Metzgar et al v. U.A. Plumbers and Steamfitters Local No. 22 Pension Fund et al
Filing
139
DECISION AND ORDER DENYING 110 MOTION for Leave to File Supplemental Complaint filed by Gary Metzgar, Ronald Reagan, Charles Puglia, Sherwood Noble, Daniel O'Callaghan, Kevin Reagan, Richard Mueller.REPORT AND RECOMMENDATIO NS re 98 MOTION for Summary Judgment filed by Board of Trustees of U.A. Plumbers and Steamfitters Local No. 22 Pension Fund, U.A. Plumbers and Steamfitters Local No. 22 Pension Fund, Debra Koropolinski, 101 MOTION for Summary Judgment filed by Gary Metzgar, Ronald Reagan, Charles Puglia, Sherwood Noble, Daniel O'Callaghan, Kevin Reagan, Richard Mueller 111 MOTION for Preliminary Injunction filed by Gary Metzgar, Ronald Reagan, Charles Puglia, Sherwood Noble, Daniel O'Callaghan, Kevin Reagan, Richard Mueller, Objections due fourteen days from receipt. Signed by Hon. Leslie G. Foschio on 3/28/2019. (SDW)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
________________________________________
GARY METZGAR, RICHARD MUELLER,
KEVIN REAGAN, RONALD REAGAN,
CHARLES PUGLIA, SHERWOOD NOBLE,
DANIEL O’CALLAGHAN,
Plaintiffs,
v.
DECISION
and
ORDER1
----------------------------REPORT
and
RECOMMENDATION
U.A. PLUMBERS AND STEAMFITTERS LOCAL
NO. 22 PENSION FUND,
BOARD OF TRUSTEES OF U.A. PLUMBERS AND
STEAMFITTERS LOCAL NO. 22 PENSION FUND, and
DEBRA KORPOLINSKI, in her capacity as Plan
Administrator, for the U.A. Plumbers and Steamfitters
Local 22 Pension Fund,
Defendants.
________________________________________
APPEARANCES:
13-CV-85V(F)
CHRISTEN ARCHER PIERROT, ESQ.
Attorney for Plaintiffs
3959 N. Buffalo Road
Orchard Park, New York 14052
COLLIGAN LAW LLP
Attorneys for Plaintiffs
A. NICHOLAS FALKIDES,
MATTHEW K. PELKEY, of Counsel
12 Fountain Plaza, Suite 600
Buffalo, New York 14202
BLITMAN & KING
Attorneys for Defendants
DANIEL R. BRICE,
JULES L. SMITH, of Counsel
The Powers Building
16 West Main Street, Suite 207
Rochester, New York 14614
1
Motions pursuant to Rule 15(d) are non-dispositive. See McKenzie v. Obertean, 2019 WL 441593, at
*1 n. 1 (W.D.N.Y. Feb. 5, 2019) (citing Fielding v. Tollaksen, 510 F.3d 175, 178 (2d Cir. 2007); (Second
Circuit found magistrate judge decision to deny plaintiff’s motion to amend based on futility not “an abuse
of discretion.”); Palmer v. Monroe Cty. Sheriff, 378 F.Supp.2d 284, 289 (W.D.N.Y. 2005) (internal citation
omitted); but see Crenshaw v. Hamilton, 2012 WL 1565696, at *1 n. 1 (W.D.N.Y. Mar. 30, 2012) (citing
Velez v. Hartke, 2011 WL 2489987, at *1 n. 2 (W.D.N.Y. May 13, 2011)). Accordingly, as Plaintiffs’
motion for leave to serve a supplemental complaint is closely related to the parties’ opposing motions for
summary judgment the court considers such motions in this combined Decision and Order and Report
and Recommendation.
JURISDICTION
This case was referred to the undersigned by Hon. Richard J. Arcara for all
pretrial matters on October 29, 2014 (Dkt. 40). It is presently before the court on
Defendants’ motion for summary judgment, filed February 1, 2018) (Dkt. 98), Plaintiffs’
motion for summary judgment (Dkt. 101), Plaintiffs’ motion for leave to file a
supplemental complaint filed February 1, 2018 (Dkt. 110), and Plaintiffs’ motion for a
preliminary injunction also filed February 1, 2018 (Dkt. 111).
BACKGROUND
In this ERISA, 29 U.S.C. § 1001, et seq., action Plaintiffs allege unlawful
reductions and/or elimination of Plaintiffs’ accrued pension benefits in violation of 29
U.S.C. §§ 1054(g), denial of Plaintiffs’ pension benefits in violation of § 1132(a)(1)(B),
breach of fiduciary duty in violation of § 1104(a)(1), and declaratory relief. On February
1, 2018, Defendants moved for summary judgment (Dkt. 98) along with the Affirmation
of Jules L. Smith in Support of Defendants’ Motion For Summary Judgment (Dkt. 98-3)
and an Affidavit In Support Of Defendants’ Motion For Summary Judgment (Dkt. 99)
attaching Exhibits A – Q (Dkt. 99-1-17) (“Defendants’ motion”). An (Amended)
Memorandum Of Law In Support Of Defendants’ Motion For Summary Judgment was
filed February 1, 2018 (Dkt. 100).
Plaintiffs filed their Notice Of Motion For Summary Judgment also on February 1,
2018 (Dkt. 101) attaching Plaintiffs’ Memorandum Of Law In Support Of Motion For
Summary Judgment (Dkt. 101-1), Plaintiffs’ Rule 56.1 Statement Of Undisputed Facts
(Dkt. 101-2), Attorney Affirmation of A. Nicholas Falkides, Esq. (Dkt. 101-3) with
Exhibits A-T (Dkts. 101-4-23), the Affidavit of Ronald Reagan in Support of Motion for
2
Summary Judgment (Dkt. 102), Affidavits in Support of Plaintiffs’ Motion for Summary
Judgment of Kevin Regan (Dkt. 103), Ronald Reagan (Dkt. 104), Gary Metzgar (Dkt.
105), Richard Muller (Dkt. 106), Daniel O’Callaghan (Dkt. 107), Charles Puglia (Dkt.
108), and Sherwood Noble (Dkt. 109). (“Plaintiffs’ motion”)
Defendants’ Response To Plaintiffs’ Local Rule 56.1 Statement (Dkt. 115) and
Memorandum Of Law In Further Support Of Defendants’ Motion For Summary
Judgment And In Opposition To Plaintiffs’ Motion For Summary Judgment (Dkt. 116)
was filed March 5, 2018.2 Plaintiffs’ Counter-Statement of Facts (Dkt. 118),
Memorandum Of Law In Opposition To Defendants’ Motion For Summary Judgment
(Dkt. 118-1) and the Attorney Affirmation of A. Nicholas Falkides (Dkt. 118-2) were filed
March 5, 2018. Exhibits A – I for Plaintiff’s Opposition (Dkt. 118) were filed in a
separate filing on March 5, 2018 (Dkt. 119). Defendants’ Memorandum Of Law In Reply
To Plaintiffs’ Opposition And In Further Support Of Defendants’ Motion for Summary
Judgment (Dkt. 120) and Plaintiffs’ Reply Memorandum Of Law In Support Of Motion
For Summary Judgment (Dkt. 121) were filed March 19, 2018.
Plaintiffs also moved on February 1, 2018, for Leave to File Supplemental
Complaint (Dkt. 110) along with the Attorney Affirmation of Matthew K. Pelkey (Dkt.
110-1) attaching Exhibits A-H (Dkts.110-2-9) (“Plaintiffs’ Motion To File A Supplemental
Complaint”). Defendants opposed the motion by filing on March 5, 2018, Defendants’
Memorandum Of Law In Opposition To Plaintiffs’ Motion For Leave To File A
Supplemental Complaint (Dkt. 114). Plaintiffs’ reply, Attorney Affirmation of Matthew K.
2
Defendants’ Memorandum included Defendants’ request to withdraw Defendants’ counterclaims, Dkt.
116 at 18, which the court treats as a motion to dismiss counterclaim pursuant to Fed.R.Civ.P. 41(a)(2).
See Discussion, infra, at 52-54.
3
Pelkey, was filed March 19, 2018 (Dkt. 122) with the continuation of exhibits filed as
(Dkt. 124).
By papers filed February 1, 2018, Plaintiffs moved for a Preliminary Injunction
(Dkt. 111) along with Plaintiffs’ Memorandum Of Law In Support Of Motion For
Preliminary Injunction and the Attorney Affirmation of Matthew K. Pelkey, Esq. (Dkt.
111-2) attached Exhibits A-F (Dkt. 111-3-18) (“Plaintiffs’ Motion for Preliminary
Injunction”). Defendants’ Memorandum Of Law In Opposition To Plaintiffs’ Motion For
Preliminary Injunction was filed March 5, 2018 (Dkt. 117) and Plaintiffs’ Reply
Memorandum Of Law In Further Support Of Their Motion For Preliminary Injunction was
filed March 19, 2018 (Dkt. 123).
Oral argument was deemed unnecessary. Based on the following Defendants’
motion should be GRANTED; Plaintiffs’ motion should be DENIED; Plaintiffs’ motion to
file a supplemental complaint should be DENIED; Plaintiffs’ motion for preliminary
injunction should be DENIED.
FACTS3
Plaintiffs are retired members of U.A. Plumbers & Steamfitters Local 22 (“the
Union”) who, based on their prior active Union membership, were entitled to participate
in the Defendant U.A. Plumbers & Steamfitters Local No. 22 Pension Fund (“the Fund”).
The Fund is a defined benefit multi-employer pension plan under a Trust Agreement
and Declaration created April 18, 1999 by the Fund’s Trustees made up of
representatives of the Union and an association of plumbing, heating and cooling
service contractors doing business in Western New York (“the Trust”). The Fund’s
3
Taken from the pleadings and papers filed in this action.
4
pension benefits to eligible Union member participants are provided through the U.A.
Plumbers and Steamfitters Local No. 22 Pension Fund Restated Plan of Benefits
adopted by the Fund’s Trustees effective May 1999 (“the Plan”). The Fund has eight
trustees on the Board of Trustees – four representatives of the contractors and four
from the Union. Defendant Korpolinski is the Administrator of the Fund, a position she
had held since 2005; prior thereto the position was held by Janice L. Maslen. The Fund
is financed by contributions of participating employers, plumbing, heating and cooling
contractors, of Union members based on the number of hours worked by Union
members who were employed by contractors participating in the Fund as required by a
multi-employer Union Collective Bargaining Agreement (“CBA”). Plaintiffs are among
1,868 participants and beneficiaries of the Fund as of March 2012 which then had
assets of approximately $140 million. An Employee is eligible for benefits under the
Plan upon performing 800 hours of covered employment, i.e., as a plumber or
steamfitter, employment which is subject to the CBA (“covered service or employment”)
and is vested as an accrued pension benefit under the Plan after five years of covered
service. Contributing employers make contributions to the Fund to support employee
pensions based on an employee’s hours of work in covered employment, but not on
behalf of employees who serve in managerial positions or as project managers or
estimators.
Article V Section 3 of the Trust grants to the Trustees the “full and exclusive
discretionary authority to determine all questions of coverage and eligibility, method of
providing benefits and all related matters . . . [and that the Trustees have] full
discretionary authority to interpret the provisions of this Trust Agreement and the Plan of
Benefits . . ..” Dkt. 99-1 at 12-13. The Trust also requires the Trustees comply with
5
ERISA and the Internal Revenue Code so that “the Trust and Plan of Benefits . . . will be
structured and operated to qualify for approval by the Internal Revenue Service
(“I.R.S.”) as a tax-exempt Trust and Plan to ensure that the Employer contributions to
the Fund are proper deductions for income tax purposes” and states [i]t is the intention
of the Trustees to fully comply with all requirements of the Internal Revenue Code.”
(Art. VII Sec. 4). Dkt. 99-1 at 29.
The Plan in Art. V Sec. 1(a) provides for a “Normal Retirement” pension available
to employees at age 65, Dkt. 99-2 at 15, an “Early Retirement” pension Art. V Sec. 1(c)
at a reduced monthly payment, Dkt. 99-2 at 18, and as provided in Art. V Sec. 1(d) a
“Special Early Retirement” pension (“Special Early Retirement” or “pension”) available
to an employee with at least 30 years of covered service at age 55 under a so-called
Rule of 85, Dkt. 99-2 at 18, in the amount of the employee’s Accrued Benefit. Id.
Beginning in 2002, each Plaintiff, then eligible under the Rule of 85, applied for and
received the Fund’s approval of a Special Early Retirement pension (Dkt. 101-2 ¶¶ 3537). The Plan also provided for a suspension of pension benefits for any recipient who
received a Normal Retirement pension from the Fund and who worked for over 40 hours
per month in a disqualifying employment or an industry covered by the Plan
(steamfitting or plumbing). Similarly, a recipient of an early retirement pension benefit,
such as Plaintiffs’ Special Early Retirement pensions, was subject to a suspension of
pension benefits for any month in which the recipient worked in an occupation in which
an employee was employed when pension benefits began, in the same industry and
geographic area covered by the Plan, for more than 120 hours per month. Art. V Sec.
3(a)(i)) (Dkt. 99-2 at 21-22) (“Disqualifying Employment”). Employment in “a managerial
position” or as a “project manager or estimator” for a participating employer by a
6
participant receiving a Special Early Retirement pension was not Disqualifying
Employment subjecting the recipient to a suspension of benefits under Art. 5 Sec. 3 of
the Plan (“Art. V Sec. 3”). Dkt. 99-2 at 21. Former employees who continued in nonDisqualifying Employment were also not subject to any limits as to total monthly working
hours which also did not apply after a recipient reached age 70½. Art. V Sec. 3(a)(1).
When Plaintiffs applied for their Special Early Retirement pensions the Plan did not
contain any definition of the term “to retire” or “retirement,” and the Plan was
administered with the understanding that applicants for Special Early Retirement
pensions could receive, without incurring a suspension of benefits, both their monthly
Special Early Retirement pension as well as earnings from employment with a
participating employer for whom the employee had previously worked provided the
employees were to be employed in non-Disqualifying Employment, i.e., a managerial
position or an a project manager or estimator, at the time the employees’ Special Early
Retirement pensions commenced, as defined in Art. V Sec. 3; Dkt. 101-4 at 93-94; 11011.
Plaintiff Ronald Reagan applied for his Special Early Retirement pension on July
8, 2002, at age 55 after more than 30 years of service with John W. Danforth
(“Danforth”) most recently as a general foreman. His pension, with a monthly benefit of
$3,138, was approved August 1, 2002, effective August 1, 2002 at which time he
commenced work as a project manager with Danforth. Plaintiff Noble applied for his
pension on February 1, 2003, effective the same date, with a monthly benefit of $3,532
at age 55 after 30 years of service with Danforth. On the same date, Noble also
commenced employment with Danforth as a project management/estimator. Plaintiff
Kevin Reagan applied for his Special Early Retirement pension on December 10, 2004,
7
at the age of 55 with over 30 years of service with Mollenberg-Betz (“Mollenberg”), a
contributing employer, most recently as a foreman. His pension with a monthly benefit
of $3,497 was approved and became effective on January 1, 2005. Reagan had
previously, in 2001, become eligible upon attaining age 55 for an Early Retirement
pension and left covered employment with Mollenberg to become a project manager in
which position he continued to work upon receiving his pension starting January 1,
2005.
