estopped from denying him his contractual medical benefits.
1. The Applicable Law
Section 1132 of Title 29 of the United States Code provides
that a civil action may be brought in a United States district
court by a participant or beneficiary to recover benefits due
him or to clarify his rights to future benefits under a plan.
29 U.S.C. § 1132(a)(1)(B),(e)(1); see Jameson v. Bethlehem
Steel Corp. Pension Plan etc., 765 F.2d 49, 51 (3d Cir. 1985),
cert. denied, 479 U.S. 1089, 107 S.Ct. 1297, 94 L.Ed.2d 153
(1987). Assuming that plaintiff is a participant or beneficiary
under defendant's group hospitalization plan,*fn4
plaintiff's claim for future medical benefits under the plan
clearly falls within the scope of ERISA's jurisdictional
Section 514(a) of ERISA, which became effective on January 1,
1975, provides that provisions of ERISA "shall supersede any
and all state laws insofar as they may now or hereafter relate
to any employee benefit plan." 29 U.S.C. § 1144(a). ERISA's
substantive provisions, however, do not supersede state law as
to events that occurred before January 1, 1975.*fn5
In Jameson, the Third Circuit held that section 514(b) is a
direction as to choice of laws and is intended to ensure that
ERISA is not applied retroactively. 765 F.2d at 51. Thus, once
jurisdiction has attached, section 514(b) is meant only to
inform the court that ERISA's substantive provisions are not to
be employed to determine the law at the time of the incidents
occurring before January 1, 1975. The reference made to state
law does not deny jurisdiction to the federal courts. Id. at
52; but see Menhorn v. Firestone Tire & Rubber Co.,
738 F.2d 1496 (9th Cir. 1984) (employee's action against employer for
denying employee benefits under retirement plan brought
subsequent to effective date of ERISA was insufficient to give
district court jurisdiction over the action where the action
was based on events occurring before ERISA's effective date).
The employment agreement entered into between plaintiff and USM
in 1970 contains a choice of law provision requiring that the
agreement be construed in accordance with and governed by the
laws of the Commonwealth of Massachusetts. Henry Deposition
Exhibit 1 ¶ 8. Therefore, in addressing the events that
occurred prior to January 1, 1975, the Court will apply
2. Eligibility Under the Plan
In its moving papers, defendant argues that plaintiff cannot
prevail in this action as a matter of law because plaintiff
cannot establish that he meets the eligibility requirements for
coverage under defendant's retiree group health insurance plan
and cannot establish any other basis for obtaining such
The parties do not dispute that eligibility for retiree medical
benefits requires retirement from active service. Moreover, the
parties do not contest that an employee could retire from
defendant at age sixty
with ten years of service (early retirement), at age sixty-five
(normal retirement), or after age sixty-five (deferred
retirement). Henry Deposition Exhibit 7.
Here, plaintiff terminated his employment with defendant in
1975 at age 46. Plaintiff does not meet the eligibility
requirement of retirement from active service; therefore,
plaintiff is not entitled to retiree medical benefits under the
express terms of the health insurance plan.
3. The Contract Claims
Plaintiff claims that he was promised implicitly retiree
medical insurance benefits as part of his employment contract
with defendant USM.*fn6
The employment contract between plaintiff and USM provides that
plaintiff was to receive benefits "equal to or more favorable
than" those previously supplied by defendant RSA. There is no
evidence, however, that under the terms of the RSA benefit
plan, one who left the employ of the company before drawing his
pension could become eligible for retiree medical benefits upon
reaching retirement age. To the contrary, plaintiff has
testified that it was his understanding that if he terminated
his employment with RSA before retirement, he "would get a
proportionate share, whatever [his] share was, of the assets of
that corporation. . . . If [he] stayed to retirement, [he
would] get the retirement." Henry Deposition at 23-24.
Thus, neither the written employment contract nor plaintiff's
testimony offers any evidence to establish that plaintiff was
entitled to retiree medical benefits regardless of his status
upon terminating his employment with RSA. Therefore, plaintiff
is not entitled to such benefits pursuant to the contractual
clause providing that plaintiff was to receive benefits equal
to those awarded by RSA. Moreover, no evidence has been
presented to the Court suggesting that RSA's successor provided
retiree medical benefits to former employees receiving vested
pension benefits regardless of their status upon leaving
defendant's employ. Plaintiff, therefore, cannot recover such
benefits by relying on the "more favorable than" provision of
the contractual clause.
