Campbell v. Rite Aid Corporation et al

Filing 26

OPINION AND ORDER granting 8 Motion to Dismiss; Motion to Strike as set out. Signed by Honorable Bruce Howe Hendricks on 8/5/2014.(mbro, )

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
Civil Action No.: 7:13-cv-02638-BHH
ROBERT H. CAMPBELL,
Plaintiff,
Opinion and Order
vs.
RITE AID CORPORATION and THE
PRUDENTIAL INSURANCE COMPANY
OF AMERICA,
Defendants.

This matter is before the Court on the Defendant Rite Aid Corporation’s motion to
dismiss and strike the jury demand (ECF No. 8).

Defendant Prudential Insurance

Company of America joined the motion to dismiss with regard to causes of action 3-6
and the request to strike Plaintiff’s jury trial demand. For the reasons set forth in this
order, the Court grants the Defendants’ motions.
BACKGROUND
Plaintiff Robert H. Campbell filed this ERISA action against Defendants Rite Aid
Corporation (“Rite Aid”) and The Prudential Insurance Company of America
(“Prudential”) on August 27, 2013, in the Court of Common Pleas for Spartanburg
County.

Defendants removed the case to this Court on September 26, 2013.

According to the complaint, Plaintiff was employed as a pharmacist with Defendant Rite
Aid, and, as a part of his employment, obtained accidental dismemberment insurance
through a policy (the “Policy”) issued by Defendant Prudential as a part of an ERISA
qualified plan (the “Plan”). (Compl. ¶¶ 4-5, ECF No. 1-1.) Plaintiff alleges that on
November 28, 2011, while sitting at his desk at work, he “slipped and caught himself”
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and the movement caused a stitch in an eye implant that had been placed in April of
1999 to become dislodged. (Id. ¶ 6, 8.) As a result of the dislodged stitch, Plaintiff
underwent surgery during which he “became totally blind.” (Id. ¶ 6.)
Plaintiff submitted a claim on the Policy seeking accidental dismemberment
benefits. In a letter dated April 18, 2012, Defendant Prudential denied Plaintiff’s claim
and provided the following explanation:
If not for the cataract surgery, you could not have had [t]he dislocated
intraocular lens implant in April 2011 and in December 2011 that resulted
in your loss of sight in the left eye. Therefore, your loss did result
indirectly from sickness (Cataract) and directly from complications of
surgical treatment (Cataract Surgery Left Eye with Intraocular Lens
Placement on 4/7/99) of sickness.”
(Id. ¶ 8.) Defendant Prudential referred Plaintiff to language in the Policy stating that a
loss would be covered if, “[y]ou sustain an accidental bodily injury while a covered
person, the loss results directly from that injury and from no other cause[,]” and if “[y]ou
suffer the loss within 365 days of the accident.” Prudential further indicated that the
Policy excluded from coverage losses that resulted from sickness and medical or
surgical treatment of sickness. (Id. ¶ 8.) Plaintiff alleges that Prudential lacks a proper
basis for denial of his claim and filed this action against Prudential and Rite Aid to
recover benefits under the Policy. Plaintiff also claims that he is entitled to benefits as a
result of certain statements or omissions made by Rite Aid regarding the Policy.
Defendant Rite Aid filed a motion to dismiss the complaint and to strike Plaintiff’s
jury demand (ECF No. 8) on October 24, 2013. Defendant Prudential joined the motion
to strike the jury demand and to dismiss causes of action 3-6 (ECF No. 11). Plaintiff
filed a response in opposition to the motion (ECF No. 15) on November 19, 2013, and
Defendants filed replies on December 9, 2013 (ECF Nos. 20 & 21).
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STANDARD OF REVIEW
A plaintiff’s complaint should set forth “a short and plain statement . . . showing
that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 8 “does not require
‘detailed factual allegations,’ but it demands more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To show that the plaintiff is
“entitled to relief,” the complaint must provide “more than labels and conclusions,” and
“a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550
U.S. at 555. In considering a motion to dismiss under Rule 12(b)(6), the Court “accepts
all well-pled facts as true and construes these facts in the light most favorable to the
plaintiff . . . .” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255
(4th Cir. 2009). Notably, “legal conclusions, elements of a cause of action, and bare
assertions devoid of further factual enhancement” do not qualify as well pled facts.
To survive a Rule 12(b)(6) motion to dismiss, a complaint must state “a plausible
claim for relief.” Iqbal, 129 S. Ct. at 1950. “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant
has acted unlawfully. Where a complaint pleads facts that are ‘merely consistent with’ a
defendant’s liability, it ‘stops short of the line between possibility and plausibility of
entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557). Stated differently, “where
the well-pleaded facts do not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged--but it has not ‘show[n]’—‘that the pleader is
entitled to relief.’”

