Emilien v. Stull Technologies Corp.

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit

7-18-2003

Emilien v. Stull Tech Corp
Precedential or Non-Precedential: Non-Precedential

Docket No. 02-1422

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2003

Recommended Citation
"Emilien v. Stull Tech Corp" (2003). 2003 Decisions. Paper 359.
http://digitalcommons.law.villanova.edu/thirdcircuit_2003/359

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2003 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
 NOT PRECEDENTIAL

IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________________________

NO. 02-1422
_______________________________

BERTHONY EMILIEN, Individually
and as Personal Representative
of MARIE EMILIEN, deceased

Appellant

v.

STULL TECHNOLOGIES CORP.;
SEABOARD LIFE INSURANCE CO.

_______________________________________________

On Appeal from the United States District Court
for the District of New Jersey
D.C. No. 99-cv-05312
(District Judge: Dennis M. Cavanaugh)
________________________________________________

Argued: April 29, 2003

Before: BECKER, Chief Judge,* RENDELL and AMBRO, Circuit Judges

(Filed: July 18, 2003)

NOEL C. CROWLEY (Argued)

*
Judge Becker completed his term as Chief Judge on May 4, 2003.

1
Crowley & Crowley
20 Park Place, Suite 206

Morristown, NJ 07960

Attorney for Appellant Berthony Emilien

KARL FENSKE (Argued)
26 Park Place
Morristown, NJ 07960

Attorney for Appellee Stull Technologies

Michael C. Pelletier (Argued)
Suite 104
31 Fairmount Avenue
P.O. Box 700
Chester, NJ 07930

Attorney for Appellee Seaboard Life Ins. Co.

___________________________

OPINION OF THE COURT
___________________________

BECKER, Circuit Judge.

This is a medical and severance benefits case with an ERISA facet. Plaintiff

Berthony Emilien (“Berthony”), the husband of the late Marie Emilien (“Marie”),

commenced this action in the District Court for the District of New Jersey against

defendant Stull Technologies (“Stull”), Marie’s employer, and Seaboard Life Insurance

Co., provider of Marie’s life insurance policy, both as an individual and as Marie’s duly-

appointed personal representative. Stull had decided to close the plant at which Marie

2
worked, but it offered her enrollment in a Special Severance Program (“SSP”) under

which it would provide her with medical benefits through the end of the month following

her termination, as well as a severance package, so long as she worked continuously

through November 6, 1998. Marie was unable to do so, as she was hospitalized on

October 21, 1998. During that hospitalization, Stull claims to have sent to her a letter

dated October 30 that contained two critically important pieces of information: (1) notice

of her termination (and its date); and (2) notice that, due to her termination, she would be

excluded from Stull’s group life insurance plan and would need to file a Consolidated

Omnibus Budget Reconciliation Act (“COBRA”) conversion notice in order to maintain

coverage. Although Stull received no reply from Marie, it terminated her medical

benefits in accordance with the letter, and since Marie did not effect COBRA conversion,

she found herself with no coverage.

Berthony sued Stull to regain the lost benefits, alleging that Stull in fact never sent

the October 30 letter in which it announced Marie’s termination, noting, inter alia, that

Stull has been unable to produce a certified mail receipt for the letter. He also contended

that, under the terms of the SSP, Marie qualified for severance pay even if Stull

terminated her, as the SSP provides for severance if the employee worked through

November 6 or was “released at an earlier date” by Stull. (279a.) Finally, Berthony

alleges a year-long delay in receiving requested ERISA plan documents, which ERISA

provides should be produced within thirty days, and seeks ERISA’s $100-per-day penalty

3
for that delay. The District Court granted summary judgment for Stull on all counts, and

Berthony appeals.

Because we are satisfied that Stull’s COBRA notice (which was contained in the

October 30 letter it may have mailed to Marie) was legally insufficient to discharge Stull

from liability for Marie’s medical expenses, we will vacate the District Court’s grant of

summary judgment and order Stull to pay those expenses, assuming (as described below)

it determines that New Jersey courts would apply the collateral source rule. As to

whether Stull is liable for Marie’s expenses incurred through November 30 or December

31, while the District Court may have erred in choosing November 30 rather than

December 31, Berthony failed to raise this argument before the District Court, so we will

not set the judgment aside on this basis. We do, however, bring the matter to the District

Court’s attention so that it may grant Berthony leave to amend his complaint if it deems

such a step appropriate. If it does not, the November 30 cutoff date is affirmed. We will

remand to the District Court the question whether Stull should pay ERISA’s $100-per-

day penalty for its failure timely to provide Berthony with requested ERISA plan

documents.

