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assuming that a plan cancellation falls within the 210 day notice provision of § 1024(b)
Summary of this case from Krukowski v. Omicron Technologies, Inc.Opinion
CIVIL ACTION NO. 00-10215-DPW
October 29, 2002
MEMORANDUM AND ORDER
Plaintiff Russell E. Sampson, Jr. brought this action against his former employer, a law firm; another law firm having overlapping membership with the former employer; and the individual members of both firms for breach of fiduciary and statutory duty under the Employee Retirement Income Security Act ("ERISA"). Specifically, Sampson alleges that the defendants breached their fiduciary duty by failing to notify him of the termination of the firms' long term disability insurance plan. Sampson further alleges that the defendants breached their statutory duty under 29 U.S.C. § 1132(c) to provide him with certain plan information upon request. Sampson seeks compensatory and statutory damages.
Before me are multiple motions for summary judgment filed by the defendants. This is the second round of summary judgment practice in this case. I denied the defendants' first motion for summary judgment in my September 28, 2001 Memorandum and Order. The legal landscape for the plaintiff has become decidedly bleaker since the first round of summary judgment motions and I now find it cannot support plaintiff's claims.
I. BACKGROUND A. The Parties
Plaintiff Sampson is a resident of Norfolk County in Massachusetts and is a member of the Massachusetts Bar. Sampson was diagnosed as HIV positive in 1984.
Individual defendants Martin Dropkin, Samuel Perlman, Maurice Leavitt, Michael Rubin and Mitchell Weisman are residents of Massachusetts and members of the Massachusetts bar. Plaintiff alleges that these defendants do business under the name Dropkin, Perlman, Leavitt and Rubin ("DPLR") the principal place of business of which is located in Middlesex County.
Defendant Perlman, Rubin and Stein, P.C. ("PRS") is a professional corporation organized under the laws of Massachusetts, with its principal place of business in Norfolk County. Sampson is a former employee of PRS. Individual defendant Joel Stein is a resident of Massachusetts, a member of the Massachusetts bar, and a member of PRS, P.C. Sampson alleges that PRS, P.C. is the alter-ego of the individually named defendants and of DPLR.
B. Procedure
In denying the defendants' first motion for summary judgment I determined that Sampson had standing as a plan participant to bring suit. I further determined that material questions of fact existed as to whether the defendants could be considered fiduciaries for ERISA purposes, what the exact nature of the alleged breach of the duty to provide information was, and what harm was suffered by Sampson as a result of these alleged breaches.
The several motions for summary judgment filed on behalf of the defendants in this second round of summary judgment practice focus on aspects of the remaining substantive claims. The motions are variously based on the absence of available remedies (Docket No. 86-1); on the absence of reasonable and detrimental reliance (Docket No. 87-1); on "Indisputably Unclean Hands" (Docket No. 88-1); on the purported insufficiency of the "Functional Fiduciary" allegation (Docket No. 89-1), and on the purported insufficiency of the "Alter Ego" allegation (Docket No. 90-1). Stein filed a separate motion for summary judgment as to the individual suit against him (Docket No. 95-1).
C. The Plan
The Group LTD Insurance Policy ("Plan") at issue in this case was provided by Standard Insurance Company and became effective as of January 1, 1994. DPLR was the specified Policyowner. DPLR, PRS and C.A.R.E.S of New Hampshire, Inc. d/b/a Banker's Title and Closing Co. (not a party to this action) are specified as Employers by the plan.
The Policy provided insurance coverage to employees who (1) were Members; (2) completed the Eligibility Waiting Period; and (3) met the requirements in "Active Work Provisions" and "When Your Insurance Becomes Effective." A "Member" was defined to include an active employee who regularly worked at least thirty hours per week. Employees were considered "eligible" on the later of the Group Policy Effective Date or the first day following ninety consecutive days as a Member. Under the plan, insurance continued during a leave of absence of thirty days or less.
The 1994 Standard LTD policy became effective on January 1, 1994. (Pl. Ex. A, at Bates 002). The Policy had an Initial Rate Guarantee Period of two years, and could be renewed for successive 12 month periods by the payment of the policy premiums, subject to potential rate increases after the second year. (Id. at Bates 008). The Policy also provided that it could be terminated by the policyowner upon written notice to the Standard Insurance Co. (Pl. Ex. A, ¶ F at Bates 23). Upon receiving such notice, the Policy would terminate on the later date of either the date stated in the notice, or the date Standard received the notice. (Id.). The Policy provided that an individual's coverage terminates when the Group Policy terminates or when that individual ceases to be a member, as defined by the plan. (Id. at Bates 0020).
