Coriale v. Xerox Corp..

• Citation: 775 F.Supp.2d 583,51 Employee Benefits Cas. 1471
• Decision Date: 06 April 2011
• Docket Number: No. 09–CV–6492L.,09–CV–6492L.
• Parties: Samuel D. CORIALE, Charles Wellers, Gwendolyn Combs, Arthur Wohlabaugh. Vincent Cilento, Michael Walker, Edward Runge, David Ferren, Eric Kulberg, Melvin Kahler, Bernard Henning, individually and on behalf of all others similarly situated, Plaintiffs,v.XEROX CORPORATION, Lawrence Becker, Defendants.
• Court: U.S. District Court — Western District of New York

775 F.Supp.2d 583

51 Employee Benefits Cas. 1471

Samuel D. CORIALE, Charles Wellers, Gwendolyn Combs, Arthur Wohlabaugh. Vincent Cilento, Michael Walker, Edward Runge, David Ferren, Eric Kulberg, Melvin Kahler, Bernard Henning, individually and on behalf of all others similarly situated, Plaintiffs,

v.XEROX CORPORATION, Lawrence Becker, Defendants.

No. 09–CV–6492L.

United States District Court, W.D. New York.

April 6, 2011.

David Ross Pfalzgraf, Jr., Danielle E. Shainbrown, Rupp, Baase, Pfalzgraf, Cunningham & Coppola LLC, Buffalo, NY, for Plaintiffs.Margaret A. Clemens, Littler Mendelson, P.C., Rochester, NY, Sarah B. McClure, Steven J. Sacher, Pro Hac, Vice, Jones Day, Washington, DC, for Defendants.

DECISION AND ORDER

DAVID G. LARIMER, District Judge.

This action was commenced by eleven individual plaintiffs, who assert claims pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. The amended complaint, filed in November 2009, names six defendants: Xerox Corporation (“Xerox”); three retiree health care plans (collectively “plans”), including the Xerox Medical Care Plan for Retired Employees (“Old Plan”), Xerox Retiree Health Care Plan (“New Plan”), and the Xerox Retiree Flex Health Care Plan (“Flex Plan”); and two individuals, Lawrence Becker and Patricia Nazemetz, who are identified respectively as the current administrator and a past administrator of the plans.

The plaintiffs are all former Xerox employees who retired between 1993 and 2003. Each plaintiff was a participant in one of the three plans. They seek to bring this action on behalf of a class of all former salaried Xerox employees who were: (1) hired on or before January 1, 1989; (2) “promised lifetime health care benefits” by Xerox at no cost to the employee; (3) receiving medical or other health care benefits at no cost under any of the plans; (4) whose benefits have been or will be reduced or terminated by defendants. Dkt. # 5 ¶ 26. The proposed class also includes those employees' and retirees' spouses and dependents.

Plaintiffs assert four claims under ERISA, all of which arise from Xerox's decision to limit certain benefits under the Flex Plan, as explained in more detail below. Defendants have moved to dismiss the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.

BACKGROUND

The following facts are taken from the complaint, or from documents cited by or incorporated by reference in the complaint.¹ The Old Plan provides health care benefits for eligible employees who retired or who became eligible to retire prior to January 1, 1989. The New Plan provides health care benefits for eligible employees who became eligible to retire after December 31, 1988, and who retired on or after January 1, 1989 and before January 1, 1995. The Flex Plan provides health care benefits for eligible employees who became eligible to retire after December 31, 1988 and who retired on or after January 1, 1995. See Dkt. # 11–5 at 23; Dkt. # 11–6 at 21, 22.

Each of these plans is an employee welfare benefit plan, see 29 U.S.C. § 1002(1). Dkt. # 5 ¶ 21. Plaintiffs concede in the complaint that as such, the plans “do not vest unless [the] employer makes a contractual pledge to its employees to do so.” Id. ¶ 38; see Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d 72, 77 (2d Cir.1996); Harju v. Olson, 709 F.Supp.2d 699, 729 (D.Minn.2010). Whether that ever occurred is one of the primary issues in this case.

Plaintiffs claim that going as far back as Joseph Wilson, “one of the early presidents of Xerox,” Dkt. # 5 ¶ 40, Xerox has promised and guaranteed its employees lifetime health care benefits, although the precise parameters of those promised benefits have not always been spelled out in detail. Plaintiffs relied on those promises in accepting employment with Xerox, and in remaining there over the years. Plaintiffs accepted lower salaries than they otherwise would have, based in part on Xerox's assurances that they would have lifetime health care benefits. Id. ¶ 43.

One of the features of the plans was a “benefits allowance” to supplement participants' health care coverage. This benefit, which was provided whether the member got health insurance coverage through a Xerox-sponsored plan or from a source other than Xerox, provided a lump sum payment to help cover medical costs that were not covered by the retiree's other coverage, or to offset the cost of the member's contribution or copays for Xerox-sponsored health care coverage. Id. ¶¶ 50–52.

