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holding that whether a defendant exercised discretionary authority sufficient to trigger ERISA's fiduciary requirements is a question of fact that is not appropriately decided on a motion to dismiss
Summary of this case from Sherrill v. Federal-Mogul Corp. Retirement ProgramsOpinion
No. 04 Civ. 2913 (SAS).
October 19, 2004
Robert W. Ottinger, Esq., The Ottinger Firm, P.C., New York, New York, for Plaintiff.
David Bennet Ross, Esq., Brendan Sweeney, Esq., C. Patrick McMurray, Esq., Seyfarth Shaw L.L.P., New York, New York, for Defendants.
MEMORANDUM OPINION AND ORDER
John Cassin is suing his former employer, the Prudential Insurance Company of America ("Prudential"), for allegedly breaching its promise to provide him with certain pension benefits. On April 15, 2004, Prudential removed the suit to this Court on the basis of federal preemption under the Employee Retirement Income Security Act ("ERISA"). Prudential now moves to dismiss Cassin's First Amended Complaint, arguing, inter alia, that it is time-barred. Cassin concedes that his claim as pled in the First Amended Complaint is time-barred, but seeks leave to amend. At the Court's request, Cassin has submitted a proposed Second Amended Complaint ("Proposed Complaint"). Prudential opposes Cassin's request for leave to amend. For the following reasons, Cassin is granted leave to file his Proposed Complaint.
Cassin has abandoned his claims against all defendants other than Prudential. See August 4, 2004 Letter from Robert Ottinger, plaintiff's counsel, to Brendan Sweeney, defendant's counsel, Ex. B to Declaration of Robert Ottinger in Opposition to Prudential's Motion to Dismiss.
I. BACKGROUND
A. The First Amended Complaint
The following facts are taken from Cassin's First Amended Complaint. In 1984, Cassin was hired by the Prudential-Bache Trade Corporation ("PBTC") to manage a private bank in Luxembourg ("the Bank"). In 1989, Prudential purchased the Bank and assumed PBTC's obligations to Cassin. Cassin was enrolled in Prudential's pension plan.
In 1991, Prudential instructed the Bank to convert Cassin from an expatriate employee to a local Luxembourg employee, removing Cassin from the Prudential pension plan. Prudential instructed the Bank to establish a "reasonable supplementary pension plan" for Cassin. The Bank informed Cassin of its intention to create such a reasonable supplementary plan for him. Based on this representation, Cassin maintained his employment with the Bank in the expectation that he would be provided with a reasonable supplementary pension plan, equivalent in value to the Prudential pension plan.
In 2002, the Bank closed and, pursuant to a settlement agreement, Cassin was paid his salary and benefits through July, 2003. At this point, Cassin "realized that [Prudential] had not provided him with a `reasonable supplementary pension plan.'" Cassin states that Prudential "never established a supplemental pension plan," but later states that his "pension status is unclear." Regardless of whether a supplementary plan was created for Cassin or not, he now alleges that the benefit he has received is not "reasonable." Cassin's "current employer financed benefit for his Prudential service is $187,770," $312,219 less than it would have been if he had remained in the Prudential pension plan.
First Amended Complaint ¶ 24.
Id. ¶ 19.
Id. ¶ 28. Cassin quotes contradictory communications from Prudential employees on this issue. See id.
Id. ¶ 29.
On the basis of these facts, Cassin claims that, in 1992, Prudential breached its fiduciary duties owed to him under ERISA, 29 U.S.C. §§ 1104 and 1132(a)(3), by misrepresenting that he would receive a reasonable supplementary pension benefit. Cassin now concedes that this claim is untimely as pled. Claims for breach of fiduciary duty under ERISA must be brought within the earlier of six years from the alleged breach, or three years from discovery of the breach. To the extent that Cassin's claim is based on a breach that occurred in 1992, it is unquestionably time-barred. Cassin therefore seeks leave to file an amended complaint.
