to represent) the latest information about the plan. Plaintiffs argue that defendant was required under ERISA to produce upon written request the latest SPD, the latest annual report and a copy of the plan description, whether or not these documents existed at the time of the request. Section 502(c)'s penalty provision is triggered by both refusals to provide requested information, and failures to do so. 29 U.S.C. § 1132(c). Plaintiffs note that the statute makes no exception or qualification for failures caused by the absence of mandated documents.
We adopt plaintiffs' logic. See Kascewicz v. Citibank, N.A., 837 F. Supp. at 1321 (intimating without holding that an administrator's failure to respond to a request because it had never prepared the requested document is actionable under § 502(c)). Under section 104(b)(4), participants and beneficiaries of an ERISA plan are entitled upon written request to a copy of the plan, the latest SPD, and the latest annual report. 29 U.S.C. § 1024(b)(4). If any of these documents do not exist at the time of a request, it is consistent with the aims of ERISA to impose a penalty on the plan administrator for every day that he fails to provide the document to the participant who requested it. There is nothing keeping the administrator from preparing a mandatory document where none previously existed, and it is his burden upon threat of penalty to do so. If the rule were as defendant interprets it, it would be too easy for a plan administrator to avoid section 502(c) penalties simply by failing to maintain documents or by destroying them when a participant makes a written request.
Defendant counters by arguing that the documents which it did produce are sufficient to meet the requirements of ERISA. We cannot agree. Plaintiffs were terminated in July, 1994. Thus, for the purposes of our review the then-current SPD, plan description and 1993 annual report are the critical documents. Defendant provided plaintiffs with two documents purporting to fulfill ERISA's requirements: a two-page description of the severance plan as it existed in July, 1994 (the last revision had been made on January 25, 1994), and the annual report which it filed with the IRS in 1993.
The first of these documents is not entitled "plan description" or "summary plan description." It does not contain: (1) the designation of an agent for service of process; (ii) the source of the plan's financing; (iii) the date of the end of the plan year and the basis for recordkeeping; (iv) a claims procedure and available remedies for redress of denied claims; or (v) a statement of ERISA rights. Under ERISA, each of these pieces of information must be included in a plan description or an SPD. 29 U.S.C. § 1022(b); 29 C.F.R. § 2520.102-3. Furthermore, although it reveals that the execution of a general release is a condition for eligibility, the document does not state whether or not there are other eligibility conditions.
We find that the document which defendant produced was not an SPD or a plan description as defined by statute and regulation, since it does not contain "all or substantially all categories of information required under [section 102(b) of ERISA] and [DOL regulations]." Hicks v. Fleming Cos., Inc., 961 F.2d 537, 543 (5th Cir. 1992).
When a plan participant or beneficiary requests a plan description or an SPD, an administrator is "not authorized under ERISA to respond to this request with documents that it believed were equivalent or that it thought would provide the plaintiffs with comparable information." Cohen v. Gross, Sklar & Metzger, P.C., 1992 U.S. Dist. LEXIS 2356, 1992 WL 38387, *6 (E.D.Pa. 1992). See also McFaul v. Loews Corp., 1993 U.S. Dist. LEXIS 18261, 1993 WL 541778, *4 (S.D.N.Y. 1993). Furthermore, one document cannot constitute both the plan description and the SPD. Since defendant has produced just one two-page document to satisfy both requirements, it is certainly in violation of ERISA.
Finally, there can be no 502(c) liability without a written request by the plaintiff for information which the administrator was required to produce. There is little doubt that plaintiffs' August 23, 1994 letter to Wells satisfies this requirement. As we noted in our May memorandum and opinion, although the letter is slightly overbroad, it contains a request for the production of "all filings made by Brach required under ... ERISA, relating to this particular employee welfare plan" (compl., exh. 6). Defendant cannot seriously argue that this letter did not include a request for the then-current SPD and plan description.
Having found that plaintiffs have established a section 502(c) violation, we turn now to the decision of whether to impose a penalty. See Kleinhans v. Lisle Savings Profit Sharing Trust, 810 F.2d 618, 622 (7th Cir. 1987) (court's discretion to impose statutory penalty only arises when "the facts of the case establish an actual violation of [§ 502(c)]").
As stated supra, the purpose of section 502(c) is "not so much to penalize as to induce plan administrators to respond in a timely manner to a participant's request for information." Winchester v. Pension Committee of Michael Reese Health Plan, Inc., 942 F.2d at 1193. Given this purpose, it is improper to place "a primary focus on the impact to the participant rather than the administrator's conduct." Id.
