McCarthy v. Dun & Bradstreet, No. 05-3828 (2d Cir. 2007)

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05-3828 McCarthy v. Dun & Bradstreet 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term 2005 (Argued February 15, 2006 Decided March 29, 2007 Errata Filed April 4, 2007) -------------------------------------------------------x Docket No.: 05-3828-cv Mary McCarthy, Clayton Borowski, on behalf of others similarly situated, and individually, Gail Adams, Donald Bakert, RoseMarie Black, Albin Blom, Mike Blount, William Brady, Donna Cochran, Steve Crowther, Michael Coughlin, Delia Coy, Paul Crowe, Cary Elbaum, Lisa Farnsworth, Jack Finley, James Gabrys, Gregory Gopodarek, Laura Gue, James Hadley, Gerald Hillard, Carl Langbein, Thomas Majka, Frederick Markt, Doris Megesi, Steve Miholics, Marleen Miller, Lewis Moore Jr., Philip Moscato, Brian Neary, Karl Nicosia, Barry O Neill, Roger Ruggieri, Philip Salamone, Robert Short Jr., Ruth Stewart, Charles Szymanski, Billie Thomas, Frank Tricoli, Bill Tuohy, Jerry Vincent, Walter Waitz, Mark Weiss, Donald Wickersham, John Zimmer and Debbie K. Lubonski, Exec. of the Est. of Katherine J. Lubonski, Plaintiffs-Appellants, - v. The Dun & Bradstreet Corporation, The Dun & Bradstreet Corporation Retirement Account, and The Dun & Bradstreet Career Transition Plan, Defendants-Appellees, Aldo Camerin, Terri Carpenter, Denise Cyphers and Katherine Lubonski, Plaintiffs. -------------------------------------------------------x B e f o r e : KEARSE and SACK, Circuit Judges, and STANCEU, Judge.* Appeal of grant of motion to dismiss count of complaint, grant of summary judgment, and denial in part of motion to amend * The Honorable Timothy C. Stanceu, United States Court of International Trade, sitting by designation. 1 complaint, by the United States District Court for the District 2 of Connecticut (Stefan R. Underhill, J.), in favor of Defendants- 3 Appellees. 4 AFFIRMED. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Thomas G. Moukawsher, Esq. Moukawsher & Walsh, LLC, Hartford, Connecticut, for PlaintiffsAppellants. Patrick W. Shea, Esq., Paul, Hastings, Janofsky & Walker LLP, Christine Button, of counsel, Stamford, Connecticut, for Defendants-Appellees. Stanceu, Judge: Plaintiffs-appellants are former employees of the Dun & 20 Bradstreet Corporation ( Dun & Bradstreet ) who were terminated 21 from the company when Dun & Bradstreet sold its Receivables 22 Management Services operations, conducted in the United States, 23 Canada, and Hong Kong, on April 30, 2001. 24 plaintiffs-appellants became employees of a new corporation, Dun 25 & Bradstreet Receivables Management Services, which resulted 26 from the sale. 27 to receive severance benefits under the Career Transition Plan, 28 a Dun & Bradstreet benefit plan. 29 benefits that they could receive under another benefit plan, the 30 Master Retirement Plan, which on December 31, 2001 was replaced Upon the sale, Their change in employment did not qualify them It also affected the retirement 2 1 by the Dun & Bradstreet Corporation Retirement Account Plan. 2 The new pension plan established as the Dun & Bradstreet 3 Corporation Retirement Account Plan created different retirement 4 benefits but assumed the vested obligations of the superseded 5 Master Retirement Plan, which is at issue in this appeal. 6 Plaintiffs-appellants, many of whom had nearly attained the 7 age of 55 at the time of the sale of the Receivables Management 8 Services operations, sued Dun & Bradstreet, the Dun & Bradstreet 9 Corporation Retirement Account Plan, and the Dun & Bradstreet 10 Career Transition Plan in the United States District Court for 11 the District of Connecticut, seeking individual and class action 12 relief. 13 under the Dun & Bradstreet Corporation Retirement Account Plan 14 and the Dun & Bradstreet Career Transition Plan, contrary to the 15 requirements of the Employee Retirement Income Security Act of 16 1974 ( ERISA ), 29 U.S.C. § 1001 et seq. 17 ruled against plaintiffs with respect to both benefit plans. 18 McCarthy v. Dun & Bradstreet Corp., 372 F. Supp. 2d 694 19 (D. Conn. 2005) (McCarthy II); McCarthy v. Dun & Bradstreet 20 Corp., No. 03CV431, 2004 WL 2743569, 2004 U.S. Dist. LEXIS 23996 21 (D. Conn. Nov. 30, 2004) (McCarthy I). 22 They alleged that they were wrongfully denied benefits The district court Plaintiffs-appellants appeal the district court s rulings on 23 three motions in favor of defendants-appellees: (1) the district 24 court s grant of defendants motion to dismiss, under 3 1 Fed. R. Civ. P. 12(b)(6), plaintiffs-appellants claim that the 2 Summary Plan Description for the Master Retirement Plan 3 violated ERISA by inadequately disclosing the method by which a 4 benefit of the Master Retirement Plan (the deferred vested 5 retirement benefit ) is reduced actuarially when paid to former 6 employees of Dun & Bradstreet, such as plaintiffs-appellants, who 7 elected to receive payments before reaching age 65; (2) the 8 district court s grant of defendants-appellees summary judgment 9 motion to deny relief on plaintiffs-appellants claim that the 10 Master Retirement Plan used an unreasonably high discount rate of 11 6.75 percent to reduce actuarially the deferred vested retirement 12 benefit that the Master Retirement Plan paid to such former 13 employees; and (3) the district court s denial in part of 14 plaintiffs-appellants motion to amend their complaint to 15 challenge as unlawful under ERISA the mortality table that the 16 Master Retirement Plan used in the actuarial reduction. 17 reasons discussed in this opinion, we affirm all three rulings of 18 the district court. 19 20 I. For the BACKGROUND The facts underlying this appeal, as summarized below, are 21 undisputed. 22 & Bradstreet on April 30, 2001, the date on which the company 23 sold its Receivables Management Services operations. 24 employees of Dun & Bradstreet who were terminated before reaching Plaintiffs-appellants ceased being employees of Dun 4 As former 1 the minimum early retirement age of 55, plaintiffs-appellants no 2 longer qualified for the early retirement benefit that was 3 available under the Master Retirement Plan to employees retiring 4 directly from Dun & Bradstreet. 5 pension benefits had vested by the accrual of a minimum of five 6 years of credited service with Dun & Bradstreet, but who were 7 separated from Dun & Bradstreet before reaching the age of 55, 8 plaintiffs-appellants remained eligible to receive a deferred 9 vested retirement benefit under the Master Retirement Plan. 10 Under the terms of this deferred vested retirement benefit, 11 pension-vested former employees such as plaintiffs-appellants 12 could receive, upon reaching the normal retirement age of 65, the 13 full retirement benefit for which they qualified under the plan. 14 As former employees whose The Master Retirement Plan calculated the full retirement 15 benefit according to a formula based on a participant s years of 16 credited service and earnings with Dun & Bradstreet, with a 17 reduction designed to compensate for Dun & Bradstreet s 18 contribution to the participant s Social Security retirement 19 benefit (the Social Security Offset ). 20 Offset is based on a percentage of the estimated annual 21 retirement benefit the participant would be entitled to receive 22 at age 65 under the Social Security program. The Social Security 23 The Master Retirement Plan provided that former employees, 24 i.e., employees who terminated their employment before reaching 5 1 the age of 55, instead of receiving their deferred vested 2 retirement benefit upon their reaching the age of 65, could 3 choose to receive payments as early as age 55. 4 payment option, a former employee s deferred vested retirement 5 benefit was actuarially reduced from the amount that would have 6 been paid at age 65 in two respects. 7 value of money, the Master Retirement Plan reduced the benefit by 8 a 6.75 percent discount rate for each year prior to the age of 65 9 that payments began. Under this early First, to reflect the time Second, the benefit was reduced by a 10 mortality factor to adjust actuarially for the possibility that a 11 participant might not live to the age of 65. 12 Unlike former employees such as plaintiffs-appellants who 13 were eligible only for deferred vested retirement benefits, 14 employees retiring directly from Dun & Bradstreet were eligible 15 to receive an early retirement benefit under the Master 16 Retirement Plan. 17 retirement benefit to employees who accrued ten years of credited 18 service with Dun & Bradstreet, retired directly from Dun & 19 Bradstreet after reaching the age of 55, and chose to receive 20 payments before reaching the age of 65. 21 benefit was a more desirable benefit than the deferred vested 22 retirement benefit as actuarially reduced under the early payment 23 option. The Master Retirement Plan provided this early This early retirement Under the early retirement benefit, the accrued pension 6 1 was reduced by only three percent for each year that payments 2 began before the retiree reached the age of 65. 3 To apprise plan participants of the benefits available under 4 the Master Retirement Plan, Dun & Bradstreet, as required by 5 ERISA, provided plan participants with a summary plan description 6 ( Summary Plan Description ). 