DuBrul v. Citrosuco North America, Inc. et al
Filing
26
ORDER denying 16 Motion to Dismiss. Signed by Judge Michael R. Barrett on 9/4/12. (ba1)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
MICHAEL DUBRUL,
Case No.: 1:12cv25
Plaintiff,
Judge Michael R. Barrett
v.
CITROSUCO NORTH AMERICA,
INC., et al.,
Defendants.
OPINION & ORDER
This matter is before the Court on Defendants Citrosuco North America, Inc. and
Secretary/Treasurer Plan Administrator Salary Continuation Plan's (collectively,
"Defendants") Motion to Dismiss. (Doc. 16).1 Plaintiff Michael DuBrul ("Plaintiff") filed a
response in opposition (Doc. 19), and Defendants filed their reply (Doc. 21).
This
matter is now ripe for review.
I.
BACKGROUND
The relevant facts alleged in Plaintiff's Complaint and contained in the exhibits
attached thereto are as follows:
A.
Plaintiff's Employment with Citrosuco's Predecessor
Plaintiff began his employment with Juice Farms, Inc. (the "Corporation") in 1984
as a director of sales. (Doc. 1, ¶ 7). Plaintiff became recognized as a key employee
and as a member of a select group of highly compensated management employees.
(Doc. 1, ¶ 8; Doc. 1-1, p. 1). On September 9, 1993, the Corporation entered into a
1
All document citations are to the Court's docket entry numbers.
1
Salary Continuation Agreement ("Agreement") with Plaintiff. (Doc. 1-1). The same or a
similar agreement was offered to only four other select highly compensated employees
out of approximately 1,500 employees. (Doc. 1, p. 3).
Plaintiff and the Corporation entered into the Agreement as a means for the
Corporation to "retain the valuable services and business counsel of" Plaintiff, to "induce
[Plaintiff] to remain in his executive capacity with the Corporation," and "to retain
[Plaintiff] in order to prevent the substantial financial loss which the Corporation would
incur if [Plaintiff] were to leave and were to enter the employment of a competitor."
(Doc. 1-1, p. 1). The Agreement states that the Corporation will provide Plaintiff with a
payment of $57,059.00 annually for ten years after his retirement so long as Plaintiff
remains employed with the Corporation until March 19, 2016 when he turns 65 years of
age. (Doc. 1, p. 5; Doc. 1-1, §§ 1-2 and Schedule B). The Corporation retains the right
to accelerate payment of the benefits owed without Plaintiff's consent. (Doc. 1-1, § 8).
The benefits provided by the Agreement are unfunded and unsecured, and any assets
used or acquired by the Corporation to satisfy its obligations under the Agreement are
general assets of the Corporation subject to the claims of its creditors. (Doc. 1, ¶¶ 9-12,
20; Doc. 1-1, § 4).
To claim benefits under the Agreement, Plaintiff or the designated recipient must
follow a claims procedure. (Doc. 1-1, § 3). Initially, Plaintiff or the designated recipient
is required to make a written request to the named fiduciary who is the
Secretary/Treasurer of the Corporation. (Doc. 1-1, § 3(a)-(b)). If the claim is denied in
whole or in part, then Plaintiff or another claimant must be notified in writing with
specified information about the denial within at least ninety days after the claim is
2
received by the named fiduciary. (Doc. 1-1, §§ 3(c), (d)). Plaintiff then must be given a
chance to appeal the denied claim by submitting a written appeal request to the named
fiduciary within sixty days after the receipt of the denial.
(Doc. 1-1, § 3(e)).
The
decision to hold a hearing to consider the appeal is within "the sole discretion" of the
named fiduciary, whether or not such a hearing is requested by Plaintiff or his
designated recipient. (Doc. 1-1, § 3(g)). A decision then shall be made "promptly" by
the named fiduciary. (Doc. 1-1, § 3(d)-(h)).
The Agreement is not to "be deemed to create a contract of employment
between the Corporation and the Employee and shall create no right in the Employee to
continue in the Corporation's employ for any specific period of time, or to create any
other rights in the Employee or obligations on the part of the Corporation, except as are
set forth in this Agreement." (Doc. 1-1, § 5(a)). The Agreement further indicates that
the Corporation's right to terminate Plaintiff for cause shall not be restricted and that
Plaintiff's right to terminate his employment shall not be restricted. (Doc. 1-1, § 5).
"Cause" is defined as incompetence, insubordination, conviction of a felony, alcohol
abuse which affects job performance, or drug addiction. (Doc. 1-1, § 5(b)).
The benefits to be provided to Plaintiff are to be independent of any other
benefits received by Plaintiff. (Doc. 1-1, §7). Specifically, the Agreement provides that:
The benefits payable under this Agreement shall be independent
of, and in addition to, any other benefits or compensation, whether
by salary, or bonus or otherwise, payable under any other
employment agreements that now exist or may hereafter exist from
time to time between the Corporation and [Plaintiff].
This
Agreement between the Corporation and [Plaintiff] does not involve
a reduction in salary or foregoing an increase in future salary by
[Plaintiff]. Nor does the Agreement in any way affect or reduce the
existing and future compensation and other benefits of [Plaintiff].
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(Doc. 1-1, § 7). The Agreement is binding on the "recipients, beneficiaries, heirs,
executors and administrators" of Plaintiff and "upon the successors and assigns
of the Corporation." (Doc. 1-1, § 7). Plaintiff designated his beneficiary as Susan
S. DuBrul. (Doc. 1-1, Schedule A).
B.
Assignment and Modification of the Agreement
On June 30, 2007, Juice Farms, Inc. merged into Citrus Coolstore, Inc. (Doc. 1,
¶ 21). Plaintiff, Juice Farms, Inc. and Citrus Coolstore, Inc. entered into a binding
written modification of the Agreement whereby the parties agreed that the Agreement
would be assigned to Citrus Coolstore, Inc. without triggering the accelerated vesting
and funding of the payments set forth in the Agreement. (Doc. 1, ¶ 21; Doc. 1-2, pp. 12). The modification provided that Plaintiff would continue to be employed after the
merger on the same terms as his current employment, including the Agreement as
modified.
(Doc. 1, ¶ 21; Doc. 1-2, pp. 1-2).
In or about September 1997, Citrus
Coolstore, Inc. changed its name to Citrosuco North America, Inc. (i.e., Citrosuco).
(Doc. 1, ¶ 24). Citrosuco remained bound by the Agreement and its modification. (Doc.
1, ¶ 24). Citrosuco's former President, Elliot Seabrook, referred to the Agreement as
the "Golden Handcuff.” (Doc. 1, ¶ 20).
C.
Plaintiff's Termination
Plaintiff remained employed with Citrosuco for over 18 years. (Doc. 1, ¶ 25). He
had no intention to leave his employment prior to March 19, 2016. (Doc. 1, ¶ 25).
Citrosuco, however, terminated Plaintiff effective October 15, 2011. (Doc. 1, ¶ 27). The
expressed reason for terminating his employment was "industry conditions" and to help
with "managing and reducing cost." (Doc. 1, ¶ 27).
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D.
Plaintiff's Request for Compliance with Agreement
Pursuant to the Agreement, Plaintiff made a written request for compliance with
the terms of the Agreement and for payment of damages for his termination. (Doc. 1, ¶
28). His request was denied. (Doc. 1, ¶ 28). Plaintiff then exercised his right of appeal
of the request for benefits, which also was denied. (Doc. 1, ¶ 28).
E.
This Lawsuit
On January 11, 2012, Plaintiff filed this lawsuit. In his Complaint, he brings
seven claims for relief. (Doc. 1). Count One is for a declaratory judgment relating to the
Agreement. (Doc. 1, pp. 8-9). Count Two is for breach of employment contract for
termination without cause. (Doc. 1, pp. 9-10). Count Three is for breach of employment
contract for termination foreclosing salary continuation benefits. (Doc. 1, pp. 10-11).
Count Four is in the alternative to Count Three, and is for a violation of the Employee
Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(3), for loss of benefits
under the Agreement. (Doc. 1, pp. 10-11). Count Five is in the alternative to Count
Two, and is for violation of ERISA for loss of salary under the Agreement. (Doc. 1, pp.
12-13). Count Six is for promissory estoppel. (Doc. 1, pp. 13-14). Count Seven is for
unjust enrichment. (Doc. 1, pp. 14). Defendants have moved to dismiss all seven of
Plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 16).
II.
LEGAL ANALYSIS
A.
Motion to Dismiss Standard
Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for
"failure to state a claim upon which relief can be granted." In reviewing a motion to
dismiss, this Court must "'construe the complaint in the light most favorable to the
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plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the
plaintiff.'" Bassett v. NCAA, 528 F.3d 426, 430 (6th Cir. 2008) (quoting Directv, Inc. v.
Treesh, 487 F.3d 471, 476 (6th Cir. 2007)).
"[T]o survive a motion to dismiss, a complaint must contain (1) 'enough facts to
state a claim to relief that is plausible,' (2) more than ‘a formulaic recitation of a cause of
action’s elements,' and (3) allegations that suggest a 'right to relief above a speculative
level.'" Tackett v. M&G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, passim (2007)). "A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129
S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). Although the plausibility
standard is not equivalent to a "'probability requirement,' . . . it asks for more than a
sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S.
at 556).
