ROBERT J. ARROM, et al.,

Plaintiffs,

v.

BOARD OF TRUSTEES OF THE PEPCO

HOLDINGS, INC., RETIREMENT

PLAN, et al.,

Defendants.

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

 

HONORABLE JOSEPH E. IRENAS

CIVIL ACTION NO. 11-1965

(JEI/JS)

OPINION

APPEARANCES:

O’BRIEN, BELLAND & BUSHINSKY, LLC

By: Stephen J. Bushinsky, Esq.

Mark. E. Belland, Esq. 

1526 Berlin Road

Cherry Hill, NJ 08003

Counsel for Plaintiffs

LITTLER MENDELSON, P.C.

By: Jacqueline K. Hall, Esq.

One Newark Center, 8 Floor th

Newark, NJ 07102

Counsel for Defendants

IRENAS, Senior District Judge:

Plaintiffs initiated this action under the Employee

Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §

1001 et seq., to recover additional pension benefits they were

allegedly deprived of due to a failure to implement an updated

mortality table. Pending before the Court is Defendants’ Motion 1

 The Court exercises subject matter jurisdiction pursuant 1

to 29 U.S.C. § 1331 and § 1367. 

1

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to Dismiss the Complaint. 

I.

As employees of the Atlantic City Electric Company, 

Plaintiffs were eligible to receive retirement benefits under the

Ace Sub-Plan (“the Plan”) sponsored by Pepco Holdings, Inc.,

(“PHI”). (Compl. ¶ 26.) 2

The Pension Protection Act of 2006 (“PPA”), 26 U.S.C. § 430,

mandated two changes to all pension plans including the Plan

effective January 1, 2008. (Id. ¶ 31.) First, the PPA required

the application of an updated mortality table resulting in a

higher base benefit amount for lump sum benefits. 26 U.S.C. §

430(h)(3); see also Compl. ¶¶ 31-32. Second, the PPA added a

corporate bond rate as an option for the interest rate

assumption. 26 U.S.C. § 430(h)(2)(D); see also Compl. ¶¶ 31-32. 

Plaintiffs were notified of these changes by electronic mail sent

on November 19, 2007. (Id. ¶ 34.) 3

The Complaint alleges that in October 2009, union officials

discovered that lump sum benefits after January 1, 2008 had been

calculated using an outdated mortality table. (Id. ¶ 40.) 

According to the Complaint, PHI failed to notify the “Plan

 Provisions generally applicable to the Plan are also 2

contained in the Base Plan Document. (Compl. ¶ 26.)

 According to the Complaint, the use of electronic mail 3

“was not a measure reasonably calculated to ensure actual receipt

by Plaintiffs of these material modifications.” (Compl. ¶ 36.) 

2

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Administrator” of the updated mortality table and the “Plan

Administrator” therefore had not implemented it. The Complaint

does not define the term “Plan Administrator.” Pursuant to

ERISA, Administrator is defined as “the person specifically so

designated by the terms of the instrument under which the plan is

operated.” 29 U.S.C. § 1002(16)(A)(i). According to the Base

Plan Document, the “Plan Administrator” means “the Company,

acting through the Investment Committee and Administrative Board.

. . .” (Sullivan Dec. Ex. A at 14, 16.) The Company is

Defendant PHI. (Id. at i.) Notwithstanding this definition, the

parties use “Plan Administrator” to refer to Vanguard, PHI’s

third-party pension administrator, which is not a Defendant in

this action and is not identified in any of the Plan documents

submitted with the instant Motion. In this Opinion, the Court

will not use the term “Plan Administrator” to refer to Vanguard. 

As a result of Vanguard’s failure to implement the updated

mortality table in 2008, Plan participants who elected to retire

after January 1, 2008 received smaller lump sum benefits than

they were entitled to under the Plan. (Id. ¶ 43.) Defendants

retroactively recalculated the lump sum benefits and provided

additional payments to all participants who retired after January

1, 2008. (Id.)

