Kirkendall v. Halliburton Inc.

• Decision Date: 08 June 2011
• Docket Number: 07-CV-289-JTC
• Parties: KATHY JOY KIRKENDALL, WESLEY SNYDER, BARBARA CAYA, and BONNIE SETH, on behalf of themselves and others similarly situated, Plaintiffs, v. HALLIBURTON, INC., HALLIBURTON RETIREMENT PLAN, and DRESSER INDUSTRIES, INC. CONSOLIDATED RETIREMENT PLAN, Defendants.
• Court: U.S. District Court — Western District of New York

KATHY JOY KIRKENDALL, WESLEY SNYDER, BARBARA CAYA,

and BONNIE SETH, on behalf of themselves and others similarly situated, Plaintiffs,

v.HALLIBURTON, INC., HALLIBURTON RETIREMENT PLAN,and DRESSER

INDUSTRIES, INC. CONSOLIDATED RETIREMENT PLAN, Defendants.

07-CV-289-JTC

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NEW YORK

Dated: June 8, 2011

By order of Chief United States District Judge William M. Skretny dated June 8, 2011 (Item 26), this matter has been reassigned to the undersigned for all further proceedings.

In this putative class action brought against the Halliburton Company, the Halliburton Retirement Plan (the "Halliburton Plan"), and the Dresser Industries, Inc. Consolidated Retirement Plan (the "DICON Plan" or the "Dresser Plan"), four employees of the Dresser-Rand Company ("Dresser-Rand") seek redetermination of pension benefits, compensatory damages, and declaratory relief on behalf of themselves and others similarly situated pursuant to various provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1001, et seq. Defendants move pursuant to Rule 12(c) of the Federal Rules of Civil Procedure for judgment on the pleadings dismissing the complaint, in its entirety and with prejudice, based on plaintiffs' failure toexhaust the administrative procedures for processing pension benefit claims under the Plans. For the reasons that follow, defendants' motion is granted.

BACKGROUND

As alleged in the complaint (filed on May 1, 2007), Dresser-Rand was formed on or about January 1, 1987, pursuant to a partnership agreement between Dresser Industries and the Ingersoll Rand Company. The four named plaintiffs are participants in the DICON Plan, an employer-sponsored pension benefit plan as defined in ERISA (Item 1, ¶¶ 11-13, 16).

On September 29, 1998, the Halliburton Company acquired Dresser Industries, and Halliburton became the sponsor of the DICON Plan (id. at ¶ 14). In February 2000, Halliburton sold its interest in Dresser-Rand to Ingersoll-Rand, leaving Ingersoll Rand as the sole partner of Dresser-Rand (id. at ¶ 18). Plaintiffs allege that, "[f]ollowing the sale, the parties did not wind up the affairs of Dresser-Rand. Rather, Dresser-Rand continued to operate the same business, under the same name, at the same locations, with the same employees performing the same jobs." (Id. at ¶ 19).

On November 30, 2001, Halliburton's Chairman of the Board, President and Chief Executive Officer David Lesar executed a "Merger Document" merging the DICON Plan into the Halliburton Plan (Item 12, Exh. C). The Merger Document expressly provided that:

Contrary provisions of the [Halliburton] Plan notwithstanding, all of the provisions of the DICON Plan, as in effect on the Merger Date [December 31, 2001], shall remain in effect (unless and until amended) as a part of, and shall be incorporated into, the [Halliburton] Plan for the benefit of the "participants" in the DICON Plan as of the Merger Date . . . , who shall continue to be covered by such provisions to the exclusion of any other provisions of the [Halliburton] Plan.

(Id., Exh. C, ¶ 3).

Plaintiffs allege that, "[c]ommencing in or about July, 2002, Halliburton has taken the position that sale of its interest in Dresser-Rand to Ingersoll had the effect of terminating the existence of Dresser-Rand, and thereby terminating the employment of all Dresser-Rand employees . . . , as of March 1, 2000" (Item 1, ¶ 21). Plaintiffs claim that as a result, the administrators of the Plan have been calculating pension benefits for retiring Dresser-Rand employees by using March 1, 2000 as the date of termination of employment, rather than the later actual termination dates, causing decreased benefits payable to putative class members (id. at ¶¶ 22-25).

