Dahlin v. Wells Fargo Bank, N.A.
Filing
68
ORDER by Chief Judge Philip A. Brimmer on 3/25/2019, re: 40 Defendants' MOTION to Dismiss for Failure to State a Claim is GRANTED in part and DENIED in part as stated in this order. ORDERED that plaintiff's second cause of action for denial of benefits under ERISA § 502(a) is dismissed with prejudice. ORDERED that defendants Wells Fargo & Company and Wells Fargo & Company Salary Continuation Pay Plan are dismissed from this lawsuit. (sphil, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Philip A. Brimmer
Civil Action No. 18-cv-00554-PAB-GPG
LILLIAN L. DAHLIN, an individual,
Plaintiff,
v.
WELLS FARGO BANK, N.A.,
WELLS FARGO & COMPANY, a California corporation, and
WELLS FARGO & COMPANY SALARY CONTINUATION PAY PLAN,
Defendants.
ORDER
This matter comes before the Court on Defendants’ Motion to Dismiss [Docket
No. 40]. The Court has jurisdiction pursuant to 28 U.S.C. § 1331.
I. BACKGROUND1
This is an action for benefits under the Employee Retirement Income Security
Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. Plaintiff was hired by Wells Fargo
Bank, N.A. (“Wells Fargo”) in 1986 to work as a bank teller in Wells Fargo’s branch
office in Rifle, Colorado. Docket No. 31 at 3, ¶ 13. Beginning in 2008, oil and gas
activity in the Rifle region declined and, combined with the recession, adversely
affected market conditions. Id., ¶¶ 17-18. As businesses in Rifle were failing, Wells
Fargo transferred two of plaintiff’s biggest accounts to a younger banker in Avon,
1
The facts stated below are taken from plaintiff’s first amended complaint, Docket
No. 31, and are presumed to be true for the purposes of defendants’ motion to dismiss.
Colorado. Id., ¶ 18. Despite the declining market conditions around Rifle, plaintiff was
expected to meet the same sales goals as bankers in larger Colorado cities such as
Boulder, Denver, and Grand Junction. Id. at 3, ¶ 19. On April 29, 2016, W ells Fargo
terminated plaintiff’s employment citing “poor performance.” Id., ¶ 20. Following
plaintiff’s termination, Wells Fargo conceded that its sales goals were unrealistic,
eliminated those sales goals, and did not hire anyone new to fill plaintiff’s position. Id.
at 3-4, ¶¶ 21, 23.
At the time of plaintiff’s termination, Wells Fargo had a welfare benefit plan, the
Wells Fargo & Company Salary Continuation Pay Plan (the “Plan”) under which an
employee could receive salary continuation pay if her position was eliminated. Id. at 4,
¶¶ 24-25. A full-time employee with over twenty-five years of service, such as plaintiff,
was eligible for sixteen months of salary continuation pay. Id., ¶ 26. Under the terms of
the Plan, however, a Plan participant becomes “immediately ineligible for salary
continuation pay” if she is “discharged for a reason other than a qualifying event
(including but not limited to poor performance, violation of Wells Fargo’s Code of Ethics
and Business Conduct, or Wells Fargo’s employment policies).” Docket No. 27-1 at 4. 2
Following her termination, plaintiff submitted a claim for benefits to Wells Fargo
& Company (the “Plan Administrator”). Id. at 2, 5, ¶¶ 9, 29. On July 18, 2016, the Plan
2
The Court may consider the terms of the Salary Continuation Pay Plan in
resolving defendants’ motion to dismiss because the Plan is “a document central to . . .
plaintiff’s claim and referred to in the complaint” and its “authenticity is not in dispute.”
Utah Gospel Mission v. Salt Lake City Corp., 425 F.3d 1249, 1253-54 (10th Cir. 2005).
It also appears that plaintiff intended to append the Plan document contained in Docket
No. 27-1 to the complaint. See Docket No. 27 (stricken first amended complaint
attaching terms of the Salary Continuation Pay Plan as Exhibit A); Docket No. 31 at 4,
¶ 25 (referring to the terms of the Plan, attached as Exhibit A).
2
Administrator denied plaintiff’s claim on the ground that plaintiff was ineligible for salary
continuation pay under the Plan. Id. at 5, ¶ 30. Plaintiff’s appeal, filed on September
15, 2016, was rejected by the Salary Continuation Pay Plan Appeals Committee on
October 28, 2016. Id., ¶ 32. Neither the Plan Administrator nor the Appeals Committee
investigated plaintiff’s allegations that “(i) the depressed market conditions in the Rifle
area made it impossible for any business manager to meet Wells Fargo’s unreasonable
sales performance production standards; and (ii) the market conditions clearly
warranted the elimination of [plaintiff’s] position.” Id., ¶¶ 31, 33. In addition, the Plan
Administrator “failed to give a full and fair investigation of [plaintiff’s] claims that she was
effectively terminated for ‘position elimination’ rather than ‘poor performance’ and
therefore interfered with [plaintiff’s] rights under the Plan.” Id. at 6, ¶ 36.
