Opinion
02 Civ. 5565 (GBD).
December 22, 2004
MEMORANDUM OPINION ORDER
Pro se plaintiff brings suit alleging violations of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. §§ 1001 et seq. Plaintiff moved for summary judgment on Counts One, Three and Four of his complaint pursuant to Fed.R.Civ.P. 56. Defendants submitted cross motions for summary judgment on all of plaintiff's counts. For the reasons stated below, plaintiff's motion for summary judgment is denied. Defendant's motion for summary judgment is granted in part and denied in part.
I. Background
Pro se plaintiff Victor A. Karl was employed by Asarco as their Labor Relations Counsel and/or Director of Labor Relations until his retirement on January 31, 1992. As a retired salaried employee of Asarco, Karl was eligible to receive benefits from various benefits plans, including group life insurance coverage under Asarco's Group Life Insurance Plan ("Plan"). Administered by the Asarco Administrative Committee (the "Committee"), Asarco established the Plan for the benefit of hourly and salaried employees. The Plan provides, upon retirement, life insurance equal to 50% of the employee's basic annual salary. The benefit would then be further reduced by 5% each year on the next five anniversaries of the retirement date.
Previously named the Pension Board Committee.
Prior to plaintiff's retirement, he received a letter from the Director of Personnel and Employee Benefits ("Benefits Director") that outlined his status as a retiree under various benefit plans. The letter explained plaintiff's benefits under the Plan and summarized that after the above calculations, plaintiff's final life insurance benefit would be "equivalent to 25% of [his] annual salary or $23,500." Letter dated December 23, 1991 from Benefits Director at 2 ("12/23/91 letter"). The letter further stated that "[t]his insurance will be continued in effect without any premium cost to you as long as the present provisions of the Company's contract with the Equitable Life Assurance Society of the United States are continued in force." Id. The letter included a summary plan description ("SPD") that further outlined plaintiff's benefits under the plan.
On December 18, 2001, Asarco amended the Plan to provide a maximum of $10,000 in life insurance coverage for salaried retirees, effective February 1, 2002. In a letter dated December 27, 2001, the Committee informed salaried retirees, including plaintiff, of this amendment. On March 15, 2002, plaintiff sent an e-mail to the Senior Manager of Benefit Plans seeking, among other things, the restoration of his life insurance benefit to $23,500. Plaintiff further requested copies of the SPD and information concerning the Plan's claims procedure. The Committee, on April 4, 2002, sent a letter to plaintiff advising that his request for restoration of his benefits to their original level was denied. The letter further stated that plaintiff's request was "being treated as a claim for additional benefits" under the Plan and that plaintiff was free to appeal the Committee's decision in writing. Defendants allege that on April 5, 2002, plaintiff appealed the Committee's decision by facsimile letter. In a letter dated April 9, 2002 and again in an email dated April 29, 2002, plaintiff requested additional documents and information. The Committee responded to these requests by letter dated May 9, 2002. On May 10, 2002, the Committee convened a meeting and determined that plaintiff did not have a vested right to the benefits under the Plan. The Committee subsequently notified plaintiff of their decision and that plaintiff was eligible for coverage in the amount of $10,000 by letter dated June 7, 2002.
Plaintiff disagrees with defendant's contentions, alleging that he "mailed hardcopies by regular U.S. Mail to the Committee." This disputed issue of fact, however, is irrelevant to the issues before the Court.
Plaintiff filed the instant suit on July 18, 2002, alleging contractual vesting, equitable estoppel, promissory estoppel and breach of fiduciary duty. The gravamen of plaintiff's claim is that the defendants violated ERISA by reducing his life insurance coverage from $23,500 to $10,000. The defendants, however, maintain that the Asarco Group Life Insurance Plan Document ("1965 Plan"), entitled them to amend or terminate the plan at their discretion. Specifically, defendants assert that the 1965 Plan provides them with the right to modify, amend, or terminate the Plan at any time.
Plaintiff contests, however, the validity of the 1965 Plan and asserts that he was unaware of the document's existence. He argues that "the limiting and exclusionary . . . provisions . . . were not communicated to" him and that the 1965 Plan "was hidden and concealed by defendant Asarco from [him] and similarly situated Plan participants as a relevant Plan document." Complaint at 3, ¶ 17. Plaintiff argues that the SPD "is the relevant and controlling Plan document" which "reflects [his] benefits as in effect at the time of his retirement, and thereafter." Id. at 1, ¶ 4. Plaintiff contends that the SPD does not contain any language allowing the defendants to amend or terminate his coverage from $23,500 to $10,000 and that indeed the SPD contains language that promises "lifetime life insurance coverage per Plan formula after retirement." Id. at 3, ¶ 13. Plaintiff asserts that the SPD "can be reasonably interpreted as conferring a vested right to the benefits claims, ie (sic) life insurance coverage in the amount of $23,500." Id.
