Owens v. Metropolitan Life Insurance Company

Filing 41

ORDER granting in part and denying in part 25 Motion to Dismiss for Failure to State a Claim. Count VI is DISMISSED for lack of standing. The parties are DIRECTED to confer regarding the schedule for the balance of the briefing due on Plaintiffs 7 Motion to Certify Class. Signed by Judge Richard W. Story on 04/14/15. (sk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
GAINESVILLE DIVISION
LAURA A. OWENS,
individually and on behalf of a
class of all others similarly situated
Plaintiffs,
v.
METROPOLITAN LIFE
INSURANCE COMPANY,
Defendant.

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CIVIL ACTION NO.
2:14-CV-00074-RWS

ORDER
This case comes before the Court on Defendant’s Rule 12(b)(6) Motion
to Dismiss Plaintiff’s Complaint [25]. After a review of the record, the Court
enters the following Order.
Background1
This case arises out of Metropolitan Life Insurance Company’s
(“MetLife”) administration of life insurance death benefits paid on employee
benefit plans. On April 17, 2014, Plaintiff Laura Owens, on behalf of herself

1

As the case is before the Court on a Motion to Dismiss, the Court accepts as
true the facts alleged in the complaint. Cooper v. Pate, 378 U.S. 546, 546 (1964).

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and of a class of all others similarly situated, brought this action pursuant to the
Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §
1001 et seq.
Plaintiff Laura Owens is the beneficiary of a life insurance policy that
provided $95,000.00 in coverage on her husband’s life (the “Policy”). (Compl.,
Dkt. [1] ¶¶ 7-9.) Owens’s husband, Robert F. Owens, was employed prior to
his death on April 7, 2012 by CB Richard Ellis, Inc. and was a participant in the
CB Richard Ellis Group Insurance Plan (the “Plan”). (Id. ¶ 9.) The Policy
provides, “We will pay the Life Insurance in one sum. Other modes of payment
may be available upon request.” (Id. ¶ 10.)
On or around May 21, 2012, CB Richard Ellis, Inc., submitted a claim for
life insurance benefits on Plaintiff’s behalf. (Id. ¶ 11.) MetLife approved the
claim and established a “Total Control Account” in Owens’s name (the
“TCA”). (Id. ¶ 12.) MetLife provided a “book of blank drafts” to Plaintiff,
which allowed her to withdraw funds from the TCA in increments of $250 or
more. (Id.) The TCA accrued interest at a rate tied to one of two indices; the
rate fluctuated weekly but the annual effective interest rate was no lower than
0.50%. (Id. ¶ 13.)
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MetLife’s practice is to hold payable benefits in its own general account
until called upon to transfer funds to cover drafts drawn on “Total Control
Accounts.” (Id. ¶ 15.) This practice extended to the benefits paid on Plaintiff’s
claim. MetLife established a TCA for Ms. Owens, paying interest at the rate of
0.50%. (Id. ¶ 16.) The funds remained in MetLife’s general account, earning
interest for MetLife at a higher rate than that paid to Plaintiff. (Id.)
This practice is the basis of Plaintiff’s Complaint. Plaintiff alleges that
MetLife profited from “investing [Plaintiff’s] benefits for its own account.” (Id.
¶ 17.) Plaintiff further alleges that MetLife did not disclose that profit or
similar profits to Ms. Owens or to the Plan’s sponsor or administrator. (Id. ¶
18.) Plaintiff claims that this conduct constitutes a breach of fiduciary duty.
Plaintiff alleges that MetLife routinely profits in this manner from plan
benefits paid on group life insurance policies. (Id. ¶¶ 19-25.) Plaintiff claims
that this practice violates the terms of the payment clauses in these policies,
which provide “We will pay the Life Insurance in one sum. Other modes of
payment may be available upon request.” (Id. ¶ 20.) Plaintiff alleges that
MetLife’s profits as a result of this practice total between $100 million and
$300 million annually. (Id. ¶ 25.)
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Plaintiff claims she exhausted her administrative remedies when, on or
around November 21, 2013, Plaintiff submitted a claim on the Policy to
MetLife. (Id. ¶¶ 26-28.) MetLife did not respond to Plaintiff’s claim within 90
days, as required by the ERISA addenda to the Plan’s Certificates of Insurance.
(Id.)
Plaintiff now brings her claims pursuant to ERISA on behalf of herself
and the class of others similarly situated.2 Plaintiff further brings claims on
behalf of a subclass of Georgia residents. Plaintiff claims that MetLife
functioned as a fiduciary when it engaged in the conduct described above. (Id.
¶ 31.) Further, Plaintiff claims that MetLife is a party in interest to the Plan.
(Id. ¶¶ 36-37.) On those bases, Plaintiff brings the following causes of action:
breach of the duty of loyalty imposed by ERISA § 404(a)(1)(A) (Count I);
breach of the fiduciary duties imposed by ERISA § 406(b)(1) (Count II),
§ 406(a)(1)(B) (Count III), and § 406(a)(1)(C) (Count IV); declaratory relief
regarding coverage by state insurance guaranty funds for the Georgia subclass
(Count V); and postmortem interest for the Georgia subclass (Count VI).

