The opinion of the court was delivered by: TELESCA
Plaintiffs, John Radley ("Radley"), Thomas Sloey ("Sloey"), John Battey-Sipes ("Battey-Sipes"), Patricia Boddy ("Boddy") and Richard Potter ("Potter") are former employees of the Eastman Kodak Company ("Kodak") who retired on or before July 1, 1991 under Kodak's Retirement Income Plan ("KRIP"). On August 12, 1991, Kodak announced the Resource, Redeployment and Retirement Plan ("RRRP"), which contained more favorable terms than KRIP. Plaintiffs claim, inter alia, that kodak, as plan administrator, breached its fiduciary duty under the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1104 and 1140 in that they were materially misled by Kodak benefits counselors, who allegedly told plaintiffs that no enhancements to KRIP would be forthcoming. Plaintiffs claim that, since they were misled into retiring before RRRP was announced, they should be granted the enhanced benefits of that plan retroactively.
In January of 1996, this Court conducted a five-day bench trial in Ballone et al. v. Eastman Kodak Co. et al., (92-CV-6180) limited to the issue of when RRRP was under "serious consideration" by Kodak. This Court determined that serious consideration of RRRP did not occur until July 25, 1991, well after all of the plaintiffs had retired, and, accordingly, dismissed all of the plaintiffs' claims. The Second Circuit Court of Appeals vacated the judgment, holding that "serious consideration is not the sine qua non of materiality," and remanded for further proceedings. Ballone v. Eastman Kodak Co., 109 F.3d 117, 125 (2nd Cir. 1997).
On remand, this Court granted defendants' motion pursuant to Fed. R. Civ. P. 21 to sever the Ballone action, holding that the plaintiffs' claims were no longer properly joined in light of the Second Circuit's decision. Acting pursuant to the Court's request, the parties agreed to consolidate five of the Ballone plaintiffs' cases (Radley, Sloey, Potter, Boddy, and Battey-Sipes) for trial purposes pursuant to Fed. R. Civ. P. 42.
Beginning on August 26, 1998, this Court held a six-day consolidated bench trial during which the following witnesses testified: John and Shirley Radley, Thomas and Doris Sloey, Richard and Gloria Potter, Patricia Boddy, John and Marcia Battey-Sipes, Dale Munroe, Paul Anderson, Kathleen Dexter, Jane Villano, and Russell Olson. This Court also received into evidence the deposition testimony of Corwin Potter in lieu of trial testimony based upon Mr. Potter's stipulated unavailability. This Court received into evidence and carefully reviewed volumes of exhibits, as well as stipulated deposition and trial testimony from the January, 1996 trial of Ballone et al. v. Eastman Kodak Co. et al., 92-CV-6180.
FINDINGS OF FACT and CONCLUSIONS OF LAW
Testimony during the January, 1996 trial established that in 1990 Kodak announced a substantial amendment to its KRIP retirement plan which took effect as of September 1, 1990. Kodak held informational meetings to explain the changes in the new plan. The amendments eliminated the minimum retirement age and, for the first time, gave employees the opportunity to retire with a partial pension when their age and length of service equaled 75 points or a full pension at 85 points. Also for the first time, a retiree had the choice to receive pension benefits as a lump sum rather than an annuity. These were substantial and favorable amendments to the retirement plan.
Kodak also announced that employees born in the years 1934, 1935, and 1936 who retired before January 1, 1992 would continue to maintain health care coverage under the Blue Cross/Blue Shield Basic and Extended plan. Employees retiring after January 1, 1992 would receive somewhat less favorable "K-Med" coverage.
Several plaintiffs testified that the health care issue was important to them and, therefore, they intended to retire before the end of 1991 in order to benefit from the better Blue Cross/Blue Shield coverage. Each plaintiff initiated a call to the personnel benefits office and arranged for an interview to determine the impact of the new plan on their retirement goals. Retirement was voluntary.
I. THE TRIAL TESTIMONY REGARDING ALLEGED MISREPRESENTATIONS
Plaintiff, John Radley, and his wife, Shirley Radley, testified to the details of the counseling session they attended with Kodak Benefits Counselor Dale Munroe ("Munroe"). Mr. Radley began working for Kodak in 1957 and retired on March 1, 1991. He began to seriously consider retirement in January of 1991, after his 55th birthday.
When Mr. Radley called to schedule an individual benefits retirement counseling session, he indicated that he was interested in obtaining information if he were to retire on April 1, 1991 or on June 1, 1991, for comparative purposes. On February 20, 1991, Mr. Radley met with Dale Munroe to discuss Mr. Radley's retirement. Mr. Radley testified that his three main concerns were (1) the amount of his pension; (2) his medical package; and (3) whether there would be any future retirement incentives that he would be missing if he retired at that time.
