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United States District Court, S.D. New York

July 7, 2004.

NICHOLAS BOUBOULIS, et al., Plaintiffs,

The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge



  Twenty-three retired employees of defendant Transport Workers Union of Greater New York, Local 100 ("Local 100") and twenty-two of their wives, bring this action against Local 100, the Transport Workers Union of America ("TWU"), and the TWU Local 100 Staff Benefit Plan (the "Plan"). Plaintiffs seek equitable and monetary relief in connection with defendants' termination of their health insurance coverage under the Plan, which forced plaintiffs to revert to inferior coverage provided by plaintiffs' other former (or, in one case, current) employers. Plaintiffs assert claims based on breach of contract and breach of fiduciary duty, pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"),*fn1 as well as promissory and equitable estoppel. Defendants now move for summary judgment. For the reasons set forth below, defendants' motion is granted as to both the ERISA and the equitable estoppel claims, but granted in part and denied in part with regard to the promissory estoppel claim.


  Plaintiffs are retired former staff members of Local 100 ("Retirees") and their wives.*fn2 Retirees are also active or retired employees of the New York City Transit Authority or of its subsidiary, the Manhattan and Bronx Surface Transit Operating Authority (collectively, the "TA").*fn3

  Local 100 is a local union that represents TA employees and is affiliated with the TWU, a national union.*fn4 Although Local 100 is governed by the TWU's constitution, it has its own bylaws, elects its own officers, employs its own staff, has its own building, and has its own revenue stream from membership dues.*fn5 The Plan is an employee benefit plan sponsored by the TWU, in which Local 100 participates.*fn6

  Between 1971 and 1991 each of the Retirees left his job at the TA to take a job with Local 100. Many of the Retirees claim that they were told or promised by Local 100 officers or staff either before they were hired, upon being hired, when considering retirement, or at various other times during their employment, that they would have lifetime health insurance coverage under the Plan.*fn7 All Retirees believed that they were guaranteed lifetime health coverage.*fn8 The health benefits provided to Retirees under the Plan were superior to those offered by the TA to its active and retired employees.*fn9

  The terms of the Plan are set out in two documents. The complete terms and conditions of the Plan are detailed in a Group Insurance Certificate*fn10 that has been in effect since April 1, 1981.*fn11 The terms of the Plan are also summarized in a summary plan description (the "SPD")*fn12 which was distributed in 1982.*fn13 Among other things, the SPD provides that "[t]he benefits outlined herein apply to both active and retired members of the TWU staff."*fn14 The SPD contains no express reservation of the right to amend or terminate coverage under the Plan. Under the terms of the Plan, plaintiffs' health insurance was funded by the payment of premiums by Local 100.*fn15

  In a letter to Plan participants dated April 17, 1989,*fn16 then Local 100 president Sonny Hall announced a modification to the terms of the Plan. Under the SPD, when a participant died, his or her spouse's insurance coverage under the Plan continued for only one year after the participant's death. Hall's letter announced that effective January 1, 1989, a spouse of a participant who died would continue to be covered for the remainder of the spouse's life. In 1998 or 1999, there was a meeting between Dennis Calhoun (then Secretary-Treasurer of Local 100), William James (then President of Local 100), Sonny Hall (TWU President), and David Rosen (the TWU's attorney) during which Rosen advised the others that there were no guarantees of life-long health insurance under the Plan, and that the health insurance coverage could be changed or terminated.*fn17 In December 1999, Local 100 stopped providing free health insurance to its active employees, though it continued to provide coverage to its retirees.*fn18 Also in 1999, William James promised or told several Retirees that although Plan coverage for active employees was being terminated, those employees would be covered again after retirement.*fn19 In a letter to Local 100's administrative coordinator, dated December 28, 1999,*fn20 Calhoun stated that anyone who retired from Local 100 would receive health insurance under the Plan, paid for by Local 100. At least one Retiree received a copy of this letter when it was distributed at a staff meeting.*fn21

