Supermedia Inc. et al v. Foy et al
Filing
98
Memorandum Opinion and Order granting 86 Dismiss for Failure to State a Claim; 71 Motion to Dismiss/Lack of Jurisdiction. (Ordered by Senior Judge A. Joe Fish on 8/7/2013) (ykp)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
SUPERMEDIA, INC., ET AL.,
Plaintiffs,
VS.
CAROL FOY, ET AL,
Defendants.
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CIVIL ACTION NO.
3:12-CV-2034-G
MEMORANDUM OPINION AND ORDER
Before the court are (1) the motion of the defendants Bell, Foy, Ketzer, Kraft,
Lane, Leynes, Russo, Shapses, and Sullivan (the “moving defendants”) to dismiss the
plaintiffs’ claims against them (docket entry 71), and (2) the plaintiffs’ motion to
dismiss the counterclaims of the defendants Mentzer, Noe, Ohnstad, Palmer, and
Zenus (the “Mentzer defendants”) (docket entry 86). For the reasons stated below,
the moving defendants’ motion is granted and the plaintiffs’ motion is also granted.
I. BACKGROUND
This is a suit for declaratory judgment under the Employee Retirement Income
Security Act of 1974, 29 U.S.C. §§ 1001 et seq. (“ERISA”). See Plaintiffs’ First
Amended Class Action Complaint for Declaratory Judgment (“Complaint”) at 2
(docket entry 23). The plaintiffs, SuperMedia Inc., SuperMedia LLC, SuperMedia
Services Inc., SuperMedia Sales Inc., SuperMedia Employee Benefits Committee, and
Idearc Inceptor LTD (collectively, “SuperMedia” or the “plaintiffs”), are various
corporate entities operating in the business of providing media solutions. Id. ¶¶ 2-7,
38. On June 25, 2012, SuperMedia enacted amendments to its retiree health and
welfare benefits plans (the “amendments”). Id. ¶¶ 51-52. Because SuperMedia was
aware that these amendments might cause significant contention between it and the
affected retirees, it filed this suit on June 26, 2012, seeking a declaratory judgment
announcing the legality of these amendments. Id. ¶¶ 1, 64-66. The defendants are
Linton Bell (“Bell”), Pamela Bennett (“Bennett”), Carol Foy (“Foy”), Margaret Ketzer
(“Ketzer”), Joanie Kraft (“Kraft”), Theresa Lane (“Lane”), Sharon Leynes (“Leynes”),
Robert Mentzer (“Mentzer”), Sandra Noe (“Noe”), Carl Ohnstad (“Ohnstad”), Claire
Palmer (“Palmer”), Stanley Russo (“Russo”), Howard Shapses (“Shapses”), John
Sullivan (“Sullivan”), and Bernard Zenus (“Zenus”) (collectively, the “defendants”).
Id. ¶¶ 8-30.1 The defendants are among those retirees potentially affected by the
1
The following defendants named in the first amended complaint were
subsequently dismissed by orders granting agreed motions to dismiss: (1) Martha
Bobo (docket entry 67), (2) Dale Burks (docket entry 67), (3) Dennis Cassidy
(docket entry 67), (4) Joseph Gallagher (docket entry 51), (5) Beverly Gemmell
(docket entry 50), (6) Edwin Hanson (docket entry 72), (7) Christine Harvey (docket
entry 91), and (8) Patricia Lindop (docket entry 52).
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amendments. They have voiced various objections to SuperMedia concerning the
amendments. Id. ¶ 65.
SuperMedia’s complaint in this case was filed on June 26, 2012. The moving
defendants filed the instant motion to dismiss on October 12, 2012. The Mentzer
defendants filed an answer with counterclaims on October 15, 2012. The plaintiffs
filed the instant motion to dismiss those counterclaims on November 16, 2012.
II. ANALYSIS
A. The Moving Defendants’ Motion to Dismiss: Personal Jurisdiction
1. Factual Standard: A Prima Facie Case
When a nonresident defendant moves to dismiss for lack of personal
jurisdiction, the plaintiff bears the burden of establishing the district court's
jurisdiction over the nonresident. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.), cert.
denied, 513 U.S. 930 (1994); Gardemal v. Westin Hotel Company, 186 F.3d 588, 592
(5th Cir. 1999). If the district court chooses to decide the matter without an
evidentiary hearing, the plaintiff may meet its burden by presenting a prima facie case
for personal jurisdiction. Wilson, 20 F.3d at 648; Gardemal, 186 F.3d at 592. The
court will take the allegations of the complaint as true, except where they are
controverted by opposing affidavits, and all conflicts in the facts are resolved in favor
of the plaintiff. Wilson, 20 F.3d at 648; Gardemal, 186 F.3d at 592. In making its
determination, the court may consider affidavits, interrogatories, depositions, oral
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testimony, or any combination of recognized discovery methods. Allred v. Moore &
Peterson, 117 F.3d 278, 281(5th Cir. 1997), cert. denied, 522 U.S. 1048 (1998);
Thompson v. Chrysler Motors Corporation, 755 F.2d 1162, 1165 (5th Cir. 1985).