While the Court must accept all well-pleaded factual allegations as true, it need
not "accept as true a legal conclusion couched as a factual allegation." Twombly, 550
U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). The complaint need
not contain detailed factual allegations, yet it must provide "more than an unadorned,
the-defendant-unlawfully-harmed-me accusation." Iqbal, 129 S. Ct. at 1949 (citing
Twombly, 550 U.S. at 555). A pleading that offers labels and conclusions or merely a
formulaic recitation of legal elements will not do. Id. Nor does a complaint suffice if it
tenders naked assertions devoid of factual enhancement. Id. While a plaintiff need not
plead specific facts, the complaint must "give the defendant fair notice of what the claim
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is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007)
(internal quotations omitted) (quoting Twombly, 550 U.S. at 555).
A court may consider the following when ruling on a motion to dismiss: "(1) any
documents attached to, incorporated by, or referred to in the pleadings; (2) documents
attached to the motion to dismiss that are referred to in the complaint and are central to
the plaintiff’s allegations, even if not explicitly incorporated by reference; (3) public
records; and (4) matters of which the court may take judicial notice." Smith v. Bd. of
Trs. Lakeland Cmty. Coll., 746 F. Supp. 2d 877, 889 (N.D. Ohio 2010) (citing Whittiker
v. Deutsche Bank Nat’l Trust Co., 605 F. Supp. 2d 914, 924–25 (N.D. Ohio 2009)); see
also Greenberg v. Life Ins. Co., 177 F.3d 507, 514 (6th Cir. 1999); Fed. R. Civ. P. 10(c)
("A copy of a written instrument that is an exhibit to a pleading is part of the pleading for
all purposes."). Both the Agreement and the June 26, 1997 Modification of the
Agreement are attached to Plaintiff's Complaint (Docs. 1-1, 1-2). Because they are
"referred to in the complaint and are central to the plaintiff’s allegations," the Court may
consider them both here. See Smith, 746 F. Supp. 2d at 889.
B.
Breach of Contract
Defendants argue that Plaintiff's claims for breach of contract (Counts Two and
Three) should be dismissed because the Agreement, as properly interpreted under
Florida law, does not constitute a "contract of employment" under which Plaintiff could
be discharged from Citrosuco only for cause. (Doc. 16, pp. 14-15). Plaintiff contends
that Defendants misconstrue the Agreement, which creates a contract for employment
under which Plaintiff could be terminated only for cause, and whereby a termination
without cause entitles him to not only his salary continuation benefits but also to his lost
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salary and lost benefits caused by the wrongful discharge. (Doc. 19, pp. 25-27). In
making their respective arguments, the parties argue that the issue is a matter of
contractual interpretation that is reserved for the Court. (Doc 16, pp. 14-15; Doc. 19,
pp. 25-27; Doc. 21, p. 15). The parties also agree that the choice-of-law provision in
section 12 of the Agreement requires the Court to apply Florida law when construing the
Agreement. (Doc. 16, p. 15; Doc. 19, p. 25).
Under Florida law, the construction of a written document presents a question of
law for the Court, if its language is clear and unambiguous. Crawford v. Barker, 64
So.3d 1246, 1255 (Fla. 2011) (quoting Levitt v. Levitt, 699 So. 2d 755, 757 (Fla. App.
1997)). Where the language is clear and unambiguous, the parties' intent must be
"gleaned from the four corners of the document." Id. "'[T]he language itself is the best
evidence of the parties' intent, and its plain meaning controls.'" Id. (quoting Richter v.
Richter, 666 So. 2d 559, 561 (Fla. App. 1995)).
"Resort to rules of construction is permissible only where the contractual
language is ambiguous." Miller v. Kase, 789 So. 2d 1095, 1098 (Fla. App. 2001) (citing
Herring v. First S. Ins. Co., 522 So. 2d 1066, 1068 (Fla. App. 1988); Southeastern Fire
Ins. Co. v. Lehrman, 443 So. 2d 408, 408-09 (Fla. App. 1984); Royal Am. Realty, Inc. v.
Bank of Palm Beach & Trust Co., 215 So. 2d 336, 338 (Fla. App. 1968)). An agreement
is ambiguous when it is susceptible to two different interpretations, each one of which is
reasonably inferred from the terms of the contract. Miller, 789 So. 2d at 1097-98 (citing
Mariner Cay Prop. Owners Ass'n v. Topside Marina, 714 So. 2d 1130, 1131-32 (Fla.
App. 1998); Vienneau v. Metropolitan Life Ins. Co., 548 So. 2d 856, 859 n.5 (Fla. App.
1989)). In construing the language, the Court may consider extrinsic matters, not to
8
vary the terms of the agreement, but to explain, clarify or elucidate the language with
reference to the subject matter of the contract, the circumstances surrounding its
making, and the relation of the parties. Miller, 789 So. 2d at 1098; see also Blackhawk
Heating & Plumbing Co. v. Data Lease Financial Corp., 302 So.2d 404, 407 (Fla. 1974);
Friedman v. Virginia Metal Prods. Corp., 56 So. 2d 515, 517 (Fla. 1952). A "reasonable
interpretation of a contract is preferred to an unreasonable one." Crawford, 64 So. 3d at
1255. When "a genuine inconsistency, uncertainty, or ambiguity in meaning remains
after resort to the ordinary rules of construction[,]" those "ambiguities and
inconsistencies in a contract are to be interpreted against the draftsman."
Id.
"Generally speaking, unless it appears as a matter of law that a contract cannot support
the action alleged, a complaint should not be dismissed on a motion to dismiss for
failure to state a cause of action." Vienneau, 548 So.2d at 860 (citing Helms v. General
Film Development Corp., 346 So.2d 1064 (Fla. App. 1977); Spindler v. Kushner, 284
So.2d 481 (Fla. App. 1973)). Accord: Lonestar Alternative Solution, Inc. v. LeviewBoymelgreen Soleil Developers, LLC, 10 So. 3d 1169, 1172 (Fla. App. 2009).
With those principles in mind, the Court is bound to accept Plaintiff's allegations
as true and proceed to resolve the question of whether the allegations are sufficient to
state a cause of action. Although each party believes that the Agreement is a model of
clarity, each ascribes a different meaning to the allegedly clear and unambiguous
language. The central provision in dispute is Section 5(a) of the Agreement, which
provides:
This Agreement shall not be deemed to create a contract of
employment between the Corporation and the Employee and shall
create no right in the Employee to continue in the Corporation's
9
employ for any specific period of time, or to create any other rights
in the Employee or obligations on the part of the Corporation,
except as are set forth in this Agreement. Nor shall this Agreement
restrict the right of the Corporation to terminate the Employee for
cause, or restrict the right of the Employee to terminate his
employment.
(Doc. 1-1, § 5(a)). Plaintiff contends that in the first sentence, the phrase "except as are
set forth in this Agreement" (the "except phrase") qualifies the entire sentence because
that interpretation makes sense in the context of the Agreement, whereas Defendants
argue that it qualifies only the phrase "to create any other rights in the Employee or
obligations on the part of the Corporation" because they believe that interpretation is
consistent with the Agreement. (Doc. 16, pp. 14-17; Doc. 19, pp. 25-28; Doc. 21, pp.
12-14). Since the "except phrase" is set off at the end of the sentence by a comma, it
could be either a non-restrictive phrase applicable to the whole sentence or a restrictive
phrase applicable to only the penultimate phrase of the sentence. Either interpretation
could lead to a reasonable interpretation of the Agreement as a whole. Construing the
phrase in favor of Plaintiff as it must to do at this stage of the litigation, the Court finds it
plausible that the "except phrase" qualifies the entire sentence as proposed by Plaintiff
thereby providing Plaintiff with certain employment rights set forth in the Agreement.
The next sentence of Section 5(a) plausibly sets forth one of the employment
rights created under the Agreement: "for cause" termination. Defendants interpret the
sentence as creating "for cause" termination rights with respect to salary continuation
benefits only, while Plaintiff argues that the "for cause" termination right extends to all
aspects of his employment. (Doc. 16, p. 17; Doc. 19, p. 27). Supporting Plaintiff's
interpretation are the section title of "Employment Rights" and the lack of any express
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limitation of the alleged "for cause" termination right to the salary continuation benefits.
(Doc. 1-1, § 5). Further, if the prior sentence is interpreted in favor of Plaintiff to mean
that certain employment rights are created by the Agreement, then the interpretation of
the two sentences would be consistent. On the other hand, the Agreement governs
salary continuation benefits, and not Plaintiff's regular salary and other general
employment benefits (see Doc. 1-1, § 7), which could suggest an intent not to create
any general employment rights that go beyond the scope of the Agreement. At this
early stage of the litigation, the language is reasonably construed in favor of Plaintiff.
As such, the Court finds it is plausible that Plaintiff has stated a claim for relief relating
to a general employment right of "for cause" termination.
Likewise, the Agreement is construed in favor of Plaintiff as to whether it contains
a definite term of employment. While the Agreement does not expressly guarantee a
term of employment and mere expectations of employment are insufficient, Raytheon
Subsidiary Support Co. v. Crouch, 548 So. 2d 781, 782 (Fla. App. 1989), a term of
employment could be inferred from the language of the Agreement that provides that
Plaintiff shall be entitled to benefits if he retires after being continuously employed by
Citrosuco until at least March 19, 2016. (Doc. 1-1, §§ 1-2); see also Vienneau, 548
So.2d at 861 (trial court erred in granting motion to dismiss complaint after construing
the contract to not provide for a definite term of employment at that early stage). As
such, it could be inferred that the Agreement gave Plaintiff the right to be employed until
March 19, 2016.
