Opinion
Case No. 1:04 cv 2420.
June 28, 2006
MEMORANDUM OPINION
On June 10, 2005, Plaintiff Carl Steadman ("Steadman") filed a second amended complaint against Defendants Board of Trustees of Excavating, Building Material and Construction Driver's Union Local 436 Welfare Fund ("Welfare Fund") and Board of Trustees of Building Material Driver's Local 436 Pension Fund ("Pension Fund") (collectively referred to as the "Funds"), under the Employee Retirement Income Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). (Doc. 22.) This Court's jurisdiction is based upon 29 U.S.C. § 1132(e) and (f).
Steadman asserted two causes of action to recover benefits. Initially, he contended he was entitled to recover benefits from the Funds pursuant to 29 U.S.C. § 1024(b)(4). The Court, however, ruled in favor of the Funds on this cause of action. In the remaining cause of action, Steadman claimed he was entitled to recover an information request penalty pursuant to 29 U.S.C. § 1132(c)(1)(B) for the Pension Fund's failure to timely provide him with the requested plan documents. Both parties have moved for summary judgment on this cause of action.
In his May 19, 2006 Motion for Summary Judgement, Steadman contended the Pension Fund's delay in furnishing documents caused substantial delay in his effort to determine whether his ERISA rights were violated and, because he does not need to show he was prejudiced or suffered actual damages as a result of this delay, he is entitled to a penalty of $110.00 for each day the documents were withheld. (Doc. 49, 2-3.)
The Court notes that 29 U.S.C. § 1132(c)(1)(B) only allows for a penalty of "up to $100 a day. . . ."
On June 5, 2006 the Pension Fund moved for summary judgment on five grounds: (1) Steadman suffered no prejudice from the delay in providing the documents; (2) the Pension Fund did not act in bad faith but made a clerical error; (3) Steadman did not request the documents numerous times; (4) there were neither numerous members affected nor numerous documents requested; and (5) cases cited by Steadman in his Motion for Summary Judgment demonstrate that not only would the award he seeks be excessive, but it would be within the Court's discretion to award no penalty.
For the reasons stated below, the Court DENIES Steadman's Motion for Summary Judgment and GRANTS the Pension Fund's Motion for Summary Judgment.
I. STATEMENT OF FACTS
In the summer of 1999, Steadman Trucking filed an "Employer Information Form" with the Local 436, stating that the owner of Steadman Trucking was Ann Marie Steadman ("Ann Marie"), who at that time was Steadman's wife. (Doc. 37, JX 1.) Steadman Trucking agreed to abide by the contractual terms and conditions of Local 436's labor rates and fringe benefits. (Doc. 37, JX 2.)On February 22, 2003, Steadman applied for "permanent and total disability" benefits from the Pension Fund. In his application, he stated that he intended to retire effective February 15, 2003. (Doc. 37, JX 6, at 1.) In processing Steadman's claim for disability retirement benefits, the Pension Fund asked Ann Marie, as owner of Steadman Trucking, to confirm that Steadman's last day worked was February 14, 2003. (Doc. 37, JX 7, at 3.)
In response, Ann Marie called Local 436, which memorialized the conversation as follows: "Mrs. Steadman says she has no idea what Mbr [member?] has been doing. She has not signed any forms related to W/P since 12/14/01. She also indicated that she did not sign his S/B form either." (Doc. 37, JX 7, at 4.) Subsequently, on June 3, 2003, Ann Marie sent the following note to Chris [Chambers] at Local 436: "I reviewed my files, the last contribution form was signed and completed by me for the month of November 2001 in December of 2001 . . . During finalization of our divorce, I was shocked to hear he had sold Carl Steadman Trucking without my knowlege [ sic] in February of 2003." (Doc. 37, JX 7, at 6.)
The Administrator of the Funds, Gary Boncella ("Boncella"), sent Steadman a letter on July 8, 2003, advising Steadman that his claim for a disability pension under the Pension Fund plan, was being denied. The letter reads as follows:
The Trustees of the Local 436 Benefits Funds have learned that the contributions [which] were made to the Welfare and Pension [Funds] on your behalf since December, 2001 [were] in violation of the Welfare and Pension Fund Plan documents. The Welfare and Pension Fund Plans provide that a participant shall not include any self-employed person, sole proprietor or partner with the exceptions of a so-called owner-operator that contracts with an employer making contributions on his or her behalf and the self-employed person, sole-proprietor or partner that makes contributions for at least one other Participant. In violation of these provisions, you have made contributions to the Welfare and Pension Funds on your behalf since December, 2001.
