Court Opinion

ID: 202450
Source: CourtListenerOpinion
Date Created: 2011-02-07 05:53:21+00
Date Added: 2024-06-11T17:27:27.539152
License: Public Domain

United States Court of Appeals
                        For the First Circuit

No. 05-2373

           ROBUR OTERO CARRASQUILLO, MARIA T. NEGRON CEDEÑO
         and the Conjugal Partnership formed between them AND
                       JENNIFER OTERO M. NEGRON,

                        Plaintiffs, Appellants,

                                  v.

         PHARMACIA CORPORATION; PFIZER PHARMACEUTICALS; ZAIDA
            SANABRIA in her official and personal capacity;
                COMPANIES X, Y, Z, JANE DOE AND JOHN DOE,

                        Defendants, Appellees.

             APPEAL FROM THE UNITED STATES DISTRICT COURT

                    FOR THE DISTRICT OF PUERTO RICO

            [Hon. José Antonio Fusté, U.S. District Judge]

                                Before

                   Lynch and Howard, Circuit Judges,
                 and Stafford,* Senior District Judge.

     Vilma M. Dapena Rodríguez for appellants.
     Carl Schuster, with whom Lourdes C. Hernández-Venegas, María
Santiago-Ramos and Schuster & Aguiló LLP were on brief, for
appellees.

                            October 6, 2006

*
    Of the Northern District of Florida, sitting by designation.
             HOWARD, Circuit Judge.   Robur Otero Carrasquillo brought

an action in the Puerto Rico District Court against his former

employer, Pharmacia Corporation,1 his former supervisor, Zaida

Sanabria, and unnamed administrators and fiduciaries of Pharmacia's

separation benefits plan.       At its core, the complaint alleges that

Pharmacia violated the Employee Retirement Income Security Act

("ERISA"), 29 U.S.C. § 1001 et seq., and Article 1802 of the Puerto

Rico Civil Code by improperly denying Otero severance benefits

after he left his employment with the company.        The district court

granted the defendants' motion for summary judgment, but assessed

civil penalties against Pharmacia for failing to comply with

ERISA's reporting and disclosure provision.         We affirm.

                                    I.

             Otero worked as a research associate for Pharmacia at its

Arecibo, Puerto Rico, fermentation plant from the late 1980's until

November     2001.   He   was   responsible   for   the   fermentation   of

antibiotics.     In February 2000, Pharmacia notified its employees

that, effective June 2001, the Arecibo plant would close, and the

fermentation process would be relocated to an affiliate facility in

Kalamazoo, Michigan.2     Because this relocation would result in the

elimination of all jobs at the Arecibo plant, Pharmacia presented

     1
         Pharmacia has since become a subsidiary of Pfizer, Inc.
     2
      The facility at Kalamazoo was owned and                operated    by
Pharmacia's parent company, Pharmacia & Upjohn.

                                    -2-
adversely affected employees with two options: (1) apply, between

April 2000 and December 2001, for the company's Separation Package

Plan ("Plan"), a supplement to worker unemployment benefits, or (2)

continue to work for the company in a different position.            In the

interim, regardless of election, employees would remain active in

their current positions until their services were no longer needed

or the Arecibo plant closed.        At that time, those who had elected

to remain with the company would be transferred to their newly

assigned positions.      For those who had elected to receive the

separation benefits, the company would initiate an administrative

process, designated the "Windows Exit Program," that would provide

employees with 60 days to complete the necessary Plan paperwork.

            During his last 18 months at Pharmacia, Otero was upset

by several events that transpired at the plant.            He alleges that

Andres Lugo, the plant supervisor, incorrectly informed Otero that

he could not apply for Plan benefits until the last fermentation of

antibiotics had been completed, thereby inducing him to wait while

other    plant   employees   received   job   transfers    or   applied    for

separation benefits.         Otero’s repeated inquiries regarding his

employment prospects were ignored or treated in a cursory manner.

Receiving no prospective offers of employment, Otero eventually

applied for various vacant positions with Pharmacia’s remaining

Puerto    Rico   branches,    but   these   slots   were   given   to     more

experienced applicants.       Otero's difficulties were exacerbated in

                                     -3-
March 2001, when defendant Sanabria replaced Lugo as the plant

supervisor.        She was more critical of Otero's work than his

previous supervisors, and gave him only an "average" employee

review, well below the "excellent" reviews he had customarily

received.     Finally, in August 2001, Pharmacia offered Otero a

position as a microbiologist.        Although Pharmacia considered it a

lateral transfer, Otero perceived it as a demotion.

