Delano v. Unified Grocers, Inc.

[7] 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA [10] 11 HARLEY DELANO, No. 2:19-cv-00225-TLN-DB 12 Plaintiff, 13 v. ORDER 14 UNIFIED GROCERS, INC., aka Unified Western Grocers, a California corporation; 15 SUPERVALU, INC., a Delaware corporation, [16] Defendant. [18] 19 This matter is before the Court on Defendants Unified Grocers, Inc. (“UGI”) and 20 Supervalu, Inc.’s (“SI”) (collectively “Defendants”) Motion to Dismiss under Federal Rule of 21 Civil Procedure (“Rule”) 12(b)(6). (ECF No. 8.) Plaintiff Harley Delano (“Plaintiff”) opposes 22 Defendants’ motion. (ECF No. 13.) Defendants filed a reply. (ECF No. 14.) After carefully 23 considering the parties’ briefing and for the reasons set forth below, the Court hereby DENIES 24 Defendants’ Motion to Dismiss. 25 /// 26 /// 27 /// 28 /// 1 I. FACTUAL AND PROCEDURAL BACKGROUND1 2 Plaintiff was employed by Defendant UGI from February 20002 until January 2, 2002. 3 (ECF No. 1-1 ¶ 6.) In 2001, Plaintiff and UGI discussed Plaintiff retiring early. (ECF No. 1-1 ¶ 4 6.) During the discussions, UGI agreed to a severance package for Plaintiff which included UGI 5 maintaining a life insurance policy until Plaintiff’s death. In return, Plaintiff would retire, 6 meaning UGI would no longer have to pay his salary. (ECF No. 1-1 ¶¶ 6–7.) 7 These discussions were put into a written agreement (“Delano Retirement Plan”) on 8 December 20, 2001, which established the benefits UGI agreed to provide. These included: (1) 9 retiree medical coverage beginning January 2, 2002; (2) Executive Life Insurance coverage equal 10 to 1.5 times the Plaintiff’s final earnings beginning January 2, 2002; and (3) an Executive Salary 11 Protection Plan which provided a supplemental pension benefit. (ECF No. 1-1 ¶ 7.) The Delano 12 Retirement Plan allowed Plaintiff to retire on January 2, 2002, instead of in September of 2002. 13 (ECF No. 1-1 at ¶ 7.) Plaintiff agreed to the terms. (ECF No. 1-1 ¶ 8.) Defendant was able to 14 select the promised life insurance plan and elected to use a split-dollar life insurance policy, 15 meaning that a portion of the premiums paid each year by UGI would be included in Plaintiff’s 16 income for income tax purposes. (ECF No. 1-1 ¶ 13.) 17 Plaintiff contends that the Delano Retirement Plan is an employee benefit plan within the 18 meaning of 29 U.S.C. § 1002 (2)(A) and (3) and therefore governed by the Employee Retirement 19 Income Security Act of 1974 (“ERISA”). (ECF No. 1-1 ¶ 10.) Plaintiff further contends that the 20 Delano Retirement Plan was established to provide life insurance benefits to Plaintiff after 21 retirement, rendering it an ERISA plan. (ECF No. 1-1 ¶ 10.) 22 From January 2, 2002, through December 31, 2017, UGI honored its agreement to 23 Plaintiff and maintained Plaintiff’s insurance policy. (ECF No. 1-1 ¶¶ 11-14.) On June 23, 2017, 24 Supervalu Inc. (“SI”) merged with UGI and became the successor-in-interest to the Delano 25 Retirement Plan. (ECF No. 1-1 ¶ 14.) On October 20, 2017, SI sent a letter to Plaintiff stating it [26] 27 1 The Court takes the following recitation of facts, sometimes verbatim, from Plaintiff’s Complaint. (ECF No. 1-1 at 3–10.) 28 2 Plaintiff does not allege the specific date he began his employment. 1 would be terminating Plaintiff’s life insurance benefit at the end of the 2017 year. (ECF No. 1-1 2 ¶ 16.) In the letter, SI acknowledged that Plaintiff’s life insurance provided a death benefit of 3 $287,135. (ECF No. 1-1 ¶ 16.) The letter gave Plaintiff the option of purchasing the policy and 4 assuming its continuing obligations by paying SI the policy’s cash surrender value and continuing 5 to pay the premiums. (ECF No. 1-1 ¶ 17.) The letter stated that if Plaintiff decided against 6 assuming the policy obligations, then SI would cancel the policy and receive the cash surrender 7 value. (ECF No. 1-1 ¶ 17.) However, because UGI — before merging with SI — initially elected 8 to finance the policy through a split-dollar arrangement and failed to pay the policy’s premiums 9 on several occasions, the premium for the policy increased over the years. (ECF No. 1-1 ¶¶ 1810 19.) 