Opinion
No. 3:02-CV-0108-P
October 4, 2002
ORDER
Before the Court is Defendant's Motion for Judgment on the Pleadings, filed July 16, 2002. Plaintiffs filed a Response to Defendant's motion on August 5, 2002. The Defendant's Reply was filed August 20, 2002. After considering the pleadings, the briefing, and the applicable law, the Court GRANTS Defendant's Motion for Judgment on the Pleadings.
Facts Alleged in the Pleadings
Kenneth Ray Arensberg, Jr., and Jane Arensberg ("Plaintiffs") brought this suit in state court, asserting claims under Texas law for negligence, breach of warranty, violations of the Texas Business Commerce Code, violation of the Texas Insurance Code, breach of contract and anticipatory repudiation, bad faith, and equitable estoppel. Defendant UNUM Life Insurance Co. of America ("Defendant" or "UNUM") removed the suit to this federal court on January 14, 2002. Thereafter, on February 13, 2002, Plaintiffs amended their Complaint to bring a single claim under § 510 of the Employee Retirement Income Security Act ("ERISA"). Pl's. First Amend. Compl. ¶¶ 12-15. Defendant answered and asserted a counterclaim for attorneys' fees on February 28, 2002.
The First Amended Complaint alleges that plaintiff Kenneth Ray Arensberg, Jr., ("Arensberg") was an insured person under a long-term disability policy procured through his employer, Southland Corp. Id. ¶ 5. In July 1993, Arensberg "sustained an injury to his right knee." Id. ¶ 7. He was awarded long-term disability benefits under the plan in December 1993. Id. ¶ 8. On September 19, 2000, an employee of Defendant advised Arensberg by telephone that his long-term disability benefits were being immediately terminated. Id. ¶ 9. UNUM admits that a letter dated September 19, 2000, advised Arensberg "that he was not totally disabled as defined in the Plan." Def.'s Answer ¶ 9. Plaintiffs further allege (and UNUM denies) that UNUM failed to assess properly (1) the length of time benefits were paid to Arensberg, (2) the nature and duration of his employment with Southland Corporation, (3) his employment history, and (4) the cause of Arensberg's injuries and the full nature of his conditions and medical care. Pl.'s First Amend. Compl. ¶ 10. Plaintiffs allege (and UNUM denies) that UNUM "refused to pay claims without conducting a reasonable investigation, failing to obtain a Functional Evaluation Examination and ignoring all medical evidence that contradicted Defendant's decision to terminate benefits." Id. Plaintiffs allege that they have "diligently sought and exhausted all administrative remedies available to them by the Defendant." Id. ¶ 11. Defendant UNUM admits only that its decision to deny further benefits under the Plan was upheld on administrative appeal. Def.'s Answer ¶ 11.
Based on these allegations, Arensberg — as a "participant" in and "beneficiary" of an employee benefit plan within the meaning of the Employee Retirement Income Security Act ("ERISA") — claims that he is entitled to relief because "UNUM violated, and continues to violate, ERISA § 510." ¶¶ 14 15. He claims that this violation is the direct and proximate cause of damages in the form of lost compensation, "including commissions, bonuses and employee benefits, he would have received." ¶ 15. Defendant UNUM, naturally, denies that Plaintiffs are entitled to relief. Def.'s Answer ¶¶ 13-16.
Defendant UNUM moves for judgment on the pleadings, arguing (i) that § 510 does not apply to Defendant and (ii) that Plaintiffs have not alleged facts giving rise to a claim under § 510. Def.s' Mot. at 5-7. Plaintiffs relief, if any, Defendant asserts, must be sought under § 502(a)(1)(B), but Plaintiffs have not plead a claim under that provision of ERISA. Id. at 7. In any event, Defendant maintains, Plaintiffs have failed to allege any facts to indicate that Jane Arensberg is a participant or beneficiary of the plan. Id. at 7 n. 2.
Legal Standard
Rule 12(c) of the Federal Rules of Civil Procedure allows any party to move for judgment on the pleadings "after the pleadings are closed but within such time as not to delay the trial." A motion for judgment on the pleadings "is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts." Hebert Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990) (per curiam) (citing 5A Charles A. Wright Arthur R. Miller, Federal Practice and Procedure § 1367, at 509-10 (1990)). "The central issue is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief." Hughes v. Tobacco Inst., Inc., 278 F.3d 417, 420 (5th Cir. 2001) (quoting St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 440 n. 8 (5th Cir. 2000)).
