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United States District Court, E.D. Pennsylvania

March 2, 2004.


The opinion of the court was delivered by: FRANKLIN VAN ANTWERPEN, District Judge


Plaintiff John Pergosky brings this action against Defendants PPL Electric Utilities Corporation ("PPL"), improperly denominated as Pennsylvania Power & Light Company in the Complaint, and the PPL Retirement Plan ("the Plan"), improperly denominated as Retirement Plan of Pennsylvania Power & Light Company in the Complaint, pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et. seq. Plaintiff seeks to recover retirement benefits which he believes he was wrongfully denied by Defendants. Before us now is Defendants' Motion to Dismiss and Impose Sanctions on the grounds that Plaintiff has previously litigated this matter and is now barred from doing so under the doctrine of collateral estoppel. For the reasons stated below, we grant Defendants' Motion in part and deny it in part.

I. Procedural History

  Plaintiff was a thirty year employee for PPL, prior to becoming permanently disabled in 1992. In that same year, after going on long term disability leave, Plaintiff was terminated for misconduct. However, Plaintiff disputed the grounds for termination and brought suit against PPL under the Age Discrimination in Employment Act (ADEA). This suit was settled in January 1994. Under the terms of the Settlement Agreement, there was to be no "effect upon Mr. Pergosky's right to receive disability or pension benefits, which will be governed by the terms of those policies and plans." (Settlement Agreement and Mutual Releases, filed Nov. 30, 1995, para. 4.)

  Although Plaintiff apparently agreed to these terms during a settlement conference held on the record by this court on January 25, 1994, he refused to sign the Agreement and instead filed a motion to set it aside on April 22, 1994. This court denied that motion on May 10, 1994. Plaintiff then filed a motion on July 21, 1994, to enforce the terms of the Agreement consistent with his understanding that he would continue to accrue pension benefits and be covered by the company's hospital/medical, dental and life insurance plans. (Mem. of Law in Supp. of Mot. to Enforce the Settlement Agreement at 1-2.) An evidentiary hearing was subsequently held by Magistrate Judge Rapoport to determine whether the Settlement Agreement provided Plaintiff with continued pension accrual and continued life insurance, medical insurance and sick leave benefits. Judge Rapoport concluded that Plaintiff's position was unsupported and was, in actuality, an attempt to renegotiate the terms of the settlement. (Report and Recommendation at 9.) This court adopted Judge Rapoport's Report and Recommendation on October 4, 1994, and the decision was affirmed by the Third Circuit on July 20, 1995. See Pergosky v. Pennsylvania Power & Light Co., 65 F.3d 163 (3d Cir. 1995). When Plaintiff still refused to sign the Agreement, this court granted a motion by PPL for sanctions and appointed the Clerk of Court to sign the settlement agreement on behalf of Plaintiff on August 28, 1995.

  On January 7, 2003, Plaintiff filed a Complaint with the United States District Court for the Middle District of Florida. In the Complaint, Plaintiff sought damages for wrongful denial of pension benefits in violation of ERISA, to estop Defendants from relying on plan documents that are inconsistent with the Summary Plan Description (SPD), and attorneys' fees and costs. Although Defendants' Motion to Dismiss this Complaint was denied by the Middle District of Florida, Defendants' Motion to Transfer this case back to the Eastern District of Pennsylvania was granted on October 10, 2003.

  II. Standard of Review

  Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a claim in whole or in part "for failure to state a claim upon which relief can be granted." In reviewing a motion to dismiss under Rule 12(b)(6), the Court must accept as true all the allegations set forth in the complaint and must draw all reasonable inferences in favor of plaintiffs. See Ford v. Schering-Plough Corp., 145 F.3d 601, 604 (3d Cir. 1998). Dismissal is proper only if plaintiffs can prove no set of facts in support of their claims which would entitle them to relief. Id.