See 29 U.S.C. § 1113.
B. Cassin's Proposed Complaint
Cassin's Proposed Complaint omits many of the factual details set out above, and states a new theory of liability. What follows are the facts as alleged in the Proposed Complaint.
Cassin now states simply that "as an employee of [Prudential] and its subsidiaries, [Cassin] was a participant and a beneficiary of the pension plan administered by [Prudential]. [Prudential] agreed to establish a supplementary pension for [Cassin] when it converted him to a local Luxembourg employee." However, Cassin has abandoned the theory that Prudential misrepresented its intention to establish a supplementary plan in 1992. Cassin's new theory is that no breach of fiduciary duty took place until 2003, when Prudential "purported to conduct an independent review of [Cassin's] pension benefits to determine if the supplementary pension had served its purpose." In this review, Prudential "was acting in its fiduciary capacity as the plan adminstrator, and was required to make a discretionary decision concerning the value of [Cassin's] pension benefit." Prudential determined that the supplementary plan was "reasonable," and therefore refused to "correct the shortfall which arose regarding his pension payments." Cassin alleges that this was a breach of fiduciary duty, because Prudential was not acting solely in his interests in conducting this review.
Proposed Complaint ¶¶ 6-7.
Id. ¶ 9.
Id.
Id. ¶ 14.
II. LEGAL STANDARD
A. Leave to Amend
Whether to permit a plaintiff to amend his pleadings is a matter within the Court's "sound discretion." Rule 15(a) instructs that leave to amend should be "freely given." Leave to amend should be denied, however, where the proposed amendment would be futile, if there is undue delay, bad faith, or dilatory motive, or where the opposing party would suffer undue prejudice. The request for leave to amend "will be denied as futile only if the proposed new claim cannot withstand a 12(b)(6) motion to dismiss for failure to state a claim."
Id.
See Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 87 (2d Cir. 2002).
Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001).
"An amended complaint supersedes an original complaint and the allegations in plaintiff's original complaint cannot be used to dismiss the plaintiff's amended complaint. An amended complaint need not be consistent with all prior pleadings. When that occurs, the prior pleading ceases to be a conclusive judicial admission and remains only as an evidentiary admission that may be admissible at trial."
McDowell v. Cornell Univ., No. 03 Civ. 0268, 2004 U.S. Dist. LEXIS 1312 at *6-7 (S.D.N.Y. Jan. 27, 2004) (citing Kelley v. Crosfield Catalysts, 135 F.3d 1202, 1204 (7th Cir. 1998); Contractor Utility Sales Co. v. Certain-Teed Products Corp., 638 F.2d 1061, 1084-85 (7th Cir. 1981); Frederic P. Wiedersum Associates v. National Homes Construction Corp., 540 F.2d 62, 65 (2d Cir. 1976)).
B. Standard of Review for Motion to Dismiss
A motion to dismiss should be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief." At the motion to dismiss stage, the issue "is not whether a plaintiff is likely to prevail ultimately, but whether the claimant is entitled to offer evidence to support the claims. Indeed, it may appear on the face of the pleading that a recovery is very remote and unlikely, but that is not the test."
Weixel v. Board of Educ. of New York, 287 F.3d 138, 145 (2d Cir. 2002) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957) (alterations omitted)).
Phelps v. Kapnolas, 308 F.3d 180, 184-85 (2d Cir. 2002) (quotation omitted).
A complaint need not state the legal theory, facts, or elements underlying the claim except in certain instances. Pursuant to the simplified pleading standard of Rule 8(a) of the Federal Rules of Civil Procedure, "a complaint must include only `a short and plain statement of the claim showing that the pleader is entitled to relief.'" The task of the court in ruling on a motion to dismiss is "merely to assess the legal feasibility of the complaint, not to assay the weight of evidence which might be offered in support thereof." When deciding a motion to dismiss, courts must accept all factual allegations in the complaint as true and draw all reasonable inferences in plaintiff's favor.
