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Knepper v. Volvo Group North America

United States District Court, D. Maryland

September 27, 2019

VOLVO GROUP NORTH AMERICA, et al., Defendants.



         This case arises under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), 29 U.S.C. § 1001 et seq., and primarily concerns a dispute regarding the calculation of retirement benefits. See ECF 12 (“Amended Complaint”). Plaintiff Ronnie Knepper accrued pension benefits over the course of his 22-year employment with Mack Trucks (“Mack”) and its successor, Volvo Group North America (“VGNA” or “Volvo”). Various pension plans were in effect during Knepper's employment.

         Knepper claims that defendants VGNA and The Volvo Group North America Retirement Plan (“VGNA Plan”) have “failed to properly calculate” and pay the pension benefits to which he is entitled. He alleges that, following his retirement on August 1, 2013, VGNA “incorrectly” calculated his “benefits payment amounts and retirement date” and failed to provide him “with all options and timing of benefit payments.” ECF 12, ¶ 79. According to plaintiff, defendants incorrectly used his earnings from 1987 to 1991 to calculate his benefits under a non-union contributory plan in which he participated before he transferred to a union position in 1991.

         Under that plan (hereinafter sometimes called the “Contributory Plan”), Knepper receives a pension benefit of $148.53 per month. Id. ¶ 34. But, Knepper maintains that defendants should have calculated his pension benefit using his highest average wage from 2005 to 2009, after he transferred to the union benefit plan. This would yield a monthly benefit of $294.29 under the Contributory Plan. Id. ¶ 36. In the alternative, plaintiff seeks “equitable estoppel and reformation of the Plans to conform to the Defendants' historical practice” with respect to “similarly situated participants.” Id. at 13 (Prayer for Relief).

         Plaintiff also complains that defendants failed to pay him any benefits under any plan for the first 34 months following his retirement. Id. ¶¶ 62‒67. In addition to recovery of those benefits, plaintiff seeks attorneys' fees and costs. Id. at 13.

         Based on these allegations, the Amended Complaint contains three counts: “Denial of Benefits and Rights” under § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) (Count I); “Breach of Fiduciary Duty” under § 502(a)(3), 29 U.S.C. § 1132(a)(3) (Count II); and Violation of § 502(c), 29 U.S.C. § 1132(c) (Count III). Id. ¶¶ 76-96. Two exhibits are appended to the suit.

         Defendants have moved to dismiss the Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(6) or, in the alternative, for summary judgment under Fed.R.Civ.P. 56. ECF 14. The motion is supported by a memorandum of law (ECF 14-2) (collectively, the “Motion”) and six exhibits (ECF 14-4-14-9). Knepper opposes the Motion. ECF 17 (“Opposition”). He argues that the “Motion is an improper attempt to have the Court make a benefit determination without the benefit of the full administrative record.” Id. at 1. Defendants have replied. ECF 18.

         No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I will grant the Motion in part and deny it in part.

         I. Factual Background[1]

         Knepper, who is “over the age of sixty-five” (ECF 12, ¶ 8), began working for Mack in 1972 and retired from VGNA on August 1, 2013. Knepper was an employee in the engineering department. ECF 12-3, ¶3. During that time, he accrued pension benefits under various pension plans: Mack's optional Contributory Pension Plan, a part of the Mack Non-Bargaining Unit Employees Plan (“NBE Plan”); the Mack/United Auto Workers (“UAW”) Pension Plan (“UAW Plan”); and the Volvo Group North America Retirement Plan, also called the “Cash Balance Plan” (collectively, the “Plans”). ECF 12, ¶¶ 12, 13, 16, 20, 22. The calculation of benefits issue concerns the Contributory Plan, which is part of the NBE Plan, and the UAW Plan.

         When Knepper began his employment with Mack in 1972, he was a “non-union employee.” Id. ¶ 9. From 1972 until approximately June 1991, he “worked in positions that were not in a collective bargaining unit.” Id. ¶ 11. From November 1, 1986 through June 9, 1991, Knepper “participated in the optional” Contributory Plan, which was part of the NBE Plan. Id. ¶¶ 12, 13. He “contributed to the Mack Contributory Plan through payroll deductions.” Id. ¶ 14. Both the “Contributory Plan” and the “Non-Contributory Plan, ” referred to in the Amended Complaint, appear to be part of the NBE Plan.