The membership requirement of the Policy is discussed in greater detail below.
D. Factual History
Following my September 28 Memorandum and Order, the parties conducted additional discovery. As a result, several key matters are now resolved. I restate the facts generally as found in my September 28 Memorandum, amended as necessary by the new information.
Sampson was hired as an associate attorney by PRS in March of 1993. He initially worked exclusively for partner Joel Stein, but over time received assignments from other partners and shareholders of both PRS and DPLR. Sampson's paychecks were issued by PRS.
In January of 1994, Rubin obtained a group short and long-term disability policy for PRS employees, to be paid for in full by defendants. Rubin characterized the LTD Plan as a "gift" in that there was no cost to the employees. On January 4, 1994, PRS issued a memorandum on DPLR letterhead signed by defendants Rubin, Perlman and Stein, announcing the new group policies. Several weeks later, Sampson received and reviewed copies of the policies.
While the Standard LTD policy indicates that DPLR was the "policy owner," and therefore responsible for the premiums, the memo announcing the creation of the plan was signed by the partners of PRS on behalf of PRS.
In January of 1995, Rubin cancelled the LTD Plan, apparently without notifying the other defendants, PRS employees, or Sampson. Sampson and Stein did not learn that the LTD plan had been terminated until 1998.
In May 1995, Sampson was told he was being laid off from PRS due to the firm's weakening financial condition. On May 10, Sampson was given two checks, one for his last week of work, ending May 11, 1995, and one for his accrued annual vacation time. On May 11, Sampson cashed both checks and filed for unemployment compensation with the Massachusetts Department of Employment and Training ("DET"). Sampson indicated on the DET form that his employment separation date was May 12, 1995. Sampson continued to work at PRS for another week and a half after his termination to facilitate the transition. As of May 11, Sampson had ceased performing paid work for PRS.
After the mandatory two-week waiting period, Sampson began receiving unemployment benefits in the third week of June 1995. Sampson acknowledges that during this period he was actively seeking new employment with some assistance and advice from Stein. In the first or second week of June, Sampson received his last PRS check for work performed prior to the lay-off.
On June 20, 1995, 40 days after ceasing paid work at PRS, Sampson began working for PRS again on a contract basis at a rate of $35 per hour. Sampson submitted handwritten weekly time sheets directly to Stein, who paid him by personal check. Stein characterized these payments as an office expense and was reimbursed by PRS. Sampson's time sheets cover the period from June 20 through October 27, 1995. During the first three weeks of his contract employment (June 20 — July 7, 1995), Sampson worked less than thirty hours per week. In the week of July 14, 1995, and almost every week thereafter, Sampson worked over 30 hours for PRS.
While working on a contract basis for Stein, Sampson did not receive a W-2 or a Form 1099, and expressly asked Stein not to issue a Form 1099. Sampson did not report these monies as income for 1995 to either the IRS or the Department of Employment and Training. Sampson continued to receive full unemployment benefits until the twenty-six week benefits period ended in November of 1995. Stein was aware that Sampson was collecting unemployment benefits while working on an hourly basis for PRS.
In November of 1995, Stein and Sampson agreed upon a reduced weekly salary and Sampson returned to PRS as a full-time associate. The only term of employment discussed was salary compensation. From November of 1995 until November of 1998, Sampson was a full-time salaried employee of PRS.
In 1998, Sampson decided to leave work because of health concerns. During August, 1998 Sampson was unable to locate copies of the Standard short and long term disability policies in his personal files. He then contacted Christina Karogiannis, the bookkeeper for DPLR, to request copies of the policies. Karogiannis informed Sampson that she had only a copy of the short term policy which she could send to him. She also told him that the long term policy had been cancelled in 1995. Sampson asked Karogiannis to confirm the cancellation of the LTD policy, which she did approximately a week later by faxing Sampson a copy of the letter from the insurance carrier acknowledging the cancellation. At this time, Sampson apparently made no other requests for plan documents.
Sampson then informed Stein that he was HIV-positive and that the LTD Plan was no longer in effect. Sampson asked if PRS would obtain a new long-term policy. Stein indicated to Sampson that he was unaware of the plan termination, and "had assumed all that time that it was in place."
