Feifer v. Prudential Ins. Co. of America

Decision Date07 October 2002
Docket NumberDocket No. 99-9451.,Docket No. 00-9568.
Citation306 F.3d 1202
PartiesRaymond FEIFER, Nicholas Pocchia, and Edwin Molina, Plaintiffs-Appellants, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA, Daily News, L.P., and Daily News, L.P. Benefits Program, Defendants-Appellees.
CourtU.S. Court of Appeals — Second Circuit

Jeffrey L. Kreisberg, Kreisberg, Maitland & Thornhill, LLP, New York, NY, for Plaintiffs-Appellants.

Edward D. Greenberg, Schwartz & Greenberg, New York, NY, for Defendant-Appellee Prudential Insurance Company of America.

David E. McCraw, Deputy General Counsel, Daily News, L.P., New York, NY, for Defendants-Appellees Daily News, L.P. and Daily News, L.P. Benefits Program.

Before CARDAMONE, WINTER, and SACK, Circuit Judges.

SACK, Circuit Judge.

Plaintiffs Raymond Feifer, Nicholas Pocchia, and Edwin Molina, former employees of the defendant Daily News, L.P. ("DNLP"), appeal from a judgment of the United States District Court for the Eastern District of New York (I. Leo Glasser, Judge) denying their motions for summary judgment, granting the defendants' motions for summary judgment on their counterclaims, and granting the motion of defendant Prudential Insurance Company of America ("Prudential") for a declaratory judgment. The plaintiffs seek enforcement under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001 et seq. ("ERISA"), of the terms of a document that DNLP distributed to its employees but now claims does not constitute an employee benefits plan pursuant to ERISA. We reverse the judgment of the district court and remand for further proceedings consistent with this opinion.

BACKGROUND
The Facts

The facts underlying this appeal, largely undisputed, are set forth in detail by the district court in its thoughtful opinion disposing of the motions for summary judgment. See Pocchia v. Prudential Ins. Co., 74 F.Supp.2d 240, 242-46 (E.D.N.Y.1999). They are rehearsed here only insofar as is necessary to explain our resolution of this appeal.

In 1991, after a strike by its delivery drivers, the New York Daily News and its associated businesses (the "Daily News") were acquired by Maxwell Newspapers, Inc. ("Maxwell"). By late 1992, the newspaper was foundering. At that time, Mortimer Zuckerman, then a principal of U.S. News & World Report, L.P., caused DNLP to be formed for the purpose of buying the Daily News. Zuckerman also became a DNLP principal. In late 1992 or early 1993, DNLP bought the Daily News from Maxwell.

One task confronting DNLP in the course of this acquisition was instituting a benefit plan to cover former Maxwell employees whose services were sought for the continued publication of the newspaper. The plaintiffs were among those employees.

DNLP's written agreement to purchase the Daily News expressed DNLP's intention to institute benefit plans for non-union ("exempt") Daily News workers similar to those provided by U.S. News & World Report, L.P. to its employees. But on January 18, 1993, DNLP issued a memorandum to its new employees announcing that a new benefits plan would be in effect as of February 1, 1993, without reference to the U.S. News & World Report plan. Attached to that memorandum was a twenty-one-page booklet entitled "Daily News, L.P. Benefits Program Summary" (the "Program Summary"), which summarized DNLP benefits, including medical insurance, life and accidental death and dismemberment insurance, in addition to vacation and holiday policies. Two pages of the Program Summary described disability benefits. One of the five paragraphs in the section entitled "Short-term Disability" read: "Short-term disability benefits will be offset by any payments for which you are eligible under the State Disability Benefits Law or the Workers' Compensation law." The three-paragraph section entitled "LONG TERM DISABILITY," which immediately followed, contained no analogous provision. Both the short-term and long-term disability benefits were stated to be 60 % of weekly base salary, a reduction from the 66 2/3 % of weekly salary that had been provided by the Maxwell plan.

Several of the Program Summary pages, but not the two discussing disability benefits, contained the following disclaimer, printed in small, bold type:

This summary is for informational purposes only and is not intended to cover all details of the Plan. The actual provisions of the Plan will govern in settling any questions that may arise.

