Otero-Carrasquillo v. Pharmacia , 466 F.3d 13 ( 2006 )

United States Court of Appeals
For the First Circuit
No. 05-2373
ROBUR OTERO CARRASQUILLO, MARIA T. NEGRON CEDEÑO
and the Conjugal Partnership formed between them AND
JENNIFER OTERO M. NEGRON,
Plaintiffs, Appellants,
v.
PHARMACIA CORPORATION; PFIZER PHARMACEUTICALS; ZAIDA
SANABRIA in her official and personal capacity;
COMPANIES X, Y, Z, JANE DOE AND JOHN DOE,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. José Antonio Fusté, U.S. District Judge]
Before
Lynch and Howard, Circuit Judges,
and Stafford,* Senior District Judge.
Vilma M. Dapena Rodríguez for appellants.
Carl Schuster, with whom Lourdes C. Hernández-Venegas, María
Santiago-Ramos and Schuster & Aguiló LLP were on brief, for
appellees.
October 6, 2006
*
Of the Northern District of Florida, sitting by designation.
HOWARD, Circuit Judge. Robur Otero Carrasquillo brought
an action in the Puerto Rico District Court against his former
employer, Pharmacia Corporation,1 his former supervisor, Zaida
Sanabria, and unnamed administrators and fiduciaries of Pharmacia's
separation benefits plan. At its core, the complaint alleges that
Pharmacia violated the Employee Retirement Income Security Act
("ERISA"), 29 U.S.C. § 1001 et seq., and Article 1802 of the Puerto
Rico Civil Code by improperly denying Otero severance benefits
after he left his employment with the company. The district court
granted the defendants' motion for summary judgment, but assessed
civil penalties against Pharmacia for failing to comply with
ERISA's reporting and disclosure provision. We affirm.
I.
Otero worked as a research associate for Pharmacia at its
Arecibo, Puerto Rico, fermentation plant from the late 1980's until
November 2001. He was responsible for the fermentation of
antibiotics. In February 2000, Pharmacia notified its employees
that, effective June 2001, the Arecibo plant would close, and the
fermentation process would be relocated to an affiliate facility in
Kalamazoo, Michigan.2 Because this relocation would result in the
elimination of all jobs at the Arecibo plant, Pharmacia presented
1
Pharmacia has since become a subsidiary of Pfizer, Inc.
2
The facility at Kalamazoo was owned and operated by
Pharmacia's parent company, Pharmacia & Upjohn.
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adversely affected employees with two options: (1) apply, between
April 2000 and December 2001, for the company's Separation Package
Plan ("Plan"), a supplement to worker unemployment benefits, or (2)
continue to work for the company in a different position. In the
interim, regardless of election, employees would remain active in
their current positions until their services were no longer needed
or the Arecibo plant closed. At that time, those who had elected
to remain with the company would be transferred to their newly
assigned positions. For those who had elected to receive the
separation benefits, the company would initiate an administrative
process, designated the "Windows Exit Program," that would provide
employees with 60 days to complete the necessary Plan paperwork.
During his last 18 months at Pharmacia, Otero was upset
by several events that transpired at the plant. He alleges that
Andres Lugo, the plant supervisor, incorrectly informed Otero that
he could not apply for Plan benefits until the last fermentation of
antibiotics had been completed, thereby inducing him to wait while
other plant employees received job transfers or applied for
separation benefits. Otero’s repeated inquiries regarding his
employment prospects were ignored or treated in a cursory manner.
Receiving no prospective offers of employment, Otero eventually
applied for various vacant positions with Pharmacia’s remaining
Puerto Rico branches, but these slots were given to more
experienced applicants. Otero's difficulties were exacerbated in
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March 2001, when defendant Sanabria replaced Lugo as the plant
supervisor. She was more critical of Otero's work than his
previous supervisors, and gave him only an "average" employee
review, well below the "excellent" reviews he had customarily
received. Finally, in August 2001, Pharmacia offered Otero a
position as a microbiologist. Although Pharmacia considered it a
lateral transfer, Otero perceived it as a demotion.