Plaintiff submitted the present motion pursuant to Fed.R.Civ.P. 56 seeking summary judgment on Counts One (Contractual Vesting under ERISA), Three (Promissory Estoppel) and Four (Breach of Fiduciary Duty). Defendants submitted cross motions for summary judgment pursuant to Fed.R.Civ.P. 56(b) seeking to dismiss plaintiff's complaint in its entirety.
II. Discussion
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Nebraska v. Wyoming, 507 U.S. 584, 590, 113 S.Ct. 1689, 1694, 123 L.Ed.2d 317 (1993). The burden of demonstrating that no factual dispute exists is on the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met this burden, the nonmoving party "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). In deciding a motion for summary judgment, a court must resolve all ambiguities and draw all reasonable inferences in favor of the party opposing the motion.Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.3d.2d 202 (1986). Summary judgment should be granted only when no reasonable trier of fact could find in favor of the nonmoving party. Gallo v. Prudential Residential Services, Ltd., 22 F.3d 1219, 1224 (2d Cir. 1994).
Furthermore, in a pro se case, the court must view the submissions by a more lenient standard than that accorded to "formal pleadings drafted by lawyers." Haines v. Kerner, 404 U.S. 519, 520 (1972); see Estelle v. Gamble, 429 U.S. 97, 106 (1976); Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994) (a court is to read a pro se party's "supporting papers liberally, and . . . interpret them to raise the strongest arguments that they suggest"). The Second Circuit has stated that "[i]mplicit in the right to self-representation is an obligation on the part of the court to make reasonable allowances to protect pro se litigants from inadvertent forfeiture of important rights because of their lack of legal training." Traguth v. Zuck, 710 F.2d 90, 95 (2d Cir. 1983). This liberal standard, however, does not excuse a pro se litigant from following the procedural formalities of summary judgment. Showers v. Eastmond, 00 CIV. 3725, 2001 WL 527484, at *2 (S.D.N.Y. May 16, 2001).
A. Contractual Vesting
There are two types of employee benefit plans covered by ERISA: pension plans and welfare plans. See 29 U.S.C. §§ 1002(1) (2)(A). Asarco's plan involves life insurance and is therefore classified as a welfare plan. See § 1002(1). "Unlike pension plan benefits, the benefits provided by a welfare plan generally are not vested and an employer can amend or terminate a welfare plan at any time." American Fed'n of Grain Millers, AFFL-CIO v. Int'l Multifoods Corp., 116 F.3d 976, 979 (2d Cir. 1997) (citations omitted). Although benefits do not automatically vest under an ERISA welfare plan, "if any employer promises vested benefits, that promise will be enforced." Id. at 980. However, a commitment to vest welfare benefits "is not to be inferred lightly." See Sprague v. General Motors Corp., 133 F.3d 388, 400 (6th Cir.), cert. denied 524 U.S. 923 (1998).
Plaintiff alleges that the defendant's decision to reduce his life insurance coverage from $23,500 to $10,000 violated ERISA because language contained in both the SPD and a letter that accompanied it indicate an intent to confer a vested right to insurance coverage in the amount of $23,500. Defendants argue that plaintiff has failed to offer any proof indicating vested lifetime benefits in the Plan documents. Defendants further argue that they retained the right to amend or modify the terms of the life insurance coverage, including the right to reduce plaintiff's coverage to $10,000. Plaintiff insists, however, that he was never provided with a copy of the 1965 Plan and that, nevertheless, the relevant document for the Court to consider is the SPD. Plaintiff argues that contrary to what the defendants allege, the SPD does not contain language allowing the defendants to modify or amend the terms of the life insurance coverage promised to him.
It is well settled law that "if a document unambiguously indicates whether retiree benefits are vested, the unambiguous language should be enforced." Multifoods 116 F.3d at 980. However, when the language in the relevant documents is unclear, courts in this district apply a reasonableness test. Specifically, to reach a trier of fact, an employee does not have to "point to unambiguous language to support a claim. It is enough to point to written language capable of reasonably being interpreted as creating a promise on the part of the employer to vest the recipient's benefits." Id. (internal citations and quotations omitted) (quoting Schonholz v. Long Island Jewish Medical Center, 87 F.3d 72, 78 (2d Cir. 1996).
Plaintiff asserts that Asarco's intent to confer vested benefits can be inferred from three separate sources. In the SPD entitled "Group Insurance Plans for Salaried Employees" which is undisputedly the relevant SPD, plaintiff points to the first line which states "Life and Accidental Death and Dismemberment Insurance While Working and Life Insurance After Retirement." (Emphasis added). On the same page of the SPD, plaintiff points to language in the second paragraph, which states ". . . reduces to 50% of basic annual compensation upon retirement. . . ." (Emphasis added). Finally, plaintiff points to a letter dated December 23, 1991 from Richard D. Hildebrand ("Hildebrand letter") which outlines plaintiff's various benefit plans. Plaintiff points to language on page 1 and 2 of the letter which states "Your insurance will be reduced a further 5% of your annual salary on each of the next five anniversary dates of your retirement to a final figure equivalent to 25% of your annual salary or $23,500." (Emphasis added).
