Braun v. USAA Group Disability Income

Filing 20

ORDER denying 12 Motion to Dismiss Counts/Claims. Signed by Judge David G Campbell on 7/8/2014.(DGC, nvo)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Nicole Braun,

No. CV-13-01923-PHX-DGC
Plaintiff,

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v.

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ORDER

USAA Group Disability Income, et al.,

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Defendants.

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Defendants have filed a motion to dismiss Count II of Plaintiff Nicole Braun’s

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complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Doc. 12.

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The motion is fully briefed and no party has requested oral argument. For the reasons

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that follow, the Court will deny the motion.

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I.

Background.

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Plaintiff was an employee of Defendant United States Automobile Association

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(“USAA”). Doc. 1, ¶ 9. While employed with USAA, Plaintiff participated in the

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USAA Group Disability Income Plan (the “Plan”). Id., ¶ 4. The Plan “is an ERISA

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benefit plan providing long-term disability (‘LTD’) benefits to full time employees” of

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USAA. Id. USAA is the Plan sponsor and Defendant USAA’s Executive Vice President,

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People Services, is the Plan administrator. Id., ¶¶ 5-6. The Plan is insured by Liberty

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Life Assurance Company (“Liberty”). Id., ¶ 7.

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Plaintiff suffers from Lyme disease and the Plan initially found that she was

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disabled and entitled to short-term and long-term benefits (id., ¶¶ 15-16), although

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Plaintiff does not specify when these determinations occurred. The Plan’s definition of

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disability was changed on February 22, 2012 (id., ¶ 17), and Plaintiff subsequently

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received a letter from Liberty on June 1, 2012, informing her that she had been denied

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long-term disability benefits (id., ¶ 19). The June 1 letter allegedly informed Plaintiff

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that any request for review of the denial had to be sent within 180 days, which Plaintiff

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contends is incorrect. Id., ¶ 20. Plaintiff asked for an extension, but whether Liberty

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denied her request is unclear from the complaint. Id., ¶ 20. Liberty informed Plaintiff on

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February 25, 2013, that it was affirming the denial of her LTD benefits. Id., ¶ 29.

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Plaintiff asserts that Liberty and the Plan erred in reaching this decision for a

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number of reasons not relevant to this motion. Id., ¶¶ 30-70. Plaintiff filed her complaint

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on September 19, 2013, asserting claims for recovery of plan benefits pursuant to 29

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U.S.C. § 1132(a)(1)(B) and breach of fiduciary duty. Id., ¶¶ 71-97. Defendants seek to

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dismiss Plaintiff’s breach of fiduciary duty claim.

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II.

Analysis.

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Defendants argue that Plaintiff’s breach of fiduciary duty claim under § 1132(a)(3)

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is precluded “by virtue of the availability to Plaintiff of her claim for recovery of benefits

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pursuant to § 1132(a)(1)(B), for which Plaintiff has pled in the Complaint.” Doc. 12 at 2.

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The Supreme Court has held that § 1132(a)(3) is a “catchall” provision that acts “as a

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safety net, offering appropriate equitable relief for injuries caused by violations that

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§ [1132] does not elsewhere adequately remedy.” Varity Corp. v. Howe, 516 U.S. 489,

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512 (1996). Defendant contends that “the Ninth Circuit has recognized that a plaintiff

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may not seek equitable relief under § 1132(a)(3) for a breach of fiduciary duty or other

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alleged wrongs where there is an adequate benefits remedy under § 1132(a)(1)(B) for the

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alleged ERISA violation,” and cites a number of Ninth Circuit cases as support. Id. at 3.

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The Ninth Circuit most recently addressed § 1132(a)(3) in Wise v. Verizon

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Comms., Inc., 600 F.3d 1180, 1190 (9th Cir. 2010), where the plaintiff sought equitable

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relief “in the form of an award of past and future benefits.” Wise, 600 F.3d at 1190. The

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court upheld the district court’s dismissal of the plaintiff’s claims under § 1132(a)(3) on

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the ground that the relief requested “was duplicative of relief she sought under other

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[portions of § 1132].” Specifically, the court stated that money damages “are not an

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available remedy under ERISA’s equitable safety net.” Id. (citing Mertens v. Hewitt

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Assocs., 508 U.S. 248, 255 (1993)).

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Plaintiff argues that courts have allowed claims under both § 1132(a)(3) and

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§ 1132(a)(1)(B) to go forward. Doc. 14 at 2-3 (citing cases). She also argues that, under

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the Supreme Court’s decision in CIGNA Corporation v. Amara, 131 S. Ct. 1866 (2011),

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“Varity is no longer a categorical bar to both (a)(1)(B) and [(a)(3)] claims.” Id. at 3.