On November 5, 2001, Otero declined the microbiologist
position and requested separation benefits. Linda Diaz,
Pharmacia’s Senior Director of Human Resources, immediately
contacted the Plan administrator, who stated that Otero was no
longer eligible to receive separation benefits. Although the Plan
provided that terminated employees are generally eligible to
receive such benefits, an exception existed for employees whose
employment was discontinued due to a “transfer to an affiliated
business,” and who had been offered “a comparable position” within
the company. Because Pharmacia interpreted the relocation of the
fermentation process from Arecibo to Kalamazoo as a "transfer to an
affiliated business," and Otero had been offered what it considered
a "comparable position," the Plan administrator determined that
Otero was not eligible to receive benefits.3
3
Sanabria initially told Otero that he was too late to receive
Plan benefits because the administrative window had closed. Otero
argues that, because Linda Diaz failed to inform him of the
"Windows Exit Program," the defendants breached their fiduciary
duties under ERISA. See 29 U.S.C. § 1104. But, as the district
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Immediately following the administrator's decision, Otero
sought to personally deliver a letter to Pharmacia's Human
Resources Manager, Carmen Calcano, to further inquire about his
Plan eligibility and the basis for his denial. As he waited in
Calcano’s office, Otero suffered an emotional breakdown, collapsed
to the floor, and injured his back. Because Otero required surgery
and various other treatments for physical and psychological
ailments, Otero qualified for the company’s short-term disability
program (under which he received 100% of his pre-disability
salary), and ultimately, for the long-term disability program
(under which he received upwards of 60% of his annual salary).
On July 5, 2002, Otero sent a letter to Pharmacia
requesting information on a “Serious Health Condition” provision in
the long-term disability plan, under which an injured employee
could receive up to 100% of his annual salary. Receiving no
response, Otero sent several additional letters requesting
information and copies of the long-term disability plan. On August
29, 2002, 55 days after his initial inquiry, Pharmacia responded
with the requested materials. Included was a copy of the Summary
of Material Modifications, a document (previously circulated to all
court correctly recognized, although there was some initial
confusion in response to Otero's request, the Windows Exit Program
was nothing more than an administrative tool providing employees
with notice of their termination date so that they would have time
to prepare the necessary paperwork. It had no bearing on
Pharmacia's substantive benefits decisions.
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Pharmacia employees in 1999) that outlined all the changes that had
been made to the long-term disability plan. The form explained
that the Serious Health Condition provision had been excised from
the Plan. Unsatisfied, Otero continued to send letters requesting
information on the Serious Health Condition provision, to which
Pharmacia consistently replied that all requests had been
adequately fulfilled by its August 29th response.
In July 2003, Otero filed suit against Pharmacia,
Sanabria, and unnamed Plan administrators and fiduciaries, claiming
that Pharmacia’s denial of benefits violated ERISA, that
Pharmacia’s failure to produce Plan documents within the time
period designated by ERISA’s reporting and disclosure provision
warranted the imposition of civil penalties, and that the actions
of Lugo, Sanabria and others amounted to intentional infliction of
emotional distress and fraudulent inducement under Commonwealth
law. The district court granted the defendants' motion for summary
judgment, concluding that Pharmacia's decision was not arbitrary
and capricious and that Otero's supplemental Commonwealth law
claims were preempted by ERISA. The court, however, found that
Pharmacia had violated ERISA's reporting and disclosure provision,
and accordingly ordered Pharmacia to pay Otero $2500 in civil
penalties.4 Otero now appeals.
4
The district court also granted summary judgment for the
defendants on Otero's additional claims of invasion of privacy and
violation of ERISA's notice provision for failure to notify him of
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II.
On appeal, Otero claims that Pharmacia's denial of his
request for separation benefits was arbitrary and capricious, his
supplemental state law claims are not preempted by ERISA, and the
district court incorrectly calculated the civil penalties against
Pharmacia.
