MEMORANDUM OPINION AND ORDER OF COURT
TERRENCE McVERRY, District Judge
Pending now before the Court is MOTION OF DEFENDANTS MORGAN STANLEY SMITH BARNEY F/D/B/A CITIGROUP GLOBAL MARKETS, INC., TIMOTHY P. MILLER AND KENNETH M. ROSS TO DISMISS PLAINTIFF'S COMPLAINT PURSUANT TO FED.R.CIV.P. 12(b)(6), with brief in support (Doc. Nos. 8 and 9), and PLAINTIFF'S BRIEF IN OPPOSITION TO DEFENDANTS' COLLECTIVE RULE 12(b)(6) MOTION TO DISMISS (Doc. No. 11). Defendants filed a reply brief (Doc. No. 12), in which, inter alia, they requested oral argument. Argument on the motion to dismiss was heard on August 17, 2010. Both parties presented their positions skillfully and effectively. The motion is now ripe for disposition.
Background
The following facts are taken from Plaintiff's Complaint.
In a Fed.R.Civ.P. 12(b)(6) Motion to Dismiss, all factual allegations are viewed in the light most favorable to the non-moving party. Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (citations omitted).
In general, the counts within Plaintiff's Complaint stem from what can be best described as the deterioration of a previous romantic relationship between Plaintiff and Defendant Kaczmarek and workplace disharmony between Plaintiff and Defendant Ross. According to Plaintiff, "[p]rior to the Spring of 2005, [Plaintiff] Thompson and Kaczmarek were romantically involved. [Plaintiff] ended the relationship and, as a result, Kaczmarek became intent on embarrassing [Plaintiff] in revenge." Doc. No. 1 at ¶ 11. At some point shortly after the conclusion of the relationship, Defendant Kaczmarek allegedly informed Defendant Ross that she had Plaintiff's personal laptop computer in her possession, and that the computer contained embarrassing information about Plaintiff. Id. at 12. In the late summer/early fall of 2006, Defendant Ross and Defendant Miller each allegedly contacted Defendant Kaczmarek in order to obtain the laptop, which Kaczmarek subsequently provided to Miller "on the understanding that Miller intended to have other Citi employees access, search, and extract data from the computer's hard-drive with the desired result of obtaining embarrassing information." Id. at ¶ 18.
According to the Complaint, Defendant Kaczmarek initially declined to provide the laptop computer to Defendant Ross, at which point Ross directed Miller to request the laptop from Kaczmarek. In response to Miller's request, Kaczmarek agreed to provide the computer. Doc No. 1 at ¶¶ 25-26.
A civil action was initiated by Plaintiff against Defendant Ross in 2007 in the Court of Common Pleas of Allegheny County at Case No. GD 07-018537. That action involves a number of defamation per se claims against Ross for his "repeated defamatory and false assertions to [Plaintiff's] friends and co-workers. The specific defamatory comments included that [Plaintiff] was having sex with prostitutes and homosexuals, that he was a carrier of sexually transmitted diseases as a consequence, and that he infected another person, a co-worker, with his disease . . ." Doc. No. 1 at ¶ 10. Plaintiff believes that the laptop computer was provided to some unidentified Citi employee, who was able to "access, search, and extract from [Plaintiff's] computer's hard-drive the data containing the e-mails." Id. at ¶ 32.
In the instant Complaint, Plaintiff alleges violations of the Stored Communications Act ("SCA"), 18 U.S.C. § 2701 et seq., against each Defendant at counts I-IV, violations of the Pennsylvania Stored Communications Act, 18 Pa.C.S. § 5741 et seq., against each Defendant at counts V-VII, claims of the common law tort of invasion of his privacy by intrusion into seclusion against all Defendants at counts IX-XII, and the common law tort of civil conspiracy against all Defendants at count XIII. Plaintiff brings counts I-IV under the Court's original jurisdiction pursuant to 28 U.S.C. § 1331, and counts V-XIII under the Court's supplemental jurisdiction pursuant to 28 U.S.C. § 1367. See Doc. No. 1 at ¶¶ 6-7.
Standard of Review
Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss an action for failure to state a claim upon which relief can be granted. With a motion to dismiss, "`courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.'" Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008)). In other words, a complaint survives a motion to dismiss if it contains sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
In making this determination, a court must engage in a two part analysis. Ashcroft v. Iqbal, ___ U.S. ___, ___ ___, 129 S.Ct. 1937, 1949-50, 173 L.Ed.2d 868 (2009); Fowler, 578 F.3d at 210-11. First, the court must separate factual allegations from legal conclusions. Iqbal, 129 S.Ct. at 1949. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Second, the court must determine whether the factual allegations are sufficient to show that the plaintiff has a "plausible claim for relief." Id. at 1950. Determining plausibility is a "context-specific task" that requires the court to "draw on its judicial experience and common sense." Id. A complaint cannot survive where a court can only infer that a claim is merely possible rather than plausible. See id.
Analysis
A. Counts I-III and V-VII: The Stored Communications Act and parallel state law claims
As noted above, Plaintiff alleges four counts under the federal Stored Communications Act, 18 U.S.C. §§ 2701 et seq., and four counts under the Stored Communications provision of the Pennsylvania Wiretapping Act, 18 Pa.C.S. §§ 5741 et seq., singly directing each count against a respective Defendant. Doc. No. 1. Generally speaking, Title II to the Electronic Communications Privacy Act of 1986 ("ECPA"), also known as the Stored Wire and Electronic Communications and Transactional Records Access (the "Stored Communications Act" or "SCA"), 18 U.S.C. §§ 2701- 2711, bars unauthorized access to stored electronic communications. Section 2701 includes in relevant part that whoever:
(1) intentionally accesses without authorization a facility through which an electronic communication service is provided; or
(2) intentionally exceeds an authorization to access that facility;
and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system. . . ."
Id. § 2701(a). In addition to criminal penalties, the SCA provides a civil cause of action for "any
provider of electronic communication service, subscriber, or other person aggrieved by any violation of this chapter."
Id. § 2707(a). Because the language of the Pennsylvania statute mirrors that of the federal Stored Communications Act, it is interpreted in the same way, and the analysis and conclusions herein apply equally to this state law claim.
See Fraser v. Nationwide Mutual Insurance Co., 352 F.3d 107, 114 at n. 9 (3d Cir. 2003). The Court notes that none of the parties addressed the two statutes separately.
With their motion to dismiss, Defendants Morgan Stanley Smith Barney f/d/b/a Citigroup Global Markets, Inc. ("Citi"), Kenneth M. Ross, and Timothy P. Miller challenge the notion that the facts pled within the Complaint afford Plaintiff a basis for relief under either the federal or the state Stored Communications Act. In response, Plaintiff argues that his laptop served as his conduit to the electronic communication services such as Yahoo!, America Online, and Stargate.net, the services from which he originally received the messages subsequently downloaded and saved to his laptop. Doc. No. 11. As such, his laptop was a "facility covered by the SCA" and that Defendants were little more than "electronic trespassers." Id.
With this term, Plaintiff is invoking language describing the general purpose of the Stored Communications Act to "create a cause of action against computer hackers (e.g. electronic trespassers)." Doc. No. 11 (quoting Ideal Aerosmith, Inc. v. Acutronic USA, Inc., 2007 WL 439447 (WD Pa. 2007) (internal quotations omitted).
