United States District Court, Western District of New York
June 24, 1999
EDWARD J. WALSH, PLAINTIFF,
EASTMAN KODAK COMPANY, DEFENDANT.
The opinion of the court was delivered by: Larimer, Chief Judge.
DECISION AND ORDER
I. Procedural Background
Plaintiff Edward J. Walsh ("Walsh") commenced this action on
September 23, 1998 against defendant Eastman Kodak Company
("Kodak"). Pending before this Court is defendant's motion to
dismiss pursuant to FED.R.CIV.P. 12(b)(6).
For the reasons that follow, defendant's motion to dismiss is
granted and plaintiff's complaint is dismissed with prejudice.
II. Factual Allegations*fn1
Walsh, who was a Kodak employee in 1997, advised Kodak that he
was electing to retire on January 1, 1998. He requested a single
lump-sum payout of the benefits due to him. Based upon
plaintiff's requested retirement date of January 1, 1998, the
amount of the lump-sum retirement benefit that he was entitled to
receive was calculated. The parties agree that this amount was
paid in January, 1998. Plaintiff does not raise any dispute with
respect to the principal amount of the lump sum paid to him.
Rather, plaintiff claims that, because the lump sum benefit was
payable January 1st and was not paid until twenty-five days
later, he was denied the use of the money for that period, and is
entitled to interest thereon.
Plaintiff states that prior to his retirement "it was spelled
out to [him] the exact amount of the lump sum . . . and also the
fact that its delivery would be delayed for administrative
reasons." Plaintiff knew therefore that he would not be paid the
lump sum benefit on January 1, 1998. Plaintiff does not allege
that Kodak ever made any representation that it would pay him any
interest for any delay. Rather, plaintiff maintains that "[t]here
was no discussion, either pro or con, around the question of
interest." Plaintiff further alleges that interest earned on
periods of delay in delivery of lump sum benefits is "used to pay
company program costs."
Defendant moves under Rule 12(b)(6) to dismiss what it
characterizes as a claim for extracontractual damages. The exact
basis on which Walsh relies for his claim is, to say the least,
murky. Plaintiff's complaint fails to specify under which statute
he pursues his claim for interest. Rather, it merely states:
"From 1/98 plaintiff has money due for interest lost on lump sum
payment which was withheld for 25 days." Defendant maintains that
this represents a claim premised upon the Employee Retirement
Income Security Act of 1974, 29 U.S.C. § 1001, et seq.
("ERISA"). Given the amorphous nature of Walsh's complaint, I
will address the possible bases for relief.
In assessing a defendant's motion to dismiss, a court must
accept as true "all well-pleaded factual averments in the
complaint" and "draw all reasonable inferences in the
plaintiff's favor." Wright v. Ernst and Young, LLP,
152 F.3d 169, 173 (2d Cir. 1998), cert. denied, ___ U.S. ___, 119 S.Ct.
870, 142 L.Ed.2d 772 (1999). The court's consideration "is
limited to facts stated on the face of the complaint and in
documents appended to the complaint or incorporated in the
complaint by reference, as well as to matters of which judicial
notice may be taken. Automated Salvage Transport, Inc. v.
Wheelabrator Environmental Systems, Inc., 155 F.3d 59, 67 (2d
Cir. 1998). Dismissal of the complaint is proper only where `it
appears beyond doubt that the plaintiff can prove no set of facts
in support of his claim which would entitle him to relief.'"
(quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2
L.Ed.2d 80 (1957)); see FED.R.CIV.P. 12(b).
In Kodak's motion as well as in plaintiff's response thereto,
the parties allege facts not found in the complaint. Consistent
with Rule 12(b), having chosen not to convert the motion into one
for summary judgment, this Court's inquiry is limited to the four
corners of the complaint. Additional facts raised in submissions
filed subsequent to the complaint will not be considered in
evaluating the motion to dismiss.
However, when a party is proceeding pro se, as is the case
with plaintiff, the Court is obliged to "read his supporting
papers liberally, and . . . interpret them to raise the strongest
arguments that they suggest." Soto v. Walker, 44 F.3d 169, 173
(2d Cir. 1995) (quoting Burgos v. Hopkins, 14 F.3d 787, 790 (2d
As an initial matter, it cannot be disputed that since Walsh
seeks money from Kodak's retirement income plan, an ERISA covered
plan, it is only under ERISA's provisions that he may proceed.
See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52-54, 107
S.Ct. 1549, 1555-1556, 95 L.Ed.2d 39 (1987); Plumbing Industry
Board, Plumbing Local Union No. 1 v. E.W. Howell Co., Inc.,
126 F.3d 61 (2d Cir. 1997). The Court must next determine whether
ERISA's civil enforcement provisions permit the requested relief.
