Walker v. Pharmaceutical Research & Manufacturers of America , 827 F. Supp. 2d 8 ( 2011 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
BARBARA J. WALKER, :
:
Plaintiff, : Civil Action No.: 04-1991 (RMU)
:
v. : Re Document Nos.: 117, 119, 135
:
PHARMACEUTICAL RESEARCH AND :
MANUFACTURERS OF AMERICA et al., :
:
Defendants. :
MEMORANDUM OPINION
GRANTING DEFENDANT NEW YORK LIFE’S MOTION FOR SUMMARY JUDGMENT;
GRANTING THE INDIVIDUAL DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT;
DENYING THE PLAINTIFF’S CROSS-MOTION FOR SUMMARY JUDGMENT
I. INTRODUCTION
In the final chapter of this lengthy litigious saga, the plaintiff, a former employee of the
Pharmaceutical Research and Manufacturers of America 1 (“PhRMA”), seeks damages for
alleged violations of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. §§ 1001 et seq. The plaintiff alleges that the defendants violated ERISA’s notice and
disclosure requirements by failing to provide her with certain requested documents related to her
retirement plan with PhRMA. Additionally, she asserts that in failing to meet their notice and
disclosure obligations, the defendants also breached their fiduciary duties under ERISA § 404.
The matter is now before the court on the parties’ cross-motions for summary judgment.
As elaborated below, the court concludes that the plaintiff’s claims related to her August 2002
request for documents are time-barred by the applicable one-year statute of limitations period.
1
At the time that the plaintiff began her employment with the defendant, the association was
known as the Pharmaceutical Manufacturers Association (“PMA”). See Pl.’s Statement of
Material Facts in Support of Pl.’s Mot. for Summ. J. at 2.
With respect to the plaintiff’s claims concerning her August 2003 request for documents, the
court determines that the plaintiff failed to submit evidence from which a reasonable juror could
conclude that an ERISA violation had occurred. Finally, the court concludes that claims
regarding violations of ERISA’s notice and disclosure obligations are not properly brought as a
claim for breach of fiduciary duty under § 404. Accordingly, the court grants the defendants’
respective motions for summary judgment and denies the plaintiff’s cross-motion.
II. BACKGROUND
A. Factual Background
From 1977 to 1988, the plaintiff worked for PhRMA as a full-time attorney. Am. Compl.
¶¶ 15-17. 2 In 1988, the plaintiff began working for PhRMA as an independent contractor. Id.
As part of her work in PhRMA’s general counsel’s office, the plaintiff performed labor and
employment legal work, which included reviewing employees’ Retirement and Deferred Savings
plans. Individual Defs.’ Mot., Ex. 16 at 34-40.
To maintain her employment arrangement as an independent contractor, the plaintiff and
PhRMA have entered into an identically worded one-year employment agreement every year
since 1988. Am. Compl. ¶ 27. In September 2001, the plaintiff and PhRMA signed a final
employment agreement that provided notice to the plaintiff of PhRMA’s intention to discontinue
their relationship after June 30, 2002. Mem. Op. (July 17, 2006) at 3. After this final
employment agreement was signed, the plaintiff, through an attorney, requested that PhRMA
provide her with an accounting of the employment benefits to which she was entitled. Am.
2
In the plaintiff’s second amended complaint, the plaintiff incorporates by reference certain
paragraphs from her first amended complaint, specifically paragraphs 1-67, 69-71, 73-34a and
76-86. See 2d Amend. Compl. ¶¶ 1, 3, 5, 7, 9. Because the plaintiff fails to reassert these
paragraphs in her second amended complaint, the court refers to the first amended complaint
where applicable.
2
Compl. ¶ 43. In response, PhRMA informed the plaintiff that she was not entitled to any
benefits since the time that she began working as an independent contractor. Id. ¶ 44. The
plaintiff appealed that determination to PhRMA without success. Id. ¶ 45.