Plaintiff filed this lawsuit in the District Court for Garfield County, Colorado on
February 12, 2018. Docket No. 1-1 at 1. On March 8, 2018, W ells Fargo removed the
case to this Court on the basis of diversity and federal question jurisdiction. Docket No.
1. In the operative complaint, filed on May 2, 2018, plaintiff asserts two causes of
action: (1) interference with protected rights under ERISA § 510, 29 U.S.C. § 1140,
against Wells Fargo; and (2) denial of benefits under ERISA § 502(a), 29 U.S.C. §
1132(a), against the Plan and the Plan Administrator. Docket No. 31 at 6-8. 3 On June
5, 2018, defendants moved to dismiss the complaint under Fed. R. Civ. P. 12(b)(6) and
12(c). Docket No. 40. Plaintiff filed a response on June 26, 2018, Docket No. 45, to
3
Although plaintiff’s first cause of action is asserted under “ERISA § 502(a),”
plaintiff has confirmed that this is a scrivener’s error and that the claim is properly
asserted under ERISA § 510. Docket No. 45 at 5 n.1.
3
which defendants replied on July 10, 2018. Docket No. 49.
II. LEGAL STANDARD
To survive a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, a complaint must allege enough factual matter that, taken as true, makes
the plaintiff’s “claim to relief . . . plausible on its face.” Khalik v. United Air Lines, 671
F.3d 1188, 1190 (10th Cir. 2012) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “[W]here the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged – but it has not shown – that
the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal
quotation marks and alteration marks omitted); see also Khalik, 671 F.3d at 1190 (“A
plaintiff must nudge [his] claims across the line from conceivable to plausible in order to
survive a motion to dismiss.” (quoting Twombly, 550 U.S. at 570)). If a complaint’s
allegations are “so general that they encompass a wide swath of conduct, much of it
innocent,” then plaintiff has not stated a plausible claim. Khalik, 671 F.3d at 1191
(quotations omitted). Thus, even though modern rules of pleading are somewhat
forgiving, “a complaint still must contain either direct or inferential allegations respecting
all the material elements necessary to sustain a recovery under some viable legal
theory.” Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (alteration m arks
omitted ).
The Court reviews a motion for judgment on the pleadings pursuant to Fed. R.
Civ. P. 12(c) using the same standard that applies to a motion brought under Rule
12(b)(6). See Adams v. Jones, 577 F. App’x 778, 781-82 (10th Cir. 2014)
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(unpublished) (“We review a district court’s grant of a motion for judgment on the
pleadings de novo, using the same standard that applies to a Rule 12(b)(6) motion.”
(internal quotation marks omitted)). Thus, the Court “accept[s] all facts pleaded by the
non-moving party as true and grant[s] all reasonable inferences from the pleadings in
favor of the same.” Id. at 782 (internal quotation marks omitted). Judgment on the
pleadings is appropriate if “the moving party has clearly established that no material
issue of fact remains to be resolved and the party is entitled to judgment as a matter of
law.” Id. (internal quotation marks omitted).
III. ANALYSIS
A. Interference with Benefits Under ERISA § 510
Defendants argue that plaintiff’s first claim for relief should be dismissed
because plaintiff makes “only conclusory allegations” that are insufficient to show that
Wells Fargo acted with the specific intent to interfere with plaintiff’s rights under ERISA.
Docket No. 40 at 9-10.
Section 510 of ERISA makes it “unlawful for any person to discharge, fine,
suspend, expel, discipline, or discriminate against a participant or beneficiary . . . for the
purpose of interfering with the attainment of any right to which such participant may
become entitled under the plan.” 29 U.S.C. § 1140. “T his prohibition includes
characterizing an employee’s termination as one ‘for cause’ for the purpose of
unlawfully denying that employee severance benefits.” Madera v. Marsh USA, Inc., 426
F.3d 56, 61 (1st Cir. 2005); see also Furcini v. Equibank, NA, 660 F. Supp. 1436, 1439
(W.D. Pa. 1987) (recognizing a discrimination claim under § 510 based on allegations
5
that employer characterized employee’s discharge as one for cause in order to interfere
with his receipt of severance pay).