2

The Court does not address class certification in the present Order.
Plaintiff’s Motion to Certify Class has not yet been fully briefed before the Court.
(See Dkt. [7].)
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Defendants now move to dismiss the Complaint on grounds that Plaintiff
does not have standing to sue and that her claims fail as a matter of law (Def.’s
Rule 12(b)(6) Mot. to Dismiss Pl.’s Compl. (“Def.’s Mot. to Dismiss”), Dkt.
[25]). Plaintiff responds in opposition. (Pl.’s Resp. in Opp’n to Def.’s Mot. to
Dismiss (“Pl.’s Resp.”), Dkt. [30].) As an initial matter, Defendant’s request
for oral argument (Def.’s Reply in Supp. of Def.’s Mot. to Dismiss (“Def.’s
Reply”), Dkt. [35] at 20) is DENIED. The Court now considers the parties’
arguments in turn.
Discussion
I.

Legal Standard - Motion to Dismiss
Federal Rule of Civil Procedure 8(a)(2) requires that a pleading contain a

“short and plain statement of the claim showing that the pleader is entitled to
relief.” While this pleading standard does not require “detailed factual
allegations,” “labels and conclusions” or “a formulaic recitation of the elements
of a cause of action will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In order to
withstand a motion to dismiss, “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
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Id. (quoting Twombly, 550 U.S. at 570). A complaint is plausible on its face
when the plaintiff pleads factual content necessary for the court to draw the
reasonable inference that the defendant is liable for the conduct alleged. Id.
At the motion to dismiss stage, “all-well pleaded facts are accepted as
true, and the reasonable inferences therefrom are construed in the light most
favorable to the plaintiff.” Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273
n.1 (11th Cir. 1999). However, the same does not apply to legal conclusions set
forth in the complaint. Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260
(11th Cir. 2009) (citing Iqbal, 556 U.S. at 678). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678. Furthermore, the court does not “accept as
true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at
555.
“The district court generally must convert a motion to dismiss into a
motion for summary judgment if it considers materials outside the complaint.”
D.L. Day v. Taylor, 400 F.3d 1272, 1275-76 (11th Cir. 2005); see also FED. R.
CIV. P. 12(d). However, documents attached to a complaint are considered part
of the complaint. FED. R. CIV. P. 10(c). Documents “need not be physically
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attached to a pleading to be incorporated by reference into it; if the document’s
contents are alleged in a complaint and no party questions those contents, [the
court] may consider such a document,” provided it is central to the plaintiff’s
claim. D.L. Day, 400 F.3d at 1276. At the motion to dismiss phase, the Court
may also consider “a document attached to a motion to dismiss . . . if the
attached document is (1) central to the plaintiff’s claim and (2) undisputed.” Id.
(citing Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002)). “‘Undisputed’
means that the authenticity of the document is not challenged.” Id.
II.

Discussion
Defendant moves to dismiss the Complaint in its entirety. In support of

its Motion, Defendant argues that Plaintiff’s claims fail as a matter of law and
that Plaintiff lacks standing to bring her claims. The Court first addresses the
issue of standing before turning to the sufficiency of Plaintiff’s allegations.
A.

Standing

In order to proceed with her claims, Plaintiff must have both Article III
standing and a cause of action under ERISA. The Court considers both
requirements in turn.

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1.

