Winter v. United Parcel Service, Inc. Delaware et al
Filing
54
ORDER granting 47 Motion for Reconsideration filed by Plaintiff, denying 49 MOTION to Dismiss Remaining Rescission Claim filed by Defendants and denying 48 Motion for Reconsideration filed by Defendants. Signed by District Judge Arthur J. Tarnow. (MLan)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
GREGORY WINTER,
Case No. 14-10555
Plaintiff,
SENIOR U.S. DISTRICT JUDGE
ARTHUR J. TARNOW
v.
UNITED PARCEL SERVICE, INC.
DELAWARE and UNITED PARCEL
SERVICE, INC. OHIO,
U.S. MAGISTRATE JUDGE
MICHAEL HLUCHANIUK
Defendants.
/
ORDER GRANTING PLAINTIFF’S MOTION FOR RECONSIDERATION [47]; DENYING
DEFENDANTS’ MOTION FOR RECONSIDERATION [48]; AND DENYING
DEFENDANTS’ MOTION TO DISMISS CLAIM FOR RESCISSION [49]
Plaintiff brings claims against Defendants for fraudulent and innocent
misrepresentation, alleging that agents of Defendants induced him to accept a
supervisor position by misrepresenting the retirement benefits he would receive if
he accepted the position. Defendants filed a Motion to Dismiss [Dkt. #18] on May
15, 2014. On June 19, 2014, Plaintiff filed a Response [34], to which Defendants
filed a Reply [36] on June 23, 2014. With the Court’s permission, Plaintiff filed a
Supplemental Response [42] on February 26, 2015. After a hearing on March 30,
2015, the Court took the motion under advisement. On May 8, 2015, the Court
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issued an Order [45] granting Defendants’ motion to dismiss Plaintiff’s claims,
with the exception of his claim for rescission. On May 21, 2015, Plaintiff filed a
Motion for Reconsideration [47]. On May 22, 2015, Defendants filed their own
Motion for Reconsideration [48], along with a Motion to Dismiss Claim for
Rescission [49].
For the reasons stated below, Plaintiff’s Motion for Reconsideration [47] is
GRANTED. The Court reverses its prior holding that Plaintiff’s claim for reliance
damages is preempted by the Employee Retirement Income Security Act (ERISA).
Defendants’ Motion for Reconsideration [48] is DENIED. Defendants’ Motion to
Dismiss Claim for Rescission [49] is DENIED.
FACTUAL BACKGROUND
Plaintiff’s allegations, assumed true for the purposes of ruling on
Defendants’ motion to dismiss, are as follows. Plaintiff works for Defendant UPS
Delaware and/or Defendant UPS Ohio. Plaintiff initially worked as a driver for
many years and received benefits under an ERISA plan called the UPS/IBT FullTime Pension Plan (the Driver Plan). In February 2008, several UPS managers
approached Plaintiff and offered him a supervisor position. The managers told
Plaintiff that as a supervisor, he would receive a more generous pension under the
UPS Retirement Plan (the Supervisor Plan). One of the managers told Plaintiff
that because Plaintiff had been hired before 2008, he would be eligible to have his
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retirement benefits calculated with the Final Average Compensation (FAC)
formula.
Relying on the managers’ representations, Plaintiff accepted the
supervisor position. The change in position resulted in a pay cut and higher out-ofpocket medical expenses.
When Plaintiff was working as a supervisor, UPS told him that he was
actually ineligible to have his benefits calculated under the FAC formula because
he had not been made a supervisor before 2008. Plaintiff’s benefits have been
calculated under the Portable Account Formula (PAF) instead.
Plaintiff’s
retirement benefits under the PAF formula are lower than they would have been
under the FAC formula or under the Driver Plan.
ANALYSIS
On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the
Court must “assume the veracity of [the plaintiff’s] well-pleaded factual
allegations and determine whether the plaintiff is entitled to legal relief as a matter
of law.” McCormick v. Miami Univ., 693 F.3d 654, 658 (6th Cir. 2012) (citing
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); Mayer v. Mylod, 988 F.2d 635, 638
(6th Cir. 1993)).
I.
Reliance Damages
29 U.S.C. § 1144 preempts state-law tort claims insofar as they “relate to”
ERISA plans. Thurman v. Pfizer, Inc., 484 F.3d 855, 861 (6th Cir. 2007). The
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statute “clearly preempts” state-law claims that “(1) mandate employee benefit
structures or their administration; (2) provide alternate enforcement mechanisms;
or (3) bind employers or plan administrators to particular choices or preclude
uniform administrative practice, thereby functioning as a regulation of an ERISA
plan itself.” Id. (quoting Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension
Corp., 399 F.3d 692, 698 (6th Cir.2005)) (internal quotation marks omitted). If a
claim does not fall into any of these three categories, the court must focus on
whether the remedy requested is primarily plan-related. Id.
