United States District Court, E.D. Pennsylvania
March 2, 2004.
JOHN PERGOSKY, Plaintiff,
PENNSYLVANIA POWER & LIGHT COMPANY and the RETIREMENT PLAN OF PENNSYLVANIA POWER & LIGHT COMPANY, Defendants.
The opinion of the court was delivered by: FRANKLIN VAN ANTWERPEN, District Judge
MEMORANDUM AND ORDER
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,
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.
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
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
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
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
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
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
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
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
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
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,
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.
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
3) This case is closed.
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