Id. (quoting Fed.R.Civ.P. 8(a)).

Still, Rule 12(b)(6) “does not

countenance . . . dismissals based on a judge’s disbelief of a complaint’s factual

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allegations.” Colon Health Centers of Am., LLC v. Hazel, 733 F.3d 535, 545 (4th Cir.
2013) (quoting Neitzke v. Williams, 490 U.S. 319, 327 (1989)).

“A plausible but

inconclusive inference from pleaded facts will survive a motion to dismiss . . . .”
Sepulveda-Villarini v. Dep’t of Educ. of Puerto Rico, 628 F.3d 25, 30 (1st Cir. 2010)
(Souter, J.).
DISCUSSION
I.

CAUSES OF ACTION 1 AND 2
Plaintiff’s first and second causes of action fail to state a claim against Defendant

Rite Aid. As Rite Aid points out, the parties agree that the accidental dismemberment
benefits that Plaintiff seeks are insured by Defendant Prudential, and Plaintiff has
asserted no basis for imposing liability on Defendant Rite Aid. Rather, Plaintiff alleges
that it was Defendant Prudential who wrongly denied his claim for benefits.

(See

Compl. ¶¶ 8, 10, 11, 20, 29, and 30.) It is not clear from the complaint what, if any, role
Rite Aid played in this decision. Furthermore, Plaintiff failed to respond to Rite Aid’s
argument regarding causes of action 1 and 2, and the Court can only assume that
Plaintiff concedes the argument. Causes of action 1 and 2 remain pending against
Prudential, which has not moved for dismissal of these claims.
II.

Causes of Action 3-6
Plaintiff also seeks equitable relief under 29 U.S.C. § 1132(a)(3), which

authorizes a cause of action “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.”

Plaintiff’s third, fourth, fifth, and sixth causes of action

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respectively advance claims for breach of fiduciary duty, affirmation, equitable estoppel,
and unjust enrichment.
A. LEGAL OVERVIEW
In Varity Corp. v. Howe, 516 U.S. 489, 512 (1996), the United States Supreme
Court described 29 U.S.C. § 1132(a)(3) as a “catchall” provision that “act[s] as a safety
net, offering appropriate equitable relief for injuries caused by violations that § 502 does
not elsewhere adequately remedy.”