Defendants argue that the language highlighted by the plaintiff in the Hildebrand letter is extrinsic evidence that cannot alter the meaning of unambiguous terms and should be disregarded by the Court. The Hildebrand letter, which states that the plaintiff was entitled to a "final figure" of $23,500, was received by the plaintiff, along with the SPD, prior to his retirement. Letters describing benefits, however, have been considered by courts in determining whether benefits vested in lieu of formal plan documents. See Schonholz, 87 F.3d at 78, 80 (considering two letters in finding that a question of fact arose as to a promise of vested benefits). Furthermore, since the terms in the SPD are ambiguous as to whether plaintiff possessed a right to vested life insurance benefits, plaintiff is not precluded from using extrinsic evidence such as the Hildebrand letter as evidence at trial. The ultimate determination of whether Asarco promised lifetime benefits should be left to a trier of fact, likely assisted by extrinsic evidence to clarify the meaning of ambiguous language. See Devlin, 274 F.3d at 85(citing Bidlack v. Wheelabrator Corp., 993 F.2d 603, 609 (7th Cir. 1993) (allowing parties to present extrinsic evidence to "disambiguate" a collective bargaining agreement's health benefits provisions)).
This language could be reasonably interpreted as creating a promise by the defendants to vest plaintiff's life insurance benefits, and meets the minimum standard set by the Second Circuit. This language does not definitively prove that plaintiff's benefits vested in the amount of $23,500. However, the standard in this district "permits a plaintiff to get to a trier of fact based on ambiguous plan language." Devlin v. Empire Blue Cross and Blue Shield, 274 F.3d 76, 83 (2d Cir. 2001) (finding that a clause stating "retired employees, after completion of twenty years of full-time permanent service and at least age 55 will be insured" can be reasonably read as promising vested benefits). Plaintiff, therefore, survives the defendants' motion for summary judgment.
Defendants argue, however, that even if plaintiff were able to point to language in the SPD that could be reasonably interpreted as creating a promise of vested benefits for the plaintiff, the SPD also contains language reserving defendants' right to modify, amend or terminate the Plan which defendants contend vitiates any argument by the plaintiff that his benefits vested. Specifically, defendants argue that the SPD contains language which indicate circumstances under which an employee's coverage under the Plan might terminate:
The Second Circuit has held that when a document includes both language that could reasonably be interpreted as promising lifetime benefits and a reservation of rights clause, the lifetime benefits should not be considered vested as the language "is not susceptible to an interpretation that promises vested life insurance benefits." Abbruscato v. Empire Blue Cross and Blue Shield, 274 F.3d 90, 100 (2d Cir. 2001).
Your coverage under the Plan terminates when:
• Your employment with the Company terminates;
• You no longer are eligible; or
• The Group Policy terminates;
If the Group Life Insurance Policy terminates or is amended to terminate your class of employees, your Group Life Insurance is terminated 45 days later.
There is also language dealing with circumstances where the Plan may be amended:
Plan Revisions
If you are not actively at work on the effective date of a change in Plan, any change in your amount of insurance (Contributory or Company-Paid) will be postponed until you return to active work, except for reductions described in this booklet when you reach certain ages or when you retire,
SPD at 5, 6.
This language, however, does not unequivocally reserve defendants' right to modify or amend the Plan. Although the first paragraph lists three circumstances that would cause the employee's coverage under the plan to terminate, it does not unconditionally reserve the defendants' right to unilaterally terminate the plan. Compare Joyce v. Curtiss-Wright Corporation, 171 F.3d 130, 135-36 (2d. Cir. 1999) (plan provided that employer "shall" terminate benefits upon the expiration of the collective bargaining agreement). The second paragraph articulates that the effective date of termination is 45 days after the plan terminates. The third paragraph merely asserts that a change in the amount of insurance is postponed until the employee returns to active work if that employee is not actively at work on the effective date of a change in the plan. This language is not the same as the language reserving the defendants' right to amend or terminate the 1965 Plan. That language states that
Right to Amend or Terminate. The Company shall have the right at any time to amend or modify the Plan, retroactively or otherwise, or to terminate or partially terminate the Plan provided that any action to terminate the Plan shall be authorized by the Board of Directors of the Company.