Plaintiff O’Callaghan applied for his Special Early Retirement pension on January
12, 2007, at age 55 after 30 years of service with Danforth most recently as a foreman
steamfitter. His pension was approved on February 1, 2007, effective March 1, 2007, at
which time he continued employment with Danforth as a project manager while
receiving monthly pension benefits of $3,098. Plaintiff Puglia applied for his Special
Early Retirement pension on September 30, 2008, at age 60 after more than 30 years of
service with MLP Plumbing and Mechanical, Inc. (“MLP”), a contributing employer, most
recently as a plumber foreman. His pension was approved and became effective as of
November 1, 2008, with a monthly benefit of $4,037. Shortly thereafter, Puglia
commenced employment with MLP as a warehouse manager, a non-Union managerial
position newly created by MLP. Plaintiff Metzgar applied for his Special Early
Retirement pension at age 55 from the Plan in May 2009, with a monthly pension
benefit of $4,313 having 30 years of covered service, most recently as a general
foreman, with his employer Danforth, a participating employer in the Fund, which
application was approved and became effective on June 1, 2009. On this date, Metzgar
commenced employment with Danforth as a “rover,” a new managerial position in which
Metzgar mentored junior foremen for Danforth. Plaintiff Mueller applied for his pension
8
on April 21, 2004, at age 55 with a monthly benefit of $4,279 having more than 30 years
of service with Danforth most recently as a foreman. Mueller’s pension was approved
and became effective on May 1, 2004, at which time Mueller continued employment
with Danforth as a project manager.
Sometime in the fall of 2011, Korpolinski and Fund Trustee Michael McNally
attended an employee benefits conference in New Orleans at which a presenter stated
that it was unlawful for the Fund, as a tax-exempt pension trust fund, to pay early
retirement pensions without the pension applicant having fully retired by completely
separating from any employment with the prior employer. Dkt. 99 ¶ 31. This
representation may have been based on an I.R.S. Private Letter Ruling No. 201147038,
issued April 20, 2010 (Dkt. 100), 2011 WL 5893533 (Nov. 25, 2011) (“the PLR”), in
which the I.R.S. stated that to retain its tax-exempt status, a qualified pension plan must
require that a participant who elects to receive an early retirement pension upon
becoming eligible, i.e., prior to age 62, as permitted by Section 401(a)(36) of the Internal
Revenue Code, must terminate all prior employment. Upon their subsequent review of
the Plan, based on this new information Defendant Trustees determined that numerous
Plan participants, including Plaintiffs, who had continued employment with their
respective former participating employers upon receiving Special Early Retirement
pensions, had been erroneously awarded such pensions in violation of the Internal
Revenue Code, specifically § 401(a) of the Code (“§ 401(a)”), by Defendants which
Defendants’ characterized as “an operational error/mistake.” Dkt. 99 ¶ 33. Based on
the terms of the Trust requiring the Trustees to operate the Fund in a manner that
preserved the Fund’s tax-exempt status, the Trustees also determined that the pensions
awarded to employees, including Plaintiffs, pursuant to the Rule of 85 under Art. V Sec.
9
3 also violated the terms of the Trust and Plan. Id. ¶ 33. Following the Trustees’
determination the Plan, on November 29, 2011, sent letters to all affected Special Early
Retirement pension beneficiaries including Plaintiffs advising of the Trustees’ conclusion
that if the beneficiary had remained employed by his former employer, the beneficiary
was not entitled under the Plan to the Special Early Retirement pension he had been
receiving, and should contact the Plan’s office. Dkt. 99 ¶ 34. A second letter, dated
December 27, 2011, was sent by Defendant Korpolinski as Plan administrator to
Plaintiffs informing Plaintiffs that based on the I.R.S.’s required definition of retirement
under § 401(a), Plaintiffs must cease their current employment in order to continue to
receive their pensions after February 1, 2012, failing which their pensions would be
suspended. Dkt. 99-14. Because the recent I.R.S. Private Letter Ruling was limited to
early retirement benefits received at age 55 but not at age 62 or a later age, no letter
was sent to Plaintiff Ronald Reagan as he had then stopped all employment with
Danforth and had reached age 65 at that time and thus was not subject to a suspension
of his pension benefits under the Plan for having engaged in employment with his
previous employer at age 65. Plaintiffs were also advised to file a claim with the Fund if
they wished to dispute Defendants’ determination. In response, Plaintiffs Metzgar,
Mueller, and O’Callaghan continued working for Danforth and their respective pensions
were therefore terminated by the Plan as of February 1, 2012; as requested by the
Fund, Plaintiffs Noble, Kevin Reagan, and Puglia withdrew from employment with their
respective employers, Danforth, Mollenberg and MLP, and the Fund continued their
pension payments. Plaintiff O’Callaghan later terminated his employment with Danforth
and his pension payments were resumed.
10
On February 10, 2012, the Trustees amended the Plan by adding a new Section
5.5(a) which, in substance, Dkt. 99-3 at 80, states that retirement under the Plan
requires a participant to separate from all service, i.e., employment, with a contributing
employer with the intent that such separation be permanent except for participants who
attain the Normal Retirement Age (65) (“the February 2012 Amendments”). The
February 2012 Amendments also amended Plan Section 5.3 to include any managerial
position, project manager, and estimator as Disqualifying Employment for recipients of a
Special Early Retirement pension except for participants who have attained age 65. Dkt.
99-3 at 80-81. Following adoption of these amendments Plaintiffs allege certain
Plaintiffs were required to re-retire under the amended Plan as a condition to continued
payments of their pension, see Dkt. 110-1 ¶ 1(h), an assertion which Defendants deny.
Dkt. 110-2 ¶ 1(h).
On March 2, 2012, Defendants filed a Voluntary Correction Plan submission with
the I.R.S., a procedure4 by which tax exempt pension plans like the Fund could request
I.R.S. approval of corrective actions taken by a plan necessary to preserve the taxexempt status of the plan following self-reported non-compliance, i.e., “failure” to comply
with applicable I.R.S. requirements (“the VCP” or “the VCP submission”). Dkt. 99-16 at
2-24. In the VCP, Defendants explained that the Plan had been previously
administered so as to permit participants, like Plaintiffs, eligible for an Special Early
Retirement pension, to receive such a pension without terminating all further
employment with a participating employer provided that the employees’ further
employment was as a manager, project manager, or estimator as Art. V Sec. 3 had
4
See Rev. Proc. 2006-27, 2006-22 I.R.B. 945 (May 30, 2006).
11
provided. Defendants also represented to the I.R.S. that at the time of the VCP
submission Defendants now understood “their [past]5 interpretation and administration
of the Plan was not consistent with the I.R.S.’s interpretation of a ‘retirement’ under
Treasury Regulations §§ 1.401(a)-1(b)(1)(i) and 1.401(b)(1)(i) which [interpretation]
requires a separation from employment with all employers contributing to the Plan (see,
e.g., PLR 201147038)[.]” Dkt. 99-16 at 21. Defendants’ VCP submission also stated
that 30 participants in the Plan, including Plaintiffs, had received Special Early
Retirement pensions in violation of this requirement and that Defendants had stopped
payment of pension benefits to these individuals to obtain their compliance with
Defendants’ requests to terminate the non-Disqualifying Employment in which such
participants had been engaged. Id. The Fund also advised the I.R.S. it did not intend at
that time to seek recoupment of any pension payments made in violation of the
Defendant Trustees’ present understanding of applicable I.R.S. requirements and that
any potential loss to the Fund as a result of the Trustees’ error in distributing such
payments had been accounted for in “the funding liabilities of the Plan.” Dkt. 99-16 at
22, 23. In its response to the VCP, dated August 16, 2012, Dkt. 99-17, the I.R.S. stated
that based on Defendants’ VCP submission, the I.R.S. would “not pursue the sanction
of revoking the tax-favored status of the plan” based on the compliance failures and
corrective actions described by Defendants in the VCP submission. Dkt. 99-17 at 8.
The I.R.S. also stated in its acceptance of Defendants’ VCP submission, that the
“compliance statement” did not affect the rights of any party under ERISA Title I. Dkt.
99-17 at 8.
5
Unless otherwise indicated bracketed material added.
12
On March 2, 2012, Plaintiffs, through counsel, filed an administrative appeal to
Defendants of the Fund’s 2011 determination (“Defendants 2011 Determination”)
requiring Plaintiffs to terminate their employment or suffer a suspension of their pension
benefits. In their appeal, Plaintiffs contended, inter alia, that the I.R.S. definition of
retirement for purposes of § 401(a) was not relevant to Plaintiffs’ continued entitlement
to their Early Retirement pensions as protected by ERISA § 204(g) (“the anti-cutback
rule”) and was only relevant to the Fund’s tax-exempt status. Dkt. 101-9 at 3. Plaintiffs
also contended that applicable I.R.S. regulations only prohibit continued in-service or
covered employment under the CBA after retirement which does not extend to postretirement non-covered employment like the Plaintiffs’ non-Disqualifying Employment in
managerial positions or as project managers and estimators, in which occupations
Plaintiffs had engaged as allowed in Art. V Sec. 3. On July 23, 2012, the Fund rejected
each of Plaintiffs’ appeals. This action followed on January 25, 2013 (“Metzgar I”).
In Defendants’ Answer, filed May 16, 2014, Dkt. 30, pursuant to ERISA §
502(a)(3), 29 U.S.C. § 1132(a)(3), Defendants counterclaimed against each Plaintiff for
the amount of the Special Early Retirement pensions paid erroneously by the Fund
which Plaintiffs had not repaid as Defendants had requested as follows: Metzgar $138,336.00; Mueller-$397,971.18; Noble-$381,489.48; O’Callaghan-$182,787.31;
Puglia-$158,838.81; Kevin Reagan-$282,423.55; Ronald Reagan-$357,774.18.
Defendants’ motion to dismiss for failure to state a claim (Dkt. 11) was denied by
Decision and Order by Hon. Richard J. Arcara on May 2, 2014 (Dkt. 29), 2014 WL
1767715 (W.D.N.Y. May 2, 2014) adopting Report and Recommendation, Dkt. 20, 2014
WL 1757715, at *4 (W.D.N.Y. Feb. 14, 2014) (Schroeder, M.J.).
13
On August 26, 2016, Defendant Trustees further amended the Plan by deleting
Section 10.4 relating to disclosures of pension information for participant beneficiaries to
the Social Security Administration and I.R.S. (Dkt. 99-3 at 54), replacing it with a new
provision (Dkt. 101-12 at 1-2) authorizing the Trustees to recover wrongfully paid benefit
payments “as well as any benefit payment made in error,” with 12% interest (“the
August 2016 Amendment”). The amendment also permits Defendants to recover
wrongfully paid benefits by reducing by 25% future pension benefit payments to a
participant, or by legal action. Id. The August 2016 Amendment also requires a
participant reimburse the Fund for attorneys and paralegal fees and other expenses
incurred in collecting overpayments or mistaken payments of benefits. Id. By letters to
each Plaintiff dated December 6, 2016 (Dkt. 101-13), the Fund demanded repayment of
the alleged mistakenly paid Early Retirement pensions together with 12% interest as
follows: Metzgar-$291,547.18; Mueller-$1,172,140.72; Noble-$1,225,562.28;
O’Callaghan-$445,086.06; Puglia-$347,331.08; Kevin Reagan-$794,741.86; Ronald
Reagan-$1,190,598.14. In this letter, the Fund advised Plaintiffs that if at the time
Plaintiff legitimately, at age 65 or after terminating employment, were then receiving
their pension payments from the Plan, Plaintiffs had not fully reimbursed the Fund for
the payments mistakenly paid to Plaintiffs, the Fund would commence to withhold 100%
of the first monthly pension payment due Plaintiffs and 25% of each monthly payment
thereafter until the full amount of the pension overpayments plus interest were
recovered by Defendants. Dkt. 101-13. Thereafter, the Trustees, not having received
reimbursement from any Plaintiff as Defendants had requested, commencing with the
Plaintiffs’ January 2017 pension payment, withheld 100% of such payment and reduced
by 25% each Plaintiff’s subsequent monthly pension payment to which Plaintiffs, all
14
attaining age 65, were then entitled to receive. Plaintiffs appealed these adverse
determinations on February 3, 2017. Defendants denied Plaintiffs’ appeals by letter
dated June 23, 2017. Dkt. 101-15. Plaintiffs commenced, on August 1, 2017, 17-CV726V(F) (“Metzgar II”), another action against Defendants, former Trustees and a Plan
administrator alleging violations of ERISA §§ 204(g), 502(a)(1)(B), 502(a)(3), 510 and
409(a), requesting declaratory and injunctive relief against further set-offs by
Defendants’ reducing Plaintiffs’ monthly pension payments which set-offs continue.
DISCUSSION
I.
Summary Judgment.
“Where ‘parties file cross-motions for summary judgment, . . . 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.” Fireman’s Fund
Insurance Company v. Great American Insurance Company of New York, 822 F.3d 620,
631 n. 12 (2d Cir. 2016) (quoting Morales v. Quintel Entertainment, Inc., 249 F.3d 115,
121 (2d Cir. 2001) (brackets omitted)). In this case, as the parties do not request trial,
the matter may be resolved on the parties’ summary judgment motions.
A.
Plaintiffs’ First Claim.
1.
Defendants’ 2011 Determination Was Not An Amendment To The
Plan for Purposes of § 204(g).
Plaintiffs’ First Claim alleges that Defendants’ suspension of Plaintiffs’ Early
Retirement Pensions unless Plaintiffs terminate further employment with Plaintiffs’
employers violated the anti-cutback rule embodied in ERISA Section 204(g), 29 U.S.C.
§ 1054(g) (“§ 204(g)__” or “§ 1054(g)__”). Section 204(g)(1) provides that “[t]he
15
accrued benefit of a participant under a plan may not be decreased by an amendment
to the plan . . ..” § 1054(g)(1).6 This protection applies to Plaintiffs’ Special Early
Retirement pensions under § 1054(g)(2). Specifically, Plaintiffs assert that Defendants’
determination, communicated to Plaintiffs in Defendants’ November 29 and December
27, 2011 correspondence to Plaintiffs (collectively “Defendants’ 2011 Determination”),
that unless Plaintiffs terminated Plaintiffs’ current employment with their employers, all
of which were participating employers, Plaintiffs’ pensions would be suspended,
constituted an amendment to the Plan which reduced Plaintiffs’ pension benefits,
including the possibility of Plaintiffs’ post-retirement employment as a related benefit,
prior to Defendants’ 2011 Determination, subject to protection under § 204(g). See
Central Laborers’ Pension Fund v. Heinz, 541 U.S. 739, 744-45 (2004) (plan
amendment adopted by plaintiff’s pension fund extending plan’s prohibition on postretirement employment to include plaintiff’s supervisory position within the construction
industry covered by plan after plaintiff’s retirement as a carpenter curtailed value of
plaintiff’s pension benefit, including plaintiff’s right to engage in post-retirement
supervisory employment as had been permitted by the plan, accrued at time of plaintiff’s
retirement, and thus violated the anti-cutback rule). Plaintiffs therefore contend that
Defendants’ demand, that Plaintiffs forgo Plaintiffs’ post-retirement employment or
suffer suspension of Plaintiffs’ Special Early Retirement pension benefits, issued
administratively by Defendants in Defendants’ December 2011 letter to Plaintiffs based
on Defendants’ determination that Plaintiffs had not retired, constituted a plan
amendment that improperly reduced Plaintiffs’ monthly pension payments as well as the
6
A similar protection exists in the Internal Revenue Code. See 26 U.S.C. § 411(d)(6)(A); see also 26
C.F.R. § 1.411(d)-4, A-7.
16
additional income Plaintiffs had been receiving from their respective post-retirement
employments which, Plaintiffs assert, had accrued when Plaintiffs retired, upon approval
of Plaintiffs pension applications, from Plaintiffs’ covered employment under the Plan.
Thus, the court first addresses whether Defendants’ 2011 Determination that
Defendants were required, under a correct interpretation and application of Art. V Sec.
1(d) of Plan (Dkt. 99-2 at 19) that Plaintiffs had not retired, to suspend Plaintiffs’
pensions pursuant to Art. V Sec. 3(a)(i) (Dkt. 99-2 at 21-22) until Plaintiffs ceased their
post-retirement employment, until reaching age 65, constituted an amendment in
violation of § 204(g), ERISA’s anti-cutback rule, as the basis for Plaintiffs’ First Claim.
