Opinion
03-CV-369S.
March 30, 2005
DECISION AND ORDER
1. In this case, Plaintiff Kenneth R. McNinch alleges that Defendant Goodyear-Dunlop Tire North America ("GDTNA") improperly advised him of his eligibility for severance benefits under its Severance Pay Benefit Plan ("Severance Plan"). In addition, Plaintiff claims that Goodyear used his name and reputation without his consent to solicit business. Plaintiff's claims are governed by Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., and the New York Civil Rights Law. Currently before this Court is Defendants' Motion for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.
2. The following facts are undisputed for the purposes of the instant motion except where indicated. Plaintiff was an employee of Dunlop Tire Corporation ("Dunlop") for over thirty years, and eventually became the manager of its retail tire store on Walden Avenue in Cheektowaga, New York ("Walden Store"). (Defendants' Statement of Material Facts, ¶¶ 2 4) ("Defs' State."). In 1999, Plaintiff became an employee of GDTNA, when GDTNA assumed control of the Walden Store. (Defs' State., ¶¶ 3-4, Compl., ¶ 5). By letter dated July 1, 1999, Plaintiff was advised that "[t]he new North America Joint Venture [GDTNA] will assume all obligations of Dunlop Tire's existing Severance Plan." (Compl., Ex. A, p. 3; Defs' State., ¶¶ 8-9). In relevant part, this Severance Plan provides that:
Defendants' Statement of Material Facts is attached to the Notice of Motion, which is located at Docket No. 18. Pursuant to Rule 56.1(c) of the Local Rules of Civil Procedure for the United States District Court for the Western District of New York, "all material facts set forth in the statement required to be served by the moving party will be deemed admitted unless controverted by the statement required to be served by the opposing party."
The Summons and Complaint are attached as Exhibit A to Defendants' Notice of Removal. (Docket No. 1)
All determinations regarding an employee's eligibility for Severance Pay Benefit are completely within the discretion of the Corporate Personnel Department.
If your temporary layoff or furlough becomes permanent, you may make written application to the Corporate Personnel Department to receive the Severance Pay Benefit based on your length of service and base salary in effect on your last day of work.
Under ERISA, the term "administrator" is defined as "(I) the person specifically so designated by the terms of the instrument under which the plan is operated; [or] (ii) if an administrator is not so designated, the plan sponsor." 29 U.S.C. § 1002 (16)(A)(I)-(ii). According to Defendants, the plan administrator for all employee benefits plans, including the severance plan, is not the "Corporate Personnel Department" but the "Employee Benefits Committee." (Farallo Aff., ¶ 6, attached to Docket No. 18).
(Farallo Aff., Ex. A, Severance Plan, S-4). The Severance Plan also states that in the event that the Company is sold and "the employee refuses a comparatively equal position with the Buyer [of the Company], the Severance Pay Benefits will be reduced to 25% of the amount otherwise payable." (Farallo Aff., Ex. A, Severance Plan, S-3). Lastly, under the terms of the Severance Plan, benefits are not available if the employee voluntarily quits or resigns. (Farallo Aff., Ex. A, Severance Plan, S-3).
Mary Farallo's Affidavit is located at Docket No. 18.
In October 2001, Goodyear was preparing to assume control over the Walden Store then operated by GDTNA, and offered Plaintiff the position of store manager. (Defs' State., ¶ 11; Kotaska Aff., Ex. A, McNinch Dep., 13:15-21). Around this time, Plaintiff engaged in meetings with representatives of Goodyear "to discuss the conversion of the company store known as the Dunlop Store . . . into a Gemini Goodyear store." (Kotaska Aff., Ex. A., NcNinch Dep., 6:1-11; Def's State., ¶ 12). On October 3, 2001, Plaintiff attended a meeting "to discuss issues regarding the impending transfer of the GDTNA tire store managed by plaintiff to Goodyear." (Farallo Aff., ¶ 12). GDTNA's Corporate Manager for Human Resources, Mary Farallo, and Plaintiff's immediate supervisor, Joseph Cioppa, were present at the meeting as well as representatives of Goodyear. (Farallo Aff., ¶¶ 1, 11). According to Plaintiff, Mary Farallo "mention[ed] that [he] and Dave Whitemyer would be entitled to two weeks severance for every year." (Kotaska Aff., Ex. A, McNinch Dep., 6:4-23). Under the Severance Plan, an employee who has 15 years or more of active service is entitled to "2 weeks' base salary . . . for each complete year of service." (Farallo Aff., Ex. A, Severance Plan, S-2).
