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In Denniston v. Taylor, the plaintiff asserted a state law breach of contract claim alleging that he had “not been paid all of the salary and bonus amounts to which he [was] entitled” in the months following his termination.
Summary of this case from Paparella v. Liddle & Robinson, LLPOpinion
No. 98 Civ. 3579 (LTS)
February 5, 2004
Gail I. Auster, Esq., LAW OFFICES OF GAIL I. AUSTER ASSOCIATES, P.C., New York, for Plaintiff
Joseph Vicinanza, Esq., TORYS, New York, for Defendants
OPINION AND ORDER
Plaintiff David Denniston ("Plaintiff") brings this action, asserting claims pursuant to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C.A. section 1001, et seq., against Barbara Taylor ("Taylor"), as administrator and fiduciary, of the Benckiser Consumer Products Inc. Group Life and Disability Income Insurance Plan, Benckiser Consumer Products, Inc. ("BCPI"), Benckiser Consumer Products Inc Group Life and Disability Income Insurance Plan (the "LTD Plan"), Lancaster Group World Wide, Inc ("LWW"), and Coty, Inc ("Coty"), (collectively, "Defendants") Plaintiff asserts ERISA causes of action against Defendants BCPI and Taylor for breach of fiduciary duty and against Defendants BCPI, Taylor and the Plan for equitable estoppel. In addition to his ERISA claims, Plaintiff asserts a common-law claim against defendants BCPI, LWW and Coty for breach of contract. Defendants have moved for summary judgment pursuant to Federal Rule of Civil Procedure Rule 56 with respect to all of Plaintiffs claims. Plaintiff contends that material issues of fact preclude summary judgment in Defendants' favor and cross-moves for summary judgment in his own favor
This Court has jurisdiction of this action pursuant to 29 L.S.C.A. section 1332(e)(1) and 28 U.S.C.A sections 1331 and 1367
The Court has considered thoroughly all submissions and arguments related to this motion. For the following reasons Defendants' motion for summary judgment is granted, and Plaintiffs cross-motion for summary judgment is denied in its entirety
The following factual recitation is based on the parties statements of material facts pursuant to Local Rule 56.1 and affidavits and documentary evidence submitted in connection with the motions for summary judgment. The facts outlined below are undisputed except as otherwise noted.
Plaintiff commenced employment as LWW's Director, Controlling, on or about January 17, 1994, pursuant to the terms of a written agreement (the "Agreement"). See Agreement, dated Dec 20, 1993, PI. Ex. 10. Section 1 of the Agreement provided that Plaintiff's employment contract would become effective on that date and would be "of unspecified duration " The Agreement included the following provisions pertinent to the instant controversy
1. This contract takes effect on January 17, 1994, and is of unspecified duration. Whilst the notice period is 3 months, the right to terminate this contract may not be exercised before January 1, 1995 unless for good cause, e.g., breach of contract, fraud, substantial misconduct
* * *
3. . . . Subject to the provisions of sections 1 and 19, Lancaster has the right to release you from your contractual obligations at any time and at the same time to continue contractually agreed basic payments (annual salary plus guaranteed bonus) to you
* * *
5. Your annual salary paid by Lancaster will be US 156,000.00 gross . . .
6. You will be eligible to participate in Lancaster's Bonus Program. For the year 1994 you shall be awarded an amount of up to US 40,000.00 based upon mutually agreed upon objectives, of which US 30,000.00 gross is guaranteed for the first year of your employment. Details shall be contained in a separate letter which you will receive in due course
7. Should you be terminated during a calendar year, all payments due to you under
Section 5 and 6 shall be made pro rata temporis.
11. In the event that you are unable to work through disability, your current earnings will continue to be paid for a period of up to three months Any Lancaster paid disability insurance amounts you receive will be credited toward these payments.
* * *
18. Subject to the terms and conditions of each plan, you will be eligible to participate in the benefits package offered to all Lancaster employees, including health benefits, life insurance, STD, LTD, and participation when eligible in a 401K Savings Plan
19. a) This contract requires notice of 3 months
* * *
20. b) This contract shall be construed in accordance with the laws of the State c New York
The long-term disability, or "LTD," plan referred to in the Agreement provided at relevant times for two coverage level options: an option providing a monthly benefit of 60 percent of salary (capped at $5,000 per month) which did not require an employee contribution, and a contributory option providing a monthly benefit of 66-2/3 percent of salary (capped at 510,000 per month). Defendant Taylor was at all relevant times the designated Plan Administrator of the LTD Plan The instant controversy centers principally on the communication of, and Plaintiffs knowledge of, the caps.
