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Geiger v. Alstom Signaling Inc.

April 13, 2010


The opinion of the court was delivered by: Siragusa, J.



This Employee Retirement Income Security Act ("ERISA") case is before the Court on the following motions:

#Type of MotionDateMoving Party 55For Summary Judgment09/14/2007ALSTOM Signaling Inc. 72For Summary Judgment08/07/2009The Hartford Life Insurance Motion Company 78Cross-Motion for Summary11/18/2009Plaintiff Judgment 84Motion in limine01/08/2010The Hartford Life Insurance Company

Plaintiff originally commenced this action pro se, but retained counsel on June 21, 2007. Following a conference with the Court on July 16, 2007, Plaintiff's counsel indicated that he would file an amended complaint as a matter of course pursuant to Federal Rule of Civil Procedure 15(a). He did, and Hartford answered the amended complaint on September 14, 2007 (Docket No. 54). On the same day, ALSTOM Signaling, Inc. ("ALSTOM") filed a motion for summary judgment (Docket No. 55). The Court heard argument on the motion and, subsequently, The Hartford Life Insurance Company ("Hartford") filed it's motion for summary judgment, followed by Plaintiff's cross-motion and Hartford's motion in limine. After reviewing the papers filed in support of and in opposition to the pending motions and having heard oral argument on the applications, for the reasons stated below, the Court grants in part and denies in part ALSTOM's motion [#55] and grants Hartford's motions [#72 and #84]. Plaintiff's cross-motion [#78] is denied.


The amended complaint contains two causes of action alleging breaches of contract and violations of ERISA. Plaintiff claims as a first cause of action that Hartford breached its obligations under the long term disability ("LTD") benefit option policy ("Policy") of ALSTOM as well as ERISA and that he is entitled to enforce the allegedly-breached provisions. As a second cause of action, Plaintiff claims that ALSTOM is in violation of ERISA, or, in the alternative, in breach of contract.

All parties have filed statements of fact pursuant to the local rule. The following facts are not in dispute, except where indicated. Plaintiff is a former employee of ALSTOM and was enrolled in a group benefit plan known as the Group Long Term Disability, Life, Supplemental Life, Accidental Death and Dismemberment and Supplemental Dependent Life Plan ("Plan"). (Giuliano Aff. (Sept. 14, 2007) ¶ 2.) ALSTOM was named as Sponsor and Administrator of the Plan. (Ex. 1, ALSTOM's Appendix at 43.) Defendant Hartford issued a Group Insurance Policy in connection with the Plan. (Giuliano Aff. ¶ 2; Appendix Ex. 1 at 2.) Plaintiff was insured under the Plan, and received a copy of the Plan's Summary Plan Description ("SPD"). (Giuliano Aff. ¶ 2.) On April 8, 2003, ALSTOM notified plaintiff that his employment would be terminated effective April 22, 2003. (Giuliano Aff. ¶ 3.) Plaintiff was not required to work for the remainder of the day on April 8, 2003, or thereafter. (Giuliano Aff. ¶ 3.) On April 8, 2003, plaintiff left ALSTOM's premises and never returned to work. (Giuliano Aff. ¶ 3.) Plaintiff remained on ALSTOM's payroll until April 22, 2003. (Giuliano Aff. ¶ 3.)

On April 8, 2003, during the termination notification meeting, after being advised of his termination, plaintiff stated that he was disabled. (Giuliano Aff. ¶ 4.)*fn1 ALSTOM claims that its Flexible Benefits Program ("Bene-Flex Program") is not applicable to terminated or laid-off employees, as the "Eligibility and Participation" section of the summary description of the Bene-Flex Program states that ALSTOM's Bene-Flex Program is only applicable to regular full-time salaried employees. (Giuliano Aff. ¶ 7; Appendix Ex. 4 at 3-4.) Plaintiff, however, disputes his eligibility for ALSTOM's Flexible Benefits Program. He contends that he was a full-time salaried employee as of April 8, 2003, when he qualified for long term disability benefits ("LTD benefits") under the Group Long Term Disability, Life, Supplemental Life, Accidental Death and Dismemberment and Supplemental Dependent Life Plan for employees of ALSTOM (the "Plan"). He further states that when his application for benefits was approved, it was approved retroactive to the date of the application. As such, Plaintiff argues that he is entitled to medical and dental insurance benefits during the period of his disability. (Geiger Aff. ¶¶ 15-16.)

