Court Opinion

ID: 1040859
Source: CourtListenerOpinion
Date Created: 2013-09-16 16:39:00.043593+00
Date Added: 2024-06-11T13:09:52.782253
License: Public Domain

NOT PRECEDENTIAL
                 UNITED STATES COURT OF APPEALS
                      FOR THE THIRD CIRCUIT
                           _____________

                               No. 12-4310
                              _____________

KAREN JENKINS; JACQUELINE MAYS; TERESA LATTANZE; TORY JOHNSON;
  JOHN VAN ALLEN, III; JOHN DOE; LINDA RUSSEL; DONNA ANDERSON;
 RAYMOND GUNTHER; SHARON SCHULTZ; MICHELLE QUARLES; SUSAN
                        LOLLI; DEBRA KONTRA,

                                                      Appellants.
                                     v.

   UNION LABOR LIFE COMPANY; AMALGAMATED LIFE INSURANCE
 COMPANY; INDUSTRIAL TECHNICAL AND PROFESSIONAL EMPLOYEES
    UNION; OFFICE AND PROFESSIONAL INTERNATIONAL UNION,
                        _______________

               On Appeal from the United States District Court
                  for the Eastern District of Pennsylvania
                            (D.C. No. 10-cv-07361)
                   District Judge: Hon. Harvey Bartle, III
                              _______________

                 Submitted Under Third Circuit LAR 34.1(a)
                            September 10, 2013

     Before: RENDELL, JORDAN and GREENAWAY, JR., Circuit Judges.

                        (Filed: September 16, 2013)
                             _______________

                        OPINION OF THE COURT
                            _______________
JORDAN, Circuit Judge.

      Karen Jenkins and eleven other former employees (collectively, the “Employees”)

of The Amalgamated Life Insurance Company (“ALICO” or “Amalgamated Life”)

appeal a grant of summary judgment to ALICO by the United States District Court for

the Eastern District of Pennsylvania on their claims for violations of the Employee

Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1002 et seq. For the

following reasons, we will affirm.

I.    Background

      A.     Facts

             1.      ALICO Hires the Employees

      Prior to May 9, 2004, the Employees worked in the claims department of The

Union Labor Life Insurance Company, Inc. (“ULLICO”) at a facility in King of Prussia,

Pennsylvania, known as the Pennsylvania Service Center (“PSC”). While employed by

ULLICO, the Employees were members of the Office and Professional Employees

International Union (the “OPEIU”), Local 153, and the terms and conditions of their

employment were governed by a collective bargaining agreement. As employees of

ULLICO, they were participants in a defined benefit pension plan.

      On March 9, 2004, ULLICO entered into agreements pursuant to which it would

outsource its claims administration services to ALICO beginning on May 10, 2004.

Under those agreements, PSC employees would have the opportunity to work for

                                            2
ALICO. The agreements did not, however, require ALICO to maintain their pension

benefits, nor did they provide for the transfer to ALICO of any part of ULLICO‟s defined

benefit pension plan. On March 11, 2004, ULLICO provided the PSC employees with

letters informing them about the transition of their employment to ALICO. Those letters

told them that ALICO‟s “offer of employment likely will include permanent changes in

the salary, benefits, and other terms and conditions of employment that you have

experienced with ULLICO.” (App. at 537.)

        The following week, ALICO distributed a document to the PSC employees

containing “Questions and Answers for [ULLICO] Staff about Amalgamated Life” (the

“Q&A”). (App. at 129.) The Q&A responded to the question “[i]s there a Pension

Plan?” by stating that “[t]here is a 3-year eligibility period for PSC employees to join the

Amalgamated Life staff pension plan. Once you become eligible, the 3-year wait period

will be credited towards the 5-year vesting requirement.” (App. at 130.) At around the

same time, ALICO distributed to the PSC employees a document providing a general

overview of certain employment benefits (the “General Overview”). The General

Overview refers to a 401(k) savings plan but does not mention a defined benefit pension

plan.

        ALICO extended offers of employment to each of the Employees in letters dated

April 7, 2004, that provided that, if they accepted, they would become ALICO employees

on May 10, 2004. With respect to benefits, the letters reminded them that they had

                                             3
“received a General Overview” giving “a quick summary of our benefit programs.”

(App. at 8 (italics in original) (internal quotation marks omitted).) None of the

Employees asked about participation in a defined benefit pension plan when they

received their offers of employment. All of the Employees accepted those offers,

ULLICO terminated them on May 9, 2004, and they became ALICO employees on May

10, 2004.

