I. Standard for Summary Judgment
The standard to be applied in determining motions for summary judgment is well known.
Summary judgment may be granted only when there is no genuine issue of material fact remaining for trial and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). "As a general rule, all ambiguities and inferences to be drawn from the underlying facts should be resolved in favor of the party opposing the motion, and all doubts as to the existence of a genuine issue for trial should be resolved against the moving party." However, where the nonmoving party will bear the burden of proof at trial, Rule 56 permits the moving party to point to an absence of evidence to support an essential element of the nonmoving party's claim.
Bay v. Times Mirror Magazines, Inc., 936 F.2d 112, 116 (2d Cir. 1991) (citations omitted). As is often stated, "viewing the evidence produced in the light most favorable to the nonmovant, if a rational trier could not find for the nonmovant, then there is no genuine issue of material fact and entry of summary judgment is appropriate." Binder v. Long Island Lighting Co., 933 F.2d 187, 191 (2d Cir. 1991); see also Bay, 936 F.2d at 116.
2. Donnelly Has Failed to Support Her Claim Against BNYC
A. Donnelly Is Not Entitled to Severance Benefits
As found by the uncontested facts set forth above, Donnelly was confronted in the spring of 1990 with an unenviable decision: either to resign and seek severance benefits over the advice of her employer that it was unlikely that she would qualify or to remain as an employee and maintain the health benefits provided for herself and her husband. There is no dispute that she chose the latter course.
Donnelly herself asserts that her duties were materially diminished no later than April 20, 1990, see Donnelly Aff. P 9; id. Ex. A (Aug. 27, 1990 letter from Donnelly's counsel to Trust stating that Donnelly "did not become aware that her responsibilities had been diminished permanently until the end of April 1990"); Plaintiff's Response to Defendants' 3(g) Statements P 1, by which time she was fully familiar with her rights to severance benefits under the Plan. At the very latest, Donnelly acknowledged her perception of the diminution in her duties by June 5, 1990, when she wrote to the Chairman of BNY. Nevertheless, Donnelly did not resign until December 20, 1990 if the date of her resignation letter controls or January 4, 1991 if the date she submitted the letter controls.
The right to a benefit turns on the provisions of the plan that define that benefit. See Bogue v. Ampex Corp., 750 F. Supp. 424, 427 (N.D. Cal. 1990) (resolution of plaintiff's claim under ERISA § 502 for benefits "turns on an interpretation of the plan provisions which define the severance benefits"); cf. 29 U.S.C. § 1104(a)(1)(D) (fiduciary must discharge duties with respect to plan "in accordance with documents and instruments governing the plan"). Regrettably for Donnelly, the relevant terms of the Plan unambiguously require that a claimant who suffers a diminution in duties must resign within sixty days to receive severance benefits. Thus, even assuming that Donnelly's duties were in fact diminished (a fact which the Defendants contest), the undisputed seven- to nine-month lapse between the alleged diminishment and Donnelly's resignation precludes her under the terms of the Plan from seeking severance benefits.
To avoid the consequences of her decision not to resign, Donnelly claims that BNYC is equitably estopped from denying her severance benefits based on the untimeliness of her resignation, alleging that BNY misled her not to resign in April of 1990 by telling her that the changes in her position were temporary. She claims that, had it not been for BNY's representations, she would have resigned in May 1990 and been eligible under the Plan for severance benefits.
Although the doctrine of equitable estoppel is applicable in ERISA actions, see Haeberle v. Board of Trustees, 624 F.2d 1132, 1139 (2d Cir. 1980), the principle of estoppel permits recovery only when "'a representation of fact made to a party who relies thereon with the right to so rely may not be denied by the party making the representation if such denial would result in injury or damage to the relying party.'" Id. (quoting 1 Williston on Contracts § 139, at 600 (3d ed. 1957) (other citations omitted)). The reliance must be reasonable. See Chambless v. Masters, Mates & Pilots Pension Plan, 571 F. Supp. 1430, 1452 (S.D.N.Y. 1983). Furthermore, courts are "reluctant to apply the estoppel doctrine to require the payment of pension funds," Haeberle, 624 F.2d at 1139, because "the actuarial soundness of pension funds is, absent extraordinary circumstances, too important to permit trustees to obligate the fund to pay pensions to persons not entitled to them under the express terms of the plan." Phillips v. Kennedy, 542 F.2d 52, 55 n.8 (8th Cir. 1976).
