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addressing breach of administrative duties under ERISA
Summary of this case from Sliwa v. Allied Home Mortg. Capital Corp.Opinion
No. C 03-4223 MHP.
December 7, 2004
MEMORANDUM ORDER Re: Motion to Dismiss
This action arises out of a dispute concerning the amount of retirement benefits that plaintiff Laura Serpa claims that she is entitled to receive from an employee pension benefit plan sponsored and administered by defendants SBC Telecommunications, Inc. and SBC Services, Inc. (collectively "defendants"). Plaintiff's third-amended complaint alleges that defendants failed to comply with the disclosure requirements of section 104(b)(4) of the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1024(b)(4), thereby entitling her to ERISA civil penalties under 29 U.S.C. § 1132(c)(1). Now before the court is defendants' motion to dismiss plaintiff's third-amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Having considered the arguments presented and for the reasons stated below, the court enters the following memorandum and order.
BACKGROUND
The facts giving rise to the instant action are set forth in the court's September 7, 2004 order. Serpa v. SBC Telecommunications, Inc. ("Serpa II"), No. C 03-4223 MHP, 2004 WL 2002444 (N.D. Cal. Sept. 7, 2004) (Patel, J.). Briefly stated, in October 2000, plaintiff, a former SBC employee, opted for early retirement under defendants' "Enhanced Pensions and Retirement Program," an employee pension benefit plan subject to the requirements of ERISA. See 29 U.S.C. § 1002(2)(A). Plaintiff elected to receive her pension benefits in a single lump sum payment. As in her three previously filed complaints, plaintiff now alleges that defendants erroneously informed her that the amount of her lump sum benefit would be approximately $378,990, when in fact this amount did not account for the interest that her ex-husband had obtained in her pension pursuant to a "qualified domestic relations order" ("QDRO"). Pl.'s Third-amended Compl. ("TAC") at 4-6. Plaintiff further alleges that had she been aware that her ex-husband's interest in her pension would reduce her lump sum benefit by approximately $118,000, she would not have elected to retire. Id. at 6-7.
Plaintiff has already made two failed attempts to amend her complaint to state a claim under ERISA. Most recently, the court granted defendants' motion to strike plaintiff's second amended complaint for failure to obtain leave to amend in violation of Federal Rule of Civil Procedure 15(a). Serpa II, 2004 WL 2002444, at *3. However, the court at that time granted plaintiff leave to amend her complaint for the purpose of seeking civil penalties pursuant to section 502(c)(1) of ERISA, 29 U.S.C. § 1132(c)(1). Id. at *7. Specifically, Sepra II noted that plaintiff's second amended complaint, although unduly vague in its assertions, could possibly be amended to state a claim for civil penalties predicated on defendants' failure to disclose "governing plan documents" within thirty days in violation of 29 U.S.C. § 1024(b)(4) and § 1132(c)(1). Id. at *5. On the other hand, because plaintiff had conceded that the defendants did not wrongfully deny her any benefits to which she was entitled, the court held that there was no conceivable set of facts under which plaintiff could state a claim for equitable relief under section 502(a) of ERISA, 29 U.S.C. § 1132(a). Id. at *6. The court therefore concluded that permitting amendment for that purpose would be futile. Id.
On September 30, 2004, plaintiff filed a third-amended complaint alleging four violations of the disclosure requirements set forth in 29 U.S.C. § 1024(b)(4). Specifically, plaintiff alleges that prior to her election to retire on November 15, 2000, defendants failed to provide her with (1) a calculation of her benefits as of that date and (2) a copy of plan documents related to the Enhanced Pensions and Retirement Program. Plaintiff's also alleges a third claim for ERISA civil penalties based on defendants' failure to provide her with a copy of the Enhanced Pensions and Retirement Program prior to December 12, 2000, the deadline for rescinding her decision to accept early retirement benefits. Finally, plaintiff alleges that defendants' failure to respond to her attorney's December 11, 2001 demand letter within thirty days violated section 1024(b)(4). Based on these allegations, plaintiff seeks a total of $354,000 in civil penalties, as well as attorneys' fees and costs of suit. Now before the court is defendants' motion to dismiss these claims pursuant to Federal Rule of Civil Procedure 12(b)(6), or in the alternative, to strike all or portions of plaintiff's complaint under Federal Rule of Civil Procedure 12(f). For reasons that will become apparent in the following discussion, the court need only address defendants' Rule 12(b)(6) motion here.