Plaintiffs allege that they “elected to retire on or about

December 2007 based on the projected calculations of the Plan

3

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Administrator [Vanguard] that Plaintiffs’ 2008 lump sum pension

benefit would be less than the amount they would receive if they

elected to retire in 2007.” (Id. ¶ 48.) The Complaint also 4

alleges that “[w]hether or not Plaintiffs contacted the Plan

Administrator [Vanguard] to ascertain their lump sum pension

benefit, any such contact for this purpose would have been an

exercise in futility since the Plan Administrator [Vanguard]

would not have been able to provide accurate information.” 

(Compl. ¶ 51.) The essence of Plaintiffs’ claims is that they

would have elected to retire after the PPA-mandated changes took

effect on January 1, 2008 had they been correctly advised that

they would receive a significantly larger lump sum pension

benefit at that time. (Id. ¶ 50.) 

After unsuccessfully pursuing administrative remedies under

the Plan, Plaintiffs initiated the instant action in this Court

on April 7, 2011. On July 18, 2011, Defendants moved to dismiss

the Complaint pursuant to Fed. R. Civ. P. 12(b)(6). 

5

 According to the April 21, 2010 claim denial letter, 4

Plaintiffs “requested pension estimates from Vanguard, either

orally or through the Pension Estimator on Vanguard’s website,

for both December 2007 and February 2008.” (Sullivan Dec. Ex.

D.) This fact is not included in the Complaint and it is not

referenced by Plaintiffs in their Opposition papers. 

 Defendants also bring their motion pursuant to Fed. R. 5

Civ. P. 12(b)(1) based on their argument that Plaintiffs lack

standing to assert claims under 29 U.S.C. § 1132(a)(1)(B). 

District courts have exclusive jurisdiction over ERISA actions

commenced by the Secretary of Labor, participants, beneficiaries

or fiduciaries. 29 U.S.C. § 1132(e)(1). Defendants presumably

4

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II.

Federal Rule of Civil Procedure 12(b)(6) provides that a

court may dismiss a complaint “for failure to state a claim upon

which relief can be granted.” In order to survive a motion to

dismiss, a complaint must allege facts that raise a right to

relief above the speculative level. Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007); see also Fed. R. Civ. P.

8(a)(2). 

While a court must accept as true all allegations in the

plaintiff’s complaint, and view them in the light most favorable

to the plaintiff, Phillips v. County of Allegheny, 515 F.3d 224,

231 (3d Cir. 2008), a court is not required to accept sweeping

legal conclusions cast in the form of factual allegations,

unwarranted inferences, or unsupported conclusions. Morse v.

Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). The

complaint must state sufficient facts to show that the legal

allegations are not simply possible, but plausible. Phillips,

515 F.3d at 234. “A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw

bring their motion pursuant to Fed. R. Civ. P. 12(b)(1) because

the Third Circuit has held that “[t]he requirement that the

plaintiff be a plan participant is both a standing and subject

matter jurisdictional requirement.” Miller v. Rite Aid Corp.,

334 F.3d 335, 340 (3d Cir. 2003). However, because the Court

finds that Plaintiffs have standing to assert their claims, and

that this Court has subject matter jurisdiction to consider them,

it will deny Defendants’ Motion pursuant to Fed. R. Civ. P.

12(b)(1). 

5

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the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949

(2009).

When evaluating a Rule 12(b)(6) motion to dismiss, the Court

considers “only the allegations in the complaint, exhibits

attached to the complaint, matters of public record, and

documents that form the basis of a claim.” Lum v. Bank of

America, 361 F.3d 217, 221 n.3 (3d Cir. 2004). A document that

forms the basis of a claim is one that is “integral to or

explicitly relied upon in the complaint.” Id. (quoting In re

Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.

1997)). 

III.