         In 1991, Knepper's “job at Mack was converted into a bargaining unit position covered by a collective bargaining agreement” between Mack and the UAW. Id. ¶ 15. Therefore, after June 9, 1991, he “became an inactive participant” in the NBE Plan. Id. ¶ 18. Instead, Knepper “became a participant” in the UAW Plan. Id. ¶ 16.

         “As an inactive participant” in the NBE Plan, Knepper “no longer contributed” to the NBE Plan, but “his accumulated funds remained in the plan.” Id. ¶ 19. Moreover, Knepper “began to accrue rights to benefits under the Mack/UAW Plan that were independent from any rights to benefits he had accrued” under the NBE Plan. Id. ¶ 17.

         On or about May 1, 2000, “VGNA purchased Mack, ” and all Mack employees, including Knepper, became VGNA employees. Id. ¶ 21. According to the Amended Complaint, “in or around 2006, the NBE Plan merged into the VGNA Plan.” Id. ¶ 22. As a result of this merger, plaintiff is “now entitled to benefits from the VGNA Plan.” Id. ¶ 23.

         On August 1, 2013, Knepper retired from VGNA, after 22 years of employment with Mack and then VGNA. Id. ¶ 25. He accepted an early retirement incentive bonus from VGNA, provided pursuant to a Memorandum of Understanding (“MOU”) between Mack and the UAW, dated July 2, 2013. Id. ¶¶ 56‒61.

         Knepper claims that at the time of his retirement, “he was given incomplete information as to his available retirement benefits.” Id. ¶ 26. Specifically, he contends that “Volvo representatives failed to give him a breakdown of how Volvo had calculated his benefit.” Id. ¶ 30. According to Knepper, he was not informed of his right to take his benefits as a lump sum payment. ECF 12, ¶¶ 52, 53. He also alleges that Volvo failed to provide him with annual statements from the NBE Plan after 2003 and did not provide him with Plan documents prior to 1994, when requested. Id. ¶¶ 54, 55.

         As a result of the allegedly inaccurate, incomplete, and contradictory information, Knepper “did not sign the paperwork that VGNA and/or Plan representatives told him he had to sign to begin receiving benefits.” Id. ¶ 27. Knepper explains that he refused to sign due to “fear he would arguably be waiving his right to be paid the correct benefit amounts, ” and consequently he has “not received the proper benefits from the VGNA Plan or the predecessor Mack/UAW Plan.” Id. ¶ 28.

         With respect to the NBE Plan, Knepper contends that defendants “failed to correctly calculate” his benefit amount. Id. ¶ 29. He complains that defendants calculated his benefits under the NBE Plan “by using wages prior to 1991 to determine his ‘Highest Final Average Wages.'” Id. ¶ 32. He adds that defendants “incorrectly used” his wages from 1987 to 1991 (the years he contributed to the NBE Plan), to calculate a “monthly benefit of $148.53” with respect to the NBE Plan. Id. ¶ 34. But, according to plaintiff, the “Highest Final Average Wages are the five consecutive years with the highest average wage.” Id. ¶ 33. And, he insists that defendants should have used his overall “highest final average wage for the five years leading up to” his retirement in 2013. Id. ¶ 35. In his view, based on his wages from 2005 to 2009, he is entitled to receive $249.29 per month under the NBE Plan. Id. ¶ 36.

         Central to Knepper's complaint concerning his benefit calculation is his claim of an alleged conflict between two provisions of the 2001 NBE Plan: Section 1.26 and Section 5.7. Knepper asserts that these provisions set forth conflicting instructions as to how his benefit should have been calculated. In Knepper's view, his benefit amount should not have been determined as of 1991, when he became a union employee. Rather, his earnings after 1994 and through 2013 should have been used for averaging.

         The first provision, Section 1.26, provides that the final average compensation is calculated based on income earned after 1994. Id. ¶ 37. It states, ECF 14-6 at 9:

1.26 “Final Average Compensation” shall mean a Participant's Compensation averaged over the five consecutive calendar years after 1994, out of the last 15 (or fewer) consecutive calendar years after 1994, whichever yield the highest average.
If a Participant does not have five consecutive calendar years of Compensation after 1994, his Final Average Compensation shall be based on his actual years of Compensation after 1994.
In no event shall Compensation for any Plan Year beginning before 1994 be used in determining a Participant's Final Average Compensation.

         Article V of the 2001 NBE Plan is titled “Calculation Of Benefits.”[2] Section 5.7 is titled Transfers.” It provides, in part, ECF 14-6 at 25:

(b) Change in Employment Status. The following rules shall apply to a Participant whose employment status changes so that he becomes, or ceases to be, an Employee within the meaning of Section 1.22:
(1) A participant who ceases to be an Employee but continues his employment with an Employer shall have his benefit calculated on the basis of his Years of Credited Service and his Final Average Compensation as of the date on which he ceases to be an Employee.