At or about the time Plaintiff commenced his LWW employment, he was provided with materials relating to a Flexible Benefit Plan ("FBP") under which employees of participating business units were permuted to select coverages (and different coverage levels under some plans) from among a number of employee welfare benefit plans maintained by the company. It is undisputed that Plaintiff was given an enrollment package containing a booklet describing the FBP and the "Optional Benefits" available thereunder as well as an enrollment form. Pl. Exs. 13, 14. Neither of those documents disclose the monthly benefit cap, referring simply to percentages of salary in connection with the LTD Plan options. The initial text page of the FBP booklet featured an "Important Note" as follows:
ERISA defines the term "employee welfare benefit plan" to include "any plan, fund, or program which was hereto or is hereafter established or maintained by an employer . . . to the extent that such plan, funs or program was established or is maintained for the purpose of providing for its participants ot their beneficiaries through the purchase of insurance or otherwise . . . disability . . . benefits . . . 29 U.S.C.A. § 1002(1) (West 1990).
The information provided in this Program Guide only highlights the benefit options provided to you under the Flexible Benefits Plan. For additional information, please see your Employee Booklet or contact your Benefits Representative.
Pl. Ex. 13.
The booklet also referred repeatedly to a "Personal Fact Sheet," which was described on page 6 of the booklet as one of three items needed for enrollment in the program (the other two being the booklet and the enrollment form). Id. The Personal Fact Sheet prepared for Plaintiff described the LTD options as follows:
60% of monthly earnings up to a maximum of $5,000
66 2.3% of monthly earnings up to a maximum of $10,000
Aff. of Julie Carder in support of Defs' motion ("Carder Aff."), Ex. A. Plaintiff asserts that he received the Personal Fact Sheet separately from the other materials, and that he did not receive it until a few days he had made his benefit coverage elections ton the 1994 calendar year.
BSPI, which administered human resources and employee benefit functions for LWW and its affiliated companies at relevant times, distributed a summary plan description ("SPD") for the LTD Plan to employees by mail in September 1994. The SPD accurately described the caps on monthly LTD benefits, reflected Taylor's designation as Plan Administrator, and recited that the insurer providing coverage under the plan, which is currently known as Reliastar Life Insurance Company ("Reliastar"), retained "final discretionary authority to determine all questions of eligibility and status, and to interpret and construe the terms of this polic[y] of insurance." Pl. Ex. 12 at 4, 31, 33. Defendants maintain that labels were made for, and copies of the SPD were sent to, all eligible employees, including Plaintiff. Carder Aff. ¶ 8 and Ex. B. Plaintiff asserts that he did not receive a copy of the SPD until early 1997.
