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Johannessen v. Sulzer Medica USA

May 20, 2009


The opinion of the court was delivered by: R. Barclay Surrick, J.



Presently before the Court are the Motion of Defendants Sulzer Medica, Inc., Centerpulse, Inc., and Zimmer Holdings, Inc., for Summary Judgment (Doc. No. 46) and Plaintiff Nils Johannessen's Memorandum of Law in Opposition to Zimmer's Motion for Summary Judgment and in Support of his Motion for Partial Summary Judgment Against Zimmer Holdings, Inc., Sulzer Medica USA, Inc., and Centerpulse USA, Inc. (Doc. No. 47). For the following reasons, Defendants' Motion for Summary Judgment will be granted and Plaintiff's Motion for Partial Summary Judgment will be denied.


Plaintiff Nils Johannessen ("Plaintiff") began work as a Technical Sales Representative with IntraTherapeutics, Inc. ("IntraTherapeutics") on November 9, 1998. (Pl.'s Dep. 11, Nov. 13, 2006.) Plaintiff held this position between November 1998 and June 2002. (Id. at 12.) During Plaintiff's tenure as a Technical Sales Representative, his employer changed its name twice. In January 2001, Sulzer Medica USA, Inc. ("Sulzer") acquired IntraTherapeutics and renamed it. In May 2002, Sulzer changed its name to Centerpulse USA, Inc. ("Centerpulse").*fn1

Throughout Plaintiff's employment, his compensation included a base salary plus commissions on products that he sold. Commissions made up approximately two-thirds of Plaintiff's compensation.

Plaintiff worked at Pzifer prior to working at IntraTherapeutics. (Id. at 9.) While at Pfizer, Plaintiff selected the option that provided supplemental disability insurance that augmented a basic disability insurance policy and provided disability insurance coverage at 70% of Plaintiff's base salary plus commissions. (Id. at 55-56.) Without the supplemental policy, Plaintiff would have been covered at 60% of his base salary plus commissions. (Id. at 56.) Plaintiff's insurance coverage at Pfizer ended when he left Pfizer to work at IntraTherapeutics. (Id. at 59.) Plaintiff did not consider purchasing supplemental disability insurance when he began work at IntraTherapeutics because he assumed that he would have the same level of insurance coverage as at Pfizer, since he understood it to be standard practice in the industry to provide coverage based on salary plus commissions. (Id. at 56.) Plaintiff did not speak with anyone at IntraTherapeutics about long-term disability ("LTD") benefits when he began his employment there. (Id. at 56-57, 59.) Plaintiff simply assumed that LTD benefits would include both base salary and commissions. (Id. at 59.)

For its LTD plan ("the Plan" or "the LTD Plan") under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001, et seq., Sulzer purchased group-insurance coverage from Sun Life of Canada ("Sun Life") and adopted the terms of the Sun Life group- insurance LTD policy.*fn2 (See Doc. No. 46, Ex. B.) Sulzer acted as Plan Administrator and "delegated to Sun Life its entire discretionary authority to make all final determinations regarding claims for benefits under the benefit plan insured by this Policy." (Id. at 28.) Under the Plan, it was Sulzer's responsibility to furnish information about plan participants to Sun Life. (Id. at 25.) Plaintiff was a participant in the Plan and enrolled annually in Sulzer's benefit programs. (Pl.'s Dep. 36.)

The Plan provides that an employee's LTD benefits will equal 60% of the employee's Total Monthly Earnings, up to a Maximum Monthly Benefit of $10,000.00. (Doc. No. 46, Ex. B at 4.) "Total Monthly Earnings" is defined as "the Employee's basic monthly earnings as reported by the Employer immediately prior to the first date Total or Partial Disability begins. Total Monthly Earnings does not include commissions, bonuses, overtime pay or any other extra compensation." (Id. at 10.)

