Opinion
No. 01-CV-73209-DT
June 4, 2002
OPINION ORDER GRANTING DEFENDANT'S MOTION TO STRIKE AND AFFIRMING MAGISTRATE JUDGE PEPE'S ORDER OF JUNE 4, 2002
Background
On August 22, 2001, Plaintiffs filed this action against Defendant TRW, Inc. The above named Plaintiffs are current and former employees of Defendant, and were all members of the bargaining unit represented by UAW Local 985 ("the union"). Plaintiffs' two-count complaint asserts the following claims: "breach of contract — Section 301 of the LMRA" (Count I) and "violation of an employee welfare benefit plan — Section 502 of ERISA" (Count II).
In Count I, Plaintiffs assert that as members of the union they were covered by a collective bargaining agreement ("CBA"), and that the CBA states that the parties have been provided with, among other things, an Insurance Program that provides for "Sickness and Accident Benefits (hereinafter `SA Benefits')." (Am. Compl. ¶¶ 20-24). Plaintiffs further assert that "[a]n employee is eligible for SA Benefits if she becomes wholly and continuously disabled as a result of any injury or sickness so as to be prevented from performing any and every duty of her occupation, and during the period of such disability is under treatment therefore by a physician legally licensed to practice medicine." (Am. Compl. ¶ 24). An eligible employee may receive such SA Benefits for up to 52 weeks. (Am. Compl. ¶ 25).
Each of the Plaintiffs claim that, at different times, they were "wholly and continuously disabled as a result of an injury or sickness," that they met the eligibility requirements to receive SA benefits, but were wrongfully denied SA Benefits. (Am. Compl. ¶¶ 26-55).
Plaintiffs also assert that the "Insurance Program provides for Extended Disability Insurance," in that "an employee who is insured for SA Benefits and who, at the date of expiration of the maximum number of weeks for which she is entitled to receive SA Benefits and during a continuous period of disability thereafter, is totally disabled so as to be unable to engage in any gainful occupation or employment for which she is reasonably qualified by education, training or experience shall receive monthly Extended Disability Benefits." (Am. Compl. ¶¶ 56-57). Plaintiff McClure claims that, at certain times, she was "wholly and continuously disabled as a result of injury or sickness," met the eligibility requirements to receive Extended Disability Benefits, but was "wrongfully denied" such benefits. (Am. Compl. ¶¶ 58-65).
Plaintiffs claim that by the "denials of SA Benefits and/or Extended Disability Benefits, TRW has breached it obligation under the collective bargaining agreement and related benefit plans to provide SA Benefits and Extended Disability Benefits for employees who meet the eligibility requirements." (Am. Compl. ¶ 66).
In Count II, Plaintiffs assert that by "wrongfully denying [them] SA Benefits and/or Extended Disability Benefits, Defendant violated the terms of an employee welfare benefit plan in violation of Section 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132 (a)(1)(B)." (Am. Compl. ¶ 76).
Plaintiffs request identical relief in Count I and in Count II: Judgment against Defendant in an amount equal to the SA Benefits and Extended Disability Benefits to which they were wrongfully denied, plus interest; Judgment against Defendant to "compensate Plaintiffs for damages for mental distress and anguish suffered as a result of [Defendant's] breach of the collective bargaining agreement and plans;" and reasonable attorney fees and costs incurred in this action. (Am. Compl. ¶¶ 66 76).
Plaintiffs demanded a "trial by jury on Count I of the Complaint." (Am. Compl. at 11).
On June 3, 2002, each of the eight remaining Plaintiffs filed motions for summary judgment. Defendant filed motions for judgment with respect to each of the Plaintiffs on that same date.
This matter is currently before the Court on: 1) Defendant's motion to strike Plaintiffs jury demand and claims for extra-contractual damages, filed on June 3, 2002, and 2) Plaintiffs objections to Magistrate Judge Pepe's Order of June 4, 2002, which were filed on June 13, 2002.
Discussion
I. Defendant's Motion To Strike
In this motion, Defendant asks the Court to strike Plaintiffs' demand for a jury trial on Count I of their Amended Complaint, and to strike Plaintiffs' claims for extra-contractual damages on Counts I and II. For the reasons set forth below, Defendant's motion to strike shall be granted.
A. Jury Demand
Defendant contends that under Bittinger v. Tecumseh Prods. Co., 123 F.3d 877 (6th Cir. 1997), Plaintiffs are not entitled to a jury trial on Count I of their complaint. The Court agrees.
