The other request for information--the letter from Bell asking whether IBM intended to
disburse the proceeds of the policy--can only be loosely described as a request for information
and certainly is not the kind of information ERISA mandates plan administrators provide, and
thus Rosemary’s claim falters here as well. See, e.g., Baxter v. Northwest Airlines, Inc., No. 96
C 2060, 1998 U.S, Dist. LEXIS 14358, at *14 (N.D. Ill. Sept. 3, 1998) (citing Kleinhans v. Lisle
Sav. Profit Sharing Trust, 810 F.2d 618, 621-23 (7th Cir. 1987)) (“[A] demand for benefits does
not constitute a ‘request’ for information that gives rise to liability .. . should the administrator
fail to respond.”).

Further, the undisputed facts in the record show that on October 16, 2000, the IBM
HRSC employee responsible for the administration of Patrick’s benefits left Bell a message
stating that the benefits had already been paid out to Jennifer and Jeffrey and noted that the
Designation of Beneficiary Form previously submitted was invalid for the reasons stated in its
August 29, 2000 communication, and IBM thus had not approved the change. (Def.’s LR
56.1(a)(3) | 108.) Thus, even if the October 11 letter were sufficient to trigger IBM’s obligation
to respond under section 1132(c), which it was not, IBM responded within the thirty-day time
limit as required under section 1132(c). Accordingly, the Court holds that Rosemary has failed
to establish a triable issue as to a material fact regarding her breach of fiduciary duty claim for

IBM’s purported failure to respond.

19


auditing procedures that resulted in the rejection of the new Designation of Beneficiary Form
Patrick had submitted were not arbitrary or capricious. See, e.g., Jones v. Local 705 Int'l Bhd. of
Teamsters Pension Fund, No. 00 C 1157, 2002 U.S. Dist LEXIS 7715, at *10 (N.D. Ill. Apr. 25,
2002) (Pension Fund’s actions were not arbitrary and capricious where it required proof of age in
certain forms, and deceased did not provide that proof). These actions were the routine
procedures of a human resources service center that receives, on average, between 1,000 and
4,000 Designation of Beneficiary Forms a month. (Def.’s LR 56.1(a)(3) 4 59.) At the time
Patrick sent in the new Designation of Beneficiary Form, he was on leave for a medical
disability and so eligible for only the group life insurance and not travel accident insurance.
Rosemary essentially claims that because Patrick was eligible for group life insurance only at the
time he mailed in his form, he should not have been required to check a box because IBM should
have known or had reason to know that as he was only eligible for one plan on the form. This
line of reasoning is undermined by the sheer size of the IBM corporation and the amount of
Designation of Beneficiary Forms processed by its HRSC in a given month. As the procedures
in place to handle this volume of forms could not be characterized as random or unpredictable,
the ultimate rejection of the form, which failed to conform to the explicit instructions for
completion, cannot itself be labeled arbitrary or capricious.

IBM cannot be said to have breached its fiduciary duty either because it was properly
managing and administering the Plan in this instance. Patrick first requested new Designation of
Beneficiary Forms for his group life insurance policy on June 6. They were mailed by IBM’s
HRSC the following day. The instructions on this form state, in all capital letters no less, that
the employee must indicate whether the designation of the beneficiary is for the group life
insurance policy only, travel accident policy only, or both policies. The form states that changes

13


insurance policy, IBM’s HRSC requested a copy of the most recent, accepted beneficiary form
from Prudential. (/d. 74.) The form on file with Prudential indicated that Jennifer and Jeffrey
were the beneficiaries of Patrick’s group life insurance policy. (Id. 175.) Rosemary was the
beneficiary of record of all of Patrick’s other benefits. (/d.) On August 21, the following day,
IBM’s HRSC sent Rosemary a Benefits Statement as well as a letter asking Rosemary to call
with any questions she had regarding the statement and provided telephone numbers for this
purpose. (/d. § 78.) The Benefits Statement itself further stated that before payment could be
made, additional information would have to be provided. (Jd. 1 79.)

A month later, on September 22, Rosemary called Bell to tell him that she had received
the Benefits Statement. (Id. § 80.) Bell’s time sheet indicates that he spoke with Rosemary
“regarding documents,” but he does not remember whether Rosemary instructed him to find out
what had happened, as Rosemary claims. (/d.) In any case, neither Bell nor Rosemary contacted
IBM at that time regarding the Benefits Statement listing Jennifer and Jeffrey as the beneficiaries
of their father’s group life insurance policy. (/d. 481.) Rosemary claims to have called IBM on
numerous occasions, including on or about October 3, to tell IBM that she was the group life
insurance beneficiary and that Bell sent IBM a letter on October 11. (/d.; Pl’s. LR 56.1(b)(3)(A)
q81.)