  In December 2000, Roger Toussaint and Ed Watt were elected to the positions of President and Secretary-Treasurer, respectively, of Local 100, and they assumed office in January 2001.*fn22 In December 2001, Toussaint wrote a letter to TWU President Sonny Hall, in which Toussaint notified Hall that Local 100 was considering scaling back its benefits for active and retired Local 100 officers, and asked Hall if any promises or assurances had been made to Local 100 employees regarding the modification or termination of benefits.*fn23 In his deposition, Toussaint stated he did not recall whether Hall had informed him of any such promises.*fn24

  On April 16, 2003, Local 100 decided to stop paying health insurance premiums on behalf of all retirees who were entitled to receive health insurance from other employers. This decision became effective on or shortly after September 1, 2002.*fn25 As active or retired TA employees, Retirees are entitled to health insurance at no cost through the TA.*fn26 As a result, they ceased to be covered under the Plan on September 1, 2002.*fn27

  Plaintiffs seek an injunction restoring their health insurance coverage under the Plan and preventing future ERISA violations by defendants. They also seek monetary damages to the extent they have incurred expenses as a result of their present, inferior health insurance, as well as costs and attorneys' fees.*fn28


  Rule 56 of the Federal Rules of Civil Procedure provides for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."*fn29 "An issue of fact is `material' for these purposes if it `might affect the outcome of the suit under the governing law[,]' [while] an issue of fact is `genuine' if `the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'"*fn30

  In determining whether issues of material fact are in dispute, a court must view the evidence "in the light most favorable" to the non-movant.*fn31 A court must then resolve all ambiguities and draw all reasonable factual inferences in favor of the non-moving party.*fn32 "Although the moving party bears the initial burden of establishing that there are no genuine issues of material fact, once such a showing is made, the non-movant must `set forth specific facts showing that there is a genuine issue for trial.'"*fn33

  The non-moving party may not "rest upon . . . mere allegations or denials."*fn34 "Statements that are devoid of any specifics, but replete with conclusions, are insufficient to defeat a properly supported motion for summary judgment."*fn35


  Plaintiffs first contend that the Plan documents contain a promise to vest plaintiffs' health insurance benefits for life and that defendants' cessation of their coverage constituted a violation of the Plan's terms. Second, plaintiffs contend that defendants breached duties they owed to plaintiffs as Plan fiduciaries. Finally, plaintiffs contend that principles of promissory and equitable estoppel bar Local 100 from terminating plaintiffs' coverage.

  A. Contractual Vesting

  Plaintiffs' first claim is brought pursuant to section 502(a)(1)(B) of ERISA, which permits a civil action by a plan participant "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."*fn36 The parties do not dispute that the Plan is an employee welfare benefit plan for ERISA purposes.*fn37 "Under ERISA it is the general rule that an employee welfare benefit plan is not vested and that an employer has the right to terminate or unilaterally to amend the plan at any time."*fn38 Nonetheless, an employer may agree to vest employee welfare benefits.*fn39 Plaintiffs contend that defendants promised to vest plaintiffs' health insurance benefits through language in the SPD, through the 1989 letter from Sonny Hall to Plan participants, and through various oral promises and representations.*fn40

  With respect to promises to vest ERISA welfare benefits, it is well settled in this Circuit that "to reach a trier of fact, an employee does not have to `point to unambiguous language to support [a] claim. It is enough [to] point to written language capable of reasonably being interpreted as creating a promise on the part of [the employer] to vest [the recipient's] . . . benefits.'"*fn41 The language in question must be "specific written language" that "affirmatively operates to create the promise of vesting."*fn42 Furthermore, "any agreement to vest [an employee's] benefits would . . . have to be memorialized at the same level of formality that [the employer] chose in promulgating the [employee welfare benefit plan] in the first place."*fn43 In this case, the Plan was promulgated in formal plan documents, namely, the Group Insurance Certificate and the SPD. Therefore, in order to be binding, any promise to vest employee benefits would have to be contained in the Group Insurance Certificate or the SPD, or in a document of the same level of formality.

