Billy Prince v. Sears Holdings Corporation
PUBLISHED AUTHORED OPINION filed. Originating case number: 1:15-cv-00006-JPB. . [16-1075]
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UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
representative for the late JUDITH A. PRINCE,
Plaintiff - Appellant,
SEARS HOLDINGS CORPORATION, a Delaware corporation,
Defendant - Appellee.
Appeal from the United States District Court for the Northern
District of West Virginia, at Clarksburg. John Preston Bailey,
District Judge. (1:15-cv-00006-JPB)
December 6, 2016
January 27, 2017
Before MOTZ, KEENAN, and THACKER, Circuit Judges.
Affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge Keenan and Judge Thacker joined.
Clarksburg, West Virginia, for Appellant. Jill E. Hall, BOWLES
RICE LLP, Charleston, West Virginia, for Appellee.
Frank E. Simmerman, Jr., SIMMERMAN LAW OFFICE, PLLC, Clarksburg,
West Virginia, for Appellant.
Gerard R. Stowers, BOWLES RICE
LLP, Charleston, West Virginia, for Appellee.
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DIANA GRIBBON MOTZ, Circuit Judge:
claims, we affirm the judgment of the district court dismissing
In November 2010, Billy E. Prince submitted an application
to his employer for $150,000 in life insurance coverage for his
administered the life insurance program through The Prudential
acknowledgment letter to Prince and began withholding premiums
from his pay shortly thereafter.
Later in 2011, Mrs. Prince learned she had Stage IV liver
Almost a year after Mrs. Prince’s initial diagnosis,
Prince checked his online benefits summary, which confirmed his
election to purchase life insurance coverage for his wife in the
amount of $150,000.
Another year passed, and Sears sent Prince
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Prudential had sent a notice to Prince in January 2011 advising
submitted, Prudential would terminate his application for the
life insurance coverage.
Prince claims that he has no record of
receipt of that notice but does not dispute that Prudential sent
it to him.
On May 26, 2014, Mrs. Prince died.
Because Prince did not
receive the $150,000 in life insurance, he filed a complaint
The complaint asserted one count of “constructive
“intentional/reckless infliction of emotional distress,” based
Sears removed the suit to the United States District Court
for the Northern District of West Virginia and asked the court
preempted Prince’s state law claims.
Prince opposed the motion
and moved to remand the case back to state court.
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dismissed the complaint without prejudice.
Prince timely filed
this appeal. 1
Sonoco Prods. Co. v. Physicians Health Plan, Inc.,
338 F.3d 366, 370 (4th Cir. 2003) (quoting Mayes v. Rapoport,
198 F.3d 457, 460 (4th Cir. 1999)).
The party seeking removal
bears the burden of showing removal is proper.
Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994).
When reviewing the grant of a motion to dismiss, we assume all
facts in the complaint as true and resolve all doubts in favor
of the non-moving party.
Edwards v. City of Goldsboro, 178 F.3d
231, 243–44 (4th Cir. 1999).
“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
Aetna Health Inc. v. Davila, 542 U.S. 200, 207
Sears moved to dismiss the appeal, arguing that the
district court’s order was not final.
We denied the motion,
explaining that “no amendment to the complaint would enable
Prince’s [state law] claims to survive the district court’s
holding that they were preempted by ERISA.”
Order, Prince v.
Sears Holdings Corp., No. 16-1075, at *2 (4th Cir. May 13,
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(2004) (quoting 28 U.S.C. § 1441(a) (2012)).
U.S.C. § 1331.
To determine whether a plaintiff’s claims “arise
under” the laws of the United States, courts typically use the
“well-pleaded complaint rule,” which focuses on the allegations
of the complaint.
Aetna, 542 U.S. at 207.
An exception to the well-pleaded complaint rule occurs when
Id. at 207–08.
“[C]omplete preemption ‘converts an
ordinary state common law complaint into one stating a federal
Darcangelo v. Verizon Commc’ns, Inc., 292 F.3d 181,
187 (4th Cir. 2002) (quoting Metro. Life Ins. Co. v. Taylor, 481
U.S. 58, 65 (1987)).
“[W]hen complete preemption exists, ‘the
plaintiff simply has brought a mislabeled federal claim, which
may be asserted under some federal statute.’”
Sonoco, 338 F.3d
at 371 (quoting King v. Marriott Int’l, Inc., 337 F.3d 421, 425
(4th Cir. 2003)).
plaintiff has used.
Defendants may remove preempted state law
See id.; Griggs v. E.I. DuPont de Nemours &
Co., 237 F.3d 371, 379 (4th Cir. 2001).
codified at 29 U.S.C. § 1132(a), has the potential to preempt
state law causes of action.
That provision allows a participant
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or beneficiary of an ERISA plan to bring a civil action “to
recover benefits due to him under the terms of his plan, to
enforce his rights under the terms of the plan, or to clarify
his rights to future benefits under the terms of the plan[,]
. . . to enjoin any act or practice which violates any provision
obtain . . . equitable
enforcement mechanism . . . is a distinctive feature of ERISA,
Aetna, 542 U.S. at 208.
