Collins et al v. Teamsters Benefit Trust et al

Filing 34

ORDER by Judge Yvonne Gonzalez Rogers granting 9 Motion to Dismiss with Leave to Amend. (Attachments: # 1 Certificate/Proof of Service) (fs, COURT STAFF) (Filed on 4/5/2013)

1
2
3

UNITED STATES DISTRICT COURT

4

NORTHERN DISTRICT OF CALIFORNIA

5
6
7

RICHARD COLLINS AND RUBY COLLINS,

8

Plaintiffs,

9
10

United States District Court
Northern District of California

11
12

vs.

Case No.: 4:12-CV-2984 YGR
ORDER GRANTING DEFENDANTS’ MOTION TO
DISMISS WITH LEAVE TO AMEND

TEAMSTERS BENEFIT TRUST, LIPMAN
INSURANCE ADMINISTRATORS, INC., AND
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS LOCAL 853,
Defendants.

13

Plaintiffs Richard and Ruby Collins (“Plaintiffs”) challenge the change to their retiree health

14
15

plan that requires them to contribute to the costs of healthcare benefits. Plaintiffs’ First Amended

16

Complaint (Dkt. No. 6 (“FAC”)) brings four claims: (1) violation of the terms of the plan and the

17

Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. (“ERISA”); (2) breach

18

of fiduciary duty, also under ERISA; (3) a state law claim for breach of the implied covenant of good

19

faith and fair dealing; and (4) breach of the duty of fair representation.
Defendants filed a Motion to Dismiss (Dkt. No. 9) on the grounds that: (1) Plaintiffs fail to

20
21

allege cognizable claims under ERISA; (2) ERISA preempts their third claim which is brought under

22

state common law claim; and (3) the Fourth Claim is both time-barred and fails to state a claim.

23

Having reviewed the papers submitted, the FAC, for the reasons set forth below, the Court GRANTS

24

the Motion to Dismiss WITH LEAVE TO AMEND.1

25
26
27
28

1

Plaintiffs did not appear at oral argument and both parties agreed to submit the matter on the papers.

1
2

I.

BACKG
GROUND
This disp concern the propriety of amen dments to an ERISA hea and wel
pute
ns
n
alth
lfare plan.

3

Dur
ring his work
king years, Plaintiff Rich
P
hard Collins prepaid into a fund for h postretire
o
his
ement health
h

4

insu
urance coverage for hims and his wife. When Mr. Collins retired, Pla
self
w
n
s
aintiffs did no need to
ot

5

cont
tribute towar their hea
rds
althcare costs Subseque
s.
ently, the term of the he
ms
ealth and welfare plan

6

chan
nged to their detriment, and they now need to co
r
a
w
ontribute tow
wards the cos of their he
st
ealthcare.

7

Plaintiffs brough this action to enforce the terms of the health a welfare p in effec at the time
ht
n
f
and
plan
ct
e

8

of Mr. Collins’ retirement.
M
r

9
10

A.

ABOUT THE PARTIES

Plaintiff Richard Collins is a reti
f
ired member of Defenda Internatio Brother
r
ant
onal
rhood of

United States District Court
Northern District of California

11

Team
msters, Loca 853 (“Loc 853”), a labor organiz
al
cal
l
zation, and a participant in the Retir
t
rement

12

Secu
urity Plan (“
“RSP” or “Pl
lan”), a post-retirement h
health and w
welfare plan. (FAC ¶¶ 4, 7-8.) His
,

13

wife Plaintiff Ruby Collins, as an eligib spouse, i a beneficia in the RS (Id. ¶ 4.) Defendant
e,
R
ble
is
ary
SP.
t

14

Team
msters Bene Trust (“T
efit
TBT”) is the sponsor of t Plan and acts under t direct ma
the
d
the
anagement of
o

15

a joi Board of Trustees co
int
f
omprised of union and em
u
mployer mem
mbers. (Id. ¶ 5.) Defend Lipman
dant
n

16

Insu
urance Admi
inistrators, In (“Lipman is a third party admi
nc.
n”)
d
inistrator tha carries out the
at
t

17

“adm
ministrative functions as
ssociated wit operating the RSP—b
th
billing partic
cipants for m
monthly

18

prem
miums and processing pa
p
articipants’ and provider claims—
a
rs’
—but under th direct supe
he
ervision of

19

TBT Board of Trustees.” (Id. ¶ 6.)
T’s
f

20

B.

