Diamond v. Local 807 Labor-Mgmt. Pension Fund

• Decision Date: 07 February 2014
• Docket Number: 12-CV-5559 (RRM) (VVP)
• Parties: LANCE S. DIAMOND, Plaintiff, v. LOCAL 807 LABOR-MANAGEMENT PENSION FUND, its Trustees, JOHN SULLIVAN, ANTHONY STORZ, LUIS HERRERA, JOHN ZAK, ANTHONY ZAPULLA, and ALLEN SWERDLICK, and its Fund Administrator, ALFRED FERNANDEZ, Defendants.
• Court: U.S. District Court — Eastern District of New York

LANCE S. DIAMOND, Plaintiff,
v.
LOCAL 807 LABOR-MANAGEMENT PENSION FUND, its Trustees,
JOHN SULLIVAN, ANTHONY STORZ, LUIS HERRERA,
JOHN ZAK, ANTHONY ZAPULLA, and ALLEN SWERDLICK,
and its Fund Administrator, ALFRED FERNANDEZ, Defendants.

12-CV-5559 (RRM) (VVP)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

Dated: February 7, 2014

MEMORANDUM & ORDER

ROSLYNN R. MAUSKOPF, United States District Judge.

Plaintiff Lance Diamond originally commenced this action in the United States District Court for the Southern District of New York, alleging multiple violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq. (See Compl. (Doc. No. 1).) On November 9, 2012, the case was transferred to this Court. (Doc. No. 6.) On March 3, 2013, plaintiff filed an amended complaint alleging causes of action under ERISA against defendants for failing to adhere to the instruments governing plaintiff's benefits plan, failing to act solely in the interest of the participants and beneficiaries of the benefits plan, and failing to make reasonable efforts to remedy those breaches of fiduciary duty. (See Am. Compl. (Doc. No. 25).) The amended complaint also alleged that defendant Fernandez improperly discontinued plaintiff's pension benefits in retaliation for conduct protected under ERISA, and sought statutory penalties for defendants' failure to produce certain documents plaintiff requested. (Id.)

Before the Court is defendants' motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) for

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failure to state a claim. (See Doc. Nos. 30-32.) For the reasons that follow, the motion is granted.

BACKGROUND¹

Defendants are fiduciaries who administer a pension plan ("the Plan") for qualifying employees working under collective bargaining agreements between Truck Drivers Local 807IBT of Long Island City, New York, and their employers. (Am. Compl. ¶ 4.) The Plan is an "employee pension benefit plan" and "pension plan" as defined by ERISA. (Id. ¶¶ 7-8.) Both the Plan and its associated pension fund ("the Fund") are administered in accordance with an "Agreement and Declaration of Trust" between Local 807IBT and an association comprised of employers who are parties to various collective bargaining agreements. (Id. ¶ 6.)

Plaintiff, who is over sixty-five years of age, was employed by defendants as a "Controller" of the Fund from January 1997 through May 2005. (Id. ¶¶ 3, 16.) Plaintiff reported directly to defendant Fernandez, the administrator of the Fund. (Id. ¶ 32.) As an employee of the Fund, plaintiff was eligible for and received benefits under the Plan. (Id. ¶¶ 17, 19.) Between 2000 and 2005, plaintiff repeatedly cautioned Fernandez that the Plan's funding was threatened and recommended several cost-saving measures. (Id. ¶ 33.) Fernandez did not follow plaintiff's advice and grew aggravated when plaintiff continued to make suggestions regarding funding issues. (Id. ¶ 34.) Fernandez eventually terminated plaintiff in May 2005. (Id. ¶ 36.) Believing that he had been wrongfully terminated in retaliation for his attempts to protect the

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Fund, plaintiff accused Fernandez of violating the law. (Id. ¶¶ 35, 38.) These allegations resulted in both parties retaining legal counsel.² (Id. ¶ 37.)

On January 9, 2012, plaintiff accepted a consulting position with "the Puerto Rican Family Institute, Inc. . . . , a non-profit, multi-program family[-]oriented mental health and human service agency." (Am. Compl. ¶ 24.) At that time, plaintiff was eligible to receive pension benefits under the Plan. (Id.) With reference to subsequent employment by Plan participants, however, the Plan provides that

If the Participant has attained Normal Retirement Age, his monthly benefit shall be suspended for any month in which he worked or was paid for at least 40 hours in Totally Disqualifying Employment. "Totally Disqualifying Employment" means employment or self-employment that is (A) in an Industry Covered by the Plan when the Participant's pension payments began, and (B) in a geographic area covered by the Plan when the Participant's pension began; and (C) in any occupation in which the Participant worked under the Plan at any time or (D) any occupation covered by the Plan at the time the Participant's pension payments began.³

