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Miller v. Mellon Long Term Disability Plan

June 25, 2010

ARLENE MILLER, PLAINTIFF,
v.
MELLON LONG TERM DISABILITY PLAN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Lenihan, Magistrate Judge.

Magistrate Judge Lisa Pupo Lenihan

Doc. Nos. 9, 23, & 34

OPINION

Currently before the Court for disposition are three motions: (1) a Motion to Dismiss (Doc. No. 9) filed by Defendants Mellon Bank, N.A., Mellon Financial Corporation, The Bank of New York Mellon Corporation, Corporate Benefits Committee, and Sheila Miller (the "Mellon Defendants"); (2) a Motion to Dismiss (Doc. No. 23) filed by Life Insurance Company of North America ("LINA") and CIGNA Corporation ("CIGNA") (together the "Insurance Defendants"); and (3) a Motion for Leave to File an Amended Complaint (Doc. No. 34) filed by Plaintiff, Arlene Miller. This case is brought pursuant to Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. §§1001, 1132(a)(1)(B), for review of a denial of long-term disability benefits and determination of her rights to past and future benefits under the terms of her employer's long-term disability plan. This Court has subject matter jurisdiction over this action pursuant to 29 U.S.C. §1132(e)(1). Venue in this District is proper under 29 U.S.C. §1132(e)(2).

For the reasons set forth below, the Court finds it would be futile to allow Plaintiff to file the proposed amended complaint with one exception, and therefore, will grant in part and deny in part Plaintiff's Motion for Leave to File an Amended Complaint (Doc. No. 34). Accordingly, the motions to dismiss are not moot. In consideration of the pleadings, motions and supporting papers filed in this case, the Court will grant the Mellon Defendants' Motion to Dismiss (Doc. No. 9) as to Mellon Bank, N.A., Mellon Financial Corporation, The Bank of New York Mellon Corporation, the Corporate Benefits Committee, and Sheila Miller, on all Counts. In addition, the Court will grant the Insurance Defendants' Motion to Dismiss (Doc. No. 23). Finally, the Court will grant the Motions to Dismiss Plaintiff's Demand for a Jury Trial filed by all of the Defendants.

I. FACTUAL BACKGROUND/PROCEDURAL HISTORY

Because this action comes before the Court on a motion to dismiss, the Court must accept as true all of Plaintiff's allegations of fact and must view the facts in the light most favorable to her. The relevant facts are as follows.

Arlene Miller (hereinafter "Plaintiff") is a participant in the Defendant Mellon Long-Term Disability Plan (hereinafter "Plan"),*fn1 an employee welfare benefit plan that provides disability benefits. (Mellon Long-Term Disability Plan Summary Plan Description dated January 2004 ("SPD") at 25.*fn2 ) Thus, the Plan constitutes an "employee welfare benefit plan" within the meaning of 29 U.S.C. § 1002(1). The Plan is funded through a trust established by Mellon Bank, N.A., to make long-term disability ("LTD") benefit payments. (SPD at 26; Plan at Preamble.) The trust constitutes the sole source of benefits under the Plan. (Plan at Preamble.)

Defendant Corporate Benefits Committee (hereinaft er "CBC") was the Plan Administrator of the Mellon Long-Term Disability Plan until July 2009, when it was dissolved.*fn3

(Plan at §5.l; SPD at 25.) Defendant Sheila Miller acted as the "Plan Manager" and, as such, was responsible for the day-to-day administration of the Plan. (Plan at §1.25.)

Defendant Mellon Bank, N.A., is named as the "Plan Sponsor" in § 1.3 of the Plan, as well as in the SPD.*fn4 Defendant Mellon Financial Corporation is described in the Plan Document as a Pennsylvania Corporation of which the CBC is a part. (Plan at §§ 1.9, 1.12.) Defendant The Bank of New York Mellon Corporation ("BNY Mellon Corp.") was created in May 2007 as a result of a merger between Mellon Financial Corporation and The Bank of New York Company, and, by virtue of which, is the successor-in-interest to Mellon Financial Corporation. Thus, Mellon Financial Corporation ceased to exist on July 1, 2007 when BNY Mellon Corp. was formed. In addition, Mellon Bank, N.A. changed its name to BNY Mellon, National Association, effective July 1, 2008. Thus, the Plan Sponsor at the time this litigation was commenced appears to be BNY Mellon, N.A., which is not named as a defendant in this litigation.

Defendant LINA was retained by the Plan to provide ministerial services, such as information collection on an as-requested basis. (Compl. ¶ 7.) Defendant CIGNA Corporation was designated as the claims administrator and, as such, performed certain claims administrative functions for the Plan. (SPD at 25.)