In their Complaint, Plaintiffs advance several theories of

recovery for the harm they allegedly suffered. First, they

assert claims for unpaid pension benefits due under the terms of

the Plan. (Compl. Counts 1, 6.) Second, Plaintiffs assert

breach of fiduciary duty claims based on (1) Defendants’ failure

to disclose information about the updated mortality table to

Plaintiffs and to Vanguard, and (2) Vanguard’s failure to provide

correct information to Plaintiffs about the value of their

benefits in 2007 as compared to 2008. (Compl. Counts 2, 3, 4.) 

Finally, Plaintiffs assert state law claims for negligence and

breach of the duty of good faith and fair dealing.

6

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The Court will first consider each of these theories of

liability. Then, the Court will examine Plaintiffs’ remaining

claims for improper notice of claim denial and for unpaid

vacation and holiday time under the Labor Management Relations

Act, 29 U.S.C. § 185. 

A.

In Counts One and Six, Plaintiffs seek the amount of unpaid

benefits due to them under the terms of the Plan pursuant to 29

U.S.C. § 1132(a)(1)(B), as well as equitable relief under §

1132(a)(3)(B). 

Pursuant to 29 U.S.C. § 1132(a), a participant or

beneficiary may bring a civil action “to recover benefits due to

him under the terms of his plan. . . .” 29 U.S.C. §

1132(a)(1)(B)(emphasis added). However, Plaintiffs are not

seeking benefits under the Plan in effect at the time of their 

retirement in December 2007. Indeed, there is no dispute that

Plaintiffs received all the benefits to which they were entitled

under the Plan in effect in 2007. (See Sullivan Dec. Ex. E at

5.) 

Rather, the Complaint is clear that Plaintiffs’ argument is

that they would have chosen to retire in 2008 had they been

properly advised that their lump sum benefits would be

significantly larger. Thus, Plaintiffs’ claims are not for

unpaid benefits under the Plan, but for breach of fiduciary duty. 

7

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Because Plaintiffs’ claims are not for benefits due under

the terms of the Plan in effect as of their retirement in 2007,

they cannot assert a cause of action under 29 U.S.C. §

1132(a)(1)(B). See Cigna Corp. v. Amara, 131 S.Ct. 1866, 1877 6

(2011)(a court is only authorized by this provision to enforce

the contract as written). Accordingly, Defendants’ Motion to

Dismiss will be granted as to Counts One and Six.7

B. 

A claim under ERISA for breach of a fiduciary duty requires

proof that “(1) the defendant was acting in a fiduciary capacity;

(2) the defendant made affirmative misrepresentations or failed

to adequately inform plan participants and beneficiaries; (3) the

misrepresentation or inadequate disclosure was material; and (4)

the plaintiff detrimentally relied on the misrepresentation or

 While Defendants frame their argument for dismissal of 6

this claim in terms of standing, the essence of their argument is

that Plaintiffs cannot assert a colorable claim to benefits under

this particular provision. See supra note 5. 

 Defendants also argue that the claims pursuant to 29 7

U.S.C. § 1132(a) are time-barred because Plaintiffs failed to

file suit in this Court within the Plan’s contractual 90-day

limitations period as set forth in the Summary Plan Description

(“SPD”). (Defs’ Br. at 10.) However, the SPD submitted with

Defendants’ moving papers is not a summary of the Plan effective

January 1, 2005. It is a summary of a 1999 version of the Plan

sponsored by Conectiv, effective prior to the date Potomac

Electric Power Company and Conectiv merged and became

subsidiaries of the holding company, PHI. (See Sullivan Dec. Ex.

A at i; Ex. G.) Because the Plan does not include a 90-day

limitations period and because the SPD is not a summary of the

Plan at issue in this case, the Court concludes that any argument

based on its provisions is inapplicable here. 

8

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inadequate disclosure.” Shook v. Avaya, Inc., 625 F.3d 69, 73

(3d Cir. 2010)(internal quotations and citation omitted).