Given the relatively straight forward factual scenario, the question before the Court is whether the unauthorized access of previously received electronic mail messages ("e-mail") that had been downloaded by the recipient and saved to the hard drive of his personal laptop computer violates the Stored Communications Act.
The legal structure to Plaintiff's position is clear: 1) that e-mail messages are considered to be electronic communications protected by the SCA; 2) that his laptop computer was his means by which he accessed his e-mail messages, and was therefore, "a facility through which an electronic communication service is provided"; 3) that the e-mail messages were downloaded and saved to the laptop hard drive for the purpose of backup protection for the message, and 4) that Defendants accessed the data without proper authority or permission, hence violating the SCA and the parallel Pennsylvania statute. See, e.g., Doc. No. 1 at ¶¶ 36, 40, 44, 48, 52, and 54; see also, Doc. No. 11 at 5-7.
For their part, Defendants accept for the purpose of the motion that e-mail messages are included within the definition of an electronic communication that is protected under the SCA, and that Plaintiff did not provide them with authority to access the data saved to the laptop hard drive. See generally, Doc. Nos. 8 9. Nevertheless, Defendants argue that the conduct described within the Complaint "does not relate to the improper access of material held in electronic storage by an electronic communication service", and, therefore, the SCA does not apply. Doc. No. 9 at 2. Essentially, Defendants' motion to dismiss challenges what they characterize as the legal conclusion on the part of Plaintiff that the e-mail messages downloaded and saved to his hard drive were in "electronic storage" for the purpose of falling under the protection of the SCA.
Congress enacted the relevant provision of the Stored Communication Act to protect privacy interests in personal and proprietary information from the mounting threat of computer hackers "deliberately gaining access to, and sometimes tampering with, electronic or wire communications" by means of electronic trespass. See S.Rep. No. 99-541, at 3 (1986), reprinted in 1986 U.S.C.C.A.N. 3555 at 3557. Consistent with that overall purpose, the conduct proscribed by § 2701 is two-fold. Initially, it makes it unlawful to access a facility through which electronic communications service is provided, and thereby further obtains, alters, or prevents authorized access of an electronic communication "while it is in electronic storage in such system." 18 U.S.C. § 2701(a). It is this second element that is controlling here. It is not enough for the electronic communication data to have been accessed in any format on any computer, in order to run afoul of the SCA, the data must have been accessed or obtained while it was within the electronic storage of the electronic communications service itself.
For the reasons that follow, the facts pled in the Complaint do not allege a violation of the SCA because the e-mail data that was allegedly accessed was not data in "electronic storage" as that term is defined within the statute. 28 U.S.C. § 2510(17)(B). The SCA defines electronic storage as either a) "any temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof", and b) "any storage of such communication by an electronic communications service for purposes of backup protection of such communication." 18 U.S.C. § 2510(17); see also 18 U.S.C. § 2711(1) (providing that terms defined in § 2510 apply to Title II of ECPA).
As to the first part of the definition, Plaintiff does not allege that the e-mail messages were in temporary or intermediate storage incidental to the transmission thereof. To the contrary, the Complaint alleges that the data was accessed while it was stored on the hard drive, as opposed to during the course of, or incidental to, transmission. See, e.g., Doc. No. 1 at ¶ 31; see also, Doc. No. 11 at 7 ("In this case, the e-mails were in backup storage on Thompson's hard drive.") Accordingly, the first part of the definition of "electronic storage" is inapplicable to the facts alleged in the Complaint. Considering the second part of the definition of electronic storage, the plain language of subsection (B) extends SCA protection to e-mails received by the intended recipient in those instances where they remain stored by an electronic communication service. The Court notes that the language of this portion of the definition includes two prepositional phrases, namely "of such communication" and "by an electronic communication service." The interpretive maxim noscitur a sociis suggests "different clauses of the same sentence" should be presumed "to embrace the subject matter of the sentence." See Graham County Soil and Water Conservation District v. U.S. ex rel. Wilson, ___ U.S. ___, 130 S.Ct. 1396, 1406 (Mar. 30, 2010). It stands to reason, naturally, that in order to fit within the second part of the definition of protected electronic storage, the electronic communication in question must have been stored by the electronic communication service itself, as opposed to the user of the service.
While the phrase "such communication" in § 2510(17)(B) refers to "wire or electronic communications" as mentioned in (17)(A) — it does not also include the requirement that the electronic communications be "incidental to the electronic transmission thereof." If that were the case, there would be no need to write them as two separate meanings.
Turning to the facts as alleged in the Complaint, the information which Plaintiff claims was illegally accessed by Defendants was retrieved from storage within the hard drive of the laptop and not from the electronic communication service provider's own storage. Clearly Plaintiff has not alleged that the Defendants accessed e-mail communications directly from any kind of storage operated and maintained by the internet service providers ("ISPs"), more specifically America Online, Yahoo!, and Stargate.net, with which Plaintiff had e-mail accounts and received e-mail services. Such a scenario, one in which e-mail was accessed directly from the ISP server by a defendant after it was originally received and read by a plaintiff, was addressed by a U.S. District Court in the eastern district of Michigan, see Bailey v. Bailey, Civ.A. No. 07-11672, 2008 WL 324156 (E.D.Mich. 2008), a decision that provides guidance here. In Bailey, the court noted that the plain language of the SCA includes "e-mails received by the intended recipient e-mail traffic received by the intended recipient where they remain stored by an electronic communication service." Bailey, 2008 WL 324156 at *6. In so doing, the Bailey court incorporated reasoning from the Court of Appeals for the Ninth Circuit regarding use of the term "backup protection" within the definition of "electronic storage":
There is no dispute that messages remaining on NetGate's server after delivery are stored `by an electronic communication service' within the meaning of
18 U.S.C. § 2510(17)(B). The only issue, then, is whether the messages are stored `for purposes of backup protection.'
18 U.S.C. § 2510(17)(B). We think that, within the ordinary meaning of those terms, they are.
An obvious purpose for storing a message on an ISP's server after delivery is to provide a second copy of the message in the event that the user needs to download it again — if, for example, the message is accidentally erased from the user's own computer.
The ISP copy of the message functions as a `backup' for the user. Notably, nothing in the Act requires that the backup protection be for the benefit of the ISP rather than the user. Storage under these circumstances thus literally falls within the statutory definition.
Theofel v. Farey-Jones, 359 F.3d 1066, 1075 (9
th Cir. 2003) (emphasis added). In other words, e-mail messages stored by an electronic communication service (in
Theofel it was an ISP called NetGate) for backup purposes, is included in the SCA's definition of electronic storage. The district court in
Bailey went on to note,
"[h]owever, as a point of clarification, Stored Communications Act protection does not extend to emails and messages stored only on Plaintiff's personal computer."
Id. at * 6 (emphasis added);
see also, In re Doubleclick, Inc., 154 F.Supp.2d 497, 511 (S.D.N.Y. 2001)
("cookies" resident on plaintiffs' computers do not fall into § 2510(17)(B) because plaintiffs are not "electronic communication service" providers.) This Court agrees that e-mail messages downloaded and stored on, and subsequently accessed solely from, a user's personal computer does not fit within the SCA's definition of electronic storage. To hold otherwise would require this Court to simply ignore the statutory language that qualifies "storage of such communication" with the conjunctive condition "by an electronic communication service", which the Court will not do.
