Romero v. SmithKline Beecham

Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit
10-30-2002
Romero v. SmithKline Beecham
Precedential or Non-Precedential: Precedential
Docket No. 01-3273
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Recommended Citation
"Romero v. SmithKline Beecham" (2002). 2002 Decisions. Paper 680.
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PRECEDENTIAL
Filed October 30, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 01-3273
LOUISE C. ROMERO
Appellant
v.
SMITHKLINE BEECHAM,
a Delaware Corporation;
SMITHKLINE BEECHAM PENSION PLAN;
VINCENT C. BRUETT;
STANLEY J. SEROCCA, JR.
ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
District Court Judge: Honorable Dickinson R. Debevoise
(D.C. No. 99-1308)
Argued: September 12, 2002
Before: ALITO and FUENTES, Circuit Judges,
and OBERDORFER,* District Judge
(Opinion Filed: October 30, 2002)
_________________________________________________________________
* The Honorable Louis F. Oberdorfer, Senior District Judge for the
District of Columbia, sitting by designation.
(ROBERT H. JAFFE (Argued)
Robert H. Jaffe & Associates, P.A.
8 Mountain Avenue
Springfield, NJ 07081
Counsel for Appellant
JACQUELINE V. GUYNN
BRIAN T. ORTELERE (Argued)
JEFFREY K. TECHENTIN
Pepper Hamilton, L.L.P.
3000 Two Logan Square
Eighteenth & Arch Streets
Philadelphia, PA 19103-2799
Counsel for Appellees
OPINION OF THE COURT
ALITO, Circuit Judge:
Plaintiff Louise Romero brought this action under ERISA
sections 502(a)(1)(B), 502(c)(1), and 510, 29 U.S.C.
SS 1132(a)(1)(B), 1132(c)(1), and 1140, claiming that she
was wrongfully denied ERISA benefits, was terminated for
the purpose of interfering with her attainment of ERISA
rights, and was entitled to a civil penalty because the
administrator of her employer’s plan did not provide
requested plan documents within the time specified by
statute. The District Court granted summary judgment in
favor of the defendants, holding that (1) defendant
SmithKline Beecham did not abuse its discretion when it
declared Romero ineligible for enhanced retirement benefits,
(2) SmithKline did not terminate Romero in order to
sabotage her benefits package, and (3) Romero was not
entitled to a civil penalty from defendant Serocca,
SmithKline’s ERISA plan administrator. We affirm the
judgment of the District Court with respect to the first two
issues, but we hold that the District Court misconstrued
ERISA section 502(c)(1), which governs the civil-penalty
issue, and we therefore reverse and remand for further
proceedings regarding that issue.
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I.
Romero began working for SmithKline in 1973. In 1995,
the company announced a "Voluntary Reduction in Force"
(VRIF) plan promising enhanced severance packages to
employees retiring early. Romero agreed to a package
conditioned on satisfactory completion of her work
assignments and a departure date during the fourth
quarter of 1997. She intended to retire on December 31,
1997, but SmithKline scheduled her last day as October 3,
1997. Since October falls during the fourth quarter of the
calendar year, this date preserved Romero’s eligibility for all
the benefits that she would have received by leaving in
December, but she evidently did not understand this and
became deeply angered.
Romero made several remarks that some employees
construed as threats against Human Resources Director
Vincent Bruett, who had helped Romero arrange her
resignation. She canceled her plate at a company dinner
that Bruett planned to attend, explaining to Human
Resources employee Betzaida Boynton:
My spouse doesn’t want to have to see that man’s face
after everything he has done to me. . . . I can’t say how
he might react when he sees that man. . . . I hope
someday somebody puts a bullet in that man. . . . I
won’t do it because I [am] not going to jail for that
man, but I would love to see the day when someone
does get him.