1.

In Counts Two and Three of the Complaint, Plaintiffs assert

breach of fiduciary duty claims for Defendants’ failure to

disclose information about the updated mortality table to

Plaintiffs and to Vanguard. Defendants move to dismiss these 8

claims arguing that Defendants had no duty to affirmatively

disclose information about the PPA-mandated changes to either

Plaintiffs or Vanguard. 

First, with respect to Defendants’ alleged failure to notify

Vanguard of the PPA-mandated changes, the Court finds no theory

under which such a duty could be imposed. Vanguard was selected

by PHI as a third-party administrator presumably pursuant to the

Plan Administrator’s right to delegate its responsibilities as

 According to Plaintiffs’ Opposition Brief, “the gravamen 8

of Counts Two and Three are that Defendants may be estopped from

denying Plaintiffs the additional sums of pension benefits as a

result of their failure to properly notice Plaintiffs and

properly notice and implement the revised mortality tables with

the third party Plan administrator.” (Pls’ Opp. at 24.) 

However, an estoppel theory of recovery, which “operates to place

the person entitled to its benefit in the same position he would

have been in had the representations been true,” is inapplicable

to the facts of this case. Cigna Corp. v. Amara, 131 S.Ct. 1866,

1880 (2011). Plaintiffs are plainly not seeking to hold Vanguard

to its representations that lump sum pension benefits in 2008

were smaller than in 2007, but instead seek the higher benefits

Vanguard did not tell them they would be entitled to if they

retired in 2008. 

9

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set out in sections 4.4 and 4.5 of the Base Plan Document.9

There is no basis on which this Court could find that PHI acted

in a fiduciary capacity with respect to Vanguard, which is

plainly an agent delegated responsibilities by its principal,

PHI. See infra note 11. 

With respect to Defendants’ alleged failure to notify

Plaintiffs, the Court begins with the rule that a “pension plan

may not be amended so as to provide for a significant reduction

in the rate of future benefit accrual unless the plan

administrator provides the [required] notice. . . .” 29 U.S.C. §

1054(h)(1); see also 26 U.S.C. § 4980F(e)(1). In this case, the

PPA-mandated changes significantly increased the base amount of

Plaintiffs’ lump sum pension benefits. Therefore, no notice was

required for Plan changes made pursuant to the PPA. See also 26

C.F.R. § 54.4980F-1 Q&A-8(d)(“[N]o notice is required to be

provided” for a plan that is “amended to reflect the changes to

the applicable interest rate and applicable mortality table . . .

made by the Pension Protection Act of 2006. . . .”).

Despite this, Defendants did send notice via email on

 Section 4.4 provides: “Any powers and duties of the named 9

fiduciaries allocated above may be further delegated by a written

resolution of the Investment Committee or the Administrative

Board, as the case may be.” (Sullivan Dec. Ex. A at 19.) 

Section 4.5 provides: “The Investment Committee or the

Administrative Board, or any person delegated duties by them may

employ such counsel, accountants or other specialists as it deems

necessary or desirable in connection with the administration of

the Plan.” (Id.) 

10

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November 19, 2007 to PHI employees advising them of the PPAmandated changes. (See Sullivan Dec. Ex. C.) The email 10

provides: 

The Pension Protection Act of 2006 (PPA)

requires plan sponsors such as PHI to make

certain amendments to its retirement plans. 

One of the required amendments affects

participants who are eligible for a lump sum

payout from their plan. Specifically, the PPA

requires the lump sum payment to be calculated

using a new mortality table and an interest

rate based on corporate bond rates. 

Although the Internal Revenue Service has not

yet issued final guidance on this provision of

the PPA, PHI recognizes that this is very

important to many PHI employees who need the

information to make necessary decisions about

their future retirement plans. 

