Opinion
No. C 03-04189 CRB.
September 8, 2004
MEMORANDUM AND ORDER
In this ERISA lawsuit plaintiff claims she is entitled to $50,000 in life insurance proceeds as a result of the death of Dana Pitman. The Court granted defendant insurer summary judgment, concluding that Mr. Pitman died one day before the effective date of his benefits.
One claim remains in this case: plaintiff's contention that the insurer (defendant Reliance Standard Insurance Company ("Reliance")) violated 29 U.S.C. sections 1021(a) and 1024(b)(4) by failing to provide plaintiff with a summary plan description.See Second Amended Complaint ("SAC") ¶¶ 29-33. Now pending before the Court is Reliance's motion for summary judgment of this claim, as well as plaintiff's motion for reconsideration of the Court's previous order.
SUMMARY JUDGMENT STANDARD
A principle purpose of the summary judgment procedure is to isolate and dispose of factually unsupported claims. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Reliance, as the party moving for summary judgment and the party that does not have the ultimate burden of persuasion at trial, has the initial burden of producing evidence negating an essential element of plaintiff's claim or showing that plaintiff does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial. See Nissan Fire Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000).If Reliance does not satisfy its initial burden, plaintiff has no obligation to produce anything and summary judgment must be denied. If, on the other hand, Reliance has satisfied its initial burden of production, then plaintiff may not rest upon mere allegations or denials of defendant's evidence, but instead must produce admissible evidence that shows there is a genuine issue of material fact for trial. See Nissan Fire Marine Ins. Co., 210 F.3d at 1102. A genuine issue of fact is one that could reasonably be resolved in favor of either party. A dispute is "material" only if it could affect the outcome of the suit under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).
DISCUSSION
A. Defendant's motion for summary judgment
Plaintiff's second cause of action alleges Reliance failed to provide her and Mr. Pitman with a summary plan description in violation of ERISA. "An administrator of an ERISA plan has a duty to provide a plan summary and other documents to each participant upon request under [29 U.S.C.] sections 1021(a) and 1024(b)(4)."Moran v. AETNA Life Ins. Co., 872 F.2d 296, 298 (9th Cir. 1989). "Failure or refusal to provide such documents may result in fines of up to $100 a day, costs and attorney's fees under sections 1132(c) and (g)." Id. at 298-99. The Ninth Circuit has held that only the plan administrator can be sued for failing to provide plan documents. See id. at 299-300.
Reliance moves for summary judgment on the ground that it cannot be sued for failing to provide plan documents because it was not the plan administrator. ERISA defines a plan administrator as "(i) the person so designated by the terms of the instrument under which the plan is operated" and "(ii) if an administrator is not so designated, the plan sponsor." 29 U.S.C. § 1002(16)(A). The "plan sponsor" is "the employer in the case of an employee benefit plan established or maintained by a single employer." 29 U.S.C. § 1002(16)(B)(i).
It is undisputed that the plan itself does not designate Reliance as the plan administrator. It is also undisputed that a single employer, ATG, established the plan for its employees. Accordingly, pursuant to 29 U.S.C. section 1002(16)(A), the plan sponsor — employer ATG — is the plan administrator. See Moran, 872 F.2d at 299.
Plaintiff nonetheless argues that there is a genuine dispute as to whether Reliance was the plan administrator because, it contends, Reliance acted like the plan administrator. As support for its de facto administrator argument it cites two out-of-Circuit cases: Law v. Ernst Young, 956 F.2d 364 (1st Cir. 1992) and Hamilton v. Allen-Bradley Co., 244 F.3d 819 (11th Cir. 2001). Both cases are distinguishable and, in any event, contradict binding Ninth Circuit law.