In the fall of 1994, as well as in the fall of 1995 and 1996, BCPI distributed FBP enrollment packages offering plan participants the opportunity to make coverage elections to be effective as of January 1 of the following calendar year Each package consisted of a booklet, a Personal Fact Sheet, and an enrollment form. Each of those booklets and Personal Fact Sheets described the monthly cap on LTD benefits, the enrollment forms did not. Carder Aff., Exs. C, D E. Plaintiff asserts that he did not receive the package that was distributed in the fall of 1994 and that, in light of transmittal memoranda and introductory language included with the 1996 enrollment materials indicating that it would not be necessary to turn in new enrollment forms if one did not wish to change one's prior benefit elections, he did not read the package that was distributed in 1995 until the late summer or early fall of 1996
In 1995, BCPI retained Buck Consultants. Inc ("Buck") to prepare "Personal Statements of Benefits for participants in the various employee benefit plans administered by BCPI: including the LTD Plan. The statements summarized and purported to quantify the benefits to which each individual was entitled under each plan in which the individual was a participant With respect to LTD Plan benefits the calculations reflected in the statements failed to take into account the monthly caps. Accordingly, statements provided to highly-compensated employees like Plaintiff showed monthly disability benefit amounts in excess of the otherwise applicable caps Although Buck provided exemplars of the statements to Taylor for review prior to broad distribution, including (it appears), exemplars for highly-compensated employees showing benefits in excess of the caps, neither Taylor nor anyone else at BCPI noticed the error Aff of Barbara a Taylor ¶ 10 Buck sent Plaintiff two such statements, one in 1995 and one in 1996, which quantified his LTD benefit amounts as a full 60 percent of salary ($8,750 00 per month in 1995 and 59,108 00 in 1996) Aff of Robert J. Tracy in support of Defs' motion ("Tracy All"), Ex. A at 144-45, Dep. of David Denniston ("Denniston Dep. "), Ex. 10. The Buck Personal Statements included a disclaimer, which read
Since errors can still occur, the information shown is subject to correction And in all cases, benefits are payable according to the provisions of the governing plan documents, which may be changed from time to time
Tracy Aff. Ex. A, Denniston Dep., Exs 10 at 9, 18 at 9
Plaintiff noticed a discrepancy between his Personal Statements and the LTD Plan benefit caps inflected in the FBP enrollment materials in late summer or fall of 1996 Plaintiff as 10 the discrepancy On December 10, 1996, Plaintiff elected the higher 1 TD Plan benefit level, to take effect on January 1, 1997
On or about December 20, 1996, representatives of Coty (the LWW affiliate unit by which Plaintiff was then employed) met with Plaintiff if and advised him that his employment would be terminated as of December, 31 1996, in connection with a restructuring of the company operations, and proposed a severance benefit and release agreement to Plaintiff. See Letter from W.P. Lawrence to David Denniston (Dec. 20, 1996), Pl. Ex. 23.
Plaintiff promptly inquired as to his eligibility for LTD benefits and was told that he would not qualify for LTD benefits if he became disabled after December 31, 1996, because he would no longer be an active employee of a participating company after that date. Plaintiff promptly applied for short- and long-term disability benefits, submitting an Attending Physician's Statement of Disability that asserted that Plaintiff suffered from macular degeneration resulting in a progressive decrease of vision "until 12/96 when significant daily functioning decreased." The Statement, dated December 30, 1996, classifies Plaintiff as "Legally Blind," incapable of performing "[a]ll duties requiring vision," and "totally disabled" for "patient's job," although not disabled for unspecified "other work." PI. Ex. 25. Plaintiff contends that, notwithstanding the information presented in the Statement, he was not totally disabled for all functions in connection with LWW employment, specifically that he could and would have continued to perform non-visual work, including providing advice and information regarding historic operations.
Plaintiffs election of the higher LTD benefit level was never effectuated, as Plaintiffs employment was treated as terminated as of December 31, 1996. He was eventually paid short-term disability benefits for the six-month period following that date. His base salary was continued for the first three months of 1997. although he asserts that the salary effectively went unpaid because his eventual short-term disability award was offset for the three months of salary continuation. Plaintiff further contends that he was not paid bonus amounts to which he was entitled for the first three months of 1997. He has been paid, and continues to receive, a $5,000 monthly benefit under the LTD Plan. Plaintiff was 42 years old when he began receiving the disability benefits.
DISCUSSION
Plaintiff asserts that the corporate defendants breached his employment agreement by failing to maintain him in active employment status for the three-month period following the termination of his employment This failure, he asserts, caused him damages in the form of ineligibility for continued participation in the relevant employee benefit plans (including the opportunity to effectuate his election of the higher LTD Plan benefit level and thus receive a $10,000 monthly benefit following the termination of his employment and certification of his disability) and loss of bonus compensation. He does not contend that the termination was made immediate in order to defeat his benefit eligibility, rather, he accepts that the termination was in connection with the corporate restructuring but contests the corporate defendants' right to terminate UK employment in this fashion See Pl Mem of Law at 25, Aff of David Denniston n opp'n to Defs motion ("Denniston Aff") ¶ 50
Plaintiffs ERISA claims focus on Defendants' communications regarding the LTD Plan. He alleges breaches of fiduciary duty by Taylor and BCPI. Specifically, Plaintiff contends that these defendants breached duties to communicate the applicable Plan benefit levels to him accurately including the caps, and that they failed in this connection to properly supervise the service providers (Buck and Reliastar) who prepared LTD Plan communications materials Plaintiff further asserts that these defendants and the than are estopped from denying him a monthly benefit an the form of a full 60 percent of salary be virtue of the materials. misrepresentation of the actual benefits payable under the LTD Plan.
