Gregory v. Goodman Manufacturing Company, L.P.
Filing
50
ORDER granting in part and denying in part 35 Motion for Judgment on the Pleadings; adopting Report and Recommendations re 46 Report and Recommendations. Signed by District Judge Harry S Mattice, Jr on March 2, 2012. (CNH, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
at WINCHESTER
JERRY GREGORY,
)
)
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)
)
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Plaintiff,
v.
GOODMAN MANUFACTURING
COMPANY, L.P.,
Defendant.
Case No. 4:10-cv-23
Judge Mattice
ORDER
Before the Court is Plaintiff Jerry Gregory’s Motion for Summary Judgment.1 (Doc.
35). Plaintiff was a participant in the Amana Refrigeration, Inc. Fayetteville Bargaining Unit
Pension Plan (“the Plan”), over which Defendant Goodman Manufacturing Company now
has administrative responsibilities.
In April 2010, Plaintiff brought this Employee
Retirement Income Securities Act (“ERISA”) action against Defendant pursuant to 29
U.S.C. §§ 1132(a)(1)(B) and 1132(c)(1). (Doc. 1). The Court has disposed of Plaintiff’s
ERISA claim for benefits pursuant to § 1132(a)(1)(B). (Doc. 31, 33). Plaintiff’s only
remaining claim arises under §§ 1132(c)(1) (requiring a plan administrator to provide plan
documents within 30 days upon request by a participant or beneficiary of the plan) and
1132(a)(1)(A) (defining a discrete cause of action based on § 1132(c) that is separate from
a claim for benefits under § 1132(a)(1)(B)).
On January 13, 2012, Magistrate Judge William Carter issued a Report and
Recommendation (“R&R”) pursuant to 28 U.S.C. § 636(b). (Doc. 46). In his R&R, Judge
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Plaintiff captioned his Motion as a “Motion for Statutory and Punitive Dam ages Pursuant to 29
U.S.C. § 1132(c)(1).” (Doc. 35). In light of the posture of this case and the m aterials relied upon in Plaintiff’s
Motion, the Magistrate Judge correctly construed it as a Motion for Sum m ary Judgm ent.
Carter recommended that Plaintiff’s Motion for Summary Judgment be granted as to
Defendant’s failure to produce Plan documents and denied as to Defendant’s failure to
produce enrollment forms. (Id. at 16).
Magistrate Judge Carter recommended that
Plaintiff be awarded $45,430 in damages pursuant to 29 U.S.C. § 1132(c)(1). Defendant
filed timely objections to the R&R, to which Plaintiff responded and Defendant replied.
(Docs. 47, 48, 49).
The Court has conducted a de novo review of the record in this case, including
those portions of the R&R to which Defendant now objects. See 28 U.S.C. § 636(b)(1).
For the reasons stated, the Court will OVERRULE Defendant’s objections (Doc. 47) and
ADOPT and ACCEPT Magistrate Judge Carter’s Report and Recommendation (Doc. 46)
in its entirety.
I.
STANDARD OF REVIEW
The Court must conduct a de novo review of those portions of the R&R to which an
objection is made. 28 U.S.C. § 636(b)(1). Upon review, the Court may accept, reject, or
modify, in whole or in part, the Magistrate Judge’s findings or recommendations. Id.
II.
BACKGROUND
Magistrate Judge Carter’s R&R outlined the procedural and factual background of
this case at some length. (Doc. 46 at 3-8). The parties have not objected to the Magistrate
Judge’s recitation of the facts, and the Court concludes that it is accurate. Thus, for the
purpose of addressing Defendant’s objections, the Court ADOPTS BY REFERENCE the
entire “Relevant Facts” section of the R&R. (See id.).
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III.
ANALYSIS
Defendant raises three objections. First, it contends that the Magistrate Judge erred
in reaching his conclusion by relying on evidence outside the administrative record and by
assessing penalties without an evidentiary hearing. (Doc. 47 at 1, 2-4). Next, it argues that
the Magistrate Judge erroneously levied a $110-per-day statutory penalty. (Id. at 1, 4-8).
