Summary
noting the difference between “claims premised on promissory estoppel,” which require reliance based on a “promise or a misstatement of future intent,” and claims “based on equitable estoppel,” which require a misrepresentation of fact
Summary of this case from Brenner v. BrennerOpinion
No. 02-CV-4312 (ERK)(VVP).
July 16, 2004
MEMORANDUM ORDER
This case involves three former employees of defendant Matsushita Electric Corporation of America (hereafter "MECA" or "Matsushita") who elected to participate in MECA's Voluntary Resignation Program (VRP) expecting to receive higher pension payments than they ultimately received. The former employees brought suit pursuant to the Employee Retirement and Income Security Act (ERISA) against MECA for equitable estoppel. Last year I wrote an extensive opinion denying defendant's motion to dismiss. See DePace v. Matsushita Elec. Corp. of America, 257 F. Supp. 2d 543 (E.D.N.Y. 2003). Subsequently, plaintiffs amended their complaint to include a cause of action for age discrimination in violation of the Age Discrimination in Employment Act, 29 U.S.C. § 621 (ADEA). Now defendant moves for summary judgment on all claims.
Background
In my opinion denying defendant's motion to dismiss, I set forth the background of this case, as alleged. After discovery, the facts — with certain exceptions that I note — are consistent with those that were alleged, particularly when drawing every inference in favor of plaintiffs. Plaintiff Andrew Molinaro commenced employment with Panafax Corporation ("Panafax") in October 1977. Plaintiff Salvatore Di Blasi commenced employment with Panafax in November 1977. And plaintiff Nicholas DePace commenced employment with Panafax in March 1987. On April 1, 1989, Panafax merged into MECA. Plaintiffs remained employees of MECA following the merger, and as of October 2001, Nicholas DePace, Salvatore Di Blasi, and Andrew Molinaro were all still employees of MECA. While their subsequent experiences were similar, I address them individually.
1. Facts as to Plaintiff DePace
On October 12, 2001, plaintiff Nicholas DePace received materials advising him of his eligibility to participate in MECA's Voluntary Resignation Program (the "VRP"). Garland Cert. Exhibit 14 (hereafter, "Exhibit" refers to exhibits attached to Garland Cert. unless otherwise noted). This program provided employees with special severance payments including lump sum or annual cash payments based upon years of service and enhanced medical benefits, in exchange for retirement and the execution of a release of claims against MECA. The materials sent to DePace included a Summary Plan Description of the VRP (Exhibit 11), an Election and Release Form (Exhibit 13), and a Checklist (Exhibit 12).
According to the Summary Plan Description, participation in the VRP was "STRICTLY VOLUNTARY" and eligible employees who elected to participate were required to inform Matsushita of their decision by December 3, 2001. (Exhibit 11, at 2). The Summary Plan Description also informed Mr. DePace that by electing to participate in the VRP he would receive a lump sum separation payment on December 31, 2001 equal to 2.6 weeks of base pay for each year of service earned through October 12, 2001, up to a maximum of 52 weeks. (Id. at 3). The Summary Plan Description further explained that participating employees would have their monthly premium payments for COBRA paid by the Company for up to 18 months or, as an alternative for employees age 55 years or older with 10 years of service, special rates for their continued medical coverage under a Post Employment Medical Option. (Id. at 4-5).
Mr. DePace received four pension benefit estimates during the month of October 2001: one dated October 18, 2001 (Exhibit 31); two dated October 19, 2001 (Exhibits 32-33); and one dated October 26, 2001 (Exhibit 34). Each pension benefit estimate provided March 30, 1987 as Mr. DePace's date of hire, but included differing estimated pension figures based on various anticipated retirement dates. The estimated lump sum payments ranged from $349,219.42 to $381,139.80. The estimated life annuities ranged from $2,479.32 to $4,431.79. Each pension estimate clearly stated that, "[w]hile every effort has been made to provide accurate figures, this statement is subject to correction for any errors in data accumulation or benefit calculations." (Exhibits 31-34). All four estimates also contained the following disclaimer: "The availability and amount of all benefits is governed by the plan documents and not by this statement." (Id.).
The Election and Release Letter advised Mr. DePace that he had forty-five days to consider participating in the VRP and another seven days to revoke his decision to participate. It also encouraged Mr. DePace "to consult with your personal attorney" before signing the Release. (Exhibit 35). On November 5, 2001, Mr. DePace signed and submitted a Voluntary Resignation Package. Included in the VRP package was an Election and Release Letter signed by Mr. DePace, which provided for a release of all claims against Matsushita including: "[c]laims, actions, causes of action or liabilities arising under . . . the Employee Retirement Income Security Act of 1974, as amended . . ." (Exhibit 13, 35). On the final page of the Election and Release Letter, just above the signature line where Mr. DePace signed to indicate his interest in participating in the VRP, the following language appeared in bold print:
By signing this Agreement, you acknowledge that: (i) you have read this Agreement completely; (ii) you have had an opportunity to consider the terms of this Agreement; (iii) you have had the opportunity to consult with an attorney of your choosing prior to executing this Agreement to explain the Agreement and its consequences; (iv) you know that you are giving up important legal rights by signing this Agreement; (v) you understand and mean everything that you have said in this Agreement, and you agree to all its terms; and (vi) you have signed this Agreement voluntarily and entirely of your own free will.
(Id. at 5).
On or about December 10, 2001, Mr. DePace learned that there might be a "possible problem with pension information not being correct." (Exhibit 40). He e-mailed Mike Miller at MECA and Ken Portington, MECA's Human Resources Manager, seeking clarification. He was told that, "Bill Schupp is reviewing the matter and will have a response shortly." Id. Receiving no further response, Mr. DePace left employment with Matsushita as planned on December 28, 2001. On January 22, 2002, he was informed that his actual pension benefit would be $308,030.70, rather than the $349,219.42 indicated in the October 18, 2001 estimate, which had used December 31, 2001 as his estimated retirement date. (Exhibit 31). This represented a shortfall of $41,188.72 and a reduction of 12% of the anticipated pension benefit. The estimate had used his first date of employment with Panafax, instead of the date Panafax merged with Matsushita, as his hire date. Because Mr. DePace did not learn the actual figure until January 22, 2002, he could not then revoke his participation in the VRP.
