United States District Court, S.D. New York
RONALD REID, Plaintiff,
THE LOCAL 966 PENSION FUND and THE PLAN ADMINISTRATOR OF THE LOCAL 966 PENSION FUND, Defendants.
The opinion of the court was delivered by: LORETTA PRESKA, District Judge
On November 20, 2003, Plaintiff Ronald Reid ("Plaintiff") filed
a complaint ("Complaint" or "Compl.") against defendants The
Local 966 Pension Fund (the "Plan") and The Plan Administrator of
the Local 966 Pension Fund (the "Administrator") (collectively,
"Defendants") pursuant to the Employee Retirement Income Security
Act of 1974, as Amended ("ERISA") § 502(a)(3),
29 U.S.C. § 1132(a)(3), to enforce Plaintiff's alleged statutory right of
access to the Plan's claims procedure and pursuant to ERISA §
502(a)(1)(A), 29 U.S.C. § 1132(a)(1)(A), to obtain certain
documents from the Administrator in order to establish whether
Plaintiff is entitled to pension benefits under the Plan. Before
this Court are Defendants' motion, dated January 23, 2004, to
dismiss the Complaint pursuant to Fed.R. Civ. P. 12(b)(1) for
lack of subject matter jurisdiction and Fed.R. Civ. P. 12(b)(6)
for failure to state a claim and Plaintiff's cross-motion, dated April 7, 2004, for summary judgment.
I. Motion to Dismiss for Lack of Subject Matter Jurisdiction
"A case is properly dismissed for lack of subject matter
jurisdiction under Rule 12(b)(1) when the district court lacks
the statutory or constitutional power to adjudicate it."
Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000).
"[T]he plaintiff asserting subject matter jurisdiction has the
burden of proving by a preponderance of the evidence that it
exists. Luckett v. Bure, 290 F.3d 493 (2d Cir. 2000) (citing
Makarova, 201 F.3d at 113). In considering challenges to
subject matter jurisdiction under Rule 12(b)(1), a court may
consider evidence extrinsic to the pleadings, such as affidavits.
See Antares Aircraft, L.P. v. Fed. Republic of Nigeria,
948 F.2d 90, 96 (2d Cir. 1991), vacated for reconsideration on other
grounds, 505 U.S. 1215 (1992), reaff'd on remand, 999 F.2d 33
(2d Cir. 1993). The consideration of such materials does not
convert the motion to one for summary judgment pursuant to Rule
56. See United States v. Vazquez, 145 F.3d 74, 80 (2d Cir.
As the Court of Appeals has explained, "[w]hether a federal
court possesses federal-question subject matter jurisdiction and
whether a plaintiff can state a claim for relief under a federal
statute are two questions that are easily, and often, confused."
Carlson v. Principal Fin. Group, 320 F.3d 301, 305-06 (2d Cir.
2003) (citations omitted). "In order to sustain federal jurisdiction, the complaint must allege a claim that
arises under the Constitution or laws of the United States and
that is neither made solely for the purpose of obtaining
jurisdiction nor wholly insubstantial and frivolous." Carlson,
320 F.3d at 306. "[T]he question of whether a federal statute
supplies a basis for subject matter jurisdiction is separate
from, and should be answered prior to, the question of whether
the plaintiff can state a claim for relief under that statute."
Id. "`In cases where the asserted basis for subject matter
jurisdiction is also an element of the plaintiff's allegedly
federal cause of action, [the court] ask[s] only whether on its
face the complaint is drawn so as to seek recovery under
federal law or the Constitution. If so, then [the court]
assume[s] or find[s] a sufficient basis for jurisdiction, and
reserve[s] further scrutiny for an inquiry on the merits.'" Id.
at 307 (quoting Nowak v. Ironworkers Local 6 Pension Fund,
81 F.3d 1182, 1189 (2d Cir. 1996)). In other words, "[t]he pertinent
question in the subject matter jurisdiction context is whether a
plaintiff has asserted a non-frivolous federal claim, not whether
Plaintiff will ultimately be able to obtain relief under the
relevant statute." Vengurlekar v. HSBC Bank, No. 03 Civ. 243,
2004 U.S. Dist. LEXIS 6838, at *5 (S.D.N.Y. May 14, 2004) (citing
Carlson, 320 F.3d at 306).
