Opinion
Civil No. 03-3067-CO
June 3, 2004
ORDER
Plaintiff has filed an "Amended Complaint to Compel Defendant to Provide ERISA Plan Information and Breach of Oral Agreement." This court has jurisdiction pursuant to 29 U.S.C. § 1132(e). The parties have executed written consents for entry of final judgment by a magistrate judge (#36). Before the court is plaintiff's motion for summary judgment (#14), which defendant opposes.
I. FACTS
In making the following findings of fact, the court considers the evidence in the light most favorable to the non-moving party:
On or about February 17, 1998, defendant David Wise hired plaintiff Mindy Berry as an insurance sales representative. Defendant is an insurance agent based in Grants Pass, Josephine County, Oregon. (Berry Aff. ¶ 1.) Defendant is the Plan Administrator of a pension plan known as the David Wise Profit Sharing Plan, formerly known as the David Wise Money Purchase Plan, which is sponsored and adopted by defendant for the benefit of his employees. (Berry Aff. ¶ 2).
On February 17, 1998, when defendant hired plaintiff, defendant and plaintiff entered into a letter of intent which provided that plaintiff's participation in the pension plan would begin when she became eligible to participate. (Pl. Ex. 1; Wise Aff. ¶ 3.) According to the letter of intent, pension plan participation was to be "tested" each January 1. (Berry Aff. ¶ 3; Pl. Ex. 1). The letter of intent signed by plaintiff and defendant states only that, "Pension Plan participation will be `tested' each January 1. Participation will begin when employee is eligible." (Pl. Ex. 1.) However, the Retirement Plan Statement for 2000 provides that plaintiff's date of participation began on July 1, 2000. (Pl. Exs. 1, 4).
During plaintiff's employment, defendant informed her that the plan was set up and that she was a participant in the plan. (Answer ¶ 5). Plaintiff made numerous requests for information concerning the plan to defendant. (Berry Aff. ¶ 4.)
Defendant made a contribution on plaintiff's behalf to her pension plan for the years 2000 and 2001 and, according to the pension plan reports provided by defendant, plaintiff's beginning date of participation was July 1, 2000. (Am. Compl. ¶ 15; Answer to (First) Am. Compl. ¶ 15; Berry Aff. ¶ 10; Pl. Ex. 4.)
On March 18, 2002, plaintiff terminated her employment with defendant. (Berry Aff. ¶ 5.)
A year later, on March 18, 2003, plaintiff, through her attorney, made a written request to defendant's attorney for information regarding the balance of plaintiff's retirement account and copies of the pension plan and any documentation showing the amount plaintiff had in her pension account. However, no information was received. (Berry Aff. ¶ 7; Pl. Ex. 2.)
Defendant was initially unable to comply with plaintiff's request about her account balance due to circumstances beyond defendant's control caused by a computer crash which caused defendant to lose his accounting system. (Wise Aff. ¶ 7.) Before defendant could provide plaintiff with accounting information plaintiff requested, he had to reconstruct his accounting system year by year beginning with 2000 and continuing through 2002. (Wise Aff. ¶ 7; Supp. Berry Aff. ¶ 1.) The Internal Revenue Service accepted late tax returns from defendant without penalty. (Wise Aff. ¶ 7.)
On June 5, 2003, plaintiff, through her attorney, made a second written demand to defendant to provide the information requested in the March 18, 2003, letter. (Berry Aff. ¶ 8; Pl. Ex. 3.)
On or about June 10, 2003, defendant provided a copy of the Summary Plan Description for the pension plan, but failed to provide any of the financial information that was previously requested. (Berry Aff. ¶ 8; Wise Aff. ¶ 9.) Defendant's attorney advised counsel for plaintiff, in writing, on or about June 10, 2003, why the financial information could not be immediately provided and that the information would be provided as soon as the necessary information had been reconstructed. (Wise Aff. ¶ 10.)
On or about July 16, 2003, plaintiff filed this action to compel defendant to provide the information requested concerning the amount in her pension account. (Berry Aff. ¶¶ 9, 12.)
On or about August 1, 2003, defendant, through his attorney, provided Retirement Plan Statements for the years 2000, 2001, and 2002. (Exs. 4, 5, 6; Berry Aff. ¶ 10.) No Statement for 1999 was provided. The 2000 Statement reflects a contribution of $982.26 for plaintiff and the 2001 Statement reflects a contribution of $573.81 for plaintiff. (Berry Aff. ¶ 10.)
