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Pierce v. P & A Administrative Services

August 24, 2010


The opinion of the court was delivered by: Leslie G. Foschio United States Magistrate Judge




This matter was referred to the undersigned for all pretrial matters by Hon. Richard J. Arcara on July 16, 2009 (Doc. No. 5). It is presently before the court on Defendant's motion for summary judgment, filed December 14, 2009 (Doc. No. 13), Plaintiff's motion for leave to file an amended complaint filed April 1, 2010 (Doc. No. 26), and Plaintiff's motion to compel filed April 29, 2010 (Doc. No. 28).


At the time Plaintiff commenced this action, Plaintiff, a registered nurse, was an employee of Chautauqua Opportunities, Inc., a not-for-profit organization providing charitable services to persons within the State of New York, particularly those residing in Chautauqua County ("Chautauqua Opportunities") and, at present, a non-party. Plaintiff worked full-time as an employee of Chautauqua Opportunities from 1987 to 2000 when she became a part-time employee working over 1,000 hours annually. As of the time this suit, claiming violations of ERISA, 29 U.S.C. § § 1001 et. seq., was commenced Plaintiff was working part-time for Chautauqua Opportunities. Throughout her employment Plaintiff alleges she was a participant in the Chautauqua Opportunities Retirement Plan, Inc. ("the Plan"). The Plan is a tax qualified defined contribution annual plan into which eligible employees made contributions toward a retirement annuity and Chautauqua Opportunities contributed a discretionary amount of 2% of each participant's earnings between 2002 and 2007. The retirement annuities are provided by Nationwide Insurance Company. Defendant, P&A Administrative Services, Inc. ("P&A"), acted as administrator of the Plan from the Plan's inception in 1995 until 2007. From 1995 until January 1, 2002, the Plan excluded from eligibility part-time employees working less than 1638 hours annually.

Plaintiff alleges P&A's obligation as Plan administrator was to inform Chautauqua Opportunities of those employees eligible for contributions to the Plan on behalf of the employees eligible for such contributions so that, pursuant to the Plan, Chautauqua Opportunities was then able to make its employer contribution to the retirement accounts of eligible employees identified by Defendant. According to Plaintiff, after the Plan was amended in 2002 to conform to applicable tax law requirements to make part-time employees eligible for participation in the Plan, and thus contributions by Chautauqua Opportunities, by reducing the minimum annual hours worked to 1,000, Defendant failed to advise Chautauqua Opportunities of the identities of such newly eligible employees, including Plaintiff, so that the Plan's accounts of part-time employees, including Plaintiff, were not credited with the annual contributions by Chautauqua Opportunities that were otherwise made to its full-time employees based on their earnings in accordance with the Plan for the period 2002 through 2007. See, e.g., Exh. A to Attorney Affirmation of Hedwig M. Auletta, § 2.4(a) (administrator to determine eligibility of participants in Plan), (f) (Plan administrator to "compute and certify" to employer Chautauqua Opportunities amount of funds "necessary" to be contributed by employer). Plaintiff, therefore, alleges violations of ERISA, specifically, 29 U.S.C. §§ 1109 ("§ 1109") and § 1132(a)(2) ("§ 1132(a)(2)") asserting that Defendant P&A breached its fiduciary duty to the Plan as plan administrator. Plaintiff also seeks to compel P&A to repay to the Plan P&A's fees paid by Chautauqua Opportunities as well as any commissions earned, and attorneys fees.

In its motion for summary judgment ("Defendant's motion"), Defendant does not, pursuant to Fed.R.Civ.P. 12(b)(6) assert Plaintiff has failed to state a claim, rather, Defendant argues that because under § 1132(a)(2) an individual participant like Plaintiff lacks standing to seek reimbursement to a plan covered by ERISA based on a breach of a fiduciary's duty, and as Plaintiff has not sought to sue in a representative capacity on behalf of the other participants and beneficiaries of the Plan adversely affected by Defendant's alleged breach, the Complaint is subject to summary judgment for failure to meet this threshold legal requirement. Defendant's Memorandum of Law (Doc. No. 16) at 3 (citing Coan v. Kaufman, 257 F.3d 250, 261 (2d Cir. 2006)). Defendant also maintains that Plaintiff's complaint is subject to summary judgment on the ground that repayment of fees by a fiduciary acting as a plan administrator is not among the remedies available for ERISA violations under § 1109(a), arguing that as P&A earned no profits from its work in the administration of the Plan, such reimbursement is foreclosed. Id. at 10-11 (citing cases). Discovery in this action is not complete as Defendant has refused to proceed with depositions until resolution of its summary judgment request. Plaintiff opposed Defendant's motion by papers filed March 1, 2010 (Doc. No. 22). Plaintiff has also requested an amended scheduling order be issued.