Plaintiff also maintains that it was his understanding that he
and Sherman would be treated equally by USM. Plaintiff claims
that he arrived at this belief because the employment contracts
between plaintiff and USM and Sherman and USM essentially were
identical. Plaintiff also claims that he believed that he and
Sherman would be treated equally based upon discussions between
plaintiff and Mr. Sampson, USM's Industrial Relations Director.
Henry Deposition at 24-25.
First, the employment contracts with USM do not provide retiree
medical benefits for an employee who terminates his employment
with defendant prior to becoming eligible for retirement. That
both plaintiff and Sherman had essentially identical employment
contracts with USM is of no consequence.
Second, plaintiff's oral agreement with Mr. Sampson that
plaintiff and Sherman would be treated equally was never
memorialized in writing. The law of contracts is well settled
that a party to a contract cannot rely on extrinsic parol
evidence to circumvent the clear and unambiguous terms of that
contract. Atwood v. City of Boston, 310 Mass. 70,
37 N.E.2d 131 (1941); Goldband v. Commissioner of Banks, 245 Mass. 143,
139 N.E. 834 (1923). The agreement between plaintiff and
defendant USM is clear:
7. This Agreement sets forth the entire understanding between
the parties with reference to the subject matter hereof
and may not be modified or terminated and no requirement of or
breach of this Agreement can be waived orally or otherwise than
by a writing signed by Employee and by [the company] acting by
its President or Assistant Vice-President.
Henry Deposition Exhibit 1. Therefore, plaintiff cannot rely on
his oral discussions with Mr. Sampson to contradict the terms
of his agreement with USM.
Based upon the language of the written agreement entered into
by plaintiff and USM, plaintiff is not entitled to receive
retiree medical benefits.
4. The Estoppel Claim
Plaintiff claims that as a result of his belief that retiree
medical benefits would be provided to him by defendant as part
of his retirement package, he did not obtain retiree medical
coverage for himself. Plaintiff further claims that because he
was aware that Sherman received retiree medical benefits after
retiring, plaintiff had no reason to doubt that he, too, would
receive retiree medical benefits upon reaching age sixty.
Plaintiff asserts that, therefore, defendant is equitably
estopped from denying to plaintiff medical insurance benefits.
The conduct upon which plaintiff relies in support of his
estoppel claim is the receipt of retiree medical benefits by
Sherman. Sherman began receiving such benefits in September,
1979. Because the act of receiving the benefits occurred after
January 1, 1975, the provisions of ERISA apply. See 29 U.S.C.
§ 1144(a), (b); Jameson, 765 F.2d at 51. Therefore, in ruling
on the merits of plaintiff's estoppel claim, the Court must
look to the substantive provisions of ERISA.
Under Third Circuit precedents, a claim of equitable estoppel
is not available in ERISA cases absent "extraordinary
circumstances." Gridley v. Cleveland Pneumatic Co.,
924 F.2d 1310, 1319 (3d Cir.), cert. denied, ___ U.S. ___, 111 S.Ct.
2856, 115 L.Ed.2d 1023 (1991); see Hozier v. Midwest
Fasteners, Inc., 908 F.2d 1155 (3d Cir. 1990).
In Hozier, the Third Circuit noted that an employer's
post-formation promise to increase benefits, whether explicit
and oral or implicit through custom, cannot alter the scope of
entitlements created by a plan that must, under governing law,
be established and maintained pursuant to a written instrument
under section 402(a)(1) of ERISA.*fn7 Hozier, 908 F.2d at
1165 n. 10. The Hozier court further noted that the most that
the plaintiffs could allege was that defendants' practice of
paying benefits to certain employees after the consolidation
had been completed constituted an implied representation to all
other employees that such benefits would continue to be
provided, notwithstanding the scope of the original plan. 908
F.2d at 1165 n. 10. The court concluded that under those
circumstances, a claim of estoppel could not be reconciled with
section 402(a)(1) of ERISA. Id. The Hozier court cautioned,
however, that estoppel may be available in ERISA cases
involving extraordinary circumstances. Id.; see Gridley v.