Because the events of April 8, 2003, are central to the issues, the Court will set out the parties' contentions from their affidavits. First, Joanne Giuliano ("Giuliano"), the Benefits Manager for ALSTOM, described the events of April 8 as follows:

3. On April 8, 2003, ALSTOM notified plaintiff that termination of his employment would be effective on April 22, 2003. Plaintiff was not required to work for the remainder of the day on or after April 8, 2003, even though he continued on the payroll until April 22, 2003. In fact, on April 8, 2003, plaintiffleft ALSTOM's premises and never again returned.

4. On April 8, 2003, during plaintiffs above-mentioned termination notification meeting and after ALSTOM advised plaintiff that he was being laid off, plaintiff stated that he was disabled. This was the first time plaintiff told ALSTOM that he was unable to work because of his disability. (Giuliano Aff. ¶¶ 3--4.) In his affidavit, Plaintiff describes the events as follows:

11. On April 8, 2003, Alstom informed me that my employment would be terminated effective April 22, 2003.

12. On April 8, 2003, I informed Alstom that I was disabled and I subsequently submitted my application for disability benefits under the Policy.

13. On August 3, 2004, my application was approved and benefits were awarded retroactive to October 6, 2003, which was the first day following the Policy's 180-day elimination period based on a disability date of April 8, 2003.

14. Since April 8, 2003, I have been continuously disabled and remain entitled to benefits under the Policy. (Geiger Aff. (Docket No. 64) ¶¶ 11--14.)

The Bene-Flex Program's summary description states that "Participation in Bene-Flex ends on the day you are no longer an eligible employee." (Appendix Ex. 4, at 3-4.) Accordingly, ALSTOM maintains that as of April 23, 2003, ALSTOM's Bene-Flex Program no longer applied to Plaintiff because he was no longer a regular, active salaried employee. (Giuliano Aff. ¶ 8 .) Plaintiff counters, though, that his disability date for the purpose of receiving LTD benefits was April 8, 2003, the commencement of the 180-day elimination period. He further contends that when he became disabled on April 8, 2003, he was a full-time employee who was eligible to participate in the Plan and that if he had become disabled after his termination date (i.e., April 22, 2003), when he was no longer a "participant" of the Plan, only then he would have been ineligible to receive LTD benefits. (Docket No. 64-2.)

Medical, dental and life insurance coverage continuation is a benefit available for ALSTOM employees who are terminated for reasons other than cause. There are different benefit continuation packages depending on the reason for the employee's termination. (Giuliano Aff. ¶ 9.) A "layoff' benefits continuation package is provided to employees who have been laid off. (Giuliano Aff. ¶ 9.) Under the layoff benefits continuation package, an employee will automatically receive ALSTOM's basic severance package. The employee can also opt to receive an enhanced severance package which includes an additional six months of continued medical and dental insurance coverage. (Appendix Ex. 5.) In order for an employee to receive the enhanced package, the employee must execute a separation agreement and release of claims. (Giuliano Aff. ¶ 11; Appendix Ex. 5.)

Both Plaintiff and ALSTOM agree that he was terminated as part of a layoff. However, Plaintiff contends he qualified for benefits under the Plan when he became disabled, since he was still a full-time salaried employee. For this reason, Plaintiff argues that ALSTOM's layoff benefits continuation package is not applicable to him. (Geiger Aff. ¶ 17.) ALSTOM, though, contends Plaintiff never executed the separation agreement and release of claims, and consequently, was only entitled to receive the basic severance package benefits. Plaintiff, however, argues that he was not required to execute a separation agreement to receive the benefits, because he automatically became eligible for coverage (including ALSTOM-paid medical and dental insurance benefits) for as long as he remained disabled. (Geiger Aff. ¶¶ 18--21.)