         And, under Section 1.22, “Employee” is defined as “any employee of an Employer who (a) is not covered by a collective bargaining agreement, unless the collective bargaining agreement specifically provides for participation hereunder . . . .” ECF 14-6 at 8‒9.

         According to plaintiff, when faced with the seemingly conflicting provisions, “Volvo has resolved the conflict between Sections 1.26 and 5.7(b)(1) by applying Section 1.26 and not applying section 5.7(b)(1) to participants that [sic] ceased to be an employee prior to 1994.” Id. ¶ 39. In support of this contention, Knepper cites a 1997 Summary Plan Description (“SPD”) that stated that “eligible earnings after January 1, 1995 will be used to determine your Final Average Earnings when calculating the amount of your benefit.” Id. ¶ 40. Further, the SPD provided that the “Final Average Annual Plan Compensation” for use in calculating benefits would be determined by “the average of your Annual Earnings for the five consecutive plan years of the 15 years immediately preceding your retirement date during which you receive the greatest aggregate amount of compensation.” Id. ¶ 41.

         Knepper contends that he “received benefit estimates” that calculated his benefit using his compensation after he joined the union. Id. ¶¶ 43, 51. In addition, he alleges that Volvo “consistently calculated the benefits of other participants using average wages at the time of retirement.” Id. ¶ 44. This included engineering employees who were similarly situated to Knepper. Id. ¶ 46.

         In support of his position, Knepper submitted as an exhibit to the Amended Complaint the Affidavit of Taylor Searfoss, Mack's Manager of the Pension and Savings Plan Administration for Mack from 1987 to 2009. Id. ¶¶ 48, 49. Searfoss avers, ECF 12-3, ¶¶ 11, 12:

11. From January 1, 1994, through March 31, 2009, the period during which I have personal knowledge of the Merged Plan, pension benefits for Engineering Bargaining Unit Employees under the Contributory Option were calculated using the Plan definition of Final Average Plan Compensation, based on eligible earnings for all of the Employees' years as a Participant under the Contributory Option.
12. All Engineering Employees who were similarly situated to Mr. Knepper and who retired before 2009 had their benefits under the Contributory Option calculated according to the actuary's determinations . . . and Plan administration consistent with those determinations.

         Further, Knepper claims to have received letters from Volvo indicating that “his benefits would commence effective August 1, 2013.” Id. ¶ 62. Volvo “informed” plaintiff “that he could receive his benefits retroactively to August 1, 2013.” Id. ¶ 63. Nevertheless, Volvo “began providing benefits based on a retirement date almost three years later.” Id. ¶ 65. Thus, Knepper claims he is owed “thirty four (34) months of retirement benefits from his Non-Contributory Pension Plan, his Contributory Pension Plan, and the UAW/Mack Plan.” Id. ¶ 67.

         In the course of discussions with Volvo, Knepper was allegedly provided with conflicting and contradictory information. Id. ¶ 68. Based on this inconsistent information, Knepper was “unable to properly determine or reasonably understand the benefits and options to which he is entitled.” Id. ¶ 69. He alleges that Volvo, once made aware of the problem, has “refused to correct, update, or in any way remedy” the conflicting information. Id. ¶ 70. And, Knepper alleges that even though he is receiving benefits from his UAW Plan, the amount is incorrect. Id. ¶¶ 72, 73. He insists that Volvo is aware of the error and has even once corrected his benefit amount, but the benefit amount is still not correct. Id. ¶¶ 74, 75.

         Knepper pursued an internal appeal to VGNA as to both his benefit calculation under the NBE Plan and the benefits he claims he is due from the date of his early retirement to his normal retirement date. Defendants attached to their Motion a letter from VGNA, denying Knepper's claim upon review (“Denial Letter”). EC 14-7.

         In relevant part, VGNA explained that Section 1.26 refers to the calculation of non-contributory benefits, and that in the revision of the 1999 NBE Plan text “all of the substantive provisions governing the Contributory Benefit were consolidated [in the 2001 NBE Plan] in a new Article XIV (see Sections 1.14, 1.15, 5.1, and Article XIV).” ECF 14-7 at 3‒4. The Denial Letter also explained that Knepper could not rely on the terms of the 1997 SPD to alter the terms of the NBE Plan. Id. at 4.