              2.     The Collective Bargaining Agreements

       Days earlier, on May 7, 2004, ALICO and the Industrial, Technical and

Professional Employees Union (the “ITPEU”), a union affiliated with OPEIU, signed a

memorandum of understanding, stipulating that the ITPEU would be the exclusive

representative for the PSC employees for the purpose of negotiating a collective

bargaining agreement. The ITPEU subsequently raised the possibility of the new ALICO

employees participating in a defined benefit pension plan, but ALICO said that it could

not afford to provide those benefits to them. In December 2004, ALICO and the ITPEU

signed an agreement (the “2004 CBA”) that would govern the terms of the PSC

employees‟ employment until December 31, 2006. The 2004 CBA did not contain any

provision that entitled the PSC employees to participate in ALICO‟s defined benefit

pension plan, although it did provide that they could participate in a 401(k) savings plan.

Each of the Employees received a copy of the 2004 CBA.

                                             4
       In March 2007, ALICO and the ITPEU entered into a second agreement (the

“2007 CBA”) that would govern the conditions of the PSC employees‟ employment from

January 1, 2007, through December 31, 2009. During the negotiation of the 2007 CBA,

the ITPEU again raised the possibility of the PSC employees‟ participation in a defined

benefit pension plan, but ALICO again rejected that request, and the union settled for

increased wages and enhanced severance benefits. As with the 2004 CBA, each of the

Employees received the 2007 CBA and could note that it did not provide for participation

in a defined benefit pension plan.

       In 2009, ALICO and the ITPEU began negotiating a third agreement. In April

2010, after ITPEU members had already rejected one proposed agreement, ALICO

proposed two alternatives, both of which provided that PSC employees would become

participants in a defined benefit pension plan. Under one alternative, employees who met

the plan‟s vesting requirements would accrue benefits beginning in June 2009, and under

the other, they would receive higher cash compensation but would accrue benefits only

after January 2011. The PSC employees voted to accept the second proposal, and, on

May 4, 2010, ALICO and the ITPEU entered into a memorandum of understanding that

fixed the terms of their continuing employment (the “2010 MOU”).

              3.     ALICO Terminates the Employees

       In 2007, ULLICO decided not to renew its administrative service agreements with

ALICO, but it agreed to a more limited arrangement that reduced the volume of claims

                                            5
processed at the PSC. At that time, ALICO considered closing the PSC and moving

ULLICO‟s remaining claims processing work to one of its other offices, but decided not

to. However, the lease on the PSC facility was due to expire in February 2011, and, in

April 2010, ALICO began to consider closing it. Over the next several months, ALICO

reviewed a number of options for the PSC, ultimately deciding to consolidate it with

another of the company‟s operations. On October 8, 2010, ALICO informed PSC

employees that it was closing the facility, and their employment was terminated on

October 29, 2010.

       B.     Procedural History

       Following their termination, the Employees filed an eight-count complaint against

ULLICO, ALICO, the OPEIU, and the ITPEU, alleging that they had been improperly

denied benefits under ALICO‟s defined benefit pension plan. The complaint stated

claims for violations of ERISA, seeking relief based on theories of unjust enrichment and

equitable estoppel, and for violations of the National Labor Relations Act, 29 U.S.C. §

151 et seq., and the Labor Management Relations Act, 29 U.S.C. § 141 et seq.

       Following discovery, each of the four defendants moved for summary judgment as

to the claims against it. In response, the Employees stipulated to the dismissal of all

claims against ULLICO, the OPEIU, and the ITPEU. The District Court granted

ALICO‟s motion to dismiss some of the claims against it, leaving only the ERISA claims.

                                             6
On October 24, 2012, the District Court granted summary judgment to ALICO on those

claims as well.

       The Employees filed this timely appeal.

II.    Discussion1

       The Employees have appealed only the District Court‟s grant of summary

judgment to ALICO on their equitable estoppel claim. ERISA § 502(a)(3) provides that

“a beneficiary may „obtain ... appropriate equitable relief ... to redress [ERISA] violations

or ... to enforce any provisions of [ERISA].‟” Pell v. E.I. DuPont de Nemours & Co.,

Inc., 539 F.3d 292, 300 (3d Cir. 2008) (alterations in original) (quoting 29 U.S.C. §

1132(a)(3)). “A beneficiary can make out a claim for appropriate equitable relief based

on a theory of equitable estoppel.” Id. (citation and internal quotation marks omitted).

