Opinion
IP 00-983-C-B/S.
January 29, 2001.
ENTRY GRANTING MOTIONS TO DISMISS AND GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO STRIKE
Plaintiff, Katherine Blickenstaff ("Blickenstaff"), alleges that Defendants, R.R. Donnelley Sons Company Short-Term Disability Plan ("Plan"), R.R. Donnelley Sons Company ("Donnelley"), and Hartford Life Accident Insurance Company, sued incorrectly as The Hartford ("Hartford"), wrongfully denied her claim for short-term disability benefits in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiff originally filed suit in Indiana state court and Defendant Hartford removed the action to us, pursuant to 28 U.S.C. § 1441 (b), with the consent of Defendants Donnelley and the Plan. Defendants Donnelley and Hartford separately move to dismiss the complaint for failing to state a claim upon which relief may be granted, pursuant to Rule 12(b)(6). Defendant Plan moves, and Defendants Donnelley and Hartford move in the alternative, to strike portions of the complaint, pursuant to Rule 12(f). For the reasons explicated below, we GRANT the motions to dismiss the complaint with respect to Defendants Donnelley and Hartford and GRANT IN PART AND DENY IN PART the motions to strike the requested portions of the complaint.
Factual Allegations
Prior to October 24, 1998, Blickenstaff worked as an employee of Donnelley in Crawfordsville, Indiana. R.R. Donnelley Sons Company's Mot. to Dismiss Pl.'s Complaint Presented in the Alternative to Its Mot. to Strike ("Donnelley Mot. to Dismiss"), Ex. A, Complaint in Indiana Superior Court, Montgomery County, Cause No. D01-0005-CP0164 ("Complaint") ¶¶ 3-4. While employed by Donnelley, Bilckenstaff was entitled to employee benefits, including short-term disability benefits provided under the terms of the Plan. Id. ¶ 5. Blickenstaff alleges that while so covered, she began to suffer from chronic back and muscular pain which ultimately rendered her unable to perform the material and substantial duties of her position. Id. ¶¶ 6-7. As a result of this inability to perform the duties of her position, Blickenstaff filed a claim for short-term disability benefits on or about February 10, 1999. Id. ¶ 8.
Blickenstaff alleges that she received notice from Hartford that her claim for benefits had been denied. Id. ¶ 10. Blickenstaff further alleges that she has requested reviews of and has appealed Hartford's decision, thereby exhausting her rights to appeal under ERISA. Id. ¶ 11. In an unnumbered allegation in her complaint, Blickenstaff asserts that "Defendants' conduct was willful and wanton and was designed to deprive Katherine Blickenstaff of her rights as guaranteed under the [sic] ERISA." Id. at 3. Blickenstaff seeks general damages, including, but not limited to pain and suffering, mental anguish, humiliation, and embarrassment (and we assume her claim for benefits under the terms of the Plan), legal interest, punitive damages, costs and fees, and any other appropriate relief.
Discussion A. Rule 12(b)(6) Standard of Review
Federal Rule of Civil Procedure 12(b)(6) permits the dismissal of a claim for "failure to state a claim upon which relief may be granted." See FED. R. CIV. P. ("RULE") 12(b)(6). When considering a motion under this rule, the Court must examine the sufficiency of the plaintiff's complaint, not the merits of the lawsuit. See Gibson v. City of Chicago, 910 F.2d 1510, 1520-21 (7th Cir. 1990); Triad Assocs., Inc. v. Chicago Housing Auth., 892 F.2d 583, 585 (7th Cir. 1989), abrogated on other grounds by Board of County Comm'rs, v. Umbehr, 518 U.S. 668 (1996). Dismissal is appropriate only if it appears to a certainty that the plaintiff cannot establish any set of facts which would entitle her to the relief sought. See Hishon v. King Spalding, 467 U.S. 69, 73 (1984); Mosley v. Klincar, 947 F.2d 1338, 1339 (7th Cir. 1991). To survive a motion to dismiss, a complaint must contain either "direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory. . . . But such allegations need only state a possible claim, not a winning claim." Herdrich v. Pegram, 154 F.3d 362, 369 (7th Cir. 1998), rev'd on other grounds, 530 U.S. 211 (2000).