Additional information on the pension plans sponsored by defendant while plaintiff was in his employ was furnished to plaintiff on August 14, 2003, with much additional material furnished to plaintiff on September 25, 2003. (Wise Aff. ¶ 12, 13.)
On or about August 20, 2003, defendant filed an Answer to the Complaint in which he admitted that he did not provide plaintiff with the requested financial information prior to the filing of her complaint. (Answer ¶ 7.)
II. LEGAL STANDARDS
A moving party is entitled to summary judgment as a matter of law "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issues as to any material fact. . . ." Fed.R.Civ.P. 56(c); Freeman v. Oakland Unified Sch. Dist., 291 F.3d 632, 636 (9th Cir. 2002). The court cannot weigh the evidence or determine the truth but may only determine whether there is a genuine issue of fact. Playboy Enters., Inc. v. Welles, 279 F.3d 796, 800 (9th Cir. 2002).
The moving party must carry the initial burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986). The moving party meets this burden by identifying for the court portions of the record on file which demonstrate the absence of any genuine issue of material fact. Id.; Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001) (en banc). In assessing whether a party has met its burden, the court views the evidence in the light most favorable to the non-moving party. Allen v. City of Los Angeles, 66 F.3d 1052, 1056 (9th Cir. 1995). All reasonable inferences are drawn in favor of the non-movant. Gibson v. County of Washoe, 290 F.3d 1175, 1180 (9th Cir. 2002).
If the moving party meets its burden with a properly supported motion, the burden then shifts to the opposing party to present specific facts which show there is a genuine issue for trial. Fed.R.Civ.P. 56(e): Auvil v. CBS "60 Minutes", 67 F.3d 816. 819 (9th Cir. 1995): see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 4 (1986). If the moving party presents evidence which, taken by itself, would establish the right to a directed verdict at trial, the motion for summary judgment must be granted, in the absence of any significant probative evidence tending to support the opposing party's theory of the case. THI-Hawaii, Inc. v. First Commerce Fin. Corp., 627 F.2d 991, 993-94 (9th Cir. 1980); First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 290 (1968). Conclusory allegations, unsupported by factual material, are insufficient to defeat a motion for summary judgment. Taylor v. List, 880 F.2d 1040, 1045 (9th Cir. 1989). Instead, the opposing party must, by affidavit or as otherwise provided by Rule 56, designate specific facts which show there is a genuine issue for trial. Devereaux, 263 F.3d at 1076.
III. DISCUSSION
Plaintiff moves for summary judgment on the grounds that there are no genuine issues of material fact regarding defendant's failure to provide her with the requested information regarding her pension plan in violation of ERISA provisions. Defendant responds that plaintiff is not entitled to summary judgment because case law requires that plaintiff must demonstrate more than mere failure to provide retirement plan information to a requesting participant and plaintiff has failed to show facts entitling her to a discretionary award. In reply, plaintiff contends that nowhere in 29 U.S.C. § 1132(c) does it state that acting in bad faith, prejudice, and/or actual harm are prerequisites to finding a plan administrator liable for penalties; and, even if defendant's computer crashed, he fails to establish that his failure to produce the requested information was reasonably beyond his control for 105 days.Upon written request of any plan participant, the plan administrator "shall" furnish a copy of certain documents including the "latest updated summary," "plan description," or "other instruments under which the plan is established or operated." 29 U.S.C. § 1024(b)(4) (footnote omitted);see 29 U.S.C. § 1021(a)(1) 1022(a) (summary plan description); 1025(a) (statement indicating the total benefits accrued). The penalty provision for failure to disclose, § 1132(c), provides in pertinent part that,
Any administrator . . . who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court's discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper.29 U.S.C. § 1132(c)(1)(B). The maximum penalty was increased to $110.00. 29 C.F.R. § 2575.502c-3. The purpose of the disclosure provisions of section 1132 is to ensure that "`the individual participant knows exactly where he stands with respect to the plan.'" Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 118 (1989) (quoting H.R. Rep. No. 93-533, p. 11 (1973)); Brown v. Am. Life Holdings, Inc., 64 F. Supp.2d 882, 890 (S.D. Iowa 1998) (§ 1024(b)(4)). The purpose of the penalty is to "induce plan administrators to comply with ERISA's disclosure provisions, and not to make a participant whole." Maiuro v. Fed. Express Co., 843 F. Supp. 935, 942 (D.N.J. 1994) (citing Groves v. Modified Retirement Plan for Hourly Paid Employees of the Johns Manville Corp., 803 F.2d 109, 117 (3d Cir. 1986)); Kerr v. Charles F. Vatterott Co., 184 F.3d 938, 948 (8th Cir. 1999); Brooks, 1 F. Supp.2d at 568.
