Bishop v. Lucent Technologies, Inc., 07-3435.

• Decision Date: 25 March 2008
• Docket Number: No. 07-3435.,07-3435.
• Citation: 520 F.3d 516
• Parties: Virginia J. BISHOP, et al., Plaintiffs-Appellants, v. LUCENT TECHNOLOGIES, INC., and The Lucent Retirement Income Plan, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

520 F.3d 516

Virginia J. BISHOP, et al., Plaintiffs-Appellants, v. LUCENT TECHNOLOGIES, INC., and The Lucent Retirement Income Plan, Defendants-Appellees.

No. 07-3435.

United States Court of Appeals, Sixth Circuit.

Submitted March 11, 2008.

Decided and Filed March 25, 2008.^*

ON BRIEF: Thomas G. Moukawsher, Moukawsher & Walsh, LLC, Hartford, Connecticut, for Appellants. John Houston Pope, Epstein, Becker & Green, P.C., New York, New York, for Appellees.

Before SILER, MOORE and McKEAGUE, Circuit Judges.

OPINION

McKEAGUE, Circuit Judge.

This is an appeal from an order dismissing retirees' claims for breach of fiduciary duty against their former employer and its employment benefit plan. Plaintiff retirees allege they were misled into prematurely accepting early retirement. The district court dismissed the claims as time-barred. On appeal, plaintiffs contend the district court failed to construe the complaint liberally in their favor and misapplied the governing statute of limitations. For the reasons that follow, we affirm the judgment of the district court.

I

Plaintiffs Virginia Bishop, Gerald Deckard, Charles Himmelspach, Jr., James Kastet, Janet Koch, George Policello, Karen Staff, and Sharon Stratton were employees of defendant Lucent Technologies, Inc. in Ohio and Illinois. All eight plaintiffs retired from their employment with Lucent in late 2000 or early 2001. They allegedly retired in reliance on representations by Lucent officials that "there was no point in delaying their retirement in the hope that the company would offer special retirement incentives like those offered by Lucent in the past, because Lucent had decided not to offer packages again in the near future, a prospect the officials guaranteed the company had specifically ruled out." Amended complaint ¶ 1. Yet, on June 11, 2001, within approximately six months after their retirements, Lucent publicly announced the offering of a lucrative severance package known as the 2001 Voluntary Retirement Program ("VRP"). Had they remained employed for several more months, plaintiffs allege, they would have been eligible for enhanced benefits. Feeling duped, they commenced this action under the Employee Retirement Income Security Act ("ERISA"), alleging under 29 U.S.C. § 1132(e)(1) that defendants Lucent Technologies and The Lucent Retirement Income Plan breached fiduciary duties owed them. Plaintiffs claim that defendants breached fiduciary duties "by actively misleading them into choosing to retire when they did with false information about the company's policy and intentions with respect to severance incentives." Amended complaint ¶ 1.

Plaintiffs filed their complaint in the District Court for the Southern District of Ohio on January 3, 2005. Defendants responded by moving to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, contending the complaint fails to state a claim upon which relief can be granted because the claims are barred by the governing statute of limitations. In their motion to dismiss, defendants contended that plaintiffs had actual knowledge of the alleged breach of fiduciary duty on the date of the VRP announcement and that the three-year limitation period therefore expired on June 10, 2004, almost seven months before the complaint was filed.

Plaintiffs opposed the motion by contending that the VRP announcement itself did not necessarily disclose to plaintiffs that misleading representations earlier made by Lucent officials were untrue. They further insisted that the complaint does not allege when plaintiffs learned that they had been misled. Because the complaint does not reveal when plaintiffs acquired this actual knowledge, plaintiffs maintained that it could not be ascertained whether the complaint was untimely filed.

The district court rejected plaintiffs' argument, concluding they had actual knowledge of the facts or transactions that made out the alleged violation on June 11, 2001, even if they didn't then know all material facts necessary to understand that a breach of fiduciary duty occurred. This was held to be sufficient "actual knowledge" to trigger the running of the three-year period and the complaint was held to be time-barred.