2. Legal Standards and Application
a. Statute-Based Personal Jurisdiction: ERISA’s
Nationwide Service of Process
FED. R. CIV. P. 4(k)(1)(C) provides that “[s]erving a summons or filing a
waiver of service establishes personal jurisdiction over a defendant: . . . when
authorized by a federal statute.” 29 U.S.C. § 1132(e)(2) authorizes nationwide
service of process “[w]here an action is brought under this subchapter.” Subchapter I
of ERISA contains provisions under the heading “Protection of Employee Benefit
Rights” and is codified at 29 U.S.C. §§ 1001-1191(c). Since Congress may not
override the Constitution, where a federal statute like ERISA authorizes nationwide
service of process, the Fifth Circuit has held that the Fifth Amendment right to due
process requires that a defendant so served have minimum contacts with the United
States. See Bellaire General Hospital v. Blue Cross Blue Shield of Michigan, 97 F.3d 822,
826 (5th Cir. 1996) (citing Busch v. Buchman, Buchman & O’Brien, Law Firm, 11 F.3d
1255, 1258 (5th Cir. 1994)).
Here, the moving defendants do not dispute that they have sufficient
minimum contacts with the United States. See generally Memorandum in Support of
Motion to Dismiss Defendants Bell, Foy, Harvey, Ketzer, Kraft, Lane, Leynes, Russo,
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Shapses, and Sullivan (“Defendants’ Motion”) (docket entry 71-1). Rather, they
argue that SuperMedia’s case does not fall “under this subchapter” of ERISA, because
(1) SuperMedia brought the action under the Declaratory Judgment Act, 28 U.S.C.
§ 2201, see Defendants’ Motion at 1-2, and (2) there is no provision of ERISA that
specifically authorizes this action, id. at 8. This, according to the moving defendants,
means that ERISA’s nationwide service of process provision does not apply and that
the plaintiffs must make a prima facie case of personal jurisdiction under traditional
principles. Id.
The plaintiffs respond that, while the Declaratory Judgment Act increases the
scope of remedies available to a plaintiff, courts consistently hold that it does not
provide an independent cause of action. See Plaintiffs’ Response to Bell Defendants’
Motion to Dismiss and Brief in Support (“Plaintiffs’ Response”) at 9 (docket entry
88); see also, e.g., Lawson v. Callahan, 111 F.3d 403, 405 (5th Cir. 1997) (citing
cases); Michigan Savings and Loan League v. Francis, 683 F.2d 957, 960 (6th Cir. 1982)
(citing Skelly Oil Company v. Phillips Petroleum Company, 339 U.S. 667 (1950), and
Aetna Life Insurance Company v. Haworth, 300 U.S. 227 (1937)). The plaintiffs also
cite the ample case law holding that a court has subject matter jurisdiction of an
ERISA action for a declaratory judgment, where the defendant in the action could
have brought a separate ERISA action as a plaintiff to enforce rights or recover plan
benefits (the “mirror image rule”). Plaintiffs’ Response at 10-11; see also, e.g.,
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NewPage Wisconsin System Inc. v. United Steel, Paper & Forestry, Rubber, Manufacturing,
Energy Allied Industrial and Service Workers International Union, AFL-CIO/CLC, 651 F.3d
775, 778 (7th Cir. 2011) (referring to a declaratory judgment defendant’s
hypothetical suit as plaintiff as a “mirror-image” suit). Under the plaintiffs’
argument, since the case law makes clear that ERISA is the source of the court’s
subject matter jurisdiction here, the action is clearly one for which nationwide service
of process is available. Plaintiff’s Response at 12. Since nationwide service of process
is available, and since the moving defendants have minimum contacts with the
United States, the plaintiffs assert, the court has personal jurisdiction over the
moving defendants. Id.
While the plaintiffs’ argument has some force, the mere fact that courts
generally rely on the mirror image rule to find that ERISA confers subject matter
jurisdiction in cases like this one does not resolve the problem of the applicability of
ERISA’s nationwide service of process provision. The court must first interpret 29
U.S.C. § 1132(e)(2)’s phrase “an action . . . under this subchapter.” The plaintiffs
have presented minimal argument to demonstrate that the phrase should be
interpreted to mean “an action for which ERISA is the source of subject matter
jurisdiction.” See id. at 10-12.
The interpretation of § 1132(e)(2) has played a key role in a number of
appellate cases examining personal jurisdiction in ERISA declaratory judgment
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actions brought by plan administrators. See, e.g., Gulf Life Insurance Company v.
Arnold, 809 F.2d 1520, 1523 (11th Cir. 1987); NGS American, Inc. v. Jefferson, 218
F.3d 519, 524 (6th Cir. 2000); Denny’s, Inc. v. Cake, 364 F.3d 521, 525 (4th Cir.),
cert. denied, 543 U.S. 940 (2004). In these cases, the circuit courts have followed the
same procedure, looking to 29 U.S.C. § 1132(a)(3), which delineates the types of
actions a fiduciary is authorized to bring, to determine whether the case falls “under
this subchapter” for purposes of nationwide service. See Gulf Life, 809 F.2d at 1523;
NGS American, 218 F.3d at 524; Denny’s, Inc., 364 F.3d at 525. The interpretive
conclusion these courts implicitly adopt is that, for an action to fall “under this
subchapter,” 29 U.S.C. § 1132(e)(2), it must be specifically authorized by
Subchapter I of ERISA, not merely an action for which ERISA supplies subject matter
jurisdiction.
In the case most directly square with the facts here, the Eleventh Circuit ruled
that ERISA’s nationwide service of process provision was unavailable in a declaratory
judgment action in which a plan administrator sought a ruling on the legality of its
denial of an individual’s claim for certain benefits. See Gulf Life, 809 F.2d at 1522,
1525. The plan administrator had argued that the action fell within § 1132(a)(3)
and that therefore it was an action “under this subchapter” for purposes of
§ 1132(e)(2). Id. at 1523.
