Greer v. Operating Engineers Local 324 Pension Fund

Filing 16

MEMORANDUM AND ORDER GRANTING DEFENDANT OPERATING ENGINEERS LOCAL 324 PENSION FUND'S MOTION FOR PARTIAL DISMISSAL 4 . Signed by District Judge Avern Cohn. (MVer)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

JOSEPH WAYNE GREER,
Plaintiff,
vs.

Case No. 17-11832

OPERATING ENGINEERS LOCAL
324 PENSION FUND, LINDA REETZ,

HON. AVERN COHN

Defendants.
______________________________________________/
MEMORANDUM AND ORDER
GRANTING DEFENDANT OPERATING ENGINEERS LOCAL 324 PENSION FUND’S
MOTION FOR PARTIAL DISMISSAL (Doc. 4)1
I. Introduction
This is a denial of benefits case. Plaintiff Joseph Wayne Greer has sued
Operating Engineers Local 324 Pension Fund (Fund) and Linda Reetz claiming
entitlement to ½ of a lump sum death benefit. The benefit was payable on the death of
Robert John Greer (decedent) who was a participant in the Fund. The Fund paid the
entire benefit, approximately $20,000.00, to Linda Reetz, who was the designated
beneficiary. Plaintiff is the decedent’s son. Reetz is the decedent’s long time
companion. Plaintiff generally claims that Reetz agreed to split the death benefit with
him and the Fund violated the law in paying the full benefit to Reetz. The complaint
makes several claims under state and federal law, as follows:

1

Upon review of the parties’ papers the Court deems these matters appropriate
for decision without oral argument. See Fed. R. Civ. P. 78(b); E.D. Mich. LR 7.1(f)(2).

Count I - violation of ERISA - failure to provide plan documents
Count II - violation of ERISA - wrongful denial of benefits
Count III - violation of ERISA - failure to accord full and fair review
Count IV - violation of ERISA - request for preliminary injunction
Count V - Constructive Trust
Count VI - Tortious Interference
Count VII - Fraud
Count VIII - Undue Influence
Count IX - ERISA claim for attorney fees
The Court declined to exercise supplemental jurisdiction over the state law
claims, Counts V - VIII, and dismissed them without prejudice. (Doc. 15). This
eliminated Reetz from the case.
Before the Court is the Fund’s motion for partial dismissal, seeking to dismiss all
ERISA claims except for a claim for benefits under ERISA § 502(a)(1)(B), 29 U.S.C. §
1132(a)(1)(B) as plead in Count II. For the reasons that follow, the motion will be
granted.
II. Legal Standard
A Rule 12(b)(6) motion tests the sufficiency of a plaintiff's pleading. The Rule
requires that a complaint "contain something more . . . than . . . a statement of facts that
merely creates a suspicion [of] a legally cognizable right of action." Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007) (internal citation omitted). A "plaintiff's obligation to
provide the 'grounds' of his 'entitlement to relief' requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do."
Id. "[T]hat a court must accept as true all of the allegations contained in a complaint is
inapplicable to legal conclusions. Threadbare recitals of all the elements of a cause of
action, supported by mere conclusory statements do not suffice." Ashcroft v. Iqbal, 556
U.S. 662; 129 S. Ct. 1937, 1949 (2009). The court is "not bound to accept as true a

2

legal conclusion couched as a factual allegation."
III. Analysis
A. State Law Claims
As an initial matter , the Fund says that all of plaintiff’s state law claims are
preempted by ERISA. In light of the Court’s order dismissing plaintiff’s state law claims,
this argument is moot.
B. ERISA Claims In General
ERISA § 502(a)(1)(B) permits a civil action by a participant or beneficiary:
to recover benefits due to him under the terms of his plan, to enforce
his rights under the terms of the plan, or to clarify his rights to future
benefits under the terms of the plan
29 U.S.C. § 1332(a)(1)(B). ERISA § 502(a)(3) permits a civil action:
by a participant, beneficiary, or fiduciary (A) to enjoin any act or
practice which violates any provision of this subchapter or the terms
of the plan, or (B) to obtain other appropriate equitable relief (i) to
redress such violations or (ii) to enforce any provisions of this
subchapter or the terms of the plan;
29 U.S.C. § 1132(a)(3).
In Varity Corp. v. Howe, 516 U.S. 489, 512 (1996), the Supreme Court “clearly
limited the applicability of § 1132(a)(3) to beneficiaries who may not avail themselves of
§ 1132's other remedies.” Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 615
(6th Cir. 1998), citing Varity, 516 U.S. at 512. In Wilkins, the Sixth Circuit held that
where “§ 1132(a)(1)(B) provides a remedy” for the plaintiff’s injury that “allow[ed] him to
bring a lawsuit to challenge the Plan Administrator's denial of benefits to which he
believes he is entitled, he does not have a right to a cause of action for breach of
fiduciary duty pursuant to § 1132(a)(3) [or] any other subsection of § 1132.” Wilkins,

