Opinion
04-CV-6322 CJS.
January 18, 2005
Lawrence I. Heller, Esq., Rochester, New York, For plaintiff.
Thomas E. Reidy, Esq., Ward, Norris, Heller Reidy, LLP, Rochester, New York, For defendants Alstom Transportation, Inc. a/k/a Alstom Signaling Inc.
R. Scott DeLuca, Esq., Damon Morey LLP, Buffalo, New York, For defendant Hartford Life Insurance Co.
DECISION AND ORDER
INTRODUCTION
Plaintiff brought this civil action pursuant to the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001 et seq. ("ERISA"). Now before the Court are defendants' motions [#6][#9] to dismiss the complaint for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). The applications are granted in part and denied in part.
BACKGROUND
The following facts are taken from the complaint in this action. Plaintiff was employed by defendant Alstom Transportation, Inc. ("Alstom") as a Logistics Manager and Purchasing Manager. In 1999 plaintiff suffered a heart attack, had triple bypass surgery, and eventually returned to work full time. In or about November 2002, plaintiff's health "deteriorated," and his doctors ordered him to stop working.
Defendant Alstom is the sponsor of a Group Long Term Disability, Life, and Supplemental Life Plan ("the plan") for its employees. In addition to providing disability benefits, the plan contains a "waiver of premium" benefit, waiving life insurance premium payments for participants who become disabled. Defendant Hartford Life Insurance Co. ("Hartford") is the plan insurer, claims administrator, and agent for service of process.
Plaintiff applied for disability benefits under the plan. Defendants denied plaintiff's disability claim, and he exhausted his administrative remedies as to that claim on or about January 7, 2004. On or about April 24, 2004, defendants notified plaintiff that he did not meet the eligibility requirements for the waiver of premium benefit. In this regard, although defendants ordinarily would have sent the notice concerning waiver of premium benefits at the same time that they denied the disability claim, in this case they did not. Plaintiff did not appeal the determination, or otherwise exhaust his administrative remedies with regard to the waiver of premium benefit. According to plaintiff: "To appeal administratively would be absurd, as Defendants, although apparently agreeing they failed to timely notify Plaintiff, clearly apply the same denial and, in fact, agree that their administrative denials for LTD [long-term disability] prohibit payment of these benefits or waiver of premium therefor." Complaint ¶ 28 (Emphasis added).
Plaintiff commenced this action on July 13, 2004. In addition to asserting claims for past and future disability benefits and waiver of premium benefits under ERISA, plaintiff also alleged claims for "such punitive damages for bad faith, breach of fiduciary duty, bad conduct and breach of the employment covenant for fair dealing as may be just and proper, as well as any consequential damages allowable under New York State law or developing ERISA case law." On September 16, 2004, Hartford filed the first of the two pending motions [#6] to dismiss the complaint for failure to state a claim. In that regard, Hartford alleged that the claims for punitive and consequential damages, as well as any claims under state law, were preempted by ERISA. Hartford also alleged that plaintiff's cause of action for waiver of premium benefits should be dismissed for failure to exhaust administrative remedies. Defendant Alstom filed an essentially identical motion to dismiss [#9] the same day.
On October 26, 2004 plaintiff filed papers in response to the motions. Plaintiff agrees that his state law claims and claims for punitive and consequential damages should be dismissed. However, he opposes the motions to the extent they are based on a failure to exhaust administrative remedies, arguing that it would have been futile to appeal the denial of his waiver of premium benefits. In this regard, plaintiff notes that he exhausted administrative his administrative remedies as to the LTD claim, and that "[t]he standard for waiver of premium is exact[ly the] same . . . as LTD, and is, in fact, predicated on being ineligible for LTD." Plaintiff's Memo [#11], p. 3.
While claiming that various decisions by federal courts "have seen some changes in the extent of ERISA preemption," and that at least two district courts have "found state laws of bad faith [are] not preempted," plaintiff "agrees that this is not the case to argue [these matters]." Plaintiff's Memo of Law [#11], p. 3.
ANALYSIS
Pursuant to Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint for "failure to state a claim upon which relief can be granted." It is well settled that in determining a motion under Fed.R.Civ.P. 12(b)(6), a district court must accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party. Burnette v. Carothers, 192 F.3d 52, 56 (1999), cert den. 531 U.S. 1052 (2000). While the Court must accept as true a plaintiff's factual allegations, "[c]onclusory allegations of the legal status of the defendants' acts need not be accepted as true for the purposes of ruling on a motion to dismiss." Hirsch v. Arthur Andersen Co., 72 F.3d 1085, 1092 (2d Cir. 1995) ( citing In re American Express Co. Shareholder Litig., 39 F.3d 395, 400-01 n. 3 (2d Cir. 1994)). The Court "may dismiss the complaint only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Id. (internal quotations omitted) ( citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). While the pleading standard is a liberal one, bald assertions and conclusions of law will not suffice. Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996).
Since plaintiff agrees that the claims based on state law and those seeking punitive and compensatory damages should be dismissed, the Court grants defendants' application as to those claims. The only remaining issue is whether the "waiver of benefits" claim should also be dismissed. The law in this regard is well settled:
A plaintiff bringing an ERISA claim challenging a denial of benefits is required to exhaust administrative remedies before pursuing claims in court. See Burke v. Kodak Retirement Income Plan, 336 F.3d 103, 107 (2d Cir. 2003). Exhaustion is unnecessary, however, upon a "clear" and "positive" showing that pursuit of such remedies would be futile. See Krizek v. Cigna Group Ins., 345 F.3d 91, 97 (2d Cir. 2003).Scott v. New York City Dist. Council of Carpenters Pension Plan, 224 F.R.D. 353, 355 (S.D.N.Y. 2004). Where as here a plaintiff has exhausted one claim but not another, he may demonstrate futility by showing that the two claims are so identical that the denial of one "demonstrates with certainty" that the other will also be denied. Lindemann v. Mobil Oil Corp., 79 F.3d 647, 650 (7th Cir. 1996).
As discussed above, the complaint alleges that defendants "agree that their administrative denials" of plaintiff's LTD claim "prohibit payment" of the waiver of premium benefit. Complaint ¶ 28. Since defendants are proceeding under Rule 12(b)(6), the Court would have to accept this factual allegation, even if defendants disputed it. The Court notes nonetheless that nowhere in defendants' papers do they specifically deny this factual allegation. Since it appears that plaintiff's factual allegation, if proven, would establish futility, the motions to dismiss for failure to exhaust must be denied.
CONCLUSION
Defendants' motions [#6][#9] are granted in part and denied in part. Plaintiff's claims pursuant to New York State law, and any claims seeking punitive or compensatory damages, are dismissed. Defendants' applications to dismiss the fourth cause of action for failure to exhaust administrative remedies are denied.
SO ORDERED.