Turner v. Volkswagen Group of America, Inc. et al
Filing
36
MEMORANDUM OPINION AND ORDER granting in part and denying in part defendants, Volkswagen Group of America, Inc. and Liberty Life Assurance Co. of Boston 23 MOTION for Judgment on the Pleadings. Signed by Judge Joseph R. Goodwin on 7/18/2017. (cc: attys; any unrepresented party) (tmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
KAREN TURNER,
Plaintiff,
v.
CIVIL ACTION NO. 2:16-cv-06570
VOLKSWAGEN GROUP OF AMERICA, INC, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the court is the defendants’, Volkswagen Group of America, Inc.
and Liberty Life Assurance Co. of Boston, Rule 12(c) Motion for Judgment on the
Pleadings [ECF No. 23]. The plaintiff, Karen Turner, filed an Opposition [ECF No.
29], and the defendants filed a Reply [ECF No. 31]. The matter is now ripe for
decision. For the reasons stated herein, the defendants’ Motion is GRANTED in part
and DENIED in part.
I.
BACKGROUND
Volkswagen Group of America, Inc. (“Volkswagen”) employed Keith Turner
(“Mr. Turner”), the plaintiff’s deceased husband, from 1984 to 1985. Compl. ¶¶ 7–9.
At that time, Volkswagen sponsored a group disability insurance plan for its
employees. Id. at ¶ 8. Mr. Turner began receiving long-term disability (“LTD”)
benefits through Volkswagen’s group disability insurance plan in 1985 after an
accident in the course of his employment rendered him quadriplegic. Id. at ¶¶ 9, 11.
Mr. Turner continued receiving LTD benefits until he died in February 2016. Id. at
¶¶ 11, 16. In addition to disability benefits, Volkswagen also offered a group life
insurance plan through which Mr. Turner purchased a life insurance policy before
his death. Id. at ¶ 10.
From 2011 to 2016, he received confirmation statements from Volkswagen
indicating that he was covered under the company’s group life insurance plan for
$52,000. Id. at ¶ 13. Early in 2016, Mr. Turner received a notification that Liberty
Life Assurance Co. of Boston (“Liberty”) would serve as the provider of the life
insurance coverage previously provided by Volkswagen and that his coverage would
remain the same. Id. at ¶ 15. Indeed, prior to Mr. Turner’s death, neither Volkswagen
nor Liberty indicated any alteration to Mr. Turner’s insurance plans. Id.
After Mr. Turner died, the plaintiff provided Volkswagen with a copy of Mr.
Turner’s death certificate in an attempt to receive benefits. Id. at ¶¶ 16–18. In
response to the plaintiff’s submission, Volkswagen sent the plaintiff a condolence
letter on February 29, 2016, stating that she was eligible only for the continuance of
her husband’s health and welfare benefits through COBRA. Id. at ¶ 19; Admin. R.
Ex. A, at LI 0001 [ECF No. 21-2]. In response to this letter, prior counsel for the
plaintiff sent Volkswagen a letter on March 14, 2016, asking it to advise whether Mr.
Turner was covered by life insurance at the time of his death. Compl. ¶ 20; Obj.
Admin. R. 3 [ECF No. 26]. After receiving the letter from plaintiff’s counsel,
2
Volkswagen responded with its own letter on March 31, 2016, (“March 31 Letter”)
stating that the plaintiff was not entitled to benefits under its life insurance policy.
Answer Ex. A, at 1 [ECF No. 13-1]. Notably, although the March 31 Letter included
a copy of Volkswagen’s benefits plan and urged the plaintiff to contact the plan
administrator if she had questions, the letter itself omitted any mention of the benefit
plan’s internal appellate procedure. Id.
The plaintiff’s current counsel sent a letter on June 14, 2016, (“June 14 Letter”)
that indicated the plaintiff intended to appeal the life insurance determination.
Answer Ex. A, at 38–39. In response to the plaintiff’s June 14 Letter, the defendants’
counsel wrote a letter on July 14, 2016, (“July 14 Letter”) indicating that the plaintiff
was procedurally barred from appealing the March 31, 2016, benefits denial because
the benefit plan’s sixty-day appeal period had lapsed. Id. at 42–43. The plaintiff never
attempted to file an appeal for the denial of her life insurance benefits through the
benefits plan’s internal appellate procedure.
