JOHNSON v. DUKE ENERGY RETIREMENT CASH BALANCE PLAN et al
Filing
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MEMORANDUM OPINION AND ORDER signed by CHIEF JUDGE WILLIAM L. OSTEEN JR. on 09/30/2013; that Defendants' Motion to Stay or Dismiss (Doc. 12 ) is GRANTED. This case will be stayed pending exhaustion of Plaintiff's administrative rem edies under Article XI of the Plan. FURTHER that the parties' Joint Motion to Postpone Determination of Plaintiff's Motion for Class Certification Pending Completion of Preliminary Proceedings (Doc. 17 ) is GRANTED. Plain tiff shall renew his motion within 20 days after the stay entered by this order is terminated. FURTHER that the parties shall notify this court in writing immediately after a final decision has been issued on Plaintiff's administrative appeal of his claim. (Garland, Leah)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
THOMAS JOHNSON, on behalf of
himself and on behalf of a
class of persons similarly
situated,
Plaintiff,
v.
DUKE ENERGY RETIREMENT CASH
BALANCE PLAN and DUKE ENERGY
CORPORATION,
Defendants.
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1:13CV156
MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
Presently before this court is Defendants‟ Motion to Stay
or Dismiss (Doc. 12).
Defendants have filed a memorandum in
support of their motion (Doc. 13), Plaintiff has filed a
response in opposition (Doc. 16), and Defendants have filed a
reply (Doc. 18).
grant the motion.
For the reasons that follow, this court will
This case will be stayed pending exhaustion
of Plaintiff‟s administrative remedies.1
I.
BACKGROUND
Plaintiff Thomas Johnson (“Plaintiff”) worked for Defendant
Duke Energy Corporation (“Defendant Duke Energy”) from June 1978
until March 31, 2008.
(Complaint (“Compl.”) (Doc. 1) ¶ 26.)
At
all relevant times, he has participated in Defendant Duke Energy
Retirement Cash Balance Plan (the “Plan”).
(Id.)
He brings
suit under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B),
alleging that Defendants‟ rounding methods have resulted in an
understatement of his retirement benefits under the Plan.2
At the time he filed the instant lawsuit, Plaintiff had not
invoked the formal channels of the Plan‟s administrative claims
1
The parties prefer a stay to a dismissal in this case.
Because this court agrees and finds that a stay is warranted,
this order does not address Defendants‟ argument pursuant to
Federal Rule of Civil Procedure 12(b)(6).
Defendants have also requested oral argument on their
motion pursuant to Local Rule 7.3(c)(1). This court finds that
oral argument is unnecessary because the briefs adequately set
out the parties‟ respective positions.
2
In addition to himself, Plaintiff seeks to represent a
class of present and former participants in the Plan. His
Motion for Class Certification (Doc. 14) is pending. As
addressed below, this court will postpone determination of that
motion until after the stay entered by this order has been
terminated.
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process.3
Under Article XI of the Plan, a participant may not
bring suit on a claim for benefits without first exhausting a
two-level administrative process.
at 47-49.)4
(See Compl., Ex. A (Doc. 1-1)
To initiate this process, the participant must
submit a written claim to the Plan Administrator or its
delegate.
If that claim is denied in whole or in part, the
participant may submit a written appeal to the Plan
Administrator or its delegate within sixty days of receiving the
written denial.
The decision on appeal “shall be final and
conclusive and a Claimant shall not be permitted to bring suit
3
Plaintiff had called Aon Hewitt several times to demand
payment of the benefits which he contends he is owed. (Compl.
(Doc. 1) ¶¶ 48-50.) However, he did not submit a written claim
as required by the Plan. The October 5, 2012 letter Plaintiff
received presented the formula used to calculate Interest
Credits under the Plan and invited Plaintiff to contact the Duke
Energy myHR Service Center if he had additional questions. (See
id., Ex. C (Doc. 1-3).) The letter was not a denial of a formal
claim.
Plaintiff‟s counsel also wrote a letter to Defendant Duke
Energy demanding payment of the retirement benefits allegedly
owed. (Compl., Ex. D (Doc. 1-4).) In response to that letter,
Defendant Duke Energy informed Plaintiff‟s counsel that the
demand did not comply with the Plan‟s claims procedure and would
be treated as a request for information rather than as a claim
for benefits. (Id., Ex. E (Doc. 1-5) at 1.) The response also
directed Plaintiff‟s counsel to the requirements and procedures
for submitting claims set out in Article XI of the Plan if
Plaintiff wished to file a formal claim.
4
All citations in this Order to documents filed with the
court refer to the page numbers located at the bottom right-hand
corner of the documents as they appear on CM/ECF.
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on a claim without first exhausting the remedies available
[under Article XI].”
