Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-00903/USCOURTS-azd-2_04-cv-00903-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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 The Court will deny the request for oral argument because the parties have submitted

memoranda thoroughly discussing the law and evidence and the Court concludes that oral

argument will not aid its decisional process. See Mahon v. Credit Bur. of Placer County,

Inc., 171 F.3d 1197, 1200 (9th Cir. 1999).

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Frank Gonzales, et al., 

Plaintiffs, 

vs.

Phelps Dodge Miami, Inc., a Delaware

corporation, et al., 

Defendants.

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No. CV-04-903-PHX-DGC

ORDER

Pending before the Court are Defendant Phelps Dodge Miami, Inc.’s motion for

summary judgment and Plaintiffs’ cross-motion for partial summary judgment regarding

liability. Docs. ##48, 55. Also pending is Defendant’s motion to strike Plaintiffs’ reply

and supplemental counter statement of undisputed facts. Doc. #61. For the reasons set

forth below, the Court will grant Defendant’s motion for summary judgment and deny

Plaintiffs’ cross-motion for partial summary judgment and Defendant’s motion to strike.1

Background

Plaintiffs are former employees of Defendant Phelps Dodge Miami. Plaintiffs were

laid off by Defendant in January 2002. Plaintiffs commenced this action by filing a breach

Case 2:04-cv-00903-DGC Document 63 Filed 04/14/06 Page 1 of 7
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of contract claim against Defendant in state court on October 8, 2003, alleging that

Defendant wrongfully denied them severance pay following their layoff. Plaintiffs filed an

amended complaint on November 25, 2003. Defendant removed the action to this Court on

April 29, 2004, asserting that Plaintiff’s breach of contract claim was preempted by the

Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. Doc. #1.

On July 8, 2004, Plaintiff filed a second amended complaint that purported to allege a

breach of contract claim and alternative claims for recovery of benefits and failure to supply

information under ERISA. Doc. #13. Defendant filed an answer on July 19, 2004.

Doc. #14.

On December 16, 2004, the parties informed the Court that they disagreed on whether

the case was an ERISA case subject to federal question jurisdiction. Doc. #23. The Court

set an expedited discovery and briefing schedule with respect to this issue. Doc. #26. In an

April 25, 2005 order, the Court concluded that Plaintiffs’ breach contract claim sought to

recover benefits promised under Defendant’s ERISA-governed Severance Plan, not

Defendant’s Employee Handbook or the General Release Plaintiffs signed when they were

laid off. Doc. #32 at 2. The Court further concluded that the breach of contract claim was

preempted by ERISA and that the claim for severance benefits was subject to the exclusive

remedy provisions of 29 U.S.C. § 1132(a). Id. at 3-4 (citing Metro. Life Ins. Co. v. Taylor,

481 U.S. 58, 62-63 (1987)). 

At a status hearing held on May 20, 2005, the parties stated that the Court should next

determine whether the Severance Plan was properly terminated. The present motions for

summary judgment address this issue.

Discussion

I. The Parties’ Motions for Summary Judgment.

A. Summary Judgment Standard.

Summary judgment is appropriate if the evidence, viewed in the light most favorable

to the nonmoving party, “show[s] that there is no genuine issue as to any material fact and

that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); see

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Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). “Only disputes over facts that might

affect the outcome of the suit . . . will properly preclude the entry of summary judgment.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The disputed evidence must be

“such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248.

Summary judgment may be entered against a party who “fails to make a showing sufficient

to establish the existence of an element essential to that party’s case, and on which that party

will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

B. Analysis.

1. Plaintiffs’ Second Claim for Relief: Recovery of Benefits Under

ERISA – 29 U.S.C. § 1132(a)(1)(B).

Defendant’s Severance Plan provides that “[t]he Severance Plan Committee . . . has

the right to terminate [the] Plan when it is in the best interest of [Defendant].” Doc. #49

Ex. 1 § III(1). The Plan was terminated in its entirety on December 31, 2000, more than a

year before Plaintiffs were laid off. Id. Ex. 14 (Am. No. 3 to Severance Plan).

Plaintiffs do not dispute that the ERISA-governed Severance Plan was terminated

according to its terms. Rather, Plaintiffs state that Defendant’s “reference to ‘the Severance

Plan’ may be interpreted in different ways, and is so vague and unclear that it is likely to

confuse the Court.” Doc. #54 at 4. Plaintiffs contend that there are “two separate and

distinct” severance plans at issue in this case: the plan that was terminated on December 31,

2000, and the plan set forth in Defendant’s Employee Handbook. Id. Plaintiffs further

contend that the Handbook was a binding agreement between the parties that required

Defendant to have a severance plan in place and that the Handbook was not superseded by

the ERISA-governed Severance Plan. Docs. ##56 at 5-10, 59 at 2-8.

