Swire Pacific Holdings Inc v. Jones

[6] UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON [7] AT SEATTLE [8] SWIRE PACIFIC HOLDINGS, INC., and CASE NO. C19-1329RSM 9 THE EMPLOYEE HEALTH CARE PLAN FOR THE BOTTLING EMPLOYEES OF ORDER DENYING DEFENDANTS’ 10 SWIIRE PACIFIC HOLDINGS, INC. and ITS SECOND MOTION TO DISMISS AFFILIATES, [11] Plaintiffs, [12] v. [13] JAMES JONES, and JEFFREY R. CAFFEE 14 LEGAL, PLLC d/b/a THE LAW OFFICES OF JEFFREY R. CAFFEE, [15] Defendants. [16] I. INTRODUCTION [17] This matter comes before the Court on Defendants’ Second Motion to Dismiss under [18] Rule 12(b)(6). Dkt. #29. Plaintiffs oppose. For the reasons stated below, the Court DENIES [19] Defendants’ Motion. [20] II. BACKGROUND [21] For purposes of this Motion to Dismiss, the Court will accept all facts in the Amended [22] Complaint as true. The Court will briefly summarize these facts as necessary for ruling on this [23] Motion. [24] 1 Plaintiffs are The Employee Health Care Plan for the Bottling Employees of Swire Pacific Holdings, Inc. and its’ Affiliates (“Plan”) and Swire Pacific Holdings, Inc., d/b/a Swire [2] Coca-Cola, USA (“Swire”). Swire alleges it is the Plan Sponsor and Plan Administrator for the [3] Plan. [4] Defendant James Jones worked for Swire and was a covered person and beneficiary of [5] the self-funded ERISA plan at issue in this case. On or about July 11, 2018, Jones was injured [6] in a serious car accident, the details of which are not at issue. The Plan paid medical benefits on [7] his behalf, at least $407,622.76. [8] Benefits provided under the Plan are fully funded by Swire and not through an insurance [9] carrier, although the plan is administered by Regence BlueCross BlueShield of Utah. [10] Plaintiffs allege that the applicable Summary Plan Description (“SPD”), effective from [11] January 1, 2018, to December 31, 2018, is the controlling document for the Plan, and that “there [12] is no separate or additional master plan document for the Plan.” Dkt. #28 at 3. [13] The SPD/Plan contains a “Subrogation and Right of Recovery” provision, setting forth [14] the self-funded ERISA Plan’s rights of reimbursement and subrogation. See Dkt. #28-1 [15] (“Summary Plan Description” or “SPD”) at 53–54 (“If You receive any payment as a result of [16] an Injury, Illness or condition, You agree to reimburse the Plan first from such payment for all [17] amounts the Plan has paid and will pay as a result of that Injury, Illness or condition, up to and [18] including the full amount of Your recovery.”). [19] Defendant Jones settled his claims related to the Accident for $150,000. However, he [20] has refused to reimburse the Plan. The other Defendant in this case, his counsel Jeffrey R. [21] Caffee Legal, PLLC, has “dominion and control over all of part of the Disputed Funds…” Dkt. [22] #28 at 6. [24] 1 Plaintiffs bring claims under 29 U.S.C. § 1132 (a)(3) to impose an equitable lien or constructive trust with respect to the disputed funds. They seek an Order enforcing the terms of [2] the Plan and requiring Defendants to turn over the full amount of the disputed funds, as well as [3] attorneys’ fees. [4] III. DISCUSSION [5] A. Legal Standard under Rule 12(b)(6) [6] In making a 12(b)(6) assessment, the court accepts all facts alleged in the complaint as [7] true and makes all inferences in the light most favorable to the non-moving party. Baker v. [8] Riverside County Office of Educ., 584 F.3d 821, 824 (9th Cir. 2009) (internal citations omitted). [9] However, the court is not required to accept as true a “legal conclusion couched as a factual [10] allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, [11] 550 U.S. 544, 555 (2007)). The complaint “must contain sufficient factual matter, accepted as [12] true, to state a claim to relief that is plausible on its face.” Id. at 678 . This requirement is met [13] when the plaintiff “pleads factual content that allows the court to draw the reasonable inference [14] that the defendant is liable for the misconduct alleged.” Id. The complaint need not include [15] detailed allegations, but it must have “more than labels and conclusions, and a formulaic [16] recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 . Absent [17] facial plausibility, a plaintiff’s claims must be dismissed. Id. at 570 . [18] B. Defendants’ Motion to Dismiss under Rule 12(b)(6) [19] Defendants first argue that the Amended Complaint cites only to the SPD, but that under [20] ERISA the “Summary Plan Description serves to ‘provide communications with beneficiaries [21] about the plan, but do[es] not [itself] constitute the terms of the plan.’” Dkt. #29 at 2 (citing [22] Cigna Corp. v. Amara, 563 U.S. 421 at 438 (2011) (emphasis in original)). Defendants contend [23] that Relief under ERISA, 29 U.S.C. § 1132 (a)(3) is not available for enforcement of provisions [24] 1 included in a “Summary Plan Description.” Although the Amended Complaint clearly pleads that the SPD is the only Plan document, Defendants argue that such is “illogical” and that the [2] SPD “does not contain the information required by 29 U.S.C. § 1102 to be included in a plan [3] document.” Id. at 4 . [4] Plaintiffs respond that this line of argument directly conflicts with controlling Ninth [5] Circuit law, Dkt. #34 at 2 (citing Mull v. Motion Picture