Opinion
Civ. No. 99-1308 (DRD).
September 29, 1999
Robert H. Jaffe, Esq., ROBERT H. JAFFE ASSOCIATES, P.A., Springfield, New Jersey, Attorneys for Plaintiff.
Constance P. Lahoda, Esq., PEPPER HAMILTON, LLP, Cherry Hill, New Jersey, Attorneys for Defendants.
O P I N I O N
This is a civil action brought pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiff Louise Romero seeks benefits allegedly owed to her under an employee pension plan, as well as damages for various pendent state law claims. The matter is now before the Court on the motion of defendants SmithKline Beecham, the SmithKline Beecham Pension Plan, and Vincent C. Bruett ("defendants") for a stay of the proceedings pending exhaustion of administrative remedies. Defendants also seek dismissal of Counts III, IV, and V of plaintiff's complaint, as well as portions of Count I. For the reasons set forth below defendants' motion for a stay of the proceedings is granted; the remaining relief requested by defendants, seeking partial dismissal of plaintiff's complaint, will be granted in part and denied in part.
STATEMENT OF FACTS
In analyzing a motion to dismiss, all allegations set forth in the complaint must be accepted as true and all reasonable inferences must be drawn in the plaintiff's favor. Schrob v. Catterson, 948 F.2d 1402, 1405 (3d Cir. 1991). According to the complaint, plaintiff worked as an employee of defendant SmithKline Beecham ("SmithKline") from August 13, 1973 until her termination on April 29, 1997. On or about December 7, 1995, plaintiff learned of a proposed reorganization of employees at the Piscataway, New Jersey facility where she worked. She received literature explaining a package of enhanced employee severance benefits offered to participants in a voluntary retirement program. After reviewing this literature and speaking on several occasions with defendant Vincent C. Bruett ("Bruett"), plaintiff decided to participate in the voluntary retirement program.
Plaintiff signed a document styled as a "Formal Signed Commitment to Take Voluntary Termination of Employment" on April 30, 1996. This document includes the following statements by plaintiff:
I also understand that I must complete my work assignments in a satisfactory manner and voluntarily sign and return a General Release form 30 days prior to my termination date in order to be eligible for the enhanced severance package.
I understand that the exact date of my termination has yet to be determined and that I will be provided with a minimum of 60 days advance notice of my official termination date.
To date, plaintiff has not executed the General Release Form.
Notwithstanding these provisions, plaintiff alleges that sometime in March or April of 1996, she reached an agreement with defendant Bruett as to the date of her early retirement. Bruett later informed plaintiff that her voluntary retirement date would be October 3, 1997, a date plaintiff alleges to be three months earlier than the date which she and Bruett had previously agreed upon.
Plaintiff confronted Bruett about her retirement date and the alleged agreement. She became upset, as she describes it, "to the point that it became difficult for her to suppress her feelings of extreme disappointment." See complaint at ¶ 34. She then told another SmithKline employee, Ms. Boynton, how upset she was with Bruett and remarked "that she would not care if someone taught him `a lesson'". Id. at 37. Plaintiff states that she had no intention of causing physical harm to Bruett, but was merely expressing her anger. She later left a voice mail message with Ms. Boynton, stressing that she had meant no harm towards Bruett.
This incident became the subject of a disciplinary meeting attended by plaintiff, management representative Graham Carey, and the director of operations at the Piscataway facility, Arthur L. Perri. At the meeting, plaintiff was told that Bruett had learned of the remarks made to Ms. Boynton and believed he had been threatened with physical harm. Plaintiff denied any intention to threaten Bruett. Mr. Perri then informed plaintiff that a criminal complaint had been filed against her in the Piscataway Municipal Court.
Plaintiff later received a letter from Mr. Perri informing her that her employment had been terminated, effective April 29, 1997, for violating a SmithKline company policy prohibiting "deliberate and reckless action that causes either actual or potential losses to the company or employees, damage to the company or employees' property or physical injury to an employee."
