz, Docket No. 61-7; Defendants’ Response, ¶ 35.)
These letters did not comply with the relevant provisions of § 8.9 (b) of the Plan,
which provides that upon denial of a claim, American Axle must provide written or
electronic notice of the following information, written in a manner calculated to be
understood by the claimant:
(1) the specific reason or reasons for denial;
(2) specific reference to pertinent Plan provisions on which the
denial is based;
(3) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary;
(4) an explanation of the Plan’s claim review procedures and the
time limits applicable to such procedures including a
statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to and copies of, all
documents, records and other information relevant to the
claimant’s claim for benefits;
(5) a statement of the claimant’s right to bring a civil action under
Section 502 (a) of the [ERISA] following an adverse benefit
determination on review
...
(Plaintiffs’ Statement, ¶ 37; Defendants’ Response, ¶ 37; Plan, Docket No. 61-5, p. 144.)
Elizabeth Main wrote these letters (and Wise’s letter) on American Axle’s behalf.
(Plaintiffs’ Statement, ¶ 37; Defendants’ Response, ¶ 37; Deposition of Elizabeth Main
4 All page citations herein are to the page numbers generated by the court’s CM/ECF filing system.
8
(“Main Dep.”), Docket No. 62-4, pp. 83, 85.) At the time, Main worked for American Axle
as a coordinator in its retirement plan services department. (Main Dep., Docket No. 624, p. 78.) Main admitted at her deposition that she omitted from the letters certain
information required by § 8.9 (b) of the Plan to keep the letters “short and succinct and to
one page . . . [because] [p]eople tend to read things if it’s only one page.” (Id. at pp. 84,
86.)
4. Plaintiffs’ Administrative Appeal
The UAW challenged American Axle’s decision on Plaintiffs’ behalf, arguing that
workers’ compensation payments received from claims filed before the breaking of
seniority could not be used to offset pension payments due under the Plan because those
claims were necessarily filed “not later than two years after the breaking of seniority.”
(Defendants’ Statement, ¶ 200; Plaintiffs’ Statement, ¶ 200; Letter from UAW to the Plan,
Docket No. 61-40.)
The MBC considered the UAW’s challenge as an appeal of its decision and denied
it on November 9, 2009, explaining that, in its discretion under the Plan, it had “determined
that retirees that receive Workers Compensation payments from claims filed prior to the
breaking of seniority shall have such payments offset from pension benefits payable
under the Plan.” (Defendants’ Statement, ¶ 203; Letter from MBC to UAW, Docket No.
61-42.) American Axle then rejected the UAW’s request for further administrative review.
(Defendants’ Statement, ¶¶ 205, 206; Plaintiffs’ Statement, ¶ 206; Plaintiffs’ Statement,
¶¶ 40, 41; Defendants’ Response, ¶¶ 40, 41; Letter from UAW to the Plan, Docket No.
61-43; Letter from American Axle to UAW, Docket No. 61-44.) All administrative review
9
concluded by April 4, 2011. (Letter from American Axle to UAW, Docket No. 61-44.)
B. Procedural History
Plaintiffs timely filed their civil suit under ERISA in this court on January 17, 2012.
(Docket No. 1.) Defendants filed their answer on March 23, 2012.5 (Docket No. 9.)
This matter was then referred to the magistrate judge to conduct all pretrial proceedings.
(Docket No. 11.) Upon the conclusion of proceedings before the magistrate judge, the
parties filed cross-motions for summary judgment on February 19, 2016. (Docket Nos.
61, 62). Briefing on the parties’ motions, including supplemental briefing, concluded on
July 1, 2016, at which time this Court reserved decision without oral argument.
III. DISCUSSION
Plaintiffs assert four causes of action in their corrected complaint. First, they
allege that Defendants violated ERISA by reducing their pension payments by the amount
of certain workers’ compensation payments they received.
(Corrected Complaint,
Docket No. 15, ¶¶ 204-216.) Second, they assert a promissory estoppel claim under
ERISA. (Corrected Complaint, ¶¶ 217-227.) Third, they allege that Defendants failed
to provide a reasonable claims procedure under ERISA, entitling them to de novo review.
(Corrected Complaint, ¶¶ 228-231.) And fourth, they seek equitable relief under ERISA
in the form of a declaratory judgment.
(Corrected Complaint, ¶¶ 232-233.)
Before
moving to these claims, two general issues must be resolved.
First, as all parties have acknowledged in the record, Plaintiffs Dixon, Higgins, and
5 Plaintiffs later filed a corrected complaint on April 11, 2012, which Defendants answered on April 13,
2012. (Docket Nos. 15, 16.) The corrected complaint only added a page that was inadvertently omitted
from the original complaint due to a scanning error. (See Docket No. 15.)
10
Lichtenthal died during the pendency of this action. (Defendants’ Statement, ¶¶ 67, 81,
100; Plaintiffs’ Response, ¶¶ 67, 81, 100; Defendants’ Response, ¶ 45.) When a party
dies during the pendency of a civil action, Rule 25 (a) of the Federal Rules of Civil
Procedure permits the court to substitute a proper party in the decedent’s place if any
non-extinguished claims remain.
See Fed. R. Civ. P. 25 (a).
But the rule further
requires that an action by or against any decedent must be dismissed if a motion to
substitute a proper party is not made within 90 days after service of a statement noting
the death.
Id.
Here, well more than 90 days have passed since the parties
acknowledged the deaths of Dixon, Higgins, and Lichtenthal in the record and no
substitution motions have been filed. Consequently, the actions by Dixon, Higgins, and
Lichtenthal will be dismissed under Rule 25 (a).
Second, Defendants maintain that six of the remaining plaintiffs 6 —Brandon,
Czech, McDonell, Short, Stowell, and Wise—signed releases at the time of their
retirements that now bar their claims. (Memorandum of Law, Docket No. 61-69, pp. 2628.) Indeed, Czech, McDonell, Short, and Stowell all signed identical “General Release
of All Claims” documents, see General Releases, Docket Nos. 61-11, 61-23, 61-31, 6133, while Wise and presumably Brandon7 signed similar releases with similar terms, see
Wise Release, Docket No. 61-36. But one important term found in both releases—a term
not disclosed by Defendants in their Statement of Undisputed Facts (see, e.g.,
6 Defendants also maintain that Dixon and Higgins signed general releases, but for the reasons just stated,
their actions will otherwise be dismissed under Rule 25 (a). (Defendants’ Statement, ¶¶ 64, 78.)
