Opinion
99 Civ. 12090 (JGK)
September 24, 2002
OPINION AND ORDER
The plaintiff, Patricia Yak, brought this lawsuit against the defendants, Bank Brussels Lambert and BBL (USA) Holdings Inc. (collectively "BBL"), and Dominiek Vangaever, seeking damages arising out of BBL's alleged failure to provide the plaintiff with employment related benefits.
The plaintiff contends that after working initially as an independent contractor for BBL and providing services as an attorney, she entered into subsequent employment agreements that changed her status to a full-time employee. The plaintiff alleges that she was entitled to various benefits that she was denied, including pay for time worked during vacations and holidays; sick and personal days; health, life and disability insurance; and benefits from BBL's severance and pension plans.
The complaint alleged five causes of action: (1) breach of contract; (2) restitution and unjust enrichment; (3) a claim under the Employee Retirement Income Security Act ("ERISA"), as amended, 29 U.S.C. § 1001et seq, for failure by BBL to provide benefits under its ERISA designated plans in violation of 29 U.S.C. § 1132; (4) a claim under ERISA for breach of fiduciary duty in violation 29 U.S.C. § 1104; and (5) tortious interference with contract. The defendants filed an answer, and cross-claimed for damages for an alleged violation of New York State Judiciary Law § 478(1). Judge Parker initially granted the defendants' motion to dismiss the plaintiff's complaint pursuant to Fed.R.Civ.P. 12(b)(6) on the grounds that the plaintiff had waived her rights to any benefits by signing a release contained in the contracts governing her employment. (See Mem. Decision and Order dated June 9, 2000 at 8.) The Court dismissed the tortious interference claim for lack of supplemental jurisdiction. On appeal the Court of Appeals for the Second Circuit vacated the judgment of dismissal and remanded the case. Yak v. Bank Brussels Lambert, BBL (USA), 252 F.3d 127, 131 (2d Cir. 2001). The order to remand directed the District Court to resolve three questions: (1) which, if any, of the benefits the plaintiff seeks are governed by ERISA; (2) the plaintiff's employment status; and (3)the circumstances surrounding the execution of the release. Id.
After the case was transferred to this Court, the defendants failed to renew their 12(b)(6) motion. The parties subsequently completed discovery, and each has now moved for summary judgment. The defendants moved for summary judgment on all of the plaintiff's claims and moved to strike the plaintiff's demand for a jury trial. The plaintiff has moved for partial summary judgment on the issue of her employment status and on the defendants' counterclaim.
I.
Unless otherwise noted, the following facts are not in dispute. The plaintiff, Patricia Yak, is an attorney, admitted to practice in New York, who specializes in bank finance and loan securitization matters. (Defts.' Rule 56.1 Stmt. ¶¶ 1, 3; Pl.'s Resp. Rule 56.1 Stmt. ¶¶ 1, 3.). In August, 1997 the plaintiff began working for BBL as a temporary attorney, a position she obtained through a temporary legal staffing agency. (Pl.'s Rule 56.1 Stmt. ¶¶ 1, 3; Defts. Resp. Rule 56.1 Stmt. ¶¶ 1, 3.). This work through the agency continued until October 27, 1997, when the plaintiff entered into an employment agreement with BBL. (October 27, 1997 Consulting Agreement ("First Agreement") attached as Ex. C to Decl. of Brian Belowich ("Belowich Decl.") dated February 13, 2002.) This agreement provided that the plaintiff would work for BBL as a legal consultant on a part-time basis, working a maximum of 27 hours per week. (Id. at 1.) The agreement further provided that the plaintiff would be "an independent contractor" and would "not be entitled to any employee benefits" from BBL. (Id. at 2.) BBL agreed to pay an hourly fee of $50; the plaintiff's term of employment was to last for six months, until April 27, 1998. (Id.) The plaintiff did not receive, and did not expect to receive, any employee benefits under the October Consulting Agreement. (Defts.' Rule 56.1 Stmt. ¶¶ 11, 12; Pl.'s Resp. Rule 56.1 Stmt. ¶¶ 11, 12.)
