Kollman v. Hewitt Assoc , 487 F.3d 139 ( 2007 )

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
5-14-2007
Kollman v. Hewitt Assoc
Precedential or Non-Precedential: Precedential
Docket No. 05-5018
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 05-5018
GERALD E. KOLLMAN
v.
HEWITT ASSOCIATES, LLC; ROHM AND HAAS
COMPANY; ROHM AND HAAS BENEFITS
ADMINISTRATIVE COMMITTEE
Rohm and Haas Company;
Rohm and Haas Benefits Administrative Committee,
Appellants
No. 05-5207
GERALD E. KOLLMAN,
Appellant
v.
HEWITT ASSOCIATES, LLC; ROHM AND HAAS
COMPANY; ROHM AND HAAS BENEFITS
ADMINISTRATIVE COMMITTEE
No. 06-1558
GERALD E. KOLLMAN
v.
HEWITT ASSOCIATES, LLC; ROHM AND HAAS
COMPANY; ROHM AND HAAS BENEFITS
ADMINISTRATIVE COMMITTEE,
Appellants
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 03-cv-02944)
District Judge: Honorable Michael M. Baylson
Argued January 8, 2007
Before: SLOVITER and RENDELL, Circuit Judges,
and IRENAS, District Judge*
(Filed: May 14, 2007)
Raymond A. Kresge (Argued)
Cozen O’Connor
Philadelphia, PA 19103-3508
Attorney for Appellants/Cross-Appellees
Kevan F. Hirsch (Argued)
Daniel R. Utain
Kaplan, Stewart, Meloff, Reiter & Stein
Blue Bell, PA 19422
Attorneys for Appellee/Cross-Appellant
OPINION OF THE COURT
SLOVITER, Circuit Judge.
*
Hon. Joseph E. Irenas, Senior Judge, United States District
Court for the District of New Jersey, sitting by designation.
2
I.
Summary
Gerald Kollman, who was an employee of Rohm and
Haas Company at the time at issue, sought to ascertain the
amount of lump sum pension to which he would be entitled if he
were to retire. He accessed the computer website prepared and
maintained for that purpose by Hewitt Associates, LLC and
received an incorrect figure. That figure, $522,043.30, had not
been reduced by the amount of the Qualified Domestic Relations
Order (“QDRO”) that was owing to Kollman’s former wife.
Kollman was notified of the correct pension amount some two
months later. In the interim, he had signed the retirement papers.
He concedes he is not entitled to the difference from Rohm and
Haas. Instead, he makes two claims: a claim against Rohm and
Haas that it violated the Employee Retirement Income Security
Act of 1974 (“ERISA”) by failing to provide him with a copy of
the company’s Plan and Summary Plan Description (“SPD”)
within thirty days of his letter requesting certain documents, and
a claim against Hewitt for professional malpractice because of
the failure of the website to provide the correct pension amount.
Kollman prevailed on the first claim, and Rohm and Haas
appeals. Hewitt prevailed on the second claim, and Kollman
cross appeals.1
II.
Facts and Procedural Posture
Kollman was employed by Rohm and Haas as a Field
Research and Development Manager in Rohm and Haas’
AgroFresh unit in Springhouse, Pa., and was a beneficiary of the
Rohm and Haas Company Retirement Plan (the “Plan”). Rohm
and Haas outsourced most of the administrative services
associated with the Plan to Hewitt which undertook to perform
the day-to-day Plan administration. In his second amended
1
We have appellate jurisdiction to review the District
Court’s orders pursuant to 28 U.S.C. § 1291.
3
complaint, Kollman referred to Hewitt as the agent for Rohm
and Haas.
One of Hewitt’s functions was the calculation of proper
retirement benefits. Hewitt created and maintained a website
that allowed Rohm and Haas employees to go on-line and access
information providing them with estimates of their retirement
benefits. The website is not part of the Plan, but a distinct and
separate service that Hewitt provides for Rohm and Haas and
Plan beneficiaries.
Rohm and Haas announced a Severance Benefit Package
(“SBP”) for employees who voluntarily retired by December 31,
2002. On October 31, 2002, Kollman logged on to the website
maintained by Hewitt to obtain a statement of his pension
benefits calculation. Kollman was aware that a portion of his
pension was earmarked for his former wife but, as noted above,
the website’s calculation that he would receive a lump sum of
$522,043.30 if he decided to accept the SBP failed to account for
Kollman’s obligations under the QDRO. The calculation
provided by the website made it seem as though the lump sum
figure had already been adjusted for the QDRO.