7 The release that Brandon signed is not contained in the record, but there is similarly no indication in the
record that he signed a release substantially different than the ones the other plaintiffs signed. (Plaintiffs’
Supplemental Response to Interrogatories and Document Demands, Docket No. 61-67, p. 26.)
11
Defendants’ Statement, ¶¶ 56, 115, 163, 172, 188)—is that “[t]his agreement does not
waive any claims that arise after the date I separate from AAM under this Agreement.”
(See General Releases, Docket Nos. 61-11, 61-23, 61-31, 61-33; Wise Release, Docket
No. 61-36.)
Since the claims herein all arose after these plaintiffs separated from
American Axle, these releases by their plain terms do not bar their claims.
Consequently, Defendants are not entitled to summary judgment against these plaintiffs
on this basis.
With these two issues resolved, this Court moves to Plaintiffs’ causes of action.
A. General Legal Principles
1. Summary Judgment
Summary judgment is appropriate “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56 (a). A fact is “material” if it “might affect the outcome of the suit under
the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505,
91 L. Ed. 2d 202 (1986). An issue of material fact is “genuine” if “the evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” Id.
In deciding a motion for summary judgment, the evidence and the inferences
drawn from the evidence must be "viewed in the light most favorable to the party opposing
the motion." Addickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S. Ct.1598, 26 L.
Ed. 2d 142 (1970). "Only when reasonable minds could not differ as to the import of
evidence is summary judgment proper." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir.
1991). Indeed, “[i]f, as to the issue on which summary judgment is sought, there is any
12
evidence in the record from which a reasonable inference could be drawn in favor of the
opposing party, summary judgment is improper.”
Sec. Ins. Co. of Hartford v. Old
Dominion Freight Line, Inc., 391 F.3d 77, 82–83 (2d Cir. 2004) (citations omitted).
But a “mere scintilla of evidence” in favor of the nonmoving party will not defeat
summary judgment. Anderson, 477 U.S. at 252. A nonmoving party must do more than
cast a “metaphysical doubt” as to the material facts, Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); it must “offer
some hard evidence showing that its version of the events is not wholly fanciful,”
D’Amico v. City of N.Y., 132 F.3d 145, 149 (2d Cir. 1998). That is, there must be
evidence from which the jury could reasonably find for the nonmoving party. Anderson,
477 U.S. at 252.
In the end, the function of the court at the summary judgment stage is not “to weigh
the evidence and determine the truth of the matter but to determine whether there is a
genuine issue for trial." Id. at 249. “Assessments of credibility and choices between
conflicting versions of the events are matters for the jury, not for the court on summary
judgment.” Rule v. Brine, Inc., 85 F.3d 1002, 1011 (2d Cir. 1996).
This same standard applies to cross motions for summary judgment.
See
Morales v. Quintel Entm’t, Inc., 249 F.3d 115, 121 (2d Cir. 2001). “[W]hen both parties
move for summary judgment, asserting the absence of any genuine issues of material
fact, a court need not enter judgment for either party. Rather, each party’s motion must
be examined on its own merits, and in each case all reasonable inferences must be drawn
against the party whose motion is under consideration.”
13
Id. (citing Heublein, Inc. v.
United States, 996 F.2d 1455, 1461 (2d Cir. 1993); Schwabenbauer v. Bd. of Educ., 667
F.2d 305, 314 (2d Cir. 1981)).
2. Standard of Review
“A denial of benefits challenged under [29 U.S.C.] § 1132 (a)(1)(B) is to be
reviewed under a de novo standard unless the benefit plan gives the administrator or
fiduciary discretionary authority to determine eligibility for benefits or to construe the terms
of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S. Ct. 948,
103 L. Ed. 2d 80 (1989); see Muller v. First Unum Life Ins. Co., 341 F.3d 119, 123-24 (2d
Cir. 2003). If the benefit plan vests the administrator or fiduciary with such discretionary
authority, the denial of benefits is subject to a deferential “arbitrary and capricious”
standard of review. See Celardo v. GNY Auto. Dealers Health & Welfare Trust, 318 F.3d
142, 145 (2d Cir. 2003): Burke v. Kodak Ret. Income Plan, 336 F.3d 103, 109 (2d Cir.
2003); Pagan v. Nynex Pension Plan, 52 F.3d 438, 441 (2d Cir. 1995) (“where the written
plan documents confer upon a plan administrator the discretionary authority to determine
eligibility, we will not disturb the administrator’s ultimate conclusion unless it is ‘arbitrary
and capricious’”).
“Language that confers discretionary authority must be clear, as
‘[a]mbiguities are construed in favor of the plan beneficiary.’” Thoma v. Fox Long Term
Disability Plan, 17 Civ. 4389, 2018 WL 6514757, at *25 (S.D.N.Y. Dec. 11, 2018) (quoting
Krauss v. Oxford Health Plans, Inc., 517 F.3d 614, 622 (2d Cir. 2008)).
Judicial review under this standard is narrow. See Celardo, 318 F.3d at 146. A
decision to deny benefits “may be overturned only if the decision is ‘without reason,
unsupported by substantial evidence or erroneous as a matter of law.’” Kinstler v. First
14
Reliance Standard Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999) (quoting Pagan, 52
F.3d at 442). Reasonable interpretations by the plan administrator must be upheld.
See Jordan v. Ret. Comm. of Rensselaer Polytechnic Inst., 46 F.3d 1264, 1271 (2d Cir.
1995).
“Where both the [plan administrator] and a rejected applicant offer rational,
though conflicting, interpretations of plan provisions, the [plan administrator’s]
interpretation must be allowed to control.”
Miles v. New York State Teamsters
Conference Pension & Ret. Fund Emp. Pension Benefit Plan, 698 F.2d 593, 601 (2d Cir.
1983). In other words, courts “are not free to substitute [their] own judgment for that of
the [plan administrator] as if [they] were considering the issue of eligibility anew.” Pagan,
52 F.3d at 442. Substantial evidence is “such evidence that a reasonable mind might
accept as adequate to support the conclusion reached by the [decisionmaker and] . . .
requires more than a scintilla but less than a preponderance” of evidence.
Miller v.