PHI will implement the new mortality table as

required on January 1, 2008. Further, PHI

will implement the new corporate bond rate

required by the PPA, but the corporate bond

rate will only be a “floor,” that is, lump

sums will be calculated using the interest

rates currently in the plans and also

calculated using the corporate bond rate. The

employee will receive the higher lump sum

benefit. 

In the event further changes are found to be

warranted, PHI will, as always, provide as

much advance notice as possible. 

(Id.) What this email does not include is the information that

would be meaningful to Plaintiffs considering retirement in 2007,

namely, that the new mortality table would result in a staggering

 There is no dispute that Defendants acted in a fiduciary 10

capacity with respect to Plaintiffs. 

11

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increase in value for plan participants electing lump sum pay

outs. At oral argument, the change in value from the 2007 lump

sum calculated with the old mortality table to the 2008 lump sum

based on the new mortality table was estimated to be $1.8 million

for the sixteen Plaintiffs in this case. 

The Third Circuit has “firmly establish[ed] that when a plan

administrator affirmatively misrepresents the terms of a plan or

fails to provide information when it knows that its failure to do

so might cause harm, the plan administrator has breached its

fiduciary duty to individual plan participants and

beneficiaries.” In re Unisys Corp. Retiree Medical Benefit ERISA

Litig., 57 F.3d 1255, 1265 (3d Cir. 1995); see also Bixler v.

Central Pa. Teamsters Health and Welfare Fund, 12 F.3d 1292, 1300

(3d Cir. 1994)(a fiduciary’s duty to inform “entails not only a

negative duty not to misinform, but also an affirmative duty to

inform when the trustee knows that silence might be harmful”). 

While Defendants were not required to disclose plan changes

pursuant to the PPA, they elected to provide notice to plan

participants and therefore had a fiduciary obligation “not to

misinform employees through material misrepresentations and

incomplete, inconsistent or contradictory disclosures.” Id. at

1264. A reasonable fact-finder might conclude that Defendants’

email misled Plan participants by omitting material information

about the effect the updated mortality table would have on lump

12

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sum pension benefits. Without knowledge that the updated

mortality table would substantially increase lump sum pay outs,

Plaintiffs who were considering retirement elected to do so in

December 2007 to their detriment. However, had the email

informed Plan participants that by working one additional month,

they would be entitled to over $100,000 dollars more in their

lump sum distribution, it would be implausible that any

participant would choose retirement in December 2007. 

Based on the allegations in the Complaint, Plaintiffs have

stated a plausible claim that Defendants had an affirmative duty

to inform Plan participants who might be considering retirement

in 2007 that the updated mortality table would significantly

increase their lump sum pension benefits in 2008. Therefore, at

this stage of the litigation, the Court finds that Plaintiffs

have stated a colorable breach of fiduciary duty claim based on

Defendants’ incomplete and misleading email regarding the PPAmandated changes. 

Accordingly, Defendants’ Motion to Dismiss will be granted

as to Count Three and denied as to Count Two. 

2.

Count Four of the Complaint alleges a breach of fiduciary

duty stemming from Vanguard’s incorrect advice to Plaintiffs in

response to their inquiries regarding the value of their lump sum

benefits in 2007 as compared to 2008. Defendants move to dismiss

13

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Plaintiffs’ breach of fiduciary duty claim in Count Four arguing

that Plaintiffs cannot establish a material misrepresentation or

detrimental reliance. (Defs’ Br. at 14-16.) 11

 The Court notes that the alleged misrepresentations were 11

made by Vanguard, which is not named as a Defendant in this

action. In their Moving Brief, Defendants “reserve the right to

argue that, to the extent any misrepresentations were made by

Vanguard, they are not fiduciary representations that can be

attributable to them.” (Defs’ Br. at 14 n.5.) 