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002) (quoting Rule 8(a)(2)).
Pierce v. Marano, No. 01 Civ. 3410, 2002 WL 1858772, at *3 (S.D.N.Y. Aug. 13, 2002) (quotation and citations omitted).
See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002).
III. DISCUSSION
Cassin concedes that the First Amended Complaint must be dismissed. The only question before the Court is whether Cassin should be granted leave to amend. Prudential argues that amendment would be futile, because the Proposed Complaint fails, for two reasons, to state a claim. Neither argument is persuasive.
First, Prudential argues that "the commitment to provide a `reasonable supplementary pension plan' was made by [the Bank] and not Prudential," and that Prudential cannot be held liable for the Bank's contractual commitment. This argument is beside the point. The Proposed Complaint's theory is that Prudential is liable for the breach of the fiduciary duties it owed to Cassin as the administrator of the "pension plan for its employees and the employees of its subsidiaries." Second, Prudential argues that its "independent review" in 2003 did not involve "actions that could give rise to a claim for breach of fiduciary duty." To qualify as an ERISA fiduciary, a person must exercise "discretionary authority." Prudential argues that the review did not involve the exercise of discretionary authority, but was merely ministerial — i.e. the review merely determined Cassin's benefits under the plan. In support of this argument, Prudential has submitted to the Court a copy of the January, 2003 letter in which Susan Markuson, the employee responsible for the review, informed Cassin of her determination that his supplementary pension plan was "reasonable." Contrary to Prudential's argument, it is far from clear that the review did not require the exercise of discretionary authority by Markuson; and, in any case, the important issue is whether Prudential, not Markuson, was a fiduciary. Whether Prudential's review involved the exercise of discretionary authority is a question of fact, and is not appropriately decided on a motion to dismiss.
September 22, 2004 Letter from Brendan Sweeney in Opposition to Leave to Amend ("Sept. 22 Letter") at 1.
Proposed Complaint ¶ 5.
Prudential's Memorandum of Law in Further Support of Motion to Dismiss at 5.
29 U.S.C. § 1002(21)(A). See also Varity Corp. v. Howe, 516 U.S. 489, 512, 134 L. Ed. 2d 130, 116 S. Ct. 1065 (1996) (holding that plan administrator "engages in a fiduciary act when making a discretionary determination about whether a claimant is entitled to benefits under the terms of the plan documents."); Mortgage Lenders Network USA, Inc. v. CoreSource, Inc., No. 03 Civ. 1578, 2004 WL 2093506 at *6 (D. Conn. Sept. 16, 2004) ("[A] benefit determination based on no more than application of a mathematical formula in accordance with the Plan rules is a ministerial, rather than a discretionary act, even if it is the final decision on the claim[, but] a benefit determination that requires interpretation of plan provisions is a discretionary, not ministerial, act if it is the final decision on a disputed claim rather than a mere recommendation.").
January 9, 2003 Letter from Markuson to Cassin, Ex. A to Sept. 22 Letter. The Court may consider this document because it is incorporated by reference in both the First Amended Complaint and the Proposed Complaint. See Sira v. Morton, 380 F.3d 57, 67 (2d Cir. 2004).
Of course, if Prudential is able, at a later date, to come forward with evidence that the review did not involve the exercise of discretionary authority, Prudential may move for summary judgment.
Cassin's Proposed Complaint therefore states a claim; it sufficiently alleges that Prudential owed a fiduciary duty to Cassin, as the plan adminstrator, and that Prudential breached that duty. Because Cassin's proposed amendment would not be futile, he is granted leave to amend.
IV. CONCLUSION
Prudential's motion to dismiss Cassin's First Amended Complaint is granted. Cassin is granted leave to amend by filing his Proposed Complaint. The Clerk is directed to close this motion [#9 on the docket sheet]. A conference is scheduled for November 12, 2004, at 4:30 p.m.
SO ORDERED.