In the meantime, however, on September 27, Rosemary and Jennifer had met at the
Gassners’ condo in order to review Patrick’s affairs. (Def.’s LR 56.1(a)(3) 82.) Rosemary told
Jennifer that the Benefits Statement was wrong and that she was meant to be the beneficiary of
Patrick’s group life insurance policy, rather than Jennifer and Jeffrey. (/d. J 83.) Nevertheless,
Rosemary accompanied Jennifer to the building’s office to make copies of the Benefits
Statement. (/d. | 84.) Jennifer called an HRSC employee responsible for the administration of

4


CONCLUSION

For the reasons provided in this Memorandum Opinion and Order, the Court grants
IBM’s Motion for Summary Judgment [63-1]. IBM is hereby dismissed as a defendant, and
IBM?’s third-party complaint is dismissed as moot. To preserve scarce judicial resources, the
Court strikes without prejudice Rosemary’s motion to dismiss the first amended “counterclaim”
of third-party defendants [52-1] and the third-party defendants’ motion for partial summary
judgment [54-1]. Given the facts and issues in this case, the Court, in its discretion to control its
own docket, will first rule on Prudential Insurance Co.’s liability before addressing any claims of
or against third-party defendants. Prudential’s motion for summary judgment is due three weeks
from the date of this opinion; Rosemary’s response is due three weeks thereafter; Prudential’s

reply is due two weeks thereafter.

SO ORDERED ENTERED: Wf 7/ of

HON. RONALD A. GUZMAN
United States Judge

20


participant and beneficiaries which, to the best of IBM’s knowledge in this case with regard to
the plan at issue, were Patrick, Jennifer, and Jeffrey. Rosemary was not the named beneficiary
of Patrick’s group life insurance policy, and IBM was entirely unaware of the disagreement
between Rosemary and Jennifer regarding the appropriate beneficiary. Rosemary, it seems,
would ask the Court to hold that the new Designation of Beneficiary Form sent to the HRSC,
even if it was incomplete, indicated Patrick’s intentions sufficiently such that no further follow-
up by her, or anyone on her behalf, was required. IBM’s failure to make such an inference was
neither arbitrary or capricious conduct nor a breach of fiduciary duty. It may very well be that
Patrick wanted Rosemary named as the beneficiary of his life insurance policy, but given the
undisputed facts in the record and reading al] disputed facts in Rosemary’s favor, she has failed
to establish a genuine issue as to a material fact regarding whether IBM breached its fiduciary
duty when it did not advise Prudential of the rejected designation of beneficiary form, advised
Prudential to disburse the group life insurance policy proceeds to Jennifer and Jeffrey, and

allowed Prudential to disburse the proceeds.

Vv. Failing To Provide Plan Information When Requested

ERISA provides that plan administrators may be fined for failing to provide beneficiaries
information when requested. 29 U.S.C. § 1132(c); 29 U.S.C. § 1132(a)(1)(A). Sections
1024(b)(4) and 1025(a) require administrators to furnish certain information, namely summary
plan descriptions, annual reports, and total benefits accrued, only upon written request. “[A]s a
matter of law, a party cannot claim a breach of fiduciary duty based on a failure to disclose when
the statutory requirements for disclosure are met.” Zych v. Goodheart-Willcox Co., Inc., No. 94
C 6943, 1995 WL 417539, at *6 (N.D. Ill. July 12, 1995).

17


Under ERISA, fiduciaries are not only those named as such by a plan, but also any entity
who exercises discretionary control or authority over the plan’s management, administration, or
assets. Mertens, 508 U.S. at 251; 29 U.S.C. § 1102(a); 29 U.S.C. § 1002(21)(A). In addition to
requiring a fiduciary to act solely in the interest of the plan participants and beneficiaries, ERISA
assigns fiduciaries more detailed duties and responsibilities, including “the proper management,
administration, and investment of [plan] assets; the maintenance of proper records; the disclosure
of specified information; and the avoidance of conflicts of interest.” Mertens, 508 U.S. at 251;
see Russell, 473 U.S. at 142-43; 29 U.S.C. § 1104(a).

Rosemary maintains that IBM breached its fiduciary duty by: (1) rejecting the new
Designation of Beneficiary Form; (2) failing to forward notice of this rejection to Bell or to
Patrick at his last known residence at Northwestern Memorial Hospital; (3) failing to advise
Prudential of the substantially compliant, but ultimately rejected, Designation of Beneficiary
Form, advising Prudential to pay the benefit proceeds to Jennifer and Jeffrey instead of
Rosemary, and allowing Prudential to disburse the proceeds; and (4) failing to provide plan
information when requested. The Court will consider each of these alleged failings both as
breach of fiduciary duty claims and denial of benefits claims below.

