"The insurance is effective the first day of hire." Amended
Complaint Ex. B.
These statements, then, were simply part of an overall
discussion about a range of matters relating to plaintiff's
employment. Such statements are routinely made to new employees
in any business, and to hold that they give rise to a fiduciary
duty would be to expand ERISA's reach well beyond what is
warranted by the statute itself or under the case law. Holsey,
954 F. Supp. at 148 (describing discussions that covered a number
of matters relating to terms and conditions of plaintiff's
employment, including disability benefits, as "a quintessential
`employer' function," and observing that "similar discussions
occur with respect to all new hires").
The contrast between the facts here and those in Varity,
which as stated was a highly fact-specific decision, is
instructive. In Varity, the employer summoned all the employees
of its money-losing divisions to a special meeting convened for
the specific purpose of discussing the future of their benefits
if they changed their benefit plans to the plan being offered by
the newly-created transferee subsidiary. The employees were given
a lengthy presentation and four documents, all of which conveyed
the deliberately false message that the employees' benefits would
be safe if they made the change.
After reviewing these facts, the Court stated that "[t]o offer
beneficiaries detailed plan information in order to help them
decide whether to remain with the company is essentially . . .
plan-related activity." Varity, 116 S.Ct. at 1073. The Court
also noted that the information given to the employees "came from
those within the firm who had authority to communicate as
fiduciaries with plan beneficiaries." Id. Lastly, the Court
said, the employees' acceptance of Varity's assurances that their
benefits would remain secure could well have been influenced by
their belief that Varity, as the plan administrator, had expert
knowledge about how their plan worked, and the employees
therefore might not have distinguished consciously between
Varity's dual roles as employer and plan administrator. Id.
In reaching its decision, the Court repeatedly stressed that
its holding was dependent upon the factual context in which it
was reached. For example, the Court stated that the district
court had correctly concluded that Varity had spoken in its
capacity as plan administrator "given [the district court's] view
of the facts." Id. at 1072. The Court stated that "the factual
context in which the statements were made" supported the district
court's conclusion. Id. at 1073. Accepting the district court's
finding that Varity connected its statements predicting a rosy
future for the new subsidiary to statements it made about the
future of benefits, thereby rendering the statements about
benefits misleading, the Court said that "making intentional
representations about the future or plan benefits in that
context is an act of plan administration." Id. at 1074
In contrast, the statements allegedly made to plaintiff in the
case at bar were made not at a meeting held specifically to
discuss plaintiff's benefits, but as part of a broader, general
discussion of various matters relating to the commencement of his
employment. To hold that under this set of facts, Xomed acted as
a plan fiduciary in advising plaintiff that his disability
benefits were available immediately, would stretch the holding of
Varity far beyond its factual context, which the Supreme Court
stressed was so crucial to its holding. The brief statements
about Cerasoli's benefits were not made at a meeting held
expressly and solely to discuss plaintiff's benefits; they were
not intended to persuade plaintiff to take any particular action,
such as switching to a different plan; they were not made for
Xomed's own financial benefit; and based on plaintiff's own
allegations, they were not intentionally misleading, but at most
simply mistaken. Based upon the context in which they were made,
these statements related more
to plaintiff's employment in general than to his particular
rights under the plan, and they cannot be said to have been made
in connection with Xomed's administration or management of the
Plaintiff incorrectly asserts that "this Court has already
reviewed and rejected Xomed's claims that it could not act in a
fiduciary capacity." Plaintiff's Memorandum of Law in Opposition
to Defendants' Motion for Summary Judgment (Item 59) at 7.
Plaintiff bases this assertion on my statements in my July 23,
1997 Decision and Order that "informing employees about the
existence or extent of their coverage could itself be considered
a fiduciary act," and that the SPD "suggests that Xomed might be
a fiduciary with respect to the plan participants" because it
states, "The people who operate your plan, called `fiduciaries'
of the Plan, have a duty to do so prudently and in the interest
of you and other plan participants and beneficiaries." Cerasoli
II, 972 F. Supp. at 179.
