United States District Court, W.D. New York
DECISION AND ORDER
G. LARIMER United States District Judge.
Robert Testa brings this action against the Xerox Corporation
Retirement Income Guarantee Plan (“RIGP”) and the
administrator of the RIGP, alleging that his pension benefits
have been reduced in violation of the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. §
1101 et seq.
brought this action in the United States District Court for
the Central District of California in January 2010. The
action was transferred to this Court in April 2010, based on
a forum selection clause that was added to the RIGP in July
motions are now pending before this Court: plaintiff's
motion for summary judgment (Dkt. #49) and defendants'
cross-motion for summary judgment (Dkt. #53). For the reasons
that follow, plaintiff's motion is granted, and
defendants' motion is denied.
one of several related cases presenting roughly similar
claims by current and former employees of Xerox Corporation
(“Xerox”). Plaintiff Testa began working for
Xerox in 1972, and left in 1983, at which time he took a
lump-sum distribution of about $30, 000 from the
then-existing Profit Sharing Plan (“PSP”).
returned to Xerox for a second period of employment, from
1985 to 2008. In 1990, Xerox discontinued the PSP. See
Conkright v. Frommert, 559 U.S. 506, 524 (2010). When it
did so, Xerox merged the PSP into the RIGP. Plaintiff then
became a participant in the RIGP.
Testa finally retired from Xerox in 2008, defendants
calculated his benefit utilizing a so-called “phantom
account” offset. That offset involves defendants'
deduction from a participant's pension benefit, not only
of the amount of the lump sum that the participant received
when he first left Xerox, but also a sum representing the
hypothetical interest that the lump sum would have earned had
it remained in the pension plan until the employee's
retirement at the end of his final period of employment with
Xerox. See Frommert v. Conkright, 433 F.3d 254 (2d
Cir. 2006) (explaining the details of the phantom account).
about January 13, 2009, Testa received a “pension
calculation statement, ” setting forth the amount of
his pension benefit, as determined by defendants. For the
purposes of this Decision and Order, the details of that
calculation are not important, but what is important is that
defendants utilized the phantom account offset. Plaintiff
alleges that his pension benefit, following his final period
of employment, is significantly lower than it should be, due
to the application of the phantom account offset.
the relevant correspondence does not seem to be in the
record, but it is referred to by the parties, and the
substance of that correspondence is not in dispute. It
appears that on or about January 30, 2009, Testa sent a
letter to the Xerox Benefits Center, raising his objections
to Xerox's calculation of the amount of his benefit.
Apparently Xerox's response was not to plaintiff's
liking, because he sent them another letter dated May 26,
2009, in which he sought to appeal what he characterized as
Xerox's denial of his claim for additional benefits.
letter dated June 2, 2009, Arlyn Kaster (described as
“Mgr. Pension and Life Ins. Benefits”), responded
to plaintiff. Kaster stated that Testa's January 30
letter had not been submitted in accordance with prescribed
procedures, and hence would not be treated as a formal claim.
Kaster added that Xerox would construe Testa's May 26
letter as a claim, but without waiving any defenses that
Xerox might have in any future lawsuit, including the defense
that Testa's claims were time-barred. Dkt. #52-3 at 10.
informed Testa that Xerox had determined that Testa was not
entitled to any additional benefits, because Testa was not a
plaintiff in the Frommert action (which was
commenced in 2000) or in any other litigation concerning the
phantom account. See Dkt. #52-3. By letter to
plaintiff dated August 4, 2009, Plan Administrator Lawrence
Becker essentially affirmed that ruling, and stated that
“[t]his represents a final and binding decision under
the Plan ... .” Dkt. #52-3 at 16.
filed this lawsuit in January 2010, in the Central District
of California. The action was transferred to this Court in
April 2010. The complaint asserted four causes of action, as
explained below. A full understanding of this case, however,
requires some familiarity with the related cases referenced
above, many of which predate this lawsuit.
indicated in Kaster's letter, this is not the first case
stemming from Xerox's use of the phantom account. To the
contrary, the phantom account has given rise to much
litigation, and numerous reported cases over the years, in
this and other courts, including the Supreme Court of the
United States See, e.g., Frommert,
559 U.S. 506; Frommert v. Conkright, 738 F.3d 522
(2d Cir. 2013); Miller v. Xerox Corp. Retirement Income
Guarantee Plan, 464 F.3d 871 (9th Cir. 2006),
cert. denied, 549 U.S. 1280 (2007); Clouthier v.
Becker, No. 08-CV-6441, 2016 WL 245157 (W.D.N.Y. Jan.
21, 2016). At least in this circuit, the primary focus of
that litigation has been on defendants' failure to
provide plan participants with adequate notice of the
existence and operation of the phantom account. See
Frommert v. Conkright, __ F.Supp.3d __, 2016 WL 7186489,
at *11 (W.D.N.Y. Dec. 12, 2016) (“At its heart, this
case has always been primarily about (1) Xerox's
application of the phantom account, to employees who were not
given clear and adequate notice of its existence and how it
was utilized, in violation of ERISA, and (2) how to remedy
some issues remain to be resolved in some of these cases, one
thing that has been established is that Xerox violated ERISA
by applying the phantom account to certain employees, who
were inadequately apprised of the phantom account's
existence, the fact that it would be applied to them, and the
effect that its application would have on the amount of their
pension benefits. As this Court recently stated, “If
nothing else, this litigation has established that defendants
violated ERISA through their application of the
‘phantom account' to employees who retired before
the existence and operation of that account was fully
disclosed in [the summary plan description issued in] 1998,
and that plaintiffs who were adversely affected by that
inequitable conduct are entitled to relief.”
Frommert, 2016 WL 7186489, at *2 (citing cases).
case at bar, plaintiff originally asserted four claims under
ERISA. On October 30, 2013, the Court issued a Decision and
Order, 979 F.Supp.2d 379, granting defendants' motion to
dismiss plaintiff's first, second and fourth causes of
action. Those causes of action asserted claims for pension
benefits under 29 U.S.C. § 1132(a)(1)(B), and for
“other appropriate relief” under §
Court dismissed those three claims principally on the ground
that they were time-barred. Id. at 383. Familiarity
with that decision is assumed, for purposes of this Decision
and Order, but the gist of the decision was that plaintiff
could not seek benefits directly under the terms of the plan
itself, or under the summary plan description
(“SPD”), because Xerox's 1998 SPD had put
plaintiff on notice of the existence and operation of the
phantom account, when that SPD was issued to and received by
him. At the latest, then, plaintiff's six-year
limitations period under § 1132(a)(1)(B) expired in
2004. Id. The Court added ...