Gary Kotaska's Affidavit is located at Docket No. 18.
According to Mary Farallo, "[i]n the course of the October 3, 2001 meeting, [she] mentioned to one of the Goodyear representatives present (not to plaintiff) that it was possible that Mr. McNinch might be eligible for a Severance Plan in connection with the proposed transfer of ownership of the retail location." (Farallo Aff., ¶ 15). However, she "did not represent to plaintiff that he would be eligible for a severance benefit, but merely suggested that it was a possibility that had to be reviewed." (Farallo Aff., ¶ 16). Plaintiff testified that "at some date [after the October 3, 2001 meeting] it was brought back to me [by Joe Cioppa] that I would only be entitled to 25 percent." (Kotaska Aff., Ex. A, McNinch Dep., 11:7-21). Plaintiff further testified that he called Mary Farallo "and was just again told that that's the way it was going to be, that it would be 25 percent." (Kotaska Aff., Ex. A, McNinch Dep., 11:22-12:21). Mary Farallo did not provide an explanation of why Plaintiff was only entitled to 25 percent. (Kotaska Aff., Ex. A, McNinch Dep., 12:6-13). At the end of November 2001, Plaintiff decided to accept Goodyear's offer of employment. (Kotaska Aff., Ex. A,McNinch Dep., 15:1-6).
In October of 2002, Plaintiff retired from Goodyear as the manager of the Walden Store. (Kotaska Aff., Ex. A, McNinch Dep., 4:9-13 28:14-17). Plaintiff never request anything in writing regarding the Severance Plan while he was employed with GDTNA. (Kotaska Aff., Ex. A, McNinch Dep., 12:22-13:4). Nor did Plaintiff make a written or formal claim for benefits under the Severance Plan. (Defs' State., ¶ 18; Farallo Aff., ¶ 28).
3. Plaintiff initially brought this action for breach of contract by filing a Complaint in New York State Supreme Court in the County of Erie. On May 7, 2003, Defendants removed this action to the United States District Court for the Western District of New York, because Plaintiff's claim under the Severance Plan is governed by ERISA. Defendants filed the instant Motion for Summary Judgment on July 20, 2004. This Court heard oral argument on September 20, 2004, and reserved decision at that time. For the following reasons, Defendants' motion is granted.
In support of their Motion for Summary Judgment, Defendants filed a Statement of Undisputed Material Facts, a Memorandum of Law, an Affidavit by Gary F. Kotaska with an exhibit, an Affidavit by Mary Farallo with exhibits, and a Reply Memorandum of Law. Plaintiff filed a Memorandum of Law, a Statement of Material Facts, an Affidavit by Mark E. Saltarelli with exhibits, an Affidavit by Kenneth R. McNinch with exhibits, and an Affidavit by Joseph C. Cioppa.
4. Federal Rule of Civil Procedure 56 provides that summary judgment is warranted where the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show 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." FED. R. CIV. P. 56(c). A "genuine issue" exists "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). A fact is "material" if it "might affect the outcome of the suit under governing law." Id.
In deciding a motion for summary judgment, the evidence and the inferences drawn from the evidence must be "viewed in the light most favorable to the party opposing the motion." Adickes v. S.H. Kress Co., 398 U.S. 144, 158-59, 90 S. Ct. 1598, 1609, 26 L. Ed.2d 142 (1970). "Only when reasonable minds could not differ as to the import of evidence is summary judgment proper." Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir. 1991). Ultimately, the function of the court is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249.
