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Stout v. American Federation of State

March 31, 2009


The opinion of the court was delivered by: Schiller, J.


Plaintiff William Stout, as the administrator of the estate of his father Earl Stout, alleges that Defendants breached their fiduciary duties under the relevant provisions of the Employment Retirement Income Security Act (ERISA) by failing to provide William Stout with information regarding his father's ERISA plans. After removing the case to this Court, the litigants informed the Court that they had previously tried a case in state court that adjudicated the liability of Defendant American Federation of State, County and Municipal Employees District Council 33 (AFSCME) with respect to money owed to Earl Stout.

Plaintiff filed an Amended Complaint, which Defendants seek to dismiss as barred by claim preclusion. This Court agrees; because this battle has already been fought, the Court grants Defendants' motion and dismisses this case.


On October 3, 2007, Plaintiff sued AFSCME in the Philadelphia County Court of Common Pleas. According to the complaint, Earl Stout was a member of the AFSCME Executive Board from May 14, 1970 until May 8, 1988. (State Ct. Compl. ¶ 8.) On March 5, 1987, the AFSCME Board of Directors voted that all members of the Executive Board of AFSCME who had served two consecutive terms would be entitled to company sponsored life insurance equal to two times their annual salary. (Id. ¶ 9.) In May of 1987, the New York Life Insurance Company issued a life insurance contract for Earl Stout in the amount of $420,000, twice Earl Stout's salary. (Id. ¶¶ 13, 15.) Earl Stout died on March 14, 2006; soon thereafter, Plaintiff's representative made a claim to recover that amount under the life insurance policy. (Id. ¶¶ 2, 19.) AFSCME asserted that the New York Life Insurance Company contract was no longer in effect and that the benefit Earl Stout was entitled to had been decreased. (Id. ¶ 20.)

A four day trial was held in September of 2008 before the Honorable Sheldon C. Jelin in the Philadelphia County Court of Common Pleas. On September 18, 2008, Judge Jelin issued findings of fact and conclusions of law, including the following: (1) AFSCME never offered to provide life insurance to Plaintiff's decedent and hence, no contract existed in which defendant agreed to provide life insurance to Plaintiff's decedent; and (2) AFSCME maintained a practice of extending life insurance coverage in the amount of $30,000 to former Executive Board members who had served two consecutive terms. (AFSCME's Summ. J. Mot. Ex. E [Findings of Fact & Conclusions of Law] ¶¶ 11, 13-19.) The court entered judgment in favor of Plaintiff in the amount of $30,000. (Id. Ex. D [J.].) The Court also held that no "competent evidence" supported a claim of bad faith that Plaintiff initially raised shortly before the trial. Judge Jelin therefore found in favor of AFSCME on that claim. (Findings of Fact and Conclusions of Law ¶ 24.) Plaintiff filed a motion for reconsideration and post-trial relief, which Judge Jelin denied on December 5, 2008. (AFSCME's Mot. for Summ. J. Ex. I [Order Denying Post-Trial Relief].)

On August 25, 2008, just prior to the start of trial before Judge Jelin, Plaintiff filed another complaint against AFSCME in the Philadelphia Court of Common Pleas. The second state court complaint alleged statutory bad faith and violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law ("UTPCPL") based on AFSCME's failure to make payment on its agreement with Earl Stout for life insurance benefits. On September 23, 2008, AFSCME removed this second state court complaint to this Court based on ERISA. Plaintiff sought to remand the case, but this Court concluded that removal was proper and that Plaintiff's state law claims for bad faith and violation of the UTPCPL were preempted. After this Court denied Plaintiff's remand motion, Defendant filed a summary judgment motion on December 12, 2008, arguing that Stout's claims should be dismissed because they were preempted by ERISA.*fn1 In a memorandum and order dated January 20, 2009, this Court granted the motion and dismissed Plaintiff's bad faith and UTPCPL claims, but allowed Plaintiff an opportunity to amend his Complaint if he was able to do so in good faith. On February 9, 2009, Plaintiff filed the Amended Complaint now before this Court. The Amended Complaint names not only AFSCME, but also the AFSCME Health & Welfare Committee, the AFSCME Executive Board, unknown members of both the Health and Welfare Committee and Executive Board, and Herman J. Matthews Jr., the current President of AFSCME. The lawsuit alleges that Defendants breached their fiduciary duties under ERISA because "Defendant refused, and still refuses, to furnish summary plan description[s] . . . Defendants have routinely refused to deliver upon Plaintiff a plan summaries [sic] for Executive Board Plan and Employee Plan and written instrument upon which each plan was created." (Am. Compl. ¶¶ 22, 28.) Plaintiffs seek equitable relief "in the form of money paid to the Plan and its participants and beneficiaries" as well as costs and attorneys' fees. (Id. ad damnum clause.)


In reviewing a motion to dismiss for failure to state a claim, a district court must accept as true all well-pleaded allegations and draw all reasonable inferences in favor of the non-moving party. See Bd. of Trs. of Bricklayers and Allied Craftsman Local 6 of N.J. Welfare Fund v. Wettlin Assocs., Inc., 237 F.3d 270, 272 (3d Cir. 2001). A court should accept the complaint's allegations as true, read those allegations in the light most favorable to the plaintiff, and determine whether a reasonable reading indicates that relief may be warranted. Umland v. PLANCO Fin. Servs., Inc., 542 F.3d 59, 64 (3d Cir. 2008). A court need not credit "bald assertions" or "legal conclusions" when deciding a motion to dismiss. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).

"Factual allegations [in a complaint] must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965 (2007). To survive a motion to dismiss, a complaint must include "enough facts to state a claim to relief that is plausible on its face." Id. at 1974. Although the federal rules impose no probability requirement at the pleading stage, a plaintiff must present "enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary element[s]" of a cause of action. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2007). Simply reciting the elements will not suffice. Id. at 231.

When faced with a motion to dismiss for failure to state a claim, courts may consider the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim. Lum v. Bank of Am., 361 F.3d 217, 222 n.3 (3d Cir. 2004). A district court may also consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss, if the plaintiff's claims are based on the document. Pension Ben. Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993).

"The defense of claim preclusion . . . may be raised and adjudicated on a motion to dismiss and the court can take notice of all facts necessary for the decision . . . ." Toscano v. Conn. Gen. Life Ins. Co., 288 F. App'x 36, 38 (3d Cir. 2008) (citations omitted). "Specifically, a court may take judicial notice of the record from a previous court proceeding between the parties." Id. The burden rests with the party asserting the defense of claim preclusion. See Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 158 (3d Cir. 2001).


A. General Principles of Res ...

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