Opinion
No. C 04-02462 JW.
December 22, 2004
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT STANDARD INSURANCE COMPANY'S MOTION TO DISMISS
I. INTRODUCTION
This lawsuit arises under the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaintiff Mary Elizabeth Doherty ("Plaintiff") asserts three claims for relief: (1) an ERISA claim for benefits, (2) a breach of contract claim, and (3) an ERISA claim for injunctive relief. Defendant Standard Insurance Company's ("Standard") moves, pursuant to FED. R. CIV. P. 12(b)(6) ("Rule 12(b)(6)"), to dismiss Plaintiff's Complaint (hereinafter "Standard's Motion"). On Monday, December 20, 2004, this Court held a hearing regarding Standard's Motion. Based upon the comments made at the hearing and upon all papers filed to date, this Court denies Standard's Motion.
Originally, Plaintiff asserted four claims for relief. However, on September 2, 2004, Magistrate Judge Richard Seeborg dismissed Plaintiff's Third Claim for Relief (ERISA Breach of Fiduciary Duty). Thus, there are only three remaining claims for relief.
II. BACKGROUND
Plaintiff's husband, Shaun Doherty ("Mr. Doherty"), was employed by Schoolpop, Inc. ("Schoolpop"), a Delaware corporation with offices in Menlo Park, California. (Complaint, Docket Item No. 1, ¶¶ 3-4.) As a benefit to its employees, Schoolpop established a health and welfare benefit plan (the "Plan"), which provided life insurance and accidental death and dismemberment ("ADD") insurance. (Complaint ¶ 4.) The Plan named Schoolpop as its administrator. (Complaint ¶ 5.) Standard was the insurer. (Complaint ¶ 5.) Plaintiff, however, claims that Standard did more than provide insurance. According to her, "Standard performed all the functions of the Plan administrator and was the de facto plan administrator." (Complaint ¶ 5.)Mr. Doherty named his wife, Plaintiff, as the beneficiary of his life and ADD insurance policies. On May 19, 2002, Mr. Doherty was involved in an automobile accident. (Complaint ¶ 8.) A passenger in the vehicle was killed. (Complaint ¶ 8.) Mr. Doherty himself died one month later on June 19, 2002. (Complaint ¶ 8.)
Plaintiff requested benefits under Mr. Doherty's life and ADD insurance policies. (Complaint ¶ 10.) Standard paid Plaintiff under Mr. Doherty's life insurance policy. (Complaint ¶ 10.) However, Standard did not pay Plaintiff under Mr. Doherty's ADD insurance policy. (Complaint ¶ 10.) Instead, Standard invoked the "felony exclusion" provision of Mr. Doherty's ADD insurance policy, and denied Plaintiff compensation. (Complaint ¶ 10.) The "felony exclusion" provision states that "No ADD Insurance benefit is payable if [an] accident or loss is caused or contributed to by . . . [c]ommitting or attempting to commit an assault or felony[.]" (Standard's Reply to Plaintiff's Opposition to Standard's Motion, hereinafter Standard's Reply, Docket Item No. 33, Ex. A at 7-8.) Plaintiff's claim was reviewed twice more — once, again, by Defendants and once by Standard's Quality Assurance Unit. (Complaint ¶¶ 10-12.) Plaintiff's claim was rejected both times. (Complaint ¶ 12.)
According to Plaintiff, the "felony exclusion" provision of Mr. Doherty's ADD insurance policy should not apply here because "Defendants never provided [Mr.] Doherty with any documents indicating that there were exclusions applicable to the [ADD] policy benefits." (Complaint ¶ 13.) In fact,
Standard did not provide the plan to Schoolpop employees. Schoolpop provided its employees with a handbook which did not explain that there was an exclusion for accidental death benefits when death is the result of participation in a felony. Standard provided Schoolpop with a document which outlined the benefits but did not disclose the felony exclusion. Standard did not provide Schoolpop's employees with a summary plan description.
(Plaintiff's Opposition to Standard's Motion, hereinafter Plaintiff's Opposition, Docket Item No. 32, at 3:16-20.)
III. STANDARDS
A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the claims stated in a complaint. In ruling on a motion to dismiss, the court must accept as true all allegations of material fact and must construe said allegations in the light most favorable to the non-moving party. Western Reserve Oil Gas Co. v. New, 765 F.2d 1428, 1430 (9th Cir. 1985). Any existing ambiguities must be resolved in favor of the pleading.Walling v. Beverly Enterprises, 476 F.2d 393, 396 (9th Cir. 1973). Conley v. Gibson, 355 U.S. 41 (1957), sets forth the strict standard for granting a Rule 12(b)(6) motion to dismiss. A Rule 12(b)(6) motion to dismiss must not be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. at 45-46. As the Ninth Circuit has observed, "The [Rule 12(b)(6)] motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted." Gilligan v. Jamco Develop. Corp., 108 F.3d 246, 249 (9th Cir. 1997).