Such an interpretation also would be consistent with Plaintiff's
proposed interpretation of the "for cause" provision because where employment is for a
definite term, the presumption is that the employment is no longer at will and the
11
employee may not be terminated except "for cause." Olsen v. Allstate Ins. Co., 759 F.
Supp. 782, 786 (M.D. Fla. 1991) (citing Jarvinen v. HCA Allied Clinical Lab., 552 So.2d
241 (Fla. App. 1989); De Marco v. Publix Super Markets, 360 So.2d 134 (Fla. App.
1978), aff’d, 384 So. 2d 1253 (Fla. 1980)). The interpretation also would be consistent
with the stated reason for the Agreement, which is to retain Plaintiff to prevent
substantial financial losses and provide retirement benefits as long as he complies with
the Agreement's terms of being continuously employed until March 19, 2016 and
retiring.
(Doc. 1-1, p. 1).
Defendants' proposed interpretation that he would be
permitted to receive benefits if terminated without cause after satisfying those preconditions is not necessarily consistent with their own proposed interpretation of the
Agreement since Plaintiff could not satisfy the pre-condition of continuing to be
employed with Citrosuco if he was terminated.
Although Plaintiff's interpretations of the Agreement discussed above are
plausible, they are not necessarily the interpretations that ultimately will be adopted by
the Court. Nevertheless, if any party is to bear the burden for the choice of wording in
the Agreement, it should be Defendants who are alleged to have drafted the Agreement
(Doc. 19, p. 28), rather than Plaintiff in whose favor the language shall be construed at
this early stage of the litigation. Crawford, 64 So. 3d at 1255. Indeed, in the cases
relied upon by Defendants in support of an interpretation as a matter of law, none of
those courts granted a motion to dismiss based on contractual interpretation; rather,
most of them were decided at more advanced stages of the litigation. Excelsior Ins. Co.
v. Pomona Park Bar & Package Store, 369 So. 2d 938, 941 (Fla. 1979) (finding the trial
court properly granted summary judgment to the defendant based upon its interpretation
12
of an insurance contract); DHL Express (USA), Inc. v. Express Save Indus., No. 0960276, 2009 U.S. Dist. LEXIS 109607, at *15 (S.D. Fla. Nov. 24, 2009) (denying
summary judgment on breach of contract claim after interpreting contractual provisions
to provide a right to relief); Three Keys, Ltd. v. Kennedy Funding, Inc., 28 So. 3d 894
(Fla. App. 2009) (finding that trial court properly directed a verdict for appellees on
appellant's breach of contract claim); General Sec. Nat'l Ins. Co. v. Marsh, 303 F. Supp.
2d 1321 (M.D. Fla. 2004) (granting insurance company's motion for summary judgment
where a plain reading of the contract revealed that the insurance company owed no
further obligation to the insured). But c.f. St. Johns Inv. Mgmt. Co. v. Albaneze, 22 So.
3d 728, 733 (Fla. App. 2009) (reversing trial court’s denial of a temporary restraining
order where the plain meaning of the contract indicated the non-compete provisions
were enforceable against the employee).
For each of the foregoing reasons, the Court finds that Plaintiff has stated a
plausible claim for breach of contract in Counts Two and Three. Therefore, Defendants'
Motion is denied as to both Count Two and Count Three.2
C.
ERISA Claims
Defendants argue that Plaintiff's ERISA claims (Counts Four and Five) should be
dismissed because the Agreement does not constitute an ERISA Benefit "Plan" under
the test articulated in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987). (Doc. 16,
pp. 8-12; Doc. 21, pp. 3-8). Plaintiff counters that the applicable test for determining
2
Although Defendants did not raise the issue of preemption at the motion to dismiss stage, Plaintiff's
breach of contract claim may be preempted if it is determined that the Agreement is governed by ERISA.
29 U.S.C. § 1144(a) (“Except as provided in subsection (b) of this section, the provisions of this
subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may
now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not
exempt under section 1003(b) of this title.").
13
whether an ERISA Benefit "Plan" exists is the more stringent test articulated in Donovan
v. Dillingham, 688 F.2d 1367, 1373 (11th Cir. 1982), and that Plaintiff has sufficiently
alleged facts to support a claim for relief that is plausible and rises above the
speculative level. (Doc. 19, pp. 10-20).3
ERISA governs an employer's administration of employee benefits plans. 29
U.S.C. § 1001-1381. ERISA defines an employee benefits plan as an employee welfare
benefits plan, an employee pension benefits plan, or a plan that is both an employee
welfare benefits plan and an employee pension benefits plan. 29 U.S.C. § 1003(3). As
the United States Supreme Court has recognized, the definitions selected by Congress
to describe what constitutes a qualifying ERISA benefits plan are tautological. Fort
Halifax, 482 U.S. at 8-9. As such, the judiciary has had to fill in the textual gap to
determine what qualifies as an ERISA plan. See generally id.; Dillingham, 688 F.2d
1367.
The Sixth Circuit has recognized that the "existence of an ERISA plan is a
question of fact, to be answered in light of all the surrounding circumstances and facts
from the point of view of a reasonable person."
Thompson v. American Home
Assurance Co., 95 F.3d 429, 434 (6th Cir. 1996). It has articulated the following threepart test for determining whether an ERISA benefits "plan" exists:
First, the court must apply the so-called "safe harbor" regulations
established by the Department of Labor to determine whether the
program was exempt from ERISA. [citations omitted]. Second, the
court must look to see if there was a "plan" by inquiring whether
"from the surrounding circumstances a reasonable person [could]
3
The parties dispute whether an agreement's status as an ERISA plan is a jurisdictional requirement or a
merits determination. (Doc. 16, p. 8; Doc. 19, p. 14; Doc. 21, p. 2). Following Sixth Circuit precedent, the
Court finds that it is a merits determination and not a jurisdictional requirement. Daft v. Advest, Inc., 658
F.3d 583, (6th Cir. 2011).
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ascertain the intended benefits, the class of beneficiaries, the
source of financing, and procedures for receiving benefits." Int'l
Resources, Inc. v. New York Life Ins. Co., 950 F.2d 294, 297 (6th
Cir. 1991) (citing [Dillingham], 688 F.2d at 1373), cert. denied, 504
U.S. 973, 119 L. Ed. 2d 565, 112 S Ct. 2941 (1992)). Finally, the
court must ask whether the employer "established or maintained"
the plan with the intent of providing benefits to its employees.
[citations omitted].
See Thompson, 95 F.3d at 434-35. It is only the second prong of that test that is in
dispute at this stage of the litigation. (See Doc. 19, p. 12; Doc. 21, pp. 1-9).
That second prong is the four-factor test set forth in Dillingham, 688 F.2d at
1373. See Thompson, 95 F.3d at 434-35. Notably, the Sixth has recognized that the
Dillingham test is not exclusive of the Fort Halifax test. Kolkowski v. Goodrich Corp.,
448 F.3d 843, 850 (6th Cir. 2006). Rather, the fourth factor of the Dillingham test –
procedures for receiving benefits – incorporates the "ongoing administrative scheme"
requirement from Fort Halifax. Hughes v. Zurz, 298 Fed. App'x 404, 414 (6th Cir. 2008).
The "ongoing administrative scheme requirement is a lesser hurdle than the reasonably
ascertainable claims procedure requirement."
Id.4
"[T]he claims procedure, a
requirement for all ERISA benefits plans, in itself constitutes an ongoing administrative
scheme." Id. As such, a plaintiff who is able to satisfy the more stringent Dillingham
test also is able to satisfy the Fort Halifax "ongoing administrative scheme" requirement,
which the Sixth Circuit has specifically applied when determining whether severance
benefits are part of an ERISA plan. Id.; Cassidy v. Akzo Nobel Salt, Inc., 308 F.3d 613,
616 (6th Cir. 2002).
The two particular factors that the Sixth Circuit examines to
4
Defendants' argument that the Fort Halifax test is a more exacting standard than the Dillingham test
(Doc. 21, pp. 5-6) is not supported by Sixth Circuit precedent. Indeed, as explained above, the Sixth
Circuit has held that the Fort Halifax test is a less exacting standard than the Dillingham test. Hughes,
298 Fed. App'x at 414.
15
determine whether the severance plan meets the Fort Halifax requirement are (1)
whether the employer has discretion over the distribution of benefits, and (2) whether
there are on-going demands on the employer's assets. Cassidy, 308 F.3d at 616.
Accord: Hughes v. White, 467 F. Supp. 2d 791, 804 (S.D. Ohio 2006); Kolkowski, 448
F.3d at 848.
Here, the Court will consider whether Plaintiff has alleged plausible ERISA claims
under the Dillingham test while keeping in mind the Fort Halifax requirement.
1.
Intended benefits
To satisfy its burden as to the first factor of the Dillingham test, Plaintiff must
allege facts sufficient to make it plausible that a reasonable person could ascertain the
intended benefits. Thompson, 95 F.3d at 434-35. Here, the Agreement upon which
Plaintiff relies sets forth the precise amount of the payment to be received and the exact
time period during which it is to be received. (Doc. 1-1, Schedule B). Specifically,
Plaintiff shall receive "yearly payments of Fifty-seven Thousand, Fifty-nine and no/100
Dollars (57,059.00) each to the employee MICHAEL DUBRUL, for a period of ten
years." (Doc. 1-1, Schedule B). The Agreement further indicates that the benefit is a
"fringe benefit" and is independent of any other benefits Plaintiff received, and does not
reduce or otherwise affect his salary. (Doc. 1-1, p. 1 and § 7). The Agreement labels
the benefits to be provided as "Salary Continuation and Post[-]Retirement Death
Benefit." (Doc. 1-1, § 2). If Plaintiff is eligible, then the benefits are to be paid to
Plaintiff within thirty days after he retires on or after March 19, 2016. (Doc. 1-1, §§ 1-2).