Additionally, Liberty called the plaintiff several times and left voicemails
indicating that a survivor benefit existed under Mr. Turner’s LTD benefit plan.
Compl. ¶ 30. However, after the plaintiff left a voicemail inquiring about the survivor
benefit, Liberty called the plaintiff and left a voicemail informing her that no survivor
benefit existed. Id. at ¶¶ 31–32. In reply to that voicemail, the plaintiff’s counsel sent
a letter notifying the defendants of her intent to appeal the denial of her survivor
benefit. Answer Ex. B, at 1–2. The defendants’ counsel responded by sending a formal
3
letter indicating that the plaintiff’s survivor benefit had been denied and restarting
the time-period during the which the plaintiff could appeal the benefits plan’s
determination. Id. at 5–6. Unlike the letter denying her life insurance claim, the
letter denying the plaintiff’s survivor benefit specifically referenced the benefit plan’s
internal appellate procedure. Id. Despite the letter’s reference, the plaintiff never
attempted to use the benefit plan’s internal appellate procedure from the denial of
her survivor benefit claim.
Following the denial of her benefits, the plaintiff brought a lawsuit asserting
three causes of action under the Employee Retirement Income Security Act
(“ERISA”). Specifically, the plaintiff asserted claims for (1) wrongful denial of her life
insurance claim, (2) wrongful denial of her survivor benefit claim, and (3) breach of
fiduciary duty.
II.
LEGAL STANDARD
“[T]he Rule 12(c) judgment on the pleadings procedure primarily is addressed
to . . . dispos[e] of cases on the basis of the underlying substantive merits of the
parties’ claims and defenses as they are revealed in the formal pleadings.” 5C Charles
Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1367 (3d ed. 2004).
A motion under 12(c) is useful when only questions of law remain. Id.
[A] Rule 12(c) motion is designed to provide a means of
disposing of cases when the material facts are not in
dispute . . . and a judgment on the merits can be achieved
by focusing on the content of the competing pleadings,
exhibits thereto, matters incorporated by reference in the
4
pleadings, [and] whatever is central or integral to the claim
for relief or defense . . . .
Id.
When ruling on a 12(c) motion, courts must consider the pleadings, documents
attached to the pleadings, and any documents that are “integral to the complaint and
authentic.” Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th Cir. 2013) (citation
omitted). Additionally, district courts apply the Federal Rule of Civil Procedure
12(b)(6) standard when ruling on 12(c) motions. Wright & Miller, supra, § 1367; see
Exec. Risk Indem., Inc. v. Charleston Area Med. Ctr., Inc., 681 F. Supp. 2d 694, 706
n.17 (S.D. W. Va. 2009) (“[T]he standards under Federal Rule of Civil Procedure 12(c)
for a motion for judgment on the pleadings are identical to those applicable to a
Federal Rule of Civil Procedure 12(b)(6) motion to dismiss.”).
A motion to dismiss filed under Rule 12(b)(6) tests the legal sufficiency of a
complaint or pleading. Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). A
pleading must contain a “short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). This standard “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 Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “To survive a motion
to dismiss, a complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” Id. (quoting Twombly, 550 U.S.
at 570). To achieve facial plausibility, the plaintiffs must plead facts allowing the
5
court to draw the reasonable inference that the defendant is liable, moving the claim
beyond the realm of mere possibility. Id. Mere “labels and conclusions” or “formulaic
recitation[s] of the elements of a cause of action” are insufficient. Twombly, 550 U.S.
at 555.1
III.