7 contains both a Vesting section that explains the deferred 8 vested retirement benefits available to pension-vested former 9 employees and an Early Retirement Benefit section that The Summary Plan Description 10 discusses the early retirement benefits available to 11 directly-retiring Dun & Bradstreet employees. 12 Early Retirement Benefit section is a reduction table that 13 illustrates the percentage of accrued retirement benefits a 14 direct retiree would receive for each year that payments begin 15 before age 65, based on the three percent annual reduction. 16 There is no table or discussion in the Vesting section of the 17 Summary Plan Description that sets forth the percentage by which 18 the actuarial reduction will reduce the benefit of a pension- 19 vested former employee who is terminated from employment with Dun 20 & Bradstreet before reaching the age of 55 but elects to receive 21 payments before the age of 65. Included in the 22 On March 12, 2003, plaintiffs sued in district court, 23 claiming that the provision of the Master Retirement Plan that 24 actuarially reduced benefits of former employees who elected to 7 1 receive payments prior to attaining the age of 65 could not be 2 enforced against them because, in their view, the Summary Plan 3 Description was inadequate under ERISA. 4 a result of the deficiencies in the Summary Plan Description, 5 they should be held to qualify for unreduced benefits or, 6 alternatively, for the early retirement benefits they would have 7 received had they retired directly from Dun & Bradstreet. 8 district court dismissed this count of plaintiffs complaint 9 under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon They maintained that, as The 10 which relief can be granted. 11 the treatment of the actuarial reduction in the Summary Plan 12 Description was satisfactory under ERISA. 13 raise the same issue on appeal. 14 The district court concluded that Plaintiffs-appellants Plaintiffs-appellants argue, as a second issue on appeal, 15 that the district court erred in denying them the opportunity to 16 amend their complaint to raise a challenge to the mortality table 17 used in the Master Retirement Plan which, together with the 6.75 18 percent discount rate reduction, actuarially reduced the deferred 19 vested retirement benefit payable to former employees choosing to 20 receive payments before reaching age 65. 21 denied the motion, concluding that the amendment would constitute 22 an entirely new claim that would have prejudiced defendants 23 because the amendment was sought at a late stage of the 8 The district court 1 litigation, after the close of discovery and after defendants had 2 moved for summary judgment. 3 Plaintiffs-appellants also claimed in district court, and 4 argue again on appeal, that the 6.75 percent discount rate that 5 the Master Retirement Plan used to reduce actuarially the 6 deferred vested retirement benefits of former employees renders 7 the actuarial reduction unreasonable. 8 their view, works a prohibited forfeiture of benefits under 9 ERISA Section 203(a). This discount rate, in Am. Compl. ¶ 95. The district court 10 awarded summary judgment to defendants-appellees, concluding that 11 ERISA does not require a zero-risk discount rate and that no 12 reasonable juror could find that the 6.75 percent discount rate 13 was unreasonable. 14 15 16 17 McCarthy II, 372 F. Supp. 2d at 699 & n.2. II. A. DISCUSSION The District Court Did Not Err in Dismissing the Claim that the Summary Plan Description Violates ERISA Section 102 and related provisions of ERISA require that a 18 summary plan description be furnished to all participants and 19 beneficiaries of an employee benefit plan and that it reasonably 20 apprise participants and beneficiaries of their rights and 21 obligations under the plan. 22 1024(b) (2000). 23 claimed in their amended complaint that Dun & Bradstreet violated 24 ERISA Section 102 by fail[ing] to include in the [Master 25 Retirement Plan] summary plan description the actuarial 29 U.S.C. §§ 1022(a), Before the district court, plaintiffs-appellants 9 1 assumptions and/or the reduction chart it intended to apply to 2 early retirement for former employees . . . . 3 They sought as relief unreduced benefits upon early retirement 4 or, in the alternative, early retirement benefits reduced for 5 former employees in the same manner as such benefits are reduced 6 for current Dun & Bradstreet employees. 7 Cl. ¶ 3. 8 Description satisfied the requirements of ERISA, granted 9 defendants motion to dismiss. 10 11 Am. Compl. ¶ 93. Am. Compl. WHEREFORE The district court, concluding that the Summary Plan McCarthy I, 2004 WL 2743569, at *5, 2004 U.S. Dist. LEXIS 23996, at *15. We review de novo determinations of a district court that 12 resolve a motion to dismiss a complaint. 13 Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir. 2003). 14 a motion to dismiss under Fed. R. Civ. P. 12(b)(6) for failure to 15 state a claim upon which relief can be granted, we accept as true 16 all factual statements alleged in the complaint and draw all 17 reasonable inferences in favor of the non-moving party. 18 Tamoxifen Citrate Antitrust Litig., 429 F.3d 370, 384 19 (2d Cir. 2005), amended by 466 F.3d 187, 200 (2d Cir. 2006). 20 general, our review is limited to the facts as asserted within 21 the four corners of the complaint, the documents attached to the 22 complaint as exhibits, and any documents incorporated in the 23 complaint by reference. 24 768, 776 (2d Cir. 2002). Miller v. Wolpoff & In reviewing In re In Taylor v. Vt. Dep t of Educ., 313 F.3d 10 1 The Federal Rules of Civil Procedure require that a pleading 2 contain a short and plain statement of the claim showing that 3 the pleader is entitled to relief. 4 Under this simplified standard for pleading, a court may dismiss 5 a complaint only if it is clear that no relief could be granted 6 under any set of facts that could be proved consistent with the 7 allegations. 8 v. Sorema N.A., 534 U.S. 506, 514 (2002) (quotation marks, 9 citation, and alteration omitted)). Fed. R. Civ. P. 8(a)(2). Tamoxifen, 429 F.3d at 384 (quoting Swierkiewicz We therefore must construe 10 the complaint liberally to determine whether the district court 11 erred in concluding that plaintiffs could prove no set of facts 12 that would entitle them to relief on their claim that the Summary 13 Plan Description violates Section 102 of ERISA. 14 Jaghory v. N.Y. State Dep t of Educ., 131 F.3d 326, 329 (2d Cir. 15 1997). 16 motion to dismiss and agree with the underlying conclusion that 17 the Summary Plan Description did not violate Section 102 of 18 ERISA. 19 See generally We find no error in the district court s grant of the Section 102(a) of ERISA provides that a summary plan 20 description shall be sufficiently accurate and comprehensive to 21 reasonably apprise such participants and beneficiaries of their 22 rights and obligations under the plan. 23 ERISA Section 102(b) lists specific information that must be 24 included in every summary plan description, including the 11 29 U.S.C. § 1022(a). 1 circumstances which may result in disqualification, 2 ineligibility, or denial or loss of benefits . . . . 3 Id. § 1022(b). 4 The disclosure requirements ERISA imposes on summary plan 5 descriptions present two issues concerning the Summary Plan 6 Description for the Master Retirement Plan. 7 general, issue is whether the Summary Plan Description, in 8 describing the deferred vested retirement benefit, is 9 sufficiently accurate and comprehensive to satisfy Section The first, and more 10 102(a). 11 Description is inaccurate, the question is whether the Summary 12 Plan Description is insufficiently comprehensive to reasonably 13 apprise plaintiffs of their rights because it does not disclose 14 the method by which the deferred vested retirement benefit 15 available to former employees choosing to receive payments before 16 age 65 would be actuarially reduced. 17 specific, issue is whether the Summary Plan Description, in not 18 disclosing that method of actuarial reduction, complies with the 19 Section 102(b) requirement to disclose circumstances which may 20 result in disqualification, ineligibility, or denial or loss of 21 benefits. 22 Because plaintiffs do not claim that the Summary Plan The second, and more ERISA provides some guidance on the meaning of the 23 requirement in Section 102(a) to reasonably apprise 24 participants and beneficiaries by including a long list of 25 specifically-required disclosures in Section 102(b). 12 That 1 statutory list does not include, specifically or by implication, 2 the method of actuarial reduction at issue in this case. 3 Department of Labor has promulgated regulations that interpret 4 and expand the statutory list of required disclosures and, in so 5 doing, provide further guidance to drafters of summary plan 6 descriptions on what disclosures are required to meet the general 7 statutory requirement to reasonably apprise beneficiaries of plan 8 benefits. 9 like the statute, do not explicitly require disclosure of the See 29 C.F.R. §§ 2520.102-2 - 102-4. The The regulations, 10 method of actuarial reduction at issue here. 11 while somewhat indicative, does not entirely resolve the issue 12 before us. 13 reduction, even though not expressly required to be disclosed by 14 the statute or the regulations, is important enough to a 15 description of the deferred vested retirement benefit that any 16 such omission results in a summary plan description that is 17 insufficient under Section 102(a). 