Based on the uncontested facts, the doctrine is inapplicable here for four reasons. First, BNY's representations in April were merely statements of opinion that Donnelly would not qualify for severance benefits based on any changes in her duties as of that time. Second, Donnelly had no "right" and it was not reasonable for her to rely on any such representations because the Plan does not provide participants with the right to a determination of entitlement prior to resignation. Third, Donnelly was not "damaged" by the representation because BNY's consistent position has been that her duties were not materially diminished. Thus, even if she had resigned within sixty days of April 20, 1990, she would not have recovered severance benefits. Fourth, the Plan by its terms provides that an employee claiming severance benefits must have resigned within sixty days of the diminution in duties, not within sixty days of her subjective perception that such diminution is permanent. Thus, BNY's alleged representations that the change in Donnelly's duties was temporary are immaterial for purposes of estoppel. A contrary conclusion would be tantamount to allowing Donnelly to use her estoppel claims to rewrite the terms of the Plan, a result rejected by courts. See, e.g., Davidian v. Southern Cal. Meat Cutters Union & Food Emps. Ben. Fund, 859 F.2d 134, 136 (9th Cir. 1988).
Perhaps most importantly, however, even if Donnelly's allegations with respect to BNY's April statements were supported in fact, there is no dispute that any illusions were dispelled by June 5, 1990 when she "fully realized that [her] job had diminished drastically." Thus, she would have had to resign within sixty days of that date to be eligible for severance benefits.
In addition, the Defendants claim that Donnelly's claim was untimely because she did not resign within two years of the Change of Control, as required by section 4.1 of the Policy, which states that "[a] Participant shall be entitled to . . . a Severance Benefit . . . if a Change in Control has occurred and if, within two years thereafter, the Participant's employment . . . shall terminate for any reason specified in Section 4.2, whether the termination is voluntary or involuntary." This argument is without merit, however, because the Plan requires that the diminishment take place within two years of the Change in Control, not the resignation.
Donnelly's choice in June of 1990 and her decision not to resign at that time bars her from asserting her right to severance benefits under the Plan.
B. Donnelly May not Maintain her Claims for Breach of Fiduciary Duties Against BNYC
Donnelly has also failed to raise material facts supporting her claims against BNY under § 404 of ERISA, 29 U.S.C. § 1104, for breach of fiduciary duties (first and second claims for relief). In the first instance, Donnelly may not sue for a breach of fiduciary duties under ERISA in her individual capacity. Section 409 of ERISA, 29 U.S.C. § 1109, the statute authorizing a suit for breach of fiduciary duties under § 404, provides that such an action can be maintained only on behalf of the plan itself, not by an individual beneficiary on her own behalf. See, e.g., Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 140-43, 87 L. Ed. 2d 96, 105 S. Ct. 3085 (1985) (recovery for violation of § 409 inures to benefit of plan as a whole); O'Neil v. Gencorp, Inc., 764 F. Supp. 833, 833-34 (S.D.N.Y. 1991).
C. The Facts Do Not Support Donnelly's Claims of Violations of ERISA's Reporting, Publication and Review Requirements or of Interference with Protected Rights.
Even if Donnelly could properly maintain her claims for breach of fiduciary duty on her own behalf, she has failed to raise facts that create a material issue as to the viability of the substantive bases for these claims.
The basis of the First Claim for Relief that BNY violated its fiduciary duties is the allegation that BNY failure to inform Donnelly of her rights to severance benefits, pursuant to §§ 101 and 105 of ERISA, 29 U.S.C. §§ 1021, 1025. The relevant parts of these sections require the administrator of a plan to furnish each participant with a summary plan descriptions, statements with respect to annual reports and other documents that specify the amounts of accrued benefits. The complaint contains no allegation that BNY failed to provide Donnelly with any of the information covered by these sections, and the factual submissions do not raise facts which indicate otherwise.
The undisputed facts also require dismissal of the Second Claim for Relief against BNY, under which Donnelly alleges that BNY breached its fiduciary duties under d 404(a)(1)(D) of ERISA, 29 U.S.C. § 1104(a)(1)(D), by failing to comply with "the documents and instruments governing the Plan." As discussed above, the relevant section of the Plan provides that a participant is entitled to claim severance benefits only if her duties are materially diminished within two years of a change in control and she resigns within sixty days of the diminution. As the uncontested facts establish, Donnelly did not resign within sixty days after the date on which she herself insists her duties were materially diminished. Thus, BNY fully complied with the documents governing the Plan in refusing to pay her severance benefits.
The Third Claim for Relief is likewise unsupported by any material facts. Donnelly alleges that BNY violated § 503 of ERISA, 29 U.S.C. § 1133 by failing to set forth in writing specific reasons for the denial of her claim in a manner calculated to be understood by her and by denying her a full and fair review.