Here, Defendants move to dismiss for lack of subject matter jurisdiction because they argue that Plaintiff is not a
"participant" in the Plan as required under ERISA § 502(a) and
502(e)(1), 29 U.S.C. § 1132(a) and (e)(1). (See Defs'
Br.*fn1 at 4-7.) However, the jurisdictional inquiry is not
whether Plaintiff can state a claim for relief under ERISA, but
whether the Complaint, on its face, "clearly seeks relief under
that statute." Carlson, 320 F.3d at 306.
The Complaint alleges that this Court has jurisdiction under
ERISA §§ 502(e)(1), 502(a)(3), 502(a)(1)(A) and under
28 U.S.C. 1331(a) because this action arises under the laws of the United
States, namely ERISA. (Compl. ¶ 2.) Further, the Complaint
alleges that the declaratory and injunctive relief sought are
authorized by ERISA § 502(a)(3), 29 U.S.C. § 1332(a)(3). (Compl.
¶ 3.) Thus, the Complaint seeks relief under ERISA because it
alleges both that federal jurisdiction is based on ERISA and that
the declaratory and injunctive relief that Plaintiff seeks are
authorized by ERISA as well. Because "it cannot be said that
[the] [C]omplaint is `plainly insubstantial' or that it fails to
present any issue worthy of adjudication," Nowak,
81 F.3d at 1190, this Court will assume subject matter jurisdiction and
evaluate Plaintiff's claims under Rule 12(b)(6). Because
Defendants' argument regarding "participant" qualification is more properly framed as an
argument that Plaintiff fails to state a claim under Rule
12(b)(6), it will be evaluated as such.*fn2
II. Motion to Dismiss for Failure to State a Claim
A. Legal Standards
In deciding a motion to dismiss under Rule 12(b)(6), a
complaint must be viewed in the light most favorable to the
plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 237 (1974); Yoder
v. Orthomolecular Nutrition Inst., Inc., 751 F.2d 555, 562 (2d
Cir. 1985). All well-pleaded factual allegations of a complaint
must be accepted as true. City of Los Angeles v. Preferred
Communications, Inc., 476 U.S. 488, 493 (1986); Mireee v.
DeKalb County, 433 U.S. 25, 27 n. 2 (1977) (referring to
"well-pleaded allegations"); Mills v. Polar Molecular Corp.,
12 F.3d 1170, 1174 (2d Cir. 1993). "The complaint is deemed to
include any written instrument attached to it as an exhibit or
any statements or documents incorporated in it by reference."
Int'l Audiotext Network, Inc. v. Am. Tel. & Tel. Co.,
62 F.3d 69, 72 (2d Cir. 1995) (quoting Cortec Indus., Inc. v. Sum
Holding L.P., 94 F.2d 42, 47 (2d Cir. 1991)). In order to avoid
dismissal, a plaintiff must do more than plea mere "conclusory
allegations or legal conclusions masquerading as factual conclusions." Gephardt v.
Allspect, Inc., 96 F. Supp. 2d 331, 333 (S.D.N.Y. 2000) (quoting
2 James Wm. Moore, Moore's Federal Practice P 12.34[a][b] (3d ed.
1997)). Dismissal is proper only when "it appears beyond doubt
that the plaintiff can prove no set of facts in support of his
claim which would entitle him to relief." Conley v. Gibson,
355 U.S. 41, 45-46 (1957); accord Cohen v. Koenig, 25 F.3d 1168
(2d Cir. 1994).
B. Factual Background
Except where noted, the following facts are drawn from the
Complaint and documents attached to affidavits submitted by both
parties which are incorporated in the Complaint by reference.
See Cortec Industries, Inc. v. Sum Holding L.P., 949 F.2d 42,
47 (2d Cir. 1991) ("[T]he complaint is deemed to include any
written instrument attached to it as an exhibit or any statements
or documents incorporated in it by reference.").
