Marks v. Newcourt Credit Grp ( 2003 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 Marks v. Newcourt Credit Group et al. No. 01-1921
ELECTRONIC CITATION: 2003 FED App. 0318P (6th Cir.)File Name: 03a0318p.06 _________________
COUNSEL
UNITED STATES COURT OF APPEALS
ARGUED: Stephen F. Wasinger, WASINGER KICKHAM
FOR THE SIXTH CIRCUIT AND HANLEY, Royal Oak, Michigan, for Appellant.
_________________ Patrick F. Hickey, DYKEMA GOSSETT, Detroit, Michigan,
for Appellees. ON BRIEF: Stephen F. Wasinger, Timothy
O. McMahon, WASINGER KICKHAM AND HANLEY,
LLOYD MARKS, X Royal Oak, Michigan, for Appellant. Patrick F. Hickey,
Plaintiff-Appellant, - Jeffrey S. Kopp, DYKEMA GOSSETT, Detroit, Michigan,
- for Appellees.
- No. 01-1921
v. -
> _________________
,
NEWCOURT CREDIT GROUP, - OPINION
INC. et al., - _________________
Defendants-Appellees. -
- KAREN NELSON MOORE, Circuit Judge. Plaintiff-
N Appellant Lloyd Marks appeals the district court’s dismissal
of his state law equitable estoppel claim and his claims that
Appeal from the United States District Court Defendant-Appellee Newcourt Credit Group, Inc., CIT
for the Eastern District of Michigan at Ann Arbor. Group, Inc., and Newcourt Financial USA, Inc. (collectively
No. 99-60792—Marianne O. Battani, District Judge. “Newcourt”), violated state law and the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. He
Argued: December 10, 2002 also appeals the district court’s entry of judgment against him
with respect to his claims that Newcourt arbitrarily and
Decided and Filed: September 4, 2003 capriciously denied him benefits, failed to comply with
ERISA § 503, and fraudulently induced him to purchase stock
Before: BATCHELDER and MOORE, Circuit Judges; options.
COLLIER, District Judge.*
Marks participated in the “AT&T Capital Leadership
Severance Plan” (“plan”), under which Marks would be
entitled to substantial benefits if he experienced a qualifying
termination by October 1, 1998. Marks filed a claim for these
benefits in June 1999, arguing that he had been constructively
terminated before the October deadline due to reductions in
his duties and compensation unknown to him at the time.
*
The Honorab le Curtis L. Collier, United States District Judge for the Newcourt denied Marks’s claims for benefits both initially
Eastern District of Tennessee, sitting by designation.
1
No. 01-1921 Marks v. Newcourt Credit Group et al. 3 4 Marks v. Newcourt Credit Group et al. No. 01-1921
and on appeal, concluding that he had not experienced a one or more of the following reasons: (a) a
qualifying termination before October 1, 1998. reduction in base salary; (b) a significant reduction
in annual cash target bonus; (c) an elimination or
Marks filed a claim in state court alleging breach of reduction of the Participant’s eligibility to
contract, fraudulent misrepresentation, innocent participate in the Company’s benefit plans or
misrepresentation, fraudulent inducement to purchase stock programs that is inconsistent with the eligibility of
options, and breach of the plan. Newcourt removed the case similarly situated employees . . . to participate
to federal district court, where the district judge liberally therein; (d) a significant reduction in the
construed Marks’s complaint to state ERISA claims and Participant’s duties as they exist immediately after
therefore dismissed the state-law claims as preempted. The the Closing Date; or (e) an obligation to relocate
district judge also dismissed Marks’s equitable estoppel claim ....
and his claims under ERISA §§ 404, 502, and 510, and
entered judgment against Marks with respect to the denial of Joint Appendix (“J.A.”) at 116-17 (Plan).
benefits and Newcourt’s alleged procedural violations of
ERISA § 503. Finally, the district court entered summary Newcourt purchased all outstanding shares of AT&T
judgment for Newcourt as to Marks’s claim that Newcourt Capital on January 12, 1998. Prior to the acquisition,
fraudulently induced him to purchase stock options. Marks Newcourt offered Marks continued employment, with duties,
timely filed this appeal. responsibilities, authority, and compensation that were
substantially identical to his duties and compensation with
We REVERSE the district court’s dismissal of Marks’s AT&T Capital. Marks accepted Newcourt’s offer, and agreed
state-law claims to the extent that they are not related to the to purchase 14,665 shares of the company’s stock as part of
plan, and REMAND for further proceedings on these his employment contract. He borrowed $453,258 to finance
grounds. We AFFIRM the district court on all other grounds. the stock purchase. Marks continued to be employed in a
senior management position that was substantially similar to
I. FACTS AND PROCEDURAL HISTORY the position he held with AT&T. He was still covered by the
plan, but he would have to make a claim by October 1, 1998
Marks was employed by AT&T Capital Corporation to be entitled to benefits for suffering a qualifying
(“AT&T Capital”) in a senior management position. In this termination.
capacity, Marks participated in a severance plan that entitled
him to a substantial cash payment if he was terminated During 1998, Newcourt allegedly began making changes to
without just cause. In the event of a change of control, Marks Marks’s business unit. Marks sought and received assurances
would also be entitled to benefits if he suffered a “Qualifying through and after October 1, 1998, that these modifications
Termination” of employment during the following two years: were not intended to reduce his duties or his compensation.