Like the Plaintiffs in this case, the plaintiffs in Bittinger brought an action under the Labor Management Relations Act ("LMRA") and the Employee Retirement Security Act ("ERISA") alleging that an employer improperly denied them insurance benefits that were provided pursuant to a collective bargaining agreement. The trial court ruled that the plaintiffs were not entitled to a jury trial, and the Sixth Circuit Court of Appeals affirmed.
In deciding the issue, the court stated:
Whether the plaintiffs are entitled to a jury trial to enforce these provisions depends on whether their claims are best characterized as legal or equitable under the familiar two-part test of Tull v. United States, 481 U.S. 412, 419, 107 S.Ct. 1831, 1836, 95 L.Ed.2d 365 (1987). This test requires (1) a historical determination, which considers whether the modern statutory cause of action most nearly resembles historical actions in law or equity, and (2) an examination of the nature of the relief sought. Chauffeurs, Teamsters and Helpers Local 391 v. Terry, 494 U.S. 558, 565, 110 S.Ct. 1339, 1344, 108 L.Ed.2d 519 (1990) (plurality opinion); Tull, 481 U.S. at 419, 107 S.Ct. at 1836.Id. at 882-83. The court rejected the plaintiffs position that their "claims most nearly resemble claims for breach of contract, are legal in nature, and hence support a jury right." Id. at 883. Rather, the court found that plaintiffs action "most closely resembles an action in chancery by beneficiaries to interpret and enforce a trust agreement or for the impressment of a constructive trust, an action historically brought before the chancellor, not before the court of common pleas." The court therefore concluded that the plaintiffs were not entitled to a jury trial on their LMRA § 301 claim. Id.
B. Extra-Contractual Damages
In Plaintiffs' response to Defendant's motion, Plaintiffs "concur in Defendant's Motion to strike their claims for extra contractual damages." (Pls.' Resp. at 8).
II. Magistrate Judge's Order of June 4, 2002
On April 2, 2002, Defendant filed a motion for a protective order, arguing that discovery in a disability benefits case such as this should be limited to the administrative record. On June 4, 2002, Magistrate Judge Steven Pepe issued an "Order Concerning Defendant's Motion For A Protective Order To Quash Subpoenas And To Strike Plaintiffs' Witness List." ( See 6/4/02 Order). In that Order, the Magistrate Judge concluded that:
Because discovery outside of the administrative record is not allowed in an ERISA case (unless there are allegations of procedural irregularity, bias, or lack of due process, of which there are none), granting discovery for Plaintiffs' LMRA claim should only be allowed if their ERISA claim is not outcome determinative of their LMRA claim. Plaintiffs failed to even address this question in their supplemental brief, and gave no adequate response at the June 4th hearing. Furthermore, Defendant cites several cases where courts rule on plaintiffs ERISA and LMRA claims together. See, e.g., Bittinger v. Tecumseh Products, Co., 123 F.3d 877, 883 (6th Cir. 1997) (denying jury trial where plaintiffs filed claims under both ERISA and the LMRA alleging the same factual predicate: the denial of welfare benefits).
Accordingly . . . it is ordered that Defendant's motion be GRANTED.
(Order at 203).
On June 18, 2002, Plaintiffs filed objections to the Magistrate Judge's June 4, 2002 Order. The standard by which a district court reviews discovery rulings by a magistrate judge is set forth in FED. R. Civ. P. 72, which provides that a district court judge shall consider a party's objections to an order issued by a magistrate judge and "shall modify or set aside any portion of the magistrate judge's order found to be clearly erroneous or contrary to law." See also 28 U.S.C. § 636 (b)(1)(A).
Magistrate Judge Pepe found that under Wilkens, v. Baptist Healthcare Sys., Inc., 150 F.3d 608 (6th Cir. 1998), Plaintiffs were not entitled to discovery on their ERISA claims. Magistrate Judge Pepe also stated that "unless Plaintiffs make a showing that their LMRA claim will continue despite dismissal of their ERISA claim, granting discovery for the LMRA claim will be futile and a waste of time and resources." (6/4/02 Order at 2). Plaintiffs failed to persuade Magistrate Judge Pepe that the Court's rulings on Plaintiffs' ERISA claim would not be outcome determinative of Plaintiffs' LMRA claim, and he therefore granted Defendant's motion.
Footnote 2 to the Order stated that "[i]f Plaintiffs prevail on their ERISA claim[s], then Plaintiffs would also not need discovery on their LMRA claim, because Plaintiffs seek identical relief."
Plaintiffs have not persuaded the Court that Magistrate Judge Pepe's June 4, 2002 Order is "clearly erroneous or contrary to law."