  In support of their claim that defendants promised to vest plaintiffs' health insurance benefits, plaintiffs point to three aspects of the SPD. First, plaintiffs point to the following sentence in the SPD: "The benefits outlined herein apply to both active and retired members of the TWU staff."*fn44 Plaintiffs assert that this language operates as a promise to vest coverage for life, since "retirement lasted a lifetime."*fn45

  Plaintiffs' interpretation of this sentence cannot be right. Rather than operating as a promise to vest, this language does nothing "more than place retired workers in the shoes of active employees" for the purpose of administering benefits.*fn46 It cannot reasonably be interpreted as an affirmative promise to vest.

  Second, plaintiffs note that the SPD contains no express reservation of the right to change or terminate coverage.*fn47 The absence of a reservation, however, cannot constitute a promise, nor can it turn language that is not a promise into a promise. As the court observed in Joyce v. Curtiss-Wright Corp., "[t]he absence of language in [a plan document] flatly rejecting the concept of vesting does not alter the retirees' failure to identify language that affirmatively operates to imply vesting."*fn48

  Third, plaintiffs note that with respect to the Plan's accidental death and dismemberment insurance, the SPD explicitly states that coverage terminates on the date a retired employee turns sixty-five.*fn49 Plaintiffs also note that the only other reason mentioned in the SPD for termination of a retiree's benefits is the retiree's death.*fn50 Plaintiffs argue that since death is the only reason given for termination of a retiree's coverage, the SPD can reasonably be interpreted as promising to vest health insurance coverage for life.*fn51 However, this argument, like the previous one, infers the presence of a promise from the absence of language — in this case, language that would have specified other possible reasons for the termination of retirees' health benefits. The absence of such language alone cannot create a promise to vest.

  In addition to these textual arguments, plaintiffs rely on oral promises and representations that were allegedly made to them by Local 100 staff, and on the 1989 letter from Sonny Hall extending the coverage of spouses of deceased participants. Oral promises and representations are irrelevant, however, because a written promise is required in order to vest rights under an ERISA plan.*fn52 The 1989 letter from Sonny Hall is also unavailing, because it concerns only the benefits of spouses of deceased participants, not the benefits of the participants themselves. That letter contains no written promise to vest a participant's benefits.*fn53 In addition, Hall's letter does not rise to the level of formality of the documents in which the Plan is promulgated — i.e., the General Insurance Certificate and the SPD — and therefore cannot create a triable issue of fact.*fn54

  Plaintiffs have not identified any affirmative written language that could reasonably be interpreted as a promise to vest Retirees' health benefits under the Plan. There is therefore no triable issue of fact as to whether plaintiffs' health benefits were vested, such that defendants' cessation of plaintiffs' coverage violated the terms of the Plan. Summary judgment must be awarded in favor of defendants on plaintiffs' breach of contract claims.

  B. Breach of Fiduciary Duty

  Plaintiffs' second claim is brought pursuant to section 502(a)(3)(B) of ERISA, which permits a civil action by a plan participant "to obtain other appropriate equitable relief" to redress ERISA violations.*fn55 Plaintiffs contend that the TWU and Local 100 were Plan fiduciaries under section 3(21)(A) of ERISA,*fn56 and that they breached their fiduciary duties through inaction and active misrepresentation.

  1. The TWU's Alleged Breaches of Fiduciary Duty

  The parties do not dispute that the TWU was a Plan fiduciary under section 3(21)(A). Plaintiffs assert that the TWU breached its fiduciary duties in two ways. First, plaintiffs argue that when TWU president Sonny Hall became aware that Local 100 was considering scaling back its retiree benefits, he had a duty, which he allegedly did not fulfill, to alert Local 100 to the fact that Retirees had been promised lifetime health coverage. Second, plaintiffs claim that during a period when Dennis Calhoun and William James held official positions at the TWU as well as at Local 100, they had a duty to deal honestly and fairly with Plan participants, which they violated by promising or telling Retirees that health benefits were guaranteed for life, even though they knew the benefits could be modified or terminated.