DISCUSSION
The defendants argue that all three of the plaintiff’s claims should be
dismissed. Specifically, the defendants argue that the plaintiff’s denial of benefits
claims should be dismissed because she failed to exhaust the administrative remedies
available to her and that the plaintiff’s breach of fiduciary duty claim should be
dismissed because the duties allegedly breached are ministerial, not fiduciary, in
nature. I will address each of the claims in turn.2
The plaintiff repeatedly cites to the administrative record in this case. Were I to consider material
outside of the pleadings, Federal Rule of Civil Procedure 12(d) dictates that when “matters outside the
pleadings are presented to and not excluded by the court, the motion must be treated as one for
summary judgment under Rule 56.” Fed. R. Civ. P. 12(d). However, “it is well-settled that it is within
the district court’s discretion whether to accept extra-pleading matter on a motion for judgment on the
pleadings and treat it as one for summary judgment or to reject it and maintain the character of the
motion as one under Rule 12(c).” 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 1371 (3d ed. 2004); see also Covey v. Assessor of Ohio Cty., 777 F.3d 186, 193 (4th Cir.
2015) (noting that Federal Rule of Civil Procedure 12(d) permits courts to simply ignore materials
outside of the pleadings when those materials are presented during a motion to dismiss). Here, I rely
solely on the pleadings to render my decision; therefore, I need not convert the defendants’ Motion to
a motion for summary judgment.
1
The parties argue over whether a de novo or abuse of discretion standard of review applies to this
case. However, I am not asked to review the benefits plan’s determination in this case. Rather, I am
merely asked to determine whether the plaintiff alleged sufficient facts to support a showing of
exhaustion of plan remedies and breach of fiduciary duty. Accordingly, because I am not reviewing the
benefits plan’s determination at this time, there is no need to rule on the appropriate standard of
review.
2
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a. Denial of Life Insurance Benefits Claim
The defendants first argue that I should dismiss the plaintiff’s denial of life
insurance benefits claim because the pleadings and attached documents show that
she failed to exhaust the administrative remedies established in the benefit plan prior
to bringing this lawsuit. In response, the plaintiff argues that her March 14 Letter
constituted an appeal and that Volkswagen’s letters denying her life insurance
benefits did not comply with ERISA’s notice requirements. For the following reasons,
I determine that the plaintiff’s administrative remedies are deemed exhausted and
her denial of life insurance benefits claim need not be dismissed for failure to exhaust.
Although ERISA does not contain an explicit exhaustion requirement, courts
have universally required exhaustion of benefit plan remedies prior to bringing suit
in federal court. See, e.g., Gayle v. United Parcel Serv., Inc., 401 F.3d 222, 226 (4th
Cir. 2005) (“An ERISA welfare benefit plan participant must both pursue and exhaust
plan remedies before gaining access to the federal courts.” (citing Makar v. Health
Care Corp. of Mid-Atl. (CareFirst), 872 F.2d 80, 82 (4th Cir. 1989))). The exhaustion
requirement is grounded in ERISA’s “text and structure as well as the strong federal
interest encouraging private resolution of ERISA disputes.” Makar, 872 F.2d at 82.
The exhaustion requirement, however, is not absolute. Under 29 C.F.R. § 2560.5031(l), one of ERISA’s implementing regulations promulgated by the Department of
Labor (“DOL”),
[I]n the case of the failure of a plan to establish or follow
claims procedures consistent with the requirements of this
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section,3 a claimant shall be deemed to have exhausted the
administrative remedies available under the plan and
shall be entitled to pursue any available remedies under
section 502(a) of the Act4 on the basis that the plan has
failed to provide a reasonable claims procedure that would
yield a decision on the merits of the claim.
While 29 C.F.R. § 2560.503-1(l) allows plaintiffs to bypass ERISA’s exhaustion
requirements, technical deviations from the requirements of 29 C.F.R. § 2560.503-1
do not permit plaintiffs to file directly in court. The DOL offers the following guidance:
[N]ot every deviation by a plan from the requirements of
the [29 C.F.R. § 2560.503-1] justifies proceeding directly to
court. A plan that establishes procedures in full conformity
with the regulation might, in processing a particular claim,
inadvertently deviate from its procedures. If the plan’s
procedures provide an opportunity to effectively remedy
the inadvertent deviation without prejudice to the
claimant, through the internal appeal process or otherwise,
then there ordinarily will not have been a failure to
establish or follow reasonable procedures as contemplated
by § 2560.503-1(l).