Mr. Radley testified that he asked Dale Munroe, "with Kodak's history, particularly in the last decade of offering retirement incentives, would there be any such incentives available certainly within the time frame we were discussing which was calendar year 1991." Mr. Radley testified that Munroe's "response was emphatic that there would absolutely not be any future incentives, certainly not in the foreseeable future." Radley also claims that Munroe gave two specific reasons for his assurance that there would be no future enhancement: (1) the 1990 amendments to KRIP were designed to prevent the need for any future retirement incentives, and (2) the "baby boomer" phenomenon, wherein as baby boomers reached retirement age and the workforce was reduced, there would be no reason to provide retirement incentives.
In his sworn interrogatory responses, Mr. Radley stated that Munroe's response was that Kodak would "probably never again offer any special incentives, and certainly would not in the foreseeable future."
Mr. Radley, accompanied by his wife, attended a second counseling session with Mr. Munroe on February 22, 1991. Mr. Radley testified that his wife had only one major concern which was whether her husband would be losing out on retirement incentives such as a year's salary which retired friends of theirs had received from Kodak in the past. Mr. Radley testified that Munroe's response again was that "there would absolutely not be any future incentives, certainly not in the foreseeable future," and that Munroe gave the same two reasons. Mrs. Radley, however, testified that Munroe's response to her inquiry was "No, he did not know of any."
At the February 22, 1991 meeting, Mr. Radley decided to retire in April or May of 1991. He alleges that Mr. Munroe said, "Why wait? I can have the papers ready by Thursday and you can retire on March 1." Radley testified that, his concerns having been met, he selected a March 1, 1991 retirement date.
Radley was aware that only the Kodak Board of Directors could change the retirement plan and that he knew a future change was possible, so the question he was asking Munroe was whether a future change was probable. He also admitted that he never asked Munroe to define "foreseeable future," nor did he ever specifically ask Munroe about calendar year 1991.
B. PLAINTIFF THOMAS SLOEY
Plaintiff, Thomas Sloey, began working for Kodak in February of 1962 and retired on February 1, 1991. In December of 1990, Mr. Sloey made an appointment to speak with a Kodak benefits counselor. When he called for the appointment, he indicated that he was interested in obtaining information about three possible retirement dates: June of 1991, January of 1992, and January of 1994.
Mr. Sloey was not concerned about the January 1, 1992 deadline for Blue Cross/Blue Shield health care coverage because he was not born in one of the affected years. In other words, he could retire at any time and still be eligible for the Blue Cross/Blue shield plan. He testified that he planned to work until age 62, which would mean retirement in about January of 1994.
On January 11, 1991, Mr. Sloey and his wife, Doris, met with counselor Dale Munroe to discuss retirement benefits. Mr. Sloey explained that some co-workers told him that he should look into retirement now because he would gain nothing by staying, since he had already achieved the 85 points necessary for retirement with a full pension under the 1990 amendments to KRIP which Munroe confirmed to be correct and said that Sloey should "retire today."
During the counseling session, Munroe informed Mr. Sloey not only about the retirement estimates for the dates Sloey had requested, but also about an estimate for an earlier retirement date of February 1, 1991. Sloey claims that he never requested an estimate for that date. However, there was evidence that Sloey had called the benefits office to request information about February of 1991 and, indeed, had changed from "exploratory" to "final" even prior to his January 11, 1991 session with Munroe.
The estimates showed that Sloey would receive a larger lump sum (approximately $ 14,000 greater) if he retired in February of 1991, rather than waiting until January of 1992. Mr. Sloey testified that this estimate helped him make the decision to retire in February of 1991.
Mr. Sloey also testified that he asked Munroe whether "there were going to be any more enhanced retirements coming down." Sloey testified that Munroe told him, "no, Kodak would never have another enhanced retirement." Sloey claims that he asked Munroe three times and received the same answer each time. Mr. Sloey testified that, based on that assurance (and the estimates) he decided to retire as of February 1, 1991 and agreed to sign the necessary paperwork that day (January 11, 1991).
One of the documents Mr. Sloey signed was a "Retirement Application" which contained the following warning: "I understand that I will not be entitled to any termination allowance payments for any special programs that are announced in the future." Sloey claims that this waiver caused him to again ask, "Dale, are you sure that Eastman Kodak is not going to have another enhanced retirement?" He testified that Munroe's response was, "Tom, this is just a formality. Believe me, Kodak will never have another enhanced retirement." Munroe denied that he would ever make such a statement.
Sloey also testified that, in August of 1991, after he became aware of RRRP, he phoned Munroe who apologized and said that "he would never again tell anyone that there wouldn't be an enhanced retirement." Mr. Munroe told Mr. Sloey that he could appeal and gave him the name of the person to contact. Although Mr. Sloey wrote an appeal letter, he was not afforded the RRRP package.
