The opinion of the court was delivered by: MIRIAM CEDARBAUM, Senior District Judge
Plaintiffs Eastman Kodak Company ("Eastman Kodak") and Martin
M. Coyne move for summary judgment on the issue of whether Coyne
has failed to exhaust his administrative remedies prior to
commencing this action for supplemental pension benefits. For the
reasons that follow, plaintiffs' motion is denied.
The following facts are not contested for the purposes of the
present motion. Martin Coyne began working for Sterling Drug Inc.
("Sterling") in 1981. Shortly thereafter, Coyne subscribed to a
Supplemental Benefit Plan (the "Plan") a so-called "top-hat"
plan designed to provide certain executives of Sterling who
participated in Sterling's standard retirement plan with
supplemental payments in excess of limitations imposed by
Sections 401(a) (17) and 415 of the Internal Revenue
Code.*fn1 In 1989, Eastman Kodak acquired Sterling. The
standard Sterling retirement plan became a part of Eastman
Kodak's retirement plan, and subscribers to the Plan became
entitled to payments in excess of benefits received under the Eastman Kodak plan. In a
series of subsequent transactions, Sterling was acquired first by
SmithKline Beecham plc, and then by defendant Bayer Corp.
In 1994, Coyne left Sterling's employ to join Eastman Kodak,
where he worked until his retirement on July 1, 2003. In May
2003, with Coyne's retirement approaching, Eastman Kodak
contacted Bayer to inquire about Bayer's responsibility for
Coyne's benefits under the Sterling Plan. Bayer responded by
e-mail with a request for Coyne's work history and a copy of the
Plan, but expressed doubts about its responsibility for Coyne's
benefits. Eastman Kodak provided the requested information.
On October 8, 2003, Eastman Kodak again contacted Bayer,
seeking to confirm Bayer's responsibility for Coyne's benefits.
Bayer responded promptly, and noted that Coyne was not yet
eligible for benefits, but that it would nonetheless convene its
benefits group to determine whether it would assume
responsibility for payments to Coyne and, if so, to confirm the
benefit amount. In several subsequent e-mails, Eastman Kodak
sought confirmation from Bayer that it would assume
responsibility for Coyne's benefits, which it informed Bayer
would become due on March 1, 2004. Bayer never responded to any
of those e-mails. Defendants made no payment to Coyne on March 1, 2004, when he
allegedly became eligible for benefits under the Plan, or at any
time thereafter. On April 6, 2004, Eastman Kodak sent a letter to
Bayer stating that "[d]espite repeated notices from Kodak, Bayer
has failed to acknowledge its liability to Mr. Coyne under the
Sterling Supplemental Retirement Benefit Plan and has failed to
make the first payment due to Mr. Coyne. Pursuant to undertakings
to Mr. Coyne at the time of his retirement in July 2003, Kodak
has paid Mr. Coyne his first monthly check. . . . Kodak seeks and
requires Bayer to indemnify Kodak from, against and in respect of
all losses arising from its breach of its obligations." Bayer
never responded to the letter.
Eastman Kodak and Coyne commenced this action on June 28, 2004.
Coyne sues defendants for his supplemental benefits under the
Plan. Eastman Kodak seeks indemnification for payments it has
already made to Coyne. Defendants moved to dismiss the action on
the ground that Coyne has failed to exhaust administrative
remedies, but withdrew their motion after the complaint was
amended. On October 15, 2004, defendants filed an answer
asserting failure to exhaust administrative remedies as a
defense. At a pre-trial conference, defendants identified the
administrative remedies that Coyne had failed to exhaust as those
contained in an amendment to the Plan that was adopted on July 12, 2004, some two weeks after the filing of the complaint.
The amendment was adopted "as of January 1, 2004."
A motion for summary judgment should be granted if the court
determines, from the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, that "there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a
matter of law." Fed.R.Civ.P. 56; see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). "Where there are no material
facts in dispute, a motion for summary judgment should be
granted." Nexans Wires S.A. v. Sark-USA, Inc.,
319 F. Supp.2d 468, 471 (S.D.N.Y. 2004).
It is undisputed that the Plan at issue provided no
administrative procedure for Coyne to follow at the time he
retired or at the time this action was commenced. The parties
disagree, however, as to whether Coyne must now exhaust the claim
procedure first adopted in the belated amendment to the Plan.
Defendants contend that, under the terms of the Plan, they are
entitled retroactively to enforce procedural amendments, such as
the July 12, 2004 amendment. Coyne must therefore exhaust the
amendment's claim procedure before proceeding in federal court.
Plaintiffs respond that the amendment does not apply because it
impairs Coyne's right to benefits, and that, in view of defendants' failure to pay and to
respond to Eastman Kodak's e-mails and letter, requiring Coyne to
exhaust the new claim procedure would be futile.
I. The Retroactive Amendment
The first question is whether the amendment to the Plan, which
was adopted after Coyne's retirement and after commencement of
this action, applies to Coyne.
In the case of "top-hat" benefit plans, such as the Plan at
issue here, courts apply principles of contract law in
determining the rights of participants. See Gallione v.
Flaherty, 70 F.3d 724, 728-29 (2d Cir. 1995); Pereira v.
Cogan, 200 F. Supp.2d 367, 375 (S.D.N.Y. 2002) ("Rights under a
top hat plan are governed by contract law as opposed to trust or
fiduciary principles under ERISA.").*fn2 In deciding whether
the amendment applies to Coyne, the language of the Plan is therefore
Article VI of the Plan provides that the employer has the right
to amend, suspend, or terminate the Plan, in whole or in part,
provided that "[n]o such amendment, suspension or termination
shall retroactively impair or otherwise adversely affect the
rights of any Employee or other person to benefits under the Plan
that may have arisen prior to the date of such [amendment] as
determined by the Committee in its sole discretion." Thus, ...