The Court explained that “where Congress

elsewhere provided adequate relief for a beneficiary’s injury, there will likely be no need
for further equitable relief, in which case such relief normally would not be ‘appropriate.’”
Id. In Korotynska v. Metro. Life Ins. Co., 474 F.3d 101(4th Cir. 2006), the Fourth Circuit
Court of Appeals joined the “great majority of circuit courts” holding that “a claimant
whose injury creates a cause of action under § 1132(a)(1)(B) may not proceed with a
claim under § 1132(a)(3).” Id. at 106 (citing Antolik v. Saks, Inc., 463 F.3d 796, 803 (8th
Cir. 2006); Ogden v. Blue Bell Creameries U.S.A., Inc., 348 F.3d 1284, 1287–88 (11th
Cir. 2003); Tolson v. Avondale Indus., Inc., 141 F.3d 604, 610–11 (5th Cir. 1998);
Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 615–16 (6th Cir. 1998); Forsyth
v. Humana, Inc., 114 F.3d 1467, 1474–75 (9th Cir. 1997); Wald v. Sw. Bell Corp.
Customcare Medical Plan, 83 F.3d 1002, 1006 (8th Cir. 1996)). The Fourth Circuit
observed that the equitable relief sought by Korotynska was “pursued with the ultimate
aim of securing the remedies afforded by § 1132(a)(1)(B),” and reasoned that if
equitable relief were available in such a case, “every wrongful denial of benefits could
be characterized as a breach of fiduciary duty.” Id. at 107-108 (quotation marks and
citation omitted). Thus, the court made clear that a claimant may not “repackage his or
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her denial of benefits claim as a claim for breach of fiduciary duty. Id. at 106 (quotation
marks and citation omitted).
More recently, in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), the Supreme
Court expanded the equitable remedies available to a plaintiff suing fiduciaries under
Section 1132(a)(3). The district court in Amara found that the plaintiffs’ cause of action
was authorized by § 502(a)(1)(B), which is the “recovery-of-benefits-due-provision” that
Defendants in the instant action cite as the only appropriate avenue for Plaintiff’s claims.
See id. at 1871. Pursuant to this provision, the district court in Amara altered the terms
of a new pension plan adopted by the defendant, Cigna Corporation, because it found
that Cigna had misrepresented the terms of the plan to its employees. The district court
considered the issue of whether relief was appropriate under § 502(a)(3), but declined
to rule on the issue in part because it had already found that relief should be granted
under § 502(a)(1)(B). The Second Circuit affirmed the decision, but the Supreme Court
reversed, finding that although § 502(a)(1)(B) authorized the district court to order a
party to pay benefits due under a plan, it did not authorize the court to first change the
terms of the plan and then order payment. See id. at 1876-77. The Court held that
such relief, which it characterized as “reformation of the terms of the plan” and a
“remedy [that] resembles estoppel,” was equitable in nature and thus could only be
granted pursuant to § 502(a)(3). See id. at 1879-80. Significantly, in instructing the
district court that the relief sought was appropriate under § 502(a)(3), the Supreme
Court did not hold that a party could seek relief for the same injury under both
§ 502(a)(1)(B) and § 502(a)(3) or that the Court could grant relief under both provisions.
Rather, it suggested that its finding that relief was not available under § 502(a)(1)(B)

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eliminated at least one of the district court’s reasons for not using § 502(a)(3). See id.
at 1878.
Relying on Amara, the Fourth Circuit held that a plaintiff seeking equitable relief
under § 502(a)(3) could recover more than wrongfully accepted premiums and could
obtain “make whole relief” such as “surcharge and equitable estoppel remedies.”
McCravy v. Metro. Life Ins. Co., 690 F.3d 176, 180, 182 (4th Cir. 2012) (quotation
marks and citation omitted). The Fourth Circuit observed that Amara had done away
with “perverse incentives” that encouraged fiduciaries “to wrongfully accept premiums”
safe in the knowledge that “the biggest risk [they] would face would be the return of their
ill-gotten gains” in those rare instances “where plan participants actually needed the
benefits for which they had paid.” Id. at 183. However, like Amara, McCravy was a
case in which relief was not available under § 502(a)(1)(B), and the plaintiff in McCravy
explicitly conceded as much. Indeed, the central issue in McCravy was the existence of
coverage, not the denial of benefits. Thus, while McCravy offers clear authority and a
compelling rationale for the availability of robust equitable remedies, it is not clear what
if any impact it has on the core holding in Varity and Korotynska.
Plaintiff contends that Defendants’ reliance on Varity and Korotynska is
“misplaced” following Amara. (Pl.’s Resp. in Opp. to Mot. to Dismiss 4, ECF No. 15.)
However, subsequent to Amara, the Fourth Circuit cited Korotynska for the very
proposition Plaintiff claims Amara negates. See Savani v. Washington Safety Mgmt.
Solutions, LLC, 474 F. App’x 310, 313 n.2 (4th Cir. 2012) (“The district court also
properly dismissed count two on the grounds that a party may not request simultaneous
relief under both ERISA, § 502(a)(1)(B) and § 502(a)(3)” (citing Korotynska, 474 F.3d at