The Agreement provides that the benefits are intended to compensate him in the future
for his continued employment and loyalty to the company.
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(Doc. 1-1, p. 1).
The
benefits will be distributed and the taxes withheld from them at the time they are paid
out to Plaintiff. (Doc. 1-1, § 2). Construing these facts in the light most favorable to
Plaintiff, the Court finds that he has alleged facts that make it plausible the intended
benefits can be ascertained by a reasonable person. Plaintiff therefore has satisfied his
burden as to the first Dillingham factor at this stage of the litigation.
2.
Class of beneficiaries
To satisfy its burden as to the second factor of the Dillingham test, Plaintiff must
allege facts sufficient to make it plausible that a reasonable person could ascertain the
class of beneficiaries. Thompson, 95 F.3d at 434-35. Here, the Agreement itself makes
clear who the beneficiaries of the particular Agreement are by making the benefits
payable to Plaintiff or to his designated beneficiary who is listed in Schedule A of the
Agreement. (Doc. 1-1, § 1 and Schedule A). Defendants do not dispute that issue.
Instead, the disputed issue is whether the Agreement applies only to Plaintiff and is a
"purely individual contract" outside the scope of ERISA.5 (Doc. 16, pp. 8-9; Doc. 19, pp.
14-15).
Defendants argue that the Agreement is a "purely individual contract" where the
triggering event for the remittance of the employee benefit does not "occur more than
once, at a different time for each employee" and therefore cannot be within the scope of
ERISA. (Doc. 16, pp. 8-9) (citing Cvelbar v. CBI Ill., 106 F.3d 1368, n.8 (7th Cir. 1997);
Bogue v. Ampex Corp., 976 F.2d 1319, 1324 (9th Cir. 1992)). The Court disagrees with
Defendants' analysis.
5
This analysis also is relevant to the fourth prong of the Dillingham test to the extent that Defendants
argue that a purely individual contract cannot require an ongoing administrative scheme under Fort
Halifax.
17
On its face, the Agreement applies only to Plaintiff.
(Doc. 1-1).
However,
Plaintiff has alleged that four other highly compensated and select management
employees received similar agreements (Doc. 1, ¶ 10), which is sufficient at this stage
of the litigation to plausibly suggest that the Agreement is not a purely individual
contract since a triggering event (i.e., the retirement of one of the employees) could
occur more than once and at a different time for each employee. See Cvelbar, 106 F.3d
at 1375 (inclusion of four other top employees suggests agreement may not be a oneperson ERISA plan); Fort Halifax, 482 U.S. at 15 n.9 (recognizing that an ERISA plan
may exist when it is predictable that different employees will receive the benefits at
different points in the future).
However, even if the alleged plan does apply to only one individual, Defendants
still are not entitled to dismissal of Plaintiff's ERISA claims at this stage of the litigation.
The weight of authority indicates that one-person plans may qualify as ERISA plans.
Cvelbar, 106 F.3d at 1376 ("Even if we must characterize the arrangement before us as
a one-person plan, we have no difficulty in holding that it is possible for a one-person
arrangement to qualify as an ERISA plan. Certainly, the plain language of ERISA in no
way excludes from coverage those situations in which only one employee is extended
benefits”); Williams v. Wright, 927 F.2d 1540, 1545 (11th Cir. 1991) ("[W]e conclude
that a plan covering only a single employee, where all other requirements are met, is
covered by ERISA."); Biggers v. Wittek Indus., 4 F.3d 291, 297 (4th Cir. 1993) (stating
that the court was "not aware of any requirement that a plan must cover more than one
employee in order to be controlled by ERISA"); Evanoff v. Banner Mattress Co., 526 F.
Supp. 2d 810, 816 fn.2 (N.D. Ohio 2007) ("The Agreement is not excluded from
18
coverage as an ERISA plan because it only applies to one person.") (citing B-T
Dissolution, Inc. v. Provident Life and Accident Ins. Co., 101 F. Supp. 2d 930, 940 n.16
(S.D. Ohio 2000)). "[A]s long as the benefits program meets the other requirements of
an ERISA plan . . . the program does not fall outside the ambit of ERISA merely
because it covers only a single employee."
Cvelbar, 106 F.3d at 1376.
Accord:
Williams, 927 F.2d at 1545 ("[W]e conclude that a plan covering only a single employee,
where all other requirements are met, is covered by ERISA."). As explained herein,
Plaintiff has alleged sufficient facts to satisfy the other factors necessary for the
plausible existence of an ERISA plan at this stage of the litigation.
The Court is not persuaded by Defendants' reliance upon two Department of
Labor opinion letters to show that an ERISA plan covering one employee falls outside
the scope of an ERISA "Plan." (Doc. 16, p. 12; Doc. 21, p. 8). In the early days of its
administration, the Department of Labor found that two separate individual contracts did
not constitute benefit plans under ERISA. U.S. Dep't of Labor Op. Letter 76-110 (Sept.
28, 1976); U.S. Dep't of Labor Op. Letter 76-79 (May 26, 1976). Not only do those two
letters contain such incomplete facts that the Court is unable to determine whether the
circumstances surrounding those individual contracts were analogous to the
circumstances in this case, but also since that time, the Department of Labor has
recognized that a contract between an employer and a single employee may constitute
an employee benefits plan. U.S. Dep't of Labor Op. Letter 91-20 (July 2, 1991). For
these reasons, the Court is unable to rely on the opinion letters as authority for
dismissing Plaintiff's ERISA claims on the purely individual contract issue.
19
Accordingly, the Court finds that Plaintiff has met his burden as to the second
Dillingham factor at this stage of the litigation.
3.
Source of financing
To satisfy his burden as to the third factor of the Dillingham test, Plaintiff must
allege facts sufficient to make it plausible that a reasonable person could ascertain the
source of financing.
Thompson, 95 F.3d at 434-35.
Section 4 of the Agreement
provides that it is an "unfunded and unsecured promise to pay."
(Doc. 1-1, § 4).
Further, "[a]ny assets which the Corporation may acquire to help cover its financial
liabilities are and remain general assets of the Corporation subject to the claims of its
creditor." (Doc. 1-1, § 4; see also Doc. 1-1, § 6). Based on the plain language of the
Agreement, the source of financing is the general assets of Citrosuco. The parties
agree on that issue.
Where the parties part ways, however, is on the issue of whether the Agreement
can be an ERISA "plan" when the benefits are to be paid out of the general corporate
assets instead of a set-aside trust or segregated fund. Defendants argue that it cannot
be. (Doc. 16 at 9) (citing Hart v. Reynolds & Reynolds Co., No. C-39-2-190, 1992 U.S.
Dist. LEXIS 22745, at *14 (S.D. Ohio June 9, 1992); James v. Fleet/NorStar Fin. Group,
Inc., 992 F.2d 463, 467 (2d Cir. 1993)).6
As Defendants acknowledge (Doc. 16 at 9), benefits that are paid out of general
corporate asserts are only more likely not to be within the scope of ERISA. That does
not mean that an ERISA plan can never exist when the benefits are paid out of the
6
This issue also is relevant to the Court's analysis as to the fourth factor of the Dillingham test.
20
general corporate assets. Indeed, the caselaw supports a conclusion that ERISA plans
may exist when benefits are paid out of the general corporate assets.
In the Hart case cited by Defendants, the court found that a salary continuation
plan was not within the scope of ERISA because the payment of the benefit was a
"payroll practice" under 29 C.F.R. § 2910.3-1(b)(2) that is exempt from the definition of
"employee welfare benefit plan." Hart, 1992 U.S. Dist. LEXIS 22745, at *15. Section
2910.3-1(b) provides that benefits do not qualify as employee welfare benefits under
ERISA when they paid out of the employer's general assets and are part of an
employee's normal compensation. Hart, 1992 U.S. Dist. LEXIS 22745, at *14 (citing 29
C.F.R. § 2910.3-1(b)). In light of that definition, the Hart court held that the plaintiff's
disability compensation was the same compensation she received for a normal fortyhour work week and that the benefits were paid out of the corporation's general assets.
Id. at *15. The benefits therefore did not fall within the scope of ERISA. Id.
Here, in contrast to Hart, the parties agree that the payments made to Plaintiff
under the Agreement are to be made out of the employer's general assets, but there are
sufficient allegations to make it plausible that the payments are not made as part of
Plaintiff's normal compensation. For example, there is nothing in the Agreement that
states that Plaintiff is to receive compensation equal to his normal salary earned at the
time of retirement.
(See Doc. 1-1).
Instead, the Agreement entered into in 1993
provides for an exact amount of compensation to be provided, which plausibly did not
take into account the specific salary that Plaintiff would be receiving at the time he
21
retired in or after March 19, 2016. (Doc. 1-1, Schedule B).7 Moreover, the Agreement
plainly states that the benefits payable under the Agreement are "independent of, and in
addition to, any other benefits or compensation, whether by salary, or bonus or
otherwise, payable under any other employment agreements . . . ." (Doc. 1-1, § 7). The
language "independent of, and in addition to" suggests that the benefits would be
separate from – rather than part of – his normal compensation.
The other case cited by Defendants is James, 992 F.2d at 467. (Doc. 16, p. 9).