18 This omission, It can be argued that the method of actuarial The Summary Plan Description for the Master Retirement Plan 19 addressed in separate sections the normal retirement benefit, the 20 early retirement benefit, and the deferred vested retirement 21 benefit. 22 these three sections in particular, we conclude that the Summary 23 Plan Description reasonably apprised plan participants and 24 beneficiaries of their rights under the deferred vested 25 retirement benefit and thereby satisfied Section 102(a) of ERISA. From our review of the Summary Plan Description and of 13 1 It did so by apprising participants and beneficiaries of the 2 deferred vested retirement benefit in general and by specifically 3 distinguishing that benefit from the early retirement benefit. 4 In a section under the heading How the Retirement Plan 5 Works, the Summary Plan Description explains that the normal 6 retirement date under the Plan is a participant s 65th birthday, 7 that payment of benefits normally begins the first full month 8 thereafter, and that the retirement benefit is calculated based 9 on credited service and earnings at separation from service with 10 Dun & Bradstreet.1 11 possibility of retirement as early as age 55, if certain 12 requirements are met. 13 in more detail in the Early Retirement Benefit section of the 14 Summary Plan Description, which explains that an employee with at 15 least 10 years of vesting service may choose to retire as early The same section contains a reference to the This early retirement option is discussed 1 The Summary Plan Description, under the heading How the Retirement Plan Works, discusses the normal retirement benefit as follows: Your normal retirement date under the Plan is your 65th birthday and retirement benefits generally begin with your first full month of retirement. The Plan pays a monthly retirement benefit based on credited service and earnings at separation from service with the Company. If you wish, you can retire as early as age 55 . . . provided you meet certain service requirements. Your Retirement Plan benefit is reduced if you begin receiving payments before age 65 or before age 60 if you have at least 35 years of service. Summ. Plan Description at 8-9. 14 1 as age 55. 2 employee may choose to delay receiving payment until age 65, in 3 which case the full accrued benefit would be paid. 4 explains that an employee retiring early may choose to receive 5 payments as early as age 55 but that, as a result, the accrued 6 benefit will be reduced by three percent for each year that 7 payments begin before age 65. 8 aforementioned reduction table setting forth the percentage of 9 accrued retirement benefits a direct retiree would receive for The section also explains that an early-retiring It further The same section contains the 10 each year that payments begin before age 65, based on the 11 reduction of three percent for each year that payments begin 12 before the participant reaches the age of 65.2 13 14 In discussing the ordinary and early retirement benefits available to employees, the sections of the Summary Plan 2 The relevant text of the Early Retirement Benefit section of the Summary Plan Description states as follows: You can retire before age 65 -- as early as age 55 -- if you have completed at least 10 years of vesting service. Your accrued benefit at early retirement is calculated based on the same formula used for normal retirement, but the amount payable to you is subject to reduction as described below if payments begin before you reach age 65. You also may retire early and delay receiving payment until age 65. In this case, your full accrued benefit is paid. If payments start early, your Retirement Plan accrued benefit is reduced 3% for each year that payments begin before age 65. That s because you ll receive benefits over a longer period of time. If you are between any 2 of the ages shown in the following table, the reduction is pro-rated. Summ. Plan Description at 11. 15 1 Description entitled How the Retirement Plan Works and Early 2 Retirement Benefit do not expressly or impliedly refer to the 3 situation of an employee who is separated from employment before 4 reaching the minimum early retirement age of 55 and who chooses 5 to receive payments before reaching age 65. 6 retirement benefits are discussed in the separate section 7 entitled Vesting, which appears later in the Summary Plan 8 Description. 9 direct their principal argument that the Summary Plan Description 10 is inadequate under Section 102 of ERISA, begins by defining the 11 concept of vesting, explaining that [v]esting means earning the 12 right to receive a retirement benefit, at a future date even 13 if you leave the Company before you are eligible for retirement. 14 Summ. Plan Description at 17. 15 vested in your accrued Retirement Plan benefits after you 16 complete 5 years of vesting service. 17 describes the deferred vested retirement benefit in general, 18 i.e., as it applies absent the early payment option, stating that 19 [i]f you terminate employment after becoming vested, you will be 20 entitled to receive a deferred vested retirement benefit from the 21 Plan and that [y]our deferred vested benefit is calculated in 22 the same way as a normal retirement benefit assuming benefit 23 payments begin at age 65. 24 consisting of a single sentence, the Summary Plan Description 25 discusses the consequence of electing early payment of the Deferred vested The Vesting section, to which plaintiffs-appellants It adds that [y]ou are fully Id. Id. The next paragraph Finally, in a third paragraph 16 1 deferred vested retirement benefit. 2 follows: If you choose, the payment of your deferred vested 3 benefit can begin as early as age 55, but the amount of the 4 benefit will be reduced actuarially, resulting in a lower Plan 5 benefit than if the reduction table in the Early Retirement 6 Benefit section was used. 7 The sentence reads as Id. The Summary Plan Description might have been more 8 informative in discussing the early payment option of the 9 deferred vested retirement benefit. However, neither ERISA nor 10 the Labor Department s regulations require a summary plan 11 description to describe or illustrate every method by which a 12 plan benefit may be limited under an early payment option or 13 similar such limitation. 14 expressly allow a Summary Plan Description to summarize, rather 15 than describe in every detail, the benefits available under an 16 employee pension benefit plan. 17 described or summarized. 18 these reasons, we are unable to agree with plaintiffs-appellants 19 argument that the Summary Plan Description is inadequate under 20 Section 102(a) of ERISA, 29 U.S.C. § 1022(a). 21 The Labor Department s regulations Such plan benefits shall be 29 C.F.R. § 2520.102-3(j)(1). For We turn next to the second issue presented, i.e., whether 22 the Summary Plan Description complied with Section 102(b) of 23 ERISA, 29 U.S.C. § 1022(b). 24 § 1022(b) specifically says that the [Summary Plan Description] As the district court observed, 17 1 must set out circumstances which may result in . . . loss of 2 benefits. 3 LEXIS 23996, at *12 (quoting 29 U.S.C. § 1022(b)) (emphasis added 4 by district court). 5 entitled Vesting, discloses the circumstances in which the 6 actuarial reduction would occur, i.e., when a participant whose 7 employment terminates after the participant s benefits become 8 vested but before the participant becomes eligible for retirement 9 chooses to receive payments before reaching the normal retirement McCarthy I, 2004 WL 2743569, at *4, 2004 U.S. Dist. The Summary Plan Description, in the section 10 age of 65. 11 Section 102(b) of ERISA to require disclosure of more detail, 12 e.g., the specific method of actuarial reduction, than the 13 circumstances resulting in the reduced benefits. 14 As did the district court, we decline to construe The Labor Department s regulations expand on the statutory 15 obligation of Section 102(b) to disclose in a summary plan 16 description circumstances which may result in disqualification, 17 ineligibility, or denial or loss of benefits . . . . 18 29 U.S.C. § 1022(b). 19 that the summary plan description disclose the circumstances 20 which may result in disqualification, ineligibility, or denial, 21 loss, forfeiture, suspension, offset, reduction, or recovery 22 (e.g., by exercise of subrogation or reimbursement rights) of any 23 benefits that a participant or beneficiary might otherwise 24 reasonably expect the plan to provide on the basis of the The regulations, in this regard, require 18 1 description of benefits required by paragraphs (j) and (k) of 2 this section. 3 Summary Plan Description at issue satisfies this requirement of 4 the regulations, both by disclosing the circumstances in which 5 the actuarial reduction will occur, and by distinguishing the 6 early payment option of the deferred vested retirement benefit 7 from the early retirement benefit. 8 observed, [t]here is simply no way that a former employee 9 reading [the Vesting] section could be under the impression that 29 C.F.R. § 2520.102-3(l) (emphasis added). The As the district court 10 he was to receive the same benefits as current employees. 11 McCarthy I, 2004 WL 2743569, at *4, U.S. Dist. LEXIS 23996, 12 at *13. 