Moon et al v. BWX Technologies, Inc. et al
Filing
89
MEMORANDUM OPINION. Signed by Judge Norman K. Moon on July 9, 2013. (sfc)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
LYNCHBURG DIVISION
JUDY L. MOON, ET AL.,
CASE NO. 6:09-cv-00064
Plaintiff,
v.
MEMORANDUM OPINION
BWX TECHNOLOGIES, INC., ET AL.,
Defendants.
JUDGE NORMAN K. MOON
This matter is before the court on Defendants’ Motion to Dismiss Plaintiff’s First
Amended Complaint, as well as Plaintiff’s Motion for Leave to File a Second Amended
Complaint. On July 7, 2011, I dismissed Plaintiff’s first amended complaint, and Plaintiff
appealed to the Fourth Circuit. The Fourth Circuit affirmed that decision in part and vacated in
part, remanding the case back to this court. Since then, Defendants have filed a supplemental
brief in support of their motion to dismiss, and Plaintiff has filed a motion for leave to file a
second amended complaint. For the following reasons, I will deny Plaintiff’s motion for leave to
file a second amended complaint, and grant Defendants’ motion to dismiss Plaintiff’s first
amended complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6).
I.
BACKGROUND
This case represents Plaintiff’s attempt to recover insurance benefits that Defendants
allegedly owe her on account of her deceased husband (“Mr. Moon”), a former employee of
Babcock & Wilcox Company and Babcock & Wilcox Power Generation Group, Inc. 1 Mr. Moon
had been a full-time employee of BWX and its predecessor companies from 1969 until June
1
Both are predecessor companies to defendant BWX Technologies, Inc. (“BWX”), which is a subsidiary of
defendant McDermott International, Inc. (“McDermott”).
1
2005. Beginning on June 1, 2005, Mr. Moon became medically unable to continue working due
to a severe heart condition, and began receiving short-term disability benefits from Defendants,
lasting for six months. Mr. Moon eventually applied for long-term disability, and his application
was approved on December 1, 2005. A confirmation statement issued only days before that
approval verified that Mr. Moon, while still an employee at BWX, had opted for an employee
life insurance plan (“Plan”) issued by Metropolitan Life Insurance Company (“MetLife”) for
2006, valued at $200,000. 2 The Plan was an ERISA-qualified life insurance plan for BWX
employees, and it was administered by MetLife. On December 1, 2005, Mr. Moon officially
retired from employment with BWX.
Soon after, on January 13, 2006, BWX mailed Mr. Moon an alleged offer to provide
certain ongoing benefits in exchange for payments.
That offer, identified as the “2006
Confirmation Statement” by the Fourth Circuit, indicated that Mr. Moon had previously selected
a variety of benefits that were to be effective on January 2, 2006. Among those benefits was the
$200,000 life insurance benefit, at an annual employee coverage cost of $804.
The 2006
Confirmation Statement stated that the total annual cost of benefits, including long-term
disability, vision, and personal accident insurance, was $3,269.76.
Over the course of that year, Mr. Moon and his family paid some, but not all of the
premiums set forth in the 2006 Confirmation Statement. Payments were made directly to BWX.
Mr. Moon passed away on November 18, 2006. On November 29, 2006, Plaintiff sent a letter to
BWX and enclosed a check for $1,173.36, which represented the entire balance due on her
deceased husband’s benefits.
2
It is unclear exactly when in 2005 Mr. Moon made his selections, though it was at some point prior to November
29, 2005, the date on which BWX confirmed Mr. Moon’s selected coverage.
2
Plaintiff then made a claim directly to BWX requesting payment of the $200,000 life
insurance benefit. BWX sent a reply by letter, stating that Mr. Moon had lost his employee
group life insurance benefit when he became unable to work, and that he failed to convert his
group employee policy with MetLife after he ceased working, as was required by the Plan. 3
Plaintiff filed suit in state court, and upon removal, I found that Plaintiff’s claim regarding the
2006 Confirmation Statement/offer was in substance an attempt to recover under the ERISAgoverned MetLife Plan. Plaintiff then filed an amended complaint containing four counts: (1)
“breach of contract,” (2) “breach of implied or quasi-contract,” (3) “estoppel,” and (4) “negligent
breach of ERISA duties.” I dismissed each of Plaintiff’s claims pursuant to Fed. R. Civ. P.