Benefits Counselor Dale Munroe
Dale Munroe began working for Kodak in 1969 and worked as a benefits counselor from March of 1990 until his retirement in 1996. He is currently an independent contractor who performs services for Kodak. He testified that he has no independent recollection of any specific conversation with any of the retirees he counseled due to the amount of time which has passed since the sessions took place and the fact that he often conducted four to five counseling sessions per day. However, Munroe testified that it was his standard practice to respond to inquiries about future enhancements by saying, "I am not aware of any retirement plan changes." He testified that he also occasionally explained to retirees that the company has a Benefits planning Department which is always evaluating the plan and that the United States government is always implementing legislation that effects retirement plans. He testified that his prepared answer always ended with "I don't know," and that he sometimes told retirees that "you and I will probably both read about the next plan change in the newspaper tomorrow morning." When asked to give his personal opinion, he told retirees that he did not believe the plan would change based on the fact that the company had just made the most significant change in its retirement plan in years and also the company's history of not changing its plan so close in time to a recent major change.
Munroe testified that it was not his function to give advice, but rather to explain to retirees the complicated components of the retirement benefits available to them and to inform them of the options available and choices they were required to make (e.g. annuity, lump sum, roll over, etc.) and to record the employee's decisions.
C. PLAINTIFF RICHARD POTTER
Richard Potter began working for Kodak in 1950 as a messenger and retired on June 1, 1991 as a Director of Technical Services. He began to seriously consider retirement in 1989 after his second heart attack. In early March of 1991, he attended an individual benefits counseling session with Paul Anderson ("Anderson"), the Senior Benefits Counselor. Anderson explained the elements of Potter's retirement benefits and answered Potter's questions. Potter was considering an August 1, 1991 retirement date because he and his wife were planning to move to Virginia. Anderson explained that Potter's accrued vacation could be taken as time off (resulting in a September 1, 1991 retirement date) or cashed out (resulting in an June 1, 1991 retirement date with a lump sum payment in lieu of vacation). Anderson explained to Potter that he would receive approximately $ 300 less by retiring on June 1, 1991 rather than taking vacation and retiring on September 1, 1991.
On April 19, 1991 Mr. Potter and his wife, Gloria, met with Anderson and informed him that they were considering a June 1, 1991 retirement date with a cash-in-lieu-of-vacation payment. Mr. Potter testified that on the morning of April 19, rumors were running rampant about an enhanced retirement package which would include a year's salary and a Social Security bridge payment. Potter testified that, at the meeting with Anderson, he said, "Paul, I want to make it clear- rumors are going all over the place - what's the story?" Potter testified that Anderson told him that he had already received twenty calls that morning, but that "the plan introduced in 1990 was the plan and it was his [Anderson's] opinion that there would be no enhanced plan in the foreseeable future."
Benefits Counselor Paul Anderson
Paul Anderson ("Anderson"), the Director of the Benefits Counseling Group, testified that he first became aware of RRRP on or about August 2nd or 3rd, 1991. He was informed by his supervisor that a new plan was being developed and he passed that information along to his subordinates (the benefits counselors) in anticipation of increasing caseloads.
Mr. Anderson testified that he counseled many hundreds of employees and, thus, had no independent recollection of any specific conversation(s). However, he testified that his normal practice would have been to respond to inquiries about future plan changes with the prepared response that "I wouldn't be aware of plan changes." He also testified that he would have never rendered an opinion as to future benefits changes. Benefits counselors were instructed not to render opinions as to benefits changes. Nonetheless, Anderson did hold the personal opinion that the retirement plan would probably not change soon after the 1990 amendments because the amended plan was "rich" in comparison to other competitive companies' retirement plans. He considered the September, 1990 plan to be "rich" because it allowed employees to retire much earlier with a full pension and because it allowed them to choose between an annuity and a lump-sum. It also allowed the retirees to receive all of the other standard retirement benefits much earlier than under the previous plan.
Mr. Anderson indicated that all retirements under the 1990 plan were completely voluntary and that it was, in fact, the employee himself or herself who always initiated the process by calling the Benefits Counseling Group to schedule an appointment for a counseling session. The employee would also give the date or dates on which he was considering retiring. An estimate would then be prepared reflecting, among other things, the amount of annuity or lump-sum pension payment the employee would receive if he ultimately decided to retire on that projected date. After reviewing the estimate(s) and consulting with a benefits counselor, an employee could decide to select his retirement date, in which case signatory forms would be prepared. If the employee needed more information or more time to think about it, he was not forced to retire on the interview date. In fact, an employee could sign all of the necessary paperwork and, if he changed his mind, he could still elect not to retire right up until the effective date of the retirement. If an employee decided not to retire after completing the signature forms, the documents would simply be "set aside" until the employee decided to retire and selected a new date. Retirement was voluntary.
D. PLAINTIFF PATRICIA BODDY
Patricia Boddy began working for Kodak in 1961 and retired on July 1, 1991 at age 55. Her husband, Corwin Boddy, also worked for Kodak and retired on November 1, 1991 under the RRRP. In the fall of 1990, both Mr. and Mrs. Boddy attended a group session to obtain information about the 1990 amendments to KRIP, particularly the health care benefits changes. Based upon the information they received, the couple transferred their health insurance to Mrs. Boddy's name and determined that she would retire during calendar year 1991 in order to lock in ...