Defendants rely upon James for the proposition that "'golden parachute' payments to a
select group of executives [are] not an ERISA 'plan' where such was funded by general
corporate assets." (Doc. 16, p. 9). However, James does not stand for that proposition
and the case did not even concern golden parachute payments. See James, 992 F.2d
at 467. Rather, the James court found that an employer's undertaking to give
employees sixty days of pay following the last day or work until an internal consolidation
was complete at which time the employees would be terminated did not constitute an
ERISA plan because there was no ongoing administrative scheme. Id. In reaching its
decision, the court considered several other cases, including Gilbert v. Burlington
Indus., Inc., 765 F.2d 320 (2d Cir. 1995), aff’d, 477 U.S. 901 (1986), and Fontenot v. NL
Indus. Inc., 953 F.2d 960 (5th Cir. 1992).
With respect to Gilbert, the court noted that it had found an employer's unfunded
severance plan to pay employees who were involuntarily terminated to be an employee
7
In their Motion, Defendants state that the salary to be paid is equal to his 1993 salary, not his salary at
the time he retired. (See Doc. 16, p. 3).
22
welfare benefits plan. James, 992 F.2d at 467. That holding supports Plaintiff's position
here.
As for Fontenot, the James court recognized that the Fontenot court had found
that a "golden parachute" program providing severance benefits did not qualify as an
ERISA plan.
James, 992 F.2d at 468.
However, the Fontenot court reached that
conclusion after determining that the severance benefit was going to be paid one time,
was triggered by a single event, and required no ongoing administrative scheme.
Fontenot, 953 F.2d at 962. Therefore, the deciding factor in the case was not whether
the benefits were paid out of the general assets, but whether the plaintiff had
demonstrated that the other requirements of an ERISA plan were satisfied. Id.; see also
Williams, 927 F.2d at 1544 (plan covering a single employee funded by general assets
constituted an employee benefits plan if there is an ongoing administrative plan; "an
employer's failure to meet an ERISA requirement does not exempt the plan from ERISA
coverage," as an employer "should not be able to evade the requirements of the statute
merely by paying . . . benefits out of general assets" (citations omitted))). As such,
Fontenot does not support Defendants' position that an ERISA claim must be dismissed
whenever the benefits are paid out of general assets. Nor does it support dismissal of
the ERISA claims here where, in contrast to Fontenot, Plaintiff has alleged sufficient
facts to satisfy the other criteria for an ERISA plan at this stage of the litigation.
Furthermore, as Plaintiff points out (Doc. 19, pp. 17-18), there are some types of
plans, namely, "top hat" ERISA plans, for which payments may be made out of the
general corporate assets. A "top hat" plan is defined as "a plan which is unfunded and
is maintained by an employer primarily for the purpose of providing deferred
23
compensation for a select group of management or highly compensated employees."
29 U.S.C. § 1051(2). Defendants do not dispute that Plaintiff sufficiently has alleged
that the Agreement was intended to provide compensation for a select group of
management or highly compensated employees.
(See Doc. 21, p. 9).8
Rather,
Defendants dispute that Plaintiff has sufficiently alleged that the Agreement was
"primarily for the purpose of providing deferred compensation." (Doc. 21, p. 9).
In disputing that requirement, Defendants argue simply that the Agreement does
not "'defer' any of Plaintiff's salary for later, more favorable tax treatment." (Doc. 21, p.
9) (citing Doc. 1-1, passim). Although Defendants point to no specific provision in the
Agreement upon which they rely for that statement, Section 7 states that the Agreement
does "not involve a reduction in salary or foregoing of an increase in future salary by the
Employee" nor "does the Agreement in any way affect or reduce the existing and future
compensation and other benefits of the Employee." (Doc. 1-1, § 7). Based on that
language, the Court agrees that the Agreement does not defer any of Plaintiff's salary or
reduce any other benefits he currently receives.
Nevertheless, Defendants do not demonstrates that "deferred compensation" is
limited to deferred salary or benefits ordinarily received as a part of employment. Under
the Agreement, these independent and additional retirement benefits are not payable to
Plaintiff until a future date in or after the year 2016 (Doc. 1-1, §§ 1-2), which plausibly
suggests that the benefits are deferred. The Agreement also provides that the federal
and state income taxes will be withheld from the payments as required by the law in
8
The Agreement provides that "Employee is considered a highly compensated employee or member of a
select management group of the Corporation . . . ." (Doc. 1-1, p. 1).
24
effect at the time those benefits are paid. (Doc. 1-1, § 7). Receiving compensation that
is taxable at the time of retirement when the employee may be in a lower tax bracket
provides the employee with favorable tax benefits. For these reasons, the Court finds
that Plaintiff has alleged facts sufficient to plausibly demonstrate that the benefits
payable to him constitute deferred compensation.
Defendants' argument that the "primary purpose" of the Agreement was to "gain
Plaintiff's employment loyalty" rather than to provide deferred compensation also is not
well-taken at this stage of the litigation.
The fact that a plan is "established as a means to retain valuable
employees" does not disqualify it from top hat status it otherwise
deserves. . . . This is equally true if a plan providing unfunded,
deferred compensation also aids recruitment of desirable
employees. . . .
A desire to recruit and retain excellent employees would be a
common, rather than unusual, motive for establishing a top hat
plan. . . . The fact that the creation of a plan was motivated by a
desire to recruit and retain excellent employees does not disqualify
it from receiving the top hat status it otherwise merits.
Alternatively, § 1051(2) expressly requires only that a top hat plan
be maintained 'primarily' to provide deferred compensation. The
term "primarily" makes it clear that "top hat" plans can have multiple
broad purposes.
Alexander v. Brigham & Women's Physicians Org., Inc., 467 F. Supp. 2d 136, 142-43
(D. Mass. 2006) (internal citations omitted). Construing the facts in favor of Plaintiff, the
Court finds that Plaintiff has alleged sufficient facts from which it plausibly can be
inferred that providing deferred compensation was the primary purpose of the
Agreement. Accordingly, Plaintiff has satisfied his burden on the third Dillingham factor
at this stage of the litigation.
25
4.
Procedures for receiving benefits
To satisfy its burden as to the fourth factor of the Dillingham test, Plaintiff must
allege facts sufficient to make it plausible that a reasonable person could ascertain the
procedures for receiving benefits. Thompson, 95 F.3d at 434-35. Section 3 of the
Agreement is entitled "Named Fiduciary and Claims Procedure." (Doc. 1-1, § 3). That
section sets forth various requirements for making a claim under the Agreement,
including an appeals process if the claim is denied. (Doc. 1-1, § 3). Specifically, it
requires that Plaintiff or the designated recipient make a written request to the named
fiduciary. (Doc. 1, p. 28; Doc. 1-1, § 3(b)). If the claim is denied, as it was in this case,
then Plaintiff or the designated recipient must be notified in writing of the denial within
ninety days. (Doc. 1-1, §§ 3(c), (d)). Plaintiff or his designated recipient may appeal the
denial in writing to the named fiduciary within sixty days after receipt of the denial.
(Doc. 1-1, § 3(e)). The named fiduciary must exercise his discretion as to whether to
hold a hearing on the appeal. (Doc. 1-1, § 3(g)). He then must "promptly" render a
decision on the appeal. (Doc. 1-1 § 3(d)-(h)). Defendants do not dispute that the claims
procedure is fully outlined in the Agreement. Accordingly, the Court finds that Plaintiff
has alleged facts that make it plausible a reasonable person could ascertain the
procedures for receiving benefits. Having found that Plaintiff satisfies this fourth factor
of the Dillingham test, the Court also implicitly has found that Plaintiff satisfies Fort
Halifax's "ongoing administrative scheme" requirement. See Hughes, 298 Fed. App'x at
414 (recognizing that "the ongoing scheme requirement is a lesser hurdle than the
reasonably ascertainable claims procedure requirement. . . . The claims procedure, a
26
requirement for all ERISA benefits, in itself constitutes an ongoing administrative
scheme").
Defendants' arguments specific to the two factors required to satisfy the Fort
Halifax "ongoing administrative scheme" requirement do not change the Court's
conclusion. (Doc. 19, pp. 8-11; Doc. 21, pp. 6-7). As to the first factor, Defendants
argue that they lacked discretion over the distribution of benefits because the payment
requires only a "simple, one-time arithmetical calculation" since the Agreement sets
forth the exact amount that Plaintiff would receive each month. (Doc. 16, pp. 10-11).
Defendants specifically rely upon the following quote from Fort Halifax: "To do little
more than write a check hardly constitutes the operation of a benefit plan." Fort Halifax,
482 U.S. at 12. Defendants also rely on two additional cases: Guccione v. Bell, No.
06cv492, 2006 U.S. Dist. LEXIS 49526, at *8-9 (S.D.N.Y. July 20, 2006) and Cassidy,
308 F.3d at 616-17.
(Doc. 16, p. 10).
Those cases do not mandate dismissal of
Plaintiff's ERISA claims.
In Guccione, the court recognized that a "one-time, lump-sum payment triggered
by a single event requires no administrative scheme whatsoever to meet the employer's
obligation and is not a 'plan' under ERISA." Guccione, 2006 U.S. Dist. LEXIS 49526, at
*8 (quoting Kosakow v. New Rochelle Radiology Assoc., P.C., 274 F.3d 706, 736-37
(2d Cir. 2001)). It went on to state that for ERISA to apply, administering the severance
plan typically must require "managerial discretion." Id. The court found that the plaintiff
had not satisfied the "ongoing administrative scheme" requirement because there was
absolutely no discretion required, as there was no claims procedure involved under
27
which the employer had to undertake any type of analysis to process claims or disburse
benefits. Id.