There appears to be no dispute that Vanguard, as a thirdparty plan administrator, and PHI, as Plan Administrator, both

acted as fiduciaries with respect to Plaintiffs. A person is a

fiduciary with respect to an ERISA plan “to the extent (i) he

exercises any discretionary authority or discretional control

respecting management of such plan or exercises any authority or

control respecting management or disposition of its assets, . . .

or (iii) he has any discretionary authority or discretionary

responsibility in the administration of such plan.” 29 U.S.C. §

1002(21)(A). 

Pursuant to 29 U.S.C. § 1105(a), “a fiduciary with respect

to a plan shall be liable for breach of fiduciary responsibility

of another fiduciary with respect to the same plan”

(1) if he participates knowingly in, or

knowingly undertakes to conceal, an act or

omission or such other fiduciary, knowing such

act or omission is a breach;

(2) if, by his failure to comply with section

1104(a)(1) of this title in the administration

of his specific responsibilities which give

rise to his status as a fiduciary, he has

enabled such other fiduciary to commit a

breach; or

(3) if he has knowledge of a breach by such

other fiduciary, unless he makes reasonable

efforts under the circumstances to remedy the

breach.

29 U.S.C. § 1105(a). 

It is also not clear that 29 U.S.C. § 1105(a)is the

exclusive basis for imposing liability on PHI for a breach of

fiduciary duty by Vanguard. As Plan Administrator, PHI chose to

contract some of its duties to Vanguard pursuant to sections 4.4

and 4.5 of the Base Plan Document. It is not clear that PHI can

escape its fiduciary duty to participants by electing to contract

with a third party to perform some of those duties. This issue

14

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In the Complaint, Plaintiffs allege: 

When eligible Plan participants sought to

retire in 2008 they contacted the Plan

Administrator [Vanguard] to ascertain the

anticipated amount of Plaintiffs’ lump sum

pension benefit, the result received from the

Plan Administrator [Vanguard] was incorrect

because of the use of the outdated mortality

table and an incorrect interest assumption. .

. . . Plaintiffs elected to retire on or

about December 2007 based on the projected

calculations of the Plan Administrator

[Vanguard] that Plaintiffs’ 2008 lump sum

pension benefit would be less than the amount

they would receive if they elected to retire

in 2007.

(Compl. ¶¶ 42, 48.) Viewed in the light most favorable to

Plaintiff, these allegations are sufficient to survive a motion

to dismiss. Plaintiffs have alleged that they contacted Vanguard

to determine the value of their pension benefits in December 2007

as compared to January 2008 and elected retirement in December

2007 in reliance on the erroneous advice they received. 

At this stage of the litigation, the Court finds that

Plaintiffs sufficiently alleged a material misrepresentation and

detrimental reliance, and have stated a plausible claim for

breach of fiduciary duty. Accordingly, Defendants’ Motion to

was not briefed by either party. Indeed, neither party even

referred to 29 U.S.C. § 1105(a). Nor do the parties refer to 29

U.S.C. § 1105(c), though at first blush the Court doubts that

this section applies to sections 4.4 and 4.5 of the Base Plan

Document. At this stage of the litigation, the Court will assume

without deciding that PHI would be liable for the alleged breach

by Vanguard. 

15

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Dismiss Count Four will be denied. 

C.

Defendants move to dismiss Plaintiffs’ state law claims for

negligence and breach of good faith and fair dealing arguing that

they are preempted by ERISA.

29 U.S.C. § 1144 provides that “the provisions of this

subchapter . . . shall supersede any and all State laws insofar

as they may now or hereafter relate to any employee benefit plan

. . . .” 29 U.S.C. § 1144(a). ERISA’s preemption provision is

“deliberately expansive, and designed to establish pension plan

regulation as exclusively a federal concern.” Pilot Life Ins.

Co. v. Dedeaux, 481 U.S. 41, 45-46 (1987). “As such, a cause of

action asserted under state law is pre-empted if it can be said

to ‘relate to’ an employee benefits plan.” Bicknell v. Lockheed

Martin Grp. Benefits Plan, 410 Fed. Appx. 570, 576 (3d Cir.