Plaintiff was employed by Royaltone, Inc. for the period 1955
through 1970, inclusive. (Compl. ¶ 6.) The Plan is an "employee
pension benefit plan" within the meaning of ERISA § 3(2)(A),
29 U.S.C. § 1002(2)(A), a "defined benefit plan" within the meaning
of ERISA § 3(35), 29 U.S.C. § 1002(35), and, specifically, is a
"multiemployer plan" within the meaning of ERISA § 3(37)(A),
29 U.S.C. § 1002(37)(A). (Compl. ¶¶ 7, 10.) The purpose of the Plan
is to provide pension benefits for participants in the Plan and their beneficiaries. (Compl. ¶¶ 7,
10.) The Administrator is the Plan's "administrator," within the
meaning of ERISA § 3(16)(A), 29 U.S.C. § 1002(16)(A), and is a
Plan "fiduciary" within the meaning of ERISA § 3(21)(A),
29 U.S.C. § 1002(21)(A).
On July 15, 2003, Plaintiff's counsel wrote by certified letter
(the "July letter") to the Administrator informing the Plan that
she had been retained by Plaintiff to make a claim for benefits
on Plaintiff's behalf and requesting copies of the current full
governing Plan instrument, the Plan instrument in effect in 1970,
each summary plan description of the Plan in effect from 1990 to
the present, the summary plan description of the Plan in effect
in 1970, the collective bargaining agreements between Royaltone,
Inc. and Teamsters Local 966 in effect from 1955 to 1970, and
various other documents and records. (Compl. ¶ 11.) After
receiving no response to the July letter, Plaintiff's counsel
again wrote by certified letter dated September 25, 2003 (the
"September letter") to the Administrator reiterating her request
and advising Defendants that in the event of their failure to
respond within two weeks, Plaintiff would seek judicial
enforcement of the request. (Compl. ¶ 12.) As of the date of the
Complaint, Plaintiff has not received any of the documents
requested in the July letter. (Compl. ¶ 13.)
Although the relationship between Royaltone, Inc. and the Plan are not detailed in the Complaint, in the July letter to
the Administrator (referenced and thereby incorporated into the
Complaint), Plaintiff's counsel explained that Royaltone, Inc.
was a union shop and a contributing employer to Teamster's Local
966 and that co-workers of Plaintiff had already received
pensions from Local 966 based upon their service with Royaltone,
Inc. (Affirmation of Victoria Quesada, dated April 7, 2004
("Quesada Aff."), Ex. D at 1.)
C. Access to Claims Procedure
Plaintiff purports to bring this claim to "enforce Plaintiff's
statutory right of access to the [Plan's] claims procedure."
(Compl. ¶ 1.) However, nowhere in the Complaint has Plaintiff
alleged that he filed a claim with the Plan or that doing so
would be futile. Plaintiff's reliance on Carey v. Electrical
Workers Local 363 Pension Plan, 201 F.3d 44 (2d Cir. 1999) is
unavailing. In Carey, the Court of Appeals held that a cause of
action accrues for statute of limitation purposes upon the
"clear" repudiation of the claim for benefits regardless of
whether' a formal benefits application has been filed. Id. at
47-49. However, it is "well established" that "plaintiffs must
pursue all administrative avenues before bringing an ERISA suit
in federal court, unless they can make a `clear and positive
showing' that pursuit of administrative remedies would be
futile." Preston v. Am. Fed. of Television and Radio Artists Health Fund, No. 90 Civ. 7094, 2002 U.S. Dist. LEXIS 8826, at
*14 (S.D.N.Y. May 16, 2002) (citing Kennedy v. Empire Blue Cross
and Blue Shield, 989 F.2d 588, 594 (2d Cir. 1993)). Nothing in
Carey dispenses with the well-established requirement. Insofar
as Plaintiff argues that it would be futile to exhaust
administrative remedies, Plaintiff fails to make the requisite
"clear and positive showing" by circularly arguing that the
alleged informal denial of benefits suffices to demonstrate
futility. The fact remains that despite being represented by
counsel, Plaintiff has not even initiated viz., filed a
formal claim the administrative claims procedures let alone
appealed the purported denial or otherwise exhausted
administrative remedies. See Kennedy, 989 F.2d at 595 ("We
hold that the ERISA plaintiffs have not made a `clear and
positive showing' of futility, given that they took no action
whatsoever with respect to their disputed claims before bringing
this action."); see also Davenport v. Harry N. Abrams,
249 F.3d 130, 134 (2d Cir. 2001) ("Defendants' position in this lawsuit
does not establish futility.").*fn3 In fact, the relief that
Plaintiff appears to seek is access to the Plan's claims procedure, see Compl. at p.