In contrast, in Cassidy, the Sixth Circuit held that a severance plan fell within the
scope of ERISA where, among other factors, the payment of benefits required a degree
of employer discretion.
Cassidy, 308 F.3d at 616-17.
Although the Sixth Circuit
recognized that the benefits in that case were generally formulaic and that "plans in
which
benefits
are
predetermined
or
which
involve
'simple
or
mechanical
determinations' have been found not to be ERISA plans[,]" it nevertheless held that
there was sufficient employer discretion because "the company president had discretion
to approve a larger amount in some cases," and the "employee had to submit a written
application in order to receive this retirement benefit, although it is not clear whether
[the employer] had discretion to deny any application." Id. at 616.
Here, even if it is unnecessary for Defendants to make complex mathematical
calculations every month in order to distribute the benefits, other facts are alleged by
Plaintiff that plausibly demonstrate that Defendants must determine eligibility for
benefits and analyze Plaintiff's particular circumstances in light of the appropriate
criteria, although the extent to which the individual circumstances are analyzed is not
clear at this stage. Rodgers v. Q3 Stamped Metal, Inc., 499 F. Supp. 2d 984, 990 (S.D.
Ohio 2007) ("[A]n employer's need to create an administrative system may arise where
the employer, to determine the employee's eligibility for and level of benefits must
analyze each employee's particular circumstances in light of the appropriate criteria.").
As explained above, there are detailed procedures for submitting claims for benefits
under the Agreement, and the named fiduciary is to make specific determinations in
28
deciding whether Plaintiff qualified for benefits under the Agreement. (Doc. 1-1, § 3(c),
(d)-(h)). Indeed, the named fiduciary denied Plaintiff's claim for benefits in this case at
each level of the claims procedure. (Doc. 1, ¶ 28; Doc. 1-1, § 3(c), (d)-(h)). Moreover,
Citrosuco retained discretion over whether to pay the benefits in lump sum or in fixed
installments. (Doc. 1-1, § 8). As such, Plaintiff has met his burden on the issue of
employer discretion.
As to the second factor, Defendants argue that the option to make a one-time
lump-sum payment of benefits to Plaintiff in and of itself removes the Agreement from
the scope of ERISA.
Defendants
argue
(Doc. 16, pp. 10-11; Doc. 21, pp. 6-7).
that
the
one-time
lump-sum
payment
More specifically,
option
conclusively
demonstrates that there are no ongoing demands on the corporate assets. (Doc. 16,
pp. 10-11; Doc. 21, pp. 6-8). The Court disagrees.
To satisfy the second factor, Plaintiff must allege facts that plausibly could show
that Citrosuco assumed "'responsibility to pay benefits on a regular basis, and thus
faces . . . periodic demands on its assets that create a need for financial coordination
and control.'" Cassidy, 308 F.3d at 616 (quoting Fort Halifax, 482 U.S. at 12). Here, the
Agreement states that Citrosuco will make yearly payments of $57,059 to Plaintiff for a
period of ten years.
(Doc. 1-1, Schedule B).
Although Citrosuco has the right to
accelerate the payments, the Agreement does not require Citrosuco to exercise that
discretion and it provides no timeframe within which that discretion must be exercised.
(Doc. 1-1, § 8).
Citrosuco therefore may never exercise that discretion or could
exercise that discretion during the ninth year in which payments are required. (Doc. 11, § 8). The fact that Citrosuco agreed to pay a large sum of money to Plaintiff amount
29
over a ten-year period plausibly suggests that Defendants had the responsibility to pay
benefits on a regular basis and faced periodic demands on its assets that created the
need for financial coordination and control. Hughes, 298 Fed. App'x at 414 ("Thus, a
benefits arrangement that provides for a lump-sum payment to an employee may qualify
as an ERISA benefits plan if the employer is potentially required to pay out benefits on a
regular basis.") (emphasis added).
Moreover, Plaintiff has alleged that four other
employees had such an agreement with Citrosuco thereby making it plausible that
Citrosuco would have to make payments to multiple employees at different times,
depending on the particular dates on which those employees retired. (Doc. 1, ¶ 10).
See also Fort Halifax, 482 U.S. at 15 n.9 (recognizing that an ERISA plan may exist
when it is predictable that the employees will receive payments at different times in the
future regardless of whether the employees received the payments in lump sum or on a
periodic basis). Even if Citrosuco accelerated the benefit for one employee, it does not
necessarily mean it would have accelerated the benefit for the other employees. As
such, the demands on its assets plausibly could be ongoing.
These facts alleged by Plaintiff suggest more of a need for financial control and
coordination than the facts in the cases relied upon by Defendants. See Rodgers, 499
F. Supp. 2d at 990 (severance benefits and six months of continued medical benefits
agreed to in an employment letter may not put an ongoing demand on the employer's
assets); Angst v. Mack Trucks, Inc., 969 F.2d 1530, 1540 (3rd Cir. 1992) (one-time
payment upon termination and continuation of benefits under a separate benefits plan
was insufficient to constitute an ERISA plan); Fludgate v. Management Technologies,
885 F. Supp. 645, 648 (S.D.N.Y. 1995) (employment agreement that provided for the
30
possibility of payment of severance benefits over a two-year period to a single
employee was insufficient to constitute an ERISA plan), Rosario v. Syntex (F.P.), Inc.,
842 F. Supp. 2d 441, 447 (D.P.R. 2012) (agreement to provide severance benefits to
employees at the closing of a plant in the form of either a lump-sum payment or
installment payments for a one-year period did not constitute an ERISA plan). Indeed,
the facts in this case are more akin to those in Cassidy, 308 F.3d at 616-17. In Cassidy,
a severance policy provided for a lump-sum payment to employees, but some
employees were permitted to choose between a lump sum payment and a two-year
salary continuation period. Id. at 616-17. Released employees also were permitted to
extend some other benefits such as medical, dental and life insurance. Id. at 617.
Under those circumstances, the Sixth Circuit found that the plaintiff had demonstrated a
periodic demand on the employer's assets.
Id. at 616-17.
Although the Court
recognizes that Plaintiff has not alleged any promise of continued medical, dental or life
insurance benefits, it does not find that issue to be dispositive given that the issue of
ongoing demands on an employer's assets is a question of fact to be answered in light
of the surrounding circumstances. Thompson, 95 F.3d at 434. Construing the facts in
the light most favorable to Plaintiff, the Court finds that he has alleged facts that
plausibly could demonstrate ongoing demands on Defendants' assets and that he has
satisfied the fourth Dillingham factor at this stage of the litigation.
For each of the foregoing reasons, Defendants' Motion is denied as to Counts
Four and Five of the Complaint.
D.
Promissory Estoppel
Plaintiff's claim for promissory estoppel (Count Six) is based on alleged oral
31
promises made by Citrosuco that "if he worked for Defendant until age 65, he would
receive a salary continuation for 10 years, would receive the benefits of two insurance
policies, and would not be terminated except for Cause." (Doc. 1, ¶ 82). The promises
allegedly were made by the corporate president at the time the Agreement was signed,
were confirmed by Citrosuco's Secretary/Treasurer, and are "at least in part" set forth in
the Agreement. (Doc. 1, ¶ 83). Defendants move for dismissal on the promissory
estoppel claim on the grounds that under Ohio law (1) the legal relationship between the
parties is governed by a valid and enforceable contract that precludes a promissory
estoppel claim, and (2) the oral promises are unenforceable under the Statute of
Frauds, Ohio Rev. Code § 1335.05. (Doc. 16, pp. 13-14). Plaintiff counters that (1)
federal law is applicable to the extent the Agreement is found to be a "top hat" ERISA
plan because it is not inconsistent to bring a claim for promissory estoppel together with
a "top hat" ERISA claim, and (2) even if the Agreement is not an ERISA plan, Plaintiff
has stated a claim for relief under Ohio law on the promise of continued employment to
the extent it is found to be outside the scope of the Agreement. (Doc. 19, pp. 22-23).
Defendants respond that the Agreement permits modifications only in writing and that
his allegations as to an oral promise of continued employment are insufficient to state a
claim. (Doc. 21, p. 11).
Addressing first Plaintiff's assertion of a claim for promissory estoppel in
connection with a "top hat" ERISA plan, the Sixth Circuit has recognized that a plaintiff
may bring a promissory estoppel claim against an ERISA welfare benefit plan, but has
not expressly recognized such a claim in the context of pension or other retirement
plans. Sprague v. GMC, 133 F.3d 388, 403 (6th Cir. 1998). Accord: Soper v. Infusion
32
Partners, Inc., No. 1:07-cv-645, 2008 U.S. Dist. LEXIS 113043, at *12-13 (S.D. Ohio
Nov. 26, 2008) (noting that the Sixth Circuit had not expressly applied promissory
estoppel to a pension plan, and declining to do so there because the plan was a
pension plan where actuarial concerns were at issue). One district court in the Sixth
Circuit has acknowledged that the doctrine of estoppel may be applicable in the
context of a top hat plan where the plan can be written or oral, in whole or in part.
Straney v. GMC, No. 06-CV-12152, 2008 U.S. Dist. LEXIS 3212, at *6-7 (E.D. Mich.
