Opinion
06 Civ. 2280 (JPO)(KNF)
08-15-2012
TIMOTHY D. LAURENT, SMEETA SHARON, MICHAEL A. WEIL, On behalf of themselves and on behalf of all others similarly situated, Plaintiffs, v. PRICEWATERHOUSECOOPERS LLP, THE RETIREMENT BENEFIT ACCUMULATION PLAN FOR EMPLOYEES OF PRICEWATERHOUSECOOPERS LLP, and THE ADMINISTRATIVE COMMITTEE TO THE RETIREMENT BENEFIT ACCUMULATION PLAN FOR EMPLOYEES OF PRICEWATERHOUSECOOPERS LLP, Defendants.
MEMORANDUM and ORDER
INTRODUCTION
Plaintiffs Timothy D. Laurent, Smeeta Sharon, and Michael A. Weil, brought this action on behalf of themselves and other similarly situated individuals, pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq., against defendants PricewaterhouseCoopers LLP, The Retirement Benefit Accumulation Plan for Employees of PricewaterhouseCoopers LLP ("RBAP") and The Administrative Committee to the Retirement Benefit Accumulation Plan for Employees of PricewaterhouseCoopers LLP, alleging that the defendants: (1) miscalculate lump sum retirement plan benefits, by using a formula that violates ERISA, Internal Revenue Code ("IRC") section 411(a), and "Treasury Regulation § 1.411(a)-4T" (Count one); (2) make the receipt of accrued benefits conditional, in violation of ERISA, IRC and Treasury Department Regulations (Count two); (3) use a formula to calculate benefits that discriminates based on age, in violation of ERISA (Count three); and (4) fail to preserve the actuarial value of "normal retirement benefits," in violation of ERISA and IRC (Count four). Before the Court is the plaintiffs' motion pursuant to Federal Rule of Civil Procedure 15(a)(2), for leave to amend their first-amended complaint to:
(1) clarif[y] and amplif[y] some of the allegations of Count one, (while narrowing the proposed class and dropping the one named plaintiff, Mr. Weil, who did not elect a lump sum prior to August 17, 2006, the effective date of the Pension Protection Act of 2006); (2) . . . delete[] the dismissed claims contained [sic] Counts two and Three . . . ; (3) [r]eassert[] dismissed Count Four (solely for purposes of preserving Plaintiffs' right to appeal its dismissal); and (4) [a]dd[] two new counts, Counts Five and Six, both of which directly relate to Count One . . . .The defendants oppose the motion.
PROCEDURAL HISTORY AND BACKGROUND
The plaintiffs commenced this action on March 23, 2006, by filing a complaint with the Clerk of Court. On May 4, 2006, the plaintiffs filed their first-amended complaint, as of right, pursuant to Federal Rule of Civil Procedure 15(a)(1). On May 18, 2006, the defendants filed a motion to dismiss the plaintiffs' first-amended complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6). The motion was decided by the Honorable Michael B. Mukasey, who retired shortly after issuing his September 5, 2006 opinion on the motion. Judge Mukasey granted the defendants' motion to dismiss, except as it related to Count one.
The case was transferred to the docket of the Honorable George B. Daniels, who, in an order dated August 17, 2007, denied the defendants' motion for reconsideration of Judge Mukasey's decision on the motion to dismiss, but granted the defendants leave to seek an interlocutory appeal to the Second Circuit Court of Appeals. The Second Circuit declined to review Judge Mukasey's decision, through a Mandate entered on the Docket Sheet, by the Clerk of Court, on April 23, 2008.
On June 5, 2008, the defendants moved for summary judgment with respect to Count one. On August 15, 2011, Judge Daniels denied the defendants' summary judgment motion. On October 13, 2011, the case was reassigned to the Honorable J. Paul Oetken, who, on December 7, 2011, referred this action to the Honorable Theodore H. Katz to supervise, generally, the parties' pre-trial activities. On January 25, 2012, due to Judge Katz's impending retirement, the case was referred to the undersigned to supervise the parties' pre-trial activities.