            On November 5, 2001, Otero declined the microbiologist

position    and     requested    separation    benefits.         Linda   Diaz,

Pharmacia’s    Senior     Director   of    Human    Resources,    immediately

contacted the Plan administrator, who stated that Otero was no

longer eligible to receive separation benefits.            Although the Plan

provided    that    terminated   employees    are   generally    eligible   to

receive such benefits, an exception existed for employees whose

employment was discontinued due to a “transfer to an affiliated

business,” and who had been offered “a comparable position” within

the company.       Because Pharmacia interpreted the relocation of the

fermentation process from Arecibo to Kalamazoo as a "transfer to an

affiliated business," and Otero had been offered what it considered

a "comparable position," the Plan administrator determined that

Otero was not eligible to receive benefits.3

     3
      Sanabria initially told Otero that he was too late to receive
Plan benefits because the administrative window had closed. Otero
argues that, because Linda Diaz failed to inform him of the
"Windows Exit Program," the defendants breached their fiduciary
duties under ERISA. See 29 U.S.C. § 1104. But, as the district

                                     -4-
               Immediately following the administrator's decision, Otero

sought    to    personally        deliver    a    letter       to    Pharmacia's      Human

Resources Manager, Carmen Calcano, to further inquire about his

Plan eligibility and the basis for his denial.                            As he waited in

Calcano’s office, Otero suffered an emotional breakdown, collapsed

to the floor, and injured his back. Because Otero required surgery

and   various       other    treatments      for    physical         and    psychological

ailments, Otero qualified for the company’s short-term disability

program   (under        which     he   received     100%   of       his    pre-disability

salary), and ultimately, for the long-term disability program

(under which he received upwards of 60% of his annual salary).

               On   July    5,    2002,   Otero    sent    a    letter      to   Pharmacia

requesting information on a “Serious Health Condition” provision in

the long-term disability plan, under which an injured employee

could receive up to 100% of his annual salary.                              Receiving no

response,       Otero      sent    several       additional         letters      requesting

information and copies of the long-term disability plan. On August

29, 2002, 55 days after his initial inquiry, Pharmacia responded

with the requested materials.               Included was a copy of the Summary

of Material Modifications, a document (previously circulated to all

court correctly recognized, although there was some initial
confusion in response to Otero's request, the Windows Exit Program
was nothing more than an administrative tool providing employees
with notice of their termination date so that they would have time
to prepare the necessary paperwork.       It had no bearing on
Pharmacia's substantive benefits decisions.

                                            -5-
Pharmacia employees in 1999) that outlined all the changes that had

been made to the long-term disability plan.                   The form explained

that the Serious Health Condition provision had been excised from

the Plan.      Unsatisfied, Otero continued to send letters requesting

information on the Serious Health Condition provision, to which

Pharmacia      consistently        replied      that   all    requests   had   been

adequately fulfilled by its August 29th response.

              In    July   2003,    Otero    filed     suit   against    Pharmacia,

Sanabria, and unnamed Plan administrators and fiduciaries, claiming

that       Pharmacia’s     denial    of     benefits     violated   ERISA,     that

Pharmacia’s failure to produce Plan documents within the time

period designated by ERISA’s reporting and disclosure provision

warranted the imposition of civil penalties, and that the actions

of Lugo, Sanabria and others amounted to intentional infliction of

emotional distress and fraudulent inducement under Commonwealth

law. The district court granted the defendants' motion for summary

judgment, concluding that Pharmacia's decision was not arbitrary

and capricious and that Otero's supplemental Commonwealth law

claims were preempted by ERISA.                 The court, however, found that

Pharmacia had violated ERISA's reporting and disclosure provision,

and accordingly ordered Pharmacia to pay Otero $2500 in civil

penalties.4        Otero now appeals.

       4
      The district court also granted summary judgment for the
defendants on Otero's additional claims of invasion of privacy and
violation of ERISA's notice provision for failure to notify him of

                                          -6-
                                   II.