In February, 1998 the plaintiff was offered, and declined BBL's offer of full time employment. (Id. at ¶ 15.) On April 13, 1998, prior to the termination of the First Agreement, the plaintiff entered into a second employment agreement with BBL. (April 13, 1998 Consulting Agreement ("Second Agreement") attached as Ex. E to Belowich Decl.) This Second Agreement contained identical terms as the First Agreement with respect to Ms. Yak's employment status as an independent contractor and the fact that she was "not entitled to any employee benefits" from BBL. (See id. at 2.) The hourly rate was increased to $52; the term of the Consulting Agreement was extended to December 31, 1998; and the plaintiff was to work a maximum of 27 hours a week. (Id. at 1-2.) While the plaintiff had requested employment benefits during the course of negotiating the Second Agreement, those requests were ultimately denied. (Defts.' Rule 56.1 Stmt. ¶ 22; Pl.'s Resp. Rule 56.1 Stmt. ¶ 22.)
On September 21, 1998 the Second Agreement was amended. The Amendment provided that the plaintiff would work 40 hours a week, and that she would receive one supplemental payment of $2,200 on or before December 31, 1998, the date on which the Second Agreement was to terminate. (Amendment to Consulting Agreement attached as Ex. F to Belowich Decl. at 1.)
The plaintiff never expected to receive, and did not in fact receive, employee benefits under the terms of the Second Agreement as amended. (Defts.' Rule 56.1 Stmt. ¶¶ 30, 31; Pl.'s Resp. Rule 56.1 Stmt. ¶¶ 30, 31.) On December 16, 1998, the plaintiff filed a written claim for severance under the "BBL (USA) Holdings Severance Pay Plan" ("Severance Plan"). (Defts.' Rule 56.1 Stmt. ¶ 33; Pl.'s Resp. Rule 56.1 Stmt. ¶ 33.) This was the only claim for any benefit made by the defendant prior to the cessation of her employment, which occurred pursuant to the Second Agreement on December 31, 1998. (Defts.' Rule 56.1 Stmt. ¶¶ 32-34; Pl.'s Resp. Rule 56.1 Stmt. ¶¶ 32-34.)
Paula Louzerio, BBL's Severance Plan Administrator, reviewed and denied the plaintiff's written claim for severance, finding, among other things, that (1) Ms. Yak was not an employee of BBL; (2) even if Ms. Yak was a BBL employee she was not eligible for severance since she was not an "Eligible Employee"; and (3) she had not suffered an "Qualifying Employment Loss" that would have entitled her to severance. (Letter dated January 29, 1999 attached as Ex. H to Belowich Decl. at 3-4.) The plaintiff appealed the decision of the Plan Administrator to the Committee designated to administer the Severance Plan. The Committee upheld the decision denying severance on the identical grounds given by the Plan Administrator. (Letter dated June 22, 1999 as Ex. I to Belowich Decl. at 2-3.).
II.
The standard for granting summary judgment is well established. Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see generally Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Gallo v. Prudential Residential Servs. Ltd. Partnership, 22 F.3d 1219 (2d Cir. 1994). "The trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are genuine issues of material fact to be tried, not to deciding them. Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution." Gallo, 22 F.3d at 1224.
The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact."Celotex, 477 U.S. at 323. The substantive law governing the case will determine those facts that are material and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In determining whether summary judgment is appropriate, the Court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, 369 U.S. 654, 655 (1962)); Gallo, 22 F.3d at 1223. If the moving party meets its burden, the burden shifts to the nonmoving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). With respect to the issues on which summary judgment is sought, if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party, summary judgment is improper. See Chambers v. TRM Copy Ctrs., 43 F.3d 29, 37 (2d Cir. 1994).
Normally, when both parties seek summary judgment, the Court must "`evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.'" Abrams v. United States, 797 F.2d 100, 103 (2d Cir. 1986) (quoting Schwabenbauer v. Bd. of Educ., 667 F.2d 304, 314 (2d Cir. 1981)).
III.
As an initial matter, it should be noted that certain claims and matters were resolved after this case was remanded by the Court of the Appeals.
After the case was remanded, the parties chose not to proceed with briefing on the questions cited by the Court of Appeals and proceeded to complete discovery and filed motions for summary judgment. Some of the issues that were raised on the motion to dismiss have become moot in the context of the motions for summary judgment, because, as explained below, the defendants' motion for summary judgment is granted on grounds not addressed by Judge Parker's decision on the motion to dismiss. It is thus unnecessary to address the questions directed by the Court of Appeals. See McKenzie v. Bellsouth Telecomm., Inc., 219 F.3d 508, 513 (6th Cir. 2000) (finding that prior Court of Appeals "holding on motion to dismiss does not establish the law of the case for purposes of summary judgment, when the complaint has been supplemented by discovery");Habecker v. Clark Equip. Co., 942 F.2d 210, 217-18 (3rd Cir. 1991) (noting that district court has substantial discretion in conducting further proceedings after a remand); cf. Euromepa, S.A. v. R. Esmerian, Inc., 154 F.3d 24, 29-30 (2d Cir. 1998) (district court did not violate terms of Court of Appeals' mandate by staying remand proceedings, in light of ongoing proceedings in foreign forum).