  III. Discussion

  Defendant moves to dismiss Plaintiff's complaint based on the doctrine of collateral estoppel. Courts may invoke this doctrine to bar relitigation of an issue that has already been adjudicated by the courts on the merits. See Witkowski v. Welch, 173 F.3d 192, 198 (3d Cir. 1999). Application of the collateral estoppel doctrine is appropriate where (1) the issue decided in the prior adjudication is the same issue in the present case; (2) there was final judgment on the merits; (3) the party against whom the plea is asserted was a party or in privity to a party in the prior adjudication; (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior adjudication. See Temple Univ. v. White, 941 F.2d 201, 212 (3d Cir. 1991). Thus the first issue this court will address is whether Plaintiff is seeking to argue the same issue here as was argued in the prior case.

  a. Whether the issue in the prior case is identical to the instant case

  Plaintiff's Complaint states that he has been wrongfully denied pension benefits because, according to plan documents, he was entitled to continued accrual of pension benefits while receiving disability benefits from PPL. We now examine the record of Plaintiff's previous case, No. 93-2400, in order to determine whether this issue was already litigated. As stated above, Plaintiff filed a Motion to Enforce the Settlement Agreement on July 21, 1994. In that Motion, Plaintiff argued that

In violation of the terms of the Settlement Agreement, the Defendant has failed and refused to provide Plaintiff John Pergosky with the continued accrual of his retirement benefits (emphasis added) and continued coverage under the Defendant company's hospital/medical, dental and life insurance plans, and sick pay benefits.
Mot. to Enforce the Settlement Agreement, para. 5.

  A hearing was then conducted by Magistrate Judge Rapoport on August 18, 1994, in order to receive evidence as to the terms of the Settlement Agreement. At the beginning of the hearing, Judge Rapoport asked the following question, which was answered by Plaintiff's then attorney, Sidney Gold:

THE COURT: Are we dealing with the language of the plan?
  MR. GOLD: Yes, we are and we attached the plan our motion, Judge [. . .]

  Tr. from Hearing before J. Rapoport, Aug. 18, 1994, at 5.

  Later, Mr. Gold told the court, "[I]t's our position that if you look at the plan, he's entitled to receive the continued accrual of his retirement benefits . . . because that's what the plan provides." Id. at 11. In response to Mr. Gold's arguments, Mr. Ossip, Defendant's attorney, stated that

the status [. . .] when his [Plaintiff's] employment was terminated, was as follows: his life insurance benefits ceased; (b) his medical insurance benefits ceased; and (c) he stopped accruing pension. He was a terminated former employee at that point.
Id. at 14.

  Later, in an apparent effort to clarify the issue, Judge Rapoport again stated, "You know, we're really talking about, you know, construing this agreement and are you prepared to give a memorandum on that?" Id. at 38. Mr. Gold answered in the affirmative. Id. Judge Rapoport concluded the hearing by arranging a schedule during which the parties would prepare an analysis of the relevant provisions of the plan. Id. at 45.

  Pursuant to Judge Rapoport's instructions, Plaintiff submitted a Memorandum of Law in Support of the Motion to Enforce the Settlement Agreement on August 26, 1994. Based on the arguments contained therein, the conclusion of Plaintiff's Memorandum was that

Defendant should be required to provide Pergosky with all of the aforesaid benefits in accordance with the dictates of the long term disability plan including continued accrual of his retirement benefits, and coverage under the company's hospital/medical dental and life insurance plans.
Also pursuant to the hearing with Judge Rapoport, the parties conducted a deposition of Plaintiff's counsel during the settlement negotiations, Martin Herring. During this deposition, Mr. Ossip asked the following questions, which were answered by Mr. Herring:
Q. Was it part of the settlement that you negotiated, and which PP&L agreed to, that Mr. Pergosky's pension would continue to accrue while he was out on disability or while he was receiving disability benefits?
A. No.
Q. Now, I made — A. Before you go on, I tried to get all those things.
Q. You tried to get all those things?
A. I couldn't get them.
Q. PP&L would not agree to them?
A. That is correct.
Tr. of Herring Deposition, Aug. 30, 1994, at 11-12.

  On September 16, 1994, after receiving legal memoranda from both parties analyzing the plan documents, Judge Rapoport filed his Report and Recommendation in which, among other things, he concluded that

Considering all of the evidence of record, the only reasonable conclusion is that the terms as stated before the Court and the document negotiated by Attorneys Herring and Ossip embodies the terms of the settlement agreement.
Report and Recommendation, Sept. 16, 1994, at 9.

