inducement, must be dismissed because, as a matter of law, it is
preempted by ERISA. Plaintiff claims that "Linotype-Hell agreed
that all of [Plaintiff's] benefits entitlements would have a
vesting date of December 8, 1975" to induce him to work for
Linotype. Comp. ¶ 27. Plaintiff further claims that he decided
to recommence employment for Linotype "[i]n reliance upon
Linotype-Hell's promise to pay all benefits based on his
original start-up date." Id. at ¶ 28. Finally, Plaintiff
claims that statements were made by Elizabeth Allen-Banks
wherein he was promised that "his benefits would be calculated
and paid out on the basis of his original start date of December
8, 1975 without break and without limitation." Id. at ¶ 30.
Plaintiff argues that his second cause of action should not be
preempted by ERISA because the fraud claim is not based upon
provisions of the Plan or amendments thereto rather, it is
"based on the misrepresentation that if Plaintiff would return
to the Company, his original start date of December 8, 1975
would be reinstated." Plaintiff's Memorandum of Law in
Opposition to Defendants' Summary Judgment Motion, pg. 8.
The preemption section of ERISA provides that ERISA "shall
supercede any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan."
29 U.S.C. § 1144(a). The language of the statute has been interpreted
broadly to preempt many state law causes of action and thereby
promote uniformity of laws regarding benefit plans. In
interpreting the preemption language of the statute, the Supreme
Court has held that "a state law `relates to' an ERISA plan `if
it has a connection with or reference to such a plan.'"
Egelhoff v. Egelhoff 532 U.S. 141, 121 S.Ct. 1322, 1327, 149
L.Ed.2d 264 (2001) (quoting Shaw v. Delta Air Lines, Inc.,
463 U.S. 85, 97, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983)).
"Civil enforcement provisions in ERISA [are] the exclusive
vehicle for actions by ERISA-plan participants asserting
improper processing of a claim for benefits." Camarda v. Pan
American World Airways, Inc., 956 F. Supp. 299, 305 (E.D.N.Y.
1997) (citing Pilot Life v. Dedeaux, 481 U.S. 41, 107 S.Ct.
1549, 95 L.Ed.2d 39 (1987)). More specifically, "[c]ommon law
claims of promissory estoppel, breach of contract, or fraud
. . . are pre-empted under ERISA." Sandler v. Marconi Circuit
Technology Corp., 814 F. Supp. 263, 265 (E.D.N.Y. 1993). The
preemption doctrine was intended to encompass "common law causes
of action that `purport to provide a remedy for the violation of
a right expressly guaranteed by [ERISA].'" MacKay v. Rayonier,
Inc., 25 F. Supp.2d 47, 51 (Conn. 1998) (quoting Diduck v.
Kaszycki & Sons Contractors, Inc., 974 F.2d 270, 288 (2d Cir.
1992)). Finally, "`[a] state law may relate to a benefit plan,
and thereby be preempted, even if the law is not specifically
designed to affect such plans or the effect is only indirect.'"
Id. (quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133,
139, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)).
Plaintiff argues that his claim should not be preempted
because "the claim clearly concerns misrepresentations about the
terms of Plaintiffs employment, not the Plan or any benefits
thereunder." Plaintiff's Memorandum of Law in Opposition to
Defendants' Summary Judgment Motion, pg. 7. Plaintiff cites
MacKay for the proposition that a claim alleging a
misrepresentation of the terms or length of employment is not
preempted by ERISA and, therefore, Plaintiff argues, that
because his claim regards the term of his employment it should
not be preempted. Id. (citing MacKay, 25 F. Supp.2d at 52).
