Neville et al v. Ariens Company et al
Filing
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ORDER signed by Chief Judge William C Griesbach on 12-19-13 granting 9 Motion to Dismiss for Failure to State a Claim; denying 15 Motion for Leave to File. (cc: all counsel) (Griesbach, William)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
NICOLE AND MATTHEW NEVILLE,
Plaintiffs,
v.
Case No. 13-C-700
ARIENS COMPANY and ARIENS COMPANY
WELFARE BENEFIT PLAN,
Defendants.
DECISION AND ORDER
Plaintiffs brought this Americans With Disabilities Act and ERISA action against Nicole
Neville’s employer and its welfare benefit plan. The complaint also includes a claim for promissory
estoppel over which the court has supplemental jurisdiction. 28 U.S.C. § 1367. In their complaint
they assert that the Ariens Company hired Nicole in July 2011 after promising her a long and steady
employment relationship. Only a month later, however, she was fired without any convincing
explanation. Plaintiffs assert that the cause of the firing was the fact that Matthew Neville, Nicole’s
husband, suffered from leukemia and would therefore be very expensive to insure.
The Defendants have filed a motion to dismiss Plaintiffs’ claim for promissory estoppel and
their ERISA retaliation claim against the Ariens Company Welfare Benefit Plan. Subsequently,
Plaintiffs moved to amend their complaint to add a claim for breach of fiduciary duty, which the
Defendants oppose on the ground that the amendment would be futile, i.e., that it would not
withstand a motion to dismiss. Accordingly, there are in essence two motions to dismiss presently
before me. For the reasons given below, the motion to dismiss will be granted and the motion to
amend will be denied.
I. Partial Motion to Dismiss
The complaint brings three claims. First, it alleges unlawful employment discrimination
under the Americans With Disabilities Act, 42 U.S.C. § 12101, due to Ariens’ alleged
discrimination against her on account of her husband’s disability. The Defendants do not move to
dismiss this claim. The complaint also alleges a claim against Ariens for promissory estoppel, on
the theory that Nicole Neville relied on Ariens’ promise of employment and gave up job
opportunities elsewhere. Finally, the complaint alleges retaliation against both Defendants for their
alleged interference with her right to coverage under the company’s benefits plan.
Consideration of a motion to dismiss under Fed. R. Civ. P. 12(b)(6) requires the court to
assume that the factual allegations are true and to evaluate whether those allegations state a claim
upon which relief may be granted.
A. Promissory Estoppel
The Defendants move to dismiss the estoppel claim (which arises under state law) on the
basis that it runs in direct contrast to Wisconsin’s long tradition of at-will employment. See
Hausman v. St. Croix Care Ctr., 214 Wis.2d 655, 663, 571 N.W.2d 393 (1997) (“The
employment-at-will doctrine is an established general tenet of workplace relations in this
jurisdiction.”). They argue, in essence, that if a court were to accept an estoppel claim under these
circumstances, estoppel could effectively undermine the state’s at-will employment regime because
coveted prospective employees are almost always given a rosy picture of their future employment.
In wooing a potential employee, the employer will almost always convey the impression that the
workplace is friendly and stable, and that turnover is low or nonexistent. If an employee’s reliance
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on such commonplace promises sufficed to give rise to an estoppel claim, the term “at-will” would
lose most of its meaning.
The Defendants cite Forrer v. Sears, Roebuck & Co. for the proposition that promissory
estoppel cannot supplant the at-will employment relationship. 36 Wis. 2d 388, 390 153 N.W.2d
587, 588 (Wis. 1967). There, the facts were these:
During December of 1964 the general manager of the Madison [Sears] store
promised him ‘permanent employment’ as manager of the hardware division of the
Madison store in consideration of giving up his farming operations and working full
time for the defendant. It is alleged that thereupon the plaintiff sold his stock of hogs
and cattle and rented the barn to a neighbor-all at a loss, placed his acreage in the
United States Department of Agriculture feed-grain program, and on February 1,
1965, commenced working full time for the defendant. He alleges that thereafter,
despite the understanding with Sears, he was discharged without cause on June 1,
1965.