To state a prima facie case under § 510, a plaintiff must allege: “(1) prohibited
employer conduct (2) taken for the purpose of interfering (3) with the attainment of any
right to which the [employee] may become entitled.” Apsley v. Boeing Co., 691 F.3d
1184, 1207 (10th Cir. 2012) (quoting Gavalik v. Cont’l Can Co., 812 F.2d 834, 852 (3d
Cir. 1987)). A plaintiff “is not required to show that the employer’s sole motivation was
to interfere with employee benefits[;] she need only show that it was a motivating
factor.” Garratt v. Walker, 164 F.3d 1249, 1256 (10th Cir. 1998). In add ition, a plaintiff
“may rely upon direct or indirect proof” to establish an employer’s specific intent to
interfere with protected benefits. Id. (quoting Phelps v. Field Real Estate Co., 991 F.2d
645, 649 (10th Cir. 1993)); see also Gavalik, 812 F.2d at 852 (explaining that, “[i]n most
cases, . . . specific intent to discriminate will not be demonstrated by ‘smoking gun’
evidence” and thus “the evidentiary burden . . . may . . . be satisfied by the introduction
of circumstantial evidence”).
Defendants argue that plaintiff has not alleged any facts to support a conclusion
that Wells Fargo designated plaintiff’s termination as one for “poor performance” in
order to interfere with her right to salary continuation pay under the Plan. Docket No.
40 at 10. The Court disagrees. The facts alleged in the complaint support a
reasonable inference that Wells Fargo was aware, at the time of plaintiff’s termination,
that declining market conditions in the Rifle region had made Wells Fargo’s sales goals
unrealistic and that plaintiff’s position would have to be eliminated. Prior to plaintiff’s
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termination, Wells Fargo had already transferred two of her larger accounts to a banker
in Avon, Colorado. Docket No. 31 at 3, ¶ 18. In addition, none of the Wells Fargo
bankers in the Western Colorado and Resort regions were able to meet their sales
goals in 2015. Id. at 4, ¶ 22. Finally, once Wells Fargo terminated plaintiff, it eliminated
the sales goals it required plaintiff to meet, conceding they were unreasonable and
could not be achieved. Id. at 3-4, ¶¶ 19, 21, 23. Coupled with the fact that plaintiff had
been working at Wells Fargo for over twenty-nine years and would have been entitled to
the highest level of salary continuation benefits under the Plan, id. at 3-4, ¶¶ 13, 28,
these allegations provide sufficient circumstantial evidence that Wells Fargo acted with
the intent to deprive plaintiff of protected benefits when it designated her termination as
one for “poor performance.” See Li-Hua Olivia Ho v. Abbott Laboratories, 2013 WL
1348426, at *4 (N.D. Ill. Mar. 31, 2013) (finding that plaintiff could plausibly allege a
§ 510 claim if she pled facts showing that the defendant “had already selected her to be
laid off (and thus would have been eligible for the severance package) but fired her
ahead of time to avoid paying her severance”); cf. Reeves v. Continental Equities Corp.
of Am., 912 F.2d 37, 43 (2d Cir. 1990) (denying summary judgment on ERISA denial-ofbenefits claim where plaintiff’s affidavit, in which he stated that “over the ensuing
months [following his termination] the entire staff of Continental Equities was
progressively eliminated, so that by March 1989 nothing remained of the Company but
a shell,” created a fact issue as to whether plaintiff was terminated as part of a
reduction in force).
Defendants do not challenge any of the other elements of plaintiff’s prima facie
7
case. Because plaintiff’s allegations are sufficient to show a specific intent to interfere
with benefits protected under ERISA, defendants are not entitled to dismissal of
plaintiff’s § 510 claim.
B. Denial of Benefits Under ERISA § 502
Defendants argue that they are entitled to dismissal of plaintiff’s claim under
§ 502 of ERISA because plaintiff has not pled any facts showing that the Plan
Administrator abused its discretion in denying plaintiff benefits. Docket No. 49 at 5.
Section 502 provides a plan participant or beneficiary a cause of action to
“recover benefits due to [her] under the terms of [an ERISA] plan.” 29 U.S.C.
§ 1132(a). Where, as in this case, “an administrator or fiduciary has been given
discretionary authority to determine eligibility for benefits or to construe the terms of the
plan,” the Court reviews a denial of benefits under an “arbitrary and capricious”
standard. Maez v. Mountain States Tel. & Tel., Inc., 54 F.3d 1488, 1505 (10th Cir.
