Filed: Sep. 16, 2013
Latest Update: Mar. 28, 2017
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 12-4310 _ KAREN JENKINS; JACQUELINE MAYS; TERESA LATTANZE; TORY JOHNSON; JOHN VAN ALLEN, III; JOHN DOE; LINDA RUSSEL; DONNA ANDERSON; RAYMOND GUNTHER; SHARON SCHULTZ; MICHELLE QUARLES; SUSAN LOLLI; DEBRA KONTRA, Appellants. v. UNION LABOR LIFE COMPANY; AMALGAMATED LIFE INSURANCE COMPANY; INDUSTRIAL TECHNICAL AND PROFESSIONAL EMPLOYEES UNION; OFFICE AND PROFESSIONAL INTERNATIONAL UNION, _ On Appeal from the United States
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ No. 12-4310 _ KAREN JENKINS; JACQUELINE MAYS; TERESA LATTANZE; TORY JOHNSON; JOHN VAN ALLEN, III; JOHN DOE; LINDA RUSSEL; DONNA ANDERSON; RAYMOND GUNTHER; SHARON SCHULTZ; MICHELLE QUARLES; SUSAN LOLLI; DEBRA KONTRA, Appellants. v. UNION LABOR LIFE COMPANY; AMALGAMATED LIFE INSURANCE COMPANY; INDUSTRIAL TECHNICAL AND PROFESSIONAL EMPLOYEES UNION; OFFICE AND PROFESSIONAL INTERNATIONAL UNION, _ On Appeal from the United States D..
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 12-4310
_____________
KAREN JENKINS; JACQUELINE MAYS; TERESA LATTANZE; TORY JOHNSON;
JOHN VAN ALLEN, III; JOHN DOE; LINDA RUSSEL; DONNA ANDERSON;
RAYMOND GUNTHER; SHARON SCHULTZ; MICHELLE QUARLES; SUSAN
LOLLI; DEBRA KONTRA,
Appellants.
v.
UNION LABOR LIFE COMPANY; AMALGAMATED LIFE INSURANCE
COMPANY; INDUSTRIAL TECHNICAL AND PROFESSIONAL EMPLOYEES
UNION; OFFICE AND PROFESSIONAL INTERNATIONAL UNION,
_______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 10-cv-07361)
District Judge: Hon. Harvey Bartle, III
_______________
Submitted Under Third Circuit LAR 34.1(a)
September 10, 2013
Before: RENDELL, JORDAN and GREENAWAY, JR., Circuit Judges.
(Filed: September 16, 2013)
_______________
OPINION OF THE COURT
_______________
JORDAN, Circuit Judge.
Karen Jenkins and eleven other former employees (collectively, the “Employees”)
of The Amalgamated Life Insurance Company (“ALICO” or “Amalgamated Life”)
appeal a grant of summary judgment to ALICO by the United States District Court for
the Eastern District of Pennsylvania on their claims for violations of the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1002 et seq. For the
following reasons, we will affirm.
I. Background
A. Facts
1. ALICO Hires the Employees
Prior to May 9, 2004, the Employees worked in the claims department of The
Union Labor Life Insurance Company, Inc. (“ULLICO”) at a facility in King of Prussia,
Pennsylvania, known as the Pennsylvania Service Center (“PSC”). While employed by
ULLICO, the Employees were members of the Office and Professional Employees
International Union (the “OPEIU”), Local 153, and the terms and conditions of their
employment were governed by a collective bargaining agreement. As employees of
ULLICO, they were participants in a defined benefit pension plan.
On March 9, 2004, ULLICO entered into agreements pursuant to which it would
outsource its claims administration services to ALICO beginning on May 10, 2004.
Under those agreements, PSC employees would have the opportunity to work for
2
ALICO. The agreements did not, however, require ALICO to maintain their pension
benefits, nor did they provide for the transfer to ALICO of any part of ULLICO‟s defined
benefit pension plan. On March 11, 2004, ULLICO provided the PSC employees with
letters informing them about the transition of their employment to ALICO. Those letters
told them that ALICO‟s “offer of employment likely will include permanent changes in
the salary, benefits, and other terms and conditions of employment that you have
experienced with ULLICO.” (App. at 537.)
The following week, ALICO distributed a document to the PSC employees
containing “Questions and Answers for [ULLICO] Staff about Amalgamated Life” (the
“Q&A”). (App. at 129.) The Q&A responded to the question “[i]s there a Pension
Plan?” by stating that “[t]here is a 3-year eligibility period for PSC employees to join the
Amalgamated Life staff pension plan. Once you become eligible, the 3-year wait period
will be credited towards the 5-year vesting requirement.” (App. at 130.) At around the
same time, ALICO distributed to the PSC employees a document providing a general
overview of certain employment benefits (the “General Overview”). The General
Overview refers to a 401(k) savings plan but does not mention a defined benefit pension
plan.