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The court determined that, for several reasons, the action was not authorized
by § 1132(a)(3). First, it noted that § 1132(a)(3) only permits fiduciaries to bring
injunctive actions or actions for “other equitable relief.” Id. Since the plan
administrator had not made a claim for injunctive relief, the court analyzed whether
its declaratory judgment claim was equitable. Id. Noting that “[b]ut for the
Declaratory Judgment Act, the only way this action could have arisen is as a suit by
[the defendant] to collect the severance pay he claims he is due,” the court
determined the declaratory judgment claim should be characterized as legal, not
equitable, and therefore it did not fall within § 1132(a)(3). Id. The court
additionally observed that § 1132(a)(3) is only available for actions seeking to
“enforce” ERISA or plan provisions. Id. The court held that “Gulf Life’s action is
defensive in nature. . . . Seeking a declaration of its liability does not ‘enforce’ the
plan.” Id. at 1523-24. Because the plan administrator had not shown that the action
was one “under this subchapter,” the Eleventh Circuit determined that nationwide
service of process was not available and the district court therefore did not have
personal jurisdiction over the defendants in the case. Id. at 1525.
Instead of pointing to a specific provision of ERISA authorizing their suit, the
plaintiffs here simply assert (with little accompanying argument) that the fact that
subject matter jurisdiction is available for suits like theirs means that nationwide
service of process is available to them. See Plaintiff’s Response at 12. The court is
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not persuaded. Indeed, the court concludes, on the basis of the following, that the
narrower reading implied in both Gulf Life and other courts’ interpretations of
§ 1132(e)(2) is preferable. To find an action is “under this subchapter,” 29 U.S.C.
§ 1132(e)(2), the court concludes the plaintiff’s action must be authorized by a
specific provision of ERISA. Briefly reviewing a Seventh Circuit case examining
subject matter jurisdiction will be instructive.
In NewPage Wisconsin System Inc., the Seventh Circuit ruled a district court had
subject matter jurisdiction2 of an ERISA case very similar in nature to this one, in
part because that case was “under this subchapter,” 29 U.S.C. § 1132(e)(1). See
NewPage, 651 F.3d at 777. The court explained that the question of subject matter
jurisdiction was “a matter of adjudicatory competence,” and that “[a] federal district
court is the right forum for a dispute about the meaning of ERISA.” Id. The court
also relied on the “mirror image” rule courts typically apply when examining subject
matter jurisdiction of pure declaratory judgment actions. Id. at 778. The NewPage
panel emphasized that, since (1) the defendant in the case already had, in a different
forum, brought an action as a plaintiff under 29 U.S.C. §§ 1132(a)(1) and (a)(3), and
(2) that suit fell “under this subchapter” for purposes of § 1132(e)(1), therefore “this
mirror-image suit by the Plan’s sponsor also is within federal subject-matter
jurisdiction.” Id. at 777-78. The court finally noted that 28 U.S.C. § 1331
2
Personal jurisdiction was not apparently contested in the case.
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independently supplied subject-matter jurisdiction, because “ERISA claims ‘are
necessarily federal in character by virtue of the clearly manifested intent of
Congress.’” Id. at 778.
The reasoning of the Seventh Circuit shows why the questions of personal
jurisdiction raised by this case demand different analysis. The district court’s
“adjudicatory competence” and the “necessarily federal” character of ERISA claims,
factors which aided the Seventh Circuit’s conclusion that the plan administrator’s
action was one “under this subchapter,” 29 U.S.C. § 1132(e)(1), are irrelevant when
personal jurisdiction is in view. In addition, the hypothetical mirror-image suit -against which SuperMedia defends via this declaratory judgment action -- would be,
as SuperMedia’s own pleadings make clear, a suit by retirees under 29 U.S.C.
§ 1132(a)(1). See Plaintiff’s Response at 11. By the principle of expressio unius, other
courts have concluded, and this court agrees, that Congress did not intend to enable a
fiduciary plan administrator like SuperMedia to bring a direct suit under
§ 1132(a)(1). See, e.g., NGS American, Inc., 218 F.3d at 528; Gulf Life, 809 F.2d at
1524. A court therefore ought not to rush too quickly to the conclusion that
nationwide service of process, which functions to ease the way for plaintiffs to bring
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actions Congress authorized in § 1132,3 is available to fiduciaries for mirror-image
§ 1132(a)(1) declaratory judgment actions.4
When Congress permits plaintiffs to override conventional strictures on
personal jurisdiction via nationwide service, the court thinks it reasonable to assume
it does so in order to give greater effect to the purposes of whatever provision
authorizes the action. See Rodd v. Region Construction Company, 783 F.2d 89, 91 (7th
Cir. 1986) (“The intention of Congress was to extend service of process nationwide in
ERISA matters because public policy justifies requiring persons who violate its
provisions to defend themselves in courts across the country.”). But SuperMedia’s
declaratory judgment action is unnecessary to further the purposes of § 1132(a)(1).5
See Gulf Life, 809 F.2d at 1523. As the Gulf Life court noted, a fiduciary like
3
See, e.g., 29 U.S.C. § 1001(b) (“It is hereby declared to be the policy of
this chapter to protect . . . the interests of participants in employee benefit plans and
their beneficiaries . . . by providing . . . ready access to the Federal courts.”); Gulf Life,
809 F.2d at 1524.
4
The Seventh Circuit in NewPage did not fully explain its conclusion that
the plaintiff’s declaratory judgment claim was one “under this subchapter,” 29 U.S.C.
§ 1132(e)(1), noting only that the claim was “under ERISA.” NewPage, 651 F.3d at
777. However, the court there did observe that the mirror image suit the defendants
in the case had already brought was under both § 1132(a)(1) and (a)(3). Since
§ 1132(a)(3) permits a direct action by a fiduciary, the declaratory judgment action
in that case was “under this subchapter,” § 1132(e)(1), even using the narrower
definition this court has concluded is appropriate for that phrase in § 1132(e)(2).
