Saunders v. Liberty Life Assurance Company of Boston et al

Filing 20

ORDER ADOPTING the Magistrate Judge's 18 REPORT AND RECOMMENDATIONS and GRANTING 11 MOTION to Dismiss. All claims of the Plaintiff against J.C. Penney Corporation, Inc. are hereby DISMISSED WITH PREJUDICE. This case is REFERRED BACK to the Magistrate Judge for further proceedings in accordance with this Court's General Order of Reference. Signed by Judge Virginia Emerson Hopkins on 12/2/2014. (JLC)

FILED
2014 Dec-02 PM 03:47
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
SUSAN SAUNDERS,
Plaintiff,
v.
LIBERTY LIFE ASSURANCE
COMPANY OF BOSTON,
Defendant.

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) Case No.: 5:14-CV-1181-JHE
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MEMORANDUM OPINION AND ORDER
I.

INTRODUCTION
Plaintiff Susan Saunders (“Plaintiff”) initiated this action against Defendants

Liberty Life Assurance Company of Boston (“Liberty”) and J.C. Penney Corporation,
Inc. (“J.C. Penney”), asserting violations of the Employee Retirement Income Security
Act of 1974 (“ERISA”). (Doc. 1). J.C. Penney moves to dismiss on the ground that,
in the disability plan at issue (“the Plan”), J.C. Penney is merely the Plan Sponsor and
not the Plan Administrator and, therefore, it is not a proper defendant. (Docs. 11 and
11-1). Plaintiff responds that she has alleged J.C. Penney is the Plan Administrator so
the Court cannot dismiss J.C. Penney without giving ten-days notice it is converting the
motion to an MSJ. (Doc. 14). J.C. Penney replies the Court may rely on an undisputed
document that is central to the complaint and therefore it is entitled to dismissal based

on the summary description of the Plan (“SPD”) attached to its motion. (Doc. 15).
II.

PROCEDURAL POSTURE
On November 5, 2014, the magistrate judge entered a Report and

Recommendation (“R&R”) recommending that the motion to dismiss be GRANTED
(Doc. 18). In that document, the parties were specifically of their right to object within
fourteen days from the date of the R&R. (Id. at 6.). No objections were filed and the
time to do so has passed. Therefore, the R&R (doc. 18) and motion to dismiss (doc. 11)
are before the undersigned.1
III.

DISTRICT COURT REVIEW OF REPORT AND RECOMMENDATION
After conducting a “careful and complete” review of the findings and

recommendations, a district judge may accept, reject, or modify the magistrate judge’s
report and recommendation. See 28 U.S.C. § 636(b)(1) (“A judge of the court may
accept, reject, or modify, in whole or in part, the findings or recommendations made
by the magistrate judge.”); Williams v. Wainwright, 681 F.2d 732 (11th Cir. 1982)
(quoting Nettles v. Wainwright, 677 F.2d 404, 408 (5th Cir. 1982), overruled on other
grounds by Douglass v. United Services Auto. Ass’n, 79 F.3d 1415 (5th Cir. 1996)).2

1

The motion was randomly assigned to the undersigned on November 21, 2014. (Margin

entry).
2

The Eleventh Circuit has adopted as binding precedent all Fifth Circuit decisions issued
before October 1, 1981, as well as all decisions issued after that date by a Unit B panel of the
2

The district judge may also receive further evidence or recommit the matter to the
magistrate judge with instructions. 28 U.S.C. § 636(b)(1).
A district judge “shall make a de novo determination of those portions of the
report or specified proposed findings or recommendations to which objection is made.”
28 U.S.C. § 636(b)(1). This requires that the district judge “give fresh consideration
to those issues to which specific objection has been made by a party.” Jeffrey S. v.
State Bd. of Educ., 896 F.2d 507, 512 (11th Cir. 1990) (citing H.R. Rep. No. 94-1609,
94th Cong., 2nd Sess., reprinted in 1976 U.S. Code Cong. & Admin. News 6162,
6163). In contrast, those portions of the R&R to which no objection is made need only
be reviewed for clear error. Macort v. Prem, Inc., 208 Fed. App’x. 781, 784 (11th Cir.
2006).3
“Neither the Constitution nor the statute requires a district judge to review, de

former Fifth Circuit. Stein v. Reynolds Sec., Inc., 667 F.2d 33, 34 (11th Cir. 1982); see also
United States v. Schultz, 565 F.3d 1353, 1361 n.4 (11th Cir. 2009) (discussing the continuing
validity of Nettles).
3