              On appeal, Otero claims that Pharmacia's denial of his

request for separation benefits was arbitrary and capricious, his

supplemental state law claims are not preempted by ERISA, and the

district court incorrectly calculated the civil penalties against

Pharmacia.

A.   The Benefits Decision

              We begin with Otero's challenge to Pharmacia's denial of

Plan benefits.       It is undisputed that because the Plan reserved

interpretative discretion to its administrators,5 judicial review

of Pharmacia's eligibility determination is limited to ascertaining

whether the administrator's decision was arbitrary or capricious.

Leahy v. Raytheon Co., 315 F.3d 11, 15 (1st Cir. 2002).           Thus,

while we review summary judgment decisions de novo, Mattias-Correa

amendments to the long-term        disability   plan.   Otero   has   not
appealed these rulings.
      5
          The relevant provision of the Plan provides that:

              The company or its delegate will determine, in
              its or their sole discretion, the eligibility
              of each terminated Employee to participate in
              the Plan, the amount of Benefits to which a
              terminated Employee is entitled, and the
              manner and time of payment of the Benefits . .
              . . Any decisions, actions or interpretations
              to be made under the Plan by [Pharmacia] . . .
              shall   be  made   in   its  respective   sole
              discretion, not in any fiduciary capacity and
              need not be uniformly applied to similarly
              situated individuals and shall be final,
              binding and conclusive upon all parties.

                                   -7-
v. Pfizer, Inc., 345 F.3d 7, 12 (1st Cir. 2003), where, as here,

the underlying decision is subject to arbitrary and capricious

review, we evaluate the district court's determination by asking

"whether the aggregate evidence, viewed in a light most favorable

to the non-moving party, could support a rational determination

that the plan administrator acted arbitrarily in denying a claim

for benefits,"     Leahy, 315 F.3d at 18.            In other words, the

question here is whether the district court correctly concluded

that Pharmacia's interpretation of the Plan's language, and its

ultimate benefits determination based upon that interpretation,

were reasonable.       Liston v. Unum Corp. Officer Severance Plan, 330

F.3d 19, 24 (1st Cir. 2003).

            Pharmacia had determined that, because Otero's research

associate position had been eliminated due to a transfer of the job

to   an   affiliated    business,   and    because   Otero   was   offered   a

comparable position as a microbiologist, he was not eligible to

receive separation benefits.        Otero argues that, according to the

Plan, an employee whose job elimination results from a transfer to

an affiliated business is only ineligible to receive benefits when

the transfer is a product of the total or partial sale of the

company.    The eligibility provision that Otero cites provides, in

relevant part, that:

            benefits under the Plan shall not be provided
            to any Employee [whose] employment termination
            is due to . . . (6) his or her transfer to an
            affiliate company or its transfer due to the

                                     -8-
             total or partial sale of the Company, either
             by the sale of its stocks or assets in which
             the Employee is offered a "Similar Position."

(Emphasis added).      Since no sale precipitated the transfer of his

job, Otero argues, this exception to benefits eligibility is

inapplicable.

             We disagree.   Otero's argument relies on an inoperative

version of the Plan.        Otero's proffered language comes from a

certified translation of a Spanish language document that had been

circulated to employees at the Puerto Rico plant and was itself a

translation of the original English language Plan. But the Spanish

language translation explicitly stated on its front page that any

terminological discrepancy between it and the original English

language version would be resolved in accordance with the terms of

the original Plan, and that copies of the original English language

Plan would be made available at Human Resources.                   Thus, the

original     English   language   Plan    is   the   controlling   document.

Because the original Plan does not require that the transfer of the

job be "due to" a sale of the company for the ineligibility

provision to be triggered, Otero's argument fails.6                Under the

     6
         The eligibility provision of the original Plan provides:

             The Company shall grant Benefits to any
             Terminated   Employee   whose   services   are
             terminated by reason of Job Elimination . . .
             .   Notwithstanding anything herein to the
             contrary, a Terminated Employee will not
             [receive separation benefits] if his or her
             employment is discontinued due to [inter alia]

                                    -9-
controlling Plan language, we see no basis to deem unreasonable

Pharmacia's     interpretation   that   an   employee   is   ineligible   to

receive separation benefits when his job is eliminated due to

either a transfer to an affiliated business or a total or partial

sale of the company, and he is offered a comparable position with

the company.7

          Otero also argues that Pharmacia acted unreasonably by

designating the move of the fermentation process from Arecibo to

Kalamazoo as a "transfer to an affiliate business."             In Otero’s

view, the move to the Kalamazoo facility could not be a "transfer"

because that facility already operated a fermentation plant.