5
Indeed, such an action is also unnecessary to further the purpose of
Subchapter I of ERISA considered broadly, a section that is concerned with (as its
title suggests) “Protection of Employee Benefit Rights.”
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SuperMedia may simply enforce the terms of its plans by granting some claims for
benefits and denying others that it finds do not fall within those plans. Id. at 1523.
Moreover, allowing fiduciaries like SuperMedia to take advantage of nationwide
service in suits like this is very likely to frustrate the purposes of § 1132(a)(1), by
making it easier for a fiduciary to delay indefinitely a claimant’s ability to challenge a
denied claim for benefits. Id. at 1525.
Thus, the facts that (1) fiduciaries are not named in § 1132(a)(1),
(2) fiduciaries need not use this provision to “enforce” a benefits plan, and
(3) allowing fiduciaries to rely on § 1132(a)(1) to gain access to nationwide service
could have perverse results, all indicate that Congress did not intend to ease the way
-- via nationwide service -- for suits brought by fiduciaries under the Declaratory
Judgment Act and § 1132(a)(1).
In addition to the foregoing analysis, the court has not identified (nor have the
plaintiffs suggested) a reason Congress might wish to make nationwide service
available when a fiduciary brings the kind of suit SuperMedia has brought. The court
concludes, then, contrary to the plaintiffs’ theory, that § 1132(e)(2) should not be
available to a fiduciary merely on the ground that the court has subject matter
jurisdiction of its declaratory judgment action.6
6
The court also notes that the Fifth Circuit has, since Busch v. Buchman,
Buchman, & O’Brien, Law Firm, 11 F.3d 1255, 1258 (5th Cir. 1994) (“[W]hen a
federal court is attempting to exercise personal jurisdiction . . . based upon a federal
(continued...)
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Though the plaintiffs did not propose it, the court may still find nationwide
service of process is available to SuperMedia if this suit is authorized by § 1132(a)(3),
which, unlike § 1132(a)(1), does contemplate direct actions by fiduciaries. 29 U.S.C.
§ 1132(a)(3) permits a fiduciary to bring a civil action “(A) 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.” The problem for
SuperMedia, though, is similar to that faced by the plan administrator in Gulf Life.
See Gulf Life, 809 F.2d at 1523-24. SuperMedia must rely on prong (B)(ii) of the
provision, because it did not request injunctive relief and, as noted below, it does not
seek to “redress . . . violations” of ERISA or a plan. See generally Complaint. Without
deciding whether this particular cause of action is equitable or legal, the court
nevertheless thinks that it is not one to “enforce” the provisions of ERISA or a plan.
The term “enforce” is not statutorily defined. See 29 U.S.C. § 1002. Applying
traditional definitions, though, an action to “enforce” something is an action “to
6
(...continued)
statute providing for nationwide service of process, the relevant inquiry is whether the
defendant has had minimum contacts with the United States.”), expressed “grave
misgivings” about the notion that merely requiring minimum contacts with the
United States is sufficient due process protection to defendants in actions under
nationwide service of process provisions. See Bellaire, 97 F.3d at 826. It is unclear
whether the Fifth Circuit will revisit this issue. Nevertheless, the court thinks that
where the availability of nationwide service of process is doubtful, as here, given the
Fifth Circuit’s reservations about the due process analysis, doubt should be resolved
in favor of strengthening the defendants’ due process rights.
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compel obedience to” or “to give force or effect to” that thing. See Black’s Law
Dictionary 608 (9th ed. 2009). In a statutory or contractual context, an action to
“enforce” a provision typically is instituted in response to another party’s violation of
obligations created by that provision. See id. (“Loosely, to compel a person to pay
damages for not complying with (a contract).”) Here, by seeking a declaration of its
amended plan’s legality, SuperMedia does not petition the court to compel anyone’s
obedience to that plan. See Complaint at 2-3. Indeed, the plaintiffs’ pleadings give
no indication that there is any current “disobedience” to (or violation of) the terms of
the plan. See generally Complaint and Plaintiffs’ Response. In addition, a declaration
of legality does not give any particular “force” or “effect” to the plan. In other words,
the declaration itself (assuming it issues) will not require any specific change in a
party’s response or behavior that was not already required by the amended plan.
SuperMedia brings, as did the administrator in Gulf Life, a purely defensive action,
not an action to “enforce” its plan. See Gulf Life, 809 F.2d at 1523-24.
Furthermore, Congress has demonstrated in § 1132(a)(1) that it knows how to
authorize the type of action SuperMedia brings here. That provision gives a
beneficiary the right to pursue an action “to clarify his rights to future benefits.”
That type of action is distinct in § 1132(a)(1) from an action “to enforce his rights
under the terms of the plan.” If Congress had meant to directly authorize a fiduciary
to bring a suit such as this one, one expects it would have included a provision in
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§ 1132(a)(3) for a fiduciary employer like SuperMedia to “clarify” its rights with
respect to plans they enact, amend, or terminate. See Gulf Life, 809 F.2d at 1524.
SuperMedia’s declaratory judgment action thus is not directly authorized by
29 U.S.C. § 1132(a)(3). Since there is no other provision of ERISA that conceivably
authorizes this type of action by a fiduciary, the action is consequently not one
“under this subchapter,” 29 U.S.C. § 1132(e)(2), for which nationwide service of
process is available. The court must therefore proceed to analyze whether the
traditional legal requirements for the exercise of personal jurisdiction have been met
with respect to these defendants.
b. Traditional Long-Arm Personal Jurisdiction
A federal district court may exercise personal jurisdiction over a nonresident
defendant if (1) the long-arm statute of the forum state permits the exercise of
personal jurisdiction over the defendant; and (2) the exercise of such jurisdiction by
the forum state is consistent with due process under the United States Constitution.
Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 2002). A defendant is amenable to the
personal jurisdiction of a federal court sitting in diversity to the same extent that he
would be amenable to the jurisdiction of a state court in the same forum.7 Pedelahore
7
This is the traditional analysis in diversity of citizenship cases, where
state law supplies the rule of decision. In this case, the plaintiffs sue under federal
law, viz., 29 U.S.C. § 1001 et seq. In this situation, federal courts adopt state
jurisdictional statutes to reach out-of-state defendants. See Stroman Realty, Inc. v.
Wercinski, 513 F.3d 476, 482 (5th Cir.), cert. denied, 555 U.S. 816 (2008).
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v. Astropark, Inc., 745 F.2d 346, 347 (5th Cir. 1984). Applying state law, this court
must first determine whether Texas, the forum state, could assert long-arm
jurisdiction. Id. Because the Texas long-arm statute confers jurisdiction to the limits
of the federal constitution, Access Telecom, Inc. v. MCI Telecommunications Corporation,
197 F.3d 694, 716 (5th Cir. 1999), cert. denied, 531 U.S. 917 (2000); Hall v.
Helicopteros Nacionales de Colombia, S.A., 638 S.W.2d 870, 872 (Tex. 1982), rev’d on
other grounds, 466 U.S. 408 (1984), the court need only concern itself with the federal
due process inquiry. Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999); Wilson,
20 F.3d at 647 n.1; see also TEX. CIV. PRAC. & REM .CODE ANN § 17.041 et seq.
(Texas long-arm statute).
Due process requires the satisfaction of two elements to exercise personal
jurisdiction over a non-resident defendant: (1) the nonresident must have some
minimum contact with the forum that results from an affirmative act on his part such
that the nonresident defendant could anticipate being haled into the courts of the
forum state; and (2) it must be fair or reasonable to require the nonresident to defend
the suit in the forum state. Burger King Corporation v. Rudzewicz, 471 U.S. 462, 476
(1985); Gulf Consolidated Services, Inc. v. Corinth Pipeworks, S.A., 898 F.2d 1071, 1073
(5th Cir.), cert. denied, 498 U.S. 900 (1990). The Due Process Clause ensures that
persons have a “fair warning that a particular activity may subject [them] to the
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jurisdiction of a foreign sovereign.” Burger King, 471 U.S. at 472 (quoting Shaffer v.
Heitner, 433 U.S. 186, 218 (1977) (Stevens, J., concurring)).
To establish minimum contacts with the forum, a nonresident defendant must
do some act by which he “purposefully avails [him]self of the privilege of conducting
activities within the forum State, thus invoking the benefits and protections of its
laws.” Burger King, 471 U.S. at 474-75 (quoting Hanson v. Denckla, 357 U.S. 235,
253 (1958)). However, the unilateral activity of one asserting a relationship with the
nonresident defendant does not satisfy this requirement. Burger King, 471 U.S. at
474 (quoting Hanson, 357 U.S. at 253); Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. 408, 417 (1984) (citing Kulko v. California Superior Court, 436 U.S. 84
(1978); Hanson, 357 U.S. at 253). In determining whether the exercise of
jurisdiction is appropriate, the Supreme Court has focused less on presence in the
forum state as a means to establish jurisdiction and looked increasingly to whether a
defendant’s contacts with the forum state make it reasonable to require the defendant
to defend the particular suit in that forum. Quill Corporation v. North Dakota, 504
U.S. 298, 307 (1992).
Two types of in personam jurisdiction may be exercised over a nonresident
defendant: specific jurisdiction and general jurisdiction. Specific jurisdiction exists if
the cause of action is related to, or arises out of, the defendant’s contacts with the
forum state and those contacts meet the due process standard. J.R. Stripling v. Jordan
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Production Company, LLC, 234 F.3d 863, 871 (5th Cir. 2000) (quotations and
citations omitted). “When a court exercises personal jurisdiction over a defendant
based on contacts with the forum related to the particular controversy, the court is
exercising ‘specific jurisdiction.’ ” Holt Oil & Gas Corporation v. Harvey, 801 F.2d 773,
777 (5th Cir. 1986) (citations omitted), cert. denied, 481 U.S. 1015 (1987). General
jurisdiction, on the other hand, may be found when the nonresident’s contacts with
the forum are “continuous and systematic,” even though the claim is unrelated to
those contacts. Helicopteros Nacionales, 466 U.S. at 415-16.
Under either a specific or general jurisdiction analysis, however, “the
constitutional touchstone remains whether the defendant purposefully established
‘minimum contacts’ in the forum [s]tate.” Burger King, 471 U.S. at 474 (quoting
International Shoe Company v. Washington, 326 U.S. 310, 316 (1945)). The
“purposeful availment” requirement of the minimum contacts inquiry “ensures that a
defendant will not be haled into a jurisdiction solely as a result of ‘random,’
‘fortuitous,’ or ‘attenuated’ contacts . . . or of the ‘unilateral activity of another party
or a third person.’ ” Id. at 475 (citations omitted). A plaintiff must establish a
substantial connection between the nonresident defendant and the forum state. Jones
v. Petty-Ray Geophysical, Geosource, Inc., 954 F.2d 1061, 1068 n.9 (5th Cir.), cert.
denied, 506 U.S. 867 (1992); Bearry v. Beech Aircraft Corporation, 818 F.2d 370, 374
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(5th Cir. 1987) (citing Burger King, 471 U.S. at 475 n.18; McGee v. International Life
Insurance Company, 355 U.S. 220 (1957)).
