United States District Court, S.D. New York
TIMOTHY D. LAURENT, Plaintiff,
PRICEWATERHOUSECOOPERS LLP, et al., Defendants
[Copyrighted Material Omitted]
For Timothy D. Laurent, on behalf of himself and all others similarly situated, Smeeta Sharon, Plaintiffs: Eli Gottesdiener, LEAD ATTORNEY, Gottesdiener Law Firm, PLLC, Brooklyn, NY.
For PricewaterhouseCoopers LLP, The Retirement Benefit Accumulation Plan for Employees of PricewaterhouseCoopers LLP, The Administrative Committee to the Retirement Benefit Accumulation Plan for Employees of PricewaterhouseCoopers LLP, Defendants: Douglas G. Smith, LEAD ATTORNEY, Kirklan & Ellis LLP, Chicago, IL; Robert J. Kopecky, LEAD ATTORNEY, PRO HAC VICE, Kirkland & Ellis LLP (IL), Chicago, IL; Lauren Oland Casazza, Kirkland & Ellis LLP (NYC), New York, NY.
OPINION AND ORDER
J. PAUL OETKEN, United States District Judge.
This case involves claims against Defendant PricewaterhouseCoopers (" PWC" ) under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq . (2000) (" ERISA" ), relating to PWC's Retirement Benefit Accumulation Plan for Employees of PriceWaterhouseCoopers LLP (" the RBAP" ). Plaintiffs Timothy Laurent and Smeeta Sharon allege that the RBAP violates ERISA's vesting and accrual standards by defining its " normal retirement age" as five years of service. They also allege that the summary plan description (" SPD" ) is defective and that it violates ERISA's general fiduciary standards provision. These claims, most of which were addressed and held to survive a previous motion to dismiss in an opinion issued by Judge Mukasey on September 5, 2006, Laurent v. PriceWaterhouseCoopers LLP, 448 F.Supp.2d 537 (S.D.N.Y. 2006) (" Laurent I " ), are alleged in Plaintiffs' Second Amended Complaint (" SAC" ). Seven years after Judge Mukasey issued his ruling, PWC has filed a motion to dismiss the SAC, pointing to intervening decisions from other circuits and reiterating its objections to Laurent I . For the reasons that follow, PWC's motion to dismiss is denied.
I. Applicable Legal Standards
A. Rule 12(b)(6)
To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a plaintiff must plead sufficient factual allegations " to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible " when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The Court must accept as true all well-pleaded factual allegations in the complaint, and " draw [ ] all inferences in the plaintiff's favor." Allaire Corp. v. Okumus, 433 F.3d 248, 249-50 (2d Cir. 2006) (internal quotations omitted). That said, " the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. In a summary of the plausibility standard, the Second Circuit explained that:
[ Twombly ] stated that a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, but mere labels and conclusions or formulaic recitations of the elements of a cause of action will not do; rather, the complaint's factual allegations must be enough to raise a right to relief above the speculative level, i.e., enough to make the claim plausible.
Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (quoting Twombly, 550 U.S. at 555, 570) (quotation marks and internal citations omitted).
B. Law of the Case Doctrine
Any questions of law ruled upon earlier in this litigation are revisited through the lens of law of the case doctrine, which provides that " when a court has ruled on an issue, that decision should generally be adhered to by that court in subsequent stages in the same case." United States v. Uccio, 940 F.2d 753, 758 (2d Cir. 1991) (citing Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 75 L.Ed.2d 318 (1983)). This doctrine serves the purpose of " maintain[ing] consistency and avoid[ing] reconsideration of matters once decided during the course of a single continuing lawsuit." 18 Wright, Miller & Cooper, Federal Practice and Procedure § 4478 at 788. It thus plays an important role in the administration of the federal courts, though " unlike the doctrines of res judicata and collateral estoppel, which a court cannot ignore where they apply, the law of the case, as Justice Holmes remarked, 'merely expresses the practice of the courts generally to refuse to reopen what has been decided.'" Devilla v. Schriver, 245 F.3d 192, 197 (2d Cir. 2001) (quoting Messenger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 739, 56 L.Ed. 1152 (1912)).
