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Laurent v. PricewaterhouseCoopers LLP

United States District Court, S.D. New York

July 24, 2017

TIMOTHY LAURENT, et al., Plaintiffs,
v.
PRICEWATERHOUSECOOPERS LLP, et al., Defendants.

          OPINION AND ORDER

          J. PAUL OETKEN, United States District Judge

         This action is brought by Plaintiffs Timothy Laurent and Smeeta Sharon, on behalf of themselves and all others similarly situated, against Defendants PricewaterhouseCoopers LLP, the Retirement Benefit Accumulation Plan for Employees of PricewaterhouseCoopers LLP, and the Administrative Committee to the Retirement Benefit Accumulation Plan for Employees of PricewaterhouseCoopers LLP (collectively, “PWC”) under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et. seq. PWC moves for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), asking the Court to dismiss Plaintiffs' claims with prejudice. (Dkt. No. 209.) Plaintiffs move for summary judgment pursuant to Federal Rule of Civil Procedure 56. (Dkt. No. 216.) The Court held oral argument on May 23, 2017. (Dkt. No. 233.) For the reasons that follow, PWC's motion is granted and Plaintiffs' motion is denied.

         I. Motion for Judgment on the Pleadings

         A. Background [1]

         The following facts are taken from the SAC and documents incorporated therein.[2] (Dkt. No. 133 (“SAC”).)

         At issue in this action are terms of the Retirement Benefit Accumulation Plan for Employees of PWC. (Dkt. No. 210-3 to -10 (“RBAP” or “Plan”); see SAC ¶ 23 n.2 (incorporating the Plan by reference).) Plaintiffs are former employees of PricewaterhouseCoopers LLP who elected a distribution of the fully vested benefits under the RBAP's lump-sum option. (SAC ¶¶ 20-21, 32, 34.) The RBAP provides a lump-sum distribution option for departing participants who have attained the Plan's “Normal Retirement Age.”[3] (RBAP § 5.4(a).) Under the RBAP, “[t]he amount of any lump sum payment . . . shall not be less than the Actuarial Equivalent of the Participant's Normal Retirement Benefit.” (Id. § 5.4(b).) The “Normal Retirement Benefit” is “calculated by projecting the Deemed Account Balance to Normal Retirement Age using the Deemed Plan Interest Rate.” (Id. § 5.1.) The “Deemed Plan Interest Rate” is the annual rate of interest equal to the interest rate on 30-year Treasury securities, as specified by the IRS for the month of February (or before July 1, 2001, the month of May) immediately preceding the “Plan Year” in which the calculation is made. (Id. § 2.16; see Id. § 2.37 (defining “Plan Year” as “[t]he twelve (12) consecutive month period commencing each July 1 and ending the immediately following June 30”).)

         Plaintiffs allege that the 30-year Treasury rate “was not an appropriate predictor of future investment crediting rates under the RBAP.” (SAC ¶ 90.) The problem with using the 30-year Treasury rate, according to Plaintiffs, is that it “undervalued” the “future interest credits” promised by the Plan, which unlawfully forced participants who opted to receive their benefits in the form of a lump sum to forfeit a portion of their return. (Id. ¶¶ 97-98.)

         On June 26, 2014, this Court granted Plaintiffs' motion for class certification as to Count One and Count Five of the SAC. (Dkt. No. 175.) Both counts assert so-called “whipsaw” claims seeking lump-sum distributions equal to the annuity payable at normal retirement age.[4] (SAC ¶¶ 113-118, 129-133.) See Laurent, 794 F.3d at 275 (describing the “whipsaw” calculation at issue). Count One, in relevant part, alleges that PWC's “lump sum calculation methodology, ” which used the 30-year Treasury rate specified in the Plan, “result[ed] in an unlawful forfeiture of accrued benefits” in violation of ERISA and the Internal Revenue Code. (SAC ¶ 117.) Plaintiffs have acknowledged that Count Five is pleaded in the alternative and seeks similar relief-albeit under a slightly different theory. (Dkt. No. 162 at 8.)