  In response to Plaintiff's allegation that Defendant agreed to provide long term disability and pension benefits, Judge Rapoport wrote, "In fact, this is untrue." Id. at 7. He then went on to summarize Plaintiff's benefits per the settlement agreement as follows:

Under the terms of the settlement agreement PP&L agreed that the resolution of the case would have no impact upon the plaintiff's entitlement to the disability and pension benefits that he was receiving at that time. In other words, the benefits that the plaintiff was receiving at the time of the settlement hearing would continue under the terms of the plans and/or policies. There is no indication anywhere in the record that PP&L agreed to provide additional benefits to the plaintiff.

  Based on the foregoing, Judge Rapoport's recommendation was that the settlement agreement be adopted as the official settlement. This court adopted Judge Rapoport's Report and Recommendation in an Order dated October 5, 1994, which the Third Circuit later affirmed. See Pergosky, 65 F.3d 163.

  Plaintiff subsequently filed a Motion for Reconsideration with this court, in which he argued that under plan documents, he was entitled to continued accrual of his full pension benefits. Pl.'s Mot. for Recon. at 9. In support of this claim, Plaintiff stated in his brief that Judge Rapoport's conclusion that as a terminated employee, Plaintiff's right to certain benefits had been terminated


did damage to the basic guarantees set forth in ERISA for individuals, namely to provide assurance and continuity to employees that all plans which qualify under ERISA would contain certain, and result in certain, benefits AND that those benefits would be provided in a noncapricious fashion to its covered employees when due or payable.
Pl.'s Br. Sur Mot. for Recon. at 11.

  In addition, Plaintiff argued that if the settlement agreement was construed as waiving ERISA protected rights, such a waiver would be illegal. Id. at 12. This court denied Plaintiff's Motion for Reconsideration on November 7, 1994. On August 22, 1995, this court conducted a hearing pursuant to Plaintiff's continued refusal to sign the settlement agreement. At the hearing, Mr. Ossip stated that

[t]he key dispute, as I understand it, that has arisen since that time, is Mr. Pergosky's insistence that he is entitled to medical benefits and sick leave benefits and continued pension accrual and all of these other accoutrements of employment that he was not getting at the time of the settlement because he was no longer an employee of PP&L.
Tr. of Hearing before Judge Van Antwerpen, Aug. 22, 1995, at 5.

  Mr. Ossip also indicated that he had learned that an additional law suit had been filed by Plaintiff against PP&L "seeking life insurance, medical insurance, continued pension accruals and all the stuff that Magistrate Rapoport said he wasn't entitled to . . ." Id. at 7-8. During the hearing, the court informed Plaintiff's then attorney, Mr. Healy, that, with regard the objections he was raising to Judge Rapoport's Report, "[I]t's res judicata." The following colloquy ensued:

MR. HEALY: I understand, your Honor. I — I think the issue also has to be resolved by our circuit as to whether the release language included in the proposed agreement is, in fact, enforceable under ERISA, there's been no definitive —
THE COURT: Did you raise that issue on appeal?
MR. HEALY: It was argued — excuse me — it was raised in my brief, your Honor, but there's no comment whatsoever as you — the Court has the record, it — it merely is a per curiam order, in effect.
THE COURT: Well, you know what that means then, that's resolved, too.
Id. at 10-11.

  This court then issued an Order on August 25, 1995, holding Plaintiff in contempt of court for failing to sign the settlement agreement and granting Defendant's motion for sanctions.

  We believe this extensive recitation of the portions of the record from the 1994-1995 case indicates that the issue being litigated today is the same one litigated previously by Plaintiff. Plaintiff himself acknowledges in his brief that this issue was at least peripherally raised in his Motion to Enforce the Settlement Agreement, but he contends that the court merely held that "PP&L did not affirmatively represent to Pergosky that his retirement benefits would continue to accrue." (Pl. Rep. Br. at 6.) Plaintiff also claims that the issue in the instant case is distinguishable from the issue in the prior case because it addresses "whether or not Pergosky's retirement benefits, in fact, accrued under the plan documents." Id. In other words, the distinction Plaintiff appears to be drawing, is that in the last case, the issue was whether his pension would accrue, and in this case, the issue is whether they did accrue.