As noted, prior to February 2012, the Plan provided for a Special Early
Retirement pension under Art. V Sec. 1(d) which requires a participant attain age 55
with at least 30 years of credited service to be eligible for such pension. The Special
Early Retirement pension was also subject to suspension where the recipient returned
to work as a steamfitter or plumber in the Western New York steamfitter and plumbing
industry covered by the CBA if the recipient worked 120 hours in any month. Art. V
Sec. 3(a)(i), Dkt. 99-2 at 21. However, under this provision employment after retirement
in a managerial position or as a project manager or estimator did not subject a Special
Early Retirement pension recipient to possible suspension of his monthly pension
payment. Id. (“Sec. 3(a)(i)”) (“non-Disqualifying Employment”). At the time Plaintiffs’
pensions were approved by the Plan, the Plan Administrator understood recipients
could under Sec. 3(a)(i) receive both a Special Early Retirement pension as well as
engage in any of the three types of non-Disqualifying Employment immediately following
approval of their pensions, without any actual temporal break in their employment with
Plaintiffs’ then participating employers, without being subject to a suspension of benefits
17
as required by Sec. 3(a)(i). Dkt. 101-8 (referencing Plaintiffs’ Statement of Facts, Dkt.
101-2 ¶¶ 49-62). However, the fact that the Plan Administrator correctly understood
that Plaintiffs would not be subject to any loss of benefits for having engaged in
disqualifying employment after their retirements did not address whether the Plan’s then
criteria for the Special Early Retirement pension required Plaintiffs not continue any
actual employment in order for the Fund to maintain its eligibility to operate as a taxexempt ERISA pension fund under § 401(a), the applicable provision of the Internal
Revenue Code for such tax benefit. However, upon learning that Defendants’
approvals of Plaintiffs’ pensions were in apparent non-compliance with the requirement
of § 401(a), as construed by the I.R.S., that to remain qualified for tax-exempt status
under § 401(a) a pension trust like the Fund in this case could not approve an early
retirement pension, i.e., one received before an employee reached 65, unless the
recipient of the early pension from a tax-exempt pension trust completely and
permanently terminated all employment, including any non-Disqualifying Employment,
which may be permitted by a plan, with the employee’s participating employer
Defendants acted to immediately bring the Plan into compliance by demanding Plaintiffs
and other employees who, like Plaintiffs, had been awarded Special Early Retirement
pensions and whom Defendants were aware had continued employment with their
employers, cease their post-retirement employment or incur a suspension of their
pensions. To insure the Plan’s future full compliance with this corrected understanding
of § 401(a) as applied to Plaintiffs’ pensions, the sole basis for Defendants’ 2011
Determination, Defendants formally amended the Plan on February 10, 2012 to require
future applicants for Special Early Retirement pensions cease any further employment.
Plaintiffs therefore contend that the Defendants’ 2011 Determination as stated in the
18
December 27, 2011 Letter to Plaintiffs constitutes a “De Facto Plan Amendment”
prohibited by § 204(g), which “determination” Plaintiffs allege is the basis for Plaintiffs’
alleged anti-cutback violations. Dkt. 101-1 at 11; Dkt. 118-1 at 25 (“There can be no
dispute that Defendants, in late 2011, applied conditions to Plaintiffs’ receipt of benefits
that were neither set forth in the terms of the Plan nor applied in the first [when
approving Plaintiffs’ pensions] instance.”); Complaint Dkt 111-3 ¶ 31 (“The monthly early
retirement benefits received by Plaintiffs prior to Defendants’ December 2011 and
subsequent determinations that Plaintiffs did not actually retire . . . constitute accrued
benefits [protected by § 204(g)].”); ¶ 32 (“Defendants’ determination that each of the
Plaintiffs did not actually retire because each of the Plaintiffs continued working in NonDisqualifying Non-Plan employment subsequent to his retirement constitutes a Plan
amendment.”); ¶ 41 (“All of the Plaintiffs will continue to be harmed until and unless the
Defendants are estopped from refusing to recognize Plaintiffs’ original dates of
retirement pre-December 2011.”). Thus, regardless of the fact that the terms of the
alleged “De Facto” amendment to the Plan are based on the administrative
“determination” made by Defendants in December 2011, the substance of which
Plaintiffs also allege was then added to the Plan as a formal amendment in February
2012, Defendants’ November and December 2011 interpretations of the requirements of
the Plan under Art. V Sec. 1(d) for Plaintiffs’ pensions are the basis for Plaintiffs’ anticutback claim pursuant to § 204(g). Accordingly, at the threshold, the court considers
whether Defendants’ 2011 Determination constitutes a plan “amendment” as that term
appears in § 204(g).
In support of Defendants’ contention that Defendants are entitled to summary
judgment on Plaintiffs’ claim under § 204(g), Defendants rely on Kirkendall v.
19
Halliburton, Inc., 2011 WL 2360058, at *10 (W.D.N.Y. June 9, 2011) (Curtin, J.),
vacated in part, and affirmed in part, 707 F.3d 173 (2d Cir. 2013), cert. denied, 571 U.S.
882 (2013) (“Kirkendall”). See Dkt. 100 at 27-28. In Kirkendall, the court held that the
term “amendment of the plan” as stated in § 204(g) refers only to “actual amendments
to the terms of the plan, not to a plan administrator’s interpretation of plan provisions
which results in a reduction of benefits.” Kirkendall, 2011 WL 2360058, at *10.
Plaintiffs do not respond directly to this contention. See Dkt. 118-1 at 23-24 (citing
caselaw holding that administrator’s interpretation of plan reducing employee pension
benefits are de facto amendments subject to § 204(g)). In reaching this conclusion,
Judge Curtin surveyed applicable circuit caselaw holding that § 204(g)’s “protections . . .
apply only to actual amendments to the terms of a Plan, not to an interpretation of terms
[by a plan administrator] which amounts to a constructive amendment of the Plan.”
Kirkendall, 2011 WL 2360058, at *8 (citing caselaw). In Kirkendall, Judge Curtin
particularly relied on the reasoning of the opinion in Stewart v. Nat’l Shopmen Pension
Fund, 730 F.2d 1552 (D.C.Cir.), cert. denied, 469 U.S. 834 (1984), in which the court
stated that as it appears in § 204(g), “[T]he word ‘amendment’ is used as a word of
limitation. Congress did not state that any change would trigger the . . . provision[ ]; it
stated that any change by amendment would do so . . ..” Stewart, 730 F.2d at 1561
(italics in original). In Stewart, as quoted by Judge Curtin, the D.C. Court of Appeals
further stated that
The plaintiffs' construction would stretch the term “amendment” nearly to
the breaking point. Under their construction, reducing any benefits,
authorized by the plan, of persons whose rights are vested, would constitute
an “amendment.” While speculation regarding why Congress chooses
specific language is not always fruitful, it should be noted that had Congress
meant [Section 204(g)] to apply to “any reduction in benefits to vested
participants,” it could easily have said so.
20
Kirkendall, 2011 WL 2360058, at *9 (quoting Stewart, 730 F.2d at 1561) (italics in original
and citing Dooley v. American Airlines, Inc., 797 F.2d 1447, 1451-52 (7th Cir. 1986))
(applying Stewart’s “common sensical rule of law” to find plan fiduciaries’ “valid exercise
of a provision which was already firmly ensconced in the pension document” did not
amount to amendment of the plan in violation of Section 204(g) and citing caselaw)).
Here, the provisions of the Plan upon which Plaintiffs rely for their First Claim are
found in Art. V Sec. 1(d) (Dkt. 99-2 at 19-20) (“Any employee who retires on or after
June 1, 1998 . . ..”)7 under which Plaintiffs qualified under the Rule of 85 (age 55 plus
30 years of service) for a Special Early Retirement pension which was also subject to
later suspension under Art. V Sec. 3(a) in the event of any subsequent employment by
the retiree “(A) in an industry covered by the Plan . . ., (B) in the geographic area
covered by the Plan . . ., and (C) in any occupation in which the Participant worked
under the Plan . . ..” Dkt. 99-2 at 22 (defined as “Disqualifying Employment”). Such
restrictions on post-retirement Disqualifying Employment were included in the Plan,
originally adopted May 1, 1999, and restated on March 28, 2002, effective as of May 1,
2002 to include subsequent amendments. Dkt. 99-2 at 3, 54. The Plan was
subsequently restated, on December 16, 2009, effective May 1, 2009, Dkt. 99-3 at 2,
65, incorporating amendments adopted since the 2003 Restatement and adopting a
different section decimal-based number system, but retaining the same language
authorizing Special Early Retirement pensions of Art. V Sec. 1(d).8 Thus, as with the
7
Unless otherwise indicated all underlining is added.
Plaintiffs state that inasmuch as all Plaintiffs, except Metzgar who “retired” under the 2009 Restated
Plan, “retired” under the 2002 Restated Plan with “virtually identical language,” with the 2001 Restated
Plan for ease of reference, reference should be to the 2002 Restated Plan. Dkt. 118-1 at 10 n. 8.
Accordingly, the court’s references are to the 2002 Restated Plan.
21
8
provision in question in Stewart, these provisions were equally well-ensconced, see
Dooley, 797 F.2d at 1451-52, in the Plan document when Plaintiffs applied for their
Special Early Retirement pensions commencing in 2002 with Plaintiff Ronald Reagan.
As noted, Facts, supra, at 6, an exception in the Plan to the prohibition on
continued employment with a contributing employer following the Plan’s approval of
Plaintiffs’ retirement pensions provided that “employment in a managerial position,
project manager, or estimator for an Employer shall not be deemed ‘Disqualifying
Employment.’” Significantly, nothing in the text of Art. V Sec. 1(d) (“Any employee who
retires . . ..”) indicates that the term “retires” includes any expectation the employee
intends to continue employment with a contributing employer in any form of employment
whether such future employment is subject to suspension of pension benefits under Art.
V Sec. 3(a) or not. As stated in Defendants’ 2011 Determination, see, e.g., Dkt. 99-13
at 3, Dkt. 99-14 at 2, because Plaintiffs, upon commencing their Special Early
Retirement pensions, continued to work for a participating employer, albeit in nonDisqualifying Employment that did not require suspension of a pension under the terms
of the Plan, Defendants’ action to suspend Plaintiffs’ pensions in order to assure the
Plan’s compliance with § 401(a) and preserve the Plan’s tax-exempt status, was an
administrative interpretation of existing Plan language, specifically, the phrase “[a]ny
employee who retires . . ..” Art. V Sec. 1(d) (“Any employee who retires . . ..”) to include
§ 401(a)’s required permanent severance of any form of employment service after
retirement to support distribution of an early retirement benefit, and is therefore not an
amendment to the Plan necessary to support an action pursuant to § 204(g).
Significantly, as the terms “retire” or “retirement” were not defined by the Plan, Dkt. 1012 ¶ 30 (“The Plan does not define the term ‘retire’”) and a perusal of the Plan yields no
22
definition of the term “retirement;” see also Dkt. 118-1 (Plaintiffs’ Memorandum of Law
in Opposition to Defendants’ Motion for Summary Judgment) at 10 (“[T]he terms of the
Plan in effect at the time that each Plaintiff qualified for early retirement do not explicitly
define ‘retirement’”). Defendants’ 2011 Determination therefore did not alter an existing
term of the Plan nor did it add any provision to the Plan; rather, it construed and applied
the relevant terms so as to comply with previously existing and applicable Internal
Revenue Code requirements, specifically § 401(a). In sum, Defendants’ prior
understanding of the term “retires” and “retirement” as used in the Plan to allow for
continued employment by an employee upon receiving an early retirement pension was
legally erroneous, and its correction in Defendants’ December 2011 Determination did
not effect an amendment to an existing term of the Plan within the scope of § 204(g).
As noted, the Second Circuit’s decision affirmed the District Court’s dismissal of
plaintiff’s § 204(g) claim in Kirkendall, see Kirkendall, 707 F.3d at 184, although
recognizing the existence of other judicial interpretations of the term “amendment” as
used in § 204(g) to include “an erroneous interpretation of a plan provision that results
in the improper denial of benefits to a plan participant may be construed as a
‘amendment’ for purposes of ERISA § 204(g),” Kirkendall, 707 F.3d at 182-83 (quoting
Hein v. FDIC, 88 F.3d 210, 216 (3d Cir. 1996) and Treas. Reg. § 1.411(d)-4, A-7
(stating that a plan allowing an employer to deny a protected benefit by the exercise of
administrative discretion violates Internal Revenue Code § 411(d)(6) a provision similar
to § 204(g)); see also Hunter v. Caliber System, Inc., 220 F.3d 702, 712 (6th Cir. 2000)
(“‘erroneous interpretation of a plan provision that results in the improper denial of
benefits to a plan participant may be construed as an ‘amendment’ for purposes of
ERISA § 204(g)’”) (underlining added) (quoting Hein, 88 F.3d at 216)). See also
23
Cottillion v. United Refining Co., 2013 WL 1419705, at *9 (W.D.Pa. Apr. 8, 2013)
(erroneous reinterpretation to correct calculation of monthly pension payment using
actuarial method for early retirement pensions previously awarded without such
actuarial computation with a resultant reduction in the amount of the monthly pension
payment constituted an “implicit” plan amendment for § 204(g) purposes), aff’d, 781
F.3d 47, 58 (3d Cir. 2015) (citing Hein, 88 F.3d at 216). Nevertheless, despite such
conflicting views concerning the meaning and scope of the term “amendment” as used
in § 204(g), the Second Circuit in Kirkendall found no need to resolve such conflicting
opinions on this threshold issue because the court found plaintiff’s claim in that case
was based on an alleged miscalculation of benefits, not an administrative
reinterpretation of any terms of the plan itself potentially constituting an informal
amendment of the plan as Plaintiffs assert here. See Kirkendall, 707 F.3d at 184. In
Kirkendall the court therefore stated it would “leave for another day the question of
whether a constructive amendment [as found in Hein] can trigger the requirements of §
204(g).” Id. Based on the undersigned’s research, that day has not arrived and this
court accordingly finds that Judge Curtin’s holding in Kirkendall that ‘constructive’
amendments based on alleged erroneous administrative determinations under a plan as
found by the Third Circuit in Hein, supra, and the Sixth Circuit in Hunter, supra, to be
sufficient to support a § 204(g) claim, and are not plan amendments subject to relief
under § 204(g), represents controlling law on the issue in this Circuit. Significantly,
Plaintiffs cite to no Second Circuit or district court decisions within the Second Circuit
reaching a contrary result. As such, Defendants’ 2011 Determination suspending
Plaintiffs’ pensions unless Plaintiffs forgo continued employment with their former
employers before reaching age 65, is not an amendment to the Plan subject to review
24
under § 204(g), and Defendants’ motion for summary judgment on Plaintiffs’ First Claim
(Dkt. 98) should therefore be GRANTED and Plaintiffs’ motion on this claim (Dkt 101)
should be DENIED.
2.
Defendants’ 2011 Determination Resulting in a Suspension of
Plaintiffs’ Pensions and Loss of Plaintiffs’ Employment Income Was
Not a De Facto Plan Amendment Subject to § 204(g).