1965 Plan at 10, ¶ 4.1. This language is clearly not present in the SPD.
Defendants further argue that the 1965 Plan document controls plaintiff's rights under the Plan, not the SPD. Case law, however, is clearly contrary to their argument. "Congress intended that plan documents and the SPDs exclusively govern an employer's obligations under ERISA plans." Moore v. Metropolitan Life Insurance Company, 856 F.2d 488, 492 (2d Cir. 1988) (emphasis added). Furthermore, "[e]mployers are bound by promises made in SPDs, which Congress intended to be a primary source of information regarding plan benefits." See Joyce v. Curtiss-Wright Corporation, 171 F.3d 130, 135-36 (2d. Cir. 1999) (citing Heidgerd, 906 F.2d at 907); see also 29 U.S.C. § 1022(a)(1) (SPD must be provided to participants and beneficiaries). Defendants' contention that the Court should disregard the SPD and look solely to the Plan document is meritless. Indeed, the Second Circuit has held that when "the terms of a plan and those of a SPD conflict, it is the SPD that controls." Multifoods, 116 F.3d at 982 (citing Heidgerd v. Olin Corp., 906 F.2d 903, 908 (2d Cir. 1990).
Plaintiff likewise argues that the Court should discredit the 1965 Plan document offered by the defendants. This argument, however, fails for the same reasons as defendants' argument to preclude the SPD. Congress clearly intended for both plan documents and SPDs to be the governing relevant documents. See Moore, 856 F.2d at 492.
The language in the SPD and the Hildebrand letter could reasonably be interpreted as creating a promise by the defendants to vest plaintiff's life insurance benefits. That language, however, does not indisputably prove that the defendants promised to vest plaintiff's life insurance benefits. The language raises a question of fact sufficient to defeat both sides' motions for summary judgment.
B. Equitable Estoppel
Defendants also seek summary judgment on plaintiff's equitable estoppel claim under ERISA. Plaintiff claims that defendants materially misrepresented his entitlement under the plan by concealing from him the 1965 Plan document, which contained a clause reserving the defendants' right to amend, modify or terminate the plan. Plaintiff alleges that by failing to make him aware of this document, the defendants concealed from him their right to unilaterally reduce his coverage, thereby misrepresenting to him the actual amount of his life insurance. He alleges that he relied upon this misrepresentation, i.e. that his life insurance coverage was vested in the amount of $23,500 and not subject to amendment or modification by the defendants, and that he was injured as a result of defendant's reduction of this coverage amount.
Plaintiff did not move for summary judgment on this count and did not brief it in his motion papers. His only response to defendants motion for summary judgment on his equitable estoppel claims is that "Count Two-Equitable Estoppel is not before this Court in this [motion for summary judgment] proceeding and was deliberately excluded from Plaintiff's notice of motion." He argues, however, that "by the nature of the causes of action brought by plaintiff, . . . there is necessarily considerable overlap of factual and legal issues." Plaintiff's Reply Brief at 20.
It is undisputed that equitable estoppel is a valid legal theory of recovery under ERISA. See Lee v. Burkhart, 991 F.2d 1004, 1008 (2d Cir. 1003). The elements of an equitable estoppel claim are "(1) material misrepresentation, (2) reliance and (3) damage." Id. at 1009. Furthermore, a plaintiff must also demonstrate the existence of extraordinary circumstances, such as an intentional inducement that goes beyond the concept of reasonable reliance. Id.
A material misrepresentation includes conduct which amounts to a false representation or concealment of material facts. See General Electric Capital Corp. v. Armadora, 37 F.3d 41, 45 (2d Cir. 1994).
Defendants move for summary judgment on the grounds that the SPD upon which plaintiff relies "repeatedly refers to the existence of the underlying Plan Document and specifically informs employees that they may request and receive a copy of the Plan Document at any time." Defendant's Brief at 18. Defendant contends, therefore, that there was no misrepresentation on their part, as the plaintiff, who acknowledged receipt and review of the SPD, should have been informed as to the 1965 Plan document's existence. Furthermore, defendants assert that "[t]he SPD states that it is a summary of the Plan and notifies all employees that Plan participants may obtain the complete Plan document upon request. (McAllister Decl. ¶ 19; Exhibit D at 1, 28)." Defendants' 56.1 Statement at 3, ¶ 13. A review of this document, however, does not support the defendants' contention. The exact language on page one of the SPD states
This booklet contains a comprehensive description of the provisions of the Group Life and Accidental Death and Dismemberment Insurance Plan (the "Plan") and Aviation and Travel Insurance Plan for Salaried Employees of ASARCO Incorporated (and designated subsidiaries). However, there are some provisions of the Plan shown in more detail in the Group Policy, issued by the Equitable Life Assurance Society of the United States (the "Equitable"). Inasmuch as it is a simplified description of the Aviation and Travel Insurance Plan, however, the terms and conditions of the policy issued by The Federal Insurance Company (the insurance company providing the business travel insurance) governs in all instances with regard to your rights and benefits.