Kollman verified the calculation on the website and by
telephone, and alleges that he elected to retire on December 31,
2002 based on those representations.2 It was not until January 6,
2003 that he was advised that he was entitled to a pension of
$419,917.72, the original amount of $522,043.30 reduced by the
QDRO offset of $102,125.28. The correct amount was
confirmed by a Pension Benefit Statement that Kollman received
on January 7, 2003. Kollman’s subsequent efforts to appeal
through the internal administrative mechanism were
unsuccessful3 and he does not seek any relief here from that
2
It is unclear that Kollman voluntarily retired. There is
some evidence that his employment was severed in connection with
a reorganization. We need not resolve that issue.
3
On February 13, 2003, Kollman filed an “R&H Company
Health and Group Benefits Claim Initiation Form,” which had been
4
decision.
Shortly after Kollman initiated his internal appeal, see
footnote 3, his counsel sent a letter dated February 18, 2003 to
Hewitt requesting that Hewitt produce the following:
1. All tape recordings of telephone calls between
Kollman and Hewitt from December 1, 2002
through the present;
2. All available printouts of or electronically stored
data on benefits projections for Kollman from
October 1, 2002 through the present;
3. All documents of any nature which relate, reflect
or refer the QDRO adjustment to Kollman’s
benefits wherever such documents were generated,
created or stored;
4. All pension benefits paperwork generated by
Hewitt for Kollman in December of 2002 and
January 2003, including any drafts thereof;
5. All internal communications and documents,
including electronic mail, which relate, reflect or
refer to Kollman or his benefits which have been
generated by Hewitt from December 1, 20034
through the present; and
6. All communications between Hewitt and Rohm &
Haas which relate, refer or reflect to Kollman of
his benefits.
App. at 804-05.
On March 20, 2003, Hewitt responded to Kollman’s
attorney’s February 18, 2003 request for documents, stating that
mailed to him by Hewitt to appeal the reduction of his retirement
benefits. On March 5, 2003, Rohm and Haas denied Kollman’s
appeal because the Plan required proper application of the QDRO
and the Plan rules did not permit payment of any additional funds.
4
It appears that the reference to December 1, 2003 was a
typographical error, and the intended date was December 1, 2002.
5
it performed certain administrative services for Rohm and Haas
regarding their defined benefits plan, but that “Hewitt is not the
Plan Administrator.” App. at 810. The letter further stated that
“[w]ith respect to Mr. Kollman’s request for documents, under
Section 2560.503-1 of the Department of Labor Regulations on
Claim Procedure, request for documentation should be addressed
to the Plan Administrator.” Id. Thereupon, by letter dated April
28, 2003, Kollman’s counsel requested from the plan
administrator, Rohm and Haas Benefits Administrative
Committee (“BAC”), “all documents, records, and other
information relevant to [Kollman’s] claim for benefits,”
including the same information requested in the February 18,
2003 letter. App. at 812. However, it was not until June 26,
2003 that outside counsel for defendants produced the Plan, the
updated SPD and the “administrative record” for Kollman’s
claim that included the severance agreement that Kollman signed
in December 2002. See Kollman v. Hewitt Assocs., No. Civ. A.
03-2944, 2005 WL 2746659, at *4 (E.D. Pa. Oct. 18, 2005).
Kollman initially filed this action against Hewitt under
state law, claiming damages for negligent misrepresentation,
negligence, promissory estoppel and breach of contract. The
District Court, by order dated September 23, 2003, dismissed the
complaint as preempted under ERISA, but gave Kollman leave
to file an amended complaint raising a claim under ERISA.
Kollman v. Hewitt Assocs., No. Civ. A. 03-2944, 2003 WL
22331870, at *1 (E.D. Pa. Sept. 22, 2003). Kollman amended
the complaint to state three counts. The amended complaint now
included a claim, Count I, against Rohm and Haas under ERISA
§ 502(c)(1), 29 U.S.C. § 1132(c)(1), that quoted from federal
regulations relating to ERISA claims procedure; Count II
asserted a state law claim against Hewitt for professional
malpractice; Count III asserted an ERISA equitable estoppel
claim against Hewitt. The District Court dismissed Count II, the
claim against Hewitt for professional malpractice, by order
entered April 14, 2004 on the ground of ERISA preemption.
