Opinion
Case No.: 99 C 6776
August 3, 2000
MEMORANDUM OPINION AND ORDER
Pending is defendant's motion to dismiss plaintiff's cause of action for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12 (b)(1). Defendant contends that plaintiff is not "participant" under the Employment Retirement Income Security Act, 29 U.S.C. § 1001-1132 (1974), and therefore, does not have standing to sue under the act. For the reasons set forth below, the motion is denied.
BACKGROUND
Plaintiff, Christopher Wahl, worked as a hairdresser for defendant, Carissima of Italy III (Carissima), a Chicago hair salon, from approximately 1987 to 1998. At some time in 1997, defendant instituted an employee benefit program to provide health insurance coverage for its employees.
In mid-October of 1997, defendant's general manager, Tim Perry, allegedly engaged in a conversation with Wahl where Perry informed Wahl that if he applied for health coverage United Healthcare (defendant's health insurance provider) would either cancel the policy or prematurely raise the rates because Wahl's condition would require costly medical expenses. At that time, Carissima was aware that Wahl had been diagnosed as HIV positive. Carissima also knew that plaintiff was under medical and pharmaceutical treatment for his disease. Perry recommended that Wahl decline coverage because his participation in the plan would damage the company and his fellow employees. Perry suggested that Wahl should explain to United's agent that he had other insurance coverage and to decline the coverage provided by Carissima. In addition, Perry promised Wahl that he could sign up for coverage the following year after the rates were "locked in," and that Carissima would pay the premiums. Nevertheless, Perry was aware that United Health's rates could not be frozen and that United was at liberty to raise its rates each year. Wahl heeded Perry's advice, signing a waiver of health insurance coverage provided by United's agent.
Wahl alleges that as a result of Perry's misrepresentations, he declined coverage by signing the health insurance waiver. Subsequent to declining his health benefits, Wahl incurred over $30,000.00 in medical and pharmaceutical expenses. In the summer of 1998, Wahl made repeated efforts to apply to defendant's insurance program. Wahl approached both Perry and other Carissima administrators requesting insurance application forms so that he could apply for the insurance program at the next enrollment period — October 1998. Yet, Carissima administrators and Perry failed to provide Wahl with the application forms. Thereafter, Wahl brought a cause of action pursuant to the Employee Retirement and Income Security Act of 1974 (ERISA) 29 U.S.C. 1132(a), seeking to recover damages from defendant for breaching its fiduciary duty to plaintiff. More specifically, Wahl alleges defendant breached its fiduciary duty when it persuaded him to decline coverage, ultimately preventing him from becoming participant in its health benefit plan.
DISCUSSION
On a motion to dismiss, the court must assume the allegations of the complaint are true and construes them in a light most favorable to the plaintiff. Doherty v. City of Chicago, 75 F.3d 318, 322 (7th Cir. 1996). The crux of defendant's argument is that because Wahl does not qualify as a "participant" under ERISA, he lacks standing to sue. To maintain a cause of action, ERISA Section 1132(a)(3) imposes a standing requirement that a plaintiff must be a "participant, beneficiary, or fiduciary" of an employee benefit scheme. 29 U.S.C. § 1132 (a)(3). The term participant is defined as "any employee or former employee . . . who is or may become eligible to receive a benefit . . ." 29 U.S.C. § 1002 (7). The scope of this definition includes "either employees in, or reasonably expected to be in, currently covered employment, or former employees who have . . . a reasonable expectation of returning to covered employment or who have a colorable claim to vested benefits." Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 117-18 (1989).
Both parties agree that plaintiff Wahl is neither currently employed by defendant Carissima nor reasonably expected to be employed in the future. Accordingly, Plaintiff must rest his claim on a "colorable claim to vested benefits." Panaras v. Liquid Carbonic Industries Corp., 74 F.3d 786, 791 (7th Cir. 1996) (citing Firestone, 489 U.S. at 117-18).