A. The Benefits Decision
We begin with Otero's challenge to Pharmacia's denial of
Plan benefits. It is undisputed that because the Plan reserved
interpretative discretion to its administrators,5 judicial review
of Pharmacia's eligibility determination is limited to ascertaining
whether the administrator's decision was arbitrary or capricious.
Leahy v. Raytheon Co., 315 F.3d 11, 15 (1st Cir. 2002). Thus,
while we review summary judgment decisions de novo, Mattias-Correa
amendments to the long-term disability plan. Otero has not
appealed these rulings.
5
The relevant provision of the Plan provides that:
The company or its delegate will determine, in
its or their sole discretion, the eligibility
of each terminated Employee to participate in
the Plan, the amount of Benefits to which a
terminated Employee is entitled, and the
manner and time of payment of the Benefits . .
. . Any decisions, actions or interpretations
to be made under the Plan by [Pharmacia] . . .
shall be made in its respective sole
discretion, not in any fiduciary capacity and
need not be uniformly applied to similarly
situated individuals and shall be final,
binding and conclusive upon all parties.
-7-
v. Pfizer, Inc., 345 F.3d 7, 12 (1st Cir. 2003), where, as here,
the underlying decision is subject to arbitrary and capricious
review, we evaluate the district court's determination by asking
"whether the aggregate evidence, viewed in a light most favorable
to the non-moving party, could support a rational determination
that the plan administrator acted arbitrarily in denying a claim
for benefits," Leahy, 315 F.3d at 18. In other words, the
question here is whether the district court correctly concluded
that Pharmacia's interpretation of the Plan's language, and its
ultimate benefits determination based upon that interpretation,
were reasonable. Liston v. Unum Corp. Officer Severance Plan, 330
F.3d 19, 24 (1st Cir. 2003).
Pharmacia had determined that, because Otero's research
associate position had been eliminated due to a transfer of the job
to an affiliated business, and because Otero was offered a
comparable position as a microbiologist, he was not eligible to
receive separation benefits. Otero argues that, according to the
Plan, an employee whose job elimination results from a transfer to
an affiliated business is only ineligible to receive benefits when
the transfer is a product of the total or partial sale of the
company. The eligibility provision that Otero cites provides, in
relevant part, that:
benefits under the Plan shall not be provided
to any Employee [whose] employment termination
is due to . . . (6) his or her transfer to an
affiliate company or its transfer due to the
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total or partial sale of the Company, either
by the sale of its stocks or assets in which
the Employee is offered a "Similar Position."
(Emphasis added). Since no sale precipitated the transfer of his
job, Otero argues, this exception to benefits eligibility is
inapplicable.
We disagree. Otero's argument relies on an inoperative
version of the Plan. Otero's proffered language comes from a
certified translation of a Spanish language document that had been
circulated to employees at the Puerto Rico plant and was itself a
translation of the original English language Plan. But the Spanish
language translation explicitly stated on its front page that any
terminological discrepancy between it and the original English
language version would be resolved in accordance with the terms of
the original Plan, and that copies of the original English language
Plan would be made available at Human Resources. Thus, the
original English language Plan is the controlling document.
Because the original Plan does not require that the transfer of the
job be "due to" a sale of the company for the ineligibility
provision to be triggered, Otero's argument fails.6 Under the
6
The eligibility provision of the original Plan provides:
The Company shall grant Benefits to any
Terminated Employee whose services are
terminated by reason of Job Elimination . . .
. Notwithstanding anything herein to the
contrary, a Terminated Employee will not
[receive separation benefits] if his or her
employment is discontinued due to [inter alia]
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controlling Plan language, we see no basis to deem unreasonable
Pharmacia's interpretation that an employee is ineligible to
receive separation benefits when his job is eliminated due to
either a transfer to an affiliated business or a total or partial
sale of the company, and he is offered a comparable position with
the company.7
Otero also argues that Pharmacia acted unreasonably by
designating the move of the fermentation process from Arecibo to
Kalamazoo as a "transfer to an affiliate business." In Otero’s
view, the move to the Kalamazoo facility could not be a "transfer"
because that facility already operated a fermentation plant.
