The opinion of the court was delivered by: Gladys Kessler United States District Judge
Plaintiffs Wade F. Hall, Hattie N. McCoy-Kemp, and Victoria F. Staton are former employees of the National Railroad Passenger Corporation ("Amtrak") and participants in Amtrak's Retirement Income Plan for Employees of the National Railroad Passenger Corporation ("Retirement Plan" or "Pension Plan"). They are also current or former participants in Amtrak's Retirement Savings Plan ("Savings Plan").*fn1 They bring these actions under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001, et seq., on behalf of themselves and others similarly situated.
In Case No. 03-1764 ("Hall I"), Plaintiffs allege that Defendants illegally cut back a Retirement Plan benefit in violation of ERISA § 404(a), 29 U.S.C. § 1104(a) (Count I) and ERISA's Anti-Cutback Rule, ERISA § 204(g), 29 U.S.C. § 1054(g) (Count II). Plaintiffs also claim that Defendants breached their fiduciary duties by failing to adequately appoint, monitor, and/or remove members of the Committees for the Retirement and Savings Plans (Count III). On August 5, 2005, the Court dismissed Count I for failure to exhaust administrative remedies.
After exhausting their administrative remedies, Plaintiffs refiled Hall I's Count I in Case No. 06-1539 ("Hall II"). In Hall II, Plaintiffs also allege that Defendants failed to disclose all relevant documents and records during the administrative process, as required by applicable regulations (Count II).
Defendants in Hall I are (1) Amtrak, (2) the Retirement Plan Committee, (3) Warren Reisig, William Herrmann, and Gordon Hutchinson (current Members of the Retirement Plan Committee), (4) the Savings Plan Committee, (5) John Does ##4-10 (unnamed current or former Members of either or both Committees),*fn2 (6) David L. Gunn, former President and Chief Executive Officer ("CEO") of Amtrak from 2002 to 2005 and a Member of Amtrak's Board of Directors, and (7) George D. Warrington, President and CEO of Amtrak from 1998 until 2002 (collectively the "Hall I Defendants").*fn3 The named Defendants in Hall II are (1) the Retirement Plan, (2) Amtrak, and (3) the Retirement Plan Committee (collectively the "Hall II Defendants").
This matter is before the Court on the following motions in Hall I: Plaintiffs' Motion for Summary Judgment Under Count II [Dkt. No. 65]; Plaintiffs' Amended Motion to Certify Class and Appoint Class Counsel [Dkt. No. 78]; and the Hall I Defendants' Motion for Summary Judgment [Dkt. No. 85]; and the following Motions in Hall II: Plaintiffs' Motion for Partial Summary Judgment on Count I [Dkt No. 20] and the Hall II Defendants' Motion for Summary Judgment [Dkt. No. 22]. Upon consideration of the Motions, Oppositions, Replies, Surreplies, the parties' supplemental filings of June 28, 2004, and the entire record herein, and for the reasons stated below, Plaintiffs' Motion for Summary Judgment on Count II in Hall I [Dkt. No. 65] is denied; Plaintiffs' Amended Motion to Certify Class and Appoint Class Counsel in Hall I [Dkt. No. 78] is denied as moot; Defendants' Motion for Summary Judgment in Hall I [Dkt. No. 85] is granted as to Count II and denied as to Count III; Plaintiff's Motion for Partial Summary Judgment on Count I in Hall II [Dkt. No. 20] is denied; and Defendants' Motion for Summary Judgment in Hall II [Dkt. No. 22] is granted as to Count I and denied as to Count II.
Amtrak is the sponsor of the Retirement Income Plan for Employees of the National Railroad Passenger Corporation, a pension plan governed by ERISA. The Retirement Plan is a non-contributory defined benefit retirement plan covering certain nonunion and certain union Amtrak employees. See Hall I Compl., Ex. 1 (Retirement Income Plan for Employees of National Railroad Passenger Corporation ("Plan")).
The Retirement Plan can be amended only through action taken by the Board of Directors. See Plan § 13.01. Specifically, Article XIII of the Retirement Plan, titled "Amendment to or Termination of the Plan," provides in Section 13.01 that "[Amtrak] reserves the right at any time and from time to time and retroactively if deemed necessary or appropriate, by action of its Board, to modify or amend the Plan in whole or in part." Id.
1. The July 26, 2001 Voluntary Early Retirement Plan ("July VERP")
Plaintiffs allege that, as part of a company-wide downsizing, Amtrak's management prepared a proposed amendment to Amtrak's existing Retirement Plan to include a Voluntary Early Retirement Plan ("VERP") featuring a monthly supplement (referred to herein as the "Railroad Retirement Supplement" or the "Supplement"). See Hall II Sec. Am. Compl. ¶¶ 30, 31, 45. On July 26, 2001, Amtrak's management presented the proposed VERP to the Amtrak Board of Directors (the "Board"). The proposed VERP stated:
Any management employee 55 years of age or older with 10 or more years of Amtrak service who files retirement papers between September 15 and October 31, 2001 will receive the following retirement package:
(1) Five years of age added to pension formula; and
(2) A monthly supplement (equal to railroad retirement annuity) payable until employee is able to commence unreduced railroad retirement annuity benefits.
