The opinion of the court was delivered by: Larimer, Chief Judge.
In this action brought under the Employee Retirement Income
Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., plaintiff Don
A. Cerasoli alleges that his employer, Xomed, Inc.,
misrepresented to him that his coverage under Xomed's long-term
disability plan ("the plan") would commence immediately upon his
employment with Xomed, whereas in fact coverage did not begin
until ninety days after he began working for Xomed. Plaintiff was
seriously injured during that ninety-day period, and was denied
benefits as a result.*fn1 Defendants are Xomed and its parent
corporations, Xomed Surgical Products, Inc., and Merocel/Xomed
On July 23, 1997, I issued a Decision and Order granting in
part defendants' motion for summary judgment. Cerasoli v. Xomed,
Inc., 972 F. Supp. 175 (W.D.N.Y. 1997) ("Cerasoli II"). I
dismissed the plaintiff's fourth cause of action, which alleged
that defendants had, through certain words and actions, created a
second plan separate from the one at issue here, and the seventh
cause of action, which purported to state a claim for punitive
damages and attorney's fees.
Five causes of action remain. The first is a claim for benefits
under the plan pursuant to 29 U.S.C. § 1132(a)(1). The second
cause of action alleges that Xomed's representations to plaintiff
and other employees that benefits were available immediately upon
employment effected a modification of the plan, and that Xomed's
failure to pay benefits to plaintiff violates the plan as
modified. The third cause of action alleges that Xomed gave
plaintiff a written employment offer stating that disability
benefits would be available immediately upon employment.
Plaintiff alleges that this offer also modified the plan, and
that Xomed violated the plan as modified by denying him benefits.
The fifth cause of action alleges that Xomed violated its
fiduciary duty to plaintiff under 29 U.S.C. § 1109 by
representing to him that benefits were available upon employment.
In the sixth cause of action, plaintiff contends that Xomed
should be estopped from denying benefits to him because of
Xomed's alleged misrepresentations.
Both sides have moved for summary judgment. Defendants' motion
seeks dismissal of the entire complaint. Plaintiff requests
summary judgment on his fifth and sixth causes of action.
Plaintiff has also moved for an award of attorney's fees.
I. Claim for Benefits Under 29 U.S.C. § 1132(a)(1)
In count one of the amended complaint, plaintiff alleges that
he is entitled to benefits under the plan. In their previous
motion for summary judgment, defendants contended that this claim
should be dismissed because plaintiff is barred from receiving
benefits due to the ninety-day waiting period. I denied
defendants' motion at that time primarily because there had been
no discovery yet. Noting that apart from an insurance contract
between Xomed and Paul Revere Life Insurance Company ("Paul
Revere"), as well as a Summary Plan Description ("SPD"), no
formal written plan appeared in the record, I stated that "[i]f
no formal written plan does exist, the terms of the plan may be
interpreted by reference to such factors as the parties' intent,
understanding, and past practice. . . . If after discovery
plaintiff is unable to present any evidence in support of this
claim, . . . summary judgment
will then be appropriate." Cerasoli II, 972 F. Supp. at 181-82.
Plaintiff has not presented any additional evidence to show
that he is actually entitled to benefits under the plan itself.
All of the evidence that he has presented in support of his
claims relates to theories of relief that depend upon actions or
statements outside of the terms of the insurance policy and the
SPD, which do appear to be the only documents that set forth the
terms of eligibility for long-term disability benefits. To the
extent that plaintiff may attempt to show that the parties'
intent, understanding, or past practice supports his request for
relief, any evidence concerning those matters would appear to
relate more to those other theories (e.g. estoppel) than to his
claim under § 1132(a)(1). Given the facts presented to the court,
then, no rational finder of fact could reasonably conclude that
plaintiff is entitled to benefits under the plan. Any possible
basis for relief here would fall under one of plaintiff's other
claims, and accordingly count one must be dismissed.