But “[t]o succeed under this theory of relief, an ERISA plaintiff must establish (1) a

       1
          The District Court had jurisdiction pursuant to 28 U.S.C. § 1331 and 29 U.S.C. §
1132(e), (f). We have jurisdiction pursuant to 28 U.S.C. § 1291. “We review de novo
district court orders granting or denying summary judgment,” Elassaad v. Independence
Air, Inc., 613 F.3d 119, 124 (3d Cir. 2010), “apply[ing] the same test required of the
district court and view[ing] inferences to be drawn from the underlying facts in the light
most favorable to the nonmoving party,” Bayer v. Monroe Cnty. Children & Youth Servs.,
577 F.3d 186, 191 (3d Cir. 2009). Summary judgment is proper when “the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a). We “may affirm the district court on
grounds different from those relied on by the district court,” In re Mushroom Transp. Co.
Inc., 382 F.3d 325, 344 (3d Cir. 2004), and “for any reason supported by the record,”
Brightwell v. Lehman 637 F.3d 187, 191 (3d Cir. 2011).

                                              7
material misrepresentation, (2) reasonable and detrimental reliance upon the

representation, and (3) extraordinary circumstances.” Curcio v. John Hancock Mut. Life

Ins. Co., 33 F.3d 226, 235 (3d Cir. 1994). Moreover, the Employees “bear the burden of

proof on each estoppel element.” Int’l Union, U.A.W. v. Skinner Engine Co., 188 F.3d

130, 152 (3d Cir. 1999).

       Because we conclude that the Employees have not met their burden with respect to

either reasonable reliance or extraordinary circumstances, we confine our discussion to

those two requirements.

       A.     Reasonable Reliance

       To prevail on their equitable estoppel claim, “[a]s the phrase „reasonable and

detrimental reliance‟ implies, ... [the Employees] must show (1) reasonableness and (2)

injury.” Pell, 539 F.3d at 301 (quoting Curcio, 33 F.3d at 237). The District Court did

not address the reasonableness of the Employees‟ alleged reliance, and concluded only

that the evidence supports an inference that at least some of them “relied to their

detriment on [ALICO]‟s misrepresentation regarding pension benefits.” (App. at 31.)

The Employees likewise focus on the element of injury, arguing that some of them would

not have accepted ALICO‟s April 2004 offers of employment if they had known that they

would not be enrolled in a defined benefit pension plan. The only evidence that the

Employees point to in support of the reasonableness of their alleged reliance is the Q&A

and General Overview which had been provided to them.

                                             8
       We conclude that that evidence is insufficient to meet the Employees‟ burden on

the element of reasonable reliance. Based on all of the documents that the Employees

received, this case is analogous to situations in which participants know that the plan

sponsor reserves the right to alter or eliminate benefits at any time. Even if one thought

that the Q&A‟s statement about eligibility for a pension plan meant that there was a

defined benefit plan, as opposed to a 401(k) plan, there were several subsequent

communications making it clear that no defined benefit plan participation was offered

until 2010. We have said that “a participant‟s reliance on employer representations

regarding benefits may never be „reasonable‟ where the participant is in possession of a

written document notifying him of the conditional nature of such benefits.” In re Unisys

Corp. Retiree Med. Benefits ERISA Litig., 58 F.3d 896, 908 (3d Cir. 1995). And in such

cases, we and other courts of appeals have rejected estoppel claims due to the

participants‟ failure to establish reasonable reliance. See id. (concluding that the

reservation of rights “undercuts the reasonableness of any detrimental reliance” by the

plan participants); Gordon v. Barnes Pumps, Inc., 999 F.2d 133, 137 (6th Cir. 1993)

(concluding that ERISA plaintiffs “have not shown that they reasonably and

detrimentally relied on any statements by the company” where they “knew or should

have known from the express terms of the ... Plan that benefits could be altered at any

time”); Alday v. Container Corp. of Am., 906 F.2d 660, 666 (11th Cir. 1990) (dismissing

                                              9
an equitable estoppel claim where the plan documents unambiguously stated that the

employer reserved the right to modify or terminate the plan).

      In this case, the Employees were in possession of documents that informed them

not only that ALICO might not include them in its defined benefit pension plan, but that,

in fact, it had not done so. First, before they received the Q&A, the letters from ULLICO

regarding its decision to outsource PSC services notified them that ALICO‟s “offer of

employment likely will include permanent changes in the salary, benefits, and other terms

and conditions of employment that you have experienced with ULLICO.” (App. at 537.)

