Plumbers and Pipefitters Local Union No. 803 Health & Welfare Fund et al v. System Tech Services, Inc.

Filing 55

ORDER denying 44 motion to dismiss; granting 46 Motion to Dismiss for Failure to State a Claim. Signed by Judge Gregory A. Presnell on 3/28/2014. (ED)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
PLUMBERS AND PIPEFITTERS LOCAL
UNION NO. 803 HEALTH & WELFARE
FUND, DAVID GARLINGTON, GARY
MONSON, BRAD GRABILL, BERNARD
HORNE, TIM MILES, PAUL JONES and
CHARLES V. NEWARK,
Plaintiffs,
v.

Case No: 6:13-cv-574-Orl-31TBS

SYSTEM TECH SERVICES, INC.,
Defendant.

ORDER
This matter comes before the Court on dueling motions to dismiss filed by the Defendant
(Doc. 44) and the Plaintiffs (Doc. 46).
I.

Background

The Plaintiffs filed the instant suit on April 9, 2013, seeking to recover, under ERISA,
approximately $7,000 in monthly contributions that the Defendant, System Tech Services, Inc.
(henceforth, “System Tech”) allegedly failed to pay to the Plumbers and Pipefitters Local Union
No. 803 Health & Welfare Fund (the “Fund”). On May 15, 2013, System Tech filed an answer
and counterclaim (Doc. 7) seeking to recoup approximately $70,000 in contributions that it had
made to the Fund. On November 21, 2013, the Court dismissed the parties’ pleadings without
prejudice and ordered the Plaintiffs to file an amended complaint, attaching terms of the ERISA
plan and any relevant agreements between the Defendant and any of the Plaintiffs. (Doc. 36).
The Plaintiffs filed an Amended Complaint (Doc. 39) on December 13, 2013, with numerous

documents attached. The Defendant filed a Second Amended Counterclaim (Doc. 43) on
December 23, 2013. By way of the instant motions, the Defendant seeks dismissal of the
Amended Complaint, while the Plaintiffs seek dismissal of the Second Amended Counterclaim.
II.

Legal Standards

Federal Rule of Civil Procedure 8(a)(2) requires “a short and plain statement of the claim
showing that the pleader is entitled to relief,” so as to give the defendant fair notice of what the
claim is and the grounds upon which it rests, Conley v. Gibson, 35 U.S. 41, 47, 78 S.Ct. 99, 2
L.Ed.2d 80 (1957), overruled on other grounds, Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A Rule 12(b)(6) motion to dismiss for failure to state a
claim merely tests the sufficiency of the complaint; it does not decide the merits of the case.
Milbum v. United States, 734 F.2d 762, 765 (11th Cir.1984). In ruling on a motion to dismiss, the
Court must accept the factual allegations as true and construe the complaint in the light most
favorable to the plaintiff. SEC v. ESM Group, Inc., 835 F.2d 270, 272 (11th Cir.1988). The
Court must also limit its consideration to the pleadings and any exhibits attached thereto.
Fed.R.Civ.P. 10(c); see also GSW, Inc. v. Long County, Ga., 999 F.2d 1508, 1510 (11th Cir.
1993).
The plaintiff must provide enough factual allegations to raise a right to relief above the
speculative level, Twombly, 550 U.S. at 555, 127 S.Ct. at 1966, and to indicate the presence of
the required elements, Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1302 (11th Cir.2007). Conclusory
allegations, unwarranted factual deductions or legal conclusions masquerading as facts will not
prevent dismissal. Davila v. Delta Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003).
In Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), the Supreme Court explained that a complaint
need not contain detailed factual allegations, “but it demands more than an unadorned, the

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defendant unlawfully harmed me accusation. . . . A pleading that offers ‘labels and conclusions’ or
‘a formulaic recitation of the elements of a cause of action will not do.’ . . . Nor does a complaint
suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id. at 1949
(internal citations omitted). “[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 ‘show[n]’ -‘that the plaintiff is entitled to relief.’” Id. at 1950 (quoting Fed. R. Civ. P. 8(a)(2)).
III.

Analysis
A. Defendant’s Motion to Dismiss

Defendant argues that dismissal of the Amended Complaint is warranted because the
Plaintiffs failed to abide by this Court’s order to attach certain documents to the Amended
Complaint and because the page numbering of one document attached to the Amended Complaint
is different now than it was when it was produced on a previous occasion. However, even
assuming these things to be true, they would not justify dismissal pursuant to Rule 12(b)(6)
because they do nothing to establish that the Plaintiff has failed to state a claim upon which relief
may be granted.
The Defendant also complains that several terms used in the Amended Complaint are not
defined or are contradictory. Again, even if these assertions are taken as true, they do not warrant
dismissal. The Defendant also argues that the Plaintiffs have failed to “identify any provision
within any agreement attached to the Amended Complaint which requires System Tech to pay the
alleged delinquent contributions” (Doc. 44 at 6) and have failed to allege that all conditions
precedent have been performed (Doc. 44 at 10), but fail to provide any authority showing that
either of these are mandated in an ERISA case. The Defendant’s motion to dismiss will be
denied.