13 14 The Labor Department s regulations, in addressing the contents of a summary plan description, provide that 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 C.F.R. § 2520.102-2(b) (emphasis added). 29 Summary Plan Description does not run afoul of the regulatory 30 requirements. [t]he format of the summary plan description must not have the effect to [sic] misleading, misinforming or failing to inform participants and beneficiaries. Any description of exception [sic], limitations, reductions, and other restrictions of plan benefits shall not be minimized, rendered obscure or otherwise made to appear unimportant. Such exceptions, limitations, reductions, or restrictions of plan benefits shall be described or summarized in a manner not less prominent than the style, captions, printing type, and prominence used to describe or summarize plan benefits. Here also, the The regulations permit a summary plan description 19 1 to summarize a limitation on a benefit, so long as the other 2 requirements of the regulations are observed. 3 Plaintiffs-appellants argue that the Summary Plan 4 Description is inadequate because, in failing to disclose the 5 method of actuarial reduction in the Vesting Section, it does 6 not disclose what their age 55 retirement benefits are. 7 Br. of Pls.-Appellants 12. 8 Plan Description misleads the plaintiffs by highlighting what 9 Dun & Bradstreet says are the subsidized benefits of current They argue further that the Summary 10 employees and obscuring the stunning difference between 11 subsidized (70 percent of normal retirement) and unsubsidized 12 (38 percent of normal retirement) early retirement benefits, 13 id., and minimizes the effect of benefit limitations and 14 restrictions, id. at 5. 15 Description causes confusion by omitting discussion of the 16 fate of terminated early retirees in the Early Retirement 17 Benefit section in the Summary Plan Description and by 18 discussing this type of former employee only briefly in a 19 vaguely titled section called Vesting. 20 the Summary Plan Description should have included a reduction 21 table, statement, or illustration to explain the extent of the 22 actuarial reduction. They argue that the Summary Plan Id. In their view, Id. at 20. 23 We find no reason to conclude that the Vesting section of 24 the Summary Plan Description confuses, misleads, or misinforms 20 1 plan participants whose employment is terminated prior to their 2 reaching the minimum early retirement age of 55 such that they 3 would believe that they will receive the early retirement 4 benefit. 5 the reader that a plan participant who leaves Dun & Bradstreet 6 before becoming eligible for retirement and who receives the 7 deferred vested retirement benefit prior to the age of 65 will 8 not receive the early retirement benefit determined according to 9 the reduction table in the Early Retirement Benefit section but To the contrary, the Vesting section expressly informs 10 instead, as a result of actuarial reduction, will receive a 11 lower benefit. 12 sufficiently prominent within the context of the Summary Plan 13 Description as a whole, we do not conclude that the text or 14 format of the Summary Plan Description minimized, rendered 15 obscure, or otherwise made to appear unimportant the limitation 16 resulting under the early payment option of the deferred vested 17 retirement benefit that was available to employees leaving Dun & 18 Bradstreet before reaching the age of 55 and choosing to receive 19 payments prior to age 65. 20 Moreover, because the Vesting section is Plaintiffs-appellants maintain that the failure of the 21 Summary Plan Description to disclose the size of the actuarial 22 reduction violates ERISA as construed in Layaou v. Xerox Corp., 23 238 F.3d 205 (2d Cir. 2001). 24 Layaou compels the conclusion that the Summary Plan Description We disagree that our holding in 21 1 at issue in this appeal violates ERISA. 2 that to satisfy ERISA requirements a summary plan description 3 invariably must describe or illustrate the method by which a 4 specific retirement benefit is actuarially reduced in a 5 particular circumstance, such as this case, where the employees 6 separated before reaching the minimum early retirement age and 7 elected to receive a vested benefit before reaching the ordinary 8 retirement age. 9 Layaou does not hold The plaintiff Layaou, upon voluntarily leaving the employ 10 of Xerox in 1983, had received under a retirement plan lump-sum 11 distributions totaling $22,353.88. 12 206 & n.2. 13 earning retirement benefits for this second employment period, 14 and was laid off in 1994 during a reduction-in-force. 15 Id. at 206. 16 brochure to fulfill the ERISA obligation for a summary plan 17 description as well as a form listing the estimated individual 18 retirement benefits Layaou had earned to date. 19 The summary plan description brochure stated, [t]he amount you 20 receive may also be reduced if you had previously left the 21 Company and received a distribution at that time. 22 The form issued to Layaou in 1994 estimated for Layaou a monthly 23 retirement benefit of $924 as calculated under the Retirement 24 Income Guarantee Plan guaranteed annuity calculation method Layaou, 238 F.3d at Layaou was re-employed by Xerox in 1987, began Each year, Layaou had received from Xerox a 22 Id. at 206-07. Id. at 210. 1 ( RIGP method ), which was one of three methods used by the 2 Xerox retirement plan to calculate retirement benefits; the 3 Xerox retirement plan paid benefits upon retirement in an amount 4 equal to the highest result of three different calculation 5 methods. 6 was based on retirement at age 65. 7 the brochure, the form stated that the benefits as calculated 8 under the RIGP method may be reduced if you receive amounts 9 before age 65 or receive amounts from another Xerox retirement Id. at 206, 210. The $924 estimated monthly benefit See id. at 206-07. As did 10 plan. 11 the Cash Balance Retirement Account method ( CBRA method ) of 12 calculating his benefits, he would receive a lump sum payment of 13 $18,403 and that under the Transitional Retirement Account 14 method ( TRA method ), his lump sum benefit would be $9,244. 15 Id. 16 Id. at 207. The 1994 form notified Layaou that under When Layaou s retirement became effective in 1995, by which 17 time Layaou had reached the age of 55, the plan administrator 18 calculated Layaou s benefit as a lump sum and converted it to a 19 monthly payment of $145; this amount was calculated not under 20 the RIGP method but under the CBRA method, which under the plan 21 administrator s calculation yielded the highest of the three 22 benefit calculation methods. 23 final calculation of Layaou s monthly retirement benefit 24 reflected a reduction for what Xerox referred to as a phantom Layaou, 238 F.3d at 207-08. 23 The 1 account offset, under which earned benefits were reduced by the 2 value of a hypothetical account containing the original 3 distributed sum (in this case, $22,353.88) and an amount based 4 on an estimate of what that distribution would have earned had 5 it been invested. Id. at 206-07. 6 The brochure constituting the summary plan description did 7 not inform Layaou about the phantom account offset other than 8 by stating that [t]he amount you receive may also be reduced if 9 you had previously left the Company and received a distribution 10 at that time. 11 estimate, in referring to the benefit calculated under the RIGP 12 method, alluded generally to the possibility of a reduction if 13 you . . . receive amounts from another Xerox retirement plan. 14 Id. 15 the estimated lump-sum distributions calculated under the CBRA 16 and TRA methods. 17 Id. at 210. The form containing the annual The form did not include such a qualification in presenting We concluded in Layaou that the summary plan description 18 contravened ERISA by fail[ing] to provide notice to Layaou and 19 other similarly situated employees that their future benefits 20 would be offset by an appreciated value of their prior lump-sum 21 benefits distributions. 22 description failed to satisfy Section 102 of ERISA and the Labor 23 Department s regulations, noting that the summary plan 24 description did not clearly identify the loss of benefits caused Id. We found that the summary plan 24 1 by a prior lump-sum distribution. 2 § 2520.102-3(l)). 3 Id. at 211 (citing 29 C.F.R. In contrast to the summary plan description at issue in 4 Layaou, the Vesting section of the Summary Plan Description for 5 the Master Retirement Plan is definite in informing a 6 participant that a reduction will occur under the early payment 7 option and gives some information, albeit limited, about the 8 method of reduction, stating that the amount of the benefit 9 will be reduced actuarially, resulting in a lower Plan benefit 10 than if the reduction table in the Early Retirement Benefit 11 section was used. 12 information provided about the method of reduction, although 13 presented only in brief summary form, is sufficient under 14 Section 102 of ERISA and the Labor Department s regulations, 15 which permit some details about a particular option associated 16 with a particular benefit to be summarized. 17 Description reasonably apprises participants of their rights 18 concerning the deferred vested retirement benefit provided by 19 the Master Retirement Plan and discloses the circumstances under 20 which that benefit will be reduced. 