THE HEALTH PLAN
H

21

The Plan is a multi-e
n
employer health and wel
lfare plan av
vailable to qu
ualifying reti
irees and the
eir

22

spou
uses. As an employee be
enefit plan, the Plan is g
t
governed by ERISA. Th Plan allow for prehe
ws

23

paym of post
ment
t-retirement health insurance premiu with an employee’s wages in the years prior
ums
e
r

24

to re
etirement. (I ¶ 12.) Th Summary Plan Descr
Id.
he
y
ription (“SPD explains that “[t]he R is
D”)
s
RSP

25

inten
nded to be funded by co
fu
ontributions before retire
b
ement. Parti
icipation and Plan exper
d
rience will

26

dete
ermine wheth this pre-r
her
retirement fu
unding is ad
dequate—and post-retirem
d
ment, you m be requir
may
red

27

to make supplem
m
mental self-p
payments for Plan covera
r
age.” (Id. ¶ 9 (emphasis in original)
s
).)

28

2

1

The pre-retirement contribution dollar amount is set and adjusted by the TBT Board of

2

Trustees and is based on actuarial factors such as Plan-wide “participation” levels (i.e., number of

3

employees participating in the plan) and “experience” ratings (i.e., medical costs). (Id. ¶ 9.)

4

According to the SPD, “[t]he current monthly contribution is subject to change based on the number

5

of employees in the RSP and the Plan’s experience.” (Id.) TBT may “change or discontinue any

6

Plan at any time for any reason … [and such] amendments may change benefit levels, eligibility

7

requirements or any other provision of the Plan.” (Id. ¶ 22.)

8

C.

THE AMENDMENT TO THE HEALTH PLAN AND THE PRESENT DISPUTE

9

Under this Plan, on September 30, 2003, Plaintiff Richard Collins fulfilled the requirements
for full participation in the RSP after his retirement and, after retiring in April, 2008, began receiving

11

United States District Court
Northern District of California

10

RSP benefits for himself and his wife with no monthly charges. (Id. ¶¶ 11, 13-14.)

12

On April 2, 2010, the TBT Board of Trustees amended the Plan and adopted a two-tiered Plan

13

(“Revised Plan”) that became effective July 1, 2010. (Id. ¶¶ 14-15.) Under the Revised Plan, a

14

participant is assigned through his or her bargaining unit to either the “Gold” or “Silver” option. (Id.)

15

The “Gold” option preserved “the full extent of the RSP Plan without diminution of benefits or

16

terms” and maintained the monthly pre-retirement contribution increases to Plan participants. (Id. ¶

17

14) The “Silver” option” provided for a lower monthly pre-retirement contribution rate but (1)

18

required that participants increase the minimum number of contributions to qualify for post-

19

retirement RSP benefits, and (2) required retired participants, including those already receiving RSP

20

benefits, to “pay 20% of TBT’s costs for post-retirement health coverage, as a per-retiree monthly

21

charge, regardless of the Plan-wide ‘participation’ or ‘experience’ factors.” Plan. (Id. (emphasis in

22

original).) Thus, as of July 1, 2010, the effective date of the Revised Plan, “TBT formally abandoned

23

the Plan-wide ‘participation’ factor that was to affect, along with the Plan-wide ‘experience’ factor,

24

any necessity for post-retirement monthly contributions. (FAC ¶ 15.)

25

On May 1, 2011, without including retirees in the discussions, deliberations, or voting, then

26

Local 853 voted to accept the “Silver” option and imposed its terms on Plaintiffs and other members

27

of that bargaining unit. (Id. ¶ 15-16.) As such, under the Revised Plan, Plaintiffs now must pay a

28

monthly charge―currently $363.20―for continued eligibility to participate. (Id. ¶ 15.) This

3

1

amo
ounts to over 21% of Mr. Collins’ pe
r
ension, which Plaintiffs a
h
allege is a to failure o the part of
otal
on
f

2

Defe
fendants to sa
atisfy the int of the Pl “to secu a retiree’s retirement income from being
tent
lan:
ure
t
m

3

cons
sumed by th ravages of post-retirem health c
he
f
ment
care coverag costs.” (I ¶ 17.)
ge
Id.
After TB adopted the Revised Plan, Plainti Richard C
BT
t
iff
Collins objec to the ap
cted
pplication of
f

4
5

the Revised Plan as to retire
R
n
ees. (Id. ¶ 18 Specifica
8.)
ally, Plaintif allege in t FAC tha they were
ffs
the
at

6

“wro
ongly” enrol in the “S
lled
Silver” optio and shoul have been included in the bargain
on
ld
n
n
ning process or

7

have been exem
e
mpted from paying the ne monthly c
ew
charges. (Id ¶ 16.) Hav
d.
ving exhaust “all
ted

8

reas
sonable, non-futile admin
nistrative rem
medies” requ
uired by the Plan, Plaint
tiffs brought this action.

9

II.

