Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca5-09-20131/USCOURTS-ca5-09-20131-0/pdf.json

Parties Involved:
Committee of the United Way of the Texas Gulf Coast Cash Balance Plan
Appellee
Stanley Rosenblatt
Appellant
United Way of Greater Houston
Appellee
United Way of the Texas Gulf Coast Cash Balance Plan
Appellee

Document Text:

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 09-20131

STANLEY ROSENBLATT

Plaintiff - Appellant

v.

UNITED WAY OF GREATER HOUSTON; UNITED WAY OF THE TEXAS

GULF COAST CASH BALANCE PLAN; COMMITTEE OF THE UNITED WAY

OF THE TEXAS GULF COAST CASH BALANCE PLAN

Defendants - Appellees

Appeal from the United States District Court

for the Southern District of Texas

Before HIGGINBOTHAM, WIENER, and GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Stanley Rosenblatt appeals the district court’s dismissal of his lawsuit

alleging claims under the Employee Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. § 1001, et seq. For the reasons stated below, we AFFIRM

the judgment of the district court in favor of defendants United Way of Greater

Houston, United Way of the Texas Gulf Coast Cash Balance Plan, and

Committee of the United Way of the Texas Gulf Coast Cash Balance Plan

(collectively, “United Way”).

United States Court of Appeals

Fifth Circuit

F I L E D

May 21, 2010

Lyle W. Cayce

Clerk

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I

Rosenblatt joined the staff of the Jewish Community Center (“JCC”) in

1974, at the age of thirty-three, and continues to work there to this day. As a

JCC employee, Rosenblatt became a participant in United Way’s pension plan

system (the “Plan”) under which he earned a retirement annuity, payable to him

after he reached his “normal retirement age” of sixty-five. The Plan was run as

a traditional defined benefit plan, meaning that Rosenblatt accrued an increase

in his annuity, based on a specified formula according to his length of service,

that would be distributed to him on retirement.

In 1996, United Way amended the Plan in order to alleviate a large

funding deficit, redefining it as a cash balance plan rather than a traditional

defined benefit plan. Under the amended 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 would be increased by an “interest credit”

(interest earned on a participant’s account balance) and a “contribution credit”

(a percentage of the participant’s salary), as determined by the Plan’s formula

in accordance with its terms. The Plan also provided an early retirement benefit

which would pay the sum of the benefit earned under the traditional defined

benefit plan plus whatever subsequent contribution credits a participant earned,

if he retired prior to age sixty-five. Rosenblatt’s opening balance under the cash

balance plan was a retirement annuity of $2833 per month, the amount of his

accrued benefit under the former Plan as of December 31, 1995. 

After switching to the cash balance Plan, United Way continued to send

Rosenblatt a benefits statement indicating that interest credits and contribution

credits were being added to his account. Under the terms of a cash balance plan,

an “account” is notional and does not involve an actual cash deposit allocated to

an employee. The credits in a participant’s account reflect bookkeeping entries

that track the growth of accrued benefits redeemable by the participant upon

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No. 09-20131

 It is unclear to us exactly why United Way failed to back up its interest and 1

contribution credits with actual payments. Rosenblatt alleges that these credits “were

actually applied to the funding deficit, i.e., to pay for a benefit he had already earned in 1995.”

United Way contends that this interpretation “demonstrates a complete lack of understanding

of the nature of cash balance plans,” but does not offer any reason, beyond United Way’s

general Plan funding shortfall, for why Rosenblatt’s notional credits did not result in any

benefit accrual from 1995 to 2005.

 Rosenblatt’s complaint also alleged a violation of the Age Discrimination in 2

Employment Act (“ADEA”), 29 U.S.C. § 621(a)(1), (a)(2) & (f). The district court dismissed this

claim and Rosenblatt does not appeal the dismissal.