Indus. Health Plan, 865 F.3d 1207 , [6] 1208-09 (9th Cir. 2017), and that it misstates the ruling of CIGNA Corp. v. Amara “by omitting [7] crucial facts and legal analyses regarding the specific identification of a separate plan [8] document,” Dkt. #34 at 2. According to Plaintiffs, the SPD and plan document are one-and-the9 same and the reimbursement and subrogation terms of the SPD found at Dkt. #28-1 are [10] enforceable under ERISA. Plaintiffs maintain that the SPD document is in compliance with: 29 11 U.S.C. § 1102 (b)(1) because it provides a procedure for establishing and carrying out a funding [12] policy and method; 29 U.S.C. 1102(b)(2) because it describes a procedure for the allocation of [13] responsibilities for the operation and administration of the plan; 29 U.S.C. § 1102 (b)(3) because [14] Defendants make no argument to the contrary; and 29 U.S.C. § 1102 (b)(4) because it specifies [15] the basis on which payments are made to and from the plan. Id. at 7–9. [16] On Reply, Defendants point to the SPD’s repeated references to other “plan documents.” [17] See Dkt. 35 at 4. But Defendants do not attempt to argue that there is some other controlling [18] plan document. The Court believes these are most likely drafting errors. [19] The Court finds that Plaintiffs have adequately pled that the SPD document attached to [20] the Complaint satisfies the requirements of ERISA even though it is serving both as a summary [21] plan description and the Plan document itself, and that in any event its’ reimbursement [22] provision is binding on Defendants. This issue was addressed in Mull, where the Ninth Circuit [23] found “an SPD may constitute a formal plan document, consistent with Amara, so long as the [24] 1 SPD neither adds to nor contradicts the terms of existing Plan documents.” 865 F.3d at 1210 . The Court agrees with Defendants that Plaintiffs are essentially calling into question the [2] existence of the Plan, and that Ninth Circuit case law runs against nullifying ERISA plans in [3] this situation. Accordingly, this does not serve as a basis to dismiss this case. [4] Defendants next argue that ERISA’s Anti-Inurement Provisions, 29 U.S.C. § 1103 (c) [5] and 29 U.S.C. § 1104 (a) bar Plaintiffs’ claim. 29 U.S.C. § 1103 (c) mandates that “the assets of [6] a plan shall never inure to the benefit of any employer and shall be held for the exclusive [7] purpose of providing benefits to participants in the plan and their beneficiaries and defraying [8] reasonable expenses of administration.” Defendants argue that “[a]n award in favor of Plaintiff [9] would not result in a plan asset being utilized solely in the interest of ‘participants and [10] beneficiaries,’ but would rather be a windfall for the Plaintiff Employer.” Dkt. #29 at 6. This [11] appears to be baseless and contrary to the record as Plaintiffs have already paid out over [12] $400,000 in Defendant Jones’ medical expenses and there is no evidence that reimbursed [13] money would benefit the employer Swire. Reimbursement will defray a previous cost paid by [14] the Plan. Defendants make an argument about how the pool of insureds changes from one year [15] to the next, meaning that the reimbursement funds will not benefit the original insureds, see [16] Dkt. #29 at 15–16, but provide no controlling legal authority to support the conclusion that this [17] somehow reduces the Plan’s legal right to seek reimbursement. Defendants make several policy [18] arguments against allowing subrogation and reimbursement. [19] Plaintiffs argue that any statement from Defendants about where the money will go [20] relies on facts (or speculation) outside the pleadings and is therefore improper on a motion to [21] dismiss; that the Amended Complaint seeks to turn these funds over to the Plan, not Swire the [22] employer, and that there is no “legal authority precluding a Plan Sponsor from recovering [23] subrogation funds relating to its self-funded plan and Defendants cite none.” Dkt. #34 at 11. [24] 1 Plaintiffs cite cases where subrogation and reimbursement have been permitted through the obtaining of an equitable lien. See Dkt. #34 at 12 (citing Sereboff v. Mid Atl. Med. Servs., 547 2 U.S. 356, 361 , 126 S. Ct. 1869 , 164 L. Ed. 2d 612 (2006); Cramer v. John Alden Life Ins. Co., [3] 763 F. Supp. 2d 1196, 1212 (D. Mont. 2010)). [4] The Court again agrees with Plaintiffs. Defendants cannot speculate about where [5] reimbursement money will go in a motion to dismiss. Even if the Court were to consider [6] Defendants’ arguments at a later stage it would find them unavailing, unless the factual record [7] changes substantially. The law currently allows subrogation and reimbursement under these [8] circumstances. [9] Finally, Defendants argue that reimbursement will violate ERISA’s prohibition on self10 dealing. Dkt. #29 at 7. The Court finds that Defendants have no basis for making this [11] argument, and that reimbursement to the Plan is permitted, even if the Plan and the employer [12] are one and the same. [13] IV. CONCLUSION [14] Having reviewed the relevant pleadings and the remainder of the record, the Court [15] hereby finds and ORDERS that Defendants’ Motion to Dismiss, Dkt. #29, is DENIED. [17] DATED this 7 day of January 2020. [19] A [20] RICARDO S. MARTINEZ 21 CHIEF UNITED STATES DISTRICT JUDGE