United States District Court, D. New Jersey
G. SHERIDAN, U.S.D.J.
action arises out of Defendants' denial of ERISA benefits
to Plaintiffs Walter Dowman and Jonathan Needham, employees
of Defendant Halifax Plantation Golf Management, Inc.
("Halifax"). The review of this ERISA decision is
brought before the Court on three motions:
1. Defendants' Motion for Summary Judgment. (ECF
No. 38), seeks (a) to dismiss Plaintiffs' claims against
Defendants Halifax, Bellemead, and Chubb because they are not
fiduciaries under the plan and (b) to uphold the
Committee's determination as reasonable and based on
substantial evidence, thus dismissing Plaintiffs' claim
against the Committee
2. Plaintiffs' Motion for Partial Summary
Judgment. (ECF No. 40), seeks an order finding that the
Committee's denial of benefits to Plaintiffs was
arbitrary and capricious.
3. Defendants' Motion to Strike Exhibit G to
Plaintiffs' Motion for Partial Summary Judgment and the
Declaration of Jonathan Needham, submitted with
Plaintiffs' Reply Brief (ECF No. 56).
aver that in the nineties they were employees of Bellemead
and/or Chubb, and as such, they should be qualified members
of the Chubb Pension Plan. The relationship among Halifax,
Bellemead and Chubb is explained below.
is a subsidiary of Bellemead, which, in turn, is a subsidiary
of Chubb. The Committee is the current administrator of
Chubb's Pension Plan ("Pension Plan"), Capital
Accumulation Plan ("CCAP"), and Employee Stock
Ownership Plan ("ESOP") (collectively, "the
Plans"). Although Bellemead is a participating
employer in the Plans, Halifax is not. Plaintiffs, relying
upon corporate-veil-piercing arguments, contend they are in
fact employees of Bellemead; not Halifax, and thus are
eligible to participate in the Plans. More specifically,
Plaintiffs contend that Chubb has created "sham"
corporations "to wrongfully exclude employees from
participating in the ERISA benefits plans offered to
[Bellemead] and Chubb employees." (Complaint, ECF No. 1,
at ¶ 8, 43). Specifically, "[Halifax] officers
and/or directors were mainly management level employees of
[Bellemead] or Chubb. Through these officers and directors,
[Bellemead] and Chubb controlled the operations and
management of [Halifax]." (Id. at ¶ 26).
Plaintiffs also claim that "[Bellemead] employees worked
right alongside [Halifax] employees, in some instances
perform[ed] the exact same jobs under the direction and
supervision of [Bellmead] management." (Id. at
¶ 15). Nonetheless, when Plaintiffs applied for
Chubb's Plans, which were available to Bellemead
employees, the plan administrator, citing their status as
Halifax employees, denied their claims. (CD 1105-17).
was incorporated in Florida in 1992 as a wholly-owned
subsidiary of Bellemead. It manages a single golf course in
Ormond Beach, Florida. (Defendant's Statement of Material
Facts, at ¶ 7-8; CD 1020, 1024-26, 1085). Plaintiff
Needham worked at Halifax from April 12 to September 12,
1993, and then returned to the company as a general manager
on July 29, 1996, and he still works there today.
(Id. at ¶¶ 1-3; CD 773-74, 1119).
Plaintiff Dowman has worked at Halifax since April 12, 1993,
and is currently employed as a golf pro. (Id. at
¶¶ 4-5; CD 773-74).
was incorporated in the State of Delaware in 1923 and became
a wholly-owned subsidiary of Chubb INA Holdings, Inc., or its
predecessor in the mid-1970s. (Id. at ¶ 9; CD
1105-06). Bellemead is a real estate management company that
owns and manages multiple properties in the United States
through subsidiary companies. (Def. SOMF ¶ 10; CD 1576).
Chubb owns 100% of the outstanding stock of Bellemead, (Def.
SOMF ¶ 11; CD 1120, 1575), which owns 100% of the
outstanding stock of Halifax, (id. at ¶ 12; CD
1992 to February 1998, Halifax employees, including
Plaintiffs, were paid from Bellemead's payroll.
(Defendant's SOMF, at ¶ 13; CD 1106, 1119, 1127,
1146-47). Bellemead issued W-2 Forms, and paychecks, which
listed Bellemead as the payor and included the Chubb logo.
(Id. at ¶¶ 14-15; CD 1119; 1797-1826).
Plaintiffs' payroll profile history lists their
"Branch" as "Halifax PI Golf and their
"Department and Section" as "Bellemead."
(Defendant's SOMF, at ¶ 16; CD 1150-51, 1751-53).
Despite the payroll records, Dowman was included on the June
27, 1996 Halifax employee list, (Def. SOMF ¶I7; CD 1119,
1152-54); the Halifax "Salary Control Report as of
07/02/97," (Id. at ¶ 18; CD 1119,
1152-54), and the July 23, 1997 Halifax employee list,
(Id. at ¶ 19; CD 1119, 1157-59).
May 8, 1990 meeting, the Committee approved changes to the
Pension Plan, the CCAP, and the ESOP, which had been adopted
in the 1980s. (Def. SOMF, at ¶ 28; CD 1120, 1957-63).