L
RD
LEGAL STANDAR
A motion to dismiss under Rule 12(b)(6) tes the legal s
n
sts
sufficiency o the claims alleged in the
of
s
t

10

United States District Court
Northern District of California

11

com
mplaint. Ileto v. Glock, In 349 F.3d 1191, 1199
o
nc.,
d
9-1200 (9th Cir. 2003). Dismissal u
under Rule

12

12(b
b)(6) may be based on th lack of a cognizable le
e
he
c
egal theory o on the abs
or
sence of suff
fficient facts

13

alleg under a cognizable legal theory. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). To
ged
l
.

14

with
hstand a mot
tion to dismi “a compl
iss,
laint must co
ontain suffic
cient factual matter, acce
epted as true,

15

to ‘s
state a claim to relief tha is plausible on its face.’” Ashcroft v. Iqbal, 55 U.S. 662, 678 (2009)
m
at
ft
56

16

(quo
oting Bell At Corp. v. Twombly, 550 U.S. 544, 557 (2007)).2
tl.
T

17

III.

DISCUS
SSION
ERISA provides a co
p
omprehensiv scheme th regulates the design a administration of
ve
hat
s
and

18
19

emp
ployee benef plans—bo pension and welfare b
fit
oth
a
benefit plan Aetna He
ns.
ealth Inc. v. D
Davila, 542

20

U.S. 200, 208 (2
2004) (“The purpose of ERISA is to provide a u
E
uniform regu
ulatory regim over
me

21

emp
ployee benef plans.”). “Among the principal pu
fit
“
e
urposes of th ‘compreh
his
hensive and reticulated

22

statu was to ensure that employees an their bene
ute’
e
nd
eficiaries wo
ould not be d
deprived of a
anticipated

23

retir
rement benef ….” Pen
fits
nsion Ben. Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 7 (1984)
G
y
7
720

24

(citi Nachman Corp. v. Pe
ing
n
ension Ben. Guar. Corp 446 U.S. 3
p.,
359, 361-362 (1980)). T
2
Title I of

25
26
27
28

2

Pro se complain are held to less stringen standards th complain drafted by attorneys. Se Erickson v.
o
nts
o
nt
han
nts
ee
Pard 551 U.S. 89, 94 (2007 In their Re
dus,
7).
eply, Defenda state “Pla
ants
aintiff Richar Collins was admitted to
rd
s
the bar of Califor in 1981 and disbarred in 1991.” (R
b
rnia
a
Reply at 8.) T
They argue tha the FAC is not entitled to
at
the same “indulge
s
ence” general accorded to the pleadin of pro se l
lly
t
ngs
litigants becau Mr. Colli although
use
ins,
disbarred, was tra
ained as an att
torney. (Id. at 8-9.)
a

4

1

ERISA contains provisions concerning reporting and disclosure requirements, participation and

2

vesting rules, funding, fiduciary obligations, plan administration, enforcement, and continuation

3

coverage under group health plans. See generally, 29 U.S.C. §§ 1021-1169.
Section 502 authorizes ERISA participants and beneficiaries to bring civil actions to enforce

4
5

ERISA rights. 29 U.S.C. § 1132. Plaintiffs bring claims under two of the civil enforcement

6

provisions of Section 502, subparts (a)(1)(B) and (a)(3). ERISA § 502(a)(1)(B) allows a plan

7

participant to “recover benefits due to him under the terms of his plan,3 to enforce his rights under the

8

terms of the plan, or to clarify his rights to future benefits under the terms of the plan.” Id. §

9

1132(a)(1)(B).
Under ERISA § 502(a)(3), a suit may be brought by a plan participant or beneficiary “(A) to

11

United States District Court
Northern District of California

10

enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or

12

(B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any

13

provisions of this subchapter or the terms of the plan.” 29 U.S.C. § 1132(a)(3). This Section has

14

been characterized as a “catch all” provision, and normally is invoked by a plaintiff where relief is

15

not provided elsewhere in the statute. See Varity Corp. v. Howe, 516 U.S. 489, 512-15 (1996). The

16

provision authorizes solely equitable relief, and if an adequate remedy is provided elsewhere, then a

17

claim under § 502(a)(3) is not appropriate. See id. at 515 (“[W]here Congress elsewhere provided

18

adequate relief for a beneficiary’s injury, there will likely be no need for further equitable relief, in

19

which case such relief normally would not be ‘appropriate’”).
FIRST CLAIM ― VIOLATIONS OF THE TERMS OF THE PLAN AND ERISA

20

A.

21

Plaintiffs’ First Claim, brought under 29 U.S.C. §§ 1022 and 1132(a), alleges two ERISA

22

violations against TBT and Lipman: (1) imposing a monthly charge violated the terms of the Plan;

23

and (2) the Summary Plan Description is misleading.

