Syed v. Hercules, Inc.

Opinions of the United

2000 Decisions States Court of Appeals

for the Third Circuit

5-31-2000

Syed v. Hercules, Inc.

Precedential or Non-Precedential:

Docket 99-5472

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Filed May 30, 2000

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 99-5472

SAJID L. SYED,

Appellant

v.

HERCULES INC., a Delaware corporation; HERCULES

INCORPORATED INCOME PROTECTION PLAN, an

employee welfare benefit plan; HERCULES

INCORPORATED, Plan Administrator of Disability Plan

ON APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE

(Dist. Court No. 96-62)

District Court Judge: Joseph J. Farnan, Jr., C.J.

Argued January 11, 2000

Before: BECKER, Chief Judge, and ALITO and BARRY,

Circuit Judges.

(Opinion Filed: May 30, 2000)

John M. Stull, Esq. (Argued)

1220 North Market St., Ste. 510

P.O. Box 1947

Wilmington, DE 19899

Counsel for Appellant

Kevin R. Shannon (Argued)

Potter, Anderson & Corroon, LLP

1313 N. Market St.

P.O. Box 951

Wilmington, DE 19899

Counsel for Appellee

OPINION OF THE COURT

ALITO, Circuit Judge:

Sajid Syed ("Syed") injured his back in January 1992,

while working as a chemical operator for Hercules, Inc.

("Hercules"). Syed brought this action under ERISA

S 502(a)(1)(B), 29 U.S.C. S 1132(a)(1)(B), alleging that

Hercules denied him disability benefits owed under the

company's employee benefits plan. In addition to damages,

Syed requested the imposition of sanctions against

Hercules for failure to provide him with the plan document

pursuant to a written request, as required by ERISA

S 502(c), 29 U.S.C. S 1132(c). He also sought redress for

Hercules's failure to give him adequate written notice of the

reasons for the denial of his claim, as required by ERISA

S 503, 29 U.S.C. S 1133. Syed appeals the District Court's

grant of summary judgment in favor of Hercules on all

counts. We affirm.

Hercules discharged Syed on March 4, 1992, effective

March 31, 1992, as part of a reduction in force. Following

his termination, Syed submitted a claim for long-term

disability benefits under the Hercules Incorporated Income

Protection Plan (the "Plan"). His claim was approved on

June 18, 1993, and Syed began receiving benefits

retroactive to April 1, 1992.

Benefits are payable under the Plan when a worker

becomes totally disabled and remains disabled for six

consecutive months.1 See App. at B21. Because Syed was

_________________________________________________________________

1. This six-month period, known as the "elimination period," was

apparently not imposed by Provident in Syed's case. He began receiving

benefits less than three months after his workplace accident.

2

under 62 when he started receiving benefits, he was eligible

to receive benefits for as long as he remained totally

disabled, up to age 65. See id. at B22. The Plan provides

two definitions of total disability, one that applies for the

first 24 months after the "elimination period" and another

that applies thereafter. The Plan states:

During the elimination period, normally 6 months, and

the first 24 months of benefit payments, you are

considered totally disabled if you are not able to

perform your job. You must not engage in any work for

wages or profit during this time.

After receiving 24 monthly payments, you are

considered totally disabled for as long as you are not

able to engage in any employment for wage or profit for

which you are reasonably qualified by training,

education, or experience.

App. at B24.

After paying benefits to Syed for almost two years,

Provident Life and Accident Insurance Co. ("Provident"), the

Claims Fiduciary under the Plan, asked Syed to undergo an

independent medical evaluation in February 1994 to

determine if he was totally disabled under the latter

definition. Dr. Joson, who performed the examination in

March 1994, reported that Syed could not do heavy work,

but that he could do "sedentary to light" work. App. at A4.

Because Syed would no longer qualify for benefits after the

24-month period lapsed, Provident notified Syed that his

benefits would be terminated as of March 31, 1994. See id.

at A6-7.

Syed appealed the decision to terminate his disability

benefits to Provident's ERISA Committee, which upheld its

previous decision. See App. at A19-20. Syed renewed his

appeal to the ERISA Committee on July 27 and October 28,

1994, each time including updated medical reports. The

ERISA Committee sent its final denial of benefits to Syed by

letter dated November 9, 1994. On February 24, 1995, Syed

requested a copy of the plan document that was effective as

of the date he began receiving benefits. Hercules sent him

a document entitled "Summary Plan Description" (SPD).

App. at B15-32.

3

Syed filed suit on February 6, 1996 -- one year and

eleven months after the initial denial of benefits on March

31, 1994, and one year and three months after thefinal

letter from Provident dated November 9, 1994. Shortly

thereafter, he filed a motion for summary judgment seeking

recovery of benefits under ERISA S 502(a)(1)(B), sanctions

under S 502(c) for failure to produce the Plan document in

response to a written request, and a remedy underS 503

for failure to provide written notice of the reasons for

termination of benefits. Hercules made a cross-motion for

summary judgment, claiming that Syed owed money for

overpayments made under the Plan.

The District Court denied Syed's motion. As the Plan gave

the Claims Fiduciary the exclusive discretion to deny claims

for benefits, the District Court reviewed Syed'sS 502(a)(1)(B)

claim under the abuse of discretion standard in accordance

with Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101,

115 (1989); see also Abnathya v. Hoffman-La Roche, Inc., 2

F.3d 40, 45 (3d Cir. 1993). After reviewing the medical

evidence, the District Court found that there was a genuine

issue as to whether Provident acted arbitrarily and

capriciously in terminating Syed's medical benefits.

