06-3107-cv
Strom v. Siegel Fenchel & Peddy P.C.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2006
(Argued: June 11, 2007 Decided: August 15, 2007)
Docket No. 06-3107-cv
KAREN STROM,
Plaintiff-Appellant,
– v. –
SIEGEL FENCHEL & PEDDY P.C. PROFIT SHARING PLAN, SIEGEL FENCHEL &
PEDDY, P.C. DEFINED BENEFIT PENSION PLAN, SIEGEL FENCHEL & PEDDY, P.C.
CASH BALANCE PENSION PLAN, SAUL R. FENCHEL, P.A. PLAN, SIEGEL FENCHEL &
PEDDY, P.C., in its capacity as Plan Administrator, WILLIAM D. SIEGEL, in his capacities as
Trustee and fiduciary, SAUL R. FENCHEL, in his capacities as Trustee and fiduciary, TRACIE
P. PEDDY, in her capacities as Trustee and fiduciary and 2 Plan Administrator and SAUL R.
FENCHEL, P.A., in its capacity as Plan Administrator,
Defendants-Appellees.
____________________________________________
Before: McLAUGHLIN, CALABRESI and SOTOMAYOR, Circuit Judges.
____________________________________________
Plaintiff-appellant Karen Strom appeals from a judgment of the United States District
Court for the Eastern District of New York, partially granting defendants’ motion for summary
judgment and dismissing Strom’s claims under the Employee Retirement Income Security Act
(ERISA), for benefits under pension plans. With respect to Strom’s claims under the Profit
Sharing Plan, the district court erroneously deferred to a non-existent decision by the pension
plan administrators; with respect to the Cash Balance Pension Plan, the district court erroneously
held that Strom had waived her claim by failing to exhaust her administrative remedies.
Accordingly, the judgment of the district court is VACATED and REMANDED.
Leslie Corwin (Neil A. Capobianco & Simon Miller, on the
brief), Greenberg Traurig, LLP, New York, N.Y., for
plaintiff-appellant.
Stephen B. Latham (Philip D. Nykamp, on the brief),
Twomey, Latham, Shea, Kelley, Dubin & Quartararo LLP,
Riverhead, N.Y., for defendants-appellees.
SOTOMAYOR, Circuit Judge:
Plaintiff-appellant Karen Strom sued her former law firm, defendant-appellee Siegel
Fenchel & Peddy, P.C. (“SFP”), under the Employee Retirement Income Security Act of 1974
(ERISA), 29 U.S.C. § 1001 et seq., claiming entitlement to benefits under pension plans
administered by the firm. Strom now appeals from the September 30, 2005 judgment of the
United States District Court for the Eastern District of New York (Orenstein, M.J.), partially
granting defendants-appellees’ motion for summary judgment on those claims. We vacate and
remand that judgment because the plan administrators failed to offer any interpretation of the
plans’ terms to which the district court might have accorded deference in granting summary
judgment to SFP, and because the district court erroneously held that Strom had waived her
claim under one of the plans by failing to exhaust her administrative remedies, of which remedies
she was never informed by SFP.
BACKGROUND
Except where noted, the parties do not dispute the facts in this case.
Strom started her career as a secretary at a predecessor firm to SFP in 1980. She began
attending law school in 1985, but continued to work at SFP part-time. After passing the New
York bar exam in 1988, she joined the firm as an attorney. She was promoted to the position of
“partner” at SFP, effective January 1, 1995, and was again promoted, this time to the position of
“profit-sharing partner,” effective January 1, 1997. Although SFP was technically a professional
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corporation, the title of “partner” was given to those, like Strom, who were senior attorneys in the
office. At the time of Strom’s elevation to “partner” status in 1995, the three individual
defendants in this case — William Siegel, Saul Fenchel and Tracie Peddy — were shareholders,
and two other attorneys — Michael Schroder and Andrew Cangemi — were “profit-sharing
partners” as well as “officers” of the firm. Nothing in the record explains the significance of the
“officer” title within the corporate structure of SFP — for example, how it was assigned or what
the officers’ roles and responsibilities were.
