The opinion of the court was delivered by: J. Phil Gilbert District Judge
This matter comes before the Court on the parties' cross-motions for summary judgment. The plaintiffs in this matter, Davis and Weede (hereinafter "Davis" unless otherwise stated) filed a motion for summary judgment (Doc. 136) and memorandum in support (Doc. 137), to which the defendants, Retirement Plan of Phibro Animal Health Corporation and subsidiaries and affiliates, Phibro Animal Health Corporation, Prince Agri Products, Inc., Prince Minerals Inc., Jack Bendheim, Richard Johnson, and David Storbeck, (hereinafter "Phibro"), filed a response (Doc. 149), and Davis filed a reply (Doc. 153). Phibro then filed its own motion for summary judgment (Doc. 138) and memorandum in support (Doc. 139), to which Davis filed a response (Doc. 148) and Phibro filed a reply (Doc. 154). Phibro also filed a response to Davis's statement of undisputed material facts (Doc. 150).
The retirement plan in question was originally established effective January 1, 1951 and is a defined benefit plan. Davis was hired by Prince Manufacturing on September 14, 1971. Phillip Brothers acquired Prince Manufacturing on November 1, 1974 and Davis claims he became a participant in the plan at this point. The Plan back-credited Davis's benefit-related service to September 14, 1971 for purposes of calculating his benefits. Plaintiff Weede commenced employment on March 4, 1985 and participated in the retirement plan.
In 1980, Phillip Brothers created Prince Agri as a wholly owned subsidiary. In 1988, Phibro retained James Benefits to review the plan's terms. The report written by James Benefits ("James Report") suggested Phibro (then Phillips Company) "freeze the existing accrued benefits, and adopt a new benefits formula providing the basic level of benefits for further service." (Doc.150, para. 12). Around May 30, 1989, Phibro distributed a letter signed by Jack Bendheim to Davis and Weede along with a brochure entitled "Retirement and Savings Plan." On August 15, 1989, Phibro adopted Amendment No. 3 which amended Section 3.01 of the plan retroactively to July 1, 1989. The relevant portion of the amendment states:
Notwithstanding the foregoing, if a Participant's Normal Retirement Pension determined as of June 30, 1989 based on Average Compensation determined as of June 30, 1989, exceeds the amount determined in accordance with the first sentence of this Section 3.01(a), then the Participant's Normal Retirement Pension shall be his Normal Retirement Pension determined as of June 30, 1990, based on Average Compensation determined as June 30, 1989.
(Doc. 137-11). Phibro did not distribute a notice characterized as a § 204(h) notice after it adopted Amendment No. 3 on August 15, 1989. Phibro asserts this is because none was required following the distribution of the May 1989 letter and brochure.
Following the July 1st Amendment, Phibro adopted an Amendatory Amendment No. 3 on September 12, 1990. This amendment applied retroactively to July 1, 1989 because the original amendment did not accurately reflect the intent of the company. The Amendatory Amendment stated the plan was to provide:
i. The Participant's Accrued Benefit, if any, as of June 30, 1989; plus
ii. One percent (1%) of the Participant's Average Compensation multiplied by his Years of Service after July 1, 1989; plus one-half percent (1/2%) of the Participant's Average Compensation over the Social Security Taxable Wage Base, multiplied by his Years of Service after July 1, 1989.
In 1991, Phillip Brothers was preparing to spin-off two divisions then known as C.P. Chemicals and C.P. Organics into a public company. In anticipation of the spin-off, Phibro purchased an annuity for Davis in the amount of $5,611.56 payable as a ten-year certain and continuous annuity, with monthly pay-outs of $467.63 to begin on October 1, 2013.
On September 1, 2003, Phillip Brothers changed its name to Phibro Animal Health Corporation. In late 2003, Phibro sold Prince Manufacturing to Palladium Equity Partners, who changed the name of the company to Prince Minerals, Inc. Davis and Weede remained employed by Phibro/Prince Agri and remained participants in the plan after the sale of Prince Manufacturing. The Plan was renamed to its current name effective April 15, 2005. Davis left his employment with Phibro on June 30, 2006 and received a copy of his final benefit statement and benefit calculation worksheet on November 8, 2006. Weede left his employment on April 9, 2009 and the record is unclear as to whether he received his final statement on April 21, 2009 or April 29, 2009.
According to the terms of the current Plan, effective July 1, 1997, Davis's normal retirement pension is the sum of:
(a). His Accrued Benefit under the Prior Plan, determined as of June 30, 1989, under the terms and conditions of the Prior Plan, plus
(b). His normal retirement pension earned after July 1, 1989 determined based on his age, his average compensation, and his years of service.
