The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge
Plaintiff Jamal J. Kifafi, on behalf of himself and similarly situated individuals, brings this lawsuit alleging that the terms and implementation of the Hilton Hotels Retirement Plan violated the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. § 1001, et seq. In particular, Kifafi alleges that (1) the terms of the Plan produced an impermissible amount of variation among accrual rates, commonly called "backloading," (2) Defendants improperly applied the Plan's vesting provisions, and (3) Defendants committed multiple other ERISA violations as to Kifafi individually by, for example, failing to keep on file records of his marital status. On May 11, 1999, the Court certified a so-called "benefit-accrual class" as to the first allegation, and on March 30, 2005, the Court certified four sub-classes as to the second allegation.
Defendant Hilton Hotels Corporation (together with the Hilton Hotel Retirement Plan, Committee, and individual members, "Hilton"), assert that the terms of the Plan have not violated ERISA, and that they have fully implemented the Plan in accordance with its terms.
Hilton has, nevertheless, continuously amended its Plan throughout the course of this litigation in an attempt to respond to Kifafi's allegations and to moot all of the claims in this case.
Currently pending before the Court are the parties' Cross-Motions for Summary Judgment, Hilton's Motion to Strike certain declarations submitted by Kifafi in support of his Motion for Summary Judgment, and a Motion for Leave to submit a Sur-Reply, which was filed by Kifafi as support for his Opposition to Hilton's Motion to Strike. After thoroughly reviewing the parties' submissions, relevant case law, applicable statutory and regulatory authority, and the record of the case as a whole, the Court shall GRANT-IN-PART and DENY-IN-PART Kifafi's  Motion for Summary Judgment, GRANT-IN-PART and DENY-IN-PART Hilton's  Cross-Motion for Summary Judgment, DENY Hilton's  Motion to Strike, and DENY  Kifafi's Motion for Leave to file a Sur-Reply, for the reasons that follow.
A. Statutory and Regulatory Background
It is well established that ERISA does not require employers to establish retirement plans for their employees and does not mandate any particular level of benefits that must be provided should an employer choose to have such a plan. See Lockheed Corp. v. Spink, 517 U.S. 882, 887 (1996). "Employers or other plan sponsors are generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans." Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995). Nevertheless, employers' discretion with respect to their retirement plans is not without limitation. ERISA contains certain requirements that "protect employees' justified expectations of receiving the benefits their employers promise them." Central Laborers' Pension Fund v. Heinz, 541 U.S. 739, 743 (2004).
The present case involves ERISA protections associated with employees' accrual of benefits (the amount of benefits to which an employee is entitled) and vesting of benefits (the time at which an employee obtains a right to his or her accrued benefits). These are distinct but related concepts:
the 'vesting schedule' specifies the time at which an employee obtains his nonforfeitable right to a particular percentage of his accrued benefit. It does not provide any formula or schedule for determining the amount of the accrued benefit. Thus, 'vesting' governs when an employee has a right to a pension; 'accrued benefit' is used in calculating the amount of the benefit to which the employee is entitled.
Holt v. Winpisinger, 811 F.2d 1532, 1536 (D.C. Cir. 1987) (quoting Stewart v. Nat'l Shopman Pension Fund, 730 F.2d 1552, 1562 (D.C. Cir. 1984) (emphasis in original omitted)). Because "vesting is tied to length of employment" and the accrual of benefits "depends upon participation in the plan," it is possible for employees to "earn credit toward vesting without accumulating any pension benefits." Id. at 1537.