  Plaintiff seems to think that by using the magic word "ERISA," he has created a new issue. But the issue remains the same, regardless of the authority he seeks to invoke: Plaintiff believes that under plan documents, which Defendant is obligated to follow in determining what benefits Plaintiff is entitled to receive, he should have continued to accrue pension benefits. He argued this in his Motion to Enforce the Settlement Agreement, he argued it before Judge Rapoport, he argued it in his appeal to the Third Circuit Court of Appeals, he argued it in his Motion for Reconsideration, and he argued it before this court in a hearing pursuant to his refusal to sign the Settlement Agreement.

  Plaintiff also makes the feeble argument that the issue in the instance case concerning his retirement cannot be deemed identical to the one in the prior case because that case alleged wrongful discharge. However, while Plaintiff's initial case may have begun as a wrongful discharge claim, the extensive record subsequent to his settlement negotiation clearly shows that the parties were litigating the meaning of the Settlement Agreement. Plaintiff himself must recognize this much, since he does not argue that the court's holding was a determination of his wrongful termination claim, but that the court instead "held that Pergosky is entitled to all benefits set forth in Defendants' plan documents." (Pl. Br. in Opp. at 6.) By virtue of adopting Judge Rapoport's Report and Recommendation, we held in the last case that the Settlement Agreement did not provide that Plaintiff's pension accrual would be reinstated. Plaintiff now seeks a monthly pension which would reflect accrual for the 1992-2003 period. Seeing no difference in these issues, we find that they are identical for purposes of collateral estoppel. b. Final Judgment on the Merits

  Defendants argue that final judgment was entered on the merits of whether Plaintiff could continue to accrue pension benefits. As evidence of this, Defendants point to the Third Circuit Court of Appeal's decision affirming this court's decision to adopt Judge Rapoport's Report and Recommendation, as well as this court's Order that "this matter remains settled, closed, and dismissed with prejudice." (Order, Aug. 28, 1995). Plaintiff, on the other hand, argues that a final judgment could not have been reached on this issue because ERISA provides the exclusive remedy for determining claims that touch and concern pension benefits. See Pilot Life Ins. Co. v. Dedaux, 481 U.S. 41, 47 (1987). We do not accept that Plaintiff is making a genuine ERISA claim and view it instead as a red herring meant to distract the court from the central issue of whether the Settlement Agreement altered Plaintiff's status as a terminated employee, such that he would be able to resume pension accrual.

  Merely because an individual's pension benefits are impacted by a particular dispute, does not mean a claim is exclusively governed by ERISA. See Ryan v. Puerto Rico Maritime Shipping Authority, 848 F. Supp. 33 (D.N.J. 1994); Zewe v. Law Firm of Adams & Reese, 852 F. Supp. 516 (E.D. La. 1993). Plaintiff's initial complaint against PPL was that he had been wrongfully terminated under the ADEA. Since Plaintiff was terminated, his benefits were accordingly terminated. In negotiating a settlement in which he would agree to drop his ADEA claim, Plaintiff apparently sought to have his benefits reinstated. However, as indicated in Attorney Healy's deposition, PP&L would not agree to these terms. Thus the Settlement Agreement did not call for Plaintiff to be returned to the status of "employee," as held by this court, and affirmed by the Court of Appeals, when we adopted Judge Rapoport's Report and Recommendation. Plaintiff is now making the same claim, cloaked in ERISA law, arguing that Defendants have somehow miscalculated his benefits and if he had been allowed pension accrual after he was terminated in 1992, he would now receive higher monthly benefits. The issue here is not the calculation of Plaintiff's pension benefits, but whether the Settlement Agreement affected his status as terminated employee. Since we decided it did not, and the Court of Appeals affirmed this decision, there has been final judgment on the merits of this issue.