In re Doubleclick was a civil class action claim alleging, inter alia, that an internet company violated the SCA when it accessed "cookies" that had been downloaded from the internet and stored on the hard drives of the personal computers of individual users. In re Doubleclick, 154 F.Supp.2d 497. In this context, "cookies" is a term defined as "computer programs commonly used by Web sites to store useful information such as usernames, passwords, and preferences, making it easier for users to access Web pages in an efficient manner." Id. at 154 F.Supp. 2d at 502-503.
Plaintiff argues that his laptop computer should be considered a protected "facility" under the terms of the statute, and that, as a result, accessing the facility (laptop) to retrieve an electronic communication without his permission violates the SCA. In support, Plaintiff cites the decisions in Fraser, infra., and Markert v. Becker Technical Staffing, Inc., 2010 U.S.Dist. LEXIS 44828, * 18-19 (ED Pa. 2010), for the proposition that the SCA applies to downloaded e-mail communications that are accessed after having been received and saved by the recipient. While the Court recognizes a degree of logic which underpins this argument, it finds that Plaintiff is conflating the concept of "backup storage" to extend the protection of the SCA. In Fraser, an insurance company provided an e-mail account to plaintiff employee, and conducted a search of plaintiff's e-mail on its own main file server when it suspected plaintiff of disloyal behavior. In the course of that search, Nationwide apparently accessed e-mail data that had previously been received and read by plaintiff, had not been deleted by plaintiff after receipt or downloaded or saved elsewhere, and remained stored on the Nationwide server. The district court in that case granted summary judgment in favor of Nationwide, holding that the SCA did not apply to the e-mail data in question, reasoning that the transmissions were neither in "temporary, intermediate storage" nor in "backup protection." The district court held that "retrieval of a message from post-transmission storage is not covered by the Stored Communications Act. The Act provides protection only for messages while they are in the course of transmission. The facts of Fraser are that Nationwide retrieved Fraser's e-mail from storage after the e-mail had already been sent and received by the recipient. Nationwide acquired Fraser's e-mail from post-transmission storage." Fraser v. Nationwide Mutual Insurance Co., 135 F.Supp.2d 623, 636 (ED Pa. 2001). The Court of Appeals for the Third Circuit held:
We agree that Fraser's e-mail was not in temporary, intermediate storage. But to us it seems questionable that the transmissions were not in backup storage — a term that neither the statute nor the legislative history defines. Therefore, while we affirm the District Court, we do so through a different analytical path, assuming without deciding that the e-mail in question was in backup storage.
Fraser, 352 F.3d at 114. With respect to the meaning of the phrase "backup protection",
Fraser is not inconsistent with the Ninth Circuit's reasoning in
Theofel, although it did not go so far as to affirmatively hold that the e-mail in question was in backup storage. However,
Fraser does nothing to change the statutory requirement that the electronic communication must be in storage held by an electronic communication service provider. By the same token, characterizing his laptop as a "facility" likewise does not render the Plaintiff or his laptop computer "an electronic communications service" for the purpose of satisfying the SCA definition of electronic storage.
In sum, Plaintiff's claims under the Stored Communications Act and the parallel Pennsylvania statute fail to state a claim upon which relief can be granted, and Defendants' motion to dismiss as to these counts will be granted.
B. Death of Defendant Kaczmarek
Within their brief in support of the motion to dismiss, Defendants Citi, Miller, and Ross, attached the obituary for Defendant Kaczmarek, who apparently died on April 18, 2010. Doc. No. 9 at attachment A. The Court notes that while no party has filed a separate Suggestion of Death regarding this development, such as that found within the Federal Rules of Civil Procedure at Form 9, the attachment filed with the brief in support of the moving Defendant's motion accomplished the same. That brief was served on Plaintiff on June 14, 2010. Since the initiation of the action, the docket reflects that Plaintiff has failed to effectuate service upon Defendant Kaczmarek, which is not altogether surprising in light of the close proximity in time between the reported date of death and the dates upon which the other Defendants were served. In light of that lack of service, coupled with no party having moved for the substitution of the estate of Defendant Kaczmarek within 90 days of the service of the declaration of her death, Defendant Kaczmarek will be dismissed from this action pursuant to Fed.R.Civ.P. 25(a).
C. Counts XI and XIII: Common law tort claims against Defendant Citi
In Count XI, Plaintiff alleges the common law tort of invasion of his privacy by way of an unreasonable intrusion into his seclusion against Defendant Citi. Doc. No. 1 at ¶¶ 90-93. Pennsylvania law recognizes four torts under the umbrella of invasion of privacy: "[1] unreasonable intrusion upon the seclusion of another; [2] appropriation of another's name or likeness; [3] unreasonable publicity given to another's private life; and [4] publicity that unreasonably places the other in a false light before the public." See Burger v. Blair Med. Assocs., Inc., 600 Pa. 194, 964 A.2d 374, 376-77 (2009) ( citing Restatement (Second) of Torts §§ 652B-E (1977)). To state a claim for intrusion upon seclusion, a plaintiff must allege conduct which demonstrates "an intentional intrusion upon the seclusion of their private concerns which was substantial and highly offensive to a reasonable person, and aver sufficient facts to establish that the information disclosed would have caused mental suffering, shame or humiliation to a person of ordinary sensibilities." Pro Golf Mfg., Inc. v. Tribune Review Newspaper Co., 570 Pa. 242, 809 A.2d 243, 247 (2002) (citations omitted). The extent to which Plaintiff alleges conduct on the part of Defendant Citi is limited to "providing the necessary program through which Miller and Ross accessed Thompson's private and personal e-mail." Doc. No. 1 at ¶ 92. Even accepting this conduct as true, the conduct alone does not suggest the requisite intent on the part of Defendant Citi to invade Plaintiff's privacy. The fact that an asset owned by Defendant Citi was allegedly used by other Defendants to, as Plaintiff alleges, unreasonably intrude upon his seclusion, does not itself implicate Defendant Citi in the same intentional conduct. For that reason, Defendant Citi's motion to dismiss Count XI will be granted.
In Count XIII, Defendant alleges the common law tort of civil conspiracy against all Defendants, including Defendant Citi. Defendants move to dismiss this count on the basis that Plaintiff has failed to sufficiently allege specific factual matter to state a claim for relief that is plausible on its face. See Doc. No. 89 at pp. 16-18. In response, Plaintiff argues that the facts, as pled, sufficiently allege a conspiracy among the Defendants.
The Court considers the question of whether Plaintiff has sufficiently pled a civil conspiracy with respect to Defendant Citi. To state a claim for civil conspiracy, (1) the persons must combine with a common purpose to do an unlawful act or to do a lawful act by unlawful means or unlawful purpose, (2) an overt act in furtherance of the common purpose has occurred, and (3) the plaintiff has incurred actual legal damage. Weaver v. Franklin County, 918 A.2d 194, 202 (Pa. Cmwlth. Ct., 2007) (citing Brown v. Blaine, 833 A.2d 1166, 1173 n. 16 (Pa. Cmwlth. Ct. 2003)). A party that asserts a claim of civil conspiracy is required to aver "material facts which will either directly or inferentially establish elements of conspiracy." Id.
