Anderson v. Xerox Corp.

29 F.Supp.3d 323

Herbert E. ANDERSON, Plaintiff,

v.XEROX CORPORATION, Lawrence M. Becker, Xerox Corporation Plan Administrator, The Retirement Income Guarantee Plan (RIGP), Defendants.

No. 06–CV–6202L.

United States District Court, W.D. New York.

Signed July 10, 2014.

Nira T. Kermisch, Sudbury, MA, for Plaintiff.

Margaret A. Clemens, Littler Mendelson, P.C., Rochester, NY, for Defendants.

DAVID G. LARIMER, District Judge.

INTRODUCTION

This case is one of a group of related cases presenting claims under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1101 et seq., by current and former employees of Xerox Corporation (“Xerox”), relating to their pension benefits. In general, these cases concern the manner in which benefits have been calculated for employees who left Xerox's employ at some point, at which time they each received a lump-sum distribution of accrued pension benefits, and who later returned to work for Xerox.

The basic issue in these cases involves how to take those past distributions into account when calculating plaintiffs' current or future benefits, so that plaintiffs are neither shortchanged nor given a windfall. The particular bone of contention is defendants' use of a so-called “phantom account,” which involves reducing participants' benefits according to a formula that utilizes the fiction that the prior distribution had remained in the participant's account, and appreciated accordingly. For a fuller description of the phantom-account formula, see Frommert v. Conkright, 433 F.3d 254, 260 (2d Cir.2006) (“ Frommert I ”).

This particular case was brought by a single plaintiff, Herbert Anderson, against Xerox Corporation, the Xerox Retirement Income Guarantee Plan (“RIGP”), and Lawrence M. Becker, the administrator of the RIGP. Like most of these cases, this action has a long and somewhat convoluted history, the most pertinent aspects of which will be summarized here.

Plaintiff resigned from Xerox in 1980 and received a lump-sum distribution at that time. In 1984, he was hired by Versatec (which plaintiff describes as “a Xerox Company,”) see Anderson Aff. (Ex. 10) ¶ 5, and became a participant in its retirement plan. Versatec became a part of Xerox's XES/CGS Group in 1993, and Versatec's retirement plan was incorporated into the RIGP. Plaintiff was terminated in 2002. Plaintiff's Statement of Material Facts (Dkt. # 10–12) ¶¶ 1–5. He filed this action in April 2006, asserting, in brief, that he is entitled under the RIGP to greater benefits than those he has been paid by defendants.

In October 2006, defendants moved for summary judgment, principally on the ground that in 2002, in exchange for certain severance benefits, plaintiff executed a release of all claims that he had or might have had against defendants, including ERISA claims. Specifically, defendants note that on October 9, 2002, plaintiff signed a release stating that for certain identified consideration, he “release[d defendants] from any and all claims of any kind, known or unknown, which I now have or may have against the Releasees by reason of facts which have occurred prior to the date of this Release.” See Dkt. # 7–4 at 2. ERISA claims were expressly included within the scope of the release, which, even aside from that, was by its terms quite broad. Id.

After defendants moved for summary judgment, plaintiff cross-moved for summary judgment, based on the decision by the Court of Appeals for the Second Circuit in Frommert I. The Second Circuit held in Frommert I that the “phantom account may not be applied to employees rehired prior to the issuance of the 1998 SPD [summary plan description].” Id. at 263. The basis for the court's ruling was its finding that “the phantom account was not part of the Plan until 1998 when it was added by amendment of the Plan's text through its explanation in the 1998 SPD,” and that “application of the phantom account by the defendants prior to its inclusion in the Plan by amendment constituted a prohibited reduction of justified expectations of rehired employees' accrued benefits in contravention of § 204(g).” Id. at 263.

The court also held that “for employees rehired subsequent to the amendment of the Plan through the 1998 SPD, the phantom account is a component of the Plan that they joined and thus may permissibly be applied to them.” Id. Again, the basis for the court's decision was its conclusion that the phantom account “was added by amendment of the Plan's text through its explanation in the 1998 SPD,” which was widely distributed to Xerox employees and Plan participants. Id.