Summary Judgment Standard
Summary judgment shall be granted in favor of a moving party where the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law" Fed R Civ. P 56(c). The moving party bears the burden of establishing the absence of any genuine issue of material fact Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986) The non-moving party then must meet the burden of coming forward with "specific facts showing that there is a genuine issue for trial," by "a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial " Celotex Corp v. Catrett, 477 U S 317, 322(1986), see also Western World Ins. Co. v. Stack Oil Inc., 922 F.2d 118, 121 (2d Cir. 1990) (quoting Fed.R.Civ.P. 56(e)). National Union Fire Ins. Co. v. Turtur, 892 F.2d 199, 203 (2d Cir. 1989) A court faced with a summary judgment motion does not make credibility determinations or weigh the evidence, all inferences must be construed in a light most favorable to the nonmoving party Anderson 477 U.S. at 255, see Reeves v. Sanderson Plumbing Prods Inc., 530 U.S. 133, 150 (2000), Carlton v. Mystic Transp. Inc. 202 F.3d 129 133 (2d Cir. 2000) Breach of Contract Claim
Defendants argue that Plaintiff's breach of contract claim is preempted by ERISA. ERIS A supersedes any and all State laws insofar as they may now or hereafter relate to any employee benefit plan " 29 U.S.C.A. § 1144(a) (West 1999). The phrase "relate to" in section 1 144(a) is interpreted in its broadest sense, reaching any state laws that have any connection or reference to a particular employee benefit plan. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987), Fortune v. Medical Assocs. of Woodhull, P.C., 803 F. Supp. 636, 640 (E.D.N.Y. 1992) "A law `relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983). It is undisputed that the LTD Plan is an employee benefit plan subject to ERISA's provisions.
Defendant contends that Plaintiffs contract cause of action is preempted because it "relates to" the LTD Plan, specifically that the principal damages Plaintiff seeks would be measured according to Plan formulae While it is true that contract causes of action are preempted where "they are not independent of the rights and duties created by [the] ERISA plan,". Plaintiff's cause of action here is not so limited. He claims that he had a contractual right under the Agreement, which is a document separate from the LTD Plan, to maintain active employment stains throughout his three-month termination notice period, and that he suffered financial damage m the form of lost cash compensation and benefits as a result of the corporate alleged breach He seeks to recover cash damages from the employer(s), not benefits payable through the plans. He further contends that, even if the corporate defendants were entitled to terminate his employment immediately and pay him certain compensation in lieu of notice, he has not been paid all of the salary and bonus amounts to which he is entitled. At least to the extent of his damages claims that are no dependent on plan formulae for measurement, the contract claim has no "connection with or reference to" an employee benefit plan and thus is not preempted. While it is debatable whether his contract claim for damages measured by plan benefit formulae is within the scope of ERISA preemption, it is not necessary for the Court to reach the issue because it is clear that the contract claim fails on its merits to the extent it is premised on a failure to maintain him in active employment status, including LTD Plan coverage as an active employee, through the three-month notice period
Morlino v. Staten Island University Hospital, No 95 CV 3891 (NG) 1998 WL 160937 at *91, 1998), aff'd mem., 173 F.3d 845 (2d Cir. 1999)
In a contract dispute, "a motion for summary judgment may be granted only where the agreement's language is unambiguous and conveys a definite meaning " Savers v. Rochester Telephone Corp Supplemental Mgmt Pension Plan, 7 F.3d 1091, 1094 (2d Cir. 1993) Determining whether or not a contract is ambiguous is a question of law for the district court Id. The Second Circuit has held that "ambiguity without the existence of extrinsic evidence of intent presents not an issue of fact, but an issue of law for the court to rule on " Mellon Bank, N.A. v. United Bank Corp of New York, F.3d 113, 116 (2d Cir. 1994)
The Agreement, as noted above, included a provision limiting the employer's right to terminate it during its first year, and also provided for a guaranteed amount of bonus payable for that year. However for periods after 1994 section 3 of the Agreement permitted termination without cause and further granted the employer the "right to release [Plaintiff] from [his] contractual obligations at an time and at the same time to continue contractually agreed basic payment (annual salary plus guaranteed bonus) to [him], subject only to the provision of section 1 and 19 of the Agreement. Sections 1 and 19 impose a three-month termination notice requirement. Read together, these provisions unambiguously permitted the employer to release Plaintiff from his contractual obligation to work (i.e., to terminate his active employment immediately), subject to the continued payment of base annual salary plus any guaranteed bonus amount through the three-month contract termination period. Thus, Plaintiffs claim that he had a contractual right to remain in active employee status, and thus, that he had a right to the level of LTD Plan benefits that he could have elected as an active employee as of January 1, 1997, following Coty's notification to him that his employment was terminated, is without merit, assuming that his employment was validly terminated in accordance with the contract
