This is an action for benefits under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (hereinafter "ERISA"). Defendant Citibank, N.A. ("Citibank") moves for summary judgment on the claims of plaintiff Alan Kascewicz ("Kascewicz") for benefits and statutory penalties. Kascewicz cross-moves for partial summary judgment on his claim for statutory penalties. For the reasons set forth below, we deny Citibank's summary judgment motion and grant Kascewicz's motion for partial summary judgment.
I. Undisputed Facts
The essential facts in this case are undisputed. Kascewicz was hired by Citibank in 1958 as a clearance clerk and thereafter received promotions to positions of increasing responsibility. In 1975, he was promoted to the position of operations officer in Citibank's international banking group, formally known as the Institutional Banking International Services Management ("IBISM") division. In November 1988, Kascewicz requested and was permitted to take an unpaid two-year leave of absence, which he commenced on January 1, 1989. Kascewicz's decision to take the leave of absence was completely voluntary, and he understood when he applied for the leave that he was not guaranteed reemployment with Citibank if he chose to return at its conclusion. Def.'s 3(g) St. PP 1,3; Pl.'s 3(g) Opp. PP 1,3.
After commencing his leave, Kascewicz provided no services to Citibank, received no salary in return, and was no longer considered an officer in "active" status. Def.'s 3(g) St. PP 4,5.
In February 1989, one month after Kascewicz began his leave, Citibank reorganized the IBISM division, eliminating many senior officers' positions. In conjunction with the reorganization, Citibank implemented an early-retirement incentive Plan, the Voluntary Officers Separation Program (the "Plan"), which, according to Citibank, was intended to provide two years severance pay to senior officers with twenty years experience who were in active status and who were willing to retire by the offered date of April 14, 1989. Citibank does not dispute that the Plan was subject to the requirements of ERISA. Pl.'s 3(g) St. P 1; Def.'s 3(g) Opp. P 1.
Citibank implemented the Plan by distributing a one-page memorandum (the "Memorandum"), with a three-page Plan description attached (the "Plan Description"; together, the "Announcement"). See Abramson Aff. Exh. H. The Announcement is silent on the conditions of eligibility for the Plan and lacks any express indication of the persons to whom it is supposed to be addressed.
Citibank's personnel department distributed the Announcement to senior officers in the IBISM division with twenty years of service who were actively employed by Citibank. Citibank did not send Kascewicz a copy of the Announcement or otherwise contact him about the Plan. Def.'s 3(g) St. P 11; Pl.'s 3(g) Opp.
In mid-February 1989, having heard about the Plan through friends, Kascewicz approached several individuals in Citibank's personnel department to inquire about his eligibility. Several employees in that office told him that he was not eligible for the Plan, which they said was limited to officers in active employment as of February 13, 1989. Kascewicz did not communicate with Citibank about the Plan again until August 1989. At that time, his attorney wrote to Citibank, twice requesting a copy of a summary Plan description ("SPD"), as required by the reporting and disclosure provisions of ERISA, 29 U.S.C. §§ 1021, 1022, 1024. Citibank had not prepared an SPD, and did not respond to the request. Def.'s 3(g) St. PP 11-14.
In January 1991, Kascewicz' leave of absence ended, and he sought to renew his employment with Citibank. In January 1992, having failed to secure renewed employment with Citibank, he commenced this action, seeking benefits in the amount of two years' salary (approximately $ 84,000) as well as penalties of $ 100 per day from September 27, 1989 to the date of Citibank's compliance with his request for Plan information.
A. Kascewicz's Claim That He Was Eligible For the Plan
Citibank has moved, pursuant to Fed. R. Civ. P. 56, for summary judgment on Kascewicz's claim for Plan benefits. Summary judgment may be granted only where the moving papers and affidavits submitted by the parties "show 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). The court's role is not to resolve disputed factual issues, but rather to determine whether the record, taken as a whole, supports any issues that require a trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986).