Where, as here, a term is not defined by the benefits
plan, we give it "an ordinary and popular" reading "as would a
[person] of average intelligence and experience." Richardson v.
. . . a transfer to an affiliated business,
the sale of Pharmacia & Upjohn, Inc. or any
portion thereof, either through a sale or
exchange of stock or assets, or the
outsourcing of a division, department,
business unit or function where the employee
has been offered a comparable position with
the Company or the new employer.
7
Additionally, there is a presumption that judicial review is
limited to the evidentiary record presented to the administrator.
See Liston, 330 F.3d at 23-24. Because the Plan administrator was
located in the mainland United States, and the original English
language Plan was the controlling version, we presume that it was
the version that informed the administrator's decision. Otero has
not presented any basis to believe otherwise, nor has he presented
any argument for why we should consider the Spanish language
version the controlling document.
-10-
Pension Plan of Bethlehem Steel Corp., 112 F.3d 982, 985 (9th Cir.
1997); Kolkowski v. Goodrich Corp., 448 F.3d 843, 850 (6th Cir.
2006); see also 29 U.S.C. § 1022 ("A summary plan description of
any employee benefit plan . . . shall be written in a manner
calculated to be understood by the average plan participant . . .
."). The term "transfer" is commonly defined as "to convey from
one person, place, or situation to another." Merriam-Webster's
Collegiate Dictionary 1249 (10th ed. 2001). That the Kalamazoo
facility may have already maintained a fermentation plant is not by
itself inconsistent with this definition. Otero has presented no
evidence that Pharmacia failed to convey some level of capacity
from Arecibo to Kalamazoo. Indeed, the record suggests that
Pharmacia conveyed the function of the Arecibo plant to Kalamazoo
to save on electricity costs. Accordingly, Pharmacia's
interpretation was not unreasonable.
Finally, Otero argues that Pharmacia’s denial of benefits
was arbitrary and capricious because the positions of
microbiologist and research associate are not "comparable." The
Plan defines "Comparable Position" as:
employment with the Company or a successor
employer in which the individual's level of
responsibilities is substantially similar, as
determined by the Company, to the individual's
immediately prior position with the Company,
requiring similar skill levels and offering
similar pay (within 10%) and in which the
Employee is not asked to move his or her
principal business location more than 50
miles.
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Otero concedes that the positions pay identical salaries, are
performed within the same principal business location, and require
the same educational background and basic skill levels.
Nevertheless, he contends that the level of responsibilities of a
microbiologist are not "substantially similar" to those of a
research associate. Otero argues that a microbiologist has less
substantial supervisory responsibilities, is not on call 24 hours
a day, and has no office, cellular phone or beeper. The district
court was unpersuaded, finding that the positions were comparable
because Otero's qualifications fulfilled the requirements of both
jobs.
While the positions' respective levels of responsibility
are not identical, the Plan only requires that they be
"substantially similar as determined by the Company." Employing
the company's traditional methodology for comparing two positions,
Pharmacia found that, based on job descriptions, job requirements,
salary, educational requirements and banding (the company's general
method for systematizing position responsibilities), the positions
of research associate and microbiologist were in fact comparable.
Otero states that as a microbiologist he would no longer
be "producing millions in money for [the company]" as he had
before, and that he would no longer be responsible for highly
valuable company products and equipment. Statements at this level
of abstraction, however, do not establish that the administrator's
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decision was arbitrary. See Liston, 330 F.3d at 25 (holding that
the appellant's claim that she was "no longer responsible for
developing and implementing growth and service strategies as well
as piloting new work processes" was too abstract to stand as proof
of "diminished responsibility" under the company's employee
benefits plan, and therefore was not enough to make the company's
denial of benefits arbitrary and capricious). Nor do Otero's more
concrete arguments -- that the microbiologist is not on call, and
has no office, cellular phone or beeper -- suffice to negate the
otherwise substantially similar level of responsibilities, benefits
and qualifications of the positions. In light of the broad
interpretive discretion that Pharmacia reserved to itself, see
supra note 5, we cannot say that its determination was arbitrary
and capricious.
