Court Opinion

ID: 2735549
Source: CourtListenerOpinion
Date Created: 2014-09-22 15:00:43.636079+00
Date Added: 2024-06-11T10:03:33.074560
License: Public Domain

13-3535-cv(L)
     Buckley v. Slocum Dickson Medical Group, PLLC

                          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 “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 22nd day of September, two thousand fourteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                CHRISTOPHER F. DRONEY,
 8                              Circuit Judges,
 9                LEWIS A. KAPLAN,*
10                              District Judge.
11
12       - - - - - - - - - - - - - - - - - - - -X
13       RUDOLPH A. BUCKLEY, M.D.,
14                Plaintiff-Counter-Defendant-
15                Appellee-Cross-Appellant,
16                                                                13-3535-cv(L)
17                    -v.-                                        13-3536-cv(XAP)
18                                                                13-3767-cv(CON)
19       SLOCUM DICKSON MEDICAL GROUP, PLLC, as
20       successor in interest to SLOCUM
21       DICKSON MEDICAL GROUP, P.C.,
22                Defendant-Counter-Claimant-
23                Appellant-Cross-Appellee.
24       - - - - - - - - - - - - - - - - - - - -X

                *
              Judge Lewis A. Kaplan, of the United States District
         Court for the Southern District of New York, sitting by
         designation.
                                                  1
 1   FOR APPELLANT:             ANTHONY J. PIAZZA (with Mark T.
 2                              Whitford Jr. on the brief),
 3                              Hiscock & Barclay, LLP,
 4                              Rochester, New York.
 5
 6   FOR APPELLEE:              JOSEPH S. DEERY, JR., Kowalczyk,
 7                              Deery & Broadbent, LLP, Utica,
 8                              New York.
 9
10        Appeal from a judgment of the United States District
11   Court for the Northern District of New York (Hurd, J.).
12
13        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
14   AND DECREED that the judgment of the district court be
15   AFFIRMED.
16
17        Appellant Slocum Dickson Medical Group, PLLC, appeals
18   from the judgment of the United States District Court for
19   the Northern District of New York (Hurd, J.), granting
20   summary judgment in favor of plaintiff-appellee Rudolph A.
21   Buckley and awarding Buckley attorney’s fees. Buckley has
22   filed a cross-appeal related to the amount of the fee award.
23   We assume the parties’ familiarity with the underlying
24   facts, the procedural history, and the issues presented for
25   review.
26
27        Dr. Rudolph A. Buckley worked in Slocum Dickson’s
28   medical practice as the group’s only orthopedic physician
29   specializing in spine surgery. The employment agreement,
30   executed in December 2000, required Buckley to provide 90
31   days’ notice before leaving the group. If Buckley failed to
32   give the required notice, the agreement called for him to
33   pay liquidated damages of $10,000. On June 2, 2009, Buckley
34   gave his 90 days’ notice that he would leave Slocum Dickson
35   on August 30, 2009.
36
37        Before the 90 days elapsed, Buckley realized that an
38   earlier departure date would yield a greater severance
39   package, because the plan calculated severance as a
40   percentage of the accounts receivable associated with
41   Buckley’s department at the time of his departure, and
42   Buckley had performed a disproportionate number of surgeries
43   in July 2009. On August 4, Buckley informed Slocum Dickson
44   that he was unilaterally terminating his employment,
45   effective that very day. He immediately paid the $10,000
46   liquidated damages for termination without notice. The
47   liquidated damages did not appreciably reduce the advantage