The dispute turns on how the accrued benefit in Part (a) was calculated. Davis believes that under the terms of the Prior Plan, his accrued benefit as of June 30, 1989, could not have been calculated until he retired or otherwise left employment with Phibro. Because, until then, the Plan could not calculate his "Average Compensation" which is defined as "your compensation averaged over the five consecutive years during which your pay is highest within the ten-year period before your normal retirement date or the date of your earlier termination of employment." Under the terms of the Prior Plan, Davis's "normal retirement benefit" was calculated as 3% of the employee's Average Compensation reduced by 66 2/3% of the employee's Social Security Benefits.
When Davis did the math, plugging in his "Average Compensation," he came up with a number that is radically different from the number the Plan came up with. He contacted Dianne Kappes, a benefits coordinator at Phibro asking how the Plan arrived at its figure. He was told the 6/30/1989 accrued benefit is based upon average compensation as of 6/30/1989. The 6/30/1989 accrued benefit was calculated for all participants around that time and Phibro does not have copies of the original calculations and those amounts are frozen benefit amounts based on pay prior to 6/30/1989. He was further told the accrued benefit did not increase as a result of pay increases after 6/30/1989. Rather, the benefit earned for service after 6/30/1989 was added to the 6/30/1989 accrued benefit to come up with the total benefit. The 6/30/1989 accrued benefit was not adjusted for any pay increases occurring after 6/30/1989. This was consistent with the annual statements received over the years by Davis and Weede.
This matter was originally filed November 5, 2008. Phibro filed a motion to Dismiss (Doc. 15) which was denied in part and granted in part (Doc. 44). The Court stayed the matter for ninety days to allow the parties to take part in the administrative process and ordered them to file a joint status report. The stay was lifted on September 25, 2009 and Davis filed an Amended Complaint (Doc.55) on October 16, 2009. Davis then filed an Amended Motion to Certify Class (Doc. 72) which has been stayed pending the resolution of the pending motions for summary judgment (Doc. 152). On November 12, 2010, the Court granted the parties' jointly requested sixty day stay (Doc. 109). Following the lift of the stay, Davis filed a Second Amended Complaint (Doc. 114) on January 31, 2010 which added Plaintiff Weede. Phibro answered and pleaded a counterclaim against Plaintiff Weede for breach of contract (Doc. 122). Davis then filed a motion to strike the answer which contained the counterclaim (Doc. 147) to which Phibro responded (Doc. 151). Davis's subsequently filed a consent motion to strike counts II, IV, V, and VI of the second amended complaint with prejudice as to Davis and without prejudice as to Weede which the Court granted (Doc. 124).
The counts which remain against Phibro (et al.) by Davis and Weede ("Davis") therefore include Counts I and III. In Count I, Davis seeks recovery of benefits or clarification of the right to future benefits under the terms of the Plan using the final Average Compensation to calculate the Accrued Benefit as of June 30, 1989 under 29 U.S.C. §1132(a)(1)(B). In Count III Davis seeks injunctive relief pursuant to 29 U.S.C. §1132(a)(3) to render Amendment 3 as void ab initio because of failure to provide notice in violation of 29 U.S.C. §1054(h). Phibro asserted a counterclaim against Weede for breach of contract based upon the bringing of this suit. Phibro alleges the claim release Weede signed has been violated by this suit and Weede therefore needs to return the $96,562.44 he has received upon retirement back to Phibro. This brings the Court to the present pending cross-motions for summary judgment (Docs. 136, 138) in which the parties both seek judgment in their favor on counts I and III. Davis's motion, though filed first, focused on why he should prevail on the substantive claims whereas Phibro's motion argued why it should prevail procedurally. The Court therefore begins its analysis with the motion to strike (Doc. 147) and Phibro's procedural arguments (Doc. 138).
II. Phibro's Counterclaim
In Phibro's answer to Davis's Second Amended Complaint, it added a counterclaim against Weede (second named plaintiff) alleging a breach of contract for violating the Separation & Release Agreement. Weede then moved to strike the counterclaim on the basis it was retaliatory against Weede for exercising his rights under ERISA (Doc. 147). The Court is aware the motion to strike was filed very late and without permission of the Court to file such a late response. In spite of this, the Court considers its merits. The defendants had the opportunity to respond to the motion and did in fact do so (Doc. 151) and the Court finds it is sufficiently briefed on the motion to render a decision. Plaintiff Weede also responded to the counterclaim within its motion to strike.
There are two ways to establish a prima facie case for unlawful retaliation: the direct method and the indirect method. Stone v. City of Indianapolis Public Util. Div., 281 F.3d 640, 644 (7th Cir. 2002). In order to survive a motion for summary judgment under the direct method, Weede must present direct evidence that: (1) he engaged in statutorily protected activity; (2) he suffered an adverse employment action; and (3) there is a causal connection between the two. Haywood v. Lucent Tech., Inc., 323 F.3d 524, 531 (7th Cir. 2003). With the indirect method, Weede must establish: (1) he engaged in statutorily protected activity; (2) he performed his job to legitimate expectations; (3) despite his satisfactory performance, he suffered an adverse employment action; and (4) he ...