Macort dealt only with the standard of review to be applied to a magistrate's factual
findings, but the Supreme Court has held that there is no reason for the district court to apply a
different standard to a magistrate's legal conclusions. Thomas v. Arn, 474 U.S. 140, 150, 106 S.
Ct. 466, 88 L. Ed. 2d 435 (1985). Thus, district courts in this circuit have routinely applied a
clear-error standard to both. See Tauber v. Barnhart, 438 F. Supp. 2d 1366, 1373–74 (N.D. Ga.
2006) (collecting cases). This is to be contrasted with the standard of review on appeal, which
distinguishes between the two. See Monroe v. Thigpen, 932 F.2d 1437, 1440 (11th Cir. 1991)
(when a magistrate's findings of fact are adopted by the district court without objection, they are
reviewed on appeal under a plain-error standard, but questions of law remain subject to de novo
review).
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novo, findings and recommendations that the parties themselves accept as correct.”
United States v. Woodard, 387 F.3d 1329, 1334 (11th Cir. 2004) (internal quotation
marks omitted) (quoting United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir.
2003)). It is incumbent upon the parties to timely raise any objections that they may
have regarding a magistrate judge’s findings contained in a report and recommendation,
as the failure to do so subsequently waives or abandons the issue, even if such matter
was presented at the magistrate judge level. See, e.g., United States v. Pilati, 627 F.3d
1360 at 1365 (11th Cir. 2010) (“While Pilati raised the issue of not being convicted of
a qualifying offense before the magistrate judge, he did not raise this issue in his appeal
to the district court. Thus, this argument has been waived or abandoned by his failure
to raise it on appeal to the district court.”).
IV.

THE REPORT AND RECOMMENDATION IS NOT CLEARLY
ERRONEOUS
A.

Consideration of the SPD Does Not Require Conversion of the
Motion To Dismiss to a Motion for Summary Judgment

The Magistrate Judge states that Plaintiff’s sole opposition to the Motion To
Dismiss is that because J.C. Penney has attached a copy of the SPD to the Motion,4 the
Motion cannot properly be considered without being converted to a motion for

4

Plaintiff has not asserted that the SPD is not authentic, nor that it is contrary to the Plan

itself.
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summary judgment. (Doc. 18 at 1, 3, 4). Although the Plaintiff has not objected to this
statement, the undersigned finds that it is not accurate. In her three-page opposition, the
Plaintiff also opposed the Motion To Dismiss on the basis that “Plaintiff’s Complaint
alleges that J.C. Penny [sic] administers the plan, thus J.C. Penny [sic] is a proper
defendant.” (Doc. 14 at p. 3).
The undersigned finds Plaintiff’s argument that attachment of the SPD requires
conversion of J.C. Penney’s motion to a motion for summary judgment to be contrary
to well-established law of this Circuit. See Bickley v. Caremark Rx, Inc., 461 F.3d
1325, 1329 n. 7 (11th Cir.2006) (“where the plaintiff refers to certain documents in the
complaint and those documents are central to the plaintiffs claim, then the Court may
consider the documents part of the pleading for purposes of Rule 12(b)(6) dismissal”)
(quoting Brooks v. Blue Cross & Blue Shield, Inc., 116 F.3d 1364, 1369 (11th
Cir.1997)). Accordingly, the Magistrate Judge’s Report and Recommendation’s
consideration of the SPD without converting the Motion To Dismiss to a Motion for
Summary Judgment was not error, much less “clear error.”
B.

