United States District Court, E.D. New York
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
For the Plaintiff: Rick Ostrove, Esq., Bryan L. Arbeit, Esq., Of Counsel, Leeds Brown Law, P.C., Carle Place, NY.
For the Defendant: Robert Steven Whitman, Esq., Barbara H. Borowski, Esq., Scott Roblan Rabe, Esq., Of Counsel, Seyfarth Shaw LLP, New York, NY.
MEMORANDUM OF DECISION & ORDER
ARTHUR D. SPATT, United States District Judge.
On March 12, 2012, the Plaintiff Janet D'Iorio (the " Plaintiff" ) commenced this action by filing a Complaint against the Defendant Winebow, Inc. (the " Defendant" ). The action sought statutory, injunctive, and equitable relief relating to the Defendant's alleged failure to disclose plan documents and its affirmative and/or negligent misrepresentation of benefits under its long-term disability and life insurance plan governed by the Employee Retirement Income Security Act of 1974 (" ERISA" ). Specifically, the Plaintiff asserted (1) a cause of action under ERISA § 502(c)(1), 29 U.S.C. § 1132(c)(1), for the Defendant's alleged failure to provide or comply with a request for information by a participant or beneficiary, which a plan administrator is required to furnish and (2) a cause of action under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), to redress alleged violations by the Defendant of fiduciary and statutory duties under ERISA.
On January 18, 2013, the Court granted the Defendant's motion pursuant to Federal Rule of Civil Procedure (" Fed. R. Civ. P." ) 12(b)(6) to dismiss the Plaintiff's first cause of action under ERISA § 502(c)(1) and denied the Defendant's motion with respect to its second cause of action under ERISA § 502(a)(3).
Presently before the Court is the Defendant's motion for (i) summary judgment pursuant to Fed.R.Civ.P. 56(a) to dismiss the Plaintiff's remaining cause of action under ERISA § 502(a)(3); or (ii) in the alternative, to limit the Plaintiff's damages at trial pursuant to Fed.R.Civ.P. 56(g). For the reasons set forth below, the motion is denied in part and granted in part.
Unless stated otherwise, the following facts are drawn from the parties' Rule 56.1 statements. Triable issues of fact are noted.
A. The Underlying Facts
1. The Plaintiff's Compensation
In 1997, the Plaintiff began working as a sales representative for the Defendant. Before being employed by the Defendant, the Plaintiff had a history of chronic pain related to her neck and back. (D'Iorio Dep. Tr. 102:16-20.) The parties do not set forth the Plaintiff's age or marital status.
The Defendant is a New Jersey corporation, which has its primary place of business in New Jersey. (Compl. at ¶ 5.) The parties do not make clear the precise nature of the Defendant's business.
Pursuant to the Plaintiff's March 26, 2008 and October 1, 2009 employment contracts with the Defendant, the Plaintiff's compensation was based on " [r]ecoverable draw against commission: $60,000.00 per annum, paid bi-weekly." (Whitman Decl., Ex. 6; Ostrove Decl., Ex. 36.)
Under this policy, the Plaintiff received bi-weekly checks based on a salary of $60,000, referred to as her recoverable draw. The Plaintiff's recoverable draw did not include commissions. (Id.) In this regard, if the Plaintiff's commissions were less than her recoverable draw in a given month, she would start the following month owing the Defendant money and would have to earn additional commissions to " make it up." (D'Iorio Dep. 230:9-19; Delvin Dep. 9:20-24.) If in a given month, the Plaintiff earned commissions in excess of her recoverable draw, then she would receive an " additional check" for an unspecified amount. (Delvin Dep. 9: 10-14.) In 2008 and 2009, the two years prior to when she went on disability leave in 2010,
the Plaintiff earned $110,000 and $112,000, respectively. (D'Iorio Dep. Tr. 241:2-13.) Her compensation in 2008 and 2009 was therefore significantly higher than her recoverable draw of $60,000.
Under the Defendant's compensation policy, an employee could submit a request to her supervisor to change her " recoverable draw." A party's request was only granted if approved by the sales representative's supervisors and senior management.
However, the parties dispute whether the Defendant had a policy in place that precluded employees from increasing their recoverable draw above a certain amount. Both parties agree that there was no written policy relating to a maximum recoverable draw. (Response to the Pl.'s. Req. for Admission at 6, Ostro. Decl., Ex. 27.) However, the Defendant alleges that there was an oral policy that the maximum amount that a commissioned sales employee could increase her recoverable draw to was 80 percent of 5.5 percent of that employee's prior year sales. (Edelstein Decl. at ¶ 5; Delvin Dep. Tr. 10:6-8.) According to the Defendant, it enforced this policy " rigidly," so that an employee could only alter her recoverable draw above the maximum amount under " extraordinary circumstances." (Edelstein Dep. Tr. 32:3-6.) The Defendant does not make clear the meaning of " extraordinary circumstances."
On the other hand, the Plaintiff disputes that the Defendant had an oral policy that prevented employees from raising their recoverable draw above a certain amount. (See Delvin Dep. Tr. 10:6-10; Ostro Decl., Ex. 13.) She asserts that an employee could seek permission from her supervisor to increase her recoverable draw at any time and for any reason.
