On Appeal From The United States District Court for the Eastern District of Pennsylvania (D.C. Civil Action No. 04-cv-1618) District Judge: Honorable J. Curtis Joyner.
The opinion of the court was delivered by: Lourie, Circuit Judge
Argued September 27, 2005
BEFORE: ALITO, AMBRO, and LOURIE,*fn1 Circuit Judges.
Richard Ranke and other similarly situated individuals in this case are former employees of Eastman Kodak Company ("Kodak"), and current or former employees of SanofiSynthelabo Inc. ("Sanofi"). They appeal from the decision of the United States District Court for the Eastern District of Pennsylvania dismissing their complaint for breach of fiduciary duty under the Employee Retirement Income Security Act of 1974 ("ERISA"). Ranke v. Sanofi-Synthelabo, Inc., No. 04-1618 (E.D. Pa. Nov. 3, 2004) ("Decision"). Because their breach of fiduciary duty claim was time-barred under ERISA § 413, 29 U.S.C. § 1113, the District Court dismissed the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) ("Rule 12(b)(6)"). We affirm.
Because the District Court granted appellees Kodak's and Sanofi's motions to dismiss under Rule 12(b)(6), we take the factual background of this case from the complaint and accept all allegations contained therein as true. ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994).
Appellants are all former employees of Kodak's Eastman Pharmaceutical Division and were participants in the Kodak Retirement Income Plan ("KRIP"). In 1988, Kodak began the process of merging its Eastman Pharmaceutical Division with Sterling Winthrop, Inc. ("Sterling"), a wholly-owned subsidiary of Kodak. According to the complaint, human resources personnel at both Kodak and Sterling told appellants that they would receive pension benefits under both the Kodak and Sterling pension plans if they decided to accept transfer of employment to Sterling. Kodak also allegedly informed appellants that it would use their final average salaries from Sterling to calculate the pension benefits. In addition, appellants were allegedly told that their total years of service with Kodak and with Sterling would be used to determine their early retirement eligibility. Relying on these representations, appellants say that they accepted employment with Sterling instead of remaining at Kodak.
In 1994, Sanofi acquired certain "portions" of Sterling through an asset purchase agreement. Appellants were selected to become employees of Sanofi. As an incentive to change employment again, human resources personnel at Sanofi allegedly advised appellants that their retirement benefits would remain undiminished for a period of two years after changing employment. Sanofi is also said to have informed appellants that during this period, for purposes of calculating benefits, they would continue to accrue years of service based upon their original Kodak start dates. Relying on these representations, appellants say that they accepted employment with Sanofi and thus became participants in the Sanofi-Winthrop Retirement Income Plan ("SWRIP").
In their complaint, appellants identified three communications from Kodak and Sanofi regarding their pension plans that took place after their 1994 change of employment. First, Sanofi purportedly informed appellants in 1996 that the SWRIP was being merged with the pension plans of other Sanofi companies to become the Sanofi Group Pension Plan, which ultimately became the Sanofi-Synthelabo Group Pension Plan ("SSGP"). Secondly, appellants allege that, sometime between 1995 and 2000, Kodak informed them that the IRS "same desk rule" prohibited appellants from combining their Kodak and Sanofi pension plans. Lastly, sometime between 1998 and 2000, Sanofi allegedly told certain appellants that discussions were ongoing, but that they could expect to have their KRIP and SWRIP pension plans combined into a single pension plan of Sanofi. Until the latter part of 2002, when appellants received their retirement election forms from Kodak, there were no other allegations of contact between appellants and appellees regarding pension plans.
The Kodak Lump Sum/Annuity Election form that was distributed to appellants in 2002 contained estimates of appellants' pension benefits. In calculating the benefits, Kodak only considered appellants' total years of service with that company. Moreover, Kodak's calculation did not include appellants' pending or final average salaries at Sanofi, but instead was based only on their final salaries at Sterling in 1994. Soon thereafter, upon questioning Sanofi, appellants also discovered that their Sanofi pension benefits would be calculated based only on their years of service at Sterling and Sanofi, but would not include their time at Kodak. According to appellants, under the current calculations, the value of their pension benefits are lower than expected and they will lose certain early retirement opportunities.
Based on these allegations, appellants filed their complaint in April 2004. In July 2004, Kodak and Sanofi filed their respective motions to dismiss under Rule 12(b)(6). On November 3, 2004, the District Court granted the motions to dismiss in their entirety. This appeal ensued.
In granting the motions to dismiss, the District Court initially noted that appellants failed to state a claim for breach of fiduciary duty with respect to the Sanofi and Kodak pension plans. According to the Court, a pension plan cannot be liable as a fiduciary under ERISA § 409(a), 29 U.S.C. § 1109(a), since it is not an individual, corporation, or other association. Decision, slip op. at 5. That issue has not been appealed here.
As for Kodak and Sanofi in their corporate capacities, the District Court held that appellants' claims, as pled, were time-barred under ERISA § 413, 29 U.S.C. § 1113. Specifically, the Court relied on § 413(1)(A), which required appellants to have commenced suit within six years of "the date of the last action which constituted a part of the breach or violation." According to the Court, appellants' complaint contained no allegations of breach of fiduciary duty or detrimental reliance on a breach of fiduciary duty occurring after April 1998, six years prior to the complaint's filing date. Id., slip op. at 6. The only acts relevant to a breach of fiduciary duty that the Court could identify from the complaint were appellees' purported misrepresentations regarding the pension benefits and appellants' act of reliance in changing their jobs. All these events, however, occurred no later than April 1998. Id.
In concluding that the complaint was not timely filed, the District Court rejected appellants' contention that the complaint alleged that appellants made "important financial and general life choices" in detrimental reliance on appellees' misrepresentations, and that that detrimental reliance occurred within six years of the complaint's filing date. Moreover, the Court found the detrimental reliance allegation to be "vague and unspecified," and insufficient to withstand a motion to dismiss. Id., slip op. at 9. The Court also rejected appellants' assertion that Kodak and Sanofi had a continuing duty to furnish accurate information regarding the plans, and that they breached that duty after April 1998. According to the Court, "this [continuing] duty has never been used . . . to extend the ERISA statute of limitations in cases alleging affirmative misrepresentations." Id., slip op. at 10 (citations omitted).
The District Court further concluded that the "fraud or concealment" exception of § 413, which would have extended appellants' time for filing their complaint beyond April 1998, was inapplicable. For the "fraud or concealment" exception to have applied, the Court required allegations that Kodak and Sanofi each took "affirmative steps beyond the breach itself to hide its breach of fiduciary duty." Id., slip op. at 7. It noted that, other than the alleged misrepresentations in 1988 and 1994, appellants identified only three other communications with appellees: the name change of Sanofi's pension plan, Kodak's representations regarding the IRS "same desk rule," and Sanofi's representations regarding the possible combination of the KRIP and SSGP pensions. None of these actions, however, in the Court's view, constituted "fraud or concealment." Id.
In the alternative, even if appellants had alleged sufficient facts to bring their claim within the six-year statute of limitations, the District Court ruled that it would still dismiss the complaint because appellants did not seek the "appropriate equitable relief" authorized by ERISA § 502(a)(3)(B), 29 U.S.C. § 1132(a)(3)(B).*fn2 Id., slip op. at 13. Citing Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002), the Court determined that appellants sought legal, not equitable, relief. Id., slip op. at 16. Specifically, according to the Court, appellants' request for reinstatement of benefits calculated using formulas from "prior to transfer of employment," while couched as an equitable "make-whole" remedy, was closer in nature to a legal remedy not authorized by § 502(a)(3)(B). Id. Moreover, the Court noted that ...