Watson v. Consolidated Edison Co. of New York, Inc.

09-3936-cv
Watson v. Consolidated Edison Co.
1 UNITED STATES COURT OF APPEALS
2 FOR THE SECOND CIRCUIT
3
4 SUMMARY ORDER
5
6 RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUM M ARY ORDER
7 FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
8 PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMM ARY ORDER IN A DOCUM ENT
9 FILED W ITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC
10 DATABASE (W ITH THE NOTATION “SUM M ARY ORDER”). A PARTY CITING A SUM M ARY ORDER M UST SERVE
11 A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
12
13 At a stated term of the United States Court of Appeals for the Second Circuit, held at
14 the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New
15 York, on the 20th day of April, two thousand ten.
16
17 PRESENT:
18 AMALYA L. KEARSE,
19 ROBERT D. SACK,
20 DEBRA ANN LIVINGSTON,
21 Circuit Judges.
22 __________________________________________
23
24 James Watson, Joseph Avitabile, Thomas McGlade,
25 Joseph Keelin, Robert Sheehan, Individually and on
26 behalf of all others similarly situated,
27
28 Plaintiffs-Appellants,
29
30 v. 09-3936-cv
31
32 Consolidated Edison Company of New York, Inc.,
33 The Consolidated Edison Pension and Benefits Plan,
34
35 Defendants-Appellees.
36 __________________________________________
37
1 FOR APPELLANTS: JAMES E. TULLMAN, JOSEPH H. WEISS, JOSHUA M.
2 RUBIN, Weiss & Lurie, New York, N.Y. and LEONARD LEEDS,
3 MATTHEW I. MARKS, Leeds, Morelli & Brown, PC, Carle
4 Place, NY
5
6 FOR APPELLEES: MYRON D. RUMELD, DEIDRE A. GROSSMAN, Proskauer
7 Rose, LLP, New York, NY
8
9 UPON DUE CONSIDERATION IT IS HEREBY ORDERED, ADJUDGED, AND
10 DECREED that the judgment of the district court be AFFIRMED.
11 Plaintiffs-Appellants James Watson, Joseph Avitabile, Thomas McGlade, Joseph Keelin, and
12 Robert Sheehan (“Appellants”) appeal from an August 25, 2009 judgment of the United States
13 District Court for the Southern District of New York (Rakoff, J.) granting summary judgment in
14 favor of Defendants-Appellees Consolidated Edison Company of New York, Inc. and The
15 Consolidated Edison Pension and Benefits Plan (“Appellees” or “Consolidated Edison”) as to all
16 of Appellants’ claims. We assume the parties’ familiarity with the underlying facts, procedural
17 history, and the issues on appeal.
18 A. Background
19 The five named Appellants in this action are Consolidated Edison employees who took early
20 retirement. Watson, McGlade, and Sheehan all retired in 1999, Keenan retired in 2005, and Avitable
21 retired in 2006. An October 14, 2008 amended complaint filed by Appellants alleges that Appellees
22 violated provisions of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001,
23 et seq., including a violation of Appellees’ fiduciary duties under 29 U.S.C. § 1104 and a violation
24 of ERISA’s disclosure requirements under 29 U.S.C. §§ 1104, 1022(a), and 1055(g). The district
25 court granted the Appellees’ motion for summary judgment, finding that the 1999 retirees’ claims
26 are time-barred and that, in any event, all retirees’ claims for breach of fiduciary duty fail on the
2
1 merits given the clarity of the written materials Appellants received from Consolidated Edison and
2 the “overall absence of any material oral misrepresentations.” The district court also granted
3 summary judgment in favor of Appellees on the disclosure claims because Consolidated Edison
4 proffered undisputed evidence that it made reasonable efforts to ensure the plan participants’ receipt
5 of the plan documents and, in any event, Appellants failed to come forward with evidence tending
6 to show they were prejudiced by any failure to satisfy the disclosure requirements. For the reasons
7 that follow, we affirm the judgment of the district court.
8 We review the district court’s summary judgment decision de novo. Roe v. City of
9 Waterbury, 542 F.3d 31, 35 (2d Cir. 2008). Summary judgment is appropriate if “there is no genuine
10 issue as to any material fact” and “the movant is entitled to judgment as a matter of law.” Fed. R.