"Pleadings should be construed liberally, and judgment on the pleadings is appropriate only if there are no disputed issues of fact and only questions of law remain." Id. (citing Voest-Alpine Trading USA Corp. v. Bank of China, 142 F.3d 887, 891 (5th Cir. 1998)). The standard to be applied when analyzing a Rule 12(c) motion is the same as the standard used for a motion to dismiss for failure to state a claim under Rule 12(b)(6). See Lee v. Am. Airlines, Inc., No. 3:01-CV-1179-P, 2002 U.S. Dist. LEXIS 12029, at * 5-6 (N.D. Tex. July 2, 2002) (Solis, J.). "The [district] court may dismiss a claim when it is clear that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief." Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999) (per curiam) (citing Fee v. Herndon, 900 F.2d 804, 807 (5th Cir. 1990)). "In analyzing the complaint, we will accept all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff." Id. (citing Doe v. Hillsboro Indep. Sch. Dist., 81 F.3d 1395, 1401 (5th Cir. 1996)). "The issue is not whether the plaintiff will ultimately prevail, but whether he is entitled to offer evidence to support his claim. Thus, the court should not dismiss the claim unless the plaintiff would not be entitled to relief under any set of facts or any possible theory that he could prove consistent with the allegations in the complaint." Id. (citing Doe, 81 F.3d at 1401; Vander Zee v. Reno, 73 F.3d 1365, 1368 (5th Cir. 1996)).
Legal Analysis
Section 510 of ERISA, 29 U.S.C. § 1140, provides as follows:
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 title, section 3001 [ 29 U.S.C. § 1201], or the Welfare and Pension Plans Disclosure Act, or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this title, or the Welfare and Pension Plans Disclosure Act. It shall be unlawful for any person to discharge, fine, suspend, expel, or discriminate against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to this Act or the Welfare and Pension Plans Disclosure Act. The provisions of section 502 [ 29 U.S.C. § 1132] shall be applicable in the enforcement of this section.
A § 510 violation requires proof that (1) a participant or beneficiary of an ERISA plan (2) was injured by a "person" (3)(a) because of the participant/beneficiary's "exercise of rights to which they are entitled" under the plans and ERISA or (b) for the purpose of interfering with their attainment of such rights. See Heimann v. Nat'l Elevator Indus. Pension Fund, 187 F.3d 493, 505 (5th Cir. 1999). Plaintiffs have plead that Arensberg is both a "participant" and a "beneficiary" as defined by ERISA, and Defendant admits that Arensberg was a "covered employee." Pl.'s First Amend. Compl. ¶ 14; Def.'s Answer ¶ 14. Defendant UNUM maintains that Plaintiffs cannot satisfy the other elements of a § 510 claim.
Defendant first argues that "this section of ERISA was not intended to apply to non-employers." Def.'s Mot. at 5. "Indeed, Section 510 `speaks of conduct which, functionally, can only be completed by one who is an employer of the aggrieved person.'" Id. (quoting Rollo v. Maxicare of La., Inc., 698 F. Supp. 111, 114 (E.D. La. 1988). See also Byrd v. MacPapers, Inc., 961 F.2d 157, 161 (11th Cir. 1992) (a "retaliatory discharge claim under § 510 of ERISA lies only against [the] employer"). In essence, Defendant argues that it is not a "person" as that term is meant to be used in § 510.
The term "person" is defined by ERISA to include "an individual, partnership, joint venture, corporation, mutual company, joint-stock company, trust, estate, unincorporated organization, association, or employee organization." 29 U.S.C. § 1002(9). Plaintiffs allege that UNUM is "an insurance company doing business in Dallas County, Texas, pursuant to the laws of the State of Texas." Pl.'s Compl. ¶ 2. Defendants admit that "Unum Life is licensed to issue insurance in Texas." Def.'s Answer ¶ 2. Defendant's argument that the scope § 510 is limited to employers defies the plain meaning of the definition given in § 3 of ERISA.