Citing a provision of the Agreement requiring the delivery of notices thereunder by certified mail. Plaintiff argues that his employment was not validly terminated because it is undisputed that he was notified in person rather than by certified mail. This contention is also meritless. Under New York law, which the parties agree applies to any viable state contract claim asserted in the Complaint, failure to comply strictly with a termination notice provision of an at-will employment contract does not vitiate the effectiveness of the termination Rather, it is treated as something less than a wrongful discharge and the employee's remedy is limited to the compensation to which he would have been entitled had notice properly been given See Holt v. Seversky Elecronatom Corp., 452 F.2d 31, 34-35 (2d Cir. 1971) ("[W]hen an employee's protection has been diminished by a late notice of termination or no notice at all, New York courts have required the employer to pay the employee's salary for the full notice period. The New York courts have refused however, to hold that failure to comply strictly with these notice requirements will result in a wrongful discharged in the traditional sense. (footnote omitted), Leiser v. Gerard Daniel Co., No. 01 Civ. 2932 (DLC), 2002 WL 1285558, at * 10 (S.D. N. Y). June 11, 2002) ("In the absence of [a liquidated damages provision] . . . Gerard Daniel's failure to give sufficient notice of nonrenewal would entitle Leiser to damages for breach, which courts have held to require payment of his salary for the full notice period." (citations omitted)); Kemelhor v. Penthouse Int'l. Ltd., 689 F. Supp. 205, 214 (S.D.N.Y. 1988) ("It is the law of New York that if incomplete notice or no notice is given, the employer has breached the employment contract. . . . However, damages for such a breach will be limited to the salary which the employee would have been entitled to had notice been properly given." (citation omitted)), aff'd mem. 873 F.2d 1435 (2d Cir. 1989); Del Vecchio v. Bayside Chrysler Plymouth Jeep Eagle, Inc., 271 A.D.2d 636, 638-39 (2d Dep't 2000) (failure to provide written termination notice did not make for-cause termination ineffective where contract did not provide for opportunity to cure).
Thus, to the extent the company breached the Agreement by failing to supplement its oral notification to Plaintiff of his termination with written notice delivered by certified mail, Plaintiff's remedy is limited to recovery of the payments to which he would have been entitled had the written notice been delivered by certified mail — namely three months of base salary and any guaranteed bonus. As explained above. Plaintiff would not have been entitled to participate in the LTD as an active employee during the notice period. He therefore is not entitled to recover as contract damages the difference between the higher level of LTD benefits and the level he is actually receiving.
As to the other compensation aspects of Plaintiff's contract damages claims, the Agreement itself provided for a guaranteed bonus only in respect of 1994. While it included a proration provision for payments due you under the base salary and bonus provisions of the Agreement in the event of mid-year contract termination, Plaintiff has proffered no evidence supporting his claim that any unpaid bonus amount was due or guaranteed to him for either 1996 or the first quarter of 1997. Nor has Plaintiff proffered any evidence that he was entitled to any further benefits under any other plans or programs in the context of a termination effective as of December 31, 1996 Defendants BPI, LWW, and Coty are therefore entitled to summary judgment in their favor in respect of Plaintiff's breach of contract claim, and Plaintiff's cross-motion is denied as to this claim
Plaintiff makes the bald assertion that the relevant STD policy document provides for payments of "salary and bonus " Denniston Aff ¶ 75, Pl Mem of Law at 34 The document, however, refers to payments based on "regular pay," and states that [a]s a general rule, regular pay for salaried employees is based on the monthly rate at the time disability begins " Tracy Aff, Ex E Plaintiff's invocation of this document is thus insufficient to frame a genuine issue of material fact as to whether he was entitled to bonus payments following the termination of his employment.