In their motion for reconsideration, Defendants argue that the Court should
not have applied the remedy-focused approach used by the Sixth Circuit in
Thurman. The plaintiff in Thurman alleged that the defendant’s misrepresentations
induced the plaintiff to leave his former employer and accept employment with the
defendant.
Id. at 858.
Defendants emphasize that the misrepresentations in
Thurman occurred before the plaintiff was employed by the defendants, whereas in
this case, Plaintiff was already employed by Defendants when they allegedly
misrepresented the benefits of the supervisor position. Defendants argue that this
distinction renders Thurman’s remedy-focused approach inapplicable. Defendants
distinguished Thurman on this basis in their original briefing on their motion to
dismiss.
The Court remains unpersuaded that the distinction is relevant, and
therefore denies Defendants’ motion for reconsideration. See E.D. MICH. LOCAL
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RULE 7.1(h)(3) (“Generally … the court will not grant motions for rehearing or
reconsideration that merely present the same issues ruled upon by the court, either
expressly or by reasonable implication.”).
In his own motion for reconsideration, Plaintiff accepts the applicability of
Thurman’s remedy-focused approach, but argues that the Court erred in applying it
to his factual allegations.
In Thurman, the Sixth Circuit held the plaintiff’s
misrepresentation claims not preempted insofar as he sought “reliance damages,”
or “that which he relinquished when he left his former employer.” 484 F.3d at
862-64. Here, Plaintiff alleges that he relinquished various benefits, including
retirement benefits under the Driver Plan, when he transferred from the driver
position to the supervisor position. In its prior Order, the Court distinguished
Plaintiff’s claim for “reliance damages” from the claim in Thurman on the grounds
that Plaintiff seeks relinquished benefits that arose under an ERISA plan—
specifically, the retirement benefits he would have received under the Driver Plan.
The Court held Plaintiff’s claims preempted by ERISA to the extent he seeks
reliance damages.
Plaintiff argues that in focusing on his relinquished benefits under the Driver
Plan, the Court overlooked his claim for relinquished benefits unrelated to an
ERISA plan, including higher wages and better medical benefits. In Thurman, the
Sixth Circuit specified that the plaintiff’s misrepresentation claims for forfeited
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wages (along with moving expenses and forfeited stock options) were not
preempted. Id. at 862. Thus, to the extent that Plaintiff seeks to recover forfeited
wages and other relinquished benefits that did not arise under an ERISA plan, his
claims are not preempted. The Court reconsiders its prior Order to the extent that
it overlooked these allegations.
The Court also reconsiders its holding that Plaintiff’s claims are preempted
to the extent that he seeks to recover the value of relinquished benefits under the
Driver Plan. Plaintiff challenges the Court’s reliance on Marks v. Newcourt Credit
Group, Inc., 342 F.3d 444 (6th Cir. 2003). He emphasizes that in Marks, as in
other cases, the Sixth Circuit stated that a state-law claim is not preempted by
ERISA if its “reference to plan benefits [is] only a way to articulate ‘specific,
ascertainable damages.’” 342 F.3d at 454–53 (quoting Wright v. Gen. Motors
Corp., 262 F.3d 610, 615 (6th Cir. 2001)). The Marks court held a breach of
contract claim not preempted, even though it sought “damages equaling the
benefits he would have received under [a] plan” but for the breach, because the
claim referred to plan benefits only to ascertain damages. Id. The Thurman court
cited Marks on this point. 484 F.3d at 862 (citing Marks, 342 F.3d at 452). The
court distinguished misrepresentation claims referring to plan benefits only to
ascertain damages, which are not preempted, from those “necessarily requir[ing]
evaluation of the plan and the parties’ performance pursuant to it,” which are
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preempted. Id. (quoting Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension
Corp., 399 F.3d 692, 702 (6th Cir. 2005)).
It does not appear that Plaintiff’s misrepresentation claims necessarily
require evaluation of any ERISA plan or the parties’ performance under it.
Instead, Plaintiff’s misrepresentation claims seem analogous to the breach of
contract claim in Marks, which was held to refer to an ERISA plan only to
ascertain damages.
Accordingly, the Court reconsiders its prior holding that
Plaintiff’s claim for damages equaling the benefits he would have received under
the Driver Plan is preempted by ERISA. Plaintiff’s claims are not preempted by
ERISA to the extent he seeks to recover the value of benefits relinquished in
reliance on Defendants’ alleged misrepresentations, including (but not limited to)
the value of lost benefits under the Driver Plan.