Benefits Claims Procedure Regulations FAQs, FAQ F–2, U.S. Dep’t of Labor,
http://www.dol.gov/ebsa/faqs/faq_claims_proc_reg.html (last visited July 18, 2017).
Consistent with the DOL’s interpretation, a number of federal circuit courts have
limited the “deemed-exhausted provision . . . to instances in which the notice and
disclosure deficiencies actually denied the participant a reasonable review
procedure.” Holmes v. Colo. Coal. for Homeless Long Term Disability Plan, 762 F.3d
29 C.F.R. § 2560.503-1 establishes a number of procedural guidelines for the ERISA claims process.
I discuss the section relevant to this matter in further detail herein. See infra pp. 10–12.
3
Section 502(a) of the Act is codified at 29 U.S.C. § 1132(a), the section under which the plaintiff
brought her claims.
4
8
1195, 1213 (10th Cir. 2014); see also Schorsch v. Reliance Standard Life Ins. Co., 693
F.3d 734, 739 (7th Cir. 2012) (determining that “[f]laws in [the benefit plan’s]
termination notice . . . become relevant only if [the plaintiff] reasonably relied on
them in failing to request a review of its decision to terminate her disability benefits
or if [the benefit plan’s] missteps denied her meaningful access to a review” (citation
omitted)); Chorosevic v. MetLife Choices, 600 F.3d 934, 944 (8th Cir. 2010) (noting
that courts “may excuse a claimant from exhausting administrative appeals when the
ERISA plan’s actions or omissions deprive the claimant of information or materials
necessary to prepare for administrative review or for an appeal to federal courts”
(citation omitted)); cf. Eastman Kodak Co. v. STWB, Inc., 452 F.3d 215, 222 (2d Cir.
2006) (“The ‘deemed exhausted’ provision was plainly designed to give claimants
faced with inadequate claims procedures a fast track into court.”).
The Fourth Circuit, however, has not considered when administrative
remedies are deemed exhausted under 29 C.F.R. § 2560.503-1(l). Prior to the
promulgation of 29 C.F.R. § 2560.503-1(l), the Fourth Circuit determined that
“[n]ormally, where the plan administrator has failed to comply with ERISA’s
procedural guidelines and the plaintiff/participant has preserved his objection to the
plan administrator’s noncompliance, the proper course of action for the court is
remand to the plan administrator for a ‘full and fair review.’” Weaver v. Phoenix
Home Life Mut. Ins. Co., 990 F.2d 154, 159 (4th Cir. 1993) (citing Berry v. Ciba-Geigy
Corp., 761 F.2d 1003, 1007 n. 4 (4th Cir. 1985)); Claims Procedure, 65 Fed. Reg.
9
70,246, 70,265–71 (Nov. 21, 2000) (to be codified at 29 C.F.R. § 2560.503-1). The
Fourth Circuit has not, however, considered procedural ERISA violations and the
proper remedy for those violations in light of the DOL’s promulgation of 29 C.F.R. §
2560.503-1(l) in 2000.5
The Fourth Circuit counsels that remand is generally the correct remedy in
ERISA cases. Remand to the plan administrator furthers ERISA’s statutory goal of
giving plan administrators—not federal courts—primary responsibility for claims
processing “by enabl[ing] plan fiduciaries to efficiently manage their funds; correct
their errors; interpret plan provisions; and assemble a factual record which will assist
a court in reviewing the fiduciaries’ actions.” Makar, 872 F.2d at 83 (citation omitted).
Remand, however, is not the appropriate remedy for every case. I determine,
consistent with the federal circuit courts that have considered 29 C.F.R. § 2560.5031(l)’s “deemed exhausted” provision, that waiver of ERISA’s exhaustion requirement
is the appropriate remedy where the plan failed to comply with procedures outlined
in 29 C.F.R. § 2560.503-1 and the plan’s failure to comply “denied the [plan]
participant a reasonable review procedure.” Holmes, 762 F.3d at 1213. My
determination is consistent with the DOL’s determination that 29 C.F.R. § 2560.5031’s protections are “essential to procedural fairness and that a decision made in the
In its 2008 case Gagliano v. Reliance Standard Life Ins. Co., 547 F.3d 230, 240 (4th Cir. 2008), the
Fourth Circuit again stressed that the proper remedy for procedural noncompliance with 29 C.F.R. §
2560.503-1 is remand to the plan administrator; however, the Fourth Circuit examined neither the
exhaustion requirement nor 29 C.F.R. § 2560.503-1(l) in that case.