On April 9, 2012, the undersigned issued an order permitting the plaintiffs to file the instant motion for leave to amend their first-amended complaint. Through their motion, the plaintiffs explain that they seek to amend their first-amended complaint to "clarify and amplify" their allegations, and to add two additional counts to the complaint, because the information on which the claims in the two new counts are predicated became available to them after they filed their first-amended complaint in 2006. With respect to proposed Count five, the plaintiffs "allege Defendants' purported 5-years-of-service [Normal Retirement Age-vesting definition] violated (A) ERISA's minimum vesting standards, ERISA § 203(a) [29 U.S.C. § 1053(a)] and IRC § 411(a), and (B) the statute's benefit accrual rules, ERISA § 204 [29 U.S.C. § 1054] and IRC § 411(b)."
To the extent that the plaintiffs seek to amend their complaint to reassert Count four, "solely for purposes of preserving plaintiffs [sic] right to appeal its dismissal," they may do so. Though it may not be necessary for the plaintiffs to replead a dismissed count to preserve it on appeal, as they may appeal all final decisions by the district court, see 28 U.S.C. § 1291, the law in this judicial circuit appears to be unsettled on this point in a circumstance where a party is granted leave to amend. See P. Stolz Family Partnership L.P. v. Daum, 355 F.3d 92, 96 n. 2 (2d Cir. 2004) ("we will not require a party, in an amended complaint, to replead a dismissed claim in order to preserve the right to appeal the dismissal when the court has not granted leave to amend . . . [w]e indicate no views on the appropriate standard for cases where the district court has granted leave to amend a dismissed claim.").
According to the plaintiffs, the information that prompted them to make the allegations in proposed Count five became available to them in August 2007, when the Internal Revenue Service ("IRS") issued "Notice 2007-69" interpreting "Treas. Reg. § 1.411(b)(2)(ii)(F)." Based on that interpretive notice, the plaintiffs concluded that the defendants' determination to define "normal retirement age," under the relevant retirement plan, as the earlier of age 65 or five years of vesting service, caused the retirement plan's vesting standards to violate ERISA and the IRC, which bar retirement plans, like the defendants' plan, from defining normal retirement age "based on the completion of a specified number of years of service." The plaintiffs also concluded that the accrual standards employed under the retirement plan violate Treasury Department regulations that "prohibit[] plan provisions that change the basis on which benefits are calculated solely due to increased service." The plaintiffs contend that, since the new interpretation provided by the IRS's August 2007 notice came after their first-amended complaint was filed in 2006, they had no opportunities to include Count five in the first-amended complaint. Accordingly, this necessitated the instant motion to amend the complaint to add proposed Count five.
In the plaintiffs' proposed Count six, they "allege[] that despite the fact that [ERISA] specifically required Defendants to disclose to participants the [RBAP] Plan's normal retirement age, Defendants concealed the [RBAP] Plan's 5-years-of-service definition." The plaintiffs maintain that, until they reviewed the Supreme Court's opinion in Cigna Corp. v. Amara, ___U.S.___, 131 S. Ct. 1866 (2011), they did not realize that the defendants' alleged deceptive conduct may have contravened "ERISA §§ 102 [29 U.S.C. § 1022] and 404(a) [29 U.S.C. § 1104(a)]" providing them with an additional theory on which to assert a claim for relief. Therefore, the plaintiffs' proposed Count six includes, for the first time, claims asserted by the plaintiffs under the above-noted provisions of ERISA.
The defendants contend that the plaintiffs have not proffered "any plausible explanation for not asserting these claims sooner" and, consequently, the request to amend should be denied. The defendants aver that the "new claims asserted in Counts Five and Six are not based on newly discovered facts." The defendants maintain that, inasmuch as IRS "Notice 2007-69" prompted the plaintiffs to propose Count five as an amendment to their first-amended complaint, the assertion that the notice represents a new source of information for the plaintiffs is baseless, as the IRS Notice was available to the plaintiffs for years, and the plaintiffs have not provided a legitimate reason for their failure to have acted sooner to amend their first-amended complaint, based on the IRS Notice.
The defendants did not concede the viability of any of the plaintiffs' new claims; however, the defendants chose not to address the sufficiency of the additional claims in their response to the plaintiffs' motion. --------
With respect to the proposed Count six, which the plaintiffs contend was motivated by the Supreme Court's decision in Cigna, the defendants note that the decision was rendered "nearly a year before plaintiff [sic] file[d] this motion" to amend. In addition, according to the defendants, the plaintiffs' allegation in proposed Count six, that the defendants concealed information about their retirement plan's 5-years-of-service definition, is not predicated on newly acquired information, since the plaintiffs concede in their moving papers that, as long ago as 2004, they had the information that forms the basis for this allegation. In any event, according to the defendants, Cigna did not alter significantly the landscape with regard to ERISA remedies, as alleged by the plaintiffs and, thus, cannot be relied upon by the plaintiffs as the basis for their new allegations.
