United States District Court, Western District of New York
April 14, 2003
NORMAN R. BOCK, JR., PLAINTIFF, VS. ALLIED WASTE INDUSTRIES, INC., INDIVIDUALLY AND AS PLAN ADMINISTRATOR AND FIDUCIARY, AND ALLIED WASTE INDUSTRIES, INC. SEPARATION BENEFITS PLAN, ITS PLAN ADMINISTRATOR AND COMMITTEE, DEFENDANTS.
The opinion of the court was delivered by: John T. Elfvin, Senior District Judge.
MEMORANDUM and ORDER*fn1
Plaintiff commenced this action against his former employer, Allied Waste Industries, Inc. ("Allied"), pursuant to section 502 of the Employee Income Retirement Security Act ("ERISA"), 29 U.S.C. § 1132, seeking payment of benefits that he alleges have been denied to him by Allied's Benefits Administrator.*fn2 Presently before the Court is Allied's motion for summary judgment. For the reasons stated hereinbelow, defendant's motion will be granted.
The facts in this case are largely undisputed.*fn3 Bock was an employee of Browning-Ferris Industries, Inc. ("BFI") when it was acquired by Allied on July 31, 1999. At the time of the acquisition, BFI had been providing waste management services to Ford Motor Company ("Ford") pursuant to a three-year "Total Waste Management" ("TWM") contract — effective from May 1, 1997 to April 30, 2000. Pursuant to such contract, certain BFI employees — including Bock — worked at various Ford facilities providing on-site waste management supervision. Bock, an Integrated Waste Supervisor, performed such services at a Ford facility in the Buffalo, N.Y. area. Bock's position and job duties were not immediately affected by Allied's acquisition of BFI and he continued thereafter to work as an Integrated Waste Supervisor at the Ford facility. However, Bock subsequently learned, in February of 2000, that Allied and Ford would not be renewing the TWM contract that was to expire on April 30, 2000.*fn4 On April 6, 2000 Allied convened a company meeting among those employees who were working pursuant to the TWM contract in order to inform them of the status of such contract and to offer them a retention bonus to remain with the company. According to a memorandum that was issued at the meeting, Ford had requested that Allied provide "transition assistance" to it in conjunction with the expiration of the TWM contract in order to help Ford "prepare, issue and award competitive bids." Bock Decl., Ex. A. Accordingly, employees were offered a retention bonus by Allied to "remain with BFI until the facilities for which [they were] responsible [were] no longer the responsibility of BFI." Ibid.*fn5 Bock accepted the retention bonus and continued to work thereafter as an Integrated Waste Supervisor until he was terminated by Allied on November 30, 2000. Following his termination, Bock made a formal request for severance benefits via a January 30, 2001 letter from his attorney, Robert F. LaDuca, Jr., Esq.
According to LaDuca's letter, Bock had claimed that he was eligible to receive benefits pursuant to the provisions of Allied's Separation Benefits Plan (the "Plan"). Allied had established such in conjunction with its acquisition of BFI to, inter alia, "provide separation benefits to certain Allied and Browning-Ferris Industries, Inc. ("BFI") employees whose employment may [have been] adversely affected by the acquisition of BFI by Allied." Compl., Ex. A. The Plan's eligibility requirements are found in Article 3, which reads, in pertinent part:
"Eligibility. All employees of BFI or Allied *** shall
be eligible to participate in the Plan and to receive
Benefits *** if they meet the following criteria:
(c) The employee's employment is terminated during
the time period beginning at the Effective Time
and ending twelve months after the Effective
Time by either:
(i) BFI or Allied, but only if the termination is
Without Cause, or
"Additionally, all employees of BFI *** who meet the
following criteria shall be eligible to participate in
the Plan and to receive Benefits ***:
(a) In conjunction with the acquisition of BFI by
Allied, the employee continues employment in a
transitional position with BFI or Allied;
(c) The employee's employment is terminated by either:
(i) BFI or Allied, but only if the termination is
Without Cause, ***." Declaration of Donna
Marquette, Ex. B, § 3.01.