II.
Rescission
In its prior Order, the Court held Plaintiff’s claims not preempted by ERISA
to the extent that Plaintiff seeks rescission. The Court authorized Defendants,
however, to file a motion to dismiss addressing whether rescission is available as a
remedy on Plaintiff’s misrepresentation claims. Defendants have done so.
Plaintiff’s Amended Complaint asks the Court to “rescind the parties’
employment agreement insofar as it relates to Plaintiff’s pension entitlement and
participation in the PAF Plan.” In his Response to Defendants’ Motion to Dismiss,
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however, Plaintiff asserts that he is not seeking even partial rescission of the
employment agreement, since the employment agreement did not include the terms
he seeks to rescind. Plaintiff has not moved to amend the Amended Complaint.
The Court will therefore address only the relief requested therein: partial rescission
of the parties’ employment agreement to remove his “pension entitlement and
participation in the PAF Plan.”
The parties agree that partial rescission is generally unavailable under
Michigan law. See, e.g., Viacom Outdoor, Inc. v. Bratt, No. 265044, 2007 WL
397152, at *1 (Mich. Ct. App. Feb. 6, 2007) (citing Blumrosen v. Silver Flame
Industries, 334 Mich. 441, 445-446 (Mich. 1952)). Plaintiff argues, however, that
his request for partial rescission falls under an exception applicable to divisible
contracts. Id. He also cites authority for the proposition that partial rescission of
even an indivisible contract may be allowed where necessary, on the particular
facts of the case, to achieve a just result. E.g., 17 Am. Jur. 2d Contracts § 533
(“[E]ven aside from rights of partial rescission in cases of actual severability … a
right of partial rescission may sometimes be upheld, simply because under the
peculiar circumstances it is essential to a just result.”).
Under Michigan law, the contracting parties’ intent is the primary
consideration in determining whether contractual provisions are divisible. Viacom
Outdoor, 2007 WL 397152 at *1 (citing Professional Rehabilitation Assoc. v. State
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Farm Mut. Automobile Ins. Co., 228 Mich. App 167, 174 (Mich. Ct. App. 1998)).
Since intent is a factual issue, the Court declines to hold the parties’ employment
agreement indivisible, and thus immune to partial rescission, on a motion to
dismiss. Factual development may also determine whether equity justifies partial
rescission even if the contract is indivisible.
Defendants argue that Plaintiff’s claim for rescission must be dismissed
because he has not tendered the benefits he has received under the contract (or
portions thereof) to be rescinded. However, Plaintiff seeks only to rescind the
portion of his employment agreement concerning his pension entitlement, and it is
undisputed that Plaintiff has not retired and thus has not yet received any benefits
contemplated under that provision.
Moreover, tender of benefits under the
provisions to be rescinded is not a condition precedent to a claim for rescission.
Barke v. Grand Mobile Homes Sales, Inc., 6 Mich. App. 386, 392–93 (Mich. Ct.
App. 1967); 11 Mich. Pleadings & Practice § 85:22 (2d ed.).
Defendants also raise the defense of laches, arguing that Plaintiff’s claim for
rescission must be dismissed because Plaintiff failed to assert it seasonably.
However, “whether a recission was within a reasonable time is a fact question to be
decided by a jury (or the trier of the fact) in view of all the facts and
circumstances.” Cole Lakes, Inc. v. Linder, 99 Mich. App. 496, 508 (Mich. Ct.
App. 1980). Further, given the equitable nature of the defense, it may be rejected
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where the plaintiff’s delay in seeking rescission has not prejudiced the defendants.
See Gyles v. Stadel, 252 Mich. 349, 352 (Mich. 1930). Defendants have not even
claimed to be prejudiced. The Court therefore declines to dismiss the rescission
claim under the doctrine of laches.
In sum, Defendants’ Motion to Dismiss Claim for Rescission [49] is denied.
CONCLUSION
For the reasons stated above,
IT IS ORDERED that Plaintiff’s Motion for Reconsideration [47] is
GRANTED.
The Court reverses its prior holding that Plaintiff’s claims are
preempted by ERISA to the extent they seek reliance damages.
IT
IS
FURTHER
ORDERED
that
Defendants’
Motion
for
Reconsideration [48] is DENIED.
IT IS FURTHER ORDERED that Defendants’ Motion to Dismiss Claim
for Rescission [49] is DENIED.
SO ORDERED.
Dated: December 10, 2015
s/Arthur J. Tarnow
Arthur J. Tarnow
Senior United States District Judge
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