Strom decided to leave SFP in 2000 to form a new firm with fellow SFP alumnus
Michael Schroder. She then claimed entitlement to benefits under, inter alia, two of SFP’s
pension plans: the SFP Profit Sharing Plan (“Profit Plan”) and the SFP Cash Balance Pension
Plan (“Cash Plan”) (collectively, the “Plans”). The Plans made pension benefits available to all
employees, but reserved an “increased contribution” for a defined subset of employees.1 This
subset changed repeatedly over the duration of Strom’s employment at SFP as a result of several
amendments to the Plans. Each amendment excluded a different group of employees from the
“increased contribution”: an amendment purportedly effective January 1, 1995 excluded all
“salaried associates”; another purportedly effective January 1, 1996 excluded all “non-profit
sharing attorneys”; and a third amendment purportedly effective January 1, 1997 excluded all
“non-equity profit-sharing attorneys with 13% or less profit share.” Notably, SFP claims that
Strom was a member of each of the three excluded groups of employees and candidly admits that
1
The difference between the two levels of eligibility is substantial. For example, at
one point during Strom’s employment with SFP, under the Profit Plan, the firm’s contributions
totaled eighty-four percent of all annual income over $120,000 for participants eligible for the
“increased contribution,” but only five percent for those, like Strom, who were excluded from it.
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the firm amended the language of the Plans expressly “to maintain[] the existing rate of benefit
accrual for Strom and to allocate the increased contribution only to the officers and
shareholders.”
With respect to the 1995 amendment, Strom insists that she could not have been excluded
as a “salaried associate” because she was a partner entitled to full benefits — specifically, that
she was entitled to the “increased contribution” benefits that Siegel, Fenchel, Peddy, Schroder
and Cangemi all received. Strom claims, inter alia, that the 1996 and 1997 amendments were
invalid as applied to her because they were passed by the firm’s leadership without notice to her,
and after her benefits had accrued under the Plans’ unamended provisions, in contravention of
various ERISA provisions. By contrast, the defendants argue that because SFP was a
professional corporation and distinguished only between shareholders and non-shareholders, the
title “partner” did not affect Strom’s status under the Plans. They claim that Strom’s eligibility
for benefits is governed exclusively by the terms of the Plans, and that she was excluded from the
“increased contribution” by each successive Plan amendment, all of which were passed in
compliance with the relevant ERISA provisions.
I. Strom’s 2000 Lawsuit
In 2000, Strom requested certain documents from SFP relating to its Profit Plan and Cash
Plan. In an August 2, 2000 letter, SFP informed Strom that it was in the process of computing
her benefits under the Profit Plan and that, “[a]s you know, you are not a participant in the [Cash
Plan] as you were neither a shareholder, nor an officer of Siegel Fenchel & Peddy, P.C.” The
letter did not indicate which provisions of the Cash Plan were being interpreted, or why the fact
that Strom was not a shareholder or officer of SFP rendered her ineligible for any benefits under
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the terms of the Cash Plan or its operative amendments.
On August 7, 2000, Strom and Schroder filed an ERISA action in the United States
District Court for the Eastern District of New York (Mishler, J.), against SFP, as well as Siegel
and Peddy. In that action — which is not before us in the present appeal — Strom claimed
entitlement to benefits under both the Profit Plan and the Cash Plan. The district court did not
reach the merits, however, but rather dismissed Strom’s complaint on December 7, 2000, for
failure to exhaust administrative remedies. The district court also rejected Strom’s argument that
SFP had denied her effective access to the administrative remedies provided under the relevant
Plans, but nonetheless granted Strom “the opportunity to file requests for review of [her Profit
Plan and Cash Plan claims] on or before December 18, 2000.”
By letters dated January 8, 2001, January 17, 2001, and April 25, 2001, Strom submitted
to SFP a claim for benefits under both the Profit Plan and the Cash Plan. Even though these
letters came after the December 18, 2000 deadline set by the district court, SFP considered the
claims on the merits.
II. The Administrative Proceedings
In response to the requests for Cash Plan benefits contained in Strom’s letters, SFP sent
her a letter on April 23, 2001, summarily reiterating its position that Strom was ineligible for any
Cash Plan benefits “as she was not a partner or shareholder.” Like the August 2, 2000 letter, this
letters did not purport to interpret a particular provision of the Cash Plan, nor did it provide
further clarification as to why Strom was ineligible to claim benefits.
Strom’s January letters to SFP also contained requests for documentation relating to the
Profit Plan and the Cash Plan. In its April 23, 2001 letter to Strom, SFP indicated that it had
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already provided her with the documents relating to the Profit Plan on January 5, 2001. With
respect to her request for documents relating to the Cash Plan, SFP informed Strom that she was
“not entitled to the Information requested in [her] letter,” because, as SFP had explained to her
previously, she was “neither a shareholder [n]or an officer of Siegel Fenchel & Peddy, P.C.”