United Welfare Fund, 72 F.3d 1066, 1072 (2d Cir. 1995) (quoting Sandoval v. Aetna Life
& Cas. Ins. Co., 967 F.2d 377, 382 (10th Cir. 1992)). The plan administrator carries the
burden of proving that the deferential standard of review applies. See Fay v. Oxford
Health Plan, 287 F.3d 96, 104 (2d Cir. 2002).
Here, the Plan vests the MBC with
discretionary authority to determine all questions arising in the
administration, application and interpretation of the Plan
including the authority to correct any defect or reconcile any
inconsistency or ambiguity in the Plan and the authority to
determine a Participant’s, beneficiary’s or other individual’s
right to participate in the Plan, eligibility to receive a benefit
from the Plan, and the amount of that benefit.
(Defendants’ Statement, ¶ 4; Plaintiffs’ Response, ¶ 4; Plaintiffs’ Statement, ¶ 22;
15
Defendants’ Response, ¶ 22.)
Notwithstanding this language, Plaintiffs first argue that de novo review should
apply because Defendants operated under a conflict of interest by both administering and
funding the Plan. Plaintiffs are wrong for two reasons.
First, the existence of a structural conflict of interest does not change the standard
of review; rather, it is a factor to be considered when applying the arbitrary and capricious
standard. See Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 115, 128 S. Ct. 2343, 171 L.
Ed. 2d 299 (2008) (rejecting the argument that a conflict of interest changes the standard
of review from deferential to de novo, reiterating that “a conflict should ‘be weighed as a
‘factor in determining whether there is an abuse of discretion’’”) (quoting Firestone, 489
U.S. at 115, in turn quoting Restatement § 187, Comment d; (alteration omitted));
McCauley v. First Unum Life Ins. Co., 551 F.3d 126, 133 (2d Cir. 2008) (“a plan under
which an administrator both evaluates and pays benefits claims creates the kind of conflict
of interest that courts must take into account and weigh as a factor in determining whether
there was an abuse of discretion but does not make de novo review appropriate”).
Second, such a conflict of interest is given weight only if it actually affected an
administrator’s decision-making. See Durakovic v. Bldg. Serv. 32 BJ Pension Fund, 609
F.3d 133, 140 (2d Cir. 2010) (explaining that “[n]o weight is given to a conflict in the
absence of any evidence that the conflict actually affected the administrator’s decision”).
Here, Plaintiffs have presented no evidence from which it could be reasonably concluded
that the structural conflict of interest actually affected Defendants’ decision-making. See
Roganti v. Metro. Life Ins. Co., 786 F.3d 201, 218 (2d Cir. 2015) (noting that plaintiff
16
carries the burden of demonstrating that the conflict of interest actually affected the
administrator’s decision-making).
But Plaintiffs also argue that de novo review should apply because Defendants
failed to comply with ERISA’s procedural regulations. On this point, Plaintiffs are correct.
In Halo v. Yale Health Plan, the Second Circuit held that “a plan’s failure to establish or
follow the claims-procedure regulation, 29 C.F.R. § 2560.503-1, will result in that claim
being reviewed de novo in federal court, unless the plan has otherwise established
procedures in full conformity with the regulation and can show that its failure to comply
with the claims-procedure regulation in the processing of a particular claim was
inadvertent and harmless.” 819 F.3d 42, 58 (2d Cir. 2016) (emphasis in original). The
Plan bears the burden of proof on this point. Id.
Plaintiffs maintain that Defendants failed to comply with 29 C.F.R. § 2560.503-1
(j), which requires, inter alia, that written or electronic notification of an adverse benefit
determination include (1) the specific reason for the adverse determination, (2) a
reference to the specific plan provision upon which the determination is based, (3) notice
that the claimant is entitled to free access to all information relevant to his or her claim,
and (4) a statement describing the plaintiff’s appeal rights and options. See 29 C.F.R. §
2560.503-1 (j)(1)-(4). These basic provisions are also incorporated into the Plan in § 8.9
(b).
Indeed, it is undisputed that the letters Elizabeth Main sent to Plaintiffs on the
Plan’s behalf did not comply with the governing regulation or relevant provisions of § 8.9
(b) of the Plan. That is, the letters did not contain notice of the following information,
17
written in a manner calculated to be understood by the claimants:
(1) the specific reason or reasons for denial;
(2) specific reference to pertinent Plan provisions on which the
denial is based;
(3) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary;
(4) an explanation of the Plan’s claim review procedures and the
time limits applicable to such procedures including a
statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to and copies of, all
documents, records and other information relevant to the
claimant’s claim for benefits;
(5) a statement of the claimant’s right to bring a civil action under
Section 502 (a) of the [ERISA] following an adverse benefit
determination on review
...
(Plaintiffs’ Statement, ¶ 37; Defendants’ Response, ¶ 37; Plan, Docket No. 61-5, p. 14.)
Under Halo, the question now becomes whether the Plan can show that its failure
to comply with 29 C.F.R. § 2560.503-1 (j)(1)-(4) was “inadvertent and harmless.” 819
F.3d at 58 (emphasis in original). It cannot. Elizabeth Main admitted at her deposition
that she purposefully omitted certain information required by 29 C.F.R. § 2560.503-1
(j)(1)-(4) and § 8.9 (b) of the Plan to keep the letters “short and succinct and to one page
. . . [because] [p]eople tend to read things if it’s only one page.” (Main Dep., Docket No.
62-4, pp. 84, 86.)
inadvertent.
The omission of this information was therefore intentional, not
That is, Main intentionally omitted the information required under the
regulation so that the letters would not exceed one page. In light of this uncontested
18
admission, examination of whether the omission was harmless is not required. Under
Halo, de novo review applies.8 See Halo, 819 F.3d at 58.
De novo review “applies to all aspects of the denial of an ERISA claim, including
fact issues.” Kinstler, 181 F.3d at 245. The court affords no deference to the insurer’s
interpretation of the plan documents, its analysis of the record, or its conclusions
regarding the merits of the claim. McDonnell v. First Unum Life Ins. Co., No. 10 CV 8140
(RPP), 2013 WL 3975941, at *12 (S.D.N.Y. Aug. 5, 2013). Rather, the court “stands in
the shoes of the original decisionmaker.” Dimaria v. First Unum Life Ins. Co., No. 01 CV
11413, 2005 WL 743324, at *4 (S.D.N.Y. Mar. 31, 2005). It “interprets the terms of the
benefits plan, determines the proper diagnostic criteria, reviews the medical evidence,
and reaches its own conclusion about whether the plaintiff has shown, by a
preponderance of the evidence, that she is entitled to benefits under the plan.”
