Morris v. General Motors Corporation

Full title: PAMELA H. MORRIS, Plaintiff, v. GENERAL MOTORS CORPORATION, a Delaware…

Court: United States District Court, N.D. Georgia, Atlanta Division

Date published: Sep 30, 2004

Civil Action File No. 1:03-CV-153-TWT (N.D. Ga. Sep. 30, 2004)

Opinion

Civil Action File No. 1:03-CV-153-TWT.

September 30, 2004

ORDER

THOMAS THRASH, District Judge

This is an ERISA action. It is before the Court on the Defendant's Motion for Summary Judgment [Doc. 17]. For the reasons set forth below, the Defendant's Motion is GRANTED.

I. BACKGROUND

Plaintiff Pamela H. Morris is a former salaried employee of Defendant General Motors Corporation. She last worked on February 19, 1997, as a supervisor at its Parts Operation in Doraville, Georgia. As a salaried employee, Morris participated in the General Motors Retirement Program for Salaried Employees ("GM Retirement Program"). On December 28, 1998, Morris completed an application for total and permanent disability benefits under the GM Retirement Program. A GM Physician reviewed her application and recommended that she be considered totally and permanently disabled. Morris retired from General Motors, retroactively effective December 1, 1998.

On or about May 12, 1999, Morris received several forms from General Motors that she had to sign in order to initiate her retirement under the GM Retirement Program. The form SRP 117 set the amount of Morris' monthly total and permanent disability retirement benefits at $1,354.82. The handbook for the GM Retirement Program states that workers' compensation benefits are offset against monthly retirement benefits. Recognizing that the figure in the SRP 117 did not account for any deduction of her workers' compensation benefits, Morris alleges that she made numerous telephone inquiries to the General Motors Corporation Benefits Center. She alleges that customer service representatives repeatedly assured her that the figure on the SRP 117 reflected the amount of her total and permanent disability retirement benefits that she would receive. Based upon this information, Morris signed the SRP 117 form and delivered it to General Motors, thereby officially effecting her retirement from General Motors. On August 31, 1999, Morris received another set of forms from General Motors. Included were another SRP 117 form and a SRP 117A.¹ Morris assumed that the prior forms provided estimates of her benefits and that these new forms were "final." Paragraph 4 of the SRP 117A form states:

1 This form is entitled "Supplemental Information to Form SRP-117 Authorization of Monthly Benefits — The General Motors Retirement Program for Salaried Employees" and is abbreviated "SRP 117A."

If workers compensation benefits are or become payable to me, a deduction may be made from my monthly benefits otherwise payable under the Retirement Program. The deduction will equal the full amount of such workers compensation benefits, unless otherwise provided under applicable provisions of the Retirement Program.

(Morris Aff., Ex. E). Morris again called the Benefits Center to inquire about her retirement benefits. She allegedly told the GM representative that she was receiving workers' compensation and asked the representative if the amount outlined on her SRP 117 forms accounted for such compensation. She alleges that the representative replied that "nothing would change." Based on these conversations with GM representatives, Morris believed that the GM Retirement Program would pay her the stated benefits without any setoff or deduction for her workers' compensation benefits.

By letter dated December 21, 2000, General Motors' Pension Administration Center notified Morris that she was subject to a workers' compensation offset, which lowered the amount of her benefits payments. (Morris Aff., Ex. F). The letter indicated that due to the failure to offset workers' compensation benefits, Morris had received an overpayment in the amount of $28,578.00.Id. The letter advised that if she did not repay the sum in full, a portion of her retirement benefits would be suspended until the overpayment was recovered. Id. On February 1, 2001, the GM Retirement Program began to withhold a workers' compensation offset equal to the amount of workers' compensation benefits that Morris receives each month.

Alleging that she based her decision to retire from General Motors on incorrect information she received both in the SRP 117 forms and from the Benefits Center, Morris asserts state law claims for breach of contract, negligent misrepresentation, breach of fiduciary duty, conversion, and intentional infliction of emotional distress. Defendant General Motors moves for summary judgment, asserting, among other defenses, that these state law claims are preempted by the Employee Retirement Income Security Act of 1974.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate only when the pleadings, depositions, and affidavits submitted by the parties show that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court should view the evidence and any inferences that may be drawn in the light most favorable to the nonmovant. Adickes v. S.H. Kress Co., 398 U.S. 144, 158-59 (1970). The party seeking summary judgment must first identify grounds that show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). The burden then shifts to the nonmovant, who must go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).