24

1.

Plaintiffs allege that TBT and Lipman breached the terms of the Plan in violation of ERISA

25
26

Action to enforce terms of Plan.

when they adopted a Revised Plan that required retirees to contribute toward the costs of their

27
3

28

This is not a lawsuit to recover benefits due under the Plan pursuant to ERISA § 502(a)(1), since according to
Plaintiffs’ allegations no benefits for covered services have been denied.

5

1

healthcare benefits based on a choice made by each bargaining unit’s non-retired active members,

2

and not plan-wide “participation” or “experience” factors. (FAC ¶ 21.) Defendants argue that

3

Plaintiffs fail to allege a breach of the terms of the Plan because: (1) the Plan expressly advised that

4

Plaintiffs may need to make post-retirement contributions for Plan coverage; and (2) TBT reserved

5

the right to modify the Plan and having done so, Plaintiffs are not entitled to any relief.

6

In essence, Plaintiffs bring this claim to enforce the terms of the old Plan, not the Revised

7

Plan. In their Opposition, Plaintiffs characterize the Plan as a “hybrid” pension and welfare plan,

8

intended to provide post-retirement health benefits but funded in a way to “secure” or vest retirees’

9

post-retirement health benefits without post-retirement payments. (Opp. at 3.) This “hybrid” Plan

10

United States District Court
Northern District of California

11

argument is not consistent with ERISA or the allegations in the FAC.
Under ERISA, welfare plans are not subject to the vesting requirements to which pension

12

plans are subject. See 29 U.S.C. § 1051(1). ERISA § 3(1) defines a “welfare plan” as any plan

13

“established … for the purpose of providing for its participants or their beneficiaries, through the

14

purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits in the event of

15

sickness.” 29 U.S.C. § 1002(1). By contrast, pension plans, which do vest, “provid[e] retirement

16

income” or “resul[t] in a deferral of income [until retirement],” are “nonforfeitable,” and are subject

17

to minimum vesting requirements under § 203(a). 29 U.S.C. §§ 1002(2)(A)(i)-(ii) and 1053(a).

18

Plaintiffs do not allege in the FAC that the Plan has features common to both welfare and pension

19

plans, but rather allege that it is “a post-retirement health and welfare plan.” (FAC ¶ 8.)

20

Accordingly, as alleged in the FAC, the Plan is an ERISA welfare plan that is not subject to

21

minimum vesting requirements.

22

If an ERISA welfare benefits plan is to vest at all, it is only if the plan expressly and

23

unambiguously so specifies. See Shore v. Int’l Painters & Allied Trades Indus. Pension Plan, 418

24

Fed. App’x 597, 602 (9th Cir.) cert. denied, 132 S. Ct. 247 (2011). Plaintiffs do not allege in the

25

FAC that their welfare benefits vested, but rather, they allege that Defendants reserved the right to

26

change the Plan at any time, including by requiring retirees contribute towards the cost of their post-

27

retirement healthcare. Accordingly, as alleged in the FAC, Plaintiffs’ healthcare benefits did not vest

28

6

1

upon retirement. See, e.g., Williams v. Caterpillar, Inc., 944 F.2d 658, 666-67 (9th Cir. 1991)

2

(“Retiree medical benefits do not become vested once an employee becomes eligible or retires”).

3

The claim for breach of the terms of the Plan is based on a theory that their retiree health

4

benefits were vested rights, which could not be modified and must be restored. As pled, neither

5

ERISA nor the Plan provides Plaintiffs with this vested right. Because Plaintiffs seek to enforce

6

rights under a modified Plan that no longer provides such rights, this claim fails.
Accordingly, Plaintiffs’ claim that Defendants failed to comply with the terms of the Plan

7
8

fails to state a claim upon which relief may be granted.

9

2.

“Confusing” Summary Plan Description

In the alternative, Plaintiffs allege that, if the Defendants did not violate the terms of the Plan,

10

United States District Court
Northern District of California

11

then the Summary Plan Description (“SPD”) violates ERISA’s disclosure requirements. Plaintiffs

12

allege they were confused by the “confounding, mixed message assertions in the SPD” regarding the

13

right to change or terminate the Plan “at any time for any reason,” while assuring participants that the

14

monthly contribution was subject to change “based on the number of employees in the RSP and the

15

Plan’s experience.” (FAC ¶ 22 (emphasis in original).)4
ERISA § 102 requires that an SPD “be written in a manner calculated to be understood by the

16
17

average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise

18

… participants and beneficiaries of their rights and obligations under the plan.” 29 U.S.C. § 1022(a).