LEGAL STANDARD
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). "[U]nless it appears beyond doubt that plaintiff can prove no set of facts in support of her claim which would entitle her to relief," a motion to dismiss must be denied. Lewis v. Telephone Employees Credit Union, 87 F.3d 1537, 1545 (9th Cir. 1996) (citation omitted);see also Conley v. Gibson, 355 U.S. 41, 45-46 (1957). When assessing the legal sufficiency of a plaintiff's claims, the court must accept as true all material allegations of the complaint, and all reasonable inferences must be drawn in favor of the nonmoving party. See, e.g., Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996) (citations omitted). Dismissal is proper under Rule 12(b)(6) "only where there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory." Navarro, 250 F.3d at 732 (quoting Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988)). DISCUSSION
I. Motion to Dismiss
In moving to dismiss, defendants assert that plaintiff failed to meet the deadline for filing an amended complaint set forth in the court's September 7, 2004 order and thus urge dismissal of her third-amended complaint as untimely. Defendants also contest the sufficiency of plaintiff's pleadings on the merits, arguing, inter alia, that plaintiff has failed to allege the elements required to establish a violation of 29 U.S.C. § 1024(b)(4). As to defendants' first argument, the court agrees that its September 7, 2004 order instructed plaintiff to file her third-amended complaint on or before September 27, 2004. Serpa II, 2004 WL 2002444, at *7. By failing to file her third-amended complaint until September 30, 2004, plaintiff's counsel has once again proven himself unable to comply with the basic procedural rules governing the practice of law in federal court.
The court would be well within its discretion to dismiss plaintiff's third-amended complaint on this basis alone. Nonetheless, the court need not concern itself with the untimeliness of plaintiff's amendment because it is apparent that she has failed to cure the defects in her pleadings that the court identified in Serpa II. Plaintiff's third-amended complaint once again seeks ERISA civil penalties under 29 U.S.C. § 1132(c)(1). Under section 1132(c)(1), a plan participant can recover penalties of up to $100 per day [increased to $110 per day by 29 C.F.R. § 2575.502c-1] if the plan administrator "fails or refuses to comply with a request for any information which such administrator is required . . . to furnish to a participant or beneficiary . . . within 30 days after such request [has been made]." 29 U.S.C. § 1132(c)(1). "The imposition of such penalties is left to the sound discretion of the [c]ourt." Spencer v. Caterpillar, Inc. Non-Contributory Pension Plan, No. C 02-2101 SI, 2003 WL 21148467, at *6 (N.D. Cal. May 13, 2003) (Illston, J.).
Echoing the arguments that she made in seeking leave to amend, plaintiff's claim for civil penalties is premised on alleged violations of 29 U.S.C. § 1024(b)(4), which states:
The administrator shall upon written request of any participant or beneficiary, furnish a copy of the latest updated summary plan description, and the latest annual report, any terminal report, bargaining agreement, trust agreement, or other instrument under which the plan was established or operated.Id. In allowing plaintiff to amend her complaint, the court identified two elements that are necessary to state a claim for violations of section 1024(b)(4). First, the document request must be one of the enumerated documents listed by the statute or another "governing plan document" — i.e., a document that provides individual participants with information about the plan or available benefits. Serpa II, 2004 WL 2002444, at *5 (citingHughes Salaried Retirees Action Comm. v. Hughes Non-Bargaining Retirement Plan, 72 F.3d 686, 689-90 (9th Cir. 1995) (en banc)). Second, the court observed that based on the plain meaning of section 1024(b)(4), a plaintiff seeking statutory penalties "must identify a specific, written request for plan documents." Id. at *7 n. 6 (emphasis in original).