As the Seventh Circuit has intimated with respect to plaintiffs "colorable claim to vested benefits," a former employee may achieve standing by a demonstration that she has a colorable claim to benefits which an employer promised to provide pursuant to the employment relationship and which a non-frivolous argument suggests have accrued to the employee's benefit. Id. Yet, it has been held that a former employee who never participated in her former employer's plan which was governed by ERISA, "cannot retroactively become eligible for a plan under which they do not qualify." Loechl v. Illinois Bell Telephone Co., 648 F. Supp. 1178, 1180-81 (N.D. Ill. 1986); Freeman v. Jacques Orthopedic Joint Implant Surgery Medical Group, Inc., 721 F.2d 654, 656 (9th Cir. 1983). Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) involved employees who were terminated by their employer and subsequently hired by a successor corporation. The former employees brought action for alleged violations of ERISA's notification requirements. In analyzing the suit the Supreme Court found that those "participants" of a plan entitled to disclosure and to damages for failure to disclose under the Act are only those employees in, or reasonably expected to be in, currently covered employment or former employees who have a reasonable expectation of returning to covered employment or a colorable claim to vested benefits. In Christopher v. Mobil Oil Corporation, 950 F.2d 1209, 57 Fair Empl.Prac.Cas. (BNA) 1280, 58 Empl. Prac. Dec. P 41,235, 14 Employee Benefits Cas. 2492 (5th Cir 1992) the court commenced its analysis with the language of 29 U.S.C. § 1140 (ERISA § 510):
Plaintiff's circumstance is akin to that of the plaintiff in Freeman. Freeman, like Wahl, a former employee, brought an action for benefits under ERISA § 1132(a)(1)(B). Freeman, 721 F.2d at 655. Freeman waived his right to participate in the plan, but later wished to participate alleging that defendant misrepresented the costs of his participation in the plan. Id. The court held that Freeman did not have standing under ERISA because he was not a "participant" in the plan. The court reasoned that Freeman was not a participant because "[n]othing Freeman can do will make him eligible for a benefit, since he is no longer employed by the defendants." Id. at 656. The court further noted that even if Freeman were to be victorious on his claim, he would not become enrolled as a participant in the plan and receive a benefit. Id. The court's rationale was based "on the fact that plaintiffs allegations, even if true, did not state a claim for eligibility for benefits under the pension plan simply because plaintiff never enrolled in the plan, and thus had never acquired a vested benefit in the plan." Kuntz v. Reese, 760 F.2d 926, 931 (9th Cir. 1985) (explaining its earlier decision in Freeman). In its conclusion the Freeman court ruled that plaintiff Freeman had no standing, and thus the court was forced to dismiss his complaint for lack of subject matter jurisdiction.
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan, this subchapter, section 1201 of this title, or the Welfare and Pension Plans Disclosure Act [ 29 U.S.C. § 301 et. seq.], or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this subchapter, or the Welfare and Pension Plans Disclosure Act . . .29 U.S.C. § 1140 (emphasis added).
The court went on to state:
The Supreme Court's recent McClendon decision held that this provision would foreclose the development of any state law cause of action for wrongful termination to prevent vesting of pension benefits. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 485, 112 L.Ed.2d 474 (1990). The implication of the Court's holding that the discharged employee must look solely to ERISA for his remedy is that he would have standing to do so. Nevertheless, it is not readily apparent that he would have standing under the construction of Firestone urged by Mobil; he would be a former employee lacking both a claim for vested benefits and (unless he requested reinstatement) a reasonable expectation of returning to covered employment. It would be unusual if in that situation his ability to assert a claim at all turned on whether or not his requested relief included reinstatement; it would seem more logical to say that but for the employer's conduct alleged to be in violation of ERISA, the employee would be a current employee with a reasonable expectation of receiving benefits, and the employer should not be able through its own malfeasance to defeat the employee's standing.
We agree with this analysis. This section forbids, and gives rise to wrongful discharge claims for, both "retaliation" for exercise of ERISA plan rights, and, as is alleged in this case, "interference" with future ERISA plan benefits. ("[T]he plain language of § 510 provides a cause of action for employees who have been discharged `for exercising any right' to which employees are entitled . . . under an ERISA-protected benefit plan. But § 510 also goes further, protecting employees from interference with the `attainment of any right to which [the employees] may become entitled.'"). Morris v. Winnebago Industries, Inc. 950 F. Supp. 918 (N.D. Iowa. 1996).
In order to recover on a § 510 interference claim, the employee must show "`(1) prohibited employer conduct (2) taken for the purpose of interfering (3) with the attainment of any right to which the employee may become entitled.'" Fischer v. Philadelphia Elec. Co., 96 F.3d 1533, 1543 (3d Cir. 1996) (quoting Gavalik v. Continental Can Co., 812 F.2d 834, 852 (3d Cir.), cert denied, 484 U.S. 979, 108 S.Ct. 495, 98 L.Ed.2d 492 (1987)); Berger v. Edgewater Steel Co., 911 F.2d 911, 922 (3d Cir. 1990), cert.denied, 499 U.S. 920, 111 S.Ct. 1310, 113 L.Ed.2d 244 (1991); Sofo v. Pan-American Life Insurance, 13 F.3d 239, 241 (7th Cir. 1994).
Taking plaintiffs allegations as true, plaintiff has set forth an interference with ERISA benefits cause of action. To be sure plaintiff is no longer eligible since he is no longer an employee, but pursuant to § 510's broad sweep plaintiff may be able to establish that defendant discriminated against him and interfered with the attainment of his health care benefits in violation of § 510 first, by inducing him to delay his application for coverage under the employee health care plan on the promise that he would be allowed to apply after the plan's initial installation, and then reneging on that promise.
CONCLUSION
For the foregoing reasons, the Court denies defendant's motion to dismiss. (#6-1).