Plaintiff also learned in a letter from Kim Nelson, a retiree benefits representative with SmithKline, dated April 29, 1997, that her termination had been "for cause" and that she had thereby forfeited the enhanced employment severance benefits. Plaintiff retained counsel and on January 2, 1999 delivered a letter petition to Ms. Nelson offering to execute the General Release Form in exchange for the enhanced employment severance benefits to which plaintiff asserts she is entitled.
Plaintiff initially received no response to this letter petition, and so she filed her complaint with this Court on March 23, 1999. Several days later, plaintiff's counsel received a letter dated March 26, 1999 from Stanley J. Serrocca, Jr., Vice President and Director of Human Resources Services with SmithKline. The letter denies plaintiff's claim for benefits on the grounds that plaintiff "was not actively employed by [SmithKline] as of her job elimination date, which was a prerequisite for receiving any severance or enhanced pension benefits." The letter advises plaintiff of her right to appeal the decision to the Plan Administrator and outlines the procedures for doing so. To date, plaintiff has made no such appeal.
Under the procedure provided in the Plan Information booklet, defendants had 90 days to provide plaintiff with a written verification of denial. See plaintiff's brief at Exhibit "B", at 4-5.
DISCUSSION
A. Exhaustion of Administrative Remedies
A federal court will not entertain an ERISA claim for payment of benefits unless the plaintiff has exhausted his remedies under the plan.Canale v. Yegen, 782 F. Supp. 963, 971 (D.N.J. 1992); Weldon v. Kraft, Inc., 896 F.2d 793, 800 (3d Cir. 1990).
Several days after filing this complaint, plaintiff's counsel received the letter from Mr. Serocca advising him that plaintiff's claim for benefits had been denied. The concluding paragraph of the letter advises plaintiff that she "may appeal this decision by submitting a written request to the Plan Administrator for a review of denial within 60 days after receiving this letter." See defendants' brief at Exhibit "B". Plaintiff does not dispute that to date, no such written request has been made. Nevertheless, plaintiff asks that the Court excuse this deficiency for either of two reasons.
First, plaintiff asks that the August 29, 1997 letter from Ms. Nelson be deemed the first stage denial of plaintiff's claim for benefits. The court will not do so because Ms. Nelson's letter was not in response to a claim for benefits, nor was Ms. Nelson the person in charge of determining plaintiff's eligibility for benefits under the plan. In any event, the appeals procedure set forth in the plan requires a written request for review within 60 days after receiving a denial notice. See plaintiff's brief at Exhibit "B" at 5. Plaintiff failed to follow this procedure, since the letter petition submitted by plaintiff's counsel is dated January 2, 1999, more than 16 months later.
Second, plaintiff argues that her failure to seek review by the Plan Administrator should be excused as futile. See Berger v. Edgewater Steel Co., 911 F.2d 911, 916 (3d Cir. 1990); Tomczyscyn v. Teamsters, 590 F. Supp. 211, 216 (E.D.Pa. 1984). Plaintiff avers that Mr. Serraco is, in addition to his role as Vice President and Director of Human Resources, the Plan Administrator and that a request for review would amount to asking "the same person who has already denied her claims . . . to deny her again." Plaintiff's brief at 10.
Even if Mr. Serraco is, in fact, the Plan Administrator, plaintiff has failed to demonstrate that additional administrative proceedings would be futile. "For the futility exception to apply, a plaintiff must do more than show that his claim would likely be denied on appeal." Wahl v. First Unum Life Ins. Co., 1994 WL 57214, *2 (E.D.Pa. Feb. 17, 1994). "In practice, most courts have interpreted this standard as requiring a showing that the defendant had a policy or pattern of denying the type of . . . benefits claimed by the plaintiff." Id. (citing Berger, 911 F.2d at 916-17; Tomczyscyn, 590 F. Supp. at 216-17).
Here, plaintiff was given the opportunity to submit a written request for a review to the Plan Administrator, along with any evidence or documentation not already considered, within 60 days of her notice of denial. The plaintiff in Wahl was required to submit to the identical procedure, and plaintiff here has failed to present any additional evidence to show why that case should be distinguished from the one at bar. She has failed to demonstrate that her request for review would not be taken seriously, or that defendants have established a pattern or policy of automatically denying such requests.
