Lamkins et al v. Dressbarn, Inc. et al

Filing 36

MEMORANDUM Opinion and Order Signed by the Honorable John Robert Blakey on 5/27/2015. Mailed notice(gel, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
Cheryl Lamkins and Morton A. Segall,
Plaintiffs,
v.
The Dress Barn, Inc., et al.,

Case No. 14 C 8118
Judge John Robert Blakey

Defendants.
MEMORANDUM OPINION AND ORDER
This is a class action brought by Plaintiffs Cheryl Lamkins and Morton
Segall against Defendants for failure to pay certain medical expenses under a
health insurance policy. Defendants are the employer of Ms. Lamkins, The Dress
Barn, Inc. (“dressbarn”); its parent company, Ascena Retail Group, Inc.; and the
insurers who apparently administered the health insurance plan.
Defendants move to dismiss [11] Plaintiffs’ state law and class action claims,
principally arguing that the claims are preempted by the Employee Retirement
Income Security Act (“ERISA”). Plaintiffs, in turn, move to remand [23] this case to
state court.

For the following reasons, Defendants’ motion to dismiss [11] is

granted, and Plaintiffs’ motion to remand [23] is denied.
I.

Legal Standard
Under Federal Rule of Civil Procedure 12(b)(6), this Court must construe the

Complaint [1-1] in the light most favorable to Plaintiffs, accept as true all wellpleaded facts and draw reasonable inferences in their favor. Yeftich v. Navistar,

Inc., 722 F.3d 911, 915 (7th Cir. 2013); Long v. Shorebank Development Corp., 182
F.3d 548, 554 (7th Cir. 1999). Statements of law, however, need not be accepted as
true. Yeftich, 722 F.3d at 915. Rule 12(b)(6) limits this Court’s consideration to
“allegations set forth in the complaint itself, documents that are attached to the
complaint, documents that are central to the complaint and are referred to in it, and
information that is properly subject to judicial notice.” Williamson v. Curran, 714
F.3d 432, 436 (7th Cir. 2013). It is proper for this Court to take judicial notice of
matters of public record. General Electric Capital Corp. v. Lease Resolution Corp.,
128 F.3d 1074, 1080181 (7th Cir. 1997).
To survive Defendant’s motion under Rule 12(b)(6), the Complaint must
“state a claim to relief that is plausible on its face.” Yeftich, 722 F.3d at 915. “A
claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
II.

Facts 1
Plaintiffs procured insurance from Defendants sometime on or before

January 1, 2013. Complaint, Count I ¶ 1. The insurance policy was not attached to
the Complaint, but Plaintiffs do not dispute that Defendants attached the correct
policy to their motion to dismiss.

That policy is titled: “Benefit Booklet for

Administrative Committee of the Ascena Retail Group, Inc. Benefits Plan PPO”
The facts are taken from (1) the Complaint [1-1]; (2) documents that are central to the
Complaint and referred to in it, namely, the Benefits Plan [12-1]; and (3) documents that
are proper subject of judicial notice, such the Ascena Retail Group Form 10-K [12-7], a
public document.
1

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(“Benefits Plan”).

Ascena Retail Group, which issued the Benefits Plan, is

dressbarn’s parent company. Ascena Retail Group Form 10-K at 3. Ascena Retail
Group and dressbarn are two of the Defendants in this action. Ms. Lamkins was
employed by dressbarn. Complaint, Count I ¶ 3. Mr. Segall (whose relationship to
Ms. Lamkins is not specified in the Complaint) was not employed by dressbarn or
the other Defendants, yet nonetheless was a beneficiary under the Benefits Plan.
Complaint, Count I ¶ 3, Count III ¶ 16
From the time they acquired the Benefits Plan, Plaintiffs paid approximately
$144.29 bi-monthly as a premium. Complaint, Count I ¶ 1. At an unspecified time,
Plaintiffs incurred “medical, hospital and ancillary expenses.” Complaint, Count I ¶
4.

Plaintiffs do not describe these expenses in the Complaint.

