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Steven J. Feinstein, M.D., et al v. Saint Luke's Hospital

October 19, 2011


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


This is a fourteen-count action brought under the Employee Retirement Income Security Act of 1974 ("ERISA"),*fn1 29 U.S.C. § 1001, et seq., by Steven J. Feinstein, M.D., and Albert P. Sarno, M.D., against their former employer Saint Luke‟s Hospital and the administrators of its pension plans. The plaintiffs are seeking injunctive and declaratory relief in addition to monetary compensation for denied and lost pension benefits. They allege various ERISA violations and state law claims. The defendants filed a motion to dismiss the complaint in its entirety, to which the plaintiffs have responded. I held a hearing on the motion. For the following reasons, I will grant the motion in its entirety. Further, I will decline to exercise supplemental jurisdiction over the remaining state law claims.


The plaintiffs are both perinatologists who were employed by Saint Luke‟s Hospital from January 1991 and August 1993, respectively, until late November 2008. See Compl. ¶¶ 14-16. Saint Luke‟s is the sponsor of a qualified pension plan for its employees, and a non-qualified pension plan known as the Executive Retirement Benefit Restoration Plan (the "Restoration Plan" or the "Plan"). The plaintiffs participated in both plans. Id. ¶¶ 17, 20. The Restoration Plan resulted from a change to the Internal Revenue Service Code in 1993 that lowered the maximum salary that a qualified pension plan could recognize when determining an employee‟s pension benefit. Accordingly, Saint Luke‟s adopted a non-qualified pension benefit plan that allowed it to "restore" the amounts that would have been paid into the qualified pension plan but for the new IRS limitations. Id. ¶ 18.

The complaint alleges that in 2008 there had been an employment dispute between the hospital and the physicians. Id. ¶ 21. Attempts were made to resolve the dispute, but allegedly the hospital halted the attempts and abruptly terminated both employees on November 30, 2008. Id. This allegation becomes significant because if the physicians were involuntarily terminated, they would be eligible to receive Restoration Plan benefits. If they voluntarily terminated their employment before the age of 65, those benefits would not be available.*fn3 The defendants allegedly threatened to withhold almost $600,000 of the plaintiffs‟ pension benefits. Id. ¶¶ 24-25. The complaint also alleges that the defendants failed to comply with the plaintiffs‟ employment agreements regarding termination notice and procedures. Id. ¶ 22.

The complaint further alleges that the defendants had a systematic practice of transferring and merging benefits accrued under the Restoration Plan into the qualified plan, a policy upon which the plaintiffs allegedly relied. Id. ¶¶ 27-28. The defendants instead treated the benefits accrued under each plan as separate, allegedly misleading the plaintiffs and breaching the fiduciary duty the defendants owed to them as administrators of the pension plans. Id. ¶¶ 27, 35-37.

The plaintiffs requested information and documents related to the Restoration Plan on several occasions and claim that the defendants did not provide them. Id. ¶¶ 40-41. The defendants treated these requests for documents as a claim for benefits under the Restoration Plan. Id. ¶ 42.


A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure examines the legal sufficiency of a complaint. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The factual allegations must be sufficient to make the claim for relief more than just speculative. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). In determining whether to grant a motion to dismiss, a federal court must construe the complaint liberally, accept all factual allegations in the complaint as true, and draw all reasonable inferences in favor of the plaintiff. Id.; see also D.P. Enters. v. Bucks County Cmty. Coll., 725 F.2d 943, 944 (3d Cir. 1984).

The Federal Rules of Civil Procedure do not require a plaintiff to plead in detail all of the facts upon which he bases his claim. Conley, 355 U.S. at 47. Rather, the Rules require a Ashort and plain statement@ of the claim that will give the defendant fair notice of the plaintiff=s claim and the grounds upon which it rests. Id. The Acomplaint must allege facts suggestive of [the proscribed] conduct.@ Twombly, 550 U.S. at 564. Neither Abald assertions@ nor Avague and conclusory allegations@ are accepted as true. See Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3d Cir. 1997); Sterling v. Southeastern Pennsylvania Transp. Auth., 897 F. Supp. 893 (E.D. Pa. 1995). A complaint, however, Amust satisfy . . . the simple requirements of Rule 8(a)." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 513 (2002). Following the Supreme Court=s decision in Twombly, Rule 8(a) now requires that the facts in a complaint plausibly suggest that the pleader is entitled to relief. Accordingly, to state a claim, plaintiffs must state enough factual matter, taken as true, to suggest the required element, which does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008).