Constitutional standing

Article III of the Constitution confines the reach of federal jurisdiction to
“Cases” and “Controversies.” U.S. Const. art. III, § 2. This limitation “defines
with respect to the Judicial Branch the idea of separation of powers on which
the Federal Government is founded.” Allen v. Wright, 468 U.S. 737, 750
(1984); see Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1990)
(describing how standing interfaces with separation of powers and breadth of
judicial power). These values are reflected in the three required elements for
constitutional standing: (1) “an ‘injury in fact’–a harm suffered by the plaintiff
that is ‘concrete’ and ‘actual or imminent, not ‘conjectural’ or ‘hypothetical;’ ”
(b) “causation–a fairly traceable connection between the plaintiff's injury and
the complained-of conduct of the defendant;” and (3) “redressability–a
likelihood that the requested relief will redress the alleged injury.” Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 102-04, (1998); see also Vt. Agency of
Natural Res. v. United States ex rel Stevens, 529 U.S. 765, 771 (2000); 31
Foster Children v. Bush, 329 F.3d 1255, 1263 (11th Cir. 2003).
“[W]hen a question about standing is raised at the motion to dismiss
stage, ‘it may be sufficient to provide general factual allegations of injury
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resulting from the defendant's conduct.’ ” Bochese v. Town of Ponce Inlet,
405 F.3d 964, 975 (11th Cir. 2005) (quoting Fl. Pub. Interest Research Grp. v.
EPA, 386 F.3d 1070, 1083 (11th Cir. 2004)) (internal quotations omitted).
Defendants move for dismissal on grounds that Plaintiff has failed to allege any
injury-in-fact. (Def.’s Mem. of Law in Support of Def.’s Mot. to Dismiss
(“Def.’s Mem.”), Dkt. [25-1] at 28-29.) The Court finds this contention
unavailing as to Counts I, II, III, IV, and VI, and concludes that Plaintiff has
met her pleading burden for constitutional standing on those claims. But the
Court finds that Plaintiff has failed to meet her burden with respect to her
request for a declaratory judgment in Count V.
While 28 U.S.C. § 2201 allows courts to “declare the rights and other
legal relations of any interested party seeking such declaration, whether or not
further relief is or could be sought” in a case of actual controversy within its
jurisdiction, the Supreme Court has “recognized the potential for declaratory
judgment suits to fall outside the constitutional definition of a ‘case’ in Article
III. Calderon v. Ashmus, 523 U.S. 740, 746 (1998). Accordingly, in the
context of declaratory judgments, a controversy must allow for “specific relief
through a decree of a conclusive character, as distinguished from an opinion
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advising what the law would be upon a hypothetical state of facts.” Id. (quoting
Aetna Life Ins. v. Haworth, 300 U.S. 227, 241 (1937)).
Plaintiff asks the Court to decide “whether ERISA plan assets that
MetLife lends to itself and labels as Total Control Accounts are, in case of
default, covered by the Georgia Life and Health Insurance Guaranty
Association.” (Compl., Dkt. [1] ¶ 95.) Plaintiff does not allege that MetLife
has defaulted or is likely to default on these accounts. (See Pl.’s Resp., Dkt.
[30] at 32 (conceding that “Ms. Owens has not alleged that a default is
imminent”).) Accordingly, judgment on this issue would not resolve the case or
controversy underlying this action, and would instead offer an advisory opinion.
“As is well known the federal courts established pursuant to Article III of the
Constitution do not render advisory opinions.” United Pub. Workers of Am.
(C.I.O.) v. Mitchell, 330 U.S. 75, 89 (1947). Count VI of the Complaint is,
therefore, DISMISSED.
2.

