Opinion
99 Civ. 1779(RLE).
September 6, 2001.
OPINION ORDER
I. INTRODUCTION
Plaintiff Alfred Perreca ("Perreca") and his wife, Marie A. Perreca (collectively, "plaintiffs"), bring this action pursuant to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § § 1001, et seq. Perreca seeks money damages as the result of defendants' violation of ERISA. Perreca alleges that defendants Michael Gluck ("Gluck") and others (collectively, "defendants") wrongfully denied him his pension calculated from August 1, 1959, in contrast to the express terms of his retirement plan and in breach of a promise Gluck made to Perreca in 1965. Additionally, Perreca alleges that the defendants denied him the possibility of receiving his benefits in a lump sum payment. Finally, Perreca alleges that because he retired early based on the expectation he would receive larger pension benefits, he seeks lost income from 1986 to 1997. On August 8, 1999, District Judge Deborah A. Batts referred the case to the undersigned for trial pursuant to 28 U.S.C. § 636(c). On April 17, 2000, defendants filed a third-party complaint against USI Retirement Systems ("USI") and others (collectively "third-party defendants"). On October 3, 2000, defendants moved for summary judgment. On November 14, 2000, and December 1, 2000, plaintiffs and third-party defendants, respectively, cross moved for summary judgment. For the foregoing reasons, defendants' motion for summary judgment is GRANTED, plaintiffs' cross-motion for summary judgment is DENIED, and third-party defendants' cross-motion is GRANTED.
II. BACKGROUND
Perreca was born on February 3, 1932. Def. Mem. at 2. Sternberger Transport Corporation ("Sternberger") employed Perreca on August 1, 1959, as a truck driver. Pl. Mem. at 2. Perreca was a member of the Teamsters Union ("Union") during his first few years with the company. Id . In 1963, when Perreca was promoted to night manager, he ceased being part of the Union. Id . Perreca received credit for his Union pension through April 1966. Def. Mem. at 3. Perreca is not certain whether his employer made payments to the pension plan or they were deducted from his paycheck. Id . Gluck testified that pursuant to a collective bargaining agreement, Sternberger made pension payments to the Union on behalf of the employees. Id . In 1968, Perreca became an officer of Sternberger, and held several positions as an officer with Sternberger, before serving as president of Todd Logistics, a related company. Def. Mem. at 3.
"Def. Mem." refers to defendants' memorandum of points and authorities in support of their motion for summary judgment.
Sternberger existed until 1976, when a holding company, Agora, was formed. The company has been known as Marketing Industries since the 1990s. Def. Mem. at 3.
"Pl. Mem." refers to plaintiffs' memorandum of law in support of their cross-motion for summary judgment.
Perreca originally indicated that the promotion occurred in 1964. In a supplemental affidavit he states that the promotion took place in 1963. As a result of finding bills from that year related to his sons' illness, Perreca concluded that the 1963 date was correct. Supp. Aff. ¶ 4. According to Perreca, their illness and the toll it was taking on his wife, caused him to request a transfer from his position as a truck driver to another where he would no longer be working out of town. Id . ¶ 2. It was then that he was promoted to night manager. Id .
The records and testimony conflict as to when Perreca left the Union. The Union records, however, clearly reflect that Sternberger paid into the Union pension until 1966. Def. Mem. at 3, n. 2. Plaintiffs challenge this assertion citing that defendants have failed to produce documents revealing the exact date of his promotion and thus the date on which he ceased being a member of the Union. Pl. Mem. at 5. Further, plaintiffs point out that defendants have failed to produce records evidencing their payments to the Union on Perreca's behalf. Id . at 6.
A. The Pension Plan
Sternberger first created a retirement plan and trust on behalf of its employees on July 6, 1966. Id . at 4. Defendants assert that the plan does not cover employees who are also members of the Union. Def. Mem. at 5, n. 7. Plaintiffs allege that the plan was in effect on January 1, 1965, and because Perreca was not covered by a collective bargaining agreement at that time, he was covered by the pension plan. Pl. Mem. at 8. Perreca says that then he received a form for membership in the pension plan, he quickly completed and returned it. Id . at 10. At all times, Sternberger has used the same outside pension consulting firm, USI Retirement Systems, formerly known as Pension Planning. Def. Mem. at 4. Gluck is a trustee of the pension firm. Id .
On January 1, 1976, the accrued benefits under the pension plan were frozen in response to suspected embezzling. Id . During this time, Sternberger created a holding company, Agora Industries, and the pension plan was known under that company name. Id . at 5. The plan was reactivated on July 1, 1984. Id . Under the terms of the plan, Sternberger could amend or modify, in whole or in part, any or all the provisions of the plan. Id . The plan also provided for the lump sum payment upon retirement "with the approval of the committee." In 1985, the plan referred to the lump sum payment option but added: "Since the basic purpose of the plan is to provide a lifetime pension, the Committee will approve a lump sum payment only in unusual circumstances." Id .