Plaintiff's claim as alleged against Defendant Citi fails because Plaintiff has not averred sufficient material facts that establish Citi's participation within the required elements of a conspiracy. Viewing the allegations in the complaint in the light most favorable to the Plaintiff, he has sufficiently alleged certain overt acts, such as the various interactions between and among Defendants Kaczmarek, Miller, and Ross, that could have been done in furtherance of an unlawful act, such as conspiring against Plaintiff. He has failed, however, to allege facts that demonstrate that Defendant Citi acted in concert or agreement with any of the other Defendants.
Courts in Pennsylvania require that plaintiffs who allege civil conspiracy must plead some fact, "such as meetings, conferences, telephone calls or joint signatures" on relevant forms, or "allege facts inferring conspiratorial conduct." Petula v. Mellody, 588 A.2d 103, 107 (Pa. Cmwlth. Ct. 1991). In Petula, the court held that the plaintiff had failed to state a civil conspiracy claim where, although he alleged parallel conduct between defendants, he did not allege any facts from which one could infer conspiratorial conduct. Id.; see also, Landau v. Western Pennsylvania Nat. Bank, 282 A.2d 335, 339 (Pa. 1971).
As noted herein, Plaintiff has alleged interpersonal dysfunction between himself and Defendant Ross, as well as between himself and Defendant Kaczmarek, both relationships which, he alleges, inspired a motivation by the individual Defendants to embarrass and humiliate him. To that end, Plaintiff alleges that Defendants Miller and Ross worked together to obtain the laptop computer from Kaczmarek. Devoid in the factual scenario pled, however, is any allegation of fact from which one could infer conspiratorial conduct on the part of Defendant Citi. Averring "upon information and belief" that some unidentified individual utilized what Plaintiff believes to be software or other computer resource owned by Defendant Citi in order to access the stored data from his laptop is little more than a threadbare conspiracy cause of action with no factual corroboration that would suffice to state a claim. See Doc. No. 1 at ¶¶ 31-32. For this reason, Defendant Citi's motion to dismiss Count XIII will be granted, and, accordingly, Defendant Citi will be dismissed from this civil action as no claims remain as to it.
D. Remaining Counts: Common law tort claims against remaining Defendants
The claims remaining against the individual Defendants allege the common law tort of invasion of privacy by intrusion upon seclusion at Counts IX-XII, and a common law civil conspiracy at Count XIII. The decision whether to exercise supplemental jurisdiction over state law claims is committed to the discretion of district courts. 28 U.S.C. § 1367. A court may decline such jurisdiction if it dismisses all claims over which it possessed original jurisdiction. 28 U.S.C. § 1367(c)(3). In fact, in the Third Circuit, "where the claim over which the district court has original jurisdiction is dismissed before trial, the district court must decline to decide the pendent state claims unless considerations of judicial economy, convenience, and fairness to the parties provide an affirmative justification for doing so." Borough of W. Mifflin v. Lancaster, 45 F.3d 780, 788 (3d Cir. 1995).
Given the fact that the claims over which this Court has original jurisdiction will be dismissed, the Court will decline to exercise supplemental jurisdiction over the remaining pendent state claims against the individual Defendants. To that end, the Court finds that considerations of judicial economy, convenience, and fairness to the parties do not provide an affirmative justification for doing so. On the contrary, such considerations negate the justification for exercising jurisdiction, as any continued consideration by this Court of the claims alleging a civil conspiracy between Defendants Miller and Ross to embarrass and humiliate Plaintiff, as well as the claims of the invasion of privacy by intrusion into seclusion discovered by Plaintiff in the course of his continuing defamation action in state court, contravenes the concepts of judicial economy, convenience, and fairness to the parties. For this reason, the remaining counts will be dismissed without prejudice.
An appropriate order follows.
ORDER OF COURT
AND NOW, this 30th day of September, 2010, in accordance with the foregoing Memorandum Opinion it is hereby ORDERED, ADJUDGED and DECREED that the Motion to Dismiss Plaintiff's Complaint filed by Defendants Morgan Stanley Smith Barney f/d/b/a Citigroup Global Markets, Inc., Kenneth M. Ross, and Timothy P. Miller is:
a.
GRANTED with respect to counts I-VIII, XI and XII;
b.
GRANTED as to count XIII with respect to Defendant Morgan Stanley Smith Barney f/d/b/a Citigroup Global Markets, Inc.;
c.
GRANTED as to count XIII with respect to Defendant Kaczmarek; and
d.
GRANTED without prejudice with respect to all other counts.
The Clerk shall docket this case closed.
at Chemineer was merely temporary. Defendants further assert that if Cole ever became
permanently disabled, it was only after her employment was terminated. Accordingly, they argue, her depression never permanently prevented her "from satisfactorily performing [her] usual duties."
Id. It is worth mentioning, briefly, that Defendants' position is not derived from an analysis of Cole's medical evidence, which is discussed next. Rather, Defendants' argument is based entirely on the SSA
Administrative Law Judge's findings of the dates during which Cole was disabled for social security purposes.
2. Plaintiff's Evidence
Plaintiff first requested disability benefits under the Plan on May 21, 2008. The only evidence or information included with Plaintiff's initial claim was a copy of an award letter from the SSA, explaining the disability benefits Cole was to receive. A.R. at 52-55. Robbins Myers rejected her initial claim, on the grounds that the SSA had determined that she was disabled over a "closed period" between November of 2004 and November of 2005, and that a new period of disability began on November 15, 2007.See id. at 62-63. Robbins Myers wrote that the "closed" period of disability did not entitle Cole to any benefits, because it did not demonstrate that Plaintiff was "permanently" disabled as required by the Plan, an issue the Court will explain in greater detail in the following sections. As to the second period of disability found by the SSA, the denial letter stated the following:
The award letter from the Social Security Administration enclosed with your letter provides that your client's disability for purposes of Social Security began on November 15, 2007. As you know, your clients employment with Chemineer, Inc., terminated on November 14, 2007. Accordingly, because her disability for purposes of social security commenced
after her termination of employment, Ms. Cole was not "Disabled" under the Plan before her employment terminated and thus is not entitled to Disability Retirement benefits.
Id. at 63 (emphasis added). In the same letter, Robbins Myers informed Cole of her right to appeal the rejection, and to submit additional evidence to support her
claim.
Id. Plaintiff appealed the denial of benefits on August 13, 2008. This time she included a variety of reports, letters, and medical records from various mental health professionals, attesting to her struggles with depression. She disputed the Plan's finding that she was only temporarily disabled, contending that she had been depressed for many years while she was working for Chemineer.
See id. at 65 ("The symptoms and conditions surrounding Ms. Coles' [sic] disability have been ongoing for many years but she continued to work through her disability while undergoing treatment.").
Of particular note are three letters from Dr. Payne, Cole's treating psychologist, which were included in her appeal. In a letter to Dr. Gardner, her treating physician, dated April 12, 2007, Dr. Payne offered his assessment of Cole's mental state at that time:
While these are not the only medical documents contained in her appeal, the findings of Dr. Payne are highlighted herein because they deal with Cole's mental health following her return to Chemineer on November 27, 2005, after her leave of absence had ended, but before Chemineer terminated her employment on November 14, 2007. This time period seems most relevant in light of the manner Defendants went about reaching the decision to deny benefits. However, the Court has also considered the report of Dr. Jones from February 2005, which is relevant in that her conclusions are similar to Dr. Payne's subsequent findings, and help to demonstrate the long standing nature of Cole's depression. See A.R. at 93-100. Because the reports of both doctors are considered, the Court refers to Cole's "psychologists," in the plural, throughout the remainder of its discussion.