J.C. Penney Is Due To Be Dismissed from this Action

A motion to dismiss is appropriate when it is demonstrated “beyond doubt that
the plaintiff can prove no set of facts in support of his claim which would entitle him
to relief.” Conley v. Gibson, 355 U.S. 41, 45–46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
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For the purpose of the motion to dismiss, the complaint is construed in the light most
favorable to the plaintiff, and all facts alleged by the plaintiff are accepted as true.
Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984).
Regardless of the alleged facts, however, a court may dismiss a complaint on a
dispositive issue of law. Marshall County Bd. of Educ. v. Marshall County Gas Dist.,
992 F.2d 1171, 1174 (11th Cir.1993).
Applying this standard, the undersigned finds that the Magistrate Judge correctly
applied the relevant law and correctly found that J.C. Penney is due to be dismissed
with prejudice as a matter of law. As the Magistrate Judge stated:
In its motion to dismiss, J.C. Penney asserts that, in the Eleventh Circuit,
the proper party defendants concerning ERISA benefits are parties “that control
administration of the plan.” (Doc. 11 at 3) (quoting Garren v. John Hancock
Mut. Life Ins. Co., 114 F.3d 186, 187 (11th Cir. 1997)). Pointing to the summary
description of the Plan attached to its motion to dismiss, J.C. Penney asserts it
is not an administrator and is therefore not a proper party. (Id. at 4) (citing doc.
11-1 at 17, 18, & 20).
***
Plaintiff’s complaint alleges Plaintiff is “a participant in [] the J.C. Penney
Corporation, Inc. Long Term Disability Plan,” which is administered by Liberty
and falls “within the meaning of Sec. 3(2)(a) of ERISA,” (doc. 1 at ¶ 4), and the
complaint ultimately alleges Liberty violated obligations under ERISA, (id. at ¶
29). Based on those allegations, whether the Plan falls under ERISA and is
administered by defendants (and, as a result, the Plan itself) are central to the
complaint. Plaintiff, although given the opportunity to respond to J.C. Penney’s
motion to dismiss and attached summary description of the Plan, did not dispute
the authenticity of the attached copy but instead argued the Court could not
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address it on a motion to dismiss. (Doc. 14). Therefore, the summary description
of the Plan attached to J.C. Penney’s motion to dismiss ... may be considered on
a motion to dismiss without converting the motion to one for summary judgment.
The question then becomes whether the attached document answers
whether J.C. Penney is a proper party. “Proof of who is the plan administrator
may come from the plan document, but can also come from the factual
circumstances surrounding the administration of the plan, even if these factual
circumstances contradict the designation in the plan document.” Hamilton v.
Allen-Bradley Co., 244 F.3d 819, 824 (11th Cir. 2001).
The summary description of the Plan, attached to J.C. Penney’s motion,
clearly states J.C. Penney is the “Plan Sponsor” and the Benefits Administration
Committee is the “Plan Administrator.” (Doc. 11-1 at 20-21). The Benefits
Administration Committee is defined in the Plan as “[a] committee appointed by
J.C. Penney Corporation, Inc. to act as the Plan Administrator for the benefit
plans and programs.” (Id. at 32). It is “the named fiduciary for the Disability
Insurance option and has the authority to control, administer and manage the
operation of the Disability Insurance option.” (Id. at 21). Under ERISA, the
committee is a separate entity from J.C. Penney, separately subject to suit. See
29 U.S.C.A. § 1132(d)(1) (“An employee benefit plan may sue or be sued under
this subchapter as an entity.”); Rosen v. TRW, Inc., 979 F.2d 191, 192-93 & 194
n.2 (11th Cir. 1992) (finding a company properly dismissed where the plan
designated an unincorporated committee as administrator under ERISA and the
complaint did not allege the committee and company were alter egos); Boyer v.
J. A. Majors Co. Emp. Profit Sharing Plan, 481 F. Supp. 454, 458 (N.D. Ga.
1979) (“[T]he Committee was an entity separate from the Company.”); Barrett
v. Thorofare Markets, Inc., 452 F. Supp. 880, 884 (W.D. Pa. 1978) (“This court
has no jurisdiction over the [non-party] Committee, which is an entity
independent of either the union or [employer], and can sue or be sued in its own
right.”) (citing 29 U.S.C. §§ 1102, 1132(d)(1)). Under the Plan, the committee,
as Plan Administrator, controls and administers the operation of the Plan and,
therefore, is the proper party defendant. See Garren, 114 F.3d at 187 (“The
proper party defendant in an action concerning ERISA benefits is the party that
controls administration of the plan.”).
As for the circumstances surrounding administration of the Plan, the
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complaint conclusorily alleges J.C. Penney “is the ‘Plan Sponsor and
Administrator’ of the Plan,” (doc. 1 at ¶ 5), but the subsequent factual
allegations state only that J.C. Penney “sponsored the disability insurance plan
which was and is administered by Liberty for the J.C. Penney’s employee and
plan participants,” (doc. 1 at ¶ 6). Even under “Count One,” the complaint only
alleges Liberty’s refusal to pay, not J.C. Penney’s. (Id. at ¶ 29). As there are no
allegations of factual circumstances surrounding the administration of the Plan
indicating J.C. Penney is the actual administrator contrary to what is designated
in the Plan, the court must rely on the Plan itself.
As the summary description of the Plan shows (and the complaint does
not contradict), the Benefits Administration Committee is the Plan Administrator
and named fiduciary for the Disability Insurance option, (doc. 11-1 at 21), and,
therefore, subject to suit under ERISA; J.C. Penney, on the other hand, is Plan
Sponsor and not subject to suit under ERISA. Based on the facts alleged in the
complaint and other documents properly considered on a Rule 12(b)(6) motion
to dismiss, J.C. Penney is an improper party to this action and the claims against
it are due to be dismissed without prejudice. See Rosen, 979 F.2d at 194
(affirming dismissal of the company on the original complaint but finding the
district court erred in denying a motion to amend the complaint asserting facts
indicating the company was the de facto administrator).
(Doc. 18 at pp. 3-6).
The undersigned agrees that with the Magistrate Judge that the Plaintiff’s
allegations against J.C. Penney are insufficient “mere labels and conclusions” such that
J.C. Penney is entitled to judgment as a matter of law. See Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (citing Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007)(Mere
“labels and conclusions” or “a formulaic recitation of the elements of a cause of action”
are insufficient. “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid
of ‘further factual enhancement.’”). Thus, his recommendation to dismiss J.C. Penney
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with prejudice is not error, much less “clear error.”
V.

CONCLUSION AND ORDERS
For the reasons stated above, the court ADOPTS the recommendations of the

magistrate judge and ORDERS as follows:
1.

The Motion To Dismiss (doc. 11) is GRANTED.

2.

All claims of the Plaintiff against J.C. Penney Corporation, Inc. are hereby
DISMISSED WITH PREJUDICE.

3.

This case is REFERRED BACK to the magistrate judge for further
proceedings in accordance with this court’s General Order of Reference.

DONE and ORDERED this the 2nd day of December, 2014.

VIRGINIA EMERSON HOPKINS
United States District Judge

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