Defendant finally asserts that the Magistrate Judge erred by recommending that Plaintiff
be awarded $45,430. (Id. at 1).
In its first objection, Defendant asserts that the Magistrate Judge erred in making
a finding as to Defendant’s intent based on materials outside the administrative record
without first holding an evidentiary hearing. (Id. at 2-4). Defendant’s claim that the
Magistrate Judge could not consider material beyond the scope of the administrative
record is incorrect. “In an ERISA claim for benefits action, the district court’s review is
generally based solely upon the administrative record.” Huffaker v. Metro. Life Ins. Co.,
271 F. App’x 493, 503 (6th Cir. 2008) (quotation omitted). This is because, in the context
of a claim for benefits pursuant to 29 U.S.C. § 1132(a)(1)(B), a district court’s review of a
plan administrator’s decision based on evidence not presented to the administrator would
seriously undermine ERISA’s goal of providing a fair method by which workers could
resolve benefits disputes quickly and inexpensively. Id. at 504 n.4 (citing Perry v. Simplicity
Eng’g, 900 F.2d 963, 967 (6th Cir. 1990)). However, “[e]vidence outside the administrative
record may be considered if that evidence is offered in support of a procedural challenge
to the administrator’s decision, such as an alleged lack of due process afforded by the
administrator or alleged bias on its part.” Id. at 504 (citing Wilkins v. Baptist Healthcare
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Sys., Inc., 150 F.3d 609, 619 (6th Cir. 1998) (Gilman, J., concurring)).
Defendant’s present position is puzzling. The Court’s ability to consider evidence
beyond what Defendant characterizes as the “administrative record” was conclusively
decided over one year ago when the Magistrate Judge held a hearing and entered an
Order permitting additional limited discovery in this case. (Doc. 29; see Doc. 18).
Defendant did not object to that Order. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(a)
(providing 14 days in which to object to a magistrate’s nondispositive order and stating that
“[a] party may not assign as error a defect in the order not timely objected to”). Indeed,
Defendant itself submitted over 100 pages of affidavits and other exhibits in connection
with its opposition to Plaintiff’s Motion for Summary Judgment.
(See Doc. 42,
attachments).
Moreover, at this stage, this matter is not a “claim for benefits” as contemplated in
§ 1132(a)(1)(B). It does not involve the “appellate-style” review of a plan administrator’s
calculation of benefits, to which the parties have already stipulated. (Doc. 30). It is instead
a standalone claim, akin to a procedural challenge, in which Plaintiff asserts that the Plan
administrator repeatedly failed to provide Plan documents as required by 29 U.S.C.
§ 1132(c)(1) – for which a separate cause of action is provided by § 1132(a)(1)(A). The
reason for ordinarily limiting judicial review to the administrative record – namely, that
district courts would function as “substitute plan administrators” and potentially diminish the
statutory protections for employees if permitted to reject an administrator’s decision based
on evidence that was not before him or her – is not implicated here. See Huffaker, 271 F.
App’x at 504; Kalish v. Liberty Mut./Liberty Life Assurance Co. of Boston, 419 F.3d 501
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(6th Cir. 2005); Calvert v. Firstar Finance, 409 F.3d 286 (6th Cir. 2005). Thus, it was not
improper for the Magistrate Judge to consider material beyond that which Defendant
submitted as the “administrative record.”
Defendant also asserts that, because Plaintiff’s claim is based on the intent behind
its failure to produce Plan documents and the potential prejudice to Plaintiff resulting from
that failure, the Magistrate Judge was required to hold an evidentiary hearing before
imposing a penalty under 28 U.S.C. § 1132(c)(1). (Doc. 47 at 3-4). At the outset, the court
notes that the United States Court of Appeals for the Sixth Circuit has held to the contrary:
“[Section 1132(c)(1)] does not require a district court to take testimony or make any
particular findings before assessing a penalty.” Lampkins v. Golden, 104 F.3d 361 (table),
1996 WL 729136 at *4 (6th Cir. Dec. 17, 1996). To the extent that Defendant suggests
that penalties may be imposed only after explicit findings of bad faith and prejudice, it is
mistaken. See, e.g., Garst v. Wal-Mart Stores, Inc., 30 F. App’x 585, 590 (6th Cir. 2002)
(“The purpose of ERISA’s penalty provision is not so much to penalize as to induce plan
administrators to respond in a timely manner to a participant’s request for information.”)