ALSTOM is obligated to follow the Internal Revenue Service's ("IRS") guidelines with respect to calculating the taxable portion of an employee's LTD benefits, specifically IRS Publication 15-A Section 6,. (Giuliano Aff. ¶ 17.) An employee's LTD benefits are taxed based on the portion of the premium he paid, in ratio to the portion of the premium paid by the employer. (Giuliano Aff. ¶ 14.) Plaintiff does not dispute ALSTOM's interpretation of IRS Publication 15-A, but argues that ALSTOM breached its duty to him as a Plan participant by failing to comply with its own disclosures, thereby damaging Plaintiff by reducing the net benefit he would have expected to receive. (Geiger Aff. ¶ 23.) Plaintiff also does not dispute that in 2003, ALSTOM calculated the taxable percentage for Plaintiff's LTD benefits based on the last three years of employer/employee contributions towards the LTD premiums. Instead, Plaintiff claims that by unilaterally contributing a greater percentage of the premium payments, without any notice to plaintiff, ALSTOM effectively and improperly reduced his benefits. (Geiger Aff. ¶ 24.)

ALSTOM does not challenge the fact that it communicated to Plan participants that "52% of the benefit, representing the company paid portion, would be taxable." (Giuliano Aff. ¶ 17.) ALSTOM, however, characterizes the description in the Plan as a "blanket statement" which "is not correct, as individual circumstances will vary and a specific calculation must be made for each individual." (Giuliano Aff. ¶ 17.) Further, ALSTOM contends that for the 2000-2002 "look back"*fn2 period, the taxable portion of plaintiff's LTD benefit payments is 61%. (Giuliano Aff. ¶ 16; Appendix Ex. 7.) Plaintiff does not dispute the fact that the calculation of the taxable portion of his LTD benefits was not subject to ALSTOM's discretion, but rather that ALSTOM was obligated to disclose accurate information and is legally responsible for its failure to do so. (Geiger Aff. ¶ 17.)

ALSTOM cites to the following provision in the summary of its Bene-Flex Program: Nothing contained in this Planner Kit should be construed as a promise, guarantee or commitment by ALSTOM Signaling Inc. of continued employment, the continuance of the Bene-Flex Flexible Benefits Program, its component benefit plans, or other benefit plans. ALSTOM Signaling Inc. reserves the right to modify, suspend, or end any benefit plan or arrangement at any time should this become necessary or appropriate at the company's discretion. (Flexible Benefits Program, Giuliano Aff. Ex. 4 at 6.) ALSTOM argues from this provision that the summary description of ALSTOM's Bene-Flex Program does not constitute a promise or a contract. (Giuliano Aff. ¶ 18; Appendix Ex. 4, at six.) Plaintiff responds that neither his status with ALSTOM at the time he applied for LTD benefits is in dispute, nor is his eligibility for benefits under the Plan, and that nowhere in the pertinent Plan documents does ALSTOM reserve the right to reduce benefits after an application has been submitted and approved based on information previously disclosed. He further argues that any such right, if reserved, would constitute an abuse of discretion by the Plan fiduciary. (Geiger Aff. ¶ 28.)

Finally, ALSTOM contends that under its "Separation Pay Play [sic], severance benefits are calculated based on the employee's annualized base salary" and that Annual Earnings is defined as "the annualized base salary of the employee at the time of separation, without regard to overtime, bonus, incentive payments or commission payments." (Giuliano Aff. ¶ 19; Appendix Ex. 9, §§ 4.4, 4.1, 4.2.) ALSTOM further states that Items such as lump sum bonus payments, merit-based payments, fringe benefits and perks are properly excluded when calculating severance benefits. (Giuliano Aff ¶ 21; Appendix Ex. 9 §§ 4.2, 4.4.) In that regard, ALSTOM asserts that Plaintiff's 2002 lump sum payment was a one-time bonus and was not part of his base salary, or "standard compensation," or that the lump sum payment given to Plaintiff in lieu of an annual increase in salary, or given to him in lieu of an annual increase in salary, contrary to what Plaintiff has alleged in his amended complaint. (Giuliano Aff. ¶ 20.) Plaintiff, however, argues that by characterizing his 2002 lump sum payment as a bonus, ALSTOM has attempted to reduce the severance benefits, to which it acknowledges Plaintiff was entitled to receive, pursuant to the company's Separation Pay Plan. Plaintiff further argues that ALSTOM does not produce any documentation which defines the lump sum payment as a bonus or otherwise excludes it from the calculation of "the annualized base salary of the employee at the time of separation." In addition, citing to ALSTOM's letter dated December 19, 2003, Plaintiff contends that this payment was specifically described as a "lump sum," and not a bonus. (Plaintiff's Exhibit 3.) Plaintiff also disputes ALSTOM's assertion that fringe benefits and perks were excluded when calculating severance benefits and contends that no documentary support for this position has been provided. (Geiger Aff. ¶¶ 29-31.)