On or about February 2004, the Plaintiff began receiving short-term disability benefits. Upon the expiration of her eligibility for short-term benefits, the Plaintiff applied to the Plan for long-term disability ("LTD") benefits. Plaintiff's claim was initially denied. However, on June 20, 2005, the Plaintiff was advised by letter, that the CBC had reversed the denial, and directed that monthly benefits be paid in the amount of $2,210.83. The monthly benefits would continue for a period of two years, retroactive to August 30, 2004. The letter also advised the Plaintiff that CIGNA would be conducting a subsequent review of her claim to determine whether she would be entitled to receive benefits as of August 30, 2006, the two year anniversary of her initial benefit eligibility date.

Section 2.3 of the Plan provides that a participant is considered "Totally Disabled" following the two year anniversary if she is "wholly and continuously unable" to engage in any occupation or perform any work for compensation or profit for which he is or may become reasonably fitted by education, training, or experience. (Plan at 8.)*fn5

On September 22, 2006, CIGNA recommended that the Plan deny further benefits because of a purported failure by the Plaintiff to provide further medical evidence. Defendant Sheila Miller, by letter dated October 12, 2006, advised the Plaintiff that no benefits were payable as of October 15, 2006, based on her failure to provide further medical evidence indicating that as of August 30, 2006, she was disabled within the meaning of the "any occupation" standard set forth in § 2.3(b) of the Plan. In response, on March 15, 2007, Plaintiff appealed the determination to the CBC. By letter dated April 17, 2007, Sheila Miller indicated that the CBC had received the Plaintiff's appeal. On October 29, 2007, the CBC advised the plaintiff that her appeal was denied and that her claim for benefits was deemed terminated as of October 12, 2007.

On August 28, 2009, Plaintiff instituted the present litigation, pursuant to Section 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132 (a)(1)(B), seeking payment of monies allegedly due to her under the terms of the Plan, and judgment directing Defendants to honor the Plaintiff's alleged entitlement to future disability benefits under the terms of the Plan. The Plaintiff specifically contends that Defendants' determination terminating disability benefits ignored lay and medical evidence in Plaintiff's administrative file; contradicted defendants' own previous determination that the medical evidence was sufficient to establish that Plaintiff was entitled to benefits; ignored and disregarded the debilitating effect plaintiff's disability had on her ability to respond to requests for medical information and to provide medical information; ignored medical evidence establishing that plaintiff was disabled within the meaning of the "any occupation" standard set forth in §2.3(b) in the Plan Document; failed to request Plaintiff submit to medical, psychological, or functional capacity examinations; and, ignored additional indicia of disability as evidenced by the award of social security disability benefits in August of 2005. (Compl., ¶¶ 39, 44-45.)

In response, the Mellon Defendants filed a Motion to Dismiss and supporting brief on January 12, 2010. The Insurance Defendants also responded by separately filing a Motion to Dismiss and supporting brief on February 12, 2010.*fn6 In essence, the Mellon Defendants and Insurance Defendants (collectively, the "non-Plan Defendants") contend that they are improper parties in a denial of benefits claim under 29 U.S.C. §1132(a)(1)(B), and therefore, request that the Complaint as to them be dismissed with prejudice. The non-Plan Defendants, as well as Defendant Mellon Long Term Disability Plan, also move the Court to dismiss the Plaintiff's demand for a jury trial, contending that Plaintiff has no right to a jury trial under ERISA. The Plaintiff filed briefs in opposition to both motions to dismiss on March 3, 2010. The Defendants filed reply briefs in support of their respective motions to dismiss on March 23, 2010.

While the motions to dismiss were pending, Plaintiff filed a Motion for Leave to File an Amended Complaint (Doc. No. 34) on April 2, 2010, which attempts to address the arguments raised by the Defendants in their motions to dismiss. Defendants have filed a response objecting on the basis that it would be futile to allow the proposed amendments. The motions, having been fully briefed and responded to, are now ripe for disposition.

II. MOTION FOR LEAVE TO FILE AN AMENDED COMPLAINT

A. Standard of Review

Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend a pleading "shall be freely given when justice so requires." In Foman v. Davis, the Supreme Court delineated the grounds that would justify denying leave to amend: "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment". Foman v. Davis, 371 U.S. 178, 182 (1962). The grant or denial of leave to amend is within the sound discretion of the district court; however, failure to provide a reason for denying leave to amend is considered an abuse of that discretion. Id.; see also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997) (citing Foman, supra). In determining whether the proposed amendment would be futile, courts apply the same standard as that applied to motions to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000) (citation omitted). The Rule 12(b)(6) standard is discussed, infra, at Part III, Section A.