5
10
absence of the mandated procedural protections should not be entitled to any judicial
deference.” Claims Procedure, 65 Fed. Reg. at 70,255.
Here, documents attached to the pleadings show that Volkswagen’s denial of
benefits letter did not comply with the procedural requirements of 29 C.F.R. §
2560.503-1(g). Under 29 C.F.R. § 2560.503-1(g), whenever a plan renders an adverse
benefit determination, the plan must give the plan participant notice of that adverse
benefit determination in writing. The writing provided by the plan must “set forth, in
a manner calculated to be understood by the claimant” several different types of
information. 29 C.F.R. § 2560.503-1(g). Of particular importance to this case, the
writing must include “[a] description of the plan’s review procedures and the time
limits applicable to such procedures, including a statement of the claimant’s right to
bring a civil action under section 502(a) of the Act following an adverse benefit
determination on review.” Id. Volkswagen’s March 31 denial letter included neither
a description of the plan’s review procedures nor any indication that the plaintiff
could pursue a civil claim under section 502(a) of ERISA following an adverse benefit
determination on review.
The defendants are careful to note, “Enclosed [with the March 31 denial letter]
was the relevant summary plan description, which states that any claim must be
appealed within 60 days.” Mem. Supp. Defs.’ 12(c) Mot. 13 [ECF No. 24]. Merely
attaching the summary plan description, however, is insufficient to satisfy the notice
requirements of 29 C.F.R. § 2560.503-1(g) because notice provided pursuant to that
11
regulation must be “set forth, in a manner calculated to be understood by the
claimant.” 29 C.F.R. § 2560.503-1(g) (emphasis added). Simply put, appending an
arcane thirty-six page insurance plan description to a denial letter without once
referencing the plan’s review procedures in the body of the denial letter fails to
sufficiently apprise the claimant of the plan’s review procedures. See Burke v. Kodak
Ret. Income Plan, 336 F.3d 103, 108 (2d Cir. 2003) (finding inadequate notice where
the “initial denial letter [did] not expressly say that [the claimant] had ninety days
to appeal” and cross-references in the denial letter failed to apprise the claimant of
the plan’s internal review procedures); Hall v. Tyco Int’l Ltd., 223 F.R.D. 219, 238
(M.D.N.C. 2004) (finding inadequate notice where the letter did “not describe the
plan’s review procedures or the time limits applicable to those procedures, and it
clearly [did] not inform [the claimant] that he had the right to bring a civil action
pursuant to section 502”); Ross v. Diversified Ben. Plans, Inc., 881 F. Supp. 331, 335
(N.D. Ill. 1995) (finding inadequate notice where the “denial notice did not mention
the Plan’s appeal procedure or specifically refer the claimant to the Plan book for
information about the appeal procedure”). Similarly, Volkswagen failed to apprise the
plaintiff of the plan’s review procedures by merely stating, “If you have any questions,
please do not hesitate to contact me.” See SunTrust Bank v. Aetna Life Ins. Co., 251
F. Supp. 2d 1282, 1289 (E.D. Va. 2003) (finding inadequate notice where the denial
letter merely included the plan administrator’s contact information for the claimant
to contact if he had questions); Answer Ex. A, at 1. Accordingly, because Volkswagen
12
failed to describe its internal review procedure in the denial letter and the mere
inclusion of the insurance plan description did not apprise the plaintiff of the plan’s
internal review procedure, I FIND that the pleadings contain sufficient allegations to
support a showing that Volkswagen failed to comply with 29 C.F.R. § 2560.503-1(g).