On August 26, 2002, after completing her final one-year work agreement, the plaintiff
submitted a letter to PhRMA’s Retirement Committee requesting documents related to the denial
of her claim for benefits. Pl.’s Mot. at 17; Individual Defs.’ Mot., Ex. 3. On September 5, 2002,
the Retirement Committee responded to the plaintiff’s letter, stating that it would provide her
with documents to which she was legally entitled. PhRMA’s Mot., Ex. 5. On September 26,
2002, the Retirement Committee provided her with several documents, including the 1994 and
1999 restatements of the Retirement Plan, the 1989 restatement of the Deferred Savings Plan, the
2002 Summary Plan Description (“SPD”) for the Retirement Plan and the 1996 SPD for the
Deferred Savings Plan. Id., Ex. 6.
In August 2003, 3 the plaintiff emailed the Retirement Committee a request for copies of
the Summary Annual Reports (“SARs”) for the 2002 Retirement Plan and Deferred Savings
Plan. Pl.’s Mot. at 22. On August 27, 2003, the Retirement Committee responded by providing
the plaintiff with copies of the 2001 SARs for the Retirement and Deferred Savings Plans. Id.;
Individual Defs.’ Mot., Ex. 7. When the plaintiff inquired as to why she had not received the
2002 documents, the Retirement Committee notified her that those documents were not yet
available. Pl.’s Mot. At 22. According to PhRMA, the 2002 SARs were not prepared until
December 2003. Individual Defs.’ Mot., Ex. 8.
3
The exact date of this request is unspecified by the parties.
3
B. Procedural History 4
The plaintiff filed her original complaint in November 2004, seeking to recoup the
retirement benefits that she claimed to be entitled to as an independent contractor. See generally
Compl. The plaintiff amended her complaint in August 2005, see generally Am. Compl., and
again in March 2009, see generally 2d Am. Compl. The only remaining claims at this juncture
are those brought against individual members of the PhRMA Board of Directors and its
Retirement Committee (“the individual defendants”) and against New York Life Investment
Management, LLC (“NYLIM”), the organization that provides administrative and actuarial
services for the PhRMA Retirement Committee. Am. Compl. ¶ 12.
The plaintiff’s claims revolve around the defendants’ alleged failure to provide her with
documents as required under ERISA. Pl.’s Mot. at 15-16. More specifically, the plaintiff asserts
that the defendants violated the notice and disclosure requirements outlined in ERISA by failing
to provide her with the documents that she requested in 2002 and 2003. Id. at 16, 22. Such
violations, she argues, entitle her to “civil penalties” under ERISA § 502(c), codified at 29
U.S.C. § 1132(c). Id. The plaintiff further alleges that the defendants’ notice and disclosure
violations also give rise to a breach of fiduciary duty claim under ERISA § 404, codified at 29
U.S.C. § 1104. Pl.’s Mot. at 21-22, 25-27, 33.
4
This case has a lengthy and convoluted procedural history. Because a recitation of this history is
not necessary for purposes of this memorandum opinion, the court refers the reader to its previous
memorandum opinions for further details. See Mem. Op. (July 17, 2006) (granting the
defendants’ motion for summary judgment because the plaintiff’s claims were time-barred);
Mem. Op. (Nov.15, 2006) (denying the plaintiff’s motion to alter or amend judgment); Mem. Op.
(Aug. 8, 2008) (dismissing the plaintiff’s ERISA claims with the exception of those relating to
disclosure violations); Mem. Op. (Mar. 10, 2009) (granting the plaintiff’s motion for leave to file
a second amended complaint).
4
The parties have now filed cross-motions for summary judgment. See generally Pl.’s
Mot.; Individual Defs.’ Mot.; NYLIM’s Mot. With these motions now ripe for adjudication, the
court turns to the parties’ arguments and the applicable legal standards.
III. ANALYSIS
A. The Court Grants the Defendants’ Motions for Summary Judgment
1. Legal Standard for Summary Judgment
Summary judgment is appropriate when the pleadings and evidence show “that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” FED. R. CIV. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986);
Diamond v. Atwood, 43 F.3d 1538, 1540 (D.C. Cir. 1995). To determine which facts are
“material,” a court must look to the substantive law on which each claim rests. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A “genuine dispute” is one whose resolution
could establish an element of a claim or defense and, therefore, affect the outcome of the action.
