Billy Prince v. Sears Holdings Corporation
Filing
PUBLISHED AUTHORED OPINION filed. Originating case number: 1:15-cv-00006-JPB. [1000011687]. [16-1075]
Appeal: 16-1075
Doc: 41
Filed: 01/27/2017
Pg: 1 of 11
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-1075
BILLY
E.
PRINCE,
individually
and
as
representative for the late JUDITH A. PRINCE,
personal
Plaintiff - Appellant,
v.
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)
Argued:
December 6, 2016
Decided:
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.
ARGUED:
Chad
Lewis
Taylor,
SIMMERMAN
LAW
OFFICE,
PLLC,
Clarksburg, West Virginia, for Appellant. Jill E. Hall, BOWLES
RICE LLP, Charleston, West Virginia, for Appellee.
ON BRIEF:
Frank E. Simmerman, Jr., SIMMERMAN LAW OFFICE, PLLC, Clarksburg,
West Virginia, for Appellant.
Gerard R. Stowers, BOWLES RICE
LLP, Charleston, West Virginia, for Appellee.
Appeal: 16-1075
Doc: 41
Filed: 01/27/2017
Pg: 2 of 11
DIANA GRIBBON MOTZ, Circuit Judge:
Alleging
insurance
that
his
benefits,
misrepresentation,
emotional
Security
an
improperly
employee
constructive
distress.
Act
employer
Because
(“ERISA”)
brought
fraud,
the
administered
and
Employee
completely
suit
for
infliction
Retirement
preempts
life
these
of
Income
state
law
claims, we affirm the judgment of the district court dismissing
the complaint.
I.
In November 2010, Billy E. Prince submitted an application
to his employer for $150,000 in life insurance coverage for his
wife,
Judith
Prince.
The
employer,
Sears,
sponsored
and
administered the life insurance program through The Prudential
Insurance
Company
of
America.
In
May
2011,
Sears
sent
an
acknowledgment letter to Prince and began withholding premiums
from his pay shortly thereafter.
Later in 2011, Mrs. Prince learned she had Stage IV liver
cancer.
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.
a
letter
become
advising
effective
Another year passed, and Sears sent Prince
him
that
because
Mrs. Prince’s
no
2
“evidence
coverage
of
had
never
insurability
Appeal: 16-1075
Doc: 41
Filed: 01/27/2017
questionnaire”
had
been
Pg: 3 of 11
submitted.
Sears
explained
that
Prudential had sent a notice to Prince in January 2011 advising
that
unless
a
completed
insurability
questionnaire
was
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
against
Sears
Virginia.
in
the
Circuit
Court
of
Marion
County,
West
The complaint asserted one count of “constructive
fraud/negligent
misrepresentation”
and
one
count
of
“intentional/reckless infliction of emotional distress,” based
on
Sears’s
insurance
alleged
policy
and
misrepresentations
the
harm
thereby
regarding
inflicted
the
on
Mr.
life
and
Mrs. Prince.
Sears removed the suit to the United States District Court
for the Northern District of West Virginia and asked the court
to
dismiss
the
complaint,
arguing
preempted Prince’s state law claims.
that
ERISA
Prince opposed the motion
and moved to remand the case back to state court.
court
held
Accordingly,
that
ERISA
completely
the
court
denied
preempted
Prince’s
3
completely
The district
Prince’s
motion
to
claims.
remand
and
Appeal: 16-1075
Doc: 41
Filed: 01/27/2017
Pg: 4 of 11
dismissed the complaint without prejudice.
Prince timely filed
this appeal. 1
II.
“We
review
jurisdiction,
removal.’”
de
‘including
novo
questions
those
relating
of
to
subject
the
matter
propriety
of
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.
Mulcahey v.
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
federal court.”
Aetna Health Inc. v. Davila, 542 U.S. 200, 207
1
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,
2016).
4
Appeal: 16-1075
Doc: 41
Filed: 01/27/2017
Pg: 5 of 11
(2004) (quoting 28 U.S.C. § 1441(a) (2012)).
have
original
Constitution,
U.S.C. § 1331.
jurisdiction
laws,
or
over
treaties
claims
of
the
District courts
“arising
United
under
the
States.”
28
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
a
federal
action.
statute
completely
Id. at 207–08.
preempts
state
law
causes
of
“[C]omplete preemption ‘converts an
ordinary state common law complaint into one stating a federal
claim.’”
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)).
claims to
federal
plaintiff has used.
Defendants may remove preempted state law
court,
regardless
of
the
“label”
that
the
See id.; Griggs v. E.I. DuPont de Nemours &
Co., 237 F.3d 371, 379 (4th Cir. 2001).
ERISA’s
broad
civil
enforcement
provision,
§ 502(a),
codified at 29 U.S.C. § 1132(a), has the potential to preempt
state law causes of action.