11 On November 1, 2017, SI sent a second letter to Plaintiff stating that all of his benefits 12 under the Delano Retirement Plan would be unilaterally terminated on December 31, 2017. (ECF 13 No. 1-1 ¶ 20.) On November 20, 2017, Plaintiff’s attorney sent a letter to SI in which Plaintiff 14 alleged that Plaintiff and Defendants had entered into a severance agreement where Defendants 15 agreed to maintain the policy until Plaintiff’s death. (ECF No. 1-1 ¶ 21.) The letter also 16 requested that Defendants deliver certain documents related to the Delano Retirement Plan and 17 Plaintiff’s employment. (ECF No. 1-1 ¶ 22.) According to Plaintiff, Defendants only produced 18 some of the documents. (ECF No. 1-1 ¶ 22.) 19 On December 12, 2017, Defendants responded to Plaintiff’s letter by treating it as a claim 20 under ERISA. (ECF No. 1-1 ¶ 23.) SI rejected Plaintiff’s claim by stating that SI considered the 21 Delano Retirement Plan as part of SI and UGI’s other ERISA plans. (ECF No. 1-1 ¶ 23.) 22 Plaintiff contends that the clear language in the Delano Retirement Plan shows that it was the 23 only agreement between Plaintiff and SI. (ECF No. 1-1 ¶ 23.) In its letter, SI also stated that 24 since it was treating this letter as a determination of Plaintiff’s benefits under the Delano 25 Retirement Plan for ERISA benefits, Plaintiff could appeal SI’s decision within 60 days. (ECF 26 No. 1-1 ¶ 23.) 27 /// 28 /// 1 On February 9, 2018, Plaintiff appealed SI’s rejection and asserted the Delano Retirement 2 Plan constituted the entire agreement between the parties as to the severance package and 3 qualified as a separate benefit plan under ERISA. (ECF No. 1-1 ¶ 25.) On April 9, 2018, SI 4 denied Plaintiff’s appeal. (ECF No. 1-1 ¶ 28.) Having exhausted all his administrative remedies, 5 Plaintiff filed his Complaint on January 3, 2019. (ECF No. 1-1 ¶ 28.) 6 Plaintiff alleges three causes of action: (1) 29 U.S.C.§ 1132(a)(1)(B) – wrongful denial of 7 ERISA benefits against all defendants; (2) 29 U.S.C. § 1132 (a)(2) and (3) – breach of fiduciary 8 duty by ERISA Fiduciary against SI, UGI and DOES 1 through 10; and (3) violation of California 9 Welfare & Institutions Code § 15610, et seq. – Financial Elder Abuse against all Defendants. 10 (ECF No. 1 at 10-13.) Defendants move to dismiss Plaintiff’s Third Cause of Action pursuant to 11 Rule 12(b)(6) arguing that it is preempted under ERISA. (ECF No. 8.) 12 II. STANDARD OF LAW 13 A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal 14 sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Federal Rule of 15 Civil Procedure 8(a) requires that a pleading contain “a short and plain statement of the claim 16 showing that the pleader is entitled to relief.” See Ashcroft v. Iqbal, 556 U.S. 662 , 678–79 17 (2009). Under notice pleading in federal court, the complaint must “give the defendant fair notice 18 of what the claim . . . is and the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 19 544, 555 (2007) (internal quotations omitted). “This simplified notice pleading standard relies on 20 liberal discovery rules and summary judgment motions to define disputed facts and issues and to 21 dispose of unmeritorious claims.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002). 