Also at an

unspecified time, Plaintiffs made a claim under the Benefits Plan for payment of
these expenses. Complaint, Count I ¶ 6. However, Defendants denied the claim at
a date left unknown. Complaint, Count I ¶ 7.
This purported class action arises from Defendants denying Plaintiffs’ claim.
Plaintiffs bring the action on behalf of themselves and a similarly situated class of
persons who acquired the Benefits Plan. Complaint, Count II. Plaintiffs allege that
in denying their claim, Defendants breached the Benefits Plan (Count I) and
misrepresented the coverage under the Benefits Plan, giving rise to claims for
violation of the Illinois Consumer Fraud and Deceptive Business Practices Act
(“ICFA”) (Count III) and common law fraud (Count IV).

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Plaintiffs’ last count (Count V) is for discovery under 735 ILCS 5/2-402.
Section 2-402 is a feature of Illinois civil procedure that allows plaintiffs to
designate in their pleadings non-defendants who may have relevant information for
discovery. Count V does not bear on the substance of Plaintiffs’ claims and does not
bear on this Court’s decision.
III.

Analysis
Defendants move to dismiss the Complaint. Defendants principally argue

that Plaintiffs’ state law claims are preempted by ERISA, but also argue that
Plaintiffs, who are proceeding pro se, cannot maintain a class action and that their
fraud claims do not meet Rule 9(b)’s heightened pleading standards. This Court
addresses these arguments in turn, as well as Plaintiffs’ argument that this case
should be remanded to state court, where it was originally filed.
A.

Preemption of State Law Claims (Counts I, III and IV)

ERISA preempts Plaintiffs’ state law claims. In reaching this conclusion, this
Court first finds that the Benefits Plan is an “employee benefit plan” governed by
ERISA (Section 1); then finds that the state law claims here “relate to” the Benefits
Plan under ERISA (Section 2); and last finds that no exception is warranted under
ERISA’s savings clause (Section 3).
1.

The Benefits Plan Is Governed by ERISA

ERISA “supersede[s] any and all State laws insofar as they may … relate to
any employee benefit plan.” ERISA § 514(a), 29 U.S.C. § 1144(a). The Benefits

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Plan here is an “employee welfare benefit plan” governed by ERISA. That term is
defined to include employer-sponsored health care plans:
any plan, fund, or program … established or maintained by an
employer or by an employee organization, or by both, to the extent that
such plan, fund, or program was established or is maintained for the
purpose of providing for its participants or their beneficiaries, through
the purchase of insurance or otherwise, (A) medical, surgical, or
hospital care or benefits, or benefits in the event of sickness, accident,
disability, death or unemployment[.]
29 U.S.C. § 1002(1).
Here, in the Complaint, Plaintiffs reference “a policy of insurance … to cover
them for their medical, hospital and ancillary healthcare expenses.” Complaint,
Count I ¶ 1; see also id. at Count II ¶ 2, Count III ¶ 1. Plaintiffs do not dispute that
the referenced “policy of insurance” is the Benefits Plan that Defendants attached to
their motion to dismiss. Plaintiffs instead assert, without explanation, that their
claims “are not under any ‘employer [welfare] benefit plan.’” [23] at 2; see also
Segall Affidavit [23] ¶ 2.
The Benefits Plan clearly is an “employee welfare benefit plan.” The Plan (1)
provides medical benefits; (2) is employer-sponsored; and, in fact, (3) includes a
section about the rights afforded to participants under ERISA. Benefits Plan [12-1]
at 2, 66. That section is titled: “General Information About ERISA.” Id. at 66. It
also is not disputed that dressbarn, which employed Ms. Lamkins, see Complaint,
Count I ¶ 3, issued the Benefits Plan; and that Mr. Segall’s rights in this action
derive from that Benefits Plan. Courts have applied ERISA to these circumstances:
where a beneficiary seeks medical benefits under an employer-sponsored health

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insurance plan. E.g., McDonald v. Household International, Inc., 425 F.3d 424, 42526 (7th Cir. 2005).
If there is a reason why the Benefits Plan is not an “employee welfare benefit
plan” (and this Court sees none), Plaintiffs have failed to raise it.

Any such

arguments are now waived. See Mitsui Sumitomo Insurance Co., Ltd. v. Moore
Transportation, Inc., 500 F. Supp. 2d 942, 950-51 (N.D. Ill. 2007).
2.