5. Under ERISA, a participant or beneficiary of an employee benefit plan may commence a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132 (a)(1)(B). It is well established, however, that federal courts have a narrow role in reviewing the discretionary acts of ERISA plan administrators. Peterson v. Cont'l Cas. Co., 282 F.3d 112, 117 (2d Cir. 2002) (citing Pagan v. NYNEX Pension Plan, 52 F.3d 438, 443 (2d Cir. 1995)). If a benefit plan vests the administrator with discretionary authority, the denial of benefits is subject to a deferential, "arbitrary and capricious" standard of review. Burke v. Kodak Ret. Income Plan, 336 F.3d 103, 109 (2d Cir. 2003). Under this standard, the decision to deny benefits "may be overturned only if the decision is `without reason, unsupported by substantial evidence or erroneous as a matter of law.'" Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999) (quoting Pagan, 52 F.3d at 442).
Because there is no right to a jury trial under ERISA, the district court typically acts as the finder of fact and conducts a bench trial "on the papers." Muller v. First Unum Life Ins. Co., 341 F.3d 119, 124 (2d Cir. 2003). However, federal courts are not free to substitute their judgment for that of the plan administrator. Pagan, 52 F.3d at 442; see also Miller v. United Welfare Fund, 72 F.3d 1066, 1071 (2d Cir. 1995) (reasoning that "nothing in the legislative history suggests that Congress intended that federal district courts would function as substitute plan administrators") (internal quotation marks omitted). Consistent with this principle, federal courts are without jurisdiction to adjudicate whether an employee is eligible for benefits under an ERISA plan absent a determination by the plan administrator. Peterson, 282 F.3d at 117 (citing Jones v. UNUM Life Ins. Co. of Am., 223 F.3d 130, 140-41 (2d Cir. 2000)).
To preserve administrative autonomy, the Second Circuit imposes an exhaustion requirement in ERISA cases as a prerequisite to the commencement of a lawsuit. Kennedy v. Empire Blue Cross Blue Shield, 989 F.2d 588, 594 (2d Cir. 1993) (recognizing the "firmly established federal policy favoring exhaustion of administrative remedies in ERISA cases"). This exhaustion requirement serves numerous objectives: (1) to further "Congress' desire that trustees be responsible for their actions, not the federal courts;" (2) to "provide a sufficiently clear record of administrative action if litigation should ensue;" and (3) to "assure that any judicial review of fiduciary action (or inaction) is made under the arbitrary and capricious standard, not de novo." Kennedy, 989 F.2d at 594. Moreover, the exhaustion requirement helps to reduce the number of frivolous lawsuits under ERISA, promotes the consistent treatment of claims for benefits, provides a non-adversarial method of claims settlement, and minimizes the costs of claims settlement. Id. (citing Amato v. Bernard, 618 F.2d 559, 567 (9th Cir. 1980)). When an application for benefits has been denied, ERISA itself requires that the plan administrator be afforded an opportunity for review. See 29 U.S.C. § 1133;Jones, 223 F.3d at 140.
6. In the instant matter, it is clear that Plaintiff failed to exhaust his administrative remedies before commencing suit against Defendants. As previously noted, the Severance Plan provides that an employee "may make written application to the Corporate Personnel Department to receive the Severance Pay Benefit based on [the employee's] length of service and base salary in effect on [his or her] last day of work," if the employee is permanently laid off. (Farallo Aff., Ex. A,Severance Plan, S-4). As an initial matter, this Court notes that Plaintiff's claim for severance benefits never ripened because he was never terminated from GDTNA. Rather, Plaintiff accepted Goodyear's offer to continue as manager of the Walden Store after it assumed control of the business. The record reflects that Plaintiff continued his employment as the Walden Store manager with GDTNA through December 2001, and that he commenced his employment in the same capacity with Goodyear on January 1, 2002. (Defs' State., ¶ 15; Kotaska Aff., Ex. A,McNinch Dep., 15:7-20). That being the case, Plaintiff was never permanently or temporarily laid off.
It is clear that Plaintiff did not initiate an inquiry regarding his entitlement to severance benefits. Rather, it appears that Mary Farallo volunteered information regarding Plaintiff's potential eligibility for benefits under the Severance Plan. Moreover, the record reflects that Mary Farallo's initial statements were informal, as well as unsolicited. Plaintiff testified that Mary Farallo "mention[ed] [during the October 3, 2001 meeting] that Ken McNinch and Dave Whitemyer [sic] would be entitled to two weeks severance for every year." (Kotaska Aff., Ex. A, McNinch Dep., 6:16-23). Plaintiff further testified "at some date it [after the meeting] was brought back to me [by Joseph Cioppa] that I would only be entitled to 25 percent." (Kotaska Aff., Ex. A, McNinch Dep., 12:9-14).
