Smoak et al v. Cangioalosi et al

Filing 10

ORDER AND OPINION granting 5 Defendants' Motion to Dismiss. Defendants Elizabeth Cangialosi, ADP Totalsource Inc, Automatic Data Processing Inc,and Automatic Data Processing Insurance Agency Inc, are DISMISSED WITH PREJ UDICE. The Court GRANTS IN PART AND DENIES AS MOOT IN PART 6 Defendant Aetna Life Insurance Company's Motion to Dismiss and to Strike. The complaint is DISMISSED WITHOUT PREJUDICE as to Defendant Aetna; the motion is otherwise DENIED AS MOOT. The Court further ORDERS that Plaintiffs may file an amended complaint asserting claims under 29 U.S.C. § 1132 within 21 days of the date of this order. AND IT IS SO ORDERED. Signed by Honorable Richard M Gergel on 7/21/2017.(sshe, )

IN THE UNITED STATES DISTRICT COUR1ECE1VEO CLERK'S OFFICE
DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
ZOil JUL 2W I A q: 3b

J. William Smoak, III, and Smoak's Air
Conditioning Co., Inc.,
Plaintiffs,

v.
Elizabeth Cangialosi; ADP TotalSource,
Inc.; Automatic Data Processing, Inc.;
Automatic Data Processing Insurance
Agency, Inc.; and Aetna Life Insurance
Company,
Defendants.

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ORDER AND OPINION

This matter is before the Court on Defendants Elizabeth Cangialosi, ADP Totalsource, Inc.,
Automatic Data Processing, Inc., and Automatic Data Processing Insurance Agency, Inc.'s
(collectively, the "ADP Defendants") motion to dismiss and to strike (Dkt. No. 5) and Defendant
Aetna Life Insurance Company's motion to dismiss and to strike (Dkt. No. 6). For the reasons set
forth below, the Court grants the ADP Defendant's motion, grants in part and denies as moot in
part Aetna's motion to dismiss, dismisses claims against Aetna without prejudice, and grants leave
to amend the complaint within 21 days.
I.

Background
Plaintiffs allege Defendants failed to pay death benefits for decedent Helen B. Smoak, who

was an employee of ADP Totalsource, 1 as agreed under a group life policy Aetna issued to ADP
Totalsource. They filed suit in the Charleston County Court of Common Pleas on May 22, 2015.

1 Plaintiffs

assert they are unsure what entity employed the decedent. (Dkt. No. 9.)

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Defendants were served between May 30, 2017 and June 4, 2017, and this action was timely
removed on June 29, 2017.
II.

Legal Standard

Rule 12(b)( 6) of the Federal Rules of Civil Procedure permits the dismissal of an action if
the complaint fails "to state a claim upon which relief can be granted." Such a motion tests the
legal sufficiency of the complaint and "does not resolve contests surrounding the facts, the merits
of the claim, or the applicability of defenses. . . . Our inquiry then is limited to whether the
allegations constitute 'a short and plain statement of the claim showing that the pleader is entitled
to relief."' Republican Party ofN.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (quotation marks
and citation omitted). In a Rule 12(b)(6) motion, the Court is obligated to "assume the truth of all
facts alleged in the complaint and the existence of any fact that can be proved, consistent with the
complaint's allegations." E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th
Cir. 2000). However, while the Court must accept the facts in a light most favorable to the nonmoving party, it "need not accept as true unwarranted inferences, unreasonable conclusions, or
arguments." Id.
To survive a motion to dismiss, the complaint must state "enough facts to state a claim to
relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Although
the requirement of plausibility does not impose a probability requirement at this stage, the
complaint must show more than a "sheer possibility that a defendant has acted unlawfully."
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint has "facial plausibility" where the

pleading "allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged." Id.

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III.

Discussion
Defendants move for dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure

because the Employment Retirement Income Security Act of 1974 ("ERISA") preempts all
Plaintiffs' state law claims and that 29 U.S.C. § 1132 provides the exclusive remedy available to
Plaintiffs. In response, Plaintiffs concede their claims are preempted and ask for leave to amend
the complaint to proceed under 29 U.S.C. § 1132. (Dkt. No. 9.) Leave to amend the complaint
should be freely given when no reason to the contrary is apparent. Foman v. Davis, 371 U.S. 178,
182 (1962). The Court therefore dismisses the complaint without prejudice and grants leave to file
an amended complaint within 21 days of the date of this order.
Because the complaint is dismissed, the Court cannot reach Defendants' arguments about
striking demands from the complaint. Defendants may reassert those arguments if they remain
germane after amendment of the complaint.
The only ripe dispute before the Court at present is whether the ADP Defendants are proper
defendants in an ERISA action.