21 Summ. Plan Description at 17. The The Summary Plan Plaintiffs-appellants point to dicta in Layaou in which we 22 noted that a statement such as [a]ny future benefit will be 23 offset by the appreciated value of any prior distribution 24 assuming that amount remained in the plan would have sufficed 25 1 to provide employees with sufficient notice of the plan s offset 2 provision, and in which we indicated that a clarifying example 3 calculating the benefits of an employee who had received a prior 4 distribution could have provided adequate notice. 5 238 F.3d at 211. 6 opinion to signify that ERISA imposes a blanket requirement 7 under which a Summary Plan Description invariably must describe 8 the method of calculating an actuarial reduction or must use a 9 clarifying example to illustrate how a benefit is actuarially 10 reduced when a participant who has vested rights to receive a 11 particular plan benefit chooses to receive payments before 12 reaching normal retirement age. 13 Layaou, We do not consider the dicta in the Layaou Plaintiffs-appellants reliance on various other precedents 14 is also misplaced. 15 v. Prudential Insurance Co. of America, 306 F.3d 1202 16 (2d Cir. 2002), this court refused to allow a plan sponsor to 17 reduce disability plan benefits by the amount of participants 18 social security benefits where the reduction was not properly 19 disclosed in a summary plan description. Id. at 1212. 20 however, does not support this argument. In Feifer, the 21 employer had distributed a Program Summary with an 22 accompanying booklet announcing a new benefits plan that did not 23 exist in written form at the time the Program Summary was 24 distributed. 25 Summary and the booklet, at the time they were distributed, Plaintiffs-appellants argue that in Feifer Id. at 1205. Feifer, We concluded that the Program 26 1 constituted the actual retirement plan for ERISA purposes and 2 that no summary plan description of the retirement plan existed 3 at that time. 4 controlled the amount of permissible reductions to an employee s 5 benefits. 6 adequacy of a disclosure of a benefit reduction in a summary 7 plan description associated with a retirement plan and therefore 8 has no bearing on the issue before us. 9 Id. Id. at 1209-10. As a result, the Program Summary Feifer did not involve the question of the Plaintiffs-appellants also rely on Burke v. Kodak 10 Retirement Income Plan, 336 F.3d 103 (2d Cir. 2003). 11 that pursuant to the holding in Burke, an employer may not 12 enforce a plan requirement where that requirement was not 13 clearly set forth in the section of the summary plan description 14 that dealt with the benefits at issue. 15 distinguishable because it involved a conflict between the 16 employer s summary plan description and the retirement plan. 17 See id. at 110-11. 18 income benefits under a retirement plan that conditioned 19 eligibility for receipt of such benefits on the filing of an 20 affidavit. 21 of the summary plan description omitted any reference to the 22 affidavit requirement, to which the summary plan description 23 made reference in sixteen other sections. 24 held that the summary plan description violated ERISA, applying 25 the well-established principle that [w]here the terms of a plan They argue However, Burke is In Burke, a plaintiff sued for survivor Id. at 106. The Survivor Income Benefits section 27 Id. Accordingly, we 1 and the [summary plan description] conflict, the [summary plan 2 description] controls. 3 not alleging a conflict between Dun & Bradstreet s Summary Plan 4 Description and the Master Retirement Plan. 5 Id. at 110. Plaintiffs-appellants are Plaintiffs-appellants argue that the common-law principle 6 of Gediman v. Anheuser Busch, Inc., 299 F.2d 537 (2d Cir. 1962), 7 a pre-ERISA case, requires us to reject a summary plan 8 description that conceals the size of a benefit reduction. 9 do not find this argument persuasive. We Gediman involved benefits 10 owed on behalf of a deceased beneficiary of a pension plan who 11 previously had received negligent advice from an employer s 12 pension consultants. 13 executor of an estate, brought the action on behalf of the 14 deceased former employee, James Barsi, to recover amounts 15 allegedly due under the employer s pension plan. 16 Barsi, who had arranged for an early retirement date and had 17 elected to receive deferred cash benefits instead of an annual 18 pension benefit, died as a result of a car accident prior to 19 receiving the payments under the deferred cash benefit option. 20 Id. at 540-41. 21 cash benefits, Barsi wrote a letter to his employer, seeking 22 advice regarding his retirement benefit options. 23 received written advice in the form of a memorandum from the 24 employer s pension consultants that failed to inform him that, 25 as a result of an election to receive the cash benefits, the Id. at 541. H. James Gediman, the Id. at 538-39. Just before he elected to receive the deferred 28 Id. He 1 value of his benefits would be greatly reduced in the event of 2 his death before the deferral date for the cash payments. 3 Id. at 545. 4 negligent advice of the pension consultants. The employer was held liable in tort for the Id. at 547-48. 5 Gediman is distinguishable from this case in two ways. 6 First, because the case did not arise out of ERISA, it does not 7 involve the statutory and regulatory requirements imposed on a 8 summary plan description. 9 application of common-law principles regarding the fiduciary Instead, the case involved the 10 duty of care that arose when the pension consultants voluntarily 11 undertook to give advice to Barsi. 12 are inapposite. 13 misinformed Barsi as to the consequences of the election that he 14 made upon retirement. 15 the memorandum from the pension consultants failed to disclose 16 that the retirement plan would provide a greatly reduced benefit 17 if Barsi should die before rather than after his deferral date 18 and also failed to disclose that the retirement plan, in that 19 event, provided a benefit under a wholly different regime. 20 Id. at 545 ( [T]he death benefit described in paragraph 3 of 21 their memorandum differed from that in paragraph 2 not just in 22 degree but in kind. ). 23 conclude that the defendants had misled Barsi. 24 25 Second, the facts of Gediman In Gediman, the court held that the defendant Id. at 539. The opinion explains that The court even went so far as to Id. at 547. In contrast to the situation in Gediman, the Summary Plan Description at issue here did not misinform or mislead the 29 1 plaintiffs-appellants. 2 would result in a reduction of their benefits and, as set forth 3 above, was not required by statute or regulation to disclose the 4 specifics of how the reduction would occur. 5 It disclosed the circumstances that Plaintiffs-appellants also direct our attention to Wilkins 6 v. Mason Tenders District Council Pension Fund, 445 F.3d 572 7 (2d Cir. 2006), which was decided after briefing and oral 8 argument in this appeal. 9 holding in Wilkins supports their claim that the Summary Plan Plaintiffs-appellants argue that the 10 Description violates ERISA because it fails to disclose relevant 11 information regarding the size of benefits due to former 12 employees electing to receive early payment of deferred vested 13 retirement benefits. 14 of a summary plan description to disclose circumstances which 15 may result in disqualification, ineligibility, or denial or loss 16 of benefits. 17 We disagree. Wilkins involved the failure Id. at 580-81 (quoting 29 U.S.C. § 1022(b)). The plaintiff in Wilkins was a union employee who, over a 18 period of thirty years, worked in the construction industry for 19 several different employers. 20 required by collective bargaining agreements with the union to 21 contribute to the union pension fund based on their employees 22 covered employment. 23 significant discrepancies between the earnings that the 24 employers reported to the pension fund and those the employers 25 reported to the Social Security Administration. Id. Id. at 575. The employers were In Wilkins s case, there were 30 Id. at 575-76. 1 Following his receipt of a lump sum benefit in 1999, Wilkins 2 claimed additional benefits based on work that was not reflected 3 in the records of the fund but was reflected in his Social 4 Security Administration statement of earnings. 5 pension fund maintained a policy that employees seeking benefits 6 based on work that was not reported by employers must submit 7 proof of covered employment as a condition of receiving the 8 benefits to which they are entitled under the terms of the plan 9 . . . . Id. at 584. Id. at 576. The Social Security earning statements did 10 not suffice under the policy. 11 this policy was not set forth in the summary plan description. 12 Id. at 581. 13 employment, his claim was denied. 14 Id. at 576-77. Additionally, Because Wilkins did not produce proof of covered Id. at 576-77. The district court denied relief on other grounds. 15 Id. at 577-78. 16 wrongfully denied due to the failure of the summary plan 17 description to comply with 29 U.S.C. § 1022(b), and we agreed. 18 Id. at 584. 19 erecting an additional, mandatory prerequisite to the receipt of 20 promised benefits, may result in disqualification, 21 ineligibility, or a denial or loss of benefits. 22 therefore, be disclosed in the [summary plan description]. 