Courts have looked to a number of factors in determining whether to assess a section 502(c) penalty, such as "bad faith or intentional conduct on the part of the administrator, the length of the delay, the number of requests made and documents withheld, and the existence of any prejudice to the participant or beneficiary." Pagovich v. Moskowitz, 865 F. Supp. 130, 137 (S.D.N.Y. 1994). See also Ziaee v. Vest, 916 F.2d 1204, 1210 (7th Cir. 1990) ("the judge may, but need not, consider the provable injury when exercising the discretion"), cert. denied, 499 U.S. 959, 113 L. Ed. 2d 646, 111 S. Ct. 1581 (1991); Kleinhans, 810 F.2d at 622 (conduct and intent of the administrator in not providing the required information considered).
In our May memorandum and order we determined that plaintiffs were not prejudiced by defendant's procedural violations, since they had received adequate notice of their rights under the plan.
Plaintiffs admit that at the time of their terminations or shortly thereafter, Brach sent them a statement detailing the amount they would receive under the plan and explaining that they would be paid only if they waived all their claims against Brach. The company gave them three months to make their decision whether to accept. These facts clearly show that Brach did not conceal the plan, act in bad faith, or induce plaintiffs' reliance on a faulty plan summary after they were terminated.
Jackson v. E.J. Brach, Corp., 1995 U.S. Dist. LEXIS 7173, 1995 WL 319761, at *3. Thus, while the two-page document which defendant provided plaintiffs contained insufficient information to constitute an SPD or a plan description, see supra, it was at least sufficiently comprehensive to provide plaintiffs with all the information they needed to determine their rights under the plan.
Our inquiry cannot end here, however. See Ziaee, 916 F.2d at 1210 (it is improper to use the absence of prejudice as a dispositive factor in determining whether to assess a penalty).
Courts faced with the decision of how large a penalty, if any, to assess in a situation where the plaintiff has established little or no prejudice due to defendant's ERISA violations have come to a wide variety of solutions. See Pagovich, 865 F. Supp. at 138 (imposing a $ 75 per diem penalty on defendant whose conduct was found to be indifferent and whose delay in producing important documents was extensive); Piggot v. Livingston Co., Inc., 1989 U.S. Dist. LEXIS 11155, 1989 WL 111845, *3 (N.D.Ill. 1989) ($ 2 per day "nominal penalty" imposed where delay was not in bad faith and documents appeared not to be related to plaintiff's claim for benefits); Mitchell v. American Hardware Manufacturers Assoc., LEXIS Genfed Library, DIST File, 1985 WL 2559, *11 (N.D.Ill. 1985) ("nominal" $ 1000 total award granted to plaintiff where "there [was] no evidence that defendants acted intentionally, recklessly, or maliciously"); Geary v. Chicago Tile Institute Welfare Trust, 1995 U.S. Dist. LEXIS 4921, 1995 WL 228971, *6 (N.D.Ill. 1995) (no penalty assessed); Nunez v. Monterey Peninsula Engineering, 867 F. Supp. 895, 910 (N.D.Cal. 1994) (same). See also Kascewicz, 837 F. Supp. at 1324 (noting, in a case where prejudice was found, that "the size of the per diem penalties [in past cases] has ranged from $ 10 a day to $ 50 a day, and the aggregate penalties have ranged from $ 1,500 to over $ 15,000").
In this case, there is no dispute that defendant provided plaintiffs with the two-page summary of the severance plan promptly upon receiving plaintiffs' counsel's first written request. We take this evidence of defendant's good faith into consideration. Nevertheless, despite further requests from plaintiffs, both written and in open court, defendant has failed to produce a formal and complete SPD or plan description as required under ERISA. Since count II of the complaint specifically refers defendant to the applicable sections of the ERISA statute, we cannot excuse defendant's actions based on ignorance of the law. Defendant has had over two years to educate itself about what is required, and to bring itself into compliance.
We are of the opinion that this case requires some penalty, although one closer to a nominal amount, since plaintiffs were not denied the information they needed and defendant made a prompt attempt at fulfilling its duties under the statute. We believe that $ 10 per diem is appropriate, since that amount should more than cover the expense of pursuing this claim. Calculation of the penalty shall run from the first day Brach was in default of his disclosure obligations, September 22, 1994 (the thirty-first day after the first written request was made), through and including the day this opinion is issued to the parties, a total of 692 days. Penalties are therefore awarded against Brach in the total amount of $ 6,920.
For the foregoing reasons, defendant's motion for summary judgment on count II is denied, and plaintiffs' motion for summary judgment is granted. A penalty in the amount of $ 6,920 is assessed against defendant.
JAMES B. MORAN
Senior Judge, U.S. District Court
August 14, 1996