ORDER

SAUNDRA ARMSTRONG, District Judge

This matter comes before the Court on Defendants Steelworkers Western Independent Shops Pension Plan, Joint Board of Trustees of the Steelworkers Western Independent Shops Pension Plan, Professional Insurance Consultants, Inc., David Mellow, Ray Macdonald, Michael Hereford, and Gaylan Prescott's ("Collective Defendants") Motion to Dismiss Plaintiffs' Second and Third Claims for Relief [Docket No. 9] and Defendants Professional Insurance Services, Inc. and Thomas P. Corcoran's Motion to Dismiss Plaintiff's Second, Third, and Fourth Claims for Relief [Docket No. 7].

Having read and considered the arguments presented by the parties in their moving papers, the Court finds this matter appropriate for disposition without a hearing. The Court HEREBY GRANTS IN PART and DENIES IN PART Collective Defendants' Motion to Dismiss. The Court also HEREBY GRANTS Professional Insurance Services, Inc. and Thomas P. Corcoran's Motion to Dismiss.

BACKGROUND

A. Facts

On April 29, 2004, Plaintiffs Fred T. Carl and six other individuals filed a Complaint against Defendants Steelworkers Western Independent Shops Pension Plan ("the Plan"), Joint Board of Trustees of Steelworkers Pension Plan (the "Board"), Professional Insurance Consultants, Inc. ("PIC"), Thomas P. Corcoran ("Corcoran") and five members of the Board, namely, David Mellow, Wayne Clary, Ray MacDonald, Michael Hereford, and Gaylan Prescott. [Docket No. 1.] All seven Plaintiffs are longstanding participants of the Plan, which is an employee pension benefit plan within the meaning of ERISA § 3(2), 29 U.S.C. § 1002(2). PIC is the Plan's manager and contract administrator, responsible for the Plan's daily operations. Corcoran is an employee and principal of PIC, responsible for carrying out PIC's duties with respect to the Plan. (Compl., ¶¶ 18, 19.)

Each Plaintiff was a participant in the Cascade Rolling Mills Pension Plan ("Cascade Plan"), which was merged into the Steelworkers District 38 Independent Shops Pension Plan ("District 38 Plan") in 1995. At the time of the merger, the Cascade Plan's fiscal year was modified according to the fiscal year of the District 38 Plan so that the Cascade Plan's 1994 plan year was converted into a short year of nine months. The District 38 Plan language was amended to preserve the accrued rights and benefits of the Cascade Plan participants, including separate benefit accrual and calculation methods and special "25-and-out" early retirement benefits. In the year 2000, the District 38 Plan was amended and renamed the Steelworkers Western Independent Shops Pension Plan ("the Plan"). The special provisions derived from the Cascade Plan were not affected by the restatement. (Compl., ¶¶ 21-25.)

Plaintiffs claim that Defendants have engaged in the following acts of mismanagement: (1) Defendants did not distribute updated summary plan descriptions or a summary of material modification from 1989 until 2003, despite the merger of the Cascade Plan into the District 38 Plan and subsequent amendments to the present Plan (Compl., ¶ 29); (2) Defendants made mistakes regarding plan benefit calculations and benefit payments, such as incorrect and inconsistent calculations of accrued hours of service, failure to apply Cascade-specific provisions to Cascade participants, and failure to take into account the "short plan year" of 1994 (Compl., ¶¶ 30-31); (3) Defendants communicated in a contradictory and confusing way information regarding members' benefits (Compl., ¶ 31); (4) Defendants instituted charges ($75.00) to participants who sought certain information about benefit accruals, and declined in certain instances to provide year-by-year calculations of accruals to participants (Compl., ¶ 32); (5) Defendants failed to audit Plan records, adequately supervise or replace the Plan's record-keeper (PIC), or to improve record-keeping and minimize errors (Compl., ¶ 33); (6) Defendants implemented, but did not provide explanations for, reductions in benefit multipliers due to funding shortfalls and errors in actuarial assumptions (Compl., ¶¶ 34-37); and (7) Defendants failed to provide information to its members about the financial problems before announcing in the spring of 2003 that the Plan was underfunded in the amount of approximately 38 million dollars. (Compl., ¶ 38.)