1995) (internal quotation marks omitted).4 “An administrator’s action is arbitrary and
capricious if it is based on a lack of substantial evidence, mistake of law, bad faith, or
conflict of interest.” Id. (internal quotation marks and bracket omitted). By contrast, a
denial of benefits is not arbitrary “if it is a reasonable interpretation of the plan’s terms
and was made in good faith.” Torix v. Ball Corp., 862 F.2d 1428, 1429 (10th Cir. 1988).
Defendants contend plaintiff’s “admission that she failed to meet her
performance goals” precludes a finding that the Plan Administrator’s denial of benefits
4
In addition to alleging that “the Plan Administrator has the discretion to
determine eligibility for benefits,” Docket No. 31 at 8, ¶ 56, plaintiff agrees that her
benefits denial claim is reviewable under an abuse of discretion standard. Docket No.
45 at 8.
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was arbitrary and capricious. Docket No. 40 at 12. As noted by defendants, the Plan
expressly provides that an employee becomes “immediately ineligible for salary
continuation pay” if she is “discharged for a reason other than a qualifying event [,]
including but not limited to poor performance.” Docket No. 27-1 at 4. Plaintiff responds
that the Plan Administrator “ignored evidence showing [plaintiff’s] position was
eliminated.” Docket No. 45 at 9 (citing Docket No. 31 at 8, ¶ 57).
The Court finds that plaintiff has failed to state a cognizable claim for wrongful
denial of benefits under § 502(a). The relevant section of the Plan provides that an
employee becomes “immediately ineligible for salary continuation pay and a Salary
Continuation Leave” if the employee is “discharged for a reason other than a qualifying
event (including but not limited to poor performance, violation of Wells Fargo’s Code of
Ethics and Business Conduct, or W ells Fargo’s employment policies).” Docket No. 271 at 4. Plaintiff alleges that Wells Fargo “designated [her] separation as a termination
for ‘poor performance.’” Docket No. 31 at 4, ¶ 24. Accordingly, plaintiff’s allegations
establish that she was disqualified from receiving Salary Continuation Pay under the
plain terms of the Plan. See Farhner v. United Transp. Union Discipline Income Prot.
Program, 645 F.3d 338, 346 (6th Cir. 2011) (affirming summary judgment in favor of
plan administrator where plaintiff’s termination for insubordination rendered him
ineligible for benefits under the plain terms of the plan); Maez, 54 F.3d at 1505
(affirming district court’s dismissal of denial-of-benefits claim where the denial was
“based on the ‘active employee on the payroll’ eligibility requirement”); Generations
Physical Med., LLC v. United Healthcare Servs., Inc., 2012 WL 136897, at *3 (D.N.J.
Jan. 18, 2012) (holding that plaintiff had failed to state a claim that defendant’s denial of
9
benefits was arbitrary and capricious where plan explicitly excluded coverage for the
medical services at issue).
Plaintiff argues that she did not receive a “full and fair review” of her claim
because the Plan Administrator “failed to address or investigate the accuracy and
reliability of the evidence that Dahlin was terminated for position elimination.” Docket
No. 45 at 10. However, plaintiff does not cite any authority for the proposition that the
Plan Administrator was obligated to look beyond the plain language of the Plan to
ascertain whether the stated reason for plaintiff’s termination was justified.
At least one court has rejected a similar argument. In Farhner, the plaintiff was
denied benefits under a plan provision that excluded coverage for discharges “for one
or more . . . reasons,” including insubordination. 645 F.3d at 343. Although the record
clearly showed that the plaintiff was terminated for insubordination, he argued that his
termination violated the FMLA and that the Plan Administrator “should have looked
beyond the plain meaning of the Plan to accurately determine whether [the plaintiff’s]
termination was proper.” Id. at 344. The Sixth Circuit disagreed. In affirming summary
judgment in favor of the Plan Administrator, the court held that the Plan Administrator
was under no obligation to consider the lawfulness of plaintiff’s termination in assessing
his eligibility for benefits. Id. at 345. The court reasoned that, because “the terms of
the Plan [were] specifically defined by the plain language of the Plan itself[,] . . . . the
Plan Administrator needed to look only at the stated reason for [the plaintiff’s]
termination, not the underlying conduct, to determine if such reason fell under the list of
exclusions outlined by the Plan.” Id. at 345.