  a. Failure to Communicate with Local 100

  Plaintiffs allege, based on Roger Toussaint's August 28, 2002 letter to Sonny Hall,*fn57 Toussaint's deposition,*fn58 and the allegations of numerous Retirees,*fn59 that Sonny Hall knew that Local 100 was considering altering Retirees' health coverage, that he knew that promises of lifetime coverage had been made by Local 100 to Retirees, and that he nonetheless failed to alert Local 100 of those promises.*fn60 Plaintiffs argue this alleged omission constituted a violation of the TWU's duty under ERISA to "discharge [its] duties with respect to [the] plan solely in the interests of the participants and beneficiaries."*fn61

  However, plaintiffs fail to identify any authority for their assumption that the TWU's duties with respect to the Plan included a duty to communicate with third parties, such as Local 100, that were not Plan participants. Although it is well settled in this Circuit that an ERISA fiduciary has "a duty to deal honestly and fairly with its beneficiaries,"*fn62 no court has recognized an affirmative duty to communicate with third parties. Thus, Sonny Hall, acting on behalf of the TWU, had no fiduciary duty to alert Local 100 that promises of lifetime coverage had been made to Retirees.

  b. Failure to Deal Honestly and Fairly With Plan Participants

  Plaintiffs allege that in 1999 and 2000, two officers of Local 100, Dennis Calhoun and William James, promised or told Retirees that they would have lifetime health benefits under the Plan, even though both had been informed by David Rosen that the benefits could be modified or terminated.*fn63 In addition, plaintiffs note that at that time, Calhoun was also a TWU vice president.*fn64 Plaintiffs thus suggest that Calhoun and James were acting as agents on behalf of the TWU when they communicated with Retirees about health benefits, and that their promises or misrepresentations therefore constituted a breach of the TWU's fiduciary duty to deal honestly and fairly with Plan participants.*fn65

  But plaintiffs do not allege facts sufficient to support any such agency theory. The only aspect of the record that suggests an agency relationship is the fact that Calhoun and James held positions at the TWU. In their depositions, however, both Calhoun and James testified that their duties for the TWU were limited almost entirely to attending a small number of meetings per year and that they received no pay from the TWU other than per diem stipends in connection with the meetings they attended.*fn66 Plaintiffs produced no evidence that Calhoun's and James's limited responsibilities in their positions at the TWU were in any way related to health benefits, or that the TWU exercised any control over Calhoun and James in their communications with Retirees, an essential element of an agency relationship.*fn67 Plaintiffs have therefore not met their burden of setting forth specific facts showing that Calhoun's and James's communications to Retirees were attributable to the TWU. Accordingly, plaintiffs' claim for breach of fiduciary duty against the TWU must fail.

  2. Local 100's Fiduciary Status

  Plaintiffs next argue that Local 100 is a Plan fiduciary under the terms of the SPD because the SPD states that "[t]he Plan Administrators are the Transport Workers Union of America and the Transport Workers Union of Greater New York Local 100,"*fn68 and section 3(21)(A) provides that "a person is a fiduciary with respect to a plan to the extent . . . (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan."*fn69

  However, "whether or not an individual or entity is an ERISA fiduciary must be determined by focusing on the function performed, rather than on the title held."*fn70 That is, despite being designated a "Plan Administrator" in the SPD, Local 100 is only a fiduciary if it performs the discretionary functions of a fiduciary. An entity that performs only "ministerial" functions such as "the application of rules determining eligibility for participation, calculation of services and benefits, and collection of contributions," is not a fiduciary, regardless of title.*fn71

  On the basis of the depositions of several former Local 100 officers, Local 100 asserts, and plaintiffs do not deny, that Local 100's responsibilities under the Plan were limited to purely ministerial functions.*fn72 Plaintiffs have produced no evidence to the contrary. As a result, plaintiffs have not met their burden of setting forth specific facts showing that Local 100 is a Plan fiduciary. Accordingly, plaintiffs have failed adequately to support their claim under section 502(a)(3)(B). Summary judgment must be awarded in favor of defendants on plaintiffs' breach of fiduciary duty claims.