2. Facts as to Plaintiff Di Blasi
On October 12, 2001, Mr. Di Blasi also received written materials advising him of his eligibility to participate in the VRP, including many of the same materials provided to Mr. DePace: a Summary Plan Description; an Election and Release Letter; and an Employee Checklist.
Mr. Di Blasi received a pension estimate, dated October 18, 2001, which informed him of the estimated benefits he would receive if he chose to participate in the VRP on January 1, 2002. (Exhibit 28). The estimate indicated that Mr. Di Blasi would be entitled to a lump sum pension payment of $360,402.89. (Id.). In calculating this benefit, Mr. Di Blasi's years of service were based on a date of hire of November 17, 1977, the date on which he commenced employment with Panafax. (Id.). As with the estimates provided to Mr. DePace, the estimate sent to Mr. Di Blasi indicated that it was "For Illustration Purposes Only," and stated that "[w]hile every effort has been made to provide accurate figures, this statement is subject to correction for any errors in data accumulation or benefit calculations." (Id.). In addition, the estimate contained the identical disclaimer that, "[t]he availability and amount of all benefits is governed by the plan documents and not by this statement." (Id.).
On October 27, 2001, Mr. Di Blasi signed and submitted a Voluntary Resignation Package, effective December 28, 2001. Included in that package was the Election and Release Letter signed by Mr. Di Blasi on the same date. (Exhibit 30). The letter contained a release of all claims against Matsushita, including "[c]laims, actions, causes of action or liabilities arising under . . . the Employment Retirement Income Securities Act of 1974, as amended . . ." (Id.). The Election and Release Letter signed by Mr. Di Blasi indicated that he had forty-five days to indicate his desire to participate in the VRP, after which he would be afforded a seven-day revocation period. (Id.). Mr. Di Blasi's Election and Release Letter also contained the same bold print language just above the signature line, which specified that he had read the agreement, that he had the opportunity to review it with an attorney of his choosing, that he understood it, and that he agreed to its terms. (Id.).
Mr. Di Blasi was informed via letter dated November 29, 2001 (Exhibit 36) that his actual pension benefit would be $229,387.01, rather than $360,402.89, as had been indicated in the October 18, 2001 estimate. He claimed that he received this letter on December 7, 2001, prior to his last date of employment, but still long after his seven-day revocation window had closed. (Di Blasi Cert. ¶ 6). The actual pension benefit he would receive represented a shortfall of $131,015.88, and a reduction of 36% from his anticipated pension benefit. The estimate had used his first date of employment with Panafax, instead of the date Panafax merged with Matsushita, as his hire date.
On December 10, 2001, Mr. Di Blasi e-mailed Mr. Schupp to inform him of the discrepency between his previous pension estimates and what he was suddenly being told. He had just received "finalized actuarial figures," and he wrote:
I immediately called Susan McElroy to find out why the huge difference. She explained that because I am a former Panafax employee, I am only entitled to pension benefits from April 1, 1989. I am currently at a loss for words. I have never been informed of this. In fact, all of the annual benefit books I have received over the years have always included full and normal retirement benefit payments. Even the MECA timeline on the intranet has Panafax joining MECA in 1988. I am requesting that your office investigate this matter to determine if an error has been made.
(Exhibit 37). A day later, Schupp responded that "no error has been made." Id. Approximately six weeks later, in response to another inquiry from Di Blasi, Michael Miller wrote: "In hindsight, a closer review should have been completed before you made the decision. At this point in time, nothing can be changed. I suggest you consult with an attorney to determine what your options may be." Id. He continued: "In review of all the records, I can't find anything that would indicate why you guys would get the understanding that Panafax time will be included for Panasonic Pension service time." Id. In the end, Mr. Di Blasi retired early as part of the VRP.
3. Facts as to Plaintiff Molinaro
On October 12, 2001, Mr. Molinaro received the same Voluntary Resignation Package as Mr. DePace and Mr. Di Blasi. (Exhibit 6). That package included a pension estimate that predicted that he would be entitled to a lump sum payment of $378,133.69 if he retired on January 26, 2003. (Exhibit 20). Mr. Molinaro also received two pension estimates, dated October 30, and October 31, 2001. (Exhibits 22-24). Mr. Molinaro's predicted pension payments in these estimates — as with the initial estimate — were calculated based on a commencement date of October 24, 1977, the day on which he began employment with Panafax. (Exhibits 22-24). As with the estimates to Mr. DePace and Mr. Di Blasi, Mr. Molinaro's estimates all stated that they were "For Illustration Purposes Only" and provided that "[w]hile every effort has been made to provide accurate figures, this statement is subject to correction for any errors in data accumulation or benefit calculations." (Exhibits 22-24). In addition, the estimates stated that, "[t]he availability and amount of all benefits is governed by the Plan documents and not by this statement." (Id.). Nevertheless, these estimates predicted lump sum payments of $349,738.19 or $352,668.47 depending on his retirement date.
Mr. Molinaro submitted his signed Voluntary Resignation Package on November 2, 2001. (Exhibit 25). Contained in that package was the Election and Release Letter executed by Mr. Molinaro, which released Matsushita from all claims including "[c]laims, actions, causes of action or liabilities arising under . . . the Employment Retirement Security Act of 1974, as amended . . ." (Id.). The Election and Release Letter informed Mr. Molinaro of the forty-five day election window and seven day revocation period. (Id.). It also contained the same bold print language found in DePace's and Di Blasi's Election and Release Letters, stating that Mr. Molinaro had read the agreement, had the opportunity to review it with counsel, understood it, and had agreed to its terms. (Id.).
On December 5, 2001, prior to leaving Matsushita, but well after his revocation window had closed, Mr. Molinaro sent an e-mail inquiry to Susan McElroy seeking two more estimates based on possible termination dates of February 1st, 2003, and February 1st, 2004. (Exhibit 27). After apparently not receiving a response, he forwarded the request to Michael Miller, General Manager of Personnel for Matsushita, and indicated that, "[i]t has come to my attention that there may be a discrepancy in my pension calculations provided to me prior to my election of the VRP. Could you please clarify if any such discrepancy exists?" Id. On December 17, 2001, Mr. Miller responded that he was "working with Bill Schupp on this issue and hope[d] to have some information shortly." (Id.).