Plaintiff's argument that his fraudulent inducement claim
permitted to stand is an effort to circumvent the preemption
doctrine. Plaintiff's fraudulent inducement claim relates
directly to the benefits to which he alleges he is entitled
under the Plan. Whether he frames the argument as one for
fraudulent inducement or under ERISA, the claim is based upon
his assertion that changes were made to the standard severance
plan through a variety of letters and oral representations. Any
claim relating to an employer's severance plan is preempted by
ERISA. See Tappe v. Alliance Capital Mgmt. L.P., 177 F. Supp.2d 176,
187 (S.D.N.Y. 2001). The Supreme Court recently stated that
"[o]ne of the principal goals of ERISA is to enable employers
`to establish a uniform administrative scheme, which provides a
set of standard procedures to guide processing of claims and
disbursement of benefits.'" Egelhoff, 121 S.Ct. at 1328
(quoting Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9, 107
S.Ct. 2211, 96 L.Ed.2d 1 (1987)). Permitting Plaintiff to
maintain his fraudulent inducement claim when the gravamen of
that claim rests on a factual determination of the provisions of
the Plan and the permissibility of purported amendments thereto,
both of which are subject to the provisions of ERISA, would not
promote uniformity of the laws governing such plans.
Accordingly, Defendants' motion for summary judgment with
respect to Plaintiffs second cause of action is GRANTED because,
as a matter of law, Plaintiffs fraudulent inducement claim is
preempted by ERISA.
(2) Plaintiffs claim alleging a violation of ERISA
As more fully set forth above, Plaintiff claims that
Defendants breached their contract with Plaintiff to pay him a
severance package based upon the date he was initially hired.
The administrator of the Plan, Linotype, determined that,
pursuant to the terms of the Plan, he was only entitled to a
severance package based upon the date of his most recent hire. A
preliminary issue that must be addressed is the standard of
review that this Court must employ in deciding Plaintiffs claim.
Defendants argue that "the decision to deny Plaintiffs claim for
additional severance benefits [made by the Administrator] must
be affirmed unless it was arbitrary and capricious."
Defendants' Memorandum of Law in Support of their Summary
Judgment Motion, pg. 4 (citing Miller v. United Welfare Fund,
72 F.3d 1066, 1070 (2d Cir. 1995) (finding that the standard
that a district court must employ when reviewing an
administrative decision requires a determination of whether the
decision was arbitrary and capricious, so long as the plan
grants fiduciary discretionary authority to an administrator to
construe the terms of the plan)). Plaintiff argues that the
Court should employ a de novo standard of review because the
administrator did not in fact have discretion to determine
Plaintiffs eligibility for coverage. See Plaintiff's Memorandum
of Law in Opposition to Defendants' Summary Judgment Motion,
The parties agree that if the Administrator did have
discretion to make the determination as to Plaintiffs benefits,
the proper standard of review is the arbitrary and capricious
standard. Plaintiff asserts that the Administrator did not have
discretion to make the determination as to him because none of
the four exceptions to eligibility to partake in the Plan, as
defined therein, could be attributed to him, requiring that he
be covered by the Plan and, therefore, according to Plaintiff,
removing any discretion from the Administrator. Plaintiff notes
that he has denied, in his Rule 56.1 Counter Statement, that
"the Plan afforded Linotype the broad or fiduciary authority to
make any such
determinations for any employees." Id. at 10.
The Plan specifically gives discretionary authority to the
"Plan Administrator" to determine "for each employee of [sic]
Company all questions about eligibility, entitlement to
Severance, and the date on which eligibility or entitlement
ceases." Ull. Depo. Ex. 3. The amount of money to which a Plan
participant is entitled, based upon the terms of the Plan, is
most certainly covered by the grant to the Administrator of
discretionary authority to determine "all questions about
eligibility [or] entitlement to Severance." Id. Plaintiff's
interpretation that the terms of the Plan preclude the
Administrator from making determinations, as defined above, in
its discretion if a party is an "Eligible Employee" pursuant to
the terms of the Plan, is incorrect. Moreover, Plaintiff ignores
language in the very section of the Plan that defines "Eligible
Employee," which provides that such employee "shall be eligible
for coverage under the Plan (an "Eligible Employee") as of his
most recent date of hire." Id. Viewing the evidence in a light
most favorable to Plaintiff, the Court finds that the Plan does
grant discretionary authority to the Administrator to make the
determinations as to employees' eligibility and to construe the
terms of the Plan as it applies to such employees. Accordingly,
the Court will review the Administrator's decision to grant
Plaintiff severance based upon his start date in 1994 to
determine whether such decision was arbitrary or capricious.
