The opinion of the court was delivered by: JOHN M. CANNELLA
Defendants' motion to amend their answer is granted. Fed. R. Civ. P. 15(a). Defendants' motion for summary judgment is granted. Fed. R. Civ. P. 56(c).
Plaintiff Roy A. Ludwig brought this action under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001-1461 (1988 & Supp. II 1990) [hereinafter ERISA], against the defendants
to recover pension distributions and other employee benefits allegedly due plaintiff under employee benefit plans administered by the defendants, and to obtain a declaratory judgment regarding his portability rights with respect to such plans. Plaintiff also seeks relief under the state common-law theories of promissory estoppel and breach of contract. Plaintiff asserts that federal subject matter jurisdiction over these state-law claims is founded upon diversity and pendent jurisdiction.
Viewed in the light most favorable to the plaintiff, the facts of this case are as follows. Plaintiff Roy A. Ludwig, a domiciliary of New Jersey,
commenced employment with New York Telephone on March 4, 1957. Ludwig worked with New York Telephone until November 30, 1983, eventually advancing to a management position in the network department of this firm as a special service design engineer. On December 1, 1983, Ludwig began employment with AT&T, where he continued to work until his retirement therefrom on May 31, 1988. At AT&T, Ludwig held the position of regional telecommunications manager and possessed expertise in the specific fields of design engineering and contract regulation work.
During July and August 1988, Ludwig had conversations with two different employees of NYNEX during which he discussed career opportunities with the firm. Ludwig first met with Lawrence J. Chu, then employed as a management employee of NYNEX. Ludwig alleges that Chu, as a personal friend of plaintiff, initiated this meeting for the purpose of discussing Ludwig's potential employment as an "associate director" with NYNEX.
Shortly thereafter, Ludwig met with Charles White on July 21, 1988, then employed as a staff director in the personnel department at NYNEX, for the purpose of interviewing Ludwig for an associate director position with the firm. At this interview, Ludwig alleges that he specifically told White that if he were hired by NYNEX, he did not wish to be considered a portable employee insofar as this status would entail the carrying forward of his prior service credits from AT&T, and would therefore result in the suspension of his pension and other employee benefits that he was receiving from AT&T. Ludwig also alleges that he told White that he would not accept employment with NYNEX unless he were treated as a non-portable employee, and that he further made this position known to White through his refusal, at that time, to sign a release acknowledging his eligibility for portability rights. According to plaintiff, White told Ludwig that all new employees, whether or not eligible for portability, signed the release and that this action constituted a mere matter of procedure without substantive effect. See Ludwig Aff. at 5. Ludwig further alleges that, at this meeting, White demonstrated an understanding of Ludwig's concerns and evinced an appreciation of the ramifications that would ensue through any determination of plaintiff's portability status. Ludwig, however, does not allege that White, at this interview of July 21, 1988, made any statement to Ludwig, either affirmative or hypothetical, concerning whether Ludwig would indeed be considered a non-portable employee for the purpose of determining his pension rights in the event that Ludwig were to become employed by NYNEX.
Despite his alleged refusal to sign the release at the time of the interview, plaintiff, approximately eleven days thereafter, did just that.
On or about August 1, 1988, Ludwig signed the release, dated it August 1, 1988, and mailed it to White.
Ludwig alleges that on two separate occasions subsequent to his commencement of employment with NYNEX, he received telephone calls from Charles White during which White asked Ludwig if he wanted his pension to be portable. The first occasion occurred near the end of September 1988, and the second transpired in either late November or early December 1988. On both occasions, Ludwig alleges that he emphatically told White that he did not want his pension to be portable. On the second occasion, plaintiff alleges that in response to White's inquiry, Ludwig asked White why he continued to call regarding this matter, to which White responded that somebody else had directed him to do so.
Between August 18, 1988 and June 30, 1989, NYNEX treated Ludwig as a "new hire" without providing him with any prior service credit, contingent or otherwise, to reflect his prior employment with AT&T. (Thus, during this time period, Ludwig received the pension benefits from AT&T described supra.) In its answer, defendant NYNEX admits that an employee who claimed entitlement to portability would, as a matter of company policy, receive one year of net credited service conditional upon the later determination of such employee's portability status. One year's net credited service would entitle such employee to a company contribution under the NYNEX Management Medical Plan, participation in the NYNEX Corporation Savings Plan for Salaried Employees, additional paid vacation time, and telephone concession service.
NYNEX further admits that between August 18, 1988 and June 30, 1989, plaintiff was coded in NYNEX's personnel records with a net credited service date of August 18, 1988.
