A federal district court judge on Aug. 12 dismissed a suit by current and former employees of a Maryland construction company who alleged that the company failed to comply with ERISA disclosure requirements and to provide retirement plan documents upon request because the Spanish-speaking plaintiffs couldn’t understand the English documents.
ERISA requires that plan sponsors make disclosures in a manner designed to be understood by the average participant.
The judge, Ellen Lipton Hollander, ruled that ERISA and federal law “contain no express requirement that the Summary Plan Description be provided in multiple languages” other than English. Ultimately, the case was dismissed for lack of demonstrated harm from the alleged breaches.
Background of the Case
In Melendez v. Hatfield’s Equipment & Dedication Services Inc., No. 1.13-cv-03684 (D. Md., Aug. 12, 2014), about 40 members of the company’s concrete crew also alleged the Hatfield’s plan did not distribute plan notices that would allow them to calculate their benefits. They further said they were not given requested documents in a timely manner, including an SPD, as mandated by ERISA.
Their lawsuit was filed against the company’s owner; his wife, the plan trustee; and the plan itself, as well as the company. It asked that the plan sponsor be ordered to issue plan documents and benefit statements in Spanish, and that the company pay a surcharge to plaintiff class members who never received plan documents in English or Spanish.
Hatfield’s and the defendants filed a motion to dismiss the case, which Judge Hollander granted in part.
Upon his employment termination in 2012 after 10 years with Hatfield’s, lead plaintiff Esli Perez Melendez wrote in early December 2012 to the company’s owner, seeking information about accessing his account in Hatfield’s Profit Sharing Plan along with a copy of the plan. The owner’s wife, as plan trustee, responded to Perez’s letter by saying plan distributions are calculated at the end of the year, and did not provide a copy of the plan document.
A few weeks later, he later received a letter from the plan’s third-party administrator explaining his options for obtaining retirement benefits from the Hatfield’s plan, but it did not include Perez a plan document or any information about his accrued benefits. Next, Perez’s lawyer wrote to the TPA to request “copies of any and all documents” related to Hatfield’s profit sharing plan “and all other pertinent information” along with Perez’s record of participation in the plan.
The TPA referred Perez’s attorney back to the plan trustee, who in August 2013 forwarded Perez’s participant account statement, a 2009 plan document and an SPD also dated 2009. None of these documents was in Spanish or was accompanied by Spanish explanation.
The district court judge decided that dismissal was appropriate because the plaintiffs failed to state a claim upon which relief can be granted. She also cited case law that kept courts from considering matters outside the pleadings when ruling on a motion to dismiss.
Judge Hollander did say federal law requires a notice of assistance in a language other than English be included in plan documents. However, the relevant regulation (29 C.F.R. Section 2520.102-2) applies only if a certain number or percentage of participants are “literate only in the same non-English language.” She ruled that the plaintiffs didn’t provide sufficient evidence to make this regulation applicable.
In the end, she noted that the plaintiffs didn’t claim any harm as a result of the plan sponsor’s alleged failure to provide plan documents in a timely manner. She ruled that Hatfield’s, the company, as the plan administrator is the only party that could be held liable for failure to respond to document requests, and dismissed the complaint against the company owner, his wife and the plan.
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