For these acts, Plaintiffs are seeking relief for: (1) breach of fiduciary duty under ERISA §§ 404 and 405 ( 29 U.S.C. §§ 1024, 1025, respectively) (First Claim for Relief); (2) civil penalties of $100.00 per day for each day in excess of 30 days that the Plan failed to provide required documents under ERISA § 502(c)(1)(B) ( 29 U.S.C. § 1132(c)(1)(B)) (Second Claim for Relief); (3) plan benefits due to Plaintiffs under the terms of the plan pursuant to ERISA § 502(a)(1)(B) ( 29 U.S.C. § 1132(a)(1)(B)) (Third Claim for Relief); and (4) professional negligence under "supplemental state law" against PIC and Corcoran, specifically (Fourth Claim for Relief).

B. Procedural History

On June 30, 2004, Defendants PIC and Corcoran filed a Motion to Dismiss Plaintiffs' Second, Third, and Fourth Claims under Fed.R.Civ.P. 12(b)(6). (PIC and Corcoran's Motion to Dismiss ("PIC Motion") [Docket No. 8].) On the same day, Defendants Plan, Board, Mellow, Hereford and Prescott filed their Motion to Dismiss Plaintiffs' Second and Third Claims for Relief. (Collective Defendants' Motion to Dismiss ("Collective Motion") [Docket No. 9].) This Motion was joined in by Defendant MacDonald on August 27, 2004 [Docket No. 20] and by Defendants PIC and Corcoran as to the Third Claim for Relief.

On September 14, 2004, Plaintiffs filed their Oppositions to the two Motions to Dismiss. As to Defendants Plan, Board, and Board members' Motion to Dismiss the Second and Third Claims for Relief, Plaintiffs sought leave to amend the Second Claim to correct deficiencies identified by Defendants, and rebutted Defendants' argument as to the Third Claim for Relief. (Opposition to Collective Motion ("Opp. to Co. Motion") [Docket No. 24].) With regard to Defendants PIC and Corcoran's Motion to Dismiss the Second, Third, and Fourth Claims for Relief, Plaintiffs clarified that PIC and Corcoran "are not proper parties to [the Second and Third] claims," but rebutted Defendants' argument as to the Fourth Claim for Relief. (Opposition to PIC and Corcoran's Motion to Dismiss ("Opp. to PIC Motion") [Docket No. 25].) Defendants filed their respective Reply Memoranda on September 21, 2004.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a motion to dismiss should be granted only if it appears beyond a doubt that the plaintiff "can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). For purposes of such a motion, the complaint is construed in a light most favorable to the plaintiff and all properly pleaded factual allegations are taken as true. Jenkins v. McKeithen, 395 U.S. 411, 421 (1969); Everest and Jennings, Inc. v. American Motorists Ins. Co., 23 F.3d 226, 228 (9th Cir. 1994). All reasonable inferences are to be drawn in favor of the plaintiff. Jacobson v. Hughes Aircraft, 105 F.3d 1288, 1296 (9th Cir. 1997).

When a complaint is dismissed for failure to state a claim, "leave to amend should be granted unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). The court should consider factors such as "the presence or absence of undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party and futility of the proposed amendment." Moore v. Kayport Package Express, 885 F.2d 531, 538 (9th Cir. 1989). Of these factors, prejudice to the opposing party is the most important. See Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990) (citing Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330-31 (1971)). Leave to amend is properly denied "where the amendment would be futile." DeSoto v. Yellow Freight Sys., 957 F.2d 655, 658 (9th Cir. 1992).

ANALYSIS

A. Collective Defendants' Motion to Dismiss Second and Third Claims for Relief

1) Second Claim for Relief

In their Second Claim for Relief, Plaintiffs allege that Defendants failed to provide Plaintiffs with updated summary descriptions and statements of material modifications as required by ERISA, and seek penalties under ERISA § 502(c)(1)(B), which provides that:

Any administrator . . . who fails or refuses to comply with a request for any information which such administrator is required . . . to furnish to a participant or beneficiary . . . within 30 days after such request may in the court's discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal . . .

Defendants moved to dismiss this claim on the grounds that Plaintiffs did not allege that they made oral or written requests for the summary descriptions and statements of material modifications, or that Defendants refused or failed to comply with such requests. (Co. Motion, 2-4.) Plaintiffs concede in their Opposition to Defendants' Motion to Dismiss that "the Complaint does not contain allegations regarding Plaintiffs' requests or Defendants' failure to comply with those requests," adding, however, that "[s]everal Plaintiffs have in fact made such requests . . . within the 3-year time period . . ." (Opp. to Co. Motion, 11.) Plaintiffs therefore seek to amend their Complaint to correct this deficiency. Defendants argue that leave should not be granted because Plaintiffs have not proffered any specific allegation that would correct the pleading deficiency. Leave to amend, however, is granted in this case because alleging additional facts could cure the defect at issue. Accordingly, Plaintiffs' Second Claim for Relief is DISMISSED WITHOUT PREJUDICE.