SPD at 1. Page twenty-eight, in relevant part, states
ERISA provides that all Plan Participants shall be entitled to:
• Examine, without charge, at the Plan Administrator's office and at other specified locations, such as worksites, all plan documents, including insurance contracts and copies of all documents filed by the plan with the U.S. Department of Labor, such as detailed annual reports and plan descriptions.
• Obtain copies of all plan documents and other plan information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies.
SPD at 28. There is no reference to the Asarco Group Life Insurance Plan Document (the "1965 Plan") which contains the defendants reservation of rights clause and which plaintiff claims he never received and was not made aware of. The portions of the SPD cited by the defendants refer to the existence of three plans: the Group Life and Accidental Death and Dismemberment Insurance Plan; the Aviation and Travel Insurance Plan for Salaried Employees of ASARCO Incorporated (and designated subsidiaries); and the Group Policy issued by the Equitable Life Assurance Society of the United States. There is no mention of the Asarco Group Life Insurance Plan Document. Indeed, a review of the entire SPD shows no reference to the Asarco Group Life Insurance Plan Document. It is a disputed fact whether plaintiff ever received, was aware, or should have been aware of the 1965 Plan document, and therefore whether there was a material misrepresentation by the defendants.
Defendants have not argued and have presented no evidence to support a finding that any of the plans referred to in the relevant portion of the SPD are indeed the Asarco Group Life Insurance Plan Document.
Defendants further argue that in his role as Director of Labor Relations, plaintiff "supported employee benefits functions for Asarco, including drafting Asarco's employee benefit plan claims procedures." Defendants do not claim, however, that plaintiff drafted or was ever aware of the 1965 Plan. Indeed the first time defendants allege to have sent the 1965 Plan document to plaintiff is in response to plaintiff's email request dated March 15, 2002 to see the Plan Document and the SPD. Defendants' 56.1 Statement at 6, ¶ 27.
Furthermore, plaintiff has provided sufficient evidence that he relied on the defendants' statements concerning his life insurance coverage amount. Plaintiff asserts that "[t]he reasonable expectations of the fulfillment of these promises was relied on by [him] as a component of one of his life decisions to provide for the financial security of his spouse, along with other postretirement benefits promised by defendant Asarco." Plaintiff's Affirmation at 5, ¶ 5a. Plaintiff maintains that "when [he] entered into the employee of Asarco . . ., he placed a premium on such benefits which included non-contributory postretirement life insurance coverage." Id. at 5, ¶ 5b. Plaintiff further states that "[b]ut for the promises of such coverage, . . . [he] would have procured affordable coverage from other sources at a much earlier age and with fewer if any health risks and . . . he would not have accepted employment with Asarco in the first place." Id. These affirmations are sufficient to create a dispute of material fact as to whether plaintiff reasonably relied on material misrepresentations.
Defendants do not challenge that plaintiff has suffered or will suffer injury as a result of his reliance.
In order to prevail on a claim of either equitable or promissory estoppel in the ERISA context, however, plaintiff must also prove the existence of "extraordinary circumstances." Aramony v. United Way Replacement Benefit Plan, 191 F.3d 140, 151 (2d Cir. 1999). "[A]n ERISA plaintiff must `adduce not only facts sufficient to support the four basic elements of promissory estoppel, but facts sufficient to [satisfy an] extraordinary circumstances' requirement as well.'" Id. (quoting Devlin v. Transp. Comms. Int'l Union, 173 F.3d 94, 102 (2d Cir. 1999). Although "extraordinary circumstances" has not yet been specifically defined, it requires that "surrounding circumstances are indeed beyond the ordinary." Aramony, 191 F.3d at 152. The Third Circuit has found "extraordinary circumstances" as those including fraud or acts of bad faith on the part of the employer. However, "this Circuit has recognized extraordinary circumstances where an employer promised benefits to an employee in good faith in an intentional effort to induce the employee to take some action, and the employer later reneged on its promise."Bouboulis v. Transportation Workers Union of Greater New York, Local 100, 2004 WL 1555129, *7 (S.D.N.Y., June 9, 2004); see e.g., Jordan v. Federal Exp. Corp., 116 F.3d 1005, 1011 (3d Cir. 1997) (finding that "extraordinary circumstances generally involve acts of bad faith on the part of the employer, attempts to actively conceal a significant change in the plan, or commission of fraud."). The list of extraordinary circumstances, however, is not necessarily limited to those situations addressed in existing caselaw.