III. DISCUSSION

A. ERISA Preemption

The Defendant contends that the Plaintiff's state law claims are preempted by federal law. The Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq., sets forth a comprehensive federal scheme for the enforcement of employee benefit plans. This scheme reflects "a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans." Sanson v. General Motors Corp., 966 F.2d 618, 622 (11^th Cir. 1992) (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987)). The policies underlying ERISA would be undermined if plan participants or beneficiaries were free to bypass the ERISA system and obtain remedies under state law that were rejected by Congress in ERISA. Id. Section 502(a)(1)(B) of ERISA provides that a participant in a retirement program may bring a civil action to recover benefits due her under the terms of her plan. 29 U.S.C. § 1132(a)(1)(B). Thus, "[i]t is clear, then, that ERISA preempts state common law causes of action as they relate to employee benefit plans." Phillips v. Amoco Oil Co., 799 F.2d 1464 (11^th Cir. 1986); see also Pilot Life, 481 U.S. at 45. Defendant General Motors contends that ERISA preempts Morris' state law claims for breach of contract, negligent misrepresentation, breach of fiduciary duty, conversion, and intentional infliction of emotional distress.

1. Breach of Contract

Morris asserts a state law claim for breach of contract. Specifically, she alleges that in June 1999, Morris and General Motors entered into a contract whereby Morris would retire in return for General Motors paying her a set sum of monthly benefits. She alleges that General Motors breached the contract by failing to pay the agreed upon benefits. The Supreme Court has specifically held that state law claims for breach of contract based on failure to pay benefits under an ERISA-governed plan are preempted by the exclusive remedy provision of section 502 of ERISA. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 62-63 (1987); Pilot Life, 481 U.S. at 45; see also Aetna Health Inc. v. Davila, 124 S. Ct. 2488, 2495-96 (2004) (state law causes of action that duplicate or supplement ERISA remedies are preempted); Land v. CIGNA Healthcare of Florida, 2004 WL 1908388 (11^th Cir. 2004). Even the case cited by Morris suggests that state law claims for breach of benefit contract are preempted by ERISA. See Sandler v. New York News Inc., 721 F. Supp. 506, 512 (S.D.N.Y. 1989) (holding that the plaintiff's contract claims sought to increase the amount of benefits payable to him and thereby "collect benefits protected by ERISA"). Rather, the ERISA enforcement scheme has "such `extraordinary pre-emptive power' that it `converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.'" Aetna Health, 124 S. Ct. at 2496 (quotingMetropolitan Life, 481 U.S. at 65-66). As Morris' claim for breach of contract is preempted by ERISA, summary judgment on the state law claim for Defendant General Motors should be granted. Morris' claim that the Defendant breached the terms of her benefits package will be preserved as a federal claim under section 502(a)(1)(B) of ERISA.

2. Negligent Misrepresentation

Morris also asserts a claim for negligent misrepresentation, alleging that she relied on erroneous information from the General Motors Corporation Benefit Center in making her decision to retire from General Motors. The Defendant again contends that ERISA preempts this state law claim. Morris attempts to avoid ERISA preemption by purporting to sue not as a participant seeking recovery of benefits from the plan, but rather as a former employee seeking damages from her employer arising from her retirement from the company. In Sandler, a district court upheld a former employee's state law claim of detrimental reliance based on this theory. In its narrow holding inSandler, the district court noted that Sandler's claim was "premised upon an employer's misrepresentation that was made outside the routine course of pension administration and could as easily have concerned economic benefits unrelated to ERISA as it did covered benefits."Sandler, 721 F. Supp. at 514. For this reason, the court held that Sandler's claim and similar claims would not threaten to interfere with the administration of benefit plan functions.Id. at 515 n. 9. In this case, the misrepresentations alleged by Morris, although related to her retirement, dealt exclusively with ERISA-covered benefits and were made solely in the context of pension administration. Permitting disappointed ERISA participants to challenge their benefit amounts outside the ERISA framework could have a significant effect, even if primarily procedural in nature, on benefit plan function and administration. Thus, the narrow holding in Sandler is inapplicable to the facts at bar.