Id.
The Wisconsin Supreme Court held that under those circumstances a promissory estoppel
claim would undoubtedly exist, but it found that Sears had in fact lived up to its promise of
“permanent employment,” despite the fact that the plaintiff was discharged less than a year later.
Id. at 393, 589. The court was able to reach that conclusion because, in Wisconsin, an offer of
“permanent employment” does not mean an employee is guaranteed a job as long as he wants it—it
simply means an employment relationship that is terminable at will. Id. “We thus conclude that
the most that was promised by Sears was employment terminable at will. This promise was carried
out when the plaintiff was hired as the defendant's full-time manager. The defendant's obligation
was discharged when its promise was kept, and, hence, the doctrine of promissory estoppel is not
applicable.” Id. at 394, 590. Based on Forrer and similar cases, Ariens argues that at most it
offered the Plaintiff an at-will employment relationship, and it lived up to its end of the bargain
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when it hired her. The fact that it terminated her employment soon after does not mean it reneged
on its promise.
Plaintiffs argue, however, that Forrer does not mandate that employment relationships are
always on an at-will basis. That court noted simply that there is “a strong presumption in favor of
a contract terminable at will unless the terms of the contract or other circumstances clearly manifest
the parties' intent to bind each other.” Id. at 393, 589-90. Here, Plaintiffs argue that the facts
alleged in the complaint, when read in the light most favorable to them, suggest that the
circumstances did clearly manifest the parties’ intent to bind each other. This was not a casual, runof-the-mill employment offer but an explicit solicitation of Nicole Neville by Ariens. After it
learned she had already accepted a position elsewhere, it created a new position for her with a higher
salary in order to convince her to accept it. During her interview, the company said she would have
a bright future at the company and that employment at Ariens was usually a long-term relationship.
Employees were not terminated “except in the case of extreme and long-term performance issues,”
and Nicole Neville would have many opportunities to prove her value to the company in the years
to come. (ECF No. 1, ¶ 9.)
Plaintiffs are correct that Forrer leaves an opening for parties to enter into permanent
employment relationships, but I am not satisfied that the complaint meets that high hurdle here. At
best (and it must be read in the light most favorable to the Nevilles), the complaint states that Ariens
gave Nicole Neville a hard sell and encouraged her to accept an offer because, in general,
employment at Ariens is a long-term relationship. The complaint does not allege that Ariens
promised that she, in particular, would be guaranteed long-term employment. In fact, the complaint
does not even allege that any employees at Ariens are actually promised “permanent” employment
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(in the colloquial sense)—it merely says the company, as a matter of practice rather than a matter
of promise, does not generally fire people without good cause. Thus, although it is true that in some
cases an estoppel claim might be viable, here the complaint’s allegations do not give rise to that
kind of promise because the promises were too vague and general to constitute anything more than
a typical at-will relationship. As in Forrer, the company did live up to the promises it made by
employing Nicole Neville on a “permanent” basis.
B. ERISA Retaliation Claim
Plaintiffs also brought an ERISA retaliation claim against both Defendants. Under § 510
of ERISA, it “shall be unlawful for any person to discharge, fine, suspend . . . . a participant . . . for
exercising any right to which he is entitled . . . under the plan.” 29 U.S.C. § 1140. The Defendants
argue that the benefits plan is not a “person” who may be sued for retaliation and seek to dismiss
the claim against the plan on that basis.
The Plaintiffs essentially concede the point. They argue, however, that their complaint
should be read more broadly to include claims for breach of fiduciary duty under § 1132(a)(2). In
fact, they have filed a motion to amend the complaint to make the fiduciary claim more explicit and
to eliminate the benefits claim. Thus, I will address the merits of the proposed amended claim
below and will grant the Defendants’ motion to dismiss the retaliation claim against the plan.