With respect to the accrual of benefits, ERISA protects employees by limiting the variation associated with rates of accrual, setting forth three alternative tests for monitoring accrual rates. See Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 512-13 (1981). By requiring defined benefit plans to comply with any one of these three alternative tests, ERISA prevents employers from "backloading" benefits, a term of art used to describe "a plan's use of a benefit accrual formula that postpones the bulk of an employee's accrual to [his] later years of service." In re Citigroup Pension Plan ERISA Litig., 470 F. Supp. 2d 323, 333 (S.D.N.Y. 2006). See also 26 C.F.R. 1.411(b)-1 ("[a] defined benefit plan is not a qualified plan unless the method provided by the plan for determining accrued benefits satisfies at least one of the alternative methods . . . for determining accrued benefits with respect to all active participants under the plan").*fn1 Backloading is prohibited because it defeats ERISA's minimum vesting provisions:
[t]he primary purpose of [minimum accrual rates] is to prevent attempts to defeat the objectives of the minimum vesting provisions by providing undue 'backloading,' i.e., by providing inordinately low rates of accrual in the employee's early years of service when he is most likely to leave the firm and by concentrating the accrual of benefits in the employee's later years of service when he is most likely to remain with the firm until retirement.
Langman v. Laub, 328 F.3d 68, 71 (2d Cir. 2003) (quoting H.R. Rep. No. 93-807 (1974), reprinted in 1974 U.S.C.C.A.N. 4639, 4688).
The three alternative tests are set forth in Section 204(b) of ERISA, 29 U.S.C. § 1054(b)(1). The first test is commonly called the "3% rule," 29 U.S.C. § 1054(b)(1)(A).*fn2 The second test is commonly called the "133 1/3% rule," and it requires that the annual rate of accrual in any later year of participation not exceed 133 1/3% of the accrual rate in any earlier year under the plan:
[a] defined benefit plan satisfies the requirements of this paragraph of a particular plan year if under the plan the accrued benefit payable at the normal retirement age is equal to the normal retirement benefit and the annual rate at which any individual who is or could be a participant can accrue the retirement benefits payable at normal retirement age under the plan for any later plan year is not more than 133 1/3 percent of the annual rate at which he can accrue benefits for any plan year beginning on or after such particular plan year and before such later plan year.
Id. § 1054 (b)(1)(B). The third test is commonly called the "fractional rule," and it requires an employee's accrued benefit to exceed a fractional projected retirement benefit:
[a] defined benefit plan satisfies the requirements of this paragraph if the accrued benefit to which any participant is entitled upon his separation from the service is not less than a fraction of the annual benefit commencing at normal retirement age to which he would be entitled under the plan as in effect on the date of his separation if he continued to earn annually until normal retirement age the same rate of compensation upon which his normal retirement benefit would be computed under the plan, determined as if he had attained normal retirement age on the date any such determination is made (but taking into account no more than the 10 years of service immediately preceding his separation from service). Such fraction shall be a fraction, not exceeding 1, the numerator of which is the total number of his years of participation in the plan (as of the date of his separation from the service) and the denominator of which is the total number of years he would have participated in the plan if he separated from the service at the normal retirement age.
With respect to vesting, Section 203(a) of ERISA provides that an employee's accrued benefits cannot be forfeited once an employee reaches the age of retirement. Id. § 1053(a). Whether an employee has reached the age of retirement turns, at least in part, on his or her years of service. Id. § 1002(24) (allowing retirement plans to specify the age of retirement or, alternatively, setting the age of retirement as 65 years old or the fifth year of participation in the plan).
Pursuant to Section 203(b) of ERISA, employers are required to count all of an employee's years of service for calculating his or her years toward vesting. Id. § 1053(b)(1) (requiring employers to count "all of an employee's years of service with the employer or employers maintaining the plan"). An employee's years of service are counted even if they occur prior to participation in the retirement plan. See Holt, 811 F.2d at 1537 (citing H.R. Conf. Rep. No. 1280, 93rd Cong., 2d Sess. 268 (1974), reprinted in 1974 U.S. Code Cong. & A. News 5038, 5050 ("generally, . . . once an employee becomes eligible to participate in a pension plan, all his years of service with an employer (including pre-participation service, and service performed before the effective date of [ERISA]) are to be taken into account for purposes of determining his place on the vesting schedule")).