                                  2
 1   of early departure: Buckley’s calculated severance amount
 2   under the plan on August 4 was $455,096, whereas it would
 3   have been only $47,912 had he waited until the end of
 4   August.
 5
 6        On September 1, 2010, Slocum Dickson’s Board of
 7   Managers decided to pay no severance to Buckley. Buckley
 8   filed this lawsuit in New York Supreme Court alleging common
 9   law claims for breach of contract. Slocum Dickson removed
10   the action to the Northern District of New York. The
11   district court granted Buckley’s motion for summary judgment
12   as well as attorney’s fees.
13
14        As a threshold matter, this Court must ascertain
15   whether the district court had subject matter jurisdiction
16   over this dispute. As a general rule, federal question
17   jurisdiction pursuant to 28 U.S.C. § 1331 turns on whether a
18   well-pleaded complaint relies on federal law. See Metro.
19   Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). Buckley’s
20   state court complaint asserted only common law breach of
21   contract claims. Nevertheless, “Congress specifically
22   intended to exert ‘extraordinary pre-emptive power’ when it
23   adopted the detailed provisions of” Section 502(a) of the
24   Employee Retirement Income Security Act of 1974 (“ERISA”),
25   29 U.S.C. §§ 1001 et seq. Romney v. Lin, 94 F.3d 74, 78 (2d
26   Cir. 1996) (quoting Taylor, 481 U.S. at 64). Where a
27   beneficiary of an employee benefit plan covered by ERISA
28   seeks benefits under that plan, “ERISA preempts any state
29   law claims that the plaintiff may have because the state law
30   claims directly ‘relate to’ the plan, and Congress intended
31   for ERISA to supercede all state laws that relate to
32   employee benefit plans.” Kolasinski v. Cigna Healthplan of
33   CT, Inc., 163 F.3d 148, 149 (2d Cir. 1998) (per curiam)
34   (quoting 29 U.S.C. § 1144(a)). Further, where, as here, “‘a
35   federal statute wholly displaces the state-law cause of
36   action through complete pre-emption, the state claim can be
37   removed’ to federal court.” Arditi v. Lighthouse Int’l, 676
38   F.3d 294, 299 (2d Cir. 2012) (quoting Beneficial Nat’l Bank
39   v. Anderson, 539 U.S. 1, 8 (2003)). As the Slocum Dickson
40   severance plan in substance provides, and the parties agree,
41   that the plan is governed by ERISA, this action was removed
42   properly from the state court, and the district court had
43   subject matter jurisdiction. Moreover, as the parties
44   consistently litigated this case on the basis of ERISA, and
45   the district court treated it as arising under that statute,
46   we constructively amend the complaint to assert a claim
47   under ERISA. See Greenblatt v. Delta Plumbing & Heating

                                  3
 1   Corp., 68 F.3d 561, 569 (2d Cir. 1995) (noting this Court’s
 2   “discretionary power . . . to amend a complaint
 3   constructively to recognize unpleaded claims”).
 4
 5        As to the merits, the Court reviews de novo the
 6   district court’s grant of summary judgment. See Hobson v.
 7   Metro. Life Ins. Co., 574 F.3d 75, 82 (2d Cir. 2009).
 8   Summary judgment is appropriate only if “there is no genuine
 9   dispute as to any material fact and the movant is entitled
10   to judgment as a matter of law.” Fed. R. Civ. P. 56(a). As
11   for the parties’ challenges regarding the fee award, “[t]he
12   standard of review of an award of attorney’s fees is highly
13   deferential to the district court,” Mautner v. Hirsch, 32
14   F.3d 37, 39 (2d Cir. 1994), however the district court’s
15   underlying conclusions of law are reviewed de novo, Baker v.
16   Health Mgmt. Sys., Inc., 264 F.3d 144, 149 (2d Cir. 2001).
17
18        When a written plan is governed by ERISA and “confer[s]
19   upon a plan administrator the discretionary authority to
20   determine eligibility,” a court “will not disturb the
21   administrator’s ultimate conclusion unless it is ‘arbitrary
22   and capricious.’” Pagan v. NYNEX Pension Plan, 52 F.3d 438,
23   441 (2d Cir. 1995). Moreover, the severance plan conferred
24   on Slocum Dickson’s board “exclusive authority and
25   discretion” to “[d]etermine whether an individual is
26   eligible for any benefits under the Plan,” to determine the
27   amount of any such benefits, and to interpret the provisions
28   of and terms used in the Plan. Nevertheless, the grant of
29   discretion to the board does not decide this case for
30   several reasons.
31
32        The first question is whether the Slocum Dickson board
33   properly applied the terms of the severance plan with
34   respect to Buckley’s claim for severance pay. Section 2(i)
35   of the plan provides that an employee in Buckley’s
36   circumstances “shall receive . . . an amount equal to sixty-
37   five percent (65%) of Employee’s share of the accounts
38   receivable of the Corporation, existing as of the date of
39   termination, assigned to Employee’s department in accordance
40   with the accounting practices adopted by the Corporation, as
41   to which there has been any activity (either to billings or
42   payment) within the preceding two (2) years.” In assessing
43   Slocum Dickson’s application of this term, we give effect to