Section 502(a) of ERISA, 29 U.S.C. § 1132, sets forth six civil
enforcement provisions. A participant or beneficiary may bring a
civil action, for instance, (1) "to recover benefits due to him
under the terms of his plan, to enforce his rights under the
terms of the plan, or to clarify his rights to future benefits
under the terms of the plan," 29 U.S.C. § 1132(a)(1)(B); (2) "for
appropriate relief under section 409," 29 U.S.C. § 1132(a)(2);
and (3) "to enjoin any act or practice which violates any
provision of this title or the terms of the plan, or . . . to
obtain other appropriate equitable relief . . . to redress such
violations . . .," 29 U.S.C. § 1132(a)(3). Of ERISA's six civil
enforcement provisions, only two*fn2, section 1132(a)(1)(B) and
section 1132(a)(3)(B), might appear to permit an independent
claim for interest.
ERISA Section 502(a)(1)(B)
Section 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B),
allows a private plaintiff to sue "to recover benefits due him
under the terms of his plan, to enforce his rights under the
terms of the plan, or to clarify his rights to future benefits
under the terms of the plan."
Massachusetts Mutual Life Insurance Co. v. Russell,
473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985), casts doubt on the
viability of an independent claim for interest under section
1132(a)(1)(B). There, petitioner delayed paying disability
benefits to respondent under the plan. As a result of the delay,
respondent's husband had to cash out his retirement savings
which, in turn, aggravated the psychological
condition that caused respondent's back ailment. The respondent
sought to recover compensation for the injury by suing the plan
administrator using section 502(a)(2) to enforce section 409(a).
The Court held, however, that section 409(a) may only be used to
recover money for the plan itself, not for an individual
beneficiary. The Court further held that an individual
beneficiary cannot recover extracontractual damages "caused by
improper or untimely processing of benefit claims" under section
409(a) of ERISA. Id. at 148, 105 S.Ct. at 3093. Although
plaintiff's claim here does not arise under section 409(a), the
Russell Court also noted, in dicta, that:
the statutory provision explicitly authorizing a
beneficiary to bring an action to enforce his rights
under the plan — § 502(a)(1)(B) . . . says nothing
about the recovery of extracontractual damages, or
about the possible consequences of delay in the plan
administrators' processing of a disputed claim. Thus,
there really is nothing at all in the statutory text
to support the conclusion that such a delay gives
rise to a private right of action for compensatory or
punitive relief. Id. at 144, 105 S.Ct. at 3091.
Since Russell, the issue of whether a plan beneficiary may
recover interest or other compensatory damages for benefits
initially withheld or delayed but subsequently paid prior to the
initiation of a lawsuit has been addressed by a number of
district courts within the Second Circuit. All have determined
that interest is not recoverable because of a delay in payment.
See Klein v. Empire Blue Cross and Blue Shield, 93-CV-5187,
1998 WL 336633 (S.D.N.Y. June 23, 1998) (noting that "the cases
make clear that when the benefits have been fully provided, the
plaintiff cannot recover compensation [under section
1132(a)(1)(B)] for any injury caused by a delay in those
payments"); O'Rourke v. Pitney-Bowes, Inc., 95-CV-10288, 1997
WL 431091 (S.D.N.Y. July 31, 1997) (finding that plaintiff is not
entitled to "extracontractual interest, which would cover the
delay in payments made by [defendant's] reversal of its prior
denial of [plaintiff's] benefits"); DeVito v. Pension Plan of
Local 819, 975 F. Supp. 258, 270-273 (S.D.N.Y. 1997) (granting
defendants summary judgment on plaintiff's claim for additional
interest on underpayment of benefits because such an interest
claim is for extracontractual damages that are not available
under ERISA); Frank v. Civil Service Employee Assoc'n, Inc.,
91-CV-673, 1992 WL 73191 (W.D.N.Y. March 20, 1992) (granting
defendant's motion to dismiss plaintiff's claim for interest
stemming from five month delay in payment of lump sum retirement
benefit, and, in so doing, noting: "[t]his Court . . . finds that
the plaintiff has failed to state a cause of action because
extra-contractual damages are not available under section
1132(a)(3)" and because section 1132(a)(1)(B) is "inapplicable"
because plaintiff sought neither benefits due pursuant to the
applicable plan nor the enforcement of any provision of the
Outside this circuit, in Scott v. Central States, Southeast
and Southwest Areas Pension Plan, 727 F. Supp. 1095 (E.D.Mich.
1989), defendant approved plaintiff's claim for pension benefits
twelve years after plaintiff submitted the claim. Plaintiff
sued*fn3 for interest during the delay period. The court
concluded that, since the pension plan did not prescribe interest
payments for delays, the claim was extracontractual. Id. at
1098. The court, relying on Russell and subsequent cases
interpreting Russell in other contexts*fn4, held that
are not available under ERISA. Id.*fn5
This Court agrees with the reasoning and holdings in Klein,
O'Rourke, DeVito, Frank, and Scott, which find claims for
extracontractual damages, such as plaintiffs, are precluded under
ERISA. The court finds instructive DeVito's analysis of the
issue raised in Hizer:
The Court finds a clear distinction between an award
of prejudgment interest and an independent judgment
for interest on a delayed payment. See generally
Cefali v. Buffalo Brass Co., 748 F. Supp. 1011, 1025
(W.D.N.Y. 1990) (noting distinction between award of
prejudgment interest on damages recovered and
independent action solely to recover extracontractual
damages). A court can only award prejudgment interest
upon finding that a defendant violated a provision of
ERISA for which Congress authorized relief. In
contradistinction, in order to award damages on an
independent claim for extracontractual interest, the
Court must create a cause of action which Congress
did not provide for under ERISA. As the Supreme Court
stated in Russell, "[t]he six carefully integrated
civil enforcement provisions found in [section
1132(a)] of the statute as finally enacted, however,
provide strong evidence that Congress did not intend
to authorize other remedies that it simply forgot to
incorporate expressly." 473 U.S. at 146, 105 S.Ct. at
3092. As to extracontractual interest, this Court
refuses to find that a right exists under ERISA
without instruction from Congress to do so,
particularly in light of the Supreme Court's
suggestion in Russell that no such right exists.
