Opinion
03 Civ. 0373 (SAS).
October 10, 2006
Martin L. Milner, Esq. SIMON MILNER, ESQS. Valley Stream, New York, For Plaintiffs.
Thomas M. Kennedy, Esq. KENNEDY, JENNIK MURRAY, P.C. New York, New York, For Defendants.
OPINION AND ORDER
I. INTRODUCTION
Retirees bring this action against their union-employers, plan administrators and benefit plan for allegedly breaching their contractual and fiduciary duties pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA") and on claims of promissory and equitable estoppel. The gravamen of the Complaint is that although defendants repeatedly assured plaintiffs that they had guaranteed lifetime health benefits, defendants eventually modified the benefits plan with the result that plaintiffs lost coverage. By Opinion and Order dated July 7, 2004, this Court dismissed plaintiffs' ERISA and equitable estoppel claims in their entirety, and dismissed the promissory estoppel claims with respect to sixteen of the twenty-three plaintiffs. By Order dated July 14, 2004, this Court declined to exercise supplemental jurisdiction over plaintiffs' remaining state law claims and dismissed the Complaint in its entirety for lack of subject matter jurisdiction.
29 U.S.C. §§ 1000- 1461.
See Bouboulis v. Transportation Workers Union of Greater New York, Local 100, No. 03 Civ. 0373, 2004 WL 1555129 (S.D.N.Y. July 9, 2004).
See 7/12/04 Order.
On March 14, 2006, the Court of Appeals reversed this Court's finding that defendant Transport Workers Union of Greater New York, Local 100 ("Local 100") was not an ERISA fiduciary and vacated the Court's grant of summary judgment with regard to the breach of fiduciary duty claim against Local 100. The Court of Appeals remanded this action to this Court for consideration of the following: "Because Local 100 is a fiduciary, if the plaintiffs can establish that Local 100 made intentional misrepresentations about the existence of lifetime health benefits, then Local 100 could be found to have breached its fiduciary duties to the plaintiffs."
See Bouboulis v. Transportation Workers Union of Am., 442 F.3d 55 (2d Cir. 2006) (affirming trial court in all other respects).
Id. at 66.
Local 100 renews its motion for summary judgment with respect to the breach of fiduciary duty claim, arguing that the record is devoid of any evidence of intentional deception upon which plaintiffs relied to their detriment. Plaintiffs counter that it is undisputed that they received assurances of lifetime benefits even after Local 100 knew that the benefits could be terminated and that they have sufficiently alleged reliance on those representations to survive summary judgment. For the following reasons, Local 100's motion is granted.
II. BACKGROUND
The factual allegations giving rise to this action are set forth in the July 7, 2004 Opinion, and familiarity with that opinion is assumed. For purposes of clarity, some relevant facts will be restated. Because there has been no further development of the record since the 2004 Opinion the parties have cited to the factual allegations in their 2004 submissions and exhibits and the Court will also cite to those submissions.
See Bouboulis, 2004 WL 1555129, at *1-2.
Plaintiffs are retired former staff members of Local 100 ("Retirees") and their wives. Retirees are also active or retired employees of the New York City Transit Authority or of its subsidiary, the Manhattan and Bronx Surface Transit Operating Authority (collectively, the "TA"). Local 100 is a local union that represents TA employees and is affiliated with the Transport Workers Union of America ("TWU"), a national union. The TWU Local 100 Staff Benefit Plan (the "Plan") is an employee benefit plan sponsored by the TWU, in which Local 100 participates.
See Complaint ("Compl.") ¶¶ 30-120.
See Local 100's Statement of Material Facts Pursuant to Local Civil Rule 56.1 ("Local 100 56.1") ¶ 2.
See the TWU and the Plan's Statement of Undisputed Material Facts ("TWU 56.1") ¶¶ 1-2.
See Local 100 56.1 ¶ 5.