ALICO extended offers of employment to each of the Employees in letters dated
April 7, 2004, that provided that, if they accepted, they would become ALICO employees
on May 10, 2004. With respect to benefits, the letters reminded them that they had
3
“received a General Overview” giving “a quick summary of our benefit programs.”
(App. at 8 (italics in original) (internal quotation marks omitted).) None of the
Employees asked about participation in a defined benefit pension plan when they
received their offers of employment. All of the Employees accepted those offers,
ULLICO terminated them on May 9, 2004, and they became ALICO employees on May
10, 2004.
2. The Collective Bargaining Agreements
Days earlier, on May 7, 2004, ALICO and the Industrial, Technical and
Professional Employees Union (the “ITPEU”), a union affiliated with OPEIU, signed a
memorandum of understanding, stipulating that the ITPEU would be the exclusive
representative for the PSC employees for the purpose of negotiating a collective
bargaining agreement. The ITPEU subsequently raised the possibility of the new ALICO
employees participating in a defined benefit pension plan, but ALICO said that it could
not afford to provide those benefits to them. In December 2004, ALICO and the ITPEU
signed an agreement (the “2004 CBA”) that would govern the terms of the PSC
employees‟ employment until December 31, 2006. The 2004 CBA did not contain any
provision that entitled the PSC employees to participate in ALICO‟s defined benefit
pension plan, although it did provide that they could participate in a 401(k) savings plan.
Each of the Employees received a copy of the 2004 CBA.
4
In March 2007, ALICO and the ITPEU entered into a second agreement (the
“2007 CBA”) that would govern the conditions of the PSC employees‟ employment from
January 1, 2007, through December 31, 2009. During the negotiation of the 2007 CBA,
the ITPEU again raised the possibility of the PSC employees‟ participation in a defined
benefit pension plan, but ALICO again rejected that request, and the union settled for
increased wages and enhanced severance benefits. As with the 2004 CBA, each of the
Employees received the 2007 CBA and could note that it did not provide for participation
in a defined benefit pension plan.
In 2009, ALICO and the ITPEU began negotiating a third agreement. In April
2010, after ITPEU members had already rejected one proposed agreement, ALICO
proposed two alternatives, both of which provided that PSC employees would become
participants in a defined benefit pension plan. Under one alternative, employees who met
the plan‟s vesting requirements would accrue benefits beginning in June 2009, and under
the other, they would receive higher cash compensation but would accrue benefits only
after January 2011. The PSC employees voted to accept the second proposal, and, on
May 4, 2010, ALICO and the ITPEU entered into a memorandum of understanding that
fixed the terms of their continuing employment (the “2010 MOU”).
3. ALICO Terminates the Employees
In 2007, ULLICO decided not to renew its administrative service agreements with
ALICO, but it agreed to a more limited arrangement that reduced the volume of claims
5
processed at the PSC. At that time, ALICO considered closing the PSC and moving
ULLICO‟s remaining claims processing work to one of its other offices, but decided not
to. However, the lease on the PSC facility was due to expire in February 2011, and, in
April 2010, ALICO began to consider closing it. Over the next several months, ALICO
reviewed a number of options for the PSC, ultimately deciding to consolidate it with
another of the company‟s operations. On October 8, 2010, ALICO informed PSC
employees that it was closing the facility, and their employment was terminated on
October 29, 2010.
B. Procedural History
Following their termination, the Employees filed an eight-count complaint against
ULLICO, ALICO, the OPEIU, and the ITPEU, alleging that they had been improperly
denied benefits under ALICO‟s defined benefit pension plan. The complaint stated
claims for violations of ERISA, seeking relief based on theories of unjust enrichment and
equitable estoppel, and for violations of the National Labor Relations Act, 29 U.S.C. §
151 et seq., and the Labor Management Relations Act, 29 U.S.C. § 141 et seq.
Following discovery, each of the four defendants moved for summary judgment as
to the claims against it. In response, the Employees stipulated to the dismissal of all
claims against ULLICO, the OPEIU, and the ITPEU. The District Court granted
ALICO‟s motion to dismiss some of the claims against it, leaving only the ERISA claims.
6
On October 24, 2012, the District Court granted summary judgment to ALICO on those
claims as well.
The Employees filed this timely appeal.