Plaintiffs’ State Law Claims “Relate to” the Benefits Plan

Having determined that the Benefits Plan is governed by ERISA, this Court
next must determine whether ERISA preempts the three state law claims here:
breach of contract, which also includes a claim for damages under 215 ILCS 5/155
(Count I); violation of the ICFA (Count III); and common law fraud (Count IV).
ERISA preempts state law claims that “relate to” any employee benefit plan.
ERISA § 514(a), 29 U.S.C. § 1144(a). The Seventh Circuit has given ERISA broad
preemptive effect. Klassy v. Physicians Plus Insurance Co., 371 F.3d 952, 957 (7th
Cir. 2004). In analyzing ERISA § 514(a), 29 U.S.C. § 1144(a), the Supreme Court
has adopted a two-part test for determining when ERISA preempts a state law
claim. There is preemption when: (1) Plaintiff, at some point in time, could have
brought his claim under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B); and (2) no
other independent legal duty is implicated by Defendants’ actions. Aetna Health
Inc. v. Davila, 542 U.S. 200, 210 (2004); see also Franciscan Skemp Healthcare, Inc.
v. Central States Joint Board Health & Welfare Trust Fund, 538 F.3d 594, 597 & n.1
(7th Cir. 2008). This Court is not beholden to the labels Plaintiffs place on their

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claims when determining if they could have been brought under ERISA. Klassy,
371 F.3d at 954-55, 957.
The Davila test is met here.

Indeed, Defendant fails to address the

application of the test altogether. See [23] at 1-3.
Regarding the first part of the Davila test, ERISA § 502(a)(1)(B), 29 U.S.C. §
1132(a)(1)(B), allows plan beneficiaries to bring an action, like this one, (1) to
recover benefits due under the terms of the plan, (2) to enforce rights under the
terms of the plan and (3) to clarify rights to future benefits under the terms of the
plan. The analytical framework for determining when a state law claim could have
been brought under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), is simple: Does
the claim require this Court to interpret or apply the terms of the employee welfare
benefit plan? Bowles v. Quantum Chemical Co., 266 F.3d 622, 631 (7th Cir. 2001);
Rice v. Panchal, 65 F.3d 637, 644 (7th Cir. 1995). 2
Courts in this District have found—repeatedly—that the exact state law
claims brought here require an interpretation or application of the terms of an
employee welfare benefit plan and thus are preempted by ERISA. E.g., Surgical
Center, Inc. v. Cigna Healthcare of Illinois, No. 13-7227, 2014 WL 4914299, at *3
(N.D. Ill. Sept. 30, 2014) (Section 155); Maatman, 2010 WL 415384, at *4-5 (fraud);

Numerous Courts in this District also have adopted this approach. E.g., Maatman v.
Lumbermens Mutual Casualty Co., No. 09-5929, 2010 WL 415384, at *5 (N.D. Ill. Jan. 28,
2010); Agranoff v. LensCrafters, Inc., No. 07-4933, 2007 WL 4557080, at *2 (N.D. Ill. Dec.
21, 2007); Jacobson v. Humana Insurance Co., No. 05-1011, 2005 WL 1563154, at *3 (N.D.
Ill. June 6, 2005); Tawse v. DHL Airways, No. 04-5514, 2005 WL 1563208, at *1 (N.D. Ill.
June 8, 2005); Trainor v. SBC Services, Inc., 04-779, 2004 WL 2958684, at *4 (N.D. Ill. Dec.
20, 2004); Dobner v. Health Care Service Corp., No. 01-7968, 2002 WL 1348910, at *3-4
(N.D. Ill. June 19, 2002).
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Agranoff, 2007 WL 4557080, at *2-3 (breach of contract and ICFA); Jacobson, 2005
WL 1563154, at *3 (breach of contract and Section 155); Tawse, 2005 WL 1563208,
at *1 (Section 155); Trainor, 2004 WL 2958684, at *4-5 (breach of contract and
fraud); Dwyer v. Unum Life Insurance Co. of America, No. 03-1118, 2003 WL
22844234, at *5-6 (N.D. Ill. Dec. 1, 2003) (Section 155, ICFA and fraud); Dobner,
2002 WL 1348910, at *3-4 (Section 155 and ICFA). Nothing in this case warrants
deviating from this line of decisions. Rather, here, Plaintiffs’ own pleading confirms
that all the state law claims turn on an interpretation of the Benefits Plan, that is,
whether the Plan covered the medical claim submitted by Plaintiffs.