19

Section 102(b) lists the specific information that the SPD is required to contain, including the

20

“circumstances which may result in disqualification, ineligibility, or denial or loss of benefits.” Id. §

21

1022(b). The Department of Labor regulations interpreting this provision require that the “plan[ ]

22

must include a summary of any plan provisions governing the authority of the plan sponsors or others

23

to terminate the plan or amend or eliminate benefits under the plan.” 29 C.F.R. § 2520.102–3.
Plaintiffs have alleged insufficient facts to show that Defendants’ violated ERISA’s

24
25

disclosure requirements by providing a summary of Plan participants’ rights and obligations that also

26

disclosed that TBT may amend those terms. Here, as alleged in the FAC, the SPD explicitly stated

27
4

28

Plaintiffs argue that Defendants should be equitably estopped from challenging this portion of the claim
because Plaintiff’s administrative appeals were denied based on the terms of the SPD.

7

1

that TBT may “change or discontinue any Plan at any time for any reason … [s]uch amendments may

2

change benefit levels, eligibility requirements or any other provision of the Plan.” (FAC ¶ 22.) This

3

is a sufficient disclosure that the terms of the Plan may change. See Curtiss-Wright Corp. v.

4

Schoonejongen, 514 U.S. 73, 78 (1995) (holding that because “plan sponsors are generally free under

5

ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans,” a reservation clause

6

in a SPD is a valid amendment procedure).5
Plaintiffs have failed to explain how information on Plan funding is so inconsistent with the

7
8

reservation of the right to modify the Plan that it renders the SPD ambiguous.6

9

3.

Conclusion regarding Plaintiffs’ First Claim

Because Plaintiffs seek to enforce rights under a modified Plan that no longer provides such

10

United States District Court
Northern District of California

11

rights, and do not allege any facts to show that Defendants’ violated ERISA’s disclosure

12

requirements, this claim fails.
Therefore, the Court GRANTS Defendants’ Motion to Dismiss Plaintiffs’ First Claim WITH

13
14

LEAVE TO AMEND.

15

B.

SECOND CLAIM ― BREACH OF FIDUCIARY DUTY

16

ERISA imposes duties on “fiduciaries” and provides remedies for breach of such duties.

17

Section 404 imposes the fiduciary duties of loyalty and prudence, and requires that in making

18

benefits determinations, fiduciaries must follow the terms of the plan documents and instruments

19
20
21
22
23

5

Regarding amendments to the Plan, ERISA section 402(b)(3), which requires that a welfare plan set forth a
“procedure for amending [the] plan,” the Supreme Court has held that “the company reserves the right at any
time and from time to time to modify or amend, in whole or in part, any or all of the provisions of the Plan” is
sufficient to satisfy ERISA section 402(b)(3). Curtiss-Wright, supra, 514 U.S. at 76-77, 81.

6

24
25
26
27
28

Plaintiffs further allege that TBT violated ERISA by failing to disclose explicitly that the “‘participation’ and
‘experience’ triggers could be manipulated administratively.” (FAC ¶ 24.) While ERISA requires the
summary of the plan provisions to be comprehensive, it does not require the summary to be exhaustive.
Compare 29 U.S.C. § 1022(b) (summary disclosures) with § 1024(b) (governing plan documents include plan
descriptions, annual and terminal reports, and bargaining and trust agreements). The governing plan
documents themselves, not the summary, provide plan participants with the exact terms of the Plan. See
Curtiss-Wright, supra, 514 U.S. at 83-84 (1995) (“ERISA already has an elaborate scheme in place for
enabling beneficiaries to learn their rights and obligations at any time, a scheme that is built around reliance on
the face of written plan documents”) (emphasis in original).

8

1

unless inconsistent with ERISA. 29 U.S.C. § 1104(a)(1).7 Sections 502(a)(2) and 409 provide a civil

2

right of action to impose liability on plan fiduciaries for breach of such duties. See 29 U.S.C. §§

3

1132(a)(2) & 1109.8
Plaintiffs allege that Defendants TBT and Lipman breached a fiduciary duty of impartiality by

4
5

adopting and enforcing the Revised Plan against Plaintiffs.9 In particular, the actions that allegedly

6

breached the duty of impartiality are: (1) adopting and enforcing the two-tiered Plan against those

7

who had retired before July 1, 2010, including Plaintiff Richard Collins; and (2) accepting and

8

enforcing a Local 853 bargaining unit choice to adopt the “Silver” option. (FAC ¶¶ 28-29.)

9

Defendants move to dismiss on the grounds that (1) the complained of acts are not fiduciary in
nature; (2) Lipman is not a fiduciary under ERISA; and (3) the remedy Plaintiffs seek is not available

11

United States District Court
Northern District of California

10

under ERISA.

12

1.