2. The Employee Handbook
The Defendant provides its employees with certain benefits, including a long term disability plan (the " LTD Plan" ). Generally, a company's LTD Plan provides benefits in the form of compensation checks to employees in the event that they are disabled by an accident or an illness. (Whitman Decl., Ex. Q, at 62.) The Defendant is the Plan Administrator and named fiduciary of its LTD Plan.
On June 1, 2008, the Defendant revised its Employee Handbook. In a section entitled, " Long Term Disability Insurance," the 2008 Employee Handbook states:
If you are a regular full-time employee of the Company, you are protected through a long-term disability insurance policy from financial hardship if you are totally disabled because of illness or accident that is not job related. Coverage amounts are defined in the Summary Plan Descriptions (SPD's) provided by the insurance company. The Summary Plan Descriptions can be found on the Intranet under Human Resources or directly from the Human Resources Department. Long term disability benefits begin after 180 days of total disability and provide you with a % of your annual salary.
(Whitman Decl., Ex. Q, at 62.)
The Defendant operated an " Intranet" site, known as " Sharepoint," which is an internal company website that the Defendant made available to its employees to access certain documents related to their benefits, including summary plan descriptions. Summary plan descriptions (" SPDs" ) are documents provided by insurance companies that describe the benefits available to employees.
On June 12, 2008, the Plaintiff signed a form acknowledging that she had " received and read a copy of the Company Employee Handbook." (Whitman Decl., Ex. B, at 146-47.)
On May 18, 2009, the Defendant revised the Employee Handbook again but left the section entitled, " Long Term Disability Insurance" the same. On June 4, 2009, the Plaintiff signed another form acknowledging that she had " received and read a copy of the Company Employee Handbook." (Whitman Decl. at Ex. S.) The Plaintiff also saved copies of the 2008 and 2009 Employee Handbooks on her computer.
3. The December 1, 2008 PowerPoint Presentation
The Defendant held " Open Enrollment meetings" for its employees several times a year to provide an overview of certain benefits available to its employees. The parties dispute whether at these meetings, the Defendant generally directed its employees to the Company's intranet site for copies of the benefit plans and SPDs.
In addition, when the Defendant made changes to its employees' benefits, Michelle Edelstein (" Edelstein" ), the Defendant's Vice President of Human Resources, would send communications to employees regarding those changes.
Prior to 2009, the Defendant used United of Omaha Life Insurance Company (" United of Omaha" ) as its insurance carrier for the LTD Plan. Under the United of Omaha's LTD plan, if an employee qualified for the LTD Plan because of an injury, he or she would receive a " monthly benefit" or check for a certain amount of money. (Ostrove Decl., Ex. 32, at 1.) The " monthly benefit" was " 60% of [an employee's] Basic Monthly Earnings up to a maximum benefit of $5,000 per month." (Id. at 1.) The United of Omaha LTD plan defined " Basic Monthly Earnings" as " gross income received from [the Defendant] for the month immediately prior to the month in which [the employee's] disability began." (Ostrove Decl., Ex. 32, at 2.) Significantly, under this plan, an employee's gross income " include[d] commissions received [from the Defendant]." (Id.)
In 2008, the Defendant changed its insurance carrier for its LTD Plan from United of Omaha to Unum Life Insurance Company of America (" Unum" ). The change would become effective as of January 1, 2009. As is described in more detail below, the Unum Plan calculated employees' monthly benefit payments under the LTD Plan based on their recoverable draw and not their gross earnings, including commissions.
Prior to the effective date, the Defendant held presentations regarding the changes to its benefits, including the LTD Plan. In particular, in a November 26, 2008 email to sales employees, Edelstein stated that the " 2009 Benefit Enrollment Meeting" was scheduled for December 1, 2008. (Edelstein Decl., Ex. AA.) Edelstein attached to the email a copy of a PowerPoint presentation to be given at the meeting and asked the employees to " either print it out or have it up on your computer so that you can read along as we present the benefit plans for 2009." (Id.) In the email, Edelstein also attached an " UNUM . . . Long Term Disability Election Form." (Id.) The Plaintiff received the email and attachments. (D'Iorio Decl. at ¶ 2.)
The PowerPoint presentation was prepared by Mercer Health Benefits LLC (" Mercer" ), a third party hired by the Defendant. However, Edelstein reviewed and approved it. (Edelstein Dep. Tr. 37:11-25.)
The PowerPoint presentation consisted of forty-one slides relating to the different benefit plans offered by the Defendant to its employees. (Edelstein Decl., Ex. AA.) One of the slides was entitled, " Short and Long Term Disability." (Id.) Under a section of the slide entitled, " Long Term Disability," there were four bullets, which stated: (i) " 66 2/3 % of monthly earnings to
a maximum of $15,000 per month" ; (ii) " Survivor Benefit" ; (iii) " Dependent Care Benefit" ; and (iv) " Paid by [the Defendant] at no cost to you." (Id.) However, the slides did not define the meaning of " earnings," nor did any of the slides direct employees to the Defendant's intranet site to obtain a copy of the plans or SPDs for the benefits discussed at the presentation. (Id.)