However, when casting Rosemary’s complaint as a denial of benefits claim, the Court
must first contend, as a threshold matter, with IBM’s argument that Rosemary’s claim fails first
as a matter of law because she failed to name the Group Life Insurance Plan as a defendant.
Generally, in this circuit, the proper defendant in an ERISA suit to recover benefits is a plan
itself, not an employer. Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1490 (7th Cir.
1996); 29 U.S.C. § 1132(4)(2). An exception to this general rule exists, however, when a plan
and an employer are closely intertwined. See, e.g., Mein v. Carus Corp., 241 F.3d 581, 585 (7th

9



benefits left Bell a message stating that the benefits had already been paid out to Jennifer and
Jeffrey and noted that the attached form was invalid because it had not been signed or stamped
by IBM, a fact of which Bell was, or should have been, aware. (Jd. { 108.) Bell does not
remember listening to this message, but he admits that he sometimes deletes voice-mail
messages without listening to them. (/d.) The Court notes here that on the same day Rosemary
brought her action against IBM, she also brought a malpractice suit against Bell, alleging that as
a result of Bell’s failures, the group life insurance policy benefits were mistakenly paid to

Jennifer and Jeffrey, rather than Rosemary. (/d. § 24.)

DISCUSSION

Rosemary has framed her claim as a breach of fiduciary duty claim. IBM, however,
maintains that Rosemary’s claim should in fact be cast as a denial of benefits claim and urges
this Court to treat it as such. No matter how it is viewed, however, Rosemary’s claim fails. The
Court will analyze it first as a breach of fiduciary duty claim as Rosemary presented it and then
as a denial of benefits claim as IBM advocates.

On a motion for summary judgment, the Court considers all of the moving papers with
all reasonable inferences drawn in favor of the non-moving party and all factual disputes
resolved in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S, 242, 247
(1986). To overcome a motion for summary judgment, the non-moving party cannot simply
allege the existence of a factual dispute. Id. at 248. Instead, the non-moving party must set forth
admissible facts which demonstrate that there is a genuine issue of material fact whose
resolution requires a trial. Jd. Summary judgment is appropriate when a reasonable finder of
fact could not find in favor of the non-moving party. Matsushita Elec. Indus. Co. vy. Zenith

6


her father’s policies stating that she and her brother were sending the information necessary to
receive payment of her father’s group life insurance policy, which she did the next day. Ud. 4
87, 90.) Jennifer did not inform IBM of the dispute between herself and Rosemary regarding the
intended beneficiary of Patrick’s group life insurance policy. Ud. { 91.) Jennifer also did not
inform Rosemary that she was sending the additional requested information necessary to obtain
payment of the benefits to herself and her brother. (Id.) On October 2, a day before Rosemary
called IBM’s HRSC, it received the additional information provided by Jennifer, and in
accordance with its procedure, it sent a Proof of Death Statement to Prudential so the group life
insurance checks could be processed. (Jd. 92.) Thus, at the time that IBM’s HRSC sent the
requisite information to Prudential in order to release the funds to Jennifer and Jeffrey, it was
unaware of a dispute regarding the intended beneficiary of the group life insurance policy. (Id. 4
95.) Rosemary apparently thought Bell was doing so, but he did not contact the HRSC until
October 11, (/d.) Rosemary herself contacted the HRSC on the day following its delivery of
the information to Prudential releasing the funds to Jennifer and Jeffrey. did.)

On October 9, Prudential wrote checks to Jennifer and Jeffrey in the amount of
$132,481.67 each, the amount each was owed on their father’s group life insurance policy. (Jd. §
110.) Jennifer received her check sometime after October 13 and informed Rosemary of this
fact. (Id. 4106.) Although Rosemary told Jennifer that the money was supposed to have been
hers, she made no effort to block either Jennifer or Jeffrey from spending it. (Jd. J 109.)

On October 11, Bell sent a letter to IBM asking whether it would be disbursing proceeds
from Patrick’s group fife insurance policy pursuant to the Designation of Beneficiary Form
“filed previously with IBM.” Gd. { 103.) Attached to the letter was the already rejected form.
(d.) On October 16, the IBM HRSC employee responsible for the administration of Patrick’s

5


Rosemary’s Amended Complaint alleged four requests for information to which IBM.
allegedly failed to respond: (1) the September 20, 2000 telephoned request that IBM pay the
proceeds of Patrick’s Group Life Insurance plan to Rosemary; (2) the October 3, 2000
telephoned request that IBM pay the proceeds of Patrick’s Group Life Insurance plan to
Rosemary; (3) the October 11, 2000 letter from Bell asking whether IBM intended to disburse
any of the proceeds of Patrick’s group life insurance policy; and (4) the January 2001 request via
telephone for information regarding the plan’s benefits. The statements of fact before the Court
on summary judgment, however, fail to establish that on September 20, 2000 Rosemary
requested that IBM pay the proceeds of Patrick’s Group Life Insurance plan to her and merely
show that on that date she informed IBM’s HRSC of Patrick’s death. (Def.’s LR 56.1(a)(3) J
71.) The statements of fact also fail to establish that Rosemary requested such proceeds on
October 3, 2000 and merely state that neither party noted anything about the beneficiaries being
incorrect at the time of the conversation. (Jd. § 99.) The statements of fact are devoid of any
facts relating to a January 2001 telephone request for information.