Plaintiffs’ contend that while Defendants suspended Plaintiffs’ pensions based on
Defendants’ 2011 Determination prior to the formal amendments to the Plan adopted in
February 2012, Defendants’ administrative action nevertheless constituted a de facto
plan amendment reducing Plaintiffs’ accrued benefits and, as such, is actionable under
§ 204(g). Dkt. 118-1 at 24-25 (citing Deschamps v. Bridgestone Americas, Inc. Salaried
Employees Ret. Plan, 169 F.Supp.3d 735, 751 (M.D.Tenn. 2015), aff’d, 840 F.3d 267
(6th Cir. 2016); DiCioccio v. Duquesne Light Co., 911 F.Supp. 880, 899 (W.D.Pa. 1995);
Hein v. F.D.I.C., 88 F.3d 210, 216 (3d Cir. 1996) and Hadden v. Consol. Edison Co. of
N.Y., Inc., 312 N.E.2d 445, 448 (N.Y. 1974)). In these cases, an administrator’s
“reinterpretation of plan language,” Deschamps, 169 F.Supp.3d at 751, to exclude
plaintiff’s occupation of maintenance manager from coverage in defendants’ pension
plan, despite evidence that defendants had considered plaintiff’s job title as one within
the plan for 16 years prior to defendants’ later attempt to exclude plaintiff’s job, which
earlier inclusion defendants claimed was a “clerical mistake,” id., was held to be an
“amendment” within the meaning of § 204(g). In affirming the district court’s finding
defendants’ reinterpretation of the plan to exclude plaintiff’s job title from plan coverage
to correct an alleged clerical error was a de facto amendment for § 204(g) purposes, the
Sixth Circuit Court of Appeals held that such later administrator’s interpretation
25
constituted a plan amendment for purposes of § 204(g) where the original interpretation
including plaintiff’s position within the coverage of plan was not “untenable” based on
the actual language of the plan describing the specific job classification, supervisor,
under which plaintiff had been considered to be a covered employee. Deschamps, 840
F.3d 267, 280 (6th Cir. 2016). Likewise, in DiCioccio, the court found defendant’s
attempt to exclude employee income realized from the employees’ exercise of stock
options, which the employer had granted on a one-time basis, from employees’
compensation upon which employees’ pensions were to be calculated under the plan, to
constitute a de facto amendment despite defendants’ position that defendants’ plan
sponsor never intended such extra incentive income to be considered within the plan’s
definition of compensation for pension plan purposes when granting the stock options
as a one-time boost to employees’ compensation to enhance employee morale, and
that including the income represented “a mistake in practice which had inadvertently
‘developed’” which the administrator’s discretionary interpretation, although after the
fact, was intended to correct. DiCioccio, 911 F.Supp.3d at 895. In reaching its
conclusion, the court relied on the past practice of several of the employer’s senior
human resource and employee benefits managers who had previously considered the
stock option income to be within the plan’s definition of compensation. Id. at 899. In
Hein, the court stated that “[a]n erroneous interpretation of a plan provision that results
in the improper denial of benefits to a plan participant may be construed as “an
amendment” for the purposes of ERISA § 204(g).” 88 F.3d at 216. In Hein, the court
reversed the district court’s award of early retirement benefits for plaintiff under § 204(g)
despite the fact that plaintiff had not attained age 55 as required by the plan prior to his
termination from his original employer, a bank, which had resulted from his employer’s
26
take-over by defendant, the F.D.I.C., and subsequent asset sale to an unrelated bank.
In Hadden, the court held that defendant’s post-retirement interpretation of defendant’s
pension plan to cancel retroactively plaintiff’s pension based on plaintiff’s pre-retirement
criminal misconduct was without support in any existing provision of the plan at the time
of plaintiff’s retirement and constituted an unauthorized amendment.9 Thus, whether a
subsequent administrative interpretation of a plan intended to overcome an alleged prior
mistaken or erroneous interpretation by the plan administrator resulting in an approval
of pension benefits constitutes a de facto plan amendment for § 204(g) purposes
depends on whether the initial interpretation or practice which approved the benefit to
which the subsequent corrective interpretation is directed, was reasonable or tenable
based on the existing provisions of the plan when the benefits at issue were approved.
See Deschamps, 840 F.3d at 280 (finding that defendant’s determination that plaintiff’s
position was included in definition of a pension eligible occupation was not “untenable . .
. under the language of the Plan.”) (citing Redd v. Bhd. of Maint. Way Emps. Div. of Int’l
Bhd. of Teamsters, 2010 WL 1286653, at *8 (E.D. Mich. Mar. 31, 2010). As the court of
appeals in Deschamps stated, “Redd further concluded that to succeed on a [§ 204(g)]
claim, plaintiffs must establish that the benefits they received prior to the alleged
amendment were based on a ‘tenable’ or ‘permissible reading of the terms of the Plan.’”
Deschamps, 840 F.3d at 280 (quoting Redd, 2010 WL 1286653, at **9-10). See also
Cottillion, 781 F.3d at 57-58 (plan administrator’s later attempt to interpret plan to
require actuarial computation of plaintiff’s early retirement pension as allegedly required
by federal tax law constituted an informal plan amendment actionable under § 204(g)
9
Hadden, decided May 1, 1974, is of limited authority as it is a state court decision issued based on
state contract law, now pre-empted by ERISA, see 29 U.S.C. § 1144(a), following its enactment effective
September 2, 1974.
27
when plan language at time of plaintiff’s retirement provided no indication that actuarialbased reduction in early retirement pension was required).
Whether the plan administrator’s award of benefits was based on such a
“tenable” or “permissible” reading of the plan will be reviewed under an arbitrary or
capricious standard. Redd, 2010 WL 128665, at *10. Where, as here, the Trust grants
discretionary authority to the Defendant Trustees, a plan’s fiduciary’s decision such as
in this case made by Defendants, may be judicially voided as arbitrary or capricious or
contrary to law, “only if it was ‘without reason, unsupported by substantial evidence or
erroneous as a matter of law.’” Pagan v. NYNEX Pension Plan, 52 F.3d 438, 442 (2d
Cir. 1995) (quoting Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 45 (2d Cir. 1993),
abrogated on other grds by Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008)). “This
standard is highly ‘differential,’ and ‘the scope of judicial review is narrow.’” Roganti v.
Metropolitan Life Ins. Co., 786 F.3d 201, 210-11 (2d Cir. 2015) (quoting Celardo v. GNY
Auto. Dealers Health & Welfare Trust, 318 F.3d 142, 146 (2d Cir. 2003)). In this case,
Defendants’ prior practice of approving Special Early Retirement pensions where
recipient employees intended to continue employment was based on a fundamental
misunderstanding of Internal Revenue Code requirements applicable to tax-exempt
pension trusts, for such early retirement pensions and therefore was not “tenable” or
“permissible” under the relevant provisions of the Plan at the time of such approvals
such that Defendants’ misunderstanding resulted in an improper distribution of pension
benefits thereby jeopardizing the tax-exempt status of the Fund. Thus, Defendants’
reinterpretation or corrective interpretation of the Plan by Defendants’ 2011
Determination to require the suspension of Plaintiffs’ Special Early Retirement pensions
or termination of Plaintiffs’ non-Disqualifying Employment in order to fully comply with §
28
401(a) was not the result of an arbitrary or capricious decision, and Defendants’
subsequent interpretation of the relevant provisions of the Plan requiring Plaintiffs forgo
such continued employment or suffer suspension of Plaintiffs’ pension payments
therefore did not constitute a de facto amendment of the Plan.
First, as trustees, Defendants are required by the explicit terms of the Trust to
comply with ERISA and the Internal Revenue Code so that “the Trust and Plan of
Benefits . . . will be structured and operated to qualify for approval by the Internal
Revenue Service as a tax-exempt Trust and Plan to ensure that the Employer
contributions to the Fund are proper deductions for income tax purposes . . .. It is the
intention of the Trustees to fully comply with all requirements of the Internal Revenue
Code.” Trust Art. VII, Section 4 (Dkt. 99-1 at 29). Under ERISA, ERISA pension funds
like the Fund in this case are to be administered under “the common law of trusts to
define the general scope of their authority and responsibility.” Central States, Southeast
and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 570
(1985). ERISA requires a plan fiduciary to “discharge [their] duties with respect to a
plan solely in the interest of the participants and beneficiaries . . . for the sole purpose of
providing benefits to participants . . . ..” 28 U.S.C. § 1105(a)(1)(A). It is basic that the
duty of a trustee is “to administer the trust, diligently and in good faith, in accordance
with the terms of the trust and applicable law.” Restatement (Third) Trusts § 76(A)
(2007). Moreover, a fiduciary plan administrator “is [not] precluded from reconsidering
an award of benefits to correct its own error, so long as the plan administrator
specifically justifies the change as the correction of an earlier mistake and the record
supports that decision.” Serbanic v. Harleysville Life Ins. Co., 325 Fed.Appx. 86, 91 (3d
Cir. Apr. 30, 2009); see also Oster v. Barco of California Employees’ Retirement Plan,
29
869 F.2d 1215, 1219 (9th Cir. 1988) (no abuse of discretion where “[t]he Committee’s
decision to modify its policy appears to be reasonable”).
In this case, Plaintiffs applied for Special Early Retirement pensions under Art. V
Sec. 1(d) of the Plan which states in relevant part that “any employee who retires . . .
after his fifty-fifth (55th) birthday and whose combined age and years of Special Service
shall equal eighty-five (85) or more, shall be entitled to a monthly pension equal to his
Accrued Benefit on the date he makes application for Special Early Retirement.” Dkt.
99-2 at 19. The Accrued Benefit under the Plan is the monthly benefit payable to the
employee at age 65 calculated in accordance with Art. V Sec. 1(a). Dkt. 99-2 at 15; Art.
1 Sec. 1 (Dkt. 99-2 at 4). Art. V Sec. 1(a) refers to the vested participants who may
“retire” on or after age 65. Dkt. 99-2 at 16. This provision also provides that
“retirements” at age 65 which occur after May 1, 2000, receive “a monthly pension
payable over his [the employee’s] lifetime” calculated in accordance with that section.
Dkt. 99-2 at 16. As noted, the terms “retire” and “retirement” are not defined by the
Plan. See Discussion, supra, at 7, 22. It is also undisputed that Plaintiffs intended to
continue to be employed with their respective employers albeit in occupations that
would not subject Plaintiffs to a suspension of pension benefits under Art. V Sec. 3 (Dkt.
99-2 at 22) for Disqualifying Employment. Further, nothing in Art. V Sec. 1(d) defines
an employee’s eligibility for the Special Early Retirement pension with reference to
whether the employee intends to engage in non-Disqualifying Employment such as
those occupations in which Plaintiffs intended to be employed when Plaintiffs applied for
the Special Early Retirement pensions and in fact were employed upon receiving their
pensions. In approving Plaintiffs’ pensions without regard to whether Plaintiffs
continued to be employed in non-Disqualifying Employment, Defendants acted in the
30
mistaken belief that such distributions were permissible under § 401(a) and would not
impair the tax-exempt status of the Plan as non-compliant distributions.10 As such, if
Defendants’ prior interpretation of the Plan and past practice in approving Plaintiffs’
pensions in relation to the requirements of § 401(a), knowing Plaintiffs intended to
engage in continuing employment with a participating employer, thereby placed the
Fund in violation of the Internal Revenue Code jeopardizing the Fund’s tax-exempt
status in violation of the specific provisions of the Trust requiring Defendants to operate
the Fund and Plan so as to assure such compliance and the Fund’s future tax-exempt
status was not “tenable” or “permissible,” Deschamps, 840 F.3d at 280, Defendants’
subsequent interpretation in 2011 represented by Defendants’ 2011 Determination to
bring the Plan into compliance with § 401(a), if reasonable, does not constitute a de
facto amendment to the Plan subject to § 204(g). A brief overview of the requirements
of § 401(a), applicable I.R.S. regulations, rulings, and relevant caselaw demonstrates
Defendants’ prior misunderstanding of § 401(a)’s requirements as applied to
Defendants’ administration of the Special Early Retirement pension benefit and
approval of Plaintiffs’ pensions under the Plan was not reasonable or tenable, and that
Defendants’ 2011 reinterpretation and corrective actions were not arbitrary or
capricious.
26 U.S.C. § 401(a) (“§ 401(a)”), enacted as part of the Internal Revenue Code of
1954, authorizes and states the requirements for tax-exempt trusts created for the
10
There are several adverse consequences of significance to employees and employers in the event a
pension plan’s tax-exempt status is revoked including the disallowance of deductions for the employer’s
contributions until the amount of its contributions are included in employees’ income, and payment of
taxes on a trust’s earning. See Dkt. 100 at 40 including I.R.S., TAX CONSEQUENCES OF PLAN
DISQUALIFICATION (2018), http://www.irs.gov/retirement-plans/tax-consequences-of-plan-disqualification,
last visited March 28, 2019.
31
exclusive purpose of providing pension and other benefits for retired employees. 26
C.F.R. § 1.401-1(a)(2)(i) (“§ 1.401-1(_)”) states that § 401(a) “prescribes the
requirements which must be met for qualification [as a tax-exempt entity] of a trust
forming part of a pension . . . plan.” As relevant, Treasury Regulation § 1.401-1(b)(1)(i)
further states that
“A pension plan within the meaning of Section 401(a) is a plan established
and maintained by an employer primarily to provide systematically for the
payment of definitely determinable benefits to his employees over a period
of years, usually for life, after retirement.
26 C.F.R. § 1-401-1(b).
Section 401(a) therefore further requires a distribution of pension benefits to employees
to begin not later than at age 70½ or the calendar year when the employee “retires.” §
401(a)(9)(A)(i); § 401(a)(9)(C)(i)(II).
Additionally, 26 C.F.R. § 1.410(a)-7(b)(2) provides that the term “severance from
service” is the date “on which the employee quits, retires, is discharged or dies,” or
“remains absent from service.” 26 C.F.R. § 1.410(a)-7(b)(6) provides that an
employee’s “period of service” is the “period of service commencing on the employee’s
employment . . .” “ending on the severance from service date.” 26 C.F.R. 1.409A1(h)(1)(i) states in relevant part “[a]n employee separates from service with the
employer if the employee . . . retires, or otherwise has a termination of employment with
the employer.” Section 1.409A-1(h)(1)(ii) provides as relevant
whether a termination of employment has occurred is determined based on
whether the facts and circumstances indicate that the employer and
employee reasonably anticipated that no further services would be
performed after a certain date . . ..
32
Thus, I.R.S. regulations which define the requirements for administration of a taxexempt trust under § 401(a) make clear that a qualified pension trust shall begin
pension payments upon an employee’s retirement and that such retirement occurs
when the employee terminates his or her employment with an employer with the
expectation that no further services will be performed by the employee for the employer.
I.R.S. rulings also make clear that a pension trust established under § 401(a)
may not distribute benefits and retain its tax-exempt status if pension benefits are
distributed to employees prior to severance of employment. See Rev. Ruling 74-254,
1974-1 C.B.91 (qualified pension plan under § 401(a) may not permit distributions “prior
to termination of employment”); Rev. Ruling 71-437, 1971-2 C.B.185 (“A pension plan
does not qualify [for tax-exempt status] under § 401(a) if it permits distributions of the
employer’s contributions or increments therein prior to severance of employment . . ..”);
see also I.R.S. Notice 07-69, 2007-35 C.B. 468 (“[A]n early retirement benefit is
generally only permitted to commence with an annuity starting date that is after
severance from employment (except to the extent permitted under § 401(a)(36) . . ..),
2007 WL 2285348, at *6. Moreover, in the case of early retirement, i.e., in this case
prior to age 65, § 401(a)(36), enacted in 2006, permits an employee to receive an early
retirement pension from a tax-exempt pension trust at age 62 where the employee
intends to continue working if the trust elects to grant such an early retirement pension.
Thus, by necessary implication, § 401(a)(36) recognizes that early retirements such as
those received by Plaintiffs where the employee intends to engage in employment after
retiring are permissible only at age 62 and not, as here, at age 55. In this case, the
Plan has not adopted § 401(a)(36) and established age 65 as the Normal Retirement
Date. Plan Art. I(23) (Dkt. 99-2 at 10); Art. I(34) (Dkt. 99-2). As noted, Facts, supra, at
33
7-9, it is undisputed that each Plaintiff, at the time such Plaintiff applied for his Special
Early Retirement pension, had an understanding with Plaintiff’s then current employer
that Plaintiff would continue employment after the date of Plaintiff’s retirement albeit in a
job title that would not be subject to a suspension of Plaintiff’s pension under Art. V Sec.