Equitable Estoppel Claim
Defendants argue that Plaintiff's equitable estoppel claim must be dismissed because the record cannot support a finding either of reasonable reliance or the extraordinary circumstances required to establish such a claim
A claim of equitable estoppel cognizable under ERISA requires a promise, reliance on the promise injury caused by the reliance, and an injustice if the promise is not enforced Schonholz v. Long Island Jewish Medical Center, 87 F.3d 72, 79 (2d Cir. 1996) A plaintiff must demonstrate a promise that the defendant reasonably should have expected to induce action or forbearance on the plaintiff's part. Id.
Plaintiff asserts that the 1994. booklet, 1994 and later enrollment forms. and the Buck Personal Statements promised, indeed "guaranteed", him uncapped disability benefits, that he reasonably relied on those documents, and that his circumstances are sufficiently extraordinary in light of the repeated provision of incorrect information and his own vision limitation problems that the Court should find estoppel in order to prevent an injustice.
See Pl Mem of Law at 13.
The Court finds, on the record read in the light most favorable to Plaintiff, that Plaintiff has failed to proffer facts sufficient to support a finding of estoppel as against the Plan, its Administrator, or BCPI. While the Second Circuit recognizes that estoppel is applicable in the ERISA context, "extraordinary" circumstances are required.Schonholz, 87 F.3d at 79; see also Aramony v. United Way Replacement Benefit Plan, 191 F.3d 140, 151 (2d Cir. 1999). Such extraordinary circumstances have been found in cases in which the employer has engaged in willful misconduct designed to put plan participants at a disadvantage for the benefit of the employer See Lee v. Burkhart, 991 F.2d 1004, 1009-1010 (2d Cir. 1993) (record found insufficient to support claim of estoppel where there was no allegation of affirmative misrepresentation), Schonholz, 87 F.3d 72 (employer's promise of severance benefits prompted resignation beneficial to employer and employer then reneged on promise); Devlin v. Transp Communications Int'l Union, 173 F.3d 94, 102 (2d Cir. 1999) (extraordinary circumstances not present where there was no indication that employer sought claimants' retirement or used alleged promise to induce "any particular behavior on appellants' part"), Fitch v. Chase Manhattan Bank, 64 F. Supp.2d 212, 226-227 (W.D.N.Y. 1999) (no extraordinary circumstances where record does not support finding that defendants acted intentionally).
Here, there is no basis in the record for a finding of extraordinary circumstances Based on the conduct of defendants. There is no evidence of intentional misrepresentations, much less such misrepresentations designed to induce prejudicial conduct on the part of actual or potential LTD Plan participants. Indeed, the record shows that the Defendants provided employees with SPDs and packages of benefit enrollment information that included Personal Fact Sheets containing prominent information regarding the caps. The importance of the Personal Fact Sheets was repeatedly flagged. The core of the problem here, if Plaintiff's account of the disputed issues is credited, is that Plaintiff did not receive some of the information, and did not read all of the information that he did receive. There is no indication that Defendants were even aware that Plaintiff did not have all of the information or that he was not reading the Personal Fact Sheets. On this record, the circumstances are insufficiently "extraordinary" to warrant the application of estoppel to require the payment of benefits to Plaintiff that are in excess of Plan limits.
The Court further finds, on the record read in the light most favorable to Plaintiff, that any reliance by Plaintiff on the materials as promising uncapped benefits was not reasonable. The Buck Personal Statements and the FBP brochures contained legends making it clear that they did not purport to set forth all relevant plan terms and that further materials were both important and available. The Personal Statements also specifically disclosed the possibility that the calculations presented could be erroneous. It was plainly unreasonable for Plaintiff to rely on those documents, or on even less detailed enrollment or confirmation forms, as complete statements of the terms of the benefit plan. Furthermore, Plaintiff neglected to read several documents that he actually received and which contained accurate information regarding the relevant Plan terms.
