Vartanian v. Monsanto Co., Civ. A. No. 92-30223-F.

• Decision Date: 24 May 1993
• Docket Number: Civ. A. No. 92-30223-F.
• Parties: Leo VARTANIAN, Plaintiff, v. The MONSANTO COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

822 F. Supp. 36

Leo VARTANIAN, Plaintiff, v. The MONSANTO COMPANY, et al., Defendants.

Civ. A. No. 92-30223-F.

United States District Court, D. Massachusetts.

May 24, 1993.

John C. Sikorski, John W. Lake, Robinson, Donovan, Madden & Barry, Springfield, MA, for plaintiff.

Francis D. Dibble, Jr., Bulkley, Richardson & Gelinas, Springfield, MA, Richard J. Pautler, Richard P. Sher, St. Louis, MO, for defendants.

MEMORANDUM REGARDING DEFENDANTS' MOTION TO DISMISS¹

PONSOR, United States Magistrate Judge.

I. INTRODUCTION.

Does an employee who elects to take a lump sum distribution of his retirement benefits, and who receives all of the benefits that he is entitled to at the time of distribution, have standing to sue under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., when a more favorable retirement plan is adopted by his employer some time later?

Plaintiff, Leo Vartanian ("plaintiff or "Vartanian") has filed this four-count complaint against his former employer, defendant Monsanto Company ("defendant" or "Monsanto") asserting such a claim. Counts I and II allege that the defendant breached its fiduciary duty in violation of 29 U.S.C. § 1104(a) by failing to disclose its intention to create a new, more generous retirement package — or at least misrepresenting the fact that the company was giving "serious consideration" to this plan. Plaintiff claims that as a result of his reliance on defendant's misleading statements, he missed the opportunity to retire under the more advantageous provisions of the new plan which went into effect shortly after his retirement. Count III of plaintiff's complaint alleges unlawful discrimination in violation of 29 U.S.C. § 1140 and Count IV asserts a claim for common law misrepresentation.

Defendants have filed a motion to dismiss arguing, first, that because plaintiff received a lump sum payment of his benefits he lacks standing to assert claims under ERISA and, second, that ERISA preempts plaintiff's common law claim of misrepresentation. Because the undisputed facts and the case law conclusively support defendants' position, the court must allow defendants' motion to dismiss in its entirety.

II. FACTUAL BACKGROUND.

Plaintiff was employed by the defendant for thirty-seven years, from 1954 until 1991. At the time of his retirement, plaintiff was employed at the Springfield, Massachusetts division of Monsanto. Throughout his tenure he was a participant in the Monsanto Company Salaried Employees Pension Plan (the "1986 Plan"), an employee benefits plan as defined by ERISA. Plaintiff's Complaint at ¶¶ 4-6. Under the terms of the 1986 Plan, Monsanto employees could choose to receive their entire benefit in a lump sum upon retirement.

As required under the terms of the plan, in March of 1990, one year prior to his retirement date, plaintiff submitted his request for a lump sum payment to be paid upon his retirement on May 1, 1991. Complaint at ¶ 16.

In early February, 1991, plaintiff heard rumors that Monsanto was planning to offer an incentive early retirement package in the near future. Id. at ¶ 17. In February and March of 1991 Vartanian approached his supervisor, asking whether the company might offer an early retirement program which would have more advantageous terms for retirement. Plaintiff's supervisor responded that he could not confirm any rumors and that at that time there were no plans regarding a more generous early retirement plan. Id. at ¶¶ 19-20. In April of the same year plaintiff approached two of his supervisors, one of whom had direct access to this sort of information, inquiring into the company's stance on an incentive early retirement program; he was again told that Monsanto had no such plans. Id. at ¶ 21. As a result, plaintiff retired as of May 1, 1991 and took a lump sum distribution of approximately $509,000.

On June 28, 1991, Monsanto amended the 1986 Plan and adopted a special early retirement program (the "1991 Plan"). Under the 1991 Plan, eligible employees could receive both a lump sum payment and enhanced benefits.

In his complaint plaintiff alleges that the company violated its fiduciary duty by failing to inform him that it was giving "serious consideration" to this new early retirement plan. He states that the defendant was obligated not to make misrepresentations regarding the status of the new plan and should have advised the plaintiff that the company was considering implementing a future retirement incentive offer. Id. at ¶ 33. Plaintiff claims that he is entitled to roughly $200,000, the amount of added benefits he would have received had he delayed his retirement a few months until the effective date of the 1991 Plan.