Defendant admits that he did not provide the requested information to plaintiff as required by statute. Defendant contends that, consistent with case law, plaintiff is not entitled to any award because he acted in good faith and plaintiff was not harmed, citing Ames v. Am. Nat'l Can Co., 170 F.3d 751 (7th Cir. 1999); Shlomchik v. Retirement Plan of Amalgamated Ins. Fund, 502 F. Supp. 240 (E.D.Pa. 1980), aff'd, 671 F.21d 496 (3d Cir. 1981), and imposition of a penalty will not further the purpose of ERISA. Plaintiff contends that defendant's argument fails because § 1132(c) does not state that acting in bad faith, prejudice, and/or actual harm are prerequisites to finding a plan administrator liable for penalties. Plaintiff asserts that she is only required to show that she made a written request for information regarding her pension plan and defendant failed to provide such information within thirty days, citing Brooks v. Metrica, Inc., 1 F. Supp.2d 559, 568 (E.D. Va. 1998).
Defendant argues that the award of the penalty is discretionary, citingParis v. Profit Sharing Plan for Employees of Howard B. Wolf. Inc., 637 F.2d 357 (5th Cir. 1981), whereas plaintiff argues that she establishes that defendant is liable for penalties and the amount of penalties imposed is within the discretion of the court, citing Kerr, 184 F.3d at 948; Brooks, 1 F. Supp.2d 559. Plaintiff asserts that the factors of prejudice, injury, or bad faith should be used in determining the amount of penalties that should be imposed. Plaintiff contends that the full $110 penalty per day should be imposed because the purpose of the penalty is to encourage the plan administrator to timely respond to requests for documents and because actual harm can be difficult to quantify; and because defendant fails to show that the requested information was reasonably beyond his control for the eight-and-one-half months it took him to produce any financial information regarding the pension plan.
It seems clear from the language of the penalty provision, § 1132(c),supra, and the cases cited, Kerr, 184 F.3d at 948: Paris v. Profit Sharing Plan for Employees of Howard B. Wolf. Inc., 637 F.2d 357, 362 (5th Cir. 1981): see Moran v. Aetna Life Ins. Co., 872 F.2d 296 (9th Cir. 1989) (Fletcher, J., dissenting) ("the statute allows the court discretion to decide whether to impose personal liability and to decide the amount of any penalty up to the statutory maximum that should be assessed"), that the imposition of an award and the amount of an award, if imposed, is discretionary with the court.
The statutory language of section 1132(c), supra, provides for a penalty for a "failure" to provide requested information as well as for a "refusal" to provide information. Therefore, bad faith is not required before a penalty may be assessed. It seems clear that prejudice and/or actual harm are not prerequisites for imposing the statutory penalty, but are factors to be considered both in determining whether to impose a penalty and, if a penalty is imposed, the amount of the penalty. Kerr, 184 F.3d at 948 (prejudice not prerequisite to award of penalties, but could be considered in assessing the penalty); Paris v. F. Korbel Bros., Inc., 751 F. Supp. 834, 839 (N.D. Cal. 1990); Brown, 64 F. Supp.2d at 890; Draper v. Baker Hughes Inc., 892 F. Supp. 1287, 1298 (E.D. Cal. 1995); Paris v. Profit Sharing Plan, 637 F.2d at 362; Brooks, 1 F. Supp.2d at 568; Bouteiller v. Vulcan Iron Works, Inc., 834 F. Supp. 207, 215 (E.D. Mich. 1993): see Crotty v. Cook, 121 F.3d 541, 547 (9th Cir. 1997).
Defendant contends that a penalty should not be imposed because his failure to provide the financial information was beyond his control due to a crash of his computer system maintaining his accounting records. The Eighth Circuit in Kerr, 184 F.3d at 947-48, determined that the phrase in section 1132(c) of "(unless such failure or refusal results from matters reasonably beyond the control of the administrator)," is in the nature of an affirmative defense, which the administrator has the burden of establishing. The court notes that defendant makes this argument only as to his failure to provide the financial information requested by plaintiff; defendant offers no explanation for his failure to provide the summary plan description.