Even if such alleged failures to respond were properly supported by the record, which
they are not, the fact that three of these requests were made by telephone is fatal. See, eg.
Anderson v. Mortell, 722 F. Supp. 462, 473 (N.D. Ill. 1989) (“[I]t is undisputed that plaintiffs did
not make any written request upon the Plan administrator for the documents they now claim they
had a right to review. Therefore, plaintiffs cannot recover . . . .”); Kamler v. H/N Telecomm.
Sery., Inc., No. 00 C 4024, 2001 U.S. Dist. LEXIS 21328, at *25 (N.D. IIL. June 25, 2001) (“A
participant must send a written request to the plan administrator in order to trigger its disclosure

obligations.”).

18


Here, Rosemary asks that IBM be ordered to pay her $265,000 as compensation for
insurance proceeds accrued and unpaid. Because Rosemary is seeking payment to herself, rather
than the group life insurance plan as a whole, her breach of fiduciary duty claim fails under
section 1132(a)(2).

In contrast, section 1132(a)(3) permits individual recovery. This subsection is one of two
“catchall” provisions within section 1132 that provide appropriate equitable relief for any
ERISA violation that is not otherwise adequately remedied by any other subsection of section
1132. Vanity, 516 U.S. at 512. “{A]ppropriate equitable relief” under section 1132(a)(3) has
been limited to traditional equitable remedies such as awarding an injunction or restitution.
Mertens v. Hewitt Assocs., 508 U.S. 248, 255 (1993). Traditional legal remedies, such as money
damages, are not appropriate equitable relief under this subsection. /d. The Supreme Court has
distinguished between ERISA actions seeking equitable relief and those secking legal relief,
stating: “[N]ot all relief falling under the rubric of restitution is available in equity. . . .[F]or
restitution to lie in equity, the action generally must seek not to impose personal liability on the
defendant, but to restore to the plaintiff particular funds or property in the defendant’s
possession.” Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 213-14 (2002).

Defendant argues that Rosemary’s breach of fiduciary duty claim under section
1132(a)(3) fails because: (1) IBM did not breach its fiduciary duty; (2) the remedy Rosemary
seeks is legal, not equitable; and (3) Rosemary seeks a restoration of particular funds that were
never in IBM’s possession, and thus restitution is inappropriate. Because the Court holds that
Rosemary has failed to create a genuine issue as to a material fact regarding whether IBM

breached its fiduciary duty, IBM’s second and third arguments need not be addressed.


Minute Order Form (06/97)

United States District Court, Northern District of Minois

Nam of Assigned Sitting Judge it
Sudge or Magistrate Ronald A. Guzman Other than
\, Judge Assigned Judge
CASE NUMBER 02 C 5985 DATE 9/7/2004
CASE ROSEMARY A. GASSNER vs, INTERNATIONAL BUSINESS MACHINES
TITLE
[In the following box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly
MOTION: the nature of the motion being presented.]
DOCKET ENTRY;
ql) a Filed motion of [ use listing in “Motion” box above.}
(2) oO Brief in support of motion due
QB) o Answer brief to motion due . Reply to answer brief due, .
(4) Oo Ruling/Hearing on set for at
(5) o Status hearing[held/continued to] [set for/re-set for] on set for at
(6) o Pretrial conference{held/continued to] [set for/re-set for] on set for at :
(1) oO Trial[set for/re-set for] on at
(8) a {Bench/Jury trial] [Hearing] held/continued to at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) OLocal Rule 41.1 OOFRCP41(a)(1) O FRCP41(a)(2).
(10) a {Other docket entry] | ENTER MEMORANDUM OPINION AND ORDER: The Court grants IBM’s Motion for
Summary Judgment [63-1]. IBM is hereby dismissed as a defendant, and [BM’s third-party complaint is dismissed as moot.
To preserve scarce judicial resources, the Court strikes without prejudice Rosemary’s motion to dismiss the first amended
“counterclaim” of third-party defendants {52-1] and the third-party defendants’ motion for partial summary judgment (54-1].
Given the facts and issues in this case, the Court, in its discretion to contro! its own docket, will first rule on Prudential
Insurance Co.’s liability before addressing any claims of or against third-party defendants, Prudential’s motion for summary
judgment is due 9/28/04. Rosemary’s response is due 10/19/04 ; Prudentia{’s reply is due 11/2/04.
ay 8 (For further detail see order attached to the original minute order.]
No notices required, advised in open court.
‘No notices required. number of notices
Notices mailed by judge's staff. SEP 0 004
¥ | Notified counsel by telephone. ane 92
Docketing to mail notices, meng LOM i an
Mail AO 450 form.
Copy to judge/magistrate judge, HY = dS 8G. 9
courtroom i 4 date mailed notice
CG deputy’s
initials
Date/time received in
central Clerk's Office rang deputy inal



