UPMC BASIC RETIREMENT PLAN et al v. KELLER et al
Filing
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ORDER granting in part and denying in part 15 Motion to Dismiss for Failure to State a Claim. Signed by Judge Arthur J. Schwab on 10-21-13. (nam)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
UPMC BASIC RETIREMENT PLAN and
UPMC,
13cv0954
ELECTRONICALLY FILED
Plaintiffs,
v.
COLLEEN KELLER and CHARLES
SCHWAB & CO., INC.,
Defendants.
Memorandum Order on Motion to Dismiss Counterclaims
I.
Introduction
This is an action brought pursuant to the Employee Retirement Income Security Act
(“ERISA”). Plaintiffs brought this action to recover almost $600,000 of assets under the UPMC
Basic Retirement Plan (the Plan), for benefits which were paid out allegedly “mistakenly” and
incorrectly to a single participant, Defendant/Counterclaimant Colleen Keller. Ms. Keller was an
executive secretary for UPMC since 1988, and upon her retirement, according to Plaintiffs, she
allegedly should have received a lump sum distribution from the Plan in the amount of
$75,314.03, and instead, she actually received $664,213.36. Ms. Keller rolled over the
$664,213.36 into a Charles A. Schwab Individual Retirement Account (IRA), who was originally
also sued by UPMC, but has since been dismissed from the lawsuit, after having deposited the
amount of the alleged overpayment, plus interest and earnings, into a Court funded account. Ms.
Keller filed a two count Counterclaim against UPMC also for breach of fiduciary duty under
ERISA (Count I), and state law claims of Negligence/Negligent Misrepresentation under
Restatement of Tort (Second) § 522 (Count II).
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In her Counterclaim, Defendant/ Counterclaimant alleges that the payment was not a
“mistake” and that she was not “overpaid;” but, if she was, UPMC substantially breached its
fiduciary duty, failed to exercise reasonable care, and failed to conduct necessary audits to detect
any purported mistakes, thus entitling her to equitable, “make-whole,” relief.
Currently pending before this Court is Plaintiffs’ Motion to Dismiss (doc. no. 15), with
supporting briefs (doc. nos. 16 and 22), and Defendant/Counterclaimant’s Response in
Opposition thereto (doc. no. 19). For the reasons that follow, this Court will GRANT IN PART,
and DENY IN PART the pending Motion to Dismiss (doc. no. 15).
II.
Standard of Review
In considering a Rule 12(b)(6) motion, Federal Courts require notice pleading, as
opposed to the heightened standard of fact pleading. Fed. R. Civ. P. 8(a)(2) requires only “‘a
short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to
‘give the defendant fair notice of what the . . . claim is and the grounds on which it rests.’” Bell
Atlantic Corp. v. Twombly, 550 U.S. 554, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47
(1957)).
Building upon the landmark United States Supreme Court decisions in Twombly and
Ashcroft v. Iqbal, 556 U.S. 662 (2009), the United States Court of Appeals for the Third Circuit
explained that a District Court must undertake the following three steps to determine the
sufficiency of a complaint:
First, the court must take note of the elements a plaintiff must plead to state a
claim. Second, the court should identify allegations that, because they are no more
than conclusions, are not entitled to the assumption of truth. Finally, where there
are well-pleaded factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement for relief.
Connelly v. Steel Valley Sch. Dist., 706 F.3d 209, 212 (3d Cir. 2013) (citation omitted).
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The third step of the sequential evaluation requires this Court to consider the specific
nature of the claims/counterclaims presented and to determine whether the facts pled to
substantiate the claims are sufficient to show a “plausible claim for relief.” Covington v. Int'l
Ass'n of Approved Basketball Officials, 710 F.3d 114, 118 (3d Cir. 2013). “While legal
conclusions can provide the framework of a Complaint, they must be supported by factual
allegations.” Iqbal, 556 U.S. at 664.
This Court may not dismiss a Complaint/Counterclaim merely because it appears
unlikely or improbable that Plaintiff/Counterclaimant can prove the facts alleged or will
ultimately prevail on the merits. Twombly, 550 U.S. at 563 n.8. Instead, this Court must ask
whether the facts alleged raise a reasonable expectation that discovery will reveal evidence of the
necessary elements. Id. at 556. Generally speaking, a Complaint/Counterclaim that provides
adequate facts to establish “how, when, and where” will survive a Motion to Dismiss. Fowler v.
UPMC Shadyside, 578 F.3d 203, 212 (3d Cir. 2009).
In short, a Motion to Dismiss should not be granted if a party alleges facts, which could,
if established at trial, entitle him/her to relief. Twombly, 550 U.S. at 563 n.8.
III.