An employee who is credited with 1,000 hours of service during an "eligibility computation period" must generally be credited with one year of service. 29 C.F.R. § 2530.200b-1. Pursuant to this calculation, the employer must count hours reflected in its records not only for hours as to which the employee was paid or entitled to be paid for the performance of his or her duties, but also for hours "during which no duties are performed . . . due to vacation, holiday, illness, incapacity . . . layoff, jury duty, military duty or leave of absence." Id. § 2530.200b-2(a). To calculate these hours, an employer may rely on any records in its possession, "provided that they accurately reflect the actual number of hours of service with which an employee is required to be credited . . . ." Id. § 2530.200b-3(a).
If an employer's existing records do not allow it to properly calculate an employee's actual number of hours that are required to be credited, "a plan must either develop and maintain adequate records or use a permitted "equivalenc[y]," provided that it credits "no less than the actual number of hours of service required be credited under § 2530.200b-2 to each employee in a computation period." Id. If an employer is unable to accurately determine an employee's total hours of service under this standard, an employer "may determine service to be credited to an employee on the basis of hours worked . . . if 870 hours worked are treated as equivalent to 1,000 hours of service . . . ." Id. § 2530.200b-3(d). Accordingly, if an employer is relying on its records to calculate an employee's total hours of service, it may credit one year of service time if the employee has worked 1,000 hours (taking into account all hours and not only those during which the employee is required to be paid for performance); if an employer is unable to calculate an employee's total hours of service, it may credit one year of service time if the employee has worked 870 hours (taking into account only the hours during which the employee is required to be paid for performance).
A third method for calculating an employee's years of service for vesting purposes is not based on an employee's hours, but rather, based upon the total time elapsed while the employee is employed with the employer or employers maintaining the plan (the "elapsed time" method). See 26 C.F.R. 1.410(a)-7(a)(ii). This method allows an employer to avoid having to maintain hourly records associated with its employees, and permits "each employee to be credited with his or her total period of service with the employer or employers maintaining the plan, irrespective of the actual hours of service completed in any 12-consecutive-month period." Id.
Finally, ERISA provides for civil enforcement of its provisions and those in an employee's plan. Under Section 502(a)(1)(B) of ERISA, a participant may bring an action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). Aggrieved plan participants may seek "(A) to enjoin any act or practice which violates any provisions of [Title 29] or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of [Title 29] or the terms of the plan." Id. § 1132(a)(3).
B. The Hilton Hotels Retirement Plan Background
The Hilton Hotels Retirement Plan (the "Plan") is a defined benefit pension plan subject to ERISA.*fn3 Defs.' Stmt. ¶ 1. The Plan's initial accrual formula was based on a participant's compensation and years of service, and offset by a participant's "integrated benefits," a term that encompasses a participant's "primary social security benefit." Pl.'s Ex. 1 § 1.2 (Hilton Hotels Retirement Plan, version dated March 30, 1995). Beginning in 1976 and continuing until 1999, the Plan contained an accrual schedule that was supposed to comply with the 133 1/3% rule:
5.4 133-1/3 Percent rule.
The method of computing a Participant's accrued benefit under the provisions of Article IV is intended to satisfy the requirements of the 133-1/3 rule provided in Section 411(b)(1)(B) of the Code.
Id. § 5.4. For this reason, when Hilton filed applications with the Internal Revenue Service for approval of its retirement plan, it indicated its compliance with the 133 1/3% rule. See, e.g., Pl.'s Ex. 2 at 3 (Hilton Application dated March 29, 1995) (indicating that the "[m]ethod for determining accrued benefit[s]" was the "133-1/3% Rule - Code Sec. 411(b)(1)(B)").*fn4
With respect to vesting, the Plan credits participants with years of service beginning January 1, 1976, during the periods in which the employee "is employed with a Participating Employer or a Related Company." Pl.'s Ex. 1 § 1.2 (Hilton Hotels Retirement Plan, version dated March 30, 1995) (defining "Vesting Computation Period"). By its terms, the Plan required all periods of employment between the date of hire and the date of termination to be taken into account, including leaves of absences and union service. Defs.' Stmt. ¶ 15; Pl.'s Resp. Stmt. ¶ 15. An employee can earn a year of vesting credit by completing 1,000 hours of service. Defs.' Stmt. ¶ 16; Pl.'s Ex. 1 (Hilton Hotels Retirement Plan, version dated Mar. 30, 1995) (defining "Years of Benefit Service") ("a Participant shall not be entitled to any Years or fractional Years of Benefit Service for a Plan Year during which he completes less than 1,000 Hours of Service").