2) Third Claim for Relief

a. Failure to allege facts supporting an estoppel-based claim

In their Motion to Dismiss, Defendants assert that Plaintiffs' Third Claim must be dismissed because "it is unsuccessfully pled as a claim based on estoppel." (Co. Motion, 4.) Defendants claim that Plaintiffs have not, and cannot, "allege, and ultimately establish, that the plan provision at issue is ambiguous such that reasonable persons could disagree on its meaning or effect." ( Id. at 5.)

Under their Third Claim for Relief, Plaintiffs seek to recover benefits they allege are due to them under the Plan. According to the Plan, Plaintiffs are eligible for benefits on: (1) the date they become age 62, or (2) on the date the employee "terminates employment," assuming he meets other criteria. (Compl., ¶ 59.) Plaintiffs have alleged that they meet the other criteria. ( Id., at ¶ 60.) Plaintiffs also allege that under the Plan, an employee "terminates employment" by retiring from a union position and then taking on a management position that is not covered by the Plan. ( Id., at ¶ 61.) In support of their position, Plaintiffs claim that Caspers, Hathaway, and Skeffington, among others, inquired into whether taking a management position would limit their eligibility for the pension. Plaintiffs claim that certain Plan representatives told Plaintiffs that their eligibility "would not bar them from receiving retirement payments from the Plan." ( Id.)

In their Opposition, Plaintiffs do not dispute that they must plead that the Plan term at issue is ambiguous, asserting that "[t]he Plan provision at issue is therefore clearly ambiguous. Accordingly, Plaintiffs should be able to assert an estoppel-based claim for relief, and Defendants' motion must be denied." (Opp. to Co. Motion, 16.)

A claim for estoppel requires, inter alia, the Plan provision at issue to be ambiguous. Greany v. Western Farm Bureau Life Ins., 973 F.2d 812, 821 (9th Cir. 1992). While Plaintiffs provide detailed arguments regarding why the Plan language is ambiguous in their Opposition, no such allegation appears in their Complaint. Therefore, Plaintiffs' Third Claim for Relief is DISMISSED WITHOUT PREJUDICE. Plaintiffs are granted leave to amend to plead the necessary elements of their estoppel-based claim for relief.

b. Failure to Exhaust Administrative Remedies

Under ERISA, a claimant must exhaust a plan's internal review procedures prior to bringing a suit in federal court. Diaz v. United Agric. Employee Welfare Benefit Plan and Trust, 50 F.3d 1478, 1483 (9th Cir. 1995). This requirement, however, is waived if exhaustion would be futile under the circumstances. Amato v. Bernard, 618 F.2d 559, 568-69 (9th Cir. 1980). Waiving the exhaustion requirement is merited when it is "demonstrably doomed to fail." Diaz, 50 F.3d at 1485; see also Communications Workers of America v. ATT Co., 40 F.3d 426, 431-32 (D.C. Cir. 1994) (administrative exhaustion requirement should only be waived in exceptional circumstances in which exhaustion would be clearly useless).

Plaintiffs acknowledge that Carl, Shipley, Taylor, and Whitlow have failed to exhaust their administrative remedies. (Opp. to Co. Motion, 16; and Compl., ¶ 67.) Plaintiffs also assert that because the Plan's denial of benefits affects all employees who transition from union positions to management, exhaustion would be futile. (Opp. to Co. Motion, 16-17-18.) Defendants, however, assert that exhaustion is not futile because Plaintiffs have based their claim on estoppel, and therefore the claims of each plaintiff should be separately exhausted. (Co. Motion, 6.)

Here, exhaustion of administrative remedies could assist the Court in adjudicating Plaintiffs' claims. Plaintiffs have acknowledged that their claim is estoppel-based. (Opp. to Co. Motion, 16.) Thus, individual Plaintiffs may have been told different things by different representatives of Defendants and may have relied on those statements to differing degrees. Moreover, because only three of the plaintiffs have exhausted their administrative remedies, it is far from clear that exhaustion of administrative remedies for Carl, Shipley, Taylor, and Whitlow would be futile. Thus, Plaintiffs' third claim for relief as it applies to Carl, Shipley, Taylor and Whitlow is DISMISSED WITH PREJUDICE for failure to exhaust their administrative remedies.