12(b)(6). The Fourth Circuit affirmed that decision in part, while vacating the dismissal of
Plaintiff’s claims for recovery based on estoppel and negligent breach of ERISA duties in light
of the recent decisions CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011) (“Amara”), and McCravy
v. Metropolitan Life Insurance Co., 690 F.3d 176 (4th Cir. 2012) (“McCravy II”). See Moon v.
BWX Technologies, Inc., 498 F. App’x 268, 276 (4th Cir. 2012).
On remand, on February 12, 2013, Defendants filed a supplemental memorandum in
support of its motion to dismiss Plaintiff’s first amended complaint. On March 15th, Plaintiff
filed a motion for leave to file a second amended complaint, which would amend Counts One
and Two of her first amended complaint.
II.
LEGAL STANDARD
A. Plaintiff’s Motion to Amend
Rule 15(a)(2) of the Federal Rules of Civil Procedure provides that once certain deadlines
have passed, as they have here, “a party may amend its pleading only with the opposing party’s
3
In that April 12, 2007 letter, in conclusion, BWX stated the following: “At this time, we can find no evidence that
Mr. Moon converted his active employee life insurance benefit to that of a disabled employee. Therefore,
regrettably, there is no life insurance coverage for Mr. Moon.” Docket No. 23-1 at 10.
3
written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). Leave should be freely given
“when justice so requires.” Id. Indeed, leave to amend a pleading should be denied only when
“the amendment would be prejudicial to the opposing party, there has been bad faith on the part
of the moving party, or the amendment would be futile.” Edwards v. City of Goldsboro, 178
F.3d 231, 242 (4th Cir. 1999).
B. Defendants’ Motion to Dismiss
In order to survive a motion to dismiss pursuant to Rule 12(b)(6), a complaint must
contain facts sufficient “to raise a right to relief above the speculative level” and “state a claim to
relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007).
A claim is plausible if the complaint contains “factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged,” and if there is
“more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). When considering a Rule 12(b)(6) motion, a court must accept all factual
allegations in the complaint as true, and must draw all reasonable inferences in favor of the
plaintiff. Erickson v. Pardus, 551 U.S. 89, 94 (2007). However, a court is not required to
“accept the legal conclusions drawn from the facts,” or “accept as true unwarranted inferences,
unreasonable conclusions, or arguments.” Eastern Shore Markets, Inc. v. J.D. Assocs. Ltd.
P’ship, 213 F.3d 175, 180 (4th Cir. 2000) (citations omitted).
III.
DISCUSSION
A. Plaintiff’s Motion to Amend
In her motion, Plaintiff requests permission to amend Counts One and Two of her first
amended complaint to address the equitable remedies considered in Amara and McCravy II.
With respect to Count One, Plaintiff moves for permission to request relief under the equitable
4
remedy of reformation. With respect to Count Two, Plaintiff moves for permission to request
relief under a surcharge remedy. In support, Plaintiff states that the proposed amendments do
not raise new substantive issues, and nor do they assert claims against new parties. Instead,
according to Plaintiff, the amendments only seek to readdress her previous claims in the remedial
forms expressly adopted by higher courts.
The Fourth Circuit specifically instructed this court “to address anew [Plaintiff’s] claims
of equitable estoppel and breach of fiduciary duty in light of Amara and McCravy II.” Moon,
498 F. App’x at 276. Defendants note that the Fourth Circuit was aware of the existence of
reformation and surcharge as potential remedies for ERISA plaintiffs, but was silent as to those
remedies when it remanded this case. 4 Furthermore, Plaintiff’s second amended complaint
would, in effect, revive two counts for which the Fourth Circuit has affirmed dismissal. 5
Still, given the Fourth Circuit’s citation to Amara and McCravy II, I will consider the
merits of Plaintiff’s proposed amendments, along with her remanded claims for equitable
estoppel and breach of fiduciary duty.
In Count One of her proposed second amended
complaint, Plaintiff requests that the court reform the 2006 Confirmation Statement into an
enforceable contract. Specifically, Plaintiff contends that, “[h]aving made a post-employment
offer of life insurance benefits to Mr. Moon in January 2006 which was accepted through the
receipt and acceptance of plaintiffs’ premium payments . . . . [T]his Court should reform the
4
The Fourth Circuit noted that Amara has “clarified that remedies beyond mere refunds—including the surcharge
and equitable estoppel remedies . . . are indeed available to ERISA plaintiffs suing fiduciaries under Section
1132(a)(3).” Moon, 498 F. App’x at 275 (quoting McCravy II, 690 F.3d at 182–83). The Supreme Court decided
Amara on May 16, 2011, a month before I heard oral arguments on Defendants’ first motion to dismiss, and nearly
two months before I issued my previous memorandum opinion in this case.
