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KUESTNER v. HEALTH AND WELFARE FUND & PENSION FUND

June 4, 1997

ROBERT KUESTNER and ANNE MARIE KUESTNER, h/w vd. HEALTH AND WELFARE FUND & PENSION FUND OF THE PHILADELPHIA BAKERY EMPLOYERS AND FOOD DRIVER SALESMEN'S UNION LOCAL NO. 463 AND TEAMSTERS UNION LOCAL NO. 676; and GERALD J. MORSE, JR.


The opinion of the court was delivered by: DUBOIS

 DUBOIS, J.

 June 4, 1997

 The parties have previously stipulated to the dismissal without prejudice of a third defendant, Pension Fund of the Philadelphia Bakery Employers and Food Driver Salesmen's Union Local No. 463 and Teamsters Local Union No. 676 ("Pension Fund"), and plaintiffs' claims for breach of contract and breach of the Pennsylvania Unfair Trade Practices and Consumer Protection Law. Stipulation for Dismissal Without Prejudice (Document No. 7, filed May 6, 1997). Defendants now argue that 1) plaintiffs' ERISA claims are moot, 2) plaintiffs may not assert a claim for federal common law fraud arising under ERISA in the instant case, plaintiffs are not entitled to relief under § 502(a)(3) of ERISA, 3) 29 U.S.C. § 1132(a)(3), and 4) plaintiffs' state law claim for bad faith is preempted. Furthermore, defendants contend that if plaintiffs' ERISA claims are not dismissed they should be tried non-jury. In the alternative defendants argue they are entitled to summary judgment.

 For the following reasons, the Motion to Dismiss will be granted in part and denied in part, the Motion to Strike Plaintiffs' Jury Demand will be granted, and the Alternative Motion for Summary Judgment will not be considered at this time and instead will be denied as premature. Issues raised in the Alternative Motion for Summary Judgment may be presented at the conclusion of discovery by similar motion or at trial.

 I. BACKGROUND1

 Plaintiff Robert Kuestner is a member of the Food Driver Salesmen's Union Local No. 463 ("Union"). As a member of the Union he was covered by defendant Health and Welfare Fund of the Philadelphia Bakery Employers and Food Driver Salesmen's Union Local No. 463 and Teamsters Union Local No. 676 ("Health and Welfare Fund") at all times relevant to this lawsuit. The Health and Welfare Fund is an employment health benefit plan. Plaintiff Marie Kuestner ("plaintiff-wife") is Robert Kuestner's wife. She suffers from multiple sclerosis and was also covered by the Health and Welfare Fund at all relevant times.

 In 1994, plaintiffs requested coverage for Betaseron therapy for plaintiff-wife under the prescription drug benefit plan ("PDP"). She was denied coverage for Betaseron under the PDP, but was granted coverage under the Major Medical Plan ("MMP"). The MMP has a lifetime benefit cap of two-hundred thousand dollars ($ 200,000) per illness. Coverage under the PDP was denied on the ground that injectable drugs were not covered by the PDP. Moreover, plaintiffs were told that they could not appeal the denial because the Board of Trustees had made a final decision. Plaintiffs decided they needed to preserve their remaining lifetime benefits for plaintiff-wife's future treatment so they chose not to reduce those benefits by purchasing Betaseron under the MMP.

 In 1997, plaintiffs requested PDP coverage for Avonex therapy for plaintiff-wife. Coverage was again denied under the PDP. Again, plaintiffs were told that the denial was based upon the fact that injectables were not covered by the PDP, and that they could not appeal the Board of Trustees' final decision.

 Plaintiffs request the following relief: 1) declaratory relief that Betaseron, Avonex, and similar injectable drugs are covered under the PDP; 2) compensatory damages and interest in excess of $ 30,000 for benefits which should have been paid, but were not paid, from May 1994 to date; 3) compensatory damages for pain, suffering, and emotional distress suffered by plaintiff-wife as a result of the loss of Betaseron therapy from May, 1994 through January, 1997; 4) treble damages under the Pennsylvania Unfair Competition and Consumer Protection Act; 5) punitive damages; 6) costs and attorney's fees; 7) such other relief as the Court may permit.

 II. STANDARD OF REVIEW

 The Motion to Dismiss is based on 1) the alleged failure of plaintiffs to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6) and 2) the alleged mootness of plaintiffs' claims under Federal Rule of Civil Procedure 12(b)(1).