22 On a motion to dismiss, the factual allegations of the complaint must be accepted as true. 23 Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give plaintiff the benefit of every 24 reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. Retail 25 Clerks Int’l Ass’n v. Schermerhorn, 373 U.S. 746 , 753 n.6 (1963). A plaintiff need not allege 26 “‘specific facts’ beyond those necessary to state his claim and the grounds showing entitlement to 27 relief.” Twombly, 550 U.S. at 570 . “A claim has facial plausibility when the plaintiff pleads 28 factual content that allows the court to draw the reasonable inference that the defendant is liable 1 for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. 544, 556 (2007)). 2 Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of 3 factual allegations.” United States ex rel. Chunie v. Ringrose, 788 F.2d 638 , 643 n.2 (9th Cir. 4 1986). While Rule 8(a) does not require detailed factual allegations, “it demands more than an 5 unadorned, the defendant–unlawfully–harmed–me accusation.” Iqbal, 556 U.S. at 678 . A 6 pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the 7 elements of a cause of action.” Twombly, 550 U.S. at 555 ; see also Iqbal, 556 U.S. at 678 8 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory 9 statements, do not suffice.”). Moreover, it is inappropriate to assume that the plaintiff “can prove 10 facts that it has not alleged or that the defendants have violated the . . . laws in ways that have not 11 been alleged[.]” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, [12] 459 U.S. 519, 526 (1983). 13 Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough 14 facts to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 697 (quoting 15 Twombly, 550 U.S. at 570). Only where a plaintiff has failed to “nudge[] [his or her] claims . . . 16 across the line from conceivable to plausible[,]” is the complaint properly dismissed. Id. at 680. 17 While the plausibility requirement is not akin to a probability requirement, it demands more than 18 “a sheer possibility that a defendant has acted unlawfully.” Id. at 678. This plausibility inquiry is 19 “a context–specific task that requires the reviewing court to draw on its judicial experience and 20 common sense.” Id. at 679. 21 If a complaint fails to state a plausible claim, “‘[a] district court should grant leave to 22 amend even if no request to amend the pleading was made, unless it determines that the pleading 23 could not possibly be cured by the allegation of other facts.’” Lopez v. Smith, 203 F.3d 1122 , 24 1130 (9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 484 , 497 (9th Cir. 1995)); 25 see also Gardner v. Marino, 563 F.3d 981, 990 (9th Cir. 2009) (finding no abuse of discretion in 26 denying leave to amend when amendment would be futile). Although a district court should 27 freely give leave to amend when justice so requires under Rule 15(a)(2), “the court’s discretion to 28 deny such leave is ‘particularly broad’ where the plaintiff has previously amended its 1 complaint[.]” Ecological Rights Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2 2013) (quoting Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004)). 3 III. ANALYSIS 4 Plaintiff’s Complaint alleges three separate causes of action against Defendants. In 5 Defendants’ Motion to Dismiss, Defendants assert that Plaintiff’s Third Cause of Action is 6 expressly preempted under § 514(a) and conflict preempted under § 502(a) of ERISA. (ECF No. 7 8 at 4.) 8 In his Opposition, Plaintiff asserts preemption only applies where it is demonstrated or 9 conceded that an ERISA-covered plan is at issue. (ECF No. 13 at 6.) Plaintiff argues Defendants 10 have failed to establish that ERISA applies to the Delano Retirement Plan. (ECF No. 13 at 8.) At 11 the same time, Plaintiff asserts he pleaded his Third Cause of Action in the alternative in the 12 event the Court determines that ERISA does not apply to the Delano Retirement Plan and 13 contends that, at this early junction, it is inappropriate to dismiss his third claim on the basis of 14 ERISA preemption. (ECF No. 13 at 7–8.) 