Mr. Molinaro's employment with Matsushita ended on December 31, 2001, pursuant to his participation in the VRP. Subsequently, Mr. Molinaro received a letter from Matsushita indicating that his actual pension benefit would be $226,668.79. (Molinaro Cert. ¶ 9). This was $125,999.68 less than had been indicated in the earlier estimate, and represented a reduction of 36% of the anticipated pension benefit. The estimate had used his first date of employment with Panafax, instead of the date Panafax merged with Matsushita, as his hire date.
Facts common to plaintiffs
On January 22, 2002, Mr. Miller wrote a letter to plaintiffs Molinaro, DePace, and Di Blasi confirming that the estimates they had received were too high and that their hire date for pension purposes was the date Panafax merged with Matsushita rather than the date they began working for Panafax. This was the first official notification plaintiffs received that the pension estimates they had received prior to electing the VRP were incorrect. The letter was as follows:
We finally had time to investigate the question you had on your Panafax Service time as it relates to your MECA Pension. It took some time to find and review all the records on the 1989 changeover. Attached are some key documents for your review.
In reviewing the records, it was very clear that the Panafax benefits ended on March 31, 1989 and MECA benefits started on April 1, 1989. There were of course payouts to you for the full value of the Panafax pension program at that time. The Panafax pension and the MECA pension are two separate legal documents and legally can not be "mixed" together. This means a benefit from one doesn't carry over to the new program unless there is a legal description.
All of you strongly felt that your Panafax service time was to be considered part of the MECA Pension Program. There is nothing in any document that would indicate that in any form. Again, one program ended completely and the new one started without any language related to the previous program.
There probably was a discussion at the meeting about "vesting credit". The MECA pension program allows people who were transferring from Panafax to MECA who have 5 or more years of service to be 100% vested in the MECA pension. Normally, there is a 5 year vesting period for an individual to become eligible for such a program. MECA counted your years of service for vesting only. On April 1, 1989, you may have been vested in the MECA pension but you had "0" years of service.
I understand this may not be the answer you were expecting. Please send me any further questions you may have so we can clearly respond.
Garland Cert. Exhibit 41.
Susan McElroy, Matsushita's Assistant Manager for Financial Benefits had completed each of plaintiffs' pension estimates. According to her certification submitted in connection with MECA's motion for summary judgment, McElroy prepared the estimates as she did for each of approximately 4,000 employees eligible for the VRP. (See McElroy Cert.). She utilized the information in MECA's Human Resources Information System to calculate years of service and would calculate an appropriate estimate. Then, when an employee elected to participate in the VRP, Ms. McElroy requested MECA's actuary, William M. Mercer to prepare actual pension calculations to be forwarded to employees. The confusion occurred, at least in part, because the Information System to which Ms. McElroy had access listed the dates they began work with Panafax as their start dates, even though that was not the correct date for pension purposes. Mr. Mercer had access to more complete and correct information.
Plaintiffs' claims for damages initially rested on the following: (1) Matsushita "knew or reasonably should have known that the representations made to the plaintiffs concerning the amount of their benefits upon retirement were false"; (2) the representations were intentionally or recklessly made by Matsushita "to induce plaintiffs to resign"; (3) plaintiffs "reasonably relied upon [Matsushita's] representations . . . and resigned from the employment of [Matsushita]"; and (4) as a result of their resignations, plaintiffs were damaged. (Cmplt. ¶¶ 38, 40, 43, 44). They now also allege that Matsushita acted in a discriminatory way by consciously seeking to improperly induce reliance from them because of their age.
Plaintiffs initially sought compensatory damages in the amount of their claimed shortfalls ($41,188.72 for Mr. DePace; $131,015.60 for Mr. Di Blasi; $125,999.18 for Mr. Molinaro), "together with sufficient additional damages to compensate for the tax disadvantage of not receiving these funds as a pension payment and interest," front pay and benefits, punitive damages of $1,000,000, attorneys' fees and costs, and "[s]uch other and further relief as may be just and proper." (Cmplt. ¶ 46). All of these requests for relief were premised on 29 U.S.C. § 1132(a)(3). (Cmplt. ¶ 1). In my memorandum and order denying Matsushita's motion to dismiss, I ruled that plaintiffs' requests for compensatory and punitive damages were unavailable under ERISA and that plaintiffs could only seek the equitable remedies of front pay and reformation.
Discussion
Defendant Matsushita moves for summary judgment on plaintiffs' claims. A motion for summary judgment may be granted only "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Thus, the moving party has the burden of establishing that no material facts are in dispute. See Celotex Corp. v. Catrett, 477 U.S. 317 (1986). "The District Court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor." Stagl v. Delta Airlines, Inc., 52 F.3d 463 (2d Cir. 1995). "In the context of a motion for summary judgment, `factual allegations in the pleadings of the party opposing the motion . . ., if supported by affidavits or other evidentiary material, should be regarded as true.'" Rosen v. Spanierman, 894 F.2d 28, 30 (2d Cir. 1990) (citing Burtnieks v. City of New York, 716 F.2d 982, 983-84 (2d Cir. 1983)). "Viewing the evidence produced in the light most favorable to the non-movant, if a rational trier could not find for the non-movant, then there is no genuine issue of material fact and entry of summary judgment is appropriate." Binder v. Long Island Lighting Co., 933 F.2d 187, 191 (2d Cir. 1991).