That order is the subject of Kollman’s counterclaim.
Kollman filed a second amended complaint against Rohm
and Haas asserting a claim for breach of its fiduciary duty that
the District Court construed as arising under ERISA §
6
404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D), inter alia, for failure to
produce “relevant” documents as required by ERISA §
502(c)(1), 29 U.S.C. § 1132(c)(1). App. at 218. Following
discovery, defendants’ motions to dismiss and motions for
summary judgment, the District Court, by order dated August
11, 2005, dismissed Kollman’s equitable estoppel claim and held
that there were genuine issues of material fact with respect to
Kollman’s claim for damages under § 502(c)(1) of ERISA, 29
U.S.C. § 1132(c)(1), based on failure to provide documents
required by the Plan. On August 24, 2005, the Court held a short
non-jury trial and found that Rohm and Haas was liable for
statutory penalties of $9,800 under § 502(c)(1) for violation of §
104(b)(4) of ERISA. Rohm and Haas appeals from that order.
III.
Statutory Penalty Under Section 502(c)(1) of ERISA,
29 U.S.C. § 1132(c)(1)
Section 502(c)(1) of ERISA imposes a statutory penalty
of up to $100 a day on any plan administrator who fails to
provide to a plan participant or beneficiary any information that
is required by the subchapter of the statute. That provision
states:
Any administrator . . . who fails or refuses to
comply with a request for any information which
such administrator is required by this subchapter to
furnish to a participant or beneficiary . . . by
mailing the material requested to the last known
address of the requesting participant or beneficiary
within 30 days after such request may in the
court’s discretion be personally liable to such
participant or beneficiary in the amount of up to
$100 a day . . . .
29 U.S.C. § 1132(c)(1).
The relevant subchapter provisions referred to in §
502(c)(1) are ERISA § 104(b)(4), 29 U.S.C. § 1024(b)(4), and
ERISA § 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D). Under §
7
104(b)(4) of ERISA,
The administrator shall, upon written request of
any participant or beneficiary, furnish a copy of
the latest updated summary plan description[,] and
the latest annual report, any terminal report,
bargaining agreement, trust agreement, contract, or
other instruments under which the plan was
established or operated.
29 U.S.C. § 1024(b)(4). There can be no question that the
statute requires the administrator to furnish the SPD upon
request.
The second provision referenced in § 502(c)(1) is §
404(a)(1)(D) of ERISA which states:
Fiduciary Duties
(a) Prudent man standard of care.
(1) Subject to sections 1103(c) and (d), 1342,
and 1344 of this title, a fiduciary shall discharge
his duties with respect to a plan solely in the
interest of the participants and beneficiaries
and –
(D) in accordance with the documents and
instruments governing the plan insofar as such
documents and instruments are consistent with
the provisions of this subchapter and subchapter
III of this chapter.
29 U.S.C. § 1104(a)(1)(D). The District Court imposed
sanctions on Rohm and Haas under § 104(b)(4) of ERISA but
rejected the imposition of sanctions based on § 404(a)(1)(D) of
ERISA. Rohm and Haas’ appeal of the sanctions order is the
subject of this appeal.
In Groves v. Modified Ret. Plan, 803 F.2d 109 (3d Cir.
1986), the plaintiff, a plan participant who was denied disability
benefits, sued the plan administrator under ERISA § 502(c)(1)
for failure to give reasons for the denial of his retirement
disability claim. Id. at 112. We held that Groves was entitled to
8
receive the medical information underlying the decision to deny
him benefits pursuant to § 503 of ERISA, 29 U.S.C. § 1133.
However, because § 503 only requires release of the information
by the plan and does not refer to the plan administrator, we held
that sanctions under § 502 were unavailable for that violation.
Groves also sought sanctions for failure to provide the
information as required by 29 C.F.R. § 2560.503-(1)(f). As to
that claim, we stated that “because § 502(c) authorizes penalties
only for breach of duties imposed by ‘this subchapter,’ such
sanctions cannot be imposed for violation of an agency
regulation.” Id. at 118. Further, we stated that “[b]ecause §
502(c) is a penal statute, our holdings regarding the scope of that
provision are also impelled by the rule of lenity in the
construction of penal provisions.” Id. (citing Huddleston v.