Based on evidence reviewed by the Trustees, it is evident that Steadman Trucking never made contributions on behalf of any driver other than you. In addition, because your wife has not had anything to do with Steadman Trucking since December, 2001, you have been making contributions to the Funds on your own behalf which is prohibited by both Funds.
(Doc. 37, JX 10, at 1-2.)
Shortly thereafter, Boncella sent a second letter, dated July 17, 2003, to Steadman, which read, in part:
A Pension Fund participant must meet four criteria to qualify for a disability pension:
1. The member must have fifteen years of credited service;
2. The member suffers for a total disability that prevents him from performing his normal job functions for a period of six months;
3. The disability causes the member's retirement from Local 436 employment; and
4. The disability is determined to be permanent.
Building Materials Drivers Pension Fund Plan Restatement of January 1, 1989 ("Pension Plan"), Section 5.4.
You do not meet these requirements because your disability commenced after November 2001. As of December, 2001 you were not working at Local 436 employment. Therefore, the disability did not cause you to retire from Local 436 employment. You left 436 employment effective November 30, 2001.
(Doc. 37, JX 10, at 3-4.) The letter goes on to advise Steadman of his appeal rights under ERISA.
Steadman submitted a "Request for Claims Review" [appeal] on Sept. 11, 2003. (Doc. 37, JX 11.) He stated that, since December 2001, "nothing changed internally in the business operations of Steadman Trucking or in the relationship between Steadman Trucking and Local 436 during the entire period in question of August, 1999 (the start-up date of Steadman Trucking) through February, 2003." (Doc. 37, JX 11.)
The Claims Review Board held a hearing on Steadman's appeal on October 29, 2003, and advised him of their decision upholding the denial of benefits, on February 29, 2004. (Doc. 37, JX 12, 13, 16.) The letter reiterated the four criteria required to qualify for a disability pension, and noted that Steadman met the first, second and fourth criteria. (JX 16.) However, the Claims Review Board found that he did not qualify under the third factor. (Doc. 37, JX 16, at 2.)
On May 21, 2004, approximately seven months after Steadman's appeal, and three months after the Funds notified Steadman that his appeal was denied, new counsel for Steadman sent a letter to the Funds requesting plan documents. (Doc. 50, 4; Doc. 49, 1.) The Funds contacted Steadman's counsel and requested a copy of the Steadman's representation letter. (Doc. 50, 4; Doc. 49, 1.) On June 11, 2004, Steadman's new counsel sent the representation letter. (Doc. 50, 4; Doc. 49, 1.)
Due to a clerical error, there was a delay in providing the requested documents. (Doc. 50, 5.) Steadman's counsel alleges that it contacted the Funds on October 13, 2004 and October 27, 2004 to remind the Funds of the request. (Doc. 49, 2.) The Funds acknowledge receiving one telephone call in the middle of October 2004. (Doc. 50, 5.) The Funds provided the requested documents on November 5, 2004. (Doc. 50, 5; Doc. 49, 2.)
On December 8, 2004, Steadman filed the instant Complaint against the Pension Fund. The Complaint was amended on January 5, 2005 and again on June 10, 2005, adding the Welfare Fund as a party. The Second Amended Complaint alleges that, "Pursuant to 29 U.S.C. § 1024(b)(4), Plaintiff is entitled to receive upon request copies of the summary plan description and plan documents of the Pension Fund operated by Administrator." This Court ruled in favor of the Funds with regard to Steadman's claim for benefits on February 8, 2005, and thus the only remaining claim is that of a statutory penalty against the Pension Fund for the delay in providing the documents. No similar claim was brought against the Welfare Fund.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate where the entire record "shows 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). Non-moving parties may rest neither upon the mere allegations of their pleadings nor upon general allegations that issues of fact may exist. See Bryant v. Commonwealth of Kentucky, 490 F.2d 1273, 1275 (6th Cir. 1974). The Supreme Court has held that:
Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an 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). The evidence need not be in a form admissible at trial in order to avoid summary judgment, but Rule 56(e) requires the opposing party, "go beyond the pleadings and by [his] own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial." Id. at 324.
The Sixth Circuit in Street v. J.C. Bradford Co., 886 F.2d 1472 (6th Cir. 1989), has interpreted Celotex and two related cases, Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986), and Matsushita Electric Industrial Co., Ltd. v. Zenith Radio, 475 U.S. 574 (1986), as establishing a "new era" of favorable regard for summary judgment motions. Street points out that the movant has the initial burden of showing "the absence of a genuine issue of material fact" as to an essential element of the non-movant's case. This burden may be met by pointing out to the court that the respondent, having had sufficient opportunity for discovery, has no evidence to support an essential element of his or her case. Street, 886 F.2d at 1479.
