United States District Court, E.D. Pennsylvania
P. HART, UNITED STATES MAGISTRATE JUDGE
Crossey has brought this action against the Pennsylvania
State Education Association (“PSEA”) Pension Plan
(“the Plan”), the Plan's Board of Directors
(“the Board”), and individuals who are alleged to
have been directors of the Plan, in connection with action
taken by the Plan to recover an alleged overpayment of
benefits. Defendants seek to dismiss Crossey's complaint
under Fed. R. Civ. Pr. 12(b)(6). As explained below, I will
grant Defendants' motion in part, and deny it in part.
Federal Rule of Civil Procedure 12(b)(6)
Fed. R. Civ. Pr. 12(b)(6), a party may move for the dismissal
of a complaint for “failure to state a claim upon which
relief can be granted.” A court considering a 12(b)(6)
motion will treat as true all well-pleaded facts in the
complaint, which will be construed in the light most
favorable to the plaintiff. Santomenno ex rel. John
Hancock Trust v. John Hancock Life Insurance Co. (USA),
768 F.3d 284, 290 (3d Cir. 2014). In that light, the
complaint will be considered in order to determine whether it
contains “sufficient factual matter, accepted as true,
to state a claim to relief that is plausible on its
face.” Sweda v. University of Pennsylvania,
923 F.3d 320, 325-6 (3d Cir. 2019), citing Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2007).
has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged. Iqbal, supra; Connelly v. Lane
Construction Corp., 809 F.3d 780, 786 (3d Cir. 2016).
Although the plausibility standard is less demanding than a
probability requirement, it does require a pleading to show
more than a sheer possibility that a defendant has acted
unlawfully. Connelly, supra, citing
Iqbal, supra, and Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 556 (2007). The plausibility
determination is a “context-specific task that requires
the reviewing court to draw on its judicial experience and
common sense.” Iqbal, supra, at 679.
the court must therefore take three steps: (1) it must take
note of the elements the plaintiff must plead to state a
claim; (2) it should identify allegations that are not
entitled to the assumption of truth because they are no more
than conclusions; and (3) where there are well-pleaded
factual allegations, the court should assume their veracity
and then determine whether they plausibly give rise to an
entitlement to relief. Connelly, supra, at
787, citing Iqbal, supra, and
Twombly, supra, at 570.
Factual and Procedural Background
Crossey's Employment History
is a retired teacher who was formerly employed by the
Keystone Oaks School District (“the School
District”). Crossey's First Amended Complaint
(“Complaint”) at Â¶ 22. In 2007, Crossey was
elected Vice President of PSEA, which is the primary labor
organization representing teachers and educational staff in
Pennsylvania. Id. at ¶Â¶ 5, 23. At that time, he
became an employee of PSEA, while he remained an employee of
the School District. Id. at Â¶ 24. At this time, PSEA
began reimbursing the School District for the salary it paid
to Crossey, and for his contributions to the Pennsylvania
Public School Employees Retirement System (PSERS”)
attributable to his employment with the school district.
Id. at Â¶ 24.
2011, Crossey was elected PSEA President. Id. at
¶ 30. In November 2013, he retired from the School
District, while remaining employed as the PSEA President. Â¶
42. At that point, Crossey began receiving his full salary
from PSEA. Id. at Exhibit F at 1. He also ceased
accruing service credit under the School District Retirement
System. Id. at Â¶ 43. Crossey retired from PSEA on
August 9, 2016. Id. at Â¶ 69.
October, 2007, Crossey expressed interest in a feature of the
Plan which allows a PSEA employee to purchase up to twelve
additional years of pension plan credit if he has equivalent
service credited under an educational system's retirement
plan. Id. at Â¶ 27; Exhibit A at § 6.2(a). Since
Plan benefits are calculated with reference to years of
service, the purchase of additional “years”
increases the amount of pension benefits to which a
beneficiary is entitled. Id. at Exhibit A, §2.5
(benefit accrual), 4.1 (normal or late
November, 2007, Crossey obtained an estimate of the cost to
purchase twelve years of pension service credit. Id.
at ¶Â¶ 27 and 28. As Crossey has stated in his Complaint,
the cost estimate “considered only those wages
attributable to [his] employment with PSEA.”
Id. at 28. Crossey did not purchase service years at
that time. Id. at Â¶ 29.
June, 2013, however, Crossey completed an application for the
purchase of service credits under the Plan. Id. at
32. The Plan's actuary recalculated the cost to Crossey
of purchasing twelve years of service credit, and forwarded
the calculations to PSEA's Human Resources Department.
Id. at Â¶ 33. Again, the actuary considered only
those wages paid to Crossey attributable to his PSEA
employment. Id. at Â¶ 35.
cost to purchase twelve years of service credit in a lump sum
was calculated as $123, 838.32. Id. at Â¶ 34.
PSEA's Human Resources personnel conveyed these
calculations to Crossey, who agreed to purchase the years of
service at this price. Id. at ¶Â¶ 36, 38. The
purchase was ratified by Todd C. Park, PSEA's Assistant
Executive Director for Human Resources. Id. at Â¶ 39.