Defendant next argues that "the facts alleged by Plaintiffs do not raise a claim for relief under this section of ERISA." Def.'s Mot. at 6. The Court agrees. Nothing in the pleadings — even when read in a light most favorable to the Plaintiffs — can be construed as an allegation that Defendant "discharge[d], fine[d], suspend[ed], expel[ed], discipline[d], or discriminate[d] against" Plaintiff. 29 U.S.C. § 1140. Plaintiff alleges that Defendant terminated benefits and that Defendant failed to do its homework before making the decision to do so. Even if the Court assumes that Defendant's alleged failures could be described using any of the verbs listed in the statute, the pleadings still lack any allegation that the action was taken for a purpose made improper by § 510. A generous reading of the pleadings leads only to the conclusion that Plaintiff alleges wrongful termination of benefits. Defendant is entitled to judgment on the pleadings as to Plaintiffs' § 510 claim.
The Court's reading of § 510 is reinforced by the Fifth Circuit's ruling in Heimann. In that case, a retiree who received benefits under the National Elevator Industry Pension Fund and the National Elevator Industry Health Benefit Plan ("the Plans") also worked as an elevator inspector at the University of Texas. 187 F.3d at 498. A business agent of the International Union of Elevator Contractors informed the Plans that the job of elevator inspector was "disqualifying employment," and the Plans suspended pension plan payments to the retiree and terminated his medical and dental insurance. Id. at 498-99. Arguing that the job was not "disqualifying employment" the retiree (as participant) and his wife (as beneficiary) sued the union and its business agent in state court for "intentional infliction of emotional distress and tortious interference with contract." Id. at 499. The defendants removed the suit to federal court and asked that it be consolidated with a pending suit against the Funds. Id. The district court granted a motion to dismiss the state-law claims because they were preempted by ERISA and because the plaintiffs failed to state a claim. Id.
The plaintiffs appealed and the Fifth Circuit ruled that the plaintiffs had stated a claim to relief under § 510. Id. at 502. The court first held that the union and the business agent, though not employers, were nonetheless "persons" within the meaning of § 510. Id. at 504. The court then found that the facts plead in the petition seeking recovery on preempted state-law claims matched the allegations necessary to state a claim under § 510. Id. at 508-9. Insofar as the plaintiffs alleged that the defendants intentionally and without justification told the Plans that the retired plaintiff had engaged in disqualifying employment, the Court understood the plaintiffs to claim they were discriminated against (i.e., retaliated against economically) by defendants because the retiree had exercised his right to work as an elevator inspector. Id.
In this case, the undisputed facts, no matter how generously construed in favor of Plaintiffs, could not support a § 510 claim. It is plain that Plaintiffs' counsel has plead the wrong statutory basis for recovery. See Pl.'s Resp. ¶¶ 2, 15 17. Preferring to reach the merits of a dispute properly before this Court, the Court will allow Plaintiffs to replead its case. In its Reply, Defendant UNUM stated, "If Plaintiffs want to seek leave to amend to assert a claim under § 502(a)(1)(B), let them." Def.'s Resp. at 2. Plaintiffs' counsel claims to have informed defense counsel on August 22, 2002, that he was "drafting an Unopposed Motion for leave to Amend Plaintiffs' Pleadings for the purpose of asserting an explicit ERISA § 502(a) claim against Defendant UNUM Life." See Letter of Stephen G. Good to Dennis M. Lynch, dated August 23, 2002. To date, counsel has failed so to move.
Defendant also notes that Plaintiffs fail to allege any facts to support a claim for relief by plaintiff Jane Arensberg. Although this appears to be the case, it is unnecessary to the disposition of the present motion.
Nonetheless, in the interests of a just and speedy resolution of this dispute, the Court hereby grants Plaintiffs leave to file amended pleadings to assert § 502 claims. Plaintiffs' Second Amended Complaint, if any, must be filed on or before October 15, 2002. Failing that, the Court will enter an Order of Final Judgment based on its resolution of the only claim presented in Plaintiffs' First Amended Complaint.
Conclusion
Defendant's Motion for Judgment on the Pleadings is hereby GRANTED. However, in the interests of justice, Plaintiffs are granted leave to file an amended complaint asserting an ERISA § 502(a) claim on or before October 15, 2002 .