The respondent cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must "present affirmative evidence in order to defeat a properly supported motion for summary judgment." Id. In ruling on a motion for summary judgment, the court must construe the evidence, as well as any inferences to be drawn from it, in the light most favorable to the party opposing the motion. Kraus v. Sobel Corrugated Containers, Inc., 915 F.2d 227, 229 (6th Cir. 1990).
III. ANALYSIS A. Statutory Penalty and Duty to Disclose Plan Documents
Steadman contends that statutory penalties should be imposed against the Pension Fund for its failure to timely provide the requested plan documents. (Doc. 22 ¶¶ 27-31.) ERISA § 502(c)(1)(B) provides that:
Any administrator . . . who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court's discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper.29 U.S.C. § 1132(c)(1)(B). Sanctions are not required nor always imposed when the plan administrator fails to provide plan documents because "the statute expressly grants the district court discretion in imposing penalties for an employer's failure to disclose." Bartling v. Fruehauf Corp., 29 F.3d 1062 (6th Cir. 1994); see also Knickerbocker v. Ovako-Ajax, Inc., No. 98-1319, 1999 U.S. App. LEXIS 16982 (6th Cir. July 20, 1999).
ERISA requires an administrator provide copies of any of the prescribed plan documents upon a participant or beneficiary's request, and at a reasonable fee, to cover the cost of document copies. 29 U.S.C. § 1024(b)(4). A "participant" is defined by statute to mean:
any employee or former employee of an employer, or any member of former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.29 U.S.C. § 1002(7).
B. No Statutory Penalty is Appropriate Because Steadman is not a Participant of the Plan.
The Supreme Court considered when, and to whom, a plan administrator must disclose plan documents under § 1024(b)(4) and when a failure to disclose will result in damages under § 1132(c)(1)(B) in Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115-18 (1989). The Supreme Court held, "participants of a plan entitled to disclosure and to damage for failure to disclose under Act are only those employees in, or reasonably expected to be in, currently covered employment or former employees who have reasonable expectation of returning to covered employment or colorable claim to vested benefits." Firestone, 489 U.S. at 101. This District Court found that, "given that [the plaintiff] clearly was not eligible for any of the benefit plans, the Court cannot say that the plan administrators' decisions to not provide plan documents was in error." Jaeger v. Matrix Essentials, Inc., 236 F. Supp. 2d. 815, 830 (N.D. Ohio 2002). The plan administrator in Jaeger, like the plan administrator here, determined that the plaintiff was not a plan participant nor a beneficiary under the plain terms of the plan. Id. at 822. Jaeger, like Steadman, was clearly not eligible under the benefit plan and this District Court found that imposing the statutory penalty "would not further the purpose behind such a penalty." Id. at 830. Here, the plan administrator determined that Steadman was making contributions to the Pension Fund in violation of the Pension Fund Plan documents. On July 8, 2003, the plan administrator sent Steadman a letter, advising him that his claim for a disability pension under the Pension Fund plan, were being denied. The letter reads as follows:
The Trustees of the Local 436 Benefits Funds have learned that the contributions [which] were made to the Welfare and Pension [Funds] on your behalf since December, 2001 [were] in violation of the Welfare and Pension Fund Plan documents. The Welfare and Pension Fund Plans provide that a participant shall not include any self-employed person, sole proprietor or partner with the exceptions of a so-called owner-operator that contracts with an employer making contributions on his or her behalf and the self-employed person, sole-proprietor or partner that makes contributions for at least one other Participant. In violation of these provisions, you have made contributions to the Welfare and Pension Funds on your behalf since December, 2001.
Based on evidence reviewed by the Trustees, it is evident that Steadman Trucking never made contributions on behalf of any driver other than you. In addition, because your wife has not had anything to do with Steadman Trucking since December, 2001, you have been making contributions to the Funds on your own behalf which is prohibited by both Funds.
(Doc. 37, JX 10, at 1-2.) Moreover, Steadman did not request plan documents until May 21, 2004, after his appeal application was also denied. Thus, not only is Steadman's claim "unreasonable" or "not colorable," Steadman experienced no delay in the administrative process of appealing his denial of benefits. (Doc. 37, JX 12, 13, 16.)