B. Analysis

Plaintiff seeks leave of Court to file an amended complaint to address the arguments raised in the two motions to dismiss. Specifically, Plaintiff seeks to plead additional facts to further demonstrate that each of the non-Plan Defendants acted in a fiduciary capacity with regard to her claim for denial of LTD benefits. Plaintiff also seeks to plead additional facts to demonstrate the liability of Defendant CIGNA Corporation as the alter ego of its subsidiary, LINA. Plaintiff's proposed amended complaint adds four new claims: (1) a claim for injunctive relief under 29 U.S.C. § 1132(a)(3) against all Defendants, requesting an order directing the payment of future benefits; (2) a claim for breach of fiduciary duty against the Expanded Mellon Defendants*fn7 for imprudent investment and management of Plan assets under 29 U.S.C. §§ 1104(a)(1), 1109, and 1132(a)(2); (3) a claim for breach of fiduciary duty against the Expanded Mellon Defendants*fn8 for failure to act in accordance with documents and instruments governing the Plan under 29 U.S.C. §§1104(a)(1), 1109, and 1132(a)(2); and (4) vicarious liability against Defendants Mellon Bank, N.A., Mellon Financial Corporation, and its successor-in-interest, BNY Mellon Corp. (collectively, the "Bank Defendants"), under the doctrine of respondeat superior, on Plaintiff's claims to recover benefits under Section 1132(a)(1)(B), for equitable relief under Section 1132(a)(3), and for breach of fiduciary duty under Sections 1104(a)(1), 1109, and 1132(a)(2). Finally, the amended complaint seeks to add four new parties: (1) Connecticut General Corporation; (2) CIGNA Holdings, Inc.; (3) John Doe, an unidentified employee of Defendant BNY Mellon Corp.; and (4) the Benefits Investment Committee of BNY Mellon Corp. ("BIC").

For the reasons that follow, the Court finds that the proposed amendments would not establish plausible claims against the non-plan Defendants, nor is there any support under either ERISA or federal common law for adding the four new claims and four new parties proposed by Plaintiff. Thus, permitting the proposed amendments would be futile.

1.Plaintiff's Proposed Third Claim for Equitable Relief Under 29 U.S.C. §1132(a)(3)

Plaintiff seeks to assert four new claims in her proposed amended complaint, the first of which is a claim for equitable relief against all Defendants in the form of an order directing the payment of future benefits under 29 U.S.C. §1132(a)(3), designated as "A Third Claim For Which Relief Can Be Granted" in the proposed amended complaint. The factual allegations offered in support of this claim consist of the assertion that the administrative record establishes that she was disabled at all relevant times and continues to be disabled under the "any occupation" standard. Prop. Am. Compl., ¶ 99. Plaintiff further asserts that pursuant to sections 2.3 and 3.1 of the Plan, she is entitled to continue receiving LTD benefits until she reaches age 65. Id. at ¶ 101. Consequently, Plaintiff asserts that under Section 1132(a)(3), she is entitled to "injunctive, equitable and remedial relief (a) directing defendants, as fiduciaries of the Plan, to continue to pay to plaintiff Plan benefits based on plaintiffs' [sic] ongoing disability and entitlement to benefits within the meaning of the Plan; until such time as there has been a determination by the defendants, in accordance with the procedures set forth in the Plan for rendering such determinations, that plaintiff is no longer disabled." Id. at ¶ 102.

In support of her motion for leave to amend the complaint to add this Third Claim against all Defendants, Plaintiff argues that while the language in Section 1132(a)(1)(b) clearly contemplates a declaratory judgment with regard to determining future rights to benefits, no court has held that Section 1132(a)(1)(B) provides a mechanism for actually ordering a plan to pay such benefits, and the Mellon Defendants do not contend otherwise. For that relief, Plaintiff submits the courts have held that recourse to Section 1132(a)(3) is appropriate. In support of this argument, Plaintiff relies on Reinart v. Giorgio Foods, Inc., No. 97-CV-2379, 1997 WL 364499, *5 (E.D.Pa. June 25, 1997) (citing Varity Corp. v. Howe, 516 U.S. 489, 116 S.Ct. 1065, 1077-78 (1996)); Benamara v. Plan Administrators of Mellon Long Term Disability Plan, No. Civ.A. 05-1433, 2006 WL 279101 (W.D.Pa. Feb. 3, 2006) (citing Hoagland v. Erin Group Administrators, Inc., No. 05CV0099, 2005 WL 1528383 (M.D.Pa. June 28, 2005)).