  C. Promissory and Equitable Estoppel

  Finally, plaintiffs contend, on the basis of numerous alleged promises and representations of lifetime health coverage by Local 100 officers and staff, that principles of promissory and equitable estoppel bar Local 100 from terminating plaintiffs' health coverage under the Plan.*fn73

  1. Promissory Estoppel

  In this Circuit, "promissory estoppel in ERISA cases requires satisfaction of four elements drawn from the state common law of promissory estoppel: `(1) a promise, (2) reliance on the promise, (3) injury caused by the reliance, and (4) an injustice if the promise is not enforced.'"*fn74 In addition to these traditional elements, the Second Circuit has added an "extraordinary circumstances" requirement where principles of estoppel are applied in ERISA contexts, "[i]n order to lessen the danger that commonplace communications from employer to employee will routinely be claimed to give rise to employees' rights beyond those contained in formal benefit plans."*fn75

  a. Promise

  Sixteen of the Retirees allege that they received promises of lifetime health benefits.*fn76 Local 100 objects generally that each of these alleged promises was "more in the nature of a prediction than a definite assurance,"*fn77 but these Retirees' allegations are sufficiently specific to raise a triable issue as to whether promises were made.

  b. Reliance and Injury

  Of the sixteen Retirees who specifically allege that they were promised lifetime coverage, ten allege that they relied on the promises to their detriment, either because they relied on promises of lifetime coverage in leaving or declining jobs at the TA, which were better paying than their jobs at Local 100, or because they relied on such promises in retiring earlier than they otherwise would have.*fn78 Local 100 objects that any reliance on such promises was not "reasonable," since the promises were "speculative" in nature.*fn79 This objection, however, is essentially identical to the objection that the alleged promises were really no more than predictions. Because these Retirees allege that they received actual promises of lifetime coverage, there is a triable issue as to whether their reliance on such promises was reasonable.

  c. Extraordinary Circumstances

  Plaintiffs argue that the "extraordinary circumstances" requirement is met because Local 100 used promises of lifetime health benefits to induce action on Retirees' part — in particular, to induce them to accept positions at Local 100. Local 100 objects that "extraordinary circumstances" generally means intentional deception, fraud, or bad faith, and that any use of promises as an inducement by Local 100 was done in good faith.*fn80

  Unlike the Third Circuit, which has tended to interpret "extraordinary circumstances" to entail a requirement of purposeful deception or fraudulent inducement,*fn81 this Circuit has recognized extraordinary circumstances where an employer promised benefits to an employee in good faith in an intentional effort to induce the employee to take some action, and the employer later reneged on its promise.*fn82 In Schonholz v. Long Island Jewish Med. Ctr., the President of the defendant employer sent a letter to the plaintiff employee, asking for her resignation and promising, apparently in good faith, certain severance benefits. In response, plaintiff tendered her resignation. Subsequently, the employer's board of trustees became aware of the severance arrangement and revoked it.*fn83 In a later case, the Second Circuit explained that the circumstances of Schonholz satisfied the "extraordinary circumstances" requirement because "it was as though the [defendant] had intentionally used the promise of severance benefits to win Schonholz's resignation and then reneged once she resigned."*fn84

  Seven of the Retirees allege that they relied on Local 100's promises of lifetime health benefits to their detriment in circumstances that indicate that Local 100 may have used these promises to induce them to undertake certain actions. Vincent Curulli, Dennis Gallen, John Higgins, and Pedro Quinones allege that they accepted jobs at Local 100 in at least partial reliance on promises of lifelong health benefits, even though they were making or might have later made more money at the TA.*fn85 John Moscola alleges the he decided not to pursue an opportunity to return to the TA, where he might have made more money, on the basis of the quality of the Plan's health coverage, including promises of lifetime coverage he had received before he accepted the Local 100 job.*fn86 Angelo Perilli alleges he decided not to pursue a similar opportunity on the basis of a discussion with Local 100 staff, in which he was told his health benefits were guaranteed for life if he stayed.*fn87 Finally, John Meehan alleges that during a period of financial difficulties at Local 11, he was induced to retire in at least partial reliance on promises of lifelong health benefits, though he would otherwise have continued working.*fn88 These circumstances are such that a reasonable finder of fact might conclude that Local 100 used promises of lifetime benefits to induce certain actions and that the extraordinary circumstances requirement is therefore met.*fn89 d. Injustice