II. Modification of the Plan
Both the second and third causes of action are based on
allegations that Xomed modified the plan, and then violated the
terms of the plan as modified. The second cause of action is
based on representations that Xomed allegedly made to plaintiff
and other employees that benefits were available immediately upon
employment. The third cause of action is based on Xomed's written
employment offer to plaintiff stating that disability benefits
would be available as soon as he began his employment.
In my July 23, 1997 Decision and Order, I denied Xomed's
motions to dismiss these claims primarily because there had been
no discovery in the case at that point. Though recognizing the
rule that "absent a showing tantamount to proof of fraud, an
ERISA welfare plan is not subject to amendment as a result of
informal communications between an employer and plan
beneficiaries," Moore v. Metropolitan Life Ins. Co.,
856 F.2d 488, 492 (2d Cir. 1988), I stated that, there having been no
discovery, I was not prepared at that juncture to hold that under
no set of facts could plaintiff establish these claims. Cerasoli
II, 972 F. Supp. at 181.
In response to defendants' summary judgment motion, plaintiff
has added nothing in the way of either facts or argument
regarding these claims. Remarkably, his papers filed in
opposition to defendants' summary judgment motion do not even
address these claims. Since plaintiff has not submitted any
evidence tending to show acts by Xomed tantamount to fraud, these
claims must be dismissed.
Plaintiff has simply not carried his burden in opposing
defendants' motion with respect to these claims. A party opposing
a well-founded motion for summary judgment "must do more than
simply show that there is some metaphysical doubt as to the
material facts." Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
Rather, "the non-moving party must come forward with `specific
facts showing that there is a genuine issue for trial.'" Id. at
587, 106 S.Ct. 1348 (quoting Fed.R.Civ.P. 56(e)). Plaintiff has
presented no facts tending to show conduct tantamount to fraud on
defendants' part. Although plaintiff's former attorney*fn2
states in a declaration that "Xomed has conducted a campaign to
defeat Mr. Cerasoli's claims, including lying [and] trickery . .
.," Declaration of Craig L. McGrain (Item 46) ¶ 24, those
allegations relate to Xomed's actions during this litigation;
there is no evidence that Xomed's acts or omissions that gave
rise to this lawsuit were egregious enough to effect a
modification of the
plan under the standard enunciated in Moore.
I do note that in his prior brief in opposition to the motion
to dismiss, plaintiff contended that the court could consider
oral representations and written documents outside the plan
itself because defendants had submitted no formal written "plan"
as such. The fact remains, however, that ERISA requires every
employee benefit plan to "be established and maintained pursuant
to a written instrument," 29 U.S.C. § 1102(a)(1),*fn3 and a plan
cannot be modified by informal communications, oral or otherwise,
"absent a showing tantamount to proof of fraud." Moore, 856
F.2d at 492; Green v. First Reliance Std. Life Ins. Co., No. 96
Civ. 6859, 1997 WL 249967 *3 (S.D.N.Y. May 12, 1997). Plaintiff
has not made such a showing. Although he does rely on various
statements and documents with respect to his claims for estoppel
and breach of fiduciary duty, he has not met the stringent
standard of Moore to show modification of the plan. In fact, in
discussing his claim for breach of fiduciary duty, plaintiff
states that Xomed's alleged misrepresentations "were made in
blatant ignorance of the true facts of the availability of
disability insurance" and that "[n]obody at Xomed had seen the
Paul Revere policy and Xomed had absolutely no idea of the true
facts during the time Mr. Cerasoli was applying for employment
there." Plaintiff's Memorandum of Law in Support of His Motion
for Summary Judgment at 19 (emphasis added). Accordingly, counts
two and three must be dismissed.
III. Breach of Fiduciary Duty
Plaintiff's fifth cause of action alleges that Xomed violated
it fiduciary duty to him under 29 U.S.C. § 1109 by falsely
representing to him that benefits would be available immediately
upon his employment. Both sides have moved for summary judgment
on this claim.