2011)(citing Pilot Life Ins. Co., 481 U.S. at 47).

Here, Plaintiffs’ state law claims are based on Defendants’

failure to utilize the updated mortality table when calculating

lump sum pension benefits under the Plan in effect as of January

1, 2008. These state law claims plainly relate to an ERISAgoverned plan and therefore are preempted. Accordingly,

Defendants’ Motion to Dismiss the state law claims in Count Eight

will be granted. 

16

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D.

In Count Five, Plaintiffs assert that the notice of claim

denial they were sent following Defendants’ denial of their claim

for additional pension benefits did not include required

information. Plaintiffs seek monetary sanctions against 12

Defendants in the amount of $100/day pursuant to 29 U.S.C. §

1132(c)(1) for the improper notice of claim denial. (Compl. ¶ 13

67.) In addition, Plaintiffs seek attorneys’ fees and costs

pursuant to 29 U.S.C. § 1132(g)(1), and the additional lump sum

benefits they would have obtained if they retired in 2008. (Id.) 

29 U.S.C. § 1133 provides that “every employee benefit plan”

must: 

 In their Opposition Brief, Plaintiffs appear to be 12

making an additional claim that Defendants did not comply with

their request for additional information necessary to supplement

Plaintiffs’ appeal. (See Pls’ Opp. at 30.) Plaintiffs cite to

29 C.F.R. § 2560.503-1(h), which requires “every plan” to

establish a procedure by which claimants can obtain a “full and

fair review” of claim denials. (Id. at 29-30.) That procedure

must include a provision “that a claimant shall be provided, upon

request and free of charge, reasonable access to, and copies of,

all documents, records, and other information relevant to the

claimant’s claim for benefits.” 29 C.F.R. § 2560.503-

1(h)(2)(iii). In a letter dated June 16, 2010 from Plaintiffs’

attorney to PHI’s Manager of Compensation & Benefits, Plaintiffs

requested e-mails, document drafts, and internal correspondence

regarding the review of Plaintiffs’ claims and the decision to

implement the updated mortality table. However, no such claim is

pled in the Complaint and the Court therefore will not consider

it. 

 For violations occurring after July 29, 1997, the 13

maximum amount of the monetary penalty was increased to $110 a

day. See 29 C.F.R. § 2575.502c-1. 

17

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(1) provide adequate notice in writing to any

participant or beneficiary whose claim for

benefits under the plan has been denied,

setting forth the specific reasons for such

denial, written in a manner calculated to be

understood by the participant, and (2) afford

a reasonable opportunity to any participant

whose claim for benefits has been denied for a

full and fair review by the appropriate named

fiduciary of the decision denying the claim. 

29 U.S.C. § 1133. 

29 C.F.R. § 2560.503-1(g) sets forth the required content of 

a notice of benefit determination by plan administrators. A plan

administrator is to provide claimants with written notice that

must include: 

(i) The specific reason or reasons for the

adverse determination; (ii) Reference to the

specific plan provisions on which the

determination is based; (iii) A description of

any additional material or information

necessary for the claimant to perfect the

claim and an explanation of why such material

or information is necessary; (iv) A

description of the plan’s review procedures

and the time limits applicable to such

procedures, including a statement of the

claimant’s right to bring a civil action under

section 502(a) of the Act following an adverse

benefit determination on review. 

 

29 C.F.R. § 2560.503-1(g)(1)(i)-(iv). 

Pursuant to 29 U.S.C. § 1132(c)(1), “[a]ny administrator who

fails or refuses to comply with a request for any information

which such administrator is required by this subchapter to

furnish to a participant or beneficiary . . . may in the court’s

discretion be personally liable to such participant or

18

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beneficiary in the amount of up to $100 a day.” 29 U.S.C. §

1132(c)(1).