There is no indication in the record, however, that, at that time, DNLP or its employees possessed a written document describing benefits under "the Plan" other than the Program Summary and the accompanying memorandum.1 And although the plaintiffs continued to work for DNLP after the acquisition, they received no further written communications from DNLP regarding disability benefits during the course of their employment.

At or before the time DNLP distributed the Program Summary to its employees, it began making premium payments to Prudential to cover benefits for its employees. Nothing in the record suggests, however, that it informed its employees in general, or the plaintiffs in particular, of that fact.

On September 30, 1993, DNLP's insurance broker sent DNLP a draft "Benefit Booklet" describing in detail benefits for DNLP employees. Unlike the Program Summary, the draft Benefit Booklet specified that long-term disability benefits were subject to an offset for Social Security disability and workers' compensation payments received by employees. Neither DNLP nor Prudential distributed the draft Benefit Booklet to DNLP employees in general, or to the plaintiffs in particular. DNLP and Prudential exchanged several revised versions of the Benefit Booklet over the next few years. They did not, however, execute a benefits plan agreement — what they were to call the "Group Contract" — until July 1997, some four and one-half years after the DNLP acquisition. The Group Contract incorporated a version of the Benefit Booklet, which, like previous versions but unlike the Program Summary, specified that long-term disability benefits are subject to Social Security and workers' compensation offsets.

In August 1993, some seven months after the Program Summary had been distributed and about one month before DNLP first received a draft Benefit Booklet, plaintiff Nicholas Pocchia became disabled as a result of a work-related accident. He promptly applied for and began to receive short-term disability benefits that were reduced by the amount of his workers' compensation payments in accordance with the terms of the Program Summary. After six months, Pocchia also applied for and began to receive long-term disability benefits. At the same time, Pocchia applied for and began to receive Social Security Disability Insurance payments. In October 1995, more than two and one-half years after the Program Summary had been distributed and more than two years after he had become disabled, Pocchia received a letter from Prudential indicating that his long-term benefits were subject to a Social Security offset. The letter included a form, a so-called reimbursement agreement, for Pocchia's signature. Although the reimbursement agreement does not appear in the record, the parties agree that it was similar if not identical to the reimbursement agreement received by plaintiff Raymond Feifer, which contained the following language:

I understand that the Policy requires that my [long-term disability] benefits for any month or partial month as [sic] reduced by Workers' Compensation and any benefits received under the Social Security Act that I or members of my family receive, or would be entitled to receive as a result of my disability, for that same monthly period.

The agreement also provided that the disabled employee promised to reimburse Prudential if his Social Security benefits were awarded retroactively for a period during which the employee was receiving long-term benefits without offsets. Pocchia did not sign the agreement. Prudential therefore reduced Pocchia's disability benefits by Prudential's estimate of Pocchia's monthly Social Security payments.

Feifer also took disability leave in August 1993. He too applied for and obtained short-term, and then long-term, disability benefits. Feifer also received a letter and reimbursement agreement like those received by Pocchia and containing the above-quoted language. Feifer asserts that, in response, he telephoned Prudential, and was told that he was required to sign the reimbursement agreement to receive benefits. The defendants aver that Feifer would have been told only that if he did not sign the reimbursement agreement, Social Security offsets would have been made on the basis of estimates, as they were in Pocchia's case. Feifer executed the agreement and returned it to Prudential. He thereafter received long-term disability benefits from Prudential offset by the amount of the actual Social Security payments made to him.

At some point in 1993 or 1994, plaintiff Edwin Molina also became injured and also progressed from short-term to long-term disability. In May 1994, Prudential sent Molina a letter and reimbursement agreement like those it sent Feifer and Pocchia. Molina asserts that upon receiving the reimbursement agreement he telephoned Prudential and was told that his long-term disability benefits would be reduced by any Social Security payments he received. Molina further asserts that the representative also told him that he would receive no benefits if he did not sign the reimbursement agreement. Like Feifer, but unlike Pocchia, Molina signed and submitted the reimbursement agreement, and subsequently received long-term disability benefits reduced by the amount of his actual Social Security payments rather than the estimated payments.

The Litigation

In 1996, Pocchia and Molina filed a state-court action relating to these events,...

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