Plaintiffs essentially are re-urging the breach of contract claim based on the language

of the Employee Handbook. As the Court explained in its April 25, 2005 order, however,

the Handbook does not create rights to severance benefits separate from those set forth in the

ERISA-governed Severance Plan. Doc. #32 at 3. There is only one severance plan in this

case: the Severance Plan governed by ERISA.

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The issue the Court must decide, then, is whether the Severance Plan was properly

terminated under ERISA. See Doc. #35. If the Plan was properly terminated, Plaintiffs have

no right to severance benefits. See Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78

(1995) (“Employers or other plan sponsors are generally free under ERISA, for any reason

at any time, to . . . terminate welfare plans. . . . Accordingly, that Curtiss-Wright amended

its plan to deprive respondents of health benefits is not a cognizable complaint under

ERISA[.]”).

Defendant argues that the Severance Plan was properly terminated because the

Severance Plan Committee had an unfettered right to terminate the Plan. Doc. #48 at 9

(citing Curtiss-Wright, 514 U.S. at 78); see Doc. #49 Exs. 1, 14. Plaintiffs assert that the

Severance Plan was terminated without notice to Plaintiffs and without their consent.

Doc. #56 at 4. Plaintiffs do not contend, however, that the lack of notice or consent renders

the termination invalid. Nor do Plaintiffs contend that the termination was otherwise

improper under ERISA. See Curtiss-Wright, 514 U.S. at 78; Peralta v. Hispanic Bus., Inc.,

419 F.3d 1064, 1070 (9th Cir. 2005) (“It is indisputable that an employer has a right to

eliminate an ERISA-governed benefit plan.”); Pisciotta v. Teledyne Indus., Inc., 91 F.3d

1326, 1130-31 (9th Cir. 1996) (holding that the employer’s reservation of right to terminate

a benefit plan was effective); Cinelli v. Sec. Pac. Corp., 61 F.3d 1437, 1441 (9th Cir. 1995)

(“Because benefits under a welfare plan are generally neither vested nor accrued, an

employer may amend or terminate benefits pursuant to the terms of the plan at any time.”);

Serrato v. John Hancock Life Ins. Co., 31 F.3d 882, 884 (9th Cir. 1994) (“Under ERISA,

‘health care benefits provided in an employee benefit plan are not vested benefits; the

employer may modify or withdraw these benefits at any time, provided the changes are made

in compliance with the terms of the plan.’”) (alterations and citations omitted); Joanou v.

Coca-Cola Co., 26 F.3d 96, 98 (9th Cir. 1994) (“While employers who choose to provide a

severance plan assume certain fiduciary duties in administering it, they remain free to

unilaterally amend or eliminate such plan without considering the employees’ interests.”)

(emphasis in original). The Court accordingly will grant Defendant’s motion for summary

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judgment and deny Plaintiffs’ cross-motion for summary judgment with respect to the second

claim for relief. See id.

2. Plaintiffs’ Third Claim for Relief: Failure to Supply Information

Under ERISA – 29 U.S.C. § 1132(c).

Plaintiffs allege in their third claim for relief that Defendant failed to supply Plan

information to Plaintiffs. Doc. #13 ¶ 64. Specifically, Plaintiffs allege that Defendant

ignored Plaintiffs’ requests for Plan documents in April 2002 and failed to give Plaintiffs

notice that the Plan had been terminated in violation of 29 U.S.C. § 1024. Id. ¶¶ 31, 33-38,

63-64. Plaintiffs seek a civil penalty under 29 U.S.C. § 1132(c). Id. ¶ 66.

Defendant argues that this claim fails as a matter of law because Plaintiffs were not

Plan participants when they requested the documents. Docs. ##48 at 13, 57 at 12-14.

Plaintiffs contend that this issue is not properly before the Court because the parties were

instructed to limit the present motions for summary judgment to the issue of whether the Plan

was properly terminated. Doc. #56 at 10. Defendant counters that further briefing is

unnecessary because the undisputed evidence shows that the claim is legally insufficient.

The Court agrees. ERISA requires plan administrators to furnish copies of plan

documents “upon written request of any participant or beneficiary[.]” 29 U.S.C.

§ 1024(b)(4) (emphasis added); see Burrey v. Pac. Gas & Elec. Co., 159 F.3d 388, 397

(9th Cir. 1998) ( “An administrator of an [ERISA] plan is required to provide copies of plan

documents to ‘any plan participant or beneficiary’ requesting such documents.”) (quoting

§ 1024(b)(4)); see also 29 U.S.C. § 1132(c)(1) (requiring a plan administrator to “comply

with a request for any information which such administrator is required by this subchapter

to furnish to a participant or beneficiary”). The term “participant” means any employee or

former employee who is or may become eligible to receive a benefit under an ERISA plan.