That provision allows a participant
5
Appeal: 16-1075
Doc: 41
Filed: 01/27/2017
Pg: 6 of 11
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
of
this
subchapter
or
obtain . . . equitable
the
terms
of
relief.”
the
plan,
Id.
or
“This
.
.
.
to
integrated
enforcement mechanism . . . is a distinctive feature of ERISA,
and
essential
comprehensive
plans.”
to
accomplish
statute
for
Congress’
the
purpose
regulation
of
of
creating
employee
a
benefit
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
Cir. 1996)).
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.
6
Appeal: 16-1075
Doc: 41
Filed: 01/27/2017
Pg: 7 of 11
A.
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
plan.
Prince
apparently
believes
that
focusing
on
Sears’s
actions prior to the denial will allow his claims to escape
preemption.
Prince
is
mistaken.
Regardless
of
whether
his
claims
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
core
§ 502(a)
claim.
Prince
is
entitled
to
benefits only if the ERISA plan provided them.
life
insurance
Sears withdrew
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
7
Appeal: 16-1075
Doc: 41
violated,
then
Filed: 01/27/2017
the
suit
Pg: 8 of 11
falls
‘within
the
scope
of
ERISA.’”
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
plan
administrator
scope of ERISA.
and
those
duties
clearly
fall
within
the
Prince’s claims concern only the way in which
Sears assertedly breached these duties while administering his
benefits.
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
misrepresentation.
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.
Id.
In contrast, Prince concedes that he is an
ERISA plan participant.
8
Appeal: 16-1075
Doc: 41
Filed: 01/27/2017
Pg: 9 of 11
Prince also asserts that his state law claims lie outside
the
scope
of
ERISA
preemption
rather than benefits. 2
damages,
but
its
because
he
asks
for
“damages”
ERISA does not permit recovery of money
“preemptive
scope
is
not
diminished
simply
because a finding of preemption will leave a gap in the relief
available
to
England
Life
Indeed,
the
a
plaintiff.”
Ins.
Co.,
Supreme
Wilmington
496
Court
F.3d
long
326,
ago
Shipping
341
held
(4th
that
Co.
v.
New
Cir.
2007).
“[t]he
policy
choices reflected in the inclusion of certain remedies and the
exclusion of others under the federal scheme would be completely
undermined
if
ERISA-plan
participants
and
beneficiaries
were
free to obtain remedies under state law that Congress rejected
in ERISA.”
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54
(1987).
Prince can enforce his claims under ERISA; that he cannot
recover damages does not require a different conclusion or avoid
complete preemption.
B.
Resolution
of
Prince’s
claims
would
also
require
interpretation of the ERISA plan, the third and final Sonoco
2
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.
9
Appeal: 16-1075
Doc: 41
prong.
Filed: 01/27/2017
Prince disagrees.
Pg: 10 of 11
He insists that he only challenges
the actions Sears took prior to the denial of benefits.
This is
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.
2007)
(explaining
that
misrepresentation
another”)
S.E.2d
requires
(emphasis
679,
under
683
“a
added);
(W.
Va.
West
duty
to
Stanley
1981)
Virginia
v.
give
negligent
information
Sewell
(explaining
law
Coal
that
Co.,
under
to
285
West
Virginia law constructive fraud requires “breach of a legal or
equitable duty”) (emphasis added).
Prince
regarding
his
benefits
The only duty Sears had to
(both
prior
to
denial of benefits) stemmed from the ERISA plan.
and
after
the
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
requires
assessment
of
Sears’s
conduct
in
administering
the
ERISA plan; only if that administration was so inept that it was
“outrageous” could Prince recover.
See Travis v. Alcon Labs.,
Inc.,
Va.
504
intentional
S.E.2d
or
419,
reckless
425
(W.
infliction
10
of
1998)
(holding
emotional
that
distress
Appeal: 16-1075
Doc: 41
requires
Filed: 01/27/2017
“that
intolerable,
and
the
so
bounds of decency”).
Pg: 11 of 11
defendant’s
extreme
and
conduct
outrageous
was
as
to
atrocious,
exceed
the
Prince claims that Sears misled him when
it erroneously withheld the premiums and reported that he had
coverage.
once
it
distress.
He claims that these actions, and those Sears took
discovered
the
mistake,
caused
him
and
his
wife
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.
III.
Accordingly, the judgment 3 of the district court is
AFFIRMED.
3
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,
Prince’s
counsel
expressed
skepticism
that
administrative
remedies or mediation would be fruitful, but counsel for Sears
indicated that they might indeed be fruitful. We note that the
record
reflects
that
Sears
initially
offered
to
reopen
enrollment for Mrs. Prince, with Prudential evaluating her
coverage based on her 2011 medical information.
Given that
Prince has not explored his administrative remedies, it remains
unclear whether they would be productive.
11
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?