Nonetheless, after borrowing Delaware's one-year statute of

limitations applicable to claims for "other benefits arising

from . . . work, labor or personal services performed," 10

Del. C. S 8111, the Court granted summary judgment for

Hercules on this claim.

Next, the Court dismissed Syed's S 502(c) claim. ERISA

S 502(c) provides that an administrator must comply with a

request for information by a plan participant and imposes

personal liability for failure to do so. Syed contended that

Hercules improperly sent him the SPD, rather than the

Insurance Policy, see App. at B60, in response to his

request. However, the Court held that the SPD was the

operative plan document for the relevant time period and

therefore granted summary judgment in favor of Hercules

on this count. Likewise, the Court refused to remand Syed's

case to the plan administrator for an out-of-time

administrative appeal for the alleged violation of ERISA

S 503, because Hercules's March 31 letter adequately set

forth the reasons for denying Syed's benefits.

4

Syed makes four arguments on appeal. First, he contends

that his ERISA claim for employee benefits should be

governed by Delaware's three-year statute of limitations for

contract actions, not the one-year statute for claims arising

out of work, labor, or personal services performed. Second,

he maintains that Hercules, as Plan Administrator, should

be subject to sanctions for failing to provide proper

disclosure as required by ERISA S 502(c). Third, Syed

argues that Hercules violated ERISA S 503 both by failing to

provide specific reasons for the denial of his claim and by

neglecting to name any additional material or information

that would have helped him perfect his claim. Finally, Syed

asserts that the District Court should have exercised

plenary review over the Claims Fiduciary's decision to deny

his benefits, rather than reviewing for an abuse of

discretion, as the Plan did not grant discretion to the

Claims Fiduciary to make a disability determination.

Because we hold that Delaware's one-year statute of

limitations governs this action, we affirm the District

Court's grant of summary judgment on Syed's S 502(a)(1)(B)

claim without deciding whether Provident's decision to deny

Syed's benefits was arbitrary and capricious. We likewise

affirm the District Court's dismissal of Syed's claims under

ERISA SS 502(c) and 503.

ERISA S 502(a)(1)(B): Statute of Limitations

The chief issue in this appeal concerns the statute of

limitations that is applicable to Syed's claim for benefits

under ERISA S 502(a)(1)(B).2 Unfortunately, ERISA does not

provide a statute of limitations for suits brought under

S 502(a)(1)(B) to recover benefits, and the new, general

federal statute of limitations set out in 28 U.S.C.S 1658

does not apply in this situation.3 Under these

circumstances, courts generally turn to the most analogous

_________________________________________________________________

2. We exercise plenary review over the District Court's choice of the

applicable statute of limitations. See Nelson v. County of Allegheny, 60

F.3d 1010, 1013 (3d Cir. 1995).

3. This provision, which prescribes a four-year limitations period,

applies

only to claims arising under acts of Congress enacted after December 1,

1990. ERISA was enacted much earlier.

5

state statute of limitations. See DelCostello v. International

Bhd. of Teamsters, 462 U.S. 151, 158-60 (1983). Although

this Circuit has not decided which state statute of

limitations is applicable to ERISA S 502(a)(1)(B),4 every other

circuit to address the issue has applied the statute of

limitations for a state contract action. See Harrison v.

Digital Health Plan, 183 F.3d 1235, 1239-40 (11th Cir.

1999); Daill v. Sheet Metal Workers' Local 73 Pension Fund,

100 F.3d 62, 65 (7th Cir. 1996); Adamson v. Armco, 44

F.3d 650, 652 (8th Cir. 1995); Hogan v. Kraft Foods, 969

F.2d 142, 145 (5th Cir. 1992); Meade v. Pension Appeals &

Review Comm., 966 F.2d 190, 195 (6th Cir. 1992); Held v.

Manufacturers Hanover Leasing Corp., 912 F.2d 1197, 1207

(10th Cir. 1990); Pierce County Hotel Employees &

Restaurant Employees Health Trust v. Elks Lodge, 827 F.2d

1324, 1328 (9th Cir. 1987); Dameron v. Sinai Hosp., 815

F.2d 975, 981 (4th Cir. 1987). Because Delaware, in

essence, has two statutes of limitation for contract

disputes, however, we must determine which is more

appropriate.

Delaware Code S 8106 establishes a three-year statute of

limitations for general actions on a promise. See Goldman

v. Braunstein's, Inc., 240 A.2d 577, 578 (Del. 1968). Section

8106 provides:

No action to recover damages for trespass, no action to

regain possession of personal chattels, . . . no action

based on a promise, . . . shall be brought after the

expiration of 3 years from the accruing of the cause of

such action.

Del. Code Ann. tit. 10, S 8106 (emphasis added). Delaware

also has a more specific statute of limitations covering

employment disputes, S 8111, which provides:

No action for recovery upon a claim of wages, salary, or

overtime for work, labor or personal services

_________________________________________________________________

4. We have previously suggested in dicta that the New Jersey state

statute of limitations for a contract action would apply to claims under

ERISA S 502(a)(1)(B), but we have never squarely decided the issue. See

Connell v. Trustees of the Pension Fund of the Ironworkers Dist. Council

of N. New Jersey, 118 F.3d 154, 156 n.4 (3d Cir. 1997).