         The Denial Letter acknowledged that Knepper “received estimates reflecting calculations that took his post-transfer earnings into account, ” but asserted that benefit statements “do not qualify as amendments to the plan terms which ultimately determine participants' benefits.” Id. at 5. And, VGNA claimed that Knepper's failure to return the benefits election forms placed him outside of the limited circumstances under which VGNA's “administrative practice permits . . . retroactive commencement” of benefit payments. Id. VGNA asserted that Knepper's “benefits may commence effective June 1, 2016, his Normal Retirement Date. Earlier commencement is prohibited by rules established by this Committee and incorporated by reference in the plan terms.” Id. at 6.

         Knepper attached to the Amended Complaint a letter, from Edward Macey, Assistant General Counsel of the UAW, to defendants, dated October 17, 2017. ECF 12-2. Macey asked Volvo to reopen the request for retroactive benefits, claiming that “the full scope of Mr. Knepper's situation was not presented to the Board when his appeal was considered.” Id. at 2. Moreover, Macey asserted that plaintiff was erroneously denied pension benefits from August 1, 2013, until June 1, 2016. Id. at 1.

         This suit followed. Additional facts are included, infra.

         II. Standard of Review

         As noted, defendant's Motion is styled as a “Motion to Dismiss Or, In the Alternative, For Summary Judgment.” A motion styled in the alternative implicates the court's discretion under Rule 12(d) of the Federal Rules of Civil Procedure. See Kensington Vol. Fire Dep't, Inc. v. Montgomery Cty., 788 F.Supp.2d 431, 436-37 (D. Md. 2011).

         Ordinarily, a court “is not to consider matters outside the pleadings or resolve factual disputes when ruling on a motion to dismiss.” Bosiger v. U.S. Airways, 510 F.3d 442, 450 (4th Cir. 2007). However, under Rule 12(b)(6), a court, in its discretion, may consider matters outside of the pleadings, pursuant to Rule 12(d). If the court does so, “the motion must be treated as one for summary judgment under Rule 56, ” and “[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d). But, when the movant expressly captions its motion “in the alternative” as one for summary judgment, and submits matters outside the pleadings for the court's consideration, the parties are deemed to be on notice that conversion under Rule 12(d) may occur; the court “does not have an obligation to notify parties of the obvious.” Laughlin v. Metro. Wash. Airports Auth., 149 F.3d 253, 261 (4th Cir. 1998).[3]

         A district judge has “complete discretion to determine whether or not to accept the submission of any material beyond the pleadings that is offered in conjunction with a Rule 12(b)(6) motion and rely on it, thereby converting the motion, or to reject it or simply not consider it.” 5 C Wright & Miller, Federal Practice & Procedure § 1366 (3d ed. 2018). This discretion “should be exercised with great caution and attention to the parties' procedural rights.” Id. In general, courts are guided by whether consideration of extraneous material “is likely to facilitate the disposition of the action, ” and “whether discovery prior to the utilization of the summary judgment procedure” is necessary. Id.

         Summary judgment ordinarily is inappropriate “where the parties have not had an opportunity for reasonable discovery.” Kolon Indus., Inc., 637 F.3d at 448-49. As the Fourth Circuit has said, when a district judge rules on a summary judgment motion prior to discovery, it is akin to “for[cing] the non-moving party into a fencing match without a sword or mask.” McCray v. Md. Dep't of Transp., Md. Transit Admin., 741 F.3d 480, 483 (4th Cir. 2014)); accord Putney v. Likin, 656 Fed.Appx. 632, 639 (4th Cir. 2016) (per curiam).

         However, “the party opposing summary judgment ‘cannot complain that summary judgment was granted without discovery unless that party has made an attempt to oppose the motion on the grounds that more time was needed for discovery.'” Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214, 244 (4th Cir. 2002) (quoting Evans v. Techs. Applications & Serv. Co., 80 F.3d 954, 961 (4th Cir. 1996)). To raise adequately the issue that discovery is needed, the nonmovant typically must file an affidavit or declaration pursuant to Rule 56(d) (formerly Rule 56(f)), explaining why, “for specified reasons, it cannot present facts essential to justify its opposition, ” without needed discovery. Fed.R.Civ.P. 56(d); see Harrods, 302 F.3d at 244-45 (discussing affidavit requirement of former Rule 56(f)).

