WOERNER v. FRAM GROUP OPERATIONS, LLC et al

Filing 24

OPINION. Signed by Judge Stanley R. Chesler on 4/29/2013. (nr, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

LOU ANN WOERNER, as the beneficiary of :
Michael J. Woerner,
:
:
Plaintiff, :
:
v.
:
:
FRAM GROUP OPERATIONS, LLC, and
:
ERIC SCHUENEMAN,
:
:
Defendants. :

Civil Action No. 12-6648 (SRC)
OPINION

CHESLER, District Judge
This matter comes before the Court on the motion by Defendant Eric Schueneman to
dismiss the claims against him pursuant to Federal Rule of Civil Procedure 12(b)(6). (Docket
Entry 7) Plaintiff Lou Ann Woerner has opposed the motion. (Docket Entry 16) The Court will
rule on the papers submitted, and without oral argument. See Fed. R. Civ. P. 78. For the reasons
that follow, the Court will grant the motion in part and deny it in part.
I.

THE FACTS

In July 2010, Plaintiff Lou Ann Woerner’s husband, Michael J. Woerner, was diagnosed
with brain cancer. At the time of his diagnosis, Mr. Woerner worked for Honeywell and
participated in the company’s ERISA-covered benefits plans. In January 2011, Honeywell
agreed to sell the business unit employing Mr. Woerner to Defendant FRAM. This sale closed
on July 29, 2011, about a month after Mr. Woerner took a leave of disability from work. The
Woerners were concerned that the sale would adversely affect Mr. Woerner’s employee benefits

and insurance coverages, and they actively sought information from both Honeywell and FRAM.
At some point, the Woerners were told that they would have to speak with FRAM’s Director of
Compensation, Benefits, and HRIS, Defendant Eric Schueneman.
The Woerners initially had difficulty reaching Schueneman, and when they did, they were
told that the information they sought was not yet available. The Woerners continued to seek
information, by phone and email, from Honeywell, FRAM, and Schueneman about how the sale
might affect Mr. Woerner’s benefits. During this time, the Woerners were given the impression
that Mr. Woerner would be eligible for life insurance through FRAM. Plaintiff points to a
conversation she had with Schueneman on or about December 5, 2011, in which Schueneman
indicated that he was “sure” Mr. Woerner could enroll in FRAM’s life insurance plan.
On December 7, 2011, the Woerners made their benefits and insurance coverage elections
for 2012. Mr. Worerner elected to enroll in a $297,000 basic life insurance policy and a
$198,000 voluntary life insurance policy. Both had effective dates of January 1, 2012, and
named Plaintiff as beneficiary. Mr. Woerner received written confirmation of his “enrolled”
status and life insurance converage.
Mr. Woerner’s voluntary life insurance policy required a monthly contribution of $16.91,
and in January, 2012, the Woerners noticed that premium contributions were not being
automatically deducted from Mr. Woerner’s compensation. Plaintiff emailed Schueneman to
discuss this and other issues but received no response. After repeated attempts, Plaintiff reached
Schueneman by telephone in mid to late January 2012. Schueneman told Plaintiff not to worry,
that the Woerners were covered, and that letters would be going out to explain how to make
premium contributions by check. The Woerners never received such a letter.
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Plaintiff alleges, upon information and belief, that around this time, Schueneman learned
that it might be necessary for Mr. Woerner to attend work for a day in order to become eligible
for life insurance benefits. Schueneman never shared this information with the Woerners.
Mr. Woerner passed away on February 24, 2012. After a number of unsuccessful
attempts to get information from Schueneman about the pay out on Mr. Woerner’s life insurance
policy, Plaintiff spoke directly with the insurance company, who disclosed that Mr. Woerner was
not covered at the time of his death.
Plaintiff has brought suit against both FRAM and Schueneman, alleging five separate
counts under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §
1002, et seq.1 Plaintiff seeks a constructive trust and other equitable relief.
II.

DISCUSSION
A.

