Cheryl R. Zimmerman v. Sloss Equipment, Inc., S & N Enterprises, Inc., Richard Sloss
Docket: 93-3386
Court: Court of Appeals for the Tenth Circuit; December 29, 1995; Federal Appellate Court
Cheryl R. Zimmerman filed a lawsuit against Sloss Equipment, Inc. and S. N Enterprises, alleging discrimination and wrongful termination to avoid paying her medical benefits under ERISA section 510 (29 U.S.C. Sec. 1140). The district court denied her request for a jury trial and ruled that she was not entitled to extra-contractual damages. After a bench trial, the court concluded that Zimmerman was not discharged and that her lack of health insurance resulted from her failure to complete the application process.
Zimmerman was hired as a secretary and receptionist on August 24, 1990, by the defendants, who operated from the same location. Prior to her employment, the companies had three employees. They purchased group health insurance effective June 1, 1990. Zimmerman claimed she was informed she would receive health benefits after sixty days of employment and believed her application was complete. However, only an incomplete application was received by the insurance company.
Conflicting testimonies arose regarding whether Zimmerman was notified about her incomplete application and whether she was sent a new application to complete. After becoming seriously ill and hospitalized on January 10, 1991, Zimmerman allegedly called Mr. Nixon on January 28, 1991, to inquire about her health insurance and was told she was fired. However, another conversation with Mr. McIntyre indicated she had not been terminated. Defendants countered that Zimmerman’s lack of insurance was due to her incomplete application and denied firing her, asserting they kept her position open for five months after her hospitalization. The appellate court affirmed the district court's decision.
The district court ruled in favor of the defendants after a trial, rejecting Ms. Zimmerman's claims regarding her termination and the conversations with Mr. Nixon and Mr. Sloss. The court found that Ms. Zimmerman was not fired and believed Mr. Sloss told her to focus on recovering and returning to work. On appeal, Ms. Zimmerman argues the court erred in four ways: failing to recognize a prima facie case of discrimination, not applying collateral estoppel regarding her termination, ruling against her collection of extra-contractual damages, and denying her a jury trial. Ms. Zimmerman challenges the district court's factual findings as clearly erroneous, asserting she proved discrimination. The appellate review adheres to the clearly erroneous standard, which requires a finding to lack factual support or to instill a firm conviction of mistake in the reviewing court. The trial featured conflicting testimonies, with Ms. Zimmerman asserting she followed all procedures for health insurance coverage, while the defendants claimed she did not complete her application and did not return to work after hospitalization. The court sided with the defendants and found no evidence to support Ms. Zimmerman's claims. On appeal, Ms. Zimmerman requests a reassessment of credibility, which the appellate court declines, affirming the trial court's findings as sufficiently supported. Additionally, after a disputed conversation with Mr. Nixon, Ms. Zimmerman's application for unemployment benefits was denied, but later, the Employment Security Board ruled she was discharged without misconduct, which she argues should prevent defendants from claiming otherwise.
When a state agency acts in a judicial capacity and resolves disputed factual issues with proper litigation opportunities for the parties involved, federal courts are required to give deference to the agency's findings, similar to the treatment such findings would receive in state courts. The Kansas Supreme Court has recognized that the doctrines of res judicata and collateral estoppel apply to administrative decisions under these circumstances, specifically when the agency's proceedings afford procedural protections akin to court proceedings.
In support of her collateral estoppel argument, Ms. Zimmerman references a Kansas Court of Appeals case where a prior workers' compensation determination of employment status was held to be conclusive in a subsequent tort action. Conversely, defendants cite a federal district court ruling that Kansas courts would not extend preclusive effect to factual determinations made in unemployment compensation hearings, highlighting significant differences between those proceedings and judicial hearings, including the lack of incentive to litigate similar issues in unemployment hearings.
The court refrains from reconciling the conflicting decisions from the cited cases, as Ms. Zimmerman failed to demonstrate that the necessary conditions for collateral estoppel were met or that the unemployment proceedings adhered to required due process. At trial, her attempt to introduce evidence from the Employment Security Board of Review was denied by the district court, which was supported by the Gutierrez decision. Ms. Zimmerman did not adequately argue her position regarding Murphy in district court nor explain how the unemployment proceedings met Neunzig's criteria. Consequently, the court upheld the ruling that defendants were not collaterally estopped from contesting the termination claim.
Additionally, Ms. Zimmerman contests the district court's decision to deny her request for extra-contractual damages related to alleged violations of ERISA. This matter is reviewed as a question of law, and the court evaluates such issues de novo.