However, SFP again did not explain why Strom’s ineligibility for benefits under the Cash Plan
precluded her even from receiving documents relating to that Plan, from which she or her
counsel could determine her eligibility for Cash Plan benefits. Two days later, on April 25, 2001,
Strom responded to this letter. Based on a copy of a plan she had obtained from Michael
Schroder,2 her new law partner and a former SFP attorney, Strom explained why she believed she
was a participant in the Cash Plan and therefore eligible for benefits thereunder. In response to
this letter, on June 12, 2001 SFP wrote to Strom and again summarily explained that she was not
eligible to receive Plan documents or benefits, “[a]s she was not a partner or shareholder.”
Further, SFP’s April 23, 2001 letter to Strom conceded that she was entitled to benefits
under the Profit Plan, but denied the amount of benefits Strom requested. The letter purported to
explain how SFP had reached its lower benefits calculation, but it did not explain why SFP was
using the precise figures that it did; that is, SFP did not offer, expressly or implicitly, an
interpretation of the Profit Plan terms. The April 23, 2001 letter also set a deadline of June 25,
2001 for Strom to request an administrative hearing to review the decision. Strom exercised that
2
Because of the relatively spare record concerning Schroder’s copy of the Plan, a
number of details remain unclear. First, the effective date of the copy is unclear. In her letter to
SFP, Strom’s attorney “assume[d] that the copy of the plan document that [Schroder] gave us
covered the period of time that Karen Strom was affiliated with your firm.” Second, it is unclear
whether the copy of the Plan was complete; in particular, we do not know whether Schroder’s
copy of the Plan included any information concerning participants’ rights to appellate review of
their claims.
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right and requested a hearing by letter dated June 24, 2001. The hearing was conducted on
January 22, 2002 before Siegel, Fenchel and Peddy, who serve as the Plan administrators, and the
near-exclusive focus was on Strom’s claim to benefits under the Profit Plan.
Two days after that hearing, on January 24, 2002, Strom made a formal request for a
hearing with respect to her Cash Plan claim. She claims that she waited until this date to do so
because she only learned that she was required to make a formal request for such a hearing at the
January 22, 2002 hearing on her Profit Plan claim. While it is unclear what in particular spurred
Strom’s formal request, Strom appears to argue that because SFP persistently denied her status as
a participant in the Cash Plan and refused to apprise her of any of her rights thereunder, she was
uncertain whether SFP would even have entertained a formal request for a hearing under that
Plan. Strom claims that it was only at the January 22 hearing that she learned that one of SFP’s
defenses against her Cash Plan claims was that she had not made a request for a hearing to
review them.
On March 12, 2002, SFP issued a “Decision After Hearing” (the “Decision”),
memorializing the January 22, 2002 hearing. The Decision explained that the January 22, 2002
hearing was meant to review Strom’s Profit Plan claim, and that “Strom’s claim reduced itself to
two aspects: (1) that the benefits to which she was entitled were not properly calculated in respect
to certain plan years; and (2) that she was entitled to greater contributions on the grounds that she
was a ‘partner’ in a number of the Plan years.” The Decision then proceeded to explain why it
could not conclusively resolve her claims:
The “hearing” consisted essentially of a colloquy among Ms. Strom, her counsel and the
presiding Hearing Officer. Apart from the question of the mathematical computations,
the question was, and still is, on what basis does Ms. Strom claim that she is entitled to
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additional contributions in the Siegel Fenchel & Peddy [Profit Plan]?
Ms. Strom’s counsel indicated that the basis for Ms. Strom’s claim for additional
contribution in the [Profit Plan] was that she was a “partner.”
However, there is no definition of the term “partner” in the [Profit Plan] . . . . Assuming
that the term “partner” would, in some way, qualify Ms. Strom for additional
contribution, it was requested of Ms. Strom and/or her counsel that documentation be
provided to establish (i) the position of “partner”; (ii) the significance of that position
inside the SPF firm; and (iii) the significance as it relates to the Plan.
