-VCF Parsons v. Board of Trustees of the Nevada Resort Association-I.A.T.S.E. Local 702 Retirement Plan et al., No. 2:2012cv00299 - Document 27 (D. Nev. 2012)
Court Description: ORDER Granting 14 Motion to Dismiss. FURTHER ORDERED that 18 Motion to Dismiss is GRANTED. FURTHER ORDERED that, if plaintiff chooses to file an amended complaint, he must do so not later than 15 days from the date this Order is entered and served. Signed by Judge Lloyd D. George on 8/10/12. (Copies have been distributed pursuant to the NEF - MMM)
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-VCF Parsons v. Board of Trustees of the Nevada Resort Association-I.A....02 Retirement Plan et al. Doc. 27 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 DISTRICT OF NEVADA 9 10 ROB PARSONS, 11 Plaintiff, 12 v. 13 Case No. 2:12-cv-00299-LDG (VCF) BOARD OF TRUSTEES OF THE NEVADA RESORT ASSOCIATION I.A.T.S.E. LOCAL 702 RETIREMENT PLAN, et al., 14 ORDER 15 Defendants. 16 17 18 The plaintiff, Rob Parsons, alleges that he was a participant in a retirement plan 19 administered by the defendants Board of Trustees of the Nevada Resort Association - 20 I.A.T.S.E. Local 702 Retirement Plan et al. (“Trustees”) and for which defendant Zenith 21 Administrators (“Zenith”) acts as the Administrative Office. He further alleges that the plan 22 was modified on June 15, 2010, to reduce the early retirement benefit, that the modification 23 included a grandfather provision, that he was uncertain whether he qualified under the 24 grandfather provision, that he asked an employee of Zenith for guidance, that the 25 employee stated Parsons was qualified for the grandfather provision, and that based on the 26 representation he applied for early retirement and retired. Subsequent to his retirement, he Dockets.Justia.com 1 alleges that the same employee informed him that he did not qualify under the grandfather 2 provision and that his retirement benefit would be calculated pursuant to the new rule. 3 Upon learning that his retirement benefit would be calculated under the new rule, Parsons 4 returned to work at his prior job, but received a lower-paying position. Parsons alleges a 5 claim against all defendants for breach of fiduciary duty under the Employee Retirement 6 Income Security Act (ERISA), 29 U.S.C. §1001 et seq., and a second claim against Zenith 7 for negligence. The Trustees move to dismiss the claim for breach of fiduciary duty (#14). 8 Zenith joins in the motion as to the claim for breach of fiduciary duty and further moves to 9 dismiss the state law negligence claim, arguing that the claim is preempted by ERISA 10 (#18). Parsons opposes both motions (## 16, 22). Having read and considered the papers 11 and complaint, the Court will grant the motions. 12 I. Motion to Dismiss 13 A complaint may be dismissed when the factual allegations are not plausible. Bell 14 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A claim for relief must contain a 15 “short plain statement of the claim showing the pleader is entitled to relief,” Fed. R. Civ. 16 Proc. 8(a)(2), in order to give the defendant fair notice of what the claim is and the grounds 17 upon which is rests. Twombly, 550 U.S. at 555. Thus, the court may dismiss a claim for 18 relief for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. Proc. 19 12(b)(6). 20 A complaint attacked by a Rule 12(b)(6) motion to dismiss does not require detailed 21 factual allegations, but the “factual allegations must be enough to raise a right to relief 22 above the speculative level.” Twombly, 550 U.S. at 555 (citation omitted). The Supreme 23 Court in Ashcroft v. Iqbal clarified the two-step approach district courts should follow in 24 reviewing a motion to dismiss. 556 U.S. 662 (2009). First, the court must “take the [factual] 25 allegations as true, no matter how skeptical the court may be. Iqbal, at 696. However, 26 labels, conclusions, and formulaic recitations of legal elements do not meet the level of 2 1 plausibility. Id., at 678. Second, viewing the facts in the light most favorable to the 2 nonmoving party, the court should determine whether the facts rise to the level of 3 plausibility. Id., at 679. 