When Boynton questioned whether Romero really meant
what she had said, Romero replied, "Yes, I do." Romero
then left Boynton a voice-mail message stating:
I want to correct things, if anything happened to that
mean, soulless man that you work for, if somebody get
[sic] him, I don’t want anyone to think that it is me,
but I sure would shed no tear and I will be happy, so
it ain’t going to be me if anything does happen. If
happen [sic], I don’t know, but anyhow, my hands are
clean. My mind isn’t, but my hands are.
Boynton was noticeably unsettled and shaken by the
incidents.
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Boynton reported the matter to SmithKline’s security
department, which contacted the police. The company
summoned Romero to a disciplinary proceeding, but she
refused to speak without counsel. SmithKline then
suspended her and converted the suspension to a
termination a week later, on April 29, 1997, citing a
company policy prohibiting "[d]eliberate or reckless action
that causes either actual or potential loss to the company
or employees, damages to company or employee property,
or physical injury to employees." Because Romero did not
remain in SmithKline’s employment in the fourth quarter of
the year or satisfactorily complete her work, the
termination disqualified her from receiving the enhanced
severance package.
Romero, both personally and through her attorney,
attempted to negotiate for the enhanced benefits with
SmithKline’s retiree benefits coordinators. On January 2,
1999, she wrote to Kim Nelson, a Retiree Benefits
Representative at SmithKline, requesting copies of the
company’s amended pension plan and employee
handbooks. Two weeks later, Romero’s attorney wrote to
another benefits representative, Gwen Ubil, to discuss
reinstatement of benefits. SmithKline did not respond to
the letters until shortly after Romero commenced litigation
in March 1999, when plan administrator Stanley Serocca
provided a copy of the plan description and reiterated
SmithKline’s justifications for denying her claim.
Romero commenced this action in District Court, but
since she had never filed an administrative appeal, her
action was stayed pending exhaustion of administrative
remedies. On November 29, 1999, Serocca denied Romero’s
appeal, citing her termination prior to 1997’s fourth quarter
and her consequent failure satisfactorily to complete her
work. Responding to Romero’s efforts to contest the
propriety of her termination, Serocca later explained:
"Death threats in the workplace constitute a more than
sufficient basis for firing." When Romero resumed the
litigation in District Court, she asked for de novo review of
SmithKline’s decision or review under a modified arbitrary-
and-capricious standard. She also asked the court to
impose personal liability on Serocca for his tardiness in
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supplying the plan materials. The District Court granted
summary judgment for all defendants on all claims. This
appeal followed.
II.
Summary judgment is appropriate when the record
discloses no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. F ED. R. CIV.
P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 247-48 (1986). Appellate review of a grant of summary
judgment is plenary. City of Erie v. Guaranty Nat’l Ins. Co.,
109 F.3d 156, 159 (3d Cir. 1997).
Decisions of ERISA fiduciaries generally merit deference
from courts. De novo review of a denial of benefits is
appropriate only when a plan administrator has no
"discretionary authority to determine eligibility for benefits
or to construe the terms of the plan." Firestone Tire &
Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Romero
argues that Serocca had no "real discretion" to review her
case because he believed that he could not overturn
SmithKline’s decision to terminate her.1 Since Romero
plainly could not satisfy the conditions precedent to
enhanced benefits under the VRIF after being fired, Serocca
was, she submits, "fatally inhibited from exercising
discretion." We disagree and decline to hold that an ERISA
fiduciary exercises no "discretionary authority to determine
eligibility for benefits" simply because a particular case’s
facts are so unfavorable to a claimant that a denial seems
virtually obligatory. A contrary rule would yield the absurd
result of reserving the least deferential standard of review
for the least meritorious appeals.
Romero asks alternatively for review under an arbitrary-
and-capricious standard that retains the deference
_________________________________________________________________
1. Romero challenges this belief as mistaken and maintains she was
entitled to contest her termination during ERISA review. That is
obviously incorrect. "It defies common sense to suggest that a
corporation must allow a retirement board to make personnel decisions
such as determining which plants need fewer employees." Trenton v.