5
Regarding Count One (Breach of Contract) and Count Two (Breach of Implied or Quasi-Contract) of Plaintiff’s
first amended complaint, the Fourth Circuit held that “[b]ecause Mr. Moon was clearly never eligible for benefits
under the Plan during 2006, Appellant cannot recover under the Plan’s plain terms.” Moon, 498 F. App’x at 275.
However, regarding Count Three and Count Four, the Fourth Circuit concluded that “[t]he merits of Appellant’s
equitable estoppel and breach of fiduciary claims are less clear.” Id.
5
agreement between the parties to require these [Defendants] to honor their obligation to plaintiff
to pay her $200,000 as a result of the death of Mr. Moon in 2006.” Pl.’s Proposed 2d Am.
Compl. ¶¶ 42, 42a. (Docket No. 78-1).
After Amara, it is clear that reformation is an equitable remedy available to some ERISA
plaintiffs. In Amara, the employee-plaintiffs filed a class action against an employer and pension
plan, claiming that the employer had misled them about the benefits of converting their defined
benefit retirement plan into a “cash balance” plan. 131 S. Ct. at 1874–75. The trial court agreed,
and reformed the plan under ERISA’s recovery-of-benefits-due provision, § 502(a)(1)(B), 29
U.S.C. § 1132(a)(1)(B), which authorizes beneficiaries to sue to the enforce the terms of a plan.
Id. at 1875. The Supreme Court remanded the case, holding that the plaintiffs’ claim should
instead be brought as a request for equitable relief under § 502(a)(3), 29 U.S.C. § 1132(a)(3). Id.
at 1876–78.
The Court discussed several equitable remedies available to the plaintiffs on
remand, including reformation. Id. at 1879–80.
However, a contract may be reformed only on grounds of (1) mutual mistake, or (2)
unilateral mistake plus fraudulent conduct. See Larchmont Properties v. Cooperman, 195 Va.
784, 791, 80 S.E.2d 733, 737 (1954). In Amara, the district court specifically found that the
defendant had intentionally misled the employees, and it reformed the terms of the new plan.
131 S. Ct. at 1874–75.
Conversely, Plaintiff has failed to sufficiently allege any type of
fraudulent conduct (or a “deliberate nondisclosure designed to prevent another from learning the
truth”) in her proposed second amended complaint. See Van Deusen v. Snead, 247 Va. 324, 328,
441 S.E.2d 207, 209–10 (Va. 1994).
Plaintiff does allege that “the defendants,” through the 2006 Confirmation Statement and
their acceptance of payments, “either negligently or intentionally, misrepresented unto Mr. Moon
6
and plaintiffs that their 2006 payments to BWXT would include all the specified benefits,
including the life insurance benefits.” Pl.’s Proposed 2d Am. Compl. ¶ 27. Regarding that 2006
Confirmation Statement (among other documents), the Fourth Circuit found the following: “Far
from indicating an independent, post-employment contract for benefits, the documents on which
[Plaintiff] relies all plainly demonstrate that her claims stem from nothing more than Mr. Moon’s
enrollment in a run-of-the-mill employee benefit plan weeks before his retirement.” Moon, 498
F. App’x at 274. The court continued that it was “undisputed that life insurance coverage under
the Plan continued only while the employee remained in ‘Active Work,’” and noted the
“straightforward language” relating this fact in the Summary Plan Description. Id. at 274–75.
On remand, I find that the 2006 Confirmation Statement, which confirmed Mr. Moon’s earlier
benefit selections, cannot be used to support an allegation of fraud in this case.
Furthermore, reformation under § 502(a)(3), 29 U.S.C. § 1132(a)(3) is an equitable
remedy that lies only against a plan fiduciary. 6 In Amara, the Supreme Court specifically found
that the case before it concerned “a suit by a beneficiary against a plan fiduciary (whom ERISA
typically treats as a trustee) about the terms of a plan (which ERISA typically treats as a trust) . .