Law of the case doctrine is prudential and discretionary in character, see United States v. Williams, 205 F.3d 23, 34 (2d Cir. 2000), and courts " always [have] the power to change a ruling" in light of " further reflection," Corporacion de Mercadeo Agricola v. Mellon Bank Int'l, 608 F.2d 43, 48 (2d Cir. 1979); see also United States v. Birney, 686 F.2d 102, 107 (2d Cir. 1982) (" The doctrine of the law of the case is not an inviolate rule." ). That rule holds true even where a case has been reassigned to a new judge. See In re U.S., 733 F.2d 10, 13 (2d Cir. 1984). Under law of the case doctrine, the principal bases for departure from a prior ruling include " an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Doe v. New York City Dep't of Soc. Servs., 709 F.2d 782, 789 (2d Cir. 1983). Courts remain sensitive in this context to the potential for prejudice that can result from a lack of notice or " a lack of sufficient opportunity to prepare armed with the knowledge that the prior ruling is not deemed controlling." Uccio, 940 F.2d at 758 (quotation marks, citation, and alterations omitted).
A. Count One: Defining Normal Retirement Age As A Term of Years
Count One alleges that the RBAP-defined " normal retirement age" (" the RBAP NRA" ) of five years of service is invalid under ERISA. The parties' dispute over the validity of the RBAP NRA is subject to law of the case doctrine. In September 2006, relying principally on Duchow v. New York State Teamsters Conference Pension and Ret. Fund, 691 F.2d 74 (2d Cir. 1982), Judge Mukasey concluded that the RBAP NRA is invalid. See Laurent v. PriceWaterhouseCoopers LLP, 448 F.Supp.2d 537, 545 (S.D.N.Y. 2006) ( Laurent I ); see also id . (" The RBAP does not specify one consistent age as the normal retirement age . . . each employee will be a different age at the time he reaches the normal retirement age. Such a normal retirement age is invalid under the Second Circuit's interpretation of ERISA." ).
Nearly one year later, after a reassignment from Judge Mukasey, Judge Daniels denied a motion for reconsideration of Laurent I, but certified Judge Mukasey's opinion for interlocutory appeal. See Laurent v. PriceWaterhouseCooper LLP, No. 06 Civ. 2280, 2007 WL 2363616, at *1 (S.D.N.Y. Aug. 17, 2007) ( Laurent II ). Ultimately, the Second Circuit refused to hear an interlocutory appeal. In December 2010, Judge Daniels denied Defendants' request for reconsideration of his opinion denying their original motion for reconsideration of Judge Mukasey's ruling. See Laurent v. PriceWaterHouseCoopers LLP, No. 06 Civ. 2280, 2010 WL 5396089, at *1 (S.D.N.Y. Dec. 22, 2010) ( Laurent III ).
Upon an independent examination of the merits, the Court reaffirms Laurent I 's result, though it departs somewhat from Laurent I 's reasoning. Laurent I relied on Duchow to conclude that the RBAP NRA violated ERISA, but upon careful reflection it is clear that Duchow and the other sources cited in Laurent I lend only modest support to that conclusion. Of course, the conclusion that Laurent I 's reasoning cannot control does not end the inquiry. Rather, a decision must be reached as to whether the RBAP NRA is invalid for some other reason. Considering the positions advanced by the parties, as well as the logic of recent Fourth and Seventh Circuit cases, the Court identifies another such basis in ERISA's plain text and embraces Laurent I 's result.
1. Relevant ERISA Provisions
ERISA § 3(24) defines normal retirement age as follows:
The term " normal retirement age" means the earlier of--
(A) the time a plan participant attains normal retirement age under the plan, or
(B) the later of--
(i) the time a plan participant attains age 65, or
(ii) the 10th anniversary of the time a plan participant commenced participation in the plan.
29 U.S.C.A. § 1002(24). Section § 203 of ERISA, in turn, creates minimum vesting standards:
(a) Nonforfeitability requirements
Each pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age and in addition shall satisfy the requirements of paragraphs (1) and (2) of this subsection.
(1) A plan satisfies the requirements of this paragraph if an employee's rights in his accrued benefit derived from his own contributions are nonforfeitable.
(2) A plan satisfies the requirements of this paragraph if it satisfies the requirements of subparagraph (A), (B), or (C).
(A) A plan satisfies the requirements of this subparagraph if an employee who has at least 10 years of service has a nonforfeitable right to 100 percent of his accrued benefit derived from employer contributions.
(B) A plan satisfies the requirements of this subparagraph if an employee who has completed at least 5 years of service has a nonforfeitable right to a percentage of his accrued benefit derived from employer contributions which percentage is not less than the percentage determined under the following table: (table omitted).