Defendant's third affirmative defense states: "Defendant's inability to provide information to Plaintiff as and when requested was beyond his control. As soon as Defendant could assemble the information for delivery to Plaintiff, it was done." (Answer to (First) Am. Compl. at 4.)
The undisputed facts in the record are that: plaintiff made written requests on March 18, 2003, and on June 5, 2003, for information regarding the balance of her retirement account, copies of the pension plan, and any documentation showing the amount she had in her pension account; defendant provided a copy of the Summary Plan Description for the pension plan on June 10, 2003; plaintiff filed this action to compel defendant to provide the information requested concerning the amount in her pension account on July 16, 2003; and defendant provided "Retirement Plan Statements" for the years 2000, 2001, and 2002, on August 1, 2003. It is also undisputed that defendant's attorney advised plaintiff's counsel in writing on or about June 10, 2003, "why the financial information requested could not be immediately provided and that the information would be provided as soon as the necessary information had been reconstructed." The June 10, 2003, letter to plaintiff's counsel refers to a computer crash which prevented defendant from providing plaintiff with information as to the funds in her retirement account. (Wise Aff. Ex. A at 1.)
On this record, the court finds that a penalty award would be appropriate for defendant's failure to provide the summary plan description until June 10, 2003, after two written requests from plaintiff. Defendant offers no explanation as to why the summary plan description was not provided to plaintiff for fifty-three days after it was initially requested. Plaintiff makes no showing that she suffered any prejudice from the delay; however, she was not given the information which she was entitled to receive. In these circumstances, the court finds that an award in the amount of $30.00 per day is an appropriate penalty to impose against defendant. See Daughtrey v. Honeywell, Inc., 3 F.3d 1488, 1494-95 (11th Cir. 1993).
The court further finds that, although defendant offers an explanation as to why he was unable to provide the financial information to plaintiff, the record shows that he did not offer any explanation to plaintiff until June 10, 2003, after a second request had been made, as to why the financial information was not forthcoming; defendant points to nothing in the record which shows the date when the computer crash occurred, the complexity of the crash, or the date any reconstruction was completed. See Ames, 170 F.3d at 760. The court finds it noteworthy that defendant provided the financial information in the form of statements for 2000-2001 on August 1, 2003, approximately two weeks after plaintiff filed this action on July 16, 2003, seeking to compel defendant to provide the information requested concerning the amount in her pension account. See Brooks, 1 F. Supp.2d at 569 (stating that prejudice calculus includes the trouble and expense of engaging an attorney to obtain the employer's plan; plaintiff there did not receive a copy of the summary plan description until after complaint served). On these facts, the court finds that defendant has not demonstrated a complete defense to a penalty award for his failure to provide the requested financial information; defendant does not show that his failure to provide the financial information was reasonably beyond his control for the 105 days until August 1, 2003, when it was provided to plaintiff. While plaintiff does not attempt to show prejudice, her attorney commenced this action before defendant provided the requested information, and she was not provided information which she was entitled to receive. The court finds that an award of $10.00 per day for the 105 days before the requested financial information was provided after the initial written request is appropriate in the circumstances. The court does not believe it appropriate to impose a second penalty for the period from plaintiff's second request in order to enforce the purpose of the penalty provision. See id.
Plaintiff requests attorney's fees in the conclusion of her reply brief, without discussion of the relevant factors in determining an award. Although defendant addresses the issue of the imposition of attorney's fees in his opposition, plaintiff's motion for summary judgment did not seek an award of attorney's fees; plaintiff sought only a penalty award. Accordingly, plaintiff failed to sustain her burden of proof on motion for summary judgment as to recovery of an attorney's fee award.
III. ORDER
Based on the foregoing, it is ordered that plaintiff's motion for summary judgment on her claim for statutory penalties for violation of ERISA (#14) is granted: plaintiff is entitled to recover from defendant a penalty award of $2,640.00 (representing fifty-three days (April 18 to June 10, 2003) at $30.00 per day, equaling $1,590.00, plus 105 days (April 18 to August 1, 2003) at $10.00 per day, equaling $1,050.00).