As of March 5, 2001, Plaintiff's base salary was $63,047.92. (Doc. No. 11, Ex. O.) Shortly after Sulzer purchased IntraTherapeutics, Sulzer distributed a Total Reward Summary to its employees, which detailed benefits as of April 1, 2001. (Pl.'s Dep. 138; Doc. No. 11, Ex. M ("2001 Total Reward Summary").)*fn3 The summary was personalized to each employee and included the employee's hire date, salary, cost of benefits, sick-day accumulation, dental coverage, and short-term disability and LTD benefits. (Pl.'s Dep. 138.) Under the heading "Disability Benefits," Plaintiff's personalized 2001 Total Reward Summary reported that after six months of disability Plaintiff could be eligible for LTD benefits of $3152.40 per month.*fn4

(Doc. No. 11, Ex. M.) The 2002 Total Reward Summary, which stated that after six months of disability, he "may be eligible for Long-Term Disability of $5,387.15 per month." (Doc. No. 11, Ex. Q.) Plaintiff testified that based upon these summaries he understood commissions to be included in LTD benefits, because of the dollar amount identified as his LTD benefits.*fn5 (Id. at 138-39.)

On February 2, 2001, Plaintiff was injured in a car accident. (Pl.'s Dep. 33-34.) Plaintiff returned to work approximately one to two weeks after the accident. (Id. at 34-35.) He did not consider taking disability leave immediately after the accident because he was being treated by a chiropractor who felt that Plaintiff could fully recover and remain in his job. (Id. at 35.) Plaintiff did not immediately discuss LTD benefits with anybody from Sulzer after the accident. (Id. at 36.)

On February 21, 2002, Plaintiff received an Employee Handbook. (Id. at 50; Doc. No. 46, Ex. C.) Plaintiff signed for the Employee Handbook, but did not read it until May 2002 when he felt that he could no longer work.*fn6 (Pl.'s Dep. 61.) Among other things, the Employee Handbook described the benefits to which Plaintiff was entitled under the LTD plan. (Doc. No. 46, Ex. C.) The Handbook stated that "[t]he amount of insurance is 60% of your Total Monthly Earnings . . . ." (Id. at 19.) The term "Total Monthly Earnings," the Handbook explained, "does include commissions, but does not include bonuses, overtime pay or any other extra compensation." (Id.) May 2002 was also the first time that Plaintiff looked at the company's employee intranet for information on disability benefits. (Pl.'s Dep. 59-60.) Because the website stated that LTD benefits were based on commissions as well as base salary, Plaintiff decided not to purchase supplemental insurance. (Id.; see also Doc. No. 11, Ex. T at unnumbered 13 ("Total Monthly Earnings does include commissions . . . .").) After looking at the intranet and the Employee Handbook and performing some computations, Plaintiff felt that the LTD benefits were sufficient. (Pl.'s Dep. 46.) Plaintiff testified that, had he learned in May 2002 that commissions were not included, he would have "scrambled" to attempt to purchase a policy that would cover an "existing condition," because he was injured by that time. (Id. at 70.)

The first time that Plaintiff discussed LTD benefits with anyone from the company was at the end of May 2002.*fn7 (Pl.'s Dep. 36-37, 63.) At that point, Plaintiff informed his manager, Michael Sexton, and his human resources contact, Kim Dickey, that he was experiencing too much pain to continue working. (Id. at 37, 39, 41.) Plaintiff told Dickey that he needed to take time off to get better; he had not yet considered going out on LTD. (Id. at 41-42.) Plaintiff learned from Dickey that short-term disability income replacement was calculated using a formula that was predicated on Plaintiff's commissions, as well as his base salary. (Id. at 42.) Plaintiff remained in regular contact with Dickey during the time-period following the conversation as Dickey was monitored his status. (Id. at 44.) Plaintiff intended to take time off, get better, and return to work. (Id. at 45.) As time progressed, however, it became clear that Plaintiff was not getting better and that he was going to have to take long-term disability. (Id.)