(i) A plan satisfies the requirements of this subparagraph if a participant who is not separated from the service, who has completed at least 5 years of service, and with respect to whom the sum of his age and years of service equals or exceeds 45, has a nonforfeitable right to a percentage of his accrued benefit derived from employer contributions determined under the following table: [omitted]
29 U.S.C. § 1053(a).
2. Duchow and the RBAP NRA
In Duchow, the Second Circuit held that a plan must provide that pension benefits vest either when a participant reaches normal retirement age or when he satisfies one of the three service-based requirements set forth in 29 U.S.C. § 1053(a)(2). 691 F.2d at 75.
Duchow is readily summarized. Herman Duchow became a member of a pension plan on February 1, 1969, was denied pension benefits at the age of 69 in February 1977, and terminated his employment in May 1977. Id . He then returned to work at the same company for two months in 1979, during which time he once again applied for benefits and was once again denied. Id . The Trustees justified their denials on the undisputed ground that Duchow had not fulfilled the plan's service requirements. Id . Duchow's estate sued and argued that his pension benefits had vested by February 1979, explaining that the plan's purely service-based rules violated ERISA's vesting provisions. Id . at 75-76. The Second Circuit agreed and held that " pension benefits become vested upon an employee's attainment of 'normal retirement age,' as defined in [ERISA]." Id . at 75. Because Duchow had joined the pension plan in February 1969, and sought benefits upon reaching normal retirement age in February 1979 (his 10-year anniversary of commencing participation in the plan), the Circuit concluded that Duchow had vested and was entitled to pension benefits. Id . at 80. As part of that analysis, it held that " anniversary" means " a date rather than the years between the date and the past event." 691 F.2d at 79.
Duchow 's holding that pension benefits must vest by the time a plan member reaches normal retirement age hinged on a determination that § 203 imposes two distinct kinds of vesting requirements. In reaching that result, the Circuit disagreed with the pension plan, which had argued that § 203 requires nothing more than satisfaction of the requirements set forth in § 203(a)(2), all of which are linked to an employee's years of service. Id . at 77.
Reasoning from statutory text and structure, Duchow noted that § 203 " indicate[s] that two discrete vesting requirements are imposed, the first linked to age and the second depending on length of service without regard to age." Id . at 77. Duchow also looked to legislative history, which revealed a clear intent to impose the requirement that an employee must be fully vested by the time he reaches normal or stated retirement age. Id . at 77-78. The Second Circuit thus concluded that, whereas § 203(a)(2) imposes vesting standards linked to an employee's years of service, § 203(a) imposes a vesting standard keyed to normal retirement age. Id . at 77; see also id . (" Each pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age." (quoting § 203(a))).
As a result, Duchow explained that " § 203(a)'s provisions with regard to employer contributions are properly interpreted as imposing two distinct types of minimum vesting requirements, one of
which is independent of years of service." Id . at 77.
Laurent I 's invalidation of the RBAP NRA was based almost entirely on the foregoing line from Duchow 448 F.Supp.2d at 545. Laurent I also recited Duchow 's other formulation of this point: " '[B]oth the format of § 203(a) and the disparate contents of its conjoined parts indicate that two discrete vesting requirements are imposed, the first linked to age without regard to length of service and the second depending on the length of service without regard to age.'" Id . (quoting Duchow, 691 F.2d at 77) (emphasis in original). Laurent I reasoned that any service-based definition of normal retirement age would violate the vesting rules set forth in § 203(a), as interpreted by Duchow, by impermissibly rendering both of the discrete vesting requirements dependant on length of service without regard to age. Id .
This interpretation, however, reads more into Duchow 's holding than it can bear.
When Duchow drew a sharp line between age- and service-based requirements, and referred to age-based requirements " independent" of length of service, it did not consider the possibility of a service-based normal retirement age. Rather, Duchow concerned itself with the existence of a discrete requirement under § 203(a) that pension benefits vest no later than normal retirement age. Thus, when Duchow referred to " age," it used that word as a shorthand for " normal retirement age" under § 203(a) and in contradistinction to the three service-based vesting rules set forth in § 203(a)(2). Normal retirement age, in turn, is defined under ERISA as the earlier of a plan's definition of normal retirement age or a statutory default (the later of attaining age 65 or the tenth anniversary of commencing participation). Duchow interpreted and applied only the anniversary provision of the statutory default.
In light of ERISA's text and contemporary business practice, Duchow presumed that normal retirement age would generally be defined in terms of age. In dictum, Duchow then relied on that assumption to describe as " independent of years of service" the statutory requirement that pension benefits vest by normal retirement age. 691 F.2d at 77. Understood in context, and standing alone, that dictum is too slender a reed to bear the weight it is assigned in Laurent I . Though it may gesture in that direction, Duchow did not create an anticipatory prohibition on service-based definitions like ...