In Law, the plan documents designated the "Retirement Committee" to be appointed by accounting firm Arthur Young's "Management Committee" as the "plan administrator." 956 F.2d at 372. The First Circuit nonetheless held that the employer Arthur Young (or, more precisely, Arthur Young's successor Ernst Young) could be liable for statutory penalties for failing to provide certain documents because the evidence showed that Arthur Young controlled the administration of the plan. Id. "If, to all appearances, Arthur Young acted as the plan administrator in respect to dissemination of information concerning plan benefits, it may properly be treated as such for purposes of liability provided under § 1132(c)." Id. at 373. The court explained further:
[W]here an entity of which the administrator is part in effect holds itself out as the plan administrator by officially disseminating such information, we think it is subject to § 1132(c) liability should it fail to discharge that role in a proper way. Hence, where as here plan documents place the responsibility for providing information upon an internal committee of a firm, but the firm in practice carries out that function, we see no reason not to hold the firm liable under § 1132(c) when it fails to provide the information in the timely manner required by law.Id. Law does not apply. First, the Ninth Circuit has expressly held that only those entities designated by the statute as the administrator can be held liable as the administrator for failure to provide plan documents. Moran, 872 F.2d at 298-300. InMoran, the insurer affirmatively represented in writing that it was the plan administrator. The Ninth Circuit held that the insurer could not be held liable for failing to provide plan documents because it was not the administrator as defined by the statute. Id. at 300 ("We do not have the power to rewrite the statute to extend liability to a business entity that has mistakenly identified itself as the plan administrator."). If an entity which expressly represents itself as the administrator, but which does not in fact qualify as the administrator under the statute, cannot be held liable as the administrator, see Moran, then it follows that an entity which only de facto operates as an administrator cannot be held liable as the administrator. The Ninth Circuit's strict adherence to the statutory definition of plan administrator is in accord with the Sixth, Fourth and D.C. Circuits. See Caffey v. UNUM Life Ins. Co., 302 F.3d 576, 584-85 (6th Cir. 2002); Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 62 (4th Cir. 1992);Davis v. Liberty Mutual Ins. Co., 871 F.2d 1134, 1138 n. 5 (D.C. Cir. 1989).
Second, this case, unlike Law, involves two separate and distinct entities. The Law court specifically distinguished its facts from the Ninth Circuit's decision in Moran on the ground that Moran involved an attempt to recover against an entity which was clearly distinct from the plan administrator and which was not shown to have exercised control over the administrator's functions. 956 F.2d at 374. "Such a situation is different from that here, where the employer against whom recovery was sought had set up an internal committee with little, if any, separate identity, and in fact took control of the function allegedly delegated to that committee." Id. Reliance is not related to the statutory administrator, ATG. Reliance did not "set up" the administrator or in any way control ATG.
Third, there is no evidence that Reliance acted as the administrator for purposes of dissemination of plan information. Plaintiff cites to a Summary Plan Description prepared after Mr. Pitman's death that states that the Summary Plan Description was prepared by Reliance at the request of the employer, ATG. The Plan Description also states that Reliance does not take any responsibility for the accuracy of the information in the Summary and specifically identifies ATG as the plan administrator. This document does not support an inference that Reliance controlled ATG or the administration of the plan.
Plaintiff also cites a one sheet benefit "summary" that ATG gave to Mr. Pitman. The summary has the name "ATG" at the top and under that it has in smaller letters "Reliance." At the bottom of the sheet it states that more complete information will be distributed in the form of booklets by Reliance. The sentence is ambiguous as to who will do the distributing and, in any event, is again insufficient to support a finding that Reliance, rather than ATG, controlled the dissemination of information about the Plan. In Law, in contrast, there was ample evidence that Arthur Young held itself out as the administrator for purposes of dissemination of plan information.
Hamilton is also inapposite. First, it did not involve a claim for statutory penalties for failure to provide plan documents. Second, its holding that "[p]roof of who is the plan administrator may come from the plan document, but can also come from the factual circumstances surrounding the administration of the plan, even if these factual circumstances contradict the designation in the plan document," 244 F.3d at 824 (emphasis added), contradicts Ninth Circuit law. Moran held that the statute alone identifies the administrator. Under the statute, if the plan does not designate a plan administrator, the plan sponsor is the administrator. 29 U.S.C. § 1002(16)(A). Since the plan at issue here did not designate an administrator, the plan sponsor — ATG — was the administrator.
As Reliance was not the plan administrator as a matter of law, plaintiff's claim that Reliance owes statutory penalties for failing to provide a summary plan description fails.