The Court finds that the same reasoning applies in this case. Because the plain
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language of the Plan precludes coverage when an employee is “discharged for a
reason other than a qualifying event,” including poor performance, Docket No. 27-1 at 4
(emphasis added), the Plan Administrator was obligated only to determine Wells
Fargo’s stated reason for terminating plaintiff, not whether that reason was proper or
justified. Compare Besten v. Delta Am. Reinsurance Co., 202 F.3d 267, 1999 W L
1336061, at *4-5 (6th Cir. 1999) (unpublished table decision) (holding that denial of
benefits was arbitrary and capricious where the terms of the plan precluded coverage
for employees “dismissed for cause as defined in the Delta Employee Manual,” thereby
requiring the Plan Administrator to make a determination as to whether the plaintiff’s
actions “were insubordinate and interfered with the work of others”), with Farhner, 645
F.3d at 345 (holding that the “terms of the Plan are specifically defined by the plain
language of the Plan itself” and thus “the Plan Administrator needed to look only at the
stated reason for [the plaintiff’s] termination”), and Cline v. Retirement Plan for Glass
Rock Plant & Millwood Plant of Oglebay Norton Indus. Sands, Inc. , 346 F. App’x 8, 10
(6th Cir. 2009) (unpublished) (stating that, because “[e]ligibility for benefits under the
Plan [was] conditioned in part upon employment being ‘terminated as a result of a
disability,’” it did not “matter whether the participant was actually disabled at the time of
termination; the relevant question [was] whether he was terminated because the
employer considered him disabled”).
Plaintiff makes two additional arguments in opposition to dismissal, neither of
which is persuasive. First, plaintiff contends that she “may have been terminated for
poor performance when employees in positions similar to her were terminated for
‘position elimination,’” thereby demonstrating that the Plan Administrator failed to
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conduct a full and fair review of her claim. Docket No. 45 at 10. However, there are no
allegations that other employees were terminated because of “position elimination.”
The complaint therefore does not support a finding that the “Plan Administrator treated
[plaintiff’s] claim for benefits different than others similarly situated.” Id. at 11.
Plaintiff also contends that the “Plan Administrator’s potential conflict of interest
provides reasonable support that it denied [plaintif f’s] claims arbitrarily and
capriciously.” Docket No. 45 at 11. But a conflict of interest arising from a plan
administrator’s dual roles as plan funder and plan administrator is only significant when
there is reason to believe that the plan administrator’s benefits determination was
affected by that conflict. See Menge v. AT&T, Inc., 595 F. App’x 811, 814 (10th Cir.
2014) (unpublished) (holding that the plan administrator’s “inherent conflict of interest
ha[d] little bearing in th[e] case, given that (1) the [Quality Review Unit] relied on the
medical opinions of independent physician advisors in upholding the denial of benefits,
and (2) the QRU was operated by Sedgwick, rather than AT&T”); Maez, 54 F.3d at
1505 (“An administrator’s action is arbitrary and capricious if it is based on a lack of
substantial evidence, mistake of law, bad faith, or conflict of interest.” (internal
quotation marks and bracket omitted)). According to the allegations in this case, the
Plan Administrator denied benefits on the sole ground that plaintiff was terminated for
“poor performance.” Because the Plan Administrator’s determination involved a
straightforward application of the Plan terms based on Wells Fargo’s stated reason for
plaintiff’s discharge, the allegations do not give rise to a reasonable inference that a
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conflict of interest impacted the denial of plaintiff’s benefits claim.5
In summary, plaintiff has not plausibly alleged that the Plan Administrator’s
denial of benefits was arbitrary and capricious. Plaintiff’s claim for benefits under § 502
will therefore be dismissed.
IV. CONCLUSION
For the foregoing reasons, it is
ORDERED that Defendants’ Motion to Dismiss [Docket No. 40] is GRANTED in
part and DENIED in part as stated in this order. It is further
ORDERED that plaintiff’s second cause of action for denial of benefits under
ERISA § 502(a) is dismissed with prejudice. It is further
ORDERED that defendants Wells Fargo & Company and Wells Fargo &
Company Salary Continuation Pay Plan are dismissed from this lawsuit.
DATED March 25, 2019.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
Chief United States District Judge
5
Plaintiff’s conflict of interest argument would carry more weight if the Plan
Administrator was also responsible for the decision to terminate plaintiff’s employment.
See Farhner, 645 F.3d at 345-46 (stating that, in cases “where the Plan Administrator
did not make the termination decision and had no involvement in the termination
decision, it would be imprudent to require the Plan Administrator to look beyond the
terms of the Plan to accurately ascertain the underlying facts where such action is not
required by the language of the Plan itself”). Here, however, the allegations establish
that plaintiff’s employer, Wells Fargo, N.A., and the Plan Administrator, Wells Fargo &
Company, are two separate entities, Docket No. 31 at 2, ¶¶ 8-9, and that only Wells
Fargo was responsible for the termination decision. Id. at 3-4, 6, ¶¶ 20, 24, 37.
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