4 To be plausible on its face, a claim must be more than merely possible or 5 conceivable. “[W]here the well-pleaded facts do not permit the court to infer more than the 6 mere possibility of misconduct, the complaint has alleged–but it has not ‘show[n]’–‘that the 7 pleader is entitled to relief.” Id., (citing Fed. R. Civ. Proc. 8(a)(2)). Rather, the factual 8 allegations must push the claim “across the line from conceivable to plausible.” Twombly. 9 550 U.S. at 570. Thus, allegations that are consistent with a claim, but that are more likely 10 explained by lawful behavior, do not plausibly establish a claim. Id., at 567. 11 II. Background 12 As alleged by Parsons in his complaint, he worked as a stagehand for over 30 years 13 and was a participant in the retirement plan between the I.A.T.S.E. Local Union 702 and 14 the LV Theatrical Group, Inc. Plan documents identified Zenith as the Administrative Office 15 for the plan, and further directed participants to contact the Administrative Office with 16 questions about benefits. 17 On June 15, 2010, the Trustees amended the retirement plan to reduce benefits 18 paid for early retirement. The modification, however, included a grandfather clause, which 19 stated: 20 21 This change will not apply to any Participant who satisfies all three of the following requirements before August 1, 2010: is (A) eligible for early retirement, (B) retires (a bona fide separation from Covered Employment), and (C) applies for an early retirement pension. 22 Parsons alleges he was uncertain whether or not he would qualify for the 23 grandfather position. As a result, he contacted Henry Dobbs in Zenith’s Pension 24 Department and informed Dobbs that he would not turn 55 until October 26, 2010. In 25 26 3 1 response, Dobbs stated that he would have to wait until after the Trustees’ July 1, 2010 2 meeting to determine whether Parsons qualified under the grandfather provision. 3 On July 2, 2010, Parsons met with Dobbs to again discuss whether he qualified for the 4 grandfather provision. Parsons alleges that he reminded Dobbs that he was 54, and would 5 not turn 55 until October 26, 2010. Dobbs responded that Parsons qualified under the 6 grandfather provision because he would be 55 by the time he received his first retirement 7 check on November 1, 2010. Based on Dobbs’ representations, Parsons retired and 8 applied for an early retirement pension before August 1, 2010. 9 After Parsons retired, Dobbs called and informed Parsons that, while he qualified for 10 early retirement under the plan, he did not qualify for the grandfather provision. 11 Accordingly, Parsons would receive an early retirement pension benefit of $1,900 a month 12 rather than $3,959.96. Parsons appealed the decision, which appeal the Trustees denied. 13 On October 11, 2010, Parsons informed Zenith that he no longer intended to continue with 14 the retirement process. However, when he returned to work the theater placed him into a 15 lower-paying assistant position causing him to suffer a significant wage loss. 16 III. Breach of Fiduciary Duty 17 Parson’s first claim against the Trustees and Zenith is that they breached fiduciary 18 duties under 29 U.S.C. §§ 1021 – 1022 in that the Trustees and Zenith owed a duty to 19 provide information sufficiently accurate and complete to apprise him of his rights and 20 benefits under the retirement plan. Fiduciary duties include a prudent-man standard of care 21 to act “with the care, skill, prudence, and diligence under the circumstances then prevailing 22 that a prudent man acting in a like capacity and familiar with such matters would use.” 29 23 U.S.C. § 1104(a)(1)(B). 24 Considering Parsons’ factual allegations in the light most favorable to him, he has 25 not alleged sufficient facts permitting an inference of a plausible claim that the Trustees 26 and Zenith breached their fiduciary duties. First, as to the Trustees, Parsons argues that he 4 1 “clearly identified in his complaint . . . that the Trustees breached . . . their duty of loyalty in 2 that they failed to provide him with the complete and accurate information he needed to 3 decide whether to retire, and by doing so violated 29 U.S.C. §§ 1021 & 1022, ERISA’s 4 notice provisions.” Parsons’ Opposition, at 6, ll 9-12. While Parsons cites to paragraph 28 5 of his complaint, that paragraph does not contain any allegations supporting his assertion. 