In 1989, the plan was amended, making the lump sum payment option available to employees "only if you are employed on or after attainment of age 65 and have completed ten years of service." Id . In 1995, the plan was restated, but the lump sum payment option did not change. Id . at 6. The summary plan description for the 1995 plan, however, contained a typographical error and stated that the lump sum payment option was available "only if you are employed on or after attainment of age 65 or have completed ten years of service." Id . The "or" should have been "and" and a replacement page was distributed. Id .
B. The Alleged Promise Between Perreca and Gluck
During his deposition, Perreca testified that sometime in 1965, upon returning from a meeting with the pension consulting firm, Gluck advised him that he would be a member of the pension plan as of 1959, despite his having been a Union member. See Def. Mem. at 6. Gluck denied ever having this conversation with Perreca. Id . Moreover, Gluck maintains that Sternberger did not make any payments into the pension plan on Perreca's behalf while he was a Union member because it was prohibited. Id .
Perreca testified that, as an officer with Sternberger, he came across documents listing him as a member of the plan, effective 1966. Id . at 7. Perreca testified that he spoke to Gluck, who agreed to change the effective date. Id . Gluck denies ever saying this to Perreca. Id . In planning to reactivate the pension plan, USI Retirement Systems requested information from Sternberger. Id . In response, a handwritten form was prepared in May 1982, listing "8/1/59"as Perreca's date of employment. Id . Perreca asserts this is evidence that the effective date of his membership in the pension plan was corrected. Id . Sternberger contends that this was a clerical mistake made by someone who did not realize that the date of employment for some employees was not necessarily the same as the date of enrollment in the pension plan. Id.
In 1985, Perreca started considering early retirement. Id . Perreca contends that another officer, James Antinoff, initiated the discussion regarding his retirement. Id . Perreca knew that he would not be entitled to pension payments until he reached age 65. Id . at 8. On February 4, 1986, Perreca retired and received $1,206,911 under an agreement with Sternberger. Id . It was "agreed that no representation has been made by either party to the other or to anyone else on behalf of the other except as it is expressly set forth in this agreement." Additionally, "the parties have exchanged General Releases releasing each other of and from all claims except their rights under this agreement." Id .
At the time of his retirement, Perreca was advised that on March 1, 1997, when he reached age 65, he would begin receiving monthly pension payments of $4,028. Id . Perreca, however, did not speak to Gluck about the pension. Id . He did not mention it until 1996, when he claimed that he was entitled to a lump sum payment. Id . Perreca's assertion was based on a statement he had seen whereby a lump sum payment could be received if the employee had reached age 65 or had been employed with Sternberger for ten years — the typographical error made in 1995. Id . at 8-9. Gluck testified that no one ever requested a lump sum payment from the committee and doubted whether the committee would approve such a request. Id . at 9. Perreca alleges, however, that the pension plan was amended in 1989 so that James Antinoff could receive a lump sum payment. Id .
III. DISCUSSION
A. Perreca's Claims
Perreca alleges that he is entitled to pension payments calculated as of his date of employment with Sternberger, August 1, 1959. Pl. Mem at 1. He further asserts that, in 1965, Gluck promised him that he would be enrolled in the pension plan and his benefits would be calculated from that date. Pl. Mem. at 7. Finally, Perreca alleges that he is entitled to a lump sum payment of his pension benefits because, under the 1984 restated plan, in effect on the date Perreca retired, lump sum payment was an option subject to committee approval. Id . at 25-26.
B. Standard for Summary Judgment
Rule 56(c) of the Federal Rules of Civil Procedure provides that a court shall grant a motion for summary judgment if it determines "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). See Pension Benefit Guar. Corp. v. LTV Corp ., 875 F.2d 1008, 1015 (2d Cir. 1989), rev'don other grounds , 496 U.S. 633 (1990). In making this determination, the court does not resolve disputed factual issues, but reaches a conclusion as to whether there exists "a genuine and material issue for trial." Hudson Hotels Corp. v. Choice Hotels Int'l , 995 F.2d 1173, 1175 (2d Cir. 1993) ( citing Knight v. United States Fire Ins. Co ., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied , 480 U.S. 932 (1987)). "[T]he mere existence of factual issues — where those issues are not material to the claims before the court — will not suffice to defeat a motion for summary judgment." Ouarles v. Gen. Motors Corp ., 758 F.2d 839, 840 (2d Cir. 1985). An issue of fact is "genuine" if it provides a basis for "a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp ., 475 U.S. 574, 587 (1986) ( citing First Nat'l Bank of Arizona v. Cities Serv. Co ., 391 U.S. 253, 289 (1968).