3(a), i.e., in non-Disqualifying Employment. As is evident from the applicable I.R.S.
regulations, rulings, and notice such an intention is contrary to the requirements for a
valid retirement compliant with § 401(a). The prerequisite to a valid retirement under §
401(a) that the employee intends to sever all further employment also furthers
congressional policy of assuring that distributions from tax-exempt pension trusts be for
the purpose of supporting retirement and not other purposes such as estate or income
enhancements. “The Code [§ 401(a)] attempts to ensure that those funds that have
been accumulated with the aid of the loss of tax revenue associated with tax deferral
are in fact actually used for retirement purposes and not for estate or other purposes.”
Pamela D. Perdue, Esq., The Ins and Outs of Retirement Plan Distributions, TAXES –
THE TAX MAGAZINE, Feb. 2009 at 63.
Additionally, in a Private Letter Ruling issued Nov. 25, 2011, I.R.S. Priv. Ltr. Rul.
201147033, 2011 WL 5893533 (Nov. 25, 2011) (“the PLR”) (Dkt. 100 at 32), in applying
the applicable regulations and judicial definitions of the term “retirement” as it is used in
§ 401(a), the I.R.S. stated unequivocally that “if both the employer and employee know
at the time of ‘retirement’ that the employee, with reasonable certainty, continues to
perform services for the employer, a termination of employment has not occurred upon
‘retirement’ and the employee has not legitimately retired [for purposes of § 401(a)].”
Dkt. 100 at 36 (citing Meredith v. Allsteel, Inc., 11 F.3d 1354, 58 (7th Cir. 1993) (“In
common parlance, retire means to leave employment after a period of service.” (citing
34
Webster’s Ninth New Collegiate Dictionary 1007 (1986) (to retire is “to withdraw from
one’s position or occupation: to conclude one’s working or professional career.”))). In
the PLR the I.R.S. concluded that where, as here, employees applying for early
retirement pension benefits “would not actually separate from service and cease
performing services for the employer when they ‘retire’ these ‘retirements’ would not
constitute a legitimate basis to allow participants to qualify for early retirement benefits”
and “will violate section 401(a) of the [Internal Revenue] Code and will result in
disqualification of the Plan under section 401(a) of the Code.” Dkt. 100 at 37
(underlining and bracketing added). Thus, as originally drafted and administered, the
Plan permitted Special Early Retirement pensions to be awarded to employees
including Plaintiffs who intended to and in fact engaged in continued employment after
receiving such pensions as Fund distributions without having fully retired in violation of §
401(a) thereby placing the tax-exempt status of the Fund in jeopardy contrary to the
terms of the Trust and requirements of applicable tax and trust law. Such a remarkable
misunderstanding of § 401(a)’s requirement resulting in an erroneous interpretation of
the term “to retire” or “retirement” as used in Art. V Sec. 3 and improper distribution of
Plaintiffs’ pensions can hardly qualify as a “tenable” or “reasonable” interpretation of the
Plan.
Plaintiffs contend that to the extent § 401(a) and I.R.S. regulations construing §
401(a) refer to an employee’s required retirement from employment, such employment
is limited to “covered employment” under the Plan, i.e., employment in the plumbing and
steamfitters trade for which employer contributions to the Plan are required, (citing Art. 1
Sec. 7) (Dkt. 99-2 at 6) (The term “Covered Employment” shall mean employment of an
Employee by a Contributing Employer”) and does not extend to non-Disqualifying
35
Employment for which contributions to the Fund are not required thus, according to
Plaintiffs’ theory, Plaintiffs did retire consistent with § 401(a). Dkt. 118-1 at 15-16.
Plaintiffs point to ERISA, 29 U.S.C. § 1002(2)(A) (“§ 1002(2)(A)”) which defines a tax
qualified pension plan as one providing “(i) retirement income to employees or (ii)
results in deferral of income by employees for periods extending to the termination of
covered employment or beyond.” Id. However, the conclusion Plaintiffs draw from this,
viz. that “‘retirement’ in the context of a tax qualified pension plan does not mean that a
participant . . . must terminate all employment before receiving his pension, but, instead,
that he must simply terminate ‘covered employment,’ to wit, the work [through covered
employment] that accrues benefits under the plan,” id., does not follow. First, §
1002(2)(A), the purpose of which is to guide whether a give employment related benefit
is one protected by ERISA, see, e.g., Pasternack v. Shrader, 863 F.3d 162, 168-69 (2d
Cir. 2017) (under § 1002(2)(A) Stock Rights Plan not an “employee pension benefit
plan” subject to ERISA) does not carry the relevant legal effect as does § 401(a) as the
latter is the provision of the tax code which controls the availability of a tax exemption
for a pension trust, not § 1002(2)(A). Further, nothing in the text of § 401(a) recognizes
that the term “retirement” refers exclusively to a withdrawal from work in covered
employment as its prerequisite for a valid distribution of early retirement pension
payments. In fact, in submitting the VCP, Defendants included in its description of
Defendants’ error that in approving Plaintiffs’ Special Early Retirement pensions
Defendants erroneously believed that a withdrawal “from Covered Employment” by a
participant with an expectation that the employee would continue working in noncovered employment was satisfactory compliance with applicable regulations,
specifically § 401(a)-(1)(b)(i) and § 1.410-1(i) “which require[ ] a separation from
36
employment with all employers contributing to the Plan.” Dkt. 99-16 at 21. Significantly,
a careful reading of the I.R.S.’s acceptance of the VCP (“Compliance Statement” Dkt.
99-17 at 3, 8) indicates the I.R.S. found Defendants’ statements of tax code
requirements applicable to Defendants’ approval of Plaintiffs’ Special Early Retirement
pensions to represent a misunderstanding by Defendants of such requirements. See
Dkt. 99-17 (passim). Nor did the I.R.S. in its approval of the VCP’s statement of
Defendants’ “failures” and corrective action, i.e., requiring Plaintiffs desist in engaging in
Plaintiffs’ non-covered employment or suffer suspension of their pensions, to be based
on an erroneous understanding by Defendants of the basis for Defendants’ statement of
failures, i.e., non-compliance with § 401(a), and Defendants’ need for corrective action
to avoid any loss of the Fund’s tax-exempt status. Nor does the I.R.S.’s discussion of
the issue in the PLR indicate that whether an employee’s early retirement pension
violates § 401(a) turns on whether the employee terminates covered as opposed to
non-covered employment under a plan, as Plaintiffs assert, while at the same time
receiving a distribution of early retirement pension benefits.
A similar argument was raised by plaintiff in Meakin v. California Field
Ironworkers Pension Trust, 2018 WL 405009, at *7 (N.D.Cal. Jan. 12, 2018) to support
a finding that plaintiff, who had received early retirement benefits while engaging in
continuing employment with a participating employer, had legitimately retired by moving
from covered to non-covered employment such that the plan was compliant with §
401(a). See Meakin, 2018 WL 405009, at *7. The court in Meakin rejected this
contention noting that given defendants’ fiduciary obligation to construe the plan so as
to preserve its tax-exempt status it was reasonable for defendants to conclude I.R.S.
requirements under § 401(a) could not be met based on such a distinction. Id.
37
Significantly, here, in accepting Defendants’ interpretation of § 401(a) as elaborated in
the PLR, the I.R.S. had no objection to Defendants’ interpretation and corrective action
as constituting a violation of 26 U.S.C. § 411(d)(6), a provision “substantially identical”
to § 204(g).
Plaintiffs’ reliance on Heinz (Dkt. 118-1 at 14), is misplaced. In Heinz, unlike in
this case, defendants had amended the plan after plaintiffs retired and continued work
in an occupation not previously included in disqualifying employment, to include such
employment as disqualifying and subjecting Plaintiffs’ early retirement pensions to
suspension, a new restriction on plaintiff’s accrued pension benefit the Supreme Court
held violated the anti-cut back rule. Heinz, 541 U.S. at 744-45. Here, unlike what
defendants did in Heinz, Defendants did not broaden the scope of non-disqualifying
employment to include that in which Plaintiffs were engaged. Rather, Defendants
determined that by Plaintiffs’ continued employment upon Plaintiffs’ putative early
retirements, Plaintiffs’ pensions, as approved by Defendants, violated § 401(a) and
therefore could not qualify as having legitimately accrued precluding suspension of
Plaintiffs’ pensions or termination of Plaintiffs’ post-retirement employment, an issue not
presented in Heinz. See Dkt. 118-1 at 14 n. 11 (noting that in Heinz neither party nor
I.R.S. asserted plaintiffs “never actually retired because [they] did not have a permanent
intention to never perform any kind of work for a contributing employer again”).
Specifically, in Heinz, the question present on certiorari was “whether a pension plan
amendment that is authorized by ERISA Section 203(a)(3)(B) is nonetheless prohibited
by Section 204(g) to the extent that it applies to previously accrued benefits.” 2004 WL
110581 (2004). Plaintiffs’ contention that approval of early retirement pensions, such as
those approved for Plaintiffs in the circumstances presented in this case, are permitted
38
under § 401(a) provided the employees continue to work in non-covered employment as
defined in the Plan is therefore without merit.
Two recent cases, addressing similar questions regarding a plan’s determination
that its early retirement pensions were improperly approved in violation of § 401(a), also
support this conclusion. In Meakin, 2018 WL 405009, at * 1 the plan permitted early
retirement pensions similar to that provided by the Plan in this case notwithstanding that
the employees continued to work in non-disqualifying occupations as permitted by the
Plan. Specifically, unlike the present case, the plan defined “retirement” to require the
employee’s complete severance from employment in the covered industry but exempted
employment in occupations, like the instant case, that were not covered by the
collective bargaining agreement. Meakin, 2018 WL 405009, at *2. However, like
Defendants in this case, in approximately 2011, the plan discovered that by approving
early retirement pensions where eligibility was based on the Rule of 85 and where the
employee nevertheless continued employment in the industry covered by the plan, the
plan was in violation of § 401(a). In Meakin, as in the instant case, the plan thereafter
filed a VCP with the I.R.S. disclosing the circumstances of this violation based on the
plan’s erroneous interpretation of § 401(a)’s requirements that early retirees cease any
further employment with employers in their industry which resulted in improper pension
distributions to 290 retirees including plaintiff since 1990. The I.R.S. subsequently
accepted the defendant’s VCP which proposed suspension of early retirement pensions
for 58 of the retired employees received after 2007 including plaintiff’s whose pension
was suspended in 2014. In rejecting plaintiff’s action brought pursuant to 28 U.S.C. §
1132(a)(1)(B) for benefit denial (plaintiff did not assert a claim pursuant to § 204(g)), the
court found defendants did not engage in an abuse of discretion in their reinterpretation
39
of the plan, as governed by § 401(a), that early retirement must include a severance of
any further employment including in a non-disqualifying occupation as had been allowed
under the plan. Meakin, 2018 WL 405009, at **5-6. In support of its conclusion, the
court noted defendant trustees had a duty as fiduciaries to interpret and act to ensure
the plan complied with the Internal Revenue Code to protect the plan’s continued taxexemption under § 401(a). Id. Notably, the court in Meakin also cited the PLR, relied
upon by Defendants in this case, as evidence that the defendant’s determination that by
allowing payment of early pension benefits to employees who had continued to work in
their industry, albeit in non-disqualified occupations, defendants’ prior administration of
the plan was in violation of applicable tax law, was reasonable. Meakin, 2018 WL
405009, at *6. Specifically, the court held that defendants were required to interpret the
plan in a manner compliant with applicable law, specifically § 401(a) and related I.R.S.
regulations, so as to preserve the economic viability of the plan for future beneficiaries
rather than continue to pay illegal benefits to a few beneficiaries including plaintiff
thereby jeopardizing the tax-exempt status of the plan, and that such belated corrective
action was therefore reasonable providing no basis for a claim under § 1132(a)(1)(B)
seeking to recover wrongfully denied benefits.
Similarly, in Maltese v. National Roofing Industry Pension Plan, 2016 WL
7191798, at *1 (N.D.W.Va Dec. 12, 2016) plaintiff applied for and received early
retirement benefits after defendant’s approval on May 1, 2012, at which time plaintiff
commenced work as an estimator for his former employer. Subsequently, defendant, in
2015, suspended plaintiff’s pension because by engaging in continued employment
plaintiff had not retired and that plaintiff’s receipt of early pension payments was in
violation of § 401(a) requiring defendant to take corrective action by suspending
40
plaintiff’s pension payments in order to bring the plan into compliance with § 401(a)
thereby preserving the plan’s tax-exempt status. Maltese, 2016 WL 7191798, at *4.
The court therefore granted summary judgment to defendant on plaintiff’s ERISA claim11
alleging a wrongful denial of benefits based on its finding that defendant’s interpretation
of the plan which had excluded plaintiff’s continued employment from the plan’s
exemption from a suspension of early pension benefits for work by “a Pensioner” was
“reasonable and consistent with the goal of maintaining the Plan’s tax-exempt status
under § 401(a).” Id. In reaching its conclusion, the court in Maltese also relied, despite
its non-binding effect, upon the PLR in this case which, as discussed, Discussion,
supra, at 34, concluded that no valid retirement for § 401(a) purposes occurs where an
employee otherwise eligible for early retirement benefits after receiving approval of an
application for such benefits “will immediately return to service with the employer.” Id.
Thus, both Meakin and Maltese support the court’s conclusion in this case that the tax
implications of Defendants’ prior interpretation of the Plan, particularly Art V. Sec. 1(d)
regarding Plaintiffs’ eligibility under the Plan for Special Early Retirement pensions,
strongly support the reasonableness of such interpretation and, as such, in this case,
that Defendants’ corrective action through Defendants’ later interpretation as stated in
Defendants’ 2011 Determination and suspension of Plaintiffs’ benefits in order to
preserve the tax-exempt status of the Fund was not arbitrary or capricious.
Plaintiffs’ assertion that by adopting the 2012 Amendments to the Plan to include
Defendants’ later reinterpretation demonstrates Defendants’ 2011 Determination is not
an “interpretation of the terms of the Plan,” Dkt. 118-1 at 4 n. 1, in that “Defendants
11
The court’s decision does not specify the basis of plaintiff’s ERISA claim.
41
actually changed them” is incorrect. As the relevant terms “to retire” and “retirement”
had no previous definition in the Plan, Defendants’ action in both Defendants’ 2011
Determination and the February 2012 Amendments to conform Defendants’ prior
interpretation and practice to the requirements of § 401(a) effected no change in any
previously existing term of the Plan under which Plaintiffs had sought to retire.
Accordingly, Defendants’ actions as challenged by Plaintiffs did not constitute a de facto
amendment of the Plan subject to § 204(g).
Defendants contend that by requiring Plaintiffs terminate all employment to
qualify for a Special Early Retirement pension Defendants did not impose a new Plan
condition. See Dkt. 116 at 11 (citing to Plan Art. V Sec. 2(c) which states that benefits
shall commence no later than the 60th day after the “Employee terminates service with
all of the participating Employers.”). However, as Plaintiffs point out, Dkt. 118-1 at 12,
this section is directed to protecting an employee’s right to eventually receive benefits to
which the employee is entitled under a plan and replicates the requirements stated in
ERISA, 29 U.S.C. § 1056(a)(1)-(3) (“§ 1056(a)(1)-(3)”), that unless an employee elects
otherwise benefits shall not begin later than the sixtieth (60th) day after the “last of the
following occurs:
(a)
The Employee attains Normal Retirement Date;
(b)
The occurrence of the tenth (10th) anniversary of the Plan Year in which
the employee commenced participation in the Plan;
or
(c)
The Employee terminates service with all of the participating Employers.