E.g.,

Complaint, Count I ¶¶ 4, 6-7, Count III ¶¶ 1-3, 9, Count IV ¶¶ 1-3, 9.

If the

Benefits Plan did not cover the medical claim, then Defendants could not have
fraudulently misrepresented the scope of coverage as alleged.
Plaintiffs also have not satisfied the second prong of Davila.

As already

shown, any duties owed and liabilities incurred by Defendants were in connection
with—and not independent from—the Benefits Plan. Under these circumstances,
there is no entirely independent legal duty under Davila. The Supreme Court in
Davila, 542 U.S. at 213-14, found no “entirely independent” legal duty existed
because “liability would exist here only because of petitioners’ administration of
ERISA-regulated benefit plans.” See also Vanderwiel v. Schawk USA, Inc., No. 124178, 2012 WL 3779040, at *3 (N.D. Ill. Aug. 30, 2012) (reaching the same
conclusion); Maatman, 2010 WL 415384, at *5 (same). The same is true here.

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3.

ERISA’s Savings Clause Does Not Apply

Having found preemption, this Court must consider ERISA’s savings clause.
ERISA contains a savings clause that exempts from preemption a state law that
“regulates insurance.” ERISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A). However,
the savings clause does not rescue Plaintiffs’ state law claims.
The savings clause, which exempts from preemption a state law that
“regulates insurance,” ERISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A), applies when
a state law (1) is specifically directed toward entities engaged in insurance; and (2)
substantially affects the risk pooling arrangement between the insurer and insured.
Kentucky Association of Health Plans, Inc. v. Miller, 538 U.S. 329, 341-42 (2003).
The two Illinois statutes at issue here—Section 155 of the Insurance Code and the
ICFA—do not “regulate[] insurance.” See, e.g., Anderson v. Humana, Inc., 24 F.3d
889, 892 (7th Cir. 1994) (ICFA); Jacobson, 2015 WL 1563154, at *4-5 (Section 155);
Dwyer, 2003 WL 22844234, at *4-6 (Section 155 and ICFA); Dobner, 2002 WL
1348910, at *3-5 (ICFA and Section 155).
These cases are persuasive. Section 155 does not affect the transfer or spread
of a policyholder’s risk.

Rather, it regulates the procedural aspects of claims

processing by providing certain remedies to sanction vexatious insurance practices.
Dwyer, 2003 WL 22844234, at *5.

Likewise, the ICFA does not regulate the

methods of pooling risk. The provision of information about insurance, which the
ICFA implicates, differs from the provision of insurance itself. Anderson, 24 F.3d at
892; see also Dobner, 2002 WL 1348910, at *4, 6.

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Plaintiff responds by citing the Supreme Court’s decision in Miller, but the
Supreme Court found that ERISA’s savings clause applied to the far different
statutory scheme there. The State of Kentucky passed laws restricting an HMO’s
ability to limit the number of health care providers with access to their exclusive
provider networks, which the Supreme Court found to be a restriction on the
methods of pooling risk.

538 U.S. at 331-32, 338-39.

This alters the scope of

permissible bargains between insurers and insureds. Id. at 338-39. As Courts in
this Circuit already have found, Section 155 and the ICFA do not regulate the
methods of pooling risk in a like manner.
B.

Class Action (Count II)

Defendants argue that Plaintiffs cannot maintain a class action given their
pro se status. [12] at 14-15. In support, Defendants cite Wilson v. City of Harvey,
No. 03-11, 2003 WL 21418037, at *5 (N.D. Ill. June 18, 2003), where the Court
explained that pro se plaintiffs lacked the legal competence to be adequate
representatives of other plaintiffs. Likewise, in Jagla v. LaSalle Bank, No. 05-6460,
2006 WL 1005728, at *4 (N.D. Ill. April 12, 2006), the Court denied class
certification to a pro se plaintiff based on its survey of cases from this Circuit.
Wilson and Jagla are persuasive, particularly in light of Plaintiffs’ failure to
address this issue altogether.

See [23] at 1-3.

requirements to proceed on behalf of a class.

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Plaintiffs have not met the

C.