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107)). Plaintiff argues that Amara and McCravy “allow a party to seek equitable relief
pursuant to 29 U.S.C. § 1132(a)(3), placing no qualifier on whether another avenue of
recovery is available.” (Pl.’s Resp. in Opp. to Mot. to Dismiss 5, ECF No. 15.) The
Court disagrees with Plaintiff’s analysis to the extent that Plaintiff contends that Amara
and McCravy completely overruled the rule set forth in Varity and Korotynska. While
Amara and McCravy certainly expand the types of equitable relief available to some
ERISA plaintiffs, this Court agrees with the significant majority of other district courts
that have considered the issue that Amara does not alter the rule set down in Varity that
equitable remedies are only available when adequate relief is not available elsewhere.
See Leach v. Aetna Life Ins. Co., 2014 WL 470064, at *4 (D. Md. Feb. 5, 2014) (citing
Biglands v. Raytheon Empl. Sav. & Inv. Plan, 801 F.Supp.2d 781, 785–86 (N.D. Ind.
2011); Harp v. Liberty Mut. Group, Inc., 2013 WL 5462290, at *4–5 (M.D.N.C. Sept. 30,
2013); Nemitz v. Metro. Life Ins. Co., 2013 WL 3944292, at *4 (N.D. Ill. July 31, 2013);
Roque v. Roofers’ Unions Welfare Trust Fund, 2013 WL 2242455, at *7 (N.D.Ill. May
21, 2013); Krase v. Life Ins. Co. of N. Am., 2012 WL 4483506, at *3 (N.D. Ill. Sept. 27,
2012)); see also Harris v. Aetna Life Ins. Co., 2013 WL 5935144, at *4 n.3 (D.S.C. Nov.
5, 2013). But see Strickland v. AT & T Umbrella Ben. Plan No. 1, 3:10-CV-268-RJCDSC, 2012 WL 4511367 (W.D.N.C. Oct. 1, 2012) (“Defendant’s reliance on pre-Amara
cases is misplaced.”). This Court is not convinced that claims under § 502(a)(1)(B) and
§ 502(a)(3) can never be pled in the alternative or brought in the same complaint,1 but

1

See, e.g., Winkelspecht v. Gustave A. Larson Co., 10-C-1072, 2012 WL 1995103 (E.D.
Wis. June 1, 2012), appeal dismissed (July 19, 2012) (“[A] direct citation to § 1132(a)(1)(b) does
not exclude relief sought under other grounds; pleadings do not exist in a zero-sum world in
which relief sought under one part of a statute necessarily per se excludes relief sought on
additional bases.”).

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where it is clear that a party has simply “repackaged” a § 502(a)(1)(B) claim for the
wrongful denial of benefits and placed a § 502(a)(3) bow on top, dismissal is warranted.
Plaintiff’s third cause of action is a perfect example of such a claim.
B. CAUSE OF ACTION 3
Plaintiff’s third cause of action alleges that Defendants breached their fiduciary
duties through a number of acts or omissions that culminated in a decision to deny
benefits. Such acts or omissions include, “not following the plan document(s),” (Compl.
¶ 33), “failing to investigate Plaintiff’s claim for accidental dismemberment benefits by
not seeking diligently the opinions of Plaintiff’s treating physicians and/or . . . failing to
give proper consideration of evidence produced by plaintiff, (id ¶ 35), “disregard[ing] the
opinion of Plaintiff’s treating physician,” and “neglect[ing] to speak with [Plaintiff’s
treating physician] to discuss Plaintiff’s accidental dismemberment claim.”