Summary Judgment

The standard for granting summary judgment is well established. Summary judgment may not be granted unless "the pleadings, depositions, answers to interroga-tories, 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 a judgment as a matter of law." Fed. R. Civ. P. 56(c). A party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). "[T]he movant must make a prima facie showing that the standard for obtaining summary judgment has been satisfied." 11 MOORE'S FEDERAL PRACTICE, § 56.11[1][a] (Matthew Bender 3d ed.). That is, the burden is on the moving party to demonstrate that the evidence creates no genuine issue of material fact. See Amaker v. Foley, 274 F.3d 677 (2d Cir. 2001); Chipollini v. Spencer Gifts, Inc., 814 F.2d 893 (3d Cir.1987) (en banc). W here the non-moving party will bear the burden of proof at trial, the party moving for summary judgment may meet its burden by showing the evidentiary materials of record, if reduced to admissible evidence, would be insufficient to carry the non-movant's burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322--23 (1986).

Once that burden has been met, the burden then shifts to the non--moving party to demonstrate that, as to a material fact, a genuine issue exists. Fed. R. Civ. P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). A fact is "material" only if the fact has some affect on the outcome of the suit. Catanzaro v. Weiden, 140 F.3d 91, 93 (2d Cir. 1998). A dispute regarding a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. In determining whether a genuine issue exists as to a material fact, the court must view underlying facts contained in affidavits, attached exhibits, and depositions in the light most favorable to the non-moving party. U.S. v. Diebold, Inc., 369 U.S. 654, 655 (1962). Moreover, the court must draw all reasonable inferences and resolve all ambiguities in favor of the non-moving party. Leon v. Murphy, 988 F.2d 303, 308 (2d Cir.1993); Anderson, 477 U.S. at 248-49; Doe v. Dep't of Pub. Safety ex rel. Lee, 271 F.3d 38, 47 (2d Cir. 2001), rev'd on other grounds Connecticut Dept. of Public Safety v. Doe, 538 U.S. 1, 123 S.Ct. 1160 (2003); International Raw Materials, Ltd. v. Stauffer Chemical Co., 898 F.2d 946 (3d Cir. 1990). However, a summary judgment motion will not be defeated on the basis of conjecture or surmise or merely upon a "metaphysical doubt" concerning the facts. Bryant v. Maffucci, 923 F.2d 979, 982 (2d Cir. 1991) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)); Knight v. United States Fire Ins. Co., 804 F.2d 9 (2d Cir. 1986). Rather, evidentiary proof in admissible form is required. FED. R. CIV. P. 56(e). Furthermore, the party opposing summary judgment "may not create an issue of fact by submitting an affidavit in opposition to a summary judgment motion that, by omission or addition, contradicts the affiant's previous deposition testimony." Hayes v. New York City, Department of Corrections, 84 F.3d 614, 619 (2d Cir. 1996).

ERISA Standard of Review

In Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989), the Supreme Court was called upon to determine the standard of review to be employed in ERISA cases where a beneficiary challenged a decision of a plan administrator. After an extensive review of the statue, analogizing to the law governing trusts, the Court held that,

[c]onsistent with established principles of trust law, we hold that a denial of benefits challenged under ยง 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to ...

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