Whether Lipman is a Fiduciary

13

Defendants argue that, as a matter of law, Lipman is not a fiduciary.

14

ERISA defines a fiduciary as anyone who exercises discretionary authority or control

15

respecting the management or administration of an employee benefit plan.10 Kyle Railways, Inc. v.

16

7

17
18
19
20
21
22
23
24
25
26
27
28

In enacting ERISA, Congress invoked the common law of trusts to broadly define the scope of a fiduciary’s
responsibilities. Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 583 (1985)
(“The fiduciary responsibility section, in essence, codifies and makes applicable to these fiduciaries certain
principles developed in the evolution of the law of trusts”) (quoting S. Rep. No. 93-127, p. 29 (1973),
reprinted in 1974, U.S.C.C.A.N. 4639, 4865).

8

Section 502(a)(2) provides a civil enforcement action for fiduciary liability under Section 409(a). Section
409(a) provides for recovery by the plan, as opposed to recovery for the individual participant or beneficiary,
who brings suit on behalf of the plan (the participant or beneficiary would benefit indirectly, by enhancing the
value of the plan’s assets). Section 409 authorizes recovery from the fiduciary for “any losses” and “any
profits,” and it further subjects the breaching fiduciary to “such other equitable or remedial relief as the court
may deem appropriate.”

9

“The common law of trusts … requires a trustee to take impartial account of the interests of all
beneficiaries.” Varity Corp. v. Howe, 516 U.S. 489, 514 (1996) (citing Restatement (Second) of Trusts §§ 183
and 232). Here, this duty of impartiality requires that the fiduciary balance the interests of current and future
beneficiaries.

10

The definitions section of ERISA provides that “a person is a fiduciary with respect to a plan to the extent (i)
he exercises any discretionary authority or discretionary control respecting management of such plan or
exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment
advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such
plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary
responsibility in the administration of such plan.” 29 U.S.C. § 1002(21)(A).
9

1

Pac. Admin. Services, Inc., 990 F.2d 513, 516 (9th Cir. 1993). Performance of “ministerial

2

functions” does not make an entity an ERISA fiduciary. Id. (citing 29 C.F.R. § 2509.75-8(D-2)).
Plaintiffs allege that Lipman “carries out the administrative functions associated with

3
4

operating the RSP―billing participants for monthly premiums and processing participants’ and

5

providers’ claims―but under the direct supervision of TBT’s Board of Trustees.” (FAC ¶ 6.) These

6

are purely ministerial functions that Lipman performs.
Accordingly, as alleged in the FAC, Lipman is not an ERISA fiduciary.

7
8

2.

Whether the complained of actions are “fiduciary”

Defendants argue that the complained of acts are not fiduciary in nature.

9

When a Plan sponsor also administers an ERISA welfare plan it takes on two roles―settlor11

11

United States District Court
Northern District of California

10

and trustee. “[T]he fiduciary with two hats wear[s] only one at a time, and wear[s] the fiduciary hat

12

[only] when making fiduciary decisions.” Pegram v. Herdrich, 530 U.S. 211, 225 (2000) (citing

13

Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 443-44 (1999). The threshold inquiry when an

14

ERISA fiduciary is charged with breach of that duty is whether the entity was acting as a fiduciary

15

when taking the complained of action. Id.
A plan sponsor acts as a fiduciary only when fulfilling certain defined functions. 29 U.S.C. §

16
17

1002(21)(A). When plan sponsors modify welfare plans, in general, they act as trust settlors, not

18

fiduciaries. Lockheed Corp. v. Spink, 517 U.S. 882, 890 (1996) (“Plan sponsors who alter the terms

19

of a plan do not fall into the category of fiduciaries”); see Shaw v. Delta Air Lines, Inc., 463 U.S. 85,

20

91 (1983) (describing how ERISA does not mandate that “employers provide any particular benefits,

21

and does not itself proscribe discrimination in the provision of employee benefits”).
As alleged in the FAC, TBT’s modification of the Plan was done in its role as Plan sponsor,

22
23

and, thus, its actions were not fiduciary in character. This does not mean that TBT never acts as a

24

fiduciary if it modifies the Plan, only that the FAC fails to allege that, when adopting the unfavorable

25

Plan amendments, TBT was acting in a fiduciary capacity. TBT has a fiduciary obligation as

26

administrator to act “in accordance with the documents and instruments governing the plan.” 29

27
28

11

“The person who creates a trust is the settlor.” Restatement (Third) of Trusts § 3 (2003).

10

1

U.S.C. § 1104(a)(1)(D). Here, there are no facts alleging that TBT did not act in accordance with the

2

governing plan documents when the Plan amendments were adopted.

3

3.