15 Defendants’ Reply argues there is no need to assert that ERISA is applicable to the Delano 16 Retirement Plan because of Plaintiff’s numerous assertions of its applicability in the Complaint. 17 (ECF No. 14 at 4.) Defendants urge that under the motion to dismiss standards, Plaintiff’s 18 statements are to be taken as true and Defendants need not do anything further to establish 19 ERISA’s applicability. (ECF No. 14 at 4.) Still, Defendants argue ERISA is applicable because 20 the allegations in the Complaint confirm that the benefits are a plan which Defendants established 21 and maintained for the purpose of providing medical and death benefits to Plaintiff and any 22 beneficiaries. (ECF No. 14 at 5.) Finally, Defendants contend Plaintiff did not state or imply that 23 he was pleading in the alternative. (ECF No. 14 at 3.) According to Defendants, Plaintiff’s 24 statements in his counsel’s pre-lawsuit letters to Defendant and Plaintiff’s Complaint show that 25 Plaintiff firmly believes ERISA applies and expresses no doubt as to its applicability. (ECF No. 26 14 at 4.) 27 Rule 8 of the Federal Rules of Civil Procedure provides the starting point for evaluating 28 the viability of Plaintiff’s claim. Rule 8 states in relevant part: 1 A party may set forth two or more statements of a claim or defense alternately or hypothetically, either in one count or defense or in 2 separate counts or defenses. A party may also state as many separate claims or defenses as the party has regardless of consistency and 3 whether based on legal, equitable, or maritime grounds. 4 Fed.R.Civ.P. 8(e)(2). Under Rule 8, a Plaintiff does not need to use particular words to 5 plead in the alternative so long as it can be reasonably inferred he was doing so. Holman v. 6 Indiana, 211 F.3d 399, 407 (7th Cir. 2000). 7 Additionally, “[i]n light of the liberal pleading policy embodied in Rule 8(e)(2) … a 8 pleading should not be construed as an admission against another alternative or inconsistent 9 pleading in the same case.” Molsbergen v. United States, 757 F.2d 1016, 1019 (9th Cir. 1985). 10 The Court now turns to alternative pleadings in the ERISA context, which has been 11 addressed in this district. Coleman v. Standard Life Ins. Co., 288 F. Supp. 2d 1116, 1120 (E.D. 12 Cal. 2003 ). Generally, there is good reason for alternatively pleading state and federal claims 13 when there is doubt as to whether a particular plan falls under ERISA. Id.; see also Tillotson v. 14 Valley Paving, Inc., No. CV S-08-1623 LKK/EFB, 2008 WL 11387037 , at *3 (E.D. Cal. Oct. 9, 15 2008). “If the plaintiff brings only state law claims and the court determines there is an ERISA 16 plan, the state law claims are preempted. But if the plaintiff brings only an ERISA claim and the 17 plan turns out not to be an ERISA plan, the plaintiff is also out of luck.” Id. As the Coleman 18 court properly noted, Rule 8 is designed for the situation ERISA preemption often presents. Id. 19 In the instant case, whether or not ERISA applies to the document in question has not 20 been established. At this stage in the litigation, there has been no determination as to whether 21 ERISA applies and given the uncertainties concerning whether the Delano Retirement Plan is an 22 ERISA plan, it would be against the spirit of the Federal Rules to force Plaintiff to run a risk 23 which Rule 8(e)(2) is designed to alleviate. Further, Plaintiff’s Complaint properly pleads the 24 Third Cause of Action in the alternative. Because the Court finds the Plaintiff can plead in the 25 alternative at this early juncture, it need not reach the parties’ remaining arguments. Therefore, 26 Defendants’ Motion to Dismiss Plaintiff’s Third Cause of Action based on ERISA preemption is 27 DENIED. 28 /// 1 IV. CONCLUSION 2 For the reasons set forth above, Defendants’ Motion to Dismiss is hereby DENIED. 3 IT IS SO ORDERED. 4 Dated: February 21, 2020