United States, 415 U.S. 814 (1974)). Therefore, we concluded
that “[b]ecause Congress has not plainly and unmistakably
established that § 502(c) penalties should be applied to
violations of the kind here at issue, we decline to interpret the
penalty provision to embrace such violations.” Id. at 118.
The District Court correctly opined that we must evaluate
Kollman’s ERISA § 104(b)(4), 29 U.S.C. § 1024(b)(4), and
ERISA § 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D), claims in
light of Groves. This means that the rule of lenity, which we
applied to the facts in Groves, applies with equal weight here.
By its express language, § 104(b)(4) requires the plan
administrator to furnish a copy of the SPD and other instruments
under which the plan was established “upon written request of
any participant or beneficiary.” To establish a violation under
that section, Kollman must establish that he made a written
request to the plan administrator (here, the BAC) and that the
administrator failed to respond within thirty days. A review of
the language of the letter of February 18, 2003 shows that
neither the Plan nor the SPD was listed among the six categories
of documents requested. The relevant question in this case is
whether Kollman made a written request for the documents as
required by the statute.
As the District Court noted, this court has yet to decide
9
whether a written request must specifically name the precise
documents being sought. Kollman, 2005 WL 2746659, at *6.
Other courts to have considered the issue have adopted a clear
notice test. See, e.g., Faircloth v. Lundy Packing Co., 91 F.3d
648, 655 (4th Cir. 1996) (holding that “[a]ppellants’ request did
not give any indication of the information sought by the
[a]ppellants. Their request for ‘any’ meeting minutes
‘regarding’ [the employee stock ownership plan] in the last three
years was akin to asking Lundy to comb the past three years of
trustees’ meeting minutes to determine if they contained any
information that could possibly be encompassed by §
104(b)(4).”). In addition, the United States Courts of Appeals
for the Second, Fifth, Seventh, and Tenth Circuits have held that
plaintiffs seeking documents under 29 U.S.C. § 1024(b)(4) must
provide clear notice to the plan administrator of the information
they desire. See Davenport v. Harry N. Abrams, Inc., 249 F.3d
130, 135 (2d Cir. 2001) (civil penalties denied because plaintiff
conceded she never asked for the SPD by name, but sought only
specific information for type and amount of any vested benefits
she had accrued); Fisher v. Metro. Life Ins. Co., 895 F.2d 1073,
1077 (5th Cir. 1990) (civil penalties denied because plaintiff’s
request was for copy of policies covering his contract for salary
continuation, not Plan documentation); Anderson v. Flexel, Inc.,
47 F.3d 243 (7th Cir. 1995); Moothart v. Bell, 21 F.3d 1499
(10th Cir. 1994); see also Williams v. Caterpillar, Inc., 944 F.2d
658, 667 (9th Cir. 1991) (holding that the district court did not
abuse its discretion in finding that appellants “failed to offer any
proof – or even to allege – that they had ever requested any plan
descriptions from appellees”).
Both Kollman and the BAC agree that the clear notice test
applies. Further, it is undisputed that Kollman’s February 18,
2003 letter did not specifically mention the Rohm and Haas
retirement plan or SPD. The parties dispute both the applicable
standard of review on appeal and whether the clear notice test
requires that the party seeking information ask for the specific
documents by name. Kollman argues that we should review the
District Court’s finding under the clearly erroneous standard,
because in his view the District Court made a finding of fact that
the February 18, 2003 request was sufficiently clear. On the
other hand, Rohm and Haas argues that we should exercise
10
plenary review because the District Court improperly interpreted
the legal question of what constitutes clear notice.
We are persuaded by Kollman’s argument that we should
review the District Court’s finding as one of fact under the
clearly erroneous standard. That is the approach taken in
Anderson, 47 F.3d at 248 (“Whether a request is proper under [§
1024] is a mixed question of law and fact. When such questions
present a fact specific application of the law, such as here, we
review the district court's decision under a clearly erroneous
standard.”), and Boone v. Leavenworth Anesthesia, Inc., 20 F.3d
1108, 1111 (10th Cir. 1994) (“[W]e hold that it was not clearly
erroneous for the district court to determine the letter constituted
a sufficient written request pursuant to § 1025(a).”). Because we
agree that a clear notice test applies, and because the District
Court applied such a test, the only question is whether the
Court’s finding that Kollman’s February 18, 2003 letter was
sufficiently specific was clearly erroneous.