Civil remedies for violations of the Employee Retirement Income Security Act (ERISA) are outlined in section 502, 29 U.S.C. § 1132. ERISA offers various remedial options for participants and beneficiaries of benefit plans, as noted in Firestone Tire & Rubber Co. v. Bruch. Under subsection 502(a)(1)(B), participants can initiate civil actions to recover benefits due, enforce their rights, or clarify future benefits under their plans. Subsection 502(a)(3)(B) allows for civil actions seeking equitable relief to address violations or enforce provisions of ERISA or plan terms.
The Supreme Court has indicated that ERISA does not support claims for extra-contractual damages. Although Massachusetts Mut. Life Ins. Co. v. Russell discussed remedies under section 502, it did not specifically address 502(a)(3)(B). The structured nature of the civil enforcement provisions in section 502(a) suggests that Congress did not intend to include unmentioned remedies, reinforcing the notion of a comprehensive statutory scheme. Courts are cautioned against inferring additional remedies when a statute explicitly provides certain ones, as emphasized in Transamerica Mortgage Advisors, Inc. v. Lewis.
The statute and its legislative history lack any indication of allowing for extracontractual damage recovery. In Ingersoll-Rand Co. v. McClendon, the Supreme Court found that ERISA pre-empted a Texas state law claim related to wrongful discharge intended to prevent benefit attainment. The Court ruled that section 502(a) serves as the exclusive remedy for rights under ERISA, reinforcing that claims for benefits may extend beyond mere pension benefits, thus allowing federal courts to provide appropriate relief in such cases. Ms. Zimmerman argues that this judicial language supports crafting ERISA remedies beyond just unpaid benefits.
Interpretation of Ingersoll-Rand is constrained by established case law, which holds that punitive damages are not available in ERISA actions, as affirmed in Sage v. Automation, Inc. Pension Plan Trust. The court has determined that section 502(a)(1)(B) allows recovery solely for "benefits due under the terms of the plan," with no provision for additional damages. This principle is supported by precedents such as Alexander v. Anheuser-Busch and Harsch v. Eisenberg. Compensatory damages are also unavailable under section 502(a)(3)(B), as established in Lafoy v. HMO Colorado, which emphasizes that ERISA does not allow for damages related to delays in pension benefits. The court rejected Ms. Zimmerman's interpretation of Ingersoll-Rand, suggesting it would contradict the Supreme Court's ruling in Russell and existing legal standards across circuits. The recent Supreme Court decision in Mertens v. Hewitt Associates further limits ERISA remedies, indicating that section 502(a)(3) does not permit monetary damages against nonfiduciaries involved in fiduciary breaches. Consequently, the court upholds the district court's decision that Ms. Zimmerman is not entitled to punitive or compensatory damages for emotional distress. Additionally, her claim regarding the denial of a jury trial is subject to de novo review.
ERISA does not explicitly state whether cases under sections 502 or 510 can be tried by a jury. The Supreme Court and the circuit in question have not ruled on the entitlement of an ERISA plaintiff to a jury trial, yet at least eight other circuits have determined there is no such right. Some district courts, however, have permitted jury trials. Courts denying jury trials often cite the incompatibility of such trials with the arbitrary and capricious standard of review, though this standard is no longer applicable due to the de novo review established in Firestone.
Ms. Zimmerman argues that the authorization of compensatory damages by Ingersoll-Rand implies a right to a jury trial; however, this claim is weakened by prior determinations that she cannot recover extracontractual damages. Additionally, she references Granfinanciera S.A. v. Nordberg to argue that Congress cannot deny her a jury trial for her private cause of action. This argument suggests that stripping parties of their constitutional right to a jury trial would undermine the Seventh Amendment. Nonetheless, the court declines to address this argument because it was not raised in earlier litigation stages and is thus considered waived.
The appellate court affirms the district court's order denying Ms. Zimmerman a jury trial and upholds the judgment in favor of the defendants.
The document identifies Judge John L. Kane, Jr., presiding over a case regarding the interpretation of legal remedies available under the Employee Retirement Income Security Act (ERISA). It references the Supreme Court's decision in Ingersoll-Rand, which affirmed that courts can award both extracontractual and punitive damages despite such remedies not being explicitly outlined in ERISA. Several courts, including East v. Long and International Union of United Automobile Workers v. Midland Steel Prods. Co., have interpreted Ingersoll-Rand as overruling prior decisions, specifically Russell. However, other courts, like Harsch v. Eisenberg, have disagreed, arguing that the Supreme Court did not intend to overturn established law across various circuits. The document emphasizes that Justice O'Connor would have clearly stated any intent to overrule existing federal case law regarding punitive and extracontractual damages under ERISA. It also mentions that while the majority of courts have interpreted Russell to prohibit such damages, the case of Warren v. Society National Bank represents a narrow exception where damages were permitted due to a violation of an express contractual agreement that resulted in tax liability for the plaintiff.