Additionally, the plaintiff has alleged facts sufficient to support a showing that
Volkswagen’s failure to comply with 29 C.F.R. § 2560.503-1(g) effectively denied her
a reasonable review procedure. In her Complaint, the plaintiff alleges that (1)
Volkswagen sent her misleading communications, (2) Volkswagen failed to apprise
her of her rights under ERISA or the plan’s internal procedures, (3) she was misled
and misinformed about her rights under the plan, and (4) Volkswagen did not provide
a full and fair review of her claim. Compl. ¶¶ 26–28, 35, 36. The plaintiff’s allegations
are buttressed by the July 14 Letter that stated that she was time-barred from using
the plan’s internal procedures—procedures that she was not adequately apprised of
per 29 C.F.R. § 2560.503-1(g). Therefore I FIND that the pleadings present sufficient
allegations to support a showing that Volkswagen’s failure to comply with 29 C.F.R.
§ 2560.503-1(g) denied the plaintiff a reasonable review procedure.
Because there are facts sufficient to support a showing that Volkswagen failed
to comply with 29 C.F.R. § 2560.503-1(g) and Volkswagen’s failure denied the plaintiff
reasonable review of her life insurance claim, I FIND that the pleadings present
sufficient allegations to support a showing that the plaintiff’s administrative
remedies are deemed exhausted for her life insurance benefits claim, and therefore,
13
dismissal is improper at this time. Accordingly, the defendants’ Motion is DENIED
as to the plaintiff’s life insurance benefits claim.6
b. Denial of Survivor Benefits Claim
Similarly, the defendants argue that I should dismiss the plaintiff’s denial of
survivor benefits claim because the pleadings and attached documents show that she
failed to exhaust the plan’s administrative remedies prior to initiating this lawsuit.
The plaintiff fleetingly argues that “the facts clearly and positively show that further
appeal to Liberty Mutual was futile.” See Pl.’s Opp’n. 4.
Plaintiffs may avoid ERISA’s exhaustion requirement by showing that use of
the plan’s internal appellate process is futile. See, e.g., Kunda v. C.R. Bard, Inc., 671
F.3d 464, 471–72 (4th Cir. 2011). To support a showing of futility, there must be
“‘clear and positive’ evidence that the [administrative] remedies are futile or useless.”
Id. at 472; see also Nessell v. Crown Life Ins. Co., 92 F. Supp. 2d 523, 529 (E.D. Va.
2000) (finding futility where plan administrators told the plaintiff that their decision
was final and irrevocable, that they would not consider any appeals, and that they
would not provide documents the plaintiff requested). In support of her argument
that using the plan’s internal appellate procedures for her denial of survivor benefits
claim would be useless, the plaintiff relies on West v. Cont’l Auto., Inc., No.
316CV00502FDWDSC, 2016 WL 6543128 (W.D.N.C. Nov. 2, 2016).
Because I determine that dismissal is improper on the grounds that the pleadings present allegations
sufficient to support a showing that the deemed exhausted provision applies, I need not address
whether the March 14 Letter constituted an appeal.
6
14
However, West is not analogous to this case. In West, the plaintiffs alleged that
they used the administrative appeal process, the defendants opposed a particular
plan interpretation in the administrative appeal process for three years and after two
separate court decisions, and, even after that extensive process, the defendants
continued to oppose the plaintiffs’ plan interpretation. Id. at *2. The facts alleged in
this case are decidedly different than the bureaucratic quagmire present in West;
indeed, the documents attached to the Answer cut against a showing of futility. After
vacillating on whether the plaintiff was entitled to a survivor benefit and leaving
conflicting voicemail messages, the pleadings indicate that the defendants sent a
letter to the plaintiff definitively denying her survivor benefits claim, clearly
outlining the administrative appellate procedure, and restarting the time-period
during which the plaintiff could initiate her administrative appeal. See Answer Ex.
B, at 5–6. Nothing in the pleadings shows that the defendants attempted to stymy
the plaintiff’s appeal or that the defendants would inevitably deny the plaintiff’s
appeal. Therefore, I FIND that the plaintiff has not alleged facts sufficient to support
a showing of futility. Accordingly, the defendants’ Motion is GRANTED as to the
plaintiff’s denial of survivor benefits claim.
c. Breach of Fiduciary Duty Claim
Finally, the defendants argue that I should dismiss the plaintiff’s breach of
fiduciary duty claim because the allegedly breached duties were ministerial, not
fiduciary, in nature. In response, the plaintiff argues that the alleged breaches were
15
fiduciary breaches because Volkswagen was both the payor and the adjudicator of the
plaintiff’s claims.