23 Because no provision of the [summary plan description] even 24 arguably gives notice of the Policy, the summary plan 25 description violated ERISA. On appeal, Wilkins argued that his benefits were It seems to us obvious that the Policy, by Id. at 582. 31 It must, Id. 1 Unlike the summary plan description at issue in Wilkins, 2 the Summary Plan Description for the Master Retirement Plan 3 adequately discloses the circumstances under which the actuarial 4 reduction will occur. 5 circumstances are those of a participant whose employment 6 terminates after the participant becomes vested but before the 7 participant becomes eligible for retirement, and who chooses to 8 receive payments before reaching the normal retirement age 9 of 65. 10 11 12 13 14 As we stated previously, the relevant B. The District Court Did Not Abuse its Discretion in Denying in Part Plaintiffs-Appellants Motion to Amend the Complaint to Challenge the Mortality Table Before the district court, plaintiffs moved under Fed. R. 15 Civ. P. 15(a) to amend their previously amended complaint to 16 add, inter alia, a claim that the mortality table used by the 17 Master Retirement Plan to calculate the actuarial reduction for 18 deferred vested retirement benefits is outdated and unreasonable 19 when combined with the 6.75 percent discount rate. 20 Pls.-Appellants 29, 32. 21 part, declining to allow plaintiffs to add the claim concerning 22 the mortality table, which the district court considered to be 23 an entirely new claim that was being raised at a late stage in 24 the litigation, i.e., after discovery had been completed and 25 after defendants had moved for summary judgment. 26 372 F. Supp. 2d at 700-01. 27 Br. of The district court denied the motion in McCarthy II, We review the determination of a district court to deny a 32 1 party leave to amend the complaint under Fed. R. Civ. P. 15(a) 2 for abuse of discretion. 3 318 F.3d 80, 86 (2d Cir. 2003). 4 did not abuse its discretion in denying the motion in part and 5 thereby disallowing the claim pertaining to the mortality table. 6 Although Rule 15(a) of the Federal Rules of Civil Procedure 7 provides that leave to amend shall be freely given when justice 8 so requires, it is within the sound discretion of the district 9 court to grant or deny leave to amend. Grochowski v. Phoenix Constr., We find that the district court See Zahra v. Town of 10 Southold, 48 F.3d 674, 686 (2d Cir. 1995) (upholding the denial 11 of a motion to amend a complaint that was filed two and one-half 12 years after the commencement of the action and three months 13 prior to trial); see also Ansam Assocs., Inc. v. Cola Petroleum, 14 Ltd., 760 F.2d 442, 446 (2d Cir. 1985) (upholding the denial of 15 a motion to amend a complaint when discovery already had been 16 completed and the non-movant had already filed a motion for 17 summary judgment). 18 leave for good reason, including futility, bad faith, undue 19 delay, or undue prejudice to the opposing party. 20 Davis, 371 U.S. 178, 182 (1962). 21 to grant the leave without any justifying reason for the denial 22 is an abuse of discretion. 23 310 F.3d 84, 101 (2d Cir. 2002). 24 25 A district court has discretion to deny See Foman v. However, [o]utright refusal Jin v. Metro. Life Ins. Co., Plaintiffs filed the original complaint in this action on March 12, 2003 and amended it on July 9, 2003. 33 McCarthy II, 1 372 F. Supp. 2d at 699. 2 second time on December 21, 2004, more than two months after 3 discovery was completed and more than a year and a half after 4 the filing of the original complaint. 5 court originally granted the motion, believing it unopposed. 6 Id. 7 amend. 8 proposed amendments but opposed the amendment that would add a 9 claim concerning the reasonableness of the mortality table used 10 11 They moved to amend the complaint a Id. at 700. The district Defendants moved to vacate the order granting the motion to Id. Defendants did not object to most of plaintiffs in the Master Retirement Plan s actuarial reduction. Id. In denying plaintiffs second motion to amend, the district 12 court noted that plaintiffs complaint specifically alleged an 13 unreasonable interest rate but did not allege, in general, an 14 improper actuarial reduction, which might encompass a number of 15 factors, including the mortality table used. 16 district court noted that the first amended complaint did not 17 claim that the application of an unreasonable actuarial 18 reduction worked a forfeiture, and it certainly did not claim 19 that the application of an unreasonable mortality table worked 20 a forfeiture. 21 concluded that plaintiffs motion to amend seeks to add a new 22 claim. 23 court further concluded that [i]f the amendment is allowed, 24 merits discovery will need to be reopened and the litigation Id.; see Am. Compl. ¶ 95. The The district court McCarthy II, 372 F. Supp. 2d at 700. 34 Id. at 701. The district 1 will, in essence, start over the same experts will likely need 2 to produce new reports and be re-deposed. 3 Id. at 701. Plaintiffs became aware of the need to consider a possible 4 claim directed to the mortality table more than seven months 5 before moving to amend their complaint. 6 provided, by April 30, 2004, a declaration disclosing his 7 position that the mortality table used by the Master Retirement 8 Plan raised an issue. 9 Apr. 30, 2004, ¶ 20. Their own expert had See Claude Poulin Decl. dated His declaration stated that the mortality 10 table used by the Plan in the calculation of the actuarial 11 reduction factors is an old table that overestimates the 12 mortality rates currently applicable to the affected plan 13 participants. 14 during a deposition, again identified a potential issue with the 15 mortality table, testifying that the mortality tables used by 16 the plan were outdated and led to a skewed actuarial reduction. 17 Claude Poulin Dep. dated May 27, 2004, at 122. 18 Id. ¶ 18. On May 27, 2004, the same expert, Plaintiffs-appellants argue that defendants were not 19 prejudiced by an amendment because the April 2004 declaration and 20 May 2004 deposition of plaintiffs actuarial expert gave 21 defendants full and fair notice that the mortality table 22 significantly contributed to the ERISA violation alleged in the 23 original complaint. 24 district court correctly noted, however, the amended complaint 25 challenged specifically the discount rate used in the actuarial Br. of Pls.-Appellants 29-30. 35 As the 1 reduction, not the actuarial reduction method itself. 2 McCarthy II, 372 F. Supp. 2d at 701. 3 defendant with notice of what the plaintiff s claim is and the 4 grounds upon which it rests. 5 at 512-14 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)) 6 (quotation marks omitted). 7 defendant may conduct his trial preparation accordingly and is 8 not required, based on the plaintiff s subsequent conduct in 9 litigation, to anticipate future claims that a plaintiff might A complaint provides a See Swierkiewicz, 534 U.S. Having received such notice, a 10 intend to pursue. 11 question defendants expert about mortality assumptions during an 12 October 6, 2004 deposition, defendants counsel objected, stating 13 that [a]t some point I have [to move for] a protective order if 14 you turn it into a deposition not about the opinion the witness 15 has been retained to testify on, but on a separate issue that is 16 not mentioned in the complaint, not mentioned at the motion to 17 dismiss stage that led to this round of briefing, and is not in 18 the case. 19 Thus, when plaintiffs counsel attempted to Edward W. Brown Dep. dated Oct. 6, 2004, at 74. Plaintiffs sought to amend their complaint after an 20 inordinate delay. 21 had filed for summary judgment, and nearly two years had passed 22 since the filing of the original complaint. 23 record, we conclude that the district court did not exceed its 24 discretion in denying plaintiffs leave to amend. By that time, discovery had closed, defendants 36 In light of this 1 2 3 4 C. The District Court Did Not Err in Granting Summary Judgment on the Lawfulness of the 6.75 Percent Discount Rate We review de novo a district court s grant of summary 5 judgment. 6 when there are no genuine issues of material fact and the moving 7 party is entitled to judgment as a matter of law. 8 Civ. P. 56(c). 9 district court must resolve all ambiguities, and credit all 10 factual inferences that could rationally be drawn, in favor of 11 the party opposing summary judgment and determine whether there 12 is a genuine dispute as to a material fact, raising an issue for 13 trial. 14 461 F.3d 199, 206 (2d Cir. 2006) (quoting Cifra v. Gen. Elec. 15 Co., 252 F.3d 205, 216 (2d Cir. 2001)). 16 when it might affect the outcome of the suit under governing 17 law. Jeffreys v. City of N.Y., 426 F.3d 549, 553 (2d Cir. 2005) 18 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 19 (1986)). 20 that a reasonable jury could return a verdict for the nonmoving 21 party. 22 nonmoving party offers some hard evidence showing that its 23 version of the events is not wholly fanciful[,] summary 24 judgment is granted to the moving party. 25 D Amico v. City of N.Y., 132 F.3d 145, 149 (2d Cir. 1998)). Miller, 321 F.3d at 300. Summary judgment is awarded Fed. R. In ruling on a summary judgment motion, the Kessler v. Westchester County Dep t of Soc. Servs., A fact is material An issue of fact is genuine if the evidence is such Id. (quoting Anderson, 477 U.S. at 248). 