Cleveland Pneumatic Co., 924 F.2d 1310 (3d Cir. 1991) (holding
that the distribution of an inaccurate summary plan description
cannot provide a basis for equitable estoppel absent
extraordinary circumstances); see also Labus, 740 F. Supp. at
1065 (where plaintiff's claim of estoppel, which was deemed
preempted by ERISA, was dismissed for failing to set forth
facts by which defendants could be liable to plaintiff under
In Rosen v. Hotel & Restaurant Employees & Bartenders Union,
637 F.2d 592 (3d Cir.), cert. denied, 454 U.S. 898, 102 S.Ct.
398, 70 L.Ed.2d 213 (1981), the court concluded that the case
before it involved "extraordinary circumstances." In that case,
defendant, trustee of the pension fund, advised plaintiff
employee that plaintiff's
pension was in jeopardy due to his employer's failure to
contribute to the fund. Plaintiff then made out a check for the
total amount of his employer's arrearages, and the trustee
deposited the money into the pension fund's account. The court
concluded that the trustee's acceptance of the check on behalf
of the fund estopped defendants from asserting that the
plaintiff's payment of arrearages did not entitle him to
credited service under the plan. Id. at 597.
In arriving at its decision, the Rosen court reasoned that
plaintiff was justified in believing that his payment had
brought his pension up to date and that plaintiff's detrimental
reliance on the trustees actions was reasonable under the
circumstances. Rosen, 637 F.2d at 597. The court held that
plaintiff's reliance was based on more than mere assurances
made by the trustee and classified the case before it as one
involving "extraordinary circumstances." Id. at 598.
To prevail under the doctrine of equitable estoppel, a party
must show a material representation, reasonable reliance upon
that representation, and damage resulting from that
representation. Gridley, 924 F.2d at 1319 (3d Cir. 1991);
Pane v. RCA Corp., 868 F.2d 631, 638 (3d Cir. 1989).
In this case, plaintiff has testified that defendant never
specifically told plaintiff that he would receive a benefit for
which he was not eligible. Henry Deposition at 31-33. Moreover,
plaintiff points to no specific representation made by
defendant promising retiree medical insurance benefits in the
event that he did not retire from active service. Plaintiff
claims only that the receipt of retiree medical benefits by
Sherman led plaintiff to believe that he, too, would receive
retiree medical benefits. The Court finds that defendant made
no misrepresentation that could have given rise to such a
Even if the Court deems the granting of retiree medical
benefits to Sherman a material representation by defendant,
plaintiff's reliance on that act was not reasonable under the
circumstances. In Rosen, the court determined that the
plaintiff's reliance was based on more than mere assurances
made by the defendants. 637 F.2d at 598. In that case, the
plaintiff was initially approached by the defendant trustee who
discussed with plaintiff the threat to his pension by his
employer's failure to contribute and gave the plaintiff a
tabulation of the employer's arrearages upon which the
plaintiff relied in reimbursing the pension fund for the amount
of his employer's arrearages. Id. at 597.
Here, plaintiff concedes that defendant never specifically told
plaintiff that he would receive retiree medical insurance
benefits, regardless of his eligibility, when he began
receiving his vested pension benefits. Moreover, although
plaintiff inquired as to his eligibility for a vested pension
in the event his employment terminated prior to his having
vested in the plan, there is no suggestion from the facts of
this case that plaintiff ever inquired as to whether he would
be entitled to medical benefits under those same circumstances.
In this case, plaintiff's detrimental reliance on defendant's
acts clearly was unreasonable.
Plaintiff's claim fails to satisfy even the ordinary elements
of the doctrine of equitable estoppel. The circumstances in
this case, therefore, cannot rise to the level of
extraordinary. Absent the existence of extraordinary
circumstances, plaintiff's estoppel claim cannot survive.
The parties concede that there exists no genuine issue of
material fact. Plaintiff is not entitled to retiree medical
insurance benefits under the express terms of the health plan.
Moreover, neither the written employment agreement between
plaintiff and USM not plaintiff's testimony offers any evidence
to establish that plaintiff was entitled to such benefits
regardless of his eligibility, upon receiving his vested
pension. Furthermore, because the Third Circuit has ruled that
claims of estoppel are not available in ERISA actions absent
extraordinary circumstances, plaintiff's estoppel claim cannot
lie. Thus, defendant has demonstrated that it is entitled to
judgment as a matter of law.
For the reasons set forth above, the Court will grant
defendant's motion for summary judgment and will deny
plaintiff's cross-motion for summary judgment. An appropriate
Order shall issue.