In support of his claim, plaintiff states that he detrimentally relied on defendants' misrepresentations and promises. See Affirmation of Victor A. Karl at 5, ¶ 5a. Plaintiff claims that in his experience, "companies in order to hire and retain qualified employees develop and offer comprehensive and competitive benefit packages, not the least of which are those providing postretirement benefits. An important component, along with Pensions and 401ks, is postretirement life insurance coverage." Id. at 6, ¶ 5b. Plaintiff asserts that he accepted the position at Asarco in due part because he "placed a premium on such benefits" and that "[b]ut for the promises of such coverage . . ., [he] would have procured affordable coverage from other sources at a much earlier age." Id. at 6, ¶ 5c. He attests that had he known that defendant Asarco would have reduced his benefit coverage, "he would not have accepted employment with [them] in the first place." Id. He argues that he was under no obligation to purchase additional life insurance coverage, believing that the defendants would honor their promise to him. He further states that purchasing replacement coverage now, at his advanced age and adverse health, would prove prohibitively costly. Plaintiff relies on these sworn statements in support of his claim that extraordinary circumstances exist in this case.
Plaintiff's proof, in the form of his sworn testimony, is sufficient to survive defendants' motion for summary judgment on this claim. In Devlin v. Empire Blue Cross and Blue Shield, 274 F.3d at 86, the court upheld plaintiffs' estoppel claims after finding that
a trier of fact could reasonably conclude that [defendant] intentionally promised lifetime life insurance benefits to lure (and retain) employees away from other firms paying higher salaries and then denied those benefits after the employees were of an age where they could neither make up the salary difference or obtain alternative benefits at a reasonable cost. If so found, we believe that such a practice constitutes "extraordinary circumstances" sufficient to support plaintiffs' promissory estoppel claim.Id. The court, relying on deposition testimony by former company officers, held that "plaintiffs have demonstrated more than mere acceptance of employment . . . in exchange for these benefits; instead, they have dedicated much of their working lives to [the defendants]." Id. Plaintiff attests that "he placed a premium on such benefits" when "he entered into the employ of Asarco in mid-career at the age of 42." Plaintiff's Affirmation at 6, ¶ 5b. Plaintiff's proof, consisting of his sworn testimony that he accepted his position at Asarco and chose not to purchase additional life insurance based on Asarco's alleged misrepresentation of vested benefits, could meet the standard of "extraordinary circumstances" sufficient to support a promissory estoppel claim.See Abbruscato, 274 F.3d at 101 (finding that defendants intentionally induced plaintiffs to take early retirement and forego future years of salary and the opportunity to obtain other life insurance as sufficient to satisfy `extraordinary circumstances' standard); see also Schonholz, 87 F.3d at 79-80 (finding `extraordinary circumstances' where the employer used promised severance benefits to induce the plaintiff to retire); see also Bouboulis, 2004 WL 1555129, *7 (finding that evidence of an employer's promise to induce employees to undertake certain actions to their detriment are enough to enable a finder of fact to conclude that the employer used promises of lifelong benefits to induce certain action thereby meeting the extraordinary circumstances requirement). There is, therefore, a genuine issue of material fact from which a reasonable juror could find `extraordinary circumstances.' Defendants motion for summary judgment on plaintiff's equitable estoppel claims is denied.
C. Promissory Estoppel
Plaintiff has sufficiently offered proof of the four elements of a promissory estoppel claim. See Kunkel v. Empire Blue Cross and Blue Shield, 274 F.3d 76, 85 (2d Cir. 2001) (finding that "[a] plaintiff must satisfy four elements to succeed on a claim of promissory estoppel: (1) a promise, (2) reliance on the promise, (3) injury caused by the reliance, and (4) an injustice if the promise is not enforced" as well as "facts sufficient to satisfy an extraordinary circumstances requirement."). As the Court found infra, a reasonable jury could find that the SPD contained written language capable of reasonably being interpreted as creating a promise on the part of Asarco to vest plaintiff's benefits. Furthermore, through his sworn affidavit, plaintiff has shown that he relied on this promise and that he was caused injury by his reliance. Lastly, plaintiff has shown that an injustice would arise if defendants' promise is not enforced.See Abbruscato, 274 F.3d at 101 (finding that plaintiffs adequately demonstrated that an injustice would result should employer's alleged promise of vested lifetime benefits not be enforced). Furthermore, plaintiff has offered sufficient proof of "extraordinary circumstances" to warrant denial of defendants' motion. As a genuine issue of material fact exists as to plaintiff's promissory estoppel claim, his motion for summary judgment, as well as defendants', must be denied.
D. Breach of Fiduciary Duty
Under ERISA, a fiduciary is obligated to discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits to participants and their beneficiaries. 29 U.S.C. § 1104(1). Furthermore, "Congress provided that a trustee shall discharge his duties with respect to the plan with the care, skill, prudence and diligence that a prudent man would use. This charge imposes an unwavering duty on an ERISA trustee to make decisions with single-minded devotion to a plan's participants and beneficiaries and, in so doing, to act as a prudent person would act in a similar situation." Morse v. Stanley, 732 F.2d 1139, 1145 (2d Cir. 1984) (citing 29 U.S.C. § 1104(a)(1)(B)). Furthermore,
when a plan administrator affirmatively misrepresents the terms of a plan or fails to provide information when it knows that its failure to do so might cause harm, the plan administrator has breached its fiduciary duty to individual plan participants and beneficiariesIn re Unisys Corp. Retiree Med. Benefit "ERISA" Litig., 57 F.3d 1255, 1264 (3d Cir. 1995).