A. Plaintiffs' Equitable Estoppel Claim
To succeed on a claim of equitable estoppel, a plaintiff must show: (1) a material misrepresentation, (2) reasonable reliance thereon, and (3) damage resulting therefrom. See Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir. 1993). In addition, principles of estoppel only apply in ERISA cases "under extraordinary circumstances." Devlin v. Transp. Comms. Int'l Union, 173 F.3d 94, 102 (2d Cir. 1999) (quoting Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d 72, 78 (2d Cir. 1996)). As the Second Circuit explained in Aramony v. United Way Replacement Benefit Plan, 191 F.3d 140, 151 (2d Cir. 1999), these "extraordinary circumstances" are necessary "to lessen the danger that commonplace communications will routinely be claimed to give rise to employees' rights beyond those contained in the formal benefit plans." Id. Matsushita seeks summary judgment on this claim, arguing that (i) no misrepresentation was made; (ii) plaintiffs could not reasonably rely upon the pension estimates; and (iii) there were no extraordinary circumstances.
i. Whether there were misrepresentations
Matsushita argues that "plaintiffs here cannot establish the existence of material misrepresentations because each benefit estimate was clearly marked as such and contained the type of disclaimer sufficient to defeat an estoppel claim: `[w]hile every effort has been made to provide accurate figures, this statement is subject to correction for any errors in data accumulation or benefit calculations,' and that `[t]he availability and amount of all benefits is governed by the plan documents and not by this statement.'" MECA Brief, at 25. I considered and rejected this argument in denying Matsushita's motion to dismiss. I wrote:
Matsushita argues that the complaint fails to state a claim for promissory estoppel because plaintiffs could not reasonably rely on "estimates" of benefits that specifically disclaimed any binding effect. Each statement that allegedly gave rise to plaintiffs' detrimental reliance denoted that it was an "ESTIMATE" and "For Illustration Purposes Only." The statements also warned that "[w]hile every effort has been made to provide accurate figures, this statement is subject to correction for any errors in data accumulation or benefit calculations." Moreover, the estimates each made clear that the "availability and amount of all benefits is governed by the plan documents and not by this statement." Pointing to the definition of "estimate" in Webster's Dictionary, Matsushita argues that by their very nature, the estimates provided to plaintiffs could not be relied on.
However, the issue is more complex than a simple dictionary definition of the term "estimate." All of the statements provided to plaintiffs specifically noted the date of commencement of employment that would be used for calculating pension benefits. In every single one of these statements, the date indicated was the exact date each plaintiff began working for Panafax. There is no indication that plaintiffs received any subsequent statements explaining that the dates used were erroneous. Nor did they receive any corrected estimates indicating what their actual benefits would be until after the window period for rescinding their participation had already lapsed. While plaintiffs may reasonably have expected that the actual monetary calculations would diverge slightly from the estimates, there was nothing that might indicate to plaintiffs that the entire basis for calculating their benefits would change. Most importantly, the plan documents are ambiguous on this issue. Neither the summary plan description nor any of the additional materials sent to the plaintiffs clearly define "years of service" or the accrual of benefits with respect to successor companies. Certainly these documents do not contain any information that would put employees on notice that, contrary to the written estimates they received, their benefits would not include service accumulated at a successor company that was acquired by Matsushita. In the absence of any clear documented information to rely on, I cannot conclude that plaintiffs' reliance on the statements sent by Matsushita was unreasonable as a matter of law.Matsushita, 257 F. Supp. 2d at 553-54. The evidence adduced in discovery does not challenge anything on which I relied.
Nevertheless, in raising the same argument on summary judgment, Matsushita relies primarily the Second Circuit's decision inPerreca v. Gluck, 295 F.3d 215 (2d Cir. 2002). Although the Second Circuit's decision in Perreca was issued before I ruled on Matsushita's motion to dismiss, Matsushita failed to call it to my attention. Now it argues that this case precludes plaintiffs from relying on the doctrine of estoppel.
In Perreca, the Second Circuit considered the claim of an individual who had retired with the expectation of a larger pension than he actually received. Specifically, Mr. Perreca claimed that he had retired early in 1986 based on his expectation that he would receive benefits accruing from a hire date of August 1, 1959, instead of February 22, 1966, the date his company eventually utilized. Part of Mr. Perreca's claim was based on the language of the pension plan and certain disputed facts as to when he first qualified for the plan. Another part of Mr. Perreca's claim was based on promissory estoppel. The Second Circuit affirmed the district court's denial of Mr. Perreca's promissory estoppel claim:
Perreca points to an "Annual Statement of Benefits" dated July 1, 1984 that calculated his Plan benefits from August 1, 1959 (Halbardier Aff., Ex. V) as evidence that he indeed was promised that his Sternberger Plan benefits would accrue from August 1, 1959. See Appellants' Br. at 28-29. This document, which was "prepared for" Perreca, stated, inter alia, that as of July 1, 1984, "Your accrued pension under the Retirement Plan is $4,028 a month to start on March 1, 1997 at age 65. You have 25 years of service credited toward vesting. . . . Your date of employment is August 1, 1959." (Halbardier Aff., Ex. V.) At the bottom of this document, a statement in capital letters directed the recipient to consult the reverse side of the paper. This statement read, " PLEASE SEE THE REVERSE SIDE FOR NOTES REGARDING THE PREPARATION OF THIS STATEMENT AND AN EXPLANATION OF ACCRUED AND VESTED BENEFITS." Id. On the reverse side of the paper, there was a note that read in pertinent part, "Every effort was made to avoid errors in the preparation of this statement. However, you will appreciate that errors may have occurred and that factors and assumptions used for projecting benefits may be subject to change. Actual benefits are, of course, subject to verification before any payments are authorized." (Id., Ex. W.)Perreca, 295 F.3d at 225-26. The actual benefits awarded were based on a hire date of February 22, 1966. After holding that there was a genuine issue of material fact as to when the appropriate hire date was based on the language of the pension plan, the Second Circuit considered Mr. Perreca's argument that, regardless of the pension plan's language, his benefits should accrue from August 1, 1959 because of promissory estoppel. It wrote:
To the extent that plaintiffs suggest that this statement of projected benefits alone constituted a promise supporting their claim of promissory estoppel, we reject their claim. In light of the prominent disclaimer printed on the statement that specifically cautioned Perreca that "[a]ctual benefits are . . . subject to verification before any payments are authorized," (id.), the statement of projected benefits cannot, in the circumstances of this case, reasonably be construed as a promise concerning the precise amount of benefits accrued. The disclaimer was clearly printed on the statement prepared for Perreca and notified him that actual benefits were subject to verification before any payments would be authorized.Id. at 225-26. Matsushita claims that Perreca "leaves no doubt that plaintiffs cannot establish a material misrepresentation." MECA Brief, at 23.