  Finally, even if we were to agree with Plaintiff's characterization of this issue as an ERISA claim, his argument is still problematic since ERISA does not prevent employees from entering into settlement agreements in which they waive their right to pursue ERISA claims in exchange for some benefit they receive. In the instant case, Plaintiff did just that when he entered into the Settlement Agreement before this court, in which he agreed to release Defendants from any other claims related to his termination. According to the Settlement Agreement and Release, Plaintiff agreed that he would release PP&L and its affiliates


from all manner of actions and causes of actions, suits, debts, claims and demands whatsoever in law or in equity, arising on or before the date of this Agreement which they ever had, now have, [. . .], concerning or relating in any way to Mr. Pergosky's employment relationship or the termination of his employment relationship with PP&L, including, but not limited to, any claims which have been asserted, could have been asserted, or could be asserted in the future against PP&L . . .
Settlement Agreement and Mutual Releases, filed Nov. 30, 1995, para. 1.

  Since this court, and the Court of Appeals, adopted Judge Rapoport's conclusion that the Settlement Agreement did not alter Plaintiff's status as a terminated employee and upheld the terms of the Settlement Agreement and Mutual Release precluding further related claims, we must conclude that there was a final judgment on the merits of this issue. c. Whether Plaintiff was a party to the prior litigation

  Since Plaintiff does not dispute that he was a party to the prior litigation, this element of the collateral estoppel analysis is deemed satisfied.

  d. Whether Plaintiff had a full and fair opportunity to litigate the issue

  Plaintiff argues that he has not had a full and fair opportunity to litigate this issue. Specifically, Plaintiff argues that he was not afforded the opportunity to conduct discovery on all of the relevant plan documents. Plaintiff states that since the prior litigation concerned an age discrimination claim, no discovery could have been conducted on the issue of pension accruals. In light of the extensive record in this case, much of which was recounted above, we fail to see how Plaintiff can make this claim in good conscience. Plaintiff had ample opportunities to conduct discovery on plan documents and plan administrators. Judge Rapoport specifically offered the parties the opportunity to focus on that issue when he invited them to prepare legal memoranda analyzing the relevant provisions of plan documents. (Hearing before Magistrate J. Rapoport, Aug. 18, 1994, at 45.) At that time, Plaintiff's attorney, Mr. Gold, requested that Defendants provide him with further plan documentation on Defendants' Long Term Disability Plan and Judge Rapoport affirmed the request. Although the parties ultimately learned that further documentation did not exist beyond the Summary Plan Description, this exchange indicates that Mr. Gold had the opportunity to conduct full discovery on the pension accrual issue, or at the very least, the opportunity to raise a red flag as to the unavailability of certain information. Moreover, nothing contained the Memorandum prepared by Mr. Gold on this issue signified that he was unable to properly analyze the issue because the unavailability of certain evidence. Certainly if Plaintiff felt he had been denied the opportunity to conduct further discovery on pension accrual, which we have no doubt he was trying to litigate then, such objections could have been appropriately raised on appeal. In reviewing and affirming this court's decision on appeal, the Third Circuit apparently did not find any merit to such an issue either.

  IV. Conclusion

  Defendants' Motion is granted in part and denied in part. It is granted with respect to the dismissal of Plaintiff's claims because Plaintiff is denied from relitigating them under the doctrine of collateral estoppel. It is denied, however, as to the imposition of sanctions. Plaintiff is a lay person who obviously acted on the advice of counsel in bringing this suit and we will not sanction him at this point. Nevertheless, if he persists in bringing suits against Defendant we will impose sanctions. An appropriate order will follow. ORDER

  AND NOW, this 2nd day of March, 2004, upon consideration of Defendants' Motion to Dismiss Plaintiff's Complaint and Impose Sanctions, and Memorandum of Law in support thereof, filed on December 17, 2003; and Plaintiff's Brief in Opposition to Defendants' Motion to Dismiss Plaintiff's Complaint and to Impose Sanctions, filed on January 20, 2004, it is hereby ORDERED that the Motion is GRANTED in part and DENIED in part as follows:

1) Defendants' Motion is GRANTED as to the dismissal of Plaintiff's Complaint and Plaintiff's Complaint is dismissed with prejudice;
2) Defendants' Motion is DENIED as to imposing sanctions;
3) This case is closed.

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