We accept as true all well-pleaded factual allegations and draw all reasonable inferences in favor of the plaintiff. Dawson v. General Motors Corp., 977 F.2d 369, 372 (7th Cir. 1992); Rule 8(a). However, "a complaint which consists of conclusory allegations unsupported by factual assertions fails even the liberal standard of Rule 12(b)(6)." Panaras v. Liquid Carbonic Indus. Corp., 74 F.3d 786, 792 (7th Cir. 1996) (quoting Palda v. Gen. Dynamics Corp., 47 F.3d 872, 875 (7th Cir. 1995)).
B. Claims Brought by Blickenstaff
Before we can analyze the merits of the Defendants' motions, we must first ascertain exactly what claims Blickenstaff is asserting. Blickenstaff's complaint alleges that Defendants' "wrongful denial" of Blickenstaff's claim for short-term disability benefits under the terms of the Plan was in "violation of ERISA . . ., including but not limited to Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B)." Compl. ¶ 1. Section 502(a)(1)(B), as codified, states that a "civil action may be brought — (1) by a participant or beneficiary — . . . (B) 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 plan." 29 U.S.C. § 1132(a)(1)(B).
Obviously, paragraph one of the complaint embraces a 502(a)(1)(B) claim for benefits (we discuss below which defendants are subject to this claim), but Blickenstaff contends that the complaint encompasses more. In response to Donnelley's and Hartford's motions to dismiss the complaint, Blickenstaff asserts for the first time that the complaint also states a Section 502(a)(3) breach of fiduciary duty claim, which section allows a plan participant or beneficiary to bring a civil action "(A) to enjoin any act or practice which violates any provision of this title or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provision of this subchapter or the terms of the plan." 29 U.S.C. § 1132(a)(3) (emphasis added).
To properly state an ERISA claim for breach of fiduciary duty, a complaint must contain allegations which set forth: "(1) that the defendants are plan fiduciaries; (2) that the defendants breached their fiduciary duties; and (3) that a cognizable loss resulted." Herdrich, 154 F.3d at 369 (citing 29 U.S.C. § 1104(a)). ERISA defines the term "fiduciary" to mean, in relevant part:
Except as otherwise provided in subparagraph (B), a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority of control respecting management or disposition of its assets . . . or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.29 U.S.C. § 1002(21)(A). The term "fiduciary" has routinely been construed broadly, with an emphasis placed on the importance of discretionary control and authority in determining who is a plan fiduciary. See Harris Trust and Sav. Bank v. Provident Life and Accident Ins. Co., 57 F.3d 608, 613 (7th Cir. 1995).
A party who meets the statutory definition of "fiduciary" must:
discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and —
(A) for the exclusive purpose of:
(i) providing benefits to participants and their beneficiaries; and
(ii) defraying reasonable expenses of administering the plan;
(B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims. . . .29 U.S.C. § 1104(a)(1). A fiduciary breaches its duty of care under Section 1104(a)(1) whenever it acts to benefit its own interests, such as found in 29 U.S.C. § 1106(b), 1109. Herdrich, 154 F.3d at 371; Anweiler v. American Elec. Power Serv. Corp., 3 F.3d 986, 991-92 (7th Cir. 1993). However, the simple allegation that a fiduciary denied the plaintiff's claim for benefits does not, by itself, state a claim for a breach of fiduciary duty. See Perlman v. Swiss Bank Corp. Comprehensive Disability Prot. Plan, 916 F. Supp. 843, 844 (N.D. Ill. 1996); Lister v. Stark, No. 88-C-9801, 1989 WL 88241, at *6 (N.D. Ill. Aug. 1, 1989); see also Schoonmaker v. Employee Savings Plan, 987 F.2d 410, 414-15 (7th Cir. 1993) (citing Lister with approval).
1. Section 502(a)(1)(B) claims
Both Donnelley and Hartford contend that the Plan is the only proper defendant in a Section 502(a)(1)(B) claim for short-term benefits. R.R. Donnelley Sons Co.'s Memo. of Law in Supp. of Its Mot. to Dismiss ("Donnelley's Mot. to Dismiss Br.") at 2-3; Hartford Life and Accident Ins. Co.'s Memo. of Law in Supp. of Its Mot. to Dismiss ("Hartford's Mot. to Dismiss Br.") at 2-3. Blickenstaff does not dispute this proposition, arguing instead that the complaint should be read to state only a Section 502(a)(3) breach of fiduciary duty claim against Donnelley and Hartford. By entirely failing to respond to the defendants' arguments that Section 502(a)(1)(B) is inapplicable to them, Blickenstaff has waived any Section 502(a)(1)(B) claim she may have had against either defendant. Cf. Teumer v. General Motors Corp., 34 F.3d 542, 545-46 (7th Cir. 1994) (plaintiff waived legal theory when he "fail[ed] . . . to present legal arguments linking the claim described in the complaint to the relevant statutory (or other) sources for relief"); Farnham v. Windle, 918 F.2d 47, 51 (7th Cir. 1990) (plaintiff's failure to brief legal theories supporting his claim in response to motion to dismiss constituted waiver). This waiver provides a sufficient basis to dismiss these claims.