Jan. 16, 2008). Other courts outside the Sixth Circuit also have found the doctrine of
estoppel applicable in the context of a top hat plan. See, e.g., Senior Exec. Benefit
Plan Participants v. New Valley Corp. (In re New Valley Corp.), 89 F.3d 143, 152 (3d
Cir. 1996) (recognizing the viability of estoppel claims against top-hat plans) (citing
Callahan v. Unisource Worldwide, Inc., 451 F. Supp. 2d 428, 437 (D. Conn. 2006)
(same); Koenig v. Waste Mgmt., Inc., 76 F. Supp. 2d 908, 915-916 (N.D. Ill. 1999)
(same); see also John F. Buckley IV, ERISA Law Answer Book 18:23 (6th ed. 2008)
("[e]stoppel claims are appropriate in cases involving top-hat plans . . .")). To establish
a claim for promissory estoppel under ERISA, a plaintiff must show: (1) conduct or
language amounting to a representation of material fact; (2) the party to be estopped
is aware of the true facts; (3) the party to be estopped intended that the representation
be acted on, or the party asserting the estoppel must reasonably believe that the party
to be estopped so intends; (4) the party asserting the estoppel is unaware of the true
facts; and (5) the party asserting the estoppel reasonably or justifiably relied on the
representation to his detriment. See Moore v. Lafayette Life Ins. Co., 458 F.3d 416,
428-29 (6th Cir. 2006) (citing Sprague, 133 F.3d at 403). "Principles of estoppel,
33
however, cannot be applied to vary the terms of unambiguous plan documents;
estoppel can only be invoked in the context of ambiguous plan provisions." Sprague,
133 F.3d at 404 (citing Fink v. Union Central Life Ins. Co., 94 F.3d 489, 492 (8th Cir.
1996); Hudson v. Delta Air Lines, 90 F.3d 451, 458 n.12 (11th Cir. 1996), cert. denied,
519 U.S. 1149, 137 L. Ed. 2d 217, 117 S. Ct. 1082 (1997)).
Defendants do not expressly dispute Plaintiff's argument that federal law is
applicable if the Agreement is found to be governed by ERISA. Nor do they specifically
argue that Plaintiff has failed to satisfy the required elements. The Court therefore does
not engage in that analysis here. Defendants instead focus on the argument that no
such claim can exist where the Agreement provides for no modifications except by
writing. (Doc. 21, p. 11). Although the language of the Agreement does prevent
subsequent oral modifications of the Agreement (Doc. 1-1, § 11), Defendants have not
demonstrated conclusively that it prevents promises that were made to Plaintiff either
orally or in writing prior to or at the time of the Agreement from being enforceable
where, as here, there are two reasonable interpretations of that Agreement set forth by
the parties. As such, the Court finds Plaintiff's promissory estoppel claim is not barred
under federal law at this stage of the litigation.
Under Ohio law, the elements necessary to prove a claim for promissory
estoppel are: (1) a clear, unambiguous promise, (2) the person to whom the promise is
made relies on the promise, (3) reliance on the promise is reasonable and foreseeable,
and (4) the person claiming reliance is injured as a result of reliance on the promise."
34
Pappas v. Ippolito, 895 N.E.2d 610, 622 (Ohio App. 2008).9 Promissory estoppel "is not
available as a remedy where the legal relationship between the parties is governed by a
valid and enforceable contract." Thomas & Marker Constr., Co. v. Wal-Mart Stores,
Inc., No. 3:06-cv-406, 2008 U.S. Dist. LEXIS 79072, at *62 (S.D. Ohio Sept. 15, 2008)
(applying Ohio law). Indeed, "there can not be an express agreement and an implied
contract for the same thing existing at the same time." Harwood v. Avaya Corp., No.
C2-05-828, 2007 U.S. Dist. LEXIS 38722, at *32-33 (S.D. Ohio May 25, 2007) (citing
Hughes v. Oberholtzer, 123 N.E.2d 393 (Ohio 1954)); see also Warren v. TrotwoodMadison City Sch. Dist. Bd. of Educ., No. 17457, 1999 Ohio App. LEXIS 1035, at *19
(Ohio App. Mar. 19, 1999).
A party also may not use promissory estoppel to bar the opposing party from
asserting the affirmative defense of the statute of frauds. Olympic Holding Co., LLC v.
ACE Ltd., 909 N.E.2d 93, 100-01 (Ohio 2009); Heinz & Assocs. v. Diamond Cellar
Holdings LLC, No. 10CVH-04-6672, 2011 Ohio Misc. LEXIS 235, at *12 (Ohio C.P.
June 20, 2011). A party, however, may pursue an action for reliance damages under a
promissory estoppel theory, even though the statute of frauds bars their breach of
contract claim. Olympic Holding Co., LLC, 909 N.E.2d at 100-01 ("The doctrine of
promissory estoppel comes into play where the requisites of contract are not met, yet
the promise should be enforced to avoid injustice. . . . [P]romissory estoppel is an
adequate remedy for a fraudulent oral promise or breach of an oral promise, absent a
signed agreement.") (internal citations omitted).
9
The parties both argue the state common law claim of promissory estoppel under Ohio law. (Doc. 16,
pp. 13-14; Doc. 19, pp. 22-23).
35
Although the parties have entered into the Agreement, the Agreement must be
valid and enforceable to bar Plaintiff's claim for promissory estoppel. See Thomas &
Marker Constr., Co., 2008 U.S. Dist. LEXIS 79072, at *62. The Court finds that it is
premature at this stage of the litigation to make a determination as to the validity and
enforceability of the Agreement. As such, the oral promises allegedly made to Plaintiff
plausibly may form the basis of a promissory estoppel claim for reliance damages under
Ohio law. If the Agreement, however, is ultimately found to be valid and enforceable,
then Plaintiff may be barred from asserting a promissory estoppel claim for reliance
damages under Ohio law based on those oral promises covered by the Agreement but
will not be barred from asserting a promissory estoppel claim for reliance damages
based on oral promises not covered by the Agreement. In other words, if Plaintiff can
demonstrate each of the elements of the promissory estoppel claim as to any oral
promises not covered by the Agreement, then he may be able to recover reliance
damages. As Defendants do not otherwise challenge Plaintiff's satisfaction of the
elements of his promissory estoppel claim at this stage of the litigation, the Court finds
that Plaintiff has alleged facts that could plausibly state a claim for relief and may
pursue reliance damages under a promissory estoppel theory for the alleged promises
set forth in Count Six.
Moreover, Defendants' argument that the oral praise and accolades alleged by
Plaintiff are insufficient to alter a presumption of at-will employment absent assurances
of continued employment for a definite period of time (Doc. 21, p. 15) does not change
the Court’s conclusion. In reviewing Plaintiff's allegations, the Court finds that Plaintiff
has set forth more than allegations of accolades or praise to support a determination of
36
continued employment; indeed, he alleges facts as to a specific promise of continued
employment until the age of 65, as to when the promises were made and by whom, and
as to his reliance on the promise. (Doc. 1, ¶¶ 82-86). The Court finds those allegations
are sufficient at this stage of the litigation to state a plausible claim for relief.
For the foregoing reasons, Defendants' Motion is denied with respect to Count
Six.10
E.
Unjust Enrichment
Unjust enrichment occurs under Ohio law "when a party retains money or
benefits which in justice and equity belong to another." Liberty Mut. Ins. Co. v. Indus.
Comm'n. of Ohio, 532 N.E.2d 124, 125 (Ohio 1988).11 To prevail on a claim of unjust
enrichment, a plaintiff must show "(1) a benefit conferred by a plaintiff upon a defendant;
(2) knowledge by the defendant of the benefit; and (3) retention of the benefit by the
defendant under circumstances where it would be unjust to do so without payment."
Hambleton v. R.G. Barry Corp., 465 N.E.2d 1298, 1302 (Ohio 1984). When discussing
the "benefit" element, Ohio courts "focus on the value of what was provided to the
defendant, as opposed to [focusing] on the damages incurred by the plaintiff...." Wilkin
v. Fyffe, No. 96-CA-03, 1996 Ohio App. LEXIS 3905, at *13 (Ohio App. Sept. 13, 1996);
Hughes v. Oberholtzer, 123 N.E.2d 393 (Ohio 1954). "Stated another way courts look
to see whether the complaint alleges more than that a benefit was conferred." Jan
10
Although Defendants did not specifically raise the issue of preemption at the motion to dismiss stage, all
or part of Plaintiff's state law claim may be preempted if it is determined that the Agreement is governed
by ERISA. 29 U.S.C. § 1144(a).
11
The parties both argue the state common law claim of unjust enrichment under Ohio law. (Doc. 16, p.
14; Doc. 19, p. 24).
37
Bliwas, Inc. v. Cent. States, Nos. 2:96-cv-132, 2:96-cv-948-981, 2:96-cv-1068, 2:97-cv471, 1998 U.S. Dist. LEXIS 23316, at *13 (S.D. Ohio Feb. 13, 1998). Instead, it must
allege unjust enrichment by seeking to recover the value of something furnished to the
defendant, rather than relying on express promises. Landskroner v. Landskroner, 797
N.E.2d 1002, 1016 (Ohio App. 2003). Absent fraud, bad faith, or illegality, unjust
enrichment is not available as a remedy where the legal relationship between the
parties is governed by a valid and enforceable contract. Harwood v. Avaya Corp., 2007
U.S. Dist. LEXIS 38722 at *33; Thomas & Markers Constr., Co., 2008 U.S. Dist. LEXIS
79072, at *58; Turturice v. AEP Energy Servs., No. 06AP-1214, 2008 Ohio App. LEXIS
1571, at *15 (Ohio App. Apr. 17, 2008).