Stull’s argument that Berthony fully mitigated his damages by enrolling Marie in

the U.S. Healthcare plan was not adequately briefed by either side. Although it appears

likely that New Jersey courts would nevertheless allow Berthony to recover under the

collateral source rule, the New Jersey Supreme Court has not resolved the question, nor

4
did the District Court consider it. We will therefore not decide the matter; rather, we will

remand it to the District Court with instructions that it allow briefing to resolve the

question.

Finally, we will set aside the District Court’s grant of summary judgment to Stull

on the question whether Marie should receive severance pay, and remand that issue to the

District Court for further proceedings to determine the nature of Marie’s “termination”

on October 21 and the legal effect of that termination, if any, on her eligibility for

severance pay.

I. Facts and Procedural History

In 1998, Stull, a manufacturer of injection-molded closures for use in industry,

decided to shut down its facility in Randolph, New Jersey, where Marie worked, and to

transfer its operations to another Stull plant located in Somerset, New Jersey. The

decision was announced by letter to Marie and other Randolph-based employees on

August 18, 1998 (“the August 18 letter”). At the same time, Stull sent to these Randolph

employees a separate letter (“the companion letter”) in which it extended offers of

continuing employment to those who advised management in writing by September 4,

1998, of their willingness to work at the Somerset location. The companion letter

explained that, for those who did not transfer, employment with Stull would terminate on

November 6, 1998. With a view to retaining non-transferring employees’ services up to

that date, the letter announced a Special Severance Program under which certain benefits

5
would be extended to those who worked through the plant’s closure on November 6. To

qualify for those benefits, employees were required to signify their acceptance of the SSP

not later than October 12, 1998, by executing a “General Release and Waiver

Agreement” through which they surrendered wrongful-discharge and other employment-

related claims. The terms of the SSP also required them to render satisfactory service at

the Randolph location “on a continuous basis from now until November 6, 1998 or until

released on some earlier date by Stull.” (279a.) On September 1, 1998, Marie executed

a written statement declining Stull’s offer of employment at its Somerset location. On

October 11, 1998, she submitted her timely written election to participate in the SSP.

Although we presume that Marie intended to work through November 6 so as to

meet the SSP’s terms, illness prevented her from doing so. Approximately two years

earlier, in October of 1996, she had been diagnosed with HIV and tuberculosis, and these

maladies had caused her absence from work on many occasions throughout 1997 and

1998, including a hospital stay in February of 1998. After that hospitalization, her doctor

described her as being “up and down” until October 21, 1998, approximately two weeks

before the Randolph plant closure. On that day, she was severely stricken while at work,

and was transported by ambulance to the Morristown Memorial Hospital. She returned

to her home for a time, although she remained unable to work. She was hospitalized

once again on December 28, 1998, and remained there until her death on January 7,

1999.

6
 Shortly after Marie became ill on October 21, Loretta Goldstein, a senior

representative of Stull’s Human Resources Department, composed a letter to Marie

bearing the date of October 30, 1998 (“the October 30 letter”). (144a.) The letter stated

that Stull had decided retroactively to “separate” Marie as of October 21, the day she was

stricken. There is some dispute, however, as to whether the letter was actually mailed. It

bears a notation stating “Mailed 11/2/98,” (163a), but Goldstein admitted that she had no

actual recollection of mailing that particular letter. (162a.) Instead, she stated that she

relied on her regular practice of taking letters of that nature to a particular inter-office

location for mailing by someone else. (Id.) Also, although Goldstein represents that

Stull customarily sends such letters by certified mail (144a), Stull has not been able to

produce either the “white” receipt issued by the Post Office when it accepts certified

mail, or the “green” receipt showing that it was duly delivered and received. (126a, 162a,

180a.) Berthony denies that either he or Marie ever received such a letter, stating: “I feel

certain no such letter arrived at our home.” (103a.)