Moreover, the defendants have accurately enunciated Seventh Circuit law on the issue. In this circuit, "ERISA permits suits to recover benefits only against the Plan as an entity." Jass v. Prudential Health Care Plan Inc., 88 F.3d 1482, 1490 (7th Cir. 1996) (quoting Gelardi v Pertec Computer Corp., 761 F.2d 1323, 1324 (9th Cir. 1985)); see also Riordan v. Commonwealth Edison Co., 128 F.3d 549, 551 (7th Cir. 1997); Wyluda v. Fleet Fin. Group, 112 F. Supp.2d 827, 830 (E.D. Wis. 2000); Witowski v. Tetra Tech, Inc., 38 F. Supp.2d 640, 644 (N.D. Ill. 1998); Anderson v. Ill. Bell Tel. Co., 961 F. Supp. 1208, 1212-13 (N.D. Ill. 1997); Roeder v. ChemRex Inc., 863 F. Supp. 817, 828 (E.D. Wis. 1994); cf. 29 U.S.C. § 1132(d)(2) ("Any money judgment under this subchapter against an employee benefit plan shall be enforceable only against the plan as an entity. . . ."). Therefore, suits for benefits under the terms of the plan are improper as against the plan administrator or any other plan fiduciary. Even if we did not deem Blickenstaff's silence to constitute a waiver of her Section 502(a)(1)(B) claims against Donnelley and Hartford, they would warrant dismissal. The only surviving Section 502(a)(1)(B) claim therefore must be against the Plan itself.
2. Section 502(a)(3) claims
Plaintiff supports her contention that the complaint includes a Section 502(a)(3), breach of fiduciary duty claim by stating that "[t]his case was originally filed by Plaintiff in . . . the courts of the State of Indiana, which require only notice pleading." Pl.'s Resp. to Def. R.R. [sic] Donnelley Sons Company's Mot. to Strike and Motion to Dismiss ("Pl.'s Resp. to Donnelley's Mots.") at 1. (emphasis in original). Moreover, counsel for Blickenstaff continues, the language in paragraph one of the complaint asserting that defendants had violated ERISA, "including but not limited to Section 502)(a)(1)(B)," is sufficient to put the defendants on notice in a "notice-pleading jurisdiction" such as Indiana. Id. at 2.
First, contrary to Plaintiff's interpretation of the Federal Rules of Civil Procedure, Rule 8(a) also establishes a liberal system of "notice pleading." Leatherman v Tarrant County Narcotics Intelligence and Coordination Unit, 507 U.S.163, 168 (1993). Rule 8(a)(2) requires that a complaint include only "a short and plain statement of the claim showing that the pleader is entitled to relief." Leatherman, 507 U.S. at 168 (quoting Rule 8(a)(2)). As stated above, this liberal system requires us, (N.D.Cal. 2000) to accept as true all well-pleaded factual allegations contained in the complaint and draw all reasonable inferences in favor of the plaintiff. In fact, "[b]ecause the Indiana rules are modeled closely on the federal rules, Indiana courts often look to federal cases for guidance in applying the Indiana rules." Daniels v. USS Agri-Chemicals, 965 F.2d 376, 381 n. 1 (7th Cir. 1992).
In this sense, the pleading requirements of Indiana and the Rules are identical. Compare Rule 8(a)(2) with Ind. Tr. P. R. 8(a)(1) (requiring that a complaint contain "a short plain statement of the claim showing that the pleader is entitled to relief.").
Applying these standards, it is clear to us that Blickenstaff has not stated a claim for breach of fiduciary duty. First, the complaint contains no allegations and supports no inferences to show that either Donnelley or Hartford are in fact fiduciaries of the Plan as defined by ERISA. No mention is made of either party's discretionary authority or discretionary control in the management or in the administration of the Plan. This is most clear with respect to Donnelley, about which the complaint is entirely silent, except to the extent that it references Blickenstaff's position as its employee. With respect to Hartford, the complaint merely alleges that "Blickenstaff received notice from The Hartford that her claim for short-term disability benefits had been denied." Compl. ¶ 10. There is no indication of what role Hartford or Donnelley played in reviewing the claim or in applying the Plan's terms.