He continued to be actively employed by Newcourt until
(i) A termination of a Participant’s employment by the February 1999, when he suffered a heart attack and took
Company and its Subsidiaries . . . other than a disability leave.
termination for Cause; or
(ii) A termination of employment by a Participant prior Marks did not assert any rights under the plan before
to the second anniversary of the Closing Date for October 1, 1998. In March 1999, Marks learned that
No. 01-1921 Marks v. Newcourt Credit Group et al. 5 6 Marks v. Newcourt Credit Group et al. No. 01-1921
Newcourt had awarded him a bonus that was significantly resigned prior to October 1, 1998. Furthermore, the
lower than bonuses he typically received from AT&T. committee reasoned, Marks had accepted compensation and
According to Marks, Newcourt changed its methods for benefits for several months after October 1998.
calculating performance goals before October 1, 1998, but did
not make clear that these changes were intended to and did Marks filed an action in state court, claiming that Newcourt
materially reduce Marks’s job responsibilities until May had fraudulently induced him to become employed by
1999. Newcourt, breached his employment agreement, and
wrongfully deprived him of benefits under the plan. Marks
Marks first sought to exercise his rights under the plan on also alleged that Newcourt engaged in fraudulent conduct that
June 1, 1999, when his attorney informed Newcourt that reduced his duties and compensation, while continually
Marks was entitled to plan benefits because he had been assuring him that neither was being reduced. Marks did not
constructively terminated. Marks’s claim alleged that his job raise any claims under ERISA.
responsibilities had changed in 1998 and that Newcourt had
misrepresented the nature of these changes. The plan Newcourt removed the action to federal district court on
administrators, who are responsible for reviewing all claims grounds that ERISA preempted Marks’s state law claims and
for benefits, sent Marks written notification that his claim had that there was diversity of citizenship. Marks then filed an
been denied.1 According to the administrators, Marks was amended complaint stating claims for (1) breach of contract
not entitled to benefits because the plan required an actual and constructive discharge, (2) fraud and silent fraud,
termination before October 1, 1998. (3) innocent misrepresentation, (4) fraudulent inducement of
stock purchase and loan agreement; and (5) breach of the
Marks protested the denial of his claim, arguing that the AT&T Leadership Plan, breach of contract, and breach of
administrators had imposed a condition — termination before fiduciary duties.
October 1, 1998 — on the receipt of benefits that was not
contained in the plan. The administrators referred Marks’s Newcourt moved for an order upholding the administrators’
protest to the benefits committee, which has “sole and denial of Marks’s claim for plan benefits pursuant to Federal
complete discretionary authority to determine conclusively Rule of Civil Procedure 52. Newcourt also moved to dismiss
for all parties . . . all questions relating to participation of three of Marks’s common-law claims pursuant to Rule
eligible members and eligibility for benefits, determination of 12(b)(6).
all relevant facts, the amount and type of benefits payable to
any participant, and construction of all terms of the Plan.” Marks filed a motion to amend his complaint a second time.
J.A. at 437 (Plan Summ.). The committee denied Marks’s He wanted to add an estoppel claim and claims under ERISA,
appeal, reasoning that he had no claim because Newcourt had alleging violations of §§ 502, 29 U.S.C. § 1132; 503, 29
not terminated his employment and because he had not U.S.C. § 1133; 504, 29 U.S.C. § 1134; 510, 29 U.S.C.
§ 1140; and 404, 29 U.S.C. § 1104. The magistrate judge
denied Marks’s motion to amend, but granted his motion to
1
The plan requires written notification of the d enial of benefits. The add CIT Group, Inc., as a defendant. The magistrate judge’s
notice must include a specific reason for the denial, refer to pertinent plan order said that the first amended complaint should be broadly
provisions on which the d enial was based, describe any additional construed to state claims for the denial of benefits under
material necessary to p erfect a participant’s claim, and explain why the
requirements are necessary.
No. 01-1921 Marks v. Newcourt Credit Group et al. 7 8 Marks v. Newcourt Credit Group et al. No. 01-1921
ERISA. The district court later construed Marks’s first consider it true and thus it did not affect the merits
amended complaint to include ERISA claims. of their decisions.
Marks filed his opposition to Newcourt’s Rule 52 motion J.A. at 888-89 (Order).
for judgment and, in doing so, referred to several alleged
ERISA violations that had not been addressed in the Before ruling on the motions, however, the district judge
complaint or any earlier briefs. At this point, the parties accepted Newcourt’s designation of the administrative record.
stipulated that Newcourt could voluntarily withdraw its initial Newcourt’s former Director of Employee Relations, Kenneth
Rule 52 motion and file a renewed motion that would address Auletta (“Auletta”), set forth an affidavit swearing to the
Marks’s newly asserted claims and issues. materials that were available to the benefits committee for
review. Over Marks’s objection, the district judge concluded
Marks filed a motion for summary judgment as to his that Auletta’s affidavit was not hearsay, and was “sufficient
ERISA claims. Newcourt filed a response, and then a to identify the administrative record.” J.A. at 1031 (Op.).
renewed motion for entry of judgment. Newcourt sought an
affirmance of the denial of benefits under the various The district court granted Newcourt’s renewed motion for
provisions of ERISA and moved that all but one of Marks’s judgment and denied Marks’s motion for summary judgment.
common-law claims be dismissed as preempted by ERISA. The district court also denied Marks’s motion for
reconsideration or leave to amend his complaint. Finally, the
“[F]or the purposes of Defendant’s Revised Rule 52 and district court granted Newcourt’s motion for summary
12(b)(6) motions only,” J.A. at 888 (Order), Newcourt judgment as to Marks’s final claim — fraudulent inducement
stipulated to the following: to purchase Newcourt stock — and entered final judgment for
Newcourt. Marks filed a timely notice of appeal.