Rubin obtained a new short and long-term disability policy for PRS employees in September of 1998. Stein played no direct role in the purchase of this new disability policy. On September 15, 1998, PRS announced the new plan. A letter was sent to all employees, stating that PRS' group insurance plan was "being enhanced by the addition of Long Term Disability for all employees. . . . This has necessitated a change in carriers, from Hartford to US Life Insurance Company for both our Long Term, as well as Short Term Disability Plan."
Sampson left PRS because of his disability on November 5 or 6 of 1998. He applied for short-term disability benefits, and was paid by PRS during the three-week waiting period.
In December of 1999, the long-term disability carrier notified Sampson that, because of his pre-existing condition, his claim for LTD benefits had been denied. Sampson did not appeal the insurance company's decision to deny his claim.
II. The Absence of Available Remedies
Sampson requests two independent types of relief for the alleged breaches in this case. First, he requests "compensatory damages as contemplated by ERISA" for the defendants' alleged breach of fiduciary duty under 29 U.S.C. § 1132(a). Second, he requests statutory damages for the plan administrator's refusal to comply with requests for information under 29 U.S.C. § 1132(c)(1)(B). The defendants contend that Sampson has no equitable remedy for "compensatory relief" under § 1132(a). Defendants also argue that Sampson's request for ERISA's statutory remedies fails. In the ERISA context, the analyses of demands for equitable remedies and for damages diverge in important ways and, as a result, my discussion will consider the viability of Sampson's remedies accordingly.
A. Equitable Remedies
The Supreme Court last term analyzed ERISA's equitable relief in considering the viability of requests for money damages under ERISA. In Great-West Life Annuity Insurance Company, 122 S.Ct. 708 (2002), the Court confronted a suit by an insurer under 29 U.S.C. § 1132(a)(3) seeking to enforce the reimbursement provision of an ERISA plan against a plan participant by means of the equitable enforcement mechanisms of § 1132(a)(3). Id. at 712. Rejecting the use of injunctive relief to secure a monetary award, the Court explained that "[a]lmost invariably . . . suits seeking (whether by judgment, injunction or declaration) to compel the defendant to pay a sum of money to the plaintiff are suits for money damages' . . . since they seek no more than compensation for loss resulting from the defendant's breach of legal duty." See id. at 713 (quoting Bowen v. Massachusetts, 487 distinguished between those equitable claims which seek to prevent future losses, which are permissible under ERISA, and those which seek past due sums, which are not. See id. at 713-714.
The Court also rejected the argument that plaintiff's suit was authorized under § 1132(a)(3) as a demand for restitution. See id. at 714-15, 716. The Court first noted that "not all relief falling under the rubric of restitution is available in equity." See id. The Court determined that a viable equitable restitution claim required that the action could not seek to impose personal liability on the defendant, but instead must seek to restore to the plaintiff particular funds or property in the defendant's possession. See id.; see also Harris Trust and Sav. Bank v. Salomon Smith Barney Inc., 530 U.S. 238 (2000) (equitable restitution seeks restoration of "specific property"). The Court determined that under these rules, Great West Life was not able to use the equitable remedies of ERISA to recover a money damages award. See 122 U.S. at 712-716.
The Supreme Court's decision in Great West Life further pursued the direction toward a narrowing of the scope of equitable relief available under ERISA earlier staked out in Mertens v. Hewitt Associates, 508 U.S. 248 (1996). In Mertens, the court held that monetary damages were not available against a non-fiduciary for breach of a fiduciary obligation under ERISA. 508 U.S. at 256-58. The Court read the statutory permission for suits in equity contained in § 1132(a)(3) as limited to forms of relief "traditionally viewed as `equitable' such as mandamus or injunctions and excluding money damages." Id. at 256. Furthermore, the Court suggested that "appropriate equitable relief" as defined by ERISA may not permit a court to grant equitable relief "at large," but only that relief appropriate to redress violations or to enforce provisions of ERISA. Id. at 253.