Standard of Review

A complaint will survive a motion under Rule 12(b)(6) if it states “sufficient factual
allegations, accepted as true, to ‘state a claim for relief that is plausible on its face.’” Ashcroft v.
Iqbal, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). The Third Circuit, following Twombly and Iqbal, has held that Rule 8(a) “requires not
merely a short and plain statement, but instead mandates a statement ‘showing that the pleader is
entitled to relief.’” Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008). In a Rule
12(b)(6) motion, the Court is limited in its review to a few basic documents: the complaint,

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The Complaint contains the following counts: (1) ERISA equitable estoppel; (2) ERISA
equitable relief for material misrepresentation; (3) violation of ERISA breach of fiduciary duties;
(4) violation of ERISA co-fiduciary duties; and (5) violation of ERISA statutory illegal
interference.
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exhibits attached to the complaint, matters of public record, and undisputedly authentic
documents if the complainant’s claims are based upon those documents. See Pension Benefit
Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).
B.

Breach of Fiduciary Duty

Schueneman moves to dismiss Counts Two, Three, and Four of the Complaint on the
grounds that Plaintiff has failed to adequately plead that Schueneman is an ERISA fiduciary.
The Court disagrees.
Fiduciary status is broadly defined under ERISA. Curcio v. John Hancock Mut. Life Ins.
Co., 33 F.3d 226 (3d Cir. 1994). In Unisys Corp. Retiree Med. Benefits Erisa Litig. v. Unisys
Corp., the Third Circuit articulated the general standards for determining who is an ERISA
fiduciary:
“ERISA . . . defines ‘fiduciary’ not in terms of formal trusteeship, but
in functional terms of control and authority over the plan.” Mertens
v. Hewitt Assocs., 508 U.S. 248, 262 (1993). Accordingly,
“[f]iduciary duties under ERISA attach not just to particular persons,
but to particular persons performing particular functions.” Hozier v.
Midwest Fasteners, Inc., 908 F.2d 1155, 1158 (3d Cir. 1990).
Accordingly, “a person is a fiduciary with respect to a plan only to the
extent that he has any discretionary authority or discretionary
responsibility in the administration of such plan.” Varity Corp. v.
Howe, 516 U.S. 489, 527 (1996) (internal quotation marks omitted).
“A plan administrator . . . acts as a fiduciary when explaining plan
benefits and business decisions about plan benefits to its employees.
Adams v. Freedom Forge Corp., 204 F.3d 475, 492 (3d Cir. 2000).
579 F.3d 220, 228 (3d Cir. 2009).
Schueneman argues that his position as FRAM’s Director of Compensation, Benefits and
HRIS is insufficient to establish his status as an ERISA fiduciary. Schueneman also maintains
that Plaintiff has failed to allege specific facts that Schueneman exercised individual
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discretionary authority over the plan’s management, assets, and administration and was
performing a fiduciary function when taking the challenged action.
The Court concludes that Plaintiff has alleged sufficient facts to survive a motion to
dismiss based on Schueneman’s non-fiduciary status. Schueneman’s title, while perhaps not
adequate, by itself, certainly qualifies as a non-conclusory factual allegation supporting a claim
that Schueneman was an ERISA fiduciary. The Complaint also alleges that Schueneman had
discretionary authority to act on behalf of the plan and that no other natural person had any
information about the plan. Finally, the Complaint alleges that Schueneman expressly assured
Plaintiff that her husband would have life insurance coverage at FRAM. In Adams v. Freedom
Forge Corp., the Third Circuit stated that “[a] plan administrator . . . acts as a fiduciary when
explaining plan benefits and business decisions about plan benefits to its employees.” 204 F.3d
475 (3d Cir. 2000). Under the factual allegations contained in the Complaint, it would be
improper to dismiss Plaintiff’s claims for fiduciary breach at this early stage. A determination on
Schueneman’s fiduciary status must await an evidentiary hearing. If discovery indicates that
Schueneman did not function as a fiduciary, he may move for summary judgment on the issue.
C.