[E]ach of the following alternate factual statements are
possibly true and could possibly be proven if complete II. CLAIMS DISMISSED PURSUANT TO RULE
discovery on these issues is allowed to proceed: 12(b)(6)
(1) The Plan Administrators and the Benefits
Committee did not consider Plaintiff’s claim that A. Standard of Review
Newcourt “lulled” him into not filing a claim by
October 1, 1998; We review de novo a district court’s dismissal of claims
(2) the Plan Administrators and the Benefits Committee pursuant to Federal Rule of Civil Procedure 12(b)(6). Weiner
considered the “fraudulent lulling” claim based on v. Klais & Co., 108 F.3d 86, 88 (6th Cir. 1997). In deciding
the administrative record but disregarded it as not whether to grant a Rule 12(b)(6) motion, we “must construe
being material even if true (e.g., “fraudulent lulling” the complaint in the light most favorable to the plaintiff,
does not matter) or not being within the scope of accept all factual allegations [of the plaintiff] as true, and
their jurisdiction (e.g., “fraudulent lulling” is wrong determine whether the plaintiff undoubtedly can prove no set
but no relief is available under the benefit plan); or of facts in support of his claims that would entitle him to
(3) The Plan Administrators and the Benefits relief.” Allard v. Weitzman (In re DeLorean Motor Co.), 991
Committee considered the “fraudulent lulling” claim F.2d 1236, 1240 (6th Cir. 1993). Our function is not to weigh
based on the administrative record but did not the evidence or assess the credibility of witnesses, Weiner,
No. 01-1921 Marks v. Newcourt Credit Group et al. 9 10 Marks v. Newcourt Credit Group et al. No. 01-1921
108 F.3d at 88, but rather to examine the complaint and requirements.”). But see Ky. Ass’n of Health Plans, Inc. v.
determine whether the plaintiff has pleaded a cognizable Miller, --- U.S. ----, 123 S. Ct. 1471, 1474 (2003) (noting that
claim, Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d state laws regulating insurance, banking, and securities are
434, 436 (6th Cir. 1988). The motion should not be granted “saved from pre-emption” by ERISA).
“unless it appears beyond doubt that the plaintiff can prove no
set of facts in support of his claim which would entitle him to In keeping with the Supreme Court’s recognition of the
relief.” Cameron v. Seitz, 38 F.3d 264, 270 (6th Cir. 1994) broad scope of ERISA preemption, the Sixth Circuit “has
(quotation omitted). repeatedly recognized that virtually all state law claims
relating to an employee benefit plan are preempted by
B. Preemption of State Law Claims ERISA.” Cromwell v. Equicor-Equitable HCA Corp., 944
F.2d 1272, 1276 (6th Cir. 1991), cert. dismissed, 505 U.S.
The district court concluded that Marks’s common-law 1233 (1992). However, we will not conclude that state-law
claims for breach of contract, fraud, and innocent claims are preempted where their “effect on employee
misrepresentation were preempted by ERISA, and dismissed benefits plans is merely tenuous, remote or peripheral.” Id.them pursuant to Rule 12(b)(6). According to the district For example, a state-law action only peripherally affects a
court, each cause of action relies “on plaintiff’s allegations plan where a plaintiff refers to a clause in the benefit plan
that defendants deceived him about his job responsibilities summary to support his employment discrimination claim, or
and duties, thus inducing him to accept employment with where a plaintiff simply makes “reference to specific,
defendants, further inducing him to purchase Newcourt stock, ascertainable damages” by citing a life insurance contract.
and ultimately lulling him into not exercising his rights under Wright v. Gen. Motors Corp., 262 F.3d 610, 615 (6th Cir.
the AT&T plan.” J.A. at 1018 (Op.). However, as Marks 2001). In deciding whether state-law claims are preempted
argues, there is a distinction between alleged lies inducing by ERISA, we have focused on the remedy sought by
Marks to accept employment with Newcourt and alleged lies plaintiffs. See Lion’s Volunteer Blind Indus., Inc. v.
inducing Marks not to file a claim for benefits. Automated Group Admin., Inc., 195 F.3d 803, 806 (6th Cir.
1999).
ERISA preempts “any and all State laws insofar as they
may now or hereafter relate to any employee benefit plan.” Marks’s amended complaint alleges that “Newcourt has
ERISA § 514(a), 29 U.S.C. § 1144(a). In the context of wrongfully, arbitrarily and capriciously rejected Mark[s]’s
ERISA, “the term ‘State law’ includes all laws, decisions, notice of termination; and Newcourt has done so solely for
rules, regulations, or other State action having the effect of selfish reasons, namely, to avoid paying Marks more than
law.” Id. § 514(c)(1). To relate to a benefit plan, a law only $1.5 million that he would otherwise be entitled to under the
need have “a connection with or reference to such a plan.” AT&T Plan.” J.A. at 48 (Am. Compl. ¶ 38). For each of his
Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983). state-law causes of action, Marks seeks in damages “an
ERISA’s preemption provisions “are deliberately expansive.” amount presently undetermined but believed to exceed
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-46 (1987); see $1,500,000.” J.A. at 49, 50 (Am. Compl. ¶¶ 45, 48, 51).
Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739 Because he seeks damages equaling the benefits he would
(1985) (“The pre-emption provision was intended to displace have received under the plan, it seems at first glance that his
all state laws that fall within its sphere, even including state claims relate to an ERISA benefit plan. However, a close
laws that are consistent with ERISA’s substantive reading of Marks’s complaint reveals that the reference to
No. 01-1921 Marks v. Newcourt Credit Group et al. 11 12 Marks v. Newcourt Credit Group et al. No. 01-1921
plan benefits was only a way to articulate “specific, [A] fiduciary shall discharge his duties with respect to a
ascertainable damages.” Wright, 262 F.3d at 615. plan solely in the interest of the participants and
beneficiaries and —
We conclude that the district court erred in finding that (A) for the exclusive purpose of:
Marks’s state-law claims were preempted to the extent that (i) providing benefits to participants and their
the claims alleged would have a “tenuous, remote or beneficiaries; and
peripheral” effect on the plan. Cromwell, 944 F.2d at 1276. (ii) defraying reasonable expenses of
Marks alleges that, without cause, Newcourt significantly administering the plan;
altered his duties and reduced his compensation. Because this (B) with the care, skill, prudence, and diligence under
conduct may constitute a breach of Marks’s employment the circumstances then prevailing that a prudent
contract irrespective of the plan, the breach of contract claim man acting in a like capacity and familiar with
is not preempted. such matters would use in the conduct of an
enterprise of a like character and with like aims
Moreover, Marks’s fraud and misrepresentation claims are ....