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B. Plaintiff’s Motion to Dismiss
In its Second Amended Counterclaim (Doc. 43), System Tech acknowledges that the Fund
is “an employee health and welfare benefit plan” and alleges that it “prepaid contributions [to the
Fund] for its … employees for the purpose of receiving health insurance coverage under the
Fund.” (Doc. 43 at 2). More particularly, System Tech alleges (and the Plaintiffs do not dispute)
that the company made monthly contributions from March 2012 to July 2012, totaling $67,187.50,
for insurance coverage that would have begun in July 2012 and run through March 2013. System
Tech asserts that the Fund “unilaterally terminated health insurance coverage for System Tech’s
employees and their families under the Fund effective August 31, 2012,” and that “System Tech
was required to obtain replacement health insurance for its employees and their families.” (Doc.
43 at 2-3). The Defendant asserts two causes of action based on the alleged failure to provide
health insurance benefits: unjust enrichment (Count I) and restitution (Count II).
Section 514(a) of ERISA, 29 U.S.C. § 1144(a), pre-empts “any and all State laws insofar
as they may now or hereafter relate to any employee benefit plan” covered by ERISA. It is
undisputed that the Fund is such a plan. System Tech argues that its equitable claims for unjust
enrichment and restitution are not preempted because they are federal common law claims rather
than state law claims. (Doc. 50 at 6). As System Tech notes, a number of Federal courts have
recognized federal common law causes of action in ERISA cases to permit employers to recover
overpayments. See National Mining Ass’n v. Apfel, 97 F.Supp.2d 1070, 1079 (N.D.Ala. 1999)
(listing cases). The Plaintiffs contend that the United States Court of Appeals rejected this
argument in Dime Coal Company, Inc. v. Combs, 796 F.2d 394 (11th Cir. 1986). In that case, the
court held that the ERISA statutes “neither expressly nor by reasonable implication vest in
contributing employers the right to bring suit to require the trustees of a multiemployer plan to

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return contributions that were mistakenly made.” Id. at 396. But the Dime Coal court was
considering only the question of whether such causes of action exist under ERISA -- rather than,
as here, whether such causes of action might exist under federal common law. Although it is at
least arguable that the rationale behind Dime Coal would also require a conclusion that no such
cause of actions exist under federal common law, that question remains open within this Circuit.
However, all of the parties’ discussion of Dime Coal is beside the point, as this is not an
overpayments case. This is a breach of contracts case. In the opinions cited by the Defendant,
courts allowed employers to proceed with common law claims to recover sums paid by mistake.
See, e.g., Central States, Southeast and Southwest Areas Pension Fund v. Howard Baer, Inc., 753
F.Supp. 241 (N.D.Ill. 1991) (permitting federal common law claim to proceed where employer
“allege[d] that it mistakenly paid certain sums of money to the Pension Fund during the period
June 29, 1980 to March 1990.”); and see Apfel, 97 F.Supp.2d 1070 (permitting federal common
law claim to proceed where Secretary of Health and Human Services miscalculated amounts that
employers were obligated to pay into union benefit fund, resulting in overpayments). Here, there
was no mistake or miscalculation. In the words of the Defendant:
[T]he Counterclaim does not allege that the Prepaid Contributions
were made by mistake; rather, the Counterclaim seeks a return of the
Prepaid Contributions on equitable grounds due to the Fund’s failure
to provide the paid-for health insurance coverage for System Tech’s
employees and their dependents.
(Doc. 50 at 9). Thus, the heart of System Tech’s claim is a denial of benefits, not an
overpayment. The law is clear that, under ERISA, only two categories of individuals are
permitted to sue for denial of benefits: plan beneficiaries and plan participants. Hobbs v. Blue
Cross Blue Shield of Alabama, 276 F.3d 1236, 1241 (11th Cir. 2001) (citing Engelhardt v. Paul

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Revere Life Ins. Co., 139 F.3d 1346, 1351 (11th Cir. 1998). System Tech is neither. 1 None of
the cases cited by the Defendant permit an employer to bring a breach of contract claim (under
federal common law or otherwise) against an ERISA plan based on a denial of benefits to that
employer’s employees, and the court’s research has not uncovered any. Accordingly, the
Amended Counterclaim must be dismissed.
In consideration of the foregoing, it is hereby
ORDERED that the Motion to Dismiss filed by the Defendant (Doc. 44) is DENIED.
And it is further
ORDERED that the Motion to Dismiss (46) filed by the Plaintiffs is GRANTED. 2 The
Second Amended Counterclaim is DISMISSED WITH PREJUDICE.
DONE and ORDERED in Chambers, Orlando, Florida on March 28, 2014.

Copies furnished to:
Counsel of Record
Unrepresented Party

1

Under ERISA, a “participant” is “any employee or former employee of an employer, or
any member or former member of an employee organization, who is or may become eligible to
receive a benefit of any type from an employee benefit plan which covers employees of such
employer or members of such organization, or whose beneficiaries may be eligible to receive any
such benefit.” 29 U.S.C. § 1002(7). A “beneficiary” is “a person designated by a participant, or
by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.”
29 U.S.C. § 1002(8).
2

Insofar as the Plaintiffs sought to recover attorney’s fees via this motion, the request is
premature and therefore denied without prejudice.

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