In Plaintiffs ERISA claim, Plaintiffs assert that Defendant wrongfully denied their claims for benefits. Plaintiffs do not dispute that under Wilkens, they are not entitled to discovery on their ERISA claim. (See Pls.'s Resp. at 6 10). Nevertheless, Plaintiffs contend they are entitled to discovery on their LMRA claim. Plaintiffs rely on Armistead v. Vernitron Corp., 944 F.2d 1287 (6th Cir. 1991).
Plaintiffs' reliance on Armistead is not well founded. Plaintiffs contend that the court in Armistead considered both the LMRA claim and the ERISA claim and that it was "[o]nly after the court determined that the employer violated the collective bargaining agreement under the LMRA, did it consider whether plaintiffs stated a claim under ERISA." (Pls.' Objections at 7). Plaintiffs next claim that "In Armistead, the LMRA claim and the ERISA claim had the same factual predicate, alleged the same injury and requested similar relief. 944 F.2d at 1290. Yet, the court ruled on the separate claims using the separate, appropriate standards for each of the claims." (Pls.'s Objections at 8).
Armistead is clearly distinguishable. In Armistead, the court had to decide the LMRA claim independent of the ERISA claim because the defendant asserted there was no insurance program covering the retiree plaintiffs because it had exercised its right to "terminate the retirement insurance program." Armistead, 944 F.3d at 1297. That issue was, of course, independent of the ERISA issue. Once the court determined that defendant had not effectively terminated the insurance program, the court then considered the ERISA claim.
In this case, there is no dispute that there was an insurance program in effect covering the Plaintiffs. The dispute in this case is simply whether or not each of the Plaintiffs in this case was entitled to receive benefits under that program.
Although Count I is labeled "Breach of Contract — § 301 of the LMRA," in substance, that count simply restates Plaintiffs' ERISA claim that they were wrongfully denied benefits. As such, a ruling on Count II, the ERISA claim, will render the LMRA claim moot. See System Council T-3 v. American Tel. Tel. Co., 905 F. Supp. 198, 201 (1995) (where plaintiffs claimed defendant improperly denied claims for benefits and brought suit under both ERISA and LMRA, court stated "Because the Court's resolution of the ERISA claims moots the LMRA claims, the Court considers only Plaintiffs ERISA claims.")
In Count I, "Breach of Contract — § 301 of the LMRA," Plaintiffs allege that the CBA includes an "insurance program" (Am. Compl. ¶ 22), that Plaintiffs "met the eligibility requirements to receive SA Benefits" ( Id. at ¶ 27), and that Plaintiffs were "wrongfully denied SA Benefits." ( Id. at ¶ 28).
Count II, "violation of an employee welfare benefit plan — Section 502 of ERISA," alleges that Plaintiffs "satisfied all the conditions which entitle them to SA Benefits and/or Extended Disability Benefits" ( Id. at ¶ 75), and that Plaintiffs were wrongfully denied these benefits.
The procedure by which an employee seeks disability benefits, whether it be pursuant to the CBA or ERISA, is the same. Presumably, Plaintiffs followed the procedure, i.e., each Plaintiff submitted to the Plan Administrator the information she believes entitles her to disability benefits. Based on the information submitted, Defendant denied the claims. ERISA controls the standard by which this Court determines if the denial of benefits was correct. Plaintiffs have not provided the Court with any authority to support their apparent view that the Court should review the decision denying benefits using some criteria other than that provided by ERISA. In addition, the Plaintiffs do not dispute that under ERISA the Court reviews the Plan Administrator's decision based on the record that was before the Plan Administrator.
The Court fails to see how Plaintiffs LMRA claim could survive a determination on Plaintiffs ERISA claim, i.e., a determination whether Plaintiffs' claims for benefits were wrongly denied. If Plaintiffs succeed on their ERISA claims by establishing that their claims for benefits were wrongfully denied, Plaintiffs would be entitled to the relief sought in Count II of their complaint: Judgment against Defendant in an amount equal to the SA Benefits and Extended Disability Benefits to which they were wrongfully denied, plus interest, and reasonable attorney fees and costs incurred in this action.
As noted supra, Plaintiffs agree that their request for extra-contractual damages should be stricken.
On the other hand, if the Court determines that the Plaintiffs were not wrongfully denied benefits in evaluating Plaintiffs' ERISA claims, the Court fails to see how Plaintiffs could possibly prevail on the LMRA claim, given that it is based upon the assertion that Defendant breached the CBA by wrongfully denying benefits to the Plaintiffs.
Conclusion
For the reasons set forth above,
IT IS ORDERED that Defendant's motion to strike Plaintiffs jury demand and claims for extra-contractual damages is GRANTED.
IT IS FURTHER ORDERED that Magistrate Judge Pepe's Order of June 4, 2002, is AFFIRMED.