6

performed, . . . or for any other benefits arising from

such work, labor or personal services performed . . .

shall be brought after the expiration of one year from

the accruing of the cause of action on which such

action is based.

Del. Code Ann. tit. 10, S 8111 (emphasis added). In this

case, the District Court applied S 8111, relying on Mitchell

v. E.I. DuPont de Nemours & Co., 310 A.2d 641, 642 (Del.

1973).

In Mitchell, the Delaware Supreme Court applied S 8110

(now S 8111) to a claim challenging the denial of benefits

under a disability wage plan. See Mitchell, 310 A.2d at 642.

The Court reasoned that the plan at issue was a"benefit"

arising from work, labor, or services performed within the

meaning of the statute because eligibility for the plan

accrued from tenure on the job. See id. Although the

District Court in the present case mistakenly referred to

Mitchell as an ERISA case (Mitchell was decided in 1973 and

ERISA was not effective until 1974), the application of

S 8111's predecessor in the pre-ERISA context is strong

evidence of its close relationship to the ERISA claim that

Syed asserts. See also Sorenson v. Overland Corp., 142 F.

Supp. 354, 360 (D. Del. 1956) ("The one year statute has a

comprehensive sweep. It was intended to bar all claims

arising out of the employer-employee relationship. The Act

bars claims for `wages', `salary', and it likewise applies to

`overtime' and to any other `benefits' arising from the

corporate-officer employment relationship. The word

`benefits' is embracing and covers all advantages growing

out of the employment.").

The Eighth Circuit dealt with a similar issue in Adamson

v. Armco, 44 F.3d 650 (8th Cir. 1995). There, the Court had

to choose between Minnesota's six-year statute of

limitations governing general contract disputes and the

state's two-year statute of limitations for wage claims. The

Court reasoned that the wage-claim statute of limitations

was the most analogous to the appellant's S 502(a)(1)(b)

claim because Minnesota courts had uniformly applied that

statute broadly to cover all damages arising out of the

employment relationship. See Adamson, 44 F.3d at 652. In

support of its conclusion, the Court noted that pre-ERISA

7

case law in Minnesota had applied the two-year statute of

limitations to cases of unpaid benefits. See id. (citing

Kohout v. Shakopee Foundry Co., 162 N.W.2d 237 (Minn.

1968)).

Syed relies primarily on two cases to bolster his

argument for application of S 8106: Rich v. Zeneca, Inc., 845

F. Supp. 162 (D. Del. 1994) and Shaw v. Aetna Life

Insurance Co., 395 A.2d 384 (Del. Super. Ct. 1978). Rich

held that S 8106 should apply to a claim under ERISA

S 510, 29 U.S.C. S 1140, for wrongful termination based on

a pension-defeating motive. See Rich, 845 F. Supp. at 166

(citing Goldman v. Braunstein, Inc., 240 A.2d 577 (Del.

1968)). The Rich Court chose S 8106 rather than S 8111

because the latter applies to claims for breach of a promise

to pay something already earned, whereas the former

applies to claims for breach of a promise to pay what would

have been earned had employment continued. See id. Since

Syed's disability benefits were already "earned" through his

period of employment at Hercules, Rich does not support

the argument that S 8106 should apply here.

In Shaw, the Delaware Superior Court refused to apply

S 8111 where an employee brought an action under the

employer's voluntary group accident insurance policy.

Shaw, 395 A.2d at 385. The employee was injured in a

workplace injury which resulted in his permanent and total

disability. The employer argued that S 8111 should apply to

the claim because coverage under the policy arose out of

the employment relationship. See id. at 387 (relying on

Mitchell). The Court dismissed defendant's argument

summarily. See id. ("That contention of the defendant is

without merit."). Instead, the Court applied Delaware's two-

year statute of limitations for personal injury claims. Del.

Code S 8119. It is not immediately clear how Shaw is

distinguishable from Syed's case, and Hercules has not

pointed out any meaningful distinction. Nonetheless,

because the Shaw Court failed to explain whyS 8111

should not apply, we find Mitchell to be more persuasive.

Although Syed's S 502(a)(1)(B) claim comes within

Delaware's more specific statute of limitations for claims

arising out of the employer-employee relationship, that does

not conclusively resolve the issue. After all, the selection of

8

an appropriate statute of limitations is a question of federal

law. See United Auto Workers v. Hoosier, 383 U.S. 696, 706

(1966).

Generally, we presume that Congress intended courts to

apply the most closely analogous state statute of

limitations. See DelCostello, 462 U.S. at 158. This principle

rests on the assumption that "Congress would likely intend

that courts follow their previous practice of borrowing state

statutes." Id. at 158-59 n.12. We remain mindful of the

Supreme Court's warning not to apply state statutes of

limitation mechanically since "[s]tate legislatures do not

devise their limitations periods with national interests in

mind, and it is the duty of the federal courts to assure that

the importation of state law will not frustrate or interfere

with the implementation of national policies." Occidental

Life Ins. Co. v. EEOC, 432 U.S. 355, 367 (1977).

Nonetheless, there is no reason to reject the state statute

unless we find it "inconsistent with national labor policy."