Second, the General Overview, which was the only benefits summary referred to in the

letters offering employment to the Employees, referred only to a 401(k) savings plan and

did not mention a defined benefit pension plan. Third, neither the 2004 CBA nor the

2007 CBA, copies of which were distributed to the Employees, provided for a defined

benefit plan. Cf. Allied Chem. & Alkali Workers of Am., Local Union No. 1 v. Pitt. Plate

Glass Co., Chem. Div., 404 U.S. 157, 159 (1971) (“Under the National Labor Relations

Act, ... mandatory subjects of collective bargaining include pension and insurance

benefits for active employees ... .”). Moreover, nothing in the record suggests that, when

ALICO offered future participation in a defined benefit pension plan as part of the

negotiation of the 2010 MOU, any of the Employees expressed either surprise or dismay

that they were not already vested participants in it.2 We question whether the Employees

      2
          In fact, the PSC employees bargained to defer their accrual of benefits under the
                                            10
could establish any reliance, let alone reasonable reliance, on references in the General

Overview and Q&A to potential pension benefits in deciding to accept or continue

employment at ALICO. But, assuming they did rely on those documents, that reliance

was not reasonable in light of subsequent communications.

       B.     Extraordinary Circumstances

       Even if the Employees had established reasonable reliance, “a plaintiff must do

more than merely make out the ordinary elements of equitable estoppel to establish a

claim ... under ERISA.” Kurz v. Phila. Elec. Co., 96 F.3d 1544, 1553 (3d Cir. 1996)

(internal quotation marks omitted). “Our precedents indicate that an ERISA reporting or

disclosure violation, such as the distribution of an inaccurate summary plan description,

cannot provide a basis for equitable estoppel ... in the absence of „extraordinary

circumstances.‟” Gridley v. Cleveland Pneumatic Co., 924 F.2d 1310, 1319 (3d Cir.

1991).3 “Extraordinary circumstances can arise where there are „affirmative acts of

fraud,‟ where there is a „network of misrepresentations ... over an extended course of

dealing,‟ or where particular plaintiffs are especially vulnerable.” Pell, 539 F.3d at 303-

04 (alterations in original) (quoting Kurz, 96 F.3d at 1553). We have found extraordinary

ALICO defined benefit plan by another two years in return for additional compensation.
       3
        The “extraordinary circumstances” requirement comes from the fact that “ERISA
contains two express causes of action to remedy reporting and disclosure violations as
such,” Hozier v. Midwest Fasteners, Inc., 908 F.2d 1155, 1167 (3d Cir. 1990) (citing 29
U.S.C. § 1132(a)(4), (c)), so those violations cannot ordinarily serve as the basis for
substantive relief.

                                             11
circumstances when an insurer informed a patient that certain coverage would be

provided and then denied coverage, Curcio, 33 F.3d at 238, when a defendant repeatedly

misrepresented the scope of coverage to a plan participant, Smith v. Hartford Ins. Grp., 6

F.3d 131, 142 (3d Cir. 1993), and when an employer failed to make required

contributions and the plan administrator allowed an employee to pay contributions

himself, Rosen v. Hotel & Rest. Emps. & Bartenders Union, 637 F.2d 592, 598 (3d Cir.

1981).

         Applying those principles, we find no support for the Employees‟ claim that

extraordinary circumstances exist. Far from being the victims of a “network of

misrepresentations,” the Employees were plainly put on notice by the General Overview,

the 2004 CBA, the 2007 CBA, and the 2010 MOU that they had not been granted

participation in any ALICO defined benefit pension plan prior to 2010. The only

conceivably confusing document was the Q&A that ALICO distributed, which, even if

read to offer the possibility that pension benefits would include a defined benefit plan,

was qualified by the more complete General Overview referred to in the offers of

employment sent to the Employees. Nothing in the record suggests that the Employees –

represented as they were by the ITPEU, and capable of trading pension benefits for

additional compensation when given the chance – were especially vulnerable to the

alleged misrepresentations in the Q&A. Cf. Curcio, 33 F.3d at 238 (finding special

vulnerability where hospital denied coverage to patient for substantial claim after

                                             12
representing that there was coverage); Smith, 6 F.3d at 142 (same). The Employees have

thus failed to demonstrate extraordinary circumstances, and their equitable estoppel claim

under ERISA must fail.

III.   Conclusion

       For the foregoing reasons, we will affirm the judgment of the District Court.

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