directed at IBM’s HRSC. Additionally, the Court notes that not only does IBM give short shrift
to its argument that it is not the Plan Administrator in its memorandum in support of its motion
for summary judgment, on the very same page where it makes this argument, it implicitly refers
to IBM as the Plan Administrator. For example, its memorandum states, “The IBM Plan
expressly provides the ‘Plan Administrator [with the] exclusive authority and discretion to
interpret the terms of the benefits plan described herein. Accordingly, this Court should
determine whether /BM’s ‘denial’ of benefits to Rosemary was arbitrary and capricious.”
(Def.’s Mem. Supp. Mot. Summ. J. at 7-8. (emphasis added).) Afterwards, the bulk of the brief
is spent demonstrating how IBM’s actions were not arbitrary or capricious. While pleadings
may not be enough to support a finding that IBM was the Group Life Insurance plan
administrator, the fact that it refers to itself as the Plan Administrator in at least one instance,
that the address for the Plan Administrator was the IBM Human Resources Service Center, and
that some of the language in the Plan suggests that IBM is the plan administrator are enough to
support such a finding. Rosemary’s claim, even if cast as a denial of benefits claim, is thus not
defeated because she failed to name the Group Life Insurance Plan as a defendant.

Instead, Rosemary’s claim, framed as a denial of benefits claim, fails because IBM did
not breach its fiduciary duty. Denial of benefits claims brought under section 1132(a)(1)(B) are
reviewed under the arbitrary and capricious standard of review when a benefit plan gives the
administrator or fiduciary discretion in the award or denial of benefits. Chalmers v. Quaker Oats
Co., 61 F.3d 1340, 1343-44 (7th Cir. 1995) (citing Firestone Tire & Rubber Co. v. Bruch, 489
US. 101, 115 (1989)). The Supreme Court, in announcing this standard of review in Firestone,
used as its model trusts law, and as in trusts law, “the more discretion that is conferred upon the

trustee or fiduciary, the more deference the consequent decision is entitled.” Chalmers, 61 F.3d

11


Cir. 2001) (stating employer and plan were closely intertwined where pronouns “we” and “our”
were used in plan documents and seemed clearly to refer to corporation, not plan; designated
agent for legal process was corporation; and plan trustee with whom plaintiff most often
communicated used corporate stationary indicating he was Vice President of Human Resources);
Riordan vy. Commonwealth Edison Co., 128 F.3d 549, 551 (7th Cir. 1997) (stating employer and
plan were closely intertwined where plan documents refer to corporation and plan nearly
interchangeably and corporation designated itself as plan’s agent for service of process).

Here, certain facts suggest that IBM was not the Plan Administrator. The Plan designates
the Manager of Compensation and Benefits Services, Global Human Resources as the Plan
Administrator. (IBM Ex. 2, I1BM000115.) Additionally, the Plan also states that service of legal
process may be made upon the Plan Administrator, rather than IBM. (/d.) However, other facts
in the case at bar establish that IBM was in fact the Plan Administrator. Despite the Plan’s plain
statement that the Plan Administrator is the Manager of Compensation and Benefits Services,
Global Human Resources, in the same section of the Plan where this statement is made, what
appears to be a chart lists the “Plan Trustee(s), Insurer(s), or Administrators” as “IBM
Corporation and Prudential Ins. Co. of America.” (/d. at IBM000118.) Additionally, this section
of the Plan lists the address of the Office of the Plan Administrator as “IBM Human Resources
Service Center, 3808 Six Forks Road, Raleigh, NC 27609.” (dd. at 13M000115 (emphasis
added).) Further, there are instances when the Plan refers to IBM as if it were the Plan
Administrator. For example, in a section entitled “Designating a Beneficiary” the Plan states, “If
you are in doubt about whom you designated as beneficiary, submit a designation of beneficiary
form. The most recent form received by JBM will always be used to determine beneficiaries.”
(id. at IBM000089 (emphasis added).) All communication by the various Gassners and Bell was

10


Radio Corp., 475 U.S. 574, 587 (1986).