III. DISCUSSION.

A. Motion to Dismiss.

For the purposes of the defendant's motion to dismiss, the complaint must be viewed in the light most favorable to the plaintiff and all allegations must be taken as true. Pujol v. Shearson/American Express, Inc., 829 F.2d 1201, 1202 (1st Cir.1987); United States v. Borden, Inc., 572 F.Supp. 684 (D.Mass. 1983) (citing Jenkins v. McKeithen, 395 U.S. 411, 421-22, 89 S.Ct. 1843, 1848, 23 L.Ed.2d 404 (1969)). The issue is not whether the plaintiff will ultimately prevail. Rather the appropriate inquiry is whether the plaintiff is entitled to offer evidence in support of his claims. Scheur v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974).

Upon a motion to dismiss under Fed. R.Civ.P. 12(b)(6), the court is required to look only to the allegations of the complaint, and "if under any theory they are sufficient to state a cause of action in accordance with the law, a motion to dismiss the complaint must be denied." Knight v. Mills, 836 F.2d 659, 664 (1st Cir.1987) (citing Melo-Tone Vending Inc. v. United States, 666 F.2d 687, 688 (1st Cir.1981)); accord Cuddy v. Boston, 765 F.Supp. 775, 776 (D.Mass.1991). With this standard in mind, the court now turns to the substance of defendant's motion to dismiss.

B. Standing to Sue under ERISA.

Defendant maintains that because plaintiff received a lump sum distribution of all the pension benefits to which he was entitled as of the date of his retirement, he is not a "participant" within the meaning of ERISA and therefore lacks standing to assert an ERISA violation. In opposition, plaintiff claims that he does have standing to assert an ERISA claim because "but for" defendant's misrepresentations plaintiff would have been a participant in the plan.

In enacting ERISA, Congress intended to provide those persons "protected by the Act `ready access to the federal courts.'" Mitchell v. Mobil Oil Corp., 896 F.2d 463, 473 (10th Cir.1990) (quoting 29 U.S.C. § 1001(b)). Despite its broad remedial purpose, however, only participants, beneficiaries, and fiduciaries are protected under the Act. Id. "This limitation on the group of potential claimants is necessary to avoid the creation of uncertainties about an employer's obligations under ERISA and to prevent the imposition of `great costs on pension plans for no legislative purpose.'" Id. at 473-74 (quoting Saladino v. I.L.G.W.U. Nat'l Retirement Fund, 754 F.2d 473, 476 (2d Cir.1985)).

Section 502, the civil enforcement provision of ERISA, provides that a "civil action may be brought by a participant or beneficiary to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). In its definitional section, ERISA defines the term "participant" as

any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive such benefit.

29 U.S.C. § 1002(7).

The Supreme Court in Firestone v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), offered lower courts guidance in defining the term "participant." There the Court stated that

the term "participant" is naturally read to mean either "employees in, or reasonably expected to be in, currently covered employment," or former employees who "have ... a reasonable expectation of returning to covered employment" or who have "a colorable claim" to vested benefits. In order to establish that he or she "may become eligible" for benefits, a claimant must have a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future. "... A former employee who has neither a reasonable expectation of returning to covered employment nor a colorable claim to vested benefits, however, simply does not fit within the phrase `may become eligible.'"

489 U.S. at 117-18, 109 S.Ct. at 957-58.

The parties agree that in order to state an ERISA claim, plaintiff must be a "participant" in the Plan. Since plaintiff does not allege that he has an expectation of returning to covered employment, the focus of the court's inquiry must be whether he has a colorable claim to vested benefits. A review of the relevant case law confirms that plaintiff does not have such a claim.

The facts in Raymond v. Mobil Oil Corp., 983 F.2d 1528 (10th Cir.1993), are strikingly similar to those alleged by the plaintiff in this case. In Raymond, Mobil Oil announced its decision to amend its retirement plan, which provided for a lump sum option. Under the terms of the new plan, the discount rate was increased 4.5% and the eligibility threshold was increased from $250,000 to $400,000. Mobil delayed the enactment of the plan for six months, pending approval by the IRS. This delay allowed employees who were eligible to receive a lump sum payment under the old plan, but who might not be eligible under the new plan, an opportunity to elect a lump sum distribution or continue...