          Where, as here, a term is not defined by the benefits

plan, we give it "an ordinary and popular" reading "as would a

[person] of average intelligence and experience."            Richardson v.

          . . . a transfer to an affiliated business,
          the sale of Pharmacia & Upjohn, Inc. or any
          portion thereof, either through a sale or
          exchange   of   stock  or   assets,  or   the
          outsourcing   of   a  division,   department,
          business unit or function where the employee
          has been offered a comparable position with
          the Company or the new employer.
     7
      Additionally, there is a presumption that judicial review is
limited to the evidentiary record presented to the administrator.
See Liston, 330 F.3d at 23-24. Because the Plan administrator was
located in the mainland United States, and the original English
language Plan was the controlling version, we presume that it was
the version that informed the administrator's decision. Otero has
not presented any basis to believe otherwise, nor has he presented
any argument for why we should consider the Spanish language
version the controlling document.

                                   -10-
Pension Plan of Bethlehem Steel Corp., 112 F.3d 982, 985 (9th Cir.

1997); Kolkowski v. Goodrich Corp., 448 F.3d 843, 850 (6th Cir.

2006); see also 29 U.S.C. § 1022 ("A summary plan description of

any employee benefit plan . . . shall be written in a manner

calculated to be understood by the average plan participant . . .

.").    The term "transfer" is commonly defined as "to convey from

one person, place, or situation to another."              Merriam-Webster's

Collegiate Dictionary 1249 (10th ed. 2001).             That the Kalamazoo

facility may have already maintained a fermentation plant is not by

itself inconsistent with this definition.            Otero has presented no

evidence that Pharmacia failed to convey some level of capacity

from Arecibo to Kalamazoo.          Indeed, the record suggests that

Pharmacia conveyed the function of the Arecibo plant to Kalamazoo

to     save   on    electricity   costs.      Accordingly,     Pharmacia's

interpretation was not unreasonable.

              Finally, Otero argues that Pharmacia’s denial of benefits

was     arbitrary     and   capricious     because     the   positions   of

microbiologist and research associate are not "comparable."              The

Plan defines "Comparable Position" as:

              employment with the Company or a successor
              employer in which the individual's level of
              responsibilities is substantially similar, as
              determined by the Company, to the individual's
              immediately prior position with the Company,
              requiring similar skill levels and offering
              similar pay (within 10%) and in which the
              Employee is not asked to move his or her
              principal business location more than 50
              miles.

                                   -11-
Otero concedes that the positions pay identical salaries, are

performed within the same principal business location, and require

the     same    educational    background    and    basic   skill    levels.

Nevertheless, he contends that the level of responsibilities of a

microbiologist are not "substantially similar" to those of a

research associate.         Otero argues that a microbiologist has less

substantial supervisory responsibilities, is not on call 24 hours

a day, and has no office, cellular phone or beeper.           The district

court was unpersuaded, finding that the positions were comparable

because Otero's qualifications fulfilled the requirements of both

jobs.

               While the positions' respective levels of responsibility

are     not    identical,    the   Plan   only   requires   that    they   be

"substantially similar as determined by the Company."               Employing

the company's traditional methodology for comparing two positions,

Pharmacia found that, based on job descriptions, job requirements,

salary, educational requirements and banding (the company's general

method for systematizing position responsibilities), the positions

of research associate and microbiologist were in fact comparable.

               Otero states that as a microbiologist he would no longer

be "producing millions in money for [the company]" as he had

before, and that he would no longer be responsible for highly

valuable company products and equipment.           Statements at this level

of abstraction, however, do not establish that the administrator's

                                     -12-
decision was arbitrary.    See Liston, 330 F.3d at 25 (holding that

the appellant's claim that she was "no longer responsible for

developing and implementing growth and service strategies as well

as piloting new work processes" was too abstract to stand as proof

of   "diminished    responsibility"   under   the   company's   employee

benefits plan, and therefore was not enough to make the company's

denial of benefits arbitrary and capricious).       Nor do Otero's more

concrete arguments -- that the microbiologist is not on call, and

has no office, cellular phone or beeper -- suffice to negate the

otherwise substantially similar level of responsibilities, benefits

and qualifications of the positions.          In light of the broad

interpretive discretion that Pharmacia reserved to itself, see

supra note 5, we cannot say that its determination was arbitrary

and capricious.

