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Carter v. Pension Plan of A. Finkl & Sons Co. for Eligible Office Employees

December 17, 2009


The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer


Plaintiffs, employees of Defendant A. Finkl & Sons Co., are participants in that company's Pension Plan for Eligible Office Employees ("the plan"), a plan subject to the Employment Retirement Income Security Act (ERISA). 29 U.S.C. § 1001 et seq. In a Second Amended Complaint filed in July 2009, Plaintiffs charge the plan, members of the plan's pension committee, and A. Finkl & Sons Co. as the plan's administrator, with violations of ERISA. They seek recovery of benefits (Count I) and seek to enforce rights under the Plan (Count II). In Count III of their complaint, Plaintiffs allege that Defendant understated the value of Plaintiffs' pension benefits and seek a judicial determination of the proper value of those benefits. Defendant has filed a motion to dismiss portions of Count III pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons stated below, Defendant's motion is denied.


I. Factual Background

As this matter comes before the court on a motion to dismiss, the court presumes that the allegations of the Second Amended Complaint are true. Plaintiffs are long-serving employees of A. Finkl & Sons Co. ("the company"), each having more than 30 years of Credited Service as participants in the company's pension plan. (Compl. ¶ 8.) Until February 2007, the plan provided that a defined monthly pension payment would be made to any participant with at least 30 years of Credited Service, beginning upon retirement. (Id. at ¶ 7.) In December 2006, the company sent all plan participants written notice of its intention to terminate the plan as of February 28, 2007, stating: "We will notify you in writing if the proposed termination date is changed to a later date." (Id. at ¶ 10.) The company also adopted an amendment to the plan, which announced that "the Plan shall terminate effective February 28, 2007" and set forth procedures for a final distribution of plan benefits, as required by the termination provision of ERISA. (Id. at ¶ 11-13.) The plan, as amended to facilitate the termination, allowed each participant to elect to receive his or her benefits "in the form of an immediate annuity or a deferred annuity... regardless of whether he remains employed by the Employer." (Id. at ¶ 15.) In April 2008, Defendants advised Plaintiffs that the plan termination had "been approved by the Pension Benefit Guaranty Corporation" and invited Plaintiffs to submit election forms. (Id. ¶ 21.) On May 19, 2008, Plaintiffs submitted the completed forms, stating their election to take their dispersed benefits as immediate annuities. (Id. at ¶ 22)

Plaintiffs contend that the amendment "unconditionally abolished" the requirement of actual retirement as a precondition for receiving benefit payments. (Id. at ¶ 27.) They assert, further, that their ability to continue earning regular wages while employed at the company while simultaneously collecting pension benefits enhanced the value of their economic rights under the plan. (Id. at ¶ 16-18.) Thus, Plaintiffs contend, any subsequent attempt to reinstate the retirement requirement would "work[] or attempt[] to work a reduction" in Plaintiffs' accrued rights and benefits under the plan, in violation of the plan's own anti-cutback clause and ERISA's anti-cutback provision, 29 U.S.C. § 1054(g). (Id. at ¶ 28-29.)

In May 2008, the company did change course and advised plan participants that it no longer intended to terminate the plan. (Id. at ¶ 25.) The company again amended the plan, this time by deleting the amendment provisions, an amendment described by Defendants' counsel as a "'voluntary withdrawal of a termination.'" (Id. at ¶ 26.) With the plan no longer set to terminate, the company announced in June 2008 that Plaintiffs' claims for dispersal of benefits were "moot" and that it had no intention to pay Plaintiffs any immediate annuities. (Id. at ¶ 27.) All Plaintiffs continue to work for the company, and because they are not retired, Plaintiffs have not received any portion of their plan benefits. (Id. at ¶ 8-9.)

Plaintiffs filed suit against the company and the plan, arguing that the company unconditionally abolished the plan's retirement requirement when it amended the plan and informed participants of termination, and thereby granted Plaintiffs an immediate entitlement to benefits that could not subsequently be undone without violating ERISA.*fn1

II. Defendants' Motion to Dismiss

At issue on this motion is Count III. As noted, in that Count, Plaintiff charge Defendants with understating the pension benefits to which Plaintiffs are entitled. In July 2007, in connection with the then-proposed termination of the pension plan, the company issued computations of the value of Plaintiffs' entitlements as of December 31, 2006. (Id. at ¶ 30.) Then on May 16, 2008, just before announcing its intention to terminate the plan, the company issued revised calculations. (Id. at ¶ 31.) Plaintiffs' claim forms included Plaintiffs' own computations of their benefits, "determined on a conceptually comparable basis [to those offered by the company]," but demonstrating that Defendants' calculations understated the value of the benefits to which Plaintiffs are entitled. (Id. at ¶ 22, 32.) Specifically, Plaintiffs allege that Defendants understated their pension benefits under the plan by, inter alia:

a) incorrectly classifying as "special bonuses" not part of covered compensation under the plan what, in fact, were "regular bonuses" which are part of covered compensation under the plan;

b) in the case of Plaintiff Miles, incorrectly applying rules applicable to Qualified Domestic Relations Order; and

c) in the case of Plaintiff McFawn, incorrectly excluding from covered compensation a recurring cost-of-living adjustment, a recurring housing allowance and/or vacation pay. (Id. at ¶ 33.) Plaintiffs' claim forms were rejected by the plan's Pension Committee by letter dated December 22, 2008. (Id. at 34.) Plaintiffs sought review, but the Pension Committee denied their appeal by letter dated March 26, 2009. (Id. at ¶ 35-36.)

In their motion to dismiss, Defendants argue that Plaintiffs have not pleaded sufficient facts and law in Count III to satisfy FED. R. CIV. P. 8. They urge, further, that Plaintiffs have failed to exhaust and failed to allege exhaustion of the plan's administrative procedure on aspects of the claim. Lastly, Defendants contend that any part of the claim relating to Plaintiff Miles's Qualified Domestic Relations Order ("QDRO") cannot proceed because Plaintiffs have failed to ...

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