The courts applying the clear notice test have divided as to
whether the request made by or on behalf of the plan participant
gave clear notice of the documents. Each decision depended
upon the circumstances of that case and no general rule can be
formulated. We should look to whether “either the request or the
response indicates that [defendant] knew or should have known
that [plaintiff] had requested a copy of any document relating to
the . . . [p]lan.” Fisher, 895 F.2d at 1077. A similar approach
was taken in Anderson, 477 F.3d at 250, where the court upheld
the imposition of civil penalties following a finding that the
company “knew or should have known which documents were
being requested[.]” See also Moothart, 21 F.3d at 1503 (civil
penalties appropriate when request specified “a copy of that
Summary Plan Description”).
The District Court found that Kollman’s “request was
sufficiently specific, asking for all documents relating to the
application of his QDRO, considering the background of
communications between [Kollman] and Defendants. . . .
Defendants knew or should have known, based on their
knowledge of the surrounding circumstances or the nature of the
information being sought, that [Kollman] was, at the very least,
11
requesting copies of these documents.” 2005 WL 2746659 at
*7. Although the District Court enunciated the correct standard,
we find no basis in the record to support its conclusion. The
February 18, 2003 letter made no mention of the Plan or the
SPD. The letter also did not cite ERISA. Although the letter
asked for “[a]ll documents of any nature which relate, reflect or
refer the QDRO adjustment to Mr. Kollman’s benefits whenever
such documents were generated, created or stored[,]” App. at
804, that request cannot be interpreted as a request for the Plan
or the SPD. Neither the Plan nor the SPD spoke to the
calculations of Kollman’s personal QDRO adjustment.
Moreover, neither document contains any information relating to
the mistaken estimate of the QDRO nor any information as to
how the mistaken calculation was corrected. Finally, the fact
that Kollman’s attorney initially sent the February 18, 2003 letter
to Hewitt, rather than to the BAC, is indicative of the type of
information Kollman was seeking – documents relating to the
calculation, or miscalculation, of his QDRO. Therefore, we hold
that the District Court’s finding that Kollman’s request was
sufficiently specific under the clear notice test was clearly
erroneous.
We do not hold that a future request for documents is per se
inadequate because it fails to specifically name the documents
sought. Rather, the touchstone is whether the request provides
the necessary clear notice to a reasonable plan administrator of
the documents which, given the context of the request, should be
provided. In this case, the prior communications signaled only
Kollman’s interest in the calculation of his own benefits.
Neither the Plan nor the SPD, when produced, provided any
information along the line of Kollman’s interest. It follows that
Kollman’s letter does not pass the clear notice test.
The only other basis for Kollman’s claim under § 502(c)(1),
29 U.S.C. § 1132(c)(1), was the alleged violations of §
404(a)(1)(D) of ERISA, 29 U.S.C. § 1104(a)(1)(D). That
section requires the plan administrator to “discharge his duties
with respect to a plan . . . in accordance with the documents and
instruments governing the plan . . . .” Kollman argues that
because the Plan states that a claimant is entitled to copies “of all
documents, records and other information relevant to the claim,”
12
Ohio App. at 397, the failure to produce the Plan and the SPD violated
Rohm and Haas’s fiduciary duty under § 404(a)(1)(D) of
ERISA, thereby incurring the penalty assessed under § 502(c)(1)
of ERISA, 29 U.S.C. § 1132(c)(1). The District Court was not
persuaded. The Court applied our holding in Groves mandating
that § 502(c)(1) should be narrowly construed. It found that the
link between § 404(a)(1)(D) and § 502(c)(1) was too attenuated
because § 502(c)(1) applies to failures under ERISA and not to
those under the Plan. See 29 U.S.C. § 1132(c)(1) (“Any
administrator . . . who fails or refuses to comply with a request
for any information which such administrator is required by this
subchapter to furnish to a participant or beneficiary . . . may . . .
be personally liable . . . .”) (emphasis added).