37 Unless the Id. at 554 (quoting 1 Before the district court and again on appeal, plaintiffs- 2 appellants argued that one component of the Master Retirement 3 Plan s actuarial reduction, the 6.75 discount rate, violated 4 ERISA because the discount rate was unreasonable and [t]he 5 application of an unreasonable rate of interest works a 6 prohibited forfeiture of benefits under ERISA Section 203(a). 7 Am. Compl. ¶ 95 8 reasonable discount rate is a long-term rate based on 9 relatively risk-free investments, namely the thirty-year According to plaintiffs-appellants, a 10 Treasury Bond, that would yield the kind of investment return 11 retiring plan participants would experience in the marketplace. 12 Br. of Pls.-Appellants 8-9 (quoting Claude Poulin Dep. dated 13 May 27, 2004, at ¶ 14). 14 The district court granted summary judgment to defendants, 15 concluding as a matter of law that ERISA does not mandate the use 16 of a zero-risk discount rate. 17 at 699. 18 considering the rate chosen by the Plan to be one that no 19 reasonable juror could find unreasonable . . . . 20 McCarthy II, 372 F. Supp. 2d The district court saw no genuine issue of material fact, Id. We agree with the district court that ERISA does not require 21 a plan to use in the actuarial reduction a zero-risk discount rate 22 or a rate that is practically risk-free. 23 district court s finding that the actuarial reduction used in the 24 Master Retirement Plan was not unreasonable solely for using a 38 We see no error in the 1 6.75 percent discount rate. 2 summary judgment to defendants-appellees. 3 We therefore affirm the grant of Section 206(a) of ERISA requires employers offering an early 4 retirement benefit to current employees to offer an equivalent, 5 although actuarially reduced, early retirement benefit to 6 qualifying employees who have separated from service prior to 7 satisfying the age requirement for early retirement. 8 § 1056(a).3 9 satisfying the age requirement for early retirement must be not 10 less than the benefit to which he would be entitled at the normal 11 retirement age, actuarially reduced under regulations prescribed 12 by the Secretary of the Treasury. 13 14 29 U.S.C. The benefit the separated employee receives upon Id. Section 206(a), among other sections of ERISA, has a counterpart in the Internal Revenue Code, which contains 3 ERISA Section 206 was amended by the Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780 (2006), which resulted in the addition of a new subsection. The text of Section 206(a), which was not modified by the amendment, is as follows: In the case of a plan which provides for the payment of an early retirement benefit, such plan shall provide that a participant who satisfied the service requirements for such early retirement benefit, but separated from the service (with any nonforfeitable right to an accrued benefit) before satisfying the age requirement for such early retirement benefit, is entitled upon satisfaction of such age requirement to receive a benefit not less than the benefit to which he would be entitled at the normal retirement age, actuarially reduced under regulations prescribed by the Secretary of the Treasury. 29 U.S.C. § 1056(a). 39 1 provisions allowing favorable tax treatment to qualifying 2 retirement plans. 3 parallel provision to ERISA Section 206(a) in providing that a 4 qualified defined benefit pension plan must afford early 5 retirement benefits that are not less than the benefit to which 6 [the participant] would be entitled at the normal retirement age, 7 actuarially, reduced under regulations prescribed by the Secretary 8 [of the Treasury]. 9 Section 401(a)(14) of Title 26 contains the 26 U.S.C. § 401(a)(14) (2000). The Secretary of the Treasury has promulgated regulations to 10 construe Internal Revenue Code § 401(a)(14). 11 provide that under a qualifying plan the reduced normal [i.e., 12 early] retirement benefit is the benefit to which the participant 13 would have been entitled under the plan at normal retirement age, 14 reduced in accordance with reasonable actuarial assumptions. 15 26 C.F.R. § 1.401(a)-14(c)(2) (emphasis added). 16 These regulations We conclude, as did the district court, that the regulations 17 do not specify a rate or range of discount rates that qualify as 18 reasonable actuarial reductions for payment of early retirement 19 benefits. 20 also in agreement on this point. 21 Aug. 4, 2004, at 4 (stating that [n]either the IRS [n]or any 22 actuarial organization has published guidance on what constitutes 23 a reasonable interest rate for determining early retirement 24 payments ); Claude Poulin Decl. dated Apr. 30, 2004, ¶ 20 (stating 25 that there are no prescribed interest rate or mortality table McCarthy II, 372 F. Supp. 2d at 696. 40 The parties are See Edward W. Brown Report dated 1 assumptions for the calculation of early retirement reduction 2 factors . . . . ). 3 a discount rate, the regulations provide benefit plans with a 4 degree of discretion in setting discount rates to achieve a 5 reduction according to reasonable actuarial assumptions. 6 We further conclude that by failing to specify The question of whether the discount rate qualifies as a 7 reasonable rate for purposes of ERISA is a mixed question of law 8 and fact. 9 interpretation is a question of law, and it is the court s duty to Because statutory terms are at issue, their 10 define the appropriate legal standard. 11 515 U.S. 347, 369 (1995). 12 reasonable persons applying the proper legal standard could differ 13 on whether the reduction was accomplished according to actuarial 14 assumptions that were reasonable as a result of the discount rate 15 used. 16 the de novo standard. 17 and Blue Shield of New Jersey, Inc., 448 F.3d 573, 580 18 (2d Cir. 2006). See id. Chandris, Inc. v. Latsis, However, a question of fact exists if Mixed questions of law and fact are reviewed under Beth Israel Med. Ctr. v. Horizon Blue Cross 19 In determining whether the Master Retirement Plan was 20 reasonable in its use of the 6.75 percent discount rate for the 21 actuarial reduction, the district court found that a plan has met 22 its ERISA obligations with respect to calculation of early benefit 23 payments if it selects a discount rate that is reasonably 24 calculated to be representative of its participants average 25 discount rate, McCarthy II, 372 F. Supp. 2d at 698, i.e., the 41 1 average of the rates of return desired by the participants, which 2 would vary according to such factors as degree of risk and 3 duration of investment, see id. at 697. 4 the assumptions a plan can make with regard to the average 5 discount rate of its participants. 6 selecting a discount rate, a plan could assume that its 7 participants have a zero tolerance for risk or could instead focus 8 on a plan s rate of return. 9 investment characteristics of a plan and a plan s rate of return 10 are instructive because the rate of return controls the amount of 11 defined benefit a plan will offer. 12 considered the discount rate used in the Master Retirement Plan 13 not to be unreasonable because that rate, although above the zero- 14 risk rate on thirty-year government securities that plaintiffs 15 proposed, was well below the approximate 8-10 percent rate of 16 return on the Master Retirement Plan s assets. 17 The court then considered The court noted that in The court determined that the Id. The district court Id. at 698-99. Plaintiffs-appellants submit that the rate is unreasonable, 18 arguing that employer contributions, not plan returns, control the 19 amount of defined benefits that a plan is able to offer in the 20 first place. 21 unreasonable to use a plan s investment experience when 22 calculating deferred vested retirement benefits because investment 23 in the equities market is volatile, future projections of a plan s 24 investment returns are self-interested, and allowing a plan 25 sponsor to rely on investment returns assumes that past returns Br. of Pls.-Appellants 24. 42 They consider it 1 are relevant to the analysis of long-term future investment 2 returns. 3 Id. at 25-26. The court finds no error in the district court s conclusion 4 that the actuarial reduction method was not unreasonable solely 5 for its use of a 6.75 percent discount rate. 6 significantly lower than the approximately 8-10 percent rate of 7 return earned on the assets of the Master Retirement Plan, the 8 6.75 discount percent rate was below the 7.37 and 6.88 percent 9 average interest rates on thirty-year government securities that The rate was 10 existed around the time the plan was created, and plaintiffs- 11 appellants own expert did not testify that the 6.75 percent 12 discount rate was presumptively unreasonable as an actuarial 13 matter when used in a calculation for deferred vested retirement 14 benefits. 15 A plan s experience in the market, i.e., the actual rate of 16 return on the plan s investments, is relevant to determining 17 whether an actuarial rate is reasonable. 18 Retirement Plan s actuary estimated, for funding purposes, that 19 the plan s projected rate of return would be 8.25 percent. 20 McCarthy II, 372 F. Supp. 2d at 698. 21 investment experience in the equities market yielded relatively 22 consistent results: Over the past two years, the Plan assets have 23 earned a rate of return of 9.63%; over the last year, 15.91%; over 24 the past 10 years, 10.78%; and over the past 15 years, 10.27%. 