Dameron v. Sinai Hosp. of Baltimore, Inc.

• Decision Date: 16 January 1986
• Docket Number: Civ. A. No. M-83-2835.
• Parties: Rebecca DAMERON, on behalf of herself and all others similarly situated v. SINAI HOSPITAL OF BALTIMORE, INC.; Administrative Committee of Sinai Hospital of Baltimore, Inc.; Grace Pryor; Sinai Hospital of Baltimore, Inc. Pension Plan for Employees Covered Under the Collective Bargaining Agreement Between the National Union of Hospital and Health Care Employees, Division of R.W.D.S.U., AFL-CIO, and its Affiliate Local District 1119 E, and Sinai Hospital of Baltimore, Inc.
• Court: U.S. District Court — District of Maryland

626 F. Supp. 1012

Rebecca DAMERON, on behalf of herself and all others similarly situated v. SINAI HOSPITAL OF BALTIMORE, INC.; Administrative Committee of Sinai Hospital of Baltimore, Inc.; Grace Pryor; Sinai Hospital of Baltimore, Inc. Pension Plan for Employees Covered Under the Collective Bargaining Agreement Between the National Union of Hospital and Health Care Employees, Division of R.W.D.S.U., AFL-CIO, and its Affiliate Local District 1119 E, and Sinai Hospital of Baltimore, Inc.

Civ. A. No. M-83-2835.

United States District Court, D. Maryland.

January 16, 1986.

COPYRIGHT MATERIAL OMITTED

Luther Blackiston, Legal Aid Bureau, Inc., Towson, Md., Gill Deford and Neal S. Dudovitz, Nat. Senior Citizens Law Center, Los Angeles, Cal., for plaintiffs.

Leonard E. Cohen, Jeffrey Rockman, Rudolph E. DeMeo and Frank, Bernstein, Conaway & Goldman, Baltimore, Md., for defendants.

MEMORANDUM

JAMES R. MILLER, Jr., District Judge.

On October 4, 1984, this court granted the plaintiff's motion for class certification, but found that the named class representative's claim was barred by the statute of limitations and laches. Therefore, leave to substitute appropriate named plaintiff(s) was granted. At that time, the court held in abeyance any decision on the merits of the parties' cross motions for summary judgment pending a decision on the substitution of named class representatives. Dameron v. Sinai Hospital, 595 F.Supp. 1404 (D.Md.1984).

The plaintiffs have since filed a motion for leave to substitute class representatives (Paper Nos. 31 & 33), and the defendants have responded (Paper No. 32).

Also pending before the court are the parties' cross motions for summary judgment (Paper No. 13, Defendants' Motion for Summary Judgment; Paper No. 20, Plaintiffs' Motion for Summary Judgment; Paper No. 25, Defendants' Opposition; Paper No. 26, Plaintiffs' Reply). A hearing was held on all pending matters on November 8, 1985.

A. Substitution of Class Representatives

The class certified by the court consists of current retirees who are beneficiaries of the Sinai Pension Plan and have had or are having their benefits reduced by an amount derived by using an estimated Social Security benefit which is in excess of the amount of the Social Security benefits which they have actually received after leaving the service of Sinai Hospital to retire. Dameron, 595 F.Supp. at 1417. Florence McLean and Pinkie Ricks have moved for leave to represent that class.

Florence McLean worked for Sinai Hospital for 15 years, from September 1968 through January 1983. Upon retiring at age 63, she applied for Social Security early retirement and her Sinai pension. She began to receive monthly Social Security benefits of $278.50. When Sinai calculated her pension benefits, it used an estimated Social Security benefit figure,¹ rather than the actual amount she received, to offset against the pension benefits Sinai Pension Plan would pay. Therefore, it calculated her pension to be $82.18 per month (Paper No. 31, Affidavit of McLean, Ex. A).

Pinkie Ricks worked for Sinai Hospital for 9 years, from 1973 to August 1982, at which latter time she was 62 years old. She applied for early Social Security retirement benefits and her Sinai pension. At the time of her retirement, she began receiving $262.40 monthly in Social Security benefits. Sinai calculated her pension using estimated Social Security benefits,² and she received, therefore, $36.07 per month in Sinai pension benefits (Paper No. 31, Affidavit of Ricks, Ex. C).

Pursuant to Fed.R.Civ.P. 23(a), this court has ruled previously that the class is so numerous that joinder of all members is impracticable and that there are common questions of law and fact among them. Dameron v. Sinai Hospital, 595 F.Supp. at 1407-08. Because Ms. McLean and Ms. Ricks seek to enjoin the Sinai Pension Plan from using estimated Social Security benefits which are larger than the actual benefits they have received upon retirement, their claims are typical of the claims of the class, and if they prevail, all class members will benefit. Finally, the claims of the proposed class representatives do not conflict with those of the class, and it appears Ms. McLean and Ms. Ricks will fairly and adequately represent the class. Therefore, for these reasons and those explained below, Ms. McLean and Ms. Ricks will be substituted as class representatives, despite the defendants' argument that they are not proper plaintiffs or proper class representatives.

