M. HANNAH LAUCK, District Judge.
This matter comes before the Court on Defendants Kjellstrom & Lee, Inc. ("K & L") and Mutual of Omaha Insurance Company's ("Mutual of Omaha") (collectively, the "Defendants") Motions to Dismiss the matter against them pursuant to Federal Rule of Civil Procedure 12(b)(6)
The Court dispenses with oral argument because the materials before the Court adequately present the facts and legal contentions, and argument would not aid the decisional process. The Court exercises jurisdiction pursuant to 28 U.S.C. § 1331.
"A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir.1992) (citing 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1356 (1990)). In considering a motion to dismiss for failure to state a claim, a plaintiff's well-pleaded allegations are taken as true and the complaint is viewed in the light most favorable to the plaintiff. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993); see also Martin, 980 F.2d at 952.
The Federal Rules of Civil Procedure "require[] only `a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to `give the defendant fair notice of what the... claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (second alteration in original)
"If, on a motion under Rule 12(b)(6) ..., matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56," and "[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed. R.Civ.P. 12(d); see Laughlin v. Metro. Wash. Airports Auth., 149 F.3d 253, 260-61 (4th Cir.1998); Gay v. Wall, 761 F.2d 175, 177 (4th Cir.1985). However, "a court may consider official public records, documents central to plaintiff's claim, and documents sufficiently referred to in the complaint [without converting a Rule 12(b)(6) motion into one for summary judgment] so long as the authenticity of these documents is not disputed." Witthohn v. Fed. Ins. Co., 164 Fed.Appx. 395, 396-97 (4th Cir.2006) (citing Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir.2001); Phillips v. LCI Int'l, Inc., 190 F.3d 609, 618 (4th Cir.1999); Gasner v. Cnty. of Dinwiddie, 162 F.R.D. 280, 282 (E.D.Va.1995)).
Rollins attaches to her Complaint: (1) a letter dated June 14, 2000 from Jim Pritchett, Jr., Senior Vice President of K & L, to her late husband, Millard Anthony Rollins ("Mr. Rollins") (the "Offer Letter") (Compl. Ex. A, ECF No. 1-3); (2) the Group Term Life and AD & D Insurance Summary of Coverage (the "Summary") (Compl. Ex. B, ECF No. 1-3); (3) a Certificate of Insurance issued by United of Omaha Life Insurance Company ("United of Omaha") to K & L (the "Certificate") (Compl. Ex. C, ECF No. 1-3); and, (4) a portion of K & L's Handbook for Salaried Employees (the "Handbook") (Compl. Ex. D, ECF No. 1-3).
The Defendants attach to the Notice of Removal the insurance policy issued by United of Omaha to K & L (the "Policy"), its summary plan description ("Summary Plan Description"), and its summary of coverage ("Summary of Coverage") (Not. Removal Ex. 5, ECF Nos. 1-7, 1-8). The Summary Plan Description states that it provides information required to be "furnished to eligible participants in an employee benefits plan" under ERISA. (Not. Removal Ex. 5, Summ. Plan Description 41, ECF No. 1-8). The Summary Plan Description identifies K & L as the Plan Administrator. Id.
The Court will consider all the documents filed. Rollins sufficiently referred to all of her exhibits in her Complaint, as well as the Policy and related documents attached to the Notice of Removal. The documents are central to Rollins' claims, and neither party disputes their authenticity. The Court may thus consider these documents. See Witthohn, 164 Fed.Appx. at 396-97 (citations omitted).
"Under the removal statute, `any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant' to federal court." Aetna Health Inc. v. Davila, 542 U.S. 200, 207, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (quoting 28 U.S.C. § 1441(a)). "One category of cases of which district courts have original jurisdiction is `[f]ederal question' cases: cases "arising under the Constitution, laws, or treaties of the United States."" Id. (alteration in original) (quoting 28 U.S.C. § 1331). A defendant may remove a state action to federal court if the district court would have "original jurisdiction" over the action. Met. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (quoting 28 U.S.C. § 1441(a)). "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).