No documentation was provided other than an announcement stating that Ms. Strom was
a “partner” and a letter referring to Ms. Strom as “partner.” This appeared to be the sum
total of Ms. Strom’s evidence in support of her position as a “partner.” However, no
information, documentation or any evidence was proffered to establish the significance of
this term. It was unclear whether Ms. Strom’s position was that “partner” was equivalent
to owner of the firm or was equivalent to some position which would be recognized by
the pension plan as qualifying her for additional contribution. Indeed, upon being
questioned as to the absence of any substantial documentation to establish any of these
propositions, Ms. Strom’s counsel indicated that the material was “deliberately” withheld
since Ms. Strom was involved in [other] litigation . . . against the SFP firm . . . .
In any event, no explanation was offered by Ms. Strom or her counsel as to exactly how
Ms. Strom qualified for additional contribution under the Plan terms or the significance
of the term “partner” as it relates to this Plan. Whatever the position of the Claimant, it
certainly was not made evident at the hearing, nor was any information provided at the
hearing; in fact, it was indicated that it had been deliberately withheld.
The Decision made clear that it was only tentatively denying Strom’s Profit Plan claim:
As noted, the exhaustion of administrative remedies is an absolute prerequisite. By the
same token, the administrative remedy must be pursued “in good faith” by the Claimant.
Appearing at a hearing without making a reasonable effort to present the evidence in
support of the position is not proper use of the administrative remedy, nor does it
constitute an exhaustion of the administrative remedy . . . .
Under the circumstances, since the administrators, at the hearing, were denied a
submission by Claimant of all the relevant factors to make a full and genuine evaluation
of her claim, it would be impossible and inappropriate for the administrators to reach a
final determination on Ms. Strom’s claim. Rather, the hearing should be adjourned to a
date for Ms. Strom and her representative to provide the necessary information in support
of her claim so that the administrators can render a determination. If Ms. Strom, having
presented all the evidence in support of her position, is dissatisfied with the
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determination, she can then properly seek her remedy in court.
The Decision turned briefly to the Cash Plan claim, and noted (1) that a letter rejecting
Strom’s Cash Plan claim had been sent on June 12, 2001; (2) that the denial in that letter “was
plain, leaving no doubt that Claimant’s counsel, an expert in ERISA law, had she disagreed with
the conclusion, should have exercised her right to a hearing”; and (3) that Strom raised no
questions about the Cash Plan prior to December 18, 2000. The Decision concluded that, while
the Cash Plan itself requires that a claimant request a hearing within sixty days of an adverse
decision, Strom did not make any such request following the June 12, 2001 letter. Moreover, the
Decision noted that, in any event, Judge Mishler had ordered Strom to exercise her right to
administrative review before December 18, 2000, and “it is beyond dispute that no such request
was made prior” to that date. Thus, the Decision concluded, since “[n]o request for a hearing
[had] been made either under the Plan period or the period set by the [district court], Ms. Strom
has intentionally waived her administrative remedy to review the denial under the [Cash Plan].”
Another hearing on Strom’s Profit Plan claim was held on May 14, 2002, but no decision
was issued after those proceedings.
III. The Present Lawsuit
On March 18, 2003, Strom filed the complaint that forms the basis for this appeal. In this
complaint, Strom sought a declaration of her rights under four of SFP’s pension plans (including
the Cash Plan and the Profit Plan), as well as an award of additional benefits under each. She
also added a separate claim asserting breach of fiduciary duty by the Plans’ administrators.
Defendants-appellees, in their answer to Strom’s complaint, asserted ten affirmative defenses,
including that Strom’s “claims may be barred, in whole or in part, by the doctrine of laches,
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waiver and/or estoppel, or by the applicable statute of limitations.”
By consent of the parties, the case was referred to United States Magistrate Judge James
Orenstein. See 28 U.S.C. § 636(c); Fed. R. Civ. P. 73. Both sides moved for summary
judgment, and after reviewing the parties’ submissions, the district court held, inter alia, (1) that
Strom’s claim that she was a “partner” and therefore entitled to an increased contribution was
“foreclosed by an administrative decision that was neither arbitrary nor capricious”; and (2) that
Strom “has waived her claim” under the Cash Plan because she failed to exhaust her
administrative remedies.3
As the district court noted, Strom raised a “standard of review” argument against the
March 12, 2002 Decision, which had denied her claim that, as a “partner” of the firm, she was
entitled to the same benefits as Siegel, Fenchel, Peddy, Schroder and Cangemi. Specifically,
Strom argued that the district court must interpret the relevant Plan terms — “salaried associate”
and “non-profit sharing attorney” — de novo, on the grounds that the administrators
“interpreted” the plans under a flagrant and inherent conflict of interest, refused even to
accept Strom’s participant status in 3 of the 4 plans until after Strom commenced the
instant litigation, offered varying and conflicting plan “interpretations” designed solely to
deprive Strom of her rightful benefits, and did not apply the “interpretation” it now urges
on the other non-shareholder partners[, i.e., Schroder and Cangemi,] of SFP.