Auto Workers, 383 U.S. at 706.

In this case, we recognize that the one-year statute of

limitations of S 8111 is short, but we cannot say that it is

inconsistent with the policy of ERISA. We therefore agree

with the District Court that Syed's claim was governed by

S 8111 and was thus barred.

We are not persuaded by the arguments advanced by the

dissent in support of its position that Syed's claim for

disability benefits is more analogous to an ordinary

contract claim, subject to S 8106, than to a claim for "other

benefits arising from . . . work, labor or personal services,"

subject to S 8111. Noting that the Mitchell court described

the plan at issue there as providing a "fringe benefit," the

dissent argues that "Syed's claim . . . has little or nothing

to do with work or services performed or fringe benefits

. . . .," Dissent at 15, but this is simply not true. First,

Syed's claim was squarely based on his prior employment.

In order to qualify under the long term disability plan, he

had to be "a regular, full-time non-represented employee of

the Company . . . ." Appendix to Answering Brief at B20

(Summary Plan Desciption). Second, ERISA benefits are

often termed "fringe benefits." See, e.g., Bricklayers and

Allied Craftsmen Int'l Union Local 33 Benefit Funds v.

9

America's Marble Source, Inc., 950 F.2d 114, 118 (3d Cir.

1991).5 We are inclined to agree with the dissent that the

one-year limitations period of S 8111 is not optimal, and we

also believe that a uniform, national statute of limitations

for claims such as Syed's would be beneficial. But forced to

identify the most analogous Delaware statute of limitations,

we agree with the District Court that S 8111 is the best fit.6

ERISA S 502(c)

Syed urges the Court to impose sanctions on Hercules for

failing to provide the Plan document pursuant to a written

request. ERISA S 502(c) provides that a plan administrator

must comply with a request for information from a plan

participant within 30 days or face personal liability, at the

Court's discretion, of $100 a day from the date of the

refusal. 29 U.S.C. S 1132(c). The District Court did not

abuse its discretion in refusing to order sanctions against

Hercules, and we affirm the grant of summary judgment on

this issue.

Hercules sent Syed the SPD on March 22, 1995, in

response to his February 24, 1995, written request for "a

complete copy of LTD Plan document effective as of March

4, 1992." App. at A28. Syed contends that a different

document was in effect at the time he was injured and at

the time his benefits were denied. Specifically, he points to

_________________________________________________________________

5. We also note that Delaware's Wage Payment and Collection Act

(WPCA), Del. Code Ann. tit. 19, SS 1101-1115, defines "benefits" as

"compensation for employment other than wages, including, but not

limited to, reimbursement for expenses, health, welfare or retirement

benefits . . . ." Del. Code Ann. tit. 19, S 1109(b). Although the WPCA

does

not provide a statutory remedy for the denial of benefits, its definition

quite clearly encompasses the disability benefits Syed has sued to

recover here.

6. In view of the dissent's reference (Dissent footnote 3) to the

Pennsylvania Wage Payment and Collection Law, 43 P.S. S 260.1 et seq.,

which has a three-year statute, see 43 Pa. Cons. Stat. Ann. S 260.9a(g),

we wish to make it clear that we express no view regarding the statute

of limitations that would apply if a claim such as Syed's were brought in

Pennsylvania. We note, however, that we have held that some ERISA

claims are governed by the WCPL's statute of limitations and others are

not. See Gluck v. Unisys Corp., 960 F.2d 1168, 1180-81 (3d Cir. 1992).

10

the insurance policy used to fund Hercules's long-term

disability plan (LTD). App. at B35-72.

A comparison of the SPD and LTD reveals no material

differences between the two documents. Syed complains

that he was not able to verify "whether the definition of

disability is based on official plan language, SPD language,

or some internal policy, written or unwritten." Appellant's

Br. at 20. This argument lacks merit. For example, the

March 31, 1994, letter denying Syed's benefits, see App. at

A6, quotes the definition of total disability found at page 8

of the SPD, see App. at B24. This definition is exactly the

same as the definition of total disability found on page 3 of

the LTD, see App. at B43, thus belying Syed's assertion

that the two-tier definition of disability did not exist in the

SPD, see Appellant's Br. at 22. The affidavit of Douglas Hill,

Director of Employee Benefits for Hercules, makes clear

that the document Hercules allegedly refused to send to

Syed pursuant to his March 1995 request was, in fact, not

executed until October 1995 (although it was effective

retroactively to July 1990). Because the SPD and the LTD

are identical in all respects material to this dispute, the

District Court properly refused to impose sanctions against

Hercules under ERISA S 502(c), 29 U.S.C. S 1132(c).

ERISA S 503

ERISA S 503 provides, in pertinent part, that every

employee benefit plan shall:

provide adequate notice in writing to any participant or

beneficiary whose claim for benefits under the plan has

been denied, setting forth the specific reasons for such

denial, written in a manner calculated to be

understood by the participant.

29 U.S.C. S 1133(1). Pursuant to this section, the Secretary

of Labor has established that written notice of denial of a

claim must:

provide to every claimant who has been denied a claim

for benefits written notice setting forth in a manner

calculated to be understood by the claimant:

(1) The specific reason or reasons for the denia l;

11

(2) Specific reference to pertinent plan provisi ons on

which the denial is based;

(3) A description of any additional material or

information necessary for the claimant to perfect the

claim and an explanation of why such material or

information is necessary; and

(4) Appropriate information as to the steps to be taken

if the participant or beneficiary wishes to submit his or

her claim for review.