3

retirement. However, ten years after United Way’s switch to the cash balance

plan, Rosenblatt discovered that he had not actually accrued any additional

benefit since December 31, 1995. The amended Plan ultimately failed to 1

alleviate the costs and investment risks that precipitated the switch to a cash

balance plan, and United Way froze all accruals currently in the pension system

in 2004. Consequently, Rosenblatt’s annuity was permanently frozen at $2833

per month.

Rosenblatt filed suit against United Way under ERISA, asserting, inter

alia, that the net effect and intent of the plan conversion was to shift the burden

of funding the Plan’s deficit to older employees, like Rosenblatt, who had earned

substantial benefits through longer service. Rosenblatt also alleged errors in 2

the actuarial computation of his benefit, reporting and disclosure violations, and

violations of ERISA’s anti-cutback rule. United Way moved to dismiss pursuant

to FED. R. CIV. P. 12(b)(6). The district court granted the motions to dismiss.

Rosenblatt subsequently filed a motion to alter or amend the judgment pursuant

to FED. R. CIV. P. 59, seeking leave to amend his complaint. The district court

denied this motion, and the instant appeal followed.

II

On appeal, Rosenblatt argues only that the district court erred in

dismissing his ERISA claims for actuarial errors, disclosure violations, and

violation of the anti-cutback rule. He abandons his claim that the plan

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conversion itself was discriminatory against older workers, in violation of ERISA

§ 204(b)(1)(H)(i), 29 U.S.C. § 1054(b)(1)(H)(i). 

We review de novo a district court’s dismissal for failure to state a claim

under FED. R. CIV. P. 12(b)(6). Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.

2007). In considering whether dismissal was appropriate, we must accept as

true all well-pleaded facts. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996).

“To survive a Rule 12(b)(6) motion to dismiss, a complaint ‘does not need detailed

factual allegations,’ but must provide the plaintiff’s grounds for entitlement to

relief))including factual allegations that when assumed to be true ‘raise a right

to relief above the speculative level.’” Cuvillier, 503 F.3d at 401 (quoting Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

Rosenblatt contends that the district court erroneously dismissed his claim

for actuarial errors, directing us to Paragraph 21 of his complaint: 

(a) miscalculation of the social security wage base, (b) incorrect

application of a pre-retirement mortality assumption, (c) use of an

incorrect post-retirement mortality assumption, (d) a series of errors

caused by failure to apply the Plan’s definition of “Prior Plan

Account,” and a resulting error in the “interest credit” applied to

Rosenblatt’s account.

Rosenblatt claims that United Way’s motion to dismiss makes no mention of

these claims, nor does the district court’s memorandum order discuss them in

any detail. 

We must note at the outset that of the twenty-two paragraphs of factual

allegations in the complaint, only Paragraph 21 directed United Way and the

court to the actuarial errors, disclosure violations, and violation of the anticutback rule that Rosenblatt now purports to assert. The rest of his complaint

was geared toward his now-abandoned argument that the conversion of the Plan

from a traditional defined benefit plan to a cash balance plan violated ERISA.

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Rosenblatt himself acknowledges that an actuarial error in computing

benefits must be brought under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B),

but Rosenblatt does not cite this ERISA provision among the numerous

provisions in his “Claims” section. Indeed, any mention of “actuarial error” in

Rosenblatt’s complaint appears to be directed toward supporting his claim that

the cash benefit plan discriminates against workers on the basis of their age, a

claim which five of our sister circuits have rejected, and which Rosenblatt

concedes he has abandoned. See Hurlic v. S. Cal. Gas Co., 539 F.3d 1024 (9th

Cir. 2008); Hirt v. Equitable Ret. Plan for Employees, Managers & Agents, 533

F.3d 102 (2d Cir. 2008); Register v. PNC Fin. Servs. Group, Inc., 477 F.3d 56 (3d

Cir. 2007); Drutis v. Rand McNally & Co., 499 F.3d 608 (6th Cir. 2007); Cooper

v. IBM Pers. Pension Plan, 457 F.3d 636, 639 (7th Cir. 2006). 