The district court rejected Strom’s argument that a de novo standard of review applied.
The court first explained that parties had conceded that the Profit Plan “gives the administrator or
fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of
the plan,” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989), and that,
accordingly, the administrators’ decision was subject to review for abuse of discretion.
3
The district court’s other holdings are not before us on appeal.
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Regarding Strom’s claim that the administrators reviewed her claims under a conflict of interest,
the district court observed that such a conflict did not alter the standard of review, but rather that
the “conflict must be weighed as a factor in determining whether there is an abuse of discretion.”
Id. (internal quotation marks and alteration omitted). The district court further noted that
Strom’s reliance on DeFelice v. American Internationall Life Assurance Company of New York,
112 F.3d 61 (2d Cir. 1997), was misplaced, because DeFelice involved a plan in which the plan
administrators were not given discretion to interpret ambiguous terms in the plan language.4 See
id. at 65-66.
Thus, the district court reviewed the March 12, 2002 Decision to determine whether it
was arbitrary and capricious. On the question of whether the Decision passed this standard, the
district court said only the following:
Under [the arbitrary and capricious] standard of review, I must defer to the
administrators’ decision to interpret the terms “salaried associate” and “non-profit sharing
attorney” to mean attorneys who were neither shareholders nor officers of SFP because
that interpretation was not “without reason, unsupported by substantial evidence or
erroneous as a matter of law.”
As to Strom’s Cash Plan claim, the district court explained that defendants-appellees
were arguing, inter alia, (1) that the denial of Strom’s Cash Plan claim occurred no later than
August 2, 2000, when Strom received the first letter stating that she was “not a participant in the
[Cash Plan] as [she was] neither a shareholder nor an officer of Siegel Fenchel & Peddy, P.C.”;
and (2) that Strom waived her Cash Plan claim because, following the August 2, 2000 denial,
Strom failed to seek review either before the Plan’s sixty-day deadline or even before the later
4
DeFelice dealt with the unrelated question of whether, when a plan is being reviewed de
novo, a reviewing court may consider evidence outside the administrative record when the plan
administrator was operating under a conflict of interest. DeFelice, 112 F.3d at 65.
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deadline of December 18, 2000 specified in Judge Mishler’s order dismissing Strom’s first
ERISA action.
The district court then asserted that Strom failed to offer any meaningful response to
defendants-appellees’ contentions, and that her “entire response to defendants[’] argument is
contained in a footnote in her opposition brief,” which stated:
While Strom attempted to appeal in 2001 and 2002 under both the [Profit Plan] and the
[Cash Plan], Defendants absolutely refused to provide necessary [Cash Plan] documents.
Defendants also refused to provide certain requested [Profit Plan] documents and did not
grant or deny Strom’s [Profit Plan] appeal. While Defendants initially moved to dismiss
Strom’s claims for failure to exhaust administrative remedies, that motion has been
withdrawn.
Given this, the district court noted that “[i]t thus appears that Strom concedes that she did not
request an administrative hearing before the deadlines that the defendants cite, and that implicit
concession is consistent with the record.” Nonetheless, the district court decided it would be
prudent to investigate her claim more thoroughly. In so doing, the district court found that it did
not need to determine whether the appropriate deadline for Strom to request a hearing was Judge
Mishler’s December 18, 2000 deadline or sixty days following the August 2, 2000 letter. This
was because SFP also sent a letter to Strom on June 12, 2001, which again denied her Cash Plan
claim. And, three days later, Strom’s lawyer responded to SFP with a letter formally requesting
“a hearing on the denial of [her] claim for benefits from the [Profit Plan],” but said nothing about
a hearing on her claim under the Cash Plan. It was not until January 24, 2002 — two days after
the hearing regarding the Profit Plan — that Strom finally requested a hearing for her Cash Plan
claim. And this date, the district court concluded, was well past the sixty-day deadline, even
assuming that the June 12, 2001 letter commenced the sixty-day time period.