Though

Defendants may have taken numerous steps to reach the allegedly incorrect conclusion
that Plaintiff was not entitled to benefits, there is but one injury alleged – the wrongful
denial of benefits. Accordingly, Plaintiff’s third cause of action for breach of fiduciary
duty is a repackaged claim for wrongful denial of benefits and is accordingly dismissed.
C. CAUSES OF ACTION 4 AND 5
Plaintiff’s fourth and fifth causes of action rehash his claims that he is entitled to
benefits under the terms of the Plan, (see id. ¶¶ 47, 50, 52), while paradoxically claiming
that the Plan should be reformed and that Defendants should be estopped from
enforcing its terms, (see id. ¶¶ 46, 54). To the extent that the fourth and fifth causes of
action maintain that Plaintiff is entitled to benefits under the terms of the Plan, they are
subject to dismissal because Plaintiff has an adequate remedy for wrongful denial of
benefits under § 502(a)(1)(B).
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Additionally, Plaintiff has not pled sufficient facts to allow the Court to “infer more
than the mere possibility of misconduct” with regard to the statements allegedly made
by Defendants, which form the basis for Plaintiff’s claims for affirmation and equitable
estoppel.

As an initial matter, the Court cannot determine whether any of the

statements alleged in the fourth and fifth causes of action are attributable to Defendant
Prudential. Moreover, the statements attributed specifically to Rite Aid or generally to
“Defendants” involve “coverage,” which does not appear to be at issue. (See id. ¶ 40)
(Defendants represented “that Plaintiff had accidental dismemberment coverage on his
health pertaining to his ability to work under subject policy”); (id. ¶ 40) (“Defendants
informed Plaintiff that Plaintiff was covered under subject policy”); (id. ¶ 42) (Defendants
“misrepresented to Plaintiff the policy’s coverage terms”); (id. ¶ 43) (Defendants
conveyed “that so long as Plaintiff continued to pay the premiums, subject policy would
provide coverage for Plaintiff in the event that a doctor determined that Plaintiff was
unable to work due to accidental dismemberment injury”); (id. ¶¶ 44-45) (Plaintiff was
neither given a copy of the summary plan documents nor advised “that any previous
condition would bar him from coverage under the subject policy.”). Defendants concede
that Plaintiff had coverage under the Plan and neither side has alleged that Plaintiff was
categorically barred from coverage because of a previous condition.
Construing the complaint in the manner most favorable to the Plaintiff, the Court
can only assume that the Plaintiff is using and interpreting the term “coverage” to mean,
“entitlement to benefits,” but even so, the Court does not understand the complaint to
allege that Defendants ever told Plaintiff that he was entitled to benefits for the loss of
his sight under the specific circumstances at issue in this case. On the other hand,

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what is somewhat troubling to the Court is Plaintiff’s allegation that he never received
summary plan documents or a copy of the Plan. It appears that in some instances,
failure to provide a copy of summary plan documents or other information about the
plan may constitute a breach of fiduciary duty,2 although Plaintiff did not specifically
allege a breach of fiduciary duty on this basis. Thus, in reviewing the complaint in its
current form, the Court cannot determine what statements Defendants made that would
give rise to a claim for equitable estoppel or give the Court a basis to alter the terms of
the Plan.

Accordingly, the Court concludes that even if Plaintiff is entitled to seek

simultaneous relief under § 502(a)(1)(B) and § 502(a)(3), Plaintiff’s fourth and fifth
causes of action must still be dismissed because they fail to state a claim.
Before turning to Plaintiff’s final claim, the Court wishes to address an argument
that Defendants advance as an additional basis for dismissing Plaintiff’s fourth and fifth
causes of action. Citing a number of pre-Amara cases, Defendants suggest that a
party’s oral representations may never be used to modify the written terms of a plan.
The Court declines to adopt this argument as a basis for dismissal. A bright line rule
that a defendant’s oral representations, no matter how inaccurate or misleading, may
never justify equitable relief that alters the written terms of a plan seems inconsistent
with Amara and its progeny, including McCravy. While this Court would not go as far as
2

See Latimer v. Washington Gas Light Co., 2012 WL 2087783 (E.D. Va. June 7, 2012)
(“Many courts have recognized ERISA’s requirement on plan administrators to provide
participants with plan information as a duty owed by plan administrators as fiduciaries and
failure to provide such information as a breach of fiduciary duties.”). However, a plaintiff
seeking to recover on this basis “must show some significant reliance upon, or possible
prejudice flowing from, the lack of notice of an accurate description of the terms of the plan.” Id.
(quoting Gable v. Sweetheart Cup Co., Inc., 35 F.3d 851, 859 (4th Cir. 1994). Plaintiff’s claim
for breach of fiduciary duty was not advanced on this basis, but Plaintiff may amend the
complaint to assert such a claim if he believes it to be warranted and can make the requisite
showing of reliance or prejudice.

