Syed v. Hercules Inc.

Citations: 184 F. Supp. 2d 395; 27 Employee Benefits Cas. (BNA) 2217; 2002 U.S. Dist. LEXIS 1906; 2002 WL 181088Docket: CIV.A.01-713-JJF

Court: District Court, D. Delaware; February 4, 2002; Federal District Court

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Sajid L. Syed filed a lawsuit against Hercules Incorporated and related entities, asserting claims related to long-term disability benefits following his employment as a chemical operator, during which he sustained a back injury in 1992. After filing a workers' compensation claim and being terminated due to a workforce reduction, Syed was initially approved for long-term disability benefits, which he received from March 1992 to March 1994. However, those benefits were terminated after an independent medical examination concluded he was not "totally disabled." Syed's appeals to reverse this decision were unsuccessful.

In 1996, Syed initiated a civil action to recover benefits under the Employee Retirement Income Security Act (ERISA), which ultimately resulted in a summary judgment for the defendants. Subsequent attempts to overturn this decision were also denied. In October 2001, Syed filed a second lawsuit, alleging five causes of action, including federal claims for sanctions under ERISA and breach of fiduciary duty, as well as state law claims for fraud, misrepresentation, and emotional distress. The court is currently addressing a Motion to Dismiss and a Motion for Sanctions, with the intention to grant the former and deny the latter.

Two primary allegations in Plaintiff's Complaint underpin all five causes of action. The first, termed the 'Plan Document Allegation,' asserts that Defendants knowingly provided an ineffective Plan document, hindering Plaintiff's ability to litigate effectively and settle his workers' compensation claim. Plaintiff contends that despite his repeated requests for the effective disability Plan document, Defendants supplied him with a misleading benefit booklet titled 'Your Hercules Benefits Portfolio' instead of the correct 'Summary Plan Description' (SPD). He claims this misrepresentation was confirmed by an affidavit from J. Douglass Hill, the Director of Employee Benefits, which clarified that the SPD was the effective document at the time of his requests. Plaintiff argues that the SPD includes a partial disability provision that the Portfolio lacks, denying him the chance to pursue such a claim.

The second allegation, known as the 'Limitations Allegation,' involves Defendants misrepresenting the applicable statute of limitations for legal action regarding disability benefits. Both the Portfolio and the SPD state a three-year period for pursuing claims; however, Defendants asserted a one-year limitation in their response to Plaintiff's initial action. Plaintiff argues that this contradiction illustrates Defendants' intent to obstruct his ability to seek legal recourse.

In response, Defendants have filed a Motion to Dismiss, arguing that Plaintiff's claims are barred by res judicata, asserting that Plaintiff either raised or could have raised these claims in the prior litigation. For res judicata to apply, three criteria must be met: a final judgment on the merits from a prior case, involvement of the same parties, and that the subsequent action is based on the same cause of action. The parties in both actions are identical, and Plaintiff does not dispute that the issues were fully litigated in the First Action. The court will now examine whether the third element of res judicata applies to preclude Plaintiff's current claims.

Defendants argue that Plaintiff's current claims stem from the same transaction or occurrence as those in the previous First Action. In contrast, Plaintiff asserts that res judicata should not apply due to additional facts that he claims were fraudulently concealed by Defendants during the First Action. Upon reviewing the parties' arguments and relevant records, the Court determines that res judicata bars Plaintiff from pursuing the claims in the current Complaint. Specifically, Plaintiff's ERISA 502(c) claim regarding sanctions for Defendants' failure to provide the Plan document is identical to a claim made in the First Action, which resulted in a final judgment favoring Defendants. 

While Plaintiff raises new claims of fraud, misrepresentation, emotional distress, and breach of fiduciary duty under ERISA 404(a)(1) in the current Complaint, the underlying allegations are the same as those presented in the First Action. The Court cites precedents indicating that claims that could have been brought in a prior action cannot be litigated in a subsequent one. Additionally, Plaintiff had previously asserted his Plan Document Allegation in the First Action, which was addressed by both the Court and the Third Circuit. The Third Circuit affirmed the denial of Plaintiff's motion, noting no material differences between the documents he referenced. Consequently, the Court concludes that Plaintiff's current claims are simply attempts to advance additional claims based on the same factual allegations from the First Action.

Plaintiff's claim regarding the statute of limitations was previously addressed in the First Action, where Defendants asserted a one-year statute of limitations for Plaintiff’s ERISA claims, while Plaintiff argued for a three-year period based on Plan documentation. The Court concluded that Plaintiff's argument lacked merit and noted that his current claims of fraud, misrepresentation, breach of fiduciary duty, and emotional distress arise from the same facts and are not based on new information. As such, res judicata applies. The Court acknowledged that while exceptions to res judicata exist for fraud or misrepresentation, they are narrow and do not apply here since Plaintiff was aware of all relevant facts during the prior action. Consequently, Defendants' Motion to Dismiss was granted. 

Defendants also sought sanctions under Federal Rule of Civil Procedure 11, asserting that Plaintiff knew his claims were meritless. They requested attorneys' fees and an injunction against future filings until the amount was paid. The Court considered Plaintiff's case nearly frivolous and warned of potential sanctions for future frivolous filings but ultimately denied the motion for sanctions, noting Plaintiff's pro se status. In summary, the Court granted Defendants' Motion to Dismiss and denied their Motion for Sanctions.

Defendants in this case include Hercules Incorporated, Hercules Incorporated Income Protection Plan, and the Administrator of the Disability Plan, collectively referred to as 'Defendants' and individually as 'Hercules' and 'the Plan.' Under ERISA Section 502(a)(1)(B), a participant or beneficiary can initiate a civil action to recover benefits or clarify rights under their plan. Additionally, Section 502(c) holds plan administrators liable for failing to provide requested information within 30 days, with potential daily penalties and other relief at the court's discretion.

The Plaintiff claims to have received a copy of the Portfolio on four occasions: upon starting employment in September 1988, during a meeting in March 1992, after a written request in May 1994, and after another request in February 1995. Although the Plaintiff's prior disability benefits claim under ERISA was not resolved on its merits, he has not pursued such a claim in this action, and thus the Court will not consider his references to the earlier case.

Initially, the Plaintiff acknowledged receipt of the Summary Plan Description (SPD) but later argued that he should have received the 'Insurance Policy' as the actual Plan document. After the Court ruled in favor of the Defendants, the Plaintiff changed his stance, alleging fraudulent provision of the Portfolio instead of the SPD. The Defendants argue that the Plaintiff's Complaint should be dismissed due to statute of limitations issues and failure to state proper legal claims. However, the Court has determined that all of the Plaintiff's claims are barred by res judicata and will not explore the Defendants' alternative arguments.