There is a difference between claims premised on promissory estoppel (as was the case in Perreca) and those based on equitable estoppel (as is the case here). In the former, there must be reasonable reliance based on a promise, or a misstatement of future intent. In the latter, there must be reasonable reliance on a misrepresentation. In Perreca, the Second Circuit ruled that the pension estimates could not be "construed as a promise," because of the qualifying language. It did not decide whether the qualifying language precluded reliance or whether it precluded construing the pension estimates as a misrepresentation. But see Hart v. The Equitable Life Assurance Soc., No. 02 Civ. 2364, 2002 WL 31682383, at *3 (S.D.N.Y. Nov. 26, 2002) (applying Perreca to a claim for equitable estoppel without discussion of the issue). Nevertheless, the question of whether or not the Second Circuit's brief analysis means that a qualified pension estimate can constitute a misrepresentation, or a misstatement of fact, is not one that I need not resolve here. There is a separate basis to distinguish Perreca.
The Second Circuit wrote in Perreca that "the statement of projected benefits cannot, in the circumstances of this case, reasonably be construed as a promise concerning the precise amount of benefits accrued." 295 F.3d at 226 (emphases added). The phrase "the circumstances of this case" renders the holding less absolute than Matsushita claims. In Perreca, the pension estimate on which Mr. Perreca claimed to rely was not made in connection with a voluntary resignation program. Instead, it was an annual statement, and there was no evidence that Mr. Perreca's employer made the estimate in a conscious effort to induce immediate reliance. Here, whether or not the pension estimates were intentionally false, they were explicitly intended to induce reliance. Indeed, by mailing them with VRPs, Matsushita was clearly asking its employees to specifically consider the contents and to make a decision regarding retirement based on those contents within forty-five days. Thus, notwithstanding the boilerplate disclaimers, a jury could conclude that Matsushita knew that the representations would very likely be relied upon. This makes particularly egregious Matsushita's manner of preparing the pension estimates, whereby it had Ms. McElroy prepare estimates based on information that it knew was less complete than the information possessed by the actuary Matsushita would subsequently employ to produce accurate pension figures.
More significant, the faulty estimates were the only available numbers on which plaintiffs could rely. In Perreca, there is no indication that Mr. Perreca was limited in his ability to seek a more precise estimate from his company before retiring, or making inquiries before relying upon it. Here, the plaintiffs were faced with a narrow time window in which to make a decision. Moreover, because the plan itself was vague, the only accessible information upon which they could rely was provided in the estimates. And given the premise on which the calculations were consistently based — that plaintiffs would receive benefits dating from their hire dates with Panafax — it is unclear what plaintiffs could have done, even if they had hired lawyers. Again, when plaintiffs sought to confirm the estimates with Matsushita, they were told either that the estimates were correct or that they would have to wait for an answer. Despite their efforts, plaintiffs were not told the correct amounts until after their VRP windows had closed.
Finally, a jury could reasonably believe that Matsushita knew that there was a problem, and the nature of the problem, as early as November 29, 2001 or before. That is when Ms. McElroy sent Mr. Di Blasi an actual pension figure that was 36% less than the one she had estimated he would be paid. By that point, plaintiffs' individual windows for revocation had closed, but Matsushita could have easily informed plaintiffs of the mistake and extended their windows. Instead, they did nothing to help; to the contrary, they delayed responding to the various queries by plaintiffs Molinaro and DePace. This sort of response raises serious questions about what plaintiffs could have done earlier to avoid relying on the pension estimates or to learn more accurate figures. In sum, under the circumstances of this case, the use of boilerplate disclaimers should not preclude the application of equitable estoppel to the misrepresentations of fact made by Matsushita to its employees.
Whether plaintiffs could reasonably rely upon the estimates
In addition to arguing that plaintiffs could not rely on the estimates because of the disclaimers, Matsushita argues that plaintiffs could not rely on the estimates because they should have known that the estimates were incorrect. Aside from its reliance on Perreca, Matsushita points to two factors in support of this claim.
First, Matsushita produces a series of memoranda that allegedly placed plaintiffs on notice that their pensions from Matsushita would not be based on their hire dates with Panafax. A memorandum dated February 28, 1989 that Matsushita claims was sent to plaintiffs when Panafax merged into Matsushita explained that, "[e]ffective April 1, 1989, the various benefits offered by Panafax will be replaced by the benefit program offered by our parent company, Matsushita Electric Corporation of America." See Reinhardt Cert. Ex. 1. The memorandum further explained that at a meeting on March 13, 1989, Panafax's consulting firm would "talk about the `cashing out' (termination) of the existing Pension and Savings Plans." Id. A meeting the following day would explain the new plans. Two subsequent memoranda that Matsushita claims were sent to plaintiffs on March 13, 1989 more specifically addressed the termination of the Panafax retirement plans. See Reinhardt Cert. Exs. 2, 3. These clarified that the Panafax retirement plan would be terminated and a sum would be paid to employees. Plaintiffs do not deny that they may have received these memoranda in 1989 in their statement of material facts.
Second, Matsushita points to a meeting held on March 13, 1989, where Mr. Reinhardt, the former General Manager of Human Resources at MECA, claims to have explained the termination of Panafax's retirement plan and its replacement with a Matsushita plan. While plaintiff Molinaro remembers attending the meeting, plaintiffs Di Blasi and DePace contend that they did not attend this meeting. Also, plaintiff Molinaro testified at his deposition that he believes he received a distribution from Panafax around 1989. See Molinaro Dep., at 64:15-22. Plaintiff Di Blasi similarly remembers a cash distribution from Panafax pension plan when it ceased to exist. See Di Blasi Dep. 27-30. Because of plaintiffs' experience at the time of Panafax's merger into Matsushita, Matsushita claims that even if its pension estimates could be construed as misrepresentations that could ever be relied upon, plaintiffs could not reasonably rely upon them as a matter of law. I disagree.