Crossey made payment by rolling over funds from his PSERS
retirement account to the Plan in April, 2014. Id.
at ¶Â¶ 47, 48. Oddly, there is no evidence that Crossey
ever asked PSEA how much his monthly pension benefit would be
(with or without the additional twelve years of service
credit) before making this purchase.
March, 2015, Crossey received from the Plan his 2014 Pension
Plan Statement. According to Crossey, it estimated that, as
of July 1, 2014, he would have been entitled to “a
single life annuity in the amount of $3, 160.”
Id. at Â¶ 51. A copy of this document is not attached
to his Complaint as an exhibit, but it does not appear to be
disputed that this calculation took into account not only
wages attributable to Crossey's employment with PSEA, but
also those attributable to his employment with the School
District, which were reimbursed by PSEA. Id.
April, 2015, Crossey requested from PSEA an estimate of his
retirement benefit based on an anticipated August 9, 2016,
retirement date. Id. at Â¶ 52, and Exhibit B. In
December, 2015, he received from the Plan the estimate he had
requested. Id. at Â¶ 60, and Attachment 3 to
Defendants' Motion to Dismiss. Apparently, these
calculations were premised on information sent to the actuary
by PSEA which made no distinction between the wages
attributable to Crossey's PSEA employment, and the wages
attributable to the School District employment. Id.
at ¶Â¶ 57, 59.
April and June, 2015, Crossey communicated several times with
PSEA personnel regarding his retirement options under the
plan. In a document not produced in an exhibit, Crossey was
apparently offered a retirement option under which he could
withdraw his contributions to the payment plan in a lump sum
of $153, 005, and receive the balance of his pension benefit
in payments of $4, 165.03 during his life, with the guarantee
of payments to his wife of $4, 165.03 for 240 months from his
retirement date if he were to die before the 240 months
elapsed. May 4, 2016, email from Crossey to William Gaskins,
attached to Complaint as Exhibit C.
confirmed the details of this offer in a May 4, 2016, email
to William Gaskins, a PSEA human relations employee.
Id. The PSEA employee replied: “Your reading
of the benefit choice under 6c is correct. The $4, 165.03 is
guaranteed to be paid out for 240 months”. June 7,
2016, email from Gaskins to Crossey, attached to Complaint as
Exhibit D. Crossey confirmed the $4, 165.03 amount in June,
2016, with Gaskins' successor, Jerry Oleksiak. June 23,
2016, email from Crossey to Oleksiak, attached to Complaint
as Exhibit E. Crossey and his wife formally elected this
retirement option on July 29, 2016. Complaint at Â¶ 68. The
amount of Crossey's benefits was confirmed to PSEA by the
actuary, and the Board then approved his retirement
application and the amount of his benefit. Id. at
retired as of August 9, 2016. Id. at ¶ 71. His
employee contributions to the Plan were rolled over into an
IRA account on August 17, 2016. Id. From August 17,
2016, to March, 2018, Crossey received a monthly payment
check in the amount of $4, 165.03. Id. at ¶ 72.
The March 15, 2018, Letter from PSEA
March, 2018, Crossey received a letter dated March 15, 2018,
from Todd Park. Letter of March 15, 2018, attached to
Complaint as Exhibit F. Its opening paragraph read:
As a result of an extensive review conducted by PSEA, the
PSEA Pension Directors have determined that there was an
unintentional oversight in communicating and applying cost
options under the Plan related to your purchase of 12 years
of past educational service that were credited in full to
your final pension benefit calculation. As a result of this
oversight, an overpayment situation exists in the benefit you
are receiving associated with the 12 years of purchased
service at the base cost that was charged to you as further
Id. at 1.
letter cited Section 6.2(c) of the Plan, in explaining that,
due to PSEA's “unintentional oversight”:
“The cost of your 12 purchase service years was based
on a partial salary level, however, your benefit associated
with the years purchased included the fully compensated
salary you received from PSEA.” Id. at 2. In
other words, Crossey had purchased his service years at a low
rate - in recognition of the fact that not all of his
compensation had been paid to him by PSEA until he retired
from the School District in November, 2013 - but was
receiving benefits at the higher rate he would have received
if all of his compensation had come from PSEA in 2011, at the
time he became a PSEA employee.
letter continued: “The result is that you have not been
charged enough to sustain your current benefit
payment.” Id. It then set forth options for
correcting the overpayment, which were essentially that he
could (a) start receiving lower payments, with an additional
reduction to pay back the overpayment; or (b) make an
additional payment in order to bring his purchase price in
line with the level of benefit he was receiving. (This latter
choice could be accomplished in two ways, thus the reference
to options 1, 2A and 2B, in the letter).
to the letter, the overpayment totaled $24, 836.30, as of May
14, 2018. Exhibit F at 2. That sum included the 3% interest
which would be charged if repayment was made in a lump sum;
if it was to be paid back over a period of time, interest at
6% would be added to the amount due. Id. The letter
further stated that, if Crossey did not elect a ...