. .” Id. at 1879. Given that this was “the kind of lawsuit, that before the merger of law and
equity, [ ] could have [been] only in a court of equity,” the Court in Amara found that several
traditional equitable remedies (including “reformation of the terms of the plan”) were available
to the plaintiffs in that case. Id.
For the reasons discussed infra, none of the Defendants were acting as fiduciaries when
they performed the allegedly wrongful acts giving rise to this action. Regarding Plaintiff’s
proposed amendments to Count Two (“Surcharge for Breach of Fiduciary Duty”), surcharge in
6
Plaintiff contends that “the defendants herein as ERISA fiduciaries should be obligated on their contract or
agreement made with Mr. Moon to provide him or his heirs $200,000 of life insurance coverage for year 2006.”
Pl.’s Proposed 2d Am. Compl. ¶ 42.
7
this context is a remedy that lies only against fiduciaries as well. Id. at 1880 (“The surcharge
remedy extended to a breach of trust committed by a fiduciary encompassing any violation of a
duty imposed upon that fiduciary.”). 7 Thus, Plaintiff’s motion for leave to file a second amended
complaint must be denied, because her requests for reformation (Count One) and surcharge
(Count Two) in her proposed amendments are futile.
B. Defendants’ Motion to Dismiss
As discussed, Mr. Moon ceased any involvement in active work with BWX when he
retired on December 1, 2005, at least one month before the disputed MetLife Plan coverage
purportedly went into effect. Accordingly, the Fourth Circuit held that “[b]ecause Mr. Moon
was clearly never eligible for benefits under the Plan during 2006, [Plaintiff] cannot recover
under the Plan’s plain terms.
Moon, 498 F. App’x at 275.
However, the Fourth Circuit
remanded this case “to permit the district court to address anew [Plaintiff’s] claims of equitable
estoppel and breach of fiduciary duty in light of Amara and McCravy II.” Id. at 276.
1. Plaintiff’s Breach of Fiduciary Duty Claim
Plaintiff’s claim for breach of fiduciary duty fails because none of the defendants were
acting as fiduciaries under the MetLife Plan, with respect to the allegations in this case. “Before
one can conclude that a fiduciary duty has been violated, it must be established that the party
charged with the breach meets the statutory definition of ‘fiduciary.’” Adams v. The Brink’s Co.,
420 F. Supp. 2d 523, 551 (W.D. Va. 2006) aff’d, 261 F. App’x 583 (4th Cir. 2008) (quoting
7
Regarding surcharge, the Supreme Court reasoned that “the fact that this relief takes the form of a money payment
does not remove it from the category of traditionally equitable relief . . . . [Given that] [e]quity courts possessed the
power to provide relief in the form of monetary ‘compensation’ for a loss resulting from the trustee’s breach of duty,
or to prevent the trustee’s unjust enrichment.” Id. at 1880 (citations omitted). Likewise, in McCravy II, the Fourth
Circuit concluded that because surcharge was an available remedy under ERISA § 502(a)(3), the plaintiff’s recovery
in that case was not limited to the premiums she had paid on her daughter’s life insurance plan. 690 F.3d at 181.
The court remanded to determine whether surcharge was appropriate under the circumstances of the case. Id. at
181–82.
8
Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 60–61 (4th Cir. 1992)). Under ERISA, a
person is a fiduciary:
to the extent that (i) he exercises any discretionary authority or discretionary control
respecting management of such plan or exercises any authority or control respecting
management or disposition of its assets, (ii) he renders investment advice for a fee or
other compensation, direct or indirect, with respect to any moneys or other property of
such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary
authority or discretionary responsibility in the administration of such plan.
Wilmington Shipping Co. v. New England Life Ins. Co., 496 F.3d 326, 343 (4th Cir. 2007)
(quoting 29 U.S.C. § 1002(21)(A)). “The definition is couched in terms of functional control
and authority over the plan, thus necessitating that courts ‘examine the conduct at issue when
determining whether an individual is an ERISA fiduciary.’” Id. (quoting Hamilton v. Carell, 244
F.3d 992, 998 (6th Cir. 2001)). 8
In this case, Plaintiff bases her breach of fiduciary duty claim on Defendants’ acceptance
of Mr. Moon’s payments over the course of 2006, and their failure to notify Mr. Moon that he
was no longer eligible for life insurance benefits (given that he had ceased being an employee by
the end of 2005). See Pl.’s Am. Compl. ¶ 34 (Docket No. 52) (“[D]efendants had a duty to Mr.