29 C.F.R. S 2560.503-1(f).

We have previously held that S 503 sets forth only the

disclosure obligations of "the Plan" and that it does not

establish that those obligations are enforceable through the

sanctions of S 502(c). See Groves v. Modified Retirement

Plan, 803 F.2d 109, 118 (3d Cir. 1986). Where a

termination letter does not comply with the statutory and

regulatory requirements, the time limits for bringing an

administrative appeal are not enforced against the

claimant. See Epright v. Environmental Resources

Management, Inc. Health and Welfare Plan, 81 F.3d 335,

342 (3d Cir. 1996). Thus, the remedy for a violation of S 503

is to remand to the plan administrator so the claimant gets

the benefit of a full and fair review. See Weaver v. Phoenix

Home Life Mut. Ins. Co., 990 F.2d 154, 159 (4th Cir. 1993).

The March 31, 1994, letter from Provident to Syed began

with a quotation from the Plan's definition of total

disability. See App. at A6. Next, the letter explained

that Syed's benefits were being terminated because the

results of Dr. Joson's independent medical evaluation

demonstrated that Syed was no longer totally disabled as

the term was defined in the Plan. See App. at A6-7. The

letter went on to identify several jobs for which Syed would

be qualified given his present physical condition. See App.

at A7. Provident stated that Syed could submit a request

for reconsideration of the decision, accompanied by

documents from Syed's physician. See id. Lastly, the letter

noted that any information to be considered in connection

with an appeal would have to be received within 60 days of

Syed's receipt of the letter. See id. In short, Provident fully

complied with the statutory and regulatory requirements for

12

notice under ERISA S 503, and Syed has not raised any

genuine issue of material fact to the contrary. Accordingly,

we affirm the District Court's grant of summary judgment

as to Syed's claim under ERISA S 503, 29 U.S.C. S 1133.

13

BARRY, Circuit Judge, concurring and dissenting.

While I agree with much of the majority's opinion, I

cannot agree with the conclusion that the most analogous

state statute of limitations for a S 502(a)(1)(B) claim is found

in Delaware's S 8111. It is on that issue, and that issue

alone, that I dissent.

First, it is clear, as the majority notes, that every circuit

which has addressed this issue has applied the statute of

limitations for a state contract action as most analogous to

an ERISA claim for the denial of benefits. As the majority

also notes, we, too, have suggested, albeit in dicta, that the

state statute of limitations for a contract action would apply

to claims under S 502(a)(1)(B). See Connell v. Trustees of the

Pension Fund of the Ironworkers Dist. Council of Northern

New Jersey, 118 F.3d 154, 156 n.4 (3d Cir. 1997).

Moreover, district courts too numerous to mention have

also concluded that a state contract statute of limitations is

most analogous to a S 502(a)(1)(B) claim. This is, indeed, a

resounding chorus.

The rub here, however, is this. The majority concludes

that "Delaware, in essence, has two statutes of limitations

for contract disputes," specifically S 8106 and S 8111, and

one, of course, must be selected. The majority then selects

S 8111, which relates to claims "for wages, salary, or

overtime for work, labor or personal services performed . . .

or for any other benefits arising from such work, labor or

personal services" as being "more specific" and, thus, most

analogous to a claim for denied disability benefits under

ERISA than S 8106, the statute traditionally used in

Delaware for breach of contract, or breach of promise,

actions. While I agree that S 8111 is "more specific," it

simply does not apply to a claim that ERISA benefits were

wrongly denied.

Delaware courts restrict S 8111 and its one-year statute

to work or services which have already been performed and

apply S 8106 to a promise of compensation for work or

services to be performed. The S 8111 action, in other words,

is based on the services performed rather than on the

original promise while the S 8106 action is based on the

underlying promise with respect to services not yet

14

completed. See Goldman v. Braunstein's, Inc., 240 A.2d

577, 578 (Del. 1968); Brown v. Colonial Chevrolet Co., 249

A.2d 439, 441 (Del. Super. Ct. 1968).1 Moreover, benefits

for work or services which have been performed have been

described in the case on which the majority primarily relies

as "fringe" benefits. Mitchell v. E.I. duPont deNemours & Co.,

310 A.2d 641, 642 (Del. 1973). Claims for fringe benefits

are typically governed by S 8111. See e.g. , Compass v.

American Mirrex Co., 72 F. Supp. 2d 462, 467-68 (D. Del.

1999)(claim for unpaid bonus governed by S 8111); SCOA

Industries, Inc. v. Bracken, 374 A.2d 263, 264 (Del.

1977)(claim for year-end bonus was equivalent of"wages"

and governed by S 8111).

In Mitchell, a pre-ERISA case, the Supreme Court of

Delaware determined that Mitchell's action under

Delaware's Disability Wage Plan was governed byS 8111.

The Disability Wage Plan, however, had one and only one

requirement for eligibility -- "at least one year of

continuous service." The Plan was a "fringe benefit," said

the Court, which accrued to Mitchell simply because she

had worked for the one year -- her "work" had been

"performed." Mitchell, 310 A.2d at 642.