McDonnell, 2013 WL 3975941, at *12 (citations omitted). The court must “review the
Plan as a whole, giving terms their plain meanings.” Fay, 287 F.3d at 104.
8 Defendants seemingly argue that Main’s conduct was inadvertent because she did not act with a
nefarious purpose. (See Memorandum of Law, Docket No. 72, p. 4 (arguing that because the purpose of
the omission was to keep the letter to a single page—“no other reason”—“[t]he failure to include the claims
appeal process in the letter sent to plaintiffs was not intentional and was, very simply, inadvertent.”) In
other words, Defendants seem to argue that because Main did not act intentionally to deny Plaintiffs the
required information, her actions were inadvertent.
This flatly misunderstands the concept of
inadvertence, which the Oxford dictionary defines simply as “not resulting from or achieved through
deliberate planning.” See https://en.oxforddictionaries.com/definition/inadvertent. And it finds no support
in Halo, which does not discuss inadvertence in the context of a nefarious purpose. Here, Main admitted
that she deliberately omitted the required information to keep the letters to a single page. By definition
then, her actions were not inadvertent.
19
B. ERISA Claim
Plaintiffs seek to recover the pension payments that Defendants withheld under
the “Deductions for Workers Compensation” provision of the Plan pursuant to 29 U.S.C.
§ 1132 (a)(1)(B), which provides that a participant or beneficiary may bring a civil action
“to recover benefits due to him under the terms of his plan, to enforce his rights under the
terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”
Both sides agree that Plaintiffs’ claim turns on the meaning of the “Deductions for
Workers Compensation” provision of the Plan. That provision again provides as follows:
Deductions for Workers Compensation. In determining
the monthly benefits payable under this Plan, a deduction
shall be made unless prohibited by law, equivalent to all or
any part of Workers Compensation (including compromise or
redemption settlements) payable to such associate by reason
of any law of the United States, or any political subdivision
thereof, which has been or shall be enacted, provided that
such deductions shall be to the extent that such Workers
Compensation has been provided by premiums, taxes or
other payments paid by or at the expense of the Corporation,
except that no deduction shall be made for the following:
(a) Workers Compensation payments specifically
allocated for hospitalization or medical expenses,
fixed statutory payments for the loss of any bodily
member, or 100% loss of use of any bodily member,
or payments for loss of industrial vision.
(b) Compromise or redemption settlements payable
prior to the date monthly pension benefits first
become payable.
(c) Workers Compensation payments paid under a
claim filed not later than two years after the
breaking of seniority.
(Defendants’ Statement, ¶ 8.)
20
At issue is subsection (c). Plaintiffs contend that the language of subsection (c)
is plain and unambiguous. They argue that on its face, subsection (c) provides that no
deductions will apply for workers’ compensation payments received from claims filed
earlier than two years after a participant retires or otherwise breaks seniority. That is,
two years after the breaking of seniority is a cut-off date: claims filed before that date are
not subject to deductions; claims filed after that date are. Necessarily then, no deduction
can be taken for workers’ compensation payments received from a claim filed before the
breaking of seniority (e.g., before retirement), because a claim filed before the breaking
of seniority is indisputably filed earlier than two years after the breaking of seniority.
Defendants are not convinced. They contend that the structure of this provision
sets forth a general rule with three exceptions. The general rule requires that workers’
compensation payments be deducted from pension payments: “a deduction shall be
made.” According to Defendants, the purpose of this rule is to prevent American Axle
from double-paying workers’ compensation and pension payments: “provided that such
deductions shall be to the extent that such Workers Compensation has been provided by
premiums, taxes or other payments paid by or at the expense of [American Axle].”
Defendants therefore maintain that subsection (c) must be read to except only workers’
compensation payments paid under a claim filed after the breaking of seniority but not
later than two years after that date. In other words, the breaking of seniority starts the
two-year exception period. Defendants argue that to read subsection (c) otherwise as
Plaintiffs suggest would have the exception swallow the rule.
“[T]he validity of a claim to benefits under an ERISA plan is likely to turn on the
21
interpretation of terms in the plan at issue.” Firestone, 489 U.S. at 115. ERISA plans
are interpreted according to federal common law applying “common-sense canons of
contract interpretation.” Dillon v. Metro. Life Ins. Co., 832 F. Supp. 2d 355, 365 (S.D.N.Y.
2011) (quoting Loughman v. Unum Provident Corp., 536 F. Supp. 2d 371, 375 (S.D.N.Y.
2008)); see also In Re DeRogatis, 904 F.3d 174, 187 (2d Cir. 2018); Masella v. Blue
Cross & Blue Shield of Conn., Inc., 936 F.2d 98, 107 (2d Cir. 1991). They are reviewed
as a whole, with terms given their plain meanings. See Fay, 287 F.3d at 104 (citing
Brass v. Am. Film Techs., Inc., 987 F.2d 142, 148 (2d Cir. 1993) (“Where the [contract]
language is plain and unambiguous, a court may construe the contract and grant
summary judgment.”) and Bradwell v. GAF Corp., 954 F.2d 798, 800 (2d Cir. 1992) (“In
construing the policy, we look to the language of the policy and other indicia of the intent
of the policy’s creator.”)). And courts are to “interpret ERISA plans in an ordinary and
popular sense as would a person of average intelligence and experience.” Critchlow v.
First Unum Life Ins. Co. of Am., 378 F.3d 246, 256 (2d Cir. 2004) (quoting Todd v. AIG
Life Ins. Co., 47 F.3d 1448, 1452 n.1 (5th Cir. 1995)).
“Whether contract language is ambiguous is a question of law that is resolved by
reference to the contract alone.” O’Neil v. Ret. Plan for Salaried Emps. of RKO Gen.,
Inc., 37 F.3d 55, 58-59 (2d Cir. 1994). “[U]nambiguous language in an ERISA plan must
be interpreted and enforced in accordance with its plain meaning.” Aramony v. United
Way Replacement Benefit Plan, 191 F.3d 140, 149 (2d Cir. 1999). Where ambiguities
in the plan language are found on de novo review, they are construed in favor of the plan
beneficiary. See Masella, 936 F.2d at 107; Lifson v. INA Life Ins. Co. of New York, 333
22
F.3d 349, 353 (2d Cir. 2003) (“Terms in the Plan must be construed in accordance with
the reasonable expectations of the insured.”); Browe v. CTC Corp., 331 F. Supp. 3d 263,
302-303 (D.Vt. 2018) (noting that ambiguities in an ERISA plan are construed against its
drafter). “Language is ambiguous when it is capable of more than one meaning when
viewed objectively by a reasonably intelligent person who has examined the context of
the entire . . . agreement.”