We agree. As we noted above, in Groves we held that the
defendants’ failure to provide information required by federal
regulations did not state a claim under ERISA § 502(c)(1). We
stated, “the words ‘this subchapter’ in § 502(c) refer only to
violations of statutorily imposed obligations, and that the term
does not embrace violations of regulations promulgated pursuant
to the statute.” Groves, 803 F.2d at 111. We went on to state
that liability under § 502(c) “can be imposed on plan
administrators only if they fail to fulfill an obligation [that]
ERISA imposes directly upon them,” id. at 113, and that “§
502(c) subjects plan administrators to liability only for failure or
refusal to release the information that Subchapter 1 of ERISA
specifically requires plan administrators to release.” Id. at 116.
Kollman’s theory fails because the connection between §
404(a)(1)(D) and § 502(c)(1) is too tenuous. Section
404(a)(1)(D) does not contain language that directly imposes
information obligations on plan administrators. It is addressed
only to fiduciaries. Therefore, that section cannot be used as the
basis for a penalty under § 502(c)(1) of ERISA. In addition, §
502(c)(1) states that a penalty is only permitted for failure to
provide information required by “this subchapter,” and
Kollman’s claim is based on the Plan’s mandate to provide
information, rather than ERISA’s.
We will therefore reverse the District Court’s judgment
holding that Rohm and Haas was liable for the statutory
13
penalties imposed under ERISA § 502(c)(1), 29 U.S.C. §
1132(c)(1). It follows that the grant of attorneys’ fees to
Kollman will also be reversed.
IV.
Professional Malpractice Claim
In his appeal, Kollman argues that the District Court erred
in holding that his professional malpractice claim against Hewitt
was preempted by ERISA. Section 514(a) of ERISA provides:
“Except as provided in subsection (b) of this section, the
provisions of this subchapter and subchapter III of this chapter
shall supersede any and all State laws insofar as they may now
or hereafter relate to any employee benefit plan . . . .” 29 U.S.C.
§ 1144(a). In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41
(1987), the Supreme Court gave § 514(a) a broad reading,
stating: “[T]he phrase ‘relate to’ [is] given its broad common-
sense meaning, such that a state law ‘relate[s] to’ a benefit plan
in the normal sense of the phrase, if it has a connection with or
reference to such a plan.” Id. at 47 (quoting Metro. Life Ins. Co.
v. Mass., 471 U.S. 724, 739 (1985) (internal quotation marks
omitted)).
It is no secret to judges and lawyers that the courts have
struggled with the scope of ERISA preemption. Kollman argues
that the Supreme Court narrowed the scope of § 514(a) in its
decision in N.Y. State Conference of Blue Cross & Blue Shield
Plans v. Travelers Ins. Co., 514 U.S. 645 (1995). In Travelers,
the Court reversed the decision of the Second Circuit that had
held that a New York statute that required hospitals to collect
surcharges from patients depending on the type of insurance they
carried was preempted by ERISA. In holding there was no
preemption, the Supreme Court noted that the purpose of §
514(a) was to “‘eliminat[e] the threat of conflicting and
inconsistent State and local regulation.’” Id. at 657 (quoting 120
Cong. Rec. 29192, 29197 (1974) (statement of Rep. Dent)). In
the Travelers decision, the Court did not establish a generally
applicable rule that could be used to determine preemption in
different fact situations. Therefore, we must make the
preemption decision in light of the purpose underlying § 514(a)
14
and, of course, the applicable precedents from opinions of the
Supreme Court and this court.
We derive some insight from the Supreme Court’s decision
in Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990),
because the issue in that case was preemption of a
state tort claim, as in this case. The Court determined that a
judicially created cause of action similar to a claim for wrongful
discharge was preempted. Plaintiff, a former employee, filed
suit against his former employer alleging termination by his
employer to avoid contributing to the ERISA pension plan. In
holding the cause of action preempted, the Court characterized
ERISA § 514(a) as “ERISA’s broad pre-emption provision,” and
cited as well ERISA § 510, 29 U.S.C. § 1140, “which proscribes
interference with rights protected by ERISA; and [ERISA] §
502(a), 29 U.S.C. § 1132(a), a ‘carefully integrated’ civil
enforcement scheme that ‘is one of the essential tools for
accomplishing the stated purposes of ERISA.’” Id. at 137
(quoting Pilot Life, 481 U.S. at 41, 52, 54).