Generally, whether subject matter jurisdiction exists turns on the plaintiff's "`well-pleaded complaint.'" Davila, 542 U.S. at 207, 124 S.Ct. 2488 (citing Franchise Tax Bd. of Cal v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 9-10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)). A federal defense, because it does not appear on the face of the complaint, cannot usually provide a basis for removal. Taylor, 481 U.S. at 63, 107 S.Ct. 1542 (citation omitted); Smith v. Logan, 363 F.Supp.2d 804, 808 (E.D.Va.2004) (citing Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987)). "However, if a state law cause of action has been completely preempted by federal law, any claim based on the completely preempted state law is considered a federal claim arising under federal law." Smith, 363 F.Supp.2d at 808 (citing Caterpillar, 482 U.S. at 393, 107 S.Ct. 2425). Accordingly, a defendant may remove a state action to federal court if the claim comes within the scope of the preempting federal law, "even if pleaded in terms of state law," because the cause of action "is in reality based on federal law." Davila, 542 U.S. at 207-08, 124 S.Ct. 2488 (citing Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003)). Because the interplay between ERISA preemption doctrines becomes complicated in removal actions, see Gross v. St. Agnes Health Care, Inc., No. ELH-12-2990, 2013 WL 4925374, at *7 (D.Md. Sept. 12, 2013), the Court will address the preemption issues in detail below.
K & L employed Rollins' late husband, Millard Anthony Rollins ("Mr. Rollins"), for over 28 years. June 14, 2000, K & L Senior Vice President Jim Pritchett, Jr. sent a letter to Mr. Rollins offering the position of Superintendent, detailing that K & L would provide Mr. Rollins with various benefits including "[l]ife insurance at twice [his] annual salary." (Offer Letter 1.) K & L's Handbook also stated that K & L "provides fully paid life insurance to all salaried full time employees upon their first day of employment. This life insurance is in an amount equal to [two] times [the employee's] annual base salary." (Compl. ¶ 21; Handbook VI-3.)
On November 10, 2011, Mr. Rollins passed away. In 2010, Mr. Rollins' annual base salary was $175,193.98. For the ten months in 2011 prior to his death, Mr. Rollins' salary was $141,612.56. In early December 2011, Rollins met with K & L President Peter S. Alcorn, Comptroller Derrick Vaughan, and Benefits Manager Stacy Whitlow. At the meeting, the K & L representatives informed Rollins that the Policy was subject to a $200,000 "cap." Prior to this meeting, both the Rollinses had believed that the "cap" on the life insurance benefits applied to the salary, not to the benefits. In fact, this understanding extended not only to the Rollinses, but also to the K & L representatives, who informed Rollins that they had intended to provide Mr. Rollins with a life insurance benefit two times his salary, up to a salary cap of $200,000, for a total payout of up to $400,000. Instead, upon Mr. Rollins' death, United of Omaha paid Rollins $200,591.78, and K & L paid Rollins $4,413.00. Rollins asserts that, as the beneficiary of the Policy, she is entitled to a total payment of $350,387.96.
Rollins asserts in Count I that K & L and Mutual of Omaha breached the express, written contracts formed with Mr. Rollins through the Offer Letter, the Summary, the Certificate, and the Handbook. Rollins also claims in Count II that K & L breached the oral contract established with Mr. Rollins via the Offer Letter, the Summary, the Certificate, the Handbook, and other oral representations. She seeks $145,383.18 plus interest.
On December 1, 2014, Rollins filed this action in the Circuit Court of the City of Richmond (the "Richmond Circuit Court"), alleging one count of breach of a written contract against K & L and Mutual of Omaha and one count of breach of oral contract against K & L. On January 29,
Both K & L and Mutual of Omaha filed Motions to Dismiss Rollins' Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF Nos. 3, 6.) Both Defendants assert that ERISA preempts Rollins' state law breach of contract claims, giving this Court federal question jurisdiction and requiring the Court to dismiss Rollins' claims as pled. They also argue that Rollins has no standing as the executor of Mr. Rollins' estate to bring suit under ERISA or that she has a right to a jury trial. On March 6, 2015, Rollins filed a Motion to Remand this action to the Richmond Circuit Court, arguing that ERISA does not preempt her claims and that she had adequately pled her state causes of action. (ECF No. 12.) All parties have filed appropriate responses in opposition to and replies in support of the motions.