Discussion
Count I
Although Plaintiffs are correct that Defendant/Counterclaimant has not properly set forth
a claim for breach of fiduciary duty under ERISA Section 502(a)(2), 29 U.S.C. § 1132(a)(2),
Defendant has clarified in her brief in response to the Motion to Dismiss that she, in fact, bases
her claim on an alleged violation of Section 502(a)(3), 29 U.S.C. § 1132(a)(3).
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Section 502(a)(3) allows a participant,1 beneficiary or fiduciary “to obtain other
appropriate equitable relief,” to redress violations of ERISA or the terms of the Plan. While a
mere mistake will not render a fiduciary liable for a loss, Defendant/Counterclaimant would need
to establish that Plaintiffs acted in bad faith or were negligent in miscalculating the benefit. See
Sundt v. Telcordia Technologies, Inc., 2012 WL 5522899 *4 (D. N.J. 2012)(quoting Leckey v.
Stefany, 501 F.3d 212, 224 (3d Cir. 2007)..
A participant or beneficiary in an employee benefit plan subject to ERISA can also state a
claim for “appropriate equitable relief,” based upon a theory of equitable estoppel. In order to
establish a legally sufficient claim for equitable estoppel, a plaintiff/counterclaimant must
demonstrate: (1) a material misrepresentation; (2) reasonable and detrimental reliance upon the
representation; and (3) extraordinary circumstances. Pell v. E.I. DuPont De Nemours & Co. 549
F.3d 292, 300 (3d Cir. 2008). The case law has construed the third factor, “extraordinary
circumstances,” to include “affirmative acts of fraud,” “a network of misrepresentations over an
extended course of dealing,” or “where particular plaintiffs/[counterclaimants] are especially
vulnerable.”
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Plaintiffs also argue that Defendant/Counterclaimant lacks statutory standing to bring this suit
because she is no longer a “participant” under the ERISA plan at issue. According to Leuthner
v. Blue Cross and Blue Shield of Northeastern Pennsylvania, 454 F.3d 120, 129 (3d Cir. 2006),
the Court may find that a plaintiff/counterclaimant has statutory standing if
plaintiff/counterclaimant can, in good faith, plead that she was an ERISA plan participant or
beneficiary and that she still would be but for the alleged malfeasance of a plan fiduciary. Ms.
Keller has adequately pled herself as a participant under the applicable standard of review.
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Judging the facts in a light favorable to Defendant/Counterclaimant, she has alleged
sufficient facts to proceed to discovery on her breach of fiduciary duty/equitable estoppel
Counterclaim at Count I under Section 502(a)(3).2
Count II
Defendant/Counterclaimant’s Counterclaim (which was plead in the alternative, or as
Defendant/Counterclaimant states, “brought defensively and only in the event that the Plan is
ultimately successful in recovering any alleged overpayment” doc. no. 19 at p. 10) for negligence
and negligent misrerepresentation under the Second Restatement of Torts is, however,
preempted.
ERISA preempts “any and all State laws insofar as they . . . relate to any employee
benefit plan.” 29 U.S.C. § 1144(a). The United States Supreme Court has interpreted the phrase
“relate to” in the broadest terms such that a state law will ‘relate to’ a benefit plan, “if it has a
connection with or reference to such a plan.” Pilot Life v. Ins. Co. v. Dedeaux, 481 U.S. 1, 47
(quoting Shaw v. Delta Air Lines, 463 U.S. 85, 97 (1983)). The United States Court of Appeals
for the Third Circuit has unequivocally held as much, and this Western District of Pennsylvania
has followed suit.
In Berger v. Edgewater, 911 F.2d 911 (3d Cir. 1990), the United States Court of Appeals
for the Third Circuit dismissed a misrepresentation claim brought under state law against a plan
administrator because it was preempted by ERISA. Also, in Lutz v. Philips Electronics North
America Co., 2008 WL 3914840 (W.D. Pa. 2008), this Court held that negligence and breach of
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However, equitable relief is not available to allow Defendant/Counterclaimant to retain a
“windfall.” U.S. Airways., Inc. v. McCutchen, 663 F.3d 671, 678 (3d Cir. 2011)(rev’d on other
grounds).
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contract claims are preempted by ERISA. Therefore, because it is beyond peradventure that
Count II is preempted by ERISA, Counterclaim II shall be dismissed.
IV.
Conclusion
And now, this 21st day of October, 2013, for the reasons set forth hereinabove, it is
hereby ORDERED that: (1) Plaintiffs’ Motion to Dismiss Count I is DENIED without
prejudice to raise these issues, if appropriate, on a motion for summary judgment following
discovery; (2) Plaintiffs’ Motion to Dismiss Count II is GRANTED. Accordingly, Plaintiffs’
Motion to Dismiss (doc. no. 15) is DENIED as to Count I, and GRANTED as to Count II.
SO ORDERED this 21st day of October, 2013.
s/Arthur J. Schwab
Arthur J. Schwab
United States District Judge
cc: All Registered ECF Counsel and Parties
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