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The district court then acknowledged and, in turn, rejected Strom’s argument that “the
written denial of her claim for Cash Plan benefits set forth in the letter of June 12, 2001, was not
sufficient under [the terms] of the plan” to provide her with notice of her right of review, or the
procedures governing such an appeal. Observing that the June 12, 2001 letter “contained all of
the required information, including the deadline for appeal, though it pertains to the [Profit
Plan],” the district court reasoned that Strom was implicitly provided with sufficient information
concerning the requirements governing administrative review under the Cash Plan. Thus, the
district court found that it was “difficult to believe this technicality”— the letter’s inclusion of
information concerning the Profit Plan, but not the Cash Plan —“prevented Strom from
requesting a hearing to review the administrators’ denial” of her rights under the Cash Plan.
Because the district court concluded that Strom had “waived” her Cash Plan claim, it did
not consider defendants-appellees’ alternative argument that the administrators’ denial of
benefits under the Cash Plan must be sustained under the arbitrary and capricious standard of
review.
DISCUSSION
On appeal, Strom argues that the district court erred in holding (1) that the arbitrary and
capricious standard of review applied to the Plan administrators’ Decision denying Strom’s claim
for enhanced benefits under the Profit Plan, and that the Plan administrators’ Decision rejecting
Strom’s Profit Plan claim was neither arbitrary nor capricious; and (2) that Strom waived her
Cash Plan claim.
I. The Profit Plan Claim
Strom raises two arguments why the district court should have applied a de novo standard
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of review to her claim under the Profit Plan. First, relying on this Court’s decision in Nichols v.
Prudential Insurance Co., 406 F.3d 98 (2d Cir. 2005), she contends that the Plan administrators
never issued a final decision on its review of her Profit Plan claim, and therefore that this claim
should be deemed denied by operation of law. See id. at 106 (“strongly suggest[ing]” that a plan
administrator’s failure to comply with certain plan regulations “renders the claimant’s
administrative remedies exhausted by operation of law and consequently permits the claimant to
seek review in the federal courts without further delay”). A claim deemed denied by operation of
law, Strom claims, must be reviewed by the court de novo because the claim denial does not
represent any exercise of discretion by plan administrators. Id. at 109. Second, she contends that
the Plan administrators operated under a conflict of interest necessitating de novo review by the
district court.
We hold that the district court erred, and should have reviewed the administrators’
decision de novo. The district court stated that it was compelled to “defer to the administrators’
decision to interpret the terms ‘salaried associate’ and ‘non-profit sharing associate’ to mean
attorneys who were neither shareholders nor officers of SFP,” but the district court could not
defer to an interpretation that the Decision never in fact made or explained. The Plan
administrators specifically reserved decision on Strom’s claims, observing that in light of her
alleged refusal to cooperate during the hearing, “it would be impossible and inappropriate for the
administrators to reach a final determination on Ms. Strom’s claim.” We express no opinion
concerning SFP’s claim that Strom refused to cooperate, but rather observe that the text of the
Decision itself makes clear that no actual decision was made.
In Nichols, after Prudential failed to timely issue a final decision on Nichols’ appeal from
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a denial of benefits, she went directly to federal court and sued her insurer under ERISA. We
held that her claim was “deemed denied” by Prudential’s inaction and that her administrative
remedies were exhausted by operation of law. Id. at 104, 109. Based on the Supreme Court’s
decision in Firestone Tire & Rubber Co., we observed that “we may give deferential review only
to actual exercises of discretion,” and that “[a] ‘deemed denied’ claim is not denied by any
exercise of discretion, but by operation of law.” Id. at 109. We instructed the district court to
review the plan administrator’s decision de novo because Prudential’s inaction “le[ft] the court
without any decision or application of expertise to which to defer.” Id. In the instant case, the
Plan administrators explicitly refused to decide Strom’s claim, and such a non-decision cannot be
deemed an “exercise of discretion” to which the district court might have deferred.5
Because a non-existent interpretation cannot be a reasonable one, the district court erred
in deferring to the Profit Plan administrators’ Decision. Nor could the district court properly rely
on the letters that SFP sent to Strom. None of those letters offers an interpretation of the Profit
Plan’s language. Though SFP’s letters about the Cash Plan did state that Strom was not eligible
for any Cash Plan benefits because she was neither a shareholder nor an officer — and its June
12, 2001 letter further asserted that Strom was not a “partner,” see supra — even those
statements did not offer any explanation of why this was so, much less one that could be imputed
to the terms of the Profit Plan.6
5
SFP’s argument that the Plan administrators did not issue a final decision because
Strom failed to comply with requests for certain documents does not change the fact that the Plan
administrators never issued a final decision on Strom’s claims, explaining why, under the terms
of the Plan, she was ineligible for the benefits she claimed.