Equitable Estoppel

Next, Schueneman argues that Plaintiff has failed to state a claim against him on a theory
of equitable estoppel. The Court agrees.
The parties do not dispute that to state a claim for equitable estoppel, a Plaintiff must
show “‘(1) a material representation, (2) reasonable and detrimental reliance upon the
representation, and (3) extraordinary circumstances.’” Burstein v. Ret. Account Plan for Emples.
of Allegheny Health Educ. & Research Found., 334 F.3d 365, 383 (3d Cir. 2003) (quoting
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Curcio, supra, 33 F.3d at 235).
Schueneman first argues that Plaintiff has not sufficiently pled the presence of
“extraordinary circumstances.” The Third Circuit has not clearly defined “extraordinary
circumstances” but instead relies on case law to establish its parameters. Kurz v. Phila. Elec. Co.
(Kurz II), 96 F.3d 1544, 1553 (3d Cir. 1996). Extraordinary circumstances may “involve acts of
bad faith on the part of the employer, attempts to actively conceal a significant change in the
plan, or commission of fraud.’” Burstein, supra, 334 F.3d at 383 (quoting Jordan v. Federal
Express Corp., 116 F.3d 1005, 1011 (3d Cir. 1997)). Extraordinary circumstances may also be
present “where there is a ‘network of misrepresentations over an extended course of dealing,’ or
where particular plaintiffs are especially vulnerable.” Pell v. E. I. DuPont De Nemours & Co.,
539 F.3d 292, 303-04 (3d Cir. 2008) (citing Kurz, supra, 96 F.3d at 1553). The Third Circuit has
“consistently rejected estoppel claims based on simple ERISA reporting errors or disclosure
violations, such as variations between a plan summary and the plan itself.” Kurz (II), 96 F.3d at
1553.
According to Schueneman, Plaintiff has, at most, alleged facts showing that Schueneman
was “dilatory and may have made some mistakes in delivering information” to Mr. Woerner.
(Def.’s Br. Supp. Mot. Dismiss 6) In this Court’s view, Plaintiff’s allegations, taken as true,
satisfy the “extraordinary circumstances” element of a claim for equitable estoppel.
The Third Circuit has held that “extraordinary circumstances” may exist where an ERISA
fiduciary’s repeated assurances of coverage and ultimate disclamation sends a beneficiary on a
“roller coaster” ride. See Curcio, supra, 33 F.3d at 238. In assessing whether extraordinary
circumstances are present, the Third Circuit has also considered a defendant’s “repeated oral and
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written misrepresentations,” a beneficiary’s “diligence in attempting to obtain accurate answers,”
and the amount of coverage at stake. Smith v. Hartford Ins. Group, 6 F.3d 131, 142 (3d Cir.
1993). Plaintiff has pled repeated misrepresentations and omissions by Schueneman and the
Woerner’s diligent attempts to obtain accurate information. Although the amount of disputed
coverage in this case falls short of the $1 million policy at issue in Smith, the Court concludes
that the amount is significant enough to support a claim of extraordinary circumstances.
The Court also concludes that Plaintiff has alleged extraordinary circumstances based on
Plaintiff’s vulnerable position. The Third Circuit has generally recognized the presence of
extraordinary circumstances based on particular vulnerability only “in instances of imminent and
life threatening health emergencies to the plaintiff himself or to his family members.” Araujo v.
Kraft Foods Global, Inc., 387 Fed. Appx. 212, 217 (3d Cir. 2010) (citing Smith, supra, and
Curcio, supra). Aware of the life-threatening nature of Mr. Woerner’s brain cancer diagnosis and
the uncertainty posed by the sale of his employer, Mr. Woerner tried assiduously to ensure that
his family would be financially secure in the event of his death. Plaintiff alleges, upon
information and belief, that Schueneman knew but failed to disclose that Mr. Woerner could only
qualify for coverage if he worked for at least one day in 2012. According to the Complaint, Mr.
Woerner was ready, willing, and able to satisfy that requirement, had he known about it, and
Schueneman’s failure to convey this information resulted in a substantial financial loss to
Plaintiff.
While Plaintiff has shown “extraordinary circumstances,” the claim must nevertheless be
dismissed. A claim for equitable estoppel prevents a plan from denying benefits it promised to a
participant or beneficiary. See Kimberly A. Kralowec, Comment: Estoppel Claims against
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ERISA Employee Benefit Plans, 25 U.C. Davis L. Rev. 487, 492 (1992) (“Plaintiffs in estoppel
cases are ineligible for benefits under the plan’s terms, but argue that the plan is estopped from
so asserting.”). Since a claim of equitable estoppel seeks benefits that only the plan can provide,
such a claim simply makes no sense as against anyone else. As Schueneman correctly points out,
the defendants in the cases relied upon by Plaintiff were employers, not individual employees.
Schueneman, who is not the plan, is simply not amenable to suit on a theory of equitable
estoppel. Therefore, the claim must be dismissed with prejudice.
D.