O’Neil, 37 F.3d at 59 (internal quotations and citations
omitted). Extrinsic evidence may be considered to clarify any ambiguous terms. See
Gibbs ex rel. Estate of Gibbs v. CIGNA Corp., 440 F.3d 571, 579 (2d Cir. 2006). In the
end, whether the terms are clear or ambiguous, “the provisions of an ERISA plan should
be construed so as to render all provisions meaningful and to avoid illusory promises.”
Aramony, 191 F.3d at 150 (internal quotations and citations omitted).
Upon consideration of the Plan as a whole and the “Deductions for Workers
Compensation” provision in particular, this Court agrees with Plaintiffs that the language
of the provision is plain and unambiguous.
Subsection (c) excepts “Workers
Compensation payments paid under a claim filed not later than two years after the
breaking of seniority” from the general rule that workers’ compensation payments must
be deducted from pension payments under the Plan. This exception is triggered by the
timing of the workers’ compensation claim, not the timing of the benefits received
therefrom. In that regard, the provision clearly sets a single cut-off date for the claim:
“two years after the breaking of seniority.” Workers’ compensation payments received
from claims filed before that date are not deducted; workers’ compensation payments
received from claims filed after that date are.
23
This is the ordinary and popular
understanding that a person of average intelligence and experience would reach. See
Critchlow, 378 F.3d at 256.
Contrary to Defendants’ argument, subsection (c) does not set forth an exception
period with defined start and end dates. Defendants’ construction—that subsection (c)
sets a start date at the breaking of seniority and an end date at two years thereafter—
requires reading into the provision terms that are simply not there. Subsection (c) does
not read “Workers Compensation payments paid under a claim filed after the breaking of
seniority but not later than two years thereafter.”
This language would reflect the
construction that Defendants advocate. But that is not how subsection (c) reads. It
defines the exception period for filed workers’ compensation claims as any time earlier
than two years after the breaking of seniority: “a claim filed not later than two years after
the breaking of seniority.” As such, it would include any workers’ compensation claims
filed before an individual’s breaking of seniority or retirement.
Moreover, the plain language does not contravene what Defendants represent to
be the purpose of the provision: to eliminate double-paying. This cannot be the sole
purpose, because Defendants themselves concede that even under their construction,
American Axle would double-pay if a participant filed a workers’ compensation claim
between the date he or she broke seniority and the date two years later. (Memorandum
of Law, Docket No. 61-69, p. 24.) Thus, an exception period wherein double payment
would occur is inherent in the provision.
So too, the exception in subsection (c) does not swallow the rule, because workers’
compensation payments received from claims filed later than two years after breaking
24
seniority must be deducted from pension payments due under the Plan according to the
general rule, thereby giving effect to both the general rule and the subsection (c)
exception.
While Defendants argue that no such workers’ compensation payments
would ever be received because there is a two-year statute of limitations on workplaceaccident claims in New York, see Memorandum of Law, Docket No. 66, p. 24, nothing in
the Plan supports the application of New York workers’ compensation law to construe its
terms. Even so, workplace accidents are not the only type of injuries for which workers
can be compensated.
As Plaintiffs note, other provisions of New York Workers’
Compensation Law, such as those applicable to disablement claims, are not constrained
by a two-year statute of limitations. See New York Workers’ Compensation Law § 28
(addressing “disablement”).
This Court therefore finds that the language of subsection (c) is unambiguous and
must be given its plain meaning, as set forth above. See Fay, 287 F.3d at 104; Aramony,
191 F.3d at 149. As Plaintiffs put it, “[a] natural and unforced reading of [subsection (c)]
communicates that as long as a workers compensation claim is filed earlier than two years
after retirement, payments made pursuant to such a claim shall not cause a participant’s
pension benefit to be offset or reduced.” (Memorandum of Law, Docket No. 65, p. 2.)
But even if subsection (c) could be read as ambiguous, any ambiguity must be
resolved in Plaintiffs’ favor. See Masella, 936 F.2d at 107. Ambiguous terms must be
construed according to the reasonable expectations of the beneficiary, which based on
the past administration of this provision, favors the interpretation above. See Lifson, 333
F.3d at 353.
25
As reflected in the Memorandum of Understanding that American Axle, GM, and
the UAW entered on April 27, 1994 (“the 1994 MOU”) when American Axle purchased
GM’s plants, the intent of the parties was that the benefits of those employees transferring
from GM to American Axle would remain the same. 9 (Plaintiffs’ Statement, ¶¶ 4, 7;
Defendants’ Response, ¶¶ 4, 7; Deposition of Preston M. Crabill (“Crabill Dep.”), Docket
No. 62-4, pp. 31, 36, 66.) The GM Plan contained the same workers’ compensation
deduction provision at issue here, which GM interpreted and administered consistent with
this Court’s findings above. (Plaintiffs’ Statement, ¶¶ 25, 26; Defendants’ Response, ¶¶
25, 26; Main Dep., Docket No. 62-4, pp. 79-80 (the American Axle plan was “a mirror plan
of the General Motors plan”).)
As GM’s Director of Pension and Savings Plans Preston M. Crabill testified and
explained in an email:
The key determination here is the date for the filing of the
claim. If the claim was filed not later than two years after
breaking of seniority, such as retirement, then we do not make
deductions from pension benefits for workers compensation
payable. The language does not tie to the resolution of the
claim, lump sum settlements, etc. In your example below,
the claim was filed prior to retirement. Therefore, the
pension benefits are not reduced.
(Crabill Email, Docket No. 62-6, p. 4; Crabill Dep, Docket No. 62-4, pp. 2-9.)
GM administered its plan in line with this interpretation for more than 40 years and
continues to do so.
(Crabill Dep., Docket No. 62-4, p. 9.)
And American Axle
administered its Plan the same way until 2006, when it reduced Wise’s pension payments.