Between 1971 and 1991 each of the Retirees left his job at the TA to take a job with Local 100. Many of the Retirees claim that they were told or promised by Local 100 officers or staff either before they were hired, upon being hired, when considering retirement, or at various other times during their employment, that they would have lifetime health insurance coverage under the Plan. All Retirees believed that they were guaranteed lifetime health coverage. The health benefits provided to Retirees under the Plan were superior to those offered by the TA to its active and retired employees. The terms of the Plan are summarized in a 1982 summary plan description which contains no express reservation of the right to amend or terminate coverage under the Plan.
See 3/12/04 Plaintiffs' Memorandum of Law in Opposition to Defendants' Summary Judgment Motion ("Pl. 2004 Mem.") at 19-27.
See id. at 5.
See id. at 17.
See 1982 Staff Benefit Plan, Ex. 11 to TWU 56.1.
In 1998 or 1999, there was a meeting (the "Rosen meeting") between Dennis Calhoun (then Secretary-Treasurer of Local 100), William James (then President of Local 100), Sonny Hall (TWU President), and David Rosen (the TWU's attorney) during which Rosen advised the others that there were no guarantees of life-long health insurance under the Plan and that the health insurance coverage could be changed or terminated at any time. In December 1999, Local 100 stopped providing free health insurance to its active employees, though it continued to provide coverage to its retirees. Also in 1999, James promised or told several Retirees that although Plan coverage for active employees was being terminated, those employees would be covered again after retirement. In a letter to Local 100's administrative coordinator, Rosalyn Vazquez, dated December 28, 1999, Calhoun stated that anyone who retired from Local 100 would receive health insurance under the Plan, paid for by Local 100.
See Pl. 2004 Mem. at 14.
See Local 100 56.1 ¶ 11.
See Pl. 2004 Mem. at 21, 25, 26-27.
See 12/28/99 Letter from Dennis Calhoun to Rosalyn Vasquez, Ex. C to Affirmation of Robert P. O'Brien, plaintiffs' counsel ("O'Brien Aff.").
In December 2000, Roger Toussaint and Ed Watt were elected to the positions of President and Secretary-Treasurer, respectively, of Local 100, and they assumed office in January 2001. On April 16, 2002, Local 100 decided to stop paying health insurance premiums on behalf of all retirees who were entitled to receive health insurance from other employers. This decision became effective on or shortly after September 1, 2002. As active or retired TA employees, Retirees are entitled to health insurance at no cost through the TA. As a result, they ceased to be covered under the Plan on September 1, 2002.
See Local 100 56.1 ¶ 14.
See id. ¶ 12.
See id. ¶ 3.
See Compl. ¶¶ 30-120.
III. LEGAL STANDARD
A. Summary Judgment
Summary judgment is only appropriate where the record "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." An issue of fact is genuine if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party," while a fact will be deemed material where it "might affect the outcome of the suit under the governing law."
Williams v. Utica Coll. of Syracuse Univ., 453 F.3d 112, 116 (2d Cir. 2006) (quoting Stuart v. American Cyanamid Co., 158 F.3d 622, 626 (2d Cir. 1998)).
Bouboulis, 442 F.3d at 59 (quoting Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986)).
The moving party bears the burden of demonstrating that there exists no genuine issue of material fact. In turn, to defeat a motion for summary judgment, the non-moving party must raise a genuine issue of material fact that does "not rely on conclusory allegations or unsubstantiated speculation." To do so, it must do more than show that there is "`some metaphysical doubt as to the material facts.'" In determining whether a genuine issue of material fact exists, the court must construe the evidence in the light most favorable to the non-moving party and draw all justifiable inferences in that party's favor.
See, e.g., Jeffreys v. City of New York, 426 F.3d 549, 554 (2d Cir. 2005).
Id. (quoting Fujitsu Ltd. v. Federal Express Corp., 247 F.3d 423, 428 (2d Cir. 2002)) (quotation marks omitted).
McClellan v. Smith, 439 F.3d 137, 144 (2d Cir. 2006) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)).
See id. (citing Anderson, 477 U.S. at 255).