Under ERISA,
a person is a fiduciary with respect to a plan to the extent
(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.
29 U.S.C. § 1002(21)(A). Therefore, to determine whether challenged conduct
constitutes a breach of fiduciary duty, courts must “examine the conduct at issue [to
determine] whether an individual is an ERISA fiduciary.” Wilmington Shipping Co.
v. New Eng. Life Ins. Co., 496 F.3d 326, 343 (4th Cir. 2007) (quoting Hamilton v.
Carell, 243 F.3d 992, 998 (6th Cir. 2001)). In so doing, courts must “determine
whether [the conduct at issue] constitutes ‘management’ or ‘administration’ of the
plan, giving rise to fiduciary concerns, or merely a business decision that has an effect
on an ERISA plan not subject to fiduciary standards.” Hamilton, 243 F.3d at 998
(quoting Hunter v. Caliber Sys., Inc., 220 F.3d 702, 718 (6th Cir. 2000)). The DOL
provided guidance to courts making that determination:
Only persons who perform one or more of the functions
described in [29 U.S.C. § 1002(21)(A)] with respect to an
employee benefit plan are fiduciaries. Therefore, a person
who performs purely ministerial functions such as
[advising participants of their rights and options under the
16
plan]7 for an employee benefit plan within a framework of
policies, interpretations, rules, practices and procedures
made by other persons 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.
29 C.F.R. § 2509.75-8(D-2); see also Moon v. BWX Techs., Inc., 577 F. App'x 224, 231
(4th Cir. 2014) (relying on 29 C.F.R. § 2509.75-8(D-2) to determine whether a party
breached a fiduciary duty in an ERISA case).
Here, the plaintiff alleges that the defendants breached their fiduciary duties
by failing to advise her of her rights under the benefits plan, failing to advise Mr.
Turner of his rights under the plan while he was alive, and sending the plaintiff and
Mr. Turner erroneous statements that indicated he continued to have life insurance
under the plan. None of the conduct alleged by the plaintiff constitutes management
or administration of the plan; indeed, all of the alleged conduct implicates advising
the plaintiff or her rights under the plan—a category of conduct that the DOL
specifically determined was ministerial. See Moon, 577 F. App’x at 231 (finding that
failure to notify a claimant that he was no longer eligible for life insurance was a
ministerial function based on 29 C.F.R. § 2509.75-8(D-2)). Although the plaintiff
argues that Volkswagen’s conduct constitutes a breach of fiduciary duty because it is
The regulation itself includes more examples of what constitutes purely ministerial functions;
however, for the sake of brevity, only those functions pertinent to this case are included.
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17
both the payor and adjudicator of claims, ERISA fiduciary status is conferred by the
function performed—not the position of the entity performing the duty. Id. at 229
(“[B]ecause the definition of ERISA fiduciary ‘is couched in terms of functional control
and authority over the plan,’ we must ‘examine the conduct at issue when
determining whether an individual is an ERISA fiduciary.’” (quoting Wilmington
Shipping Co., 496 F.3d at 343)). Here, the functions on which the plaintiff bases her
breach of fiduciary duty claim are ministerial. Therefore, I FIND that the plaintiff
has not alleged facts sufficient to support a breach of fiduciary duty claim.
Accordingly, the defendant’s Motion is GRANTED as to the plaintiff’s breach of
fiduciary duty claim.
IV.
CONCLUSION
For the above stated reasons, the court ORDERS that the defendants’ Rule
12(c) Motion for Judgment on the Pleadings [ECF No. 23] is DENIED as to the
plaintiff’s denial of life insurance benefits claim and GRANTED as to the plaintiff’s
denial of survivor benefits claim and breach of fiduciary duty claim.
The court DIRECTS the Clerk to send a copy of this Order to counsel of record
and any unrepresented party.
ENTER:
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July 18, 2017
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