As a result of this treatment as a non-portable employee, plaintiff did not receive these employee benefits to which he otherwise would have been entitled had he been regarded as an employee eligible for portability of service credit.
One practical ramification of this is illustrated through plaintiff's allegation that, on March 29, 1989, he was refused participation in the NYNEX Savings Plan for Salaried Employees on the basis that, according to NYNEX personnel records, he had less than one year of net credited service.
On June 27, 1989, the defendants formally determined that plaintiff was eligible for portability of service credit under the Mandatory Portability Agreement, and, on or about that same date, forwarded a request to AT&T for the transfer, from AT&T to NYNEX, of the pension assets attributable to Ludwig's pension account with AT&T.
See Ludwig Aff., Exh. B, at 65-66 (deposition of Charles White). Plaintiff was not informed, at this time, of the defendants' determination and subsequent action. Plaintiff alleges in his affidavit that he first learned of the defendants' decision in early July 1989 upon being alerted by Larry Chu that the NYNEX payroll office had received notice to change his net credited service date to 1957 to reflect his prior service with New York Telephone and AT&T.
Between the time that he was informed of the defendants' portability decision and his receipt of his final pension check from AT&T, Ludwig spoke with two separate NYNEX employees regarding his rights and the eventual suspension of his pension benefits. On or about July 13, 1989, Ludwig spoke with Deborah Tyler, the staff manager for pension administration on the staff of the Secretary of the NYNEX Employees' Benefits Committee. Ludwig alleges that Tyler did not inform him that he could appeal the portability decision. Shortly thereafter, Ludwig spoke with Elizabeth B. Flaherty, an attorney who worked for the NYNEX Legal Department, who, according to plaintiff, advised him that NYNEX was complying with the applicable portability laws. Plaintiff further alleges that Flaherty did not advise him of any appeal procedures.
Plaintiff alleges that he received his last pension payment from AT&T on August 1, 1989. It was not until September 1, 1989, when he failed to receive his monthly pension stipend, that his concern renewed that his service had been bridged to reflect his prior employment. See Ludwig Aff., Exh. G., at 82 (deposition of Roy A. Ludwig). At this point in time, Ludwig alleges that he called the AT&T benefits office which advised him that he would have to wait until at least September 7, 1989, before it could trace the pension check. Thereafter, on September 7th, AT& T informed Ludwig that his pension had been declared portable.
During the next two months, Ludwig and his legal counsel wrote two separate letters to NYNEX officials objecting to NYNEX's portability determination and demanding the reinstatement of plaintiff's monthly pension payments. On September 12, 1989, plaintiff wrote a letter to Robert Donovan, NYNEX's Managing Director of Personnel, in which he insisted upon NYNEX's restoration of the benefits that he had been receiving from AT&T. See Ludwig Aff., Exh. K. Responding in a letter dated October 19, 1989, Donovan replied that, in light of Ludwig's service history, federal law required that Ludwig's prior service credits be bridged and, therefore, he could not collect his AT&T pension while working for NYNEX. See Ludwig Aff., Exh. L.
Then, on November 10, 1989, plaintiff's counsel wrote Donovan requesting a review of NYNEX'S decision. See Ludwig Aff., Exh. M. In a letter dated January 15, 1990, Donovan responded that he would forward the letter of November 10, 1989 to Susan Kotulak, then employed as Director of Management Employment. Plaintiff alleges that neither he nor his legal counsel received a response from Kotulak.
On March 29, 1990, plaintiff's counsel took a different approach, directing his written request for the reinstatement of Ludwig's AT&T benefits to AT&T. In a letter dated April 5, 1990, Rosanne T. Maglio, the Secretary of the AT&T Benefits Committee, replied that there was nothing that AT&T could do regarding this matter because, under the Mandatory portability Agreement, AT&T was obligated to suspend Ludwig's pension upon learning of his acceptance of employment with NYNEX. Maglio further responded that since the pension assets attributable to Ludwig's account had been transferred to NYNEX, NYNEX was responsible for the payment of any future pension benefits.