The complaint sets forth the following four counts as legal basis for the relief sought in this action:

I. Declaratory judgment with respect to the pension rights of plaintiffs (and the putative class), and the corresponding duties of defendants, based upon resolution of the "actual controversy" regarding "whether the sale of Halliburton's interest in Dresser-Rand had the effect of terminating the existence of Dresser-Rand and the employment of its employees" (id. at ¶¶ 34-35);

II. Re-determination of class members' "past, present and future benefits . . . using the actual date of their termination from employment by Dresser- Rand, and [payment of] the difference between the correctly determined benefit and any benefit they have received from the Plan, together with interest" (id. at ¶ 37);

III. Breach of ERISA's "anti-cutback" provisions, §§ 204(g), 204(h), and 208, which prohibit amendments to pension plans having the effect of diminishing the accrued benefits of plan participants (id. at ¶¶ 39-40); IV. Breach of fiduciary duty (id. at ¶¶ 42-44).

Defendants filed an answer on July 23, 2007, asserting 28 affirmative defenses, including failure to exhaust the administrative claims procedures available under the Halliburton or DICON Plans (Item 11, ¶ 47). As set forth in the "Factual Averments" section of the answer:

Defendants' records reflect that none of the Plaintiffs have asserted claims for benefits pursuant to either the Halliburton or DICON Plans' remedies for redress of claims that are denied in whole or part and, as a result, Defendants do not know what Plaintiffs mean by their allegation in Paragraph 21 of the Complaint that Halliburton has taken the position that sale of its interest in Dresser-Rand to Ingersoll had the effect of terminating the existence of Dresser-Rand, and thereby terminating the employment of all Dresser-Rand employees as of March 1, 2000.

(Id. at ¶ 21). Attached to the answer as exhibits are the Halliburton Plan (Item 11, Exh. A); the DICON Plan (id., Exh. B); the November 30, 2001 Merger Document (Item 12, Exh. C); and a copy of the "Claims Procedures" for the Halliburton Plan (id., Exh. D).

On the same day the answer was filed, defendants filed the instant motion for judgment on the pleadings seeking dismissal of the complaint in its entirety, based on the following grounds:

1. Plaintiffs' claim asserted in Count II for "redetermination" of benefits must be dismissed because plaintiffs have failed to allege or show that they pursued the claims procedures provided in the applicable Plan, or that they otherwise exhausted available administrative remedies, as they are required to do before bringing suit in federal court seeking a determination of benefits under an ERISA-regulated pension plan;

2. Plaintiffs' breach of fiduciary duty claim is merely a "repackaging" of the claim for redetermination of pension benefits so as to circumvent the exhaustion requirement;3. Plaintiffs' claims under ERISA sections 204 and 208 fail because there was no actual amendment to the Plan, and because no benefits were reduced as a result of the merger;

4. Plaintiffs' declaratory judgment claim cannot stand alone as a cause of action.

(See Item 13-2).

Each of these grounds is discussed in turn below.

DISCUSSION

A. Judgment on the Pleadings

Defendants' motion was filed pursuant to Rule 12(c), which provides simply that "[a]fter the pleadings are closed-but early enough not to delay trial—a party may move for judgment on the pleadings." Fed R. Civ. P. 12(c). In deciding a Rule 12(c) motion, courts apply the same standard utilized to determine a motion under Rule 12(b)(6) to dismiss the complaint for failure to state a claim upon which relief can be granted, "accepting the allegations contained in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party." Burnette v. Carothers, 192 F.3d 52, 56 (2d Cir. 1999), cert. denied, 531 U.S. 1052 (2000); see also Harrison v. Harlem Hosp., 364 Fed. Appx. 686, 688 (2d Cir. 2010), cert. denied, ___ U.S. __ , 131 S.Ct. 1018 (2011). To survive a motion for judgment on the pleadings under this standard, the complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is considered to have "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that thedefendant is liable for the misconduct alleged." Ashcroft v. Iqbal, _____ U.S. ____ , 129 S.Ct. 1937, 1949 (2009).

In deciding a motion for judgment on the pleadings, the court may consider

the pleadings and exhibits attached thereto, statements or documents incorporated by reference in the pleadings, matters subject to judicial notice, and documents submitted by the moving party, so long as such documents either are in the possession of the party opposing the motion or were relied upon by that party in its pleadings.

McCrary v. County of Nassau, 493 F. Supp. 2d 581, 587 (E.D.N.Y. 2007) (citing Brass v. American Film Technologies, Inc., 987 F.2d 142, 150 (2d Cir. 1993)); see also Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (even if document is not incorporated by reference, court may consider it if it is "integral" to the complaint, i.e., the complaint relies heavily upon its terms and effect); Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 2006) (even if document is "integral" to the complaint, it must be clear on the record that no dispute exists regarding authenticity, accuracy, or relevance of the document). Beyond this, when "matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56 [and] [a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed. R. Civ. P. 12(d).

As discussed at further length immediately below, defendants' primary argument for judgment on the pleadings is that none of the named plaintiffs has filed a claim for pension benefits in accordance with the Halliburton Plan's claims procedures, as a prerequisite to bringing a court...