B. Breach of an ERISA Fiduciary's Duty
The ERISA statute does not enumerate an ERISA trustee's fiduciary duties. Although the statute is silent, courts have determined that an employer may violate its fiduciary duty by failing to inform its plan beneficiaries that the plan it has represented as affording lifetime benefits may, in fact, be terminated — even when the employer is not seriously considering changing the terms of the plan. The Supreme Court has stated that ERISA's legislative history shows that Congress invoked the common law of trusts (which governed benefit plans before ERISA's enactment) to inform the general scope of ERISA's fiduciary duties. It is well-settled that a common law trustee has fiduciary obligations to deal honestly with its beneficiaries, which includes the "duty to communicate to the beneficiary material facts affecting the interests of the beneficiary which he knows the beneficiary does not know and which the beneficiary needs to know for his protection." By extension, an ERISA plan administrator may breach its fiduciary duty when it "`affirmatively misrepresents the terms of the plan or fails to provide information when it knows that its failure to do so might cause harm.'"
See Varity Corp. v. Howe, 516 U.S. 489, 496 (1996) (citing Central States, Southeast Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 570 (1985)).
Restatement (Second) of Trusts § 173, cmt. d.
Devlin, 274 F.3d at 88 (quoting In re Unisys Corp. Retiree Med. Benefit "ERISA" Litig., 57 F.3d 1255, 1264 (3d Cir. 1995) (concluding that defendant had breached its fiduciary duty where it "affirmatively and systematically represented to its employees that once they retired, their medical benefits would continue for life — even though as the district court concluded in rejecting the retirees' contract claim, the plans clearly permitted the company to terminate benefits").
The Second Circuit has held that an employer may fail "to deal honestly" with ERISA beneficiaries when it promises lifetime benefits but fails to note that it can reduce or terminate these benefits at any time. While the Second Circuit does "not require an ERISA fiduciary to be perfectly prescient as to all future changes in employee benefits" it does hold "that when a plan administrator speaks, it must speak truthfully." If an intentional misrepresentation is found, whether it is material is a mixed question of law and fact based on whether "there is a substantial likelihood that it would mislead a reasonable employee in making an adequately informed decision about if and when to retire."
Id.
Mullins v. Pfizer, Inc., 23 F.3d 663, 669 (2d Cir. 1994) (internal quotation and citation omitted). Accord Ballone, 109 F.3d at 126 (stating that while an ERISA fiduciary "need not be prescient, an employer does not enjoy carte blanche to make statements that the employer knows to be false, or that have no reasonable basis in fact, simply because the statements concern the future"). See id. at 124 ("[r]egardless of whether the employer is seriously considering altering its retirement plan" an "employer's false assurances" that changes have been ruled out may be material in inducing an employee to consider if and when to retire).
Mullins, 23 F.3d at 669 (internal citation and quotation omitted).
IV. DISCUSSION
A. The Breach of Fiduciary Duty Claims Must Be Dismissed
Local 100 contends that there is no evidence in the record that its officers intentionally misrepresented the terms of the Plan to its beneficiaries. Local 100 argues that in stating that Plan health benefits would last a lifetime, Local 100's officers were stating what they believed to be true at the time because no change in the Plan was contemplated until new union leadership, elected in late 2000, opted to alter the Plan in 2002. None of the officers who allegedly represented that the plan included lifetime benefits were involved in the 2002 decision to change the plan. Therefore, the statements that were allegedly made to plaintiffs promising lifetime guarantees "were more in the nature of unactionable predictions than actionable representations of fact." Plaintiffs argue that the same factual allegations that the Court previously found sufficient to create triable issues as to whether the alleged assurances were actionable and whether it was reasonable to rely on them in the context of the promissory estoppel claim are also sufficient to create a triable issue on the breach of fiduciary duty claim. But the two causes of action have different elements and therefore the same allegations may not be able to support both claims. The Court of Appeals instructed this Court to determine whether plaintiffs have sufficiently shown that there was "intentional misrepresentation" so as to make out a breach of fiduciary duty claim. By contrast, it is not necessary to show any sort of misrepresentation to establish a viable promissory estoppel claim.