Thus, this provision cannot be fairly read to require an employee who otherwise was
eligible for a Special Early Retirement to also terminate all further employment with
42
participating employers. Section 1056(a)(1)-(3) simply “protects a participant’s right to
receive benefits by establishing . . . the latest possible trigger for payment” under a plan.
Morales v. Plaxall, Inc., 541 F.Supp 1387, 1390 (E.D.N.Y. 1982). Indeed, nothing in the
record remotely suggests that such was ever Defendants’ understanding of this
provision, and, significantly, Plan Art. V Sec. 1(d), Dkt. 99-2 at 19-20, which defines
eligibility for a Special Early Retirement pension makes no reference to it. Accordingly,
Art. V Sec. 2(c) does not, contrary to Defendants’ assertion, establish that Plaintiffs
were always required by the terms of the Plan to terminate all employment to receive a
Special Early Retirement pension without Defendants’ reliance on a more correct
application of the requirement of § 401(a) that an early retirement, one prior to age 65,
except for plans subject to § 401(a)(36) allowing for early retirement at age 62 with
continued service, retirement requires a complete severance of an employee’s further
employment with a participating employer. See Smith v. United States, 508 U.S. 223,
233 (1993) (“[j]ust as a single word cannot be read in isolation, nor can a single
provision of a statute [or plan].”)
Plaintiffs contend that Defendants’ rationale for Defendants’ reinterpretation is
based on an error by Defendants on a question of law, i.e., Defendants’ understanding
of the requirements of § 401(a), and therefore is to be reviewed de novo and not under
the deferential arbitrary and capricious standard applicable to discretionary
determinations by ERISA plan fiduciaries. Dkt. 118-1 at 3-7 (citing caselaw and
referencing Defendants’ characterization of Defendants’ approval of Plaintiffs’ Special
Early Retirement pensions where Defendants were aware of Plaintiffs’ intent to
nevertheless continue employment in non-Disqualifying Employment as “contrary to the
law,” Dkt. 118-1 at 4, and that Defendants’ approvals were based on a “mistake of law”
43
(referencing Defendants’ VCP application, Dkt. 101-6 at 21)). See Montesano v. Xerox
Corp. Retirement Income Guarantee Plan, 117 F.Supp.2d 147, 158 (D.Conn. 2000)
(where plan “administrator’s decision turned on a legal interpretation [of a statute or
regulation] . . . de novo review required) (citing caselaw), aff’d in relevant part, 256 F.3d
86 (2d Cir. 2001). However, other than asserting Defendants’ reliance on the PLR was
not permitted under 26 U.S.C. § 6710(k)(3), and attempting to distinguish Rev. Rulings
71-437 and 74-255, Dkt. 118-1 at 17 n. 14, as not involving an issue of retirement,
Plaintiffs also rely on ERISA-based regulations which are not controlling on whether
under § 401(a) Plaintiffs’ pensions were improperly approved. Plaintiffs cite no caselaw
indicating otherwise and the court’s research reveals no such contrary authority.
Further, Plaintiffs point to no judicial decisions which plausibly support that Defendants’
rationale for Defendants’ 2011 Determination and subsequent corrective actions as
detailed in the VCP were legally erroneous and thus unnecessary because Defendants’
approvals of Plaintiffs’ pensions were, contrary to Defendants’ stated failures in the VCP
as approved by the I.R.S., compliant with § 401(a) and thus not based on a “mistake of
law” or other actions prohibited by § 401(a) as Defendants contend. Because neither
I.R.S. revenue rulings nor private letter rulings are regulations promulgated after public
notice and comment, and sometimes are self-serving when issued by the I.R.S. in
preparation to litigate so as to bolster its position in the ensuing litigation, such
pronouncements are not entitled to Chevron12 deference by the courts but, rather, are
“‘entitled to respect’ only to the extent it has ‘the power to persuade,’” Laurent v.
PricewaterhouseCoopers LLP, 794 F.3d 272, 287 (2d Cir. 2015) (quoting Christensen v.
12
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-44 (1984).
44
Harris Cty., 529 U.S. 576, 587 (2000)), and provided such interpretation is not
“inconsistent with the statute’s plain meaning. . . .” Id. (citing Gen. Dynamics Land Sys.
v. Cline, 540 U.S. 581, 600 (2004) (“[D]eference to [an agency’s] statutory interpretation
is called for only when the devices of judicial construction have been tried and found to
yield no clear sense of congressional intent.”)). See also Taproot Administrative
Services, Inc. v. Comm’r, 133 T.C. 202, 209, n. 16 (2009) (noting various types of I.R.S.
pronouncements are entitled to differing levels of deference, but that Skidmore13
deference, the lowest level, has continued viability and applies to I.R.S.
pronouncements other than regulations). Given that the purpose of § 401(a) is to
assure that tax-exempt pension trusts shall function for the sole purpose of providing
retirement income and not for other financial purposes such as income enhancements
and estate creation, see Discussion, supra, at 34 (quoting Pamela D. Perdue, Esq., The
Ins and Outs of Retirement Plan Distributions, TAXES – THE TAX MAGAZINE, Feb. 2009
at 63) the relevant I.R.S. regulations, rulings and the PLR requiring an early retirement
applicant to forgo continued employment with a participating employer cannot be said to
be inconsistent with § 401(a) and Plaintiffs offer no reason to find otherwise.
Significantly, other decisions which have addressed this issue, Meakin and Maltese,
have also concluded the I.R.S.’s regulations, rulings as well as the PLR represent a
legally correct analysis of the question. The court therefore finds such regulations,
rulings and the PLR are entitled to persuasive effect and that Defendants committed no
legal error in seeking to conform Plaintiffs’ pensions to § 401(a)’s requirements. See
Maltese, 2016 WL7191798, at *4 (“while non-binding, the I.R.S.’s analysis and
13
Skidmore v. Swift, 323 U.S. 134, 140 (1944).
45
interpretation of § 401(a) [in the PLR] and its relevant regulations is persuasive”). Thus,
even under the de novo standard of review Plaintiffs fail to demonstrate Defendants
committed an error of law and wrongfully suspended Plaintiffs’ pensions and
conditioned any restoration of Plaintiffs’ pension payments upon Plaintiffs’ termination of
their employment as did Plaintiffs Puglia and Noble (Plaintiff O’Callaghan initially
continued with his employment but later stopped working and had his pension payments
restored).
3.
Plaintiffs’ Special Early Retirement Pensions Were Not An Accrued
Benefit Under The Plan.
For purposes of a claim pursuant to § 204(g) whether an early retirement
beneficiary suffered a reduction in an “accrued benefit” is “determined under the Plan.”
Central Laborers’ Pension Fund v. Heinz, 541 U.S. 739, 744 (2004) (quoting 29 U.S.C.
§ 1002(23)(A)). Here, Art. I Sec. 1 of the Plan defines “Accrued Benefit” as the monthly
benefit payable at Normal Retirement Date that the Employee has earned under Article
V . . ..” As noted, Facts, Discussion, supra, at 6, Article V of the Plan grants the Special
Early Retirement pensions to employees like Plaintiffs who reach age 55 with 30 years
of credited service in the same monthly amount as a retiree at age 65 would receive
under the Plan. Article V of the Plan grants the Special Early Retirement pension to
“[a]ny employee who retires.” Dkt. 99-2 at 19. In this case, as discussed, Discussion,
supra, at 24-45, because Plaintiffs continued to be employed by their former respective
employers, when Plaintiffs applied for their pensions between 2001-2009, Plaintiffs did
not “retire” under any definition of that term in the Plan as required by § 401(a), and
Defendants reasonably determined that Defendants’ approval of Plaintiffs’ pensions was
erroneous requiring Defendants suspend Plaintiffs’ pensions in order to bring the Plan
46
into compliance with § 401(a) unless Plaintiffs ceased further employment with their
employers before reaching age 65. Thus, as Plaintiffs’ Special Early Retirement
pensions were improperly approved by Defendants in violation of § 401(a), such
pensions did not constitute a benefit that had accrued to Plaintiffs when Plaintiffs’
pensions were approved by Defendants. An ERISA plan benefit resulting from an
administrator’s misconstruction of the plan does not accrue to support a claim pursuant
to § 204(g). See Sims v. American Postal Workers Acc. Ben. Association, 2013 WL
4677723, at *6 (D.N.H. Aug. 30, 2013) (mistake by an administrator’s prior construction
of plan to allow use of employee’s “annualized” versus employee’s last year’s actual
annual compensation to determine plaintiff’s three highest years of compensation for
purposes of calculating plaintiff’s pension did not result in accrual of a pension benefit
under § 204(g) where plan had not been properly amended to authorize such
“annualized” final year compensation and existing plan language was inconsistent with
such annualized calculation), aff’d, No. 13-2246 (1st Cir. Aug. 6, 2014) (unpublished).
See also Wetzler v. Ill. CPA Soc. & Foundation Retirement Income Plan, 586 F.3d
1053, 1058 (7th Cir. 2009) (where plan amendment eliminated lump sum distribution as
optional form of pension benefit and administrator reasonably determined such option
would violate § 401(a) resulting in potential loss of plan’s tax-exempt status, preexisting
option lump sum payment to plaintiff did not constitute an accrued benefit for purposes
of § 204(g)); Hunter v. Caliber Systems, Inc., 220 F.3d 702, 713-14 (6th Cir. 2000)
(where plan reasonably determines plaintiffs not entitled to lump sum distribution as a
pension benefit would violate applicable I.R.S. regulations plan did not reduce an
accrued benefit actionable under § 204(g)). As explained, Discussion, supra, at 29, as
fiduciaries, Defendants were authorized to reconsider a prior award of benefits as
47
improperly approved (citing Serbanic, 325 Fed.Appx. at 91; Oster, 869 F.2d at 1219).
Accordingly, because Plaintiffs’ Special Early Retirement pensions were improperly
approved, based on Defendants’ misunderstanding of § 401(a)’s requirement no such
benefit accrued to Plaintiffs and Plaintiffs did not suffer a reduction of “an accrued
benefit” by virtue of Defendants’ suspension of Plaintiffs’ pension or termination of
Plaintiffs’ continued employment within the scope of protection under § 204(g).
Defendants’ motion for summary judgment (Dkt. 98) should therefore be GRANTED on
this ground; Plaintiffs’ motion (Dkt. 101) should be DENIED.
B.
Plaintiffs’ Second Claim.
Plaintiffs’ Second Claim alleges, pursuant to ERISA 502(a)(1)(B), 29 U.S.C. §
1132(a)(1)(B), a denial of benefits under an ERISA plan, specifically Defendants
wrongful refusal to continue Plaintiffs’ Special Early Retirement pensions following
Defendants’ 2011 Determination to suspend such benefits in order to bring the Plan into
compliance with § 401(a) and avoid a likely loss of the Fund’s tax-exempt status.
ERISA § 502(a)(1)(B) authorizes a civil action by a plan participant or beneficiary to
“recover benefits due him under the terms of his plan . . ..” 29 U.S.C. § 1132(a)(1)(B).
“To prevail under § 502(a)(1)(B), a plaintiff must show that: (1) the plan is covered by
ERISA; (2) the plaintiff is a participant or beneficiary of the plan; and (3) the plaintiff was
wrongfully denied a benefit owed under the plan.” Guerrero v. FJC Security Services
Inc., 423 Fed.Appx. 14, 16 (2d Cir. 2011) (citing Giordano v. Thomson, 564 F.3d 163,
168 (2d Cir. 2009)). Under a plan, as in this case, which grants to its fiduciaries
discretionary decision-making authority with respect to questions of interpretation which
lead to an alleged denial of benefits such denials are reviewable for abuse of discretion
or more specifically whether the challenged decision was arbitrary and capricious.
48
Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 114-15 (1989). A plan
administrator’s decision is arbitrary and capricious or contrary to law “only if it was
‘without reason, unsupported by substantial evidence or erroneous as a matter of law.’”
Pagan, 52 F.3d at 442 (quoting Abnathya, 2 F.3d at 45) (abrogated on other grds, Metro
Life Ins. Co. v. Glenn, 554 U.S. 105 (2008)).
Here, the parties do not dispute the Plan is one covered under ERISA nor that
Plaintiffs were, prior to their putative retirements at issue, participants, and since their
pensions were approved are also beneficiaries of the Plan. Thus, for purposes of
Plaintiffs’ and Defendants’ motions for summary judgment whether Defendants
wrongfully denied Plaintiffs’ pension benefits turns on whether the record demonstrates
Defendants’ determination to suspend Plaintiffs’ pension benefits was based on an
unreasonable, i.e., an arbitrary and capricious interpretation of the requirements of the
Plan for approval of Plaintiffs’ pensions, or one contrary to law, in the context of the
Defendants’ legal and fiduciary obligation to administer the Plan in accordance with the
terms of the Trust, the Plan and applicable law. As discussed, Discussion, supra, at 2445, far from one fairly characterized as unreasonable, Defendants’ reinterpretation of
the Plan in 2011 to require Plaintiffs’ to completely terminate further employment as a
legally required precondition to continued eligibility for Plaintiffs’ early retirement
pension benefits in order to comply with the requirement of § 401(a) as construed by the
I.R.S., and in order to preserve the Fund’s tax-exempt status, was a corrective
interpretation entirely reasonable under the undisputed facts and applicable law and not
inconsistent with any terms of the Plan at that time. Also, as discussed, a plan trustee’s
action in distributing a benefit which violates applicable law is subject to reconsideration
and rectification as erroneous. Discussion, supra, at 29. Accordingly, Defendants’
49
suspension of Plaintiffs’ pensions or requiring Plaintiffs forgo continued employment
with Plaintiffs’ former employers was not arbitrary, capricious or illegal. To the contrary,
it was on based on a reasonable interpretation of applicable Treasury regulations, I.R.S.
rulings and the PLR required to preserve the Fund’s tax-exemption. Plaintiffs’ Second
Claim is therefore without merit and Defendants’ motion (Dkt. 98) directed to Plaintiffs’
Second Claim should be GRANTED; Plaintiffs’ motion (Dkt. 101) should be DENIED.
C.
Plaintiffs’ Third Claim.
Plaintiffs’ Third claim alleges Defendants are liable to Plaintiffs for the value of
Plaintiffs lost pension benefits, income from lost employment with Plaintiffs’ former
employers and related medical benefits as a result of Defendants’ breach of fiduciary
duty owed Plaintiffs in violation of ERISA § 404(a)(1); 29 U.S.C. § 1104(a)(1) (“§
1104(a)(1)”). Such violations are actionable pursuant to ERISA § 502(a)(3); 29 U.S.C. §
1132(a)(3) (“§ 1132(a)(3)”). As relevant, Section 1104(a)(1) requires a fiduciary to act in
the interest of participants and beneficiaries for the exclusive purpose of providing
benefits to participants and their beneficiaries, and defraying expenses of plan
administration, with “the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent” person “would use in the conduct of an enterprise of a
like character and with like aims . . ..” In order to state a claim for breach of fiduciary
duty under ERISA, plaintiff must show “(1) defendant was performing a fiduciary
function when it engaged in the conduct at issue in the complaint; (2) the defendant
breached a fiduciary duty; and (3) the plaintiff is entitled to equitable relief.” In re
DeRogatis, 904 F.3d 174, 190 (2d Cir. 2018). Here, the parties do not dispute
Defendants were fiduciaries of the Plan when Defendants suspended Plaintiffs’ pension
benefits or required Plaintiffs terminate their respective employment. However, as
50
discussed, Discussion, supra, at 24-45, because Plaintiffs did not retire in accordance
with the requirements of § 401(a) when Plaintiffs’ Special Early Retirement pensions
were approved by Defendants such that Plaintiffs’ pensions were approved in violation
of § 401(a), Defendants did not breach any fiduciary duty with respect to the award of
any pension benefit under the Plan. As discussed, Discussion, supra, at 24-45, in
suspending Plaintiffs’ pensions, Defendants acted reasonably to correct Defendants’
erroneous approval of Plaintiffs’ pensions in order to retain the tax-exempt status of the
Fund, a specific fiduciary duty imposed by the terms of the Trust itself, and necessary to
provide for its future economic viability in order to benefit all present and future retirees
as beneficiaries under the Plan who receive pensions from the Fund. See Dkt. 99 ¶ 34
(continued employment by Plaintiffs following early retirement pension approvals
“contrary to law” and “threaten the continued existence of the Pension Plan”) (Affidavit
of Debra Korpolinski, Plan Administrator, quoting from Defendants’ November 29, 2011
letter to Plaintiffs). It therefore would have been unreasonable for Defendants as
fiduciaries to act other than in compliance with their obligation under the Trust and
applicable tax law as interpreted by the I.R.S. to assure such tax-exempt status where
the failure to do so would thereby jeopardize the future viability of the Fund to the
economic detriment of all beneficiaries. As such, Defendants acted in a reasonably
prudent manner as would a prudent person in administering the Fund under the same
circumstances in accordance with § 1104(a)(i) in the best interests of the Plan’s
beneficiaries and, on this record, as a matter of law, there was no breach by Defendants
of any fiduciary duty to Plaintiffs imposed by ERISA.
