Schultz v. Stoner

• Decision Date: 08 March 2004
• Docket Number: No. 00 Civ. 0439(LTS)(MDF).,00 Civ. 0439(LTS)(MDF).
• Parties: Alton C. SCHULTZ, Jr., Elaine B. Jackson, Gladys Criddle, and Harold Weber, Plaintiffs, v. Janet L. STONER, Defendant.
• Court: U.S. District Court — Southern District of New York

308 F.Supp.2d 289

Alton C. SCHULTZ, Jr., Elaine B. Jackson, Gladys Criddle, and Harold Weber, Plaintiffs, v. Janet L. STONER, Defendant.

No. 00 Civ. 0439(LTS)(MDF).

United States District Court, S.D. New York.

March 8, 2004.

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Herman, Herman, Katz & Cotlar, LLP, By: Russ M. Herman, Stephen J. Herman, New Orleans, Louisiana, Slade & Albright, By: Stephen Albright, New York City, for Plaintiffs.

Jackson Lewis Schnitzler & Krupman, By: Elise M. Bloom, Kathryn A. Korger, New York City, O'Melveny & Myers LLP, By: Robert N. Eccles, Evelyn L. Becker, Washington, D.C., Texaco Inc., By: Joseph P. Moan, White Plains, New York, for Defendant.

OPINION AND ORDER

SWAIN, District Judge.

In this putative class action, brought pursuant to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), individuals who provided services to Texaco, Inc. or one or more of its affiliates (collectively, "Texaco") while on the payrolls of certain third-party entities with which Texaco had contracted claim that they and others similarly situated¹ were the victims of breaches of fiduciary duty by Defendant, who was at all relevant times Texaco's Vice President of Human Resources and the Plan Administrator for Texaco's employee benefit plans. (Def.'s Local Rule 56.1 Statement ¶¶ 2-3 and evidence cited therein.) Asserting that they were wrongfully excluded from coverage under the Retirement Plan of Texaco, Inc. ("Retirement Plan") and the Employees Thrift Plan of Texaco, Inc. ("Thrift Plan" and, with the Retirement Plan, the "Plans"), and characterizing their cause of action as one pursuant to section 502(a)(3) of ERISA² for "other equitable relief" in respect of various alleged fiduciary breaches, they seek appointment of a new independent Plan Administrator, a declaration that the plaintiff class members are eligible for benefits under the Plans, and related relief. The individual plaintiffs also claim that they were denied plan documents in violation of relevant disclosure provisions of ERISA, and seek to recover statutory penalties pursuant to section 502(c) of ERISA.³ The Court has jurisdiction of this action pursuant to 28 U.S.C. section 1331 and 29 U.S.C. section 1132(e).

By Amended Opinion and Order dated January 3, 2001, this Court (Parker, J.), dismissed Plaintiffs' Second Amended Complaint to the extent it asserted claims pursuant to ERISA section 502(a)(1)(B), ERISA section 510 and state law, dismissed Plaintiffs' claims against all defendants other than defendant Stoner, dismissed Plaintiff Criddle's ERISA section 502(c) claim, and denied the remainder of Defendants' motion, brought pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss the complaint. See Schultz v. Texaco Inc., 127 F.Supp.2d 443 (S.D.N.Y.2001) ("Schultz I"). The case now comes before the Court on the parties' cross-motions for summary judgment on Plaintiffs' section 502(a)(3) and 502(c) claims and Plaintiffs' motion for leave to file and serve a Third Amended Complaint. The Court has considered carefully all of the parties' initial and supplemental submissions and heard oral argument. For the reasons that follow, Plaintiffs' summary judgment motion is denied in its entirety, Defendant's motion is granted in part, and Plaintiffs' motion to amend their complaint is granted in part.

BACKGROUND

The following facts are undisputed except as otherwise indicated.

Plaintiff Alton C. Schultz, Jr. ("Schultz"), was initially employed by Texaco Exploration and Production, Inc. ("TEPI") in May 1991. From July 1991 through January 28, 1999, he continued to work at TEPI's facilities but was on the payroll of three third-party entities that were under contract with TEPI — Metro-Careers, Inc., from approximately 1991 to 1995, Kelly Services from approximately 1995 to 1998, and Professional Temporaries of New Orleans from approximately 1998 through the termination of the employment. Schultz was not offered benefits under Texaco's employee plans, unlike co-workers who were classified as Texaco "employees" and were afforded access to such benefits. (Schultz Aff. dated April 18, 2001 (Pls.' Ex. 1).)