Illegal Statutory Interference

Finally, Schueneman moves to dismiss Plaintiff’s claim for illegal statutory interference
under § 510 of ERISA on the grounds that Plaintiff has failed to allege facts showing
Schueneman had a “specific intent” to interfere with Mr. Woerner’s benefits. The Court agrees.
Section 510 of ERISA provides, in part, that
[i]t shall be unlawful for any person to discharge, fine, suspend,
expel, discipline, or discriminate against a participant or beneficiary
for exercising any right to which he is entitled under the provisions
of an employee benefit plan, this subchapter, section 1201 of this title,
or the Welfare and Pension Plans Disclosure Act [29 U.S.C. 301 et
seq.], or for the purpose of interfering with the attainment of any right
to which such participant may become entitled under the plan, this
subchapter, or the Welfare and Pension Plans Disclosure Act.
“To establish a prima facie case under ERISA § 510, an employee must demonstrate (1)
prohibited employer conduct (2) taken for the purpose of interfering (3) with the attainment of
any right to which the employee may become entitled.” Gavalik v. Cont’l Can Co., 812 F.2d
834, 852 (3d Cir. 1987). “[T]he essential element of proof under § 510 is specific intent to
engage in proscribed activity.” Id. 851; see also Jakimas v. Hoffmann-LaRoche, Inc., 485 F.3d

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770, 785 (3d Cir. 2007) (“a plaintiff must ‘demonstrate that the defendant had the specific intent’
to violate ERISA”). Proof of specific intent “can be demonstrated through direct or
circumstantial evidence, because the ‘smoking gun’ evidence may be rare.” Id. (citing Gavalik,
812 F.2d at 852). This means that, at the motion to dismiss stage, “[i]t is sufficient to plead facts
that, when taken as true, constitute circumstantial evidence of the employer’s specific intent to
interfere with the ERISA plan.” Stabile v. Allegheny Ludlum, LLC, No. 12-168, 2012 U.S. Dist.
LEXIS 126703, at *27 (W.D. Pa. Sept. 6, 2012); see also Pailleret v. Jersey Constr., Inc., No.
09-1325, 2010 U.S. Dist. LEXIS 2313 (D.N.J. Jan. 11, 2010).
According to Schueneman, Plaintiff has failed to plead facts showing specific intent – the
Complaint contains no allegations that Schueneman had a mindset to prevent Mr. Woerner from
obtaining any benefit and does not allege that Schueneman held any “animosity owing to Mr.
Woerner’s illness or his work status.” (Def.’s Moving Br. 10) The Court agrees. In opposition,
Plaintiff only points to allegations made “upon information and belief.” For example, the
Complaint alleges upon information and belief that Schueneman knew Mr. Woerner would have
to work at least one day in 2012 in order to qualify for supplemental life insurance. While
specific intent may be shown by circumstantial evidence, Plaintiff cannot survive a motion to
dismiss by offering only conclusory, unsupported allegations made upon information and belief.
Such allegations, without more, fail to demonstrate Plaintiff’s plausible entitlement to relief.
Therefore, the Court will dismiss the claim against Schueneman for illegal statutory interference
without prejudice.
III.

CONCLUSION
For the foregoing reasons, Schueneman’s motion to dismiss the complaint will be granted
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in part and denied in part. An appropriate order accompanies this opinion.
s/Stanley R. Chesler
STANLEY R. CHESLER
United States District Judge
DATED: April 29, 2013

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