Buckley v. Slocum Dickson Medical Group, PLLC , 585 F. App'x 789 ( 2014 )

13-3535-cv(L)
Buckley v. Slocum Dickson Medical Group, PLLC
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 “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals
2 for the Second Circuit, held at the Thurgood Marshall United
3 States Courthouse, 40 Foley Square, in the City of New York,
4 on the 22nd day of September, two thousand fourteen.
5
6 PRESENT: DENNIS JACOBS,
7 CHRISTOPHER F. DRONEY,
8 Circuit Judges,
9 LEWIS A. KAPLAN,*
10 District Judge.
11
12 - - - - - - - - - - - - - - - - - - - -X
13 RUDOLPH A. BUCKLEY, M.D.,
14 Plaintiff-Counter-Defendant-
15 Appellee-Cross-Appellant,
16 13-3535-cv(L)
17 -v.- 13-3536-cv(XAP)
18 13-3767-cv(CON)
19 SLOCUM DICKSON MEDICAL GROUP, PLLC, as
20 successor in interest to SLOCUM
21 DICKSON MEDICAL GROUP, P.C.,
22 Defendant-Counter-Claimant-
23 Appellant-Cross-Appellee.
24 - - - - - - - - - - - - - - - - - - - -X
*
Judge Lewis A. Kaplan, of the United States District
Court for the Southern District of New York, sitting by
designation.
1
1 FOR APPELLANT: ANTHONY J. PIAZZA (with Mark T.
2 Whitford Jr. on the brief),
3 Hiscock & Barclay, LLP,
4 Rochester, New York.
5
6 FOR APPELLEE: JOSEPH S. DEERY, JR., Kowalczyk,
7 Deery & Broadbent, LLP, Utica,
8 New York.
9
10 Appeal from a judgment of the United States District
11 Court for the Northern District of New York (Hurd, J.).
12
13 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
14 AND DECREED that the judgment of the district court be
15 AFFIRMED.
16
17 Appellant Slocum Dickson Medical Group, PLLC, appeals
18 from the judgment of the United States District Court for
19 the Northern District of New York (Hurd, J.), granting
20 summary judgment in favor of plaintiff-appellee Rudolph A.
21 Buckley and awarding Buckley attorney’s fees. Buckley has
22 filed a cross-appeal related to the amount of the fee award.
23 We assume the parties’ familiarity with the underlying
24 facts, the procedural history, and the issues presented for
25 review.
26
27 Dr. Rudolph A. Buckley worked in Slocum Dickson’s
28 medical practice as the group’s only orthopedic physician
29 specializing in spine surgery. The employment agreement,
30 executed in December 2000, required Buckley to provide 90
31 days’ notice before leaving the group. If Buckley failed to
32 give the required notice, the agreement called for him to
33 pay liquidated damages of $10,000. On June 2, 2009, Buckley
34 gave his 90 days’ notice that he would leave Slocum Dickson
35 on August 30, 2009.
36
37 Before the 90 days elapsed, Buckley realized that an
38 earlier departure date would yield a greater severance
39 package, because the plan calculated severance as a
40 percentage of the accounts receivable associated with
41 Buckley’s department at the time of his departure, and
42 Buckley had performed a disproportionate number of surgeries
43 in July 2009. On August 4, Buckley informed Slocum Dickson
44 that he was unilaterally terminating his employment,
45 effective that very day. He immediately paid the $10,000
46 liquidated damages for termination without notice. The
47 liquidated damages did not appreciably reduce the advantage
2
1 of early departure: Buckley’s calculated severance amount
2 under the plan on August 4 was $455,096, whereas it would
3 have been only $47,912 had he waited until the end of
4 August.
5
6 On September 1, 2010, Slocum Dickson’s Board of
7 Managers decided to pay no severance to Buckley. Buckley
8 filed this lawsuit in New York Supreme Court alleging common
9 law claims for breach of contract. Slocum Dickson removed
10 the action to the Northern District of New York. The
11 district court granted Buckley’s motion for summary judgment
12 as well as attorney’s fees.
13
14 As a threshold matter, this Court must ascertain
15 whether the district court had subject matter jurisdiction
16 over this dispute. As a general rule, federal question
17 jurisdiction pursuant to 28 U.S.C. § 1331 turns on whether a
18 well-pleaded complaint relies on federal law. See Metro.