not entirely preempted, even though they clearly relate to
ERISA insofar as they allege that Newcourt’s conduct 29 U.S.C. § 1104(a). Section 409 further explains that a
induced Marks “not [to] exercise his rights under the AT&T fiduciary who breaches his duty is “personally liable to make
Plan until May, 1999.” J.A. at 49 (Am. Compl. ¶ 47(d)). To good to such plan any losses to the plan resulting from each
the extent that Marks alleges that fraud or misrepresentation such breach, and to restore to such plan any profits of such
induced him to accept employment as an initial matter, he can fiduciary which have been made through use of assets of the
state a state-law claim for fraud and/or innocent plan by the fiduciary.” 29 U.S.C. § 1109(a).
misrepresentation. Marks alleges that Newcourt’s conduct
induced him to become employed by Newcourt, to purchase An ERISA plan participant can seek equitable relief against
14,665 shares of Newcourt stock, and to borrow $453,258 to his plan administrator under § 502(a), 29 U.S.C. § 1132(a), if
finance that purchase. These allegations clearly do not relate he has been harmed by the administrator’s breach of a
to an ERISA plan. Therefore, we remand to the district court fiduciary duty. Varity Corp. v. Howe, 516 U.S. 489, 512
for adjudication of those aspects of Marks’s fraud and (1996). However, a participant cannot seek equitable relief
misrepresentation claims not relating to the plan, as well as for a breach of fiduciary duty under the catchall provision of
for adjudication of Marks’s breach of contract claim. § 502(a)(3) if the alleged violations are adequately remedied
under other provisions of § 502. Id.; see Wilkins v. Baptist
C. Dismissal of ERISA Claims Healthcare Sys., Inc., 150 F.3d 609, 615 (6th Cir. 1998)
(noting the Supreme Court’s clear limitation of § 502(a)(3)
1. Section 404: Breach of Fiduciary Duty relief to beneficiaries who “may not avail themselves of
§ 1132’s other remedies”).
The district court dismissed Marks’s claim for breach of
fiduciary duty, brought pursuant to ERISA § 404, as In Wilkins, we concluded that the plaintiff could not bring
duplicative of his § 502 claim. Section 404(a)(1) states: a cause of action for breach of fiduciary duty pursuant to
§ 502(a)(3) where § 502(a)(1)(B) provided a remedy for his
alleged injury. Section § 502(a)(1)(B) permitted Wilkins to
No. 01-1921 Marks v. Newcourt Credit Group et al. 13 14 Marks v. Newcourt Credit Group et al. No. 01-1921
bring a lawsuit to challenge the administrator’s denial of 2. Section 510: Discrimination
benefits. In this case, Marks is permitted to file and has filed
a suit pursuant to the same provision, challenging the The district court dismissed Marks’s claim that Newcourt
Newcourt’s administrative decision to deny him benefits. violated ERISA § 510, 29 U.S.C. § 1140, “by misleading him
Therefore, because the district court is correct that “ERISA about the reduction and change in his job duties thereby
§ 502(a)(1)(B) provides plaintiff a remedy for the alleged lulling him into not exercising his rights under the plan.” J.A.
injury, the denial of benefits, and allows him to bring a at 1023 (Op.). Marks argues that Newcourt discriminated
lawsuit to challenge the denial of benefits,” J.A. at 1022 against him with the intention of interfering with his
(Op.), we affirm the dismissal of Marks’s claim for breach of attainment of a right to which he might become entitled under
fiduciary duty. 2 the plan. The district court found that such deception did not
constitute interference or discrimination within the meaning
of § 510.
Pursuant to § 510, “[i]t shall be unlawful for any person to
2 discharge, fine, suspend, expel, discipline, or discriminate
Even if Marks could bring a breach -of-fiduciary-duty claim, we
have recognized such claims only where the misrepresentation in question against a participant or beneficiary for exercising any right to
involves the availability or exte nt of plan benefits. See Jam es v. Pirelli which he is entitled under the provisions of an employee
Armstrong Tire Corp., 305 F.3d 439 , 455 (6th Cir. 2002) (considering benefit plan . . . or for the purpose of interfering with the
“materially misleading and inaccurate information about the plan
benefits”); Kroh n v. Hu ron M em’l H osp., 173 F.3d 542 , 547 (6th Cir.
attainment of any right to which such participant may become
1999) (describing breaches where administrator answers questions entitled under the plan . . . .” This provision of ERISA is
inaccurately or incompletely, or where administrator negligently or “aimed primarily at preventing unscrupulous employers from
intentionally misleads plan p articipants abo ut plan eligibility or benefits); discharging or harassing their employees in order to keep
Sprague v. Gen. Motors Corp., 133 F.3d 388, 405-06 (6th Cir.) (en banc) them from obtaining vested pension rights.” West v. Butler,
(suggesting that breach can occur where employer provides misleading
information about the future of a plan or fails to provide such information
621 F.2d 240, 245 (6th Cir. 1980). To violate § 510,
when required to do so), cert. denied, 524 U.S. 923 (1998). In this case, discrimination “must affect the individual’s employment
Marks inquired about his duties and compensation, not about a matter of relationship in some substantial way.” Id. at 245-46.
plan administration. Although Marks argues that his duties and
compensation were a matter of plan administration because his To state a prima facie case under § 510, “an employee must
employment status determined his benefits, we have not recognized this show that there was: (1) prohibited employer conduct
kind of misrepresentation in the context of § 404.