The meeting and plan termination on which Matsushita now relies took place over a decade before the claimed misrepresentations. Even accepting that plaintiffs were all aware, at some point in 1989, that their Panafax pension plans were terminating and that they were receiving a cash payment, that does not necessarily mean that they should have understood clearly when their Matsushita plans would begin vesting. Moreover, it is reasonable that the termination of the Panafax pension plan would not have remained fresh in plaintiffs' minds and that ten years later, they could have been confused as to when their pension started vesting with Matsushita. Significantly, the pension plan itself was vague as to when years of service would start and would have provided little guidance to them. As I explained in my earlier decision in this case:
Neither the summary plan description nor any of the additional materials sent to the plaintiffs clearly define "years of service" or the accrual of benefits with respect to successor companies. Certainly these documents do not contain any information that would put employees on notice that, contrary to the written estimates they received, their benefits would not include service accumulated at a successor company that was acquired by Matsushita.Matsushita, 257 F. Supp. 2d at 553-54. Perhaps most revealing is Matsushita's own difficulty in resolving the issue. While it now claims that the answer was obvious, the answer was apparently not so clear to Matsushita when plaintiffs first raised concerns that their pension estimates may include an incorrect hire date. Indeed, it took over a month for Matsushita to provide a response, and in the course of that month, the window for plaintiffs to withdraw from the VRP closed. Accepting Matsushita's claim that the actual date at which plaintiffs' pension began vesting was obvious, their delay in responding despite knowledge that there was a problem would reflect bad faith. In any event, a jury could find that, given the vagueness of the plan documents and the consistency with which the misrepresentations were made, plaintiffs' reliance on the misrepresentations was reasonable. And where a jury could find that a defendant made misrepresentations and should have anticipated that plaintiffs would rely on those misrepresentations, it should be estopped from arguing otherwise.
iii. Whether there were extraordinary circumstances
Finally, Matsushita contends that plaintiffs' equitable estoppel claim must fail because there were no extraordinary circumstances. Again, this is a claim that I considered in my earlier decision. I then wrote:
Matsushita also argues that plaintiffs have not shown the "extraordinary circumstances" required for equitable estoppel under ERISA. This contention is without merit. The Second Circuit has specifically held that an employer's use of promised severance benefits to induce a plaintiff to retire constitutes an extraordinary circumstance. See Devlin v. Empire Blue Cross Blue Shield, 274 F.3d 76, 86 (2d Cir. 2001) (citing Schonholz v. Long Island Jewish Med. Center, 87 F.3d 72, 79-80 (2d Cir. 1996)). To satisfy this requirement, plaintiffs need only demonstrate "a promise that [Matsushita] reasonably should have expected to induce action or forbearance on [their] part." Id. (quoting Schonholz, 87 F.3d at 79-80). As indicated above, Matsushita sent statements to the plaintiffs which gave the clear impression that their benefit calculations would include years of service accrued while employed by Panafax. Since Matsushita did not clarify this "mistake" or distribute to plaintiffs any materials purporting to explain the calculation of years of service, the company should have expected plaintiffs to rely on its statements. As alleged in the complaint, Matsushita even delayed its response to plaintiffs' inquiries on the issue until after their ability to withdraw participation in the VRP was lost. Taken as a whole, the allegations in the complaint sufficiently state a claim for fraudulent inducement such that the "extraordinary circumstances" requirement is met.
The cases Matsushita relies on are inapposite. Manning v. Niagara Mohawk Power Corp., 1997 WL 216214 (N.D.N.Y. 1997), was decided before the Second Circuit's decision in Schonholz, and its weight is therefore suspect. Berg v. Empire Blue Cross and Blue Shield, 105 F. Supp. 2d 121, 130 (E.D.N.Y. 2000), specifically held that "[t]here is nothing in the complaint to suggest, for example, that [the defendant] made such a promise to induce Plaintiff to not obtain other life insurance." In contrast, the complaint here explicitly alleges that Matsushita intentionally or recklessly mislead plaintiffs for the purpose of inducing them to retire early. This allegation is supported by the absence of any documentation indicating how years of service were to be calculated, and the complete lack of any correction to the grossly exaggerated pension estimates until after plaintiffs could no longer withdraw their participation. Finally, in Fitch v. Chase Manhattan Bank, N.A., 64 F. Supp. 2d 212, 226-27 (W.D.N.Y. 1999), Judge Siragusa's attempt to distinguish Schonholz clearly shows how different it is from the present case:
In Schonholz, the employee was induced to resign based upon the representation that she would be paid certain severance benefits, but after she actually resigned, the employer reneged. Here, the instant record does not support a finding that the defendants acted intentionally. Moreover, the defendants did not use a misrepresentation to actually induce the plaintiffs to retire, but rather, they notified the plaintiffs of the error and gave them an opportunity to return to the status quo ante.
The facts in this case are kindred to Schonholz, not Fitch, as the plaintiffs were never offered the opportunity to rescind their retirement decisions. Indeed, they were not even notified about the radical change in their potential benefits until after it was too late for them to return to the status quo ante.
Taken as a whole, the allegations in the complaint sufficiently state a claim for fraudulent inducement such that the "extraordinary circumstances" requirement is met.DePace, 257 F. Supp. 2d at 554-55.
In its brief in support of its motion for summary judgment, Matsushita does not reference Schonholz. Moreover, it addresses my earlier decision and analysis only briefly in two footnotes. It writes: "MECA's motion should be granted because the undisputed facts show that the erroneous estimates were provided to plaintiffs as a result of an honest, albeit unfortunate, mistake, not as a result of any intentional or reckless conduct on MECA's part." MECA Brief, at 28 n. 15. Plaintiffs dispute this characterization of Matsushita's conduct. While the evidence does not generally support the allegation that Matsushita initially chose to provide inflated estimates in order to induce retirement, it could support the allegation that Matsushita intentionally delayed responding to plaintiffs to assure that their reliance was effective. The evidence at least supports the allegation that Matsushita acted recklessly because it intentionally provided estimates to induce reliance, those estimates were grossly inflated, and with greater attentiveness or care in producing the estimates, such errors could have easily been avoided. Particularly given the possibility of bad faith on MECA's part by its slow response, this can support a finding of extraordinary circumstances under Schonholz and Devlin.
Matsushita further argues that the extraordinary circumstances requirement cannot be met because "MECA offered DePace the opportunity to be reemployed, but he declined the offer, and [because MECA] extended Di Blasi's employment." Matsushita Brief, at 28 n. 15. DePace disputes that he was offered meaningful employment. See Plaintiffs' Brief, at 9; DePace Dep., at 178-88. Plaintiffs also dispute that Di Blasi and Molinaro were ever contacted about rescinding their resignations or that Di Blasi's extended employment was meaningful. Indeed, the evidence suggests that plaintiffs all drastically changed their lives after agreeing to participate in Matsushita's VRP. Thereafter, Matsushita did not quickly seek to rectify the problem.