         Here, Plaintiffs seek relief under both Counts One and Five in the form of three declarations from the Court:

1. A declaration that the lawful “normal retirement age” under the RBAP for purposes of calculating lump sum benefits is not “5 years of service” but age 65.
2. “[A] declaration that [the RBAP's] method of computing the lump sums to which withdrawing employees are entitled is unlawful, ” Berger v. Xerox, 338 F.3d 755, 763 (7th Cir. 2003).
3. A declaration that members of the Class remain entitled to benefits under the Plan attributable to the investment credits that would have been credited between the date of their lump sum distributions and age 65, using the rate that the Court determines would have been “the most reasonable projection rate” to estimate the amount of those future credits at the time of the lump sum payments, Ruppert v. Alliant Energy Cash Balance Pension Plan, [726 F.3d 936, 939 (7th Cir. 2013).]

(Dkt. No. 162 at 2-3 (alterations in original) (citing SAC ¶¶ 115-118, 133, 144, Prayer for Relief ¶ F).)

         In their motion for judgment on the pleadings, Defendants argue that Plaintiffs do not have an avenue for relief under ERISA. (See Dkt. No. 209.) Specifically, Defendants argue that nothing in ERISA enables this Court to issue a declaration that invalidates the Plan's projection rate and replaces it with a new projection rate that complies with ERISA's valuation requirements. (Dkt. No. 210 at 2.)

         B. Legal Standard

         Under Rule 12(c), “a party is entitled to judgment on the pleadings ‘only if it has established that no material issue of fact remains to be resolved and that [it] is entitled to judgment as a matter of law.'” Zurich Ins. Co. v. Crowley Latin Am. Servs., LLC, No. 16 Civ. 1861, 2016 WL 7377047, at *2 (S.D.N.Y. Dec. 20, 2016) (alteration in original) (quoting Bailey v. Pataki, No. 08 Civ. 8563, 2010 WL 234995, at *1 (S.D.N.Y. Jan. 19, 2010)). “The standard for granting a Rule 12(c) motion for judgment on the pleadings is identical to that of a Rule 12(b)(6) motion for failure to state a claim.” Citibank, N.A. v. Tormar Assocs. LLC, No. 15 Civ. 1932, 2015 WL 7288652, at *3 (S.D.N.Y. Nov. 17, 2015) (quoting Gioconda Law Grp. PLLC v. Kenzie, 941 F.Supp.2d 424, 427 (S.D.N.Y. 2013)) (internal quotation marks omitted). “In both postures, the district court must accept all allegations in the non-movant's pleadings as true and draw all inferences in [that party's] favor.” Id. (alteration in original) (quoting Gioconda Law Grp. PLLC, 941 F.Supp.2d at 427) (internal quotation marks omitted).

         C. Discussion

         In order to maintain an action under ERISA, “a plaintiff must both ‘assert a constitutionally sufficient injury arising from the breach of a statutorily imposed duty' and ‘identify a statutory endorsement of the action.'” Am. Psychiatric Ass'n v. Anthem Health Plans, Inc., 821 F.3d 352, 359 (2d Cir. 2016) (quoting Kendall v. Emps. Ret. Plan of Avon Prods., 561 F.3d 112, 118 (2d Cir. 2009)). Because “ERISA is a ‘comprehensive and reticulated statute, the product of a decade of congressional study of the Nation's private employee benefit system, '” Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209 (2002) (quoting Mertens v. Hewitt Associates, 508 U.S. 248, 251 (1993)) (internal quotation marks omitted), courts are “especially ‘reluctant to tamper with [the] enforcement scheme' embodied in the statute by extending remedies not specifically authorized by its text, ” id. (alteration in original) (quoting Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147 (1985)). “ERISA's ‘carefully crafted and detailed enforcement scheme provides strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.'” Id. (quoting Mertens, 508 U.S. at 251).

         In the SAC, Plaintiffs point generally to ERISA § 502(a) as the provision under which all relief may be granted. (SAC at 41.) In Plaintiffs' motion for class certification, they specifically identified ERISA § 502(a)(1)(B) as the particular provision under which they move for relief. (Dkt. No. 162 at 2.) Now, in their opposition to PWC's motion for judgment on the pleadings, Plaintiffs also propose ERISA § 502(a)(3) as an alternative ground for relief. (See Dkt. No. 212 at 18-20.)

         The Court addresses (1) whether PWC's motion is untimely or procedurally improper; (2) whether controlling authority permits Plaintiffs' claims under ERISA § 502(a)(1)(B); and (3) whether ...


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