Even if we were to give a strained reading to the complaint so as to conclude that such fiduciary status has been alleged as to either Donnelley or Hartford, the complaint also lacks any allegations sufficient to create an inference that a breach of fiduciary duty has occurred. All that Blickenstaff alleges is that her claim for benefits was wrongfully denied. This does not suffice as claim that either Donnelley or Hartford acted to benefit its own interests in reviewing and denying her claim. As such, the complaint lacks the necessary elements of a breach of fiduciary claim and we are unable fairly to construe it to contain one. Therefore, we GRANT Donnelley's and Hartford's motions to dismiss the complaint as to them, leaving the Plan as the only defendant subject to Blickenstaff's well-pled Section 502(a)(1)(B) claim.
As we discuss below, there is no reason to allow Blickenstaff to amend her complaint to sufficiently allege a breach of fiduciary duty claim against either Donnelley or Hartford.
C. Defendants' Motions to Strike
In addition to the motions to dismiss, each defendant has filed a motion to strike the following provisions: (1) the words "including but not limited" as contained in paragraph one of the complaint; (2) those portions of the complaint alleging willful and wanton conduct; and (3) that portion of the prayer for relief requesting (a) extracontractual damages for pain and suffering, mental anguish humiliation, and embarrassment, (b) exemplary damages, (c) fees and costs, and (d) legal interest. Blickenstaff responds that striking this language is "improper according to the Federal Rules of Civil Procedure," and that the proper course is to "argue such issues when this court is considering jury instructions." Pl.'s Resp. to Donnelley's Mots. at 3, 4. In addition, Plaintiff contends that it included this language "so as not to waive any of her rights at this early stage of the case." Id. at 4. Specifically, Plaintiff asserts that we should not consider any issues relating to damages before trial, that ERISA provides for an award of attorney's fees and costs, and that the phrase 'willful and wanton" encompasses conduct that "may be relevant and actionable, including arbitrary and capricious conduct, abuse of discretion, and breach of fiduciary duty." Id.Section 502(a)(1)(B) permits only "a participant or beneficiary . . . to recover benefits due to him under the terms of the plan." Clair v. Harris Trust and Sav. Bank, 190 F.3d 495, 497 (7th Cir. 1999), cert. denied, 120 S.Ct. 1166 (2000) (quoting 29 U.S.C. § 1132(a)(1)(B)). The Seventh Circuit has interpreted this provision to mean that neither compensatory damages, punitive damages, nor prejudgment interest are available in a claim to recover benefits. See id. (discussing the award of prejudgment interest); Harsch v. Eisenberg, 956 F.2d 651, 655-56 (7th Cir. 1992) (citing Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 136 (1985)) (discussing extracontractual damages under Section 502(a)(1)(B)); id. at 660-61 (citing Russell) (discussing punitive damages). To hold otherwise "is inconsistent with the principle that benefits payable under an ERISA plan are limited to the benefits specificed in the plan." Clair, 190 F.3d at 497.
Circuit precedent also precludes claims for compensatory or punitive damages under Section 502(a)(3). See Harsch, 956 F.2d at 656, 661; Kleinhans v. Lisle Sav. Profit Sharing Trust, 810 F.2d 618, 627 (7th Cir. 1987). Although the Supreme Court authorized individual suits for a breach of fiduciary duty under Section 502(a)(3) in Varity Corp. v. Howe, 516 U.S. 489 (1996), the Supreme Court was faced there with only a request for equitable relief. Id. at 492 (seeking declaratory judgment reinstating plaintiffs as a participant of the employer's ERISA plan). A claim for money damages is not a form of "appropriate equitable relief" under Section 502(a)(3). Mertens v. Hewitt Associates., 508 U.S. 248, 255 (1993); Jass, 88 F.3d at 1491; Perlman, 916 F. Supp. at 844. Section 502(a)(3)(B)'s catch-all provision is intended to allow for equitable relief in those cases where she may not be able to recover elsewhere under Section 502(a). Varity Corp., 516 U.S. at 512. Blickenstaff's claim is essentially one for the short-term benefits alleged to be owed to her, a claim that is recoverable under Section 502(a)(1)(B). Thus, there is no additional relief available to Plaintiff that would provide a basis for a Section 502(a)(3) claim.