6 Rather, paragraph 28 recites only his allegation that the Trustees and Zenith owed him “a 7 prudent-man duty of care to disclose information sufficiently accurate and comprehensive 8 to apprise him of his rights and obligations under the Plan.” Parsons next asserts, in his 9 opposition, that the Trustees “sent notice that the Plan had been amended to reduce early 10 retirement benefits, but also provided a grandfather provision for qualifying under the old 11 Plan.” Parsons’ Opposition, at 6, ll 17-19. Parsons cites to paragraph 21 of his complaint, 12 but that paragraph alleges only that the Trustees amended the plan while providing a 13 grandfather provision. Absent from paragraph 21 is any allegation that the Trustees sent a 14 notice of the plan amendment. Absent from the complaint is any allegation that the 15 Trustees sent any communication to Parsons, or any allegation permitting a plausible 16 inference that such communication was both subject to and in violation of the requirements 17 of either §§ 1021 or 1022. 18 Second, as to Zenith, Parsons has not alleged facts permitting a plausible inference 19 that Zenith, through Dobbs, engaged in an oral communication that altered the terms of the 20 retirement. The Supreme Court, in CIGNA Corp. v. Amara, 131 S.Ct. 1866, 1878 (2011), 21 stated that summary plan descriptions “provide communication with beneficiaries about the 22 plan, but that their statements do not themselves constitute the terms of the plan.” 23 Furthermore, the Court stated: 24 25 26 [W]e have no reason to believe that the statute intends to mix the responsibilities by giving the administrator the power to set plan terms indirectly by including them in the summary plan descriptions . . . . To make the language of a plan summary legally binding could well lead plan administrators to sacrifice simplicity and comprehensibility in order to 5 1 describe plan terms in the language of lawyers. Id. at 1877-1878. (citations omitted). 2 Further, even if Dobbs’ statements were actionable under either §§ 1021 or 1022 had they 3 been delivered in writing, such statements are not actionable as Parsons alleges they were 4 delivered orally. The two decisions cited by Parsons in support of his claim against the 5 defendants require written notices, 29 U.S.C. § 1021(f)(4)(B) or a summary plan 6 description, 29 U.S.C. § 1022(a). In Matthews v. Chevron Corp., 362 F.3d 1172, 1182 (9th 7 Cir. 2004) the appellate court required active misrepresentation “about the availability of 8 future retirement benefits in an attempt to induce them to retire earlier than they otherwise 9 would.” Parsons’ complaint lacks any factual allegations concerning an attempt to induce 10 him to retire earlier than he otherwise might. Even in the light most favorable to Parsons, 11 he has not made factual allegations stating a plausible claim for relief under claim for 12 breach of fiduciary duty. 13 Third, the ERISA claim must also be dismissed as to both the Trustees and Zenith 14 because, to the extent that Parsons argues that it was the grandfather provision of the plan 15 amendment that was vague and ambiguous, the argument is without merit. While Parsons 16 does allege in his complaint that “he was uncertain whether he was qualified for the 17 grandfather provision,” Complaint, at ¶22, neither his complaint nor his opposition 18 advances any theory or argument indicating how the grandfather provision was vague and 19 ambiguous. Parsons expressly alleges, in ¶24 of his complaint, that he met the second and 20 third requirements of the grandfather provision. Thus, the grandfather provision was neither 21 vague nor ambiguous as to either the second or third requirements necessary to avoid 22 application of the amendment to the early retirement benefit. The allegations of Parsons’ 23 complaint further preclude a plausible inference that the grandfather provision was vague 24 or ambiguous as to the first requirement: that a participant “is (A) eligible for early 25 retirement” before August 1, 2010. In paragraphs 22 and 23, Parsons twice alleges that he 26 6 1 informed Dobbs, of Zenith, that he would not turn 55 until October 26, 2010. Neither