Failure to exhaust administrative remedies ordinarily would warrant outright dismissal of plaintiff's action. In this case, defendants have sought only a partial dismissal of plaintiff's complaint, recognizing that an appropriate alternative to dismissal is a stay permitting the action to proceed if plaintiff's claims are not resolved to her satisfaction during the course of administrative review. Defendants' motion to stay further proceedings pending plaintiff's exhaustion of the administrative remedies available to her under the plan is therefore granted.
B. Dismissal of Claim under ERISA § 502(A)(3)
ERISA includes a comprehensive scheme of civil enforcement provisions listed in Section 502(a) of the act. See 29 U.S.C. § 1332(a). Of relevance to this motion, § 502(a)(1)(B) provides that a civil action may be brought "by a participant or a beneficiary to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). Section 502(a)(3) allows a civil action:
by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this title or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this title or the terms of the plan.29 U.S.C. § 1132(a)(3).
In construing § 502(a)(3), the Supreme Court has noted that "where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be `appropriate.'" Varity Corp. v. Howe, 516 U.S. 489, 515; 134 L.Ed.2d 130, 151 (1996). Varity held that in some circumstances beneficiaries could make personal recoveries under § 502(a)(3) from an ERISA fiduciary for breach of fiduciary obligations.See Ream v. Frey, 107 F.3d 147, 152 (3d Cir. 1997).
Count I of the complaint charges that the defendants' actions "give rise to causes of action under both § 502(a)(1) and § 502(a)(3)" of ERISA. Complaint at ¶ 72. Relying on Varity, defendants urge dismissal of plaintiff's claim under § 502(a)(3), arguing that "plaintiff cannot pursue a claim for `other appropriate equitable relief' under ERISA section 502(a)(3), where, as pled in the Complaint, she seeks a remedy for precisely the same alleged wrongdoing under ERISA section 502(a)(1)(B). . . ." Defendants' brief at 6. Plaintiff contends that her § 502(a)(3) claim remains viable because she "not only challenges the denial by the Plan Administrator of her ERISA claims but asserts separate and distinct claims against her supervisor for tortious conduct. . . ." Plaintiff's brief at 12.
Although plaintiff's state law claims will be dismissed, she nevertheless alleges that defendants engaged in conduct giving rise to more than a § 502(a)(1)(B) claim. If plaintiff's claims were limited solely to recovery of benefits denied her, then her § 502(a)(3) claim could be properly dismissed as seeking relief already available under § 502(a)(1)(B). However, plaintiff alleges not only a denial of benefits but additional acts of unlawful conduct cognizable as violations of ERISA § 510.
Section 510 was enacted "primarily to prevent employers from discharging or harassing their employees in order to keep them from obtaining ERISA protected benefits." Kowalski v. L F Prods., 82 F.3d 1283, 1287 (3d Cir. 1996). To establish a prima facie case under § 510, a plaintiff must allege: 1) prohibited employer conduct; 2) taken for the purpose of interfering; 3) with the attainment of any right to which the employee may become entitled. Gavalik v. Continental Can Co., 812 F.2d 834 (3d Cir. 1987). In her complaint, plaintiff charges that defendant Bruett "maliciously incited management at defendant SmithKline to discharge plaintiff Romero and to cause her to forfeit the enhanced employment severance benefits promised her. . . ." Complaint at ¶ 84. This is sufficient to allege a violation of § 510.
Mere recovery of benefits under § 502(a)(1)(B) would be inadequate to redress such injuries, and thus § 502(a)(3) "acts as a safety net, offering appropriate equitable relief for injuries caused by violations that § 502 does not elsewhere adequately remedy." Varity, 516 U.S. at ___; 134 L.Ed.2d at 149. Section 510 specifically states that the provisions of § 502 are applicable in its enforcement, and without resort to the remedies provided by § 502(a)(3), § 510 would become largely unenforceable. Accordingly, defendants' motion for a partial dismissal of Count I is denied.
C. Preemption of State Law Claims
Defendants correctly argue that ERISA preempts the state law claims which appear in Counts III, IV, and V, requiring their dismissal.