Yet even after Wise’s case, American Axle continued to pay the other plaintiffs full pension
9 A copy of the 1994 MOU is contained in the record at Docket Number 62-3, pp. 85-98.
26
benefits without offset until the 2009 audit, despite their continued receipt of workers’
compensation payments. (Deposition of Karen Cimafranca, Docket No. 62-4, pp. 6465.) Defendants offer no explanation for their changed interpretation of subsection (c)
as reflected in Wise’s case, or for their subsequent inconsistent interpretation and
application of subsection (c) between 2006 and 2009.
Put simply, until Defendants’ change in interpretation, the Plan participants’ settled
expectations were that no deductions to their pension payments would be made for
payments from workers’ compensation claims filed anytime earlier than two years after
their retirement, including before their retirement. Consequently, even if the language in
subsection (c) could be viewed as ambiguous, it must be construed in Plaintiffs’ favor.
Accordingly, this Court finds that Plaintiffs are entitled to summary judgment on
their ERISA claim and that Defendants are not. Defendants must pay Plaintiffs the full
benefits to which they are entitled under the Plan (retroactive and prospective) without
deduction for workers’ compensation payments, consistent with this Court’s articulation
of the Plan’s plain meaning above, together with prejudgment interest at the rate of 9%
per annum, as provided in NY CPLR § 5004. 10 See, e.g., Rood v. New York State
Teamsters Conference Pension & Retirement Fund, 39 F. Supp. 3d 241, 254 (N.D.N.Y.
2014) (applying 9% rate under NY CPLR § 5004) (collecting cases).
10 This Court finds that the factors relevant to whether prejudgment interest should be awarded all counsel
in favor of such an award: “(i) the need to fully compensate the wronged party for actual damages suffered,
(ii) considerations of fairness and the relative equities of the award, (iii) the remedial purpose of the statute
involved, and/or (iv) such other general principles as are deemed relevant by the court.” Jones v. UNUM
Life Ins. Co. of Am., 223 F.3d 130, 139-40 (2d Cir. 2000) (quoting SEC v. First Jersey Sec., Inc., 101 F.3d
1450, 1476 (2d Cir. 1996)).
27
C. Promissory Estoppel Claim
Plaintiffs allege a promissory estoppel claim under ERISA premised on the terms
of the 1994 MOU. (Corrected Complaint, ¶ 34.)
Despite ERISA’s preemption provision—ERISA preempts “any and all State laws
insofar as they may now or hereafter relate to any employee benefit plan,” 29 U.S.C. §
1144 (a)—principles of estoppel may apply in extraordinary circumstances in ERISA
cases under federal common law.11 See Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir.
1993) (citing Chambless v. Masters, Mates & Pilots Pension Plan, 772 F.2d 1032, 1039
(2d Cir. 1985)).
“To avoid preemption, [a] [p]laintiff must satisfy the common law
elements of estoppel and establish that extraordinary circumstances exist.” Patterson v.
J.P. Morgan Chase & Co., No. 01 CIV 7513 (JSM), 2002 WL 207123, at *5 (S.D.N.Y.
Feb. 11, 2002) (citing Devlin v. Transp. Commc’ns Int’l Union, 173 F.3d 94, 102 (2d Cir.
1999)). State law does not control. See Devlin v. Empire Blue Cross & Blue Shield,
274 F.3d 76, 85 n. 5 (2d Cir. 2001) (noting that “general common law principles apply”).
Promissory estoppel in ERISA cases requires the establishment of five elements:
(1) a promise; (2) reliance on that promise; (3) injury caused by the reliance; (4) injustice
if the promise is not enforced; and (5) extraordinary circumstances. See Egan v. Marsh
& McLennan Cos., Inc., No. 07 Civ. 7134, 2008 WL 245511, at *5 (S.D.N.Y. Jan. 30,
2008) (quoting Abbruscato v. Empire Blue Cross & Blue Shield, 274 F.3d 90, 100-01 (2d
Cir. 2001), in turn quoting Aramony, 191 F.3d at 151); see also Weinreb v. Hosp. for Joint
11 Straight state law promissory estoppel claims, however, are preempted. See, e.g., Colon v. Guthrie
Clinic, Ltd., No. 06-CV-6527, 2008 WL 686268, at *2 (W.D.N.Y. Mar. 7, 2008) (“As a matter of law all state
common law claims of promissory estoppel, breach of contract, or fraud are preempted by ERISA.”).
28
Diseases Orthopaedic Inst., 404 F.3d 167, 172 (2d Cir. 2005). The Second Circuit added
the fifth element—extraordinary circumstances—to minimize “the danger that
commonplace communications from employer to employee will routinely give rise to
employees’ rights beyond those contained in formal benefit plans.” Aromony, 191 F.3d
at 151.
Extraordinary circumstances must involve intentional inducement or deception that
inures to the defendant’s benefit, such as “a promise made with the intention of inducing
action or forbearance by plaintiff, which induced action or forbearance inures to the
benefit of the defendant, and the defendant later reneges on the promise.” Turcotte v.
Blue Cross & Blue Shield of Mass., Inc., No. 07 Civ. 4023, 2008 WL 4615903 (S.D.N.Y.
Oct. 13, 2008); Long Island Neuroscience Specialists v. Fringe Benefits Funds Local 1414 Int’l Union of Operating Eng’rs, 17-3341 (JMA)(ARL), 2018 WL 3912283, at *5
(E.D.N.Y. July 31, 2018); see also Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d
72, 77 (2d Cir. 1996) (extraordinary circumstances where defendant’s promise of
severance benefits induced the plaintiff’s retirement); Abbruscato, 274 F.3d at 101-02
(extraordinary circumstances where promise of benefits induced the plaintiffs’ to retire).
One panel of the Second Circuit has described “extraordinary circumstances” as requiring
“conduct tantamount to fraud.” Greifenberger v. Hartford Life Ins. Co., 131 Fed.Appx
756, 759 (2d Cir. 2005) (citing Devlin, 173 F.3d at 101-02).12 It is the requirement that
the inducement or forbearance inure to the defendant’s benefit that separates
extraordinary circumstances from the reliance element. See, e.g., Turcotte, 2008 WL
12 Summary orders, of course, do not have precedential effect. See Local Rule 32.1.1 of the Local Rules
and Internal Operating Procedures of the Court of Appeals for the Second Circuit.