(Id. ¶ 22; see also Aff. of Alfred Fernandez ("Fernandez Aff.") (Doc. No. 30-1), Ex. A § 6.7(b)(i).) The Plan defines "Normal Retirement Age" as "age 65, or, if later, the age of the Participant on the fifth anniversary of his participation." (Fernandez Aff., Ex. A § 1.12.) An "Industry Covered by the Plan" means "the trucking, moving and general warehousing industries and any other industries in which employees covered by the Plan were employed when the participant's pension began . . . ." (Am. Compl. ¶ 23; see also Fernandez Aff., Ex. A § 6.7(b)(ii).) On June 14, 2012, defendants suspended plaintiff's benefit payments under the Plan, informing plaintiff that his employment with the Puerto Rican Family Institute constituted "Disqualifying Employment." (Am. Compl. ¶ 27-29.) Specifically, defendants told plaintiff

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that, "[w]hile [he] may be working in a different industry," his current position encompassed "the same duties and occupation" as his prior position, which would render him ineligible for benefits under their interpretation of the Plan. (Id. ¶ 28.)

Under such circumstances, the Plan provides that "[a] Participant shall be entitled to a review of a determination suspending his benefits by written request filed with the Trustees within 180 days of the notice of suspension." (Fernandez Aff., Ex. A § 6.7(e).) The Plan also outlines the procedure for any such review, which in relevant part, provides as follows:⁴

A claimant may request a formal review by the Trustees of the Fund Office's denial of his or her claim for benefits. [...] [T]he claimant and/or the claimant's authorized representative may review any documents pertinent to the Fund Office's decision and may submit written comments.
The Trustees will review their original decision and will advise the claimant in writing of their decision on review. The Trustees' decision on review will be communicated in writing and will contain the specific reason(s) for the decision.
[...]
The Trustees shall be the sole judges of the standard of proof required in any case. The Trustees have discretion to apply and interpret the rules of the Fund. Furthermore, the Trustees have sole authority and discretion to determine whether an individual is eligible for benefits under the Plan and the amount of benefits, if any to which an individual is entitled. The Trustees' determination with respect to the application and interpretation of any of the provisions of the Fund's rules shall be final and binding on all parties.

(Id. § 6.4.)

Following the suspension of his benefits, plaintiff submitted a request for review by the Plan's trustees.⁵ (See Certification of Richard S. Meisner ("Meisner Aff.") (Doc. No. 31-1), Ex.

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D.) Plaintiff's case was scheduled to be considered during a meeting of the Board of Trustees on September 11, 2012, at which plaintiff was entitled to appear personally. (See id.) However, on July 30, 2012, plaintiff withdrew his request for review. (Id.) In the letter withdrawing his request, plaintiff sought to "reserve[] his right to reinstate his appeal for benefits or utilize the administrative claim procedure at a later date" while also indicating his intent to "seek reinstatement of his pension benefit in Federal Court without exhausting the administrative appeal process." (Id.) This action followed.

DISCUSSION

Plaintiff alleges several violations under ERISA. First, plaintiff alleges that defendants violated their fiduciary duties under ERISA by failing to adhere to the instruments governing the Plan, failing to act solely in the interest of the participants and beneficiaries of the Plan, and neglecting to make reasonable efforts to remedy those breaches. (See Am. Compl. ¶¶ 48-68.) Second, plaintiff alleges that Fernandez improperly suspended plaintiff's benefits under the Plan in retaliation for plaintiff's challenge to his 2005 termination. (Id. ¶¶ 69-71.) Finally, plaintiff alleges that defendants' failure to produce certain documents entitles him to statutory penalties under ERISA. (Id. ¶¶ 72-75.)

Plaintiff also seeks several forms of relief. As to defendants' alleged breaches of fiduciary duty, plaintiff seeks an injunction or declaratory judgment compelling defendants to operate the Plan in accordance with the Plan documents, as well as an award of all benefits not provided to plaintiff, plus interest from the date of nonpayment, costs, and attorneys' fees. (Id. at

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13-14.) With regard to defendant Fernandez, plaintiff seeks "to have [d]efendant Fernandez removed as a fiduciary" of the Plan and, again, an award of all benefits not provided, plus interest, costs, and attorneys' fees. (Id. at 14.) Lastly, plaintiff seeks an order compelling defendants to furnish him with "a copy of each and every document and instrument requested," as well as statutory civil penalties, costs, and attorneys' fees. (Id. at 14-15.)

To withstand defendants' motion to dismiss, the amended complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is...