Vartanian v. Monsanto Co., Civ. A. No. 92-30223-MAP

880 F. Supp. 63

Leo VARTANIAN, Plaintiff, v. MONSANTO COMPANY, The Monsanto Company Salaried Employee's Pension Plan (1986), et al., Defendants.

Stanley RODOWICZ, et al., Plaintiffs, v. MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, et al., Defendants.

Civ. A. Nos. 92-30223-MAP, 93-30075-MAP.

United States District Court, D. Massachusetts.

March 31, 1995.

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Keith A. Minoff, John C. Sikorski, Robinson, Donovan, Madden & Barry, Springfield, MA, for plaintiff in No. 93-30075-MAP.

David G. Cohen, Egan, Flanagan & Egan, Springfield, MA, for defendants in No. 93-30075-MAP.

John C. Sikorski, John W. Lake, Robinson, Donovan, Madden & Barry, Springfield, MA, for plaintiff in No. 92-30223-MAP.

Francis D. Dibble, Jr., Bulkley, Richardson & Gelinas, Springfield, MA, Richard J. Pautler, Richard P. Sher, St. Louis, MO, for defendant in No. 92-30223-MAP.

MEMORANDUM REGARDING DEFENDANTS' MOTIONS TO DISMISS AND MOTIONS TO STRIKE JURY DEMAND AND MONSANTO'S MOTION TO TRANSFER

PONSOR, District Judge.

I. INTRODUCTION

In separate actions before this court, two sets of plaintiff-retirees allege violations of the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq. (ERISA). All the plaintiffs assert that their former employers breached ERISA fiduciary duties, intending to deprive them of pension benefits by making unlawful misrepresentations and engaging in unlawful discrimination. Defendants in both cases unsuccessfully moved for dismissal asserting that plaintiffs lacked standing to pursue their ERISA claims. See Vartanian v. Monsanto Company, 14 F.3d 697 (1st Cir.1994); Rodowicz v. Massachusetts Mutual Life Ins., 857 F.Supp. 992 (D.Mass.1994). Since it is now clear that plaintiffs have standing under ERISA to bring these claims, the court will address the other issues raised in defendants' motions to dismiss.

The remaining portions of the defendants' motions to dismiss raise identical issues of law and rest on similar factual allegations. Monsanto and MassMutual both argue that plaintiffs' claims for breach of fiduciary duty impermissibly rest on allegations of misstatements regarding business decisions outside the governance of ERISA. They further maintain that ERISA provides only equitable relief and for this reason plaintiffs' demands for jury trials and extracontractual damages should be denied. Addressing the two motions in one memorandum better illuminates both parties' positions and the court's decision on these common legal issues.

The court will allow, in part, defendants' motions to dismiss. In summary, because ERISA does not permit a claim for breach of fiduciary duty based on misrepresentations of business decisions, the court will dismiss the claims of MassMutual plaintiffs James Lemon and June DeVine. Plaintiffs' demands for jury trials and extra-contractual damages will also be dismissed. However, because the other plaintiffs have offered sufficient allegations that defendants made misrepresentations specifically regarding possible changes in pension plans, the motions to dismiss their claims will be denied. The court's reasoning is set forth below.

II. FED.R.CIV.P. 12(B)(6)

The appropriate inquiry on a motion to dismiss is whether, based on the allegations of the complaint, the plaintiffs are entitled to offer evidence in support of their claims. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). Accordingly, the court must accept as true all the factual allegations in the complaint and draw all reasonable inferences in favor of the plaintiffs. Bergeson v. Franchi, 783 F.Supp. 713 (D.Mass.1992), citing Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir.1990). If under any theory the complaint is "sufficient to state a cause of action in accordance with the law, a motion to dismiss the complaint must be denied." Knight v. Mills, 836 F.2d 659, 664 (1st Cir.1987); Cuddy v. Boston, 765 F.Supp. 775, 776 (D.Mass.1991).

III. FACTUAL BACKGROUND

The Vartanian and Rodowicz cases each present a variation on the following factual scenario. Soon-to-retire employees were concerned about whether the company was seriously considering any improvements in retirement benefits or severance packages for which they might be eligible if they postponed their retirement. Some employees made specific inquiries about the prospects of a sweeter pension deal and were told that no changes in benefits were under consideration. Others made only general inquiries about the company's financial condition, or made assumptions from general statements about the company's robust health, and concluded that lay-offs were unlikely and that, therefore, the prospects were slim for more attractive pension packages aimed to induce earlier retirement. At any rate, whether based on specific representations or general statements, the employees decided to retire. Shortly thereafter, improved pension and severance plans were made available, but only to those employees who had not yet retired. The recently retired employees now have claimed that but for their employer's statements, they would have delayed their retirement to acquire eligibility for the enhanced benefits.