In opposition to Defendant's motion, Plaintiff states that she has, since filing this suit, obtained employee information from Chautauqua Opportunities thereby indicating Plaintiff's desire to sue on behalf of similarly situated employee-participants, and has sought to have another employee join the action as a plaintiff. Defendant refused to respond to Plaintiff's document request, served April 27, 2010, seeking the identity of Chautauqua Opportunities employees for the period 2002-2007, citing alleged privacy grounds and that Plaintiff had previously obtained such information from Chautauqua Opportunities.

By papers filed April 1, 2010, Plaintiff moves for leave, pursuant to Fed.R.Civ.P. 15(a), to file an amended complaint adding Susan K. Ketchum, another retired nurse and former Chautauqua Opportunities employee like Plaintiff, as a party-plaintiff and Chautauqua Opportunities as a defendant ("Plaintiff's motion to amend"). As with Defendant, the proposed amended complaint also asserts violations of § 1109 and § 1132(a)(2) against Chautauqua Opportunities. Defendant opposes Plaintiff's motion to amend asserting that as with the Complaint the proposed amended complaint does not properly allege it is brought in a representative capacity and therefore is subject to dismissal and thus futile. Defendant also attacks several of the amended complaint's allegations on the grounds of asserted legal insufficiencies. Attorney Affirmation of Hedwig M. Auletta in Response to Plaintiff's motion to amend ¶¶ 5 - 10; ¶¶ 13-18. In particular, Defendant argues Chautauqua Opportunities breached its fiduciary duty to the Plan. Id. ¶¶ 13, 23.

In Plaintiff's motion to compel ("Plaintiff's motion to compel"), Plaintiff seeks payroll records of Chautauqua Opportunities from Defendant including addresses and phone numbers of employees, including part-time employees, for the year 2002-2007, Plaintiff's Document Request No. 4 (Doc. No. 28-3), and copies of payroll records for such employees for the years 2002-2008, Plaintiff's Document Request No. 5. Defendant refused production citing privacy issues on behalf of the employees, lack of relevance, and that Plaintiff has previously received such information from Chautauqua Opportunities. Id. Defendant also asserts that the data Plaintiff seeks is contained in a computerized database that is currently in the possession of the new Plan administrator, and therefore is no longer in Defendant's possession. Affidavit of Deborah L. Obstarczyk (Doc. No. 32) ¶¶ 11-14. Plaintiff responded to these averments with the affidavit of Bennett Gagliano, owner of TPSI, the new Plan administrator who stated that the requested information remains in Defendant's possession (Doc. No. 34- 4 ¶¶ 5-6).


ERISA § 1132(a)(2) authorizes an action on behalf of a plan to obtain equitable or remedial relief to reimburse a plan for any losses attributable to a breach of fiduciary duty by a fiduciary in violation of § 1109(a). Boyce-Idlett v. Verizon Corporate Services Corp., 2007 WL 2589445 *13 (citing 29 U.S.C. §§ 1109(a), 1132(a)(2)). However, such actions seeking such monetary relief must be brought not for an individual participant's benefit but in a representative capacity on behalf of the plan. Coan v. Kaufman, 457 F.3d 250, 257 (2d Cir. 2006) (citing Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (1985); Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir. 1993)). In order to protect the interests of absent participants and to avoid redundant suits, a party seeking to enforce fiduciary duties and monetary damages with respect to a plan must proceed in a representative capacity. Id. at 260. The requirement of proceeding in a representative capacity may be satisfied by pleading a class action pursuant to Fed.R.Civ.P. 23, making "a good-faith effort to join other participants pursuant to [Fed.R.Civ.P] Rule 19," or taking "adequate steps under the circumstances properly to act in a 'representative capacity on behalf of the plan.'" Coan, 457 F.3d at 261 (quoting Russell, 473 U.S. at 142 n. 9) (bracketed material added). Thus, the question raised by Defendant's motion is whether the Complaint satisfies the representative capacity requirement established for actions brought pursuant to § 1132(a)(2).

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, __ U.S. __, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The factual allegations of the complaint "must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true." Twombly, 550 U.S. at 570. "Asking for plausible grounds to infer [employment discrimination] does not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of [employment discrimination]." Twombly, 550 U.S. at 556. "Specific facts ...

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