Plaintiff charges that the defendants breached their fiduciary duty when they unilaterally reduced the amount of his life insurance coverage. Plaintiff claims that by reducing his benefits and failing to apprise him of their right to modify, amend or terminate his life insurance, Asarco and the Committee "did not deal honestly and fairly" with him. Plaintiff also claims that the defendants "did not communicate full and/or accurate and/or timely information" regarding various documents requests as well as "any limitations or exclusion of benefits" contained in the plan itself. Complaint at 4, ¶¶ 25-26. Plaintiff further challenges both the adequacy of the Plan's claims and appeals procedure as well as the defendants adherence to the stated procedure. These two claims center on two allegations: that defendants' review on appeal was not performed by a person different from the person who made the initial denial, and that plaintiff's appeal was not answered by the defendants within the sixty (60) days required by the procedure. Citing 29 C.F.R. 2560.503-1, plaintiff alleges that defendants violated its fiduciary duties by "providing a Claims/Appeal procedure that was not reasonable nor did it provide a full, fair and independent review of [his] appeal of his denied claim." Complaint at 4, ¶ 24. Plaintiff moves for summary judgment on his breach of fiduciary duty claim.
Defendants also move for summary judgment on plaintiff's breach of fiduciary duty claim. They argue that Asarco did not act in a fiduciary capacity in amending the plan, but rather acted as the settlor of the plan. Defendants cite Siskind v. Sperry Retirement Program, Unisys, 47 F.3d 498, 505 (2d Cir. 1995), for the principle that an employer that designs a retirement plan or amends an existing plan's design does not come within ERISA's definition of a fiduciary. Furthermore, "[a]n employer acts as a fiduciary within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A)(1988), only when fulfilling certain defined functions, including the exercise of discretionary authority or control over plan management or administration." Id.
It is true that "an employer that designs a retirement plan or amends an existing plan's design does not come within ERISA's definition of a fiduciary,"Devlin, 274 F.3d at 87-88. However, when a genuine issue of material fact exists as to an employer's breach of a contractual promise to vest such benefits, an employer may have exercised discretionary authority with respect to the plan when it unilaterally reduced the employee's benefits, thereby subjecting the employer to potential violations of its fiduciary duties under ERISA. See id. at 88. As the Court has already determined that a genuine issue of material fact exists as to defendants' breach of a contractual promise to vest benefits, a concomitant genuine issue of material fact exists whether defendants were acting in a fiduciary capacity if they broke this promise by reducing plaintiff's life insurance benefits. A reasonable finder of fact might conclude that Asarco exercised discretionary authority by reducing plaintiff's benefits, thereby subjecting itself to potential violations of its fiduciary duties under ERISA. Defendants' motion for summary judgment on this ground is therefore denied.
Although defendants do not cite to it, Section 3.2 of the 1965 Plan document, which defendants contend is the relevant governing plan document and which plaintiff alleges he did not receive and was not apprised of, states, in relevant part:
Pension Board. Asarco shall appoint a Pension Board Committee (hereinafter "the Committee" to administer the Plan. The Committee shall have all authority and responsibility for the administration and interpretation of the Plan, and, for purposes of ERISA, shall be the "administrator" of the Plan and its "named fiduciary" with respect to matters for which it is responsible; provided that the Board of Directors of Asarco (the "Board") shall have the sole authority to terminate the Plan.
Although the language of this section apparently directs all authority and responsibility regarding the Plan to the Committee, under the Second Circuit's finding in Devlin, defendants' may have exercised their discretionary authority and acted as a fiduciary in allegedly breaching a promise of vested life insurance benefits. Furthermore, Section 3.2 of the 1965 Plan document shows that the ultimate authority to amend or terminate the plan, which is the sina qua non of plaintiff's claims, remains directly and solely with defendant Asarco.
A genuine issue of material fact also exists as to whether defendants breached their fiduciary duty by failing to apprise plaintiff of their right to modify, amend or terminate plaintiff's life insurance by concealing from plaintiff the 1965 Plan document. It remains in dispute whether plaintiff was ever sent, or received, the 1965 Plan document which reserved for defendants the right to reduce plaintiff's life insurance amount. If, indeed, the facts ultimately prove to a reasonable trier of fact that the 1965 Plan document was deliberately concealed from the plaintiff, then a reasonable juror could also find that defendants breached their fiduciary duty to disclose this document to the plaintiff. Defendants' motion for summary judgment on this ground is also denied.