In reviewing the record before me in light of Great West Life and Mertens, I conclude that Sampson may not use the equitable enforcement mechanisms of § 1132(a)(3) to secure compensatory relief for an alleged breach of fiduciary duty by the defendants. See e.g., Caffey v. Unum Life Ins. Co., 302 F.3d 576, 583-84 (6th Cir. 2002) (plaintiff's § 1132(a)(3) claim for consequential losses and lost health benefits, although framed as requests for restitution as form of equitable relief, not permitted by ERISA after Great West Life); Augienello v. Coast to Coast Financial Corp., 2002 WL 1822926, 5-6 (S.D.N.Y. Aug. 7, 2002) (rejecting ERISA breach of fiduciary duty claim under § 1132(a)(3) following Great West Life where plaintiffs sought deferred compensation funds); Peterman v. Metropolitan Life Ins. Co., 217 F. Supp.2d 807, 809-810 (E.D.Mich. 2002) (applying rules of Mertens and Great West Life in dismissing suit seeking damages equal to basic life insurance coverage for breach of fiduciary duty where plaintiff alleges fiduciary misinformed participant about plan benefits); Leung v. Skidmore, Owings and Merrill, 213 F. Supp.2d 1097, 1103-04 (N.D.Cal. 2002) (rejecting plaintiff's attempt to frame claim for monetary award of long-term disability benefits as equitable restitution or late request for conversion after Great West Life); Kishter v. Principal Life Ins. Co., 186 F. Supp. 438, 441 (S.D.N.Y. 2002) (granting summary judgment on § 1132(a)(1)(b) breach of fiduciary duty claim because plaintiff may not receive monetary damages for employer's failure to provide life insurance beneficiary with complete and accurate plan information after Great West Life).
Sampson's complaint does not request a form of relief traditionally available in equity, such as the imposition of a constructive trust or injunction. See Great West Life, 122 S.Ct. at 712; Mertens, 508 U.S. at 256-58. His request for compensation is, at bottom, an attempt to recover the benefits he would have received had the 1994 LTD policy not been cancelled. See, e.g., Peterman, 217 F. Supp.2d at 809-10; Leung, 213 F. Supp.2d at 1103-04. Such relief is outside the scope of the equitable remedies envisioned by § 1132(a)(3) and summary judgment is therefore appropriate. See Great West Life, 122 S.Ct. at 712; Mertens, 508 U.S. at 256-58.
Moreover, ERISA does not permit the imposition of remedies beyond those delineated in the statute. See Massachusetts Mutual Life Ins. Co., v. Russell, 473 U.S. 134, 147 (1985); Jordan v. Federal Express Corp., 116 F.3d 1005, 1010 (3rd Cir. 1997) (noting that Congress provided limited set of remedies for statutory disclosure violations). I am mindful of the Supreme Court's "unwillingness to infer causes of action in the ERISA context, since that statute's carefully drafted and detailed enforcement scheme provides `strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly.'" Mertens, 508 U.S. at 254 (quoting Russell, 473 U.S. at 146-47). Therefore, in Sampson's suit for breach of fiduciary duties, equitable remedies beyond those delineated in the statute and authorized by Great West Life and Mertens are not permitted. See id. Consequently, because Sampson has and seeks no essentially equitable remedy, his claim against the defendants for breach of fiduciary duty for failure to timely notify him of the cancellation of the plan must be dismissed. See Turner v. Fallon Community Health Plans, 127 F.3d 196, 198-99 (1st Cir. 1997) (breach of fiduciary duty claim dismissed for lack of remedy).
In light of the First Circuit's recent decision in Watson v. Deaconess Waltham Hospital, 298 F.3d 102 (1st Cir. 2002), I would be forced to conclude that, even if Sampson had requested remedies available under ERISA after Great West Life, it is unlikely he would prevail on his claim for breach of fiduciary duty on the basis of the facts here. In Watson, the First Circuit substantially restricted the ability of plan participants to sue for breaches of fiduciary duty in the failure to provide plan information absent "extraordinary circumstances." 298 F.3d 112-113; see also, Alves v. Harvard Pilgrim Health Care, Inc., 204 F. Supp.2d 198, 213 (D.Mass. 2002) ("no breach of fiduciary duty absent evidence of intentional misrepresentation, bad faith, or failure to provide material information."). Rejecting the argument that mere negligence was sufficient to make out a claim of fiduciary breach, the court determined that only in the case of bad faith, active concealment or fraud on the part of plan administrators would technical violations of ERISA's notice provisions be deemed a breach of fiduciary duty. Id. Here, there is no evidence that PRS, DPLR or any of the individual defendants engaged in active bad faith, deliberate concealment, or fraud in not informing Sampson of the 1995 termination of the Plan. Furthermore, the Watson court rejected the argument that plan administrators have an affirmative obligation to provide participants with individualized plan information where the administrator does not have knowledge that the failure to provide that information would be harmful. See id., at 113-14; see also Barrs v. Lockheed Martin, 287 F.3d 202, 207-08 (1st Cir. 2002). Here there is no evidence that any of the defendants had any reason to know that the cancellation of the LTD plan in January 1995 would have a particular harmful effect on Sampson.