of 2 these allegations raise a plausible inference that the grandfather provision was ambiguous 3 in its requirement of eligibility for early retirement prior to August 1, 2010. Rather, the 4 allegations concerned whether Parsons would be eligible for early retirement prior to 5 August 1, 2010, given that his 55th birthday would not occur until after that date. In sum, 6 the only plausible inference from Parsons’ own allegations is that the grandfather provision 7 sufficiently disclosed, and was neither vague nor ambiguous in disclosing, that eligibility for 8 early retirement prior to August 1, 2010, was a requirement to qualify for the grandfather 9 provision. 10 As Parsons’ present complaint fails to allege sufficient facts raising a plausible 11 inference that either the Trustees or Zenith breached a fiduciary duty, dismissal of the 12 ERISA claim is appropriate. 13 IV. Remedies 14 Parsons’ ERISA claim also fails because he fails to allege facts or a theory on which 15 appropriate equitable relief under ERISA can be granted. As recently established by the 16 Supreme Court in Amara, Parsons is limited to seeking only a remedy in equity. As a suit 17 brought pursuant to ERISA, Parsons is limited: “(A) to enjoin any act or practice which 18 violates any provision of this subchapter or the terms of the plan, or (B) to obtain other 19 appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of 20 this subchapter or the terms of the plan.” 29 U.S.C. § 1132(a)(3). While Amara recognizes 21 the availability of the equitable remedies of reformation, surcharge, and estoppel, none of 22 these three equitable remedies are available in the present matter. 23 24 a. Reformation Regarding reformation, the Ninth Circuit recently stated “reformation is proper only in 25 cases of fraud and mistake.” Skinner v. Northrop Grumman Retirement Plan B, 673 F.3d 26 1162, 1166 (9th Cir. 2012) (citing Cont’s Ins. Co. of N.Y. v. Cotton, 427 F.2d 48, 53 (9th 7 1 Cir. 1970)). Skinner held that the discrepancy between a summary plan description and 2 the terms of the plan did not manifest evidence of fraudulent inducement when the 2003 3 summary plan description contradicted the plan terms. 673 F.3d at 1166-67. Furthermore, 4 the Ninth Circuit refused to follow the dictum in Amara regarding reformation because in 5 Amara “the Court suggested that reformation might be appropriate . . . because the district 6 court had already found that the employer had ‘intentionally misled its employees.’” Id. 7 Similarly, the Ninth Circuit has also imposed two requirements in order to receive 8 reformation: (1) hiding facts or affirmatively misrepresenting facts and (2) seeking a remedy 9 that is not money damages for past harm. Peralta v. Hispanic Business, Inc., 419 F.3d 10 1064, 1075-76 (9th Cir. 2005) (distinguishing “equitable claims that seek to prevent future 11 losses, which are permissible under ERISA, and those that seek past due sums, which are 12 not”) (quoting Bowen v. Massachusetts, 487 U.S. 879, 918-19 (1988)). The court in 13 Peralta used strong language to describe the evidence required for misrepresentation: 14 “[T]here is no evidence of a scheme either to hide the fact . . . or to affirmatively 15 misrepresent the facts . . .. There was no evidence of any intentional misleading or 16 trickery, or of any active concealment . . ..” Id. 17 In the case at bar, Parsons’ request for reformation fails as he has not alleged facts 18 raising a plausible inference of fraud, and his allegations of mistake do not rise to the level 19 required by the Ninth Circuit in Peralta. Though intent is not required, Parsons alleged no 20 facts regarding the mistake except that Dobbs, of Zenith, incorrectly told him he qualified 21 for early retirement when in fact he did not. Parsons has not alleged trickery, hiding facts, 22 active concealment, or active misrepresentation, as Peralta requires. As in Skinner, the 23 contradiction in Zenith’s statement and the terms of the amendment do not constitute 24 evidence of fraudulent inducement. 