Rodowicz v. Mass. Mut. Life Ins. Co.
| Decision Date | 27 July 1994 |
| Docket Number | Civ. A. No. 93-30075-MAP. |
| Citation | 857 F. Supp. 992 |
| Parties | Stanley A. RODOWICZ, James J. Lemon, Sigmund S. Ziemba, Barbara Binsky, Patricia A. Kennedy, Anne E. Buck, June DeVine, Margaret S. Stevens, Plaintiffs, v. MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY and Massachusetts Mutual Voluntary Termination Program, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
COPYRIGHT MATERIAL OMITTED
Keith A. Minoff, John C. Sikorski, Robinson, Donovan, Madden & Barry, Springfield, MA, for plaintiffs.
David G. Cohen, Egan, Flanagan & Egan, Charles S. Cohen, Egan, Flanagan & Cohen, P.C., Springfield, MA, for defendants.
MEMORANDUM REGARDING DEFENDANTS' MOTION TO DISMISS AND PLAINTIFFS' MOTION TO AMEND COMPLAINT
The plaintiffs, former employees of defendant Massachusetts Mutual Life Insurance Company ("MassMutual"), retired between August 1 and October 1, 1992. All plaintiffs are recipients of retirement benefits paid by their former employer. Each now claims that his or her decision to retire during this two-month period was strongly influenced by the defendant's representation that MassMutual was not seriously considering, or in the near future planning to offer, an early-retirement incentive program that would afford retiring MassMutual employees enhanced benefits. On October 23, 1992, MassMutual announced an early retirement incentive plan, the Massachusetts Mutual Voluntary Termination Program (the "1992 Plan" or "Severance Plan"), effective immediately. Only those employees who retired after October 23 and before January 2, 1993, were eligible to receive the more valuable retirement benefits offered under this plan. But for their reliance on the defendants' misrepresentations, plaintiffs assert they would have been employed by the defendant on October 23, 1992 and thereby eligible for the more favorable benefits package.
Count I of the complaint alleges that the defendants, by their misrepresentations, breached the fiduciary duty owed to the plaintiffs in violation of section 1104(a) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq. Count II alleges that the defendants discriminated against the plaintiffs as plan participants by interfering with the attainment of benefits to which they were entitled under the 1992 Plan, in violation of 29 U.S.C. § 1140. In the alternative, Count III alleges common law misrepresentation, through the defendants' failure to disclose to the plaintiffs the more generous 1992 Plan.
In their motion to dismiss, MassMutual and the Massachusetts Mutual Voluntary Termination Program offer three arguments. First, because plaintiffs are not "participants" in the 1992 Plan they have no standing to bring a claim before this court. Second, plaintiffs' misrepresentation claim is predicated on allegations of fraud which have not been pled with the level of particularity required by Fed.R.Civ.P. 9(b). Third, ERISA preempts all of plaintiffs' common law claims. For the reasons set forth below, the motion to dismiss will be allowed, in part. Plaintiffs have filed a motion to amend, which will also be allowed, in part.
In deciding a motion to dismiss brought under Fed.R.Civ.P. 12(b)(6) a court must 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 MeloTone 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). The appropriate inquiry on a motion to dismiss is whether the plaintiffs are entitled to offer evidence in support of their claims. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). For purposes of this motion, the court accepts as true all the factual allegations set forth in the complaint and draws all reasonable inferences in favor of the plaintiffs. Bergeson v. Franchi, 783 F.Supp. 713 (D.Mass.1992) (citing Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir.1990); Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir.1989).
The eight named plaintiffs retired from MassMutual between August 1, 1992 and October 1, 1992. On October 23, 1992, Mass-Mutual announced an early retirement incentive program, the Massachusetts Mutual Life Insurance Company Voluntary Termination Program ("the 1992 Plan" or "Severance Plan"). The 1992 Plan was part of a program to reduce MassMutual's home office workforce by seven per cent. The Severance Plan provided three weeks pay for every year of service, up to a maximum of 78 weeks. MassMutual sponsored and administered the 1992 Plan, which is also named as a defendant in this suit. As noted, only employees who retired on or after October 23, 1992 and before January 2, 1993 were eligible to receive benefits under this severance package.
