Johnston v. Indep. Blue Cross, LLC

VERNETTA JOHNSTON v. INDEPENDENCE BLUE CROSS, LLC et al.

CIVIL ACTION No. 19-3524

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

February 26, 2021

MEMORANDUM

Juan R. Sánchez, C.J.

Plaintiff Vernetta Johnston brings this action pursuant to the Employee Retirement Income Security Act (ERISA) against the plan sponsor and plan administrator of her pension plan which provided her retirement benefits from her 28 years of employment with Independence Blue Cross, LLC. Johnston's remaining claims arise under ERISA § 502(a)(3) for breach of fiduciary duty and disgorgement of profits against Defendants Independence Blue Cross, LLC and the Pension Committee of the Pension Plan of Independence Blue Cross (collectively, Independence). Independence moves for summary judgment on these claims, arguing Johnston waived all claims against it when she signed a Separation of Employment Agreement and General Release (Separation Agreement) upon her retirement from the company. Johnston argues the Separation Agreement does not bar her claims because the Court should consider parol evidence such as statements from Independence representatives informing her she could pursue ERISA claims despite signing the Separation Agreement. Because the terms of the Separation Agreement unambiguously waive Johnston's remaining claims, the Court will grant the motion for summary judgment.

FACTS

Johnston began working for Independence Blue Cross on September 25, 1989. At that time, Johnston became a participant in Independence's 1989 Pension Plan. The 1989 Plan provided that Johnston earned her retirement benefits pursuant to a final average compensation formula. Johnston voluntarily resigned from Independence on February 14, 2001.

During Johnston's early employment, Independence amended its pension benefits formula. With the change, employees hired on or after January 1, 2000, received benefits under a cash balance formula, and the final average compensation formula was no longer used.

Five months after Johnston's voluntary resignation, Independence offered to rehire her on July 27, 2001. During the negotiations surrounding her reemployment, at least two representatives informed Johnston that her benefits would remain the same as they were during her previous period of employment. Johnston was informed that if she returned to Independence Blue Cross within six months, her previous benefits would be preserved. As a result, Johnston was rehired on August 13, 2001—exactly one day before the six-month anniversary of her retirement. In her offer letter, Independence Blue Cross stated Johnston would be enrolled in the "pension plan." The letter did not specify that her benefits calculation had changed since her previous employment nor did it state which formula would govern her pension benefits.

Later, in October 2017, Johnston elected to participate in Independence's voluntary severance program with an exit date of January 31, 2018. Independence calculated Johnston's benefits using the cash balance formula for the benefits accrued during the duration of her employment after she was rehired in 2001. Johnston believed this was in error and requested information about her reemployment. She then initiated a claim for recalculation of her retirement benefits using the final average compensation formula for her full 28-year tenure with the company.

In a January 5, 2018, email, Johnston inquired as to whether she should sign and submit her paperwork for retirement. She also asked whether doing so would affect the appeal of herpension benefits. See Cashman Decl. Ex. E, ECF No. 33-7. An Independence representative responded on January 9, 2018, stating:

You should return signed paperwork by January 12 to commence distribution of your pension on your exit date if you wish to receive retiree medical benefits commencing at the end of your severance period. Your election to commence distribution of your pension at this time will not impact your benefit calculation claim. The amount of your pension will be based on your accrued benefit in our records and will be adjusted only if your benefit calculation claim is later approved.

Id.

While Independence reviewed Johnston's administrative claim for benefits, Johnston's employment ended on January 31, 2018. As is required to participate in the voluntary severance program, Johnston executed a Separation Agreement which provided her with severance payments of $178,877.28 and a lump sum pension benefit of $247,530.40. See Cashman Decl. ¶¶ 29, 37; Cashman Decl. Ex. C, ECF No. 33-5 (Separation Agreement). Johnston had 45 days to review the Separation Agreement prior to signing it and seven days to revoke it after signing. See Separation Agreement §§ 12, 12.4. She also had the opportunity to consult an attorney prior to signing. See id. § 12. Johnston received her pension benefit on February 1, 2018. See Cashman Decl. Ex. F, at 1, ECF No. 33-8.