Thus, an employee is eligible to receive benefits under the Plan if he either (1) was terminated within twelve months of the date of the acquisition or (2) continued employment in a transitional position in conjunction with the acquisition.*fn6
Bock claimed that he was eligible to receive benefits under section 3.01 because (1) he was a "transitional employee" for nine months and (2) "prior to his termination he was advised that his position was being eliminated, and that there was no other position available for him." LaDuca Decl., Ex. A. Allied subsequently denied Bock's claim — in a March 27, 2001 letter — because, according to Allied, he had not met the eligibility requirements of the Plan. Specifically, Allied found that Bock was ineligible for benefits because (1) the date upon which he was terminated — November 30, 2000 — was not within twelve months of the effective date of the Plan and (2) he was not specifically identified as a transitional employee by Allied.*fn7 LaDuca Decl., Ex. B. Bock subsequently commenced this action against Allied in New York Supreme Court, County of Niagara. Allied removed such to this Court on September 6, 2001.
In bringing this ERISA claim, pursuant to 29 U.S.C. § 1132(a)(1)(B),*fn8 plaintiff asserts that he is entitled to benefits under the Plan because he meets the eligibility requirements of section 3.01. Specifically, he claims — as he did to Allied's Plan Administrator — that he is eligible (1) because he was "effectively terminated" prior to July 30, 2000 and (2) because he was a transitional employee. Plaintiff has also asserted a separate cause of action claiming that his denial of benefits was discriminatory and that Allied has not administered the Plan in a uniform manner as required by ERISA.
Rule 56(c) of the Federal Rules of Civil Procedure ("FRCvP") provides that summary judgment shall be entered where the movant demonstrates that there is "no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." A genuine issue of fact exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In deciding whether summary judgment is appropriate this Court must take all factual inferences in favor of the non-moving party.*fn9 Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970).
In support of its motion for summary judgment, Allied first argues that its decision regarding Bock's eligibility under the Plan is entitled to a deferential standard of review because the Plan gives discretionary authority to its Administrator. Allied further asserts that such review is limited in this case to one of arbitrariness and caprice. The Court agrees.
"[A] denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Thus, if the Plan confers upon the administrator the "discretionary authority to determine eligibility," the administrator's ultimate decision regarding such eligibility will not be disturbed unless it is arbitrary and capricious. Pagan v. NYNEX Pension Plan, 52 F.3d 438, 441 (2d Cir. 1995).
Defendant's Plan confers such discretionary authority upon its Administrator. Section 5.03 provides:
"The Administrator shall have the following rights,
powers and duties:
(a) The decision of the Administrator in matters
within its jurisdiction shall be final, binding, and
conclusive upon Allied and upon any other person
affected by such decision, subject to the claims
procedure hereinafter set forth.
(b) The Administrator shall have the duty and
authority to interpret and construe the terms and
provisions of the Plan, to decide any question which
may arise regarding the rights of employees,
participants, and beneficiaries, and the amounts of
their respective interests, to adopt such rules and to
exercise such powers as the Administrator may deem
necessary for the administration of the Plan, and to
exercise any other rights, powers or privileges
granted to the Administrator by the terms of the
Plan." Marquette Decl., Ex. B, § 5.03 (emphasis
Such a clause — which confers discretion upon the Administrator to interpret and construe the provisions of the Plan — leads this Court to proceed under the highly deferential arbitrary and capricious scope of review. See Jordan v. Retirement Committee of Rensselaer Polytechnic Inst., 46 F.3d 1264
, 1270-1271 (2d Cir. 1995) (citing several court decisions where language similar to that found in section 5.03 of the Plan has led courts to apply the arbitrary and capricious standard of review to administrators' decisions). Consequently, this Court shall not disturb Allied's decision regarding plaintiff's eligibility under the Plan unless it is "without reason, unsupported by substantial evidence or erroneous as a matter of law."*fn10
Boesel v. Chase Manhattan Bank, N.A., 62 F. Supp.2d 1015, 1031 (W.D.N.Y. 1999) (citation and quotation omitted). In other words, the issue for the Court is "whether [Allied's] decision was based on consideration of the relevant factors and whether there has been a clear error of judgment." Jordan, at 1271.
Applying the foregoing principles of law to the facts of this case, the Court finds that Allied's determination regarding Bock's eligibility under the Plan was not arbitrary or capricious. Plaintiff first argues that he is entitled to separation benefits because he was "effectively terminated" within twelve months after the date of the acquisition. While he admits that he was actually terminated on November 30, 2000, plaintiff contends that was effectively terminated "by virtue of the loss of the [Ford Contract] on or about February 27, 2000, or the lack of its renewal before April 30, 2000." Compl. ¶ 18. Plaintiff's argument is unavailing.