ERISA standing

Constitutional standing is a threshold inquiry. Once Article III’s
requirements are satisfied, a plaintiff must show that Congress has created a
right of action, either expressly or by clear implication, such that the plaintiff
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has basis for relief. See Warth v. Seldin, 422 U.S. 490, 501 (1975).
Accordingly, in addition to the requirements of constitutional standing
discussed above, Plaintiffs in ERISA suits must have standing under the
statutory scheme as well. See Braden v. Wal-Mart Stores, Inc., 588 F.3d 585,
591 (8th Cir. 2009); Leuthner v. Blue Cross & Blue Shield of Ne. Pennsylvania,
454 F.3d 120, 125 (3d Cir. 2006) (“To bring a civil action under ERISA, a
plaintiff must have constitutional, prudential, and statutory standing.”).
“Prudential” limits require that “a plaintiff's grievance must arguably fall within
the zone of interests protected or regulated by the statutory provision . . .
invoked in the suit.” Bennett v. Spear, 520 U.S. 154, 162 (1997). In ERISA
cases, this requirement is explicitly met if the plaintiff is a “participant” or
“beneficiary” under 29 U.S.C. § 1132(a). Plaintiff alleges that she is the
beneficiary of the life insurance coverage afforded by her husband’s ERISAgoverned Plan and Policy. (Compl., Dkt. [1] ¶ 9.)
The Court concludes that Plaintiff has made a sufficient showing at this
stage of the litigation to satisfy all standing requirements. Defendant’s statutory
standing arguments rest primarily on the contention that Plaintiff does not meet
ERISA’s definition of “beneficiary” because she was entitled to no further
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benefits under the Plan at the time she commenced this action. (Def.’s Mem.,
Dkt. [25-1] at 30.) The Court rejects this contention. To divest standing from
Plaintiff, a beneficiary (at least at one time) who brings suit claiming that a
fiduciary has violated its duties under ERISA, would thwart Congress’s goal of
permitting wronged beneficiaries from seeking relief.3 The question of
statutory standing turns, after all, on whether the “statutory provision on which
the claim rests properly can be understood as granting persons in the plaintiff’s
position a right to judicial relief.” Warth, 422 U.S. at 500. Plaintiff has alleged
that she is a beneficiary under ERISA, a statutory scheme that explicitly
provides plaintiffs in that position a right to seek relief. Plaintiff’s ERISA
claims, therefore, are not due to be dismissed for lack of standing.
3

This comports with the approach taken by the majority of circuits to
“participant” standing. These courts “have developed an exception to the general rule
that a person who terminates his right to belong to a plan cannot be a ‘participant’ in
the plan. Specifically, if the employer's breach of fiduciary duty causes the employee
to either give up his right to benefits or to fail to participate in a plan, then the
employee has standing to challenge that fiduciary breach.” Swinney v. Gen. Motors
Corp., 46 F.3d 512, 518-19 (6th Cir. 1995) (collecting cases). Similarly, here Plaintiff
challenges the manner in which Defendant has paid her benefits due under the Plan.
Permitting Defendant to avoid adjudication of its method of payment by simply
stating that the benefits have already been paid allows Defendant to avoid the causes
of action specifically intended by ERISA. See id. (“Otherwise, a fiduciary could
defeat an employee's standing to bring an ERISA action by duping him into giving up
his right to participate in a plan. ERISA should not be construed to permit the
fiduciary to circumvent his ERISA-imposed fiduciary duty in this manner.”).
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B.

Failure of Plaintiff’s claims as a matter of law

The Court now turns to Defendant’s contention that Plaintiff’s claims
should be dismissed because they fail as a matter of law. Under the pleading
standard discussed above, Plaintiff’s claims are due to be dismissed only if
relief is implausible under the facts as alleged in the Complaint. “Rule 12(b)(6)
does not permit dismissal of a well-pleaded complaint simply because ‘it strikes
a savvy judge that actual proof of those facts is improbable.’” Watts v. Fla. Int'l
Univ., 495 F.3d 1289, 1295 (11th Cir.2007) (quoting Twombly, 550 U.S. at
556). At this stage in the proceedings, the Court must accept that Plaintiff will
be able to prove her allegations.
Defendant relies on authority from the First, Second, and Third Circuits
to argue that, as a matter of law, MetLife discharged its fiduciary duties when it
established a TCA for Plaintiff. (See Def.’s Mem., Dkt. [25-1] at 11-13 (citing
Merrimon v. Unum Life Ins. Co. of Am., 758 F.3d 46 (1st Cir. 2014);
Edmondson v. Lincoln Nat’l Life Ins. Co., 725 F.3d 406 (3d Cir. 2013); Faber
v. Metropolitan Life Ins. Co., 648 F.3d 98 (2d Cir. 2011).) Defendant argues
that a TCA is a permissible form of “payment” under those cases and other
persuasive authority. (See also Def.’s Reply, Dkt. [35] at 3-4.)
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But the relevant question before the Court is not whether a TCA
constitutes “payment,” but whether Plaintiff has alleged sufficient facts to
support her allegation that Defendant breached its fiduciary duty under the Plan
and Policy. The language of the Policy at issue here promises that MetLife will
make payment “in one sum.” (Compl., Dkt. [1] ¶ 10.) Accordingly, the
Policy’s language in this case differs from the policy language in the cases
relied upon by Defendant,4 and instead more closely resembles the language at