"ERISA comprehensively regulates, among other things, employee welfare benefit plans that, `through the purchase of insurance or otherwise,' provide medical, surgical, or hospital care, or benefits in the event of sickness, accident, disability, or death." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) (citing 29 U.S.C. § 1002(1)). Congress enacted ERISA to protect the interests of participants in employee benefit plans by providing a "uniform regulatory regime over employee benefit plans." Davila, 542 U.S. at 208, 124 S.Ct. 2488; see Marks v. Watters, 322 F.3d 316, 322 (4th Cir.2003). To that end, ERISA "includes expansive pre-emption provisions ... which are intended to ensure that employee benefit plan regulation would be `exclusively a federal concern.'" Davila, 542 U.S. at 208, 124 S.Ct. 2488 (citations omitted). Thus, Congress reserved to the federal government the "`sole power to regulate the field of employee benefit plans.'" Marks, 322 F.3d at 322 (quoting Pilot Life, 481 U.S. at 46, 107 S.Ct. 1549). ERISA contemplates two types of preemption: Section 514 conflict preemption, codified at 29 U.S.C. § 1144(a); and, Section 502 complete preemption, codified at 29 U.S.C. § 1132.
"Ordinary conflict preemption under ERISA § 514 is set forth in 29 U.S.C. § 1144(a):[
Importantly, § 514's conflict preemption provides only a federal defense to a state law claim related to employee benefit plans. Darcangelo, 292 F.3d at 186-87. "ERISA pre-emption [under § 514], without more, does not convert a
"In contrast, `complete preemption' [gives] rise to removal jurisdiction. Properly understood as a jurisdictional doctrine, complete preemption arises only when plaintiffs state law claims come within the scope of ERISA's civil enforcement provision, found at § 502(a) of the Act and codified at 29 U.S.C. § 1132(a)."
This exclusive remedy means that § 502 completely preempts all state law claims "within its scope." Darcangelo, 292 F.3d at 187. A claim falls within the scope of § 502 when a "plan participant or beneficiary" brings suit "to, among other things, recover benefits, enforce rights conferred by an ERISA plan, remedy breaches of fiduciary duty, clarify rights to benefits, and enjoin violations of ERISA." Marks, 322 F.3d at 323; see 29 U.S.C. § 1132(a)(1)-(4). In short, "`complete preemption' exists when the preempted state-law claim falls within the scope of the exclusive civil enforcement mechanism of § 502, in which case the state-law claim is converted into a federal cause of action removable to federal court." Marks, 322 F.3d at 323.
The Court will deny Rollins' Motion to Remand and will grant Defendants' Motions to Dismiss because ERISA completely preempts Rollins' state law breach of contract claims. Rollins' claims all relate to an employee welfare benefit plan, and ERISA provides her exclusive remedy.
The Court begins with the necessary recognition that Congress intended to reserve to the federal government exclusive regulation of employee welfare benefit plans. Pilot Life, 481 U.S. at 45-46, 107 S.Ct. 1549. Thus, ERISA preempts any state statutory or common law cause of action "related to" an "employee [welfare] benefit plan." Griggs, 237 F.3d at 378. The Court must examine first whether an employee welfare benefit plan exists in this case. The Court finds that such a plan does exist. The parties do not dispute that K & L, an employer, established or maintained the Policy
The parties contest, however, whether a "plan, fund, or program" exists. It does. First, the Summary Plan Description states that it provides information required to be "furnished to eligible participants in an employee benefits plan" under ERISA. (Not. Removal Ex. 5, at 41, ECF No. 1-8). The Summary Plan Description identifies K & L as the Plan Administrator. Id. This record clearly suggests that an employee welfare benefit plan stands before this Court.