29
4615903, at *8 (“the Court is not persuaded that a mere promise that induces action,
without the inuring of benefit to the defendant, is sufficient to allege extraordinary
circumstances”).
Plaintiffs maintain that American Axle promised in the 1994 MOU to establish a
new defined benefit plan containing terms identical to, and benefits equal to, the terms
and benefits of the GM plan. (Corrected Complaint, ¶ 218.) The provision they rely on
is as follow:
GM’s contract with [American Axle] will provide that [American
Axle] will establish a new defined benefit pension plan
(hereinafter referred to as the “Replacement Pension Plan”),
effective as of the Effective Date of Sale, covering all
transferred employees which, consistent with [American
Axle’s] obligations under the [American Axle]-UAW
Agreement, will contain terms identical to the GM Pension
Plan except for those provisions required to be changed as a
result of a new Plan sponsor and the provisions addressed in
this Memorandum. The intent of the parties is to provide
transferred employees with benefits from the Replacement
Plan and the GM Plan which, apart from any difference that
may result from future bargaining, in aggregate, will equal the
benefits that would have been provided had the sale not
occurred and the employees had continued working for GM.
(1994 MOU, Docket No. 62-3, pp. 88.)
Plaintiffs further allege that under the GM plan, a deduction for workers’
compensation payments received was made only for such payments received from
workers’ compensation claims made later than two years after retirement. (Corrected
Complaint, ¶¶ 220, 221.)
Thus, by offsetting Plaintiffs’ pension payments by their
workers’ compensation payments received from workers’ compensation claims filed
before retirement, Defendants’ breached this promise.
30
Defendants move for summary judgment on the basis that Plaintiffs cannot
establish the required elements of a promissory estoppel claim. First, they maintain that
the 1994 MOU was “an agreement to agree” that did not contain any enforceable
promises. Second, they argue that even if the 1994 MOU contained an enforceable
promise, there is no evidence that any of the plaintiffs knew about or relied on that
promise.
Finally, they contend that Plaintiffs cannot establish the existence of
extraordinary circumstances. Plaintiffs’ oppose Defendants’ motion and advocate the
opposite position: that they are entitled to summary judgment because they have
established each of the five required elements of a promissory estoppel claim.
Having reviewed the parties’ arguments and the record, this Court finds that
Defendants are entitled to summary judgment on Plaintiffs’ promissory estoppel claim and
that Plaintiffs are not.
Plaintiffs’ promissory estoppel claim is premised on the written 1994 MOU
provision set forth above, which by its plain terms covers only “transferred employees”—
those transferring at that time from GM’s to American Axle’s employ.
Docket No. 62-3, pp. 88.)
(1994 MOU,
Thus, it covers only Bellere, Brandon, Czech, Glover,
Jaroszewski, LoGrasso, McDonell, Schalberg, Short, and Wise.
(Defendants’
Statement, ¶¶ 23, 32, 50, 68, 82, 101, 111, 147, 158, and 184.)
Plaintiffs’ promissory estoppel claim suffers from two fatal flaws.
First, even
assuming that the provision at issue in the written 1994 MOU constituted an enforceable
promise, there is insufficient evidence from which a trier of fact could conclude that any
plaintiff relied on that promise. Plaintiffs have come forth with no evidence at all that any
31
plaintiff ever saw, was familiar with, or relied on the written 1994 MOU. In fact, Plaintiffs
Bellere, Brandon, Glover, and LoGrasso specifically admit that they never saw it.
(Defendants’ Statement, ¶¶ 25, 34, 69, 102.) Thus, even assuming that the written 1994
MOU created an enforceable promise, Plaintiffs cannot establish that any plaintiff
reviewed and relied on that promise.
The best Plaintiffs can muster is that some of the transferred plaintiffs attended a
meeting in early 1994 where they may have been told by an unidentified individual that
their benefits would not change (see Defendants’ Statement, ¶¶ 52,159) and that both
transferred and non-transferred plaintiffs developed “an understanding” from what they
heard or were told that the benefits at American Axle would be the same as they were at
GM (see Plaintiffs’ Affidavits, Docket Nos. 65-3—65-17, 65-19—65-21).
But even
assuming that these statements were actually made and constituted promises, “oral
promises are unenforceable under ERISA and therefore cannot vary the terms of an
ERISA plan.” Perreca v. Gluck, 295 F.3d 215, 225 (2d Cir. 2002); Ladouceur v. Credit
Lyonnais, 584 F.3d 510, 512 (2d Cir. 2009).
Second, Plaintiffs have failed to set forth any evidence from which a trier of fact
could reasonably find the existence of extraordinary circumstances. Plaintiffs simply
maintain that they relied on American Axle’s promise that their benefits would remain
unchanged when they continued their employment with American Axle.
But the
extraordinary circumstances standard requires more than reliance. See Devlin, 173 F.3d
at 102 (“[R]eliance is one of the four basic elements of promissory estoppel, and would
not by itself render this case ‘extraordinary.’”).
32
To demonstrate extraordinary circumstances, Plaintiffs must present evidence
“that the employer used the promise to intentionally induce a particular behavior on the
plaintiff’s part only to renege on that promise after inducing the sought after behavior.”
Peters v. Windham Cmty. Mem’l Hosp., Inc., 803 F. Supp. 2d 96, 105 (D.Conn. 2011)
(quoting Devlin, 173 F.3d at 102).
Extraordinary circumstances might include
intentionally inducing an employee to retire early, see Schonholz, 87 F.3d at 79-80, or to
forgo retirement, see Devlin, 274 F.3d at 87. But here, Plaintiffs simply continued their
employment with American Axle, and there is no evidence from which a reasonable trier
of fact could conclude that American Axle tricked them or intentionally induced them into
doing so to gain some benefit for itself. See, e.g., Turcotte, 2008 WL 4615903, at *8
(“the Court is not persuaded that a mere promise that induces action, without the inuring
of benefit to the defendant, is sufficient to allege extraordinary circumstances”). And
there is certainly no evidence of conduct amounting to fraud. See Greifenberger, 131
Fed.Appx at 759.
Accordingly, in the absence of sufficient evidence to minimally support Plaintiffs’
promissory estoppel claim, Defendants’ motion for summary judgment on this cause of
action is granted and Plaintiffs’ is denied.