A court must consider all factors when making the purposeful availment
inquiry - “no single factor, particularly the number of contacts, is determinative.”
Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). “[W]hether the minimum
contacts are sufficient to justify subjection of the non-resident to suit in the forum is
determined not on a mechanical and quantitative test, but rather under the particular
facts upon the quality and nature of the activity with relation to the forum state.”
Mississippi Interstate Express, Inc. v. Transpo, Inc., 681 F.2d 1003, 1006 (5th Cir. 1982);
see also Coats v. Penrod Drilling Corporation, 5 F.3d 877, 884 (5th Cir. 1993), cert.
denied, 510 U.S. 1195 (1994).
With minimal accompanying argument and no relevant legal citation, the
plaintiffs allege seven categories of “contacts” that each of the moving defendants
have had with Texas. See Plaintiffs’ Response at 13-14. The court is not persuaded
that any one of these categories, considered either alone or in tandem, is sufficient to
establish the defendants’ minimum contacts with Texas, which would enable the
court to exercise specific personal jurisdiction.8
8
The court assumes the plaintiffs are arguing for specific jurisdiction,
though they do not mention the term. This is because the contacts the plaintiffs list
are plainly insufficient to show the kind of “continuous, systematic” contact with this
forum that would be necessary to a finding of general personal jurisdiction.
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First, SuperMedia points to the moving defendants’ involvement as classaction plaintiffs in a suit involving similar issues before this court. Id. at 13. The
moving defendants are not named plaintiffs in that class action lawsuit, however. See
Second Amended Complaint for Proposed Class Action Relief Under ERISA (docket
entry 64) in Northern District of Texas civil action 3:09-CV-2262-G-BF. In addition,
since the class in that case was certified as a “non-opt-out” injunctive class under FED.
R. CIV. P. 23(b)(2), see Order for Class Certification at 1-2 (docket entry 55) in
Northern District of Texas civil action 3:09-CV-2262-G-BF, the mere fact that the
moving defendants are absent class members is irrelevant to the question whether
they have either “purposefully availed” themselves of this forum or have sufficient
minimum contacts that the court may exercise personal jurisdiction over them. See
7AA C. Wright & A. Miller, Federal Practice & Procedure Civ. § 1775 (3d ed.) (“The
effect of a judgment in an action under Rule 23(b)(2) is the same as under Rule
23(b)(1), which means that all class members will generally be bound.”); FED. R. CIV.
P. 23(c)(2)(A) (“For any class certified under Rule 23(b)(1) or (b)(2), the court may
direct appropriate notice to the class.”) (emphasis added); Yaffe v. Powers, 454 F.2d
1362, 1366 (1st Cir. 1972) (“Although notice to and therefore precise definition of
the members of the suggested class are important to certification of a subdivision
(b)(3) class, notice to the members of a (b)(2) class is not required and the actual
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membership of the class need not therefore be precisely delimited.”); Shook v. El Paso
County, 386 F.3d 963, 972 (10th Cir. 2004), cert. denied, 544 U.S. 978 (2005).
Second, SuperMedia asserts that the moving defendants are “voluntary
participants” in SuperMedia’s benefits plans, based in Texas. Plaintiffs’ Response at
13. However, the fact that SuperMedia and the administrators of its benefits plans
are based in Texas is a fortuity. See Moncrief Oil International Inc. v. OAO Gazprom,
481 F.3d 309, 312 (5th Cir. 2007). The happenstance that one has contracted with
a party headquartered in a particular state is insufficient on its own to establish
minimum contacts. Id. The Supreme Court made clear in Burger King that the facts
and circumstances surrounding the formation and contemplated execution of a
contract are what matter in the minimum contacts analysis. See Burger King, 471
U.S. at 479. SuperMedia points to no such clarifying facts regarding formation and
execution of the defendants’ contracts with Texas-based SuperMedia that would
support this court holding that the moving defendants have minimum contacts with
Texas.
Third, SuperMedia argues that its benefits plans contain choice-of-law
provisions stating they are governed by Texas law, where not preempted by federal
law (including ERISA). Plaintiffs’ Response at 13. With respect to choice-of-law
provisions, the Supreme Court specifically held in Burger King that “such a provision
standing alone would be insufficient to confer jurisdiction.” Id. at 482. In Burger
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King, a choice-of-law provision in a franchise contract, combined with the defendant’s
long-standing relationship with the franchisor’s Miami headquarters, were facts held
sufficient to show the defendant’s minimum contacts with Florida. Id. Here, there is
no other relevant contact to which the plaintiffs have pointed which, when combined
with the benefits plans’ choice-of-law provisions, would establish a level of contact
sufficient for the court to exercise specific personal jurisdiction over the moving
defendants.
The remaining four categories of facts to which SuperMedia points to establish
the moving defendants’ “minimum contacts” with Texas are even further afield than
the three discussed above and warrant no comment or analysis. SuperMedia has
therefore not satisfied its burden of making a prima facie showing of personal
jurisdiction.
Since the court concludes that it does not have personal jurisdiction over the
moving defendants, their motion to dismiss SuperMedia’s claims against them is
granted.