On August 10, 1990, plaintiff commenced this action in the Southern District of New York. Plaintiff alleges that defendants violated ERISA by wrongfully denying plaintiff his right to the immediate receipt of pension benefits and other benefits through their decision to declare plaintiff portable, and seeks the following relief: (a) reinstatement and payment of the monthly pension stipend of $ 1,701.60, retroactive to September 1, 1989, for plaintiff's life, together with interest on any unpaid pension benefit accrued from the date that such payment became due; (b) the right to participate in the NYNEX Pension Plan and the other NYNEX benefit plans as a "new employee;" (c) the right to receive the medical, life insurance and telephone concession benefits plaintiff was receiving prior to September 1, 1989; and (d) an award of reasonable attorney's fees, costs and other relief that is deemed reasonable and necessary by the Court pursuant to 29 U.S.C. § 1132(g)(1) (1988). Plaintiff also seeks recovery from all of the defendants under the common-law theory of promissory estoppel and requests the following relief: (a) payment of $ 1,701.60 per month, plus cost of living adjustments, for each month, retroactive to September 1, 1989, for the full period of plaintiff's past, present and future employment with NYNEX and for the rest of his life, plus interest accrued from the date that each past payment became due; (b) compensation for medical insurance premiums paid by plaintiff to procure medical insurance coverage for his dependent daughter; (c) the payment, for the remainder of plaintiff's life, retroactive to September 1, 1989, of premiums for term life insurance in the face amount of $ 57,000.00; and (d) reimbursement for his loss of AT&T long-distance telephone concession benefits. In a third cause of action, for breach of contract, against defendant NYNEX Service Company alone, Ludwig seeks recovery for the following items: (a) a monthly pension of $ 1,701.60, plus cost-of-living adjustments; (b) long-distance telephone reimbursements; (c) full, no-cost medical insurance coverage for plaintiff and his dependent daughter; and (d) the payment of premiums, retroactive to September 1, 1989, for term life insurance for the remainder of plaintiff's life.
The defendants now move for summary judgment, and offer several arguments in support of their application. First, defendants argue that they were required by both statute and private contract to make plaintiff's pension and other benefits portable, and that plaintiff, as a matter of law, does not have the ability to waive this right. Second, they argue that even if plaintiff, in the abstract, does have the ability to waive his portability rights, he failed to waive them in the instant case because either a waiver was not properly executed, or the waiver, to be effective, had to be in writing, pursuant to either ERISA or the statute of frauds. Further to this point, defendants also contend that the oral waiver or agreement concerning portability that plaintiff alleges would have required an amendment to the defendants' employee benefit plans. Third, defendants argue that even if plaintiff could prevail on its first two arguments, summary judgment should nevertheless be granted because plaintiff has failed to exhaust his administrative remedies under the applicable employee benefit plans. Fourth, the defendants argue that summary judgment is proper because an abuse-of-discretion standard applies for determining the defendants' liability as ERISA plan fiduciaries in this action, and plaintiff, as a matter of law, has been unable to establish an abuse of discretion through the affidavits and accompanying papers that he has submitted in opposition to the defendants' motion. Finally, defendants argue that summary judgment should also be granted with regard to plaintiff's estoppel claim because plaintiff is unable to establish that he reasonably relied upon the defendants' representations concerning plaintiff's portability rights.
A. MOTION TO AMEND ANSWER
Defendants seek to amend their answer to include the affirmative defense of the Statute of Frauds under New York State law. Federal Rule of Civil Procedure 15(a) provides that leave of the Court to amend a pleading "shall be freely given when justice so requires." Fed. R. Civ. P. 15(a). The Second Circuit Court of Appeals has interpreted this rule "to allow a party to amend its pleadings in the absence of a showing by the nonmovant of prejudice or bad faith." See Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993) (citing State Teachers Retirement Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981)). The Court finds that plaintiff is not prejudiced by the defendants' proposed amendment to their answer, and that the defendants have not proceeded in bad faith. Accordingly, defendants' motion to amend is granted.
B. MOTION FOR SUMMARY JUDGMENT
I. Standards for Granting Summary Judgment
Rule 56(c) of the Federal Rules of Civil Procedure provides that a district court shall grant a notion for summary judgment if it determines that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). Under this standard, summary judgment is proper if "viewing the record in the light most favorable to the nonmoving party, the evidence offered demonstrates that there is no genuine issue of fact and that the moving party is entitled to judgment as a matter of law." Pension Benefit Guar. Corp. v. LTV Corp., 875 F.2d 1008, 1015 (2d Cir. 1989) (internal quotations omitted), rev'd on other grounds, 496 U.S. 633, 110 L. Ed. 2d 579, 110 S. Ct. 2668 (1990). In making this determination, the court's role is not to resolve disputed factual issues, but rather to reach a conclusion as to whether there exists "a genuine and material issue for trial." Hudson Hotels Corp. v. Choice Hotels Int'l, Inc., 995 F.2d 1173, 1175 (2d Cir. 1993).