(Id. at 49.)
Defendants chose to treat the Complaint in this case –
which was filed on February 22, 2013 - as a written claim for
benefits under the Plan.
Ex. 1 (Doc. 12-1).)
(See Defs.‟ Mot. to Stay or Dismiss,
On May 21, 2013, Aon Hewitt, in its role as
the Plan Administrator‟s delegate, sent Plaintiff a letter
notifying him that his claim had been denied.
(See Pl.‟s Mem.
of Law in Opp‟n to Defs.‟ Mot. to Stay or Dismiss (“Pl.‟s
Mem.”), Ex. 1 (Doc. 16-1).)
That letter informed Plaintiff that
he could appeal the decision to the “Duke Energy Claims
Committee, which has been delegated the authority to review
denied claims by the Plan Administrator,” by submitting a
written request within sixty days after receiving the letter.
(Id. at 5.)
Although he believes no further exhaustion of
administrative remedies should be required, Plaintiff submitted
an appeal under protest to the Duke Energy Claims Committee on
June 3, 2013.
still pending.
(Pl.‟s Mem., Ex. 3 (Doc. 16-3).)
That appeal is
As represented to this court by Defendants, the
administrative appeal process should conclude by September 20,
2013.
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II.
LEGAL STANDARD
“[T]he power to stay proceedings is incidental to the power
inherent in every court to control the disposition of the causes
on its docket with economy of time and effort for itself, for
counsel, and for litigants.”
Landis v. N. Am. Co., 299 U.S.
248, 254 (1936); see also Williford v. Armstrong World Indus.,
Inc., 715 F.2d 124, 127 (4th Cir. 1983) (noting the wellrecognized, inherent power of district courts to grant
discretionary stays “under their general equity powers and in
the efficient management of their dockets to grant relief”).
In
determining whether a stay is warranted, the district court must
“exercise . . . judgment” and “weigh competing interests [to]
maintain an even balance.”
Landis, 299 U.S. at 254-55.
A
district court may stay an ERISA case pending completion of the
plan‟s administrative process.
See, e.g., Leaven v. Philip
Morris USA Inc., No. 1:04CV00907, 2006 WL 1666741, at *4
(June 6, 2006); Evans v. Midland Enters., Inc., 704 F. Supp.
106, 107 (M.D. La. 1989) (“[T]he Court believes it would be in
the interest of justice and judicial economy to stay this case
rather than dismiss it pending exhaustion of administrative
remedies under the plan.”).
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III. ANALYSIS
(1) Motion to Stay or Dismiss
Article XI of the Plan requires a claimant to file a
written claim for benefits and, if the claim is denied, to
submit an administrative appeal.
Plaintiff did not initiate
that process before filing this lawsuit and has not yet
exhausted those remedies.
Having now completed the first stage
of the required administrative process, Plaintiff has submitted
an administrative appeal to the Duke Energy Claims Committee.
That appeal should be completed by September 20, 2013.
In general, an ERISA plan participant “must both pursue and
exhaust plan remedies before gaining access to the federal
courts.”
Gayle v. United Parcel Serv., Inc., 401 F.3d 222, 226
(4th Cir. 2005); see also Makar v. Health Care Corp. of Mid-Atl.
(CareFirst), 872 F.2d 80, 82 (4th Cir. 1989) (“This exhaustion
requirement rests upon the Act‟s text and structure as well as
the strong federal interest encouraging private resolution of
ERISA disputes.”).
A failure to exhaust administrative remedies
may be excused if any attempt to pursue those remedies would be
futile.
This exception, however, is narrow.
Before the
exhaustion requirement may be waived on this basis, the plan
participant must make a “clear and positive” showing of
futility.
Kunda v. C.R. Bard, Inc., 671 F.3d 464, 471-72 (4th
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Cir. 2011); Hickey v. Digital Equip. Corp., 43 F.3d 941, 945
(4th Cir. 1995); Makar, 872 F.2d at 83; Fulk v. Hartford Life
Ins. Co., 839 F. Supp. 1181, 1186 (M.D.N.C. 1993); see also Kern
v. Verizon Commc‟ns, Inc., 381 F. Supp. 2d 532, 537 (N.D. W.Va.
2005) (“The futility exception . . . is quite restricted, and
has been applied only when resort to administrative remedies is
„clearly useless.‟” (omission in original) (quoting Commc‟n
Workers of Am. v. Am. Tel. & Tel. Co., 40 F.3d 426, 432 (D.C.
Cir. 1994)) (internal quotation marks omitted)).
Plaintiff asks this court to find either of the following:
(1) that Plaintiff‟s administrative remedies have been
adequately exhausted, or (2) that requiring further
administrative efforts would be futile.
For the reasons that
follow, this court declines to make either finding.