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At issue in Amara was whether the district court properly reformed the terms of a

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pension plan under § 1132(a)(1)(B). 131 S. Ct. at 1876. The court concluded that

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§ 1132(a)(1)(B) provided no such authority. Id. at 1878. The court went on to opine that

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§ 1132(a)(3) might provide such authority and engaged in a lengthy discussion of the

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meaning of “appropriate equitable relief” in the context of the court’s precedent. Id.

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at 1878-80. It is unclear whether the court explicitly held that § 1132(a)(3) provided the

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relief at issue in the case because the court remanded to the district court with instructions

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to decide that issue. Id. at 1882 (“Because the District Court has not determined if an

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appropriate remedy may be imposed under [§ 1132(a)(3)], we must vacate the judgment

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below and remand this case for further proceedings consistent with this opinion.”).

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This Court agrees with the concurrence in Amara, which asserted that because the

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district court found no need to decide whether the relief requested was available under

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§ 1132(a)(3), the majority’s discussion of that issue was dicta. See id. at 1883-83 (Scalia,

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J., concurring in the judgment). Indeed, nowhere does the Amara court explicitly state

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that § 1132(a)(3) authorizes any type of equitable relief beyond the reformation of the

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plan undertaken by the district court. Other courts have found that Amara had no effect

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on the holding in Varity. See, e.g., Roque v. Roofers’ Unions Welfare Trust Fund,

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No. 12-C-3788, 2013 WL 2242455, at *7 (N.D. Ill. May 21, 2013) (finding that “Amara

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did not . . . alter the rule announced in Varity” and rejecting the plaintiff’s argument that

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Amara “changed the nature of equitable remedies available under [§ 1132(a)(3)],

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allowing for certain forms of monetary relief”); Biglands v. Raytheon Employee Sav. &

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Inv. Plan, 801 F. Supp. 2d 781, 786 (N.D. Ind. 2011) (“[T]he equitable remedies

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discussed in the Amara are dicta, as Justice Scalia’s concurring opinion makes clear.”).

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The question, then, is whether Plaintiff has pled a claim under § 1132(a)(3) that

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seeks either money damages or duplicative relief. As an initial matter, Plaintiff has

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alleged that Defendants are providing incorrect information and are not following

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regulations, and requests that this conduct be enjoined.

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Defendants neither argue nor demonstrate that such relief is available under another

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provision of § 1132, and the Court cannot conclude that such an injunction would be

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duplicative of relief under § 1132(a)(1)(B). Thus, there is no reason why Plaintiff’s claim

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for injunctive relief under § 1132(a)(3) cannot go forward.

See generally Doc. 1.

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It is also not clear to the Court, at this stage of the litigation, that any claim for

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monetary relief under § 1132(a)(3) is entirely foreclosed. This case is unlike Wise in that

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Plaintiff has not explicitly pled her breach of fiduciary duty claim as seeking payment of

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past and future benefits, which was the case in Wise. 600 F.3d at 1190. Further, the

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majority opinion in Amara does state that “the fact that . . . relief takes the form of a

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money payment does not remove it from the category of traditionally equitable relief,”

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and noted that “[e]quity courts possessed the power to provide relief in the form of

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monetary ‘compensation’ for a loss resulting from a trustee’s breach of duty, or to

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prevent the trustee’s unjust enrichment.” 131 S. Ct. at 1880. Although this language is

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dicta, as discussed above, it apparently represents the view of a majority of the Supreme

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Court justices.

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The Court concludes that it should await summary judgment before deciding

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whether Varity and Wise remain good law after Amara. Clarifying decisions from the

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Ninth Circuit and other federal courts may be provided in the meantime. The Court is

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also unable to conclude from the pleadings that the relief sought by Plaintiff under

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§ 1132(a)(3) is duplicative of the relief she seeks under § 1132(a)(1)(B). It is conceivable

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that Plaintiff could prove that she is entitled to an award of past and future benefits under

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§ 1132(a)(1)(B) and additional monetary damages under § 1132(a)(3) for breach of

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fiduciary duty.

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development.

The Court cannot make this determination without further factual

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The Court will therefore deny Defendants’ motion to dismiss Plaintiff’s breach of

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fiduciary duty claim. Defendants may raise this issue again at the summary judgment

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stage, at which time the Court will be aided by a more fully developed record and

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perhaps additional Ninth Circuit authority interpreting Amara.

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IT IS ORDERED that Defendants’ motion to dismiss (Doc. 12) is denied.

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Dated this 8th day of July, 2014.

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