In early 2003, Xerox announced certain changes to the Flex Plan. Retirees age 65 or older could either opt out of Xerox-sponsored coverage and accept a $500 benefits allowance, or opt into a Xerox-sponsored plan with a larger benefits allowance, which would be used to pay for Xerox's premiums. Id. ¶ 57; Dkt. # 11–8. Those changes did not affect the Old Plan or the New Plan.

More changes to the Flex Plan were forthcoming. On September 29, 2008, Xerox sent a letter (“September 2008 letter”) announcing certain changes to the Flex Plan that were to take effect on January 1, 2009. The letter stated that effective that date, Xerox would no longer provide a benefits allowance under the Flex Plan for retirees who opted out of coverage under a Xerox health care plan. Id. ¶ 59. Such members would be given the opportunity to opt back into the Xerox plan, however. Dkt. # 11–7 at 2.

Xerox also announced that, effective January 1, 2010, retirees over age 65 would no longer receive any benefits allowance from Xerox. Instead, those retirees would be given access to Xerox-sponsored alternative coverage, to be fully paid for by the retiree at the Xerox group rate. Id. ¶ 61; Dkt. # 11–7 at 2.²

Based on these allegations, plaintiffs assert four causes of action. The first seeks a declaratory judgment under 29 U.S.C. § 1132(a)(1)(B), declaring that plaintiffs are entitled to reinstatement of their health care benefits at the level that existed on or before December 31, 2008, and precluding defendants from eliminating or reducing those benefits in the future. The second claim is also brought under § 1132(a)(1)(B), and seeks an order reforming all of the plans to remove all amendments that have functioned to reduce or terminate any benefits after December 31, 2008, and directing defendants to pay all past due benefits previously denied to plaintiffs.

The third count asserts a claim for breach of fiduciary duty under §§ 1132(a)(2) and (3) and 1104(a)(9), seeking an order granting essentially the same relief as the first two causes of action. The fourth claim seeks an injunction under § 1132(a)(3), again for essentially the same relief.

DISCUSSION

I. Standing

In support of their motion, defendants argue that, as to the Old Plan and the New Plan, plaintiffs lack standing under Article III of the United States Constitution. Defendants state that there is no case or controversy as to those two plans, because the changes implemented by Xerox affect only the Flex Plan, not the Old or New plans.

Defendants also contend that plaintiffs lack statutory standing under ERISA. They state that nine of the eleven plaintiffs are participants in the Flex Plan, not in the Old or New Plans, and that those plaintiffs therefore lack standing to sue concerning the latter plans. As to the two plaintiffs who are participants in the Old and New plans—plaintiffs Wellers and Combs, respectively—defendants argue that they lack standing to sue as to the Flex Plan, since neither of them is a participant in that plan.

In response, plaintiffs respond that since each plaintiff is a participant in one of the three plans, each plaintiff has statutory standing. Regarding Article III standing, plaintiffs contend that each of them has standing because “Xerox has stated its intention to terminate and/or further reduce health care benefits to its employees, including the New Plan and Old Plan participants.” Plaintiff's Mem. (Dkt. # 17) at 14.

Plaintiffs do not, however, cite any evidence in the record that Xerox has ever expressly stated such an intention. They reference certain statements indicating that Xerox has reserved its rights to amend the plans, or to limit or terminate benefits under the plans, but no language explicitly stating a definite intent to do so.

I agree with defendants that none of the plaintiffs have standing to sue with respect to the Old or New plans. The September 2008 letter from Xerox to plan participants clearly relates only to the Flex Plan.

Pursuant to Article III of the United States Constitution, a district court's jurisdiction is limited to cases which present an “actual controversy” between the parties. Bausch & Lomb Inc. v. CIBA Corp., 39 F.Supp.2d 271, 272–273 (W.D.N.Y.1999). In order to demonstrate that an actual controversy exists to be decided, a plaintiff must demonstrate the presence of imminent injury, as well as legal standing to pursue damages for that injury when it occurs.

The Supreme Court has explained that the doctrine of standing, as embodied in Article III,

requires federal courts to satisfy themselves that “the plaintiff has ‘alleged such a personal stake in the outcome of the controversy’ as to warrant his invocation of federal court jurisdiction.” ... To seek injunctive relief, a plaintiff must show that he is under threat of suffering “injury in fact” that is concrete and particularized; the threat must be actual and imminent, not conjectural or hypothetical; it must be fairly traceable to the challenged action of the defendant; and it must be likely that a favorable judicial decision will prevent or redress the injury.

Summers v. Earth Island Inst., 555 U.S. 488, 129 S.Ct. 1142, 1148, 173 L.Ed.2d 1 (2009) (internal citations omitted) (quoting Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)). See also Connecticut v. Physicians Health Services Of Connecticut, Inc., 287 F.3d 110, 116 (2d Cir.) (“At an ‘irreducible constitutional...