Id. ¶ 34 (quoting Sec. Am. Compl., Ex. 3 at 2) (emphasis added). Under the proposal, employees who retired early would receive a monthly supplement equal to what they would later receive as a railroad retirement annuity from the Railroad Retirement Board.*fn5 Id. ¶ 35. The supplement would cease once the employee began to receive his or her railroad retirement annuity. Id. The July 26, 2001 VERP was to be funded entirely out of the assets of the Retirement Plan. Id. ¶ 34 (internal citation omitted). Management informed the Board that "[t]he anticipated total cost of the Early Retirement Plan option [to the Plan] is $9.0-$12 million." Id. (internal quotation marks omitted).
In advance of the July 26, 2001 Board meeting, and in keeping with customary practice, individual directors were each sent a briefing book or binder with materials relevant to the upcoming meeting. In this instance, the directors were supplied with descriptions of the "Voluntary Early Retirement Program," "Voluntary Separation Program," "Involuntary Separation Program," and "Severance Packages." Hall I Pls.' Mot. for Summ. J., Ex. I. Among the information disclosed regarding the program was the "Design": "Employee receives an additional 5 years of age to pension formula -- Employee is provided a monthly supplement equal to railroad retirement annuity until employee is able to commence full benefit with railroad retirement with no reductions for early retirement." Id.
The signed minutes of the July 26, 2001 Board meeting reflect that the Board unanimously voted in favor of the proposed VERP, as well as a severance plan not relevant to this case. The Board resolved as follows:
WHEREAS, Management has presented to the Board an organizational restructuring plan for the Corporation; and
WHEREAS, This restructuring plan will result in the consolidation and elimination of a number of positions within the Corporation's management workforce; and
WHEREAS, Management believes that it is preferable to encourage employees who might be affected by the organizational restructuring to voluntarily leave Amtrak through programs that provide a transition to other employment; and
WHEREAS, Management has set forth in the attached Executive Summary the terms of three proposed employee separation/severance plans: a Voluntary Separation Plan, an Early Retirement Plan, and an Involuntary Separation Plan; therefore, be it
RESOLVED, That the three employee separation/ severance plans described in the attached Executive Summary are authorized and approved; and
FURTHER RESOLVED, That the President and Chief Executive Officer is authorized to take all necessary steps to implement the three separation/severance plans described in the attached Executive Summary.
Hall I Compl., Ex. 2. The parties vigorously dispute whether this resolution constituted an amendment to the Plan.
According to Plaintiffs, "[i]mmediately upon receiving the Board's July 26, 2001 approval, management announced the VERP with great fanfare and began a several weeks long campaign to induce employees to take it and retire. Over the course of the ensuing weeks, eligible employees were repeatedly told about the VERP's terms in great detail---including the specific terms of the Railroad Retirement Supplement---and were affirmatively led to believe that this was a promise they could rely upon." Hall I Sec. Am. Compl. ¶ 46.
2. The September 14, 2001 VERP ("September VERP")
Plaintiffs allege that "[b]y early September 2001, Amtrak management realized that far more employees than [it] had originally predicted were intending to elect the VERP. While management believed that this number of elections would not place the Pension Plan in an underfunded status, it might shorten the 'contribution holiday' that Amtrak enjoyed because of the Pension Plan's overfunding." Id. ¶ 52. Because of its concern, on September 14, 2001, management asked the Board "to amend the Plan to eliminate the promised monthly Railroad Retirement Supplement and replace it with a far less valuable lump sum payment of $15,000." Id. ¶ 54. Plaintiffs allege that management made this request "either unaware or heedless that [it was] proposing that the Company violate ERISA's anti-cutback rule, [ERISA Section 204(g), 29 U.S.C. § 1054(g)*fn6 ]." Id.
Plaintiffs maintain that, "[a]s part of the proposed new amendment to the Plan, management also explicitly asked the Board to require employees accepting the reduced VERP to sign a release as a condition to their participation in the reduced VERP." Id. at
¶ 56. To explain and support this request, management presented the Board with an Executive Summary pertaining to the July 26, 2001 VERP and the proposed new amendment, which explained that if Management proceeded with the plan as originally formulated, the surplus in the Fund would be depleted and the company would be required to make a significant contribution to the Fund as early as 2003. According to the actuary, as a result of a combination of market conditions, additional accrued liabilities and withdrawals, the forecasted surplus in the Fund has declined from approximately $42 million in December 2000 to $18.6 million on August 31, 2001. While Management expects the Fund to continue to grow over the long term, it has nevertheless determined that it would be prudent to offer a more modest VERP than originally envisioned and maintain a surplus in the Fund. Consequently, Management proposes to eliminate the second component of the plan, the more costly Railroad Retirement supplement, and instead offer a one-time lump sum payment of $15,000.
Id. (quoting Compl. Ex. 11) (emphasis added).
Management intended to present the amendment at the Board's regularly scheduled September 12, 2001 meeting. However, this meeting was cancelled due to the September 11th terrorist attacks. Instead, on September 14, 2001, management submitted the new amendment to the members of the Board for approval by unanimous written consent. Most directors received faxed copies of the proposed resolutions and an executive summary of the proposed amendment.*fn7 These directors signed the resolutions and faxed them back. One director, A. Linwood Holton, a former Governor of Virginia, did not receive a faxed copy of the resolutions and executive summary. Governor Holton preferred not to communicate by facsimile and had worked out an alternate system with Amtrak management whereby Assistant Corporate Secretary John Carten would sign documents, including unanimous written consents, on Holton's behalf. This procedure was followed on September 14. Carten called ...