Osberg v. Foot Locker, Inc. , 555 F. App'x 77 ( 2014 )

13-187-cv
Osberg v. Foot Locker, Inc.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ASUMMARY ORDER@). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
York, on the 13th day of February, two thousand fourteen.
PRESENT: RALPH K. WINTER,
GUIDO CALABRESI,
REENA RAGGI,
Circuit Judges.
----------------------------------------------------------------------
GEOFFREY OSBERG, on behalf of himself and on behalf
of all others similarly situated,
Plaintiff-Appellant,
v. No. 13-187-cv
FOOT LOCKER, INC., and FOOT LOCKER
RETIREMENT PLAN,
Defendants-Appellees.
----------------------------------------------------------------------
APPEARING FOR APPELLANT: ELI GOTTESDIENER, Gottesdiener Law Firm,
PLLC, Brooklyn, New York.
APPEARING FOR APPELLEES: MYRON D. RUMELD (Mark D. Harris,
Proskauer Rose LLP, New York, New York;
Robert W. Rachal, Heather G. Magier, Page W.
Griffin, Proskauer Rose LLP, New Orleans,
1
Louisiana, on the brief), Proskauer Rose LLP,
New York, New York.
APPEARING FOR AMICUS
CURIAE SETH D. HARRIS,
ACTING SECRETARY OF
THE UNITED STATES
DEPARTMENT OF LABOR: JEFFREY M. HAHN (M. Patricia Smith,
Solicitor of Labor, Timothy D. Hauser,
Associate Solicitor for Plan Benefits Security,
Elizabeth Hopkins, Counsel for Appellate and
Special Litigation, on the brief), Trial Attorney,
U.S. Department of Labor, Washington, D.C.
FOR AMICUS CURIAE ERISA
INDUSTRY COMMITTEE
AND THE CHAMBER OF
COMMERCE OF THE UNITED
STATES OF AMERICA: Scott J. Macey, The ERISA Industry Committee,
Washington, D.C.; Kathryn Comerford Todd,
Steven P. Lehotsky, National Chamber
Litigation Center, Inc., Washington, D.C.; Eric
C. Bosset, Richard C. Shea, Robert S. Newman,
Jason M. Levy, Covington & Burling LLP,
Washington, D.C.
Appeal from a judgment of the United States District Court for the Southern District
of New York (Katherine B. Forrest, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment entered on December 12, 2012, is AFFIRMED IN
PART and VACATED AND REMANDED IN PART.
Plaintiff Geoffrey Osberg appeals from an award of summary judgment in favor of
defendants, his former employer Foot Locker, Inc., and Foot Locker Retirement Plan
(“Foot Locker”), on claims that Foot Locker violated the Employee Retirement Income
2
Security Act (“ERISA”), 29 U.S.C. § 1001, et seq., in converting its defined benefit
pension plan to a cash balance retirement plan by (1) issuing false and misleading summary
plan descriptions in violation of ERISA’s disclosure requirements, see ERISA § 102(a), 29
U.S.C. § 1022(a); and (2) breaching fiduciary duties in making such materially false and
misleading statements and omissions, see ERISA § 404(a), 29 U.S.C. § 1104(a). Osberg
also appeals the dismissal of his claim that defendants failed to provide plan participants
with notice, as required by ERISA § 204(h), 29 U.S.C. § 1054(h), that the cash balance
plan would reduce future benefit accruals.
We review de novo the challenged dismissal and summary judgment award. See
Frommert v. Conkright, 433 F.3d 254, 262 (2d Cir. 2006). In doing so, we assume the
parties’ familiarity with the facts and record of prior proceedings, which we reference only
as necessary to explain our decision to affirm in part and to vacate and remand in part.
1. Section 204(h) Notice Claim
Osberg argues that the district court erred in concluding that he failed to state a
plausible notice claim under ERISA § 204(h). He contends that the notice distributed by
Foot Locker summarized only part of the new formula for calculating benefits and,
therefore, did not inform participants that it effectively reduced the rate of future benefit
accruals. Foot Locker submits that the version of ERISA in effect at the time of the
challenged notice did not require such disclosure, that any deficiency was cured by
3
subsequent summary plan descriptions, and, in any event, that Osberg’s § 204(h) claim is
time-barred.
Here, we need not determine whether Osberg’s § 204(h) notice claim is either
timely or valid because § 204(h) does not, in any event, afford him the remedy he seeks,
i.e., a pension benefit calculated under the cash balance plan but “with an opening balance
equal to the value of the retirement annuity he had already earned under the old formula.”
Appellant’s Reply Br. 5. See 10 Ellicott Square Court Corp. v. Mountain Valley Indem.
Co., 634 F.3d 112, 125 (2d Cir. 2011) (recognizing ability to affirm for any reason that
finds support in record). This is because insufficient notice in violation of § 204(h) does
not, as Osberg contends, invalidate only the undisclosed portion of the plan amendment,
but rather voids the entire amendment. See Frommert v. Conkright, 433 F.3d at 268
(“Without . . . proper notice [under § 204(h) ] to Plan participants, the amendment was
ineffective as to them.”); see also CIGNA Corp. v. Amara, 131 S. Ct. 1866, 1884 (2011)
(Scalia, J., concurring in the judgment) (observing that “[a]s the opinion for the Court
notes, the Second Circuit has interpreted ERISA as permitting the invalidation of plan
amendments not preceded by proper notice, by reason of § 204(h)” (internal citation
omitted)). Because Osberg does not seek that relief, we affirm the district court’s
dismissal of his § 204(h) claim.