The defendants assert that they will be prejudiced if the plaintiffs are permitted to amend their first-amended complaint because: (1) the defendants have been engaged in litigation with the plaintiffs in different courts, based on substantially the same issues, since 2004, with the complaint filed in the Southern District of New York being the third such litigation; (2) the proposed amended complaint has "redrafted virtually every paragraph of the [first-amended] complaint and embellished it with lengthy argumentative allegations, which would require a new answer"; (3) the plaintiffs indicated, on November 17, 2011, an intention to amend their first-amended complaint and then waited five months to do so; (4) the proposed amended pleading, if allowed to be filed, would delay the final disposition of the action; and (5) the amended pleading would prompt the plaintiffs to seek additional discovery, which would require the defendants to expend additional resources.
DISCUSSION
Generally, a motion to amend a pleading is governed by Federal Rule of Civil Procedure 15, which, in pertinent part, advises that leave to amend should be freely given by a court, when justice so requires. See Fed. R. Civ. P. 15(a)(2). However, notwithstanding this lenient standard, the decision to permit an amendment to be made, in whole or in part, "rests in the [sound] discretion of the district court." Lincoln v. Potter, 418 F. Supp. 2d 443, 454-55 (S.D.N.Y. 2006)(citation omitted). In exercising that discretion, a court may consider the futility of the proposed amendment, undue prejudice to the party opposing the motion, the movant's bad faith, dilatory motive or undue delay in making the motion. See Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230 (1962). "Mere delay, however, absent a showing of bad faith or undue prejudice, does not provide a basis for the district court to deny the right to amend." State Teachers Ret. Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981)(citation omitted). A motion to amend, under Rule 15(a)(2), may be made at any stage of the litigation. See 6 Charles Allen Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1487 (3d. 2010). However, a party seeking to amend should bring its motion "as soon as the necessity for altering the pleading becomes apparent," to avoid an allegation of delay. Id. at § 1488; see also Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 72 (2d Cir. 1990) (upholding the district court's decision to deny leave to amend where the plaintiff waited more than 24 months after bringing suit to request leave to amend the pleading and plaintiff's reason for the delay was ignorance of the law).
As noted above, leave to amend may be denied, inter alia, based on the movant's bad faith, prejudice to the opposing party or futility of the amendment. Bad faith exists when a party attempts to amend its pleading for an improper purpose. See Foman. 371 U.S. at 182, 83 S. Ct. at 230; Austin v. Ford Models, Inc., 149 F.3d 148, 155 (2d Cir. 1998) (affirming the district court's denial of leave to amend a complaint where plaintiff sought to "erase . . . admissions [made] in [the previous] complaint") (abrogated on other grounds by Swierkiewicz v. Sorema N.A., 534 U.S. 506, 122 S. Ct. 992 (2002).
Prejudice may exist, inter alia, when the amendment would: "(i) require the opponent to expend significant additional resources to conduct discovery and prepare for trial; [or](ii) significantly delay the resolution of the dispute . . . ." Monahan v. New York City Dept. of Corrections, 214 F.3d 275, 284 (2d Cir. 2000) (internal quotation marks and citation omitted). However, the need to take additional discovery, standing alone, while prejudicial, is not a sufficient basis for denying a request for leave to amend, particularly when the trial has not commenced and is not likely to commence for some time. See Silberblatt, Inc v. East Harlem Pilot Block - Bldg. 1 Hous. Dev. Fund Co., 608 F.2d 28, 42 (2d Cir. 1979)(citation omitted). Prejudice to the opposing party is the most important factor a court must consider when determining whether to grant a motion to amend. See 6 Charles Allen Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1487 (3d. 2010).