Under the Plan, a participant is eligible for early retirement benefits when he or she retires, has reached the age of 55, and has at least 10 years of vesting service (and has elected an early retirement benefit). See Pl.'s Ex. 1 § 1.2 (Hilton Hotels Retirement Plan, version dated March 30, 1995) (defining "Early Retirement Date"). A participant is eligible for normal retirement benefits on the date:
on which occurs the later of (a) or (b), where (a) is the date a Participant attains age 65, and (b) is the earlier of:
(i) the date he has completed 5 Years of Vesting Service, or
(ii) the earlier of (A) the tenth anniversary of the date he commenced participation in the Plan, or (B) the fifth anniversary of the first day of the first Plan Year beginning on or after January 1, 1988.
Id. (defining "Normal Retirement Age").
C. Factual and Procedural Background
The facts of this case are inextricably intertwined with its procedural history. Between 1976 and 1982, Kifafi was intermittently employed by Hilton and other hotels as a union employee. Defs.' Stmt. ¶ 28.*fn5 On September 11, 1983, Kifafi was hired as a full-time union employee at the Capital Hilton in Washington, D.C. Id. ¶ 29. Less than one month later, he suffered a back injury that caused him to take a leave of absence. Id. This injury limited the number of hours Kifafi worked in 1983 and 1984. Id. Kifafi was terminated from the Capital Hilton in 1984, but reinstated as a nonunion employee on July 25, 1985. Id. ¶ 30. Kifafi worked in that capacity until he resigned on November 9, 1993. Id.
Upon his resignation, Hilton did not notify Kifafi that he was eligible to receive a pension. Pl.'s Stmt. ¶ 4; Defs.' Resp. Stmt. ¶ 4. Kifafi nevertheless inquired about his eligibility for retirement benefits, which resulted in Hilton's preparation of a benefits illustration that was sent to Kifafi in July 1997. Defs.' Stmt. ¶ 31. The benefits illustration listed Kifafi's marital status as "not married," and indicated that Kifafi was eligible to receive a pension of approximately $74.85 per month. See Pl.'s Ex. 78 at 1 (1997 Benefits Illustration).
On July 9, 1997, Kifafi's counsel wrote Hilton requesting additional information concerning Kifafi's benefits. Defs.' Stmt. ¶ 32. On December 29, 1997, Kifafi's counsel sent a letter to the Plan's Pension Committee arguing that the terms and implementation of the Plan violated several provisions of ERISA. Id. In particular, the letter asserted that the Plan backloaded benefit accruals and failed to properly credit Kifafi's years of service. See Defs.' Ex. 21 at 2 (12/29/97 Letter from S. Bruce to Pension Committee).
The Pension Committee responded on March 27, 1998, through counsel, concluding that Kifafi was entitled to an additional year of vesting for 1983, but not for 1984 or 1985. Id. ¶ 33. Because the Pension Committee also concluded that Kifafi continued to fall below the 10 years of service necessary to receive early retirement benefits even with the additional year of service credit, it denied Kifafi's claim for early retirement benefits. Id. The Pension Committee also denied that the terms or implementation of the Plan violated any ERISA provisions. See Pl.'s Ex. 3 at 1-12 (3/27/98 Letter from W. Jacobsen to S. Bruce). With respect to Kifafi's argument that the Plan unlawfully backloaded benefit accruals, the Pension Committee "determined that the Plan satisfies the 133-1/3% rule." Id. at 6. Kifafi filed an appeal, which was denied on September 22, 1998. Id.