                                  4
 1   its unambiguous meaning to the extent that one exists.
 2   O’Neil v. Ret. Plan for Salaried Employees of RKO Gen., 37
 3   F.3d 55, 58-59 (2d Cir. 1994). To the extent that the term
 4   is ambiguous, we “review a denial of benefits . . . de novo,
 5   unless the plan itself grants the fiduciary discretion to
 6   construe the terms of the plan, in which event the court
 7   should apply the arbitrary and capricious standard.” Id. at
 8   59 (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
 9   101, 115 (1989)).1 Here, there was nothing ambiguous about
10   Buckley’s contractual entitlement to severance pay.2 The
11   Slocum Dickson board therefore was bound to apply the plain
12   language of its severance plan and lacked any discretion to
13   depart from it.
14
15        The result would be the same even if there were some
16   ambiguity with respect to Buckley’s entitlement to severance
17   pay. Whatever deference otherwise is due to a plan
18   administrator abates when the administrator has a conflict
19   of interest, both determining and paying the benefit. See,
20   e.g., Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111-12,
21   115 (2008). As the district court found, Slocum Dickson “is
22   both the entity that decides whether plaintiff is entitled
23   to benefits and the entity that would make such a payment,”

          1
          Accord Edwards v. Briggs & Stratton Ret. Plan, 639
     F.3d 355, 362 (7th Cir. 2011) (“[U]nambiguous terms of a
     pension plan leave no room for the exercise of interpretive
     discretion. . . . Thus, [t]he administrator must implement
     and follow the plain language of the plan.” (second
     alteration in original) (internal citations and quotation
     marks omitted)); Blackshear v. Reliance Standard Life Ins.
     Co., 509 F.3d 634, 639 (4th Cir. 2007) (“[T]he administrator
     is not free to alter the terms of the plan or to construe
     unambiguous terms other than as written. . . . An
     administrator’s discretion never includes the authority to
     read out unambiguous provisions contained in an ERISA plan.”
     (internal citations and quotation marks omitted)), abrogated
     on other grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S.
     105 (2008).
          2
          Nor, in this case, was there any issue as to the
     computation of the amount, a matter that at least in some
     circumstances might have been within the board’s discretion.
                                  5
 1   without any internal check on the resulting conflict of
 2   interest. Buckley v. Slocum Dickson Med. Grp., PLLC, 941 F.
 3   Supp. 2d 251, 258 (N.D.N.Y. 2013). We therefore would dial
 4   back our deference to the medical group’s justifications for
 5   denying Buckley’s severance.
 6
 7        The contractual arrangements here specified the
 8   financial costs and benefits of Buckley’s abrupt departure.
 9   First, the employment agreement set the price tag for
10   resignation without sufficient notice--i.e., liquidated
11   damages of $10,000. Second, the severance plan defined the
12   severance owed to Buckley--i.e., a function of accounts
13   receivable, which increased precipitously on the eve of his
14   departure. Slocum Dickson now offers several justifications
15   for its denial of severance. All would be ineffective even
16   if the plan were ambiguous as to Buckley’s entitlement.
17
18        The medical group defends the denial of severance based
19   upon various costs it encountered when Buckley resigned. To
20   the extent that these losses actually derived from Buckley’s
21   decision to leave before his 90-day notice period elapsed,
22   the liquidated damages must be deemed adequate compensation,
23   and Buckley wasted no time paying that sum to Slocum Dickson
24   upon his separation. Accordingly, the medical group could
25   not reasonably contend that the cost of Buckley’s departure
26   justifies a complete denial of his severance.
27
28        In the alternative, Slocum Dickson contends that it was
29   justified in denying severance because Buckley abandoned his
30   patients when he resigned without notice, thereby breaching
31   his ethical duties. The record would not support this
32   contention even if the board had discretion. Buckley
33   offered to supervise a physician assistant in his specialty,
34   even without pay, to ensure the continued treatment of his
35   patients at Slocum Dickson. And it is undisputed that no
36   patient suffered any harm as a consequence of Buckley’s
37   abrupt departure.
38
39        Given the unambiguous character of Buckley’s right to
40   severance as well as Slocum Dickson’s conflict of interest
41   in deciding Buckley’s severance, the unambiguous contractual

                                  6
 1   scheme, and Slocum Dickson’s unavailing justifications for
 2   its decision to deny severance, the district court was
 3   correct to grant Buckley’s motion for summary judgment.
 4
 5        Having won summary judgment, Buckley was entitled to
 6   seek attorney’s fees pursuant to both the employment
 7   agreement and Section 502(g)(1) of ERISA, 29 U.S.C.
 8   § 1132(g)(1). The district court awarded Buckley $47,723 in
 9   fees. This fee award was within the district court’s
10   discretion and was consistent with the robust record
11   surrounding the motion for fees.
12
13        For the foregoing reasons, and finding no merit in the
14   parties’ other challenges to the district court, we hereby
15   AFFIRM the judgment of the district court.
16
17                              FOR THE COURT:
18                              CATHERINE O’HAGAN WOLFE, CLERK
19

                                   7