C. Prejudice and Bad Faith Are Not Requirements of Relief but Are Considerations of the Court
The language of ERISA indicates that, "prejudice and the company's good-faith beliefs are not relevant to the company's duty to disclose the plan's terms to the employee." Gatlin v. Nat'l Healthcare Corp., No. 99-6626, 2001 U.S. App. LEXIS 3576, at *13 (6th Cir. Mar. 2, 2001). However, courts recognize that prejudice and bad faith should be considered in deciding to impose the penalty. Bartling, 29 F.3d at 1068-69; see also Knickerbocker, 1999 U.S. App. LEXIS 16982, at *14. The Sixth Circuit found that whether plaintiffs suffered prejudice by the defendants' delay in delivering requested plan documents depended on "whether [p]laintiffs are in a worse position because of [d]efendants' delays than they would have been if the required documents had been timely disclosed." Bartling, 29 F. 3d at 1067; see also Hinkel v. NAVISTAR, Int'l, Corp., No. 90-3992, 1992 U.S. App. LEXIS 778, at *11 (6th Cir. Jan. 15, 1992) ("The focus of inquiry into an injury, if there be any, is upon the delay in receiving the information, not upon the denial of benefits.")
Steadman asserts that the delay "frustrated [his] attempt to determine his rights under the Plans." (Doc. 49, 3.) Steadman, however, provides no citation to the record to support this claim. In Bartling, the plaintiffs' claimed frustration and anxiety as a result of the defendant's untimely delivery of the documents. However, the Sixth Circuit found no evidence in the Bartling record to support the plaintiff's claim. Bartling, 29 F.3d at 1068. While the Sixth Circuit upheld the statutory penalty that was assessed in Bartling, because "the lower court was expressly rewarding Plaintiffs for joining together," the Court also noted there was no evidence of the defendant's bad faith or prejudicial effect on the plaintiffs. Id. at 1069. The penalty was only awarded in Bartling due to the large number of Plaintiffs affected by the delay. Id. Steadman, on the other hand, is the only plaintiff in this cause of action, and similar to the defendant in Bartling, there is no evidence of bad faith on the part of the Pension Fund, as the delay was "due to a clerical error." (Doc. 50, 5.)
In Gaitlin, the Sixth Circuit found that the plaintiff did suffer prejudice as a result of the company's failure to produce the requested documents and the District Court's assessment of the statutory penalty was correct, however, incorrectly calculated. 2001 U.S. App. LEXIS 3576, at **13-14. The Plaintiff's "ability to appeal the decision at the earliest opportunity," was delayed by the company's failure to produce the plan documents. Id. In contrast, Steadman only requested the documents on May 21, 2004 after the Claims Review Board denied his appeal application for benefits. (Doc. 49, 1; Doc. 50, 4.)
The Claims Review Board held a hearing on Steadman's appeal on October 29, 2003, and advised him of their decision upholding the denial of benefits on February 29, 2004. (Doc. 37, JX 12, 13, 16.) The letter reiterated the four criteria required to qualify for a disability pension, and noted that Steadman met the first, second and fourth criteria. (JX 16.) However, the Claims Review Board found that Steadman did not qualify under the third factor, the disability causes the member's retirement from Local 436 employment. (Doc. 37, JX 16, at 2.) The Pension Fund provided Steadman with a precise reason his application was denied. Thus, for Steadman, the appeal process was not delayed by the Pension Fund's failure to produce the plan documents.
Similar to Steadman's case, in Hinkel, the Plaintiff was informed by the plan administrator two months after her first request for plan documents that she would not be receiving benefits. 1992 U.S. App. LEXIS 778, at *11. In affirming the District Court's denial of the penalty, the Sixth Circuit found:
The court's logic in denying penalties was to the effect that if she was never entitled to the benefits, she could not have suffered prejudice to any rights under ERISA. This is especially so if the failure to provide information did not result in the loss of the right to appeal, as is true in this case. Since [Hinkel] was made aware that the benefits were being denied fairly promptly, and because the right to appeal was preserved. . . .Hinkel, 1992 U.S. App. LEXIS 778, at *11-12. In the present case, Steadman, had already gone through the appeal process when he requested the documents, and thus Steadman was not in a worse position because of the delay. (Doc. 37.) According to the Pension Fund, "[P]laintiff was not entitled to the disability benefits he sought, and thus to argue that he was somehow prejudiced is unavailing." (Doc. 50, 9.) Plaintiff offers little or nothing to warrant a different view and the Court finds that any remaining dispute of facts, such as the number and timing of Plaintiff's request for Plan information, are immaterial to this conclusion.
IV. CONCLUSION
For the foregoing reasons, this Court GRANTS Defendant Pension Fund's Motion for Summary Judgment. The Court also DENIES Plaintiff Carl Steadman's Motion for Summary Judgment.