The defendants argue that neither Ms. McLean nor Ms. Ricks exhausted her administrative remedies. Exhaustion of administrative remedies usually is required before an action may be brought under ERISA, see, e.g., Dameron v. Sinai Hospital, 595 F.Supp. at 1414 and cases cited therein, and under section 301 of the Labor Management Relations Act, 29 U.S.C. § 185; see, e.g., Republic Steel Corp. v. Maddox, 379 U.S. 650, 652, 85 S.Ct. 614, 616, 13 L.Ed.2d 580 (1965); Fabian v. Freight Drivers and Helpers Local 557, 448 F.Supp. 835, 838-39 (D.Md.1978). It is undisputed that the two proposed class representatives did not exhaust their administrative remedies.

"Exhaustion is generally required as a matter of preventing premature interference with agency processes, to afford the parties and the courts the benefits of agency experience and expertise, to compile a record which is adequate for judicial review, and to allow the agency to function efficiently and have an opportunity to correct its own errors." Eastern Band of Cherokee Indians v. Donovan, 739 F.2d 153, 156 (4th Cir.1984).

The requirement of exhaustion, however, may be waived. See, e.g., Weinberger v. Salfi, 422 U.S. 749, 765-67, 95 S.Ct. 2457, 2466-67, 45 L.Ed.2d 522 (1975); Mandel v. U.S. Department of Health, Education and Welfare, 411 F.Supp. 542, 546-47 (D.Md.1976), aff'd, 571 F.2d 1273 (4th Cir.), cert. denied, 439 U.S. 862, 99 S.Ct. 184, 58 L.Ed.2d 171 (1978). One of the major reasons for waiving the exhaustion requirement is futility. See, e.g., Davis v. Southeastern Community College, 574 F.2d 1158, 1160 (4th Cir.1978), rev'd on other grounds, 442 U.S. 397, 99 S.Ct. 2361, 60 L.Ed.2d 980 (1979). Futility has been recognized as an exception to the exhaustion doctrine in the pension area. See, e.g., Jenkins v. Local 705, 713 F.2d 247, 254 (7th Cir.1983); Taylor v. Bakery & Confectionary Union & Industry Int'l Welfare Fund, 455 F.Supp. 816, 820 (E.D.N.C.1978).

In this action, the Sinai Pension Plan has determined that its method of calculating pension benefits will not be changed. Ms. Rebecca Dameron, the original named class representative in this action, challenged the Plan's method of calculating her benefits, exhausted her administrative remedies, and was informed on appeal that the Plan would not change the method of calculating her pension benefits. See Dameron v. Sinai Hospital, 595 F.Supp. at 1410-11. Where "the Board of Trustees has already determined the question ... and there is no reason to believe that it will change its position," exhaustion would be futile. Morgan v. Laborers Pension Trust Fund, 433 F.Supp. 518, 529 (N.D.Cal.1977).

The Board of Trustees of the Sinai Pension Plan has indicated clearly that it does not intend to stop using the estimated Social Security benefit to calculate pension benefits of class members. A change of position occurring during the named class representatives' exhaustion of administrative process is highly unlikely to say the least. This court will not require the plaintiffs to undertake a futile administrative challenge to the Plan's method of calculating benefits.

The defendants challenge the propriety of the claims of the newly named class representatives on an additional ground. They argue that because these class representatives do not have a full work history back to 1951, they are not receiving the full Social Security benefit which a person with a full work history would receive. Therefore, the defendants assert that the actual Social Security benefits granted to these plaintiffs, of necessity, will be lower than their estimated benefits. That proposition certainly is true, but it does not lead to the defendants' conclusion that neither "Ms. McLean nor Ms. Ricks has suffered any real injury." (Paper No. 32 at 7).

The injury complained of here is that the defendants' method of calculating and offsetting pension benefits by using estimated Social Security benefit figures, rather than actual Social Security benefits received, violates federal law, and, consequently, results in the receipt by them of less money in combined pension and Social Security benefits than they would have received if the calculations by defendants were in accord with federal law. That surely alleges a cognizable injury.

B. Expanding the Scope of the Class

The court previously considered whether the class representatives who were current retirees could represent the interests of future retirees without conflict. Accordingly, the parties were directed to seek the opinion of the union representing current employees. In a letter to the court on November 12, 1984, the counsel for the union responded that no conflict existed between the current and future retirees regarding the issue before the court. (See Paper No. 33, Ex. A).

As a result, the class will be defined as consisting of current and future retirees who are or will be beneficiaries of the Sinai Pension Plan and who have had, are having, or will have their benefits reduced by an amount derived by using an estimated Social Security monthly benefit which is in excess of the amount of the Social Security monthly benefit which they actually have received or will receive after leaving the service of Sinai Hospital to retire.

C. Merits of the Class Claim

The named plaintiffs and the class they represent seek a declaration that the use of the estimated Social Security monthly benefit to calculate pension benefits violates each of two...