Under the Plan, a participant who believes that she was denied benefits to which she is entitled is to first raise the matter with the Personnel Manager assigned to the participant's department at BNY. If that does not produce satisfactory results, the participant is to submit a claim in writing to the Plan Administrator, who is to respond to the claim within ninety days. If the claim was denied, the participant is to fill out a form that is to be submitted to the Trustee of the IBC Benefits Protection Trust, which is then to review the claim. If the Trustee finds that the claim has a basis in law or fact, it is to refer the claim to outside counsel retained for the purpose of pursuing benefits claims against BNY.
Donnelly submitted a formal claim and received a denial letter on January 25, 1991 which explained the reasons for the decision. The matter was then referred to the Trustee which also denied the claim.
Nothing in the Plan or the Summary Plan Description required the Plan Administrator to make a formal determination of eligibility for benefits under Section 4.2(a)(iii) until and unless the participant resigned. Accordingly, no claims procedure was violated by the refusal to give Donnelly a pre-determination of her claim for a severance benefit.
Finally, Donnelly has raised no facts which raise a material issue supporting her Fourth Claim for Relief against BNY. In this claim she alleges that BNY has interfered with her protected rights in violation of § 510 of ERISA, 29 U.S.C. § 1140. That section provides in relevant part that:
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan . . . or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan . . . .
The basis for this claim appears to be the allegation that the Plan is structurally defective under ERISA because it fails to provide a procedure through which a participant can obtain a determination of as to whether she will receive severance benefits prior to resigning. Thus, claims Donnelly, the Plan impermissibly forces the participant onto the "horns of a dilemma" in which she must choose between resigning and giving up wages and medical coverage or remaining beyond the sixty-day period and giving up her severance pay. See Plaintiff's Memo. in Opp. at 16.
Whatever else it may have been, the requirements of the Plan and BNY's conduct does not constitute "interference" under the statute. Section 510 reaches "conduct which fundamentally changes the employer-employee relationship so as to interfere with pension rights." Swanson v. U.A. Local 13 Pension Plan, 779 F. Supp. 690, 701 (emphasis added) (W.D.N.Y.) (further stating that § 510 is "'aimed primarily at preventing unscrupulous employers from discharging or harassing their employees in order to keep them from obtaining vested pension rights'") (quoting West v. Butler, 621 F.2d 240, 245 (6th Cir. 1980)), aff'd, 953 F.2d 636 (2d Cir. 1991); see also Dister v. Continental Group, Inc., 859 F.2d 1108, 1111 (2d Cir. 1988); Pompano v. Michael Schiavone & Sons, Inc., 680 F.2d 911, 916-17 (2d Cir.), cert. denied, 459 U.S. 1039, 103 S. Ct. 454, 74 L. Ed. 2d 607 (1982). The most common basis for a § 510 is the discharge of an employee. Swanson, 779 F. Supp. at 702.
No such conduct is alleged here. On the facts presented, the most Donnelly can allege is that she was misled about her duties and responsibilities. This allegation does not give rise to a claim for "interference" or "discrimination" under § 510. See Goins v. Teamsters Local 639 -- Employers Health & Pension Trust, 598 F. Supp. 1151, 1153-55 (D.D.C. 1984) (misleading statements about eligibility for benefits not actionable under section 510; section only prohibits discrimination "which is equivalent to a constructive discharge . . . or which involves the use of economic sanctions or violent reprisals"). Cf. Swanson, 779 F. Supp. at 702-03 (even if defendant encouraged plaintiff to retire prematurely, such conduct "did not amount to the kind of direct interference in the employment relationship that is required to establish liability under § 1140").
Furthermore, the Plan's omission of a procedure for obtaining a determination of eligibility for severance pay prior to resignation does not constitute an inherent "interference" violative of § 510, assuming that such a thing could exist. Nothing in ERISA requires a plan administrator to make an anticipatory determination of eligibility for benefits. Section 503 subjects ERISA plans to only two procedural requirements: (i) "adequate notice in writing to any participant or beneficiary whose claim . . . has been denied, setting forth the specific reasons for such denial . . .;" and (ii) "a reasonable opportunity . . . for full and fair review . . ." of a denied claim. 29 U.S.C. § 1133. As discussed above, the Plan more than met these requirements by providing for both a written determination and a full and fair review. Section 502(a)(1)(B), which permits participants to sue to clarify their rights to future benefits under the terms of ERISA plans, does not require a plan to make a formal predetermination of a participant's right to a particular benefit before that participant is eligible to claim that benefit, and nothing in the provision bars a claimant from suing under the provision without such a predetermination. See 29 U.S.C. § 1132(a)(1)(B).
It is undisputed that BNYC advised plaintiff of its position as to her eligibility for a separation benefit several times before her resignation. Yet she did not even attempt to commence such an action. Thus, as a matter of law, Donnelly suffered no harm by this purported "defect."