The meeting minutes indicate that "'Affiliated
Employer' shall mean the Employer and any corporation
which is a member of a controlled group of corporations . . .
which includes the Employer; any trade or business (whether
or not incorporated) which is under common control. . . with
the Employer." (PI. SOMF ¶ 2; CD 1958). Employees
of an affiliated employer not participating in the Plans
would "be eligible to be a Participant... in accordance
with Subsection 2.2(A)(i) if such employee was not a
Participant in the Bellemead Development Corporation Employee
Profit Sharing Plan and the Chubb Life Profit Sharing
Plan" (Plaintiffs' SOMF ¶ 3; CD 1960).
to the express terms of the Pension Plan and CCAP, "Any
subsidiary or affiliate may adopt [a] Plan by (1) having its
board of directors adopt [the] Plan, and (2) obtaining the
consent to such adoption by the [Chubb] Board of
Directors." (CD 0006, 0095, 0276). The ESOP provides,
"If any company is or becomes an Affiliate, the board of
Directors may include the Employees of that Affiliate as
eligible for participation in the Plan upon appropriate
action by that Affiliate necessary to adopt the Plan."
parties do not dispute that the Bellemead board of directors
adopted the CCAP in a November 7, 1991 meeting.
(Defendants' SOMF at ¶ 28; Plaintiffs' CSOMF at
¶ 28; CD 1120). At a December 6, 1991 Chubb Board of
Directors meeting, Bellemead adopted the CCAP and Pension
Plan. About six years later, on December 12, 1997,
Chubb's Board of Directors amended the Plans to include
an approved list of participating employers: Federal
Insurance Company, Chubb Custom Insurance Company, Chubb
Custom Market, Inc., and Chubb & Son of Illinois.
(Defendants' SOMF at ¶ 30; CD 1171). The Board did
so "in connection with ... the transfer of employees to
different payroll companies." (CD 1120, 1171;
Defendants' SOMF at ¶ 31). Halifax was never named
as a participating employer under the terms of the Plans.
(Defendants' SOMF at ¶ 28; CD 1120, 1166).
from the record is any indication that Halifax undertook the
steps necessary to adopt the Plans. In early March 1998,
Halifax created its own payroll system, which paid its
employees directly and, the following year, created the
Halifax Plantation 4Ol(k) Profit Sharing Plan & Trust, of
which Plaintiffs are participants. (Defendants' SOMF at
¶¶ 20-21; see 1797-1826, 1902).
2012, Halifax "merge[d] the Halifax Plantation 4Ol(k)
Profit Sharing Plan & Trust. . . into the ADP TotalSource
Retirement Savings Plan." (Defendants' SOMF at
¶ 22; CD 1119, 1160). Under this arrangement, all
"personnel account information and account transaction
history" from employees' plans were transferred to
ADP, and ADP assumed responsibility for critical HR
management processes, including payroll, benefits and policy
administration. (Defendants' SOMF ¶22, 231 CD 1119,
1160-63). The record does not indicate that the new agreement
affected Halifax's responsibility for overseeing the
day-to-day activities of the employees. (Id. at
¶ 25; CD 1119, 1160-63).
2014, Needham was named President of Halifax and learned that
Bellemead employees were entitled to Chubb-sponsored employee
plans that were not available to Halifax employees.
(Complaint at ¶¶ 20-23). On July 1, 2015,
Plaintiffs submitted a claim for benefits with the Committee,
contending that they were "entitled to the rights and
benefits of the [CCAP] or [the ESOP]." (Complaint,
¶ 33; CD 0745; Defendants' SOMF, ¶ 34; CD
0745). According to the ERISA documents, with regard to the
Pension Plan and the CCAP, the Committee had "the
exclusive right to interpret [the Plans] and to decide all
matters arising [t]hereunder, including the right to remedy
ambiguities, inconsistencies or omissions in [the
Plans]." (CD 0055; CD 0140-41; Defendants' SOMF
¶ 36, 37). In replying to Needham's claim, Carolyn
Kennedy, the Chairperson of the Committee, responded with two
letters. The first letter dated July 28, 2015, notified
Plaintiffs' counsel that "as of October 29, 2004,
[ESOP] merged with and became part of CCAP and ceased to
exist as a separate plan." (CD 0795). The second letter,
dated December 29, 2015, denied Plaintiffs' claims for
benefits (hereinafter, "Initial Denial"),
explaining that under both the CCAP and Pension Plan, only
eligible employees and participating employers were entitled
to participate in either plan. (Defendants' SOMF at
¶ 39; CD 760-63).
Initial Denial, the Committee determined that because Halifax
was not a participating employer, Plaintiffs were not
entitled to benefits under either plan. (Id.). In
addition, the letter explained:
Regardless of whether Halifax employees are or were under the
review, supervision and control of [Bellemead] or of Chubb,
or whether they are deemed to be or reclassified as employees
of [Bellemead] or another Affiliate of [Bellemead] or Chubb,
such characterization or reclassification does not create an
entitlement of benefits if Halifax is not a Participating
(CD 762). In the Initial Denial, Kennedy set forth a review
of Plaintiffs' claim, which, in ...