Even if this Court were to turn to the "surrounding circumstances" to determine, from a reasonable person's viewpoint, "the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits" that might constitute an employee welfare benefit plan, this record demonstrates that the necessary finding could be made. Madonia, 11 F.3d at 447. Even viewing Plaintiff's allegations favorably, Rollins' attempt to characterize life insurance as a lump-sum one-off payment rather than a plan provision fails. See Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 14 n. 9, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987) ("While death benefits may represent a one-time payment from the perspective of the beneficiaries, the employer clearly foresees the need to make regular payments to survivors on an ongoing basis. The ongoing, predictable nature of this obligation therefore creates the need for an administrative scheme to process claims and pay out benefits, whether those benefits are received by beneficiaries in a lump sum or on a periodic basis.").
Here, K & L provided "fully paid life insurance" to all its full-time employees. (Handbook, VI-3.) K & L's payment of its employees' life insurance premiums provides "substantial evidence" that a plan was established. See Madonia, 11 F.3d at 447. The Policy itself shows that "the intended benefit is [life and accidental death and dismemberment coverage]; the beneficiaries include [K & L's] employees who seek help with their [life] insurance payments; the source of financing is [K & L]; and the procedure for receiving benefits is submission of claims to [K & L]" Id. (See Policy 8 (benefits and beneficiaries outlined), 12 (procedure to receive benefits).) Accordingly, because the surrounding circumstances demonstrate that the "parameters of [the Policy] are readily ascertainable," a plan exists here. See Madonia, 11 F.3d at 447.
Having found the existence of an employee welfare benefit plan, the Court must next examine whether Rollins' state law breach of contract claims "relate to" that plan. While the Court should not take the phrase "related to" to its extreme, Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. 2890, the Court must also heed the notion that a claim relates to a plan "`in the normal sense of the phrase, if it has a connection with or reference to such a plan.'" Phoenix Mut., 30 F.3d at 560 (quoting Pilot Life, 481 U.S. at 47, 107 S.Ct. 1549). Here, Rollins' claims for breach of written contract and breach of oral contract relate to the employee welfare benefit plan because they seek alternative enforcement methods to ERISA's exclusive enforcement mechanism. See Coyne & Delany, 98 F.3d at 1468-69.
Finding that Rollins' claim meets the "relation to" test is not a close call. ERISA's § 502 provides the "exclusive vehicle for actions by ERISA-plan participants and beneficiaries asserting improper processing of a claim for benefits." Pilot Life, 481 U.S. at 52, 107 S.Ct. 1549. Courts regularly find that ERISA preempts breach of contract actions alleging additional or alternative mechanisms to seek benefits owed through a plan. See, e.g., Puller v. Unisource Worldwide, Inc., No. 3:08-cv-813, 2009 WL 331291, at *5 (E.D.Va. Feb. 9, 2009) ("When a plaintiff brings an action to enforce a contract and that contract is an ERISA-covered plan, it `is of necessity an alternative enforcement mechanism for ERISA § 502 and is therefore `relate[d] to' an ERISA plan and preempted.'" (alteration in original) (quoting Darcangelo, 292 F.3d at 195)); Kress v. Food Emp'rs Labor Relations Ass'n, 217 F.Supp.2d 682, 685-86 (D.Md.2002); cf. Stiltner v. Beretta U.S.A. Corp., 74 F.3d 1473, 1480 (4th Cir.1996) (finding § 514 preemption likely in breach of contract claim even though plaintiff sought ERISA benefits from employer directly and not through the plan). Such claims merely seek to provide alternate enforcement mechanisms to obtain ERISA plan benefits, a remedy forbidden by ERISA. Coyne & Delany, 98 F.3d at 1468-69. Accordingly, because a plan exists and Rollins' claims "relate to" that plan, conflict preemption under § 514 is established. The Court dismisses Rollins' state law breach of contract claims for failure to state a claim pursuant to Rule 12(b)(6), because ERISA § 514 preempts Rollins' state law claims.
The Fourth Circuit "has recognized three `essential requirements' for complete preemption." Moon, 498 Fed. Appx. at 273 (quoting Sonoco Prods. Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 372 (4th Cir.2003)). The case before this Court evinces all the conditions for complete preemption as articulated by the Fourth Circuit:
Id. (third alteration in original) (citation omitted).