Defendants argue alternatively that Plaintiffs’ Third Claim is also subject to
dismissal as duplicative. Dkt. 100 at 19 n. 16 (citing Del Greco v. CVS Corp., 337
51
F.Supp.2d 475, 486-88 (S.D.N.Y. 2004). In Del Greco the court held that a claim
pursuant to § 1132(a)(3) should proceed only if equitable relief, as Plaintiffs have
requested in this case, is sought. Del Greco, 337 F.Supp.2d at 487 (“Thus, Plaintiff may
bring a claim under both 29 U.S.C. § 1132(a)(1)(B) and 29 U.S.C. § 1132(a)(3) only as
long as she seeks equitable relief on her 29 U.S.C. § 1132(a)(3) claim.”) (citing Devlin v.
Empire Blue Cross and Blue Shield, 274 F.3d 76, 89-90 (2d Cir. 2001)). Although in Del
Greco plaintiff’s claims for breach of fiduciary duty was permitted to proceed the court
later found that the relief sought by plaintiff for that claim was the same as requested on
plaintiff’s denial of benefits claim, plaintiff’s claim pursuant to § 1132(a)(3) was deemed
redundant and dismissed. Id. at 488-89. Here, the relief Plaintiffs seek under Plaintiffs’
Third Claim is the same as requested under Plaintiffs’ First and Third Claims and, as
such, should, alternatively, also be dismissed based on redundancy. Accordingly,
Defendants’ motion (Dkt. 98) directed to Plaintiffs’ Third Claim should be GRANTED;
Plaintiffs’ motion (Dkt. 101) directed to this claim should be DENIED.
D.
Defendants’ Counterclaim for Recoupment.
In Plaintiffs’ cross-motion for summary judgment (Dkt. 101 at 27-28), Plaintiffs
request that Defendants’ counterclaims, Dkt. 30, seeking recoupment of the
approximately $1.9 million erroneously paid to Plaintiffs from 2002 to the current date as
improperly approved Special Early Retirement pensions be withdrawn for failure to
designate a fund exclusively holding such payments in order to support equitable relief
available under ERISA as required by Great-West Life & Annuity Ins. Co. v. Knudson,
534 U.S. 204, 213-14 (2002) (fiduciary’s claim for restitution of medical treatment
payments from proceeds of settlement of beneficiary’s tort action not then in actual
possession of beneficiary was legal remedy not available pursuant to § 1132(a)(3)
52
which provides for equitable relief directed to an identifiable fund under beneficiary’s
control only). In Defendants’ Answer, Defendants, pursuant to ERISA § 502(a)(3) (29
U.S.C. § 1132(a)(3) and (e)), asserted counterclaims against each Plaintiff to recover
the amounts of Special Early Retirement pensions erroneously paid to each Plaintiff as
of February 1, 2012 (“the Counterclaims”). See, e.g., Dkt. 30 at 9-11 (Plaintiff Metzgar).
In Plaintiffs’ Reply (Dkt. 57), Plaintiffs deny Defendants’ assertions that Plaintiffs were
ineligible for Special Early Retirement pensions under the terms of the Plan and that the
pension payments received by each Plaintiff were in violation of the Plan permitting
Defendants to seek recovery of the pension payments paid to each Plaintiff. See, e.g.,
Dkt. 57, ¶¶ 16, 18 (Plaintiff Metzgar). Plaintiffs also contend the Counterclaims are
outside both a three-year and six-year statute of limitation period. Id. at 17-18.
Alternatively, Plaintiffs asserted a (six-year) statute of limitation defense for Plaintiffs
Mueller, Noble, K. Reagan, and R. Reagan. In Defendants’ Memorandum of Law In
Further Support of Defendants’ Motion For Summary Judgment And In Opposition To
Plaintiffs’ Motion For Summary Judgment, filed March 5, 2018 (Dkt. 116), Defendants
request permission to withdraw the Counterclaims for the reason, consistent with
Plaintiffs’ primary defense, that Defendants have been unable to establish the existence
of the pension funds paid to Plaintiffs to support enforcement of the equitable lien or
constructive trust Defendants seek to impose upon such funds as required by Montanile
v. Bd. of Trustees of the Nat’l Elevator Health Benefit Plan, ___ U.S. ___, 136 S.Ct.
651, 659-60 (2016) (fiduciary’s action pursuant to § 1132(a)(3) for equitable relief must
be directed to an identifiable fund held by pension plan beneficiary who had agreed plan
was entitled to restitution of value of medical treatment benefits received from plaintiff
53
benefit plan).14 Plaintiffs have not responded to Defendants’ request for dismissal of the
Defendants’ Counterclaims. See Dkt. 121 (Plaintiffs’ Reply Memorandum of Law in
Support of Motion for Summary Judgment) (passim)).
Fed.R.Civ.P. 41 (“Rule 41__”), which applies to counterclaims as well as a
plaintiff’s claim, see Rule 41(c), provides for voluntary dismissal of a counterclaim
where, as here, plaintiff has filed a reply as a responsive pleading either by (1) a
stipulation of dismissal signed by all parties pursuant to Rule 41(a)(1)(ii), or (2) pursuant
to Rule 41(a)(2) by court order upon “such terms that the court considers proper.”
Because Plaintiffs have served a reply, a voluntary dismissal by Defendants of the
Counterclaims is not available pursuant to Rule 41(d) (“A claimant’s voluntary dismissal
under Rule 41(a)(1)(A)(i) must be made: (1) before a responsive pleading is served . . ..
Accordingly, in the absence, to date, of a stipulation filed pursuant to Rule 41(a)(1)(ii)
and, in the absence of any opposition by Plaintiffs to Defendants’ request, the court
finds Defendants’ concession that Defendants are unable to establish the existence of a
fund to which Defendants’ equitable relief request can attach, and request to withdraw
the Counterclaims, should be considered under Rule 41(a)(2) and, as such, because
Defendants do not request such dismissal should be without prejudice, Defendants’
motion to dismiss the Counterclaims should be GRANTED with prejudice.
14
Defendants’ request, which requires an order of the court, should have been made by motion in
accordance with Fed.R.Civ.P. 7(b)(1). Accordingly, for purposes of this Report and Recommendation, the
court treats Defendants’ request as a motion to dismiss the Counterclaims pursuant to Rule 41(a)(2) as a
dispositive motion.
54
II.
Plaintiffs’ Motion For Leave to File Supplemental Complaint.
By papers filed February 1, 2018, Plaintiffs moved for leave to file a supplemental
complaint pursuant to Fed.R.Civ.P. 15(d) (“Rule 15(d)”) (Dkt. 110) and attaching such
Proposed First Supplemental Complaint (Dkt. 110-2). In the Proposed Supplemental
Complaint, Plaintiffs seeks to allege “new facts [which] supplement and provide
additional particularization for each cause of action in the original Complaint.” Dkt. 1102 ¶ 20. Specifically, Plaintiffs seek to add allegations that Defendants amended the
Plan in August 2016 (“the August 2016 Amendment”) to authorize Defendants to
recover the asserted overpayments Defendants made to Plaintiffs as Special Early
Retirement pensions erroneously approved by Defendants in specified amounts paid to
each Plaintiff with 12% interest. Dkt. 110-2 ¶¶ 23-24(a)-(g). Plaintiffs also propose to
allege that in exercising the newly enacted authority granted to Defendants by the
August 2016 Amendment to seek recovery of the overpayments, Defendants withheld
the entire January 2017 pension payment due Plaintiffs Mueller, Noble, O’Callaghan,
Puglia, K. Reagan and R. Reagan, and have further reduced each Plaintiff’s monthly
pension payment thereafter by 25%. Plaintiffs propose to further allege that as to
Plaintiff Metzgar, who has not discontinued his non-Disqualifying Employment under the
Plan and had not reached age 65,15 Defendants have refused to pay Metzgar any
pension payments Plaintiffs claim are due him since January 2012 when he refused to
terminate his employment with Danforth in compliance with Defendants’ demand. Dkt.
110-2 ¶ 25.
15
Metzgar will turn 65 on April 10, 2019 (Dkt. 105 ¶ 8).
55
Plaintiffs also propose new allegations describing that a substantial number of
other retirees under the Plan who, like Plaintiffs, continued working with participating
employers in non-Disqualifying Employment following approval of their Special Early
Retirement pensions by Defendants and thus, according to Defendants, also owe
Defendants large sums for improperly approved pensions to such early retirees, were
offered settlements of Defendants’ threatened claims, like those asserted by
Defendants against Plaintiffs, against such other early retirees, but not Plaintiffs, for
“pennies on the dollar” which were accepted and paid by these other retirees with the
result that these retirees’ alleged overpayments were in effect reduced to approximately
5% of the face amount of Defendants’ respective claims for the pension overpayments.
Dkt. 110-2 ¶¶ 26-29. Additionally, according to Plaintiffs’ proposed supplemental
complaint, Defendants refused to settle, on the same terms as described above, with
Plaintiffs R. Regan, Puglia, K. Reagan and Noble, who were not interested in such a
favorable settlement, unless Plaintiffs Metzgar, Mueller and O’Callaghan, who
apparently refused to settle on these terms, also settled with Defendants. Dkt. 110-2 ¶
30-31. Plaintiffs further state that in the absence of a settlement with Plaintiffs as
described above, Defendants issued a 2017 denial of Plaintiffs’ administrative appeal of
Defendants’ self-help initiative upholding Defendants’ original 2011 Determination and
continued to pay Plaintiffs reduced pensions as described. Dkt. 110-2 ¶ 32.
Additionally, Plaintiffs assert a claim pursuant to 29 U.S.C. § 1132(a)(1)(B) for wrongful
denial of pension benefits based on the fact that when Plaintiffs retired the Plan did not
include the August 2016 Amendment authorizing Defendants to recover the alleged
pension overpayments by the set-offs against Plaintiffs’ pension payment commencing
in January 2017, a form of self-help prohibited by ERISA. Dkt. 110-2 ¶¶ 40-43.
56
Plaintiffs contend that Plaintiffs’ motion should be granted in the absence of undue
delay, bad faith, dilatory tactics, undue prejudice to Defendants as the party to be
served, or futility. Dkt. 110-1 at 6 (citing caselaw). Plaintiffs further assert that Plaintiffs
could not earlier seek the Proposed Supplemental Complaint as an Amended Complaint
addressing Defendants’ December 2016 determination to initiate set-off for repayment
of Defendants’ restitution or recoupment claims as Defendants’ recovery actions
occurred after the cut-off of November 4, 2016 for motions to file amended pleadings
established by the Scheduling Order (Dkt. 56) and Plaintiffs were required to exhaust
administrative remedies by appealing Defendants’ determination to obtain repayment
which Defendants eventually denied in May 2017. Dkt. 110-1 ¶¶ 26-27. Plaintiffs
therefore request permission to supplement the Complaint by asserting additional
claims pursuant to § 204(g) based on Plaintiffs’ assertion that Defendants attempt to
recover the pension overpayments by set-off is a Plan amendment in violation of the
anti-cutback rule, and Defendants’ refusal to pay Plaintiffs the full amount of Plaintiffs’
Special Early Retirement pensions due all Plaintiffs since January 2017 (except Metzgar
who does not at present receive a pension payment) is a denial of benefits in violation
of § 1132(a)(1)(B) and § 1132(a)(3). Dkt. 110-2 ¶¶ 36-48. In the Proposed
Supplemental Complaint Plaintiffs also request a permanent injunction based on these
newly stated facts, Dkt. 110-2 ¶ 44-48, and a preliminary injunction, ¶¶ 49-54, based on
an irreparable loss of enjoyment of Plaintiffs’ retirement years given Plaintiffs’ advancing
ages and the expected time necessary to complete this litigation. Dkt. 110-2 ¶¶ 49-54.
Defendants oppose Plaintiffs’ motion (Dkt. 114) (Defendants’ Memorandum of Law in
Opposition to Plaintiffs Motion for Leave to File a Supplemental Complaint filed March 5,
2018) asserting Plaintiffs’ undue delay in requesting permission to file the Proposed
57
Supplemental Complaint and futility based on a short contractual 180-day limitation
period as established by the Plan. Plaintiffs’ Reply Memorandum of Law (Dkt. 122-1)
was filed March 19, 2018.
In general, Fed.R.Civ.P. 15(d) (“Rule 15(d)”) permits the court to allow a
supplemental complaint to add “any transaction, occurrence, or event that happened
after the date of the pleading to be supplemented.” Supplemental pleadings are
typically permitted absent undue delay, bad faith, dilatory tactics, undue prejudice or
futility. See Quaratino v. Tiffany & Co., 71 F.3d 58, 66 (2d Cir. 1995). Plaintiffs assert,
see Discussion, supra, at 57, their request for the Proposed Supplemental Complaint is
not based on any undue delay by Plaintiffs. In support, Plaintiffs also point to the court’s
“suggestion” that Defendants’ set-off actions could be the subject of a Supplemental
Complaint as stated in the court’s Decision and Order (Dkt. 13), filed August 29, 2017,
(“the D&O”) denying Plaintiffs’ request to consolidate a new complaint (17-CV-726V(F)
(“Metzgar II”)) filed on August 1, 2017 by Plaintiffs against Defendants and former
trustees of the Fund asserting anti-cutback, denial of benefits, breach of fiduciary duty
and discrimination claims in violation of ERISA Sections 204(g), 502(a)(1)(B), 502(a)(3),
510 and 409(a). In Metzgar II, Plaintiffs also requested declaratory and injunctive relief.
In Metzgar II, Plaintiffs asserted these new claims were based on Defendants’ August
2016 Amendment to the Plan authorizing Defendants to seek restitution or engage in
other recovery actions such as the set-off challenged by Plaintiffs of the Special Early
Retirement pensions Plaintiffs had been erroneously paid to Plaintiffs by Defendants in
violation of Section 401(a) of the Internal Revenue Code and Defendants’ December
2016 determination reducing Plaintiffs’ future pension payments by 25% to recoup such
overpayments. In the D&O, the court determined that consolidation of Metzgar I, the
58
instant action, and Metzgar II, would delay resolution of the controlling threshold
questions, viz., whether Defendants’ 2011 Determination to suspend Plaintiffs’ early
retirement pensions violated ERISA § 204(g) or § 502(a)(3). Thus, Plaintiffs’ proposed
Supplemental Complaint which seeks to include the same claims asserted in Metzgar II
would, if allowed, effectively nullify the determination of the D&O that litigating such
claims at the present time in conjunction with Metzgar I could unduly delay resolution of
this key threshold issue.