Furthermore, we have only recognized § 404 claims when a plan (2) taken for the purpose of interfering (3) with the attainment
administrator, or an emp loyer “exercising ‘discre tionary authority’ in of any right to which the employee may become entitled.”
connection with the plan’s ‘management’ or ‘administration’” Shahid v. Ford Motor Co., 76 F.3d 1404, 1411 (6th Cir. 1996)
misrepresents a material fact. Sprague, 133 F.3d at 405 (citing Varity (quotation omitted). Courts have concluded that false
Corp. v. Howe, 516 U.S. 489, 502-04 (1996)). Marks’s employer statements affecting an employee’s pension rights do not rise
alleged ly misled him about reductions in his duties and compensation. In
doing so, Newcourt did not exercise discretion in connection with plan
to the level of discrimination found in cases enforcing § 510.
management or administration; Newcourt was discussing Marks’s duties See, e.g., Swanson v. U.A. Local 13 Pension Plan, 779 F.
as an employee. Supp. 690, 702 (W.D.N.Y. 1991) (failing to advise employee
Therefore, even if Marks could bring a § 404 claim, he would not of the consequences of retirement was not the kind of direct
prevail. Marks do es not allege the necessary kind of misrepresentation or interference required to establish liability under § 510), aff’d,
source of that misrepresentation.
No. 01-1921 Marks v. Newcourt Credit Group et al. 15 16 Marks v. Newcourt Credit Group et al. No. 01-1921
953 F.2d 636 (2d Cir. Dec. 19, 1991); Goins v. Teamsters court concluded that Marks could not prevail on an estoppel
Local 639, 598 F. Supp. 1151, 1154-55 (D.D.C. 1984) theory as a matter of law, because estoppel would “contravene
(making false statements about pension rights does not rise to the terms of the plan documents,” which “unambiguously
the level of a § 510 violation where administrator’s remarks require that plaintiff have experienced a qualifying
at most “lulled” employee into erroneously believing that termination prior to October 1, 1998.” J.A. at 1024 (Op.).
certain requirements did not apply). Such “statements [stand]
in stark contrast to the sort of discrimination found in cases This court has recognized that “equitable estoppel may be
enforcing § [510], which usually involve employers a viable theory in ERISA cases.” Sprague v. Gen. Motors
discharging or taking reprisals against employees to prevent Corp., 133 F.3d 388, 403 (6th Cir.) (en banc), cert. denied,
them from receiving benefits.” Swanson, 779 F. Supp. at 703 524 U.S. 923 (1998). To set forth a claim for equitable
(quotation omitted). estoppel in the ERISA context, a plaintiff must plead five
elements:
Marks alleges that Newcourt disguised the significance of
changes made to the terms and conditions of his employment (1) [T]here must be conduct or language amounting to
and fraudulently concealed its true reasons for making the a representation of material fact; (2) the party to be
changes. The District Court for the Southern District of New estopped must be aware of the true facts; (3) the
York has considered whether an employee can state a claim party to be estopped must intend that the
under § 510 based on allegations that the employee was representation be acted on, or the party asserting the
misled about the nature of his duties and responsibilities: “On estoppel must reasonably believe that the party to be
the facts presented, the most [the employee] can allege is that estopped so intends; (4) the party asserting the
she was misled about her duties and responsibilities. This estoppel must be unaware of the true facts; and
allegation does not give rise to a claim for ‘interference’ or (5) the party asserting the estoppel must reasonably
‘discrimination’ under § 510.” Donnelly v. Bank of N.Y. Co., or justifiably rely on the representation to his
801 F. Supp. 1247, 1255 (S.D.N.Y. 1992), aff’d, 2 F.3d 403 detriment.
(2d Cir. July 2, 1993). This is precisely what Marks alleges
in this case. Thus, construing Marks’s complaint in the light Id. Liberally construed, Marks’s complaint alleges each of
most favorable to him, we conclude that Marks failed to state the five required elements.
a prima facie case under § 510. Because he fails to allege
conduct that would fall within the scope of § 510’s A party cannot seek to estop the application of an
prohibitions, we affirm the district court’s decision to dismiss unambiguous written provision in an ERISA plan, however.
this claim. Id. at 404. When a party seeks to estop the application of an
unambiguous plan provision, he by necessity argues that he
3. Equitable Estoppel reasonably and justifiably relied on a representation that was
inconsistent with the clear terms of the plan. Id. Moreover,
Marks argues that because Newcourt fraudulently “to allow estoppel to override the clear terms of plan
represented to him that his job duties had not been reduced documents would be to enforce something other than the plan
throughout 1998, and therefore lulled him into not exercising documents themselves.” Id. In this case, the plan provision
his rights under the plan, Newcourt should be estopped from requiring that a participant assert his rights by October 1,
relying on the plan’s October 1, 1998, deadline. The district 1998, is unambiguous. Therefore Marks cannot rely on an
No. 01-1921 Marks v. Newcourt Credit Group et al. 17 18 Marks v. Newcourt Credit Group et al. No. 01-1921
estoppel theory, and the district court did not err in dismissing benefits.” J.A. at 131 (Plan § 19). Therefore, we apply the
the argument. deferential “arbitrary and capricious” standard in reviewing
the decisions of the administrators and the benefits committee
III. JUDGMENT AGAINST MARKS to deny Marks benefits. We should also take into account,
however, the fact that Newcourt is acting under a conflict of
A. ERISA § 502: Challenging the Denial of Plan Benefits interest because it both funds and administers the plan. See
Bruch, 489 U.S. at 115 (noting that courts should be attentive
The district court concluded that Marks’s claim for breach to conflicts in this context); Univ. Hosps. of Cleveland v.
of the plan was actually a claim challenging the denial of Emerson Elec. Co., 202 F.3d 839, 847 n.4. (6th Cir. 2000)
benefits brought pursuant to ERISA § 502. Section (recognizing a potential for self-interested decisionmaking
502(a)(1)(B) gives a participant or beneficiary the right to “where, as here, the plan sponsor bears all or most of the risk
bring a civil action “to recover benefits due to him under the of paying claims, and also appoints the body designated as the
terms of his plan, to enforce his rights under the terms of the final arbiter of such claims”).