3

supra. Sixth Circuit cases after Wilkins further confirm that, when a plaintiff seeks an
award of plan benefits that can be remedied under § 1132(a)(1)(B), a claim under
§ 1132(a)(3) is not available. A plaintiff cannot avoid dismissal by “repackaging” a
§ 502(a)(1)(B) claim as a § 502(a)(3) claim. See Rochow v. Life Ins. Co. of N. Am., 780
F3d 364, 373 (6th Cir. 2015) (“Impermissible repackaging is implicated whenever . . . a
duplicative or redundant remedy is pursued to redress the same injury”); Donati v. Ford
Motor Co., Gen. Ret. Plan, Ret. Comm., 821 F.3d 667 (6th Cir. 2016) (Where plaintiff’s
(a)(3) claim sought individual plan benefits, plaintiff was still a plan participant and could
obtain the benefits by way of an § (a)(1)(B) claim, § (a)(3) was not available).
Against this legal landscape, each of plaintiff’s ERISA claims will be addressed in
turn below.
C. Plaintiff’s ERISA Claims
Count I of the complaint is entitled “Violation of ERISA Section 502(c) Failure to
Provide Plan Documents Against Defendant Fund.” It alleges that the Fund failed to
comply with its obligation to produce documents “relevant to the claimant’s claim for
benefits” set forth in the ERISA claims regulation, 29 C.F.R. § 2560.503-1(h)(2)(iii).
Complaint, ¶ 54-55. Plaintiff also seeks penalties of $110 per day under ERISA §
502(c); 29 U.S.C. § 1132(c).2
Plaintiff contends that 29 C.F.R. § 2560.503–1(h)(2)(iii) and (m)(8) establishes a
duty under § 1132(c) for the Fund to provide all of the documents relevant to his claim.

2

“[T]he purpose of § 1132(c)(1) is to punish plan administrators who fail to comply
with requests for documents which ERISA requires them to provide.” Osborn v. Knights
of Columbus, 401 F.Supp.2d 822, 825–26 (N.D. Ohio 2005). See also Bartling v.
Fruehauf Corp., 29 F.3d 1062, 1068 (6th Cir. 1994).
4

The Fund says that Count I fails to state a claim because the Fund’s regulatory
obligation to produce claim documents “relevant to” a claimant’s claim established
under 29 C.F.R.2560.503-1(h)(2)(iii) does not confer a claim under ERISA. The Court
agrees.
Section 2560.503–1 is a regulation implementing 29 U.S.C. § 1133. VanderKlok
v. Provident Life and Accident Ins. Co., 956 F.2d 610, 615 (6th Cir.1992). In contrast,
§ 1133 imposes obligations on the plan, but “does not impose liability on the plan
administrator.” Id. at 618. Accordingly, “a violation of section 1133 by the plan
administrator does not impose liability on the plan administrator pursuant to section
1132(c)....” Id. See also Cultrona v. Nationwide Life Ins. Co., 936 F. Supp. 2d 832, 853
(N.D. Ohio 2013), aff'd, 748 F.3d 698 (6th Cir. 2014) (holding that § 1132(c) penalties do
not apply to a plan’s obligation to produce documents relevant to the claim under 29
C.F.R.2560.503-1). Moreover, even assuming that the Fund’s production of redacted
documents somehow failed to comply with applicable regulations, any shortcomings
relating to production of documents can be adequately addressed by way of plaintiff’s
claim for benefits under ERISA § 502(a)(1)(B). Thus, Count I fails to state a plausible
claim.
Count III asserts a claim against the Fund for “failure to accord a full and full
opportunity for review” under ERISA § 503; 29 U.S.C. § 1133.3 The Fund says that this