II. Age Discrimination Claim
Defendants move for summary judgment on plaintiffs' age discrimination claim as well. Defendants describe plaintiffs' ADEA claim as follows:
Plaintiffs' discrimination claim under the ADEA is somewhat repetitive of the estoppel claim, except that it pleads that MECA "fraudulently induced" plaintiffs to participate [in] the VRP so that the Company could "replace them with younger employees who received less compensation." (Amended Complaint, ¶ 49). Thus, to establish this claim, plaintiffs must prove not only the element of fraudulent inducement, but also that MECA perpetuated the alleged fraud because of plaintiffs' age.
Defendant's Brief, at 29. The ADEA proscribes employers from failing to hire, discharging, or "otherwise discriminat[ing] against any individual . . . because of such individual's age," 29 U.S.C. § 623(a)(1), so long as he or she is within the statutorily protected class of individuals who are at least 40 years of age. 29 U.S.C. § 631(a). To prevail in a disparate treatment action, an ADEA plaintiff must prove "by a preponderance of the evidence that age was a determinative factor in the employer's decision." Billet v. Cigna Corp., 940 F.2d 812, 816 (3d Cir. 1991) (citation omitted). Under the familiar burden-shifting rules of proof, plaintiffs must first make out a "prima facie case" by showing that they (1) were members of the protected class, (2) that they were qualified for their positions, (3) that they suffered an adverse employment actions, and (4) that those adverse employment actions occurred under circumstances giving rise to an inference of discrimination.Terry v. Ashcroft, 336 F.3d 128, 137-38 (2d Cir. 2003). In this case, more specifically, plaintiffs would have to show that defendant intentionally induced them to retire early, to their disadvantage, on the basis of their age.
As to the element of defendant's intent, plaintiffs' argument is this:
[S]ince Panafax merged with Panasonic in 1989, and the VRP was offered in 2001, twelve years later, defendant reasonably had to know that the three employees involved were over 40. Given the reckless conduct of defendant directed only at these individuals in the protected category under the ADEA, who gave up valuable employment positions on the basis of reckless misrepresentations knowingly made to the individuals in the protected category, they should be allowed to go to trial on the ADEA claim.
Plaintiffs' Brief, at 11-12. Plaintiffs' evidence is as follows: Plaintiffs are all over 40 years of age (Molinaro was 58, DePace was 60, and Di Blasi was 57). They all did retire early by electing the VRP. And if every inference is drawn in their favor, plaintiffs retired because of improper behavior by defendant that would only have effected employees who had been working for approximately 15 years or more — some of whom, I note, may not have been 40 years old. Moreover, a jury could possibly find that age played a role in defendant's delayed responses to plaintiffs' queries after they had elected to retire but had yet to actually stop working, as they were apparently the only employees affected. This alone may not be enough to survive summary judgment at a later point. Indeed, the suggestion that age played a role in defendant's decision is based primarily on speculation.
Nevertheless, because plaintiffs' ADEA claims rest on nearly identical grounds (with the addition of only one element, whose proof would add little complication to a trial) my decision of whether or not to dismiss plaintiffs' ADEA claims is not independent from my decision regarding their equitable estoppel claims. Because I deny defendant's motion regarding plaintiffs' equitable estoppel claims, it would make little sense to grant them summary judgment regarding the ADEA claims. If one of a number of integrally related causes of action have to be tried, it makes little sense to grant summary judgment as to one or more of them, as it may prove necessary to hold yet another trial in the event that it is determined on appeal that summary judgment was improperly granted. As observed by Judge Clark in an analogous context:
[T]here seems no question that in the long run fragmentary disposal of what is essentially one matter is unfortunate not merely for the waste of time and expense caused the parties and the courts, but because of the mischance of differing dispositions of what is essentially a single controlling issue.Audi Vision Inc. v. RCA Mfg. Co., 136 F.2d 621, 625 (2d Cir. 1943).
III. Did releases signed by plaintiffs' bar all claims for relief?
This is yet another issue that I considered in deciding MECA's motion to dismiss in this case. Again, the issue turns largely on whether plaintiffs can prove that MECA improperly induced their participation in the VRP. Previously, I wrote extensively on this issue:
The Releases Signed by Plaintiffs Do Not Bar This Action
In order to participate in Matsushita's Voluntary Resignation Program, plaintiffs were required to sign an Election and General Release form (the "General Release"), which purported to release Matsushita from all liability, including "[c]laims, actions, causes of action or liabilities arising under . . . the Employment Retirement Security Act of 1974, as amended . . ." (Exhibit 13). Although Matsushita argues that the releases were knowingly and voluntarily executed by plaintiffs, the allegations of fraudulent inducement in the complaint preclude enforcement of the releases at this stage of the proceeding.
In Lockheed Corp. v. Spink, 517 U.S. 882, 894, 116 S.Ct. 1783, 135 L.Ed.2d 153 (1996), the Supreme Court sanctioned the use of "early retirement incentives conditioned upon the release of claims" and found that conditioning additional benefits on the voluntary waiver of claims against an employer was not prohibited by section 406(a)(1)(D) of ERISA. The Court explained that "if an employer can avoid litigation that might result from laying off an employee by enticing him to retire early, . . . its stands to reason that the employer can also protect itself from suits arising out of that retirement by asking the employee to release any employment-related claims he may have." Id. at 894-95, 116 S.Ct. 1783. However, "[t]he validity of a waiver of pension benefits under ERISA is subject to closer scrutiny than a waiver of general contract claims." Sharkey v. Ultramar Energy Ltd., 70 F.3d 226, 231 (2d Cir. 1995). A release in exchange for early retirement benefits is effective only if, in the totality of the circumstances, the employee's waiver of rights was "knowing and voluntary." Laniok v. Advisory Comm. of Brainerd Mfg. Co. Pension Plan, 935 F.2d 1360, 1367 (2d Cir. 1991).