Defendants contend that Plaintiff has failed to state a plausible claim for relief for
unjust enrichment (Count Seven) because the relationship is governed by a written
contract. (Doc. 14). Plaintiff counters that he is permitted to plead in the alternative,
that a valuable benefit was conferred on Citrosuco by Plaintiff for which he was not
compensated, and that Plaintiff has alleged illegality or bad faith sufficient to preclude
dismissal. (Doc. 19, p. 23).
The Court holds that Plaintiff has stated a plausible claim for unjust enrichment at
this stage of the litigation. Plaintiff has alleged that his continued employment with
Citrosuco conferred upon Citrosuco the value of continued success that it would not
have received but for that loyalty and dedication of Plaintiff. (Doc. 1, ¶¶ 26, 88-92; see
also Doc. 19, p. 24). If Plaintiff remains uncompensated for any alleged value he
brought to Citrosuco relating to its continued success, then Citrosuco may have
obtained a benefit the value of which Plaintiff may be entitled to recover. Although the
38
Agreement appears to speak to that alleged value and the benefits to be conferred, the
Court finds, as it did above, that it is premature at this stage of the litigation to decide
that the Agreement is valid and enforceable so as to bar the unjust enrichment claim.
Moreover, Plaintiff has alleged facts that plausibly demonstrate bad faith. (See Doc. 1,
¶¶ 20-28).12 Therefore, Plaintiff has satisfied his burden at this stage of the litigation,
and Defendant's Motion is denied with respect to Count Seven.13
F.
Declaratory Judgment
Defendants seek dismissal of Plaintiff's claim for a declaratory judgment (Count
One) on the grounds that it is not ripe within Article III of the Constitution because
Plaintiff has not yet satisfied the pre-conditions for receiving benefits under the
Agreement that he continue to be employed by Citrosuco until March 19, 2016 and that
he retire. (Doc. 16, pp. 17-18; Doc. 21, p. 16). Plaintiff counters that his claim is ripe for
consideration because Citrosuco has breached the Agreement by terminating him
without cause and not agreeing to pay him the appropriate benefits. (Doc. 19, pp. 2829).
A claim is "ripe" within the meaning of Article III where there exists a "case or
controversy."
Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-40 (1937).
A
controversy exists when it is "definite and concrete, touching the legal relations of the
parties having adverse legal interests." Id. at 240-41. Disputes involving "contingent
12
Although Plaintiff also argues illegality, he does so on the basis of allegations that are not contained in
the Complaint. (Compare Doc. 1-1 with Doc. 19, p. 24). As those allegations are not in the Complaint,
the Court will not consider them here.
13
As with Plaintiff's other state law claims, his unjust enrichment claim may be preempted if it is
determined that the Agreement is governed by ERISA. 29 U.S.C. § 1144(a). Defendants, however, did
not raise that issue in their Motion.
39
future events that may not occur as anticipated, or indeed may not occur at all" are not
prone to declaratory relief. United Steelworkers v. Cyclops Corp., 860 F. 3d 189, 194
(6th Cir. 1998). In other words, the dispute must be "concrete and particularized" and
"actual and imminent." Sherwin-Williams v. City of Columbus, No. 2:06-cv-829, 2008
U.S. Dist. LEXIS 25084, at *15 (S.D. Ohio 2008). To determine whether a claim is ripe,
the Sixth Circuit weighs three factors: (1) "the likelihood that the harm alleged will ever
come to pass"; (2) "the sufficiency of the factual record"; and (3) "the hardship that
refusing to entertain the plaintiff's claims would create for the parties."
Moon v.
Hyosung (Am.), No. 92-2064, 1994 U.S. App. LEXIS 27556, at *14-15 (6th Cir. Sept. 28,
1994) (citing United Steelworkers of America, Local 2116 v. Cyclops Corp., 860 F.2d
189, 194-95 (6th Cir. 1988)).
The Court focuses on the first factor of whether the harm alleged will ever come
to pass, as it is the factor upon which Defendants' entire argument rests. Under the first
factor, Plaintiff "must demonstrate a realistic danger of sustaining a direct injury" in
order for his claim to be ripe. Moon, 1994 U.S. App. LEXIS 27556, at *15 (citing Babbitt
v. United Farm Workers National Union, 442 U.S. 289, 298, 60 L. Ed. 2d 895, 99 S. Ct.
2301 (1979)). Plaintiff has made such a demonstration. Based on the Court's analysis
with respect to Plaintiff's other claims, it is plausible that Plaintiff is entitled to one or
more types of benefits from Citrosuco. Although it is not certain as to when those
benefits are payable to Plaintiff, it is not out of the question based on the alleged facts
that one or more of those benefits is presently due to him. If that is the case, then a
harm already may have come to pass and may be continuing. As such, the first factor
weighs in favor of finding the claims ripe for review.
40
Although Defendants do not address the second and third factor, the Court will
briefly consider them.
The second factor is less clear, but still weighs in favor of
Plaintiff. Under the second factor, the Court must consider "whether the factual record
of this case is sufficiently developed to produce a fair and complete hearing as to the
prospective claims." United Steelworkers of America, Local 2116, 860 F.2d at 195.
Here, the facts alleged by Plaintiff suggest that the facts of the case are sufficiently
developed. An Agreement and a subsequent modification have been entered into, and
Plaintiff has been terminated without cause. Citrosuco has agreed to pay Plaintiff some
benefits under certain terms that Plaintiff does not believe satisfy its obligations.
Plaintiff now is unclear as to what his rights to benefits are under the Agreement and the
subsequent modification thereof. While there is a potential that future events could alter
how much or to what extent Plaintiff will receive any benefits (i.e., bankruptcy), no party
has expressed any concern in that regard.
In any event, the ripeness doctrine is
concerned primarily with the justiciability of claims, not with certainty as to the quantum
of damages, and the second factor is frequently viewed, rightly or wrongly, as being of
prudential rather than constitutional origin. See Moon, 1994 U.S. App. LEXIS 27556, at
*16-17 (citing E. Chemerinsky, Federal Jurisdiction, § 2.4.1, at 101 (1989); Koehring Co.
v. Adams, 605 F.2d 280, 282 (7th Cir. 1979) (suggesting that prudential ripeness
concerns may be waived by failure to raise them in the district court)).
As to the third factor, there are at least two obvious harms that would flow from a
decision against Plaintiff on the ripeness issue. He would have to wait several years to
determine what his rights to the benefits are from Citrosuco, and he would possibly not
get paid as soon as he ought to by Citrosuco. Defendants do not suggest that they
41
would suffer harm if the Court determines that the case is not ripe.
Weighing those three factors, the Court is persuaded that the instant dispute is
ripe for adjudication. Accordingly, Defendants' Motion is denied as to Count One.
G.
Secretary/Treasurer of Citrosuco as a Defendant
Defendants argue that the Secretary/Treasurer of the Corporation, who is
identified in the Agreement as the Named Fiduciary, should be dismissed as a
defendant because the Agreement provides for the pursuit of benefits under the
Agreement from only the "Corporation" (i.e., Citrosuco). Specifically, Section 6 of the
Agreement provides: "The Employee, the designated recipient of the Employee, or any
other person claiming through the Employee, shall have the right to receive those
payments specified under the Agreement only from the Corporation." (Doc. 1-1, § 6).
Section 12 of the Agreement further provides that Plaintiff "shall only have recourse
against the Corporation for enforcement of the Agreement." (Doc. 1-1, § 12). In
response, Plaintiff argues that plaintiffs frequently sue both an employer and a plan
administrator such that the language of the Agreement does not preclude Plaintiff from
suing the Secretary/Treasurer. (Doc. 19, p. 21). Plaintiff further notes that the
Secretary/Treasurer is an employee of the Corporation. (Doc. 19, p. 21).
The Court concludes that the Secretary/Treasurer should not be dismissed as a
defendant in this lawsuit at this stage of the litigation. The Secretary/Treasurer is an
employee of Citrosuco. (Doc. 1-1, ¶ 3(a)) ("The Named Fiduciary of the plan for
purposes of the claims procedure under this Agreement is the Secretary/Treasurer of
the Corporation."); see also (Doc. 19, p. 21). Citrosuco therefore may be responsible
for the actions of the Secretary/Treasurer that were within the scope of his employment.
42
As such, the inclusion of the Secretary/Treasurer as a defendant in the litigation would
not be inconsistent with the terms of the Agreement that provide for recovery only from
Citrosuco for the benefits provided for in the Agreement. Moreover, Plaintiff has alleged
facts as to the involvement of the Secretary/Treasurer in making specific decisions as to
Plaintiff's rights to benefits and making oral promises to Plaintiff that plausibly are not
covered by the Agreement, which may implicate the actions of the Secretary/Treasurer
as an employee of Citrosuco. (Doc. 1, ¶ 83). For these reasons, the Court is not
persuaded that it is necessary to dismiss the Secretary/Treasurer as a defendant at this
stage. Nor is the Court persuaded that it would be inconsistent with the Agreement to
decline to dismiss the Secretary/Treasurer as a defendant. Accordingly, Defendants'
Motion is denied as to this issue.
III.
CONCLUSION
For the foregoing reasons, Defendants’ Motion (Doc. 16) is DENIED in its
entirety.
IT IS SO ORDERED.
s/ Michael R. Barrett
.
Michael R. Barrett, Judge
United States District Court
43
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