The Separation Agreement has a general waiver and release clause. That clause states:

General Waiver and Release. Employee hereby RELEASES, AND FOREVER DISCHARGES Independence, together with its past and present parents, subsidiaries and affiliates, and its and their officers, directors, employees, agents, predecessors, shareholders, partners, successors, assigns, heirs, executors and administrators (hereinafter referred to collectively as "Releasees"), of and from any and all manner of actions and causes of actions, suits, debts, claims and demands whatsoever in law or in equity, which Employee ever had, now has or hereafter may have, whether or not now known to Employee, or which Employee's heirs, executors or administrators hereafter may have, by reason of any matter, cause, or thing whatsoever from the beginning of time until the execution date of this Agreement.

Separation Agreement § 4. The clause also explicitly covers the following claims:

(a) any and all claims concerning or relating in any way to Employee's employment relationship or the termination of Employee's employment relationship with Independence;

(b) any and all claims of . . . misrepresentation, fraud, detrimental reliance, breach of contractual obligations

. . .

(d) any and all claims of violation of any federal, state and local law relating to recruitment, hiring, terms and conditions of employment, and termination of employment; . . . and

(g) any common law claims now or hereafter recognized.

Id. § 4.1.

The Separation Agreement contains an exemption clause to the general waiver and release. The clause allows Johnston to pursue the following claims, in relevant part:

(c) any benefit entitlements that are vested as of the Separation Date pursuant to the terms of a Company-sponsored benefit plan governed by the federal law known as "ERISA;"

(d) violation of any federal, state or local statutory and/or public policy right or entitlement that, by applicable law, is not waivable . . . .

Id. § 4.3

The Separation Agreement also contains an integration clause. The integration clause states "this Agreement . . . comprise[s] the entire agreement and understanding among the Parties, and supersede[s] and replace[s] any and all prior agreements . . . ." Id. § 13.6.

On March 2, 2018, Independence denied Johnston's claim for recalculation of her benefits using the final average compensation formula. Independence stated the plan unambiguously stated Johnston's pension benefits after her rehire would be calculated using the cash balance formula. Johnston appealed the decision and on September 24, 2018, her appeal was denied.

Johnston then filed the Complaint alleging three counts arising under ERISA: (1) a claim for benefits under the terms of the plan; (2) a breach of fiduciary duty and misrepresentation claim; and (3) a claim for disgorgement. Independence moved to dismiss the claims pursuant to FederalRule of Civil Procedure 12(b)(6). The Court granted Independence's motion in part and dismissed Count I because the words of the plan did not provide Johnston with the benefits she seeks. The breach of fiduciary duty and disgorgement claims remain.

Independence now moves for summary judgment on Johnston's two remaining claims. Independence argues Johnston's claims are barred by the waiver and release in the Separation Agreement. Johnston argues the Separation Agreement is not the entirety of the contract and by considering evidence outside of the Separation Agreement, the waiver did not apply to her breach of fiduciary claims. She also alternatively argues her breach of fiduciary duty claim is not waivable as a matter of law. The Court held a telephonic oral argument on Independence's motion on October 23, 2020.

DISCUSSION

The Court will grant Independence's motion because Johnston waived and released her remaining claims by signing the unambiguous Separation Agreement. Summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "Material" facts are those facts "that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the [non-moving] party." Id. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation omitted).

The Separation Agreement unambiguously waives Johnston's breach of fiduciary duty and disgorgement claims. The Separation Agreement's broad general waiver and release clausereleases Independence "from any and all manner of actions and causes of actions, suits, debts, claims and demands whatsoever in law or in equity, which [Johnston] ever had, now has or hereafter may have, whether or not now known to [her], . . . by reason of any matter,...