II. Motion to Amend
As just noted, the motion to amend seeks to add a breach of fiduciary claim against both the
company and the plan—a claim that was not part of the original complaint. The Defendants oppose
the motion on the grounds of futility. In essence, they argue, when the company terminated Nicole
Neville’s employment, neither the company nor the plan were acting in a fiduciary capacity.
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The Seventh Circuit has recently confirmed that “[a]n employer does not act as an ERISA
fiduciary when it decides to terminate an employment relationship.” Brooks v. Pactiv Corp., 729
F.3d 758, 766 (7th Cir. 2013). Plaintiffs concede that the plan was not acting as a fiduciary when
it terminated Nicole Neville (assuming a benefits plan could even do such a thing), but they argue
that the plan provided cost information to the company so that the company would terminate
Nicole’s employment. In doing so, the plan was acting as a fiduciary because it was exercising its
discretion over management of the plan and its assets. 29 U.S.C. § 1002(21)(A).
The statute says that “[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
. . .” 29 U.S.C. § 1002(21)(A). According to the proposed amended complaint, the allegation here
is that agents of the plan “communicated with agents of the Company regarding the extent and
expense of Mr. Neville’s illness, and suggested, endorsed and / or agreed with the idea to terminate
Mrs. Neville’s employment for the purpose of avoiding expense to the Company and the Plan.”
(ECF No. 15-2 at ¶ 13.) Simply telling the company what it would cost to provide treatment for
an employee is not a fiduciary act, not least because it is not an exercise of discretionary authority
or control. 29 U.S.C. § 1002(21)(A). It is simply a matter of fact. And to the extent the plan
suggested or “endorsed” the idea of terminating Nicole Neville’s employment, the courts have
already held that terminating employees is not a fiduciary act either. “[W]hen Pactiv fired Brooks,
the company wore its ‘employer’ hat, not its ‘plan administrator’ hat. The decision did not involve
the administration or management of the Plan, the management or disposition of the Plan's assets,
the dispensation of investment advice, or a benefits determination.” Brooks, 729 F.3d at 766. The
same is true here. Obviously, the termination of an employee will have a collateral effect on the
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plan’s finances, but that does not bring a termination into the fiduciary realm.
Plaintiffs argue that the plan was in fact acting in a fiduciary capacity because the ERISA
benefits are what drove the employment termination decision rather than any actual business or
employment concerns. In other words, although the decision was styled as a termination of
employment, functionally it was really a termination of benefits decision. But “it is the nature of
the acts taken by an employer--not the intent behind them--that determines in what capacity the
employer acted.” Bodine v. Employers Cas. Co., 352 F.3d 245, 252 (5th Cir. 2003) (citing Long
v. Excel Telecomm. Corp., 1999 WL 1029088 at *2 (N.D.Tex. Nov.9, 1999)). The fact that the
employer or plan might have had some benefits-related intent does not change the fact that the
termination of employment is not a fiduciary decision. In fact, the Seventh Circuit in Brooks
rejected a similar argument:
Brooks insists that the district court misconstrued his claim, which he characterizes
as a challenge to the cancellation of his health and dental insurance, not a challenge
to Pactiv's decision to terminate his employment. That line is too fine. The
cancellation of Brooks's health and dental coverage followed as a direct consequence
of the termination of his employment and cannot be separated from the termination
itself.
729 F.3d at 766.
The same holds true here. The act at issue—termination—is an employment action, not a
fiduciary one, and that is true regardless of which party is performing the action. Even if the
termination of benefits is a direct and even intentional result of the termination, it “cannot be
separated from the termination itself,” which is not a fiduciary action. Id. Accordingly, I conclude
that the proposed amendment would be futile and will deny the motion to amend.
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III. Conclusion
For the reasons given above, the partial motion to dismiss is GRANTED, and the
promissory estoppel claim is DISMISSED. The retaliation claim against the plan is DISMISSED.
The motion to amend is DENIED.
SO ORDERED this 19th day of December, 2013.
s/ William C. Griesbach
William C. Griesbach, Chief Judge
United States District Court
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