The letter, if mailed, was the only means by which Stull informed Marie (who was

hospitalized at the time) of her termination. Equally important, it was the means by

which Stull sought to discharge its statutory duty to inform Marie that, due to her

termination, she would be excluded from the company’s group medical benefit plan and

would have to complete and return COBRA election forms if she wished to retain

medical insurance protection. (165a.) It also included forms with which Marie could

7
have applied for state disability benefits. (144a, 162a.) Since Marie did not return the

COBRA election or state disability forms — Berthony, as noted, argues that Marie never

received them — her medical coverage terminated in November of 1998.

Even without the October 30 letter, Marie might have learned of the need to

undergo COBRA conversion had Stull, and Goldstein in particular, engaged in their

regular (albeit voluntary) notification procedures. In her testimony, Goldstein

acknowledged that it was Stull’s usual practice (and her own personal responsibility) in

the case of former employees who had not been heard from in response to COBRA

conversion notices to investigate the matter by telephoning them. (180a.) In this

instance, Goldstein stated, no call was made to Marie, and she blames the tumult created

by the closing of the Randolph facility. (180a.) She did, however, admit her knowledge

of Marie’s health problems and that those problems would have made continuous

insurance coverage critical. (Id.)

Assuming arguendo that Stull mailed the October 30 letter, there is also a dispute

regarding its legal effect — Goldstein was unsure whether it terminated Marie as of

October 21, or if it instead placed her on disability leave of absence. She first testified

that the October 30 letter’s references to Marie’s “separation” meant that Marie had been

terminated, and that the October 30 letter was intended as her official notice of

termination. But later, in discussing a related issue, Goldstein testified that Marie did not

qualify for severance pay because on November 3, “she was on a leave of absence.”

8
(174a.) To Stull, the distinction is critical, for the SSP conditions severance pay on

employees “remaining employed by Stull on a continuous basis from now until

November 6 or until released on some earlier date by Stull.” Further, only those

employees who are not “on a Leave of Absence, regardless of length of service, as of the

Inactive Date” are eligible for the SSP. (279a.) Stull submits that, as it terminated Marie

on October 21, she did not fulfill the condition precedent to qualification for severance

pay, namely working until November 6. Berthony, however, contends that Marie

qualified for severance pay regardless of whether the October 30 letter placed her on

leave of absence or terminated her — if it placed her on leave of absence, she was still

employed on a continuous basis, and if it terminated her, that constituted an “earlier

release” by Stull.

At all events, Berthony represents that neither he nor Marie learned of her

termination or insurance cutoff until November of 1998, when he sought prescription

medicine from a pharmacy and was told that his insurance had been cancelled. (102a.)

He contacted the Stull Human Resources Department, which stated that Marie had been

informed of her benefit cancellation via the October 30 letter. (102a-103a.) Berthony

protested that the cutoff was inappropriate regardless of the purported notice in that

letter, for under the terms of the SSP, an employee’s enrollment in the group medical

benefit plan continues until the end of the month following her inactive date, which was

alleged to be November 6, 1998. (281a.) Under this interpretation, Stull was accountable

9
for the $23,095 in medical costs incurred through December 31, 1998. Stull, however,

submits that the SSP extended regular health insurance only to the end of the month of

the inactive date, i.e., until November 30.

In an attempt to clarify the situation, Berthony requested from Stull a copy of the

October 30 letter, but no copy was produced. (105a.) Meanwhile, as a stopgap measure,

Berthony applied to include his wife in the group medical plan offered by his own

employer, Amphenol Corporation, through United Healthcare. Although United stated

that it would not cover Marie until January 1, 1999, the bills from Marie’s hospital care

show that United nevertheless paid for her expenses following the November 30 cutoff

of the insurance provided by Stull. Stull argues that United’s replacement coverage

deprives Berthony of constitutional standing, for all of Marie’s bills were paid. Berthony

responds that New Jersey’s collateral source doctrine does not allow gratuitous payments

by third parties to deprive plaintiffs of standing to prosecute an alleged refusal to pay in

the first instance.