6
We express no opinion as to the construction of the terms “salaried associate,”
“non-profit sharing attorneys,” or “non-equity profit-sharing attorneys,” their application to
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For these reasons, we vacate the district court’s grant of summary judgment dismissing
Strom’s Profit Plan claim and remand the claim to the district court for further proceedings.
II. The Cash Plan Claim
The parties concede that SFP’s letters to Strom did not comply with the notice
requirements of ERISA, which mandate that covered employee benefit plans “provide adequate
notice in writing to any participant or beneficiary whose claim for benefits under the plan has
been denied, setting forth the specific reasons for such denial, written in a manner calculated to
be understood by the participant,” 29 U.S.C. § 1133(1), and “afford a reasonable opportunity to
any participant whose claim for benefits has been denied for a full and fair review,” id.
Strom, or the effect of the amendments on her eligibility under the Profit Plan or Cash Plan. We
do note, however, that contrary to the assertion of the district court, the Decision rendered by the
Plan administrators did not contain any analysis of the terms “salaried associate” or “non-profit-
sharing partner,” which go undefined in the Profit Plan. Nor did the Plan administrators point to
any other contextual language in the Plan which might require, or even suggest, the interpretation
of these terms that the administrators essentially urged. Furthermore, the Plan administrators did
not adduce any evidence to show that their purported interpretations of “salaried associate” and
“profit-sharing partner” were consonant with common usage or practice in the legal marketplace.
That is, the Plan administrators wholly failed to marshal any support for their own construction
of these terms.
In construing the Plan de novo, the district court on remand must first look to its terms,
and “unambiguous language in an ERISA plan must be interpreted and enforced in accordance
with its plain meaning. ‘Language is ambiguous when it is capable of more than one meaning
when viewed objectively by a reasonably intelligent person who has examined the context of the
entire integrated agreement.’” Aramony v. United Way Replacement Benefit Plan, 191 F.3d 140,
149 (2d Cir. 1999) (quoting O’Neil v. Ret. Plan for Salaried Employees of RKO Gen., Inc., 37
F.3d 55, 59 (2d Cir. 1994)) (internal citations omitted). Whether ERISA plan language “is
ambiguous is a question of law that is resolved by reference to the contract alone.” O’Neil, 37
F.3d at 59 (internal quotation marks and citation omitted). Defendants-appellees have thus far
provided no persuasive explanation why the terms “salaried associate” and “profit-sharing
partner” are ambiguous or should mean anything other than what they clearly denote.
Further, we express no opinion as to whether the amendments were passed in compliance
with the relevant ERISA provisions, an issue the district court never addressed.
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§ 1133(2).7 Additionally, ERISA regulations elaborated at 29 C.F.R. § 2560.503-1(g)(1) require
that notice to the claimant of an adverse benefit determination “shall set forth, in a manner
calculated to be understood by the claimant . . . [a] description of the plan’s review procedures
and the time limits applicable to such procedures, including a statement of the claimant’s right to
bring a civil action.” Thus, Strom argues on appeal that the district court erred in determining
that she had waived her claim because she failed to exhaust her administrative remedies. In
response, defendants-appellees argue that a failure to comply with the notice requirements of
§ 1133 will not save a plaintiff who had actual knowledge of her right to seek review.
The district court conflated its finding that Strom waived her claims under the Cash Plan
with its finding that she failed to exhaust her administrative remedies and was therefore
precluded from bringing an action in federal court. Because there is no suggestion that Strom
forewent her Cash Plan claims “knowingly and voluntarily,” Laniok v. Advisory Comm. of
Brainerd Mfg. Co. Pension Plan, 935 F.2d 1360, 1367 (2d Cir. 1991), as would be required for
her to waive those claims, we must vacate the district court’s finding of waiver. Simply put,
7
To the extent that SFP argues that Strom did have notice of the Cash Plan’s
review provisions, we observe that such an argument rests on two very thin reeds, neither of
which withstands scrutiny. First, SFP relies on the alleged similarity between the copy of the
Cash Plan that Strom obtained from Schroder and the Profit Plan, the provisions of which Strom
knew. From this alleged similarity, the SFP appears to argue that Strom was given constructive
notice of the appeals provisions of the Cash Plan. But absent a showing that Strom knew the
Plans to be identical, SFP cannot show that Strom had knowledge of the Cash Plan’s review
procedures merely because she was aware of the procedures contained in the Profit Plan.