On March 20, 2007, Connie Cole returned to my office for psychotherapy. At the time that I had seen her last she was off work due to a significant medical problem. She has a history of work-related injuries.
It is my impression that she is extremely anxious and fearful now about the
possibility of being re-injured and severely physically limited. To be specific, she fears that she will become wheelchair bound.
I had Connie complete the Beck Anxiety inventory, and she scored in the severely anxious range. I also had her complete the Beck Depression Inventory-II, and she scored in the severely depressed range. She informs me that she is taking Cymbalta, Prempro, Valtrex, Ritalin, and Vallium.
* * *
It is my impression that Connie has a major depression of long-standing duration. In addition she also has an anxiety disorder NOS. Her depression and anxiety have worsened, and it appears that they have been exacerbated by her physical injuries and the resultant changes in her physical condition and life style.
Id. at 69.
In a second letter to Dr. Gardner, dated June 1, 2007, Dr. Payne described his additional findings and recounted the results of other tests he had had Cole complete:
I last saw Connie today, and I found that she was quite depressed and tearful. She seemed to be under a lot of stress.
Earlier in May I had her complete the MMPI-2.
I have enclosed a copy of that for your perusal. It appears to me that the results are valid and reveal that Connie is having very significant psychological distress. Her depression is certainly noted as is her sensitivity, tendency to repress feelings, and her general concern with her health.
I question her ability to return to work at this time.
Id. at 70.
Finally, in a letter dated August 6, 2008, after Cole had been terminated and had begun the administrative claims process, Dr. Payne summarized his opinions as to when Cole became severely depressed:
Connie Cole has suffered from a significant major depressive disorder since at least 2005. In August 2005 I wrote a letter stating that she was suffering from a major depression and was taking psychotropic medications. At that time I further opined that her major depression had been exacerbated by a work related injury from 1997. In April 2007 I completed a form for Unum Provident stated [sic] that she was at that time psychological [sic] unable to tolerate the stress of competitive employment . . . I completed a prehearing social security inventory detailing her depression and anxiety.
MMPI-2 results in early 2007 demonstrated the continuing presence of strong depression. I am currently seeing her, and she continues to have depression and significant anxiety.
I maintain that she is still unable to be employed due to psychological status, and this status is not the result of losing her job and did not arise after her loss of employment.
Id. at 68 (emphasis added).
The documented opinions of Cole's psychologists are the only medical evidence contained in the Administrative Record. While the Plan reserved the right to require Cole to submit to an exam by a medical professional of the Plan Administrator's choosing, the Administrator did not exercise that right. See A.R. at 144.
3. Defendants' Evaluation of Plaintiff's Claims
In rendering its one-page decision on Cole's appeal, Robbins Myers did not discuss any of the medical reports and letters from her psychologists, other than to state that "[n]othing submitted on appeal addresses the provisions of the Plan and its administration that were the basis for the initial denial." A.R. at 103. It also reiterated that it "has been the Plan's and the Committee's longstanding practice to rely on a determination of disability by the Social Security Administration when determining whether a participant is disabled under the Plan."Id.
In order for a plan's decision to be reasonable, that is, neither arbitrary nor capricious, it must normally "rel[y] on medical evidence that assesse[s] [a claimant's] ability to perform job-related tasks." Elliott, 473 F.3d at 617; accord Bennett v. Kemper Nat'l Servs., 514 F.3d 547, 556 (6th Cir. 2008). The fact that Robbins Myers did not discuss Cole's medical evidence at all is part of the reason the Magistrate Judge described its final decision as "read[ing] more like a conclusion than a principled, reasoned decision." Doc. # 15 at 10 (citing Bennett, 514 F.3d at 556).
By way of both explanation and justification, Defendants quote the Supreme Court's decision in Black Decker Disability Plan v. Nord, 538 U.S. 822, 834 (2003), for the following proposition:
Plan administrators . . . may not
arbitrarily refuse to credit a claimant's reliable evidence, including the opinions of a treating physician. . . . [although] courts have no warrant to require administrators automatically to accord special weight to the opinions of a claimant's physician;
nor may courts impose on plan administrators a discrete burden of explanation when they credit reliable evidence that conflicts with a treating physician's evaluation.
Doc. #18 at 5 (emphasis in Defendants' memorandum, but not in cited case). The "reliable evidence" that Defendants would have the Court credit is the SSA's determination of Cole's disability dates, the only evidence mentioned or discussed in the final decision. Defendants acknowledge as much, writing: "Here, R M's decision to rely upon the SSA's determination of Ms. Cole's disability date as opposed to the medical evidence submitted by Ms. Cole was not arbitrary, and was not subject to any requirement that R M specifically explain that decision." Doc. #18 at 11 (emphasis added). Defendants reiterate several times that, per the Plan's definition, a disability must permanently prevent an employee from satisfactorily performing his or her job, and that her SSA award indicates that Cole's impairment was never permanent, while she was employed at Chemineer. Defendants also state that a disability that arises after a claimant is terminated does not qualify for Plan benefits. Defendants' theory of the case can thus be broken down into the following propositions: 1) because the SSA determined Cole's disability dates included a "closed period" between November 22, 2004 to November 27, 2005, and a "new period" beginning on November 15, 2007, the Plan's Administrators did not need to conduct their own inquiry into if or when Cole became "disabled," and 2) because the "closed period" was, by its nature, not permanent, and the "new period" of disability began after her termination, Cole was never "permanently prevented from satisfactorily performing her usual duties," while she was employed by Chemineer, and thus never met the definition of disability contained in the Plan. The Court finds Defendants' theory problematic for several reasons.
A memorandum prepared by Robbins Myers' attorneys at Thompson Hine further clarifies Defendants' reasoning process in denying Cole's appeal. In pertinent part it reads: "Issue 1 . . . The first issue before the Committee is whether the definition of Disability permits the Plan Administrator to make a determination of disability solely on the basis of a finding by the Social Security Administration." Under "Issue 2" the memorandum explains that "if the Committee finds that the Plan Administrator may rely exclusively on the determination of the Social Security Administration, it must then determine whether Ms. Cole's disability `arose' after her termination." A.R. at 101.
At the outset, Defendants' appeal to Black Decker is inapposite, when that decision is read in context. In that case, the Supreme Court rejected the so-called "treating physician rule" as espoused by the Ninth Circuit, which would have required ERISA plan administrators to afford special weight to the medical opinions of a claimant's treating physicians, as opposed to the contrary opinion of an independent medical expert hired by the administrator. Black Decker, 538 U.S. at 832 ("But the assumption that the opinions of a treating physician warrant greater credit than the opinions of plan consultants may make scant sense when, for example, the relationship between the claimant and the treating physician has been of short duration, or when a specialist engaged by the plan has expertise the treating physician lacks."). Thus, the Sixth Circuit has citedBlack Decker for the proposition that "while a plan administrator may not arbitrarily reject a treating physician's opinion, this opinion need not be given any special deference."Cox v. Std. Ins. Co., 585 F.3d 295, 302 (6th Cir. 2009). The situation in this case is rather different, as Robbins Myers rejected Cole's appeal not on the basis of a medical expert's evaluation that contravened those of her treating psychologists, but, rather, because it determined that her SSA disability dates demonstrated, without the need for further inquiry, that she was not "disabled" under the Plan's terms, while an employee of Chemineer. While Defendants cite no case law to indicate that this method of rendering a disability determination has been sanctioned in the Sixth Circuit or elsewhere, the Court will nevertheless address the specifics of Defendants' arguments in greater depth.