Summary judgment is a "drastic procedural weapon because 'its prophylactic function, when exercised, cuts off a party's right to present his case to the jury.'" Garza v. Marine Transport Lines, Inc., 861 F.2d 23, 26 (2d Cir. 1988) (citation omitted). Thus, the moving party has the burden of showing the absence of a genuine issue as to any material fact, and the court must view the evidence in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970); Garza, 861 F.2d at 26. "Not only must there be no genuine issue as to the evidentiary facts, but there must also be no controversy regarding the inferences to be drawn from them." Donahue v. Windsor Locks Bd. of Fire Commissioners, 834 F.2d 54, 57 (2d Cir. 1987).
Citibank contends that there is no genuine issue regarding the intended scope of the Plan. It argues that the Plan unambiguously applies only to active officers with 20 or more years of experience. First, it argues, the language of the Announcement is clear on its face; second, no other reading would be consistent with Citibank's purpose in enacting the Plan. Kascewicz responds that the intended scope of the Plan is unclear: first, that the terms of the Announcement are intelligible only if the Plan extends to inactive officers; second, that a Citibank officer admitted that the Plan was ambiguous in this regard; and, third, that Citibank's purpose in enacting the Plan cannot be unambiguously construed from the existing record.
In claims brought under 29 U.S.C. § 1132(a)(1)(B), where a plan does not grant the plan administrator discretionary authority, the Court reviews the administrator's interpretation or the plan de novo. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989); Bradwell v. GAF Corp., 954 F.2d 798, 800 (2d Cir. 1992). Citibank accepts this as the appropriate standard of review in this case. Def.'s Mem. at 10.
We construe the Plan according to general principles of contract law, looking to the language of the Plan and other indicia of the intent of the Plan's creator. Firestone, 489 U.S. at 112-13; Bradwell, 954 F.2d at 800; Bellino v. Schlumberger Technologies, Inc., 944 F.2d 26, 31 (1st Cir. 1991).
First, we must determine whether the Plan is ambiguous on its face. Whether the Plan is ambiguous is a matter that we determine by reference to the Plan's language alone. Burger King Corp. v. Horn & Hardart Co., 893 F.2d 525, 527 (2d Cir. 1990); Curry Road Ltd. v. K Mart Corp., 893 F.2d 509, 511 (2d Cir. 1990). The Plan is ambiguous only if it is "capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business." Care Travel Co. v. Pan American World Airways, 944 F.2d 983, 988 (2d Cir. 1991). Only when the language of the Plan is ambiguous may the Court turn to extrinsic evidence of its creators' intent. Curry Road, 893 F.2d at 511.
1. The Plan Language
We start by noting that the Announcement, which was the only document prepared under the Plan, entirely fails to address the question of eligibility. Citibank does not mention this obvious deficiency but instead states that "when viewed objectively by a reasonably intelligent person who has examined the context of the entire [Plan], the Plan simply is not capable of more than one meaning; active employment as of February 13, 1989 was a requirement for participation." Def.'s Mem. at 12. For support, Citibank cites various phrases scattered throughout the three-page Memorandum which, it argues, demonstrate Citibank's unambiguous intention to restrict the Plan to officers in active status.
For instance, the Memorandum notes that "we reserve the right, if you accept this offer, to set the effective date of leaving your position." Additionally, Citibank cites language from the Memorandum's offer of two severance options that, it argues, also indicates Citibank's intention to restrict the Plan to active-status officers. Recipients of the Memorandum can choose between "Choice I" -- receiving an immediate lump sum payment of two years' salary, "paid at agreed upon effective date of leaving active employment or resignation" -- or "Choice II" -- "remaining on payroll" for up to 24 months while receiving the two-year salary in installments. Abramson Aff. Exh. H. Citibank argues that this language unambiguously applies only to active employees: "Obviously, individuals like plaintiff who were not actively employed . . . as of the date of the [Plan] offer could not 'leave active employment,' 'remain' in their jobs for 24 months, 'terminate from active employment,' or 'leave' their positions." Def.'s Mem. at 13.