B. Defendants PIC and Corcoran's Motion to Dismiss Second, Third, and Fourth Claims for Relief

1) Second and Third Claims for Relief

In their Opposition to Defendants PIC and Corcoran's Motion to Dismiss the Second, Third, and Fourth Claims for Relief, Plaintiffs admit that "Plaintiffs do not bring either of [the Second and Third Claims] against PIC or Corcoran." (Opp. to PIC Motion, 1.) Accordingly, Plaintiffs' Second and Third Claims for Relief is DISMISSED WITH PREJUDICE as against Defendants PIC and Corcoran.

2) Fourth Claim for Relief

Defendants PIC and Corcoran assert that Plaintiffs' Fourth Claim for negligence should be dismissed because "as it is alleged, the claim is preempted by ERISA." (PIC Motion, 10.) "The threshold question in an ERISA preemption inquiry is whether a state law `relates to' an employee welfare benefit plan. Aloha Airlines Inc. v. Ahue, 12 F.3d 1498, 1504 (9th Cir. 1993). "A state law that `relates to' an ERISA plan is preempted by ERISA `even if the law is not specifically designed to affect such [a] plan . . . or the effect is only indirect.'" Id., (quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139 (1990)).

Plaintiffs assert that their state law claim should not be preempted by ERISA, citing Arizona State Carpenters Pension Trust Fund v. Citibank, 125 F.3d 715, 724 (9th Cir. 1997). The Court in Carpenters stated:

First, Congress intended ERISA to preempt state laws that "mandate employee benefit structures or their administration."

Second, Congress intended to preempt state laws that bind employers or plan administrators to particular choices or preclude uniform administrative practice, thereby functioning as a regulation of an ERISA plan itself.

Third, in keeping with the purpose of ERISA's preemption clause, Congress intended to preempt "state laws providing alternate enforcement mechanisms" for employees to obtain ERISA plan benefits.

The state law claims do not address the employee benefit structure or the administration of benefits; they are not aimed at binding employers or plan administrators to particular practices, nor do they preclude uniform administrative practices; and they are not an alternative enforcement mechanism for employees to obtain benefits.

The key to distinguishing between what ERISA preempts and what it does not lies . . . 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 (emphasis original)."

In the instant case, the conduct of professional negligence alleged by Plaintiffs pertain to "[f]ailing to 7 keep accurate records and provide accurate benefit accrual information . . . [f]ailing to process benefit claims in a competent manner, and . . . [f]ailing to ensure that communications by the Plan's administrative office to participants are accurate and comprehensible." (Compl., ¶ 72.) These are the same allegations that Plaintiffs make regarding the failures of the Plan's fiduciaries. (Compare, Compl. ¶ 49 ¶ 72.) Indeed, unlike in Carpenters, the negligence claim alleged here does address the administration of plan benefits, and also acts as an alternative enforcement mechanism for Plaintiffs to obtain compensation for the Plan's alleged mismanagement. Moreover, unlike in Carpenters, the negligence claim as applied in the instant case seeks to regulate the relationship between the Plan and its members regarding the accuracy of the records the Plan must keep, the processing of benefit claims, and the type of communications that are required between the Plan and its members. Therefore, because Plaintiffs' Fourth Claim is preempted by ERISA, the claim is DISMISSED WITH PREJUDICE.

CONCLUSION

Collective Defendants' motion to dismiss Plaintiffs' Second and Third Claims for Relief [Docket No. 9] is GRANTED IN PART and DENIED IN PART.

1. Plaintiffs' Second Claim for Relief is DISMISSED WITHOUT PREJUDICE. Plaintiffs are granted LEAVE TO AMEND the Second Claim.

2. Plaintiffs' Third Claim for Relief is DISMISSED WITHOUT PREJUDICE as applied to Plaintiffs Caspers, Hathaway, and Skeffington. The Third Claim is DISMISSED WITH PREJUDICE as to Plaintiffs Carl, Shipley, Taylor and Whitlow.

Defendants Professional Insurance Services, Inc. and Thomas P. Corcoran's Motion to Dismiss Plaintiffs' Second, Third, and Fourth Claims for Relief [Docket No. 7] is GRANTED. Plaintiffs' Second, Third, and Fourth claims of Relief against PIC and Corcoran are DISMISSED WITH PREJUDICE.

IT IS FURTHER ORDERED THAT the Case Management Conference set for October 5, 2004 is continued until November 3, 2004 at 3:00 p.m. The parties shall meet and confer and file a Joint Case Management Statement at least ten (10) days prior to the conference.

IT IS SO ORDERED.