Opinion
Cause No. IP 00-0085-C H/G.
December 13, 2000.
ENTRY ON DEFENDANT'S MOTION TO DISMISS ERISA CLAIMS
Plaintiffs Gene W. Moore, Jackie J. Helton, and Larry Bledsoe assert claims under the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA). Defendant ABB Power TD Company, Inc. has moved to dismiss the ERISA claims. Defendant contends both that plaintiffs have failed to plead that they exhausted administrative remedies under the ERISA plan in question and that plaintiffs have in fact failed to exhaust those remedies without good excuse for failing to do so.
The case arises from defendant's closing of its plant in Muncie. At the time of that closing, ABB negotiated an agreement with the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers and its Local 917 concerning the rights of the unionized employees. The agreement includes a provision stating: "Retirees' retirement medical contributions as defined in the plan will be indexed to the Medical Consumer Price Index (MCPI) beginning on July 1, 1998 and in future years and the parties understand the Company has the option to amend the plan document." Cplt. Ex. A. Plaintiffs claim that ABB has been calculating those contributions incorrectly, and they seek relief under both ERISA and the LMRA.
Under ERISA, exhaustion of administrative remedies is not an element of the plaintiff's claim for benefits. Failure to exhaust administrative remedies is instead an affirmative defense. See, e.g., Potter v. ICI Americas, Inc., 103 F. Supp.2d 1062, 1065 (S.D. Ind. 1999) (Barker, J.), citing Adamczyk v. Lever Bros., Co., 991 F. Supp. 931, 934 (N.D. Ill. 1997). As a general rule, a plaintiff has no obligation to anticipate in his complaint an affirmative defense and include allegations intended to negate it. See Gomez v. Toledo, 446 U.S. 635, 640 (1980) (civil rights complaint need not negate affirmative defense of qualified immunity); Tregenza v. Great American Communications Co., 12 F.3d 717, 718 (7th Cir. 1993) (rejecting dismissal of securities fraud complaint that did not allege timeliness of suit, but affirming summary judgment on statute of limitations grounds). A defendant may choose not to assert an available affirmative defense like the statute of limitations, for example, and the absence in the complaint of allegations relating to that defense does not affect the case at all. ABB has chosen to raise its affirmative defense of failure to exhaust administrative remedies in a motion for judgment on the pleadings under Fed.R.Civ.P. 12(c). Unless plaintiffs have an obligation to anticipate and plead exceptions to the requirement of exhaustion of administrative remedies, the court would be required to consider matters outside the pleadings in deciding the defense, which would require conversion of ABB's motion to a motion for summary judgment.
ABB relies primarily on a district court decision holding, as a matter of first impression among the district courts in the Seventh Circuit, that ERISA plaintiffs must affirmatively plead that they have exhausted administrative remedies. See Coats v. Kraft Foods, Inc., 12 F. Supp.2d 862, 868-69 (N.D. Ind. 1999), citing Byrd v. MacPapers, Inc., 961 F.2d 157, 160-61 (11th Cir. 1992) (requiring plaintiffs to plead exhaustion or valid reasons for not exhausting administrative remedies).
This court does not agree with the pleading requirement of Coats. There is no doubt that a failure to exhaust administrative remedies is an affirmative defense under ERISA. (Moreover, it is a defense addressed to the sound (but circumscribed) discretion of the district court. See, e.g., Gallegos v. Mt. Sinai Medical Center, 210 F.3d 803, 808 (7th Cir. 2000).)
The court in Coats drew some support for its conclusion from the Seventh Circuit's decision in Wilczynski v. Lumbermens Mut. Cas. Co., 93 F.3d 397, 402-05 (7th Cir. 1996). There the court reversed the dismissal of an ERISA complaint for failure to exhaust, finding that the plaintiff's complaint alleged sufficient grounds for excusing compliance with the exhaustion requirement. The court in Coats and ABB in this case contend that "if there were not a pleading requirement, the Court would not have needed to address whether the plaintiff adequately plead facts on exhaustion." See Coats, 12 F. Supp.2d at 869.
That reliance on Wilczynski appears to be misplaced, however, because the plaintiff in that case had included allegations with respect to exhaustion of administrative remedies in her complaint. See 93 F.3d at 402-03 (plaintiff alleged the plan did not provide sufficient records and information to have fair access to administrative remedy). That fact made the issue parallel to the Seventh Circuit's treatment of the statute of limitations on a motion to dismiss when the plaintiff has anticipated a defense and has included allegations that address the issue. See, e.g., Early v. Bankers Life Cas. Co., 959 F.2d 75, 79 (7th Cir. 1992) (recognizing that plaintiff can plead himself out of court, but reversing dismissal). Moreover, it's worth noting that the Seventh Circuit in Wilczynski in fact reversed the dismissal and remanded for further consideration of the exhaustion issue.
Accordingly, this court could consider ABB's defense of failure to exhaust only as part of a motion for summary judgment, in which the court considered documents outside the scope of the pleadings. The court cannot do so without advance notice to plaintiffs. See, e.g., Air Line Pilots Assoc. Int'l v. Department of Aviation of the City of Chicago, 45 F.3d 1144, 1154 n. 6 (7th Cir. 1995) ("it would be error for the district court to convert a 12(b)(6) motion into one for summary judgment without giving notice to the parties") The court therefore denies defendant's motion to dismiss plaintiffs' claims under ERISA, without prejudice to future consideration of those issues if properly presented.
Plaintiffs assert that the summary plan description's statement leaves the plan administrator discretion to interpret plan provisions, and plaintiffs fear in light of Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101 (1989), they will lose in that determination and that this court would review such an administrator's interpretation under a deferential arbitrary and capricious standard. See, e.g., Cozzie v. Metropolitan Life Ins. Co., 140 F.3d 1104, 1107 (7th Cir. 1998) (applying such standard). The language in the summary plan description refers only to "authority to interpret the terms of the plan as they relate to your eligibility to participate under these plans." See Def. Reply Br. Ex. 2 at 7 (emphasis added). The record before this court is not complete at this point, but the parties have not directed the court's specific attention to any broader plan language giving the plan administrator discretion that would apply to interpretation of the cost-of-living adjustment term in the plant closing agreement. See generally Herzberger v. Standard Ins. Co., 205 F.3d 327, 330-31 (7th Cir. 2000) (clarifying standard on plan language needed to establish administrator's discretion). In any event, plaintiffs may wish to try to pursue administrative remedies before the newly-postponed trial, which might moot the entire issue in dispute in this motion
So ordered.