7-8 (Prayer For Relief ¶¶ B, C), yet Plaintiff has not even filed
a formal claim initiating the procedures and appeals process.
Furthermore, if this Court were to permit Plaintiff to go forward
at this juncture, "there [would not be] a sufficiently clear
record of administrative action to support effective judicial
review and it [would be] difficult, if not impossible, for [this
Court] to apply an arbitrary and capricious standard of review
rather than engaging in review de novo." Barnett v. IBM Corp.,
885 F. Supp. 581, 588 (S.D.N.Y. 1995). Accordingly, Plaintiff's
first claim for relief is dismissed for failure to exhaust
administrative remedies without prejudice to renewal.
D. Access to Information under § 104(b)(4)
Plaintiff's second claim for relief alleges that based upon his
Plan "participant status," Plaintiff was entitled to receive the
documents and information requested in the July letter pursuant
to ERISA § 104(b)(4), 29 U.S.C. § 1024(b)(4). Under this
provision, ERISA requires that a plan administrator "shall, upon
written request of any participant or beneficiary, furnish a copy
of the latest summary plan description, plan description, and the
latest annual report, any terminal report, the bargaining agreement, trust agreement, contract or other
instruments under which the plan is established or operated."
Id. A plan administrator who fails or refuses to comply within
30 days with such a request may, in the court's discretion, be
personally liable for up to $100 a day from the date of such
failure or refusal. ERISA § 502(c)(1), 29 U.S.C. § 1132(c)(1).
Because only participants or beneficiaries are entitled to the
documents requested, the threshold question is whether Plaintiff
was a participant at the time that the request was made. See
Saladino v. I.L.G.W.U. Nat. Retirement Fund, 754 F.2d 473, 477
(2d Cir. 1985) (circularity of definition of participant is
avoided since time for measuring whether claim is colorable is at
time request for information is made).
Obviously, "[t]he term participant is of considerable
importance within ERISA's statutory scheme because numerous
rights under that scheme are limited to those who are included
within that term." Id. at 476. ERISA defines "participants" as
"any employee or former employee of an employer . . . who is or
may become eligible to receive a benefit of any type from an
employee benefit plan which covers employees of such employer or
members of such organization, or whose beneficiaries may be
eligible to receive any such benefit." 29 U.S.C. § 1002(7). The
Supreme Court has explained that "in order to establish that he
or she `may become eligible' for benefits, a claimant must have a colorable claim that (1) he or she will prevail in a suit for
benefits, or that (2) eligibility requirements will be fulfilled
in the future." Firestone Tire & Rubber Co. v. Bruch,
489 U.S. 101, 117-18 (1989). "`[A] `colorable claim' is one that is
arguable, not frivolous.'" Pawlowski v. Blue Cross & Blue Shield
of Western New York, No. 99-CV-0877E, 2001 U.S. Dist. LEXIS
1129, at *4 (W.D.N.Y. Feb. 5, 2001) (citing Christensen v.
Chesebrough-Pond's, Inc., 862 F. Supp. 22, 24 (D. Conn. 1994)).