Second, SFP suggests that Strom’s mere possession of Schroder’s copy of the Cash Plan gave her
sufficient notice of its appeals provisions. But, again, absent any showing that Schroder’s copy
of the Cash Plan was true and complete, and that Strom knew the Plan to be operative during the
time period when her claims arose, a court could not find actual knowledge on Strom’s part.
To the extent the district court relied on these arguments in finding that Strom received
adequate notice of her rights to administrative review under the Cash Plan, we reject that finding.
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Strom cannot have waived her rights to administrative review procedures of which she was not
given notice by SFP. SFP represented to Strom that she was ineligible to receive any information
concerning her eligibility under the Cash Plan. We do not opine on the legitimacy of SFP’s
repeated assertion that Strom was not in fact a participant under the Plan; we leave this question
to the district court for resolution. But we find nothing in the record to support SFP’s assertion
that Strom, as a putative non-participant in the Cash Plan, could not have access to Plan
documents, on the basis of which she might have made an argument for her participation under
the Plan or, more specifically, sought administrative review of SFP’s ostensible determination
that she was a non-participant. SFP’s repeated refusal to provide Strom with the requested
documents because in its view she was a non-participant in the Plan clearly ran afoul of ERISA’s
notice provisions, which require that adverse benefit determinations be “calculated to be
understood by the claimant” and contain notice of the claimant’s rights to administrative review.
29 C.F.R. § 2560.503-1(g)(1). Thus, Strom cannot be held to have waived any rights of which
she was never apprised.
In a case such as this one, where the plan administrator has denied a claimant’s very
status as a plan participant and consequently refused to produce plan-related documents — which
the claimant had specifically and repeatedly requested — we hold that, as a matter of law, the
plan cannot make the requisite showings concerning the knowing or voluntary nature of the
claimant’s alleged waiver of his or her rights to administrative review. Accordingly, the “actual
knowledge” exception articulated by this Court in Veltri v. Building Services 32B-J Pension
Fund, 393 F.3d 318, 326 (2d Cir. 2004), is not implicated here. In Veltri, we held that, for
purposes of the statute of limitations, a claimant will be held to her actual knowledge, regardless
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of the plan administrator’s failure to provide adequate § 1133 notice. We opined that, where a
plan administrator fails to give adequate § 1133 notice of a right to appeal to a court, it may be
appropriate to equitably toll the statute of limitations, but that such an extraordinary remedy
would not be appropriate when the claimant already knew she had a right to appeal to a court.
See id. (“[A] plaintiff who has actual knowledge of the right to bring a judicial action challenging
the denial of her benefits may not rely on equitable tolling notwithstanding inadequate notice
from her pension plan.”).
This Court has not yet ruled whether the “actual knowledge” holding of Veltri applies to
pension plan review procedures, cf. Garcia Ramos v. 1199 Health Care Employees Pension
Fund, 413 F.3d 234, 238 (2d Cir. 2005) (observing that this Court “ha[s] never squarely held that
[equitable tolling] applies to time limits that are specified in [ERISA] plan provisions”
(alterations in original; internal quotation marks omitted)), and we need not do so here because
our holding forecloses a waiver defense in the circumscribed circumstances present in this case.
When a plan assiduously refuses to provide a claimant with information concerning her
eligibility or administrative review rights under the plan, any alleged waiver simply cannot be
knowing or voluntary.
To the extent that the district court’s holding with respect to the Cash Plan turns on
Strom’s alleged failure to exhaust, the district court erred because “[d]efendants who give
inadequate notice of the right to administratively appeal a denial of benefits are thus precluded
. . . from asserting failure to exhaust administrative remedies as a defense.” Veltri, 393 F.3d at
324 (citing Burke v. Kodak Ret. Income Plan, 336 F.3d 103, 108 (2d Cir. 2003)).
In conclusion, we find the district court’s waiver determination to be untenable in light of
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SFP’s non-compliance with the notice provisions of ERISA, and we find SFP to be precluded
from raising a failure-to-exhaust defense. We therefore vacate the district court’s holding with
respect to Strom’s Cash Plan claims and remand for further proceedings consistent with this
decision.
CONCLUSION
For the foregoing reasons, the judgment of the district court is VACATED, and the case is
REMANDED for further proceedings.
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