The moving party for summary judgment bears the initial burden of demonstrating the absence of any genuine issue of material fact. Adickes v. S.H. Kress Co ., 398 U.S. 144, 157 (1970)). This burden may be met by demonstrating that there is a lack of evidence to support the nonmoving party's claim. Celotex Corp. v. Catrett , 477 U.S. 317, 325 (1986). Once the moving party satisfies this initial burden, the nonmoving party "must set forth specific facts showing that there is a genuine issue for a trial." Fed.R.Civ.P. 56(e).
C. ERISA Claims
ERISA preempts statutory and common law claims regarding employee benefit plans. Gilbert v. Berlington Industries, Inc ., 765 F.2d 320, 326 (1st Cir. 1995). Civil suits, including ones brought for the enforcement of pension plans, may be brought pursuant to ERISA. 29 U.S.C. § 1132(a)(1)(B). ERISA requires that the administrator act in the interest of plan participants. 29 U.S.C. § 1104. This includes informing plan members of their rights and obligations under the plan. Unambiguous language in an ERISA plan "must be interpreted and enforced in accordance with its plain meaning." Aramony v. United Way Replacement Benefit Plan , 191 F.3d 140 (2d Cir. 1999). Words must be given their plain meaning. O'Neil v. Ret. Plan for Salaried Employees of RICO Gen., Inc ., 37 F.3d 55, 59 (2d Cir. 1994). Moreover, under ERISA, an employer can "terminate or unilaterally . . ., amend the plan at any time." Joyce v. Curtiss-Wright Corp ., 171 F.3d 130 (2d Cir. 1999) ( quoting Schonholz v. Long Island Jewish Med. Ctr ., 87 F.3d 72, 77 (2d Cir. 1996).
1. Lump-Sum Payment of Benefits
At the time of Perreca's retirement, receiving pension benefits in a lump sum payment, was subject to committee approval. When he retired, Perreca did not request a lump sum payment. Exh. E at 22 1-22, 248. His belated request in 1997 was based on a typographical error in a 1995 summary of the plan. The Second Circuit has held that where a plan summary is inconsistent with the plan itself, the plan summary will control. Heidgerd v. Olin Corp ., 906 F.2d 903, 908 (2d Cir. 1990). In Heidgerd , however, the employees were only provided with the summary, and not the plan itself. Here both the summary and the plan were mailed to employees. Pl. Mem. at 15. More importantly, the employees were mailed a replacement page correcting the typographical error. Pl. Mem. at 6. Finally, even if Perreca had not received the corrected page in 1995, he cannot prevail because the error occurred nine years after he retired. He could not have relied upon it at the time of his retirement. In Mullins v. Pfizer , 23 F.3d 663 (1994), the Court found that an employee who claimed he voluntarily retired because of affirmative representations by the plan's administrator that a lump sum severance plan was not under consideration had standing to assert an ERISA claim seeking benefits under that plan which was adopted six weeks after his retirement. The Court held that an employer had an affirmative duty as a plan fiduciary, not to mislead participants regarding future changes in early retirement benefits. Id . The facts here differ in that Perreca could not have retired based on representations concerning a lump sum payment option because, by his own admission, he did not discuss the topic before 1997.
Perreca alleges that the plan was amended to single him out for negative treatment. He claims that this violates 29 U.S.C.A. § 1140 which states that "it is unlawful for any person to discriminate against any participant of an employee benefit plan for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan." Defendants maintain that the pension plan never distinguished between executive officers and other employees; it only distinguished between those employees whose pension was below $3,500 and those with higher pensions. Def. Reply ¶ 11. Perreca received a generous stock agreement when he retired. Id . ¶ 12. When James Antinoff retired, he made certain demands concerning lump sum payments, which Perreca did not, and Gluck tried to accommodate Antinoff to the extent possible. Id . Perreca was not singled out in any way; he simply never sought a lump sum payment of his benefits. Id . ¶ 13. On the other hand, he received approximately $1,000,000 as part of the buy-out agreement, a deal that was not offered to any other employee. Id . ¶ 12, 13. Perreca fails to establish any facts to support his conclusory allegation, and thus fails to show that he was discriminated against.
Perreca's allegations are at odds with the confusion concerning the 1995 plan summary. If Gluck and the others were consciously trying to exclude Perreca, it would appear unlikely that they would make an error which defined Perreca into the lump sum option.