Kascewicz disputes this reading. In particular, he seizes on one of these phrases for his argument that the language is ambiguous -- the description of Choice I that says an immediate lump sum payment will be "paid at agreed upon effective date of leaving active employment or resignation." Kascewicz argues that the words "or resignation" would be redundant if the Plan were directed only to active officers, since leaving active employment and resigning would be identical acts. Pl.'s Mem. at 12. Accordingly, Kascewicz argues, the language of the Announcement is ambiguous, and summary judgment must be denied because the issue of Citibank's intent can be resolved only through an examination of extrinsic evidence.
We conclude, in light of the purpose and requirements of ERISA as well as the relevant principles of contract interpretation, that a close examination of such phrases is unnecessary in order to find the Announcement's language ambiguous.
The purpose of ERISA, as the Supreme Court noted in Firestone, is to "ensure that 'the individual participant knows exactly where he stands with respect to the plan.'" 489 U.S. at 118 (citation omitted). As we have stated previously,
The general purpose of ERISA is to protect workers from abuses in the administration and investment of private employee and retirement plans. . . . Workers could not protect themselves from abuses in the administration of their severance plan when they were unaware of its terms . . .
Bennett v. Gill & Duffus Chemicals, Inc., 699 F. Supp. 454, 457-58 (S.D.N.Y. 1988) (citation omitted).
To ensure that each participant "knows exactly where he stands with respect to the plan," ERISA requires the administrator of "each employee benefit plan" to distribute a plan description and a summary plan description ("SPD") "to each participant covered under the plan and to each beneficiary who is receiving benefits under the plan." 29 U.S.C. §§ 1021, 1022, 1024. The SPD must be "written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan." 29 U.S.C. § 1022(a)(1); Pompano v. Michael Schiavone & Sons, Inc., 680 F.2d 911, 914 (2d Cir.), cert. denied, 459 U.S. 1039, 74 L. Ed. 2d 607, 103 S. Ct. 454 (1982).
Among the elements required by both the plan description and the SPD is a description of "the plan's requirements respecting eligibility for participation and benefits; (and) circumstances which may result in disqualification, ineligibility, or denial or loss of benefits." 29 U.S.C. § 1022(b). Citibank admits that its Plan was subject to ERISA and that it failed to draft any such documents. See Pl.'s 3(g) St. PP 1,5; Def.'s 3(g) Opp. PP 1,5.
It is appropriate to construe the language of the Announcement in light of these statutory requirements of clarity. Additionally, we bear in mind the established rule of contract interpretation, drawn originally from the insurance context, that "where an ambiguity exists in a standard-form contract supplied by one of the parties, the well-established contra proferentum principle requires that the ambiguity be construed against that party." Westchester Resco Co. v. New England Reinsurance Corp., 818 F.2d 2, 3 (2d Cir. 1987). The Second Circuit has adopted this rule as an aid in interpretation of ERISA insurance plans, Masella v. Blue Cross & Blue Shield, 936 F.2d 98, 107 (2d Cir. 1991), and we find it appropriate in the context of employee benefit plans as well. An employee benefit plan is not a conventional contract; the parties (plan sponsor and participant) do not negotiate its terms. Such a document is thus analogous not to a fully negotiated contract but rather to a standard form contract. Here, where the Plan was drawn up by one party only and where ERISA imposes requirements on that party to provide certain information and they have failed to do so, it would be inappropriate to grant summary judgment to that party on the basis of plan language that is less than fully clear.
2. Extrinsic Evidence
Citibank responds that "even assuming an ambiguity exists, it is easily resolved in light of the evidence establishing Citibank's intention to exclude inactive officers" from the Plan. Def.'s Reply Mem. at 14. In support of this proposition, Citibank relies on deposition statements of its personnel officers for evidence of Citibank's intent in drafting the plan, Def.'s Reply Mem. at 3-4, and for evidence that this intent was communicated to Kascewicz, Def.'s Reply Mem. at 25.