II. Discussion1
The Employees have appealed only the District Court‟s grant of summary
judgment to ALICO on their equitable estoppel claim. ERISA § 502(a)(3) provides that
“a beneficiary may „obtain ... appropriate equitable relief ... to redress [ERISA] violations
or ... to enforce any provisions of [ERISA].‟” Pell v. E.I. DuPont de Nemours & Co.,
Inc., 539 F.3d 292, 300 (3d Cir. 2008) (alterations in original) (quoting 29 U.S.C. §
1132(a)(3)). “A beneficiary can make out a claim for appropriate equitable relief based
on a theory of equitable estoppel.” Id. (citation and internal quotation marks omitted).
But “[t]o succeed under this theory of relief, an ERISA plaintiff must establish (1) a
1
The District Court had jurisdiction pursuant to 28 U.S.C. § 1331 and 29 U.S.C. §
1132(e), (f). We have jurisdiction pursuant to 28 U.S.C. § 1291. “We review de novo
district court orders granting or denying summary judgment,” Elassaad v. Independence
Air, Inc., 613 F.3d 119, 124 (3d Cir. 2010), “apply[ing] the same test required of the
district court and view[ing] inferences to be drawn from the underlying facts in the light
most favorable to the nonmoving party,” Bayer v. Monroe Cnty. Children & Youth Servs.,
577 F.3d 186, 191 (3d Cir. 2009). Summary judgment is proper when “the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). We “may affirm the district court on
grounds different from those relied on by the district court,” In re Mushroom Transp. Co.
Inc.,
382 F.3d 325, 344 (3d Cir. 2004), and “for any reason supported by the record,”
Brightwell v. Lehman
637 F.3d 187, 191 (3d Cir. 2011).
7
material misrepresentation, (2) reasonable and detrimental reliance upon the
representation, and (3) extraordinary circumstances.” Curcio v. John Hancock Mut. Life
Ins. Co., 33 F.3d 226, 235 (3d Cir. 1994). Moreover, the Employees “bear the burden of
proof on each estoppel element.” Int’l Union, U.A.W. v. Skinner Engine Co.,
188 F.3d
130, 152 (3d Cir. 1999).
Because we conclude that the Employees have not met their burden with respect to
either reasonable reliance or extraordinary circumstances, we confine our discussion to
those two requirements.
A. Reasonable Reliance
To prevail on their equitable estoppel claim, “[a]s the phrase „reasonable and
detrimental reliance‟ implies, ... [the Employees] must show (1) reasonableness and (2)
injury.” Pell, 539 F.3d at 301 (quoting Curcio, 33 F.3d at 237). The District Court did
not address the reasonableness of the Employees‟ alleged reliance, and concluded only
that the evidence supports an inference that at least some of them “relied to their
detriment on [ALICO]‟s misrepresentation regarding pension benefits.” (App. at 31.)
The Employees likewise focus on the element of injury, arguing that some of them would
not have accepted ALICO‟s April 2004 offers of employment if they had known that they
would not be enrolled in a defined benefit pension plan. The only evidence that the
Employees point to in support of the reasonableness of their alleged reliance is the Q&A
and General Overview which had been provided to them.
8
We conclude that that evidence is insufficient to meet the Employees‟ burden on
the element of reasonable reliance. Based on all of the documents that the Employees
received, this case is analogous to situations in which participants know that the plan
sponsor reserves the right to alter or eliminate benefits at any time. Even if one thought
that the Q&A‟s statement about eligibility for a pension plan meant that there was a
defined benefit plan, as opposed to a 401(k) plan, there were several subsequent
communications making it clear that no defined benefit plan participation was offered
until 2010. We have said that “a participant‟s reliance on employer representations
regarding benefits may never be „reasonable‟ where the participant is in possession of a
written document notifying him of the conditional nature of such benefits.” In re Unisys
Corp. Retiree Med. Benefits ERISA Litig., 58 F.3d 896, 908 (3d Cir. 1995). And in such
cases, we and other courts of appeals have rejected estoppel claims due to the
participants‟ failure to establish reasonable reliance. See id. (concluding that the
reservation of rights “undercuts the reasonableness of any detrimental reliance” by the
plan participants); Gordon v. Barnes Pumps, Inc.,
999 F.2d 133, 137 (6th Cir. 1993)
(concluding that ERISA plaintiffs “have not shown that they reasonably and
detrimentally relied on any statements by the company” where they “knew or should
have known from the express terms of the ... Plan that benefits could be altered at any
time”); Alday v. Container Corp. of Am.,
906 F.2d 660, 666 (11th Cir. 1990) (dismissing
9
an equitable estoppel claim where the plan documents unambiguously stated that the
employer reserved the right to modify or terminate the plan).
