The U.S. District Court for the Western District of New York found that the complaint contains no factual allegations to indicate, or give rise to a reasonable inference, that any of the named plaintiffs have ever submitted a claim for benefits under the claims procedures established by the Halliburton Plan. It rejected the argument that one plaintiff exhausted her administrative remedies by calling the Halliburton Pension Center in January 2006 and requesting a “retirement quote.”
Halliburton sent her a “retirement package” which included a summary and explanation of her pension benefit options, along with application forms and instructions for submitting a claim for benefits. She did not submit the application, but contended that Halliburton’s response amounted to an adverse determination of her benefits claim. The court said her contact with the Halliburton Pension Center was nothing more than a request for retirement information, to which the fund adequately responded, and instead of following through with an application for pension benefits in accordance with the fund’s Claims Procedures, she “gave up.”
According to the district court, courts within the 2nd U.S. Circuit Court of Appeals have long recognized “the firmly established federal policy” requiring plaintiffs seeking relief under section 502(a)(1)(B) of the Employee Retirement Income Security Act (ERISA) to demonstrate that they have fully pursued the claims procedures prescribed by the relevant employee benefit plan prior to bringing suit.
The district court added that the primary purposes of this policy are to: “‘(1) uphold Congress’ desire that ERISA trustees be responsible for their actions, not the federal courts; (2) provide a sufficiently clear record of administrative action if litigation should ensue; and (3) assure that any judicial review of fiduciary action (or inaction) is made under the arbitrary and capricious standard, not de novo.’”
Finally, the court said adherence to the exhaustion requirement “helps to reduce the number of frivolous lawsuits under ERISA, promotes the consistent treatment of claims for benefits, provides a non-adversarial method of claims settlement, and minimizes the costs of claims settlement.”
According to the court opinion, Halliburton Company acquired Dresser Industries, and Halliburton became the sponsor of the Dresser Industries, Inc. Consolidated Retirement Plan DICON Plan. In February 2000,
Halliburton sold its interest in Dresser-Rand to Ingersoll-Rand, leaving Ingersoll Rand as the sole partner of Dresser-Rand. Plaintiffs allege that, “[f]ollowing the sale, the parties did not wind up the affairs of Dresser-Rand. Rather, Dresser-Rand continued to operate the same business, under the same name, at the same locations, with the same employees performing the same jobs.”
On November 30, 2001, Halliburton’s Chairman of the Board, President and Chief Executive Officer David Lesar executed a “Merger Document” merging the DICON Plan into the Halliburton Plan. It said all of the provisions of the DICON Plan, as in effect on the Merger Date [December 31, 2001], shall remain in effect (unless and until amended) as a part of, and shall be incorporated into, the [Halliburton] Plan for the benefit of the “participants” in the DICON Plan as of the Merger Date.
However, plaintiffs allege that, “[c]ommencing in or about July, 2002, Halliburton has taken the position that sale of its interest in Dresser-Rand to Ingersoll had the effect of terminating the existence of Dresser-Rand, and thereby terminating the employment of all Dresser-Rand employees . . . , as of March 1, 2000”. Plaintiffs claim that as a result, the administrators of the Plan have been calculating pension benefits for retiring Dresser-Rand employees by using March 1, 2000 as the date of termination of employment, rather than the later actual termination dates, causing decreased benefits payable to putative class members.The case is Kirkendall v. Halliburton Inc., W.D.N.Y., No. 07-CV-289-JTC.