As is evident from that decision, however, I did not hold that
Xomed could not assert that it was not acting in a fiduciary
capacity when it made the statements in question. I held only
that at that stage of the case, there having been no discovery at
all, plaintiff had adequately stated a cause of action for breach
of fiduciary duty. For example, I noted the possibility that
discovery might yield some additional documents that could set
forth Xomed's duties as the plan administrator in more detail.
Id. That has not occurred; instead, the record now demonstrates
conclusively that Xomed has no discretionary authority with
respect to plan administration. Thus, nothing in my prior
decision foreclosed the possibility that, after discovery, Xomed
might be able to establish its entitlement to summary judgment on
this claim, as indeed it now has.
Since I find that Xomed did not act as a fiduciary when it made
the statements at issue, plaintiff cannot recover on his claim
that Xomed breached its fiduciary duty to him. It is therefore
unnecessary for me to address whether there are issues of fact
relating to the other elements of this claim, i.e., whether
Xomed made a material misrepresentation, and whether plaintiff
detrimentally relied upon that misrepresentation. Plaintiff's
fifth cause of action is therefore dismissed.
IV. Equitable Estoppel
Plaintiff's sixth cause of action asserts a claim based on a
theory of equitable estoppel. To establish this claim, plaintiff
must show: (1) that defendants made a promise to plaintiff; (2)
upon which plaintiff relied; (3) to his detriment; and (4) that
an injustice would occur if the promise were not enforced.
Bonovich v. Knights of Columbus, 146 F.3d 57, 62 (2d Cir.
1998). The Second Circuit has held, however, that equitable
estoppel applies in ERISA cases only in "extraordinary
circumstances." Schonholz v. Long Island Jewish Med. Ctr.,
87 F.3d 72, 78 (2d Cir.), cert. denied, 519 U.S. 1008, 117 S.Ct.
511, 136 L.Ed.2d 401 (1996).
I find that this claim cannot stand. First, as stated earlier,
plaintiff's allegations amount to little more than a claim that
Xomed made a mistake when it told him that he would be covered
immediately. Essentially, then, plaintiff is asserting a
negligence claim. However, "[a]rguments that negligent
misrepresentations `estop' sponsors or administrators from
enforcing the plans' written terms have been singularly
unsuccessful." Decatur Mem'l Hosp. v. Connecticut Gen. Life Ins.
Co., 990 F.2d 925, 926-27 (7th Cir. 1993).
The more fundamental problem with this claim, though, is that
while it may be styled as an estoppel claim, what plaintiff
actually seeks under this claim are extracontractual damages.
Such relief is not available under ERISA.
In Mertens v. Hewitt Associates, 508 U.S. 248, 113 S.Ct.
2063, 124 L.Ed.2d 161 (1993), the Supreme Court held that
compensatory damages are not recoverable in a claim brought under
§ 1132(a)(3). The Court in Mertens interpreted §
1132(a)(3)(B)'s provision for "other equitable relief" to
preclude claims for monetary damages, which the Court described
as "the classic form of legal relief." Id. at 255, 113 S.Ct.
As stated, plaintiff has no claim for benefits under the plan
itself. All his claims are based on Xomed's alleged failure to
inform him that he was not covered under the plan. Any award of
damages, then, would plainly not be "contractual," since they
would not be awarded pursuant to the terms of the plan. In fact,
it appears that the proper measure of damages here — were damages
available — would not even be the amount of benefits that
plaintiff would have received had he been covered under the
plan, but the amount that he would have received had he
purchased his own, separate policy to cover the ninety-day
waiting period. His damages, then, would not even be calculated
by reference to the contract at issue, i.e., the policy issued
by Paul R to Xomed. At any rate, the relief that plaintiff seeks
here is certainly not the equitable relief provided for in §
This conclusion finds support in the case law, both in this
circuit and others. In Lee v. Burkhart, 991 F.2d 1004 (2d Cir.
