Jacobs v. Xerox Corp. Long Term Disability Income

• Decision Date: 19 January 2005
• Docket Number: No. 03 C 3549.,03 C 3549.
• Citation: 356 F.Supp.2d 877
• Parties: David JACOBS, Plaintiff, v. XEROX CORPORATION LONG TERM DISABILITY INCOME PLAN, Defendant.
• Court: U.S. District Court — Northern District of Illinois

356 F.Supp.2d 877

David JACOBS, Plaintiff, v. XEROX CORPORATION LONG TERM DISABILITY INCOME PLAN, Defendant.

No. 03 C 3549.

United States District Court, N.D. Illinois, Eastern Division.

January 19, 2005.

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Mark D. Debofsky, Daley, Debofsky & Bryant, Chicago, IL, for Plaintiff.

MEMORANDUM OPINION AND ORDER

FILIP, District Judge.

David Jacobs ("Jacobs" or "Plaintiff") brings this action against the Xerox Corporation Long Term Disability Income Plan ("Plan" or "Defendant"). Plaintiff has filed a three-count second amended complaint. (D.E.10.) In Count I, Plaintiff alleges that he has been wrongfully denied long-term disability ("LTD") benefits in violation of § 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) ("Section 502"). In Count II, Plaintiff alleges that he is entitled to civil statutory penalties because the ERISA plan administrator failed, upon a suitable request, to provide Plan documents Plaintiff allegedly requested in a timely fashion, pursuant to 29 U.S.C. § 1132(c). In Count III, Plaintiff alleges that Defendant wrongfully interfered with Plaintiff's attainment of a right under the Plan, in violation of § 510 of ERISA ("Section 510"). Defendant has moved for summary judgment and Plaintiff has filed a cross-motion for summary judgment, pursuant to Federal Rule of Civil Procedure 56. As explained below, Defendant's motion (D.E.25) is granted in part and denied in part, and Plaintiff's motion (D.E. 37) is denied.

I. FACTS¹

Plaintiff was an employee of the Xerox Corporation from the end of 1996 through 2001. (Defendant's Statement of Undisputed Facts ("Def.SF") ¶ 1; Plaintiff's Statement of Undisputed Facts ("Pl SF") ¶ 6.) As a benefit of his employment, Plaintiff participated in the Xerox Corporation Long-Term Disability Plan and a separate short-term disability plan. (Pl.SF.¶¶ 8, 12.) According to a summary plan description ("SPD") given to Plaintiff, the short-term disability plan "continues to pay [an employee's] full pay if [he or she] is unable to work due to illness, injury, or pregnancy, and [he or she] satisfies the other disability requirements." (Id. at 96.) The plan provides short-term disability benefits for the first five months of a disability. (Id.) The short-term plan affects employees as follows:

During your five months of short-term disability benefits, you are treated as if you are on salary continuation. That is, your job stays intact (subject to the needs of the business) and you continue to participate in the other benefit plans.... You can also continue to participate in the 401(k) Savings Plan and receive profit sharing, if and when applicable.

(Id.)

After the first five months of a disability, from months six through twenty-nine of a disability, Xerox provides benefits through the Xerox Long-Term Disability Income Plan. (Id. at 97.) In relevant part, the long-term disability plan is implicated "if your disability lasts longer than five months and meets the applicable definition of disability." (Id.) Significantly, Section 5.3 of the 1999 Restatement of the Long-Term Disability Income Plan provides specific times when an employee's benefits terminate:

Benefits under this Plan will terminate on the earliest of:

. . . . .

(f) the date that the employment relationship terminates;

(g) the date the Employee is placed on an approved unit closing, layoff, military or personal leave of absence;

. . . . .

(D.E. 13, Attachment 2 at 10-11; Def. SF ¶ 15.)² Pursuant to the Plan, a Plan Administrator was given the authority to "[c]onstrue the Plan and any Trust Agreement thereunder and determine eligibility for, and extent of, benefits." (D.E. 13 Attachment 2 at 16.) Moreover, the Plan states that "the plan administrator is hereby authorized to interpret the terms and conditions of the Plan and empowered to promulgate any uniform rules, regulations, and schedules of general applicability and to adopt such forms when [he] deems necessary in order to carry out the purposes of the Plan." (Def. SF ¶ 19; D.E. 13, Attachment 2 at 16.) In the event a claim is denied, the Plan Administrator was charged with providing notice as to why the claims had been denied and with reviewing claims that had previously been denied in whole or in part and "send[ing] to the claimant ... notice of the grant or denial." (Id. at 17-18.)