Celotex, 477 U.S. at 322; Anderson, 477 U.S. at 248.
In ruling on a motion for summary judgment, the court must draw all justifiable
inferences in the nonmoving party’s favor and accept the nonmoving party’s evidence as true.
Anderson, 477 U.S. at 255. A nonmoving party, however, must establish more than “the mere
existence of a scintilla of evidence” in support of its position. Id. at 252. To prevail on a motion
for summary judgment, the moving party must show that the nonmoving party “fail[ed] 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, 477 U.S. at 322. By pointing to
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the absence of evidence proffered by the nonmoving party, a moving party may succeed on
summary judgment. Id.The nonmoving party may defeat summary judgment through factual representations
made in a sworn affidavit if he “support[s] his allegations . . . with facts in the record,” Greene v.
Dalton, 164 F.3d 671, 675 (D.C. Cir. 1999) (quoting Harding v. Gray, 9 F.3d 150, 154 (D.C. Cir.
1993)), or provides “direct testimonial evidence,” Arrington v. United States, 473 F.3d 329, 338
(D.C. Cir. 2006). Indeed, for the court to accept anything less “would defeat the central purpose
of the summary judgment device, which is to weed out those cases insufficiently meritorious to
warrant the expense of a jury trial.” Greene, 164 F.3d at 675.
2. The Plaintiff’s Notice and Disclosure Claims
a. The Plaintiff’s Claims Relating to Her August 2002 Request Are Barred by the
Applicable One-Year Statute of Limitations
The plaintiff claims that she is entitled to relief under ERISA § 502(c) because the
individual defendants provided an incomplete response to her August 2002 letter. 2d Am.
Compl. ¶ 8; Pl.’s Mot. for Summ. J. at 16. The individual defendants argue that, even if their
response to the plaintiff’s August 2002 request was deficient, the plaintiff’s claim is barred by
the applicable one-year statute of limitations. Individual Defs.’ Mot. at 6. According to the
individual defendants, the court should apply the District of Columbia’s one-year statute of
limitations for a civil penalty because the remedies contained within § 502(c) are penal in nature.
Id. The individual defendants further argue that the plaintiff’s claims related to her August 2002
request should be dismissed because they were filed more than a year after her cause of action
accrued. Id. at 6-7.
In response, the plaintiff acknowledges that “some” federal courts have determined that §
502(c) is analogous to a penalty. Pl.’s Opp’n to Individual Defs.’ Mot. at 5. Nevertheless, she
6
maintains that § 502(c) is more properly viewed as a remedial statute because it directly
compensates plaintiffs. Id. The plaintiff therefore concludes that the District of Columbia’s
“catch-all” three-year statute of limitations should apply. Id. In the alternative, the plaintiff
argues that her claim is not barred by the one-year statute of limitations because her cause of
action only accrued once she began preparing for this litigation and realized that the 2002 plan
documents were missing from PhRMA’s response to her August 2002 request. Pl.’s Opp’n to
Indiv. Defs.’ Mot. at 3-4.
An ERISA § 502(c) claim accrues when “(1) a plaintiff makes a demand for information
to which [she] is entitled under ERISA; and (2) the defendant fails to supply the requested
information within thirty days of the demand.” Gregorovich v. E.I. du Pont de Nemours, 602 F.
Supp. 2d 511, 517 (D. Del. 2009); see also 29 U.S.C. § 1132(c)(1). Because ERISA does not
include a limitations period, the court must “borrow the most closely analogous statute of
limitations” from the jurisdiction in which the court sits. Connors v. Hallmark & Son Coal Co.,
935 F.2d 336, 341 (D.C. Cir. 1991). Although the D.C. Circuit has not opined on the issue, other
jurisdictions have held that, in determining the most analogous statute of limitations, § 502(c)
should be considered a statutory penalty. See, e.g., Iverson v. Ingersoll-Rand Co., 125 F. App’x
73, 77 (8th Cir. 2004) (stating that “section 502(c)(1) is of a penal rather than a compensatory
nature”); Pressley v. Tupperware Long Term Disability Plan, 553 F.3d 334, 339 (4th Cir. 2009)
(concluding that the plain language of § 502(c) is analogous to a penalty); Gregorovich, 602 F.