Berthony brought suit against Stull and Seaboard Life Insurance Co. (“Seaboard”)

in the District Court for the District of New Jersey under ERISA Section 502 and

N.J.S.A. 17B:27-51.12, challenging the lawfulness of denying Marie medical, severance

and life insurance benefits.1 He also sought attorneys’ fees and a statutory penalty of

1
After Marie’s death in January of 1999, Berthony submitted a claim form to
Seaboard Life Insurance Co. by certified mail. Seaboard signed a return receipt and
returned it to Berthony. The amount of the policy was $5,000. Seaboard denied liability

10
$100 per day for Stull’s alleged failure to provide him with ERISA plan information.

The parties cross-moved for summary judgment, and the District Court granted Stull’s

and Seaboard’s motions. Berthony now appeals from that judgment. The District Court

had jurisdiction under 29 U.S.C. § 1331, and we exercise appellate jurisdiction pursuant

to 29 U.S.C. § 1291. Our review of the District Court’s grant of summary judgment is

plenary. Fogleman v. Mercy Hosp., Inc., 283 F.3d 561, 566 (3d Cir. 2002).

II. Discussion

A. Did Marie Waive Her Right to Medical Coverage?

Stull argues that the SSP, which Marie signed and returned, constituted a bargain

in which Marie waived any right to sue Stull over employment-related claims in

exchange for severance pay and Stull’s promise to pay her another month’s medical

benefits. Stull insists that it upheld its end of the bargain — it paid benefits through

November 30. Although Marie did not receive severance pay, an issue discussed more

fully below, Stull asserts that Marie was not contractually entitled to it because she did

not fulfill the condition precedent of working through November 6.

Berthony responds that the SSP’s waiver does not protect Stull, for each of

on the ground that Marie “was not employed at Stull Technologies at the time of her
demise.” (214a.) After briefs were submitted in this case, however, the parties reached a
settlement agreement under which Seaboard will pay to Berthony, in his representative
capacity, the full $5,000 policy amount. We therefore need not discuss this issue further,
except to order that Seaboard pay the $5,000 it offered in settlement. We also note that
we find Berthony’s claim for attorneys’ fees to be without merit.

11
Berthony’s claims arose subsequent to Marie’s acceptance of the waiver, which occurred

on October 11, 1998. He submits that our precedents refuse to recognize waivers of

claims arising in the future. See Three Rivers Motor Co. v. Ford Motor Co., 522 F.2d

885, 896 n. 27 (3d Cir. 1975) (holding that prospective waivers of claims are void as

against public policy). Moreover, he asserts that Stull’s concept of waiver, taken

seriously, would be perverse, as it would prevent Berthony from challenging the very

exchange that gave rise to the waiver that Stull now uses against him.

We are satisfied that the SSP’s waiver presents no obstacle to Berthony’s claim.

New Jersey public policy forbids prospective waivers of any right to sue, and that is

precisely what is at issue here. See Becker v. Sherwin Williams, 717 F. Supp. 288, 293

(D.N.J. 1989) (“[E]ven if such a release had been signed by plaintiff, plaintiff would not

be precluded from asserting claims which arose after the execution of the general

release.”); Three Rivers, 522 F.2d at 896 n.27. This is doubly true when, as here, the

consideration for the waiver is a future benefit that the employer fails to provide.

B. Assuming Arguendo that the October 30 Letter Was Sent, Was the COBRA

Notice Contained Therein Sufficiently Clear?

Berthony argues that even if Stull mailed the October 30 letter, the notice it

contained respecting Marie’s right to continued medical coverage under COBRA was

inadequate and did not fulfill Stull’s statutory obligation under 29 U.S.C. § 1166(a)(1) to

give accurate and understandable information on COBRA conversion. Under COBRA,

12
an employee opting to convert from group to private medical insurance must be given a

minimum of 60 days in which to do so. 29 U.S.C. § 1165. This time runs either from the

occurrence of a “Qualifying Event,” a statutorily-defined term, or from notice to the

beneficiary, whichever is later. Termination is usually the “Qualifying Event.” If this

COBRA conversion notice is deficient, the employer remains liable for an employee’s

medical costs incurred pursuant to the employer’s group plan.