D. Claim Seeking De Novo Review
Plaintiffs’ third cause of action seeks the application of de novo review due to
Defendants’ failure to provide a reasonable claims procedure as required under ERISA.
There is, however, no separate cause of action for the application of a particular standard
of review of which this Court is aware, and Plaintiffs do not identify one. Rather, the
33
standard of review is resolved in conjunction with a substantive ERISA claim. This
“claim” is therefore dismissed.
E. Equitable Relief Claim
In their fourth cause of action, Plaintiffs seek “a declaratory judgment of their rights
under the Plan” (Corrected Complaint, ¶ 233) pursuant to 29 U.S.C. § 1132 (a)(3), which
permits a plan participant, beneficiary, or fiduciary to bring an action to enjoin any act or
practice that violates any ERISA provision or the terms of a plan, or to seek equitable
relief to (1) redress ERISA violations, or (2) enforce any ERISA provisions or the terms of
a plan.
This section is a “catchall” provision that “act[s] as a safety net, offering
appropriate equitable relief for injuries caused by violations that § 502 [29 U.S.C. § 1132]
does not elsewhere adequately remedy.” Varity Corp. v. Howe, 516 U.S. 489, 116 S. Ct.
1065, 134 L. Ed. 2d 130 (1996); see also New York State Psychiatric Ass’n, Inc. v. United
Health Grp., 798 F.3d 125, 134 (2d Cir. 2015).
Thus, “where Congress elsewhere
provided adequate relief for a beneficiary’s injury, there will likely be no need for further
equitable relief, in which case such relief normally would not be ‘appropriate.’” Varity,
516 U.S. at 515.
Here, Plaintiffs seek equitable relief in the form of a declaratory judgment “of their
rights under the American Axle Plan” and “concerning rights to future benefits under the
American Axle Plan with respect to Article IV, Section 2(c) of the Plan.” (Corrected
Complaint, ¶ 233 and Wherefore Clause (c).) But this relief is encompassed in their §
1132 (a)(1)(B) claim, where this Court has already enforced and clarified their rights under
the Plan. Plaintiffs’ separate cause of action for equitable relief under § 1132 (a)(3) must
34
therefore be dismissed as duplicative of their § 1132 (a)(1)(B) claim. See, e.g., New
York State Psychiatric Ass’n, 798 F.3d at 134 (suggesting that § 1132 (a)(1)(B) claims
repackaged as § 1132 (a)(3) claims are subject to dismissal); Frommert v. Conkright, 433
F.3d 254, 269 (2d Cir. 2006) (finding that a recalculation of benefits consistent with the
terms of a plan “falls comfortably” within the scope of [§ 1132 (a)(1)(B)]); Elizabeth W. v.
Empire Healthchoice Assurance, Inc., No. 15 Civ. 5250 (CM), 2016 WL 5115496, at *17
(S.D.N.Y. Sept. 15, 2016) (granting summary judgment to defendant where plaintiff’s §
1132 (a)(3) claim sought relief available under § 1132 (a)(1)(B)).
F. Attorney’s Fees
ERISA is a fee-shifting statute: a court may allow a reasonable attorney’s fee and
costs of action for either party. See 29 U.S.C. § 1132 (g)(1). Congress intended this
provision to encourage beneficiaries to enforce their statutory rights. See Donachie v.
Liberty Life Assur. Co. of Boston, 745 F.3d 41, 45-46 (2d Cir. 2014) (internal quotations
omitted). Thus, awarding a prevailing party attorney’s fees and costs is appropriate
unless there is good reason not to. See id. at 47 (citing Birmingham v. SoGen-Swiss Int’l
Corp. Ret. Plan, 718 F.2d 515, 523 (2d Cir. 1983)).
Plaintiffs demand attorney’s fees and costs in their corrected complaint. (See
Corrected Complaint, Wherefore Clause (d).) And while there appears no reason to
deny their request, the parties have not briefed the issue. Accordingly, this Court will
entertain a motion for attorney’s fees and costs from Plaintiffs filed within 30 days of the
entry date of this Decision and Order. Such motion shall include the amount of attorney’s
fees and costs sought, together with all supporting documentation.
35
IV. CONCLUSION
For the reasons stated above, the parties’ cross motions for summary judgment
are each granted in part and denied in part. Plaintiffs’ motion is granted as to their first
cause of action and denied in all other respects. Defendants’ motion is granted as to
Plaintiffs’ second, third, and fourth causes of action and denied in all other respects.
Defendants must pay Plaintiffs the full benefits to which they are entitled under the Plan
(retroactive and prospective) without reduction for workers’ compensation payments
received, consistent with this Court’s articulation of the Plan’s plain meaning herein,
together with prejudgment interest at the rate of 9% per annum.
V. ORDERS
IT HEREBY IS ORDERED, that Plaintiffs’ motion for summary judgment (Docket
No. 62) is GRANTED in part and DENIED in part, consistent with the foregoing decision.
FURTHER, that Defendants’ motion for summary judgment (Docket No. 61) is
GRANTED in part and DENIED in part, consistent with the foregoing decision.
FURTHER, that the actions brought by Gerald Dixon, Patrick Higgins, and Donna
Lichtenthal are DISMISSED under Rule 25 (a) of the Federal Rules of Civil Procedure.
FURTHER, that it is hereby DECLARED that subsection (c) of the “Deductions for
Workers Compensation” provision of the Plan provides that no deductions may be applied
to pension payments due under the Plan for workers’ compensation payments received
from workers’ compensation claims filed earlier than the date falling two years after a
participant breaks seniority, as more fully explained herein.
FURTHER, that Defendants calculate Plaintiffs’ pension payments consistent with
36
this Decision and Order and pay Plaintiffs the full benefits to which they are entitled under
the Plan (retroactive and prospective), together with prejudgment interest at the rate of
9% per annum.
FURTHER, that Plaintiffs must file any motion for attorney’s fees under 29 U.S.C.
§ 1132 (g)(1) within 30 days of the entry date of this Decision and Order. Defendants
must file their response thereto within 14 days of the filing date of Plaintiffs’ motion.
Plaintiffs may file a reply within 7 days of the filing date of Defendants’ response. This
Court will thereafter take the motion under advisement without oral argument.
FURTHER, that the Clerk of Court enter judgment consistent with this Decision
and Order and then CLOSE this case.
SO ORDERED.
Dated: March 11, 2019
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
United States District Judge
37
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?