1993), the plaintiffs sued the insurance company that had
administered their claims for disability benefits, alleging that
the company had breached its fiduciary duty to them by failing to
inform them that their disability benefits plan was self-funded
by their former employer, and not insured by the defendant. After
the former employer declared bankruptcy, the defendant denied the
plaintiffs' claims for benefits because of the employer's failure
to pay premiums. Holding that the plaintiffs were not entitled to
relief under § 1132(a)(3), the court stated that
[t]he complaint does not . . . seek equitable relief;
rather, it asks for damages. Money damages are
generally unavailable under this section. The plain
language of the statute does not provide for monetary
relief and a review of the legislative history
confirms that Congress did not contemplate that this
phrase ["appropriate equitable relief"] would include
an award of money damages.
Id. at 1011 (citation omitted).
In McLeod v. Oregon Lithoprint, Inc., 102 F.3d 376 (9th Cir.
1996), cert. denied, 520 U.S. 1230, 117 S.Ct. 1823, 137 L.Ed.2d
1030 (1997), a case factually similar to the one at bar, the
Ninth Circuit reached a like conclusion. The plaintiff in
McLeod sued her employer, alleging that it had breached its
fiduciary duty to her by failing to inform her that she had
become eligible to apply for coverage under a cancer insurance
policy. Had she been aware of that fact, she alleged, she would
have elected such coverage. The plaintiff, who had developed
cancer in the interim, sought a judgment for the amount of
benefits that would have been paid to her had she elected
Affirming the district court's grant of summary judgment for
the defendant, the Court of Appeals for the Ninth Circuit stated:
The relief which McLeod seeks is not "equitable
relief." She does not seek an injunction, mandamus,
or restitution. The complaint does not allege fraud
on the part of the plan fiduciaries. There is no
allegation of a fund which was wrongfully withheld
from McLeod. The basis of her complaint is that the
fiduciaries failed to notify her in a timely manner
of her right to elect cancer coverage. This is in
essence a negligence claim, for which she seeks to be
made whole through an award of money damages equal in
amount to the benefits that she would have been paid
and compensation for her emotional distress.
Id. at 378. Such damages, the court concluded, were barred by
the Supreme Court's holding in Mertens.
Likewise, in Slice v. Sons of Norway, 34 F.3d 630 (8th Cir.
1994), the plaintiff sued his former employer under ERISA,
claims of breach of contract, equitable estoppel, and breach of
fiduciary duty. The defendant had been paying the plaintiff
retirement benefits of $251.87 per month for the first two years
of his retirement, but then informed him that due to a
computational error, it had been overpaying him and that he was
only entitled to $105.80 per month. The plaintiff did not dispute
that $105.80 was the correct calculation of his monthly benefits.
Affirming the district court's dismissal of the complaint for
failure to state a claim upon which relief could be granted, the
Court of Appeals for the Eight Circuit stated:
In the present case, Slice attempts to categorize his
theory of liability, equitable estoppel, as a form of
equitable relief. Nevertheless, the relief he seeks
is money damages to compensate him for his alleged
reliance on Norway's extracontractual promise. [W]e
understand "appropriate equitable relief" to refer to
equitable remedies. Such remedies exclude money
damages, "the classic form of legal relief."
Id. at 633 (citing Mertens, 508 U.S. at 255, 113 S.Ct. 2063).
The court concluded that the relief the plaintiff sought was "not
available under 29 U.S.C. § 1132(a)(3)(B) because he is
essentially seeking money damages." Id.
In Novak v. Andersen Corp., 962 F.2d 757 (8th Cir. 1992),
cert. denied, 508 U.S. 959, 113 S.Ct. 2928, 124 L.Ed.2d 678
(1993), the plaintiff sued his former employer and its employee
stock ownership plan, alleging breach of fiduciary duty based on
the defendants' alleged failure to apprise him of a "roll-over
option" for distribution of benefits, pursuant to which the
plaintiff's distribution would not have been immediately subject
to tax. The plaintiff alleged that because he was unaware of this
option, he was taxed on the entire distribution of benefits that
he received when he quit his job. Holding that the damages sought
by the plaintiff were not equitable relief within the meaning of
§ 1132(a)(3), the Eighth Circuit stated that it found "nothing in
the statutory language to persuade us to interpret `other
appropriate equitable relief' to mean anything other than what it
usually means — declaratory or injunctive relief." Id. at 760.