The mere existence of disputed factual issues is not enough to defeat a motion for summary judgment. See Knight v. United States Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986), cert. denied, 480 U.S. 932, 94 L. Ed. 2d 762, 107 S. Ct. 1570 (1987); Quarles v. General Motors Corp., 758 F.2d 839, 840 (2d Cir. 1985) (per curiam). Rather, "the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986) (emphasis in original). An issue of fact is "genuine" if it provides a basis for "a rational trier of tact to find for the non-moving party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). With regard to materiality, the substantive law dictates which facts are material. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson, 477 U.S. at 248.
The party moving for summary judgment bears the initial burden of demonstrating the absence of any genuine issue of material fact. See Consarc Corp. v. Marine Midland Bank, N.A., 996 F.2d 568, 572 (2d Cir. 1993) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970)). This burden may be met by demonstrating that there is a lack of evidence to support the nonmoving party's claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Once the moving party satisfies this initial burden, the nonmoving party must set forth "specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e). If the nonmoving party is unable to establish the existence of an element essential to its case on which it bears the burden of proof at trial, a genuine issue of material fact cannot exist "since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp., 477 U.S. at 323.
The above-stated standards for granting summary judgment apply to ERISA actions to the same extent as they do to other civil actions. See Rodriguez-Abreu v. The Chase Manhattan Bank, N.A., 986 F.2d 580, 583 (1st Cir. 1993); Williams v. Caterpillar, Inc., No. 89-16353, 1991 U.S. App. LEXIS 26407, at *4 (9th Cir. Nov. 1, 1991) (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 105, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989)); Catania v. NYSA-ILA Severance Benefit Fund, 91 Civ. 3262 (LBS), 1992 U.S. Dist. LEXIS 10985, at *13 (S.D.N.Y. July 15, 1992). In an action brought under ERISA, the contours guiding the court's disposition of the summary judgment motion are necessarily shaped through the application of the substantive law of ERISA. These substantive dimensions begin with a preliminary determination of whether the plaintiff has exhausted her administrative remedies under the applicable ERISA plan, or in the alternative, has raised a genuine issue of fact that could lead the Court to waive the exhaustion requirement. See Kennedy v. Empire Blue Cross and Blue Shield, 989 F.2d 588, 594 (2d Cir. 1993). If this threshold hurdle is overcome, the Court then proceeds to analyze whether the plaintiff has presented a genuine issue of material fact under ERISA's comprehensive civil enforcement scheme. A genuine issue of material fact is not presented to the extent that the facts in controversy pertain solely to a state-law cause of action that is both preempted by ERISA, and without a corresponding remedy under federal law. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 57, 95 L. Ed. 2d 39, 107 S. Ct. 1549 (1987). It is therefore in this light that the Court examines the record to determine whether any genuine issue of material fact exists in regard to Ludwig's claim that the defendants wrongfully suspended his retirement benefits.
II. Exhaustion of Remedies and Jurisdictional Basis for Review
Defendants contend that summary judgment should be granted because plaintiff has failed to exhaust his administrative remedies under the applicable employee benefit plans. Plaintiff, in turn, argues that he was absolved from exhausting his administrative remedies because such action would have been futile.
In construing Congress's intent in enacting section 503 of ERISA, 29 U.S.C. § 1133 (1988), which requires ERISA-covered benefit plans to provide internal dispute resolution procedures for participants whose claims for benefits have been denied, the courts have "developed the requirement that a claimant should ordinarily follow internal plan procedures and exhaust internal plan remedies before seeking judicial relief under ERISA." John H. Langbein & Bruce A. Wolk, Pension and Employee Benefit Law 588 (1990). The rationale for this requirement rests upon the strong federal interest in encouraging the private resolution of ERISA disputes so as "to minimize the number of frivolous ERISA lawsuits . . . and [to] decrease the cost and time of claims settlement." Makar v. Health Care Corp., 872 F.2d 80, 82-83 (4th Cir. 1989). Although Congress has not articulated an exhaustion requirement within the text of ERISA, the courts have nevertheless insisted upon a showing that all plan remedies have been pursued, or that the facts justify a waiver thereof, as a jurisdictional essential for maintaining a claim for benefits in federal court. See Kennedy v. Empire Blue Cross and Blue Shield, 989 F.2d 588, 594 (2d Cir. 1993); Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1199 (2d Cir. 1989) (noting requirement that ERISA claimants exhaust remedies provided for by their plan).
Nevertheless, under the "futility doctrine," the courts, in certain factual settings, have waived the jurisdictional requirement that a claimant exhaust all of her administrative remedies under an ERISA-covered plan. See Kennedy, 989 F.2d at 594-95. The "futility doctrine" is perhaps best understood as a term of art that considers whether, in light of both the claimant's and the plan administrator's actions, it is fair to require the dismissal of the claimant's ...