19 Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). Buckley’s
20 state court complaint asserted only common law breach of
21 contract claims. Nevertheless, “Congress specifically
22 intended to exert ‘extraordinary pre-emptive power’ when it
23 adopted the detailed provisions of” Section 502(a) of the
24 Employee Retirement Income Security Act of 1974 (“ERISA”),
25 29 U.S.C. §§ 1001 et seq. Romney v. Lin, 94 F.3d 74, 78 (2d
26 Cir. 1996) (quoting Taylor, 481 U.S. at 64). Where a
27 beneficiary of an employee benefit plan covered by ERISA
28 seeks benefits under that plan, “ERISA preempts any state
29 law claims that the plaintiff may have because the state law
30 claims directly ‘relate to’ the plan, and Congress intended
31 for ERISA to supercede all state laws that relate to
32 employee benefit plans.” Kolasinski v. Cigna Healthplan of
33 CT, Inc., 163 F.3d 148, 149 (2d Cir. 1998) (per curiam)
34 (quoting 29 U.S.C. § 1144(a)). Further, where, as here, “‘a
35 federal statute wholly displaces the state-law cause of
36 action through complete pre-emption, the state claim can be
37 removed’ to federal court.” Arditi v. Lighthouse Int’l, 676
38 F.3d 294, 299 (2d Cir. 2012) (quoting Beneficial Nat’l Bank
39 v. Anderson, 539 U.S. 1, 8 (2003)). As the Slocum Dickson
40 severance plan in substance provides, and the parties agree,
41 that the plan is governed by ERISA, this action was removed
42 properly from the state court, and the district court had
43 subject matter jurisdiction. Moreover, as the parties
44 consistently litigated this case on the basis of ERISA, and
45 the district court treated it as arising under that statute,
46 we constructively amend the complaint to assert a claim
47 under ERISA. See Greenblatt v. Delta Plumbing & Heating
3
1 Corp., 68 F.3d 561, 569 (2d Cir. 1995) (noting this Court’s
2 “discretionary power . . . to amend a complaint
3 constructively to recognize unpleaded claims”).
4
5 As to the merits, the Court reviews de novo the
6 district court’s grant of summary judgment. See Hobson v.
7 Metro. Life Ins. Co., 574 F.3d 75, 82 (2d Cir. 2009).
8 Summary judgment is appropriate only if “there is no genuine
9 dispute as to any material fact and the movant is entitled
10 to judgment as a matter of law.” Fed. R. Civ. P. 56(a). As
11 for the parties’ challenges regarding the fee award, “[t]he
12 standard of review of an award of attorney’s fees is highly
13 deferential to the district court,” Mautner v. Hirsch, 32
14 F.3d 37, 39 (2d Cir. 1994), however the district court’s
15 underlying conclusions of law are reviewed de novo, Baker v.
16 Health Mgmt. Sys., Inc., 264 F.3d 144, 149 (2d Cir. 2001).
17
18 When a written plan is governed by ERISA and “confer[s]
19 upon a plan administrator the discretionary authority to
20 determine eligibility,” a court “will not disturb the
21 administrator’s ultimate conclusion unless it is ‘arbitrary
22 and capricious.’” Pagan v. NYNEX Pension Plan, 52 F.3d 438,
23 441 (2d Cir. 1995). Moreover, the severance plan conferred
24 on Slocum Dickson’s board “exclusive authority and
25 discretion” to “[d]etermine whether an individual is
26 eligible for any benefits under the Plan,” to determine the
27 amount of any such benefits, and to interpret the provisions
28 of and terms used in the Plan. Nevertheless, the grant of
29 discretion to the board does not decide this case for
30 several reasons.
31
32 The first question is whether the Slocum Dickson board
33 properly applied the terms of the severance plan with
34 respect to Buckley’s claim for severance pay. Section 2(i)
35 of the plan provides that an employee in Buckley’s
36 circumstances “shall receive . . . an amount equal to sixty-
37 five percent (65%) of Employee’s share of the accounts
38 receivable of the Corporation, existing as of the date of
39 termination, assigned to Employee’s department in accordance
40 with the accounting practices adopted by the Corporation, as
41 to which there has been any activity (either to billings or
42 payment) within the preceding two (2) years.” In assessing
43 Slocum Dickson’s application of this term, we give effect to
4
1 its unambiguous meaning to the extent that one exists.
2 O’Neil v. Ret. Plan for Salaried Employees of RKO Gen., 37
3 F.3d 55, 58-59 (2d Cir. 1994). To the extent that the term
4 is ambiguous, we “review a denial of benefits . . . de novo,
5 unless the plan itself grants the fiduciary discretion to
6 construe the terms of the plan, in which event the court
7 should apply the arbitrary and capricious standard.” Id. at
8 59 (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S.