Assuming arguendo that Defendants' interpretation of Black Decker is defensible, that is, that plan administrators are permitted to base a "not disabled" determination on the findings of some other evaluator, rather than by conducting their own inquiry into the medical evidence, the Court would still have to consider whether the substituted judgment is reliable evidence under the circumstances. In other words, for Robbins Myers' decision to be reasonable, the SSA's findings must somehow serve as a reliable proxy for a finding of non-disability under the Plan and its terms, thus obviating the need for independent inquiry on the part of the Administrator. See Black Decker, 538 U.S. at 833. For two reasons, the Court does not believe that the SSA's determination of Cole's disability dates is a reliable substitute for the Plan's own determination.
Defendants insist throughout their briefings that the Plan's terms reserve for the Administrator the right to make a determination based solely on the SSA's findings, but this is not exactly correct. The relevant terms provide that a "Disability" is an "injury which, in the sole judgment of the Plan Administrator, based on the medical reports of a physician selected by the Plan Administrator and/or other evidence satisfactory to the Plan Administrator (including evidence the Participant is eligible for disability benefits unde [sic] the Social Security Act . . .) permanently prevents an employee from satisfactorily performing his usual duties." A.R. at 132. Thus, the Plan indicates that a finding that a claimant is eligible for SSA benefits may satisfy the Administrator that a claimant is also entitled to Plan benefits; it does not indicate that a finding of eligibility for SSA benefits, on or after a certain date, may act as proof that a claimant is not entitled to Plan benefits on a prior date. This reading of the Plan's terms is consistent with the approach most courts have taken when considering an SSA award in the context of an ERISA appeal: the SSA award may constitute some evidence that a claimant is entitled to plan benefits, but it does not automatically require such a finding on the part of the plan administrator. See Calvert v. Firstar Fin., Inc., 409 F.3d 286, 295 (6th Cir. 2005). While the Sixth Circuit has indicated that an SSA award is one factor to be considered in reviewing the reasonableness of a plan's decision to deny benefits, see id., Defendants have not cited any decision in which a court has affirmatively relied upon an SSA award as a basis for upholding a plan's decision to deny benefits.
First, what is at issue for a finding of "Disability" under the Plan is whether or not Cole became permanently incapacitated at some time prior to her termination from Chemineer. However, this issue was never placed before the SSA for a decision. As reflected in the Administrative Law Judge's opinion, Cole's application for social security disability benefits requested a "closed" period of disability between November 22, 2004, and November 27, 2005, and a "new" period of disability starting on November 15, 2007. A.R. at 56. Because the Administrative Law Judge found in her favor, Cole was granted benefits consistent with the dates that she had requested. Thus, it is not as if Cole, in applying for benefits through the SSA, argued disability in terms of the Plan's definition, whereupon the Administrative Law Judge evaluated her evidence, rejected her claim on the basis thereof, and found a different set of disability dates. Nor can the Administrative Law Judge's opinion be read to mean that, because Cole was disabled between November 2004, and November 2005, and then again on November 15, 2007, she was not disabled on November 14, or November 13, or some other day predating her termination from Chemineer. The findings of Cole's disability status for purposes of the SSA reflected the dates that she requested at her hearing. If a finding that Cole was entitled to benefits under the Plan's terms was contingent on Cole's having been disabled on some other set of dates, it was incumbent upon the Administrator to examine the medical evidence to determine if such a finding was sensible.
As discussed below, Cole's selection of these particular dates in her SSA application appear to be consistent with the substantive criteria that are applied in social security benefits cases. However, what is at issue in this case is Cole's entitlement to benefits under the Chemineer Plan.
In her appeal, Cole did not rely on her SSA benefits as proof of her entitlement to Plan benefits, but, rather, submitted medical evidence to support her claim, including numerous evaluations from her treating psychologists. In his final letter, Dr. Payne made his findings unmistakable, both as to Cole's psychological status and the time-frame for its onset, writing: "I maintain that [Cole] is still unable to be employed due to psychological status, and this status is not the result of losing her job and did not arise after her loss of employment. Id. at 68 (emphasis added). Robbins Myers indicated, in its initial denial, that it would consider new evidence submitted by Cole on appeal, which is consistent with its fiduciary obligations under ERISA. See Kalish v. Liberty Mutual/Liberty Life Assur. Co., 419 F.3d 501, 511 (6th Cir. 2005) ("The administrative record in an ERISA case includes all documentation submitted during the administrative appeals process because this information was necessarily considered by the plan administrator in evaluating the merits of the claimant's appeal.") (rejecting as arbitrary and capricious defendant's refusal to consider claimant's evidence of depression as a basis for disability where such was not raised before the plan's initial denial but was raised subsequently, prior to its final decision); see also Evans v. Metro. Life Ins. Co., 358 F.3d 307, 311 n. 6 (4th Cir. 2004) ("We are aware that Evans stated in his initial form seeking benefits that his disability began on December 2, 1999, and that his lawyer, relying in part on the award of benefits by Social Security, also represented during the administrative appeal that Evan's disability commenced December 2, 1999. Nevertheless, MetLife was not allowed . . . to necessarily limit its disability determination to the date claimed by Evans and his lawyer. The Plan requires MetLife to review all evidence it received to determine disability.").
Ultimately, because the claims and supporting evidence she presented to the Plan Administrator on appeal were not identical to those presented in her SSA proceedings, Defendants could not reasonably conclude that Cole's disability dates, as determined by the SSA Administrative Law Judge, resolved the issue of her disability status under the Plan. The Administrative Law Judge's opinion confirmed that Cole was entitled to social security benefits for the dates identified in her application, but did not determine that she was not entitled to benefits on other dates or under any other program.
Second, the SSA's determination that Cole was or was not disabled on a certain set of dates cannot be divorced from the evaluative criteria and definitions that it employed in reaching that determination. The myriad benefits plans governed by ERISA often define disability somewhat differently than the SSA, or require proof of a different set of criteria in consideration of benefits, but the relevant inquiry must be governed by the particular plan's terms, not the SSA's. See Elliott v. Sara Lee Corp., 190 F.3d 601, 603 (4th Cir. 1999) ("[W]hat qualifies as a disability for social security disability purposes does not necessarily qualify as a disability for purposes of an ERISA benefits plan-the benefits provided depend entirely on the language of the plan.") (emphasis added); cf. Conkright v. Frommert, ___ U.S. ___, 130 S. Ct. 1640, 1646 (2010) (The Supreme Court has routinely "looked to principles of trust law for guidance" under ERISA, and "recognized that, under trust law, the proper standard of review of a trustee's decision depends on the language of the instrument creating the trust.") (citation omitted).