Plaintiff thereafter made a phone call to Mary Farallo to clarify Joseph Cioppa's statement that "things [had] changed." (Kotaska Aff., Ex. A, McNinch Dep., 11:7-21). Plaintiff testified that he "called Mary and was just again told that that's the way it was going to be, that it would be 25 percent." (Kotaska Aff., Ex. A, McNinch Dep., 12:6-9). Neither Mary Farallo nor any other GDTNA representative provided Plaintiff with an explanation of why "it would be 25 percent." (Kotaska Aff., Ex. A, McNinch Dep., 12:6-21). Despite the fact that he "wasn't happy," Plaintiff never requested anything in writing regarding the Severance Plan while he was still employed with GDTNA. (Kotaska Aff., Ex. A, McNinch Dep., 11:16-21, 12:22-13:4).
The record reflects that Plaintiff never made a written or formal claim for benefits under the Severance Plan. (Defs' State., ¶ 18; Farallo Aff., ¶ 28). Moreover, this Court declines to construe Mary Farallo's unsolicited and informal representations as a "determination" by the plan administrator. Even assuming that Mary Farallo was a representative of the plan administrator, her statements were not made in response to a claim for severance benefits. Further, Mary Farallo's evaluations were strictly prospective in nature and were provided without explanation. As such, they cannot reasonably be construed as administrative determinations, subject to judicial review. Accordingly, this Court finds that Plaintiff did not exhaust the available administrative remedies.
It is not clear whether Mary Farallo was a representative of either the department or the committee, which administered the Severance Plan in October and November of 2001. Defendant represented at oral argument that she was not. However, drawing all inferences in favor of Plaintiff, this Court assumes that she was a member of the Department or Committee.
Further, this Court finds that Plaintiff has failed to present facts that would entitle him to a waiver of the exhaustion requirement. To demonstrate entitlement to a waiver of exhaustion, a plaintiff must make a "clear and positive showing" that proper assertion of his claim would have been futile. See Davenport v. Harry N. Abrams, Inc., 249 F.3d 130, 133-34 (2d Cir. 2001). In the view of this Court, Plaintiff's phone call to Mary Farallo did not constitute an "unambiguous application for benefits and a formal or informal administrative decision denying benefits," which made clear that seeking further administrative review was futile. Barnett v. IBM Corp., 885 F. Supp. 581, 588 (S.D.N.Y. 1995). Certainly, Mary Farallo's statement that "it would be 25 percent," provided without explanation, did not render futile the further pursuit of Plaintiff's severance claim through the proper channels. See Bourgeois v. Pension Plan for Employees of Sante Fe Int'l Corps., 215 F.3d 475, 480 n. 14 (5th Cir. 2000) (acknowledging that "allowing informal attempts to substitute for the formal claims procedure would frustrate the primary purposes of the exhaustion requirement"); See also Barnett, 885 F. Supp. at 588 (reasoning that "if an informal or unsubstantiated denial of a `claim' that was never filed or formally presented is reviewable in the federal courts, then, in such situations, the courts and not ERISA trustees will be primarily responsible for deciding claims for benefits").