Moon to truthfully and accurately advise Mr. Moon if he was ineligible for life insurance
benefits within a reasonable time after receiving monthly payments from Mr. Moon for said
benefits . . . .”). Thus, Plaintiff can maintain her breach of fiduciary duty claim only if accepting
payments and advising participants about their eligibility for employee benefits are discretionary
acts under ERISA, meeting the statutory definition of “fiduciary.”
8
Under ERISA, an employer that establishes or maintains an employee benefit plan is a “sponsor.” 29 U.S.C. §
1002(16)(B). However, “[t]he mere fact that an employer is a sponsor does not mean that the employer is also a
fiduciary.” Healthtek Solutions, Inc. v. Fortis Benefits Ins. Co., 274 F. Supp. 2d 767, 775 (E.D. Va. 2003) (citing
Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1465 (4th Cir. 1996)). A plan sponsor becomes a fiduciary only to
the extent “it retains or exercises any discretionary authority over the management or administration of a plan.” Id.
(citation omitted). In this case, the life insurance carrier and claims administrator was MetLife, while the Plan
sponsor and administrator was McDermott Incorporated. Docket no. 54-1 at 15 (“This benefit is administered by
MetLife pursuant to a contract with the Plan Sponsor.”).
9
Because accepting payments and advising participants about their eligibility do not
qualify as discretionary acts, Plaintiff’s breach of fiduciary duty claim cannot stand. Under the
Department of Labor’s (DOL) regulation titled “Questions and answers relating to fiduciary
responsibility under the Employee Retirement Income Security Act of 1974”, persons who do
not have power to make decisions regarding ERISA plans, and only perform “administrative
functions,” are not fiduciaries under 29 U.S.C. § 1002(21)(A). 29 C.F.R. § 2509.75-8 (D-2).
Included among the (non-fiduciary) administrative functions listed are the “collection of
contributions” and “advising participants of their rights and options under the plan.” Id. The
regulation goes on to explain that a person who performs the type of functions described above
(including “collection of contributions” and “advising participants of their rights and options
under the plan”) is not a fiduciary because “such person does not have discretionary authority or
discretionary control respecting management of the plan, does not exercise any authority or
control respecting management or disposition of the assets of the plan, and does not render
investment advice with respect to any money or other property of the plan and has no authority
or responsibility to do so.” Id.
The Fourth Circuit’s decision in Estate of Weeks v. Advance Stores Co., Inc., 99 F. App’x
470 (4th Cir. 2004) provides a helpful illustration. In that case, an employee resigned from his
employment with an automotive-parts distribution center. Under the terms of his medical plan,
his medical coverage ended a week later if he failed to continue coverage within thirty-one days
of his termination as an employee. Under his life insurance plan, the former employee ceased
being covered on the same day of his resignation if he failed to continue coverage within the
applicable period. Id. at 473–74. Days after leaving his position, the former employee suffered a
relapse of leukemia.
However, when his family contacted his former employer about his
10
benefits, a human resources manager told them (incorrectly) that all of his benefits had ceased on
his last day of employment, and failed to mention the continuation option under the health and
life insurance plans. Id. at 473. The former employee died a few months later, and his family
brought suit in another court in this district, contending that the defendants breached their
fiduciary duties by misinforming the family that the former employee was not entitled to any
continuation of his benefits. Id. at 474.
Judge Wilson concluded that the human resource manager’s job activities did not bring
her within ERISA’s definition of a fiduciary, and entered summary judgment in favor of the
defendants. The Fourth Circuit affirmed, concluding that the human resource manager “did not
have any discretionary authority or control over the manner in which employee plans were
managed and administered.” Id. at 476. The mere fact that she (incorrectly) answered questions
about the former employee’s benefits did not transform her into a fiduciary, as it was her duty
only to relay information given to her by upper-management or from the company’s computer
database. Id. at 476–77 (“Our inquiry [into whether a person qualifies as an ERISA fiduciary]
solely focuses on whether that person actually exercised any discretionary authority over the
management and administration of the plan in question.”). 9
In the present case, Plaintiff alleges that Defendants had a duty to inform Mr. Moon
about his lack of life insurance coverage when they accepted his payments over the course of
2006. According to Plaintiff, the failure to provide that information constituted a breach of
Defendants’ fiduciary duty.