IV. DISCUSSION
Standard launches a quadripartite salvo against Plaintiff's Complaint. First, Standard argues that Plaintiff's claims cannot be brought against it as a matter of law. Second, Standard argues that ERISA preempts Plaintiff's breach of contract claim. Third, Standard argues that Plaintiff cannot pursue its ERISA claim for equitable relief. Fourth, Standard argues that Plaintiff has no right to a jury trial under ERISA. Plaintiff does not dispute Standard's second and fourth arguments. See (Plaintiff's Opposition at 9:9) ("Mrs. Doherty does not contest that there is no right to a jury trial in this matter") and (Plaintiff's Opposition at 9:9-10) ("Also, Mrs. Doherty requests dismissal of the breach of contract claim for relief"). Accordingly, this Court dismisses Plaintiff's breach of contract claim and strikes Plaintiff's demand for jury trial from Plaintiff's Complaint. Plaintiff is thus left with two live remaining claims: an ERISA claim for benefits and an ERISA claim for injunctive relief.
A. Plaintiff's ERISA Claim for Benefits Arguably Can Be Brought Against Standard
Plaintiff's ERISA claim for benefits "is brought under Section 502(a)(1)(B) of ERISA." (Complaint ¶ 17.) ERISA § 502(a)(1)(B) states that "[a] civil action may be brought . . . by a . . . beneficiary . . . to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan[.]" 29 U.S.C. § 1132(a)(1)(B).
1. Ninth Circuit Caselaw Permits ERISA Claims for Benefits Against Plans, And Possibly Plan Administrators
In Gelardi v. Pertec Computer Corp., 761 F.2d 1323, 1324 (9th Cir. 1985), the Ninth Circuit held that "ERISA permits suits [under 29 U.S.C. § 1132(a)(1)(B)] to recover benefits only against the Plan as an entity[.]" (Emphasis added); see also 29 U.S.C. § 1132(d)(2) ("Any money judgment under this subchapter against [a] . . . plan shall be enforceable only against the plan") (emphasis added). However, "under another line of cases, in [the Ninth Circuit] and others, claimants may also bring ERISA actions to recover benefits against plan administrators."Everhart v. Allmerica Fin. Life Ins. Co., 275 F.3d 751, 754 (9th Cir. 2001) (emphasis added) (citing, inter alia, Taft v. Equitable Life Assurance Soc'y, 9 F.3d 1469, 1471 (9th Cir. 1993) ("The beneficiary of an ERISA plan may bring a civil action against a plan administrator")).
2. Standard Is Not the Plan
Standard is not the Plan. In fact, the Plan (the Schoolpop Plan and Life Insurance and ADD Insurance Plan) is already named as a defendant.
3. Standard Is Not the Plan Administrator
Standard is not the Plan Administrator either. Title 29 U.S.C. § 1002(16)(A) sets forth a three-tiered definition of an "administrator." Under § 1002(16)(A), an "administrator" is:
(i) the person specifically so designated by the terms of the instrument under which the plan is operated;
(ii) if an administrator is not so designated, the plan sponsor; or
(iii) in the case of a plan for which an administrator is not designated and a plan sponsor cannot be identified, such other person as the Secretary may by regulation prescribe.
Plainly, these three alternative definitions are ordered preferentially. First, an "administrator" is "the person specifically so designated by [the Plan's instrument]." If, however, "an administrator is not so designated," then the administrator is "the plan sponsor." If the "plan sponsor cannot be identified," then the administrator is "such other person as the Secretary [of Labor] may by regulation prescribe." Here, the Plan's instrument clearly states that the "Plan Administrator" is the "Plan Sponsor." (Defendant's Motion Ex. A at 4.) The "Plan Sponsor" is Schoolpop. (Defendant's Motion Ex. A at 4.) Thus, Schoolpop — not Standard — is the Plan Administrator.
3. Standard May Be a De Facto Plan Administrator
However, Standard may be, what Plaintiff terms, a de facto Plan Administrator. Plaintiff cites Palmer v. University Medical Group, 994 F. Supp. 1221 (D. Or. 1998), to support her theory. In Palmer, the court opined that, "When the plan administrator has expressly delegated to a third party the performance of certain duties, and participants have been instructed to direct all communications to that delegee, arguably the latter has assumed responsibility for performing those duties and may be held liable for the failure to do so." Palmer, 994 F. Supp. at 1241 (emphasis added). Plaintiff argues that Schoolpop, the Plan Administrator here, like University Medical Group, the Plan Administrator in Palmer, "delegated the entire claims process to Standard." (Plaintiff's Opposition at 6:22.) According to Plaintiff,
All communications concerning [Plaintiff's] claim were with Standard. Standard reviewed her claim and made the decision to deny benefits. Standard sent the notice to [Plaintiff] denying her benefits on Standard's letterhead. Standard instructed [Plaintiff] to send her appeal to Standard, not Schoolpop. Standard made the final decision to deny [Plaintiff's] appeal, and the notice denying that appeal was on Standard's letterhead. [Plaintiff's] request for documents that she needed to pursue her claim was submitted to Standard, who furnished them. . . .