Second, the plaintiff conceded that there is no factual basis for her claim for tortious interference, and her attorney withdrew that claim. (Pl.'s Memo. of Law in Opp'n to Defts.' Mot. for Summ. J. at 3 n. 1; Tr. dated July 12, 2002 at 24.) Consequently, summary judgment is granted with respect to this claim and it is dismissed.
Third, the plaintiff conceded that her two state law claims for breach of contract and for restitution and unjust enrichment were preempted to the extent they were claims for benefits governed by ERISA. (Tr. at 10-11.) Therefore, the plaintiff is entitled to ERISA benefits, if at all, only under her ERISA causes of action. See Sanfilippo v. Provident Life and Casualty Ins. Co., 178 F. Supp.2d 450, 457 (S.D.N.Y. 2002).
Fourth, the parties agreed which employee benefit plans were governed by ERISA. More specifically, the parties agreed that the plaintiff's claims for health insurance, life insurance, disability insurance, pension benefits, and severance plan benefits are governed by ERISA. The remaining benefits, namely vacation pay, holiday pay, sick pay, and personal days, are not governed by ERISA and are common law benefits. (See Defts.' Mem. at 10; Pl.'s Resp. Mem. at 10 n. 4; Tr. at 12-13.)
Consequently, with respect to the defendants' motion, the only remaining issues to be decided are whether summary judgment is appropriate with respect to the plaintiff's claims for breach of contract and unjust enrichment for non-ERISA benefits and the plaintiff's two remaining ERISA claims, with respect to her alleged ERISA benefits.
IV.
The plaintiff raises claims under ERISA for the alleged failure of BBL to provide her with employment related benefits. The plaintiff seeks health, life, and disability insurance, pension benefits, and severance pay. The plaintiff, however, only filed a written claim with the relevant Plan Administrator under BBL's Severance Plan. (See Tr. at 11-12.) To receive ERISA benefits, a party typically must follow the procedures set forth by the employer and the administrator of the benefit plan.Davenport v. Abrams, Inc., 249 F.3d 130, 134 (2d Cir. 2001). The primary purposes of the exhaustion requirement are to uphold Congress's desire that ERISA trustees, and not the Courts, be responsible for their actions; provide a sufficiently clear record of administrative action; and assure that any judicial review of administrative action be conducted under the appropriate standard of review. Id. at 133.
The plaintiff's failure to make a written claim under any other benefit plan, to await the decision of a Plan Administrator with respect to that benefit, or to appeal any decision of such an administrator constitutes a failure by the plaintiff to exhaust her ERISA administrative remedies, and requires that the plaintiff's claims for all non-severance ERISA benefits be dismissed. Sanfilippo, 178 F. Supp.2d, at 457-58; see Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1199 (2d Cir. 1989) (refusing to permit claim for benefits where claimant made no attempt to exhaust ERISA remedies); Kennedy v. Empire Blue Cross and Blue Shield, 989 F.2d 588, 594-95 (2d Cir. 1993) (noting that ERISA procedures are only to be excused upon showing that they are futile); Cappiello v. NYNEX Pension Plan, No. 92 Civ. 3896, 1994 WL 30429, *4 (S.D.N.Y. Feb. 2, 1994) (holding that failure to file written claim required dismissal of claims for ERISA benefits).
The plaintiff only filed a written claim and appropriately exhausted her ERISA remedies under BBL's Severance Plan (See Tr. at 11-12.) The plaintiff concedes that the Severance Plan grants the Administrator discretionary authority to determine eligibility for benefits or to construe the terms of the plan. (See Severance Pay Plan attached as Ex. A to Supp. Aff. of Daniel Osborn sworn to March 4, 2002 at ¶ 8.1.) Because the plan grants such discretion to the Administrator, this Court is required to review the decision of the Committee denying severance claim under an "arbitrary and capricious standard." Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999). The Committee's decision may be overturned "only if the decision is without reason, unsupported by substantial evidence, or erroneous as a matter of law." Id. (quotations omitted).