Extracontractual damages therefore are not available under the relief structure established by ERISA. This relief structure has been held to preclude damages for medical expenses, pain and suffering and lost wages, physical injuries, and financial damages caused by the failure to pay benefits. See Russell, 473 U.S. at 136; Jass, 88 F.3d at 1490; Harsch, 956 F.2d at 655-56. Plaintiff's claims for pain and suffering, humiliation, and embarrassment are likewise foreclosed under Section 502(a), as is her claim for exemplary, or punitive, damages.
Rule 12(f) provides that "the court may order stricken from any pleading any . . . redundant, immaterial, impertinent, or scandalous matter." In Benjamin v. Marshal P. Morris, Ltd. Profit Sharing Plan and Trust, No. 97-C-6714, 1998 WL 299434 (N.D. Ill. May 20, 1998), the Northern District of Illinois applied Rule 12(f) to a complaint that contained a jury demand and a claim for punitive damages in conjunction with a claim for benefits under Section 502(a)(1)(B) and breach of fiduciary duty claims under both Section 502(a)(2) and 502(a)(3). As these claims were not legally available, the court struck them from the complaint. Id. at *6. We likewise have held that Blickenstaff's request for pain and suffering, humiliation, and embarrassment, and punitive damages are precluded under Section 502(a) and thus "immaterial" to this cause of action. They shall accordingly be stricken. Moreover, the allegations that Plaintiff included as support for these awards are not material and shall also be stricken.
Section 502(a)(2) authorizes a breach of fiduciary duty claim on behalf of the ERISA plan as a whole and 502(a)(3) authorizes a breach of fiduciary duty claim on behalf of an individual, under certain circumstances. See Varity Corp., 516 U.S. at 492; Russell, 473 U.S. at 140; 29 U.S.C. § 1132(a)(2), (a)(3).
The other allegations to which Defendants object, however, are not superfluous. Section 502(g)(1) provides, in relevant part, that "in any action under this subchapter . . . by a participant [or] beneficiary . . . the court in its discretion may allow a reasonable attorney's fee and costs of action to either party." 29 U.S.C. § 1132(g)(1). Blickenstaff's request for "costs of suit and reasonable attorney's fees" is therefore appropriate and should not be stricken. Likewise, Blickenstaff's request for "legal interest from the date of judgment until the same is paid" is not precluded by ERISA. Although Clair stands for the proposition that pre-judgment interest is unavailable under ERISA, we do not read Plaintiff's complaint to be requesting such relief. Rather, Blickenstaff seeks post-judgment interest, which is statutorily available to prevailing parties under 29 U.S.C. § 1961(a). To the extent that Plaintiff seeks such interest, we allow her request to stand; however, Plaintiff is precluded from seeking or obtaining interest on the allegedly-owed short-term disability benefits.
Conclusion
As explicated above, we GRANT Donnelley's and Hartford's motions to dismiss with prejudice Blickenstaff's complaint as to each of them. Donnelley's and Hartford's motions to strike are therefore DENIED as MOOT. We GRANT IN PART and DENY IN PART the Plan's motion to strike, ordering the following revisions in the Complaint language:
I. The statement in Rhetorical paragraph number one of the Complaint, "including but not limited to" is stricken. That paragraph shall now read "in violation of ERISA (Employee Retirement Income Security Disability Act), Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B)."
II. The statement in the first unnumbered paragraph on page three of the Complaint, "and has suffered damages, including but not limited to, pain and suffering, mental anguish, humiliation, and embarrassment," is stricken. The preceding phrase, "Karen Blickenstaff has been deprived of economic benefits," is amended to delete the words "economic benefits" and insert instead the words, "short-term disability benefits owed to her."
III. The entire second unnumbered paragraph on page three of the Complaint, "The Defendants' conduct was willful and wanton and was designed to deprive Katherine Blickenstaff of her rights guaranteed under the ERISA, thereby entitling Katherine Blickenstaff to an award of exemplary damages," is stricken
IV. The language in the first "wherefore" paragraph on page three of the Complaint, "(3) exemplary damages in a sum sufficient to punish and deter Defendant, and others similarly situated, from the same or similar conduct in the future;" and "(5) all other appropriate relief as deemed by the Court," is stricken. The provision, "(1) general damages in a sum sufficient to compensate Plaintiff for all of her damages" is amended as follows, after the number (1): by substituting "an award of the short-term disability benefits owed to her." The provision, "(2) legal interest from the date of the judgment until the same is paid;" is deleted, and substituted with the words "post-judgment interest."
V. The language in the second "wherefore" paragraph, "for exemplary damages;" and ", and for all other appropriate relief in the premises," is stricken.