(Plaintiff's Opposition at 6:22-7:1) (footnotes omitted). Thus, Plaintiff concludes, "Standard is the de facto plan administrator" and, therefore, liable to Plaintiff. (Plaintiff's Opposition at 7:2-4.)
Plaintiff's argument does not lack infirmities. First, the language in Palmer upon which Plaintiff relies is dicta. Second, Palmer was issued by a sister District Court (District of Oregon), and so it is not binding authority upon this Court. Third, the Ninth Circuit's reasoning in Moran v. Aetna Life Ins. Co., 872 F.2d 296 (9th Cir. 1989), seems applicable here. In Moran, the court expounded upon the meaning of a plan "administrator." In so doing, the court looked to the definition set forth in 29 U.S.C. § 1002(16). See supra Part IV.A.3. The court applied the definition straightforwardly: "Congress [in 29 U.S.C. § 1002(16)] has provided for three classes of persons who may be sued as the plan administrator. . . . Because Aetna was not designated as plan administrator in the policy and is not the plan sponsor, it is not liable under the statute." Id. at 299-300. The court concluded thusly: "The statute [ERISA] expressly identifies in section 1002(16) the persons or entities that may be sued [as plan `administrators']. We do not have the power to rewrite the statute to extend liability to a business entity that . . . mistakenly identified itself as the plan administrator [but was not, in fact, a plan `administrator' as defined by 29 U.S.C. § 1002(16)]. . . ." Id. at 300.
Nevertheless, out of an abundance of caution, this Court denies Standard's Motion to Dismiss Plaintiff's ERISA claim for benefits. As it indicated at Monday's hearing, this Court prefers to dispose of Plaintiff's ERISA claim for benefits against Standard, if at all, as a matter of summary judgment-after a greater understanding of the facts in this case. Before dismissing Standard from this lawsuit, this Court wants to ensure that Standard owes Plaintiff absolutely no duty whatsoever under ERISA.
B. Plaintiff's ERISA Claim for Injunctive Relief Fails as a Matter of Law
However, with respect to Plaintiff's ERISA claim for injunctive relief, this Court agrees with Standard: ERISA does not authorize the form of relief sought by Plaintiff. (Standard's Motion at 6:10.) The Ninth Circuit has noted that "`[E]quitable relief' in the form of the recovery of compensatory damages is not an available remedy under [ 29 U.S.C. § 1132(a)(3)]." Bast v. Prudential Ins. Co., 150 F.3d 1003, 1010 (9th Cir. 1998) (quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 257-58 (1993)); see also Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030, 1033 (9th Cir. 2000) ("[W]hen the substance of the relief is monetary . . . such a remedy is not available under [29 U.S.C.] section 1132(a)(3)") (quoting FMC Med. Plan v. Owens, 122 F.3d 1258, 1262 (9th Cir. 1997). In this Court's opinion, the substance of Plaintiff's ERISA claim for injunctive relief is, in fact, monetary; for, at the core of Plaintiff's ERISA claim for injunctive relief, lies a prayer for the insurance benefits to which Plaintiff feels she is entitled. Notably, in framing her ERISA claim for injunctive relief, Plaintiff emphasizes the benefits that she was denied (i.e., her monetary damages). (Complaint ¶ 29) ("Absent assistance from the Court, Defendants will continue to deny [Plaintiff's] benefits due her under the ERISA Plan") (emphasis added); (Complaint ¶ 30) ("Unless restrained from continuing their inappropriate conduct, Defendants will continue to deny [Plaintiff] her benefits") (emphasis added). Because the substance of Plaintiff's ERISA claim for injunctive relief is monetary, this Court holds that Plaintiff has failed to state a claim for injunctive relief under 29 U.S.C. § 1132(a)(3).
V. CONCLUSION
For the reasons set forth above, this Court grants in part and denies in part Standard's Motion to Dismiss. This Court wholly dismisses Plaintiff's Second Claim for Relief (Breach of Contract) and Fourth Claim for Relief (ERISA Claim for Injunctive Relief). However, Plaintiff's First Claim for Relief (ERISA Claim for Benefits) — Plaintiff's sole remaining claim — shall, for now, remain live against all Defendants.