(citation omitted); Knickerbocker v. Ovako-Ajax, Inc., 187 F.3d 636 (table), at 1999 WL
551409 at *4 (6th Cir. July 20, 1999) (“Although § 1132(c)(1)(B) does not require prejudice
to impose penalties, a district court may consider prejudice in exercising its discretion.”);
Bartling v. Fruehauf Corp., 29 F.3d 1062 (6th Cir. 1994) (affirming a penalty under
§ 1132(c)(1)(B) even though the district court determined that defendant’s failure to
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disclose required information was not due to bad faith).2
Magistrate Judge Carter’s analysis appropriately recognized Defendant’s
unreasonable and uncontested delay in fulfilling its obligation to produce the requested
documents and the resulting prejudice to Plaintiff, and the R&R adequately explained the
reasons for imposing a penalty, which the Court will not reiterate here. (See Doc. 46 at 1014). Viewed most favorably to Defendant, the evidence of record supports no conclusion
other than the one reached by the Magistrate Judge: “(1) that [Defendant] intentionally and
unreasonably delayed in telling [Plaintiff] that the 1983 Plan documents could not be found,
and (2) that [Defendant] intentionally and unreasonably delayed in providing the plan
documents it did rely upon (the 1989 Plan) to calculate [Plaintiff]’s benefits.” (Doc. 46 at
13-14); see Fed. R. Civ. P. 56(a) (providing that summary judgment is appropriate if the
movant shows that there is no genuine dispute as to any material fact); Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). Thus, the Court will OVERRULE Defendant’s first
objection.
In Defendant’s second objection, it asserts that the Magistrate erred in assessing
a $110-per-day statutory penalty. (See Doc. 47 at 4-9). Defendant’s arguments in this
regard are nearly identical to those it asserted before the Magistrate Judge. (Compare
2
The cases Defendant cites in support of its position are inapposite. See Nolan v. Heald College,
551 F.3d 1148 (9th Cir. 2009) (holding in the context of an ERISA benefits claim that a district court erred
because, in part, it did not apply the “traditional rules of sum m ary judgm ent” – such as viewing the evidence
in the light m ost favorable to the non-m ovant – when considering extra-record evidence of bias); Mass. Cas.
Ins. Co. v. Reynolds, 113 F.3d 1450 (6th Cir. 1997) (reversing a district court decision that no genuine issue
of m aterial fact existed as to whether the plaintiff m ade fraudulent statem ents in an application for disability
insurance coverage); Borneman v. Principal Life Ins. Co., 291 F. Supp. 2d 935, 969 (S.D. Iowa 2003) (noting
that “the issue of whether to im pose a penalty can be properly decided on sum m ary judgm ent,” but declining
to do so because the record in that case raised factual issues m eriting denial of a defendant’s m otion for
sum m ary judgm ent); Lidoshore v. Health Fund 917, 994 F. Supp. 229, 236 (S.D.N.Y. 1998) (holding that the
record in that case did not provide sufficient factual basis on which to determ ine whether to im pose penalties
and, if so, what those penalties should be).
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Doc. 42 at 18-23 with Doc. 47 at 4-9). The Court notes that Defendant does raise one
issue that is not a near-verbatim recitation of prior arguments: it now contends that it
should not be subject to a penalty because it had no affirmative statutory duty to inform
Plaintiff that it could not locate the 1983 Plan (on which his benefit calculation should have
been based) or to provide him with a copy of the 1989 Plan (on which Defendant ultimately
relied to calculate his benefits).3 This is unpersuasive.
Pursuant to 29 U.S.C. § 1024(b)(4):
The administrator shall, upon written request of any participant or beneficiary,
furnish a copy of the latest updated summary, plan description, and the latest annual
report, any terminal report, the bargaining agreement, trust agreement, contract, or other
instruments under which the plan is established or operated.
As early as 2007, Defendant had computed that Plaintiff was entitled to $720 per year.