In response, Defendants counter that the relief requested in paragraph 102 of the proposed amended complaint, on its face, is the very relief that a claim under Section 1132(a)(1)(B) already authorizes solely from an ERISA plan. Defendants further contend that Plaintiff's attempt to distinguish between legal relief, in the form ofan award of benefits, or equitable relief, in the form of an injunction ordering the payment of benefits, is unavailing based on the Supreme Court's decision in Great West Life & Annuity Company v. Knudson, 534 U.S. 204, 221 (2002) (In Section 1132(a)(1)(B), "Congress authorized 'a participant or beneficiary' to bring a civil action 'to enforce his rights under the terms of the plan,' without reference to whether the relief sought is legal or equitable.") Because Section 1132(a)(1)(B) expressly authorizes equitable and injunctive relieve from the ERISA plan in enforcing rights under the plan, clarifying rights to future benefits under the plan, and for benefits due under the plan, and thus, an adequate remedy exists under that section, Defendants submit that Plaintiff may not assert a claim under the catch-all provision under Section 1132(a)(3) for "other appropriate" equitable relief. Defendants rely on Varity Corporation v. Howe, 516 U.S. 489, 515 (1996), as support for this argument. Defendants further contend that Benamara, upon which Plaintiff relies, is not controlling here because the district court in that case failed to give proper weight to the Varity decision and also failed to consider that the relief requested was really indistinguishable.

The Court agrees with the Defendants that under Varity and Knudson, Plaintiff's proposed Third Claim for equitable relief under Section 1132(a)(3) is inappropriate. In Varity, the Supreme Court explained:

[Section 502(a)(3)] of ERISA authorizes " appropriate " equitable relief. We should expect that courts, in fashioning "appropriate" equitable relief, will keep in mind the "special nature and purpose of employee benefit plans," and will respect the "policy choices reflected in the inclusion of certain remedies and the exclusion of others." Pilot Life Ins. Co. [v. Dedeaux, 481 U.S. 41, 54 (1987)].

See also [Mass. Mut. Life Ins. Co. v.] Russell, 473 U.S. [134, 147 (1985)]; Mertens [v. Hewitt Assoc., 508 U.S. 248, 263-264 (1993)].

Thus, we should expect that where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief, in which case such relief normally would not be "appropriate." Cf. Russell, supra, at 144. 516 U.S. at 515. In determining whether the requested relief is appropriately framed in equity for purposes of Section 1132(a)(3), the Supreme Court has cautioned that a court must look past the label attached by the plaintiff. In this regard, the Supreme Court further explained:

"Almost invariably . . . suits seeking (whether by judgment, injunction, or declaration) to compel the defendant to pay a sum of money to the plaintiff are suits for 'money damages,' as that phrase has traditionally been applied, since they seek no more than compensation for loss resulting from the defendant's breach of legal duty."

Knudson, 534 U.S. at 210 (quoting Bowen v. Massachusetts, 487 U.S. 879, 918-19 (1988) (Scalia, J., dissenting)).

When the Court looks past the label here, it is clear that the equitable relief requested by Plaintiff is essentially "a claim for benefits expressed in equitable language." Clark v. Feder Semo & Bard, P.C., 527 F.Supp. 2d 112, (D.D.C. 2007) (holding plaintiff who sought "such declaratory, legal, equitable and remedial relief as the Court deems appropriate" to ensure her receipt of all benefits due was essentially "a claim for benefits expressed in equitable language," and thus, failed to seek appropriate equitable relief under §1132(a)(3)) (quoting Fairview Health Servs. v. Ellerbe Becket Co. Employee Med. Plan, Civ. File No. 06-2585, 2007 WL 978089, at *6 (D. Minn. Mar. 28, 2007)). Here the relief Plaintiff seeks in her proposed Third Claim under Section 1132(a)(3) is "injunctive, equitable and remedial relief (a) directing defendants, as fiduciaries of the Plan, to continue to pay to plaintiff Plan benefits based on plaintiffs' [sic] ongoing disability and entitlement to benefits within the meaning of the Plan; until such time as there has been a determination by the defendants, in accordance with the procedures set forth in the Plan for rendering such determinations, that plaintiff is no longer disabled." Proposed Am. Compl., ¶102. This relief is essentially a claim for benefits expressed in equitable language, and thus, authorized by Section 1132(a)(1)(B).

