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United States District Court, S.D. New York

RONALD REID, Plaintiff,

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. 1998).

  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 (1962)).

  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. 1994).

  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.

  C. Analysis

  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).

  IV. Penalties

  ERISA § 502(c)(1)(B), 29 U.S.C. § 1132(c)(1)(B), provides in pertinent part:

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 prejudice.

  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 4, 2004.


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