In Finz v. Schlesinger, 957 F.2d 78 (2d Cir. 1992), the Court
of Appeals reasoned that even a "potential plan participant" who
requested plan information would trigger a plan administrator's
obligation to provide such information:
It is well-established that the trustees of a pension
plan have an obligation to provide plan participants
with summary plan descriptions upon request. See
29 U.S.C. § 1132(c); see also 29 U.S.C. § 1104. The
question arises, however, whether this obligation
extends to a `potential plan participant,' i.e., an
individual, such as [plaintiff], whose coverage is in
doubt. Although ERISA does not speak to this issue
directly, we believe that plan trustees have a
general obligation to provide potential plan
participants who request plan descriptions with
adequate information about the plan. Cf. Haynor v.
Ephrata Community Hosp., 690 F. Supp. 373, 379 (E.D.
Pa. 1988). Because "the primary purpose of [ERISA] is
the protection of individual rights," H.R. Rep. No.
533, 93rd Cong., 2d Sess. 1 (1974), reprinted in 1974
U.S.C.C.A.N. 4639, it is only logical that a pension
plan's trustees owe at least some duty to a potential
plan participant to facilitate the determination of
whether he or she has rights under the plan.
Id. at 82.
Here, the Complaint alleges that Plaintiff worked for Royaltone, Inc. for the period 1955 through 1970, inclusive.
(Compl. ¶ 6.) The Complaint further alleges that on July 15,
2003, Plaintiff's counsel wrote to the Administrator requesting
copies of Plan documents and, after receiving no response, wrote
again on September 25, 2003 reiterating the request. (Compl. ¶¶
11-12.) Additionally, the Complaint alleges that up until the
time the Complaint was filed, Plaintiff has not received any of
the documents requested. (Compl. ¶ 14.) As discussed, supra,
Royaltone, Inc. was a union shop and a contributing employer to
Teamster's Local 966, and co-workers of Plaintiff had already
received pensions from Local 966 based upon their service with
Royaltone, Inc. (Quesada Aff., Ex. D at 1 (July letter).) Thus,
under all these circumstances, at least at the time the request
was made, there was a possibility that Plaintiff was eligible to
receive benefits. See Saladino, 754 F.2d at 477 ("when
[plaintiff] first requested information from the Fund, his claim
was colorable because his years of covered employment, without
more, created a plausible possibility that he was eligible");
see also Algie v. RCA Global Communication, 891 F.Supp. 839,
869 (S.D.N.Y. 1994) ("In this case plaintiffs' counsel initially
requested copies of `all plan documents and other plan
information' by letter dated November 23, 1988. Although at the
time plaintiffs were no longer employed by RCAG, and the
corporation was claiming that they were no longer participants, their request triggered the administrator's disclosure
responsibilities under section 104 because the question of their
eligibility for benefits was at least arguable and hence they
were `potential participants.'"); Kascewicz v. Citibank, N.A.,
837 F. Supp. 1312, 1321 (S.D.N.Y. 1993) ("[T]he class of . . .
those who have `colorable claims' to benefits clearly
encompasses a larger group than just those individuals ultimately
determined to have rights under a plan. A court may properly
award statutory penalties under § 502(c) even if it determines
that the plaintiff does not qualify for plan benefits.").
Accordingly, the Administrator's motion to dismiss the second
claim is denied. Because only a plan administrator may be liable
under this provision, insofar as Plaintiff attempts to state a
claim against the Plan under this claim, the Plan's motion to
dismiss is granted as to this claim.
III. Summary Judgment
A. Legal Standards
Under Rule 56, summary judgment shall be rendered if the
pleadings, depositions, answers, 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. See
Fed.R.Civ. P. 56(c); Anderson v. Liberty Lobby, 477 U.S. 242, 250
(1986). An issue of fact is genuine when "a reasonable jury could return a verdict for the nonmoving party," and facts are
material to the outcome of the litigation if application of the
relevant substantive law requires their determination.
Anderson, 477 U.S. at 248.
The moving party has the initial burden of "informing the
district court of the basis for its motion" and identifying the
matter that "it believes demonstrates the absence of a genuine
issue of material fact." Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986).