However, the cited DOL regulation clearly states that the
“collection of contributions” and “advising participants of their rights and options under the
9
The court also noted that the plaintiffs could have corrected any of the manager’s misstatements simply by going
through the medical and life insurance plan documents that had been provided to the former employee. Id. at 477.
Similarly, in this case, both the MetLife Plan and the Summary Plan Description (see Docket Nos. 54-1, 2) are clear
that life insurance benefits end upon the cessation of active employment.
11
plan” are administrative, rather than discretionary, acts. See 29 C.F.R. § 2509.75-8 (D-2).
Because Plaintiff has failed to establish Defendants’ fiduciary status with respect to the particular
activities at issue in this case, see Coleman, 969 F.2d at 61, her breach of fiduciary duty claim
must be denied.
2. Plaintiff’s Equitable Estoppel Claim
Because Plaintiff cannot show that Defendants were fiduciaries in this case, Plaintiff
cannot recover under a theory of equitable estoppel either.
Along with reformation and
surcharge, the Supreme Court cited equitable estoppel as a potential equitable remedy available
to the Amara beneficiaries. See McCravy II, 690 F.3d at 181 (“In sum, the portion of Amara in
which the Supreme Court addressed Section 1132(a)(3) stands for the proposition that remedies
traditionally available in courts of equity, expressly including estoppel and surcharge, are indeed
available to plaintiffs suing fiduciaries under Section 1132(a)(3).”).
The Fourth Circuit
emphasized that “estoppel is ‘a traditional equitable remedy’—i.e., a remedy available to
plaintiffs suing a fiduciary under Section 1132(a)(3).” Id. at 182 (quoting Amara, 131 S. Ct. at
1880).
In order to assert a claim for equitable estoppel, Plaintiff must identify some basis for
equity jurisdiction. See Drexel v. Berney, 122 U.S. 241, 253 (1887) (“[I]t is necessary to show
some ground of equity other than the estoppel itself . . . .”). If Plaintiff cannot show any
independent ground for equity jurisdiction, her § 1132(a)(3) claim must fail as a matter of law.
In both Amara and McCravy II, the jurisdictional basis for plaintiffs’ equitable claim was the
defendants’ status as plan fiduciaries. See Amara, 131 S. Ct. at 1869; McCravy II, 690 F.3d at
182–83. Likewise, Plaintiff contends that Defendants are plan fiduciaries in this case, and
Plaintiff should be able to proceed on her claim for equitable estoppel relief. In support, Plaintiff
12
notes in her brief in opposition that 29 C.F.R. § 2509.75-8 states that a plan agent or employee
that “has the final authority to authorize or disallow benefit payments in cases where a dispute
exists” qualifies as an ERISA fiduciary. Plaintiff contends that, due to the letter that BWX sent
on April 12, 2007, Defendants effectively handled and denied Plaintiff’s claim. 10
However, Defendants alleged “handling and denial” of Plaintiff’s claim has nothing to do
with their silent acceptance of Mr. Moon’s payments, which is the action that Plaintiff contends
constituted the breach of fiduciary duty in this case. Again, according to the Fourth Circuit, “a
party is a fiduciary [under ERISA] only as to the activities which bring the person within the
definition.” Coleman, 969 F.2d at 61. The alleged breach of fiduciary duty in this case occurred
when Defendants accepted payments without informing Mr. Moon that he was no longer eligible
for life insurance benefits, rather than due to the April 12, 2007 letter that BWX sent.
Specifically, Plaintiff alleges that, “[a]s fiduciaries under ERISA for such Plan, defendants had a
duty to Mr. Moon to truthfully and accurate advise Mr. Moon if he was ineligible for life
insurance benefits within a reasonable time after receiving monthly payments from Mr. Moon for
said benefits . . . .” Pl.’s Am. Compl. ¶ 34. Plaintiff alleges that the Defendants “negligently or
intentionally breached the duty they owed to Mr. Moon under ERISA to advise him of his
ineligibility for life insurance benefits and their conduct, in fact, caused Mr. Moon to believe he
had procured said benefits.” Id. at ¶ 36. As discussed, “advising participants of their rights and
options under the plan” and the “collection of contributions” are not fiduciary actions under §
1002(21)(A).
