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Caufield v. Colgate-Palmolive Co.

United States District Court, S.D. New York

February 24, 2017

PAUL CAUFIELD, et al., Plaintiffs,
v.
COLGATE-PALMOLIVE CO., et al., Defendants.

          OPINION AND ORDER

          Lorna G. Schofield United States District Judge.

         This is a continuation of the litigation in In re Colgate-Palmolive Co. ERISA Litigation, Master File No. 07 Civ. 9515 (“Colgate I ”). Plaintiffs Paul Caufield and Rebecca Staley allege that Defendants Colgate-Palmolive Co. (“Colgate”), Colgate-Palmolive Co. Employees' Retirement Income Plan (the “Plan”), Laura Flavin, Daniel Marsili and the Employee Relations Committee of Colgate-Palmolive Co. (the “Committee”) denied certain Residual Annuity benefits to which Plaintiffs are entitled under the Plan. They assert claims against Defendants for violations of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”), and for contempt of the Court's Final Order and Judgment in Colgate I Defendants move to dismiss Plaintiffs' claims pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that the claims were released in the settlement agreement from Colgate I, are time barred and fail to state a claim. For the following reasons, the motion is denied.

         I. BACKGROUND

         For purposes of Defendants' motion, the following facts are drawn from the Complaint and documents integral to the Complaint. The facts are construed in the light most favorable to Plaintiffs as the non-moving party. See Littlejohn v. City of New York, 795 F.3d 297, 306 (2d Cir. 2015).

         Plaintiffs are former employees of Colgate. Plaintiff Paul Caufield was employed by Colgate from 1977 to 1999. Plaintiff Rebecca Staley was employed by Colgate from 1979 to 1994. Both Plaintiffs were and are participants in the Plan, which is sponsored by Colgate and administered by the Committee. The Committee is comprised of selected Colgate officials, including Defendants Laura Flavin and Daniel Marsili.

         The Plan is a defined benefit pension plan. As such, the Plan guarantees that each participant will receive a certain level of benefits, known as accrued benefits, expressed as the amount the participant would receive annually as an annuity upon reaching normal retirement age, here, age 65. A participant's accrued benefit is determined under the terms of the Plan. Prior to July 1, 1989, the Plan used a final average pay formula, meaning in simplest terms that the level of benefits was based on the participant's length of service and average salary during her final years of service. Effective July 1, 1989, the Plan became a cash balance plan, which essentially uses a career average pay formula. Specifically, the new plan formula defines a participant's benefits in terms of a Personal Retirement Account (“PRA”) balance, which reflects accumulated monthly pay-based credits and interest. Upon retirement, the PRA balance is converted into an annuity or, if preferred, paid as a lump sum.

         Because the benefits provided under the new formula would in some circumstances be less valuable than the benefits provided under the old formula, Colgate enacted protective Plan provisions and offered enhanced benefits for participants with pre-July 1989 benefits. These provisions and benefits are set forth in Plan Appendices B, C and D. First, all such participants were to receive the larger of the annuity calculated under (1) the Plan's pre-July 1989 final average pay formula, or (2) the Plan's new PRA formula. Second, these participants had the option to continue earning benefits under the pre-July 1989 final average pay formula by making employee contributions to the Plan. Participants who selected this option were to receive the larger of the annuity calculated under (1) the Plan's pre-July 1989 final average pay formula as continued in effect post-July 1, 1989, or (2) the Plan's new PRA formula plus an annuity based on the employee's contributions.

         Caufield and Staley had pre-July 1989 benefits and opted to make employee contributions. When they retired from Colgate in 1999 and 1994, respectively, they each elected to receive their benefits under the Plan in the form of a lump sum. Colgate paid Caufield $104, 386.00 and Staley $22, 425.64.