Supp. 2d at 517 (holding that § 502(c)(1) “is penal in nature” and applying Delaware’s one-year
statute of limitations).
As a preliminary matter, this court has reviewed § 502(c) and agrees with those courts
that have found it to be penal in nature. Under § 502(c), a plan administrator can be held
7
personally liable for up to $100 per day for failing to comply with ERISA’s notice and disclosure
obligations. 29 U.S.C. § 1132(c)(1). By imposing a fine, the provision aims to punish those
administrators that do not timely disclose certain documents under ERISA. Iverson, 125 F.
App’x at 77. As the applicable statute of limitations for a statutory penalty is one year in the
District of Columbia, see D.C. CODE § 12-301(5), the court applies a one-year statute of
limitations to the plaintiff’s claims.
The court next turns to the plaintiff’s argument that her claim did not accrue until she
discovered the defendants’ violations in the course of this litigation. In this Circuit, the
plaintiff’s claims would have accrued when she discovered or with due diligence should have
discovered that the defendants provided her with an incomplete response to her August 2002
request. Connors, 935 F.2d at 341 (holding that the discovery rule applies in this Circuit and,
therefore, a claim accrues when the plaintiff “discovers, or with due diligence should have
discovered” the injury); see also Gregorovich, 602 F. Supp. 2d at 517 (holding that a claim
accrues when a plaintiff demands information and a defendant does not reply within 30 days).
On September 26, 2002, the plaintiff received PhRMA’s response to her August 2002 request.
Pl.’s Mot. at 20. The plaintiff concedes in her deposition that upon receiving this reply, she
knew that PhRMA’s response was deficient, but, as she explained it, she assumed that
“[PhRMA] had provided [her] everything they were going to provide.” Individual Defs.’ Mot.
for Summ. J., Ex. 16. Accordingly, the plaintiff’s cause of action accrued on September 26,
2002, the date that she received the response and thereby discovered or should have discovered
the alleged injury.
Applying the one-year statute of limitations, the plaintiff was therefore required to file
her suit by September 2003. D.C. CODE § 12-301(5). Yet the plaintiff did not file this suit until
8
November 2004, more than two years after her original request for documents. See generally
Compl. The plaintiff’s claims related to her August 2002 request are thus barred by the District
of Columbia’s one-year statute of limitations for a civil penalty.
b. The Plaintiffs’ Claims Relating to Her August 2003 Request Fail Because a Reasonable
Juror Could Not Conclude That the Individual Defendants Violated ERISA § 104(b)(4)
The plaintiff further claims that the individual defendants violated ERISA’s disclosure
requirements when, in August 2003, the plaintiff requested the 2002 SAR from PhRMA but
received the 2001 SAR instead. Pl.’s Mot. at 22. The individual defendants argue that they met
their statutory obligations under ERISA by providing the plaintiff with the “latest annual reports”
in response to her 2003 request. Individual Defs.’ Mot. at 18.
In response, the plaintiff acknowledges that on August 27, 2003, PhRMA provided her
with the 2001 SAR and advised her that the 2002 SAR was not yet available. Pl.’s Opp’n to
Individual Defs.’ Mot. at 2. The plaintiff concedes that because the 2002 SAR had not been
prepared, “no liability could have accrued against [the individual defendants] when [they] failed
to provide the documents to [the plaintiff] in September 2003.” Id. at 3. Nevertheless, the
plaintiff argues, her August 2003 request “remained pending” and her “reasonable expectation
was that she would be provided with the requested documents when they were published.” Id. at
2.