The plaintiff submitted the BBL (USA) Holdings Inc. Severance Pay Plan effective October 1, 1998. The defendants submitted the BBL New York Branch Severance Pay Plan effective as of May 1, 1998. There are no significant differences between the plans for purposes of this decision. The decisions of the Administrator referred to both plans. This decision uses numbering in the Plan effective October 1, 1998 which is included with the plaintiff's papers.
The conclusion of the Committee denying severance was based on factual findings that the plaintiff was not an "Eligible Employee" who qualifies for the Plan and alternatively, that the plaintiff did not suffer a "Qualifying Employment Loss." This conclusion cannot be set aside absent a showing that both findings were unsupported by substantial evidence or erroneous as a matter of law. See Gustafson v. Bell Atlantic Corp., 171 F. Supp.2d 311, 321 (S.D.N.Y. 2001) (deferential review given to Committee's conclusion that employee not eligible for employer's benefit plans). Substantial evidence is "such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the decisionmaker and requires more than a scintilla but less than a preponderance." Miller v. United Welfare Fund, 72 F.3d 1066, 1072 (2d Cir. 1995). "Where there are two competing interpretations of a plan's provisions, this Court is required to accept the administrator's interpretation." Gustafson, 171 F. Supp.2d at 321.
It is unnecessary to review the Committee's additional basis for decision, that the plaintiff was not a BBL employee, given that the other two grounds for its conclusion were neither arbitrary nor capricious.
It is plain from the Severance Plan that the plaintiff was not an "Eligible Employee" who could qualify for severance benefits. Article IV of the Severance Plan provides, in relevant part, that "[a]n Eligible Employee whose employment terminates as a result of a Qualifying Employment Loss shall be paid, in accordance with the terms of the Plan, a Basic Severance Benefit." (Severance Plan at ¶ 4.1.) Eligible Employee, according to the Plan, is defined as "a Full-Time Employee with at least one (1) Year of Service who is employed by the Company on the date of Qualifying Employment Loss." (Id. at ¶ 2.6.) In turn, a "Full-time Employee" is an
employee of the Company with customary employment of thirty-five (35) or more hours per week and twelve (12) months per calendar year who (i) is paid on a salaried or hourly basis, (ii) is treated by the Company as a full-time employee, and (iii) generally is eligible for Company-provided employee benefits. (Id. at ¶ 2.8.)
The Severance Plan is also clear that "temporary or limited duration employees on the payroll of an Employer or the payroll of a temporary employee agency" are not Eligible Employees. (Id.)
The plaintiff only began to work more than 35 hours per week after the Second Agreement was amended on September 21, 1998. Her employment relationship with BBL ended a little over three months later on December 31, 1998, leaving her far short of the twelve months of employment necessary to be considered an "eligible employee." Additionally, neither the First nor Second Agreement provided, or led the plaintiff to expect, any employment benefits. Thus, the plaintiff cannot satisfy requirement (iii) for being a "Full-time Employee" that she be an employee "generally eligible for Company-provided employee benefits." Consequently, since the plaintiff was not an "Eligible Employee" because she did not have one year of service, and because she did not meet the requirements for a "Full Time Employee," she did not meet the requirements for severance benefits under the Severance Plan.
Moreover, the plaintiff did not suffer a "Qualifying Employment Loss." Article IV requires that for a Eligible Employee to receive severance she must have suffered a "Qualifying Employment Loss" on the date of her termination. (Id. at ¶ 4.1.) In addition, as the plaintiff points out, there is a limited severance benefit available to an "Eligible Employee" with less than one year of service whose employment terminates between May 1, 1998 and May 1, 1999, but that benefit is also conditioned on the requirement that the employment terminates "as a result of a Qualifying Employment Loss." (Id. at ¶ 6.1.) The Severance Plan defines a Qualifying Employment Loss as an "involuntary termination of an Eligible Employee's employment as a result of Job Elimination." (Id. at ¶ 2.13.) "Job Elimination" is defined as "the elimination of a position as the result of a reorganization, merger, reduction in force, the closing of a department or other similar reasons, as determined by the Committee." (Id. at ¶ 2.9.) The Administrator and the Committee both determined that the plaintiff did not suffer a "Qualifying Employment Loss." Her relationship with BBL terminated because her Consulting Agreement expired on December 31, 1998. This could no be characterized as a termination similar to the elimination of a position for reasons similar to a reorganization, merger, reduction in force, or the closing of a department. The decisions by the Administrator and the Committee were reasonable and correct and could not be characterized as arbitrary or capricious. Because the plaintiff suffered no "Qualifying Employment Loss," she was entitled to no benefits under the Severance Plan.