The Court in Ingersoll-Rand stated that the preemption
question requires a determination of congressional intent, “the
ultimate touchstone.” Id. at 138 (internal quotation marks and
citation omitted). The Court noted that Congress had
underscored its intent that § 514(a) be expansively applied by
using “equally broad language in defining the ‘State law’ that
would be pre-empted. Such laws include ‘all laws, decisions,
rules, regulations, or other State action having the effect of
law.’” Id. at 138-39 (quoting ERISA § 514(c)(1)). The Court
concluded that the unlawful discharge claim that the plaintiff had
filed was preempted because “[a]llowing state based actions like
the one at issue here would subject plans and plan sponsors to
burdens not unlike those that Congress sought to foreclose
through § 514(a).” Id. at 142. Of particular interest is the
Court’s comment that “state courts, exercising their common law
powers, might develop different substantive standards applicable
to the same employer conduct, requiring the tailoring of plans
and employer conduct to the peculiarities of the law of each
jurisdiction.” Id. That outcome, the Court stated, “is
fundamentally at odds with the goal of uniformity that Congress
sought to implement.” Id.
15
Although the Court in Ingersoll-Rand was addressing the
concern of employers and ERISA plan managers, the same
consideration is equally applicable to agents of employers, such
as Hewitt, who undertake and perform administrative duties for
and on behalf of ERISA plans. To subject such companies to the
differing state court interpretations of the tort of professional
malpractice would create obstacles to the uniformity of plan
administration that was and is one of ERISA’s goals.
Kollman relies on this court’s decision in Painters of Phila.
Dist. Council No. 21 Welfare Fund v. Price Waterhouse, 879
F.2d 1146 (3d Cir. 1989), for his argument that his claim of
professional malpractice against Hewitt is not subject to
preemption because Hewitt is supposedly a nonfiduciary.
Notwithstanding some dictum on which Kollman relies, the
situations are much different. Painters involved a suit by a
plan’s trustees against the plan’s accountant/auditor for failure to
uncover the fraudulent activity in which the fund’s administrator
had engaged. It is not surprising that we held that ERISA
preemption does not generally preempt professional malpractice
actions “brought by a plan,” id. at 1153 n.7, as such actions are
unlikely to interfere with plan administration.5 Congress was
concerned with subjecting plans to burdens, and said nothing
about actions by plans. As noted above, the ERISA preemption
provision was designed to “eliminat[e] the threat of conflicting
or inconsistent State and local regulation of employee benefit
plans.” 120 Cong. Rec. 29928, 29933 (1974) (statement of Sen.
Williams); see also Pilot Life, 481 U.S. at 46 (quoting same).
Indeed, in a number of other cases, courts of appeals have
held that state law malpractice claims brought by or on behalf of
ERISA plans were not preempted. See Gerosa v. Savasta & Co.,
Inc., 329 F.3d 317, 330 (2d Cir. 2003) (a malpractice claim
brought by plan trustees against a plan actuary not preempted);
Custer v. Sweeney, 89 F.3d 1156, 1167 (4th Cir. 1996) (trustee’s
5
Nor did the dictum suggest that professional malpractice
suits would never be preemptive. The Court stated that “ERISA
does not generally preempt state professional malpractice actions,”
id. at 1153 n.7 (emphasis added).
16
state law legal malpractice claim against an ERISA plan’s
attorney not subject to ERISA preemption); Airparts Co., Inc. v.
Custom Benefit Servs. of Austin, 28 F.3d 1062, 1064 (10th Cir.
1994) (ERISA did not preempt state law claims brought by
trustees of an ERISA plan against a non-fiduciary firm “hired by
plaintiffs to provide expert benefit plan consultation”). The
Fourth Circuit, in holding that a malpractice claim by the trustee
is not preempted, noted that the defendant, the attorney sued by
the ERISA trustee, “has not cited a single decision holding that
ERISA preempts a malpractice or professional negligence claim
against a service provider to an ERISA plan.” Sweeney, 89 F.3d
at 1167. Kollman cites these decisions in support of his effort to
overturn the District Court’s decision dismissing his malpractice
action against Hewitt, an ERISA plan agent, as preempted. The
argument is unpersuasive. There is no reason why ERISA’s
preemptive scope would reach state law malpractice claims filed
by ERISA plans or trustees because such claims do not
undermine the congressional policies that underlie ERISA.