B. Statutory Remedies
I turn to the question whether the absence of equitable remedies has a similar effect on Sampson's remaining claim for breach of statutory duties. Here Sampson seeks enforcement of rights afforded to him by statute, namely the prompt release of information to plan participants upon request and notification of the termination of the plan. See 29 U.S.C. § 1132(c)(1)(B), 1024(b)(1).Defendants argue that Sampson's statutory claims are barred first because of Sampson's alleged failure to make an affirmative inquiry as to the existence and terms of the plan, and second because Sampson's lay-off during 1995 "cut-off" his right as an employee to receive notification of the plan termination.
I note at the outset, Sampson bases his § 1132(c)(1)(B) claim on defendant Rubin's failure to respond to a request made on Sampson's behalf in connection with this litigation for information related to the plan in effect during Sampson's employment. The defendants' contention that Sampson did not make an "affirmative" request is plainly without merit. Nevertheless, as I discuss below, I decline in this context to award statutory damages.
1. Section 1024
Deciding whether Sampson's lay-off in May of 1995 cuts off his statutory rights to be notified of changes to the plan requires that I construe the LTD Policy in light of the recent resolution of certain factual disputes in the most recent round of discovery. In particular, the clarification of Sampson's employment history at PRS following his termination in May 1995 permits a determination of the duties PRS owed to Sampson regarding the disclosure of plan information.
Section 1024(b)(1) provides:
The administrator shall furnish to each participant, and each beneficiary receiving benefits under the plan, a copy of the summary plan description, and all modifications and changes . . . (A) within 90 days after he becomes a participant, or within 90 days after he first receives benefits, or (B) if later, within 120 days after the plan becomes subject to this part . . . If there is a modification or change described in section 102(a) [ 29 U.S.C. § 1022(a)] . . . a summary description of such modification or change shall be furnished not later than 210 days after the end of the plan year in which the change is adopted to each participant.
As the text of the statute indicates, the duty created by 1024(b)(1) attaches to administrators only on behalf of participants and beneficiaries under a plan. Thus, in this case, the central question is whether Sampson was a "participant" at the time the plan administrator of the Standard LTD policy was required to provide notification of the plan's termination.
The Effective Date of the Standard LTD Plan was January 1, 1994. The creation of the Plan was announced to PRS employees three days later, on January 4. On the one year anniversary of the Plan's creation, in January 1995, Defendant Rubin cancelled the Policy, apparently without notifying the other defendants or PRS employees. Therefore, under § 1024(b)(1), the plan administrator was obligated to notify participants and beneficiaries within 210 days of January 1, 1995, or July 29, 1995.
The record has now established that Sampson was in fact laid-off on May, 11 1995, the last day for which he was compensated as a regular full-time employee. Under the terms of the LTD Plan, coverage automatically ends on the date the individual ceases to be a member of the plan, which may occur if the individual stops working for the employer. Nevertheless, the Plan also provides that disability coverage continues for a period of 31 days after employment ends.
Furthermore, the Policy provides that, once coverage ends, an individual may become insured again as a new Member. Several conditions apply to this reinstatement of insurance, however. For present purposes, the relevant provision states that "if your insurance ends because you cease to be a Member, and if you become a Member again within 90 days, the Eligibility Waiting Period will be waived." A Member is defined as "an active partner or employee of the Employer . . . regularly working at least 30 hours each week . . ." In other words, an individual covered by the plan who ceases to be employed will be immediately reinstated as a plan participant if he or she becomes a member again, i.e. an employee working at least 30 hours per week, within 90 days.
Applying these terms to Sampson's PRS work history, I note it is undisputed that Sampson began contract work for PRS, or defendant Stein, on June 20, 1995, more than 31 days after his lay-off on May 11. Therefore, the question that must be answered is whether Sampson's contract work for PRS met the requirements for membership under the plan, that is whether he thereafter worked regularly at least 30 hours each week, and, if he did, whether he met this requirement within the 90-day reinstatement period.