The October 30 letter, if mailed, contained a form titled “COBRA ELECTION

FORM AND NOTICE,” but Berthony argues that even if Marie had received it, it was

insufficiently clear to put her on notice of her rights. Although it referred to a 60-day

time period and a “Qualifying Event,” the notice did not define “Qualifying Event.”

Berthony therefore contends that Stull failed to discharge its statutory duty to “explain

the circumstances which may result in disqualification or denial of loss of benefits.” 29

U.S.C. § 1022(b), and to do so “in a manner that is calculated to be understood by the

average plan participant.” 29 U.S.C. § 1022(a)(1).

We are satisfied that Stull’s COBRA notice was insufficiently clear to discharge

Stull from liability for Marie’s health costs. This is because it is highly unlikely that a lay

person would understand the meaning of the term “Qualifying Event” without any

explanation of that term. Indeed, we note that the wording was sufficiently opaque that it

confused even Loretta Goldstein, Stull’s plan administrator. In her deposition, when

asked where in the conversion form one is given an amount of time in which to convert,

13
she stated: “Well, my interpretation of this form states that they have forty-five days.”

(167a.) A forty-five day conversion period, of course, would violate 29 U.S.C. § 1165,

which requires a minimum of sixty days. Because Stull failed to provide Marie with a

readily comprehensible COBRA conversion form, it is liable for her health costs.2

C. Does Stull’s liability for Marie’s health costs extend through November 30,

1998, or December 31, 1998?

Stull argues that, even if Marie was entitled to medical benefits under the SSP, she

was only entitled to benefits through November 30, 1998, not December 31, 1998. It

reasons that Marie’s situation is governed by subsection c, which states:

If you do not accept Stull’s offer of continued employment at its Somerset
facility and do not make the SSP election in the manner described above, your
group health care will cease at the end of the month of your Inactive Date.
You must continue to make contributions while this coverage is in effect, even
if the level of contribution subsequently changes.

(281a) (emphasis added). As Marie’s inactive date was November 6, Stull submits that

her coverage ended on November 30, 1998, and that it is therefore not liable for the

$23,095 in expenses incurred through December.

2
Because we conclude that any COBRA conversion notice that Stull might have sent to
Marie was legally insufficient to discharge it from liability, we need not decide whether,
for summary judgment purposes, Stull actually did send that form to Marie. We note,
however, that it is doubtful that Stull would prevail on the strength of its records.
Although it asserts that it sent the October 30 letter (which contained a COBRA
conversion notice) by certified mail, it has been unable to produce any certified mail
receipt for that letter. (126a, 162a) Moreover, Loretta Goldstein has no specific
recollection of mailing that letter, (162a), and Stull did not demonstrate the regularity of
its mailing procedures.

14
 Berthony, however, contends Stull relies upon the wrong section of its plan in

arguing that Marie’s December expenses were not covered. Subsection c, rescribed

above, applies only to employees “who do not make the SSP election.” Marie plainly did

make that election by signing the “General Release and Waiver Agreement and

Acceptance of the Randolph SSP.” (274a-275a, 279a.) For those in her position who

signed and returned the SSP election form, subsection b governs, and it states:

If you do not accept Stull’s offer of continued employment at its Somerset
facility and make the SSP election in the manner described above, your group
health care coverage will cease at the end of the month following your Inactive
Date. You must continue to make contributions while this coverage is in
effect, even if the level of contribution subsequently changes.

(281a) (emphasis added).

Although Berthony’s argument may well have merit, the record reflects that he

failed to raise it before the District Court, and it is therefore not properly before us. We

will not set the judgment aside on this basis, but leave to the District Court the question

whether to grant Berthony leave to amend his complaint to include this claim; if it does

not, the judgment to this extent is affirmed.