As explained in the March 27, 2001 letter denying Bock's claim for benefits, Allied had determined that Bock was not eligible because he was not terminated until November 30, 2000 — four months after the last day in which a terminated employee would have been eligible for separation benefits under section 3.01(c). Such a decision is not only reasonable but fully supported by the express language of section 3.01(c) — which clearly provides that an employee is eligible for benefits if, inter alia, "[t]he employee's employment is terminated [within twelve months of the July 31, 1999 acquisition date]." Marquette Decl., Ex. B, § 3.01(c). There is simply nothing within the Plan to support plaintiff's interpretation of section 3.01(c) — to wit, that he was eligible because his employment had been effectively terminated upon the expiration of the TWM contract in April of 2000.*fn11 Thus, because Allied's determination regarding Bock's eligibility was consistent with the terms of section 3.01(c) and because Bock has not shown that such determination was arbitrary and capricious, summary judgment will be granted to Allied with respect to plaintiff's first and second causes of action.*fn12
Plaintiff's alternative theory of eligibility is that he was a transitional employee as contemplated by section 3.01(a) of the Plan. The term "transitional position" is not defined by the Plan and in denying Bock's claim, Allied construed section 3.01(a) to mean that it only provided eligibility for "those individuals who were identified by Allied as being a transitional employee." LaDuca Decl., Ex. B. Accordingly, Allied explained that Bock was not eligible under section 3.01(a) because he was never initially identified by Allied as a transitional employee in conjunction with its acquisition of BFI. Allied offers the same rationale in support of its motion for summary judgment and further argues that its decision not to identify Bock initially as a transitional employee was not arbitrary and capricious. Bock contends that he should have been so identified and that Allied's contrary decision was arbitrary and capricious.
As a preliminary matter, the Court must clarify the issue in this case because it appears that both parties have, to a certain degree, misstated the scope of the Court's inquiry. In their arguments, the parties have erroneously framed the issue as whether or not it was arbitrary and capricious for Allied not to identify Bock as a transitional employee. However, the Court is not concerned with the propriety of Allied's business decisions that were made in conjunction with its acquisition of BFI and it is therefore irrelevant whether a particular BFI employee was correctly identified by Allied as a transitional employee. This is an ERISA action brought by plaintiff to recover benefits that he claims he is due under the Plan and the Court's only concern is Allied's reason for denying such claim. Therefore, whether or not Bock should have been identified as a transitional employee by Allied at the time of the acquisition is not before the Court as an issue. Rather, the only proper issue is whether Allied's determination that Bock is ineligible under the Plan — based on the fact that he had not been specifically and previously identified as a transitional employee — was arbitrary and capricious. The Court finds that it was not.*fn13
Allied's determination is supported by the purpose and intent of the Plan. Section 1.02 reads as follows:
"The purpose of the Plan is to assist Allied in
achieving the synergies and economics of scale
relative to the acquisition of BFI by eliminating
overlapping staff and reorganizing to meet business
objectives. This Plan also is intended to offer
assistance, in the form of separation payment,
outplacement (where applicable) and other benefits, to
eligible, terminated employees." Marquette Decl., Ex.
B, § 1.02.
Thus, the Plan was designed not only to assist those employees who would be terminated due to the acquisition but also to facilitate a smooth transition while Allied integrated BFI's operations with its own. An integral part of such transition was the need to retain some key BFI employees identified by Allied as vital to such efforts. To induce such employees to remain with Allied during an indefinite transition period, Allied offered them the incentive package which included compensation in the form of, inter alia, separation benefits.*fn14
Thus, it is reasonable to conclude that such incentive package was intended to correspond with, or supplement, section 3.01(a) — which provides benefits to those employees who, in conjunction with the acquisition, remained with Allied in a transitional position. Such conformity provides a reasonable basis for Allied's determination that section 3.01(a) applies only to those individuals who were specifically identified by Allied as transitional employees in conjunction with the acquisition. Consequently, it was reasonable for Allied to conclude that Bock was ineligible under the Plan because he was never identified as a transitional employee.