Kifafi filed this lawsuit on June 17, 1998. Initially, Hilton defended the Plan as having complied with the 133 1/3% rule. For example, in its initial Statement of the Case submitted to the Court, Hilton represented that:
[t]he rate of accrual of pension benefits is set forth in the Hilton Hotels Retirement Plan ('Retirement Plan'), which expressly provides for accrual of pension benefits under ERISA § 204(b)(1)(B), 29 U.S.C. § 1054(b)(1)(B) -- the so-called '133 1/3% rule.' The Retirement Plan complies with the 133 1/3% rule.
Defs.' Stmt. of the Case at 2 (Oct. 15, 1998). The documents produced to Kifafi in discovery, however, demonstrated that Hilton's own consultants had performed analyses of the Plan and concluded that the Plan did not, in fact, comply with the 133 1/3% rule. For example, the Towers Perrin consulting company ("Towers Perrin") prepared a spreadsheet dated February 10, 1998, titled "411(b) Accrual Test." Pl.'s Ex. 7 at 2 (2/10/98 Accrual Test). The spreadsheet examines the Plan's benefit accrual formula and asks, "Does the Plan Pass 133% Rule?" Id. The answer "No" appears for the first seven years of benefit accruals reflected in the spreadsheet. Id. AON consulting also prepared a spreadsheet for a February 27, 1998 Hilton meeting. Pl.'s Ex. 8 at 1 (2/27/93 Meeting Spreadsheet). The spreadsheet depicts accrual rates of more than 200% under the Plan's benefit accrual formula, which is greater than the variation permissible under the 133 1/3% rule. Id.
Kifafi moved for class certification on November 4, 1998. After his motion had been fully briefed by the parties but prior to its resolution by the Court, Hilton amended the Plan. See Pl.'s Ex. 11 (Amendment 1999-1). The amendment modified the Plan's benefit accrual formula "for the purpose of eliminating any controversy regarding the proriety [sic] of the rate of benefit accruals under the Plan," and specifically referenced this lawsuit. Id. at 1. Unlike the previous formula which purportedly complied with the 133 1/3% rule, Hilton's new formula sought to comply with the fractional rule. Id. at 2-3. According to Kifafi, and not disputed by Hilton, the amendment also modified two unrelated components of the Plan that were favorable to participants: (1) the Plan previously offered 2.0% of the highest average pay for each of the first 25 years of participation but was amended to effectively reduce this amount to 1.33% at its lowest, and (2) the Plan previously calculated Social Security benefits based only on earnings from Hilton but was amended to calculate this amount using projected earnings.*fn6 Pl.'s Stmt. ¶ 27. Significantly, the amendment made all of these changes retroactive and specified that a participant would receive benefits pursuant to the formula under the pre-amendment Plan or the post-amendment Plan, whichever produced greater benefits for that participant. See Pl.'s Ex. 11 at 4 (Amendment 1999-1).
Following Hilton's amendment, Kifafi filed an Amended Complaint that contains six claims for relief. Count I alleges that the Plan unlawfully backloaded benefit accruals and that Hilton's amendment would pay class members only a portion of the benefits that would be owed if their accrued benefits had been calculated in compliance with ERISA. Am. Compl. ¶¶ 40-42A. Count II alleges that Hilton failed to count all of his years of service in violation of the Plan. Id. ¶¶ 43-45. Count III alleges that Hilton failed to maintain sufficient data needed to locate and pay surviving spouses of Plan participants in violation of ERISA. Id. ¶¶ 46-48. Count IV alleges that Hilton failed to issue an individual benefit statement to Kifafi after his separation from service in violation of ERISA and Hilton's Supplemental Plan Document ("SPD"). Id. ¶¶ 49-51. Count V alleges that Hilton failed to timely supply a copy of the Plan document to Kifafi in violation of ERISA. Id. ¶¶ 52-53. Count VI alleges that Hilton's failure to comply with the obligations set forth in ERISA (based apparently on the alleged violations underpinning Counts I-V) constituted a breach of fiduciary duty. Id. ¶¶ 54-56.