Throughout their memoranda, Defendants alternate between referring to Cole as being "temporarily disabled," on the one hand, and not being disabled at all, per the Plan's definition, because her impairments were not permanent, on the other. See, e.g., Doc. #18 at 10 ("Because the record is clear that Ms. Cole returned to work after November 27, 2005, the temporary disability period is of no consequence-the condition giving rise to Ms. Cole's temporary disability did not permanently prevent her from performing her job."). While it is clear enough that Defendants' argument is that Cole was not disabled under the Plan, because her impairments were not permanent, their rhetoric is confusing, at times, because the notion of a "temporary disability" is irrelevant if permanence is a threshold requirement for a finding of disability. As explained below, this confusion appears to be the result of Defendants' alternating between two different definitions of "disabled," one from SSA criteria, as applied by the Administrative Law Judge in awarding Cole social security benefits, and the other from the actual terms of the Chemineer Plan. This distinction is misleading, because it suggests that Cole's entitlement to benefits from the Plan turns on the dates of her award of benefits from the SSA, but ignores the substantive differences in those two entities' definitions of "disabled" and the criteria applicable thereto.
The way the SSA determines disability status is governed by a five-step sequential review process; if at any step a claimant is determined to be disabled or not disabled, the inquiry goes no further. See 20 CFR § 404.1520(a) and 416.920(a). One of the sequential steps is to determine whether an individual is engaging in "substantial gainful activity," which would require a finding of "not disabled." See id. To determine whether an individual is engaged in "substantial gainful activity," the SSA looks to whether he or she is employed, and to how much money he or she is making. 20 CFR § 404.1574(a); see, e.g., Rossello ex rel. Rossello v. Astrue, 529 F.3d 1181, 1185 (D.C. Cir. 2008) ("The [Social Security] Appeals Council initially informed [claimant] that she had not been continuously disabled since turning 22 because her average monthly earnings in 1986 and 1987 were greater than $300, thereby triggering a presumption that she had engaged in substantial gainful activity."). The Administrative Law Judge indicated that Cole's SSA disability dates were consistent with her having engaged in substantial gainful activity between November 27, 2005, and November 14, 2007, the dates during which she had returned to Chemineer after a year-long absence. A.R. at 56. In other words, an individual is generally not considered disabled by the SSA if he or she is working.
By contrast, the Plan's definition of disability is met by an impairment that permanently "prevents an Employee from satisfactorily performing his usual duties," a somewhat less onerous burden as it can be satisfied while an individual is still employed and earning wages. A.R. at 132 (emphasis added). The record does not indicate that the Administrative Law Judge inquired into how satisfactory Cole's performance at Chemineer was, and such a finding would most likely be irrelevant to an SSA determination. Thus, because the definition of "disabled" that was employed for social security purposes was substantively different than the relevant definition under the Plan, Defendants could not reasonably rely on the SSA's "closed" period of disability as proof that Cole's impairment under the Plan's terms was merely temporary, or became permanent only after her dismissal. Put simply, Cole's disability status in terms of the Chemineer Plan was neither discussed nor decided by the Administrative Law Judge, who, in rendering his decision, applied specific federal laws that govern SSA cases.
Indeed, when Plaintiff's history before the SSA and the Plan's terms are considered side-by-side, it is apparent that a finding of Cole's depression leading to a "closed" period of disability for SSA purposes is not inconsistent with a finding of its being permanently incapacitating for Plan purposes. By way of illustration, if Cole clocked in to work beginning on November 27, 2005, endeavored to complete various tasks and received a normal paycheck, her activity might be considered both substantial and gainful in the eyes of the SSA; however, if her condition meant that she continued to be absent from work quite frequently, or was often ineffectual when present (as the Administrative Record, in fact, indicates in the present case), her performance of her usual duties might, nevertheless, be unsatisfactory in the eyes of her employer. Thus, even if the SSA's determination that Cole was disabled on the set of dates she requested meant, by negative implication, that she was disabled on no other dates, that determination could only mean "not disabled" in light of the SSA's criteria, not the Plan's.
When considered in this context, the contrast between the proceedings before the SSA and the Plan seem unremarkable. Cole's representations to the SSA did not make her claim for Plan benefits internally contradictory. Rather, she simply presented two different arguments that reflected the differing criteria of the two respective entities with which she had filed claims, on the theory that she was entitled to recover benefits from both. Accordingly, Defendants could not make a reasoned determination of Cole's status under the Plan, simply by reading the eight pages of the decision awarding her SSA benefits. They were under a duty, as a fiduciary, to investigate Cole's evidence with reasonable "care, skill, prudence, and diligence. 29 USC § 1104(A)(1)(b) (setting forth ERISA's fiduciary duty standards of care). Denying Cole's appeal for Plan benefits solely on the basis of two sets of dates contained within her SSA award, without reference to any of her medical evidence, is not indicative of the careful and diligent review owed by a fiduciary. Quite the opposite, it suggests an outcome-oriented approach, seeking to deny benefits. See Garmon v. Liberty Life Assur. Co., 385 F. Supp. 2d 1184, 1201 (N.D. Ala. 2004) ("The defendant's . . . reason for denial appears to be contrived and spurious. A decision that a plaintiff's employment terminated on January 23, 2002, and that, coincidentally, she only became disabled the next day is totally wrong.") (finding plan administrator's review arbitrary and capricious, because it ignored plaintiff's medical evidence and determined that the date she became disabled for social security purposes was the same as the date she became disabled for plan purposes, one day after her employment terminated).
It is well established that a plan administrator's decision may be found inadequate upon arbitrary and capricious review if it presents insufficient reasoning or analysis of the relevant medical data. See Elliott, 473 F.3d at 619 ("Put differently, [reciting] medical data, without reasoning, cannot produce a logical judgment about a claimant's work ability."); Kalish 419 F.3d at 509 (rejecting as inadequate a report which simply recounted six pages of medical history and engaged in only one page of analysis). The nature of the review and analysis in this case falls well below the mark the Sixth Circuit has set for a finding that an administrator's review neither arbitrary nor capricious. Defendants' analysis of Cole's medical evidence was not inadequate; rather, it was simply nonexistent.
Accordingly, Defendants' decision to deny benefits was arbitrary and capricious.
C. Remedy
Having determined that Defendants acted arbitrarily and capriciously in denying Cole's claim, only her remedy remains to be determined. "In cases such as these, courts may either award benefits to the claimant or remand to the plan administrator" for further consideration. Elliott, 473 F.3d at 621 (citing Smith v. Cont'l Cas. Co., 450 F.3d 253, 265 (6th Cir. 2006)). The Magistrate Judge found that Cole should be awarded disability benefits. In their Objections, the Defendants argue that, if the administrative review was inadequate, the proper remedy should be a remand of Cole's case to the Plan Administrator for further consideration. For the reasons that follow, the Court concludes that the Magistrate Judge's determination is correct, although for slightly different reasons than those reflected in the Report and Recommendations.
In Elliott, the Sixth Circuit set out the basic parameters of the remedial determination, once a court finds that a plan's decision to deny benefits was arbitrary and capricious:
In
Buffonqe [v. Prudential Ins. Co. Of Am.,
426 F.3d 20, 31 (1st Cir. 2005)], the court held that, where the "problem is with the integrity of the [the plan's] decision-making process rather than "that [a claimant] was denied benefits to which he was clearly entitled," the appropriate remedy generally
is to remand to the plan administrator.
Ibid. We agree with the First Circuit. Such a course is consistent with this court's precedent and we adopt it here.
See Smith [v. Cont'l Cas. Co.,] 450 F.3d [253, 265 (6th Cir. 2006)] ("[W]e vacate the judgment of the district court and remand this case for entry of an order requiring CCC to conduct a full and fair review of Smith's disability claim.").