In addition, case law suggests that the Eleventh Circuit would reject the holding in Sandler. The Eleventh Circuit has recognized the extensive scope of ERISA preemption, holding that "[a] party's state law claim `relates to' an ERISA benefit plan for the purposes of ERISA preemption whenever the alleged conduct at issue is intertwined with the refusal to pay benefits."Franklin v. QHG of Gadsden, Inc., 127 F.3d 1024, 1028 (11^th Cir. 1997) (quoting Garren v. John Hancock Mut. Life Ins. Co., 114 F.3d 186, 187 (11^th Cir. 1997)); see also Hall v. Blue Cross/Blue Shield of Alabama, 134 F.3d 1063, 1065 (11^th Cir. 1998) (finding ERISA preemption where terms of benefit policy are critical to resolution of asserted state law claims). A state law claim of negligent misrepresentation involving the payment of retirement benefits relates to a benefit plan and is thus preempted by ERISA. Id. "[W]here state law claims of fraud and misrepresentation are based upon the failure of a covered plan to pay benefits, the state law claims have a nexus with the ERISA plan and its benefits system." Id. (quoting Variety Children's Hosp., Inc. v. Century Medical Health Plan, Inc., 57 F.3d 1040 (11^th Cir. 1995)). Indeed, in Franklin, the appellants similarly attempted to avoid ERISA preemption by characterizing their complaint as one seeking damages for fraud in the inducement of employment and misrepresentation of employee benefits. Id. The Court of Appeals held that the appellants' state law fraud claims were directly connected to administration of benefits under an ERISA plan and, consequently, preempted by ERISA. Id. at 1029. As Morris' claim for negligent misrepresentation is similarly connected to administration of retirement benefits, ERISA preempts the state law claim. Summary judgment of the state law claim for Defendant General Motors is granted.

3. Other State Law Claims

In her response brief, Morris suggests that her state law claims for breach of fiduciary duty, conversion, and intentional infliction of emotional distress are related to her claim for negligent misrepresentation and are thus not preempted by ERISA. As discussed above, Morris' claim for negligent misrepresentation is preempted by ERISA, as it is connected to the administration of retirement benefits. The related state law claims for breach of fiduciary duty, conversion, and intentional infliction of emotional distress similarly involve the administration of employment benefits. Morris provides no compelling reason that these claims should not similarly be preempted by ERISA. Thus, summary judgment of these state law claims for the Defendant is appropriate.

B. The Plaintiff's ERISA Claim

Plaintiff Morris' state law claims are preempted by ERISA. Consequently, Morris' claims to recover benefits allegedly due her under the terms of her retirement plan are treated as a federal claim pursuant to section 502(a)(1)(B) of ERISA which provides that:

A civil action may be brought — (1) by a participant or beneficiary . . . (B) to recover benefits due 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). Put simply, if a participant in a retirement plan believes that benefits promised to her are not being provided, she may bring suit seeking recovery of those benefits. Morris contends that she was promised that her retirement benefits would not be offset by the workers' compensation benefits that she received. Pursuant to section 502(a)(1)(B), she brings suit against Defendant General Motors for these offset benefits.

In Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989), the Supreme Court outlined the standard of review to be applied to ERISA plan administrators' decisions to deny benefits. "[A] denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone, 489 U.S. at 115. Where the plan provides the administrator discretionary authority, the administrator's decisions should be reviewed only for abuse of discretion under the "arbitrary and capricious" standard. Adams v. Thiokol Corp., 231 F.3d 837, 842 (11^th Cir. 2000). But if a plan administrator operates under a conflict of interest, the conflict must be evaluated as a factor in determining whether there is an abuse of discretion. Firestone, 489 U.S. at 115; Adams, 231 F.3d at 842. Under this heightened standard, the court must first determine if the administrator's interpretation is legally correct. Adams, 231 F.3d at 842; Newell v. Prudential Ins. Co. of America, 904 F.2d 644, 651 (11^th Cir. 1990); Brown v. Blue Cross and Blue Shield of Alabama, Inc., 898 F.2d 1556, 1565 (11^th Cir. 1990). If so, the inquiry ends, and the administrator's decision is upheld. Adams, 231 F.3d at 842;Collins v. American Cast Iron Pipe Co., 105 F.3d 1368, 1370 (11^th Cir. 1997). If not, the court must determine whether the administrator reached the differing interpretation arbitrarily or capriciously.Adams, 231 F.3d at 842; Newell, 904 F.2d at 651; Brown, 898 F.2d at 1570.

The GM Retirement Program explicitly authorizes the plan administrator to interpret plan provisions and to make determinations regarding eligibility for benefits: "General Motors Corporation is the Plan Administrator and has full authority to construe, interpret and administer the Program." (Def.'s Br. Supp. Mot. Summ. J., Ex. F, p. 171). The plan administrator interpreted the program to provide that retirement benefits are to be deducted to offset a beneficiary's receipt of workers' compensation benefits. Section 3 of the General Provisions of the program states that "a deduction shall be made, unless prohibited by law, equivalent to all or any part of Workers Compensation (including compromise or redemption settlements) payable to such employee. . . ." Id., Ex. F. at p. 127. As a result, the plan administrator's decision to offset Morris' retirement benefits in the amount of her workers' compensation benefits comports with, and is indeed mandated by, the express language of the program.

Morris contends that oral representations allegedly made to her by the General Motors Corporation Benefits Center established the terms of her retirement benefits and did not permit offsets for her workers' compensation benefits. Oral representations cannot alter the terms of ERISA-governed plans.Burks v. American Cast Iron Pipe Co., 212 F.3d 1333, 1338 (11^th Cir. 2000) (ERISA preempts and does not recognize claims based on oral representations that contradict unambiguous written plan terms); Nachwalter v. Christie, 805 F.2d 956, 959-60 (11^th Cir. 1986) (noting that ERISA preempts estoppel claims based on oral representations). ERISA requires that plans outline procedures for their amendment and identify the persons authorized to amend them. 29 U.S.C. § 1102(b)(3); see also Nachwalter, 805 F.2d at 960. The GM Retirement Program provides that only the Board of Directors or those given written authority to amend the plan by the Board of Directors may amend the plan. Morris alleges neither that the Board of Directors nor that anyone given written authority to amend the plan effectively amended her benefits. Consequently, Morris' benefit package was not effectively amended, and her claim that the reduction of her retirement benefits to offset her workers' compensation benefits was improper is without merit. Summary judgment on this claim should be granted.

C. Exhaustion of Administrative Remedies

Section 503 of ERISA mandates that every employee benefit plan outline a procedure for review of decisions regarding benefit claims. 29 U.S.C. § 1133. An ERISA claimant must exhaust any available appeal procedures before bringing an action for benefits. Perrino v. Southern Bell Tel. Tel. Co., 209 F.3d 1309, 1315 (11^th Cir. 2000); Springer v. Wal-Mart Associates' Group Health Plan, 908 F.2d 897, 899 (11^th Cir. 1990); Mason v. Continental Group, Inc., 763 F.2d 1219 (11^th Cir. 1985). The procedure for appealing benefits determinations under the GM Retirement Program is outlined in Section 16 of the General Provisions and described in the summary plan description entitled "Your GM Benefits." (Def.'s Br. Supp. Mot. Summ. J., Ex. F at p. 172, Ex. G at p. 138). Morris did not exhaust these appeal procedures prior to bringing the claims in question. An administrative appeal could have provided the parties a non-adversarial dispute resolution process and could have decreased the cost and time devoted to settlement of her claim. As Morris failed to exhaust her administrative remedies, her claims, even if they had been deemed valid on the merits, are barred from consideration by this Court.

IV. CONCLUSION

For the reasons set forth above, the Defendant's Motion for Summary Judgment [Doc. 17] is GRANTED.

SO ORDERED.