Defendants BCPI, Taylor and the Plan are therefore entitled to summary judgment in respect of Plaintiffs ERISA estoppel claim, and Plaintiff's cross-motion for summary judgment on this claim is denied.
Breach of Fiduciary Duty
Plaintiff argues that defendants Taylor and BCPI have breached their fiduciary duties to Plaintiff by making certain "misrepresentations" to Plaintiff with respect to the level of LTD benefits for which he was eligible. Defendants argue that Plaintiff's breach of fiduciary duty claim must be dismissed since there were no intentional misrepresentations by Defendants, and any inadvertent errors were not made in a fiduciary capacity
"[A] person is a fiduciary with respect to a plan, and therefore subject to ERISA fiduciary duties, to the extent that he or she exercises any discretionary authority or discretionary control respecting management of the plan, or has any discretionary authority or discretionary responsibility in the administration of the plan " Varity Corp v. Howe, 516 U.S. 489, 498 (1996) (internal quotation marks omitted), see 29 U.S.C.A. § 1002(21)(A) (West 1999) "In order to establish a claim for breach of fiduciary duty under ERISA, the plaintiff must establish that the defendant is a fiduciary with respect to the particular activity at issue in the action "Devlin v. Transp. Communications Int'l Union, No 95 Civ 742 (JFK), 1997 WL 570512, at *9(S.D.N.Y. Sept 15, 1997)
Plaintiff asserts that Taylor was a fiduciary with respect to the LTD Plan by virtue of her designation (as reflected in the SRD) as Plan Administrator and that BCPI bears fiduciary responsibility because it was responsible for providing benefit administration services to members of the LWW/Coty group. Pointing to SPD language reciting that Reliastar, the insurer that provided benefits under the LTD Plan, had final discretionary authority to determine all questions of eligibility and status and to interpret and construe the terms" of the insurance policy, BCPI and Taylor argue that they had no discretionary authority with respect to the Plan and therefore cannot be subject to liability as fiduciaries. They further argue that the preparation and dissemination of the erroneous Personal Statements was in any event a ministerial nonfiduciary task.
PI. Ex 12 at 33.
ERISA defines plan "administrator" as "the person specifically so designated by the terms of the instrument under which the plan is operated" or, if no such person is designated, the plan sponsor. 29 U.S.C.A. § 1002(16)(A) (West 1999). Plan management and administration are broader than claims administration, and can include discretionary policy determinations with respect to plan operations, as well as communications. See Varity, 516 U.S. at 505 ("making intentional representations about the future of plan benefits [in context of facts of case wa]s an act of plan administration"); Ballone v. Eastman Kodak Co., 109 F.3d 117, 122 (2d Cir. 1997) (affirmative misrepresentations regarding future plan changes as breach of administration's fiduciary duty), see also Devlin v. Empire Blue Cross and Blue Shield, 274 F.3d 76. 87 (2d Cir. 2001) (discussing potential breaches of fiduciary duty in connection with discretionary plan decisions and communications). Indeed, although the Department of Labor, which has enforcement oversight of ERISA matters, has released administrative guidance regarding fiduciary matters indicating that benefit calculations are not a fiduciary unction, it has done so in the context of a statement making it clear that such is the case only where the person doing the calculations is hot in a policymaking position:
[A] person who performs purely ministerial functions such as . . . [benefit calculations] for an employee benefit plan within a framework of policies, interpretations, rules, practices and procedures made by other persons is not a fiduciary because such person does not have discretionary authority or discretionary control respecting the management of the plan . . . and does not have any authority or responsibility to do so"
Interpretive Bulletins Relating to [ERISA], 29 C F R § 2509-75-8, at D-2
With respect to plan administrators, by contrast, the DOL's statement indicates that
Some offices or positions of an employee benefit plan by their very nature require persons who hold them to perform one or more of the functions described in [ERISA's definition of "fiduciary"]. . . . For example, a plan administrator must, b[y] the very nature of his position, have `discretionary authority or discretionary responsibility in the administration' of the plan. . . . Persons who hold such positions will therefore be fiduciariesId. at D-3
Taylor admitted in her deposition that she made decisions regarding approval and dissemination of communications materials (including the materials here at issue) and other policy decisions regarding plan administration, and held overall responsibility for BCPI's plan administration function at the relevant times See Pl Ex 3a at 12-15, 36. Under these circumstances, the Court cannot find that the SPD provision allocating insurance policy interpretation and claims administration discretion to Reliastar insulated Taylor or BCPI from any possible fiduciary liability in connection with the communications materials at issue here The Court finds that the relevant question is whether Haylon or BCPI Violated any fiduciary duties in connection with the communication of information regarding benefit caps under the LTD Plan
Fiduciary status does not necessarily mean liability under the fiduciary responsibility provisions of ERISA for all mistakes, large and small, in connection with plan administration. ERISA requires not that fiduciaries perform all of their duties perfectly but, rather, that they perform those duties "with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims." 29 U.S.C.A. § 1104(a)(1)(B) (West 1999). The facts of record, construed in the light most favorable to Plaintiff, do not support a viable claim of fiduciary breach by Taylor or BCPI in connection with the selection and dissemination of LTD Plan communication materials or in the oversight of Buck's preparation of the faulty Personal Benefit statements.