It is evident from the hand-written invoices that Sampson submitted to Defendant Stein that he had begun working more than 30 hours per week as of July 14, 1995. In the sixteen weeks between July 10 and October 27, 1995, Sampson worked less than 30 hours on only five weeks: the weeks ending July 28 (21 hours), August 4 (24.5 hours), September 8 (24 hours), October 13 (27 hours), and October 20 (28 hours). During this entire period, Sampson averaged 30.5 hours of work per week. Therefore I conclude that Sampson was an employee of PRS regularly working more than 30 hours per week as of July 14, 1995 and a "Member" according to the Standard LTD Policy membership provision.
I also conclude that Sampson was effectively "reinstated" as a plan participant in the LTD Plan. Although Defendants are correct in their assertion that the week of July 10 is more than 60 days after Sampson's lay-off, and more than 29 days after Sampson ceased to be a member, these facts are not dispositive of Sampson's status given the terms of the reinstatement provision. In fact, under this provision, Sampson had ninety days in which to return to regular, 30-plus hour work weeks. Thus, by resuming regular, 30-plus hour weeks during the week of July 14, Sampson returned to the status of plan participant.
Defendants contend however that because the plan was lawfully cancelled on January 1, 1995, there simply was no plan in which Sampson could be a participant in July of 1995. This argument misses the point. The statutory duty created by § 1024(b), and by ERISA generally, does not immediately disappear upon either the termination of a plan or upon the end of employment. The 210 day notification period described by § 1024(b), not to mention the reinstatement provisions contained within the LTD Plan itself, define a continuing obligation to an individual, like Sampson, who was a participant in a duly qualified ERISA plan. Therefore, I conclude that Sampson, like other PRS participants in the LTD Plan, was entitled to receive notification of the cancellation of the plan by July 29, 1995. Furthermore, I find that by not providing notice to Sampson prior to the expiration of the 210 day period prescribed by § 1024(b) the plan administrator breached its statutory duty to Sampson (as well as others).
Whether Sampson may recover the statutory penalties for this breach is, however, a separate question. Given the complex and "reticulated" character of ERISA, it is essential that I identify and assign the proper remedy defined by the statute to the particular breaches of fiduciary duty found here. See Russell, 473 U.S. at 146. The First Circuit has observed that "trust principles cannot be transferred wholesale, and where ERISA itself specifies a notice requirement, courts must be especially cautious in creating additional remedies." Barrs v. Lockheed Martin Corp., 287 F.3d 202, 207 (1st Cir. 2002). This observation applies with even greater force to the selection of remedies for ERISA notice deficiencies. In this respect I note that the ERISA treats breaches of duty relating to disclosure of plan information differently depending on whether the breach is a result of a failure or refusal following a request for information or the breach concerns one of the "automatic" disclosure requirements set out in § 1024(b). See Meyer v. Phillip Morris, Inc., 575 F. Supp. 1232, 1235 (E.D.Mo. 1983) (articulating difference between ERISA's "automatic" duties and duties expressly conditioned upon written request). In essence, the difference in the available remedies comes down to the difference in the scope of the enforcement provisions delineated by § 1132(a)(3) and § 1132(c)(1)(B).
2. Section 1132
Section 1132(a)(3)(A) and (B) permits suit by a participant, and certain others, "to enjoin any act or practice which violates any provision of this title or the terms of the plan" or to obtain other equitable relief." 29 U.S.C. § 1132(a)(3)(A) and (B) (emphasis supplied). As I have discussed above, the effect of the Supreme Court's recent decision in Great West Life is to restrict relief under § 1132(a)(3) to traditional forms of equitable relief, almost entirely foreclosing the possibility of receiving money damages for a breach of a fiduciary duty under ERISA. See Great West Life, 122 S.Ct. at 712. On the other hand, § 1132(c)(1)(B) specifically authorizes the assessment of statutory damages for certain enumerated breaches. 29 U.S.C. § 1132(c)(1)(B). Specifically, § 1132(c)(1)(B) contemplates the award of money damages of up to $100 per day for each violation of the duty "to comply with a request for information which such administrator is required by this title to furnish . . ." § 1132(c)(1)(B) (emphasis supplied).
