Law v. Ernst & Young, No. 91-1567

Decision Date09 October 1991
Docket NumberNo. 91-1567
Citation956 F.2d 364
Parties, 14 Employee Benefits Cas. 2710 Donald LAW, Plaintiff, Appellee, v. ERNST & YOUNG, etc., Defendant, Appellant. . Heard
CourtU.S. Court of Appeals — First Circuit

Kathryn A. Oberly, Associate General Counsel, with whom Elizabeth B. Healy, Asst. General Counsel, George C. Shelling, and Gross, Minsky, Mogul & Singal were on brief, for defendant, appellant.

Alfred C. Frawley, with whom Brann & Isaacson was on brief, for plaintiff, appellee.

Before BREYER, Chief Judge, CAMPBELL, Circuit Judge, and ZOBEL, * District Judge.

LEVIN H. CAMPBELL, Circuit Judge.

This appeal presents two questions under the Employee Retirement Income Security Act ("ERISA"). Holding that 1) appellee has neither made out the elements of an estoppel claim nor established that his estoppel claim is actionable under ERISA, and 2) appellant's predecessor may be treated as the "administrator" of appellee's ERISA plan for purposes of appellee's statutory claim for failure to provide information concerning the plan, we reverse in part and affirm in part.

Appellee Donald Law was employed by the accounting firm of Arthur Young & Co. 1 ("Arthur Young") from 1967 to 1983. In 1983 Law withdrew from the partnership and engaged in several business ventures in New York and Massachusetts. At the time he withdrew he had certain vested pension rights entitling him to certain benefits which he could elect to start drawing then or at a time in the future. Depending on the time and plan selected, these would be in varying amounts.

The dates and places of Law's activities after he left Arthur Young are not entirely clear from the record, but it appears that, just before the time period at issue, Law acquired an equity interest in a Massachusetts company. After successfully revitalizing that company, Law sold it, apparently in January 1989 but possibly earlier. Meanwhile, sometime in 1988, Law moved to Maine and began to consider early retirement from business activity.

In the summer of 1988, Law made several phone calls to Arthur Young's offices in New York seeking information about the benefits he would receive if he elected to commence receiving his accrued benefits when he turned 55 that December. Law received an acknowledgment of his inquiries in a September 28 letter typed on Arthur Young's letterhead 2 and signed by "Gail Paduch/Administrative Assistant/Retirement Benefits Department." The letter contained no information on retirement benefits but informed Law that he would receive a response within 30 days. However, Law did not receive such a response until the following March, when he received a letter dated March 3, 1989 informing him of various options, including a commencement of benefits at age 55 with annual payments of $19,193. The letter instructed Law that "if you wish to have your retirement benefits commence at any time prior to December 1, 1993, you should send your request to the Management Committee via William L. Gladstone, Chairman." The letter was signed by Rosemary V. Kalin, whose job title was not provided.

On March 30, 1989, Law wrote to William Gladstone informing him of Kalin's letter and stating that "[p]rovided these estimates are close to actual when final calculations are made I am requesting ... benefits commence June 1, 1989." Law received no response to this letter and, on May 6, 1989, Law again wrote to Gladstone asking "[w]ould you please acknowledge receipt of this letter and advise me regarding the status of my request."

Law next received a letter from Kalin dated May 9, 1989 acknowledging receipt of his March 30 letter and informing him that, because of recent changes in the tax laws, Robert Brewster would be contacting him with further information. On this letter Kalin was identified as the "Partner Information Coordinator." Brewster, identifying himself as the "Director of Finance" and a former colleague of Law, wrote Law on May 12, 1989. Brewster's letter explained the election that had to be made, included the forms for making that election, and stated that "[a]t age 55 and five months your annual income is estimated at $19,193." It went on to state that if Law had any questions he was to call Kalin or Brewster.

On May 22, 1989, Law mailed the completed election forms to Brewster. In an accompanying letter Law stated that he intended to begin his retirement on July 1, 1989 with a benefit level "approximately as stated" in Kalin's letter of March 3, i.e., $19,193 per year.

When Law's first payment arrived in July, it was less than the expected amount. Law retained counsel who wrote to Arthur Young in August. Sometime after August 17, 1989 Arthur Young informed Law that his benefits under the plan were $11,199 per year, not $19,193.