Because of a previous stroke, complications from that stroke, and other ailments, Plaintiff received short term disability benefits nearly continuously from January 23, 2001, to May 21, 2001. (Pl. SF ¶¶ 32-40.) Plaintiff then returned to work, but he was on short-term disability benefits again from October, 2001 through March 3, 2002. (Pl. SF ¶¶ 41-43, 56; Def. SF ¶¶ 4; D.E. 41 at 1.) On November 1, 2001, Plaintiff was given notice that he was being terminated as part of an involuntary reduction in force. (Def. SF ¶ 2.) At the time of the termination, Plaintiff was receiving short term disability benefits. (Id. ¶ 3.) On December 3, 2001, Plaintiff signed a form entitled "The Reduction in Force Salary Continuance Payment Option Election" (Pl. SF ¶ 47), and on December 13, 2001, he signed another form that released Xerox from all claims that he might have had that arose prior to December 13, 2001. (Pl. SF ¶ 53; Def. SF ¶ 5.) In effect, these forms allowed Plaintiff to receive a "salary continuation" at his regular pay rate for an additional seven and one-half weeks, even though he had been terminated from his job, as consideration for signing a general release of all claims he might have against Xerox. (Def. SF ¶¶ 5-6; Pl. SF ¶¶ 48, 53.) By the terms of this general release, Plaintiff specifically "release[d] Xerox from any and all claims, even if I don't know about the claim at this time, based on anything that has occurred prior to the date I sign this Release," and the release specifically referenced putative claims arising under, among other things, the ERISA statute. (D.E. 13, Attachment 1 at 0015.) The general release further stated that Plaintiff had an opportunity to consult with counsel of his choice before signing it, that he had the opportunity to take up to 45 days to evaluate the release from the date it was provided (Plaintiff appears to have actually taken 44 days), that Plaintiff had sufficient time to evaluate whether he wanted to sign the release, and that Plaintiff could change his mind for seven days even after signing the release so as to back out of the deal he struck with Xerox. (Id. at 0016.)

Plaintiff's short-term disability benefits expired on March 3, 2002. (Pl. SF ¶¶ 41-43, 56; Def. SF ¶ 4.) On March 5, 2002, Plaintiff's counsel wrote a letter to the Human Resources Manager at the Xerox Corporation, requesting more information about the status of Plaintiff's disability claims. (Pl. SF ¶ 54.) The letter was passed on to the general counsel's office at Xerox. (D.E. 13, Attachment 1 at 0007.) On March 12, 2002, Ms. Hermina Glaser in Xerox's office of general counsel responded to the letter, stating that Plaintiff had not qualified for long-term disability benefits. (Pl. SF ¶ 55.) Afterwards, Plaintiff and Ms. Glaser had a conversation regarding the status of Plaintiff's benefits. (Id. ¶ 57.) Plaintiff's counsel followed up this discussion by faxing a letter to Ms. Glaser that at least purported to confirm their conversation and stated that Ms. Glaser had agreed to forward all documents pertaining to "Plaintiff's entitlement to short term and long-term disability benefits." (Id.)

On May 8, 2002, Plaintiff's counsel again contacted Ms. Glaser, indicating that she had not yet provided the documents. (Id. ¶ 58.) Eleven months later, in a letter dated April 4, 2003, Plaintiff's counsel contacted Lawrence Becker, the Plan Administrator, and informed him of Plaintiff's alleged entitlement to benefits under the Plan; this April 4, 2003 letter attached all of the previous documentation submitted to Xerox. (Id. ¶ 60.) Plaintiff alleges that this correspondence "requested relevant plan documents" (id.), but Defendant denies that the correspondence requested any documents. (D.E. 52 ¶ 60.) Both parties agree, however, that the letter stated:

Please consider this letter a claim for benefits under the plan. I would appreciate it if you would forward all of the aforementioned documents to the appropriate person at Xerox so that Mr. Jacobs may perfect his claim for long-term disability benefits. I would also appreciate it if you would respond to this letter and provide the name of the proper individual to expedite the claim process.

(D.E. 13, Attachment 1 at 0001.) Plaintiff applied for and was denied long-term disability benefits ("LTD"). (D.E. 52 ¶ 62.) He disputed the denial by appealing to the Plan Administrator, Lawrence Becker, on August 1, 2003. (Def. SF ¶¶ 7-9; Pl. SF ¶¶ 59-62.)

Ultimately, Becker denied the appeal. (Def. SF ¶¶ 9-10; Pl. SF ¶ 64.) In his role as Plan Administrator, Becker reviewed the LTD Plan, documents presented by the attorneys, the general release signed by Plaintiff, Plaintiff's employment records, and other documents signed by Plaintiff. (D.E. 13, Attachment 1 at 0089.) In denying Plaintiff's claims, Becker determined that Plaintiff was not qualified to receive LTD benefits because the Plan only allowed "employees" to receive benefits, and at the time of his application, Plaintiff was not an employee, since he had been laid off. (Def. SF ¶¶ 11, 17; Pl. SF ¶ 68.) Becker interpreted the term "layoff" to include "all involuntary terminations." (Def. SF ¶ 16.) In this case, Becker held that at the time Plaintiff first received his salary continuance as part of his severance, his status as an eligible employee under the LTD plan terminated pursuant to Section 5.3 of the LTD plan. (D.E. 13, Attachment 1 at 0089-0090.) He also found that Plaintiff's "continued receipt of short-term disability...