Therefore Sampson's claim for money damages for the plan administrators' violation of the duty to provide plan information within the 210 day period as defined by § 1024(b) is squarely barred by ERISA's limitation of available remedies. See Great West Life, 122 S.Ct. at 712; Mertens, 508 U.S. at 254; Russell, 473 U.S. 147. That is, while Sampson could have sought some form of equitable relief, such as an injunction against PRS or DPLR requiring them to provide plan information under the automatic notification requirements of § 1024(b), he may not pursue a claim for damages under the statutory penalties of § 1132(c)(1)(B). In short, the monetary damage enforcement provisions contained within § 1132 do not offer Sampson a general damage remedy for the failure to provide notification, in the absence of a request, of the termination of the plan within the 210 day period described by 1024(b). See Meyer v. Phillip Morris, Inc., 575 F. Supp. at 1235.
Sampson's request for damages provided by § 1132(c)(1)(B) for PRS's failure to respond to his written request for plan information does not suffer from this defect. Indeed, Sampson's claim seems to fall squarely within the set of circumstances contemplated by Congress as calling for the imposition of a statutory penalty. However, because I have determined that, with respect to his request for plan information on December 21, 1999, Sampson was not a plan participant, his request for statutory penalties must be denied. Under ERISA, the term participant means "any employee or former employee of an employer or any member or former member of an employee organization who is or may become eligible to receive a benefit of any type." 29 U.S.C. § 1002(7) (emphasis supplied). The Supreme Court has explained that "participant" in the ERISA context means either "employees in, or reasonably expected to be in, currently covered employment," or "former employees who `have . . . a reasonable expectation of returning to covered employment' or who have `a colorable claim' to vested benefits." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 117 (1989) (citations omitted).
At the time Sampson made the relevant request for plan information in December 1999, he was neither employed by PRS nor covered by the LTD Plan, the latter having been cancelled in 1995. Because he knew of the cancellation of the plan as of August 1998, Sampson had no reasonable expectation of returning to covered employment at PRS at the time he made his request for information. Furthermore, I find that Sampson had no "colorable claim" to vested benefits because his claim on this issue in this litigation concerns a failure to notify him of the cancellation of the plan, not a wrongful denial of benefits to which he was entitled. See Winchester v. Pension Comm. of Michael Reese Health Plan, 942 F.2d 1190, 1193 (7th Cir. 1991) (finding no colorable claim for vested benefits where former employee did not seek benefits denied under plan but rather damages for failure to provide plan information upon request); see also, Kamler v. H/N Telecommunication Serv., Inc., 305 F.3d 672, 682 (7th Cir. 2002) (denial of statutory penalties for failure to provide "outdated" plan documents).
I note that Sampson does not base his § 1132(c)(1)(B) request for information claim upon his August, 1998 discussion with Christina Karogiannis but upon his attorney's request in December, 1999. In any event, the outcome would be the same because Sampson was not a plan participant at either time.
Furthermore, even if Sampson were a plan participant, I find that an award of statutory penalties under 1132(c)(1) is not called for under the circumstances. The purpose of the request obligation is to insure that participants have access to plan materials to make decisions under the plan. Sampson, in fact, received in 1994 when he was a participant the materials he requested again in 1999 when he ceased to be one. Sampson bears some burden of maintaining materials he has received to avoid making duplicative requests upon which he seeks to mount a claim for statutory damages.
Although § 1132(c) permits an award of up to $100 per day for each violation, the decision whether to award the statutory penalties is placed strictly within the discretion of the court. 29 U.S.C. § 1132(c)(1)(B). That discretion is most likely to be exercised on behalf of those who have done what they can to maintain the relevant documentation they have received. Cf., Faircloth v. Lundy Packing Co., 91 F.3d 648 (4th Cir. 1996) (purpose of damage provisions of § 1132(c)(1) is not to compensate plan participants but to punish noncompliance with ERISA); Davis v. Featherstone, 97 F.3d 734 (4th Cir. 1996) (purpose of penalty provision is to provide plan administrators with incentive to give timely response to requests for information); see also, Kamler, 305 F.3d at 368.