         In 2005, Colgate acknowledged that the lump sums the Plan had been paying to participants with pre-July 1989 benefits were less than the lump sums to which they were statutorily entitled. The deficiency in the lump sum payments meant that Defendants had deprived Plan participants of some of their non-forfeitable pension benefits. To correct this problem, Colgate enacted the Residual Annuity Amendment (“RAA”) in 2005. The RAA amended the Plan and granted an additional annuity benefit to any participant with pre-July 1989 benefits who elected a lump sum and whose benefit under Appendices B, C or D was greater than her benefit under the PRA formula. The RAA was effective retroactively to July 1, 1989. Defendants did not implement the RAA until 2014 and have never provided Plan participants an updated summary plan description (“SPD”) or summary of material modifications (“SMM”) disclosing the RAA.

         In 2007, three lawsuits were filed against the Plan alleging that it had miscalculated the pension benefits of several thousand participants since July 1, 1989. The cases were consolidated into Colgate I. In May 2010, after three years of litigation, the parties reached an agreement in principle to settle the case. Up to that point, Defendants had not produced a copy of the RAA in response to discovery requests, and counsel for the plaintiffs in Colgate I were not aware of the RAA. Once plaintiffs' counsel received a copy of the RAA in July 2011, they insisted that all RAA claims be carved out of the settlement agreement. Colgate and the Plan eventually agreed, and on October 9, 2013, the parties executed a settlement agreement. The settlement agreement excluded any claims “that are based upon, or arise under” the RAA and prohibited the Plan or Colgate from asserting in any future administrative or legal proceeding that claims under the RAA were released under the settlement agreement. The Court approved the settlement agreement and noted that “certain claims known as the Residual Annuity Claims were excluded from the scope of the settlement.” In re Colgate-Palmolive Co. ERISA Litig., 36 F.Supp.3d 344, 346-47 (S.D.N.Y. 2014).

         In August 2014, Defendants granted additional benefits under the RAA to a few hundred Plan participants. Caufield received a Residual Annuity of $57.94 per month plus a gross payment of $16, 262.54, representing missed payments of his Residual Annuity from the date his lump sum pension benefit was paid, accumulated with interest. Staley received no Residual Annuity.

         In a letter to the Plan Administrator dated July 30, 2014, Staley stated that it had come to her attention that she should be receiving an annuity benefit in addition to her original lump sum benefit. She requested that the Plan provide her the annuity benefit and an explanation of how it was calculated. By letter dated November 4, 2014, Flavin, Colgate's Vice President for Global Compensation and Benefits, responded on behalf of the Committee and denied Staley's claim for an annuity benefit.

         Counsel for Plaintiffs subsequently requested additional documents, records and information from Defendants and, by letter dated April 6, 2015, appealed both (1) the denial of Staley's claim for an annuity benefit, and (2) the determination of the amount of Caufield's Residual Annuity.[1] Marsili, Colgate's Senior Vice President, Global Human Resources, denied Staley's claims appeal by letter dated June 4, 2015. Marsili asserts in the letter that Staley's claims were released as part of the settlement agreement in Colgate I. On June 3, 2016, Plaintiffs filed this putative class action lawsuit.

         II. STANDARD

         “On a motion to dismiss, all factual allegations in the complaint are accepted as true and all inferences are drawn in the plaintiffs favor.” Littlejohn, 795 F.3d at 306. “In determining the adequacy of the complaint, the court may consider any written instrument attached to the complaint as an exhibit or incorporated in the complaint by reference, as well as documents upon which the complaint relies and which are integral to the complaint.” Subaru Distribs. Corp. v. Subaru of Am., Inc., 425 F.3d 119, 122 (2d Cir. 2015) (citation omitted); see also Beauvoir v. Israel, 794 F.3d 244, 248 n.4 (2d Cir. 2015).

         “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, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. “[W]hatever documents may properly be considered in connection with the Rule 12(b)(6) motion, the bottom-line principle is that ‘once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.'” Roth v. Jennings, 489 F.3d 499, 510 (2d Cir. 2007) (quoting Twombly, 550 U.S. at 563).

         III. DISCUSSION

         A. Release of Claims

         Plaintiffs' claims for benefits under the RAA (Count Two) are not barred by the release in the ...


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