         To justify a denial of summary judgment on the grounds that additional discovery is necessary, the facts identified in a Rule 56 affidavit must be ‘essential to the [the] opposition.'” Scott v. Nuvell Fin. Servs., LLC, 789 F.Supp.2d 637, 641 (D. Md. 2011) (alteration in original) (citation omitted). A nonmoving party's Rule 56(d) request for additional discovery is properly denied “where the additional evidence sought for discovery would not have by itself created a genuine issue of material fact sufficient to defeat summary judgment.” Strag v. Bd. of Trs., Craven Cmty. Coll., 55 F.3d 943, 954 (4th Cir. 1995); see McClure v. Ports, 914 F.3d 866, 874 (4th Cir. 2019); Pisano v. Strach, 743 F.3d 927, 931 (4th Cir. 2014); Amirmokri v. Abraham, 437 F.Supp.2d 414, 420 (D. Md. 2006), aff'd, 266 Fed.Appx. 274 (4th Cir. 2008) (per curiam), cert. denied, 555 U.S. 885 (2008).

         If a nonmoving party believes that further discovery is necessary before consideration of summary judgment, the party who fails to file a Rule 56(d) affidavit does so at his peril, because “‘the failure to file an affidavit…is itself sufficient grounds to reject a claim that the opportunity for discovery was inadequate.'” Harrods, 302 F.3d at 244 (citations omitted). But, the non-moving party's failure to file a Rule 56(d) affidavit cannot obligate a court to issue a summary judgment ruling that is obviously premature.

         Although the Fourth Circuit has placed “‘great weight'” on the Rule 56(d) affidavit, and has said that a mere “‘reference to Rule 56(f) [now Rule 56(d)] and the need for additional discovery in a memorandum of law in opposition to a motion for summary judgment is not an adequate substitute for [an] affidavit, '” the appellate court has “not always insisted” on a Rule 56(d) affidavit. Id. (internal citations omitted). According to the Fourth Circuit, failure to file an affidavit may be excused “if the nonmoving party has adequately informed the district court that the motion is premature and that more discovery is necessary” and the “nonmoving party's objections before the district court ‘served as the functional equivalent of an affidavit.'” Id. at 244-45 (internal citations omitted).

         Knepper has not filed an Affidavit under Rule 56(d). However, in his opposition, he seeks “limited discovery.” ECF 17 at 1. Moreover, he contends that “the entire record of the benefit determination” has not been submitted. Id. at 4. Defendants counter that not only has Knepper failed to file a Rule 56(d) affidavit, but he has failed to “specify what discovery he is entitled to, and to justify its necessity and relevance.” ECF 18 at 12‒13. Because pre-discovery motions for summary judgement are disfavored, I am satisfied that it is appropriate to address the Motion as one to dismiss.

         A defendant may test the legal sufficiency of a complaint by way of a motion to dismiss under Rule 12(b)(6). In re Birmingham, 846 F.3d 88, 92 (4th Cir. 2017); Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016); McBurney v. Cuccinelli, 616 F.3d 393, 408 (4th Cir. 2010), aff'd sub nom., McBurney v. Young, 569 U.S. 221 (2013); Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). A Rule 12(b)(6) motion constitutes an assertion by a defendant that, even if the facts alleged by a plaintiff are true, the complaint fails as a matter of law “to state a claim upon which relief can be granted.”

         Whether a complaint states a claim for relief is assessed by reference to the pleading requirements of Fed.R.Civ.P. 8(a)(2). That rule provides that a complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” The purpose of the rule is to provide the defendants with “fair notice” of the claims and the “grounds” for entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007).

         To survive a motion under Fed.R.Civ.P. 12(b)(6), a complaint must contain facts sufficient to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; see Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009) (citation omitted) (“Our decision in Twombly expounded the pleading standard for ‘all civil actions' . . . .”); see also Willner v. Dimon, 849 F.3d 93, 112 (4th Cir. 2017). But, a plaintiff need not include “detailed factual allegations” in order to satisfy Rule 8(a)(2). Twombly, 550 U.S. at 555. Moreover, federal pleading rules “do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.” Johnson v. City of Shelby, Miss., __U.S.__, 135 S.Ct. 346, 346 (2014) (per curiam).

         Nevertheless, the rule demands more than bald accusations or mere speculation. Twombly, 550 U.S. at 555; see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013). If a complaint provides no more than “labels and conclusions” or “a formulaic recitation of the elements of a cause of action, ” it is insufficient. Twombly, 550 U.S. at 555. Rather, to satisfy the minimal requirements of Rule 8(a)(2), the complaint must set forth “enough factual matter (taken as true) to suggest” a cognizable cause of action, “even if . . . [the] ...

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