The substantive law determines the facts which are material to
the outcome of a particular litigation. See Anderson,
477 U.S. at 250; Heyman v. Commerce & Indus. Ins. Co., 524 F.2d 1317,
1320 (2d Cir. 1975). In determining whether summary judgment is
appropriate, a court must resolve all ambiguities, and draw all
reasonable inferences against the moving party. See Matsushita
Elec. Indus. Co. v. Zenith Radio Corp, 475 U.S. 574, 587-88
(1986) (citing United States v. Diebold, Inc., 369 U.S. 654
If the moving party meets its burden, the burden then shifts to
the non-moving party to come forward with "specific facts showing
that there is a genuine issue for trial." Fed.R. Civ. P. 56(3).
The non-moving party must "do more than simply show there is some
metaphysical doubt as to the material facts." Matsushita,
475 U.S. at 586. Only when it is apparent, however, that no rational finder of fact "could find in favor of the
non-moving party because the evidence to support its case is so
slight" should summary judgment be granted. Gallo v. Prudential
Residential Servs. Ltd. Partnership, 22 F.3d 1219, 1223 (2d Cir.
Because Plaintiff's first claim for relief has been dismissed
due to failure to exhaust his administrative remedies, I consider
Plaintiff's motion for summary judgment only as to Plaintiff's
second claim against the Administrator.
B. Undisputed Facts
Except where noted, the following facts are undisputed. In
response to Plaintiff's inquiry, by letter dated September 24,
2002, Defendants informed Plaintiff that he was not entitled to a
benefit under the Plan because Royaltone, Inc. was not a
contributing employer. (Quesada Aff., Ex. C.; see also
Plaintiff's Rule 56.1 Statement, dated April 7, 2004 ("Pl's 56.1
Statement") ¶ 4; Defs' 56.1 Statement ¶ 4.) Plaintiff's
co-worker, Aaron Norman, who worked at Royaltone, Inc. from
September 1959 to December 1972 received a pension from the Plan
based on his work at Royaltone, Inc. (Pl's 56.1 Statement; Defs'
56.1 Statement.) Plaintiff's counsel's July letter requesting
documents was sent by certified mail, and the Administrator
received the letter. (Pl's 56.1 Statement" ¶ 8; Defs' 56.1
Statement ¶ 8.) In that letter, Plaintiff's counsel informed the Administrator that "[c]o-workers of Mr. Reid have already
received pensions from [the Plan] based upon their service with
Royaltone, Inc." (Quesada Aff., Ex. D.) Plaintiff's counsel's
September letter reiterating the request for documents was sent
by certified mail, and the Administrator received the letter.
(Pl's 56.1 Statement ¶ 9; Defs' 56.1 Statement ¶ 9.) Defendants
did nothing to respond to either of these requests. (Pl's 56.1
Statement ¶¶ 10, 14; Defs' 56.1 Statement ¶ 14 ("Defendants do
not deny that they did not respond to Plaintiffs' request for
[Plan] documents.").) Defendants claim that they did not respond
to Plaintiff's requests "because we did not consider him to be a
participant under the [Plan]." (Affidavit of Glenn Shaffer, sworn
to April 27, 2004 ("Shaffer Aff.") ¶ 9; see also Defs' 56.1
Statement ¶ 10 ("The Defendants had informed [Plaintiff] that he
was not eligible for a pension benefit and did not consider it
necessary to continue restating that benefit determination.")
Presumably, the basis for the determination that Plaintiff was
not a "participant" was the reason stated in the September 2002
letter i.e., that Royaltone was not a contributing employer
to the Plan.