In his pleading, Rosenblatt disclosed neither a claim of error nor how any

errors affected his retirement benefits. “While a complaint attacked by a Rule

12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s

obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more

than labels and conclusions . . . .” Twombly, 550 U.S. at 555 (citations omitted)

(quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). Rosenblatt cannot fault

either United Way or the district court for failing to address a “claim” which he

inadequately pled.

Rosenblatt also contends that the district court erroneously dismissed his

claim for notice and disclosure violations. Rosenblatt’s complaint states in a

conclusory fashion, “Defendants did not provide an appropriate notice of a

reduction in benefit accruals.” Rosenblatt argues that he did not receive notice

that the rate of his future benefit accruals would be zero, and that in fact he

received information implying his benefits were increasing. Pursuant to ERISA

§ 204(h), 29 U.S.C. § 1054(h), a pension plan may not be amended so as to reduce

the rate of benefit accruals unless the administrator provides notice to each plan

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participant. However, while Rosenblatt alleges that he did not receive

“appropriate notice” of a reduction in benefit accruals, he does not allege that he

failed to receive any notice of a potential reduction, nor does he specify what an

“appropriate notice” would have consisted of. Rosenblatt also alleges that his

statements “consistently conveyed the impression that benefits were being

increased each year by contributions,” but he does not specify how this

“impression” was conveyed. Indeed, nowhere in his complaint does Rosenblatt

contend that United Way failed to provide him with any statements or notice of

amendments to or potential reductions in his benefit accruals under the Plan.

Rosenblatt nevertheless contends that failure to disclose “wear-away” in

a 204(h) notice is impermissible under ERISA. See Hurlic, 539 F.3d at 1038–39.

However, nowhere in Rosenblatt’s complaint does he even mention the term

“wear-away,” referring to a period of time during which a cash balance plan

participant accrues benefits at a rate of zero percent because the cash balance

formula benefits exceed the participant’s pre-conversion formula benefits.

Without setting forth a factual basis for an allegation that he failed to receive

notice of any potential zero-growth period in his benefit accrual, Rosenblatt fails

to present a claim for a notice violation on these grounds. Accordingly, the

district court did not err in dismissing this claim.

Finally, Rosenblatt argues that the district court improperly dismissed his

“cut-back” claim. ERISA forbids reduction of an accrued benefit “on account of

any increase in his age or service.” 29 U.S.C. § 1054(b)(1)(G). Rosenblatt

contends that his accrued benefit had been larger, but had impermissibly been

reduced as a result of his turning sixty-five years old. Rosenblatt points to the

summary judgment decision in Humphrey v. United Way of the Texas Gulf Coast,

590 F. Supp. 2d 837 (S.D. Tex. 2008), arguing that its holding required the

instant Plan to change the method by which it calculated early retirement

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benefits because Rosenblatt’s benefits, as they currently stand, are less than the

amount Humphrey mandates. 

However, the holding in Humphrey concerned benefits available to

employees eligible for early retirement, a class to which Rosenblatt does not

belong: he has already passed the early retirement age of 65. See id. at 843

(excluding from the certified class of plaintiffs “active or former [Plan]

Participants who accrued benefits under the two Plans but who are no longer

eligible to elect an ERP [(‘Early Retirement Pension’)]” and “Participants who

have received either a Normal Retirement Pension or a Late Retirement

Pension”). Rosenblatt argues that he need not have actually taken early

retirement in order to assert his claim, and that any reduction in accrued

benefits under ERISA is actionable. This argument is without merit: under the

cash benefit plan, benefit accruals are illusory until the time they are claimed.

Rosenblatt is without standing to contest a diminishment of his ERP once he is

past the age to claim this benefit. The Humphrey court’s explicit exclusion of

plaintiffs similarly situated to Rosenblatt supports this conclusion. Thus, the

holding in Humphrey, without anything else in support, does not suggest that

Rosenblatt has a cause of action that he can assert regarding a diminished ERP

on execution of the Plan. Furthermore, Rosenblatt’s complaint does not indicate

that his previously accrued benefits had diminished in any way, only that he had

not received properly calculated benefit accruals since the conversion of the plan.