ERISA is a comprehensive statute intended to safeguard the interests of employees and
their beneficiaries in pension and welfare benefit plans. Shaw v. Delta Airlines, Inc., 463 U.S.
85, 90 (1983); see Mass. Mut'l Life Ins. Co. v. Russell, 473 U.S. 134, 140 (1985) (“The floor
debate also reveals that the crucible of congressional concern was misuse and mismanagement of
plan assets by plan administrators and that ERISA was designed to prevent these abuses in the
future.”). To this end, ERISA mandates duties of loyalty and care for fiduciaries, obligating
them to act solely in the interest of the participants and beneficiaries of a plan. 29 U.S.C. §
1104; Anweiler v. Am. Elec. Power Serv. Corp., 3 F.3d 986, 990 (7th Cir. 1993). Accordingly,
the statute also establishes liability for any breach of these duties. 29 U.S.C. § 1104; 29 U.S.C,
§§ 1132(a)(2), (3). Civil actions for ERISA violations are detailed in 29 U.S.C. § 1132 of the
statute. However, claims for breach of fiduciary duty are usually brought under sections
1132(a)(2) and 1132(a)(3). Benjamin y. Marshal P. Morris, Ltd., Profit Sharing Plan & Trust,
No. 97 C 6714, 1998 U.S. Dist. LEXIS 8358, at *11-12 (N.D. Ill. May 19, 1998).

Section 1132(a)(2) does not contemplate individual recovery. Jd. at *13. Instead, it
provides a remedy to a plaintiff only indirectly in that it authorizes claims brought on behalf of a
plan itself. Section 1132(a)(2) is concerned with fiduciary obligations related to a plan's
financial integrity. Vanity Corp. v. Howe, 516 U.S. 489, 512 (1996). Thus, to the extent that a
plaintiff seeks individual recovery on a breach of fiduciary duty claim under section 1132(a)(2),
such recovery is not permitted. Russell, 473 U.S. at 142 (“A fair contextual reading of the
statute makes it abundantly clear that its draftsmen were primarily concerned with the possible
misuse of plan assets, and with remedies that would protect the entire plan, rather than with the
rights of an individual beneficiary.”) (emphasis added).

7


Beneficiary Form that they had received in June. (Id. § 39.) He went back to his office where
his staff at least partially filled out the form and returned to the hospital later that same day, and
Patrick signed the form. (/d.) Having read the instructions on the form, Bell signed it four days
later on August 25 and sent it to IBM on August 28. (/d. {{[ 51, 55.) For reasons which are not
clear, on August 22, Rosemary requested a new Designation of Beneficiary Form which was
mailed to Patrick’s home the following day. (/d. ]§ 45, 50.)

At any rate, the form that was received by IBM failed to pass the routine internal audit to
which all forms are subjected because: (1) Patrick’s signature date was unclear, (2) Bell’s
witness date did not match Patrick’s signature date, and (3) there was no box checked indicating
the plan for which Patrick was trying to change the beneficiary, i.e., the group life insurance
plan, the travel accident plan, or both. (/d. | 63.) Accordingly, IBM rejected the form, and it
mailed the original rejected form, an audit checklist, and a new form back to Patrick’s home on
August 29.

Patrick returned home on August 30, and at some point in the following week, he
apparently received and viewed the August 29 package from IBM’s HRSC. (Id. J 66, 67.) On
three consecutive days beginning August 30, Patrick and Bell discussed what was recorded
variously on Bell’s time sheets as “review [of] . . . IBM follow-up” and “IBM forms.” (/d. { 68.)
Bell cannot remember what they discussed or whether Patrick told him that the Group Life
Insurance plan form had been rejected or whether Patrick wished to send in a new form. (/d.)
IBM was not contacted by anyone connected with this situation until September 20, when
Rosemary called to inform it that on September 12, Patrick had died. (id. 71.)

At this point, an IBM HRSC employee determined who the beneficiaries were with
regard to the plans in which Patrick was a participant. (/d. 73.) In the case of the group life

3


are effective only when the form is received and processed by IBM’s HRSC and that forms
which fail to pass processing will be returned to the employee. When the form Patrick sent in
was rejected in this processing, it was promptly returned to him along with a checklist detailing
the reasons for the rejection and a new form for correct completion the very next day. It cannot
fairly be said that IBM was not acting in the interest of plan participants and beneficiaries when
it so promptly alerted Patrick of the problems with the Designation of Beneficiary Form that had

been mailed to the HRSC by his attorney Bell.