 A. Motion To Dismiss For Failure To State A Claim Upon Which Relief Can Be Granted Pursuant To Federal Rule Of Civil Procedure 12(b)(6)

 In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court may not consider anything outside the allegations of the Complaint. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988). Furthermore, the Court must "accept all factual allegations in the Complaint as true and give the pleader the benefit of all reasonable inferences that can be fairly drawn therefrom." Ditri v. Coldwell Banker, 954 F.2d 869, 871 (3d Cir. 1992) (citation omitted). "However, [the Court is] not required to accept legal conclusions either alleged or inferred from the pleaded facts." Id. (citation omitted). The question before the Court is not whether plaintiffs will ultimately prevail, but whether they can support their claim by proving any set of facts that would entitle them to relief. See Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984); Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957).

 B. Motion To Dismiss For Mootness Pursuant To Federal Rule Of Civil Procedure 12(b)(1)

 Defendants argue that because they have provided coverage for Avonex under the PDP, plaintiffs' have received all of benefits to which they are entitled and their claims for declaratory relief are moot and should be dismissed. Motion to Dismiss, at 6. Any such dismissal would be pursuant to Federal Rule of Civil Procedure 12 (b)(1), which allows a defendant to file a motion to dismiss based on lack of jurisdiction over the subject matter of a pending lawsuit. See Daly v. Wigen, 1994 U.S. Dist. LEXIS 1139, No. Civ. A. 93-3139, 1994 WL 35003, *1 n.3 (E.D. Pa. Feb. 7, 1994) (analyzing a motion putatively made pursuant to Fed.R.Civ.P. 12(b)(6) as having been made under Fed.R.Civ.P. 12(b)(1) because "the issue of mootness is jurisdictional and relates to the very power of the Court to hear [a] case").

 Attacks on subject matter jurisdiction may take two forms. First, a defendant may contend that jurisdiction was not properly pled (a "facial" attack). Second, a defendant may contend that jurisdiction does not actually exist in a particular case (a "factual" attack). See Young v. Francis, 820 F. Supp. 940, 943 (E.D. Pa. 1993) (discussing the two types of attacks). Defendants in the instant case make a factual attack. In determining the merits of such an attack, the court may consider affidavits and other relevant evidence outside the pleadings. Beradi v. Swanson Memorial Lodge No. 48 of Fraternal order of Police, 920 F.2d 198, 200 (3d Cir. 1990). The burden of proof on this issue is placed on plaintiffs. Lattanzio v. Security Nat'l Bank, 825 F. Supp. 86, 88 (E.D. Pa. 1993).

 Defendants state that "to the extent the Court relies [on] documents not referred to in or attached to the Complaint, the Court may treat the Rule 12(b)(6) portion of this motion as one for summary judgment under Rule 56." Motion to Dismiss, at 6 n.3 (citing Fed.R.Civ.P. 12(b)(6)). They ask that the Court do so wherever necessary. Plaintiffs argue throughout their Memorandum of Law in Opposition to Defendants' Motion to Dismiss, or in the Alternative, for Summary Judgment ("Plaintiffs' Memorandum of Law") that because they have yet to conduct discovery a motion for summary judgment is premature and that the Court should not permit conversion of defendants' Motion to Dismiss into a Motion for Summary Judgment.

 A district court has the discretion to act in the manner suggested by defendants. Fed.R.Civ.P. 12(b)(6). "This discretion generally will be exercised on the basis of a determination of whether or not the proffered material, and the resulting conversion form the Rule 12(b)(6) to the Rule 56 procedure, is likely to facilitate the disposition of the action." 5A Charles Alan Wright & Kenneth A. Graham, Jr., Federal Practice and Procedure § 1366 (2d ed. 1990). Conversion may be improper when the motion to dismiss is filed before discovery begins or during its early stages. Owens v. Hahnemann University, 1995 U.S. Dist. LEXIS 9081, Civ. A. No. 94-4654, 1995 WL 392516, at *2 (E.D. Pa. June 27, 1995) (citing Brennan v. National Telephone Directory Corp., 850 F. Supp. 331, 335 (E.D. Pa. 1994)).

 The Court will not exercise its discretion to convert the Motion to Dismiss into a Motion for Summary Judgment because 1) the Motion was filed before discovery began and 2) those exhibits outside of the pleadings that have been provided will not "facilitate the disposition of the action" at this time. Of course, the moving defendant, Health and Welfare Fund, may file another Motion for Summary ...


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