In this case, the Employees were in possession of documents that informed them
not only that ALICO might not include them in its defined benefit pension plan, but that,
in fact, it had not done so. First, before they received the Q&A, the letters from ULLICO
regarding its decision to outsource PSC services notified them that ALICO‟s “offer of
employment likely will include permanent changes in the salary, benefits, and other terms
and conditions of employment that you have experienced with ULLICO.” (App. at 537.)
Second, the General Overview, which was the only benefits summary referred to in the
letters offering employment to the Employees, referred only to a 401(k) savings plan and
did not mention a defined benefit pension plan. Third, neither the 2004 CBA nor the
2007 CBA, copies of which were distributed to the Employees, provided for a defined
benefit plan. Cf. Allied Chem. & Alkali Workers of Am., Local Union No. 1 v. Pitt. Plate
Glass Co., Chem. Div., 404 U.S. 157, 159 (1971) (“Under the National Labor Relations
Act, ... mandatory subjects of collective bargaining include pension and insurance
benefits for active employees ... .”). Moreover, nothing in the record suggests that, when
ALICO offered future participation in a defined benefit pension plan as part of the
negotiation of the 2010 MOU, any of the Employees expressed either surprise or dismay
that they were not already vested participants in it.2 We question whether the Employees
2
In fact, the PSC employees bargained to defer their accrual of benefits under the
10
could establish any reliance, let alone reasonable reliance, on references in the General
Overview and Q&A to potential pension benefits in deciding to accept or continue
employment at ALICO. But, assuming they did rely on those documents, that reliance
was not reasonable in light of subsequent communications.
B. Extraordinary Circumstances
Even if the Employees had established reasonable reliance, “a plaintiff must do
more than merely make out the ordinary elements of equitable estoppel to establish a
claim ... under ERISA.” Kurz v. Phila. Elec. Co., 96 F.3d 1544, 1553 (3d Cir. 1996)
(internal quotation marks omitted). “Our precedents indicate that an ERISA reporting or
disclosure violation, such as the distribution of an inaccurate summary plan description,
cannot provide a basis for equitable estoppel ... in the absence of „extraordinary
circumstances.‟” Gridley v. Cleveland Pneumatic Co.,
924 F.2d 1310, 1319 (3d Cir.
1991).3 “Extraordinary circumstances can arise where there are „affirmative acts of
fraud,‟ where there is a „network of misrepresentations ... over an extended course of
dealing,‟ or where particular plaintiffs are especially vulnerable.” Pell, 539 F.3d at 303-
04 (alterations in original) (quoting Kurz, 96 F.3d at 1553). We have found extraordinary
ALICO defined benefit plan by another two years in return for additional compensation.
3
The “extraordinary circumstances” requirement comes from the fact that “ERISA
contains two express causes of action to remedy reporting and disclosure violations as
such,” Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1167 (3d Cir. 1990) (citing 29
U.S.C. § 1132(a)(4), (c)), so those violations cannot ordinarily serve as the basis for
substantive relief.
11
circumstances when an insurer informed a patient that certain coverage would be
provided and then denied coverage, Curcio, 33 F.3d at 238, when a defendant repeatedly
misrepresented the scope of coverage to a plan participant, Smith v. Hartford Ins. Grp., 6
F.3d 131, 142 (3d Cir. 1993), and when an employer failed to make required
contributions and the plan administrator allowed an employee to pay contributions
himself, Rosen v. Hotel & Rest. Emps. & Bartenders Union,
637 F.2d 592, 598 (3d Cir.
1981).
Applying those principles, we find no support for the Employees‟ claim that
extraordinary circumstances exist. Far from being the victims of a “network of
misrepresentations,” the Employees were plainly put on notice by the General Overview,
the 2004 CBA, the 2007 CBA, and the 2010 MOU that they had not been granted
participation in any ALICO defined benefit pension plan prior to 2010. The only
conceivably confusing document was the Q&A that ALICO distributed, which, even if
read to offer the possibility that pension benefits would include a defined benefit plan,
was qualified by the more complete General Overview referred to in the offers of
employment sent to the Employees. Nothing in the record suggests that the Employees –
represented as they were by the ITPEU, and capable of trading pension benefits for
additional compensation when given the chance – were especially vulnerable to the
alleged misrepresentations in the Q&A. Cf. Curcio, 33 F.3d at 238 (finding special
vulnerability where hospital denied coverage to patient for substantial claim after
12
representing that there was coverage); Smith, 6 F.3d at 142 (same). The Employees have
thus failed to demonstrate extraordinary circumstances, and their equitable estoppel claim
under ERISA must fail.
III. Conclusion
For the foregoing reasons, we will affirm the judgment of the District Court.
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