4
2. Disclosure Claims
As to his disclosure claims, Osberg contends that the district court erred in holding
his § 102(a) claim time-barred, and in finding that he failed to raise a genuine issue of
material fact entitling him to surcharge and contract reformation on either his § 102(a) or
§ 404(a) claims. Because Osberg seeks the same relief under § 404(a) as under § 102(a),
and because the timeliness of the § 404(a) claim is undisputed, we need not conclusively
decide whether Osberg’s § 102(a) claim is subject to a three- or six-year statute of
limitations to resolve the instant appeal.
To survive summary judgment on his disclosure claims, Osberg was required to
raise a genuine issue of material fact with respect to his demand for “appropriate equitable
relief”—specifically, surcharge or reformation—under ERISA § 502(a)(3), 29 U.S.C.
§ 1132(a)(3). See CIGNA Corp. v. Amara, 131 S. Ct. at 1879–80 (recognizing surcharge
and reformation as traditional equitable remedies that may allow for awarding monetary
compensation based on misleading disclosures). We recently articulated the appropriate
analysis as follows:
In order to impose an equitable remedy, the district court must
consider two questions: (1) what remedy is appropriate;
(2) whether Plaintiffs have established the requisite level of harm
as a result of the notice violations.
We have previously held that, for claims of ERISA notice
violations, plaintiffs need to satisfy a standard of “likely
prejudice.” Burke v. Kodak Ret. Income Plan, 336 F.3d 103,
113 (2d Cir. 2003). The Supreme Court has since clarified that
the standard of harm that plaintiffs must show depends upon the
5
equitable remedy that plaintiffs seek. See Amara, 131 S. Ct. at
1881–82. For example, while “detrimental reliance” is a
requirement for the remedy of estoppel, it is not a strict
requirement for every equitable remedy. See id. at 1881. Thus,
in considering whether Plaintiffs have made a sufficient showing
of harm, the district court must consider this question in tandem
with the equitable remedies it may impose. Id. at 1871.
Frommert v. Conkright, 738 F.3d 522, 534 (2d Cir. 2013).
Here, the district court concluded that Osberg’s disclosure claims failed to raise an
issue of fact as to whether he suffered the type of “actual harm” necessary to obtain the
equitable relief of reformation and surcharge. Osberg v. Foot Locker, Inc., 907 F. Supp.
2d 527, 533–35 (S.D.N.Y. 2012). As to the remedy of reformation, we agree with Osberg
that the district court erroneously applied an “actual harm” requirement.
In CIGNA Corp. v. Amara, the Supreme Court held that, with respect to the
equitable remedies under § 502(a)(3), “any requirement of harm must come from the law
of equity.” 131 S. Ct. at 1881. To obtain contract reformation, equity does not demand a
showing of actual harm. See Restatement (Second) of Contracts § 155 cmt. e (1981)
(stating that party seeking reformation “need not show that the mistake has resulted in an
inequality that adversely affects him”). Indeed, Foot Locker does not attempt to defend
the award of summary judgment on Osberg’s reformation claim on “actual harm” grounds.
Rather, it urges affirmance on the following alternative grounds: (1) as a former employee,
Osberg cannot pursue reformation, and (2) Osberg cannot show fraud or mutual mistake
entitling him to reformation. We disagree.
6
Foot Locker construes Amara to hold that monetary relief is only available in
ERISA cases via surcharge; therefore, absent a viable surcharge claim, the only
beneficiaries with standing to pursue reformation are those that can prospectively benefit
from a modification of plan terms, which does not include former employees. This
interpretation is supported by neither Amara, see 131 S. Ct. 1879–82 (identifying three
alternative—not interdependent—equitable avenues for obtaining monetary compensation
for misleading disclosures), nor equity, see Baltzer v. Raleigh & Augusta Air-Line R. Co.,
115 U.S. 634, 645 (1885) (“[I]t is well settled that equity would reform the contract, and
enforce it, as reformed, if the mistake or fraud were shown”); Hogg v. Maxwell, 218 F.
356, 358 (2d Cir. 1914) (observing that if court of equity granted relief of contract
reformation, it could “go on and do complete justice by awarding damages for the
breach”); see also Johnson v. Meriter Health Servs. Emp. Ret. Plan, 702 F.3d 364, 369 (7th
Cir. 2012) (holding that ERISA authorizes former employees to sue for unpaid benefits,
whether under the plan as it is, or as it should be once reformed). As to the contention that
Osberg cannot satisfy the other requirements for obtaining contract reformation, we leave
that determination for the district court to address in the first instance on remand.
Because reformation of the plan would afford Osberg the total relief sought, there is
no need for us now to decide whether he would also be entitled to recovery under
surcharge. See Restatement (Third) of Trusts § 100 cmt. a (2012) (stating that where
beneficiary is entitled to multiple avenues of recovery in equity for a fiduciary’s breach of
7
trust, “recovery is to be based on the alternative that is more beneficial to the trust and its
beneficiaries”). Thus, we affirm the district court’s dismissal of the surcharge claim as
moot. We do not, however, foreclose Osberg from seeking reinstatement of his surcharge
claim in the district court or pursuing that claim in a future appeal should that court
determine that reformation is not available.
We have considered Osberg’s remaining arguments on appeal and conclude that
they are without merit. Accordingly, the judgment of the district court is AFFIRMED IN
PART and VACATED AND REMANDED IN PART.
FOR THE COURT:
CATHERINE O=HAGAN WOLFE, Clerk of Court
8