Rosenblatt v. United Way of Greater Houston, Civil Action No. H-08-1970.
| Decision Date | 23 December 2008 |
| Docket Number | Civil Action No. H-08-1970. |
| Citation | 590 F.Supp.2d 863 |
| Parties | Stanley ROSENBLATT, Plaintiff, v. UNITED WAY OF GREATER HOUSTON, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Augustus Thorburn White, Attorney at Law, Houston, TX, for Plaintiff.
Matthew Roy Scott, Bell Nunnally & Martin, Dallas, TX, for Defendants.
Pending before the Court is the defendants United Way of Greater Houston, United Way of the Texas Gulf Coast Cash Balance Plan, and the Committee of the United Way of the Texas Gulf Coast Cash Balance Plan's, (collectively "United Way" or "defendants"), motions to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). The plaintiff, Stanley Rosenblatt ("Rosenblatt"), submitted a response to these motions. The defendants filed a joint reply to Rosenblatt's response, which he answered with a supplemental response to address the contested issues. Having carefully reviewed the pleadings, the Court hereby GRANTS the motions.
For roughly forty years, United Way provided a traditional defined benefit pension plan for employees of its affiliated agencies to participate in order to receive benefits upon retirement.1 Under a defined benefit plan, retirement benefits are generally based on a formula that included such factors as years of service and compensation. Under United Way's plan, the plan administrator would calculate a participant's pension benefits by multiplying a percentage of the participant's income by his years of service. By the plan's terms, United Way would be the "Principal Employer" for all matters connected with it.
Rosenblatt joined the staff of the Jewish Community Center ("JCC") on September 9, 1974, at the age of 33, and has continued to work there to this day.2 As a JCC employee, he became a participant in United Way's pension plan system. Under United Way's plan system, Rosenblatt earned a retirement annuity, which was payable to him after he reached his "normal retirement age" of sixty-five. The amount of his annuity depended on his (a) length of "service," (b) "final average earnings," and (c) the "Social Security Wage Base," as these terms were defined in the plan's documentation and applicable law. Each year, Rosenblatt accrued an increase in his annuity, rather than some particular amount of cash, that would be distributed to him upon retirement.3
In May 1995, United Way informed agencies participating in its pension system that the plan had a large funding deficit in which there was substantially less money than it would need to pay the benefits already accrued. United Way issued several statements disclosing that the size of the deficit totaled several millions of dollars.4 During that time, it considered a number of options to eliminate the funding deficit. Some of the alternatives developed by the defendants after reviewing the dilemma included terminating the plan, converting it into an alternative employee benefit plan, or merging the plan with United Way's Savings Plan.
At the conclusion of its deliberations, United Way converted its traditional defined benefit plan into a cash balance plan ("CB Plan"). Under the CB Plan, each participant's accrued benefit would be treated as a hypothetical cash balance as of a chosen date. After that date, the account balance was increased by an "interest credit"5 and a "contribution credit"6 as determined by the CB Plan's formula in accordance with its terms. For participants in the previous plan, the CB Plan provided that their accrued benefits would become the opening balances in their accounts. The CB Plan went into effect on January 1, 1996, thereby leaving unaffected the benefits Rosenblatt accrued up to December 31, 1995.
Although United Way sought to explain the conversion to employees of its agencies as a way to ease any concerns about it, the CB Plan did not appear to do anything to reduce costs and investment risks made with respect to its assets. Moreover, as Rosenblatt alleges, it also had a greater negative impact on older employees than on younger employees. Rosenblatt contends that, upon further inquiry, he discovered that, according to the CB Plan's calculations, he accrued a retirement annuity of $2833 per month as of the end of 1995 but did not accrue any further benefits. As it did previously, United Way continued to send Rosenblatt a benefits statement informing him that specific amounts of "interest credits" and "contribution credits" were added to his account. However, Rosenblatt alleges that he has not seen any additional accrued benefits included in his account since he last reviewed it.
As adopted in 1995, the CB Plan also provided an early retirement benefit which, in essence, paid the sum of the benefit earned under the traditional defined benefit plan and the subsequent contribution credits. In 2002, United Way amended the CB Plan to create a "wearaway" provision to prevent participants from acquiring new benefits for a period of years after it is changed. Ultimately, United Way's efforts to convert the defined benefit plan into the CB Plan failed to alleviate the deficit it incurred as a result of its investment decisions. In 2004, due to its continued financial deterioration, United Way amended the CB Plan to freeze all accruals currently in the pension system.
Rosenblatt subsequently filed a Charge of Discrimination with the Equal Employment Opportunity Commission ("EEOC") against United Way, alleging that he was discriminated against because of his age. He claimed that United Way changed the traditional defined benefit plan to improve benefits earned by younger employees at the expense of older employees.7 Rosenblatt specifically alleged that the CB Plan used employer contributions to the accounts of older employees to pay down the retirement fund's deficit, rather than increasing retirement income.8 As a result, older employees would make two payments for their retirement: one payment for promised benefits before 1996, and again, to fund benefits they already earned. Moreover, he asserted that the plan was being administered in a way that did not adequately calculate the value of benefits he and other employees similarly situated earned before 1996. The EEOC issued a notice of right to sue on April 29, 2008, after concluding its investigation on Rosenblatt's claim.
United Way argues that Rosenblatt fails to allege specific facts to support his claims under ERISA and the Age Discrimination in Employment Act ("ADEA"). The defendants contend that five circuit courts previously rejected the argument that cash balance plans are per se discriminatory against older employees. Thus, ERISA does not provide any relief for Rosenblatt on his claim that the CB Plan discriminated against older employees. Moreover, because he cannot recover on this claim under the applicable ERISA provisions, it follows that he cannot assert a claim under the ADEA provisions that would provide him with a remedy. Furthermore, Rosenblatt's additional claims under ERISA fail because he neglects to allege any facts that would support a cause of action to proceed to trial. The defendants also allege that some of the facts Rosenblatt states contradict any basis for liability he would have under any provisions cited in his complaint. Accordingly, his claims should be dismissed for failure to state claims upon which relief can be granted.
Rosenblatt asserts that the defendants move for dismissal without properly addressing many of the claims presented in his complaint. He contends that they do not make any effort to address the benefit calculations issues or the age discrimination claims related to them. Rosenblatt also alleges that the line of cases cited by the defendants do not control the issues presented and thus should not be given significant weight in resolving his claims. He also argues that further discovery is appropriate to determine the scope of the defendants' improper conduct and to allow time for the applicable authority to be settled through appellate review. Moreover, he claims that the factual allegations in his complaint are specific enough to provide him with adequate relief. Accordingly, Rosenblatt asserts that his complaint states causes of action against United Way to preclude dismissal.
Federal Rule of Civil Procedure 12(b)(6) authorizes a defendant to move to dismiss for "failure to state a claim upon which relief may be granted." FED. R. Crv. P. 12(b)(6). Under the demanding strictures of a Rule 12(b)(6) motion, "the plaintiffs complaint is to be construed in a light most favorable to the plaintiff, and the allegations contained therein are to be taken as true." Oppenheimer v. Prudential Sec., Inc., 94 F.3d 189, 194 (5th Cir.1996). In essence, "the district court must examine the complaint to determine whether the allegations provide relief on any possible theory." Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001). Under Rule 12(b)(6), a court will dismiss a complaint only if the "[f]actual allegations [are not] enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007). To survive a Rule 12(b)(6) motion, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Id.
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