Other courts, including several district courts from within
this circuit, have reached similar conclusions. See, e.g.,
Drinkwater v. Metropolitan Life Ins. Co., 846 F.2d 821, 824 (1st
Cir. 1988) ("`Other appropriate equitable relief' should be
interpreted to mean what it says — declaratory or injunctive
relief, not compensatory and punitive damages"), cert. denied,
488 U.S. 909, 109 S.Ct. 261, 102 L.Ed.2d 249 (1988); Thomas v.
Board of Trustees of Int'l Union of Operating Engineers, Local
542, No. CIV. A. 97-CV-2423, 1998 WL 334627 *9 (E.D.Pa. June 24,
1998) ("ERISA does not authorize an award of compensatory damages
against non-fiduciaries"); DeSimone v. Transprint USA, Inc.,
No. 94 CIV. 3130, 1996 WL 209951 *5 (S.D.N.Y. Apr.29, 1996)
("compensatory damages are not available in an ERISA action";
striking claim for such damages sua sponte); Jordan v.
Retirement Committee of Contributory Defined Benefit Retirement
Plan at Rensselaer Polytechnic Inst., 875 F. Supp. 125, 127
(N.D.N.Y. 1995) ("Since plaintiff seeks money damages and not
equitable relief, it is clear that he may not proceed under ERISA
§ 502(a)(3), 29 U.S.C. § 1132(a)(3)"); D'Amore v. Stangle and
DeNigris, No. 3:94CV01087, 1995 WL 704687 *2 (D.Conn. May 19,
1995) ("If the plaintiffs are correct, then the phrase `other
appropriate equitable relief,' in the statute, implies legal as
well as equitable relief. As the Supreme Court stated in
Mertens, `We will not read the statute to render the modifier
superfluous'") (quoting Mertens, 113 S.Ct. at 2069).
The fact that this claim is presented as an equitable
estoppel claim also makes no difference, since the actual relief
sought by plaintiff is legal in nature. "It makes no difference
that the [plaintiff's] claim is equitable in nature. The Court in
looked to the substance of the remedy sought (i.e., injunction
versus damages) rather than the label placed on that remedy."
Watkins v. Westinghouse Hanford Co., 12 F.3d 1517, 1528 n. 5
(9th Cir. 1993) (citing Mertens, 508 U.S. at 255, 113 S.Ct.
2063); accord Slice, 34 F.3d at 633.
This case is also distinguishable from those cases in which
courts have permitted equitable estoppel ERISA claims to go
forward against claims administrators. In those cases, the
plaintiffs were usually told by the claims administrator
(typically an insurance company) that they would be entitled to
coverage, but when the plaintiffs filed claims, the claims were
denied. See, e.g., Green v. First Reliance Std. Life Ins. Co.,
No. 96 CIV. 6859, 1997 WL 249967 (S.D.N.Y. May 12, 1997);
Fortune v. Medical Associates of Woodhull, P.C., 803 F. Supp. 636,
642 (E.D.N.Y. 1992); Fitch v. Arkansas Blue Cross and Blue
Shield, 795 F. Supp. 904 (W.D.Ark. 1992).