Anderson was rehired prior to 1998. Based on Frommert I, therefore, in June 2007 this Court denied defendants' motion for summary judgment in Anderson, and granted plaintiff's cross-motion. (Dkt. # 23.) ¹

At that point, however, this Court had also issued a decision on remand in Frommert, setting forth the terms of the remedy for defendants' ERISA violation. In that decision, I also held that the release forms signed by several of the Frommert plaintiffs (which generally released Xerox from any claims in exchange for salary continuance or similar severance benefits) were ambiguous in certain material respects, and that they therefore did not bar the plaintiffs' ERISA claims. See Frommert v. Conkright, 472 F.Supp.2d 452, 460–65 (W.D.N.Y.2007).

At the time this Court issued its June 2007 decision in Anderson, that Frommert decision was on appeal before the Second Circuit. Because of the overlap between some of the issues in Frommert and Anderson, in my June 2007 Anderson decision, the Court stayed further proceedings in Anderson pending a decision by the Court of Appeals on the Frommert appeal. Dkt. # 23 at 1.

In 2008, the Court of Appeals issued another decision in Frommert v. Conkright, 535 F.3d 111 (2d Cir.2008) (“ Frommert II ”), which, inter alia, reversed this Court's ruling that the releases at issue in Frommert were unenforceable. As to that issue, the Second Circuit stated:

There appears to be no dispute that those Plaintiffs–Appellees who signed these releases had ample time (45 days) to decide whether to sign the release, that Xerox encouraged such individuals to consult an attorney, and that the signatories received salary continuances in consideration of their releasing claims. Some Plaintiffs–Appellees even modified the terms of the release forms with which they had been presented before signing them. As to the language of the releases themselves, we cannot conclude, as the District Court did, that the express terms of these releases were “at the very least ambiguous as to what the employee was giving up in exchange for salary continuance.” Frommert, 472 F.Supp.2d at 462. As the District Court's interpretation of the release forms is incorrect, it cannot stand. Unless the release form at issue specifically exempted this litigation as noted above, the releases signed by certain Plaintiffs–Appellees are enforceable.

Frommert II, 535 F.3d at 122–23.

Based principally on the Second Circuit's decision in Frommert II, defendants have moved for reconsideration of this Court's June 2007 decision in Anderson. Defendants contend that Anderson's claims are barred by the release that he executed.

Defendants further contend that Anderson's claims should be dismissed as time-barred. In support of that argument, defendants rely on the Second Circuit's decision in Hirt v. Equitable Retirement Plan for Employees, Managers and Agents, 285 Fed.Appx. 802 (2d Cir.2008), which, defendants say, clarified when an ERISA cause of action accrues in a case involving an alleged failure to notify a plan participant of a plan's terms. According to defendants, Hirt makes clear that Anderson's claims are untimely, as explained in more detail below.²

DISCUSSION

I. Plaintiff's Release

A. Consideration for the Release

Defendants have asked the Court to reconsider its June 2007 Decision and Order in this case. A so-called “motion for reconsideration” should be granted only when the movant identifies “an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.” Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Trust, 729 F.3d 99, 104 (2d Cir.2013) (quoting Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir.1992)) (internal quotation marks omitted).

Defendants assert that Frommert II effected a change in the relevant law, insofar as it upheld the releases signed by the plaintiffs in that action. Defendants contend that the reasoning of Frommert II with respect to the releases applies with equal force in the case at bar, and that this Court should hold that Anderson's claims are barred by his release.

Plaintiff has conceded that “there is no question that the [defendants'] motion for reconsideration must be granted to the extent that the summary judgment in favor [of] plaintiff be vacated,” but plaintiff contends that discovery is needed regarding the validity of the release. Dkt. # 39. See also Transcript of Proceedings on June 2, 2011 (Dkt. # 42), at 68 (statement by plaintiff's counsel that the motion to reconsider “should be granted and the matter should go to discovery”).³ According to plaintiff's counsel, such discovery should relate to the circumstances under which plaintiff signed the release, and when plaintiff first became aware that his benefits would be reduced by the phantom account offset. See Dkt. # 39 at 2.

Both sides agree that the motion to reconsider is affected, if not necessarily controlled, by Frommert II. In that case, the Second Circuit recognized the principle that “an individual can waive his or her right to participate in a pension plan governed by ERISA only if his or her waiver is made knowingly and voluntarily.” 535 F.3d at 121. The court also set forth a non-exhaustive list of six factors that bear upon whether a release will be considered knowing and voluntary:

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