D. Can Marie prove damages?

Stull asserts that even if it failed to provide Marie with a comprehensible COBRA

conversion form, it should nonetheless prevail because Marie has suffered no damages

due to Stull’s denial of medical benefits. As noted above, Berthony testified that when

Stull dropped his coverage, he transferred Marie to a plan provided by his employer,

15
Amphenol Corporation, through United Healthcare. Although United initially stated that

it would not cover Marie until January 1, 1999, the bills from Marie’s hospital care show

that United nevertheless paid for her $23,095 in expenses that followed Stull’s

November 30 cutoff date. Stull submits that because Berthony obtained from United the

same coverage he would have enjoyed under Stull’s plan, he incurred no costs due to any

error Stull might have committed. As Stull puts it, “No harm, no foul.” (Stull Br. at 13.)

Although Stull’s argument is not without intuitive appeal, it was not supported by

legal authority. Indeed neither side adequately briefed the possibile applicability of the

New Jersey collateral source rule. As one New Jersey court stated, it is “the general rule

that one obligated to pay because of a wrong done, or an obligation incurred by contract,

may not benefit by payments or medical services rendered to the injured party from

collateral sources.” Lapidula v. Government Employees Ins. Co., 146 N.J. Super. 463,

467 (1977). See also Ronson v. Talesnick, 33 F. Supp. 2d 347, 354 (D.N.J. 1999).

While the rule has been modified by statute, the modification applies only to civil actions

for personal injury or death. N.J.S.A. 2A15-97. In an analogous context, the Eleventh

Circuit, confronting a potential double recovery by an insurance claimant, nevertheless

allowed a full recovery since that was the amount the defendant should have paid as the

primary insurer. See National Companies Health Plan v. St. Joseph’s Hospital, 929 F.2d

1558, 1574-75 (11th Cir. 1991). The court noted that the double recovery was unlikely

to stand, as separate and independent efforts were underway by the secondary insurer to

16
recover the sums in question. Id. Here, too, United would certainly have a cause of

action to recover sums wrongfully paid to Berthony for Marie’s expenses.

It is worth noting that after briefs were submitted to this Court, we stated in

Burstein v. Retirement Health Plan for Employees of Allegheny Health Education and

Research Foundation, No. 02-2666, that “[c]laims for ERISA plan benefits under ERISA

§ 502(a)(1)(B) are contractual in nature.” If Burstein were interpreted to mean that all

claims in ERISA cases were essentially contractual, Stull might validly argue that

Berthony is entitled to no recovery because he successfully mitigated his damages when

he enrolled in the United Healthcare plan. But this might read too much into Burstein,

where the quoted statement was made in the context of a dispute over construction of the

terms of a discrete plan.

Although it appears likely that New Jersey employs the collateral source rule, the

Supreme Court of New Jersey has not resolved the question, and it was not briefed in the

District Court. 3 Furthermore, it was analyzed only superficially in the briefs submitted to

3
Judge Rendell questions whether the views of the Supreme Court of New Jersey are
relevant to the analysis of this federal claim for benefits under ERISA, and more
generally whether tort principles such as the collateral source rule are applicable to
claims, such as these, that are “contractual in nature.” Burstein v. Ret. Account Plan for
Employees of Allegheny Health Educ. and Research Found., __ F.3d __, 2003 WL
21509028, at *12 (3d Cir. 2003). In addition, she believes that Emilien’s complete
mitigation of damages likely negates any entitlement to recovery for plan benefits under
ERISA. See, e.g., Garofalo v. Empire Blue Cross & Blue Shield, 67 F.Supp.2d 343, 347
(S.D.N.Y. 1999). She nonetheless joins in the Court’s opinion as it does not foreclose the
District Court from considering these issues on remand.

17
this Court. We therefore direct that, on remand, the District Court allow supplemental

briefing and argument to resolve this question.

E. Was Marie Entitled to Severance Pay?

Stull’s SSP, which Marie signed and returned, promised that Stull would grant

severance pay to Marie, although it provided that “this severance pay is conditioned on . .

. you remaining employed by Stull on a continuous basis from now until November 6 or

until released on some earlier date by Stull.” Further, only those employees who are not

“on a Leave of Absence, regardless of length of service, as of the Inactive Date” are

eligible for the SSP. (279a.) Marie was hospitalized on October 21 and, on October 30,

Stull separated her and made the separation retroactive to October 21. Stull argues that

because she was separated on October 21, she did not fulfill the condition of working

until November 6 and was therefore not entitled to severance pay. There is, however,

disagreement as to whether this “separation,” as the October 30 letter referred to it, was

in fact a termination or whether it was a medical leave of absence. Goldstein first

testified that the October 30 letter’s reference to “separation” meant that Marie had been

terminated, and that the October 30 letter was meant to memorialize that action. (164-

65a.) But later in her testimony, Goldstein testified that as of November 3, 1998, “she

was on a leave of absence.” (174a.)