When determining whether a waiver of ERISA claims was made knowingly and voluntarily, consideration must be given to the following factors: (1) the plaintiff's education and business experience; (2) the amount of time the plaintiff had possession of or access to the agreement before signing it; (3) the role of the plaintiff in deciding the terms of the agreement; (4) the clarity of the agreement; (5) whether the plaintiff was represented by or consulted with an attorney (and whether the employer encouraged the employee to consult with an attorney and gave him/her a fair opportunity to do so); and (6) whether the consideration given in exchange for the waiver exceeds employee benefits to which the employee was already entitled by contract or law. Laniok, 935 F.2d at 1368.
Matsushita argues that district courts have consistently enforced releases analogous to the General Release signed by plaintiffs in this case. In Yablon v. Stroock Stroock Lavan Retirement Plan Trust, 2002 WL 1300256 (S.D.N.Y. June 11, 2002), for example, Judge Motley granted the defendant's motion to dismiss the plaintiff's ERISA claims because the plaintiff had signed a separation agreement releasing the employer from all employment related claims. In finding that the employer's waiver of rights was knowing and voluntary, she noted that the plaintiff had 45 days to consider the terms of the release and review it with counsel, and an eight-day window period in which he could revoke the release after its execution. Id. at *5. Judge Motley also pointed to provisions in the agreement that encouraged the plaintiff to consult an attorney, and the final paragraph of the release which indicated that by signing the release the employee was acknowledging that he had read the agreement in its entirety and understood that it constituted a complete waiver and general release of all claims. Id. at *6.
Similarly, in Hogan v. Eastern Enterprises/Boston Gas, 165 F. Supp. 2d 55 (D.Mass. 2001), Magistrate Judge Collins dismissed an equitable estoppel claim under ERISA because the plaintiff accepted enhanced retirement benefits in exchange for a release of claims. In discussing why the Laniok factors favored a finding of voluntariness, the court noted that the plaintiff had 45 days to consider the retirement plan, and another 7 days within which to rescind his election to participate. Id. at 62. In addition, the release contained language advising plaintiff to seek counsel and stating that by signing the agreement plaintiff acknowledged that he had fully read the release and voluntarily assented to its terms and conditions. Id. Judge Collins also found that although the release was drafted by the employer, there was no allegation that the terms were inequitable or that the language was unclear. Finally, as in Yablon, there was no dispute that the plaintiff received additional retirement benefits in exchange for signing the release. Id.
The Laniok factors greatly favor Matsushita's position in this case. Similar to those in Yablon and Hogan, Matsushita's separation agreement encouraged employees to seek legal counsel, gave a minimum of forty-five days to consider the terms of the agreement, and provided for a seven-day window within which employees could rescind their election to participate. (Exhibit 10). It is undisputed that plaintiffs received valuable consideration in exchange for their release of all claims against Matsushita, and although the separation agreement was drafted by Matsushita, there are no allegations that the terms of the plan are inequitable or unclear. Indeed, the final paragraph of the release indicated in bold print that by signing the release the employee was acknowledging that he had read the agreement, had the opportunity to review it with counsel, understood it, and agreed to its terms. (Id.).
However, the Laniok factors are not exclusive or dispositive. The ultimate test is whether the waiver was in fact knowing and voluntary. See Laniok, 935 F.2d at 1368. As with any other contractual release, circumstances evincing fraudulent inducement, misrepresentation, mutual mistake, or duress would justify setting aside the release. See, e.g., Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40 (2d Cir. 1991) (release will be denied effect when based on misrepresentation of a material fact); Fournier v. Canadian Pacific Railroad, 512 F.2d 317 (2d Cir. 1975) (In a suit under the Federal Employers' Liability Act, a release may be set aside if both parties acted under a mutual mistake of fact or employer's representative deceived plaintiff); Ott v. Midland-Ross Corp., 600 F.2d 24 (6th Cir. 1979) (If employer made misrepresentation of material fact for purpose of inducing employee to release it from liability under Title VII, it would be estopped to interpose release as bar to suit, provided employee acted in justifiable reliance upon misrepresentation); Fonseca v. Columbia Gas Systems, Inc., 37 F.Supp.2d 214, 229 (W.D.N.Y. 1998) ("In general, a release which has been procured through fraud, misrepresentation, or deceit is not a bar to subsequent actions by the party executing the release.").
Plaintiffs allege that they were fraudulently induced into participating in Matsushita's Voluntary Retirement program, and thereby misled into signing the releases as a contingency of such participation. Matsushita argues that, as in Hogan, the releases should be enforced because plaintiffs were not justified in relying on Matsushita's "estimates" of pension benefits. In Hogan, Judge Collins determined that the plaintiff was not justified in relying on predictions by personnel at the defendant company that plaintiff's division would no longer exist after the company's impending acquisition. 165 F. Supp. 2d at 63. Unlike Hogan, however, the statements made in this case were objective and capable of being factually verified. They were not predictions as to future actions which might or might not be taken by the employer after an acquisition. See Hogan, 165 F. Supp. 2d at 65. As already discussed, the plaintiffs were justified in relying on these statements. Thus, taking all of the allegations in the complaint as true, Matsushita's fraudulent inducement renders the releases signed by plaintiffs unenforceable at this stage of the proceeding.DePace, 257 F. Supp. 2d at 555-57.
Matsushita does not now raise any new claims in support of its argument that the releases bar plaintiffs' actions except to argue that the evidence cannot support the allegation of intentional fraudulent inducement. But the evidence can support a finding of mutual mistake. See Fournier v. Canadian Pacific Railroad, 512 F.2d 317 (2d Cir. 1975). If I accept Matsushita's argument that the evidence does not show that Matsushita was aware of the mistake at the time it sent the VRPs to plaintiffs, plaintiffs and Matsushita both assumed that the pension estimates were correct. Or, in the case of each plaintiff, "both parties to the release shared the same erroneous belief as to a material fact." Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40 (2d Cir. 1991). That is sufficient to undermine the knowing and voluntary nature of the releases. Neither defendant nor plaintiffs understood what plaintiffs would receive in exchange for giving up their substantive rights; they assumed it would be substantially higher pensions than was in fact the case. At the very least, these are issues for the jury to decide.
Conclusion
Defendant's motion for summary judgment is denied.
SO ORDERED.