Plaintiff also alleges breaches relating to his requests for other documents and information regarding his benefits. Courts have found that once an ERISA beneficiary has requested information from a fiduciary who is aware of the beneficiary's status and situation, the fiduciary has a duty to convey complete and accurate information, even if that requires conveying information about which the beneficiary did not specifically inquire. See Krohn v. Huron Memorial Hospital, 173 F.3d 542, 548 (6th Cir. 1999). The "duty to inform is a constant thread in the relationship between beneficiary and trustee; it entails not only a negative duty not to misinform, but also an affirmative duty to inform when the trustee knows that silence might be harmful." Bixler v. Central Pa. Teamsters Health Welfare Fund, 12 F.3d 1292, 1300 (3rd Cir. 1993). In his complaint, plaintiff asserts claims against defendant Asarco for its failure to "communicate full and/or accurate and/or timely information to [plaintiff] as such relates to Ex7A, #7B and 7#C and Karl/Aff Para 6 and also with respect to the alleged 1965 document and any revisions thereof." Plaintiff's Complaint at 4, ¶ 26.
A review of plaintiff's exhibits 7A, 7B and 7C reveals that these memorandums were addressed to the Asarco Administrative Committee. Defendants argue, therefore, that any claims regarding these documents or communications against defendant Asarco should be dismissed. The substance of plaintiff's exhibits, however, requests information and documents relevant to plaintiff's status and situation, information that Asarco, as a fiduciary, would have a duty to disclose. The issue before this Court, therefore, is not to whom the letters were directed, but who had a fiduciary duty to provide the information requested. As a fiduciary, defendant Asarco could not absolve itself of the responsibility of providing this information merely by arguing that the letters were addressed to the Committee. See Devlin, 274 F.3d at 88 (finding that "[w]ith respect to the claims based on allegedly misleading communications, we likewise conclude that [the defendant] may have been acting as a fiduciary when it communicated with its employees and retirees concerning the contents of the welfare benefits plan"). Furthermore, all of plaintiff's claims of misleading communications regarding the 1965 Plan document are drafted against defendant Asarco.
Plaintiff also moves for summary judgment on his final claims for breach of fiduciary duty in relation to the claims and appeals procedure outlined in the plan. Plaintiff's claims are twofold. First, he alleges that under 29 C.F.R. § 2560.503-1, the defendants review of plaintiff's appeal should have been performed by someone other than the person who made the initial denial. He also alleges that defendants breached their fiduciary duty by untimely answering his appeal. Defendants also move for summary judgment on these claims. They contend that 29 C.F.R. § 2560.503-1, the portion of ERISA which plaintiff argues requires that his appeal be reviewed by a person different from the one who initially denied his request, applies only to health or disability plans and not to life insurance plans. Defendants further argue that plaintiff's appeal was timely addressed.
Defendants' motion for summary judgment on plaintiff's first claim is granted. The requirement that review on appeal be by a person or entity who was not involved in the initial determination only applies to group health plans and disability benefits plans, not welfare benefit plans as is the case here. 29 C.F.R. § 2560.503-1(h)(3).
Defendants' motion for summary judgment on plaintiff's second claim is denied. The defendants notified plaintiff and other salaried retirees in a letter dated December 27, 2001, that their life insurance coverage was being reduced to $10,000. Plaintiff, on March 15, 2002, sent an e-mail to Debra Baker, Senior Manager, Benefit Plans, seeking the restoration of the prior amount of coverage. The Committee, by letter dated April 4, 2002, sent plaintiff a letter informing him that his request to rescind their decision to reduce his benefits was "being treated as a claim for additional benefits" under the Plan, that this request was denied, and that he could appeal their decision by submitting a "written notice of appeal directed to the Asarco Administrative Committee." On April 5, 2002, plaintiff faxed his appeal to the Committee and mailed copies of the appeal on April 8, 2002. Defendants denied plaintiff's appeal by letter dated June 7, 2002.
Despite defendants' arguments, it is clear that they were made aware of plaintiff's appeal on March 15, 2002. Plaintiff disputed in a postscript at the bottom of his faxed April 4, 2002 letter defendants' decision to treat his appeal as "a claim for additional benefits." It is without question that plaintiff was not seeking additional benefits, but rather sought the restoration of his prior benefits. Defendants motion for summary judgment on this claim is therefore denied. As genuine issues of material fact exist on plaintiff's remaining breach of fiduciary duty claims, his motion for summary judgment on his breach of fiduciary duty is also denied.
III. Conclusion
Defendants' motion for summary judgment on plaintiff's claim that defendants breached their fiduciary duty pursuant to 29 C.F.R. § 2560.503-1 is granted. Defendants' motion for summary judgment in all other respects is denied. Plaintiff's motion for summary judgment is denied in its entirety.