Because both of the findings that the plaintiff was not an "Eligible Employee" and that the plaintiff did not suffer a "Qualifying Employment Loss" are supported by substantial evidence, the Committee's decision denying severance pay must be upheld, and the defendants' motion for summary judgment on the plaintiff's ERISA claims is granted.
The plaintiff has not attempted to distinguish in her motion between her claim for benefits under 29 U.S.C. § 1132 and her claim for breach of fiduciary duty under 29 U.S.C. § 1104. However, because the plaintiff has failed to establish that she is entitled to any benefits that she did not receive and because the plaintiff provided no other evidence for any alleged breach of fiduciary duties, the defendants are entitled to summary judgment dismissing both claims.
V.
The defendants argue that the plaintiff's state law unjust enrichment and breach of contract claims for non-ERISA benefits should be dismissed because, pursuant to the First and Second Agreements, she waived any rights she might have had to such benefits.Both the claims for non-ERISA benefits and the defenses to those claims raise solely questions of state law. Because there is no longer any federal claim and there is no assertion of diversity jurisdiction, the Court declines to exercise supplemental jurisdiction and dismisses the remaining state law claims for common law benefits. See 28 U.S.C. § 1367 (c)(3); Giordano v. City of New York, 274 F.3d 740, 754 (2d Cir. 2001); Morse v. University of Vermont, 973 F.2d 122, 128 (2d Cir. 1992); Devito v. Incorporated Vill. of Valley Stream, 991 F. Supp. 137, 145 (E.D.N.Y. 1998); Irish Lesbian and Gay Org. v. Bratton, 882 F. Supp. 315, 319 (S.D.N.Y.), aff'd, 52 F.3d 311 (2d Cir. 1995); Lieberman v. Fine, Olin Anderman, P.C., No. 00 Civ. 6533, 2002 WL 142198, at *4 (S.D.N.Y. Jan. 31, 2002).
VI.
The defendants' motion to strike the plaintiff's demand for a jury trial is denied as moot.
VII.
The plaintiff's motion for summary judgment on the limited question of her employment status is denied as moot, because the defendants' motion for summary judgment with respect to the plaintiff's ERISA employment benefits claims is granted, and the claims for common law benefits are dismissed for lack of jurisdiction.
IX.
The plaintiff moves for summary judgment on the defendants' counterclaim for damages pursuant to Section 487(1) of the New York State Judiciary Law, which provides that "an attorney or counselor who . . . [i]s guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party . . . . forfeits to the party injured treble damages, to be recovered in a civil action." N.Y. Judiciary Law § 487(1) (1983). Because the statute does not cover actions taken by the plaintiff, the defendants cannot recover damages, and the plaintiff's motion is granted.
Section 487 applies only to conduct by an attorney in "his or her role as an attorney. The mere fact that a wrongdoer is an attorney is insufficient to impose liability for treble damages under section 487."N. Trust Bank of Florida/Sarasota, N.A. v. Coleman, 632 F. Supp. 648, 650 (S.D.N.Y. 1986) (Weinfeld, J.) (emphasis in original); People v. Canale, 658 N.Y.S.2d 715, 717-18 (App.Div. 1997). The defendants allege that they are entitled to damages under § 487 because the plaintiff, an attorney, filed frivolous claims in this lawsuit for benefits for which she was not legally entitled. However, in filing this lawsuit the plaintiff was not acting in her capacity as an attorney. She was acting in her capacity as a party, and had a good faith basis to believe she should have received employment benefits. She was represented by counsel and was not acting as a lawyer in the present action. The mere fact that she is as an attorney does not mean she acted in a capacity as a legal representative for the purposes of § 487 liability. The defendants have failed to state a claim under Section 487, and their counterclaim is dismissed.
CONCLUSION
The remaining arguments of the parties are either moot or without merit. For the reasons explained above, the defendants' motion for summary judgment dismissing the plaintiff's claims for ERISA benefits is granted, and all the plaintiff's claims for ERISA benefits are dismissed. The defendants' motion for summary judgment dismissing the plaintiff's claim for tortious interference is granted. The defendants' motion to strike the plaintiff's jury demand is denied as moot. The plaintiff's state law claims for common law employment benefits are dismissed for lack of jurisdiction. The plaintiff's motion on the limited question of her employment status is denied as moot. The plaintiff's motion for summary judgment dismissing the defendants' counterclaim is granted. The Clerk is directed to enter judgment in accordance with this Opinion and to close the case.