Plaintiff implies that he was not required to exhaust his administrative remedies because he was never provided with a copy of the Severance Plan. (Plaintiff's Statement of Material Facts, ¶¶ 1-3). This Court finds that Plaintiff is not entitled to a waiver of the exhaustion requirement on that basis. It is clear that Plaintiff never took any affirmative steps to determine what the proper claims procedures were, and therefore, did not avail himself of those procedures. For example, Plaintiff never requested a copy of the Severance Plan during his employment with GDTNA, even after his phone conversation with Mary Farallo. (Farallo Aff., ¶ 23; Kotaska Aff., Ex. A, McNinch Dep., 16:13-15). Under such circumstances, it cannot be said that Plaintiff was denied access to the claims procedure, or that it was futile for him to try. Plaintiff was still required to make a formal claim and to exhaust the available remedies. See Davenport, 249 F.3d at 134; see also Meza v. Gen. Battery Corp., 908 F.2d 1262, 1279 (5th Cir. 1990) (holding that a former employee who had never been informed of applicable administrative procedures was not thereby excused from exhausting those remedies prior to bringing suit against his employer, where there was no indication that the employee ever applied for pension benefits prior to bringing suit, and the employee did not show that his employer's failure to provide him with plan information precluded him from pursuing his administrative remedies); Koenig v. Waste Mgmt., Inc., 104 F. Supp. 2d 961, 966 (N.D.Ill. 2000) (holding that to establish lack of meaningful access to the claims procedure, a party must attempt to initiate administrative review of his or her benefit claim);DeLong v. Teacher's Ins. Annuity Ass'n, No. 99-1384, 2000 WL 426193, at *5 (E.D.Pa. March 29, 2000) (holding that "[i]t would be illogical for [a] plaintiff to be allowed to establish futility based on ignorance of a claims process which he [or she] was never close to invoking").
Plaintiff has not asserted a breach of fiduciary duty claim for failure to provide a copy of the Severance Plan against Defendants. It is unclear if Plaintiff could maintain such a claim against Defendants, as corporate sponsors of the Severance Plan. Under ERISA, the "administrator" of a plan is required to furnish each participant with a summary of the plan containing the "source of financing of the plan and the identity of the organization through which benefits are provided." 29 U.S.C. §§ 1021, 1024 (1988). However, "that obligation is placed on the person designated under ERISA as the `administrator' of the plan, not on every fiduciary." Lee v. Burkhart, 991 F.2d 1004, 1010 (2d. Cir. 1993). As previously noted herein, ERISA defines an "administrator" as" (i)the person specifically so designated by the terms of the instrument under which the plan is operated; (ii) if an administrator is not so designated, the plan sponsor." 29 U.S.C. § 1002(16)(A). In the instant case, the "Corporate Personnel Department" was designated as the plan administrator. As previously noted herein, Defendants claim that an "Employee Benefits Committee" was authorized to administer the Plan. (Farallo Aff., ¶ 6). It is unclear whether either of these entities are separable from the corporate Defendants. However, as there is no breach of fiduciary claim before this Court, it need not resolve this issue.
It is clear from the record that the Severance Plan administrator did not have an opportunity to review Plaintiff's claim for severance benefits, or to review any alleged denial of those benefits. Absent a decision by the plan administrator, this Court has no jurisdiction to evaluate Plaintiff's right to benefits under the Severance Plan. See Peterson, 282 F.3d at 118. For the foregoing reasons, this Court finds that Defendants are entitled to summary judgment on Plaintiff's ERISA claim.
8. Having disposed of Plaintiff's ERISA claim, this Court declines to retain jurisdiction over Plaintiff's state law claims. See e.g., Crispim v. Athanson, 275 F. Supp. 2d 240, 249 (D.Conn. 2003) (citing Spear v. Town of West Hartford, 771 F. Supp. 521, 530 (D.Conn. 1991) aff'd, 954 F.2d 63 (2d Cir. 1992), cert. denied, 506 U.S. 819, 113 S. Ct. 66, 121 L.Ed. 2d 33 (1992) (holding that "absent unusual circumstances, the court would abuse its discretion were it to retain jurisdiction of the pendant state law claims on the basis of a federal question claim already disposed of"). Plaintiff's remaining state law claims originated in New York State Supreme Court, Erie County. Accordingly, those claims will be remanded.
9. For the reasons stated above, this Court finds that Defendants are entitled to summary judgment with respect to Plaintiff's ERISA claim. Plaintiff's remaining state law claims will be remanded to the New York State Supreme Court, Erie County.
IT HEREBY IS ORDERED, that Defendants' Motion for Summary Judgment (Docket No. 18) is GRANTED.
FURTHER, that Plaintiff's remaining state law claims shall be remanded to the New York State Supreme Court, Erie County.
FURTHER, that the Clerk of the Court is directed to take the necessary steps to remand this case to the New York State Supreme Court, Erie County.
FURTHER, that the Clerk of the Court is directed to close this case.
SO ORDERED.