Because Hilton amended the Plan and Kifafi had filed an Amended Complaint, the Court allowed the parties an opportunity to submit additional pleadings in connection with Kifafi's Motion for Class Certification. After considering the parties' numerous submissions, the Court subsequently granted-in-part and denied-in-part the Motion for Class Certification on May 11, 1999. See Kifafi v. Hilton Hotels Ret. Plan, 189 F.R.D. 174 (D.D.C. 1999). The Court granted the motion with respect to a benefit-accrual class in connection with Count I of the Amended Complaint, subject to a possible amendment to conform the class with the statute of limitations, if necessary. Id. at 176-78. The Court denied the motion with respect to a "service-counting" class in connection with Count II of the Amended Complaint, which the Court found to consist of five sub-classes:
[w]ith respect to [Kifafi's] (1) union-service claim and (2) his claim that the Defendants failed to give credit for leave of absence, Mr. Kifafi does not even appear to be a member of the proposed class . . . [w]ith respect to the other three service-counting claims, Mr. Kifafi fails to show that his individual circumstances give rise to a generally applicable practice that ought to be tried on a class-wide basis.
Id. at 179-80 (internal numbering added).*fn7
Notwithstanding the pendency of this litigation, on September 3, 1999, Hilton submitted the amended Plan to the IRS and requested a determination that the Plan, as amended, satisfied the requirements of a qualified retirement plan. Defs.' Stmt. ¶ 9. In connection with the same, Kifafi's counsel drafted at least three letters advising the IRS of the claims asserted in this case to "protect the rights of [the] class." Defs.' Ex. 6 at 4 (5/27/99 Letter from S. Bruce to C. Gold). See also Defs.' Ex. 7 (7/12/00 Letter from S. Bruce to IRS); Defs.' Ex. 8 (11/1/01 Letter from S. Bruce to L. Isaacs). The IRS regional office handling the request referred the issues associated with Hilton's Plan amendments to its national office (the National Employee Plans Technical Office). Defs.' Stmt. ¶ 11.
The IRS national office issued a Technical Advice Memorandum on July 25, 2002. See Pl.'s Ex. 16 (7/25/02 Technical Advice Memorandum). The Memorandum began by reviewing the accrual provisions associated with Hilton's Plan and identifying the concerns articulated by Kifafi's counsel. Id. at 6. The IRS then evaluated the pre-amendment Plan and determined that it "fails to meet the 133 1/3 percent rule." Id. at 7. The IRS explained that:
[u]nder the 133 1/3 percent rule the annual rate of accrual for any participant must be determined for each year and compared with the annual rate of accrual for any later plan year. Under the Plan, the first year accrual Pre-Amendment Benefit rate is generally .71% of a participant's average monthly compensation . . .
For all except the lowest paid participants in the Plan and participants in the Plan with decreasing compensation, an accrual rate of 1.54% or higher will generally occur in at least one plan year after the first plan year and before the twenty-sixth plan year . . . . Thus, because 1.54% is more than 133 1/3 percent of .71%, the Pre-Amendment Benefit fails to meet the 133 1/3 percent rule.
Id. The IRS also found that the pre-amendment Plan violated the 3% rule and the fractional rule (i.e., it failed to comply with any of the three alternative accrual tests set forth in 29 U.S.C. § 1054 (b)(1)). Id. at 6-8, 12 ("[t]he Plan benefit formula before the Amendment 1999-1 did not satisfy the 133 1/3% accrual rule under Internal Revenue Code Section 411(b)(1)(B), nor did it meet the fractional rule or the 3 percent method").
With respect to Hilton's post-amendment Plan, the IRS determined that the Plan still failed to comply with the 133 1/3% rule (or the 3% rule), but that it did comply with the fractional rule. Id. ("[t]he Plan benefit formula after the Amendment 1999-1 does not satisfy the 133 1/3% accrual rule under Internal Revenue Code section 411(b)(1)(B) nor does it meet the 3 percent method, but it does meet the fractional rule"). Because the IRS did not believe that Hilton had previously misstated or omitted material facts at the time it had submitted applications related to the pre-amendment Plan, and because the IRS believed that Hilton had acted in good faith reliance on the IRS' determination letters, the IRS decided not to retroactively revoke the Plan's qualified status. Id. at 13. In making this ...