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Cohen v. Prudential Insurance Co.

August 12, 2009


The opinion of the court was delivered by: Pollak, J.


Plaintiffs Allan and Rochelle Cohen have brought suit, pursuant to the Employee Retirement and Income Security Act (ERISA), against defendants Prudential Insurance Co. (Prudential), Electronic Data Systems, Inc. (EDS), and two retirement plans -- the Meritor Pension Plan and the EDS Retirement Plan -- challenging certain alterations to Allen Cohen's retirement benefits. Prudential has filed a motion to dismiss (docket no. 7) Count II of the plaintiffs' complaint. Plaintiffs have responded (docket no. 9), and Prudential has filed a reply (docket no. 22) with leave from the court. Defendants EDS and EDS Retirement Plan have filed a motion to dismiss (docket no. 14) the entire complaint as to them. Plaintiffs have responded (docket no. 16), and EDS and EDS Retirement Plan have filed a reply (docket no. 17) without leave. The two motions to dismiss are ripe for disposition.

I. Background

The following factual recital derives from the complaint. As the court is reviewing defendants' motions to dismiss, I assume the truth of plaintiffs' factual allegations and draw all reasonable factual inferences in plaintiffs' favor. DiGiacomo v. Teamsters Union Trust Fund of Phila., 420 F.3d 220, 222 n. 4 (3d Cir. 2004).

Plaintiff Allen Cohen worked for the Philadelphia Savings Fund Society, later renamed Meritor Bank, from 1961 through 1989. Compl. ¶¶ 9-13. In the spring of 1989, Cohen became an employee of defendant EDS, when that company bought the Meritor division for which Cohen worked. Id. at 13.

While with Meritor, Cohen became a participant in two group annuity plans, GA-5521 and GA-6335, naming his wife, plaintiff Rochelle Cohen, as beneficiary. Id. at 11. Prudential was the plan administrator for the two group annuity plans. Id. at 12. When Cohen became an EDS employee, he became a participant in the EDS Retirement Plan, which was administered by EDS itself. Id. at 14-15.

In an August 11, 1999 letter, EDS offered Cohen early retirement. Id. ¶ 16. The early retirement plan "included an enhancement equal to six times the credits added to his personal pension account between July 1, 1998 and June 30, 1999." Id. ¶ 17. Plaintiffs do not define what account or entity the phrase "personal pension account" refers to among the group of retirement plans described in the complaint. The complaint does state that EDS clarified that the credits amounted to "six years of credit to [Cohen's] age so that he would be awarded a pension amount equivalent to age 63." Id. ¶ 18. After receiving the offer, Cohen requested further information from EDS about the early retirement plan and "what his monthly benefits would be" if he signed up. Id. ¶ 19. At some point after this inquiry, Prudential wrote him a letter stating what his benefits under GA-5521 and GA-6335 would be. Id. ¶ 20, Exh. B.

At a date not specified in the complaint, Cohen opted for early retirement from EDS, and, for some time, he received retirement payments as promised from all defendants. On May 7, 2007, however, Cohen received a letter from Prudential (dated March 16, 2005) stating that "an error occurred in the calculation of your monthly benefit amount" as to GA-5521. Id. at Exh. C. Prudential informed him that (1) his monthly payment of $1565.00 should have been only $1331.00; (2) his monthly payment would be reduced to the lower amount moving forward; and (3) he was responsible for paying back "an overpayment of $21,762.00" for the many months he had received the higher amount. Id. Prudential provided a return envelope for Cohen's prompt repayment of the alleged overage. Id.

Though it is not described in the complaint, Cohen apparently wrote to Prudential about the planned benefit reduction. Id. at Exh. D. (June 1, 2007 letter from Prudential that opens "Thank you for your recent letter to our office..."). In a June 1, 2007 response, Prudential informed Cohen that the EDS early retirement credit of six years, outlined supra, did not apply to GA-5521:

We have reviewed the information you provided with your May 8, 2007 letter. The copy of the letter you provided from EDS dated August 11, 1999 is in regard to the EDS Retirement Plan (Personal Pension Account) only. It is not for benefits under the Meritor Pension Plan under Prudential Group Annuity Contract GA-5521. EDS-employed participants continued to earn age and service credit toward qualifying for early retirement under the Meritor Pension Plan, while employed at EDS.

There is no reference in Prudential's October 29, 1999 letter that Prudential complied and agreed to the EDS Retirement Plan (Personal Pension Account) 6-year addition and increase in benefits.

Id. at Exh. D (italics in original). At the end of June 2007, Prudential reduced Cohen's benefits pursuant to the June 1, 2007 letter. Id. at 25.

Plaintiffs filed this lawsuit in November 2008 against Prudential, EDS, the Meritor Pension Plan, and the EDS Retirement Plan.*fn1 Plaintiffs present two grounds for relief. In Count I of the complaint, plaintiffs seek to recover past and future benefits pursuant to 29 U.S.C. § 1132(a)(1)(B), one of the enforcement provisions of ERISA. In Count II, plaintiffs appear to seek the same relief, but cite § 1132(a) (of which § 1132(a)(1)(B) is a subpart) as the enabling provision. As noted supra, Prudential has filed a motion to dismiss Count II of the complaint, and EDS and the EDS Retirement Plan have filed a separate motion to dismiss the complaint against them in its entirety.

II. The Motion of Prudential to Dismiss Count II

Prudential moves this court, pursuant to Fed. R. Civ. P. 12(b)(6), to dismiss Count II of the complaint as a matter of law because "when a claim for benefits is asserted under § 1132(a)(1)(B), plaintiffs cannot pursue the same claim based on breach of fiduciary duty under § 1132(a)(3)."*fn2 Prudential Memorandum in Support of Motion to Dismiss (Pru. Mem.) at 2.

This issue has been examined, if not conclusively resolved, by the Supreme Court in Varity Corp. v. Howe, 516 U.S. 489 (1996):

(hereinafter the "EDS Plan"). EDS, acting through its managerial employees, was and is a fiduciary with ...

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