Romero v. Allstate Corp.
| Decision Date | 14 April 2005 |
| Docket Number | No. 04-2161.,04-2161. |
| Citation | 404 F.3d 212 |
| Parties | Gene ROMERO; James T. Bever; Roger T. Boyd; Richard A. Carrier; Paul R. Cobb; Craig K. Crease; Sylvia Crews-Kelly; Dwight F. English; Douglas F. Gafner; Ronald W. Harper; Michael P. Kearney; Thomas A. Kearney; Larry H. Lankford, Sr.; David C. Lawson; Nathan R. Littlejohn, II; Rebecca R. Maslowski; Craig A. Millison; James E. Moorehead; Edward T. Murray, III; Carolyn L. Penzo; Christopher L. Perkins; Richard E. Peterson; James P. Pilchak; Paula Reinerio; Paula M. Schott; Donald L. Trgovich; Richard S. Wandner; Timothy Weisman; Ernie P. Wendt; Anthony T. Wiktor; John W. Wittman; Ralph J. Wolverton, Appellants v. THE ALLSTATE CORPORATION; Allstate Insurance Company; Agents Pension Plan; Administrative Committee, in its Capacity as Administrator of the Agents Pension Plan |
| Court | U.S. Court of Appeals — Third Circuit |
Paul Anton Zevnik, Michael J. Wilson, Morgan, Lewis & Bockius, Daniel Wolf (Argued), Sprenger & Lang, Washington, DC, for Appellants.
Richard C. Godfrey, Kirkland & Ellis, Chicago, IL, Peter A. Bellacosa (Argued), Kirkland & Ellis, New York, NY, Edward F. Mannino, Katherine Menapace, Akin, Gump, Strauss, Hauer & Feld, Philadelphia, PA, for Appellees.
Before: SCIRICA, Chief Judge, RENDELL, and FISHER, Circuit Judges.
A group of plaintiffs seeking to represent different classes of current and retired insurance agents of the Allstate Insurance Company brought this action alleging four counts under the Employee Retirement Income Security Act of 1974 ("ERISA") against The Allstate Corporation, the Allstate Insurance Company, the Agents Pension Plan ("Pension Plan") and the Administrative Committee in its capacity as administrator of the Agents Pension Plan ("Plan Administrator") (collectively herein "Allstate"). The three ERISA non-fiduciary duty claims, alleged under 29 U.S.C. §§ 1054(g)(2) and (h), were dismissed by the United States District Court for the Eastern District of Pennsylvania as time-barred on the face of the complaint. The ERISA breach of fiduciary duty claim, alleged under 29 U.S.C. § 1104(a), was also dismissed on the ground that it was duplicative of claims in two related actions then pending before the District Court. We will reverse and remand for further proceedings and in so doing make explicit that the federal discovery rule should be used to determine the date of accrual of the non-fiduciary duty claims alleged here.
For many years Allstate typically hired, as employees, the agents who sold its policies and handled its claims. These "employee agents" operated under one of two types of employment contracts known as "R830" and "R1500." At some point, Allstate determined it would be better served by agents operating as "independent contractors," and thereafter, all newly hired agents were independent contractors providing services to Allstate under a contract known as "R3001." Beginning in the early 1990's, Allstate also set out to persuade current employee agents to convert to independent contractor status.
Allstate maintained a Pension Plan subject to ERISA. Prior to 1991, full-time employee agents became participants in the Pension Plan after one year of service and were fully vested after five years. The pre-1991 version of the Pension Plan contained an attractive early retirement feature under which agents with at least 20 years of continuous "credited service" could opt to retire at age 55 and receive an enhanced early retirement benefit which assumed the retiree had continued to work until age 63. That version of the Pension Plan provided that "[a]ll service" with Allstate "shall count as `Credited Service'" for purposes of accruing retirement benefits, including the enhanced early retirement benefit.
In November 1991, Allstate amended the Pension Plan (retroactive to January 1, 1989) to phase out the enhanced early retirement benefit over a period of eight years ("Phase-Out Amendment").1 The Phase-Out Amendment was re-adopted in December 1994. Plaintiffs contend that at this time, however, they could not have been affected by the Phase-Out Amendment because they had not yet reached 55 years of age and completed 20 years of credited service.