9 101, 115 (1989)).1 Here, there was nothing ambiguous about
10 Buckley’s contractual entitlement to severance pay.2 The
11 Slocum Dickson board therefore was bound to apply the plain
12 language of its severance plan and lacked any discretion to
13 depart from it.
14
15 The result would be the same even if there were some
16 ambiguity with respect to Buckley’s entitlement to severance
17 pay. Whatever deference otherwise is due to a plan
18 administrator abates when the administrator has a conflict
19 of interest, both determining and paying the benefit. See,
20 e.g., Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111-12,
21 115 (2008). As the district court found, Slocum Dickson “is
22 both the entity that decides whether plaintiff is entitled
23 to benefits and the entity that would make such a payment,”
1
Accord Edwards v. Briggs & Stratton Ret. Plan, 639
F.3d 355, 362 (7th Cir. 2011) (“[U]nambiguous terms of a
pension plan leave no room for the exercise of interpretive
discretion. . . . Thus, [t]he administrator must implement
and follow the plain language of the plan.” (second
alteration in original) (internal citations and quotation
marks omitted)); Blackshear v. Reliance Standard Life Ins.
Co., 509 F.3d 634, 639 (4th Cir. 2007) (“[T]he administrator
is not free to alter the terms of the plan or to construe
unambiguous terms other than as written. . . . An
administrator’s discretion never includes the authority to
read out unambiguous provisions contained in an ERISA plan.”
(internal citations and quotation marks omitted)), abrogated
on other grounds by Metro. Life Ins. Co. v. Glenn, 554 U.S.
105 (2008).
2
Nor, in this case, was there any issue as to the
computation of the amount, a matter that at least in some
circumstances might have been within the board’s discretion.
5
1 without any internal check on the resulting conflict of
2 interest. Buckley v. Slocum Dickson Med. Grp., PLLC, 941 F.
3 Supp. 2d 251, 258 (N.D.N.Y. 2013). We therefore would dial
4 back our deference to the medical group’s justifications for
5 denying Buckley’s severance.
6
7 The contractual arrangements here specified the
8 financial costs and benefits of Buckley’s abrupt departure.
9 First, the employment agreement set the price tag for
10 resignation without sufficient notice--i.e., liquidated
11 damages of $10,000. Second, the severance plan defined the
12 severance owed to Buckley--i.e., a function of accounts
13 receivable, which increased precipitously on the eve of his
14 departure. Slocum Dickson now offers several justifications
15 for its denial of severance. All would be ineffective even
16 if the plan were ambiguous as to Buckley’s entitlement.
17
18 The medical group defends the denial of severance based
19 upon various costs it encountered when Buckley resigned. To
20 the extent that these losses actually derived from Buckley’s
21 decision to leave before his 90-day notice period elapsed,
22 the liquidated damages must be deemed adequate compensation,
23 and Buckley wasted no time paying that sum to Slocum Dickson
24 upon his separation. Accordingly, the medical group could
25 not reasonably contend that the cost of Buckley’s departure
26 justifies a complete denial of his severance.
27
28 In the alternative, Slocum Dickson contends that it was
29 justified in denying severance because Buckley abandoned his
30 patients when he resigned without notice, thereby breaching
31 his ethical duties. The record would not support this
32 contention even if the board had discretion. Buckley
33 offered to supervise a physician assistant in his specialty,
34 even without pay, to ensure the continued treatment of his
35 patients at Slocum Dickson. And it is undisputed that no
36 patient suffered any harm as a consequence of Buckley’s
37 abrupt departure.
38
39 Given the unambiguous character of Buckley’s right to
40 severance as well as Slocum Dickson’s conflict of interest
41 in deciding Buckley’s severance, the unambiguous contractual
6
1 scheme, and Slocum Dickson’s unavailing justifications for
2 its decision to deny severance, the district court was
3 correct to grant Buckley’s motion for summary judgment.
4
5 Having won summary judgment, Buckley was entitled to
6 seek attorney’s fees pursuant to both the employment
7 agreement and Section 502(g)(1) of ERISA, 29 U.S.C.
8 § 1132(g)(1). The district court awarded Buckley $47,723 in
9 fees. This fee award was within the district court’s
10 discretion and was consistent with the robust record
11 surrounding the motion for fees.
12
13 For the foregoing reasons, and finding no merit in the
14 parties’ other challenges to the district court, we hereby
15 AFFIRM the judgment of the district court.
16
17 FOR THE COURT:
18 CATHERINE O’HAGAN WOLFE, CLERK
19
7