25 26 8 1 2 b. Estoppel ERISA equitable estoppel is limited to situations where the wronged party can prove 3 (a) the provisions of the plan at issue are ambiguous, and (b) oral representations 4 interpreting the plan were made to the employee. Qualls By & Through Qualls v. Blue 5 Cross of California, Inc., 22 F.3d 839, 845-46 (9th Cir. 1994). Parsons alleged that Dobbs 6 made oral representations to him regarding whether he would meet the requirements for 7 eligibility for early retirement prior to August 1, 2010. However, the provision that he has 8 alleged is at issue--the grandfather provision–is not ambiguous in its requirement that a 9 participant be eligible for early retirement prior to August 1, 2010. Therefore, his request 10 11 12 for the equitable remedy of estoppel fails as alleged in the complaint. c. Surcharge The Amara court ruled “appropriate equitable relief” traditionally means remedies 13 “typically available in equity,” and compensatory damages, “traditionally speaking, was 14 legal, not equitable in nature.” Amara, 131 S.Ct. at 1878 (quoting Mertens, 508 U.S. 248, 15 at 255). However, the Supreme Court recognized an equitable monetary remedy called a 16 “surcharge” against a trustee who breached a fiduciary duty. Amara, 131 S.Ct. at 1880. 17 (“The surcharge remedy extended to a breach of trust committed by a fiduciary 18 encompassing any violation of a duty imposed upon a fiduciary.” Id.) Even though 19 surcharges are possible, they are not common and “common-law attempts ‘to punish 20 trustees for a breach of trust in damages . . . w[ere] soon abandoned.” Id. Additionally, 21 ERISA does not permit equitable remedies to seek past due sums, but only to prevent 22 future losses. Peralta, 419 F. 3d at 1075. As alleged by Parsons in his complaint, he seeks 23 damages for past harm; that is, Parsons seeks payment of benefits under the old rule, 24 thereby failing the second part of the rule given in Peralta. 25 26 Therefore, considered in the light most favorable to Parsons, he has failed to allege facts supporting an equitable remedy available under 29 U.S.C. § 1132(a)(3). 9 1 V. Negligence Claim 2 Parsons’ second claim for relief is a Nevada negligence action against Zenith only. 3 Parsons asserts this claim in the alternative in the event that Zenith is determined to not be 4 a fiduciary. Zenith has moved to dismiss the claim as preempted pursuant to both 5 §§502(a) and 514(a) of ERISA. 29 U.S.C. §§ 1132(a), 1144(a). As alleged in Parsons’ 6 complaint, his claim for negligence is, at a minimum, preempted under §514(a). 7 In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45 (1987), the Supreme Court held 8 that when a lawsuit relates to an employee benefit plan, state law claims fall under the 9 scope of and are preempted by ERISA (29 U.S.C. §1144(a)) unless the causes of action 10 fall under the savings clause, 29 U.S.C. § 1144(b)(2)(A), which exempts state laws that 11 regulate insurance from pre-emption. The phrase “relate to” carries its “broad common 12 sense meaning” and an employee benefit plan relates to a state law if it has a (1) 13 connection with or (2) reference to such plan. Id., at 47. see also Paulsen v. CNF Inc., 559 14 F.3d 1061, 1082 (9th Cir. 2009). 15 following guidance: 16 As recognized by Parsons, the Ninth Circuit provided the 20 The key to distinguishing between what ERISA preempts and what it does not lies, we believe, in recognizing that the statute comprehensively regulates certain relationships: for instance, the relationship between plan and plan member, between plan and employer, between employer and employee (to the extent an employee benefit plan is involved), and between plan and trustee. Because of ERISA's explicit language, and because state laws regulating these relationships (or the obligations flowing from these relationships) are particularly likely to interfere with ERISA's scheme, these laws are presumptively preempted. 21 General American Life Ins. Co. v. Castonguay, 984 F.2d 1518, 1521 (9th Cir. 1993) (internal 22 citations omitted). Additionally, the Ninth Circuit recognized the objectives of ERISA to 23 evaluate the “connection with” language, stating that “‘[t]he basic thrust of the pre-emption 24 clause [is] to avoid a multiplicity of regulation in order to permit the nationally uniform 25 administration of employee benefit plans.’” Id. at 1082. (citation omitted). This guidance is 26 convincing in establishing that Parsons’ negligence claim is preempted by §514(a). 