See Local 100's Memorandum of Law in Support of its Motion for Summary Judgment ("Def. Mem.") at 7-8.
See id. at 9.
Id. at 8 (citing to Ballone v. Eastman Kodak Co., 109 F.3d 117, 125 (2d Cir. 1997) ("mere mispredictions are not actionable").
See Plaintiffs' Memorandum of Law in Opposition to Defendants' Renewal Motion for Summary Judgment ("Pl. Mem.") at 5-6. See also Bouboulis, 2004 WL 1555129, at *7.
Bouboulis, 442 F.3d at 66.
See Devlin v. Empire Blue Cross and Blue Shield, 274 F.3d 76, 85 (2d Cir. 2001) (enumerating elements of a promissory estoppel claim); see id. at 85-86 (describing a breach of fiduciary duty claim as requiring an "affirmative misrepresentation").
Plaintiffs' specific allegations as to intentional misrepresentation are that after the Rosen meeting when the fact that the Plan could be terminated at any time was discussed, it was a "material and intentional misstatement" for James and Calhoun to persist in telling certain plaintiffs that they would receive lifetime coverage from the Plan. Defendants respond that James and Calhoun's "omission" in not telling Plan participants that their coverage could be cancelled or altered does not constitute intentional representation because they had no legal obligation to share Rosen's legal opinion with plaintiffs. Defendants further argue that neither James nor Calhoun relayed Rosen's legal opinion to Vazquez, who was the contact person for Plan participants' questions about their coverage including lifetime duration, because they had no intention of terminating the benefits. Therefore, defendants assert that James and Calhoun's "omission was an oversight, not an intentional misrepresentation" and therefore not a cognizable breach of fiduciary duty.
Pl. Mem. at 6-7.
See Local 100's Reply Memorandum of Law in Support of its Motion for Summary Judgement ("Reply Mem.") at 5.
See id.
Id.
Local 100 does not contest that (1) its officers stated that the benefits would last a lifetime; (2) union officers were told at the Rosen meeting that the Plan could be terminated or modified at any time; and (3) plaintiffs were not directly informed after the Rosen meeting that the Plan could be terminated. Given these undisputed facts, there is a triable issue on the breach of fiduciary duty claim only if plaintiffs alleged that defendants made intentional misrepresentations after the Rosen meeting on which plaintiffs reasonably and detrimentally relied.
See Reply Mem. at 5.
Only four of the twenty-three plaintiffs allege that they were guaranteed lifetime benefits after the Rosen meeting. John Mirrione alleges that when he was considering retiring in 2000 he asked Calhoun about his benefits and was told that he and his wife would receive lifetime benefits. Mirrione alleges that "my decision [to retire] was based on what [Calhoun] told me." Angelo Perilli similarly alleges that in 1999 when active employees lost their coverage, he retired in order to keep what James represented to him were lifetime health benefits although he would have preferred to continue working. Mirrione and Perilli claim that they were injured in retiring earlier than they otherwise would have because they relied on false promises that they would receive lifetime benefits in retirement.
See 2004 Pl. Mem. at 19-27. See also Reply Mem. at 5-6.
See Deposition of John Mirrione ("Mirrione Dep."), Ex. T to O'Brien Aff. at 30, 34.
Id. at 24. See also Pl. Mem. at 8-9.
See Pl. Mem. at 7, 9. See also Pl. 2004 Mem. at 25-26. See also Deposition of Angelo Perilli, Ex. W to O'Brien Aff. at 40.
Defendants argue that even assuming that there were intentional misrepresentations, Mirrione and Perilli retired for personal reasons rather than because of the misrepresentations. Mirrione testified that the long hours demanded by his job as vice president of a large union led his wife to repeatedly press him to retire. Vazquez testified that Perilli told her that he needed to retire (and needed health coverage) because he required heart surgery. Regardless of why these plaintiffs retired, their claims suffer from a different, but fatal, defect.
See Reply Mem. at 6-7.
See Mirrione Dep. at 23-24.
See Reply Mem. at 6-7.