I Failing To Forward Notice of Rejection to Bell or Patrick at His Last Known
Hospital Address

Rosemary makes much of the fact that when IBM returned the rejected Designation of
Beneficiary Form, it did so to Patrick himself, rather than Bell as Bell had requested in his cover
letter accompanying the new Designation of Beneficiary Form. She does not make as much of
the fact that IBM failed to send Patrick the rejected form and associated materials to him at his
last known hospital address. In addition to the fact that IBM was executing routine procedures
in mailing the forms and checklist to Patrick at his home, the undisputed facts make both of
Rosemary’s arguments of no consequence. Patrick returned home on August 30, the day after
IBM’s HRSC had placed the rejected form, new form, and explanatory audit checklist in the
mail to him. He received them and thus, the fact that they were not mailed to him at the hospital
seems not only reasonable, but fortuitous. Upon receiving them, he discussed them on three
consecutive days with Bell and so, again, the fact that the forms and checklist were not mailed to
Bell seems of little ultimate consequence. Furthermore, although Bell could not remember the

content of any of these conversations, the descriptions of them on his time sheets are more

14


IM. Failing To Advise Prudential of Rejected Designation of Beneficiary Form, Advising
Prudential To Disburse the Group Life Insurance Policy Proceeds to Jennifer and
Jeffrey, & Allowing Prudential To Disburse Proceeds
It is undisputed that after IBM mailed the rejected form, a new form, an audit checklist.

and an explanation as to why the originally submitted form had been rejected on August 29, IBM

was not contacted again by anyone in or connected to the Gassner family until September 20,

when Rosemary called the HRSC to inform it of Patrick’s death. HRSC then mailed a Benefits

Statement to Rosemary only, explaining who the beneficiaries of Patrick’s benefits were and

requesting additional information in order to process the disbursement of these benefits, It was

next contacted, by Jennifer, on October 2 when it received the additional information necessary
to process the life insurance benefits claim. Rosemary, apparently, would have IBM extrapolate
her late husband’s intentions and the feud between herself and step-daughter from an incomplete
form purportedly attempting to change the beneficiaries of her late husband’s group life
insurance policy from his children to her. According to Rosemary, had IBM so extrapolated, it
would have been acting reasonably and prudently. The Court disagrees. If such were the case,

Rosemary would have had no reason, upon receiving the Benefits Statement, to have asked Bell

to contact IBM regarding the Benefits Statement because IBM would have already known. In

fact, IBM did not know anything except that Jennifer and Jeffrey were the beneficiaries on file
and that a form to change this circumstance had been rejected and, for whatever reason, never
corrected after IBM sent the rejected form and checklist on August 30, the day after JBM had
received the form from Patrick. Accordingly, it acted neither arbitrarily nor capriciously in
advising Prudential to disburse Patrick’s group life insurance benefits to Jennifer and Jeffrey.
Nor did IBM breach its fiduciary duty in advising Prudential to disburse these monies to
Jennifer and Jeffrey. ERISA requires fiduciaries to act solely in the interest of the plan

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FACTS

The following facts are either undisputed or deemed admitted due to the parties’ failure
to comply with Local Rule 56.1, which this Court strictly enforces. When Patrick began
working for IBM in 1996, he enrolled in IBM’s group life insurance and travel accident
insurance benefit plans, designating his two children, Jennifer and Jeffrey, as the beneficiaries.
(Def.’s LR 56.1(a)(3) 430.) In September 1998, Patrick was diagnosed with end-term liver
disease and stopped actively working for IBM. (/d. { 33.) On June 4, 2000, Patrick and
Rosemary were married. (Id. 36.) Two days later, on June 6, Patrick called IBM’s Human
Resources Service Center (“HRSC”) and requested a new Designation of Beneficiary Form for
his group life insurance and travel accident insurance policies. (/d.) The form at issue is for the
group life insurance policy in the amount of $265,000. (id.) HRSC sent the new form to
Patrick’s home on June 7. (/d.) The instructions on this form, state, in all capital letters,
“INDICATE WHETHER THE DESIGNATION IS FOR IBM GROUP LIFE ONLY, TRAVEL
ACCIDENT ONLY, OR BOTH POLICIES.” (d. 40.) The form warns that changes in the
designation of the beneficiaries of a policy are “effective when the completed form is received
and processed by the HRSC.” (Id.) The form indicates that such processing entails the
successful passage of auditing procedures that include an examination of whether the change
indicated on the form is for one policy or for both and the signature of the witness. (Jd. 941.) A
form that fails this internal audit is returned to the employee. (/d.) One that passes is sent on to
Prudential, the record keeper for IBM’s group life insurance plan. (id. 61.)

Two months later, in August 2000, Patrick was admitted to the hospital. (/d. 38.) On
August 21, Robert S. Bell, an attorney, was called to the hospital and met with Patrick alone to
discuss his wishes regarding his estate. (/d.) The Gassners gave Bell the Designation of

2



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

ROSEMARY A. GASSNER,

4g
Sep ey

Individually, and as Administratrix of I Y
The Estate of PATRICK GASSNER, “Cg
Deceased,
Plaintiffs,
vy. 02 C 5985
INTERNATIONAL BUSINESS Judge Ronald A. Guzman

MACHINES CORP., a New York Corporation,
and PRUDENTIAL INSURANCE OF AMERICA,

Defendants.

