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Cohen v. Prudential Ins. Co.

June 14, 2010

ALLAN B. COHEN AND ROCHELLE COHEN, PLAINTIFFS,
v.
PRUDENTIAL INS. CO., ET AL., DEFENDANTS.



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

MEMORANDUM

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 Allan Cohen's retirement benefits. Defendant Prudential has moved for sanctions against counsel for the plaintiffs, John Bobber, and his firm, Mintzer, Sarowitz, Zeris, Ledva & Meyers (docket no. 26). Counsel for the plaintiffs has responded (docket no. 31). The motion is now ripe for disposition.

I. Background

Plaintiff Allan Cohen worked for the Philadelphia Savings Fund Society, later renamed Meritor Bank, from 1961 through 1989. Compl. ¶ 9-13.*fn1 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 the Meritor Pension Plan, naming his wife, plaintiff Rochelle Cohen, as beneficiary. Id. at ¶ 11. Prudential was alleged in the complaint to be the plan administrator for the two group annuity plans in the complaint but the amended complaint alleges it to be a fiduciary to the plan. Compl. at ¶ 12; Am. Compl. at ¶ 12. The Meritor Pension Plan was funded by two Prudential Group Annuities (Nos. GA-5521 and GA 6335). Def.'s Exh. 1 & 2. Once Cohen became an employee of EDS, he also participated in the EDS Retirement Plan. Compl. at ¶ 13-15.

In a letter dated August 11, 1999, EDS offered Cohen early retirement. Compl. at ¶ 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. at ¶ 17. The complaint states 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. at ¶ 18.

The motion for sanctions derives from the original complaint's allegations regarding Cohen's early retirement and communications with Prudential. The original complaint alleged that on October 29, 1999, Cohen received a letter from Prudential Investments stating "that his monthly retirement benefits would be in the amount of $1,435.80 ($1,565.00 less $85.38 Federal Income Tax and $43.82 State Income Tax)." Compl. at ¶ 20. The complaint alleged that "Plaintiffs have relied on the amount of his pension payments as a direct result of EDS['s], Prudential Insurance['s] and/or Prudential Investments['] conduct." Id. at ¶ 33. It states that "[t]his reliance caused Cohen to accept early retirement, to alter his financial planning, and to alter his lifestyle in accordance with the representations made by Defendants." Id. at ¶ 34.

Documents provided by Prudential in its motion for sanctions show that on August 23, 1999, Cohen accepted the early retirement offer. Defs'. Exh. 9-10. In a letter dated September 10, 1999, Prudential correctly calculated the amount of benefits Cohen would receive if he retired early. Defs'. Exh. 6. On September 15, 1999, Cohen then elected an early annuity commencement. Def. Exh. 12.

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. Compl. 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. According to Prudential, the enhancement of the early retirement offer only applied to the EDS Retirement Plan and not Meritor Pension Plan funded by the Prudential Group Annuities. Compl. at ¶ 24.

Plaintiffs filed this lawsuit in November 2008 against Prudential, EDS, the Meritor Pension Plan, and the EDS Retirement Plan. Prudential sought dismissal of Count II of the complaint alleging breach of fiduciary duties (docket no. 7). In an opinion and order dated August 12, 2009 (docket nos. 23 & 24), I dismissed Count II of the complaint because under ERISA a claim for breach of fiduciary duties cannot be maintained in addition to a claim for benefits (Count I) that seeks the same relief. See LaRocca v. Borden, Inc., 276 F.3d 22, 28-29 (1st Cir. 2002).

Prudential seeks sanctions because in its view there was no factual or legal basis to allege that the plaintiffs relied on statements of Prudential incorrectly calculating Cohen's benefits. Particularly, Prudential argues that it was not possible for Cohen to rely on the letter of October 29, 1999, when he elected for an early annuity commencement date on September 15, 1999.

II. Motion for Sanctions

Sanctions for impropers filings are governed by Federal Rule of Civil Procedure 11. Rule 11(b) states that:

By presenting to the court a pleading, written motion, or other paper--whether by signing, filing, submitting, or later advocating it--an attorney or unrepresented party certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:

(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly ...


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