(Doc. 19-2 at 1). As the Magistrate Judge correctly concluded, upon Plaintiff’s request,
Defendant was required to furnish Plaintiff with a copy of the documents on which it relied
in formulating that calculation.
See (Doc. 46 at 10-11); 29 U.S.C. §§ 1024(b)(4),
1132(c)(1)(B). It failed to do so until June 2010, in violation of its statutory obligations.
A lengthy analysis of the remainder of Defendant’s second objection would be
cumulative and is unwarranted in light of Magistrate Judge Carter’s well-reasoned Report
and Recommendation, in which he addressed Plaintiff’s instant arguments and fully
articulated the bases for the penalty assessment. (Doc. 46 at 11-14); see Lampkins, 1996
WL 729136 at *4 (“[B]ecause the court articulated its reasons for imposing the penalty, the
district court did not abuse its discretion in determining the amount of [the defendant]’s
3
Although Defendant did not expressly raise this argum ent before the Magistrate Judge, the R&R
addressed the issue generally when discussing the m anner in which Defendant violated 29 U.S.C. §
1132(c)(1)(B). (See Doc. 46 at 10-11).
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fine.”). For the present purposes, it will suffice to reiterate the Magistrate Judge’s finding
that “the record is replete with instances in which [Plaintiff], in writing, asked [Defendant]
over a two and a half year period for Plan documents. Many of these requests were simply
ignored, [and the other] responses simply weren’t responsive to the requests.” (Doc. 46
at 12-13). Under the circumstances, a $110-per-day statutory penalty is appropriate for
the reasons stated in the R&R. (Id. at 10-14); see 29 U.S.C. § 1132(c)(1)(B) (providing for
a $100-per-day maximum penalty for each day that a plan administrator fails to furnish
requested plan documents); 62 Fed. Reg. 40696 (increasing the $100-per-day penalty
maximum to $110 per day). Consequently, the Court will OVERRULE Defendant’s second
objection.
In Defendant’s third objection, it asserts without further explanation that the
Magistrate Judge’s total penalty calculation was incorrect.4 (See Doc. 47 at 1). Plaintiff’s
cause of action accrued on April 23, 2009 – 31 days after Plaintiff’s attorney requested the
plan documents and the earliest such request within the period prescribed by statute. (See
Doc. 19-2 at 6; Doc. 31 at 10; Doc. 33); 29 U.S.C. §§ 1024(b)(4), 1132(c)(1)(B). Defendant
did not provide the requested Plan documents until 413 days later. (See Doc. 19-1). At
$110 per day, the Magistrate Judge correctly calculated the total penalty at $45,430. Thus,
the Court will OVERRULE Defendant’s third objection.
Accordingly, and for the reasons stated:
•
Defendant’s objections (Doc. 47) are OVERRULED;
4
To the extent that Defendant’s third objection is based on its contention that a $110-per-day penalty
was not warranted, it is m erely an extension of Defendant’s second objection, which the Court addressed
above.
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•
Magistrate Judge Carter’s Report and Recommendation (Doc. 46) is
ACCEPTED and ADOPTED IN ITS ENTIRETY;
•
Plaintiff’s Motion for Summary Judgment (Doc. 35) is GRANTED IN PART
and DENIED IN PART;
•
Plaintiff’s claim for monetary damages pursuant to 29 U.S.C. § 1132(c)(1)(B)
for failure to timely provide enrollment forms is DENIED;
•
Plaintiff’s claim for monetary damages pursuant to 29 U.S.C. § 1132(c)(1)(B)
for failure to timely provide Plan documents is GRANTED;
•
Plaintiff is hereby AWARDED $45,430 in damages, for which Defendant is
liable as the Plan administrator, pursuant to 29 U.S.C. § 1132(c)(1)(B).
Because this Order and the Report and Recommendation it adopts dispose of all
issues pending in this action, the Clerk is DIRECTED to close this case.
SO ORDERED this 2nd day of March, 2012.
/s/Harry S. Mattice, Jr.
HARRY S. MATTICE, JR.
UNITED STATES DISTRICT JUDGE
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