17 18 19 10 1 As alleged by Parsons, in ¶14 of his complaint (which paragraph he incorporates 2 into his negligence claim), “the Plan documents provide that . . . Zenith acts as the 3 “Administrative Office” for the Plan.” Paragraph 14 further alleges that the plan documents 4 advise participants to contact the Administrative Office with questions about benefits. As 5 Parsons further alleges, he “has been a Participant in the Plan since 1974 . . ..” Complaint, 6 ¶20. Parsons has not cited to any authority suggesting that ERISA does not govern the 7 relationship between a plan participant and the entity identified in the plan as the 8 administrative office of the plan, particularly when the plan documents direct participants to 9 contact the administrative office with questions regarding benefits. 10 Parsons’ argument that he has alleged the negligence count in the alternative, “in 11 the event that Zenith is found not to be a fiduciary of the Plan” is unavailing for several 12 reasons. Parsons has not offered any authority for the underlying premise of his argument: 13 that ERISA governs the relationship between a participant and the entity designated by the 14 plan as the “Administrative Office” only if it is a fiduciary relationship. In the language cited 15 above from Castonguay, the Ninth Circuit did not indicate that ERISA regulates only 16 fiduciary relationships. Parsons argues that the “entire point” of his negligence claim is that 17 “[i]f Zenith is not a fiduciary of the plan, . . . then Parsons is entitled to the reasonable 18 inference that Zenith provided information to him pursuant to a non-Plan agreement 19 between Zenith and the Trustees.” Parsons is incorrect. A determination that Zenith is not 20 a fiduciary does not, by itself, establish that Zenith’s relationship with either the Trustees or 21 Parsons is not regulated by ERISA. As pointed out by Zenith, and not contradicted by 22 Parsons, he has not alleged any facts from which a plausible inference can be drawn that a 23 non-plan relationship exists between Zenith and either the Trustees or himself that is not 24 regulated by ERISA. Parsons’ reliance on Paulsen v. CNF Inc., 559 F.3d 1061 (9th Cir. 25 2009) is misplaced. In Paulsen, the plan participants’ negligence claim against the firm 26 that provided actual services to the plan was not pre-empted. As stated by the court: “The 11 1 duty giving rise to the negligence claim [ran] from a third-party actuary, i.e., a non-fiduciary 2 service provider, to the plan participants as intended third party beneficiaries of the 3 actuary's service contract.” Id., at 1083 (emphasis added). The provision of actuarial 4 services to a plan is not a relationship regulated by ERISA. While the actuarial firm was a 5 non-fiduciary service provider, the duty arose from the actuary’s service contract. Parsons 6 has not alleged any facts suggesting that Zenith’s relationship to himself is comparable to 7 that of a third-party beneficiary to an actuarial services contract between an actuarial firm 8 and a plan. Rather, the facts alleged by Parsons in his complaint expressly allege a 9 relationship between Zenith and the plan arising from the management or administration of 10 the plan with respect to a plan participant. Even assuming that Parsons’ allegations 11 somehow raise a plausible inference of a non-fiduciary relationship, those same allegations 12 (which are the only allegations permitting an inference of a relationship) require a 13 determination that the relationship is nevertheless regulated by ERISA. As Parsons’ 14 negligence claim bears on an ERISA-regulated relationship, it is pre-empted by §514(a) 15 and must be dismissed. Accordingly, 16 THE COURT ORDERS that the Trustees’ Motion to Dismiss (#14) is GRANTED; 17 THE COURT FURTHER ORDERS that Zenith Administrators, Inc.’s Motion to 18 19 Dismiss (#18) is GRANTED; THE COURT FURTHER ORDERS that, if plaintiff chooses to file an amended 20 complaint, he must do so not later than 15 days from the date this Order is entered and 21 served. 22 23 DATED this ______ day of August, 2012. 24 Lloyd D. George United States District Judge 25 26 12
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