Plaintiff‟s first argument appears to be that the May 21,
2013 letter he received from Aon Hewitt denying his
administrative claim is proof that he has adequately exhausted
his remedies under the Plan.
(See Pl.‟s Mem. (Doc. 16) at 4)
(“That letter makes clear that Defendants have denied the
administrative claim.”).
The May 21 letter, however, shows only
that Plaintiff has now completed the first stage of the
two-level review process required by Article XI of the Plan.
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Accordingly, this court concludes that Plaintiff has not yet
adequately exhausted his remedies under the Plan.
In the alternative, Plaintiff asks this court to find that
further efforts to pursue his claim administratively would be
futile.
He argues that “it is reasonable to conclude further
exhaustion efforts will not change Defendants‟ position” because
“the issue between the parties is not a matter of opinion or
factual dispute but rather a fundamental disagreement on the
mathematical calculations and the plain terms of the Plan.”5
(Id. (Doc. 16) at 5.)
This argument is insufficient to make the
“clear and positive” showing of futility required by law.
Plaintiff‟s argument is essentially that the denial of his
claim upon first-level review renders any administrative appeal
futile.
However, an initial denial is generally insufficient to
make a “clear and positive” showing of futility when there is a
right to an administrative appeal.
See, e.g., Commc‟n Workers
of Am., 40 F.3d at 433 (“Because the Plan‟s final review
authority, the Benefits Committee, never had an opportunity to
5
Plaintiff also suggests that “[u]nder the circumstances
and to provide speedy disposition of the underlying issues and
avoid redundant proceedings and additional delay, it is
appropriate for this Court to find that further exhaustion of
administrative remedies is excused.” (Pl.‟s Mem. (Doc. 16) at
5.) Plaintiff cites no authority that a court may consider such
factors in deciding whether to excuse further exhaustion of
administrative remedies, and this court has been unable to find
any.
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render a final determination on [the plan participants‟] claims,
we fail to see any basis for finding than an unfavorable
decision by that Committee was a foregone conclusion.”); Corrias
v. UnumProvident Corp., 472 F. Supp. 2d 685, 688 (M.D.N.C. 2007)
(“[The plaintiff] has admittedly failed to file any appeal, and
the applicable appeal procedures provide for both access to
relevant documents and review by a different person than the
person who made his initial eligibility determination.”).
Even
if it is reasonable to conclude that the administrative appeal
will also result in an unfavorable decision, Plaintiff has not
shown that the appeal is “clearly useless,” see Corrias, 472 F.
Supp. 2d at 688, or that an unfavorable decision by the Duke
Energy Claims Committee - which has not yet had an opportunity
to review the claim - is a “foregone conclusion,” see Commc‟n
Workers of Am., 40 F.3d at 433.
Based on the foregoing, this court finds that Plaintiff has
not yet exhausted his administrative remedies under the Plan and
that his failure to do so is not excused.
Accordingly, this
court will stay this case until a final decision has been issued
in Plaintiff‟s administrative appeal.
(2) Joint Motion to Postpone Class Action Determination
Also pending is the parties‟ Joint Motion to Postpone
Determination of Plaintiff‟s Motion for Class Certification
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Pending Completion of Preliminary Proceedings (Doc. 17).
Specifically, the parties ask this court to postpone briefing on
and determination of Plaintiff‟s Motion for Class Certification
(Doc. 14).
Pursuant to Local Rule 23.1(b), this court may “order
postponement of the [class action certification] determination
pending discovery or such other preliminary procedures as appear
to be appropriate and necessary in the circumstances. Whenever
possible, . . . a date will be fixed by the Court for renewal of
the motion.”
This court finds that the relief requested in the
motion is appropriate and necessary in the circumstances and
will further the interests of judicial economy and efficiency.
Accordingly, this court will grant the joint motion.
Plaintiff
shall renew his motion within 20 days after the termination of
the stay entered by this order.
IV.
CONCLUSION
For the reasons set forth herein, IT IS HEREBY ORDERED that
Defendants‟ Motion to Stay or Dismiss (Doc. 12) is GRANTED.
This case will be stayed pending exhaustion of Plaintiff‟s
administrative remedies under Article XI of the Plan.
IT IS FURTHER ORDERED that the parties‟ Joint Motion to
Postpone Determination of Plaintiff‟s Motion for Class
Certification Pending Completion of Preliminary Proceedings
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(Doc. 17) is GRANTED.
Plaintiff shall renew his motion within
20 days after the stay entered by this order is terminated.
IT IS FURTHER ORDERED that the parties shall notify this
court in writing immediately after a final decision has been
issued on Plaintiff‟s administrative appeal of his claim.
This the 30th day of September, 2013.
_______________________________________
United States District Judge
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