Accordingly, Rosenblatt has not adequately stated a claim for relief on his “cutback” claim, and the district court did not err in dismissing his complaint for

failure to state a claim.

III

Rosenblatt argues that the district court erred by refusing to amend the

judgment pursuant to FED. R. CIV. P. 59(e) to permit him to file an amended

complaint emphasizing, inter alia, how the Plan’s reduction in his accrued

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benefit violates ERISA §§ 204(b)(1)(G) & (b)(1)(H), 29 U.S.C. §§ 1054(b)(1)(G) &

(b)(1)(H). We review a denial of a Rule 59(e) motion for abuse of discretion.

Rosenzweig v. Azurix Corp., 332 F.3d 854, 864 (5th Cir. 2003). “[A] motion to

alter or amend the judgment under Rule 59(e) ‘must clearly establish either a

manifest error of law or fact or must present newly discovered evidence’ and

‘cannot be used to raise arguments which could, and should, have been made

before the judgment issued.’” Id. (quoting Simon v. United States, 891 F.2d

1154, 1159 (5th Cir. 1990)). 

However, when the underlying action is dismissed with prejudice, we

review the denial of the Rule 59(e) motion with “‘the same considerations

controlling the exercise of discretion under rule 15(a),’” which permits a plaintiff

to amend the complaint with the permission of the district court. Id. (quoting

Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597 (5th Cir. 1981)). Denial of

a motion to amend is warranted for “‘undue delay, bad faith or dilatory motive

on the part of the movant, repeated failure to cure deficiencies by amendments

previously allowed, undue prejudice to the opposing party by virtue of the

allowance of the amendment, [and] futility of the amendment.’” Id. (quoting

Foman v. Davis, 371 U.S. 178, 182 (1962)). 

Rosenblatt contends that there is no record evidence to support the district

court’s refusal to permit him to amend his complaint. He points out that he had

not previously sought leave to amend and that his proposed amended complaint

“simply eliminates the age discrimination claims and pleads additional factual

details in support of the remaining ERISA claims.” However, throughout the

pendency of the motions to dismiss his case, Rosenblatt urged the sufficiency of

his complaint and did not seek leave to amend, despite awareness of its potential

deficiencies. His primary argument was that converting the Plan from a

traditional defined benefit plan to a cash balance plan violated ERISA and the

ADEA, an argument that the district court and numerous other courts of appeals

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have rejected. Rosenblatt’s request now to amend, after his case has been

dismissed on his now-abandoned conversion claim theory, “rings hollow in light

of h[is] failure to amend h[is] complaint as a matter of right and h[is] failure to

furnish the district court with a proposed amendment” while the motions to

dismiss were pending. Spiller v. City of Tex. City, 130 F.3d 162, 167 (5th Cir.

1997); see also Babb v. Dorman, 33 F.3d 472, 479 (5th Cir. 1994). 

Furthermore, “[i]n cases where a party seeks to amend [his] complaint

after entry of judgment, we have consistently upheld the denial of leave to

amend where the party seeking to amend has not clearly established that he

could not reasonably have raised the new matter prior to the trial court’s merits

ruling.” Vielma v. Eureka Co., 218 F.3d 458, 468 (5th Cir. 2000) (internal

quotation marks and citation omitted). The facts Rosenblatt seeks to add to his

complaint now were available to him previously and he has not shown any

reason, other than a misguided attempt at strategy, why he failed to plead them

before. Indeed, Rosenblatt concedes as much in his brief, acknowledging that he

“had been aware of some additional facts” at the time he pleaded his original

complaint. Accordingly, the district court did not abuse its discretion in denying

Rosenblatt’s motion to amend his complaint.

IV

For the foregoing reasons, we AFFIRM.

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