Syed's claim, however, has little or nothing to do with

work or services performed or fringe benefits and has

everything to do with benefits for disability based on an

interpretation and analysis of the Plan documents, akin to

the analysis required in a traditional breach of contract

claim:

The [claimant] has brought this action to recover

benefits allegedly due him under the terms of the

employee pension benefit plan and to enforce and/or

_________________________________________________________________

1. As the majority acknowledges, selecting the appropriate statute of

limitations is a matter of federal, not state, law, and thus our task is

not

to predict which statute of limitations the Delaware Supreme Court

might select for an ERISA claim. Rather, "in borrowing the state statute

of limitations to impose a time limitation on the federal cause of action,

the federal court is `closing the gap' left by Congress in order to

fashion

a body of federal common law to supplement the federal statutory cause

of action." Harrison v. Digital Health Plan , 183 F.3d 1235, 1238-39 (11th

Cir. 1999).

15

clarify his rights under the terms of that Plan. The

employee pension benefit plan and its predecessor . . .

are in written form. Each of the Plans contain extensive

and detailed terms and conditions governing the rights

and duties of all participants in the fund.

Jenkins v. Local 705 Int'l Bd. of Teamsters Pension Plan,

713 F.2d 247, 252-53 (7th Cir. 1983); see also Hogan v.

Kraft Foods, 969 F.2d 142, 145 (5th Cir. 1992)("[The] claim

involves the interpretation of the annuity contract[.]");

Meade v. Pension Appeals and Review Comm., 966 F.2d

190, 195 (6th Cir. 1992)("[T]he Plan at issue in this case

constitutes a written contract [for disability benefits].");

Johnson v. State Mut. Life Assur. Co. of America, 942 F.2d

1260, 1264 (8th Cir. 1991)(noting that life insurance policy

governed by ERISA "is a written promise to pay money if a

specified condition, accidental death, occurs in the future").

Here, as in Jenkins, it is the Plan which will dictate the

outcome of Syed's claim for unpaid disability benefits.2

There is simply no reasoned basis for concluding that fringe

benefits given by the employer to the employee, i.e.

"benefits arising from . . . work, labor or personal services

performed," should be stretched to include the very

different pension and health benefits governed by an ERISA

plan that is subject to contract interpretation. 3 The

majority's two-fold rejoinder to this is not persuasive. The

majority misses the point by stating the hardly startling

_________________________________________________________________

2. It also bears mention that ERISA plans involve parties outside the

employment relationship such as family members, the insurance

company, and the plan administrator, and for that reason as well a

S 502(a)(1)(B) claim does not fit squarely within S 8111. See Harrison,

183 F.3d at 1241-42 (noting that ERISA claims may involve non-work

related injuries or illnesses and, thus, concluding that state breach of

contract statute was more analogous to S 502(a)(1)(B) claims than

workers compensation statute).

3. Pennsylvania has a similar statute, the Wage Payment and Collection

Law, 43 P.S. S 260.1 et seq. See Ferguson v. Greyhound Retirement and

Disability Trust, 613 F. Supp. 323, 324 (W.D. Pa. 1985)(rejecting use of

wage statute -- and other statutes of limitations-- as most analogous

and stating "[t]his is an action for recovery of benefits due under the

terms of an employee pension benefit plan[.] We believe that the claim is

most analogous to contract law.").

16

proposition that "Syed's claim was squarely based on his

prior employment," "hardly startling" because Syed, of

course, had to have been an employee to have brought an

ERISA claim. Beyond that, the majority's citation to one

case -- a preemption case which emanated from New

Jersey, not Delaware -- for the proposition that ERISA

benefits are "often" termed fringe benefits is somewhat

disingenuous. The category of funds to which the New

Jersey Construction Workers' Fringe Benefit Security Act at

issue in that case applied consisted "largely if not entirely

of employee benefit plans governed by ERISA." Bricklayers

and Allied Craftsmen Int'l Union Local 33 Benefit Funds v.

America's Marble Source Inc., 950 F.2d 114, 118 (3d Cir.

1991).

Mitchell aside, the majority also invokes a 1956 District of

Delaware case which states that S 8111 is meant to

encompass all disputes arising from the employment

relationship. See Sorensen v. Overland Corp., 142 F. Supp.

354 (D. Del. 1956), aff 'd, 242 F.2d 70 (3d Cir. 1959).

Separate and apart from the fact that this sweeping

language emanates from a case decided long before ERISA

was even a twinkle in Congress's eye, the statement which

the majority quotes has been qualified in at least two post-

ERISA District of Delaware cases. In Rich v. Zeneca, Inc.,

845 F. Supp. 162 (D. Del. 1994), relied on by Syed, the

District Court found Mitchell and the "fairly broad"

statement in Sorenson inapplicable to Rich's claim under

ERISA that his employer wrongfully interfered with his

attainment of pension and employment benefits:

S 8111 and its one year statute of limitations for wage,

salary and benefit claims should not be read as being

so comprehensive as to bar all claims arising out of the

employer-employee relationship. Rather [S 8111] is

directed to claims alleging a breach of a duty to pay

wages, salary or overtime for work performed. Where,

as here, a plaintiff alleges that a defendant has

breached a different duty arising out of the employer-

employee relationship, another statute of limitations

may apply to the plaintiff 's claim.