The significance of this distinction is simple: the claims
administrator is the party that has the power to determine
whether an employee is eligible for benefits under a plan. As
such, it can be estopped, by virtue of its prior representations,
from denying benefits under the plan. In other words, the claims
administrator cannot inform a beneficiary that he is entitled to
benefits, and then, when the employee submits a claim, do an
about-face and say that he is not. Here, however, Xomed, which is
only the plan administrator and which did not act in a fiduciary
capacity when it made the alleged misrepresentations, has no
power to award plaintiff benefits under the plan; even if it
now stated that plaintiff was covered at the time of his injury,
that would have no effect on Paul Revere's determination that he
was not. All that Xomed could do, then — and what plaintiff seeks
it to do — is give plaintiff extracontractual benefits, which
It is true that this result apparently leaves plaintiff with no
avenue of relief. His claims under state law were preempted by
ERISA because they unquestionably related to an employee benefit
plan, but given the nature of the relief he seeks, i.e.,
benefits to which he is not entitled under the terms of the plan,
ERISA affords him no remedy. Although this result may seem harsh,
courts have recognized their obligation to abide by Congress's
intent in this area, and to avoid taking on the role of
legislator by creating remedies that are not provided for by
In Smith v. Dunham-Bush, Inc., 959 F.2d 6 (2d Cir. 1992), for
example, the plaintiff sued his employer in state court,
asserting common-law claims of breach of contract and negligent
misrepresentation, based on the employer's alleged false
assurances that if the plaintiff relocated from England to the
defendant's Connecticut affiliate, his pension benefits would
remain the same. The defendant removed the action to federal
court on the ground of ERISA preemption. The district court held
that the claims were preempted by ERISA, and awarded summary
judgment to the defendant.
The Second Circuit affirmed. Rejecting the plaintiff's
"argument that ERISA preemption will leave him with no adequate
remedy," since he was not entitled to additional benefits under
the terms of the plan, the Second Circuit agreed with other
circuit courts "that the preclusion of remedy does not bar the
operation of ERISA preemption." Id. at 11 (collecting cases).
In addition, the court said, to allow a plaintiff to sue his
employer for additional benefits
in such a situation "would countermand Congress's express
directives. It would irreparably undermine ERISA and would
seriously discourage employers from adopting such plans.
Eventually, it would reduce the level of financial security for
working people." Id. at 12. See also Lee, 991 F.2d at 1011-12
("Distasteful as it is to conclude that people who prudently
secured insurance may be left nevertheless exposed to the risk
[that they will not receive benefits], this suit does not open an
avenue to recovery . . ."); Harsch v. Eisenberg, 956 F.2d 651,
659 (7th Cir.) ("While a broader remedial view [permitting
extracontractual damages] might serve the ends of justice in the
case before us, we do not think such a view is consistent with
the reasoning of [Massachusetts Mut. Life Ins. Co. v. Russell,
473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)]," which held
that extracontractual damages are not recoverable in suit under
29 U.S.C. § 1132(a)(2)), cert. denied, 506 U.S. 818, 113 S.Ct.
61, 121 L.Ed.2d 29 (1992); Pohl v. National Benefits
Consultants, Inc., 956 F.2d 126, 128 (7th Cir. 1992) ("The fact
that ERISA does not provide a substitute remedy reflects not a
senseless gap in the statute but a determination to carry through
the policy [of protecting the financial integrity of benefit
plans] by confining participants to the entitlements spelled out
in writing. . . . [The plaintiffs] . . . have no claim, period;
and this, as we have emphasized, for reasons grounded in the
policy of the statute").
Contrary to plaintiff's position, the Supreme Court's holding
in Varity did not overrule numerous lower courts' decisions
holding that ERISA's preemptive reach can preclude remedies that
would otherwise be available under state law. The Ninth Circuit
rejected that very argument in McLeod. Pointing out that "[t]he
plaintiffs in Varity were seeking reinstatement as participants
in the employer's ERISA plan," the court stated that
"[r]einstatement is equitable, not compensatory, relief. The
Varity opinion does not alter the holding in Mertens that
compensatory damages are unavailable under § 502(a)(3)."
McLeod, 102 F.3d at 379.*fn7
Plaintiff's motion for summary judgment and for attorney's fees
(Item 42) is denied. Defendant's cross-motion for summary
judgment (Item 50) is granted, and the complaint is dismissed.
IT IS SO ORDERED.