Court Opinion

ID: 2653196
Source: CourtListenerOpinion
Date Created: 2014-02-14 01:00:19.678739+00
Date Added: 2024-06-11T09:11:10.536188
License: Public Domain

13-187-cv
Osberg v. Foot Locker, Inc.

                               UNITED STATES COURT OF APPEALS
                                   FOR THE SECOND CIRCUIT

                                       SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ASUMMARY ORDER@). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.

      At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 13th day of February, two thousand fourteen.

PRESENT: RALPH K. WINTER,
                 GUIDO CALABRESI,
                 REENA RAGGI,
                                 Circuit Judges.
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GEOFFREY OSBERG, on behalf of himself and on behalf
of all others similarly situated,
                                 Plaintiff-Appellant,

                              v.                                          No. 13-187-cv

FOOT LOCKER, INC., and FOOT LOCKER
RETIREMENT PLAN,
                                 Defendants-Appellees.
----------------------------------------------------------------------

APPEARING FOR APPELLANT:                         ELI GOTTESDIENER, Gottesdiener Law Firm,
                                                 PLLC, Brooklyn, New York.

APPEARING FOR APPELLEES:                         MYRON D. RUMELD (Mark D. Harris,
                                                 Proskauer Rose LLP, New York, New York;
                                                 Robert W. Rachal, Heather G. Magier, Page W.
                                                 Griffin, Proskauer Rose LLP, New Orleans,

                                                    1
                                         Louisiana, on the brief), Proskauer Rose LLP,
                                         New York, New York.

APPEARING FOR AMICUS
CURIAE SETH D. HARRIS,
ACTING SECRETARY OF
THE UNITED STATES
DEPARTMENT OF LABOR:                     JEFFREY M. HAHN (M. Patricia Smith,
                                         Solicitor of Labor, Timothy D. Hauser,
                                         Associate Solicitor for Plan Benefits Security,
                                         Elizabeth Hopkins, Counsel for Appellate and
                                         Special Litigation, on the brief), Trial Attorney,
                                         U.S. Department of Labor, Washington, D.C.

FOR AMICUS CURIAE ERISA
INDUSTRY COMMITTEE
AND THE CHAMBER OF
COMMERCE OF THE UNITED
STATES OF AMERICA:                       Scott J. Macey, The ERISA Industry Committee,
                                         Washington, D.C.; Kathryn Comerford Todd,
                                         Steven P. Lehotsky, National Chamber
                                         Litigation Center, Inc., Washington, D.C.; Eric
                                         C. Bosset, Richard C. Shea, Robert S. Newman,
                                         Jason M. Levy, Covington & Burling LLP,
                                         Washington, D.C.

      Appeal from a judgment of the United States District Court for the Southern District

of New York (Katherine B. Forrest, Judge).

      UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment entered on December 12, 2012, is AFFIRMED IN

PART and VACATED AND REMANDED IN PART.

      Plaintiff Geoffrey Osberg appeals from an award of summary judgment in favor of

defendants, his former employer Foot Locker, Inc., and Foot Locker Retirement Plan

(“Foot Locker”), on claims that Foot Locker violated the Employee Retirement Income
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Security Act (“ERISA”), 29 U.S.C. § 1001, et seq., in converting its defined benefit

pension plan to a cash balance retirement plan by (1) issuing false and misleading summary

plan descriptions in violation of ERISA’s disclosure requirements, see ERISA § 102(a), 29

U.S.C. § 1022(a); and (2) breaching fiduciary duties in making such materially false and

misleading statements and omissions, see ERISA § 404(a), 29 U.S.C. § 1104(a). Osberg

also appeals the dismissal of his claim that defendants failed to provide plan participants

with notice, as required by ERISA § 204(h), 29 U.S.C. § 1054(h), that the cash balance

plan would reduce future benefit accruals.

       We review de novo the challenged dismissal and summary judgment award. See

Frommert v. Conkright, 433 F.3d 254, 262 (2d Cir. 2006). In doing so, we assume the

parties’ familiarity with the facts and record of prior proceedings, which we reference only

as necessary to explain our decision to affirm in part and to vacate and remand in part.

1.     Section 204(h) Notice Claim

       Osberg argues that the district court erred in concluding that he failed to state a

plausible notice claim under ERISA § 204(h). He contends that the notice distributed by

Foot Locker summarized only part of the new formula for calculating benefits and,

therefore, did not inform participants that it effectively reduced the rate of future benefit

accruals. Foot Locker submits that the version of ERISA in effect at the time of the

challenged notice did not require such disclosure, that any deficiency was cured by

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subsequent summary plan descriptions, and, in any event, that Osberg’s § 204(h) claim is

time-barred.

       Here, we need not determine whether Osberg’s § 204(h) notice claim is either

timely or valid because § 204(h) does not, in any event, afford him the remedy he seeks,

i.e., a pension benefit calculated under the cash balance plan but “with an opening balance

equal to the value of the retirement annuity he had already earned under the old formula.”

Appellant’s Reply Br. 5. See 10 Ellicott Square Court Corp. v. Mountain Valley Indem.

Co., 634 F.3d 112, 125 (2d Cir. 2011) (recognizing ability to affirm for any reason that

finds support in record). This is because insufficient notice in violation of § 204(h) does

not, as Osberg contends, invalidate only the undisclosed portion of the plan amendment,

but rather voids the entire amendment. See Frommert v. Conkright, 433 F.3d at 268

(“Without . . . proper notice [under § 204(h) ] to Plan participants, the amendment was

ineffective as to them.”); see also CIGNA Corp. v. Amara, 131 S. Ct. 1866, 1884 (2011)

(Scalia, J., concurring in the judgment) (observing that “[a]s the opinion for the Court

notes, the Second Circuit has interpreted ERISA as permitting the invalidation of plan

amendments not preceded by proper notice, by reason of § 204(h)” (internal citation

omitted)).     Because Osberg does not seek that relief, we affirm the district court’s

dismissal of his § 204(h) claim.     