A. Extraneous Documents

The defendants have attached to their motion to dismiss several exhibits which the plaintiffs contend should not be considered here. These documents include emails and letters between counsel, and a copy of the Restoration Plan. The plaintiffs do not challenge the authenticity of these exhibits. A district court may consider certain narrowly defined types of material without converting the motion to dismiss to a summary judgment motion, including items that are integral to or explicitly relied upon in the complaint. In re Rockefeller Center Properties, Inc. Securities Litig., 184 F.3d 280, 287 (3d Cir. 1999). A court may also consider an "undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff‟s claims are based on the document." Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). This prevents a plaintiff with a deficient claim from surviving a motion to dismiss by simply not attaching a dispositive document. Id. When a plaintiff is aware of a document prior to filing a complaint, the concern over his lack of notice is eliminated, and the document can be considered. Id. at 1196-1197. As the Third Circuit Court of Appeals explained:

The reason that a court must convert a motion to dismiss to a summary judgment motion if it considers extraneous evidence submitted by the defense is to afford the plaintiff an opportunity to respond. When a complaint relies on a document, however, the plaintiff obviously is on notice of the contents of the document, and the need for a chance to refute evidence is greatly diminished.

Id. Moreover, a court may consider Adocuments whose contents are alleged in the complaint and whose authenticity no party questions, but which are not physically attached to the pleading.@ Pryor v. Nat=l Coll. Athletic Ass=n, 288 F.3d 548, 560 (3d Cir. 2002).

Here, the plaintiffs allege:

When an employment dispute arose between the parties in 2008, they entered into negotiations in an attempt to resolve the dispute under terms agreeable to both sides. However, Saint Luke‟s abruptly ended negotiations to resolve the employment dispute before the parties came to an agreement on the terms and conditions of the proposed solution, and terminated Plaintiffs‟ employment with Saint Luke‟s on November 30, 2008.

See Compl. ¶ 21. All remaining facts, allegations, and defenses stem from this alleged employment dispute between the parties. It is the foundation of this action. All of the plaintiffs‟ claims are based on their alleged understanding that Saint Luke‟s abruptly terminated their employment after negotiations failed to resolve a dispute. It is curious that, although the plaintiffs attached twenty exhibits to their complaint, not one of those exhibits provides any background or explanation of this central event of involuntary termination. In fact, the majority of the plaintiffs‟ attached exhibits are dated well after November 30, 2008, the date of the alleged termination.

Thus, the plaintiffs allege an employment dispute, subsequent negotiations, and an involuntary termination, and none of their attached exhibits provide a context for these allegations. The defendants, on the other hand, attached to their motion several documents which provide a background of the dispute the plaintiffs allege, and memorialize the parties‟ negotiations. Attached as Exhibit A to the motion is an email chain between counsel for the defendants and counsel for the plaintiffs, all with dates in June and July 2008. Of particular interest is an email sent to plaintiffs‟ counsel dated June 17, 2008, by the defendants‟ Associate General Counsel that states,

Your clients have expressed repeatedly their desire to terminate their employment with [Saint Luke's] and enter into private practice. . . . However, a participant who voluntarily terminates his/her employment before the age of 65 forfeits all rights under the plan. Since your clients have chosen to terminate their employment with [Saint Luke‟s], they will not be entitled to any benefits -- and we are unable to make any payments -- under the plan.

See Document #6-3 at 3 (emphasis added). Also, attached as Exhibit B to the motion is a copy of a letter dated September 12, 2008 from counsel for the plaintiffs to the defendants‟ Associate General Counsel, which states:

(2) Pursuant to our previous agreement of June 17, 2008, both parties mutually agreed that Drs. Sarno and Feinstein would continue their employment with [Saint Luke‟s] until November 30, 2008 and Drs. Sarno and Feinstein would be permitted to cease their employment with [Saint Luke‟s] on November 30, 2008 provided they provided written notice by November 1, 2008. Pursuant to the agreement, please allow this correspondence to serve as ...

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