Preemption under § 514(a) covers “any and all State laws”
that “relate to” an ERISA plan. 29 U.S.C. § 1144(a). A claim
that an attorney, accountant or other service provider was
negligent does not “relate to” the plan although the negligent act,
which provided the basis for the malpractice suit by the plan,
may have adversely affected the plan. As the trustee of a plan
argued in Sweeney, “professional negligence and malpractice
claims against third-party service providers to an ERISA plan do
not implicate the essential functions of an employee benefit plan,
such as funding, benefits, reporting, and administration . . . .”
Sweeney, 89 F.3d at 1165 (internal quotation marks omitted).
As always, the relevant question is how such suits should be
viewed in light of the purpose of the ERISA preemption
provision, § 514(a). The analysis of the courts that have held
such claims not preempted because they do not “relate to” an
ERISA plan are consistent with this view. A claim by the plan
that an agent negligently acted in some way causing injury to the
plan does not implicate the funding, benefits, reporting or
administration of an ERISA plan. Instead, the purpose of the
ERISA preemption is to eliminate claims that would interfere
with the ERISA plans.
17
An example of the type of action against an ERISA plan
that is not preempted is provided by the decision in Mackey v.
Lanier Collection Agency & Serv., Inc., 486 U.S. 825 (1988)
(holding that a state action garnishing funds due to participants
in an ERISA employee welfare benefit plan not preempted). In
Mackey, the Court made clear that the broad protection afforded
by § 514(a) notwithstanding, general state enforcement
mechanisms can be used to reach a participant’s benefits. It is in
this context that we must consider the frequently cited quotation
from the Mackey opinion where the Court explained that ERISA
does not preempt “run-of-the-mill state-law claims such as
unpaid rent, failure to pay creditors, or even torts committed by
an ERISA plan. . . .” Id. at 833. Thus, although some ordinary
state law or common law claims may be asserted against an
ERISA plan, such suits do not interfere with the essential role of
an ERISA plan.
In contrast, the claim that Kollman asserts against Hewitt
goes to the essence of the function of an ERISA plan – the
calculation and payment of the benefit due to a plan participant.
As the District Court recognized, “[i]n order to determine
whether [the calculation] error constituted malpractice, [the]
Court would necessarily need to consult the Plan to determine
such issues as whether the calculation was in error, whether the
Plan includes provisions regarding the representations of Lump
Sum Payout amounts made on the Website or by [Hewitt’s]
customer service personnel, and whether the Plan includes
provisions regarding representations of Lump Sum Payout
amounts before claims for benefits are actually submitted.”
Kollman v. Hewitt, No. Civ. A. 03-2944, 2004 WL 1211961, at
*3 (E.D. Pa. Apr. 14, 2004). Such claims are plainly preempted.
See, e.g., Custer v. Pan Am. Life Ins. Co., 12 F.3d 410, 418 (4th
Cir. 1993) (holding that plaintiff’s claim for “past and future
health care benefits” was preempted by ERISA).
The rationale for these holdings is that “[a]llowing
beneficiaries to assert state law claims against non-fiduciary plan
administrators . . . would upset the uniform regulation of plan
benefits intended by Congress.” Howard v. Parisian, Inc., 807
F.2d 1560, 1565 (11th Cir. 1987). ERISA itself contains a civil
enforcement scheme referred to in Ingersoll-Rand which
18
provides the mechanism for claims by beneficiaries or plan
participants to question or challenge the provision or amount of
benefits. See 29 U.S.C. § 1132(a). Any adjudication of
Kollman’s state law malpractice claim would necessarily require
a court to consider the Plan in detail in order to properly address
Kollman’s arguments outside the mechanism prescribed by
ERISA. Such an outcome is precisely what Congress sought to
avoid in developing a nationwide scheme for ERISA plans. See
29 U.S.C. § 1144(a). Thus, we will affirm the District Court’s
dismissal of Kollman’s professional malpractice claim.
V.
Conclusion
For the reasons set forth above, the District Court’s Order
of October 18, 2005 is reversed. The Court’s April 14, 2004
order dismissing Kollman’s professional malpractice claim is
affirmed.
19