See 29 U.S.C. § 1002(7). The term “beneficiary” means a person who is or may become

entitled to receive a benefit under an ERISA plan. See 29 U.S.C. § 1002(8).

In this case, Plaintiffs were not Plan participants or beneficiaries when they requested

Plan documents in April 2002 because their rights to severance benefits ended when the Plan

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 The Court disagrees with Defendant’s contention that Plaintiffs lacked standing to

bring this claim. See Doc. #48 at 12-13. The Court concludes that at the time Plaintiffs filed

the second amended complaint they had a colorable claim that they were participants in the

Severance Plan. See Boettcher v. Sec. of Health & Human Servs., 759 F.2d 719, 722 (9th

Cir. 1985) (“[W]e cannot say that the challenge Boettcher raises is wholly insubstantial,

immaterial, or frivolous. We find the claim colorable, but ultimately incorrect.”).

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was lawfully terminated on December 31, 2001. Defendant thus had no statutory obligation

to comply with Plaintiffs’ requests for Plan documents. See 29 U.S.C. §§ 1024(b)(4),

1132(c)(1). The Court will grant Defendant’s motion for summary judgment with respect

to the claim that Defendant failed to furnish Plan documents. See Doc. #13 ¶ 63.2

 As

explained in the following section, this grant does not include Plaintiffs’ claim for failure to

notify them of the Plan’s termination.

II. Defendant’s Motion to Strike.

Plaintiffs argue in their reply that Defendant is not entitled to summary judgment on

the third claim for relief because Defendant did not give Plaintiffs notice that the Severance

Plan had been terminated. Doc. #59 at 8-9 (citing Peralta v. Hispanic Bus., Inc., 419 F.3d

1064, 1072 (9th Cir. 2005)); see Doc. #56 at 4 n.2. Defendant argues in its motion to strike

that the Court should reject this argument because Plaintiffs have not pled a claim that

Defendant failed to notify them of the Plan’s termination. Doc. #61 at 3-4.

The “Defendant’s Breach” section of Plaintiffs’ second amended complaint alleges

that Defendant “unilaterally reduced the right to Severance Pay enjoyed by the Plaintiffs

without providing them notice[.]” Id. ¶ 31 (emphasis added). The third claim for relief then

alleges that Defendant violated 29 U.S.C. § 1024 by failing to “furnish certain additional

information to . . . Plaintiffs regarding the Severance Plan.” Doc. #13 ¶¶ 63-64. These

allegations of a failure-to-notify claim are minimal to be sure, but the notice-pleading

requirements of the Federal Rules of Civil Procedure call for only “a short and plain

statement of the claim.” Fed. R. Civ. P. 8(a)(2). The Court concludes that Plaintiffs have

sufficiently pled a failure-to-notify claim under 29 U.S.C. § 1024. See Porter v. Jones, 319

F.3d 483, 494 (9th Cir. 2003) (“[A] complaint generally must satisfy only the minimal notice

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pleading requirements of Rule 8(a)(2).”). The Court accordingly will deny Defendant’s

motion to strike.

The Court agrees, however, with Defendant’s argument that Plaintiffs’ reliance on

Peralta is misplaced. See Doc. #61 at 4. The Ninth Circuit held in Peralta that a plan

administrator’s failure to timely notify the plaintiff of the plan’s termination violated the

administrator’s fiduciary duties under 29 U.S.C. § 1104. 419 F.3d at 1073. Plaintiffs have

not alleged a breach of fiduciary duty claim in this case. See Doc. #13; see also Peralta, 419

F.3d at 1071 (stating that ERISA imposes both fiduciary duties and reporting and disclosure

obligations on plan administrators and that “[t]he reporting and disclosure provisions, see 29

U.S.C. §§ 1021-1031, are set forth separately from the fiduciary duty provisions, see 29

U.S.C. §§ 1101-1114”). To the extent Plaintiffs have asserted a claim for failure to notify,

it is a claim only under 29 U.S.C. § 1024. 

IT IS ORDERED:

1. Defendant Phelps Dodge Miami, Inc.’s motion for summary judgment

(Doc. #48) is granted.

2. Plaintiffs’ cross-motion for summary judgment regarding liability (Doc. #55)

is denied.

3. Defendant Phelps Dodge Miami, Inc.’s motion to strike Plaintiffs’ reply

and supplemental counter statement of undisputed facts (Doc. #61) is denied.

4. A status conference will be held on April 28, 2006 at 3:30 p.m. to discuss the

litigation schedule for the remainder of this case.

DATED this 14th day of April, 2006.

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