Scott Paper Co., 832 F.2d 806, 809 (3d Cir. 1987).
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accorded to administrative decisions but appraises a
fiduciary’s "conflict of interest" as a "factor in determining
whether there is an abuse of discretion." Firestone, 489
U.S. at 115 (citation omitted); see also Pinto v. Reliance Std.
Life Ins. Co., 214 F.3d 377, 382-86 (3d Cir. 2000)
(recounting efforts by the Courts of Appeals to resolve
ambiguity in Firestone’s conflict-of-interest standard).
Romero argues that a conflict of interest tainted Serocca’s
review because she sought $50,000 in benefits from her
employer and because Serocca supervised Bruett. The
District Court found neither argument convincing because
Romero "failed to adduce evidence that a potential payout
of approximately $50,000 in benefits by SmithKline, a
company with $12.5 billion in revenues in 1999, created a
conflict" and because the District Court saw"no support in
the record for Romero’s contention that Serocca was
conflicted by the fact that he was Bruett’s supervisor." The
District Court properly applied the reasoning of our
decisions in Pinto, 214 F.3d at 388, and Kotrosits v. GATX
Non-Contributory Pension Plan for Salaried Employees , 970
F.2d 1165, 1173-74 (3d Cir. 1992), in holding that the
potential payout to Romero under the benefits plan was
insufficient to establish a conflict of interest. We also agree
that Serocca’s supervision of Bruett establishes no such
conflict.
Reviewing Serocca’s decision under the arbitrary and
capricious standard, the District Court found it within
reason and supported by substantial evidence. We agree.2
Moreover, because Romero does not dispute that " ‘there is
sufficient evidence for a reasonable person to agree with the
[administrator’s] decision,’ " Courson v. Bert Bell NFL Player
Retirement Plan, 214 F.3d 136, 142 (3d Cir. 2000) (citation
omitted), the District Court plainly had no basis for
overturning Serocca’s decision as an abuse of discretion.
Summary judgment in favor of SmithKline on Romero’s
section 502(a)(1)(B) claim was therefore proper.
The District Court also held that Romero did not state a
claim under section 510 of ERISA, 29 U.S.C. S 1140, which
_________________________________________________________________
2. Indeed, we would sustain the decision even under a less deferential
standard.
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prohibits terminations "for the purpose of interfering with
the attainment of any right to which [a] participant may
become entitled under the plan . . . ." 29 U.S.C.S 1140
(2002). In order to state a section 510 claim a plaintiff must
allege: "1. prohibited employer conduct; 2. taken for the
purpose of interfering; 3. with the attainment of any right
to which the employee may become entitled." Dewitt v.
Penn-Del Directory Corp., 106 F.3d 514, 522 (3d Cir. 1997).
Here, Romero alleges a "conspiracy" to deny her benefits,
but she does not identify any facts in the record that would
establish either prohibited conduct or the requisite"specific
intent" to interfere with benefits. Id. A party opposing a
motion for summary judgment must "go beyond the
pleadings" and demonstrate that a reasonable factfinder
could return a favorable verdict. Celotex Corp. v. Catrett,
477 U.S. 317, 324 (1986). Romero’s vague allegations of
malicious termination, unsupported by any facts, are
insufficient.
Finally, the District Court declined to impose personal
liability on Serocca for delays in responding to Romero’s
information requests. Under ERISA section 502(c)(1),
[a]ny administrator . . . who fails or refuses to comply
with a request for any information which such
administrator is required by this title to furnish to a
participant . . . 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. S 1132(c)(1) (2002). Citing authority cautioning
that section 502(c)(1) must be strictly construed, see
Haberern v. Kaupp Vascular Surgeons Ltd., 24 F.3d 1491,
1505 (3d Cir. 1994), the District Court held that because
Romero addressed her requests for information to Nelson
and Ubil, not Serocca, she could not recover the civil
penalty.