B. Preemption
We next turn to the district court's finding that Otero's
state law claims are preempted by ERISA, 29 U.S.C. § 1144(a). In
light of ERISA's goal to promote uniformity in the nationwide
regulation of employee benefit plans, Congress designed the statute
to supersede "any and all State [causes of action] insofar as they
may now or hereafter relate to any employee benefit plan." Id.(emphasis added). The Supreme Court has identified two instances
where a state cause of action relates to an employee benefit plan:
where the cause of action requires "the court's inquiry [to] be
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directed to the plan," or where it conflicts directly with ERISA.
Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 140-42 (1990).
Because the resolution of Otero's Commonwealth law claims for
fraudulent inducement and intentional infliction of emotional
distress would require analysis of the Plan, the district court
correctly concluded that they are preempted.
In his complaint, Otero alleges that Pharmacia
fraudulently induced him to continue his employment at the Arecibo
plant by incorrectly informing him that he could not apply for
severance benefits until all fermentation at Arecibo was completed,
changing the benefits application deadline without informing him,
and falsely promising him a comparable position at the company
whenever he expressed concern for his job security. To determine
whether these acts constitute fraudulent inducement, the district
court would have to consult the severance plan to identify the
application dates and the administrative process for determining
and informing the employees of such dates. Additionally, to
determine whether Pharmacia's promises of comparable employment
were fraudulent, the court would have to consult the Plan to
determine whether the offered microbiologist position was
"comparable" to his prior job as a research associate. Because the
court's inquiry would necessarily "be directed to the Plan," the
court was correct to dismiss the fraudulent inducement claims. See
Carlo v. Reed Rolled Threat Die Co., 49 F.3d 790, 794 (1st Cir.
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1995) (holding that plaintiff's misrepresentation claim was
preempted by ERISA because the computation of damages would require
reference to the severance plan).
Otero's claim for intentional infliction of emotional
distress is similarly unavailing. The factual basis supporting his
emotional distress claim is simply a reiteration of the facts
supporting his fraudulent inducement claims. Thus, "because the
emotional distress claim obviously piggybacks on the facts
underlying the [fraudulent inducement] claim, which [is] preempted,
the emotional distress claim, too, is preempted." Danca v. Private
Health Care Sys., Inc., 185 F.3d 1, 7 n.9 (1st Cir. 1999).
C. Civil Penalties
Finally, Otero appeals the district court's method for
calculating the civil penalties owed by Pharmacia for violating
ERISA's reporting and disclosure provision. See 29 U.S.C. §
1132(c) (providing that any administrator who fails, within 30
days, "to comply with a request for any information which such
administrator is required" to furnish, "may in the court's
discretion be personally liable . . . in the amount of up to $100
a day from the date of such failure"). Finding that Pharmacia
provided all the necessary materials 55 days after Otero's July 5th
inquiry, the district court determined that Pharmacia's reply was
25 days late. See id. By assessing the maximum discretionary
penalty of $100 a day, the court calculated an award of $2500 in
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civil penalties. We review the court's determination for abuse of
discretion. Sullivan v. Raytheon Co., 262 F.3d 41, 52 (1st Cir.
2001).
Otero has presented nothing that causes us to question
the district court's calculation. He argues that neither
Pharmacia's August 29th response nor any of its subsequent
correspondence contained information regarding the "Serious Health
Condition" provision about which he requested information. But
Pharmacia's August 29th correspondence fully explained that the
"Serious Health Condition" provision was no longer in effect.
Pharmacia was not obligated to provide any further explanation
regarding an inactive provision. See Shields v. Local 705, Intern.
Broth. of Teamsters Pension Plan, 188 F.3d 895, 903 (7th Cir.
1999).
III.
For the foregoing reasons, the judgment of the district
court is affirmed.
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