473 F.3d at 622. However, "where there [is] no evidence in the record to support a termination or denial of benefits, an award of benefits is appropriate without remand to the plan administrator."
Shelby County Health Care Corp. v. Majestic Star Casino, LLC, 581 F.3d 355, 373 (6th Cir. 2009) (internal quotation marks and citation omitted);
see also Glenn v. Metro. Life Ins. Co., 461 F.3d 660, 675 (6th Cir. 2006) (awarding retroactive benefits in lieu of remand),
aff'd on other grounds, 554 U.S. 105 (2008). The Sixth Circuit has acknowledged that "district courts must have considerable discretion to craft a remedy after finding a mistake in the denial of benefits."
Elliott, 473 F.3d at 622 (internal quotation marks and citation omitted). A district court is not required to remand a case for further review by the plan administrator where it is apparent that doing so would be futile, or could not possibly result in a denial of benefits decision that would be reasonable given the administrative record.
Majestic Star Casino, 581 F.3d at 375;
accord Miller v. United Welfare Fund, 72 F.3d 1066, 1071 (2d Cir. 1995).
The Magistrate Judge's recommendation that Cole should be awarded benefits was based on reasoning similar to Defendants' argument above, although she reached the opposite conclusion. The Magistrate Judge determined that Cole's absence from work between 2004 and 2005 demonstrated that her disability "arose" before she was terminated, and characterized Cole's subsequent return to work as a period of "temporary improvement" which did not negate the fact that her disability predated her termination. Doc. #17 at 14. In other words, both the Magistrate Judge and Defendants considered the disability dates found by the SSA sufficient to reach a final decision, although the former takes them as proof that Cole is entitled to benefits, while the latter takes them as proof that she is not. For the same reasons as.above, the Court respectfully disagrees. The Administrative Law Judge's determination only resolves the issue of Cole's SSA benefits. Her disability status under the Plan was a separate question that Defendants reviewed in an arbitrary and capricious manner.
Defendants argue in their Objections that even if the decision to deny benefits was arbitrary and capricious, a remand for further consideration is the appropriate remedy because the Administrative Record "is far from conclusive." Doc. #18 at 16. On the contrary, there is simply no evidence in the Administrative Record that would tend to indicate that Cole was not suffering from disabling depression under the Plan's terms, and thus is not entitled to benefits. The only medical evidence in the record is from Cole's treating psychologists, who are clearly of the opinion that she suffered from disabling depression while employed at Chemineer. The Administrative Record is so limited, because Defendants never undertook any inquiry into Cole's medical evidence, preferring instead to base the decision to deny benefits entirely on the SSA's disability dates. Nevertheless, the Administrative Record upon which the Court must make its determination became complete once Robbins Myers issued its final decision denying Cole's appeal. See Wilkins v. Baptist Healthcare Sys., 150 F.3d 609, 618 (6th Cir. 1998) ("The district court's review of the merits of Wilkins's action was limited to the evidence presented to LINA at the time LINA's denial of benefits became final.").
A remand could accomplish one of two things: 1) it could give the Administrator a second chance to examine the same medical evidence, as it presently exists in the Administrative Record, or 2) it could allow Robbins Myers to develop the evidentiary record further, to see if there is a reasonable medical basis upon which Cole's claim would fail. Remand would be futile in the former case as there is simply no evidence in the Administrative Record upon which a rational denial of benefits could be based.See Quinn v. Blue Cross Blue Shield Ass'n, 161 F.3d 472, 477 (7th Cir. 1998) ("Cases that call for reinstatement usually either involve claimants who were receiving disability benefits, and, but for their employers' arbitrary and capricious conduct, would have continued to receive the benefits, or they involve situations where there is no evidence in the record to support a termination or denial of benefits.") (collecting cases where remand was unnecessary). With no countervailing medical evidence in the record, a denial of Cole's claim on remand would require the Administrator to simply disregard her medical evidence wholesale, which is impermissible under ERISA. Evans v. Unumprovident Corp., 434 F.3d 866, 877 (6th Cir. 2006) ("[A] plan administrator may not arbitrarily disregard reliable medical evidence proffered by a claimant, including the opinions of a treating physician."). Similarly, remand would be inappropriate in the latter case, as Defendants should not now be permitted to supplement the evidentiary record by requiring Cole to submit to additional medical examinations, although they could have done so during the administrative review process, before this suit was initiated. See Majestic Star, 581 F.3d at 374 (affirming the district court's decision to award benefits despite defendant's argument that remand was appropriate, in order that the plan administrator could consider new evidence that might disqualify plaintiff's claim; because it had entered its denial decision and sought to defend same on the administrative record, "Majestic cannot now claim that its review is incomplete."); see also Darland v. Fortis Benefits Ins. Co., 317 F.3d 516, 530 (6th Cir. 2003) (noting that equitable principles "certainly weigh against [a plan administrator] taking . . . inconsistent positions" in administrative and court proceedings), overruled on other grounds by Black Decker Disability Plan, 538 U.S. 822. The fiduciary obligations codified in ERISA are not consistent with allowing plan administrators the opportunity to repeatedly test a beneficiary's claims under new theories and evidence until one denial decision or another "sticks." See Majestic Star, 581 F.3d at 375 n. 8 ("Remanding this case also is inappropriate because it would sanction the notion that a plan administrator may deny claims in a piecemeal fashion, testing each potential basis for denying a claim at separate points in the proceedings. Such litigation is contrary to one of ERISA's `primary goal[s],' of `provid[ing] a method for workers and beneficiaries to resolve disputes over benefits inexpensively and expeditiously.'") (quoting Perry v. Simplicity Eng'g, Div. of Lukens Gen. Indus., 900 F.2d 963, 967 (6th Cir. 1990)); see also Vega v. National Life Ins. Servs., 188 F.3d 287, 302 n. 14 (5th Cir. 1999) (en banc) ("[Remand would be inappropriate because] we have made plain in this opinion that the claimant only has an opportunity to make his record before he files suit in federal court, [and] it would be unfair to allow the administrator greater opportunity at making a record than the claimant enjoys."), overruled on other grounds by Glenn, 554 U.S. 105 (rejecting the Fifth and other Circuit courts' adoption of a "sliding scale" approach to deferential review where a benefits plan administrator is determined to be operating under a conflict of interest). Stated somewhat differently, "a plan administrator will not get a second bite at the apple when its first decision was simply contrary to the facts." Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1163 (9th Cir. 2000). Accordingly, a remand for further consideration is unnecessary in this case and Plaintiff will be awarded benefits. Vega, 188 F.3d at 302 ("If an administrator has made a decision denying benefits when the record does not support such a denial, the court may, upon finding an abuse of discretion on the part of the administrator, award the amount due on the claim and attorneys' fees.")
III. Conclusion
Accordingly, and for the foregoing reasons, Plaintiff's Motion for Judgment on the Administrative Record (Doc. #13) is sustained. Defendants' Motion for same (Doc. #14) is overruled. Defendants' Objections (Doc. #18) to the Magistrate Judge's Report and Recommendations (Doc. #17) are overruled and the aforesaid judicial filing is adopted, as supplemented herein by the Court's reasoning and citations of authority.
This matter is hereby remanded to Defendant Robbins Myers for an award to Plaintiff of the Plan benefits to which she is entitled, including past-due benefits with interest, as well as those to be paid in the future.
September 30, 2010