The civil enforcement provisions of ERISA are intended to be exclusive, and thus the preemption clause of ERISA provides that the statute supersedes all state laws, including common law causes of action, insofar as they relate to an employee benefit plan. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987); 29 U.S.C. § 1144(a). "ERISA is the exclusive vehicle for challenging the processing and denial of benefits claims under ERISA plans," Gould v. Great-West Life Annuity Ins. Co., 959 F. Supp. 214, 218 (D.N.J. 1997), and thus "laws that have been ruled preempted," include "those that provide an alternative cause of action to employees to collect benefits protected by ERISA. . . ." Bernatowicz v. Colgate-Palmolive Co., 785 F. Supp. 488, 492 (D.N.J. 1992) (quoting Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 146 (2d Cir. 1989)).
Applying this standard, the Court finds that Counts III, IV, and V of the complaint are preempted by ERISA and therefore subject to dismissal. Count III asserts a common law claim for breach of contract based upon defendants' "reneging on its promise to provide enhanced severance pay, pension benefits, and medical benefits after retirement in exchange for the execution of the April 30, 1996 commitment letter." See complaint at ¶ 80. This is clearly a claim to benefits under an ERISA plan, and even plaintiff concedes that the third count of the complaint "could be preempted because of the plaintiff's assertion of her ERISA claim under Section 502(a)(1)(B)." Plaintiff's brief at 13. See also Pane v. RCA Corp., 868 F.2d 631, 635 (3d Cir. 1989) (affirming dismissal of breach of contract claim seeking payment of ERISA benefits); Weinstein v. Paul Revere Ins. Co., 15 F. Supp.2d 552, 559 (D.N.J. 1998) ("courts have found state common law tort and breach of contract actions preempted by ERISA").
Count IV is a tort claim for malicious interference with prospective economic advantage. Like contract claims, tort claims arising out of the administration of an ERISA employee benefit plan generally will be dismissed as preempted. See Pane, 868 F.2d at 635; Butler v. Wu, 853 F. Supp. 125, 129 (D.N.J. 1994); Weinstein, 15 F. Supp.2d. at 559. The allegations made in this count have already been addressed as a violation of ERISA § 510, see Part B, supra, and so Count IV is preempted by plaintiff's claim for relief under § 502(a)(3). Defendant's motion for dismissal of Count IV is granted.
Count V alleges intentional infliction of emotional distress and is directed solely at the conduct of defendant Bruett. See complaint at ¶ 93. State law claims of emotional distress arising out of the administration of an employee benefit plan are also preempted by ERISA.Pane, 868 F.2d at 635. Thus, to the extent that this count is based upon allegations that Bruett encouraged SmithKline to discharge plaintiff, thereby causing her to lose the enhanced employment severance benefits, it is preempted by plaintiff's ERISA claim under § 502(a)(3). To the extent that it is based upon Bruett's role (if any) in causing plaintiff to believe that a criminal complaint had been filed against her, the allegations are insufficient to state a cause of action for intentional infliction of emotional distress under New Jersey. Defendants' motion to dismiss Count V is therefore granted.
The complaint itself is not clear on this matter. While ¶ 43 of the complaint alleges that Mr. Perri told plaintiff that a criminal complaint had been filed against her by Bruett, no complaint was ever filed. See complaint at ¶ 46.
To establish a claim for intentional emotional distress under New Jersey law, plaintiff must establish: 1) intentional or reckless conduct by the defendant; 2) that the conduct was extreme and outrageous; 3) proximate cause, and; 4) that the emotional distress suffered by the plaintiff was "so severe that no reasonable man could be expected to endure it." Buckley v. Trenton Sav. Fund Soc . , 111 N.J. 355, 366 (1988).
CONCLUSION
For the reasons set forth herein, defendants' motion for a stay of the proceedings pending exhaustion of administrative remedies is granted, as well as defendants' motion for dismissal of Counts III, IV, and V. The remaining relief requested is denied. In the interim, the action will be administratively terminated without prejudice to the right of either party to move to reinstate it to the active calendar after plaintiff has exhausted her remedies or otherwise for good cause. An appropriate order shall be entered.