B. The Plaintiffs’ Motion to Dismiss the
Mentzer Defendants’ Counterclaims
In their answer, the Mentzer defendants brought two counterclaims against the
plaintiffs, the first against the plaintiff SuperMedia Employee Benefits Committee
(the “EBC”) for breach of fiduciary duty under ERISA Section 404(a)(1), and the
second against all of the plaintiffs, for violation of ERISA Section 510. See Answer
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and Counterclaim by Defendants Mentzer, Noe, Ohnstad, Palmer, and Zenus
(“Counterclaims”) at 7-8 ¶¶ 15-18 (docket entry 73). The plaintiffs have moved to
dismiss the Mentzer defendants’ counterclaims for failure to state claims on which
relief can be granted. See generally Plaintiffs’ Motion to Dismiss the Counterclaim by
Defendants Mentzer, Noe, Ohnstad, Palmer, and Zenus (“Plaintiffs’ Motion”)
(docket entry 86).
1. Legal Standard
“To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead
‘enough facts to state a claim to relief that is plausible on its face.’” In re Katrina
Canal Breaches Litigation, 495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atlantic
Corporation v. Twombly, 550 U.S. 544, 570 (2007)), cert. denied, 552 U.S. 1182
(2008). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not
need detailed factual allegations, a plaintiff’s obligation to provide the grounds of his
entitlement to relief requires 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
(citations, quotation marks, and brackets omitted). “Factual allegations must be
enough to raise a right to relief above the speculative level, on the assumption that all
the allegations in the complaint are true (even if doubtful in fact).” In re Katrina
Canal, 495 F.3d at 205 (quoting Twombly, 550 U.S. at 555) (internal quotation marks
omitted). “The court accepts all well-pleaded facts as true, viewing them in the light
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most favorable to the plaintiff.” Id. (quoting Martin K. Eby Construction Company, Inc.
v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)) (internal quotation
marks omitted).
The Supreme Court has prescribed a “two-pronged approach” to determine
whether a complaint fails to state a claim under Rule 12(b)(6). See Ashcroft v. Iqbal,
556 U.S. 662, 677-79 (2009). The court must “begin by identifying the pleadings
that, because they are no more than conclusions, are not entitled to the assumption
of truth.” Id. at 679. The court should then assume the veracity of any well-pleaded
allegations and “determine whether they plausibly give rise to an entitlement to
relief.” Id. The plausibility principle does not convert the Rule 8(a)(2) notice
pleading to a “probability requirement,” but “a sheer possibility that a defendant has
acted unlawfully” will not defeat a motion to dismiss. Id. at 678. The plaintiff must
“plead[ ] factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Id. “[W]here 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. at 679 (quoting FED. R. CIV. P. 8(a)(2)). The court, drawing on its judicial
experience and common sense, must undertake the “context-specific task” of
determining whether the plaintiff’s allegations “nudge” his claims against the
defendant “across the line from conceivable to plausible.” See id. at 679-680.
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2. Breach of Fiduciary Duty
The defendants allege that the EBC’s decision to “fil[e] this civil action against
them after soliciting them to complete and return a claim form” is a breach of
fiduciary duty under 29 U.S.C. § 1104(a)(1) (“Section 404(a)(1)”). See
Counterclaims at 7-8 ¶ 16. The plaintiffs argue that the EBC’s decision to bring a
declaratory judgment suit was not made in a fiduciary capacity, and that there can
therefore be no breach where an entity is not performing a fiduciary function. See
Plaintiffs’ Motion at 8. The defendants respond, with no citation to any case law,
that the EBC is not an employer or a plan sponsor and can act only as a fiduciary and
in no other capacity. See Response by Defendants Mentzer, Noe, Ohnstad, Palmer,
and Zenus to Plaintiffs’ Motion to Dismiss Counterclaims (“Mentzer Defendants’
Response”) at 6 (docket entry 96).
This court has uncovered no case examining whether an employee benefits
committee that brings and maintains a declaratory judgment suit is performing a
fiduciary function. There is ample case law, however, that practically dictates the
opposite conclusion. The Supreme Court has held that “[t]he threshold question” in
ERISA breach of fiduciary duty cases is “not whether the actions of some person
employed to provide services under a plan adversely affected a plan beneficiary’s
interest, but whether that person was acting as a fiduciary (that is, was performing a
fiduciary function) when taking the action subject to complaint.” Pegram v. Herdrich,
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530 U.S. 211, 226 (2000). The typical fiduciary functions, as the Court noted in
Pegram, involve “decisions about managing assets and distributing property to
beneficiaries.” Pegram, 530 U.S. at 231. Thus courts have held that when employers
take actions like firing an employee and amending a benefits plan, they are not
performing “fiduciary functions” that trigger fiduciary duties under ERISA. See
Bodine v. Employers Casualty Company, 352 F.3d 245, 251-52 (5th Cir. 2003) (“a
decision to terminate an employee, who is also a Plan beneficiary, is inherently not
fiduciary in nature”) (emphasis in original); Curtiss-Wright Corporation v. Schoonejongen,
514 U.S. 73, 78 (1995) (citing Adams v. Avondale Industries, Inc., 905 F.2d 943, 947
(6th Cir.), cert. denied, 498 U.S. 984 (1990), for the proposition that decisions to
terminate or amend benefits plans are not taken in a fiduciary capacity).
The court thinks the “action” at issue here, i.e. bringing and maintaining a
declaratory judgment suit for the purpose of determining the legality of benefits plan
amendments, does not even come close to the “fiduciary function” line. As the
plaintiffs observed, see Plaintiffs’ Motion at 9, the decision to bring a suit like this
flows from, and is intimately connected to, the decision to amend the plan. Thus, the
logic of Curtiss-Wright controls. The bringing and maintaining of a declaratory
judgment action seeking to determine the legality of proposed plan amendments is
not a “fiduciary function” that would support a claim for breach of fiduciary duty.