Here, Rollins, a plan beneficiary,
Accordingly, § 502 completely preempts Rollins' claims as alleged. Therefore, federal question jurisdiction has been established, and the Court denies Rollins' Motion to Remand.
A finding that ERISA preempts Rollins' claims, thus allowing the Court to exercise federal question jurisdiction and requiring dismissal of her state law claims, does not end the Court's inquiry. Should the Court determine her claim to be an ERISA matter, Rollins asks for leave to file an Amended Complaint. The Defendants make no real effort to argue that Rollins should not be granted the opportunity to plead her causes of action under ERISA. Rollins must be granted leave to amend her complaint to comply with the ERISA enforcement statutes. See Makar v. Health Care Corp. of the Mid-Atl., 872 F.2d 80, 83 (4th Cir.1989) (finding plaintiff's claims preempted under ERISA and remanding the case to be dismissed without prejudice to allow plaintiff to pursue remedies under ERISA); Robinson, 2009 WL 3233474, at *4 (dismissing breach of contract claim as preempted by ERISA but granting plaintiff "leave to file an amended complaint raising a claim under ERISA").
Accordingly, while the Court will dismiss Rollins' claims,
For the foregoing reasons, the Court denies Rollins' Motion to Remand. (ECF No. 12.) The Court grants the Defendants' Motions to Dismiss. (ECF Nos. 3,
An appropriate Order shall issue.
The Court will dismiss all claims against Mutual of Omaha entirely and grant Rollins leave to amend to correctly name the intended party. For ease of the reader, the Court will refer to the insuring entity as United of Omaha.
The Court notes, however, that Rollins attaches a new exhibit to her reply in support of the Motion to Remand. In her reply, she also introduces arguments not previously raised and cited over 30 extra cases to support the new arguments. Because, in reply, Rollins raises facts and legal arguments to which the Defendants cannot fully respond, the Court will not consider these arguments or Rollins' new exhibit. See Seneca Ins. Co. v. Shipping Boxes I, LLC, 30 F.Supp.3d 506, 512 (E.D.Va. 2014) (declining consideration of arguments raised about a claim only in reply because opposing party did not have a full opportunity to respond); Vollette v. Watson, 937 F.Supp.2d 706, 726 (E.D.Va.2013) (rejecting attempt to assert new legal and factual arguments in reply while noting that the opposing party would be prejudiced in its ability to respond).
28 U.S.C. § 1144(a).
The Supreme Court of the United States has outlined three types of laws that ERISA preempts: (1) "laws that mandate[] employee benefit structures or their administration;" (2) "laws that bind employers or plan administrators to particular choices or preclude uniform administrative practice;" and, (3) "laws providing alternate enforcement mechanisms for employees to obtain ERISA plan benefits." Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1468-69 (4th Cir.1996) (alteration in original) (citations omitted) (internal quotation marks omitted).
To determine whether a "plan, fund or program" exists, the Fourth Circuit instructs courts to examine the "surrounding circumstances" to discern whether a "reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits." Madonia, 11 F.3d at 447 (citation omitted). The Fourth Circuit endorses "the well-established rule that `payment of premiums on behalf of... employees is substantial evidence that a plan, fund or program [was] established.'" Id. (alterations in original) (quoting Kidder v. H & B Marine, Inc., 932 F.2d 347, 353 (5th Cir.1991)).
Sonoco has not been called into question, and this Court's finding does not change under Davila in any event. This Court discusses the Sonoco standard because its three-part evaluation essentially elucidates the broad parameters as to whether an individual "could have brought" an ERISA claim that constitutes the first part of the Davila test. Moreover, the case at bar does not involve any "independent legal duty," such as duties arising under the Texas Health Care Liability Act that the Davila court considered. No "legal duty ... independent of ERISA or the plan terms" is alleged here, Davila, 542 U.S. at 210, 124 S.Ct. 2488, meaning that the Court would not undertake any analysis under part two of the Davila test in any event.