Berthony contends that he is entitled to a judgment under either interpretation. If

Marie was merely placed on leave of absence, he notes, she would still be an employee

18
and would therefore be entitled to the medical benefits denied to her by Stull. But if she

was terminated as of October 21, the position Stull adopts, Berthony submits that Marie’s

termination would constitute an “earlier release” by Stull that would qualify her for

severance pay under the SSP. It is not clear, however, that she would be eligible for the

SSP if she were on a leave of absence as of the Inactive Date. (279a.) He argues that

any other interpretation would allow Stull to render impossible Marie’s fulfillment of the

“work until November 6" condition. See Epright v. Environmental Resources Mgmt, Inc.

Health and Welfare Plan, 81 F.3d 335, 341 n.1 (3d Cir. 1995) (“Just as in contract law,

failure to satisfy a condition should be excused if the other party thwarted fulfillment of

the condition.”). Stull responds that “[o]bviously the company wanted employees to

work right up to the closure of the plant. Severance pay was the incentive to do so.”

(Stull Br. at 6.) It contends that Marie’s inability to work, unfortunate though it may

have been, was not Stull’s fault, and that it therefore cannot be said to have thwarted

Marie’s fulfillment of the contractual condition.

Although the District Court concluded that Marie “was not qualified for severance

pay since she did not meet the requirements of the SSP agreement,” summary judgment

is inappropriate in the face of the disagreement that existed among Stull’s own

employees regarding whether Marie’s separation was a termination or medical leave of

absence. We will therefore vacate the District Court’s grant of summary judgment in

favor of Stull on the matter of Marie’s eligibility for severance pay, and remand the issue

19
to the District Court for further proceedings. On remand, the District Court should first

resolve this question of status. If it determines that Marie was terminated on October 21,

it should then assess whether, as a contractual matter, her termination rendered her

ineligible for severance pay, or if instead it merely constituted a contractual “earlier

release” that nevertheless qualified her for severance pay. If it determines that Marie was

on a leave of absence, it should assess whether she is ineligible for severance pay under

the terms of the SSP. (279a.)

F. Should Stull Pay ERISA’s $100-Per-Day Penalty for Failing to Respond to

Requests for a Summary Plan Description?

Berthony alleges that Stull failed to respond to his repeated requests for a

summary description of Stull’s benefits plan pursuant to ERISA, 29 U.S.C. § 1024(b)(4),

and he seeks damages pursuant to 29 U.S.C. § 1332(c), which states:

Any administrator who fails or refuses to comply with a request for any
information which such administrator is required by this title to furnish to a
participant or beneficiary (unless such failure or refusal results from matters
reasonably beyond the control of the administrator) by mailing the material
requested to the last known address of the requesting participant or beneficiary
within 30 days after such request may in the court’s discretion be personally
liable to such participant or beneficiary in the amount of up to $100 a day
from the date of such failure or refusal, and the court may in its discretion
order such other relief as it deems proper.

A claimant seeking this penalty need not demonstrate that the failure to respond caused

actual harm — a showing of noncompliance is itself sufficient. Gillis v. Hoechst

Celanese Corp., 4 F.3d 1137, 1148 (3d Cir. 1993). Likewise, a claimant need not

20
demonstrate bad faith by the plan administrator, for the statute penalizes a failure to

comply with a request as well as a refusal to comply with a request.

The record reflects that Berthony sent a written request to Stull on July 27, 1999,

asking for a copy of the October 30 letter so that he might assess his legal options. He

repeated the request on August 9, 1999. (188a, 189a.) Stull did not respond to these

requests. On August 20, 1999, Berthony’s counsel sent a letter to Stull specifically

requesting the summary plan description for employee medical plans, and this letter

mentioned explicitly ERISA’s $100-per-day penalty for noncompliance. (190a.)