plan, or to clarify his rights to future benefits under the terms
of the plan.” 29 U.S.C. § 1132(a)(1)(B). 2. Administrative Record Considered on Review
1. Standard of Review The scope of the district court’s and this court’s review of
the denial of benefits is limited to the administrative record
We review de novo a denial of benefits challenged under available to the plan administrators when the final decision
§ 502(a)(1)(B), “unless the benefit plan gives the was made. Miller, 925 F.2d at 986. Although Newcourt did
administrator or fiduciary discretionary authority to determine not identify the administrative record before the magistrate
eligibility for benefits or to construe the terms of the plan.” judge, it subsequently presented to the district court what it
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 “assert[s] is the complete administrative record containing all
(1989). If a plan affords such discretion to an administrator documents reviewed by the benefits committee.” J.A. at 1031
or fiduciary, we review the denial of benefits only to (Op.). Marks argues that the district court erred by relying on
determine if it was “arbitrary and capricious,” Miller v. Auletta’s affidavit to identify the administrative record
Metropolitan Life Insurance Co., 925 F.2d 979, 983 (6th Cir. because Auletta was not a member of the benefits committee.
1991), and will uphold his decision if it is “rational in light of
the plan’s provisions,” Borda v. Hardy, Lewis, Pollard & Pursuant to Federal Rule of Civil Procedure 56, affidavits
Page, P.C., 138 F.3d 1062, 1066 (6th Cir. 1998) (quotation submitted in support of a motion for summary judgment
omitted). “shall be made on personal knowledge, shall set forth such
facts as would be admissible in evidence, and shall show
The plan at issue grants its administrators discretion over affirmatively that the affiant is competent to testify to the
determining eligibility for benefits. Section 19, matters stated therein.” Fed. R. Civ. P. 56(e). We review for
“Administration,” states that “[t]he Plan Administrator shall an abuse of discretion “all evidentiary rulings of the district
make the rules and regulations necessary to administer the court, including its determination of whether testimony is
Plan and shall have the responsibility and discretionary inadmissible hearsay.” United States v. Khalil, 279 F.3d 358,
authority to interpret the terms of the Plan, determine 363 (6th Cir. 2002). Auletta’s affidavit claims his “personal
eligibility for benefits and to determine the amounts of such knowledge of the facts contained in this affidavit” and
No. 01-1921 Marks v. Newcourt Credit Group et al. 19 20 Marks v. Newcourt Credit Group et al. No. 01-1921
explains that the documents attached “were the materials 3. Arbitrary and Capricious Denial of Benefits
reviewed by the Benefits Committee in reviewing Plaintiff’s
appeal of the Plan Administrators’ denial of Plaintiff’s Marks alleges that Newcourt’s denial of benefits was
claim.” J.A. at 213, 214 (Auletta Aff.). Auletta was not a arbitrary and capricious because the administrators
plan administrator or a member of the benefits committee, so impermissibly added a new term to the plan by refusing to
he did not have personal knowledge of the documents treat Marks’s alleged constructive termination before
actually considered by the committee. However, Auletta October 1, 1998, as a qualifying termination. According to
could have personal knowledge of what materials were Marks, the plan was ambiguous as to whether constructive
available to the committee when it decided to deny benefits. termination before October 1, 1998, constitutes a qualifying
Marks does not contest that Auletta, as the then-Director of termination. Therefore, Marks argues that we should resolve
Employee Relations, was responsible for assembling any ambiguity against the drafter of the provision —
materials presented to the administrators and the committee Newcourt. See Univ. Hosps., 202 F.3d at 847.
for review. Therefore, because Auletta would have personal
knowledge of the administrative record available to the plan In their initial denial of Marks’s claim for benefits, the plan
administrators at the time of their final decision, we find that administrators explained that Marks’s actual termination was
the district court did not abuse its discretion by relying on a condition precedent to establishing a qualifying termination
Auletta’s affidavit to determine the administrative record. under the plan. The plan recognizes two kinds of qualifying
terminations: (1) termination by the company without cause,
The district court did clearly err, however, in relying on and (2) termination by the employee because, among other
Auletta’s affidavit to designate a piece of electronic mail sent reasons, the company significantly reduced the employee’s
from Rob McFarlane to Auletta on August 30, 1999, as part duties. With respect to Marks’s claim of termination by the
of the administrative record. The benefits committee notified company, the administrators interpreted the language of the
Marks that it had denied his appeal on August 27, 1999. plan to require actual, not constructive, termination, and
Clearly McFarlane’s electronic mail could not have been found that “[t]o date, no such termination of [Marks’s]
available to the administrators when they made their final employment by the Company has occurred and more than two
decision to deny Marks’s claim. Therefore, this document years have passed since the Closing Date.” J.A. at 144
should not be considered part of the administrative record. In (Admin. Decision). Then, the administrators determined that
reviewing Marks’s § 502 claim, we will consider the they could not evaluate Marks’s claim that he terminated his
administrative record designated by the district court, with the own employment because the company reduced his duties
exception of this electronic mail.3 until Marks provided written notice of his termination of
employment with the company.
3 The benefits committee offered a similar explanation for its
Marks also argues that the district court should have included denial of Marks’s claims. After defining and establishing the
Marks’s own affidavit, created in March 2 000, as part of the
administrative record. Appellant’s Br. at 18 n.7. Because Newco urt can
deadline for a “qualifying termination,” the committee
identify the administrative record, howev er, this argument is without
force. A district court can only consider new non-record evidence “when
consideration of that evidence is necessary to resolve an ERISA
claima nt’s procedural challenge to the administrator’s decision, such as bias on its part.” Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609,
an alleged lack of due process afforded by the administrator or alleged 618 (6th Cir. 1998). M arks alleges no such procedural error.