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The only question that remains is what to make of the defendants’ odd
assertion that, since the EBC is not an “employer” or “plan sponsor,” it can only act in
a fiduciary capacity. Mentzer Defendants’ Response at 6. The fact that the
defendants cite no case law supporting the assertion does not bode well for their
argument. Id. The plaintiffs have amply shown that nothing in ERISA’s definitions
or provisions, or the case law interpreting them, suggests that an entity like the EBC
cannot act except in a fiduciary capacity. See Plaintiffs’ Reply to Response to Motion
to Dismiss the Counterclaims by Defendants Mentzer, Noe, Ohnstad, Palmer, and
Zenus (“Reply”) at 2-4 (docket entry 97). Moreover, and in direct contradiction to
the defendants’ argument otherwise, the Supreme Court has reasoned that there is no
“apparent reason in the ERISA provisions to conclude . . . that” performing both
fiduciary and non-fiduciary functions “is permissible only for the employer or plan
sponsor.” Pegram, 530 U.S. at 225. Because the court agrees with the plaintiffs that
the EBC was not performing a fiduciary function when it brought this declaratory
judgment action with the other SuperMedia entities, the defendants’ first
counterclaim for breach of fiduciary duty is dismissed.
3. ERISA Section 510 Violation
29 U.S.C. § 1140 (“Section 510”) states 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
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plan, this subchapter, section 1201 of this title, or the
Welfare and Pension Plans Disclosure Act [29 U.S.C.A.
§ 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.
The defendants assert that the plaintiffs’ institution of this lawsuit against
them specifically (in contrast to the other 900 SuperMedia retirees), upon their
submission of requested claim forms, constitutes discipline and discrimination “for
exercising any right to which [they are] entitled.” Counterclaims at 8 ¶ 18; Mentzer
Defendants’ Response at 9-10.
Intent is an element of a Section 510 discrimination claim. See Hines v.
Massachusetts Mutual Life Insurance Company, 43 F.3d 207, 209 (5th Cir. 1995) (citing
McGann v. H & H Music Company, 946 F.2d 401, 404 (5th Cir. 1991), cert. denied,
506 U.S. 981 (1992)). While the Mentzer defendants employ the label “specific
intent” multiple times in both their counterclaims and their response to the motion to
dismiss, see Counterclaims at 7-8 ¶¶ 14, 18, and Mentzer Defendants’ Response at
10, the question post-Twombly is whether the facts the defendants have alleged make
it plausible that SuperMedia intended to discriminate against or discipline them by
naming them as defendants. The court concludes that the facts alleged in the
defendants’ counterclaims are insufficient to hurdle the plausibility threshold. The
only alleged facts contributing to an inference of intent to discriminate are (1) that
the named defendants returned claim forms, (2) that SuperMedia instituted this suit
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before taking action on the defendants’ claim forms, and (3) that there are other
retirees who returned claim forms whom SuperMedia did not name in its complaint.
See Counterclaims at 6-7 ¶¶ 8, 10, 12-14.
These facts are insufficient to create an inference of intent to discriminate for
at least two reasons. First, there is no factual allegation that there was something
special about these defendants, in contrast to the other 900 retirees who returned
claim forms, that would have motivated SuperMedia to “discipline” or
“discriminat[e]” against them (but not the others). Indeed, the Mentzer defendants
admit that the named defendants were selected “randomly.” Counterclaims at 6
¶ 13. Second, there are perfectly obvious and legitimate reasons that are likely to
have motivated the selection of these defendants and the timing of this lawsuit:
namely, SuperMedia’s business judgment and its need to institute manageable
litigation. See Complaint ¶ 1, Plaintiffs’ Motion at 2-3, and Reply at 5-6. For the
plaintiffs to institute this proceeding at all, someone had to be sued. As the plaintiffs
argued, it would have been impractical and costly on first filing to name and serve all
900 SuperMedia retirees who returned claim forms. See Reply at 5. The Federal
Rules permit this sort of efficiency. FED R. CIV. P. 23(a). The rules do not require
the plaintiff in an action against class defendants to sue the entire class from the
outset. Id. Rather the rules contemplate an order certifying a class “[a]t an early
practicable time.” FED. R. CIV. P. 23 (c)(1)(A).
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The facts the Mentzer defendants have alleged give the court no reason to
think that SuperMedia’s business judgment and litigation strategy were not the
motivating factors behind the timing of, and decision to pursue, this suit. While the
alleged facts certainly indicate the bare possibility of intent to discriminate, without
more to overcome the (equally likely) possibility that SuperMedia’s suit was
motivated by its business judgment and litigation strategy, such facts do not give rise
to a plausible inference of intent to discriminate.
Furthermore, to hold that the bare facts alleged here about SuperMedia’s
litigation strategy state a discrimination claim under Section 510 would imply that
plaintiff employers in all ERISA declaratory judgment actions like this one should be
required to massively reorient the way they proceed against a class of defendants.
In light of all of this, the court concludes that the Mentzer defendants have
not alleged enough facts for the court to plausibly infer SuperMedia’s intent to
discriminate against and discipline them. The plaintiffs’ motion to dismiss the
Mentzer defendants’ Section 510 counterclaim is granted.
III. CONCLUSION
For the reasons stated above, the plaintiffs’ motion to dismiss the Mentzer
defendants’ counterclaims is GRANTED, and the moving defendants’ motion to
dismiss for lack of personal jurisdiction is GRANTED.
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SO ORDERED.
August 7, 2013.
___________________________________
A. JOE FISH
Senior United States District Judge
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