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to say that such an argument is “dead in the water after Amara,” see Strickland, 2012
WL 4511367 at *7, it would note that the rule cited by Defendants has the potential to
create the same type of moral hazard that Judge Duffy and the Fourth Circuit were
concerned about in McCravy.3 Thus the Court declines to adopt Defendants’ argument
as an additional basis for dismissing the fourth and fifth causes of action.
D. CAUSE OF ACTION 6
Plaintiff’s sixth cause of action for unjust enrichment must be dismissed for failure
to state a claim. Like his third cause of action, Plaintiff’s claim for unjust enrichment is
simply a reiteration of Plaintiff’s claim for wrongful denial of benefits.

Additionally,

Plaintiff alleges that “Defendants never intended to pay any accidental dismemberment
benefits, even against the treating physician’s written documentation of injury,” (Compl.
¶ 58), however, he offers absolutely no facts beyond the denial of his claim for benefits
to support the allegation. Consequently, the sixth cause of action will be dismissed.
III.

JURY DEMAND
The Fourth Circuit has held that “proceedings to determine rights under

employee benefit plans are equitable in character and thus a matter for a judge, not a
jury.” Phelps v. C.T. Enterprises, Inc., 394 F.3d 213, 222 (4th Cir. 2005) (quoting Berry
3

Although he concluded that then existing precedent compelled him to rule for the
Defendants in McCravy, Judge Duffy noted that the rule in place created perverse incentives:
“[W]hile this Court is compelled to such a holding by the law of ERISA as interpreted by higher
courts, it cannot ignore the dangerous practical implications of this application. The law in this
area is now ripe for abuse by plan providers, which are almost uniformly more sophisticated
than the people to whom they provide coverage. With their damages limited to a refund of
wrongfully withheld premiums, there seems to be little, if any, legal disincentive for plan
providers not to misrepresent the extent of plan coverage to employees or to wrongfully accept
and retain premiums for coverage which is, in actuality, not available to the employee in
question under the written terms of the plan . . . . Plaintiff’s allegations in this case present a
compelling case for the availability of some sort of remedy . . . .” McCravy v. Metro. Life Ins.
Co., 743 F. Supp. 2d 511, 524 (D.S.C. 2009) rev’d and remanded, 690 F.3d 176 (4th Cir. 2012).

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v. Ciba–Geigy, 761 F.2d 1003 (4th Cir. 1985)); see also Cherepinsky v. Sears Roebuck
& Co., 455 F. Supp. 2d 470, 474 (D.S.C. 2006) (acknowledging that “a review of Fourth
Circuit case law reveals a theoretical maze of interpretations wherein courts have taken
many different approaches,” but concluding “that it is still good law in the Fourth Circuit
that ERISA actions are equitable in nature and are for the Court to decide rather than
the jury.”).

Thus, the Court grants the Defendants’ motion to strike the Plaintiff’s

demand for a jury trial.
CONCLUSION
For the reasons set forth above, the motion to dismiss and to strike the jury
demand is granted. The Court dismisses all causes of action with respect to Defendant
Rite Aid and causes of action 3-6 with respect to Defendant Prudential. These causes
of action are dismissed with prejudice, except that such dismissal is made without
prejudice to Plaintiff’s right to file additional causes of action as set forth in footnote 2, if
appropriate.
IT IS SO ORDERED.
/s/ Bruce Howe Hendricks
United States District Judge
August 5, 2014
Greenville, South Carolina

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