25 Id. at 696. In 2002, the Master The Master Retirement Plan s The 6.75 percent discount rate used by the Master 43 1 Retirement Plan for purposes of the actuarial reduction was thus 2 below both the estimated rate of return and the actual rate of 3 return achieved by the assets of the plan. 4 A discount rate chosen by a plan may be suspect where a plan 5 projects inordinately high returns or experiences unusually high 6 investment success and bases its actuarial discount rate on this 7 high rate. 8 Retirement Plan sought to link the discount rate with its 9 projected return on investment. There is no indication here, however, that the Master The fact that the discount rate 10 selected by the Master Retirement Plan to calculate actuarial 11 reductions fell well below that rate, which was projected to be 12 8.25 percent but actually yielded an average over 10 percent, is a 13 further indication that the actuarial assumptions are not 14 unreasonable solely because of the use of the 6.75 percent 15 discount rate. 16 Master Retirement Plan based its portfolio of investments on high- 17 risk equities yielding volatile returns. Nor is there any indication in the record that the 18 Additionally, the Master Retirement Plan selected and 19 maintained a discount rate that was, at the time, comparable to 20 the interest rate on thirty-year government securities. 21 Master Retirement Plan was amended and restated in 1994, in which 22 year the average interest rate for thirty-year government 23 securities was 7.37 percent. 24 Release: Selected Interest Rates: Historical Data: 30-year 25 Treasury Bill, available at The See Fed. Reserve Statistical 44 1 http://www.federalreserve.gov/releases/h15/data.htm. 2 the time the Internal Revenue Service ( IRS ) reviewed the plan 3 for compliance with the trust qualification requirements of 4 26 U.S.C. § 401(a), the average interest rate for thirty-year 5 government securities was 6.88 percent, a rate comparable to but 6 still higher than the Plan s 6.75 percent rate.4 7 Pls.-Appellants 10 (stating that the 6.75 percent fixed rate ten 8 years ago approximated the rate of the thirty-year Treasury Bond). 9 By selecting a discount rate that was lower than the average 10 interest rate set for thirty-year government securities, the 11 Master Retirement Plan applied a discount rate that was at that 12 time more favorable to participants in the plan than would have 13 been the thirty-year interest rate on government securities. 14 summary, the district court s finding that no juror could have 15 found on this record that the use of the 6.75 percent discount 4 In 1995, at Id.; Br. of In Defendants-appellees argue that the 1995 determination letter that Dun & Bradstreet received from the IRS demonstrates implicit approval by the IRS that the discount rate and other actuarial assumptions in the Master Retirement Plan were reasonable. The determination letter refers to only two sections of the Treasury regulations, sections 1.401(a)(4)-1(b)(2) and 1.401(a)(4)-4(b), both of which require that benefits be provided in a nondiscriminatory manner, and does not refer to the regulation addressing reasonable actuarial assumptions, section 1.401(a)-14(c)(2). See 26 C.F.R. §§ 1.401(a)(4)-1(b)(2), (a)(4)-4(b), (a)-14(c)(2). In addition, I.R.S. Publication 794, which discusses the significance and limitations of a favorable determination letter, states that [a] determination letter does not consider whether actuarial assumptions are reasonable for funding or deduction purposes or whether a specific contribution is deductible. I.R.S. Publ. 794, Favorable Determination Letter at 2 (Rev. Sept. 2006). The court therefore declines to accord great weight to the determination letter. See Esden v. Bank of Boston, 229 F.3d 154, 175-76 (2d Cir. 2000). 45 1 rate was unreasonable is further supported by the average rate of 2 return on the Master Retirement Plan s investments, which was 3 substantially higher than the discount rate, and the rate of 4 return on thirty-year government securities around the time the 5 plan was created, which was comparable to the discount rate. 6 Plaintiffs-appellants argue that although application of the 7 6.75 percent discount rate may have been reasonable in 1995, it is 8 not reasonable in today s low interest rate environment.5 9 Essentially, plaintiffs-appellants advocate for periodic 10 adjustment of the rate used to determine actuarial equivalence. 11 Reply Br. of Pls.-Appellants 18 (arguing that nothing prevents 12 the company from periodically reviewing its rate and changing it 13 as needed ). 14 plans periodically adjust their actuarial interest rates. 15 plan were required to do this, an employer potentially could 16 manipulate the benefits provided to a participant, particularly in 17 a year in which interest rates were extraordinarily high. 18 court recognizes the concern expressed in the relevant provisions 19 of Title 26, Title 29, and the related regulations, that employers 20 should not be able to manipulate actuarial assumptions to their 21 benefit and to the detriment of employees. 22 26 U.S.C. § 401(a)(25) (requiring, in order for a defined benefit 5 ERISA does not specifically require that retirement If a The See, e.g., At the time the District Court issued its Memorandum and Order on June 6, 2005, the rate on thirty-year Treasury bills was approximately 4.9 percent. See McCarthy II, 372 F. Supp. 2d at 698. 46 1 plan to be treated as providing definitely determinable benefits, 2 that whenever the amount of any benefit is to be determined on 3 the basis of actuarial assumptions, such assumptions [be] 4 specified in the plan in a way which precludes employer 5 discretion ). 6 Plaintiffs expert, Claude Poulin, prepared a declaration and 7 testified at deposition on the unreasonableness of the actuarial 8 discount rate.6 9 discount rate was presumptively unreasonable or that it failed to Notably, he did not testify that the 6.75 percent 10 comply with industry standards. 11 seen discount rates both lower and higher than that used by the 12 Master Retirement Plan. 13 at 49. 14 the mortality tables [was] unreasonable in determining actuarial 15 equivalency. 16 Mr. Poulin s testimony was that the discount rate adopted by the 17 Master Retirement Plan became unreasonable when it was used in 18 connection with what he considered to be an outdated mortality 19 table. 20 to generate or create a mortality table that combined with a 6.75 21 percent interest rate would produce a reasonable actuarial 6 Instead, he testified that he had Claude Poulin Dep. dated May 27, 2004, He concluded that the interest rate in conjunction with Id. at 122 (emphasis added). Id. at 48, 52. The essence of Mr. Poulin testified that it is possible Both parties relied on experts that are Fellows in the Society of Actuaries, members of the American Academy of Actuaries, and Enrolled Actuaries under ERISA. See Claude Poulin Decl. dated April 30, 2004, ¶ 1, Ex. A; Edward W. Brown Report dated Aug. 4, 2004, at 1. 47 1 equivalent benefit. 2 expert did not characterize the 6.75 percent discount rate as 3 presumptively unreasonable but testified that many plan rates are 4 lower or maybe slightly higher supported the district court s 5 conclusion. 6 Id. at 132. The fact that plaintiffs own Id. at 49 (emphasis added). Plaintiffs expert further stated that the rates used for 7 the calculation of lump sums give an indication of what ERISA and 8 the Internal Revenue Code prescribe as reasonable actuarial 9 assumptions for the purpose of determining actuarial equivalence 10 in general. 11 statute, 26 U.S.C. § 417(e)(3)(A)(ii)(II), formerly required that 12 qualified retirement plans use the annual interest rate yield on 13 thirty-year Treasury securities in determining certain 14 distributions.7 15 distributions and deferred vested retirement benefits. 16 use of the thirty-year Treasury rate may create a strong 17 presumption that a plan complies with 26 C.F.R. 18 § 1.401(a)-14(c)(2), neither the Internal Revenue Code nor any 19 regulations require use of the rate on thirty-year Treasury 7 Claude Poulin Decl. dated Apr. 30, 2004, ¶ 20. The We note significant differences between lump sum Although This section of the Internal Revenue Code has been amended to provide, in relevant part, that the applicable interest rate means the adjusted first, second, and third segment rates applied under rules similar to the rules of section 430(h)(2)(C) for the month before the date of the distribution or such other time as the Secretary may by regulations prescribe. 26 U.S.C. § 417(e)(3)(C), amended by Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780 (2006). The amendments made by this section apply with respect to plan years beginning after December 31, 2007. Id. 48 1 securities to determine the actuarial equivalent of a deferred 2 vested retirement benefit. 3 4 III. CONCLUSION For the reasons stated in the foregoing, the district court s 5 grant of defendants motion to dismiss the count of the complaint 6 that challenged the Summary Plan Description, the district court s 7 denial in part of plaintiffs motion to amend the complaint to 8 disallow a claim relating to the mortality table, and the district 9 court s award of summary judgment in favor of defendants on the 10 11 issue of the use by the Master Retirement Plan of the 6.75 percent discount rate in the actuarial reduction, are AFFIRMED. 49

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