ERISA § 502(a) completely preempts a state law claim when
the following three-prong test is met:
(1) the plaintiff must have standing under § 502(a) to
pursue its claim; (2) its claim must “fall[ ] within
the scope of an ERISA provision that [it] can enforce
via § 502(a)”; and (3) the claim must not be capable
of resolution “without an interpretation of the
contract governed by federal law,” i.e., an ERISAgoverned employee benefit plan.
Sonoco, 338 F.3d at 372 (alterations in original) (quoting Jass
v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1487 (7th
Prince concedes that he has standing under ERISA
§ 502(a) to bring a claim and therefore meets the first prong of
the Sonoco test.
Accordingly, we need only consider the second
and third prongs.
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The second prong requires us to determine whether Prince
can enforce his claims under § 502(a).
the scope of Prince’s claims.
This analysis depends on
Prince asserts that his claims
rely on the actions of Sears prior to the denial of benefits,
when the company deducted premiums from his pay and reported
that he had coverage.
Prince does not dispute that he never
submitted the required evidence of insurability and that Sears’s
decision to deny benefits was proper given the terms of the
actions prior to the denial will allow his claims to escape
attack Sears’s actions prior to the denial or in issuing the
denial, these claims are enforceable under § 502(a).
This is so
because they challenge the administration of the ERISA plan -- a
benefits only if the ERISA plan provided them.
premiums from Prince’s pay only because the ERISA plan required
Sears to do so.
“It follows that if an individual brings suit
complaining of a denial of coverage . . . , where the individual
is entitled to such coverage only because of the terms of an
ERISA-regulated employee benefit plan, and where no legal duty
(state or federal) independent of ERISA or the plan terms is
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Aetna, 542 U.S. at 210.
Contrary to Prince’s assertions, his claims implicate no
independent legal duty that Sears owed him.
Of course, Sears
employs Prince, but the company also administers an ERISA plan.
Distinct from its duties as an employer, Sears has duties as the
scope of ERISA.
Prince’s claims concern only the way in which
Sears assertedly breached these duties while administering his
His claims are thus entirely within the scope of
ERISA § 502(a)(1)(B).
See Aetna, 542 U.S. at 211–13; see also
Pizlo v. Bethlehem Steel Corp., 884 F.2d 116, 120 (4th Cir.
1989) (explaining that while ERISA does not preempt claims based
on a contract of employment, it does completely preempt claims
related to modification of pension plans).
In arguing to the contrary, Prince relies heavily on an
out-of-circuit district court case, Tovey v. Prudential Ins. Co.
of Am., 42 F. Supp. 2d 919 (W.D. Mo. 1999).
There, the court
held that ERISA did not preempt a state law claim for negligent
But this was because “[f]irst and foremost”
Tovey was not an ERISA plan participant and for this reason was
not attempting in enforce her rights under an ERISA plan.
at 925–26, 926 n.3.
In contrast, Prince concedes that he is an
ERISA plan participant.
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Prince also asserts that his state law claims lie outside
rather than benefits. 2
ERISA does not permit recovery of money
because a finding of preemption will leave a gap in the relief
choices reflected in the inclusion of certain remedies and the
exclusion of others under the federal scheme would be completely
free to obtain remedies under state law that Congress rejected
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54
Prince can enforce his claims under ERISA; that he cannot
recover damages does not require a different conclusion or avoid
interpretation of the ERISA plan, the third and final Sonoco
To the extent that he cites any law for this proposition,
Prince appears to rely on Tovey, but his reliance is misplaced.
Tovey did not hold that a plaintiff could avoid preemption by
asking for damages instead of benefits. Rather, the Tovey court
referred to Tovey’s request for damages to further illustrate
that she was not a plan participant. 42 F. Supp. 2d at 926.
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He insists that he only challenges
the actions Sears took prior to the denial of benefits.
a distinction without a difference.
Prince’s claims of misrepresentation and constructive fraud
require assessment of Sears’s “duty” as the plan administrator.
See Folio v. City of Clarksburg, 655 S.E.2d 143, 151 (W. Va.
Virginia law constructive fraud requires “breach of a legal or
equitable duty”) (emphasis added).
The only duty Sears had to
denial of benefits) stemmed from the ERISA plan.
See JA 42, 43,
45, 46, 48, 49, 96 (language in the plan explaining information
the administrator will provide and what actions it will take).
Determining whether Sears met its duty would require examining
what the plan obligated Sears to do.
Prince’s infliction of emotional distress claim similarly
ERISA plan; only if that administration was so inept that it was
“outrageous” could Prince recover.
See Travis v. Alcon Labs.,
bounds of decency”).
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Prince claims that Sears misled him when
it erroneously withheld the premiums and reported that he had
He claims that these actions, and those Sears took
Determining whether Sears acted in an “outrageous”
way would require examining and interpreting Sears’s duties and
responsibilities under the ERISA plan.
In sum, Prince’s claims meet all three prongs of the Sonoco
test, and ERISA completely preempts them.
Accordingly, the judgment 3 of the district court is
The district court dismissed Prince’s complaint without
prejudice to permit him to refile it as an ERISA action after he
had exhausted his administrative remedies.
At oral argument,
remedies or mediation would be fruitful, but counsel for Sears
indicated that they might indeed be fruitful. We note that the
enrollment for Mrs. Prince, with Prudential evaluating her
coverage based on her 2011 medical information.
Prince has not explored his administrative remedies, it remains
unclear whether they would be productive.
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