No. 01-1921 Marks v. Newcourt Credit Group et al. 21 22 Marks v. Newcourt Credit Group et al. No. 01-1921
concluded that Marks had not suffered a qualifying B. ERISA § 503: Procedural Requirements
termination because “the Company had not terminated [his]
employment ‘prior to the second anniversary of the Closing Appellant argues that he did not receive the procedural
Date,’ which is October 1, 1998.” J.A. at 211 (Benefits protections established by ERISA § 503. Pursuant to § 503,
Comm. Decision). Marks was employed by the company
until June 1999, and continued to accept compensation and [E]very employee benefit plan shall —
benefits from the company for months after October 1, 1998. (1) provide adequate notice in writing to any
Like the administrators, the committee found that the plan participant or beneficiary whose claim for benefits
addresses only actual, not constructive, termination, and under the plan has been denied, setting forth the
concluded that Marks would have had to resign before specific reasons for such denial, written in a
October 1, 1998, to establish a benefits claim on grounds that manner calculated to be understood by the
he terminated his employment due to a reduction in duties. participant, and
(2) afford a reasonable opportunity to any participant
The plan administrators’ and benefits committee’s whose claim for benefits has been denied for a full
decisions to deny Marks benefits in light of their and fair review by the appropriate named
interpretations of “qualifying termination” under the plan fiduciary of the decision for denying the claim.
provisions was not arbitrary or capricious. The administrators
made the reasonable determination that the provision in 29 U.S.C. § 1133.
question in fact was not ambiguous. They concluded that the
plan clearly required either resignation or actual termination We review de novo “the question of whether the procedure
of employment prior to October 1, 1998.4 Because Marks employed by the fiduciary in denying the claim meets the
continued to be actually employed by the company until June requirements of Section [503].” Kent v. United of Omaha
1999, we can only conclude that the administrators and Life Ins. Co., 96 F.3d 803, 806 (6th Cir. 1996). For this court
benefits committee offered a reasoned explanation for the to consider a plan’s claims procedure reasonable, the plan
denial of benefits. Davis, 887 F.2d at 693. We affirm the must:
denial of benefits because the administrators’ decision is
rational in light of the plan provisions, and therefore was not (1) establish a procedure for the filing of claims by
arbitrary and capricious. Borda, 138 F.3d at 1066. participants and beneficiaries, provide for a written
notification procedure for denial or partial denial of
claims, and provide for an appeal procedure for
denied or partially denied claims, see 29 C.F.R.
4
§ 2560.503-1(b)(1)(i); (2) be described in the
At any rate, Marks co uld no t demonstrate that he w as constructive ly Summary Plan Description, see id. § 2560.503-
discharged: “In order to demonstrate constructive discharge, an employee 1(b)(1)(ii); (3) not contain any provision and not be
must show that working cond itions were so unplea sant and unreasonable administered in a way that “unduly inhibits or
that a reaso nable person in the emp loyee’s shoes would have felt
compelled to resign.” Welsch v. Empire Plastics, Inc., No. 99-3420, 2000 hampers the initiation or processing of plan claims,”
W L 687 678 , ** 4 (6th Cir. May 19, 2000) (citing Wilson v. F irestone Tire id. § 2560.503-1(b)(1)(iii); and (4) provide for a
& Rubber Co., 932 F.2d 510 , 515 (6th C ir. 199 1)). Marks neither claims procedure for informing participants in a timely
that he felt compelled to resign before October 1, 1998, nor alleges that fashion of the time periods for decisions on claims
his working co nditions were unpleasant.
No. 01-1921 Marks v. Newcourt Credit Group et al. 23 24 Marks v. Newcourt Credit Group et al. No. 01-1921
made and the time periods for making appeals and committee did effectively reject the lulling claim in that “the
receiving decisions thereon, see id. § 2560.503- determination that plaintiff did not suffer a termination
1(b)(1)(iv). necessarily encompasses a rejection of plaintiff’s lulling
claim, the gravamen of which was that plaintiff did suffer a
Fallick v. Nationwide Mut. Ins. Co., 162 F.3d 410, 413-14 n.2 termination.” J.A. at 1036 (Op.). However, the plain
(6th Cir. 1998). language of § 503(1) suggests that “effectively rejecting” a
claim for benefits is not sufficient. Rather, administrators
Because Newcourt’s plan ostensibly complies with these must provide written notice “setting forth the specific reasons
procedural requirements, we must consider whether Newcourt for such denial, written in a manner calculated to be
complied with these procedures when evaluating Marks’s understood by the participant.” 29 U.S.C. § 1133(1). Neither
claim. We have adopted the rule that plan administrators the administrators nor the benefits committee set forth
need only substantially comply with ERISA notice specific reasons for rejecting Marks’s estoppel, or “lulling,”
requirements. Kent, 96 F.3d at 807-08. To decide whether theory.