We believe that the District Court’s reading of section
502(c)(1), 29 U.S.C. S 1132(c)(1), is not compelled by the
statutory language and is unduly narrow. Although section
502(c)(1) specifies the address to which a response to a
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request must be sent -- "the last known address of the
requesting participant or beneficiary" -- it nowhere states
that a request for covered information must be served upon
or even mailed personally to the plan administrator.
Moreover, such a requirement would in some
circumstances unreasonably frustrate the evident purposes
of the provision. For example, if the plan administrator is
changed and a request for information is addressed to the
previous administrator but actually reaches the current
administrator, we see no reason why section 502(c)(1)
should not apply. In addition, there may be other
circumstances in which it is not easy for a participant or
beneficiary to obtain the name of the administrator. We
have no doubt that section 502(c)(1) was not meant to
impose upon a plan participant or beneficiary seeking
information the inflexible requirement of addressing the
request to the current plan administrator.
At the same time, however, we agree with the District
Court’s general view that section 502(c)(1) must not be read
too loosely. First, we believe that section 502(c)(1) requires
actual receipt by the administrator. This interpretation is
supported by the statute’s reference to an administrator
"who . . . fails or refuses to comply with a request for . . .
information." It is not customary to refer to a person’s
failure or refusal to comply with a request that has never
been received. Furthermore, it is unlikely that Congress
wanted to impose a civil penalty on a person who has not
engaged in any wrongful conduct.
Second, because section 502(c)(1) requires a response
within a rather short time (30 days) "after [the] request,"
the statute appears to contemplate that the request will be
delivered in a manner that permits the administrator or the
appropriate subordinates to work on the matter soon after
the request is made. Accordingly, we believe that the 30-
day period should not begin to run until the request is
actually received either by the administrator or those under
the administrator’s supervision. This requirement, we
conclude, provides adequate protection for an administrator
in a situation in which a request for information is not
delivered or sent directly to the administrator.
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Because the District Court in the present case did not
correctly interpret section 502(c)(1), we remand this case for
further proceedings relating to Romero’s civil-penalty claim.
We note that if an administrator does not comply with a
request within the specified time, the District Court must
make a discretionary decision as to whether a civil penalty
should be assessed and as to the amount of any such
penalty. Section 502(c)(1), as noted, provides that a penalty
may be imposed "in the court’s discretion" and that any
such penalty may be in any amount "up to $100 a day."
Appropriate factors to be considered in making these
decisions include "bad faith or intentional conduct on the
part of the administrator, the length of the delay, the
number of requests made and documents withheld, and the
existence of any prejudice to the participant or beneficiary."
Devlin v. Empire Blue Cross & Blue Shield, 274 F.3d 76, 90
(2d Cir. 2001) (citation omitted). Other circuits have studied
the role of prejudice or damages in the inquiry and have
concluded that although they are often factors, neither is a
sine qua non to a valid claim under section 502(c)(1). See
Bannistor v. Ullman, 287 F.3d 394, 407 (5th Cir. 2002);
Yoon v. Fordham Univ. Faculty & Admin. Ret. Plan, 263 F.3d
196, 204 n.11 (2d Cir. 2001); Faircloth v. Lundy Packing
Co., 91 F.3d 648, 659 (4th Cir. 1996); Moothart v. Bell, 21
F.3d 1499, 1506 (10th Cir. 1994); Daughtrey v. Honeywell,
Inc., 3 F.3d 1488, 1494 (11th Cir. 1993).
III.
We affirm the District Court’s grant of summary
judgment to the defendants on Romero’s claims under
sections 502(a)(1)(B) and 510 of ERISA. We reverse the
District Court’s grant of summary judgment to defendant
Serocca on Romero’s section 502(c)(1) claim and remand for
further proceedings related to that claim.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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