A detailed recitation of the facts is set forth in two previous decisions. See Vartanian v. Monsanto Company, 14 F.3d 697; Rodowicz v. Massachusetts Mutual Life Ins., 857 F.Supp. 992. The following summation provides the necessary factual framework for the discussion that follows.

Leo Vartanian, an employee at Monsanto's Springfield production facility, had elected to receive a lump sum payment upon his retirement on May 1, 1991. In early February, 1991, plaintiff heard rumors that Monsanto was planning to offer an incentive early retirement package in the near future. From the time Vartanian heard these rumors until his retirement, he repeatedly queried his supervisors specifically as to whether an early retirement package was under serious consideration. He was always told that there was no such plan. On June 28, 1991, Monsanto did adopt a special early retirement program. Had Vartanian remained on the payroll until June 28, 1991, he would have been eligible for enhanced benefits unavailable to him on the date of his retirement.

Stanley Rodowicz and seven other former MassMutual employees retired between August 1 and October 1, 1992. The eight named plaintiffs received retirement benefits paid by MassMutual. Each claims that the decision to retire during this two-month period was strongly influenced by his or her assumption that MassMutual was not seriously considering, or in the near future planning to offer, an early-retirement incentive program that would have afforded enhanced retirement or severance benefits to the plaintiffs. Plaintiffs allege that their assumptions were based either on responses to direct inquiries or inferences they drew from official communications in the company newsletter.

On October 23, 1992, MassMutual announced an early retirement incentive plan. Eligibility for this plan was limited to employees who retired after October 21, 1992 and before January 2, 1993. Plaintiffs now contend that, but for their assumption that no new retirement benefits were under serious consideration, they would have waited to retire until after October 23, 1992.

Vartanian's complaint is comprised of three related claims: Count I, breach of fiduciary duty by misrepresenting the status of Monsanto's consideration of early retirement program in violation of 29 U.S.C. § 1104; Count II, breach of fiduciary duty by misrepresenting the status of impending significant staff reductions in violation of 29 U.S.C. § 1104, and Count III, unlawful discrimination in violation of 29 U.S.C. § 1140.

The Rodowicz plaintiffs assert the following ERISA violations: Count I, breach of fiduciary duty by failing to disclose truthfully the status of plans for a reduction in force and accompanying early retirement incentive programs in violation of 29 U.S.C. § 1104; Count II, discrimination in violation of 29 U.S.C. § 1140, and Count III, equitable estoppel pursuant to 29 U.S.C. § 1132(a)(3)(B).

In their respective complaints, all these plaintiffs also demand jury trials on all issues, and seek consequential damages and damages for emotional distress.

IV. DISCUSSION

These motions raise four issues common to both cases. First, does ERISA permit a claim that an employer breached its fiduciary duty by making general misrepresentations regarding a prospective reduction in force, or must the misrepresentations explicitly concern a prospective or contingent ERISA plan under serious consideration? Second, can allegations of misrepresentation support a claim of discrimination pursuant to 29 U.S.C. § 1140? Third, under what circumstances, if any, are jury trials permissible in ERISA suits? Fourth, may an ERISA plaintiff recover extra-contractual damages?

The court will address each of these issues and then turn to Monsanto's motion to transfer pursuant to 28 U.S.C. § 1404(a).

A. Section 1104: Misrepresentations Regarding Business Decisions

With respect to the administration of benefit plans under the governance of ERISA, company management wears two hats. On the one hand, ERISA does not interfere with the employer's discretionary policy decisions to create, amend or terminate a particular benefit plan. This means that employers are not required to disclose their internal deliberations or the status of business activities. Drennan v. General Motors Corp., 977 F.2d 246, 251 (6th Cir.1992). On the other hand, employers have a fiduciary duty to administer existing ERISA plans for the benefit of participant-employees. When an employer administers a benefit plan, it may not make material misrepresentations concerning a prospective or contingent ERISA plan "under serious consideration." Vartanian v. Monsanto, 14 F.3d at 702, citing Berlin v. Mich. Bell Tel. Co., 858 F.2d 1154, 1163-64 (6th Cir.1...