ERISA § 104(b)(4) states, in part, that “[t]he [plan] administrator shall, upon written
request of any participant or beneficiary, furnish a copy of the . . . latest [SAR] . . . under which
the plan is established or operated.” 29 U.S.C. § 1024(b)(4). The SAR must be completed
within approximately seven months after the close of the plan year, id, and distributed “within
nine months after the close of the plan year,” 29 C.F.R. § 2520.104b–10.
9
Here, the plaintiff requested the 2002 SAR in August 2003, and the PhRMA Retirement
Committee responded later that same month. Pl.’s Opp’n to Indiv. Defs.’ Mot. at 2. In its
response, the Retirement Committee not only provided the plaintiff with the 2001 SAR, but also
advised the plaintiff that the 2002 SAR had not yet been completed. Id. at 2. Indeed, PhRMA
had not prepared the 2002 SAR and would not prepare it until December 2003, more than three
months after the plaintiff’s request. Individual Defs.’ Mot. for Summ. J., Ex. 8. The plaintiff has
not suggested that the defendants’ timeline for the preparation and distribution of its 2002 SAR
violated ERISA or any applicable regulations. See 29 U.S.C. § 1024(b)(4) (requiring that the
administrator file the annual report with the Secretary within 210 days after the close of the plan
year); 29 C.F.R. § 2520.104b–10. Moreover, the plaintiff fails to point to any authority that
would support her assertion that the Retirement Committee was statutorily required to
continuously update its response and ultimately provide the desired 2002 SAR. 5 See Groves,
803 F.2d at 113.
Because PhRMA had not yet prepared the 2002 SAR at the time of the plaintiff’s request
and was not required to have done so, the court concludes that a reasonable juror could not find
that the individual defendants had violated § 502(c) by failing to disclose the 2002 SAR. As a
result, the court grants the individual defendants’ motion for summary judgment with respect to
the plaintiff’s claims that stem from her August 2003 request for documents.
5
Indeed, the plaintiff, as an attorney for PhRMA, would have been intimately familiar with the
company’s annual SAR disclosures, and was thus well aware that PhRMA would not distribute
the 2002 SAR until December 2003. See Pl.’s Mot. for Summ. J., Ex. 28 (a letter addressed to all
PhRMA retirees, dated December 11, 2001, in which PhRMA sent copies of the 2000 SAR, with
a cover sheet stating, “[e]ach year at this time we send you information regarding PhRMA’s
Deferred Savings Plan and Retirement Plan.”).
10
c. NYLIM Is Not Subject to Liability For the Plaintiff’s 2002 and 2003 Requests
NYLIM argues that it cannot be held liable for penalties related to disclosure
requirements because the plaintiff never made a request for documents to NYLIM and because
NYLIM was not the designated “plan administrator.” NYLIM Mot. for Summ. J. at 8. NYLIM
contends that penalties under ERISA § 502(c) can only be imposed on the plan administrator,
which is the PhRMA Retirement Committee, and only after a plan participant makes a written
request. Id. at 9-10. At no point does the plaintiff argue that her 2002 and 2003 requests for
documents were directed at NYLIM. See generally Pl.’s Opp’n to NYLIM Mot. for Summ. J.
Under ERISA § 104(b)(4), the plan administrator is responsible for responding to a
written request by a plan participant or beneficiary. 29 U.S.C. § 1024(b)(4). An administrator
“who fails or refuses to comply with a request for any information” is subject to penalties under
ERISA § 502(c). 29 U.S.C. § 1132(c)(1). Here, the plaintiff’s 2002 and 2003 requests were
directed at PhRMA, and not at NYLIM. Pl.’s Mot. for Summ J. 19-22. The court, therefore,
determines that NYLIM cannot be held accountable for the alleged ERISA § 502(c) violations,
and grants NYLIM’s motion for summary judgment regarding the plaintiff’s notice and
disclosure claims.