It is correct, as Plaintiffs point out, Dkt. 110-1 ¶ 29, that the court, in the D&O did
observe that Plaintiffs could seek to include the facts relating to Defendants’ August
2016 plan amendment and Defendants’ subsequent decision in December 2016 to
recover by set-off, beginning in January 2017, the overpayment of Plaintiffs’ early
pension benefits from pension payments to which Plaintiffs (except as to Metzgar) were
then entitled having reached age 65, but, contrary to Plaintiffs’ contention, the court’s
“suggestion,” Dkt. 110-1 ¶ 29; Dkt. 122-1 at 13, was limited to Plaintiffs’ request for
injunctive relief in Metzgar I. As the D&O stated in this regard “Plaintiffs may, if Plaintiffs
deem it necessary, also request permission to add the Defendants’ December 2016 setoff decision to the Complaint in Metzgar I pursuant to Fed.R.Civ.P. 15(d), as a
supplemental pleading regarding such decision and its adverse effect on Plaintiffs as
additional particularization to support Plaintiffs’ injunctive request.” Decision and Order,
Dkt. 13 at 11.
In reliance on the court’s observation Plaintiffs, in the proposed Supplemental
Complaint, sought to add allegations regarding Defendants’ August 2016 Plan
amendment authorizing Defendants to obtain restitution of Defendants’ pension
overpayments to Plaintiffs and the December 2016 implementation of substantial (100%
59
of Plaintiffs’ January 2017 pension payment and 25% of each following payment) setoffs as a form of self-help in accordance with the 2016 Plan Amendment authorization
to do so which Plaintiffs assert constitute additional violations of § 204(g) and §
502(a)(3). In support of Plaintiffs’ motion for leave to file the Proposed Supplemental
Complaint, Plaintiffs assert the court’s “suggestion” induced Plaintiffs to “file a
supplemental complaint for additional particularization of their claims . . ..” Dkt. 122-1 at
8. However, as a fair reading of the actual text of the relevant portion of the D&O
demonstrates, the court’s comment was limited to Plaintiffs’ providing additional support
for Plaintiffs’ probable request for preliminary injunctive relief in Metzgar I by explaining
the additional economic harm incurred by Plaintiffs stemming from the underlying
Defendant’s 2011 Determination that Plaintiffs’ Special Early Retirement pensions were
erroneously approved and needed to be suspended as additional evidence that a
balance of hardships, see D&O at 10-11, favored Plaintiffs. Plaintiffs acknowledge
“[Defendants’] recoupment action [counterclaims] is based entirely on the same facts as
the 2011 Determination.” Dkt. 122-1 at 10. Accordingly, allowing the Proposed
Supplemental Complaint to proceed at this point in the case would circumvent the
court’s denial of consolidation of Metzgar I and Metzgar II and is predicated on Plaintiffs’
misreading of the intent of the court’s observation. Additionally, as the undersigned has
recommended Defendants’ summary judgment motion on the merits of the threshold
issue in this case be granted, Discussion, supra, at 24-45, and, that Plaintiffs’ motion for
preliminary injunctive be denied, see Discussion, infra, at 61-65, for lack of a showing of
irreparable harm, a prerequisite to such relief, any use of Plaintiffs’ proposed
supplemental allegations to support Plaintiffs’ request for injunctive relief is moot. As
Defendants have requested dismissal of the Counterclaims, which the court also
60
recommends be granted, the need for any supplemental pleading of facts relating to
such Counterclaims in Metzgar I has been substantially diminished if not eliminated.
Further, all of Plaintiffs’ claims in Metzgar II attacking Defendants’ set-offs remain
unaffected and regardless of the disposition of the motions for summary judgment
directed to Plaintiffs’ claims in the instant action, Plaintiffs may, upon vacating the stay
of Metzgar II yet proceed based on the allegations in Metzgar II and the Proposed
Supplemental Complaint, including that the August 2016 Amendment may not be
enforced against Plaintiffs’ pensions as post-dating Plaintiffs’ retirements, should
Plaintiffs seek to vacate the stay and leave to file such Supplemental Complaint (see
Dkt. 110-2 ¶¶ 42) in connection with Metzgar II.
Based on these factors the court finds Plaintiffs’ motion to file the Proposed
Supplemental complaint by injecting additional claims into the instant case at this point
in the litigation could unduly delay resolution of the threshold merits of this case thereby
prejudicing Defendants and interfering with the early resolution of the instant litigation.
See Krumme v. WestPoint Stevens, Inc., 143 F.3d 71, 88 (2d Cir. 1998) (prejudice
arising from delay in disposing of case because of proposed additional claims warrants
denial of motion for leave to amend). Finally, based on the foregoing, it is not
necessary to address Defendants’ alternative contention in opposition to Plaintiffs’
motion contending Plaintiffs’ proposed supplemental allegations are futile as outside the
Plan’s contractual 180-period for asserting claims directed to Defendants’ August 2016
Amendment. Accordingly, Plaintiffs’ motion for leave to file the Proposed Supplemental
Complaint (Dkt. 110) should be DENIED.
61
III.
Preliminary Injunction.
As noted, Background, supra, at 4, Plaintiffs also move, by papers filed February
1, 2018, pursuant to Fed.R.Civ.P. 65(a) (“Rule 65(a)”) for a preliminary injunction
enjoining Defendants from any reduction of Plaintiffs’ Special Early Retirement monthly
pension benefits (“Plaintiffs’ Motion for Preliminary Injunction” or “Plaintiffs’ motion”).
The basis for Plaintiffs’ motion is that beginning in January 2017 Defendants have
reduced Plaintiffs’ monthly pension payments by 100% of the January 2017 payments
and thereafter by 25% (except for Plaintiff Metzgar who has continued employment with
his former employer since January 2012 when Defendants suspended Plaintiffs’ Special
Early Retirement pensions but who will also become eligible for such pension payments
upon attaining age 65) until Plaintiffs terminated their continued employment or reached
age 65 which pensions Defendants had determined in December 2011 were approved
in violation of § 401(a). Also, as noted, Facts, supra, at 12-13, Defendants’ 2011
Determination is the subject of Plaintiffs’ and Defendants’ motions for summary
judgment addressing whether Defendants’ 2011 Determination constitutes a violation of
Plaintiffs’ rights under ERISA § 204(g) (anti-cutback rule), ERISA § 502(a)(1)(B)
(authorizing beneficiary recovery of benefits wrongfully denied) and ERISA § 1104(a)(1)
(breach of fiduciary duty). Thus, whether Defendants’ subsequent decision to recoup,
commencing in January 2017, the pensions erroneously paid to Plaintiffs up to January
2012 by partially reducing Plaintiffs’ pension payments, as Defendants maintain, was
lawful under ERISA thereby supporting Plaintiffs’ request for preliminary injunction,
turns on whether Defendants’ underlying decision in December 2011 to suspend such
pension payments to bring the Plan into compliance with § 401(a) was lawful. As
discussed, Discussion, supra, at 54-61, although Plaintiffs’ motion for leave to serve a
62
supplemental pleading pursuant to Rule 15(d) has been denied, the court finds
Plaintiffs’ claims as alleged in this action, Metzgar I, provides a sufficient basis to
support Plaintiffs’ motion for preliminary injunctive relief if the other prerequisites for
Plaintiffs’ motion have been satisfied. Specifically, if Defendants’ suspensions of
Plaintiffs’ pensions in 2012, as illegally approved by Defendants, were improper under §
204(g), then Plaintiffs would have been entitled to continue to receive their pensions
without set-off to the present time and Defendants would have no legal basis for
recouping beginning in 2017 the amount of Plaintiffs’ pensions received by Plaintiffs to
January 2012. Thus, the threshold issue of the basic validity of Defendants’ actions
against Plaintiffs as challenged in this case provide a sufficient basis upon which
Plaintiffs may seek preliminary injunctive relief to attempt further to avoid adverse
consequences, i.e., reduced pension payments.
The criteria for granting a temporary restraining order pursuant to Fed.R.Civ.P.
65(b) (ARule 65(b)@) or a preliminary injunction pursuant to Fed.R.Civ.P. 65(a) (ARule
65(a)@) are the same. Neopost USA, Inc. v. McCabe, 2011 WL 4368447, *3 (D.Conn.
Sep=t 19, 2011) (quoting Citigroup Global Markets, Inc. v. VCG Opportunities Master
Fund Limited, 598 F.3d 30, 35 (2d Cir. 2010). A party seeking either form of preliminary
equitable relief must Ashow >(a) irreparable harm and (b) either (1) likelihood of success
on the merits or (2) sufficiently serious questions going to the merits to make them a fair
ground for litigation and a balance of hardships tipping decidedly toward the party
requesting the preliminary relief.=@ Citigroup Global Markets, Inc., 598 F.3d at 35
(quoting Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir. 1979)).
The injunctive relief requested must also be shown to be A>in the public interest.=@
Carlson v. Medco Health Solutions, Inc., 2011 WL 3800017, *4 (W.D.N.Y. Aug. 29,
63
2011) (Arcara, J.) (quoting Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20
(2008)). It is Awell-settled@ that a showing of irreparable harm is a prerequisite for relief
pursuant to both Rule 65(a) and 65(b). Neopost USA, Inc., 2011 WL 4368447, *3. To
qualify as irreparable, the requisite harm must be Aactual and imminent, not remote and
speculative, and not adequately compensable by money damages.@ Id. (citing cases).
The party seeking injunctive relief carries the burden of establishing each of these
factors by a preponderance of the evidence. Carlson, 2011 WL 3800017, *4 (citing
Procter & Gamble Co. v. Ultreo, Inc., 574 F.Supp.2d 339, 344 (S.D.N.Y. 2008)). AThe
irreparable harm requirement is the most important factor in determining whether
preliminary injunct[ive] [relief] should issue.@ Chapman v. South Buffalo Railway
Company, 43 F.Supp.2d 312, 318 (W.D.N.Y. 1999) (Arcara, J.). Moreover, absent Aa
showing of irreparable harm, it is not necessary to examine the second prong of the
preliminary injunction requirements,@ i.e., likelihood of success or the presence of
serious questions together with a balance of hardship in movant’s favor. Id. at 318
(citing Shady v. Tyson, 5 F.Supp.2d 102, 109 (E.D.N.Y. 1998)).
As noted, it is established Second Circuit law that “[a] showing of irreparable
harm is essential to the issuance of preliminary injunction.” See Sperry Int’l Trade, Inc.
v. Government of Israel, 670 F.2d 8, 11-12 (2d Cir. 1982). To establish irreparable
harm, the movant must demonstrate ‘an injury that is neither remote nor speculative but
actual and imminent’ and that cannot be remedied by an award of monetary damages.”
Shapiro v. Cadman Towers, Inc., 51 F.3d 328, 332 (2d Cir. 1995) (quoting Tucker
Anthony Realty Corp. v. Schlesinger, 888 F.2d 969, 975 (2nd Cir. 1989)). See also
Wright v. New York State Dep’t. of Corrections, 568 Fed.Appx. 53 (2d Cir. 2014)
(quoting Shapiro, 51 F.3d at 332); Wright Miller Kamer Marcus Spencer Steinman, FED.
64
PROC. & PRAC. § 2348.1 (3d ed.) (“[A] preliminary injunction usually will be denied if it
appears that the applicant has an adequate alternate remedy in the form of money
damages or other relief.”) (citing cases). An exception to this general rule arises where
there is a risk that the movant will become insolvent prior collection of a judgment in the
movant’s favor. Id. (citing Brenntag Intern’l Chemicals, Inc. v. Bank of India, 175 F.3d
245, 249-50 (2d Cir. 1999). Here, however, none of the Plaintiffs aver that in the
absence of a preliminary injunction to prevent Defendants from any further reduction of
Plaintiffs pension payments, Plaintiffs will suffer insolvency. At most, Plaintiffs Metzgar,
Mueller, Noble, O’Callaghan, K. Reagan, and Puglia, see Affirmation of Matthew K.
Pelkey, Esq., Dkt. 111-2 ¶ 20, (referencing Affidavits of Plaintiffs Metzgar, Mueller,
Noble, O’Callaghan, Kevin Regan, and Puglia, filed in support of Plaintiffs motion for a
preliminary injunction), state that Defendants’ actions have resulted in a “significant
financial hardship.” See Metzgar Affidavit (Dkt. 111-18 ¶ 34); Mueller Affidavit (Dkt.
111-9 ¶ 29); Noble Affidavit (Dkt. 111-10 ¶ 28); O’Callaghan Affidavit (Dkt. 111-11 ¶ 30);
K. Reagan Affidavit (Dkt. 111-12 ¶ 27); Puglia Affidavit (Dkt. 111-14 ¶ 28).16 Each
Plaintiff also asserted that based their respective ages, 63-71, and further expected
lengthy proceedings to obtain complete financial relief in this case, he “may suffer harm
that cannot be compensated by money damages.” See, e.g., Dkt. 111-18 ¶ 34 (Metzgar
Affidavit dated January 25, 2018). Thus, Plaintiffs do not demonstrate that absent
preliminary injunctive relief Plaintiffs will suffer insolvency and that such a result is
“actual and imminent.” Neopost USA, Inc., 2011 WL 4368447 at *3. Accordingly,
16
Plaintiff Metzgar also avers that the loss of his pension in January 2012 and the anticipated reduction
by Defendants in his pension payments when his pension resumes at age 65, in April 2019, has and will
result in “significant financial hardship.” Dkt. 111-8 ¶ 28.
65
Plaintiffs fail to satisfy the threshold prerequisite of irreparable harm, and Plaintiffs’
motion, Dkt. 111, should therefore be DENIED.
CONCLUSION
Based on the foregoing, Defendants’ motion for summary judgment (Dkt. 98)
should be GRANTED; Plaintiffs’ motion for summary judgment (Dkt. 101) should be
DENIED; Plaintiffs’ motion for leave to file a Supplemental Complaint (Dkt. 110) is
DENIED; Defendants’ motion to dismiss the Counterclaims (Dkt. 116) should be
GRANTED; Plaintiffs’ motion for preliminary injunction (Dkt. 111) should be DENIED.
The Clerk of Court should be directed to close the file.
Respectfully submitted,
/s/ Leslie G. Foschio
________________________________
LESLIE G. FOSCHIO
UNITED STATES MAGISTRATE JUDGE
As to Plaintiffs’ Motion for Leave
to File a Supplemental Complaint
(Dkt. 110), Plaintiffs motion is
DENIED.
SO ORDERED.
/s/ Leslie G. Foschio
_________________________________
LESLIE G. FOSCHIO
UNITED STATES MAGISTRATE JUDGE
Dated: March 28, 2019
Buffalo, New York
66
ORDERED that this Report and Recommendation be filed with the Clerk of the
Court.
ANY OBJECTIONS to this Report and Recommendation must be filed with the
Clerk of the Court within fourteen (14) days of service of this Report and
Recommendation in accordance with the above statute, Rules 72(b), 6(a) and 6(d) of
the Federal Rules of Civil Procedure and Local Rule 72.3.
Failure to file objections within the specified time or to request an
extension of such time waives the right to appeal the District Court's Order.
Thomas v. Arn, 474 U.S. 140 (1985); Small v. Secretary of Health and Human
Services, 892 F.2d 15 (2d Cir. 1989); Wesolek v. Canadair Limited, 838 F.2d 55 (2d
Cir. 1988).
Let the Clerk send a copy of this Report and Recommendation to the attorneys
for the Plaintiffs and the Defendants.
SO ORDERED.
/s/ Leslie G. Foschio
______________________________________
LESLIE G. FOSCHIO
UNITED STATES MAGISTRATE JUDGE
DATED:
March 28, 2019
Buffalo, New York
67
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