Courts evaluating claims for statutory damages have commonly looked to factors including prejudice and the presence of bad faith in shaping their exercise of discretion. See e.g., Rodriguez-Abreu v. Chase Manhattan Bank, N.A., 986 F.2d 580 (1st Cir. 1993) (prejudice and bad faith not prerequisites but proper factors in court's exercise of discretion regarding penalties); Godwin v. Sun Life Assurance Co., 980 F.2d 323 (5th Cir. 1992) (showing of prejudice not required but may be considered as factor).
Sampson first requested plan information, through his attorney, on December 21, 1999. Neither this request, nor Sampson's subsequent requests in January and February, 2000, yielded the information Sampson sought. It appears that Defendant Rubin's responses to these requests were at best belligerent and at worst obstructionist. Nevertheless, I do not find any evidence in the record that Sampson as a plan participant was in any way prejudiced by Rubin's recalcitrance. See Rodriguez-Arbreu, 986 F.2d 588-89 (no evidence of prejudice where plan administrator mailed copies of plan administration booklet only after third written request). For example, the delay in receiving this information did not delay receipt of benefits to which he was entitled, compromise his ability to secure other insurance, or have any other deleterious effect on his reliance on plan coverage, particularly because Sampson knew he was no longer covered at the time he made his request. See, e.g., Winchester, 942 F.2d at 1193; see also, Lesman v. Ransburg Corp., 719 F. Supp. 619, 622 (W.D.Mich. 1989) (no statutory penalty under § 1132(c) where plaintiffs failed to show prejudice in obtaining severance benefits due to failure to respond to request for information); Shlomchik v. Retirement Plan of Amalgamated Ins. Fund, 502 F. Supp. 240, 245 (E.D.Pa. 1980) (same, regarding retirement benefits).
This is not, of course, to ignore that as a plaintiff in a law suit Sampson could have been hindered by Rubin's tardy production of plan documents for Sampson's review. Indeed, it is arguable that Sampson was somewhat set back in developing the theory of his claims by Rubin's failure to mail the documents as required by § 1132(c)(1)(B). But that is a litigation problem not a plan participation problem.
The goal of ERISA is not to protect litigants but to assist participants in making informed choices about their insurance arrangements. See Pension Ben. Guar. Corp. v. Greene, 570 F. Supp. 1483, 1502 (W.D.Pa. 1983). By December 21, 1999, Sampson knew that the Standard LTD Policy under which he had been insured was no longer in force. In fact, the primary, if not sole reason, he requested the plan information was to prepare his law suit, preparations which, I find, would have gone forward even if Rubin had provided a timely and appropriate response. See Winchester, 942 F.2d at 1193; Rodriguez-Arbreu, 986 F.2d 589, n. 11 (no prejudice to ensuing legal action from delay of response). I conclude therefore that Sampson has not shown any actual detriment or prejudice as a result of the plan administrator's failure to provide plan information upon written request.
Likewise, I find no evidence that the conduct of Rubin, or any other person responsible as plan administrator, descended to the level of bad faith or malfeasance sufficient to prompt the award of statutory damages for the failure to answer Sampson's request in a timely fashion. There is an essential difference between the antagonism of the adversarial process and bad faith. In this respect, Sampson has produced no evidence that the plan administrator's refusal to comply in a more timely manner with his information request was an attempt to deprive Sampson of disability benefits, to conceal the misuse of plan assets, or to commit any other act touching upon a duty involved in plan management. In other words, there is nothing in the record to show that the refusal to respond to Sampson's request for information had any bearing on Sampson's rights as a plan participant, which is the core circumstance by which the statutory penalties of 1132(c)(1)(B) are implicated. See Winchester, 942 F.2d at 1193.
To be sure, Rubin's failure to give notice of the termination of the plan in 1995 can be termed reprehensible but that is not the breach of duty § 1132(c)(1)(B) is directed to remedy.
3. Conclusion
I conclude that because the monetary penalties of § 1132(c)(1)(B) do not attach to claims for a failure to notify participants of plan modification under § 1024(b)(1), Sampson's request for money damages for the Plan Administrator's failure to notify him of the cancellation of the plan within the 210 period must be denied. Moreover, Sampson does not state a viable claim for the imposition of statutory penalties for the refusal of the Plan Administrator to provide information upon written request because he is not a plan participant according to terms governing requests for information. In any event, he has failed to describe factors which would prompt, in the discretion of this court, the imposition of the statutory penalties.
CONCLUSION
For the reasons set forth more fully above, summary judgment for the defendants is GRANTED.