DeVito, supra, 975 F. Supp. at 270-273.
Walsh received the amount of benefits due to him. The damages
he seeks stem merely from Kodak's payment of plaintiff's lump sum
benefit later in the month than he would have liked. He does not
allege that the plan provided that interest was to be paid
between his retirement date and the date when actual payment was
made. Nor does he allege that Kodak ever made any representation
that he was to receive any such interest. He therefore had no
false expectation at the time he chose to retire that he would be
paid such interest. It is inescapable that Walsh simply seeks
extracontractual damages, which are unavailable under ERISA.
ERISA Section 502(a)(3)(B)
With respect to section 1132(a)(3)(B), the Supreme Court, in
Mertens v. Hewitt Assocs., 508 U.S. 248, 113 S.Ct. 2063, 124
L.Ed.2d 161 (1993), interpreted this section's provision for
"other appropriate equitable relief" to preclude claims for
monetary damages, which the Court described as "the classic form
of legal relief." Id., 508 U.S. at 255, 113 S.Ct. 2063.
I am aware that on December 18, 1998, the Third Circuit in
Fotta v. Trustees of the United Mine Workers of America Health
and Retirement Fund, 165 F.3d 209 (3d Cir. 1998), recognized, as
a matter of first impression in that circuit, an independent
claim for interest under ERISA based on section 1132(a)(3)(B).
Id., 165 F.3d at 213. The court held that section 1132(a)(3)(B)
is the statutory basis for such actions, and that "interest is
appropriate when ERISA benefits have been delayed." Id., 165
F.3d at 213-214.
In the Second Circuit, however, I find no evidence that any
similar rule has been adopted. To the contrary, in Lee v.
Burkhart, supra, 991 F.2d 1004, the Second Circuit stated:
Money damages are generally unavailable under
[section 1132(a)(3)]. 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., 991 F.2d at 1011.
Moreover, in Fotta, the payment of benefits had been withheld
for a period of over nine years, which the Third Circuit aptly
described as a period of "considerable delay." Fotta, 165 F.3d
at 211. Assuming that Kodak's payment was delayed for twenty-five
days, as plaintiff alleges, it can hardly be deemed of the same
proportion, especially given plaintiff's admission that Kodak
informed him prior to his retirement that the payment would be
delayed for administrative reasons and plaintiff's further
concession that the issue of interest was not discussed during
his retirement interview. Finally, I am unaware that any other
circuit has cited the Fotta decision to overturn the widely
held view that a claim for interest is one for extracontractual
damages that is unavailable under ERISA. Therefore, because
plaintiff seeks only compensatory damages, relief under section
1132(a)(3)(B) is precluded.
Kodak Is Not A Proper Party
Although Kodak fails to raise the following point, this Court
further notes that, in the instant case, neither the plan,
presumably the Kodak Retirement Income Plan, nor the
administrators or trustees of the plan are named as defendants.
Plaintiff has elected to name Kodak as the sole defendant. In
this circuit, however, "[i]n a recovery of benefits claim [under
29 U.S.C. § 1132(a)(1)(B)], only the plan and the administrators
and trustees of the plan in their capacity as such may be held
liable." Crocco v. Xerox Corp., 137 F.3d 105, 107 (2d Cir.
1998), quoting Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1199
(2d Cir. 1989); see also Muller v. First Unum Life Ins. Co.,
23 F. Supp.2d 231 (N.D.N.Y. 1998) (denying plaintiff's motion to
amend the complaint to add ERISA claim against employer); Esden
v. Bank of Boston, 5 F. Supp.2d 214, 217 (D.Vt. 1998) (dismissing
plaintiff's claim pursuant to § 502(a)(1)(B) against employer);
Brannon v. Tarlov, 986 F. Supp. 146, 152 (E.D.N.Y. 1997) ("[t]he
plan participant's employer is not a proper party defendant
[under § 502(a)(1)(B)]"), aff'd, 164 F.3d 617 (2d Cir. 1998).
For this additional reason, therefore, plaintiff's complaint
fails to state a claim under section 502(a)(1)(B) of ERISA.*fn6
Defendant's motion to dismiss (Dkt.# 4) is granted. The
complaint is dismissed with prejudice.
IT IS SO ORDERED.