Rich, 845 F. Supp. at 165. The Court concluded that Rich's

claims were most analogous to the breach of contract and

17

breach of promise claims asserted in Goldman and Brown

and, thus, subject to the S 8106 three-year statute of

limitations. See id. at 165-66. Parenthetically, the

majority's effort to distinguish Rich by shoe-horning Syed's

case into "work performed" because his benefits have been

"earned" makes no sense both on its face and because

those contracted-for benefits can only be "earned" when

certain criteria -- criteria stated in the Plan-- are met, a

finding which cannot now be made.4

In the second post-ERISA District of Delaware case, the

Court, referencing what it called the "broad interpretation"

of S 8111 in Sorensen, found that the bonus at issue -- a

clear "fringe" benefit -- was subject toS 8111's one-year

statute of limitations. The Court summarized the

distinction between S 8106 and S 8111:

If a plaintiff alleges a breach of a duty to provide

benefits or to pay wages for work already performed,

then the one year statute of limitations in section 8111

governs. On the other hand, if plaintiff alleges that his

employer breached a different duty arising out of the

employment agreement, then the three year statute of

limitations in section 8106 applies.

Compass, 72 F. Supp. 2d at 467. Just such a"different

duty" has been alleged here. See also DeWitt v. Penn-Del

Directory Corp., 872 F. Supp. 126, 134-35 (D. Del.

1994)(S 8106 is the most analogous statute of limitations

for ERISA S 510 claim).

_________________________________________________________________

4. The majority rejects a second case relied on by Syed primarily because

the Court in that case did not explain why it foundS 8111 inapplicable

to a claim brought under a group accident insurance policy for personal

injuries resulting in disability. See Shaw v. Aetna Life Ins. Co., 395

A.2d

384 (Del. Super. Ct. 1978). It is very clear, however, why the Shaw Court

found as it did: the very specific two-year statute of limitations for

personal injury claims was the perfect fit. I note, for what it is worth,

that by virtue of subsequent amendments to the personal injury

protection ("PIP") provisions of Delaware's No Fault Insurance Statute,

actions for PIP benefits are now statutory causes of action, subject to

the

three-year statute of limitations of S 8106. See Harper v. State Farm Mut.

Auto. Ins. Co., 703 A.2d 136 (Del. 1997).

18

Finally, the majority cites a 1995 Eighth Circuit case

which applied Minnesota's two-year statute of limitations

for wage claims as more analogous to a S 502(a)(1)(B) claim

than the six-year statute of limitations governing contract

disputes. See Adamson v. Armco, Inc., 44 F.3d 650 (8th

Cir.), cert. denied, 516 U.S. 823 (1995). Conceding that

Minnesota courts have not had occasion to determine

whether claims for employee benefits under an ERISA plan

are wage claims, the Adamson Court found the issue

"hardly in doubt," but cited in support of its"hardly in

doubt" conclusion only pre-ERISA cases involving claims

not for disability benefits but for unpaid vacation benefits,

salary increases and "adjustment of all fringe benefits." 447

F.3d at 653. Hardly ringing support.

It is, thus, clear, at least to me, that S 8106's statute of

limitations for contract actions is more analogous to an

ERISA claim for the denial of benefits than that found in

S 8111.5 Moreover, in our search for the most analogous

statute, we are not necessarily limited to reviewing the two

presented to us. It might well be appropriate, therefore, to

consider Delaware's three-year statute of limitations for

claims alleging breach of insurance policies, 19 Del. C.

S 3315. Other circuits have concluded that similar state

statutes are the most analogous to S 502(a)(1)(B) claims and

supply the appropriate statute of limitations. See, e.g., Lang

_________________________________________________________________

5. I note in passing, and only in passing because the parties have not

discussed it, that S 8106 also provides a statute of limitations for

"action[s] based on a statute". Delaware courts have applied the

provision to S 8106/S 8111 disputes. See Johnson v. Williams, 728 A.2d

1185, 1188-89 (Del. Super. Ct. 1998)(concluding that lower court's use

of S 8106 where fireman sought line-of-duty disability benefits pursuant

to state statute as an "action based on statute" was not clearly

erroneous); Vassallo v. Haber Elec. Co., 435 A.2d 1046, 1051 (Del.

Super. Ct. 1981)(applying S 8106 to plaintiff 's claim that based on a

state statute he should have been registered by employer to receive

higher wages). Section 8106 has also been found to provide the statute

of limitations for a federal RICO claim, a claim"based on a statute." See

Creamer v. General Teamsters Local Union 326, 579 F. Supp. 1284, 1290

(D. Del. 1984). Syed's claim is indisputably based on a statute -- ERISA

-- and because the more specific S 8111 simply does not apply, S 8106

is arguably a more appropriate candidate for the most analogous statute

of limitations for this reason as well.

19

v. Aetna Life Ins. Co., 196 F.3d 1102, 1104 (10th Cir. 1999)

("Our duty . . . is to choose the most analogous state

statute of limitation. While plaintiff 's ERISA claim is based

upon a contract, it is more precisely based upon a contract

of insurance. Therefore, we hold that the three-year statute

of limitations applies to plaintiff 's claim."); Nikaido v.

Centennial Life Ins. Co., 42 F.3d 557, 559 (9th Cir.

