DeRogatis v. Bd. of Trs. of the Welfare Fund of the Int'l Union of Operating Eng'rs Local 15, 15A, 15C & 15D, AFLCIO (In re DeRogatis)
904 F.3d 174
| 2d Cir. | 2018Background
- Frank DeRogatis, a Local 15 operating engineer, was diagnosed with lung cancer in Jan 2011 and died Sept 2011 at age 61; he was eligible for "early" retirement but had not filed for retirement before death.
- Frank participated in two multiemployer plans: a Pension Plan (pension and survivor benefits) administered from D.C. and a Welfare Plan (health benefits) administered from a NYC office; Welfare employees sometimes assisted with Pension paperwork.
- Emily applied posthumously for survivor benefits expecting a 100% Joint Annuity but the Pension Fund awarded a Preretirement Annuity (~$787/month) under Plan §12.01 instead of the larger 100% Joint Annuity (~$1,076 estimated).
- Before Frank’s death, Welfare office employees (Keenan and Lopez) communicated about pension and health options; Keenan sent a letter and SPD copy in March 2011; Lopez allegedly advised Emily not to file the retirement application because it would jeopardize health coverage.
- Emily sued: (1) Pension Fund under ERISA §502(a)(1)(B) (benefits due) and §502(a)(3) (breach of fiduciary duty based on agents’ misstatements); (2) Welfare Fund under §502(a)(3) seeking equitable relief for misrepresentations that caused the failure to timely elect the 100% Joint Annuity.
- District Court granted summary judgment to both Funds; Second Circuit affirmed the Pension benefits ruling, rejected the district court’s blanket ministerial-employee defense, affirmed summary judgment for the Pension Fund on fiduciary claim (SPD was clear), vacated and remanded the Welfare Fund fiduciary claim (SPD ambiguous + possible misleading statements create triable issue).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Emily is entitled to 100% Joint Annuity under §502(a)(1)(B) | Frank’s signed early-retirement application (submitted posthumously) should trigger the Joint Annuity | Plan requires a completed retirement election and payments begin only after application; §12.01 governs preretirement deaths | Denied — Plan unambiguously required retirement/election before death; Preretirement Annuity proper; summary judgment affirmed |
| Whether trustees can be liable for statements by non‑fiduciary/ministerial employees | Funds’ agents (Keenan/Lopez) had apparent authority and their misstatements make trustees liable | Employer: ministerial employees cannot convert administrators into fiduciaries for those statements | Rejected district court: trustees may be liable for communications made through non‑fiduciary agents when performing fiduciary functions |
| Whether Pension Fund breached fiduciary duty under Becker (unclear SPD + misstatement) | Misstatements by agents caused loss of election; Becker theory applies | Pension SPD clearly explained eligibility and posthumous application rule, so no breach | Pension Fund: SPD was sufficiently clear; even assuming agent misstatements, no Becker liability; summary judgment for Pension Fund affirmed |
| Whether Welfare Fund breached fiduciary duty under Becker and entitlement to equitable relief | Welfare SPD and agents’ statements left a triable question whether Emily was misled and suffered loss; seeks surcharge or other equitable relief | Welfare: SPD and other communications (e.g., check stub) made coverage status clear; no breach | Vacated summary judgment as to Welfare Fund; SPD ambiguous and record shows potentially misleading agent statements — remand for further proceedings on breach and appropriate equitable remedies |
Key Cases Cited
- Estate of Becker v. Eastman Kodak Co., 120 F.3d 5 (2d Cir. 1997) (fiduciary breach where unclear SPD combined with misleading agent statements can mislead beneficiaries)
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (plan administrators act as fiduciaries when providing beneficiaries information to obtain benefits)
- CIGNA Corp. v. Amara, 563 U.S. 421 (2011) (distinguishes SPD language from plan terms; equitable relief under §502(a)(3))
- Pegram v. Herdrich, 530 U.S. 211 (2000) (threshold question: whether defendant was acting as fiduciary when taking complained‑of action)
- Bell v. Pfizer, Inc., 626 F.3d 66 (2d Cir. 2010) (standards for §502(a)(3) fiduciary breach claims)