Plaintiff's last day of work with the Employer Defendants was May 31, 2002. (Doc. No. 46, Ex. G ("Long Term Disability Claim Statement").) Plaintiff began collecting short-term disability benefits on June 3, 2002. (Id.) He applied to Sun Life for LTD benefits on October 10, 2002. (Pl.'s Dep. 96; see also Doc. No. 46, Ex. G.) Plaintiff did not read the Summary Plan Description ("SPD") before deciding to apply for LTD benefits because he did not receive an SPD until after he had submitted his application to Sun Life. (Pl.'s Dep. 51, 90.) Plaintiff never asked anyone at IntraTherapeutics or Sulzer for an SPD. (Id. at 64.) Upon receiving his LTD application, Sun Life sent Plaintiff a copy of the August 2002 SPD. (Id. at 63.) In August 2002, an SPD had been issued that correctly tracked the language of the LTD Plan. (See Doc. No. 46, Ex. D.) The SPD provided that "Total Monthly Earnings does not include commissions, bonuses, overtime pay or any other extra compensation." (Id., Ex. D at 7.) Prior to August, the outstanding SPD from January 2002 had been printed with the incorrect statement that Total Monthly Earnings included commissions. (Doc. No. 46, Ex. F at 4.) However, by handwritten notation, the SPD had been corrected to state that commissions were not included. (Id.) On October 10, 2002, a Summary Material Modification ("SMM") was issued that stated: "The Long Term Disability insurance program Summary Plan Description has been corrected to reflect that commissions are not included in the calculation of the monthly disability benefit provided under the Company paid Long Term Disability insurance program." (Id., Ex. E (emphasis in original).)

When Plaintiff received the August 2002 SPD from Sun Life in October 2002, he realized for the first time that commissions were not included in LTD benefits. (Pl.'s Dep. 69-70, 88, 93, 96.) Plaintiff called Kim Dickey to ask why his LTD benefits were not being calculated to include commissions as stated on the intranet and in the Employee Handbook. (Id. at 92, 96.) Dickey said that she would have to look into it. (Id. at 92.) After calling Sulzer's Texas office, Dickey informed Plaintiff that commissions were not included in the LTD policy and that anything that said otherwise was incorrect. (Id. at 97.) This information from Dickey corrected the information that she had originally given Plaintiff in May 2002, when she told him that commissions were included when calculating disability benefits. (Id. at 98.) Plaintiff continued to communicate with Dickey in order to get the LTD coverage that he expected. (Id. at 99.) Sulzer, which by that time had changed its name to Centerpulse, was sold to ev3, Inc., in late November or early December 2002.*fn8 (Id. at 93.) Dickey left the company shortly before this time. (Id.) In December 2002, Plaintiff also spoke with Joan Brasier at Sun Life about the misinformation on the intranet and Employee Handbook. (Id. at 99-100, 101, 118.) When Plaintiff did not get any positive response from these actions, he gave up pursuing the issue. (Id. at 100-01.)

In a letter dated December 4, 2002, Sun Life advised Plaintiff that he had been approved for LTD benefits. (Id. at 88, 90; Doc. No. 46, Ex. H.) For the purposes of the Sun Life LTD policy, Plaintiff became disabled on June 1, 2002. (Doc. No. 46, Ex. H.) Plaintiff's benefits began to accrue on November 28, 2002. (Id.) The Sun Life letter informed Plaintiff that his Basic Monthly Earnings equaled $5254.00. (Id.) Plaintiff's LTD benefits were calculated at 60% of Plaintiff's monthly earnings, or $3152.40 per month. (Id.)

Plaintiff's full LTD benefits ended in February 2005, when Sun Life confirmed that Plaintiff was working full-time as a clock repairer. (Doc. No. 46, Ex. I at 4.) At that time, Plaintiff applied for partial disability benefits. (Pl.'s Dep. 114-15.) Plaintiff received a letter from Sun Life informing him that he would not receive partial benefits. (Id. at 115.)