ERISA further requires that fiduciaries comply with a duty of loyalty, acting solely in the interest of plan participants and beneficiaries, that they act for the exclusive purpose of providing benefits, and that they act in accordance with plan documents 29 U.S.C.A. § 1104(a)(1) (West 1999). There is no allegation supporting a claim of violation of these duties in this case.
It is undisputed that the official SPD as well as the Personal Fact Sheets and the later versions of the FBP brochure specifically disclosed the caps, and that Taylor and her staff put in place procedures designed to provide those documents to all eligible employees. The Personal Statements and other overview documents highlighted both their status as such as well as the existence and importance of other documents containing important LTD Plan information. Buck, a reputable firm, was retained to prepare the Personal Statements and undertook to perform the job accurately, See Def. Rule 56.1 Statement 27, 28 (and evidence cited therein). The Personal Statements themselves consisted in relevant part of benefit calculations, the preparation of which was ministerial, required no exercise of discretion, and therefore did not, standing alone, implicate fiduciary conduct on the part of Taylor or BCPI. See Fitch v. Chase Manhattan Bank, N.A., 64 F. Supp.2d at 229.
"A plan fiduciary may rely on information, data, statistics or analyses furnished by persons performing ministerial functions for the plan, provided that he has exercised prudence in the selection and retention of such persons. The plan fiduciary will be deemed to have acted prudently in such selection and retention if, in the exercise of ordinary care in such situation, he has no reason to doubt the competence, integrity or responsibility of such persons " 29 C F R § 2509-75-8, at FR-11.
Accordingly, Defendants are entitled to summary judgment in their favor with respect to Plaintiffs claim of breach of fiduciary duty in connection with the dissemination of Plan communications materials, and Plaintiffs cross-motion for summary judgment is denied with respect to this claim.
Plaintiff makes one additional claim sounding in breach of fiduciary duty. He asserts that the FBP constituted an employee benefit plan which established an LTD program without caps and that BCPl's subsequent "amendment" of that program through contracting for insurance incorporating the caps and adoption of the September 1994 SPD as the governing LTD document was illegal because the amendment procedures set forth in the FBP were not followed This argument is patently meritless. The FBP clearly refers to the "Optional Benefits" offered thereunder as ones provided pursuant to other plans maintained by the participating employers See FBP Document, Pl. Ex. 11, at Preamble and §§ 1.17 and 4 2 (reciting that plan is established under section 125 of the Internal Revenue Code, defining "Optional Benefit Plans" as "any group Welfare benefit plan which offered as an optional benefit under this Plan, as may be sponsered and made available by the Employer to Employees from time to time, and providing that [w]hile the election to receive Benefits may be made under this Plan, the Benefits will be provided not by this Plan but by the . . . Optional Benefit Plans or a combination of these plans."); see also FBP Brochures, Pl. Exs. 13, 18 (referring to "benefit options" as "your coverage choices under each plan"). Plaintiff has proffered no evidence that the corporate defendants adopted or maintained any "capless" LTD Plan at any relevant time.
For the foregoing reasons, Defendants are entitled to judgment as a matter or law with respect to all claims asserted by Plaintiff this action. Defendants' motion for summary judgment is granted and judgment shall be entered in their favor Plaintiff's motion for summary judgment is denied in its entirety.
SO ORDERED.