II

Whether the district court properly dismissed the complaint pursuant to Rule 12(b)(6) is a question of law subject to de novo review. Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir.2005). The reviewing court must construe the complaint in a light most favorable to plaintiffs, accept all well-pled factual allegations as true, and determine whether plaintiffs undoubtedly can prove no set of facts in support of those allegations that would entitle them to relief. Harbin-Bey v. Rutter, 420 F.3d 571, 575 (6th Cir.2005). Yet, to survive a motion to dismiss, the "complaint must contain either direct or inferential allegations respecting all material elements to sustain a recovery under some viable legal theory." Mezibov, 411 F.3d at 716. Conclusory allegations or legal conclusions masquerading as factual allegations will not suffice. Id. Even under Rule 12(b)(6), a complaint containing a statement of facts that merely creates a suspicion of a legally cognizable right of action is insufficient. Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007). The "[f]actual allegations must be enough to raise a right to relief above the speculative level"; they must "state a claim to relief that is plausible on its face." Id. at 1965, 1974, 127 S.Ct. 1955; see also Ass'n of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007).

In their motion to dismiss, defendants point out, with reference to the allegations of the complaint, that the violation complained of manifestly occurred on June 11, 2001, when the 2001 VRP was publicly announced. Because it appears from the complaint itself that plaintiffs knew they had been misled at that time, defendants reasonably deduced that the three-year period of limitation prescribed in 29 U.S.C. § 1113(2) began running at that time. The complaint not having been filed until January 3, 2005, more than three years after June 11, 2001, defendants contend that the complaint fails to state a claim upon which can be granted because it is time-barred. Defendants essentially contend, in the words of Mezibov, 411 F.3d at 716, that the complaint fails to "contain either direct or inferential allegations respecting all material elements to sustain a recovery under some viable legal theory."

Pursuant to 29 U.S.C. § 1113, in relevant part, a claim for breach of fiduciary duty may not be brought after the earlier of

(1) six years after (A) the date of the last action which constituted a part of the breach or violation, or (B) in the case of an omission, the latest date on which the fiduciary could have cured the breach or violation, or

(2) three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation.

The district court correctly determined that "actual knowledge" under 29 U.S.C. § 1113(2) is a term that has received a particular definition in the Sixth Circuit. "[T]he relevant knowledge required to trigger the statute of limitations under 29 U.S.C. § 1113(2) is knowledge of the facts or transaction that constituted the alleged violation; it is not necessary that the plaintiff also have actual knowledge that the facts establish a cognizable legal claim under ERISA in order to trigger the running of the statute." Wright v. Heyne, 349 F.3d 321, 330 (6th Cir.2003). It follows that the question posed by the motion to dismiss is whether plaintiffs' complaint contains sufficient allegations, either direct or inferential, to facially support the conclusion that they first acquired actual knowledge of "the facts or transaction that constituted the alleged violation" at some point in time less than three years prior to the filing of their complaint.

Plaintiffs concede that their complaint does not affirmatively allege when they acquired actual knowledge of the facts or transaction that comprised the alleged breach of fiduciary duty. They maintain that the court, viewing the complaint in the light most favorable to them for purposes of Rule 12(b)(6) review, must resolve this ambiguity in their favor. Yet, the complaint certainly contains allegations which, on their face, give rise to the reasonable inference that they must have known, at the time of the public announcement of the 2001 VRP that they had been wronged. That is, the allegations indicate that plaintiffs: knew what representations had been made to them by Lucent officials, on which they allegedly relied in deciding to retire early; knew the offering of enhanced benefits in the 2001 VRP was inconsistent with the representations; and knew, in retrospect, that they had been misled by these representations into believing that something that did come to pass would not. It thus appears from the face of the complaint that plaintiffs had actual knowledge of the facts or transaction comprising the wrong complained of more than three years before the complaint was filed. In the words of Wright, 349 F.3d at 331: "Although the actions complained of in this case may not themselves `communicate the existence of an underlying breach,' the extrinsic facts of which the Plaintiffs had actual knowledge demonstrate that Plaintiffs must have known that they had been wronged long before they consulted with an attorney."

Under these circumstances, it is not enough for plaintiffs to argue that the complaint, because it is silent as to when they first acquired actual knowledge, must be read in the light most favorable to them and construed as not precluding the possibility that they will be able to prove facts establishing their entitlement to relief. The obligation to plead facts in avoidance of the statute of limitations defense is triggered by the fact that "it is apparent from the face of the complaint that the...