Judge: Former Player Waited Too Long to File Claim Against Pension Plan

Apr 26, 2019

A federal judge from the Southern District of New York has granted the National Basketball Association Players’ Pension Plan motion to dismiss the lawsuit of a former player, who claimed he was short-changed.
The basis of the court’s decision was that the statute of limitations had expired because the plaintiff waited too long to complain to the Plan. Because of that delay, the Plan did not notify the plaintiff until 2015, which the plaintiff argued, unsuccessfully, was when the statute of limitations began.
The plaintiff in the case was Zaid Abdul-Aziz, who brought his action pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001, et seq., asserting claims for unpaid retirement benefits under the Plan.
Abdul-Aziz played for the NBA from 1968-78, and received eight years of credited service toward his retirement. His retirement date was set for May 1996, but he applied for early retirement benefits in May 1991. Under the Plan, participants may elect a “Normal Retirement Pension”—a monthly benefit commencing “on the first day of the first month following the player’s Normal Retirement Date and continuing to be paid on the first day of each month up to and including the month in which the player dies”—i.e., a life annuity—or a number of other forms of benefit payments. One of the options is “Installments for a Fixed Period,” which are “paid in equal monthly installments for a fixed number of years.” Each of these alternative payment options provides a benefit that is the “Actuarial Equivalent” of the participant’s Normal Retirement Pension.
The plaintiff elected to receive his benefit in the form of “Installments for a Fixed Period.” Specifically, he chose the “10 Year Certain Only” option. The application explained to the plaintiff that by selecting Installments for a Fixed Period: “A benefit will be paid for a fixed number of payments, for the period you select (e.g., 5 years, 10 years). Upon the expiration of this period, all benefits will cease. The total of all payments you receive will equal the entire value of your retirement benefit.”
Thus, in 1991, the plaintiff began “receiving monthly payments of $1,851.643” from the Plan.
Effective September 1, 1996, the Plan was amended as a result of a 1995 collective bargaining agreement (1995 CBA), which increased the benefit that the plaintiff received to $2,479.53 a month.
On April 26, 2015—nearly 14 years after the plaintiff received his final monthly benefit under the 10 Year Certain Only payment plan—the plaintiff, through an attorney, sent a letter to the Plan asserting that “the NBA purchased all of (his) lifetime pension benefits in exchange for a payment, (which) was less than the amount he would have received without such buy-out transaction.” On June 3, 2015, the Plan responded that the plaintiff’s pension benefits “were paid in full over the period from August 1, 1991 through July 31, 2001” and that the plaintiff therefore had no further rights under the Plan.
The plaintiff sued and the Plan moved to dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6)
The parties agreed that New York’s six-year statute of limitations for breach of contract governs the plaintiff’s claims. They disagreed, however, as to when that limitations period began to run. The Plan argued that the plaintiff’s claim accrued—at the latest—by July 31, 2001, when he stopped receiving benefit payments from the Plan. The plaintiff, by contrast, contended that the limitations period did not begin to run until June 3, 2015, when the Plan formally denied his claim for additional benefits.
“The fact that the Plan did not formally deny the plaintiff’s subsequent request for additional benefits until June 2015—nearly 14 years after the plaintiff received his final benefit payment—cannot and does not render the plaintiff’s claims timely,” wrote the court. “To hold that the limitations period did not begin to run until the plaintiff finally inquired into the calculation of his benefits and the Plan rejected his claim would reward The plaintiff’s lack of diligence and permit other potential ERISA claimants to effectively extend the limitations period indefinitely.” See Holland v. Becker, No. 08-CV-6171L, 2013 U.S. Dist. LEXIS 154476, 2013 WL 5786590, at *4 (W.D.N.Y. Oct. 28, 2013)
“Accordingly, I find that the applicable six-year statute of limitations began to run no later than July 31, 2001, and expired six years later, on July 31, 2007—more than ten years before the plaintiff initiated this suit. Because I have determined that the plaintiff’s claims are time-barred and must therefore be dismissed, I do not reach the defendant’s challenge to the merits of the plaintiff’s claims.”
Abdul-Aziz v. NBA Players’ Pension Plan, S.D.N.Y.; 2019 U.S. Dist. LEXIS 46248, 17-CV-8901 (VSB); 3/20/19
Attorneys of Record: (For Plaintiff) Jason Luke Melancon, Melancon Rimes, Baton Rouge, LA. (For Defendant) Myron D. Rumeld (New York, NY), Neil V Shah (Newark, NJ), Proskauer Rose LLP, Brian Joseph LaClair (Syracuse, NY), Jules L. Smith (Rochester, NY), Blitman & King LLP.


Articles in Current Issue