1994)(using California's "limitations statute specifically for

disability policies" rather than general breach of contract

statute where ERISA Plan contained provision similar to

that of California's insurance code); Duchek v. Blue Cross

and Blue Shield of Nebraska, 153 F.3d 648, 649-50 (8th

Cir. 1998)(applying Nebraska Insurance Statute to action

for benefits under ERISA). As the Duchek Court put it:

[I]t would be anomalous to characterize this suit as a

contract action and then borrow Nebraska's generic

contract statute of limitations rather than the specific

section of the Nebraska insurance laws permitting the

contractual limitation in question.

153 F.3d at 649-50.

The majority, after concluding that Syed's claim comes

within S 8111's statute of limitations, recognizes that that

does not conclusively resolve the issue because the selected

statute of limitations must not be "inconsistent with

national labor policy." It is, indeed, quite clear that a state's

statute of limitations for ERISA claims will only be

borrowed "so long as application of state statute's time

period would not impede effectuation of federal policy."

Pierce County Hotel Employees and Restaurant Employees

Health Trust v. Elks Lodge, 827 F.2d 1324, 1328 (9th Cir.

1987); see also Jenkins, 713 F.2d at 251 ("In determining

the most appropriate state statute of limitations, the court

must be cognizant of and examine the underlying nature of

the federal claim as well as the federal policies involved.").

The majority, while finding S 8111's one-year statute of

limitations to be "short," and while choosing not to discuss

the policy behind ERISA, simply concludes that it"cannot

say" the one-year statute of limitations is inconsistent with

that policy. That conclusion is not so clear to me.

In enacting ERISA, "Congress sought to protect the

20

interests of participants in employee benefits plans by

regulating the administration of such plans and by

providing participants and beneficiaries with a variety of

remedies to assure compliance with the statutory

framework." Harrison, 183 F.3d at 1239; see also Held v.

Manufacturers Hanover Leasing Corp., 912 F.2d 1197, 1202

(10th Cir. 1990)("The principal purpose of ERISA is to

protect employees' rights to benefits under a covered

plan."). While I cannot say that applying S 8111's one-year

statute of limitations (which, it must be remembered, bars

Syed's claim) is so unreasonable as to impede the

effectuation of federal policy, I surely cannot say that we

are furthering Congress's clearly stated goal by concluding

that Delaware's employees have a much shorter period of

time within which to file claims for the wrongful denial of

benefits than employees in virtually every other state.6

Perhaps the Delaware Legislature will feel obliged to

consider this unfortunate result. See Johnson , 942 F.2d at

1266 ("Either Congress, by amending ERISA, or the

Missouri Legislature is free to modify the statute of

limitations. Until such legislative action, we are required to

_________________________________________________________________

6. See e.g., Carey v. Int'l Broth. of Elec. Workers Local 363 Pension

Plan,

201 F.3d 44, 46-47 (2d Cir. 1999)(applying New York's six-year

limitations period); Lang, 196 F.3d at 1104 (applying Utah's three-year

limitations period); Harrison, 183 F.3d at 1239-40 (applying Georgia's

six-year limitations period); Duchek, 153 F.3d at 649-50 (applying

Nebraska's three-year limitations period); Blue Cross & Blue Shield of

Alabama v. Sanders, 138 F.3d 1347, 1357 (11th Cir. 1998)(applying

Alabama's six-year limitations); Daill, 100 F.3d at 65 (applying Illinois'

ten-year limitations period); Nikaido, 42 F.3d at 559 (applying

California's three-year limitations period); Hogan, 969 F.2d at 145

(applying Texas' four-year limitations period); Johnson, 942 F.2d at 1263

(applying Missouri's ten-year limitations period); Meade 966 F.2d at 193,

195 (applying Ohio's fifteen-year limitations period); Wright v.

Southwestern Bell Telephone Co., 925 F.2d 1288, 1291 (10th Cir.

1991)(applying Oklahoma's five-year limitations period); Pierce, 827 F.2d

at 1328 (applying Washington's six-year limitations period); Hawaii

Carpenters Trust Funds v. Waiola Carpenter Shop, Inc., 823 F.2d 289,

297-98 (9th Cir. 1987)(applying Hawaii's six-year limitations period);

Dameron v. Sinai Hosp. of Baltimore, Inc., 815 F.2d 975, 981-82 (4th Cir.

1987)(applying Maryland's three-year limitations period); Trustees for

Alaska Laborers-Constr. Indus. Health and Sec. Fund v. Ferrell, 812 F.2d

512, 517 (9th Cir. 1987)(applying Alaska's six-year limitations period).

21

hold, consistent with Missouri law, that plaintiff 's claim to

enforce defendant's written promise for the payment of

money is governed by the ten-year statute of limitations.").

One final note. The Supreme Court of Delaware has

instructed that when a Delaware court is in doubt as to

which of two statutes of limitations control, it should

choose the longer. See Sonne v. Sacks, 314 A.2d 194, 196

(Del. 1973). Indeed, we, ourselves, have recognized this

principle in a diversity case dealing with an S 8106 and

S 8111 dispute. See Lindsey v. M.A. Zeccola & Sons, Inc., 26

F.3d 1236, 1245 (3d Cir. 1994). Although we, of course, are

not bound to follow that sensible instruction, choosing the

concededly applicable longer statute of limitations period

would not only further the federal policy behind ERISA but

would bring Delaware into line with all of the other states

in which substantially longer statutes of limitations are

applied than the one-year period deemed applicable here. I

respectfully dissent.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

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