Defendants move to dismiss Count Five arguing that the Third

Circuit’s decision in Groves v. Modified Ret. Plan for Hourly

Paid Emps. of the Johns Manville Corp. & Subsidiaries, 803 F.2d

109 (1986), forecloses Plaintiffs’ claim for sanctions. The

Court agrees. The Third Circuit’s decision in Groves makes clear 

monetary sanctions may not be imposed on a plan administrator for

violations of 29 U.S.C. § 1133 because it “imposes duties

expressly and exclusively on the plan and not the plan

administrator.” 803 F.2d at 116 (internal quotations omitted).

In addition, the Third Circuit held that personal liability

against a plan administrator as provided for in 29 U.S.C. §

1132(c)(1) may not be imposed for violations of 29 C.F.R. §

2560.503-1(g). Id. at 116, 118. The Third Circuit reasoned 14

that penalties are authorized only for statutory violations and

not for agency regulations. Id.

Moreover, Plaintiffs are not entitled to a substantive

remedy for the alleged failure to comply with the disclosure

obligations set forth in 29 U.S.C. § 1133 and 29 C.F.R. §

 Plaintiffs cite this regulation in their Opposition 14

Brief, but make no reference to it in their Complaint. Moreover,

the Complaint omits any facts that would indicate that this

provision is relevant.

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2560.503-1(g)(1). The appropriate remedy for such a violation is

“remand to the plan administrator so that the claimant gets the

benefit of a full and fair review.” Syed v. Hercules Inc., 214

F.3d 155, 162 (3d Cir. 2000); see also Parker v. BankAmerica

Corp., 50 F3d 757, 768 (9th Cir. 1995)(“a claimant who suffers

because of a fiduciary’s failure to comply with ERISA’s

procedural requirements is entitled to no substantive remedy.”). 

The Court will not dismiss Plaintiffs’ claim for improper notice

of claim denial and to the extent that Defendants are found to

have violated 29 U.S.C. § 1133 and 29 C.F.R. § 2560.503-1(g)(1),

Plaintiffs may obtain remand to the Plan Administrator for a full

and fair review. 

 Accordingly, Defendants’ Motion is granted with respect to

Plaintiffs’ claims for sanctions and for additional lump sum

benefits only. 

E.

In Count Seven, Plaintiffs claim that “if they continued

employment in 2008, they would be immediately eligible for up to

six (6) weeks of paid vacation and five (5) paid floating

holidays pursuant to the Collective Bargaining Agreement between

Atlantic City Electric Company and Local 210 international

Brotherhood of Electrical Workers.” (Compl. ¶ 70.) According to

Plaintiffs, with this Count they “seek to be made whole for

benefits that they would have been eligible to receive if they

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had elected to remain employed in 2008.” (Pls’ Opp. at 32.)

The Complaint seeks these damages pursuant to 29 U.S.C. §

185, the Labor-Management Relations Act. However, there are no

allegations to support an inference that PHI breached the

collective bargaining agreement or that Plaintiffs exhausted

their administrative remedies by pursuing this claim through the

procedures set forth in the collective bargaining agreement. 

Because the Complaint does not set forth sufficient allegations

supporting a claim for damages pursuant to 29 U.S.C. § 185,

Defendants’ Motion to Dismiss Count Seven will be granted. 

IV.

For the reasons stated above, Defendants’ Motion to Dismiss

will be granted as to Counts One, Three, Six, Seven, and Eight,

and denied as to the fiduciary duty claim in Counts Two and Four. 

Defendants’ Motion is also granted as to Plaintiffs’ claims for

sanctions and additional lump sum benefits in Count Five, but

denied as to Plaintiffs’ claim for improper notice of claim

denial. An appropriate Order accompanies this Opinion. 

Dated: September 30 , 2011

 s/Joseph E. Irenas 

JOSEPH E. IRENAS, S.U.S.D.J. 

 

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