Plaintiff commenced this suit on November 20, 2003. On or about
December 2003, counsel for Defendants indicated to counsel for
Plaintiff that they had "found" Mr. Reid in their system and were
going to pay his benefits. (Pl's 56.1 Statement ¶ 12; Def's 56.1 Statement ¶ 12; see also "Shaffer Aff." ¶ 7
(After contacting Local 966 requesting evidence indicating that
Royaltone, Inc. did not participate in the Plan and receiving
none, "we conducted a manual review of pension benefits being
paid to other participants and found record of two retired
participants who had been employed by Royaltone, Inc. In December
2003, I contacted the President of Local 966, James Anderson, who
informed me that after reviewing records on microfilm, he had
located [Plaintiff's] name and a record of contributions made by
the former Local 249 Pension Fund on [Plaintiff's] behalf by
Royaltone, Inc., from 1958 trhough 1969.") Defendants claim that
they "only learned that specific . . . former employees of
Royaltone . . . were receiving pension benefits while
investigating Plaintiff's claim because [their data file system]
does not specify the contributing employer." (Defs' 56.1
Statement ¶ 6 (citing Shaffer Aff.).) However, on or about
January 15, 2004, counsel for Defendants realized, based upon a
review of the Plan documents, that Plaintiff was not actually
eligible to receive pension benefits from the Plan based upon
those documents and immediately informed Plaintiff's counsel of
his change in position. (Affirmation of Ira Cure in Defendants'
Reply and Opposition to Plaintiff's [Cross] Motion for Summary
Judgment, sworn to April 30, 2004 ("Cure II Aff.") ¶ 6;) On
January 20, 2004, counsel for Defendants wrote to Plaintiff informing counsel that Defendants would be filing a
motion to dismiss and enclosing the Plan's most recent annual
report, the restated plan as of January 1, 2000, the restated
plan as of 1990, and five summary plan descriptions.
It is undisputed that Plaintiff made two written requests for
documents (at least some of which a Plan participant would be
entitled to receive upon request under ERISA § 104(b)(4),
29 U.S.C. § 1024(b)(4)), and that the Administrator did not comply
with these requests within the thirty-day statutory limit found
in 29 U.S.C. § 1132(c). Thus, the only disputed issue between the
parties is whether Plaintiff presented a "colorable claim" that
he was a "participant" at the time of the requests for documents.
As discussed partially, supra, Plaintiff has presented such a
"colorable claim." Indeed, although Defendants have technically
always maintained that Plaintiff is not a participant in the
Plan, Defendants have changed their reasons for that finding.
At the time of the requests for documents, Defendants apparently
believed that Royaltone was not a contributing employer, a fact
which Defendants now admit is erroneous. Defendants came to this
conclusion through their own investigation only after Plaintiff
brought suit. Defendants present no reason why they could not
have discovered this information in July 2003. This is particularly true as the information which led Defendants to this
discovery that co-workers of Plaintiff's were receiving
benefits was alleged in the July letter.*fn4 Furthermore,
at one point after Plaintiff made these requests, Defendants
believed that Plaintiff was entitled to Plan benefits. Under
these circumstances, Plaintiff's claim was clearly colorable at
the time it was made. Accordingly, the Administrator should have
provided Plaintiff with those documents requested that were required under ERISA § 104(b)(4), 29 U.S.C. § 1024(b)(4).
ERISA § 502(c)(1)(B), 29 U.S.C. § 1132(c)(1)(B), provides in
Any administrator . . . (B) who fails or refuses to
comply with a request for any information which such
administrator is required by this title to furnish to
a participant or beneficiary . . . by mailing the
material requested . . . within 30 days after such
request may in the court's discretion be personally
liable to such participant or beneficiary in the
amount of up to $100 a day from the date of such
failure or refusal.
Effective for violations occurring after July 29, 1997, the
maximum penalty was increased from $100 to $110 per day by
29 C.F.R. § 2575.502c-1.
"The imposition of penalties for violating ERISA § 104(b)(4) is
left to the discretion of the district court." McDonald v.
Pension Plan of the Nysa-Ila Pension Trust Fund, 320 F.3d 151,
163 (2d Cir. 2003) (citing Devlin v. Empire Blue Cross & Blue
Shield, 274 F.3d 76, 90 (2d Cir. 2001) (stating that "the
ultimate assessment of penalties is a discretionary matter for
the district court")). The Court of Appeals has set out several
factors for district courts to consider in determining whether to
assess penalties and their amounts:
`(1) the administrator's bad faith or intentional
conduct; (2) the length of the delay; (3) the number
of requests made; (4) the extent and importance of
the documents withheld; and (5) the existence of any
prejudice to the participant or beneficiary.' Id. (quoting Austin v. Ford, No. 95 Civ. 3730,
1998 U.S. Dist. LEXIS 2157, at *16).
"The first factor bad faith-is arguably the most important
factor, considering that the statutory penalty provision is in
the nature of punitive damages designed more to punish the
intransigent administrator and to teach ERISA fiduciaries a
needed lesson than to compensate the [plan participant] for
actual loss." Patterson v. Ret. & Pension Plan For Officers and
Employees of the N.Y. Dist. Council of Carpenters, No. 00 Civ.