Whether Plaintiffs are entitled to the relief they seek

Plaintiffs seek recovery for breach of fiduciary duty under the “catch all” remedial provision

4
5

of ERISA § 502(a)(3). Defendants argue that because Congress provided a remedy for breach of

6

fiduciary duty under ERISA §§ 409 and 502(a)(2), Plaintiffs may not avail themselves of the more

7

general “catch all” provision of ERISA § 502(a)(3).
Although a plaintiff may not rely upon § 502(a)(3) if relief is provided elsewhere in the

8
9

statute, there is no categorical rule that precludes plan beneficiaries from bringing a claim for breach
of fiduciary duty under § 502(a)(3). See Varity Corp. v. Howe, 516 U.S. 489, 512-15 (1996). The

11

United States District Court
Northern District of California

10

Supreme Court held that the “catch all” remedial provision can provide individual relief for fiduciary

12

breach. Id.
That said, because Plaintiffs have not alleged a fiduciary act by the Defendants it is not clear

13
14

whether Plaintiffs are precluded from seeking relief under the “catch all” provision.

15

4.

Conclusion regarding Plaintiffs’ Second Claim

Because Plaintiffs do not allege any facts that indicate that Lipman was a fiduciary or that

16
17

TBT was performing a fiduciary function when it modified the Plan, the FAC fails to state a claim for

18

breach of fiduciary duty.
Based on the foregoing analysis, the Court GRANTS Defendants’ Motion to Dismiss

19
20

Plaintiffs’ Second Claim WITH LEAVE TO AMEND.

21
22

THIRD CLAIM ― BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR
DEALING

23

Defendants move to dismiss Count III for “Breach of the Implied Covenant of Good Faith and

24

C.

Fair Dealing under State Law” as preempted.12

25
26
27
28

12

Plaintiffs argue that judicial estoppel precludes Defendants from arguing that this claim is preempted.
Plaintiffs direct the Court to a pending case, Trustees on Behalf of Teamsters Benefit Trust v. Armagost, 12CV-02587-MEJ, where TBT has alleged a California common law cause of action. (Opp. at 7; Plaintiffs’
Request for Judicial Notice (Dkt. No. 21).)
11

1

ERISA § 514(a) preempts state common law claims that directly or indirectly relate to an

2

employee benefit plan. See Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1034 (9th Cir. 2000)

3

(affirming dismissal of claims for breach of contract and breach of the covenant of good faith and fair

4

dealing); Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1095 (9th Cir. 1985) (“ERISA preempts

5

common law theories of breach of contract implied in fact, promissory estoppel, estoppel by conduct,

6

fraud and deceit and breach of contract.”). When a plaintiff brings an action under an employee

7

benefit plan, ERISA provides the exclusive remedy. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41,

8

45-46 (1987) (“the express pre-emption provisions of ERISA are deliberately expansive”). “A law

9

‘relates to’ an employee benefit plan, in the normal sense of the phrase, if it has a connection with or

10

reference to such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97-98 (1983).

United States District Court
Northern District of California

11

Plaintiffs allege that Defendants breached the implied covenant of good faith and fair dealing

12

by adopting the “Silver” option and by requiring Plaintiffs to pay a monthly charge. (FAC ¶¶ 33-35.)

13

Because this state law claim arises from modification and enforcement of an ERISA health and

14

welfare benefits plan, Plaintiffs’ claim relates directly to an employee benefit plan and is therefore

15

preempted by ERISA § 514(a). See 29 U.S.C. § 1144(a) (ERISA “shall supersede any and all state

16

laws insofar as they may now or hereafter relate to any employee benefit plan.”).

17

Based on the foregoing analysis, Defendants’ Motion to Dismiss Count III is GRANTED.

18

Additionally, because Plaintiffs’ claim for “Breach of the Implied Covenant of Good Faith and Fair

19

Dealing under State Law” is preempted, this state law claim is DISMISSED WITHOUT LEAVE TO

20

AMEND.

21
22
23

D.

FOURTH CLAIM ― BREACH OF THE DUTY OF FAIR REPRESENTATION UNDER
SECTION 10(B) OF THE NLRA AND SECTION 301 OF THE LMRA

Plaintiffs allege that Local 853 violated its duty of fair representation required under the

24

Labor Management Relations Act when it voted on the revised RSP and when it supervised a vote

25

among bargaining unit members but failed to include retirees such as Mr. Collins in the process. (Id.

26

¶¶ 41-42.) Defendants move to dismiss this claim as time-barred by the statute of limitations.