4

The policies at issue in Faber provided for payment by MetLife’s Total
Control Account under circumstances specified in the policies. Faber v. Metro. Life
Ins. Co., 648 F.3d 98, 100 (2d Cir. 2011). The policy in Edmondson did not state how
the insurer was to pay the benefits. Edmonson v. Lincoln Nat. Life Ins. Co., 725 F.3d
406, 411 (3d Cir. 2013) cert. denied, 134 S. Ct. 2291 (2014). The policy at issue in
Merrimon explicitly provided “If you or your dependent's life claim is at least
$10,000, Unum will make available to the beneficiary a retained asset account (the
Unum Security Account).” Merrimon v. Unum Life Ins. Co. of Am., 845 F. Supp. 2d
310, 313 (D. Me. 2012) aff'd in part, rev'd in part and remanded, 758 F.3d 46 (1st Cir.
2014). In Phillips, the policy “provided that the beneficiary ‘may choose to have any
death benefit paid in a single sum.’ Also, under the policy, the insured could choose
from five other optional methods of settlement in the form of installment payments for
a fixed period, life income, interest payment (the Alliance Account), installments for a
fixed amount, and non-participating income.” Phillips v. Prudential Ins. Co. of Am.,
No. 11-CV-0058-DRH, 2011 WL 5915148, at *1 (S.D. Ill. Nov. 28, 2011) aff'd, 714
F.3d 1017 (7th Cir. 2013). Finally, the policy in Clark provided “Unless otherwise
requested, we may pay the insurance proceeds when the insured dies, or the cash value
on surrender of the policy in one sum, or by placing the amount in an account that
earns interest. The payee will have immediate access to all or any part of the account.”
Clark v. Metro. Life Ins. Co., No. 3:08-CV-00158-LRH, 2010 WL 3636194, at *2 (D.
Nev. Sept. 10, 2010) aff'd, 461 F. App'x 538 (9th Cir. 2011).
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issue in Mogel v. Unum Life Insurance Co., 547 F.3d 23 (1st Cir. 2008).
In Mogel, the First Circuit held that delivery of a checkbook did not
constitute the “lump sum payment” called for by the life insurance policies.
547 F.3d at 26. The Mogel court further held that the insurer had not
discharged its fiduciary duty when it set up security accounts and mailed
checkbooks to beneficiaries while retaining control of the funds represented by
the checkbooks and use of those funds for its own benefit. Id.
The Eleventh Circuit has not considered whether creation of an account
like the TCA at issue here constitutes payment of policy proceeds “in one sum.”
Garrison v. Jackson National Life Insurance Co., 908 F. Supp. 2d 1293, 1298
(N.D. Ga. 2012) (O’Kelley, J.). But the court in Garrison v. Jackson National
Life Insurance Co. held that the complaint adequately alleged that the insurer
breached the policy’s requirement of payment “in one sum” where it established
a beneficiary account, similar to the TCA here, in the designated beneficiary’s
name. 908 F. Supp. 2d at 1299. Based on that decision, and on the First
Circuit’s reasoning in Mogel, this Court cannot conclude at this stage of the
litigation that Plaintiff’s claims fail as a matter of law. The language in this
Policy differs significantly enough from the policies in the cases cited by
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Defendant that further factual development of the record is required before the
Court can determine the issues Defendant asks the Court to decide here.
Accordingly, Defendant’s Motion to Dismiss is DENIED as to Counts I,
II, III, IV, and VI.
Conclusion
Defendant’s Rule 12(b)(6) Motion to Dismiss Plaintiff’s Complaint [25]
is GRANTED IN PART and DENIED IN PART. Count VI is DISMISSED
for lack of standing. The parties are DIRECTED to confer regarding the
schedule for the balance of the briefing due on Plaintiff’s Motion to Certify
Class [7].

SO ORDERED, this 14th day of April, 2015.

________________________________
RICHARD W. STORY
United States District Judge

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