10
While courts have found that in some § 1132(a)(3) actions a defendant’s fiduciary status makes no difference, see
Trustees ex rel. N. Cal. Gen. Teamsters Sec. Fund v. Fresno Bread Bakery, Inc., 2012 WL 3062174 (E.D. Cal. July
25, 2012), this is not a case where the defendant “actively and deliberately misleads the plaintiff to the plaintiff’s
detriment.” Id. at *4 (quoting Northwest Adm’rs, Inc. v. Cutter, 328 F. App’x 577, 578 (9th Cir. 2009)) (equitable
restitution available for medical benefits paid for woman whom defendant misrepresented as his wife).
13
It is important to note that defendants can, at least in some respects, be fiduciaries
without being named as an administrator in plan documents. See Wilmington Shipping, 496 F.3d
at 343 (“[F]iduciary status under ERISA is not an all-or-nothing concept.”) (citation and internal
quotations omitted). Furthermore, “an individual or entity can still be found liable as a ‘de facto’
fiduciary if it lacks formal power to control or manage a plan yet exercises informally the
requisite ‘discretionary control’ over plan management and administration . . . .” Wright v. Or.
Metallurgical Corp., 360 F.3d 1090, 1101–02 (9th Cir. 2004). Still, “[a] defendant’s fiduciary
status under ERISA may be decided on a motion to dismiss.” Carr v. Int’l Game Tech., 770 F.
Supp. 2d 1080, 1088 (D. Nev. 2011) (citing Wright, 360 F.3d at 1101–02). 11 Indeed, “Fourth
Circuit decisions strongly support the conclusion that [ ] plaintiffs must do more than quote the
statutory language regarding ‘discretionary control’ to plead adequately that a given defendant is
a de facto ERISA fiduciary.” In re Mutual Funds Inv. Litig., 403 F. Supp. 2d 434, 446 (D. Md.
2005) (discussing Custer v. Sweeney, 89 F.3d 1156 (4th Cir. 1996)).
As discussed, Defendants were not acting as fiduciaries in this case, given the breach of
duty that Plaintiff alleged in her first amended complaint. Furthermore, Defendants in this case
neither possessed nor exercised any authority to administer the MetLife Plan, or resolve any
disputes regarding Plan benefits. As the Plan and Summary Plan Description make clear, sole
responsibility for processing claims lies with MetLife, which is not a party to this suit. See
Docket No. 54-1 at 9–10. 12 Those documents also state that if an employee’s coverage ends due
11
In Wright, the Ninth Circuit agreed with the district court’s finding that the defendants were neither fiduciaries nor
de facto fiduciaries under an employee pension plan, and affirmed the district court’s Fed. R. Civ. P. 12(b)(6)
dismissal of plaintiffs’ claims. 360 F.3d at 1103.
12
In contrast, the district court in Amara found CIGNA, the defendant-employer, to be the plan administrator and
proper fiduciary in that case. 131 S. Ct. at 1876. In Musmeci v. Schwegmann Giant Super Mkts., Inc., 332 F.3d 339
(5th Cir. 2003), which Plaintiff cites, the employer similarly had clear authority to dispose of claims under the
benefit plan. Id. at 349–50 (finding that the defendant-employer was both plan administrator and plan sponsor, as
14
to the cessation of employment, he must apply within thirty-one days to continue his life
insurance coverage through a personal policy with MetLife. Docket No. 54-1 at 10. The April
12, 2007 “denial” to which Plaintiff refers in her opposition—and cites as additional grounds for
Defendants’ fiduciary status in her proposed second amended complaint—was merely a letter
from BWX’s Human Resources department informing Plaintiff’s counsel that, more than a year
past Mr. Moon’s deadline to apply for continued coverage, there was no existing policy upon
which Plaintiff could rely to submit a claim to MetLife. See Doc. No. 23-1 at 9–10.
Because Defendants were not acting as fiduciaries in this case, Plaintiff’s proposed
amendments seeking reformation and surcharge remedies are futile. Similarly, Plaintiff’s breach
of fiduciary duty and equitable estoppel claims on remand must fail.
IV.
CONCLUSION
For the foregoing reasons, Plaintiff’s Motion for Leave to File a Second Amended
Complaint is DENIED. Defendants’ Motion to Dismiss Plaintiff’s First Amended Complaint is
GRANTED. An appropriate order accompanies this memorandum opinion.
The clerk of the court is hereby directed to send a certified copy of this memorandum
opinion to all counsel of record.
9th
Entered this ________ day of July, 2013.
the plan had no meaningful existence separate from the employer since the plan was funded by the employer’s
owner, and the employer made the decision to terminate the plan.).
15
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