The question for this Court to consider is "whether the
decision [made by the Administrator] was based on a
consideration of the relevant factors and whether there was been
a clear error of judgment." Jordan v. Retirement Comm. of
Rensselaer Polytechnic Inst., 46 F.3d 1264, 1271 (2d Cir. 1995)
(internal quotation marks and citations omitted). If the
administrative determination is "without reason, unsupported by
substantial evidence or erroneous as a matter of law," this
Court has the power to overturn that decision. Pagan v. NYNEX
Pension Plan, 52 F.3d 438, 442 (2d Cir. 1995) (internal
quotation marks and citations omitted). Thus, on a motion for
summary judgment, it must be determined whether there exists a
material issue of fact in dispute regarding the factors
considered by the Administrator, and whether as a matter of law
his or her decision based on those factors constitutes a clear
error of judgment.
No clear or legal error exists here, nor does the
Administrator's decision lack a basis in fact. Plaintiff has
completely failed to raise any genuine issue of material fact
which would make the Administrator's determination arbitrary or
capricious. The terms of the Plan expressly exclude service
prior to the "most recent date of hire." Ull. Depo. Ex. 3.
Plaintiff argues that there is an inherent conflict of interest
in designating Linotype as the Administrator of the Plan and
that such conflict caused the Administrator to ignore facts
required to make an informed decision, to ignore the oral and
written representations made to Plaintiff prior to the
commencement of his employment and to fail to interview people
that may have substantiated Plaintiffs position. See
Plaintiff's Memorandum of Law in Opposition to Defendants'
Summary Judgment Motion, pg. 13. Defendants argue that
Plaintiff cannot meet his burden because he was properly paid
pursuant to the terms of the Plan. See Defendants' Memorandum
of Law in Support of their Summary Judgment Motion, pg. 5.
As a matter of law, a benefit plan covered by ERISA cannot be
amended orally. ERISA requires that all employee benefit plans
be in writing, the amendment
procedures must be explicitly set forth and those whom must
approve an amendment must be identified. See 29 U.S.C. § 1102.
The Plan requires a resolution by the Board of Directors of
Linotype approving any amendment made to the Plan. Accordingly,
neither the oral representations made to Plaintiff prior to
employment nor the letters received by Plaintiff can act to
amend the terms of the Plan, because neither were approved by a
resolution of the Board of Directors.
The Plan explicitly sets forth the formula to determine the
amount of severance benefits to which each employee is entitled.
An Eligible Employee is entitled to "two (2) weeks of base pay
plus two (2) weeks of base pay for each year of continuous
service." Ull. Depo. Ex. 3. To reiterate, an "Eligible
Employee" is "(i) a full time salaried employee; and (ii) not
ineligible under Section 3(b)." Id. Section 3(b) provides that
"[a]n employee of Company is not an Eligible Employee if: (i) he
has waived coverage pursuant to the Plan; (ii) he is covered by
a collective bargaining agreement with [sic] Company that does
not expressly provide coverage pursuant to the Plan; (iii) he is
covered by a separation agreement with [sic] Company which
excludes Severance pursuant to the Plan; or (iv) he is covered
by another severance plan adopted by the Company." Id.
Finally, eligibility and benefits are explicitly based upon the
"most recent date of hire." Id.
Plaintiff, upon termination was eligible for severance
benefits as follows: 2 weeks pay plus two weeks for each
continuous year of service since the date of the most recent
hire (August 8, 1994 through December 31, 1997 is 3
years),*fn5 for a total of 8 weeks of pay. Plaintiff was
offered an incentive of an additional 13 weeks of severance pay
to stay with Defendants as an employee for a period of time,
which he accepted. Therefore, upon his termination, Plaintiff
should have received 21 weeks of severance pay. This is
consistent with the determination of the Administrator. This
Court finds that the Administrator's decision was neither
arbitrary nor capricious but rather based in fact and law.
Accordingly, the Administrator's decision is AFFIRMED and
Defendants' summary judgment motion as to Plaintiffs ERISA claim
For all the aforementioned reasons, Defendant's motion for
summary judgment is GRANTED in its entirety.
The Clerk of the Court is directed to mark this case as