11 Civ. P. 56(c)(2). “However, where the nonmoving party will bear the burden of proof at trial, Rule
12 56 permits the moving party to point to an absence of evidence to support an essential element of
13 the nonmoving party’s claim.” Bay v. Times Mirror Magazines, Inc., 936 F.2d 112, 116 (2d Cir.
14 1991).
15 B. Breach of Fiduciary Duty
16 ERISA requires that a fiduciary “discharge his duties with respect to a plan solely in the
17 interest of the participants and beneficiaries.” 29 U.S.C. § 1104(a)(1). In interpreting this duty, we
18 have held that an employer must “deal fairly and honestly with its beneficiaries.” Ballone v. Eastman
19 Kodak Co., 109 F.3d 117, 124 (2d Cir. 1997). Moreover, “a plan administrator has a fiduciary duty
20 not to make material misrepresentations regarding the availability of future plan benefits.” Id. at
21 123. “Where an ERISA fiduciary makes guarantees regarding future benefits that misrepresent
22 present facts, the misrepresentations are material if they would induce a reasonable person to rely
23 upon them.” Id. at 122. Because ERISA plans are governed by written documents, “a party alleging
3
1 a breach of fiduciary duty on the basis of a statement purporting to alter the terms of an ERISA
2 benefit plan must point to a written document containing the alleged statement.” Ladouceur v.
3 Credit Lyonnais, 584 F.3d 510, 513 (2d Cir. 2009) (emphasis deleted).
4 Appellants all acknowledge receiving written documentation at their Group Retirement
5 Interviews (“GRI”) regarding the Level Income Option (“LIO”) retirement plan that states:
6 The . . . Consolidated Edison Pension and Benefits Plan provide[s] an
7 option for those employees who retire before they are eligible to begin
8 receiving unreduced Social Security benefits. This is called a “Level
9 Income Option” and is intended to coordinate the payment of your
10 pension benefits with your Social Security benefits to provide a level
11 income to you from your retirement to your death.
12
13 If you elect this option, an estimate is made of your Social Security
14 benefits payable at Age 62 or your Normal Social Security Retirement
15 Age, whichever age you elect. The payment of your pension benefit is
16 adjusted so that you receive the actuarial equivalent of your pension.
17 You receive a higher pension benefit from the date of your retirement to
18 your choice of Age 62 or Normal Social Security Retirement Age, and a
19 lower pension benefit thereafter.
20
21 Upon your death, your surviving spouse will receive, for life, a pension
22 benefit based on the amount of the pension benefit you would have been
23 receiving before any adjustment under the level income option.
24
25 In addition, written plan documentation in effect in 1997 explains that under the LIO, at age 62, the
26 monthly pension amount “decreases and is combined with Social Security to achieve a level monthly
27 income.” The 2002 Summary Plan Description (“SPD”) states that “[a]fter you reach age 62 or 65,
28 and you begin receiving your Social Security benefits, your monthly pension total is permanently
29 reduced.”
30 Contrary to these written materials, Appellants now suggest that it was explained to them
31 orally that the LIO operates like a “loan” pursuant to which they would initially receive higher
32 monthly pension benefits and then would receive lower benefits only until such time as this loan was
4
1 repaid. Taking the evidence in the light most favorable to the Appellants, however, Appellants’
2 meager deposition testimony to this effect is not sufficient to create an issue of material fact on the
3 question whether Appellees breached their fiduciary duty. Given the clear written plan materials,
4 no reasonable jury could find that these alleged vague oral statements were sufficient to induce
5 reasonable reliance on the part of Appellants. See Ballone, 109 F.3d at 122-23.1
6 Moreover, as Appellants’ fiduciary duty claims are, in effect, that the oral representations
7 should be given effect as modifying the written terms of their plan, those claims are barred by
8 Ladouceur. Ladouceur, 584 F.3d at 512-13 (Because ERISA requires that “[e]very employee
9 benefit plan shall be established and maintained pursuant to a written instrument,” “[o]ral promises
10 are unenforceable under ERISA and therefore cannot vary the terms of an ERISA plan. . . . This
11 logic applies with equal force to alleged breaches of fiduciary duty when the alleged breach is an
12 oral representation that purports to change an ERISA benefit plan.” (internal quotation marks
13 omitted)); see also Frahm v. Equitable Life Assur. Soc. of the United States, 137 F.3d 955, 960 (7th
14 Cir. 1998) (“Havoc would ensue if plans meant different things for different participants, depending
15 on what someone said to them years earlier.”). We therefore affirm the district court’s grant of
16 summary judgment as to the Appellants’ breach of fiduciary duty claims. Because we agree with
17 the district court that all five Appellants’ claims fail on the merits, we need not consider whether the
18 district court correctly determined that 1999 retirees’ fiduciary duty claims are also time-barred.