Moreover, contrary to Plaintiff's argument, courts have held that Section 1132(a)(1)(B) does provide a mechanism for ordering a plan to pay benefits due. See, e.g., Clark, supra; Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146-147 (1985) ("To recover the benefits due her, [plaintiff] could have filed an action pursuant to §502(a)(1)(B) to recover accrued benefits, to obtain a declaratory judgment that she is entitled to benefits under the provision of the plan contract, and to enjoin the plan administrator from improperly refusing to pay benefits in the future."); Smith v. Life Ins. Co. of N. Am., 466 F.Supp. 2d 1275, 1292 (N.D.Ga. 2006) (finding claim for equitable relief under §1132(a)(3), requesting court to enter order enjoining defendant from reducing plaintiff's disability benefits based on personal injury settlement so long as plaintiff remained disabled, was inappropriate as an adequate remedy existed under §1132(a)(1)(B)) (citing Katz v. Comprehensive Plan of Group Ins., 197 F.3d 1084, 1088-89 (11th Cir. 1999)). In Smith, the district court concluded that because it could award back pay to plaintiff and 'clarify future rights' to benefits under Section 1132(a)(1)(B), all of the relief plaintiff sought was available under Section 1132(a)(1)(B), and thus, he was precluded from proceeding on his claim for equitable relief under Section 1132(a)(3). Id. at 1292. Likewise here, since Plaintiff has an adequate remedy under Section 1132(a)(1)(B) for the relief she seeks, there is no basis for invoking the catch-all relief provision contained in Section 1132(a)(3).

In so concluding, the Court does not find the authority relied upon by Plaintiff to be persuasive for several reasons. Benamara was decided pre-Twombly,*fn9 and thus, the court applied a less stringent pleading standard in ruling on the Rule 12(b)(6) motion. Thus, query whether the district court in Benamara would have reached the same conclusion had it applied Twombly. Second, the issue raised in the motion to dismiss filed by the defendant in Benamara was whether the plan administrator and employer were improper parties, not whether plaintiff could maintain a claim under the catchall provision, Section 1132(a)(3). Thus, the holding in Benamara regarding prospective relief is really dictum.*fn10 Finally, unlike in the case at bar, the Section 1132(a)(3) claim in Benamara was supported by an allegation suggesting a breach of fiduciary duty. Equally unpersuasive is Reinart. That case was before the court on cross-motions for summary judgment, and the question for resolution was whether the claims administrator was a proper party, not whether equitable relief was appropriate where Section 1132(a)(1)(B) provides an adequate remedy. 1997 WL 364499, at *5-6. Thus, Plaintiff's authority is simply inapposite here.

Because Plaintiff's attempt to add the proposed Third Claim for Equitable Relief under Section 1132(a)(3) fails as a matter of law, it would be futile to allow Plaintiff to amend her complaint to add this claim.

2. Plaintiff's Proposed Fourth and Fifth Claims for Breach of Fiduciary Duty against Expanded Mellon Defendants

Next, Plaintiff proposes to add two claims for breach of fiduciary duty under 29 U.S.C. §§1104(a)(1), 1109 and 1132(a)(2)-one for imprudent investment and management of Plan assets, and the other for failure to act in accordance with documents and instruments governing the Plan--against the following Defendants" Mellon Long-Term Disability Plan, Sheila Miller, Mellon Bank, N.A., Mellon Financial Corporation, BNY Mellon Corp., and the CBC, as well as proposed new defendants, the BIC and John Doe (collectively referred to by Plaintiff as the "Mellon defendants", but as noted above, the Court will refer to this group as the "Expanded Mellon Defendants"). In support of her claim for imprudent investment and management of Plan assets, Plaintiff alleges:

The actions of the Mellon defendants in engineering the Buyout and leaving a de minimus corpus in the existing funded trust were subject to the [fiduciary duties set forth in 29 U.S.C. §1104(a)(1)]. By their acts and omissions in connection with the decision to divest the Plan of virtually all of its assets in order to obtain an insurance policy which, upon information and belief, would not provide for the payment of benefits and other appropriate relief in the event plaintiff were to prevail, the Mellon defendants breached each of these fiduciary duties by failing to insure that the Plan possessed and possesses sufficient assets to comply with a judgment entered in this action directing the Mellon defendants to pay benefits and additional relief to plaintiff in conformity with the terms of the Plan.

Prop. Am. Compl., ¶106. Section 1104(a)(1) provides, in relevant part:

. . . a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and-

(A) for the exclusive purpose of:

(i) providing benefits to participants and their beneficiaries; and

(ii) defraying reasonable expenses of administering the plan;

(B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;

(C) by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and

(D) in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this ...


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