INTERNATIONAL BUSINESS
MACHINES CORP., a New York Corporation,

Third-Party Plaintiff,
Vv.

JENNIFER LAURI GASSNER, an individual,
and PATRICK JEFFREY GASSNER, an individual,

eT SS SS SS Seer

Third-Party Defendants.

MEMORANDUM OPINION AND ORDER

Plaintiff Rosemary Gassner (“Rosemary”) has sued International Business Machines
Corp. (“IBM”) for breach of fiduciary duty pursuant to the Employee Retirement and Income
Security Act (“ERISA”), 29 U.S.C. § 1132(a) et seq., as a result of a series of actions that
culminated in the payment of the proceeds of a group life insurance policy held by her husband
and former IBM employee, Patrick C. Gassner, to Patrick’s children, Jennifer Gassner
(“Jennifer”) and Patrick “Jeffrey” Gassner (“Jeffrey”). Before the Court is Defendant IBM’s

Motion for Summary Judgment. For the reasons set forth below, the Court grants the motion.


at 1344, In the instant case, the benefits manual states that, “The Plan Administrator retains
exclusive authority and discretion to interpret the terms of the benefits plans described herein.”
(Def.’s Ex. 2, Summary Pian Description, IBM 000064.) Accordingly, this Court reviews IBM’s
actions, cited by Rosemary in her complaint, to determine if they were arbitrary and capricious.

As stated above, the Court will also consider whether IBM’s conduct breached its fiduciary duty.

L Rejecting the New Designation of Beneficiary Form

The instructions on the new Designation of Beneficiary Form that Patrick received after
his June marriage to Rosemary state, in all capital letters, “INDICATE WHETHER THE
DESIGNATION IS FOR IBM GROUP LIFE ONLY, TRAVEL ACCIDENT ONLY, OR BOTH
POLICIES.” (Def.’s Ex. 8, Designation Form, RG 000001.) The form also states the audit
procedures performed by HRSC after receipt of the form, which include an audit of the
“[i]ndication of [bJeneficiary for one or both policies” and “signature of witness,” and instruct
HRSC personnel to “[rJeturn card to employee if it doesn’t pass audit.” (/d.) Changes in the
designation of the beneficiaries of a policy are “effective when the completed form is received
and processed by the HRSC.” (PI.’s Ex. 4, Designating a Beneficiary Explanation, IBM 000089,
see Def.’s Ex. 8, Designation Form, RG 000001 (stating “[s]ignature of authorized IBM
Representative is required”).) Patrick’s form was rejected by this routine internal audit because
his own signature date was unclear, his witness’ date of signature did not match Patrick’s
signature date, and perhaps most importantly, no box had been checked indicating the plan for
which Patrick was trying to change the beneficiary. IBM’s HRSC mailed this rejected form and
another new form, along with an audit checklist detailing the reasons for the rejection, to
Patrick’s home the day after receiving and rejecting the form he had submitted. The internal

12


helpful and at least somewhat telling: “IBM forms,” “review . .. IBM follow-up.” (Def.’s LR
56.1(a)(3) § 68(a)-(d).) No further action was taken by anyone, however, until September 20 and
in that case, it was Rosemary who acted. Here, the Court notes that Rosemary brought a
malpractice suit against Bell on the same day that she filed this suit against IBM, alleging that as
a result of Bell’s failures, the group life insurance policy benefits were mistakenly paid to
Jennifer and Jeffrey, rather than Rosemary. In doing so, she seems to concede, implicitly, that it
was not IBM’s alleged failures that are to blame for the group life insurance policy proceeds
being paid to Jennifer and Jeffrey, but rather the alleged incompetence of an attorney who has
admitted in a deposition that he sometimes deletes voice mail messages without listening to
them. In any case, regardless of that fact, IBM did not act arbitrarily and capriciously in not
forwarding the rejected form to Bell or, in the alternative, to Patrick’s last known hospital
address, and the fact that the forms and checklist were mailed to Patrick at home is ultimately of
little consequence because Patrick did in fact receive them and apparently spoke to Bell about
them.

Similarly, IBM did not breach its fiduciary duty under ERISA in returning the rejected
Designation of Beneficiary Form to Patrick himself at his home address, rather than at his
hospital address or to his attorney. IBM acted promptly in returning the rejected form and
explanatory checklist to Patrick at home and in any case again, whether the forms were mailed to
Patrick at his last known hospital address or to his attorney is ultimately of no import since

Patrick did in fact receive the rejected form and accompanying checklist.

15