Fraud Claims (Counts III and IV)

The fraud claims fail for the additional reason that they have not been pled
with particularity as required by Rule 9(b). Rule 9(b) requires that plaintiffs who
bring fraud claims, including under the ICFA, plead the “who, what, when, where,
and how.” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736-39 (7th Cir.
2014); Greenberger v. GEICO General Insurance Co., 631 F.3d 392, 399 & n.3 (7th
Cir. 2011); Ackerman v. Northwestern Mutual Life Insurance Co., 172 F.3d 467, 46971 (7th Cir. 1999); Vicom, Inc. v. Harbridge Merchant Services, Inc., 20 F.3d 771,
777-78 (7th Cir. 1994). In cases where there are multiple defendants or corporate
defendants, as here, plaintiffs must also identify which defendant and which of
their representatives made the fraudulent statements. Ackerman, 172 F.3d at 471;
Vicom, 20 F.3d at 777-78. The purpose of the heightened pleading requirement is to
force plaintiffs to do more than the usual investigation before filing suit. Ackerman,
172 F.3d at 469.
Here, Plaintiffs fall short of Rule 9(b)’s heightened pleading requirements.
As this Court’s factual recitation shows, Plaintiffs have not pled, among other
things: (1) when fraudulent statements about the Benefit Plan were made; (2) which
corporate defendant made those statements; (3) who at that corporate defendant
made those statements; or (4) what was said. Plaintiffs do not even contest these
deficiencies in their briefing. See [23] at 1-3.
The bare recitals here are even more sparse than the allegations in
Ackerman, where the Seventh Circuit affirmed dismissal under Rule 9(b).

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The

plaintiffs in Ackerman brought fraud claims against an insurance company for
representations its agents made when selling policies to the plaintiffs. 172 F.3d at
468-69. Yet, as here, the plaintiffs failed to: (1) give at least an approximate date on
which the fraudulent representations were made; (2) plead with specificity the
content of the false representations; and (3) identify which defendants said what to
whom and when.

Id. at 469-71.

Dismissal of Plaintiff’s fraud claims thus is

warranted for this second reason.
D.

Plaintiffs’ Motion to Remand

Having found that Plaintiffs could have brought their claims under ERISA §
502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), there is complete preemption here and
federal jurisdiction is appropriate. Rice, 65 F.3d at 640-42; see also Vanderwiel,
2012 WL 3779040, at *2-3; Maatman, 2010 WL 415384, at *2, 6. Plaintiffs cannot
avoid ERISA and federal jurisdiction through creative pleading. Klassy, 371 F.3d at
954-55, 957. Thus this Court denies Plaintiffs’ motion to remand [23].
Nothing in the holdings of the two cases Plaintiffs cite from the Ninth Circuit
changes this decision. [23] at 1 (citing Lyons v. Alaska Teamsters Employer Service
Corp., 188 F.3d 1170, 1171 (9th Cir. 1999); and Shrivastava v. Fry’s Electronics,
Inc., No. 11-1833, 2012 WL 762146, at *2 (N.D. Cal. March 7, 2012)). Both cases are
cited for the unremarkable propositions of law that ERISA does not preempt all
claims and that state courts have concurrent jurisdiction to hear some claims
brought under ERISA.

Those statements of law do not alter the fact that

jurisdiction in federal court is proper in this case.

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IV.

Conclusion
Plaintiffs’ motion to remand [23] is denied. Defendants’ motion to dismiss

[11] is granted. Counts I, III and IV are dismissed with prejudice. Count II (class
action) is dismissed without prejudice. Although all the substantive counts in the
Complaint have been dismissed, Plaintiffs need only plead facts and not legal
theories. As explained by the Seventh Circuit in McDonald, 425 F.3d at 427-28,
Plaintiffs thus can pursue an ERISA theory of liability without amending their
complaint. Nonetheless, in light of this Order, this Court will give Plaintiffs leave
to amend their Complaint, if they can do so consistent with their obligations under
Rule 11.
The status hearing set for May 28, 2015 at 9:45 a.m. in Courtroom 1725
stands. This Court will set additional case management dates, including a deadline
for Plaintiffs to file any Amended Complaint, at that time.
Dated: May 27, 2015
Entered:

____________________________
John Robert Blakey
United States District Judge

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