2. The Promise
Perreca alleges that in 1965, Gluck told him that he would be a participant in the pension plan as of August 1, 1959, even though he had been a Union member when his employment with Sternberger first began. Pl. Mem. at 35. Perreca alleges that he relied on this oral promise from Gluck and based his decision to retire early on this assurance. Id . at 36. While oral promises are not recognized under ERISA, Sandler v. Marconi Circuit Tech. Corp ., 814 F. Supp. 263 (E.D.N.Y. 1993), Perreca offers as evidence that this oral promise was embodied in documents where for purposes of the pension plan, Perreca was credited with service to the company beginning on August 1, 1959. Pl. Exhs. 10, 11, 16, 17, 18.
"Pl. Exhs." refers to exhibits which Perreca offers in support of his cross-motion for summary judgment.
These documents include tables reflecting the expected benefits under the plan for all participating employees where, in January 1982, Perreca was listed as having twenty-two years of credited service for plan purposes. Pl. Exh. 10. In January 1984, Perreca was listed as having twenty-four years of credited service. Pl. Exh. 11. In a form titled "Supplemental Application Form for Approval of Employee Benefit Plans Under TEFRA," discussing particulars of the pension plan such as annual benefits expected under the plan, Perreca was also listed as having twenty-four years of service. Exh. 16. In addition, a form titled "Your Annual Statement of Benefits From Agora Industries, Inc. Employees' Retirement Plan," prepared for A. Perreca, as of July 1, 1984, indicates that Perreca has twenty-five years of service credited toward vesting. Exh. 18.
Defendants, however, claim that the only fair reading of the pension plan is one where the time period during which Perreca was a Union member is excluded from the plan. Def. Reply ¶ 7. They maintain that to credit Perreca with service dating back to August 1, 1959, contravenes the intent of the plan that an employer not have to pay twice — that is make contributions to the pension plan and make payments pursuant to a collective bargaining agreement on behalf of the same employee. Id .
The defendants state that in 1982, the dates of birth, social security numbers, and start dates for twenty-three employees, including Perreca, were compiled in a handwritten report about the pension plan. Id . ¶ 8. The person preparing this information misconstrued start date to mean the date of employment rather than the start date for participation in the plan. Id . For most employees, these dates were the same.
Apart from the alleged oral conversations between Perreca and Gluck, there is no written documentation of the promise. Def. Mem. at 17. The Second Circuit has held that principles of estoppel apply in ERISA cases "only under extraordinary circumstances." Schonholz v. Long Island Jewish Medical Ctr ., 87 F.3d 72, 78 (2d Cir. 1996). The elements of a promissory estoppel claim pursuant to ERISA are: (1) a promise; (2) reliance on the promise; (3) injury caused by the reliance; and (4) an injustice if the promise is not enforced. Schonholz , 87 F.3d at 79. "Further, for purposes of ERISA, a plaintiff must demonstrate a promise that the defendant reasonably should have expected to induce action or forbearance on the plaintiffs part." Id .
Here, the existence of a promise is contested. Perreca claims he relied on a promise made in 1965 when considering whether to retire. The language of the pension plan is quite clear in that employees covered under a collective bargaining agreement are not covered under the pension plan. Thus, Perreca should have realized that such a promise would be illegal. Sternberger had paid Perreca's Union benefits through 1966, and under the plan could not also make contributions into the pension plan for the same time period. Any reliance on Perreca's part therefore was unreasonable. Further, the documents he received listing his expected benefits included the disclaimer that "[a]ctual benefits are, of course, subject to verification before any payments are authorized." Def. Mem. at 17.
The injury caused by the reliance is a disparity in the actual amount of benefits. At the time of his retirement, however, Perreca negotiated a generous stock agreement, Def. Reply ¶ 12, as well as a $10O, OO0 per year buyout for each of the ten years until he reached sixty-five. Id . ¶ 15. This arrangement has not been offered to other employees. Id . ¶ 13. Accordingly, if the promise is not enforced, there would be no injustice, as Perreca received a negotiated package upon retirement. There is no evidence to support the assertion that promissory estoppel should apply to the facts of this case.
3. Lost Income
Lastly, Perreca alleges that he is entitled to lost income from 1986 to 1996 as a result of his early retirement. Perreca may not recover under ERISA for "extra contractual" damages. Massachusetts Mut. Life Ins. Co. v. Russell , 473 U.S. 134 (1985). Accordingly, Perreca is only entitled to payments representing lost income.
IV. CONCLUSION
For the reasons discussed herein, defendants' motion for summary judgment is GRANTED, plaintiffs' cross-motion is DENIED, and the third-party defendants' cross-motion is GRANTED.
SO ORDERED this 6th day of September 2001 New York, New York
The Honorable Ronald L. Ellis United States Magistrate Judge