B.   Preemption

           We next turn to the district court's finding that Otero's

state law claims are preempted by ERISA, 29 U.S.C. § 1144(a).        In

light of ERISA's goal to promote uniformity in the nationwide

regulation of employee benefit plans, Congress designed the statute

to supersede "any and all State [causes of action] insofar as they

may now or hereafter relate to any employee benefit plan."           Id.

(emphasis added).    The Supreme Court has identified two instances

where a state cause of action relates to an employee benefit plan:

where the cause of action requires "the court's inquiry [to] be

                                 -13-
directed to the plan," or where it conflicts directly with ERISA.

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 140-42 (1990).

Because the resolution of Otero's Commonwealth law claims for

fraudulent   inducement   and   intentional     infliction    of   emotional

distress would require analysis of the Plan, the district court

correctly concluded that they are preempted.

            In   his   complaint,    Otero     alleges      that   Pharmacia

fraudulently induced him to continue his employment at the Arecibo

plant by incorrectly informing him that he could not apply for

severance benefits until all fermentation at Arecibo was completed,

changing the benefits application deadline without informing him,

and falsely promising him a comparable position at the company

whenever he expressed concern for his job security.            To determine

whether these acts constitute fraudulent inducement, the district

court would have to consult the severance plan to identify the

application dates and the administrative process for determining

and informing the employees of such dates.               Additionally, to

determine whether Pharmacia's promises of comparable employment

were fraudulent, the court would have to consult the Plan to

determine    whether   the   offered       microbiologist     position   was

"comparable" to his prior job as a research associate. Because the

court's inquiry would necessarily "be directed to the Plan," the

court was correct to dismiss the fraudulent inducement claims. See

Carlo v. Reed Rolled Threat Die Co., 49 F.3d 790, 794 (1st Cir.

                                    -14-
1995)   (holding     that    plaintiff's     misrepresentation      claim    was

preempted by ERISA because the computation of damages would require

reference to the severance plan).

            Otero's claim for intentional infliction of emotional

distress is similarly unavailing. The factual basis supporting his

emotional distress claim is simply a reiteration of the facts

supporting his fraudulent inducement claims.             Thus, "because the

emotional   distress        claim   obviously   piggybacks    on    the    facts

underlying the [fraudulent inducement] claim, which [is] preempted,

the emotional distress claim, too, is preempted." Danca v. Private

Health Care Sys., Inc., 185 F.3d 1, 7 n.9 (1st Cir. 1999).

C.   Civil Penalties

            Finally, Otero appeals the district court's method for

calculating the civil penalties owed by Pharmacia for violating

ERISA's reporting and disclosure provision.                 See 29 U.S.C. §

1132(c) (providing that any administrator who fails, within 30

days, "to comply with a request for any information which such

administrator   is    required"      to   furnish,   "may    in    the    court's

discretion be personally liable . . . in the amount of up to $100

a day from the date of such failure").               Finding that Pharmacia

provided all the necessary materials 55 days after Otero's July 5th

inquiry, the district court determined that Pharmacia's reply was

25 days late.      See id.      By assessing the maximum discretionary

penalty of $100 a day, the court calculated an award of $2500 in

                                      -15-
civil penalties.     We review the court's determination for abuse of

discretion.      Sullivan v. Raytheon Co., 262 F.3d 41, 52 (1st Cir.

2001).

           Otero has presented nothing that causes us to question

the   district    court's   calculation.         He   argues    that   neither

Pharmacia's   August    29th   response    nor    any   of     its   subsequent

correspondence contained information regarding the "Serious Health

Condition" provision about which he requested information.                 But

Pharmacia's August 29th correspondence fully explained that the

"Serious Health Condition" provision was no longer in effect.

Pharmacia was not obligated to provide any further explanation

regarding an inactive provision. See Shields v. Local 705, Intern.

Broth. of Teamsters Pension Plan, 188 F.3d 895, 903 (7th Cir.

1999).

                                  III.

           For the foregoing reasons, the judgment of the district

court is affirmed.

                                  -16-