Defendants further argue that even if Mirrione and Perilli retired earlier than they otherwise would have because of reliance on the intentional misrepresentations, they are no worse off for having done so because they received better health benefits as retirees than they would have had they kept working for Local 100. This assertion is uncontested. Plaintiffs offer no proof of any detriment they suffered by retiring early. It is undisputed that the benefits of retirees exceeded those of current employees from December 1999, when Local 100 stopped providing free health insurance to its employees while continuing to provide those benefits to its retirees until September 2002. After that date, beneficiaries who were eligible to receive health insurance from another source were terminated from the Plan. After September 2002, Mirrione and Perilli received free coverage from the TA's plan, whose benefits are indisptably inferior to those that had been provided by Local 100's plan. Therefore, by retiring when they did, Mirrione and Perilli received two and three years, respectively, of superior health insurance from Local 100. If they had continued to work, they would have been covered by the TA's inferior plan either two or three years earlier. Even construing the evidence in the light most favorable to Mirrione and Perilli, no genuine issue of material facts exists as to Local 100's breach of fiduciary duty claim, in that these plaintiffs have failed to offer any proof of detrimental reliance.
See id. at 7. Plaintiffs do not argue (and have offered no proof) that they would not have retired but for the defendants' misrepresentations.
See Local 100 56.1 ¶¶ 11-12. See also Compl. ¶¶ 132-33.
See id. ¶ 3. See also Pl. Mem at 2. See also Pl. 2004 Mem. at 17.
Dennis Gallen alleges that after active employees lost coverage under the Plan in 1999, in order to induce him not to retire, Local 100 officers assured him that his Plan benefits would be reinstated for life upon retirement. However, his decision to continue working left him no worse off than he would have been if he had retired in 1999, because in either case his Plan benefits would have been terminated in 2002. Although Gilbert Rodriguez alleges receiving a promise of lifetime benefits after the Rosen meeting, he fails to allege that he took any action in reliance upon such a representation. Because Mirrione, Perilli, Gallen, and Rodriguez fail to allege any detrimental reliance, their breach of fiduciary duty claims must be dismissed. Accordingly, defendants' motion for summary judgment is granted.
See Pl. Mem. at 8. See also Deposition of John Gallen, Ex. O to O'Brien Aff. at 38-41.
See Deposition of Gilbert Rodriguez, Ex. Z to O'Brien Aff. at 20, 50-51. See also Pl. 2004 Mem. at 26.
B. This Court Again Declines to Exercise Supplemental Jurisdiction Over the Promissory Estoppel Claims
Plaintiffs did not appeal this Court's July 7, 2004 Order granting defendants' motion for summary judgment on the promissory estoppel claims of sixteen plaintiffs but denying it as to plaintiffs Curulli, Gallen, Higgins, Quinones, Moscola, Perilli, Meehan and their respective wives. Plaintiffs also did not appeal this Court's July 14, 2004 Order dismissing these remaining plaintiffs' promissory estoppel claims for lack of federal jurisdiction. However, plaintiffs now argue that if this Court denies defendants' renewed summary judgment motion, then the Court should restore the promissory estoppel claims. Because I have dismissed all of plaintiffs' federal claims, I decline to exercise supplemental jurisdiction over plaintiffs' remaining state law claims. Accordingly, the Complaint is dismissed in its entirety.
See Bouboulis, 2004 WL 1555129, at *8. See also Bouboulis, 442 F.3d at 58.
See Pl. Mem. at 10-11.
See United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966) (stating that where a complaint pleads both federal and common law claims, "if the federal claims are dismissed before trial . . . the state claims should be dismissed as well"). See also 28 U.S.C. § 1367(c)(3) ("[T]he district court may decline to exercise supplemental jurisdiction" over state claims if "the district court has dismissed all claims over which it has original jurisdiction.").
V. CONCLUSION
For the foregoing reasons, defendants' motion for summary judgment is granted. The Clerk of the Court is directed to close this motion [Docket # 32] and this case.
SO ORDERED.