1
Appellants argue that the written plan materials are ambiguous and that Appellees are
not entitled to rely on these materials to support their argument that there was no breach of
fiduciary duty. We disagree that the written plan materials are ambiguous as to the operation of
the LIO. See Aon Fin. Prods., Inc. v. Société Générale, 476 F.3d 90, 95 (2d Cir. 2007) (noting
that the issue of whether there is ambiguity in contract language is a question of law).
Accordingly, and contrary to the Appellants’ claim here, the district court did not err in declining
to consider expert testimony on this question. Hygh v. Jacobs, 961 F.2d 359, 363 (2d Cir. 1992).
5
1 C. Disclosure and Reporting Requirements
2 ERISA requires plan administrators to provide a SPD to its participants setting forth certain
3 information and to “make reasonable efforts to ensure each plan participant’s actual receipt of the
4 plan documents.” Weinreb v. Hosp. for Joint Diseases Orthopaedic Inst., 404 F.3d 167, 170 (2d Cir.
5 2005) (internal quotation marks omitted); 29 C.F.R. § 2520.104b-1(b)(1) (“[T]he plan administrator
6 shall use measures reasonably calculated to ensure actual receipt of the material by plan
7 participants.”). “Material which is required to be furnished to all participants covered under the plan
8 and beneficiaries receiving benefits under the plan (other than beneficiaries under a welfare plan)
9 must be sent by a method or methods of delivery likely to result in full distribution.” 29 C.F.R. §
10 2520.104b-1(b)(1). “For example, in-hand delivery to an employee at his or her worksite is
11 acceptable.” Id. However, “an ERISA claim premised on the complete absence of an SPD . . .
12 requires a showing of likely prejudice.” Weinreb, 404 F.3d at 171; see also Tocker v. Philip Morris
13 Cos., 470 F.3d 481, 489 (2d Cir. 2006) (noting application of “likely prejudiced” standard in claims
14 for deficient SPD).
15 Appellants argue, pointing to Avitabile and Keelin’s deposition testimony, that these
16 Appellants never received the SPD.2 However, it is undisputed that both Avitabile and Keelin
17 received, at their GRI, written documentation explaining the LIO. Moreover, both of these
18 Appellants signed a “Level Income Option” form on which they elected to receive the LIO. This
19 form shows each retiree’s monthly benefits under the LIO “to Age 62” and “after Age 62.” The
20 form does not indicate that “after Age 62,” monthly benefits, excepting Social Security, would at
2
On appeal, Appellants make arguments on this issue only with respect to Avitabile and
Keelin. Accordingly, any argument that the ERISA disclosure requirement was violated with
respect to the other three Appellants is waived. See Norton v. Sam’s Club, 145 F.3d 114, 117
(2d Cir. 1998)
6
1 any point increase. Thus, because both Avitabile and Keelin received information accurately
2 describing the LIO, they were not “likely prejudiced” even if they did not receive the SPD.
3 Next, Appellants argue that Consolidated Edison had a duty under ERISA to disclose the
4 “relative values of the various options,” including the LIO. We understand Appellants’ argument
5 to contend that Appellees had a duty, with respect to each individual Appellant, to calculate the
6 financial value of each plan. However, Appellants have not pointed to any part of ERISA—and we
7 know of none—that requires a plan administrator to warn each plan beneficiary that if they outlive
8 the average mortality used to calculate the actuarial value of each plan that one plan may be of
9 higher “financial” lifetime value than another. Accordingly, we affirm the district court’s grant of
10 summary judgment to Appellees on the disclosure and reporting claims.
11 We have considered the remainder of Appellants’ claims and determined them to be without
12 merit.
13 For the foregoing reasons, the judgment of the district court is hereby AFFIRMED.
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15
16
17 FOR THE COURT:
18 Catherine O’Hagan Wolfe, Clerk
19
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