Law filed a three-count complaint in the district court for the District of Maine. The complaint stated that Law was a participant in various retirement plans "administered by and on behalf [sic] Arthur Young & Co. (now known as 'Ernst & Young') (hereinafter referred to as 'Young')." It named as the defendant "Ernst & Young, successor to Arthur Young and Co." Count One alleged that "Young's wrongful acts" constituted a breach of its "fiduciary duties as sponsor, proponent and administrator of the Plans" in violation of two provisions of ERISA codified at 29 U.S.C. §§ 1104 and 1109. Count Two alleged that "Young" was estopped to refuse "to pay over the benefits represented to Law on March 3, 1989," i.e., $19,193 per year. This count did not mention ERISA and was presumably based on state law. Count Three alleged that plaintiff's counsel had requested from "Young" documents concerning the plans on August 14, 1989, that no such documents had been provided until October 23, 1989, that the documents provided on that date were incomplete, and that "Young's violations of its obligations" were continuing. It concluded that Law was entitled to a statutory payment of $100 per day under ERISA, 29 U.S.C. § 1132(c).

The district court issued a pretrial ruling holding that the plaintiff was limited to relief provided by ERISA because state law claims relating to the plans were preempted under Ingersoll Rand Co. v. McClendon, --- U.S. ----, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990). 3 The court also denied without explanation Ernst & Young's request for a transfer to the Southern District of New York. Ernst & Young had claimed that transfer was warranted by a forum selection clause in Arthur Young's partnership agreement.

Following a bench trial, the district court denied Law's claim for breach of fiduciary duty on the ground that ERISA provides a cause of action for such breach only to the fund as a whole, not to individual participants. See Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985). However, the court found that Law had satisfied the elements of an estoppel claim because he had relied to his detriment on Arthur Young's erroneous calculation of his benefit level by retiring from his own business. Although the court had held that state law claims were preempted, it held that Law's estoppel claim was nevertheless actionable under 29 U.S.C. § 1132, ERISA's civil enforcement provision. The court therefore ordered that Ernst & Young was estopped to deny that Law was entitled to benefits of $19,193 per year. Finally, the court assessed a penalty of $12,600 against Ernst & Young for the late response to Law's request for information concerning his ERISA plan. This penalty was based on 29 U.S.C. § 1132(c) which provides that a plan "administrator" may be held liable for $100 per day when the administrator fails to respond within 30 days to a request for information concerning an ERISA plan.

On appeal, Ernst & Young argues that (1) this court should declare that the district court erred in denying its motion to transfer, (2) Law's estoppel claim is not actionable under ERISA, and (3) the district court's statutory penalty award was error.

A. The Forum Selection Clause

Ernst & Young contends that the district court erred in denying its motion, pursuant to a forum selection clause in Arthur Young's partnership agreement, to transfer this proceeding to the Southern District of New York. However, notwithstanding this alleged error, Ernst & Young does not ask us to nullify the proceedings already concluded in the district court for the District of Maine and order the case transferred now. To the contrary, we are asked to review the proceedings below on the merits and reverse the resulting judgment, something we would lack jurisdiction to do were we to hold that the case should have been tried in the Southern District of New York, a part of the Second Circuit. The only redress Ernst & Young now seeks for violation of the forum selection clause is a mere passing declaration by this court that the Maine district court erred in denying its transfer motion. This statement of ours would supposedly enable Ernst & Young later to enforce, in a separate proceeding, a damages provision in the partnership agreement for violation of the forum selection clause.

It is not the function of an appellate court to issue advisory opinions in order to help parties to a proceeding before it enforce their legal rights in some other tribunal. See generally Boston Chapter, NAACP v. Beecher, 716 F.2d 931, 933 (1st Cir.1983) (federal courts forbidden by Article III to render advisory opinions). In asking for a declaration that the trial court erred in refusing to transfer, without seeking any relief based on such error, Ernst & Young is reduced to asking for an advisory opinion with no practical bearing on the outcome of the district court proceeding under review. We lack the power under Article III to issue such an opinion and decline to do so.

B. Actionability of Law's Claim under ERISA

The district court found that Law had made out a claim for estoppel which was actionable...

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