Plaintiff's interpretation of section 3.01(a) is simply too broad in that there is nothing to indicate that the Plan was intended to provide benefits to every BFI employee who may have assisted Allied, in some capacity, during the transition. Furthermore, even if plaintiff's interpretation were found to be reasonable, the Court would still have to defer to Allied's interpretation. See Pagan, at 443 ("Where it is necessary for a reviewing court to choose between two competing yet reasonable interpretations of a pension plan, [the] Court must accept that offered by the administrators."). In sum, the Court finds that Allied's determination regarding Bock's eligibility is reasonable, supported by substantial evidence and not erroneous as a matter of law. Therefore, because this Court's scope of review is limited to whether such a decision is arbitrary and capricious and because Bock has not raised any issues of material fact that could support his proposed finding, summary judgment will be granted to Allied with respect to Bock's third and fourth causes of action.
Accordingly, it is hereby ORDERED that defendants' motion for summary judgment is granted in its entirety and that the clerk of this Court shall close this case.
*fn2 Plaintiff has named two defendants in his Complaint. They will hererinafter be collectively referred to as "Allied" or "defendant."
*fn3 As an initial matter, defendant asserts, pursuant to Rule 56 of the Local Rules of Civil Procedure, that its Statement of Undisputed Facts should be deemed wholly uncontroverted by the Court because plaintiff did not timely file his Statement of Disputed Material Facts in opposing the summary judgment motion. It is unnecessary to make such a finding inasmuch as defendant's motion for summary judgment will be granted despite the Court's consideration of plaintiff's Statement of Disputed Material Facts. It therefore is unnecessary to rule on any such untimeliness vel non.
*fn4 On February 28, 2000, Jeff Mailloux, a General Manager under the TWM Contract, had sent an e-mail to Bock and several other employees who were performing services under such contract. The e-mail reads:
"By now most of you have probably heard that
BFI/Allied will no longer be a Tier 1 vendor to Ford.
What does this mean, it means that we will be allowed
to manage what contracts we have in place till [sic]
they expire and transition over the next 10 months
those plants whos [sic] contract [sic] have expired.
We are still working out the timetable with Ford on
this. We will be bringing all of you folks together
next week to roll out our transition plan, at that
time we will be able to answer any questions that you
may have. Thank you." Bock Decl., Ex. A.
While the memorandum indicates that the amount of the retention bonus being offered was equal to 10% of an employee's annual base salary, Bock had apparently been separately offered a 20% retention bonus to remain with the company. Bock Decl. ¶ 2(b).
*fn6 Allied subsequently issued a Summary Plan Description — revised as of April 10, 2000 — wherein it provides eligibility for an employee "if [he was] identified as a transitional employee." Marquette Decl., Ex. A.
*fn7 In conjunction with the acquisition in July of 1999, Allied had identified certain employees who it believed could assist them in integrating BFI's operations with those of Allied. Accordingly, Allied sent letters to such employees requesting that they stay and assist Allied for an indefinite period of time during the transition. In exchange, Allied offered such employees an incentive package including, inter alia, a transition bonus and separation benefits under the Plan in the event that the employee was not eventually offered a job with Allied. See Marquette Decl., Ex. C. It is undisputed that Bock did not receive such a letter and that he was not specifically identified as a transitional employee by Allied.
*fn8 Section 1132(a)(1)(B) reads, in pertinent part, that "[a] civil action may be brought — *** to recover benefits due to him under the terms of his plan ***." —
*fn9 Nevertheless, the non-moving party must rebut the motion for summary judgment with more than conclusory allegations and general denials. FRCvP 56(e); see also Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir. 1998) ("Conclusory allegations, conjecture and speculation *** are insufficient to create a genuine issue of fact"). Furthermore, summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-323 (1986).
*fn10 Substantial evidence is "such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the decisionmaker and requires more than a scintilla but less than a preponderance." Boesel, at 1031.
*fn11 In fact, plaintiff's attempt to characterize his employment status as dependent on the existence of the TWM contract is belied by his own Declaration, wherein he states: "I was not employed `pursuant to' (or because of) of [sic] the [TWM Contract] between BFI and the Ford Motor Company (Ford)." Bock Decl. ¶ 3(a).
*fn12 Plaintiff's causes of action are listed in his Verified Complaint as "Counts."
*fn13 Clarification of the issue is also necessitated by Bock's primary argument in opposition to Allied's summary judgment motion — to wit, that there are issues of fact whether he should have initially been identified by Allied as a transitional employee. Such an argument does not raise any issues of fact material to whether Allied's reason for denying Bock's claim for benefits — that he had not been previously identified as a transitional employee — was unreasonable or erroneous as a matter of law.
*fn14 See note 7, supra, (explaining the specifics of the incentive package).