Opinion ID: 2522
Heading Depth: 1
Heading Rank: 4

Heading: Elimination of the Offset and General Amendments to the Plan

Text: Kendall claims that she is also injured by virtue of the fact that she is receiving less in benefits than she would have received under a Plan that did not violate ERISA. Specifically, she seeks an elimination of the Social Security Offset and a recalculation of her AFC giving her higher benefits. More generally, she claims that amending the Plan will increase her benefits by an as-yet-to-be-determined amount when the Plan is modified to conform to ERISA. A plan participant may allege a constitutional injury-in-fact based on a theoretical injury. In FIRF, the district court held that employees lacked standing to bring an ERISA claim against a pension fund for refusing to credit surpluses from the employees' former employer to the payments that the employees' new employer was required to make to the fund. See id. at 147. This Court reversed the district court, believing that ERISA casts a wider net. Id. We held the employees had standing to bring a breach-of-fiduciary-duty claim because they were theoretically injured by the funds' mismanagement of assets, some of which could be theirs. Id. at 149. The Seventh Circuit has come to a similar conclusion. In McCarter v. Ret. Plan for Dist. Managers of Am. Family Ins. Group, the court found that plan participants who had opted to cash out their retirement plans in a lump sum prior to reaching normal retirement age had standing in an ERISA action to challenge the ninety-day window the plan gave for choosing the lump-sum opt out. 540 F.3d 649, 650 (7th Cir.2008). The plan participants argued that limiting the amount of time the participants had to choose the lump-sum opt out violated 29 U.S.C. § 1053(e)(1), which provides that benefits exceeding $5,000 may not be paid out without consent of the participant. Id. In finding standing, the court noted, [t]he injury [the plan participants] assertthat monthly income at retirement age is diminished if participants are stampeded into taking cash, which then burns holes in their pocketscan be traced to the plans' terms and can be redressed by a judgment in plaintiffs' favor. No more is required for standing. Id. However, in both FIRF and McCarter, the plaintiffs could point to an identifiable and quantifiable pool of assets to which they had colorable claims. These cases are distinguishable from the case before us. Here, Kendall alleges an injury based on an as-yet-to-be-determined increase in benefits as a result of elimination of the Offset or general amendments to the Plan. The case before us more closely resembles Drutis v. Rand McNally & Co., 499 F.3d 608 (6th Cir.2007). In Drutis, the court held that plaintiffs lacked standing to bring a claim that their pension plan discriminated on the basis of age in violation of § 1054(b)(1)(H) because they suffered no injury as a result of the challenged plan. Id. at 611. The plaintiffs had the option of choosing either to remain with their current plan or to be subject to a new plan. Id. The plaintiffs chose the old plan but sued claiming the new plan violated ERISA and alleged that were the new plan modified to comply with ERISA, they would have chosen the new plan, thus receiving higher benefits. Id. The plaintiffs argued that they should be entitled to choose a version of the new plan absent alleged violations. The court held the plaintiffs did not meet the injury-in-fact requirement because their injury was entirely speculative and any harm to [plaintiffs was] hypothetical at best. Id. The court concluded that Article III standing ultimately turns on whether a plaintiff gets something (other than moral satisfaction) if the plaintiff wins. Id. at 612 (emphasis omitted). Kendall's claim, that she would receive more in benefits were the Offset to be eliminated or the Plan modified to conform to ERISA, is not an injury-in-fact. Her benefits were not reduced by any more than the customary Offset (and a reduced Offset during the period in which Kendall elected to collect under the Rule of 85), which Kendall acknowledges was legal. While it may be true that eliminating the entire Offset would increase the amount each Plan participant receives in benefits, Kendall has no right under ERISA to receive benefits that have not been reduced by a lawful social security offset, and furthermore, Kendall offers no proof that Avon would not adjust the Plan to offset for its employees' social security benefits through some other means. While Avon may not amend the Plan to reduce its employees' benefits, it may amend the plan to keep its employees' net benefits static. And while it is possible that distributing the Offset evenly among all participants could reduce Kendall's Offset, Kendall alleged nothing to support her contention that Avon would decrease the Offset per participant. Likewise, Kendall concedes that her future benefits under a modified Plan that conforms to ERISA are not yet determined. The best Kendall offers the court is a calculation of how a hypothetical Plan participant would be injured by the Rule of 85 provisions of the Plan. Her claim, like the claim in Drutis, is speculative and therefore does not constitute an injury-in-fact. [15] Kendall does state an identifiable and quantifiable injury in her appeal of Claim VII by arguing that her AFC was not calculated in accordance with ERISA for purposes of Section 1.10(d) of the 1994 Plan, resulting in a reduction of her benefits. Kendall provides mathematical calculations to support her claim, and more importantly, her claim relates to a past and present reduction in accrued benefits. Kendall has standing to bring Claim VII, and related Claims VIII and IX. However, Kendall did not raise this challenge to Section 1.10(d) before the district court and she may not raise it now before this Court. Although we may exercise discretion to consider waived arguments where necessary to avoid a manifest injustice, the circumstances normally do not militate in favor of an exercise of discretion to address new arguments on appeal where those arguments were available to the parties below and they proffer no reason for their failure to raise the arguments below. In re Nortel Networks Corp. Sec. Litig., 539 F.3d 129, 133 (2d Cir.2008) (internal quotation marks and alterations omitted). Kendall had three years to correct her complaint to allege a violation of Section 1.10 of the Plan while Avon's 12(b)(6) motion was pending before the district court. After the district court dismissed the case, Kendall did not move for relief from judgment under Fed.R.Civ.P. 60(b). On appeal, Kendall did not ask that we remand to give Kendall an opportunity to amend her complaint. She failed to take advantage of any of those opportunities, and we will not sua sponte allow her to amend her complaint before the district court. [16] Kendall lacks standing to assert Claims I, II, III, and IV, and although she may have standing to assert her modified Claims VII, VIII, and IX, we will not entertain these claims because Kendall did not allege them, or any specific injury resulting from them, before the district court.