there is substantial compliance, courts consider all
communications between an administrator and plan We conclude that, in light of the purpose of § 503,
participant to determine whether the information provided Newcourt substantially complied with ERISA’s procedural
was sufficient under the circumstances. See, e.g., White v. requirements. Neither Marks’s initial demand for benefits nor
Aetna Life Ins. Co., 210 F.3d 412, 414 (D.C. Cir. 2000); his appeal to the benefits committee clearly expressed that his
Brehmer v. Inland Steel Indus. Pension Plan, 114 F.3d 656, claims of termination and estoppel were distinct and required
662 (7th Cir. 1997) (“[T]he question is whether [plaintiff] was independent analysis. Marks alleged that Newcourt lulled
supplied with a statement of reasons that under the him into a false sense of security, and suggested that
circumstances of the case permitted a sufficiently clear Newcourt should be estopped from asserting the October
understanding of the administrator’s decision to permit deadline. However, the strongest indication of an estoppel
effective review.”). In this analysis, it is crucial for us to argument appears in a footnote to his statement that he is
determine whether the plan administrators fulfilled the providing notice of a qualifying termination and demanding
essential purpose of § 503 — notifying Marks of their reasons benefits. Given that the administrators and benefits
for denying his claims and affording him a fair opportunity committee both found that no qualifying termination
for review. Kent, 96 F.3d at 807. occurred, they did not deny Marks full and fair review by
failing specifically to address Marks’s estoppel theory. Even
1. Explaining the Denial of a Claim if Marks had received an explanation for the denial of his
estoppel theory and successfully appealed that determination,
The plan administrators and benefits committee both sent the estoppel theory alone would not entitle him to relief
Marks letters clearly explaining the denial of benefits, but absent a finding of qualifying termination. Because neither
neither expressly provided reasons for denying each of the administrators nor the benefits committee found a
Marks’s two claims for benefits: (1) his termination claim; qualifying termination, we conclude that their failure to
and (2) his estoppel claim. Marks alleges that the explain the rejection of the estoppel theory did not deprive
administrators failed to comply with § 503(1) because they Marks of his opportunity for fair review before the benefits
did not explain the denial of Marks's “lulling claim.” As the committee or the district court.
district court noted, the administrators and the benefits
No. 01-1921 Marks v. Newcourt Credit Group et al. 25 26 Marks v. Newcourt Credit Group et al. No. 01-1921
Where administrators have failed to comply with the was before the benefits committee, there is no evidence that
procedural requirements of § 503, it is ordinarily appropriate the plan administrators actually considered any of the
to reverse the denial of benefits and to remand the case to the evidence submitted when making their decision.
plan administrators or the district court. See VanderKlok v.
Provident Life & Acc. Ins. Co., 956 F.2d 610, 619 (6th Cir. It is true that neither the administrators’ nor the benefits
1992). However, because we conclude that Newcourt committee’s decision specifically lists every piece of evidence
substantially complied with § 503, we affirm the district considered, but no law requires them to do so. Marks cites as
court’s entry of judgment for Newcourt on this claim. support for his claim cases in which administrators failed to
offer any reason for their decisions to deny benefits. See, e.g.,
2. Additional Evidence VanderKlok v. Provident Life & Accident Ins. Co., 956 F.2d
610, 616 (6th Cir. 1992). But, in this case, the administrators
Marks also claims the procedural requirements were not and benefits committee did offer a reason for their denial,
met because the plan administrators failed to advise him of citing plan provisions and the fact that Marks did not
any additional evidence that would be required to make a experience a qualifying termination before the October 31,
reasoned decision. It is true that the administrators only 1998, deadline. Because Marks neither points to evidence
informed Marks generally that he could submit additional indicating that the administrators did not consider the
evidence and did not request specific additional evidence. evidence before them, nor has a claim on the basis of the
But this does not indicate any deficiency because, in light of administrators’ failure to offer reasoned explanations for their
the administrators’ and committee’s explanations for denying decisions, we affirm the district court’s dismissal of Marks’s
benefits, nothing short of evidence that Marks had been § 503(2) claim.
actually terminated before October 1, 1998, would have
changed their decisions. Therefore, the district court did not IV. SUMMARY JUDGMENT AS TO FRAUDULENT
err in concluding that the administrators substantially INDUCEMENT CLAIMS
complied with the procedural requirements of § 503(1) in this
respect. We need not review the district court’s grant of summary
judgment on Marks’s claim that Newcourt fraudulently
3. Full and Fair Review induced him to buy stock options because Marks did not raise
it before this court. According to the Federal Rules of
Finally, Marks argues that the administrators did not afford Appellate Procedure, an “appellant’s brief must contain . . . a
him an opportunity for full and fair review in accord with statement of the issues presented for review” and an argument
§ 503(2). The Seventh Circuit has said that “the persistent on each issue presented. Fed. R. App. P. 28(a); see Bickel v.
core requirements of review intended to be full and fair Korean Airlines Co., 96 F.3d 151, 153 (6th Cir. 1996), cert.
include knowing what evidence the decision-maker relied denied, 519 U.S. 1093 (1997). An appellant waives an issue
upon, having an opportunity to address the accuracy and when he fails to present it in his initial briefs before this court.
reliability of that evidence, and having the decision-maker Thaddeus-X v. Blatter, 175 F.3d 378, 403 n.18 (6th Cir. 1999)
consider the evidence presented by both parties prior to (en banc); Bickel, 96 F.3d at 153-54. The only reference to
reaching and rendering his decision.” Halpin v. W.W. Marks’s fraudulent inducement claim is in the last sentence of
Grainger, Inc., 962 F.2d 685, 689 (7th Cir. 1992) (quotation his brief addressed to this court, which requests that we
omitted). Marks argues that, even if we know what evidence “reverse the dismissal of Counts I-V.” Appellant’s Br. at 42.
No. 01-1921 Marks v. Newcourt Credit Group et al. 27
Marks does not acknowledge that judgment was entered for
Newcourt on the fraudulent inducement claim, mention the
claim in his statement of issues, or make any arguments
pertaining to the claim in his brief. Therefore, Marks waived
consideration of this issue on appeal, and we need not
consider the district court’s grant of summary judgment as to
Count IV.
V. CONCLUSION
For the reasons stated above, we REVERSE the district
court’s dismissal of Marks’s state-law claims to the extent
that they are not related to the plan, and we REMAND for
further proceedings in the district court Marks’s state-law
breach of contract claim and, insofar as Marks alleges that
Newcourt induced Marks to accept employment by deceiving
him about his duties, his state-law claim for fraud and
misrepresentation. Although the district court erred by
including McFarlane’s electronic mail in the administrative
record, we AFFIRM the district court’s judgment on all other
grounds.