The " UNUM Long Term Disability Election Form" required each employee to indicate whether he or she elected to (i) pay the premium for the LTD Plan on a " payroll deduction basis" ; or (ii) not to pay the premium for the LTD Plan. (Ostrow Decl., Ex. 2.) Under the first option, the disability benefits claimed by the employee would not be subject to federal income tax. (Id.) However, under the second option, the Defendant would pay the premiums on the policy for the employee but any disability benefits later claimed by the employee would be subject to the federal income tax. (Id.)
On December 1, 2008, the Defendant held the scheduled meeting during which the PowerPoint presentation attached to the November 26, 2008 email was given. The Plaintiff attended the meeting. (D'Iorio Decl. at ¶ 2.) Edelstein was also present during the meeting. (Edelstein Dep. Tr. 37:11-25.) The parties dispute whether Edelstein or a representative of Mercer presented the PowerPoint presentation. (Edelstein Dep. 37:2-9; the Def.'s Memo of Law, at 16.) A copy of the SPD of the LTD plan was not provided at the meeting. (Edelstein Dep. Tr. 37:11-25.)
Following the meeting, the Plaintiff filled out the " UNUM Long Term Disability Election Form" attached to Edelstein's November 26, 2008 email. The Plaintiff chose the first option pursuant to which the premiums for the LTD Plan were deducted directly from her pay check every two weeks.
The amount deducted per pay check was determined by the formula " .00847% of [the employee's] annual salary." This formula was not provided to employees in the documents contained in Edelstein's November 26, 2008 email.
However, in a December 22, 2009 email to various sales employees, Erin McGuinness (" McGuinness" ), a member of the Defendant's Human Resources department, attached a document entitled, " Summary of Health and Welfare Benefits Effective January 1, 2010." (Whitman Decl., Ex. K.) The document stated, " Long Term Disability starts after 180 days of total disability and pay[s] 66 2/3 % of your base salary." (Id.) In addition, the document stated, " If you are interested in calculating the premium costs, you can do so by using the following formula . . . Current Annual salary/26/100 * 0.22[.] For example, $30,000/26/100 * = $2.54 per pay period." (Id.)
Pursuant to this formula, beginning on January 1, 2009, $5.08 was deducted from each of the Plaintiff's pay checks. Given that it was a " nominal amount," the Plaintiff testified that she never thought to use this calculation to determine the " Current Annual Salary" that was being used by the Defendant to calculate her premium payments. (D'Iorio Decl. at ¶ 4.)
4. The Summary Plan Description of the LTD Plan
The SPD of the 2009 Unum LTD Plan provides information and answers to questions regarding the eligibility requirements for the plan and the benefits available to employees. (Whitman Decl., Ex. I.) Under a heading entitled, " What are your monthly earnings," the SPD states: " 'Monthly Earnings' means your gross monthly income from your Employer in effect just prior to your date of disability . . . . It does not include additional income received
from commissions, bonuses, overtime pay, any other extra compensation, or income received from sources other than your Employer." (Id.)
The parties dispute whether the Defendant made the SPD for the 2009 Unum LTD plan available to the Plaintiff at any time prior to or following the December 1, 2008 presentation. In this regard, the Defendant asserts that the SPD of the 2009 Unum LTD Plan was mailed to all employees, including the Plaintiff, and was available on SharePoint. (McGuinness Dep. Tr. 15:23-16:5; Edelstein Decl. at ¶ 3.) On the other hand, Plaintiff asserts that she did not receive the SPD of the 2009 Unum LTD Plan in the mail and that she did not have access to the company's SharePoint site. (D'Iorio Tr. 151:17-22; 152:24-153:13.) However, the Plaintiff admits that prior to applying for benefits under the LTD Plan in 2010, she never sought access to SharePoint to review the LTD Plan.
5. The Plaintiff's Injury and Application for LTD Benefits
In January 2010, the Defendant held Open Enrollment meetings where it used the same PowerPoint presentation delivered on December 1, 2009.
Also in January 2010, following the presentation, the Plaintiff was injured after falling in her garage. (D'Iorio Dep. Tr. 102:23-103:7.) The parties do not set forth the precise date in January when the Plaintiff was injured. After the injury, the Plaintiff was taken to the emergency room and given X-rays to her hands, wrists, and legs. (Id. at 103:10-18.) As a result of the fall, she suffered " some torn ligaments" in her foot, pain in her hands and wrists, and exacerbated her pre-existing injuries to her neck and back. (Id. at 102:11-103:24.)
On January 21, 2010, the Plaintiff emailed Lori Delvin (" Delvin" ), her direct supervisor, to inquire about the scope of her benefits under the Unum LTD Plan. Devlin responded:
Erin [McGuiness]  sent me a 45 page document but asked me not to forward as different employees fall under different plans based on salary level and other such things . . . . If you continue to feel this bad you should probably ask for a copy of your plan, it is hard for me to know the difference would be. The percentage of salary on Long Term on mine is 66.67%, but since reps ...