  Finally, Local 100 argues that there would be no injustice in failing to enforce any alleged promises that were made to Retirees because Retirees still receive the same health benefits that other TA retirees receive.*fn90 However, the fact that Retirees still receive some health benefits is irrelevant to the question of whether it would be unjust to allow Local 100 to renege on any promises it made to provide Retirees with superior benefits. As the court held in Schonholz: "Assuming that the jury concludes that [defendant] promised to extend [plaintiff's] benefits, that [defendant] should have known that [plaintiff] would rely, that [plaintiff] did in fact rely, and that [plaintiff] was injured by that reliance, it is clear to us that [plaintiff] will be able at least to contend that an injustice would result if the promise is not enforced."*fn91 Therefore, because these seven Retirees have raised triable issues as to the existence of promises, reliance, injury, and extraordinary circumstances, they have also raised a triable issue as to the injustice element of promissory estoppel. Defendants' motion for summary judgment is denied as to the promissory estoppel claims of Curulli, Gallen, Higgins, Quinones, Moscola, Perilli, Meehan, and their respective wives. 2. Equitable Estoppel

  Equitable estoppel requires satisfaction of three elements: (1) material misrepresentation, (2) reliance, and (3) damage.*fn92 In addition, as with promissory estoppel, in the context of ERISA an additional "extraordinary circumstances" element must be satisfied. The only intentional misrepresentations alleged by plaintiffs are the representations of lifetime health benefits alleged to have been made by Calhoun and James after they had learned that the benefits could be modified or terminated.*fn93 None of the plaintiffs who allege such misrepresentations were made to them have set forth facts sufficient to satisfy all four requirements of equitable estoppel.

  Four plaintiffs allege that Calhoun or James lied to them about health benefits: Dennis Gallen, John Mirrione, Angelo Perilli, and Gil Rodriguez.*fn94 Gallen alleges that when Local 100 decided to terminate coverage for active employees, James induced him not to retire — even though Gallen thought at the time that he could lock in his Plan health benefits by retiring immediately — by representing that employees would get lifetime health benefits whenever they retired.*fn95 Not only does Gallen fail to allege that any injury resulted from his reliance, his testimony is incompatible with his allegation of injury. His decision to continue working has left him no worse off than he would have been had he retired immediately — in either case his Plan health benefits would have ended on September 1, 2002. Mirrione and Perilli allege they retired in reliance on representations by Calhoun and James, respectively, but do not suggest that these representations were used as an inducement to persuade them to retire. In fact, Perilli stated that Calhoun and James did not want him to retire.*fn96 As a result, these Retirees have failed to allege the required extraordinary circumstances. Finally, Rodriguez does not allege that he took any action at all in reliance on the representation James made to him.*fn97 Therefore, plaintiffs' equitable estoppel claims fail, and summary judgment is awarded in favor of defendants as to those claims.


  For the reasons set forth above, defendants' motion for summary judgment is granted as to plaintiffs' ERISA claims for breach of contract and breach of fiduciary duty, granted as to plaintiffs' equitable estoppel claim, and granted as to plaintiffs' promissory estoppel claim against the TWU. As to plaintiffs' promissory estoppel claim against Local 100, defendants' motion is denied as to Curulli, Gallen, Higgins, Meehan, Moscola, Perilli, Quinones, and their respective wives, but granted as to all other plaintiffs. The Clerk is directed to close these motions. A conference is scheduled for July 28 at 3:30 p.m., in Courtroom 15C.


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