B. Plaintiff's motion for reconsideration/motion to amend
Plaintiff moves for reconsideration of the Court's previous order granting summary judgment on the ground that its first claim for relief for breach of fiduciary duty arose, at least in part, out of Reliance's failure to provide plan documents and by stating in the policy that it was governed by California law. Therefore, argues plaintiff, the Court should not have granted summary judgment on the first claim in its entirety.
Plaintiff's claim for breach of fiduciary duty makes four claims: (1) failing to provide information to plaintiff and Mr. Pitman, including the failure to provide a summary plan description; (2) providing a life insurance plan with ambiguous terms; (3) denying plaintiff's claim for benefits on "spurious" terms; and (4) failing to pay plaintiff benefits. SAC ¶ 26. The Court's previous ruling that Reliance did not abuse its discretion by refusing to pay benefits disposes of claims 2, 3 and 4. Claim 1 — failure to provide plan documents — survives the Court's previous order and therefore plaintiff's motion for reconsideration on that claim is granted.
This claim also alleges that Reliance failed to provide the certificate required by California Insurance Code sections 10209 and 10209.1. This portion of the claim is preempted by ERISA and, in any event, plaintiff does not raise it in her motion for reconsideration.
Summary judgment must nonetheless now be granted on that breach of fiduciary duty claim. Plaintiff alleges Reliance breached its fiduciary duty by failing to create and distribute a proper summary plan description as required by 29 U.S.C. sections 1021, 1022, 1024. SAC ¶ 26(A). As is set forth above, these sections place a duty on the plan administrator. As Reliance is not the plan administrator under ERISA and Ninth Circuit law, it could not have breached a fiduciary duty to provide such documents.
Plaintiff responds that even if Reliance was not the plan administrator, Reliance still had a fiduciary duty to provide plaintiff with the summary plan description. As support for this claim she cites Bins v. Exxon Co., 189 F.3d 929, 938-39 (9th Cir. 1999). Bins asked whether an employer plan sponsor had an affirmative duty to disclose to employees it knew were considering retirement that it was seriously considering changing certain retirement benefits. The court held that it did. The employer in that case, however, was the entity responsible for the dissemination of information about the plan. Reliance is not. Moreover, the Bins court noted that the duty of disclosure is limited by conflicting ERISA provisions. Id. at 938 n. 5. Here there is a conflicting provision: the section charging the plan administrator with the duty of disclosure. To hold Reliance responsible for the failure to produce a summary plan description would conflict with the provision making ATG — the plan administrator — responsible for the dissemination of the summary.
In her motion for reconsideration plaintiff also contends that Reliance breached its fiduciary duty by having the insurance policy itself state that it is governed by California law. Plaintiff's complaint cannot fairly be read as claiming that Reliance breached its fiduciary duty by having its policy recite that it is covered by California law. See SAC ¶ 26. Her request to amend the complaint to allege such a claim is denied as futile. The claim fails as a matter of law for the reasons stated in the Court's previous Memorandum and Order.
Plaintiff's complaint also cannot be fairly read as claiming that Reliance breached its fiduciary duty by falsely stating that it did not have any booklets or summaries of the plan or that it breached its fiduciary duty by not keeping copies of such. Her request to amend the complaint to make such a claim is also denied as futile. Again, Reliance was the claims fiduciary but not the plan administrator. Plaintiff's complaint should be directed to the plan administrator ATG. See Moran, 872 F.2d at 299 n. 2. The fact that plaintiff cannot pursue her claims against ATG in this Court because ATG filed for bankruptcy protection does not mean that Reliance can be held liable for ATG's failures.
CONCLUSION
29 U.S.C. section 1132(c) permits a plaintiff to obtain statutory penalties for a plan administrator's failure to provide plan documents. As Reliance was not the plan administrator as a matter of law, plaintiff's section 1132(c) claim fails and Reliance's motion for summary judgment on the third claim for relief is GRANTED.
Plaintiff's motion for reconsideration of summary judgment on the first claim for relief is GRANTED to the extent the claim alleges that Reliance breached its fiduciary duty by failing to disclose plan documents. Summary judgment in favor of defendant is GRANTED on this claim because, as is explained above, Reliance did not have a fiduciary duty to produce such documents to plaintiff or Mr. Pitman. Plaintiff's motion for leave to amend is DENIED as futile.