Normally, "where contractual language is ambiguous and subject to varying reasonable interpretations, intent becomes an issue of fact and summary judgment is inappropriate." Thompson v. Gjivoje, 896 F.2d 716, 721 (2d Cir. 1990). An exception exists where the moving party presents extrinsic evidence that is sufficient to remove the ambiguity and that is uncontradicted by opposing evidence; in such cases, as Citibank notes, summary judgment is appropriate. Burger King Corp. v. Horn & Hardart Co., 893 F.2d 525, 528 (2d Cir. 1990); Bacchus Associates v. Hartford Fire Ins. Co., 766 F. Supp. 104, 111 (S.D.N.Y. 1991).
Citibank contends that, in light of its deposition evidence, there is no question it intended to restrict its Plan to officers on active status. It contends, first, that the context of the Plan, specifically its implementation in conjunction with the reorganization of the IBISM division, makes this the only reasonable interpretation.
Citibank indisputably implemented its Plan as a means of inducing senior officers to take early retirement in conjunction with the division reorganization. What is at issue is whether this purpose was consistent with extending the Plan to an officer, such as Kascewicz, who was on inactive status.
Citibank contends that the Plan was an attempt to "purchase" the job guarantees of senior officers. Kascewicz knew when he left on extended leave that he was forfeiting his job guarantee, Citibank argues, so he had nothing which Citibank needed to "purchase." Citibank offers as evidence the deposition statements of its personnel officers as well as the bank's U.S. Human Resources Policy Manual (the "Manual"). The Manual provides that "full-time officers with 20 or more years of continuous service by 12/31/88 will be offered placement if their jobs are discontinued." Abramson Aff. Exh. C. Citibank contends that this policy constitutes a "guarantee" of employment for such officers, and that officers forfeit this guarantee if they take a leave of absence longer than four weeks. Def.'s 3(g) St. P 2. Kascewicz does not dispute the existence of the policy or that the "right" is forfeited upon the taking of an extended leave of absence. He notes correctly, however, that the Manual does not legally "guarantee" continued employment, as the Manual represents only an expression of current policy, which Citibank reserved the right to change at any time.
Kascewicz argues that Citibank's intent in offering the Plan was not solely to "purchase" job "guarantees," but the broader purpose of mitigating the impact of the division reorganization on employees in general, including Kascewicz. To support this interpretation, Kascewicz cites the deposition testimony of IBISM division executive Gerard P. Beitel, who described Citibank's purpose in offering the Plan as "trying to do the right thing for its employees" and as "a way to just lessen the impact on people . . . who might be impacted by the job discontinuance." Beitel Tr. (Raskin Aff. Exh. C) at 37; Pl.'s Mem. at 16.
Kascewicz also offers evidence that at the time the Plan was offered, the Citibank personnel officers who had drawn up the Plan were uncertain of its scope. To this end, Kascewicz testified in his deposition that when he approached Beitel, the vice president in charge of Citibank's international banking division and one of the architects of the Plan, to inquire about his eligibility, Beitel did not answer categorically but instead asked for a month "to think about it" and "to see how many officers take advantage of the program." Raskin Aff. Exh. A at 83-84. As this issue is before the Court in the posture of a summary judgment motion, we must view this evidence in the light most favorable to Kascewicz, the non-moving party, and conclude that a genuine issue of material fact remains to be tried.
Furthermore, the verbal representations on which Citibank relies do not, as Citibank urges, provide material evidence of Citibank's intent in formulating the Plan. Citibank argues that these representations constitute an unreviewable "plan design decision," as opposed to simply after-the-fact interpretations of the plan. Def.'s Reply Mem. at 25. We reject this characterization. As Citibank notes (Def.'s Reply Mem. at 21), the federal courts have recognized a distinction between a plan sponsor's design of an employee benefit program, which is "purely a corporate management decision," Belade v. ITT Corp., 909 F.2d 736, 738 (2d Cir. 1990) (per curiam), and the administration or such a program in accordance with its terms, which is reviewable de novo. As the Second Circuit noted in Belade:
ERISA permits employers to wear "two hats," and . . . they assume fiduciary status "only when and to the extent" that they function in their capacity as plan administrators, not when they conduct business that is not regulated by ERISA.