Also in December 1994, the Pension Plan was amended to alter the definition of "credited service." The new definition provided that only "an Agent's employment [by Allstate] as an employee shall count as `Credited Service'" ("Credited Service Amendment"). A new appendix added to the written Pension Plan explained that agents who entered into an agreement to provide "substantially similar" services to Allstate as independent contractors under an R3001 contract would be denied early retirement. Thus, newly hired agents and former employee agents who had converted to the R3001 contract would no longer have their service to Allstate count for purposes of early retirement. In January 1996, Allstate amended the Pension Plan again, this time adding a new provision to make "employee" a defined term, and to exclude therefrom any person providing services to Allstate under an R3001 contract ("Employee Definition Amendment").
As the decade advanced, Allstate stepped up it efforts to persuade remaining employee agents to convert to independent contractor status. In 1996, Allstate announced it would terminate the contracts of some 1,600 employee agents in California unless they converted or retired. In November 1999, Allstate embarked on a nationwide conversion effort, in the wake of which most remaining employee agents either converted and signed a comprehensive release of all claims against Allstate in conjunction therewith, or retired. Plaintiffs contend that it was only at this time that they could have known how the Credited Service Amendment would affect them because it was only then that they converted from employee to independent contractor status and only then that they were denied credited service under the Plan. Allstate and its plan administrator consistently represented to the employee agents considering conversion during this time period that any service to Allstate provided after conversion would not count towards early retirement under the Pension Plan.
On December 20, 2001, thirty-two named plaintiffs, seeking to represent three different classes, instituted the present action. Plaintiffs in the first group, who had converted to the R3001 contract at a time when they had accrued less than 20 years of credited service, sought to represent a class of "converted agents." Plaintiffs in the second group, who had retired rather than convert to the R3001 contract at a time when they had accrued less than 20 years of credited service, sought to represent a class of "retired agents." Plaintiffs in the third group (which included all of the named plaintiffs) sought to represent a class of employee agents who (1) were hired by Allstate as employee agents before January 1, 1992, (2) remained in Allstate's service as employee agents after December 31, 1991, and (3) had not yet attained age 55 by December 31, 1991 (the "enhanced early retirement benefit class").
The Complaint contained four counts under ERISA. In Count I, plaintiffs seeking to represent the class of converted agents alleged that the 1994 Credited Service Amendment to the Pension Plan and the 1996 Employee Definition Amendment to the Pension Plan violated ERISA § 204(g)(2), 29 U.S.C. § 1054(g)(2), because the amendments had the effect of "eliminating or reducing an early retirement benefit."2 In Count II, plaintiffs seeking to represent the class of retired agents alleged that Allstate and its plan administrator violated the fiduciary duty provision of ERISA § 404(a), 29 U.S.C. § 1104(a), during the conversion efforts in representing to employee agents choosing between conversion or retirement that any service provided under an R3001 contract would not count towards the Pension Plan. In Count III, plaintiffs seeking to represent the enhanced early retirement benefit class alleged that the 1991 Phase-Out Amendment violated ERISA § 204(g) because it too had the effect of "eliminating or reducing an early retirement benefit."3 In Count IV, the same plaintiffs as in Count III (i.e., the enhanced early retirement benefit class) alleged that Allstate and its plan administrator violated ERISA § 204(h), 29 U.S.C. § 1054(h),4 by failing to provide notice to plan participants when it added the 1991 Phase-Out Amendment, which was alleged to have the effect of significantly reducing "the rate of future benefit accrual." See A. 65 (Compl.¶ 120) ("The November 1991 amendments, under which Allstate purported to phase out and ultimately eliminate the [enhanced] early retirement benefits, caused a significant reduction in early retirement benefits or subsidies that agents accrued under the Pension Plan"); see also ERISA § 204(h)(9), 29 U.S.C. § 1054(h)(9). Allstate moved to dismiss each of the four counts under Fed.R.Civ.P. 12(b)(6) on numerous grounds, including that the non-fiduciary duty claims alleged in Counts I, III and IV were time-barred.
Pending before the District Court at the same time as the present action were two other actions challenging the legality of Allstate's conduct over the course of the conversion process. In the first action — dubbed "Romero I" — twenty-nine plaintiffs (including almost all of the same plaintiffs in the present action), also seeking to represent various classes, alleged seven counts against Allstate and its President/Chief Executive Officer. The Romero I plaintiffs sought to invalidate the comprehensive release signed by agents who had converted on the grounds that it violated ERISA § 510, 29 U.S.C. § 1140,5 the Age Discrimination in Employment Act ("ADEA"), and the common law. They also alleged interference with employment and retaliation in violation of ERISA §...
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