The plaintiffs concede that, they had access to the information that prompted them to seek leave to amend their first-amended complaint, to add proposed Counts five and six, years prior to filing the instant motion. Notwithstanding the plaintiffs' assertion that Count five "[was] understandably not offered sooner than now," it is unclear why the plaintiffs failed to seek leave to amend in 2008, after their interlocutory appeal was resolved by the Second Circuit's Mandate, or when the defendants' summary judgment motion was made. At either of these junctures, the plaintiffs had all the information they needed to assert the claim which is proposed Count five. Accordingly, their delay, until now, in seeking to amend the complaint to add Count five, is unexplained.
In addition, the plaintiffs assertion that their delay in seeking leave to amend their complaint to add proposed Count six is attributable to a "changed landscape" occasioned by the decision in CIGNA, is unconvincing. CIGNA did not overrule any prior relevant decisions and did not provide any remedies for the plaintiffs that were unavailable to them previously. See Cigna, ___U.S.___, 131 S. Ct. at 1878 ("[w]e have interpreted the term 'appropriate equitable relief in [ERISA] § 502(a)(3) [cited by the district court] as referring to those categories of relief that, traditionally speaking . . . were . . . available in equity."). Consequently, the Court finds that, in the circumstance of the instant case, the plaintiffs have failed to establish that their delay in seeking leave to amend their first-amended complaint, to assert proposed Counts five and six, is justified.
However, as noted above, delay alone is not an appropriate basis upon which to deny a motion to amend a pleading; a showing of bad faith by the movant or undue prejudice to the party opposing the motion must be made. In the case at bar, the defendants have not alleged bad faith by the plaintiffs. Instead, they allege undue prejudice will attend them should the motion to amend be granted because: (1) a new answer will have to be prepared; (2) additional discovery will be sought by the plaintiffs; (3) additional resources will have to be expended; and (4) the final disposition of the action will be delayed.
No date for trial has been fixed by the assigned district judge; thus, it is not known when the trial will commence. Accordingly, the defendants' contention that granting the motion to amend will delay the final disposition of the action is, in this instance, not a compelling reason upon which to deny the plaintiffs' motion to amend. In like manner, the defendants' concern that they will have to file a new answer is neither prejudicial, nor a reason to deny a motion to amend. Federal Rule of Civil Procedure 15 informs all litigants that amendments to pleadings should be freely granted by a court when justice so requires. See Fed. R. Civ. P. 15(a)(2). As a consequence of this liberal standard, a defendant has to anticipate and be prepared to address the fact that an amended answer may have to be made, in the event that a motion to amend the complaint is made, and granted, during the litigation. An amended pleading that necessitates a new answer is not per se prejudicial; rather, it is a predictable and routine occurrence during the pre-trial phase of litigation. As a result, the Court is not convinced that the defendants will be prejudiced by having to prepare a new answer, if the plaintiffs are permitted to amend their complaint.
The defendants' contention that granting the plaintiffs' motion will prejudice them, because it may prompt the plaintiffs to seek additional discovery, is to no avail. A party's need for additional discovery is not, without more, sufficiently prejudicial to warrant a court in denying a motion for leave to amend. See Silberblatt, 608 F.2d at 42. Moreover, the defendants have offered nothing more than mere speculation that the plaintiffs will seek additional discovery, should their motion to amend be granted. The defendants' speculation does not establish that they will be prejudiced by a successful motion to amend the plaintiffs' pleading.
The Court has also considered the defendants' assertion that granting the plaintiffs' motion to amend will prejudice them because it will require the defendants to expend additional resources defending themselves against the plaintiffs' claims. The Court is not persuaded by this assertion, as the defendants did not show what additional resources would have to be expended, and how significant, if at all, the expenditures would be. In the absence of any evidence establishing that the proposed amended pleading would require the defendants to expend significant additional resources to prepare for the trial of this action, see Monahan, 214 F.3d at 284, no basis exists upon which the Court can conclude that the undue prejudice the defendants maintain they will suffer, will attend.
In summary, the Court finds that, although it appears that the plaintiffs delayed unjustifiably in seeking leave to amend their pleading, the defendants have failed to establish that they will be prejudiced if the instant motion to amend is granted. Therefore, the Court finds that permitting the plaintiffs to amend their first-amended complaint is reasonable and appropriate.
CONCLUSION
For the reasons set forth above, the plaintiffs' motion to amend its first-amended complaint, Docket Entry No. 126, is granted. Dated: New York, New York
August 15, 2012
SO ORDERED:
/s/_________
KEVIN NATHANIEL FOX
UNITED STATES MAGISTRATE JUDGE