Summary
staying to permit administrative exhaustion of a benefits claim subject to ERISA
Summary of this case from Wegmann v. Young Adult Inst., Inc.Opinion
10 Civ. 8792.
June 24, 2011
Pro Se, PAMELA PRINCE, New York, NY.
Attorneys for Defendant, MORGAN, LEWIS BOCKIUS LLP, New York, NY, By: Brendan T. Killeen, Esq., Rene M. Johnson, Esq.
OPINION
Pursuant to Rule 12(b)(6), Defendant American Airlines (the "Defendant") has moved to dismiss or stay this action pending Plaintiff Pamela Eileen Prince's ("Prince" or the "Plaintiff") exhaustion of administrative remedies. For the reasons set forth below, the motion to stay is granted.
Prior Proceedings
Prince filed her complaint on November 22, 2010.
She has alleged that she is entitled to interest on three pension-related payments that she received in 2010, which were tendered to Plaintiff under the terms of an Employee Retirement Income Security Act ("ERISA") Plan. See Complaint ("Compl."), III(C) and V.
The Motion To Stay Is Granted
A court's power to stay a pending action "is incidental to the power inherent in every court to control the disposition of the cases on its docket with economy of time and effort for itself, counsel, and for litigants." Landis v. North Am. Co., 299 U.S. 248, 254 (1936). Therefore, this Court enjoys broad discretion to stay these proceedings pending exhaustion of the Plan's claim and appeal procedures. See Cruz v. Jordan, 80 F. Supp.2d 109, 121-23 (S.D.N.Y. 1999) (staying action pending exhaustion of administrative remedies).
Section 503 of ERISA requires that plans provide internal administrative procedures to afford participants and beneficiaries a reasonable opportunity for a full and fair review of adverse benefit determinations. 29 U.S.C. § 113. In furtherance of this Congressional goal, the Second Circuit "requires the exhaustion of administrative review procedures as a jurisdictional prerequisite to any suit to recover ERISA benefits." Greifenberger v. Hartford Life Ins. Co, 131 Fed.App'x 756, 758 (2d Cir. 2005). The exhaustion requirement is intended to
(1) uphold Congress' desire that ERISA trustees be responsible for their actions, not the federal courts; (2) provide a sufficiently clear record of administrative action if litigation should ensue; and (3) assure that any judicial review of fiduciary action (or inaction) is made under the arbitrary and capricious standard, not de novo.Kennedy v. Empire Blue Cross and Blue Shield, 989 F.2d 588, 594 (2d Cir. 1993) (quoting Denton v. First Nat'l Bank of Waco, Texas, 765 F.2d 1295 (5th Cir. 1985)).
While Prince details, and the record indicates, that she has communicated extensively with the Plan's Administrators, she has not disputed her failure to exhaust administrative remedies. Nor has Plaintiff disputed that the Administrator has complied with the procedures set forth in the Plan. Instead, Plaintiff argues that her claims should be heard by this Court because: (1) Plaintiff notified Defendant that she wanted to bring her claims in federal court (Pl. Opp. at 2); (2) she "never requested arbitration until Defendant said [it was] necessary" and instead asked Defendant not to enter arbitration until the Federal Court decision was issued (id. and Pl. Letter of May 6, 2011 at 2); and (3) she submitted all relevant exhibits to the Court and not the Administrator (Pl. Letter of May 6, 2011 at 2).
Plaintiff further cites Fotta v. Trustees of the United Mine Workers of America, Health and Retirement Fund of 1974, 165 F.3d 209 (3d Cir. 1998), which held that Section 502(a)(3)(B) of ERISA provides a cause of action for interest on delayed pension benefits. The Second Circuit has reached a similar conclusion, holding that in certain cases interest on delayed benefits can be awarded as equitable relief under ERISA Section 502(a)(3)(B):
When benefits are paid only after the date on which the beneficiary was entitled to receive them under the terms of the plan, the beneficiary has not received the full value of what was promised and, to the same degree, the plan has realized an unjust enrichment (assuming the lateness was unjustified). An award of interest in such circumstances serves as an equitable make-whole remedy.Dunnigan v. Metro. Life Ins. Co., 277 F.3d 223, 229 (2d Cir. 2002).
In keeping with Congressional intent and longstanding precedent, before proceeding with her action in court, ERISA requires Plaintiff to exhaust the Plan's claim and appeal procedures. The Second Circuit has repeatedly recognized a "`firmly established federal policy favoring exhaustion of administrative remedies in ERISA cases.'" Thomas v. Verizon, No. 04-5232 Civ. 2005 WL 3116752, at *1 (2d Cir. Nov. 22, 2005) (quoting Kennedy, 989 F.2d at 594). It is further settled "that timely exhaustion of plan remedies is a prerequisite to a suit in federal court and that, absent appropriate equitable considerations, court action is barred absent such exhaustion."Sanfilippo v. Provident Life Cas. Ins. Co., 178 F. Supp.2d 450, 458 (S.D.N.Y. 2002) (citing Kennedy, 989 F.2d at 594; Tiger v. AT T Techs. Plan for Employees' Pensions, Disability Benefits, 633 F. Supp. 532, 534 (E.D.N.Y. 1986); Barnett v. Int'l Bus. Machs. Corp., 885 F. Supp. 581, 586-87 (S.D.N.Y. 1995); Ludwig v. NYNEX Serv. Co., 838 F. Supp. 769, 781 (S.D.N.Y. 1993)). Therefore, while Prince has not lost her right to raise her claims with the Court, she is obligated to exhaust her administrative remedies prior to doing so.
Even if it is assumed that Prince seeks to assert that exhausting her administrative remedies would be futile, she has failed to do so through a "clear and positive showing." See, e.g., Greifenberger, 131 Fed. Appx. at 759 (affirming dismissal for failure to exhaust because plaintiff failed to make required showing of futility). Futility has not been established, when, as here, it is not possible to predict how the Administrator will decide Plaintiff's claim on review. See, e.g., Davenport v. Harry N. Abrams, Inc., 249 F.3d 130, 133-34 (2d Cir. 2001). Plaintiff cannot avoid her obligation to exhaust by asserting that she "feared, and still fears, she was being tricked" into administrative rather than federal court review. Pl. Opp. at 4. While Plaintiff may fear or even anticipate that the Administrator will deny her claims, her belief is insufficient to meet the futility exception, as otherwise ERISA's exhaustion requirement would be hollow. See Barnett, 885 F. Supp. at 586-89.
Staying the instant litigation during the pendency of Plaintiff's administrative claim will permit the intended administrative resolution of such disputes. Moreover, should litigation be necessary after the exhaustion of administrative remedies, that administrative action will provide the Court with a clear record for judicial review.
Conclusion
Based on the conclusions set forth above, this matter will be stayed pending the exhaustion of Plaintiff's administrative remedies.
It is so ordered.
New York, NY
June 22, 2011