27
28

Section 10(b) of the National Labor Relations Act requires that a complaint regarding an
unfair labor practice must be filed with the National Labor Relations Board (“NLRB”) within six

12

1

months after the alleged unfair labor practice took place. See 29 U.S.C. § 160(b) (“no complaint

2

shall issue [from the Board] based upon any unfair labor practice occurring more than six months

3

prior to the filing of the charge with the Board and the service of a copy thereof upon the person

4

against whom such charge is made”); DelCostello v. Int’l Broth. of Teamsters, 462 U.S. 151, 169-70

5

(1983). “All breaches of a union’s duty of fair representation are in fact unfair labor practices.” Id.

6

at 170 (emphasis in original). “[T]he six-month period generally begins to run when an employee

7

knows or should know of the alleged breach of duty of fair representation by a union.” Galindo v.

8

Stoody Co., 793 F.2d 1502, 1509 (9th Cir. 1986).
Here, Plaintiffs allege that they knew of the alleged breach soon after May 1, 2011, when

9

TBT commenced imposing a monthly charge for continued eligibility to participate in the RSP.

11

United States District Court
Northern District of California

10

(FAC ¶¶ 16, 21.) Plaintiffs also allege that they exhausted all administrative appeals on June 27,

12

2011. (Id. ¶ 18.) Under NLRA section 10(b), Plaintiffs should have filed a complaint with the

13

NLRB prior to January 1, 2012, six months after Plaintiffs should have known about the alleged

14

breach.

15

Because Plaintiffs did not file any action until June 11, 2012, their claims against TBT and

16

Local 853 alleging breaches of duties of fair representation are barred by the six-month statute of

17

limitations.

18
19

1.

Tolling

In their opposition, Plaintiffs raise two alternative theories, under which they argue that

20

statute of limitations for this claim has not run. First, Plaintiffs suggest that the facts alleged in the

21

FAC may permit the Plaintiff to prove that the statute was tolled, and second, they argue that the

22

FAC “supports an inference invoking the ‘continued violation’ doctrine.” (Opp. at 10.) Neither

23

theory is supported by the facts alleged in the FAC or any analysis in Plaintiffs’ opposition.

24

“Under federal law, a cause of action accrues when the plaintiff knows or has reason to

25

know of the injury that is the basis of the action.” Pisciotta v. Teledyne Indus., Inc., 91 F.3d 1326,

26

1331 (9th Cir. 1996) (citations omitted). This cause of action accrued as early as May 1, 2011 but no

27

later than June 2011, when Plaintiffs finished appealing the decision to impose monthly contributions

28

for continued eligibility in the Plan.

13

Additionally, in the Ninth Circu the “cont
uit,
tinuing breac theory fin no suppo in case
ch
nds
ort

1
2

law” in the cont of allega
”
text
ations brough under Sec
ht
ction 301. H
Harper v. San Diego Tra
n
ansit Corp.,

3

764 F.2d 663, 669 (9th Cir. 1985). Only one violati is alleged voting to modify the P
y
ion
d,
Plan, which

4

does not suppor invocation of the “cont
s
rt
tinued violat
tion” doctrin Accordin
ne.
ngly, even u
under the

5

fram
mework of th doctrine it
he
tself, Plaintiffs allege no facts to just a finding that Defen
o
tify
g
ndants’ actions

6

“con
ntinued beyo the expir
ond
ration of the limitations period.” No v. Chrys Motors Corp., Jeep
e
oble
sler

7

Div. 32 F.3d 99 1000 (6th Cir. 1994).
.,
97,
h
.

8

2.
2

Conclusion regar
rding Plaintif Fourth Claim
iffs’

Based on the foregoi analysis, the Court G RANTS Def
n
ing
,
fendants’ Mo
otion to Dism
miss

9

Plaintiffs’ Fourt Claim WITH LEAVE TO AMEND.
th
I
T

11

United States District Court
Northern District of California

10

IV.

12

CONCL
LUSION
For the reasons set forth above, Defendants’ Motion to D
r
fo
D
’
Dismiss is GRANTED. P
Plaintiffs’ Fir
rst

13

and Second Clai brought under ERIS and their Fourth Clai for breac of duty of fair
ims
SA,
r
im
ch
f

14

repr
resentation are DISMISSE WITH LEAVE TO AME consiste with this Order. Pla
a
ED
E
END
ent
s
aintiffs’ state

15

law claim is DIS
SMISSED WIT
THOUT LEAVE TO AMEN .
ND

16

Plaintiff may file a second amen
fs
nded compla within 4 days of th date this O
aint
45
he
Order is filed
d.

17

This Ord Terminat Docket Number 9.
der
tes
N

18

IT IS SO ORDERED.

19
20
21

Date:April 5, 2013

__
__________
___________
__________
__________
YVON GONZAL ROGERS
NNE
LEZ
UNITED ST
TATES DISTR
RICT COURT JUDGE
T

22
23
24
25
26
27
28

14
4