Plaintiff Elaine B. Jackson ("Jackson") was initially employed by TEPI in or about October 1990 and was moved to the MetroCareers Inc. payroll in or about July 1991. Jackson asserts that she was told at the time that she "could no longer be an `independent contractor' if [she] wanted to continue working for Texaco." (Jackson Aff. dated April 23, 2001 (Pls.' Ex. 2).) She thereafter worked in the "New Orleans Texaco Office" through sometime in early 1995. She was re-hired through Kelly Services in July 1996; Texaco changed the third-party payroll contract to Professional Temporaries of New Orleans in 1998. Jackson was "`laid off'" by Texaco in February 1999. She was not afforded Texaco employee benefits while she was on the third-party payrolls. (Id.) Plaintiffs Gladys Criddle ("Criddle") and Harold J. Weber, Jr. ("Weber"), also worked at Texaco's New Orleans office under third-party contractor arrangements and were not afforded Texaco benefits. (Pls.' Exs. 3, 4). Weber had previously been employed by Texaco from 1966 to 1984. (Weber Aff dated May 1, 2001 (Pls.' Ex. 4).) Weber is eligible for benefits under the Retirement Plan in connection with the 1966-1984 Texaco employment. (Id.; Pls.' Ex. 10.)

Plaintiffs assert that they were not aware of any potentially viable claim that they could make for Texaco benefits until after they read of litigation relating to coverage under the benefit plans of another company, ARCO, in 1999. In the fall of 1999, Schultz initiated correspondence with Texaco, requesting information regarding his "rights" under various Texaco plans. (Ex. P to Aff. of Elise Bloom, dated April 30, 2001, in Supp. of Def.'s Mot. ("4/30/01 Bloom Aff.").) The ensuing series of letters culminated in a December 6, 1999 letter from defendant Stoner, as Plan Administrator, to Schultz, denying his claim for Texaco benefits and reading in pertinent part as follows:

From the facts available to me, I have confirmed you were employed by Metro-Careers, Inc., Kelley Services, Inc., and Professional Temporaries USA, and provided your services to Texaco through these third parties pursuant to an agreement between the company and the third party. The eligibility provisions in all of Texaco's benefit plans include the following language, which explicitly excludes leased or third-party contract employees from coverage or participation: The Plan Administrator has sole discretionary authority to determine whether you are an employee of the company or a participating company, based only on the plan's eligibility criteria, without regard to whether you are considered a common law employee of the company or a participating company for any other purpose.

You are not eligible to join this plan if you are, in the sole discretion of the Plan Administrator, characterized or under a contract as an independent contractor or rendering services to the company pursuant to an agreement between the company or a participating company and a third party.

Therefore, in response to your inquiry, this will inform you that you are not entitled to any benefits under Texaco's benefit plans ....

(Ex. T to Bloom 4/30/01 Aff. (emph. original); see also Stoner Dep. at 105-106, 108-110.) Stoner responded in substantially identical fashion to an appeal by plaintiff Weber. (Ex. CC to 4/30/01 Bloom Aff.)

Plaintiff Jackson's initial inquiry was met with a letter from a Texaco Human Resources Manager that asserted that Jackson was not eligible for Texaco benefits because she was never an employee of Texaco or its subsidiaries but was, rather, employed by MetroCareers, Inc., Kelley Services, Inc., and Professional Temporaries USA. (Ex. DD to 4/30/01 Bloom Aff.) There is no evidence in the record indicating that plaintiff Jackson appealed this determination to the Plan Administrator. There is no evidence in the record indicating that plaintiff Criddle made any application for benefits.

The italicized language in Ms. Stoner's letters to Schultz and Weber was not drawn from the official, or formal, texts of the relevant Plan documents. Rather, Ms. Stoner quoted portions of the 1999 Summary Plan Description ("SPD") for the Retirement Plan. Compare Ex. G to 4/30/01 Bloom Aff. with Exs. T and DD to 4/30/01 Bloom Aff. The "Formal Text" for the Retirement Plan, as restated effective January 1, 1989 ("1989 Retirement Plan Text") defined "Employee" as "[a]ny individual employed by an Employer [ ... including] leased employees within the meaning of section 414(n) of the [Internal Revenue] Code",⁴ defined "Employer" as "[t]he Company [Texaco, Inc.] or any Subsidiary or Affiliated Company to which the Plan from time to time may be applied,"⁵ and included an "Eligible Employee" definition that read in pertinent part as follows:

The Board of Directors of the Employer may, from time to time, designate as eligible Employees one or more classifications of its Employees.

Employees whose services are received by an Employer pursuant to a leasing agreement between the Employer and a third party shall not be deemed within a classification of eligible Employees.

(1989 Retirement Plan Text Art. II, ¶ 1(a), Ex. H to 4/30/01 Bloom Aff.) The 1989 Formal Text of the Employees Thrift Plan ("1989 Thrift Plan Text") read in pertinent part as follows:

The Board of Directors of any Participating Employer may, from time to time, designate as eligible employees one or more classifications of its employees. Employees whose services are received by a Participating Employer pursuant to a leasing agreement between the Participating Employer and a third party shall not be deemed within a classification of eligible employees.

(1989 Thrift Plan Text, Section II ¶ 1, Ex. N to 4/30/01 Bloom Aff.) Neither the 1989 Retirement Plan Text nor the 1989 Thrift Plan...