3. The Plaintiff’s ERISA § 404 Claims
The plaintiff argues that the defendants breached their fiduciary duties under ERISA §
404 by violating ERISA’s notice and disclosure requirements. 6 Pl.’s Mot. at 15-16. These
alleged violations include the aforementioned alleged failure by the defendants to provide the
6
The plaintiff also suggests that the defendants breached their fiduciary duties by not disclosing
certain documents during the course of this litigation. Pl.’s Mot. at 24-25. A plaintiff, however,
cannot seek penalties under § 502(c) claim for any alleged disclosure violations that occur during
the course of litigation. See Verkuilen v. S. Shore Bldg. & Mortgage Co., 122 F.3d 410, 411-12
(7th Cir. 1997) (“Nothing but confusion could come from treating complaints and interrogatories
as ERISA demands, and replacing Rules 11 and 37 with the penalty provisions of § [502](c)”).
11
plaintiff with certain documents about the retirement plans. 7 Id. In response, the individual
defendants argue that “ERISA does not provide a substantive remedy beyond § 502(c) for notice
and disclosure violations.” 8 Individual Defs.’ Mot. at 19.
ERISA § 404 requires plan fiduciaries to discharge their duties “solely in the interest of
the participants and beneficiaries . . . and with the care, skill, prudence, and diligence” of a
“prudent man” under like circumstances. 29 U.S.C. § 1104(a). ERISA § 409, a provision
entitled “Liability for Breach of Fiduciary Duty,” holds plan fiduciaries personally liability “to
make good to such plan any losses to the plan . . . and to restore to such plan any profits of such
fiduciary which have been made through use of assets of the plan.” 29 U.S.C. § 1109. Section
409, however, “subjects a fiduciary to liability only to an ERISA plan – not to a plan
participant.” Murchison v. Murchison, 180 F. App’x. 163, 164 (D.C. Cir. 2006) (determining
that the district court’s refusal to award an individual plaintiff damages for a breach of fiduciary
duty was “entirely appropriate” (citing Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 140
(1985))).
Here, the plaintiff brings claims of a breach of fiduciary duty as an individual beneficiary,
not on behalf of the plan. See generally 2d Am. Compl. As noted, however, the plaintiff may
not recover as an individual. See Murchison, 180 F. App’x at 164. Additionally, the court notes
that relief under § 409 (for a violation of § 404) is inappropriate because Congress has already
7
To the extent that the plaintiff’s argument suggests that the defendants breached their fiduciary
duties by erroneously denying her benefits or misconstruing her position as an independent
contractor, see Am. Compl. ¶¶ 72-73, the court notes that “it has long been the rule that an
employer or plan sponsor does not act in a fiduciary capacity when adopting, modifying or
terminating an employee benefit plan,” Oliver v. Black Knight Asset Mgmt., LLC, 2011 WL
4442665, at *6 (D.D.C. Sept. 26, 2011).
8
NYLIM argues that the plaintiff’s § 404 claims fail because NYLIM was not acting as a
fiduciary. See generally NYLIM’s Opp’n to Pl.’s Mot. at 6-7. The court need not reach these
arguments, however, because it is persuaded that the claims against NYLIM fail for the same
reasons that they fail against the individual defendants, as pronounced above.
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provided a mechanism for relief for a notice and disclosure violation through § 502(c), as
discussed above. Varity Corp. v. Howe, 516 U.S. 489, 515 (1996) (“[W] e should expect that
where Congress elsewhere provided adequate relief for a beneficiary’s injury, there will likely be
no need for further equitable relief, in which case such relief normally would not be ‘appropriate’
[under § 409]”). The plaintiff cannot simply recycle its claims by reasserting them as claims for
breach of fiduciary duty under § 404. Accordingly, the court grants summary judgment to the
defendants with respect to the plaintiff’s § 404 claims.
IV. CONCLUSION
For the foregoing reasons, the court grants the defendants’ respective motions for
summary judgment and denies the plaintiff’s cross-motion for summary judgment. An Order
consistent with this Memorandum Opinion is separately and contemporaneously filed this 8th day
of December, 2011.
RICARDO M. URBINA
United States District Judge
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