3

ERISA section 503, 29 U.S.C. § 1133, requires that all ERISA plans have a
written claims procedure. It provides:
In accordance with regulations of the Secretary, every employee benefit plan
shall-(1) provide adequate notice in writing to any participant or beneficiary whose
claim for benefits under the plan has been denied, setting forth the specific
5

count does not state a plausible claim under 29 U.S.C. § 1333.
The Fund is correct. First, arguments of procedural failures or irregularities in the
administrative review process may be raised in the context of an ERISA § 502(a)(1)(B)
claim as detailed in Wilkins. Thus, this claim is subsumed within Count II. Moreover, a
district court has authority to remand a benefits determination matter to the plan’s
claims administrator in the context of an ERISA § 502(a)(1)(B) claim where appropriate.
Elliott v. Metro. Life Ins. Co., 473 F.3d 613, 621 (6th Cir. 2006). Thus, plaintiff has an
avenue for redress should the Court determine that the Fund did not provide a fair
review of plaintiff’s claim.
Second, plaintiff cites no authority for the proposition that ERISA § 503 confers
an independent right of action. Although a violation of section 503's procedural
requirements may be probative of whether the decision to deny benefits was proper,
courts addressing the issue have found that a failure to comply with ERISA's procedural
requirements does not entitle a claimant to a substantive remedy. See Ashenbaugh v.
Crucible Inc., 854 F.2d 1516, 1532 (3d Cir. 1988); Blakely v. WSMW Indus., Inc., 2004
WL 1739717, at *10 (D. Del. July 20, 2004); Gailey v. Life Ins. Co. of N. Am., No.
1:15-CV-564, 2016 WL 6082112, at *6 (M.D. Pa. Oct. 17, 2016). Thus, Count III
therefore fails to state a claim for relief.
Count IV seeks a preliminary injunction under ERISA § 502(a)(3) to enjoin the

reasons for such denial, written in a manner calculated to be understood by the
participant, and
(2) afford a reasonable opportunity to any participant whose claim for benefits
has been denied for a full and fair review by the appropriate named fiduciary of
the decision denying the claim.
6

Fund from paying the benefit at issue. Plaintiff concedes that this claim should be
dismissed. No further discussion is necessary.
Finally, Count IX alleges that, due to alleged inappropriate Fund conduct, plaintiff
should be awarded attorney fees and costs under ERISA § 502(g)(1), 29 U.S.C. §
1132(g). ERISA section 502(g) provides that a district court “in its discretion may allow
a reasonable attorney's fee” in “any action under this subchapter” of ERISA. This
section does not provide for an independent cause of action. Rather, it permits an
award of fees to a successful party in “any action under this subchapter.” Id. Plaintiff’s
fee request is therefore subsumed in his ERISA § 502(a)(1)(B) claim. If plaintiff
succeeds on his claim, he may ask for attorney fees. Count IX must be dismissed.
D. Plaintiff’s Additional Arguments
Plaintiff’s additional arguments against dismissal do not carry the day. Plaintiff
says that the test for determining whether a claim is an improper repackaged benefit
claim depends on whether a plaintiff is attempting to obtain a “double recovery.” And,
according to plaintiff, if there is no “double recovery,” then a claim may go forward. This
argument is misplaced. The test is whether the plaintiff is able to obtain adequate relief
under ERISA § 502(a)(1)(B). If so, no other claims are permitted. See, e.g., Rochow,
supra at 373 (Wilkins “makes clear that the availability of relief under § 502(a)(3) is
contingent on a showing that the claimant could not avail himself or herself of an
adequate remedy pursuant to § 502(a)(1)(B)”). Here, as explained above, plaintiff is
able to obtain adequate relief under ERISA § 502(a)(1)(B).
Plaintiff also argues that he should be permitted to plead “alternative” claims
seeking the same relief. This argument misses the mark. The practice of “alternative”

7

pleading of claims seeking the same remedy does not apply in the context of ERISA
benefit claims. See Rochow. Plaintiff’s related argument that is too early to dismiss his
“alternative” claims because he is entitled to take discovery first also lacks merit. When
reviewing an action challenging a denial of benefits under ERISA, a district court must
“conduct its review based solely upon the administrative record” and no discovery
generally is permitted. See Cooper v. Life Ins. Co. of N. Amer., 486 F.3d 157, 171 (6th
Cir. 2007); Wilkins, supra, at 618.
In the end, plaintiff’s claim against the Fund is a claim for the denial of benefits
under ERISA § 502(a)(1)(B). Plaintiff is able to obtain all the relief he seeks under
Count II.
IV. Conclusion
For the reasons stated above, the Fund’s motion is GRANTED. Counts I, III, IV,
IX are DISMISSED. The case continues on Count II.
SO ORDERED.
_s/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE
Dated: September 6, 2017
Detroit, Michigan

8