        

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2.     Disclosure Claims

       As to his disclosure claims, Osberg contends that the district court erred in holding

his § 102(a) claim time-barred, and in finding that he failed to raise a genuine issue of

material fact entitling him to surcharge and contract reformation on either his § 102(a) or

§ 404(a) claims. Because Osberg seeks the same relief under § 404(a) as under § 102(a),

and because the timeliness of the § 404(a) claim is undisputed, we need not conclusively

decide whether Osberg’s § 102(a) claim is subject to a three- or six-year statute of

limitations to resolve the instant appeal.

       To survive summary judgment on his disclosure claims, Osberg was required to

raise a genuine issue of material fact with respect to his demand for “appropriate equitable

relief”—specifically, surcharge or reformation—under ERISA § 502(a)(3), 29 U.S.C.

§ 1132(a)(3). See CIGNA Corp. v. Amara, 131 S. Ct. at 1879–80 (recognizing surcharge

and reformation as traditional equitable remedies that may allow for awarding monetary

compensation based on misleading disclosures). We recently articulated the appropriate

analysis as follows:

              In order to impose an equitable remedy, the district court must
              consider two questions: (1) what remedy is appropriate;
              (2) whether Plaintiffs have established the requisite level of harm
              as a result of the notice violations.
                     We have previously held that, for claims of ERISA notice
              violations, plaintiffs need to satisfy a standard of “likely
              prejudice.” Burke v. Kodak Ret. Income Plan, 336 F.3d 103,
              113 (2d Cir. 2003). The Supreme Court has since clarified that
              the standard of harm that plaintiffs must show depends upon the
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              equitable remedy that plaintiffs seek. See Amara, 131 S. Ct. at
              1881–82. For example, while “detrimental reliance” is a
              requirement for the remedy of estoppel, it is not a strict
              requirement for every equitable remedy. See id. at 1881. Thus,
              in considering whether Plaintiffs have made a sufficient showing
              of harm, the district court must consider this question in tandem
              with the equitable remedies it may impose. Id. at 1871.
Frommert v. Conkright, 738 F.3d 522, 534 (2d Cir. 2013).

       Here, the district court concluded that Osberg’s disclosure claims failed to raise an

issue of fact as to whether he suffered the type of “actual harm” necessary to obtain the

equitable relief of reformation and surcharge. Osberg v. Foot Locker, Inc., 907 F. Supp.
2d 527, 533–35 (S.D.N.Y. 2012). As to the remedy of reformation, we agree with Osberg

that the district court erroneously applied an “actual harm” requirement.

       In CIGNA Corp. v. Amara, the Supreme Court held that, with respect to the

equitable remedies under § 502(a)(3), “any requirement of harm must come from the law

of equity.” 131 S. Ct. at 1881. To obtain contract reformation, equity does not demand a

showing of actual harm. See Restatement (Second) of Contracts § 155 cmt. e (1981)

(stating that party seeking reformation “need not show that the mistake has resulted in an

inequality that adversely affects him”). Indeed, Foot Locker does not attempt to defend

the award of summary judgment on Osberg’s reformation claim on “actual harm” grounds.

Rather, it urges affirmance on the following alternative grounds: (1) as a former employee,

Osberg cannot pursue reformation, and (2) Osberg cannot show fraud or mutual mistake

entitling him to reformation. We disagree.

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       Foot Locker construes Amara to hold that monetary relief is only available in

ERISA cases via surcharge; therefore, absent a viable surcharge claim, the only

beneficiaries with standing to pursue reformation are those that can prospectively benefit

from a modification of plan terms, which does not include former employees. This

interpretation is supported by neither Amara, see 131 S. Ct. 1879–82 (identifying three

alternative—not interdependent—equitable avenues for obtaining monetary compensation

for misleading disclosures), nor equity, see Baltzer v. Raleigh & Augusta Air-Line R. Co.,

115 U.S. 634, 645 (1885) (“[I]t is well settled that equity would reform the contract, and

enforce it, as reformed, if the mistake or fraud were shown”); Hogg v. Maxwell, 218 F.
356, 358 (2d Cir. 1914) (observing that if court of equity granted relief of contract

reformation, it could “go on and do complete justice by awarding damages for the

breach”); see also Johnson v. Meriter Health Servs. Emp. Ret. Plan, 702 F.3d 364, 369 (7th

Cir. 2012) (holding that ERISA authorizes former employees to sue for unpaid benefits,

whether under the plan as it is, or as it should be once reformed). As to the contention that

Osberg cannot satisfy the other requirements for obtaining contract reformation, we leave

that determination for the district court to address in the first instance on remand.

       Because reformation of the plan would afford Osberg the total relief sought, there is

no need for us now to decide whether he would also be entitled to recovery under

surcharge. See Restatement (Third) of Trusts § 100 cmt. a (2012) (stating that where

beneficiary is entitled to multiple avenues of recovery in equity for a fiduciary’s breach of

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trust, “recovery is to be based on the alternative that is more beneficial to the trust and its

beneficiaries”). Thus, we affirm the district court’s dismissal of the surcharge claim as

moot. We do not, however, foreclose Osberg from seeking reinstatement of his surcharge

claim in the district court or pursuing that claim in a future appeal should that court

determine that reformation is not available.

       We have considered Osberg’s remaining arguments on appeal and conclude that

they are without merit. Accordingly, the judgment of the district court is AFFIRMED IN

PART and VACATED AND REMANDED IN PART.

                                    FOR THE COURT:
                                    CATHERINE O=HAGAN WOLFE, Clerk of Court

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