5962, 2001 U.S. Dist. LEXIS 15949, at *20 (S.D.N.Y. Oct. 5, 2001)
(internal quotation marks and citations omitted). Defendants'
initial total lack of response to both of Plaintiff's requests,
apparently in silent reliance on the September 2002 letter which
stated that Royaltone was not a contributing employer to the
Plan, demonstrates some slight degree of bad faith. This is
further compounded by the fact that Defendants themselves have
shifted both their position and reasoning on Plaintiff's
eligibility since the time that the requests were made.
The Supreme Court provided the following caution to
administrators in Firestone Tire & Rubber Co. v. Bruch,
498 U.S. 101 (1989):
Faced with the possibility of $100 a day in penalties
under § 1132(c)(1)(B), a rational plan administrator
or fiduciary would likely opt to provide a claimant
with the information requested if there is any doubt
as to whether the claimant is a `participant,' especially
when the reasonable costs of producing the
information can be recovered.
Id. at 118. While this is merely cautionary language,
Defendants deliberately chose not to heed this advice and are
left with that decision.
The second factor prejudice to the Plaintiff "is a
significant one." Kascewicz, 837 F. Supp. at 1322. While
Plaintiff had already retained counsel in order to make the
requests, the total lack of response by Defendants compelled
Plaintiff to initiate this lawsuit. See Patterson, 2001 U.S.
Dist. LEXIS 15949, at *21 ("Where a party is compelled to retain
counsel and initiate a lawsuit because of a disclosure violation,
that party has indeed suffered an injury.") (citing Kascewicz,
837 F. Supp. at 1323). Even "hav[ing] to bring [a] lawsuit
without being certain of the merits of his litigating position as
he would have been had he obtained the documents in advance . . .
constitutes some degree of harm." Id. at *22. However, under
these circumstances, where Plaintiff has yet to exhaust his
administrative remedies available under the Plan, it would be
difficult to find that Plaintiff has suffered a great deal of
As to the length of the delay and the number of requests,
Plaintiff made two separate requests for the documents,
Defendants did not comply until almost six months after the initial request (after the commencement of this suit)*fn5
and, apparently, Defendants did not make the further inquiry into
Plaintiff's eligibility which led Defendants to the conclusion
that Royaltone was in fact a contributing employer until after
this suit was instituted. These factors also support, to some
degree, an award of penalties.
Accordingly, because there is some showing, albeit not a
particularly strong one, of bad faith or prejudice only a modest
sanction is warranted. Even "[t]oken sanctions can be
sufficiently severe to deter violations because the mere fact of
being sanctioned is itself a sanction." Patterson, 2001 U.S.
Dist. LEXIS 15949, at *22. I therefore impose statutory penalties
of $20 per day running 30 days from July 23, 2003, the date of
Plaintiff's first request, to January 20, 2004, the date
Defendants provided Plan documents to Plaintiff's counsel, in the
total amount of $3,020.00. CONCLUSION
As stated above, Defendants' motion to dismiss (docket no. 4)
is granted as to Claim I and denied as to Claim II. Plaintiff's
cross-motion for summary judgment (docket no. 8) is granted as to
the remaining Claim II.
Defendants shall provide to Plaintiff's counsel within
thirty-days of the date of this Opinion all outstanding documents
both requested in the July letter and required to be furnished to
participants upon request under ERISA § 104(b)(4),
29 U.S.C. § 1024(b)(4), if any. Penalties are award to Plaintiff in the
amount of $3,020.00. The parties shall submit proposed judgments
to the Court reflecting the decision herein no later than October