Thereafter, Plaintiff found employment with another company in the healthcare industry. (Id. at 71.) His present employer provides LTD coverage that includes commissions. (Id. at 82.)

Plaintiff filed his Second Amended Complaint on July 24, 2006. In Count I, Plaintiff alleged that Sun Life violated ERISA when it did not pay monthly disability payments based on a calculation of Total Monthly Earnings that included commissions. (Second Am. Compl. ¶¶ 85-117.) In March 2007, Plaintiff settled with Sun Life and a Settlement Agreement and Release was signed. (Doc. No. 46, Ex. K.) Subsequently, Sun Life was dismissed as a defendant in this case. (Doc. No. 45.)

Count II alleges violations of ERISA by the Employer Defendants in their capacities as plan administrators and/or fiduciaries under ERISA. (Second Am. Compl. ¶¶ 118-63.) Plaintiff also asserts state law claims against the Employer Defendants. In Count IV, Plaintiff alleges negligent or intentional misrepresentation (id. ¶¶ 164-83), and in Count V, Plaintiff alleges equitable estoppel (id. ¶¶ 184-92).*fn9

On April 20, 2007, the Employer Defendants filed a Motion for Summary Judgment. (Doc. No. 46.) Plaintiff filed a response in opposition to Defendants' Motion. (Doc. No. 47.) In his response, Plaintiff also requested partial summary judgment. (Id. at 11.)


A moving party is entitled to summary judgment when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Fed. Home Loan Mortgage Corp. v. Scottsdale Ins. Co., 316 F.3d 431, 443 (3d Cir. 2003). Where the non-moving party bears the burden of proof at trial, the moving party may identify an absence of a genuine issue of material fact by "showing" the court that there is no evidence in the record supporting the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 325 (1986); UPMC Health Sys. v. Metro. Life Ins. Co., 391 F.3d 497, 502 (3d Cir. 2004). Once the moving party carries this initial burden, the non-moving party must set forth specific facts showing that there is a genuine issue for trial. See Fed. R. Civ. P. 56(e)(2) (stating that "an opposing party may not rely merely on allegations or denials in its own pleading; rather, its response must . . . set out specific facts showing a genuine issue for trial"); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (noting that the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts"); Watson v. Eastman Kodak Co., 235 F.3d 851, 857-58 (3d Cir. 2000) (explaining that once the movant has demonstrated an absence of a genuine issue of material fact, the non-movant must then establish the existence of each element on which it bears the burden of proof); Ridgewood Bd. of Educ. v. N.E. for M.E., 172 F.3d 238, 252 (3d Cir. 1999) (noting that plaintiffs cannot avert summary judgment with speculation or by resting on the allegations in the pleadings). "If the non-moving party 'fails to make a showing sufficient to establish the existence of an element essential to [the non-movant's] case, and on which [the non-movant] will bear the burden of proof at trial,' summary judgment is proper as such a failure 'necessarily renders all other facts immaterial.'" Jakimas v. Hoffmann La Roche, Inc., 485 F.3d 770, 777 (3d Cir. 2007) (quoting Celotex, 477 U.S. at 322-23). Courts must draw all reasonable inferences from the record in favor of the non-movant. Knabe v. Boury Corp., 114 F.3d 407, 410 n.4 (3d Cir. 1997). Moreover, courts must not resolve factual disputes or make credibility determinations. Siegel Transfer, Inc., v. Carrier Express, Inc., 54 F.3d 1125, 1127 (3d Cir. 1995).


A. Settlement Agreement and Release with Sun Life

Addressing first the Employer Defendants' motion for summary judgment on all claims based upon Plaintiff's settlement with Sun Life, the Employer Defendants argue that the Settlement Agreement and Release signed by Plaintiff releases all of Plaintiff's claims against the Employer Defendants. (Doc. No. 46 at 21.) Plaintiff responds that the Release only extinguishes Plaintiff's claims against Sun Life. (Doc. No. 47 at 19.) Plaintiff argues that ...

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