3. Donnelly Has Failed to Support Her Claim Against the Trustee
The Trust Agreement expressly states that "nothing in this Agreement shall be construed to subject the Trust created hereunder to [ERISA]." Thus, although the Trust exists as an adjunct to an ERISA employee welfare benefit plan in the sense that it is intended to provide a litigation fund to assist former IBC employees whose claims for benefits under the Plan have been rejected, the Trust itself is not an actual plan. Indeed, the Trust corpus is not "available for payment of benefits to participants and beneficiaries under the Plans." Moreover, the Trust does not "exercise any discretionary authority or discretionary control respecting management of [the Plan] or exercise any authority or control respecting management or disposition of its assets," the definition of a fiduciary under ERISA. See Goodstein Reply Aff. P 2; 29 U.S.C. § 1002(21).
As described above, the First and Second Claims for Relief
allege that a breach of fiduciary duties under ERISA by failing, neglecting, and refusing (i) to either inform Donnelly of her right to severance benefits, or (ii) to comply with the documents and instruments governing the Plan. Yet, the fiduciary duties are owed not by the Trustee, but rather by the plan administrator or the employer who established or succeeded to the Plan -- namely, BNY. Indeed, sections 101 and 105 of ERISA, which set forth the obligation to furnish participants and beneficiaries summary plan descriptions, annual reports, and other documents that specify the amount of accrued benefits, are directed to the "administrator of [each/an] employee benefit plan." See 29 U.S.C. §§ 1021, 1025 (emphasis added).
The Third Claim for Relief also does not apply to the Trustee. Section 503 of ERISA, which provides the basis for this claim, imposes an obligation upon "every employee benefit plan" to provide adequate written notice of the specific reasons for the denial of a claim and to afford claimants a reasonable opportunity to have the decision denying any such claim reviewed by the named fiduciary. See 29 U.S.C. § 1133(1), (2). This section creates obligations applicable to the plan only. In this regard, it is important to note that the claims review process mandated by the Trust is not the claims review process mandated by ERISA § 503, which requires Plan Administrator review.
Finally, the fourth claim for relief alleges that the Trust interfered with Donnelly's rights in violation of § 510, 29 U.S.C. § 1140, the text of which is provided above. As discussed, this section applies to "conduct which fundamentally changes the employer-employee relationship so as to interfere with pension rights." Swanson, 779 F. Supp. at 701. Even assuming that § 510 applies to the Trust,
the finding of an absence of any factual basis for the § 510 claim against BNY applies equally with respect to this claim against the Trust.
It is well-settled that the extent of & trustee's duties and powers is determined from the trust instrument itself and the rules of law that are applicable. See Hendry v. Title Guar. & Trust Co., 165 Misc. 349, 352, 300 N.Y.S. 741, 745 (Sup. Ct. 1937), modified on other grounds, 255 A.D. 497, 8 N.Y.S.2d 164 (1938), aff'd mem., 280 N.Y. 740, 21 N.E.2d 515 (1939); see also Restatement (Second) Trusts § 201, comment (b). The law under ERISA incorporates this common-law principal and requires adherence to the Trust documents.
Here, the Trust provides, in pertinent part, that the Trustee shall provide assistance to a claimant "unless the Trustee shall determine that the claim has no basis in law and fact (in which case the Trustee shall notify the participant or beneficiary of such determination and shall take no further action with respect to the claim) . . ." Conlan Aff. Ex. B Art. NINTH (d)(2). Thus, the Trust mandates that before the Trustee can take any action on behalf of a claimant, it must determine that the claim has a basis "in law and fact," which necessarily involves an evaluation of whether the claim meets the criteria set forth in the Plan.
In this case, the Trustee properly determined that Donnelly's claim for severance benefits did not satisfy the basic eligibility criteria set forth in the Plan. Specifically, while Donnelly complained that her duties and responsibilities were materially diminished without her consent following a Change in Control, she did not terminate her employment within sixty days of this alleged reduction as she was required to do by the express terms of the Plan. Thus, under the terms of the Plan, her resignation came too late to allow her to claim severance benefits.
In short, given the language of the Trust and the Plan, the Trustee had no option but to deny Donnelly's claim for severance benefits and she cannot come forward, as she must, with any evidence that would show that such denial constituted either a breach of fiduciary duty under ERISA or a breach of trust under common law. Under the circumstances, the Trust is entitled to judgment as a matter of law.
For the reasons set forth above, the motions by BNYC and the Trust are granted in all respects and the complaint dismissed.
It is so ordered.
New York, N. Y.
August 28, 1992
ROBERT W. SWEET