To establish a claim for breach of fiduciary duty based on
alleged misrepresentations concerning coverage under a plan, the
plaintiff must show: (1) that the defendant was acting in a
fiduciary capacity when it made the alleged misrepresentations;
(2) that the defendant made a material misrepresentation; and (3)
that the plaintiff relied on that misrepresentation to his
detriment. Varity Corp. v. Howe, 516 U.S. 489, 116 S.Ct. 1065,
1071, 134 L.Ed.2d 130 (1996); Ballone v. Eastman Kodak Co.,
109 F.3d 117, 122, 126 (2d Cir. 1997).
The first issue, then, is whether Xomed was acting in a
fiduciary capacity when it allegedly informed plaintiff that he
would be covered under the long-term disability plan as soon as
he began his employment. In support of its assertion that it was
not acting in a fiduciary capacity, Xomed relies in part on a
regulation promulgated by the Department of Labor stating that
"persons who have no power to make any decisions as to plan
policy, interpretations, practices or procedures," but who
perform various administrative functions for an employee benefit
plan, including "[o]rientation of new participants and advising
participants of their rights and options under the plan," are not
fiduciaries with respect to the plan. 29 C.F.R. § 2509.75-8.
Xomed contends that since plaintiff's fiduciary-duty claim arises
out of Xomed's advising plaintiff of his rights under the plan,
Xomed was not acting in a fiduciary capacity.
Plaintiff, however, notes that the regulation, which was
promulgated in 1975, also states that in applying the regulation,
"the effect of subsequent legislation, regulations, court
decisions, and interpretive bulletins must be considered." Id.
Plaintiff contends that the portion of the regulation
upon which defendants rely has been altered by the Supreme
Court's holding in Varity, 516 U.S. 489, 116 S.Ct. 1065, 134
L.Ed.2d 130. In Varity, the Court held that the defendant,
which was both the plaintiffs' employer and their welfare benefit
plan administrator, acted in a fiduciary capacity when, at a
special meeting convened by the defendant, it advised the
plaintiffs that their benefits would remain secure if they
voluntarily transferred to a newly-created subsidiary corporation
to which the defendant was transferring certain money-losing
divisions, in which the plaintiffs worked. In fact, however, as
the defendant well knew, the subsidiary was insolvent from day
one, and after two years ended in a receivership, under which its
employees, including the plaintiffs, lost their nonpension
benefits. The Supreme Court held "that the factual context in
which the statements were made, combined with the plan-related
nature of the activity, engaged in by those who had plan-related
authority to do so, together provide[d] sufficient support for
the District Court's legal conclusion that Varity was acting as a
fiduciary." Id. at 1073.
At first blush, neither the regulation nor Varity provides a
clear, obvious answer to the question of whether Xomed acted as a
fiduciary in informing plaintiff about the commencement of his
disability coverage. For one thing, Varity did not announce a
broad, general rule that informing employees of their rights or
options under a plan automatically gives rise to a fiduciary
relationship. The decision in Varity was expressly limited to
the "factual context" of that case. Id. Even assuming the truth
of all of plaintiff's factual allegations, Xomed's actions were
not as egregious as Varity's, which amounted to deliberate
deception of its employees in order to save money by eliminating
the employees' nonpension benefits. While § 2509.75-8 must be
read against the backdrop of Varity, then, Varity did not
overrule that regulation's inclusion of "[o]rientation of new
participants and advising participants of their rights and
options under the plan" among its list of activities that do not
give rise to a fiduciary relationship.
The regulation's applicability to this case also is not
entirely clear, for it speaks of "persons who have no power to
make any decisions as to plan policy, interpretations, practices
or procedures. . . ." 29 C.F.R. § 2509.75-8 (emphasis added).
Defendants concede that Xomed is the plan administrator, and the
"blanket" SPD covering all of Xomed's employee benefit plans
states that "[i]n carrying out their respective responsibilities
under the Plan, the Plan Administrator and other Plan fiduciaries
shall have discretionary authority to interpret the terms of the
Plan and to determine eligibility for and entitlement to Plan
benefits in accordance with the terms of the Plan." McGrain
Declaration Ex. K. This seems to suggest ...