Although Stull responded to the August 20 letter on August 25, 1999, it failed to include

a copy of the SSP, a document critical to ascertaining participants’ rights under the plan.

Although Berthony’s attorney sent a follow-up letter on August 30, 1999, calling

Stull’s attention to this omission and requesting a copy of the SSP, (193a), Stull did not

respond. Indeed, Stull did not produce a copy of the SSP until Berthony had filed his

complaint, and even then it first produced only a template copy that omitted key details

such as the “Inactive Date,” which the user of the form was instructed to insert in

response to an “insert date” instruction contained in the form itself. The inadequacy of

this version is evidenced by the fact that Loretta Goldstein, when asked to interpret the

form, testified that the Inactive Date was November 3, 1998, when it was in fact

November 6, 1998. (172a-173a.) Ginny Condello, Stull’s Human Resources Director,

testified that she found a complete copy of Marie’s SSP while undertaking an unrelated

21
search on August 17, 2000; Stull produced this complete copy on October 4, 2000, as

part of its own motion for summary judgment. (261a-262a.) In total, Berthony received

on October 4, 2000, a copy of a document he specifically requested on August 20, 1999,

a delay of at least thirteen months for a production that ERISA expects to occur within

30 days. 29 U.S.C. § 1332(c).

Stull responds that it did the best that it could under the circumstances. It explains

that:

Stull was undergoing a total reorganization and force reduction at the time that
[Marie] left her job. Not only did the plant shut down, but all management
and plant operations were consolidated under one roof, in Somerset New
Jersey. The Randolph plant’s human resources staff left Stull as well as many
of the plant employees. To make matters even more problematic, from a
record keeping perspective, the new Human Resource personnel had to deal
with the destruction of many of the employee records due to a flood. So not
only were all the records moved to a new location, but new people were
administering those records and many of the records were destroyed.
Furthermore, Stull is not a Fortune 500 company. It can easily be inferred that
a company that has to consolidate into one location from three and
significantly reduce its staff is not enjoying the best of times.

(Stull Br. at 23.)

Although we are sympathetic to the idea that a company weathering financial

distress might be less culpable than one that is simply dilatory in the face of a request for

plan documents, the statute is not so forgiving. Rather, we believe that sanctions are

appropriate under these facts. Stull did not produce even a template copy of the SSP

until Berthony filed a formal complaint, and even then it was nearly a year before

Berthony obtained a copy of the SSP from which he could glean the specific information

22
needed to establish his rights. This is not a situation where a plan administrator tried

diligently to accommodate a beneficiary while conducting a search for the missing

documents — it located Marie’s SSP only while hunting for an entirely unrelated set of

documents. This nonchalance falls directly within the behavior that § 1332(c) is

intended to penalize, for as noted above, that section condemns not only an administrator

who refuses timely to provide plan documents, but also one who fails timely to provide

those documents.

We will set aside the District Court’s determination that ERISA’s penalty is

inappropriate in this situation. Of course, because the District Court concluded that a

penalty was inappropriate, it had no occasion to consider the proper size of such a

penalty should one be awarded. We will therefore remand this matter to the District

Court, which is presumably more familiar with the case’s tenor and nuances than is this

Court. Inter alia, since bad faith can be a factor in determining the size of the penalty, the

District Court may want to consider its existence vel non.

III. Conclusion

For the foregoing reasons, we will vacate the District Court’s grant of summary

judgment in favor of Stull and remand so that it may consider the effect, if any, of New

Jersey’s collateral source rule on Berthony’s mitigation of his damages through

enrollment in the U.S. Healthcare plan. We will remand to the District Court the

question of the amount Stull should pay per day as a penalty for its failure timely to

23
provide Berthony with requested ERISA plan documents.

Finally, we will set aside the District Court’s grant of summary judgment to Stull

on the question whether Marie should receive severance pay, and remand that issue to the

District Court for further proceedings to determine the nature of Marie’s “termination”

on October 21 and the legal effect of that termination, if any, on her eligibility for

severance pay

24
TO THE CLERK:

Please file the foregoing opinion

____/s/ Edward R. Becker
Circuit Judge

DATED: July 18, 2003

25