Plaintiffs claim that, as early as January, 1992, senior officials at MassMutual knew that rumors of an early retirement incentive package were circulating at the company's home office. Plaintiffs allege that select employees were "tipped off," or informed of the impending Severance Plan prior to October 23, 1992, while the plaintiffs were kept in the dark. Those employees in the know had the opportunity to postpone their retirement until after the Severance Plan was activated and become eligible for additional benefits. Plaintiffs also contend that the seven per cent staff reduction and the formulation of the 1992 plan required considerable lead time and must have been conceived long before October 1, 1992.
Plaintiffs charge that during the first nine months of 1992, MassMutual's top officials said nothing of the impending reduction in force and retirement incentive plan. Instead, management repeatedly asserted that the company was financially strong. During this time period the official company newsletter, the MassMutual News, quoted company President Thomas Wheeler and other top executives as stating that no major changes were planned in the way the company was doing business. The MassMutual News also carried numerous articles chronicling staff reductions then occurring at other large insurance companies. Early that year, in contrast to the staff reductions at other insurers, MassMutual touted a bonus program for its employees as demonstrating the company's sound financial footing and commitment to its employees.
Plaintiffs aver that, by these statements and actions, MassMutual misrepresented the financial state of affairs of the company, which was deliberately concealed until after the Severance Plan was made public on October 23, 1992.
According to the plaintiffs, MassMutual could see the darkening clouds long before October 23. The November and December, 1992 issues of the MassMutual News reported on new regulations for the industry being drafted by the National Association of Insurance Commissioners ("NAIC"). As early as 1990, NAIC began drafting stricter regulations for the industry, to be implemented in 1993. These would require Mass Mutual and other insurers to increase their capital assets. Moreover, in the year and half preceding the October, 1992 announcement of early retirement incentives, Standard & Poors, Inc. and Moody's Investors Service lowered their economic ratings for MassMutual. The plaintiffs argue that these facts demonstrate that the defendants must have begun serious consideration of the new severance plan as early as April 1, 1992.
Plaintiffs offer their individual factual recitations in various versions. Seven of the eight named plaintiffs contend that they made their decision to retire in reliance on the statements carried in the MassMutual News, to the effect that the defendant's business would proceed as usual, i.e. without any reduction in force. For plaintiffs James Lemon and June DeVine the only allegations of misrepresentation are with regard to these pronouncements. Plaintiff Patricia Kennedy submits her ERISA claims without any reference to specific misrepresentations by MassMutual. Sigmund Ziemba attended a meeting sponsored by the defendant that was intended to provide MassMutual employees with an in-depth look at the financial issues facing the company. Ziemba avers that he attended to learn if any enhanced severance benefits were under consideration. At that meeting no mention was made of any difficult financial conditions or potential reduction in force. Ziemba retired on October 1, but he had accrued enough vacation time to have stayed on the payroll long after the October 23 eligibility cut-off date.
The four other plaintiffs allege that specific misrepresentations were made to them by MassMutual in response to their inquiries regarding the 1992 Severance Plan. Stanley Rodowicz retired on October 1, 1992, with sixty-three days of vacation remaining. Rodowicz claims he took his vacation time in the form of a lump sum payment in reliance on statements made by Laura Cowles, MassMutual's Director of Employee Benefits. Rodowicz alleges that some time in late August or early September, Cowles told him there would be no new early retirement package. Margaret Stevens and Ann Buck allege that their MassMutual pension advisor or retirement counselor expressly stated that no better retirement plan was being considered by the company. Stevens and Buck both retired on September 1, 1992. Barbara Binsky alleges that prior to her decision to retire, a senior MassMutual officer said no "golden handshake" would be available to her. Based on this information she retired on August 1, 1992.
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