According to the ADP Defendants, "ERISA allows a plan

participant to bring an action to recover benefits that were allegedly wrongfully denied only against
the benefit plan itself and any fiduciary that controls the administration of the plan." (Dkt. No. 51 at 15 (citing several unpublished cases).) Defendants argue the ADP Defendants cannot be
fiduciaries controlling administration of the plan because the plan documents explicitly provide
Aetna makes all claim determinations. (See Dkt. No. 1-3 at 115.) Plaintiffs respond that the ADP
Defendants are proper parties because they were Aetna's agents and because 29 U.S.C.
§ l 132(a)(3)2 does not limit claims to the plan or those who make benefit determinations. Because

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Subsection 1132(a) merely lists the persons who may bring civil action; it does not address who
is a proper defendant.

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Plaintiffs effectively assert the ADP Defendants will be named in an amended complaint asserting
claims under ERISA, this issue is ripe.
There is no controlling authority in this Circuit on this issue, but this District has
consistently held that a party with no control over claims administration is not a proper defendant
in an ERISA action. See, e.g., Winburn v. Progress Energy Carolinas, Inc., Civ. No. 4:11-3527RBH, 2015 WL 505551, at *13 (D.S.C. Feb. 6, 2015); Fryer v. Accutrex Prod., Inc., Civ No. 0:102811-JFA-PJG, 2011 WL 4008126, at *3 (D.S.C. Aug. 2, 2011), report and recommendation
adopted, Civ. No. 0:10-2811-JFA-PJG, 2011 WL 4102099 (D.S.C. Sept. 8, 2011). Unpublished
Fourth Circuit precedent accords with that view. See Gluth v. Wal-Mart Stores, Inc., 117 F.3d
1413 (4th Cir. 1997) (unpublished table decision). Here, the plan documents unambiguously
identify Aetna, not any ADP Defendant, as the plan's ERISA fiduciary. (Dkt. No. 1-3 at 115.)
Even if they are in some sense Aetna's marketing agents, that could not make them plan fiduciaries
under ERIS A because they have no control over benefit determinations. (Id.) Although there is a
circuit split on the issue of whether a plan fiduciary can be a defendant in an ERISA action for
benefits or whether only the plan administrator may be a defendant, Anselmo v. W Paces Hotel
Grp., LLC, Civ. No. 9:09-2466-MBS, 2011 WL 1049195, at *12 (D.S.C. Mar. 18, 2011)
(collecting cases), there is no authority for the proposition that a party that is not even a plan
fiduciary can be a defendant in an ERISA action. The Court therefore holds the ADP Defendants
are improper defendants under ERISA action and they are dismissed with prejudice from this
action.
Finally, Plaintiffs present a preemptive argument that Defendants are estopped from
asserting that Plaintiffs failed to exhaust administrative remedies. (See Dkt. No. 9 at 3 n.1.) The
Court cannot address that argument because Defendants did not present any exhaustion argument,

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presumably because they were moving to dismiss state law causes of action having no exhaustion
requirements. If Defendants argue failure to exhaust administrative remedies in response to an
amended complaint proceeding under§ 1132, the Court will address the argument at that time.

IV.

Conclusion
For the foregoing reasons, the Court GRANTS Defendants' motion to dismiss (Dkt. No.

5). Defendants Elizabeth Cangialosi, ADP Totalsource, Inc., Automatic Data Processing, Inc.,
and Automatic Data Processing Insurance Agency, Inc., are DISMISSED WITH PREJUDICE.
The Court GRANTS IN PART AND DENIES AS MOOT IN PART Defendant Aetna Life
Insurance Company's motion to dismiss and to strike. The complaint is DISMISSED WITHOUT

PREJUDICE as to Defendant Aetna; the motion is otherwise DENIED AS MOOT. The Court
further ORDERS that Plaintiffs may file an amended complaint asserting claims under 29 U.S.C.
§ 1132 within 21 days of the date of this order.

AND IT IS SO ORDERED.

=d~ergel

United States District Court Judge
July 0-/,2017
Charleston, South Carolina

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