This conclusion is entirely consistent with the case law interpreting the relationship between section 1024(b)(4) and section 1032(c)(1). As a statutory penalty provision, section 1032(c)(1) must be strictly construed. Haberern v. Kaupp Vascular Surgeons Ltd. Defined Benefit Pension Plan, 24 F.3d 1491, 1505 (3d Cir. 1994) (citing Ivan Allen Co. v. United States, 422 U.S. 617, 626 (1975)), cert. denied, 513 U.S. 1149 (1995); see also Fisher v. Metropolitan Life Ins. Co., 895 F.2d 1073, 1077 (5th Cir. 1990). Consequently, courts have interpreted the "written request" requirement of section 1024(b)(4) literally in determining whether an award of ERISA civil penalties is appropriate. See, e.g., Colin v. Marconi Commerce Sys. Employees' Retirement Plan, 335 F. Supp. 2d 590, 611 (M.D.N.C. 2004) ("[T]o prove [d]efendants' noncompliance with [section 1024(b)(4)], [p]laintiffs must first demonstrate that a written request for information was made."); Colarusso v. Transcapital Fiscal Sys., Inc., 227 F. Supp. 2d 243, 258 (D.N.J. 2002) (holding that no civil penalties may be imposed under section 1024(b)(4) based on an oral request for plan information). Moreover, such a written request must provide the plan administrator with "clear notice of what information the beneficiary desires." Anderson v. Flexel, Inc., 47 F.3d 243, 248 (7th Cir. 1995).
Significantly, the Colarusso court concluded that a claim for civil penalties under 29 U.S.C. § 1024(b)(4) must be predicated on a written request for governing plan documents regardless of the Ninth Circuit's decision in Crotty v. Cook, 121 F.3d 541 (9th Cir. 1997). See 227 F. Supp. 2d at 257-58. InCrotty, the court held that the plaintiffs were not required to make a written request prior to initiating an action for civil penalties based on a plan administrator's failure to furnish them with copies of the summary plan description within 90 days of the date that they became plan participants. Id. at 547. However, the Ninth Circuit relied on 29 U.S.C. § 1024(b)(1), a provision of ERISA that does not include the written request requirement set forth in section 1024(b)(4), and expressly excluded claims for civil penalties predicated on violations of paragraph (b)(4) from the scope of its holding. Id. at 547-48. Accordingly, like the court in Colarusso, this court finds nothing in the reasoning of Crotty that would warrant a departure from the aforementioned rule of strict construction That applies to statutory penalties provisions.
Plaintiff's third-amended complaint alleges four violations of section 1024(b)(4). However, only one of the alleged violations involves any written request for documents whatsoever. This request, set forth in a letter from plaintiff's counsel dated December 11, 2001, sought the disclosure of "all employment, pension, and Qualified Domestic Relation Order (QDRO) documents relating directly or indirectly to Ms. Serpa's election to retire from SBC on or about November 15, 2000." Pl.'s TAC at 12. As plaintiff's complaint makes clear, this letter was a general request for disclosure of documents made in preparation for litigation. Id. at 11. At best, such a request is representative of the type of "informal, pre-litigation discovery" that the should lead the court to exercise its discretion to deny ERISA civil penalties. Nunez v. Monterey Peninsula Eng'g, 867 F. Supp. 895, 911 (N.D. Cal. 1994) (Infante, M.J.). Indeed, section 1024(b)(4) may also be read as categorically prohibiting recovery based on such a broadly worded request. As the Fifth Circuit observed in Fisher, a plan administrator should not be held liable for nondisclosure of governing plan documents unless the administrator "knew or should have known that [a plan participant] had requested a copy of any document relating to the [plan]." 895 F.2d at 1077. In the instant case, to this date it remains unclear what, if any, "governing plan documents" fall within the scope of plaintiff's demand letter. In light of this fact, it would likely be an abuse of discretion to allow plaintiff to recover civil penalties based on defendants' failure to produce these unspecified documents. The court therefore declines to award ERISA civil penalties based on defendants' failure to respond within thirty days to the December 11, 2001 letter sent by plaintiff's counsel.
Plaintiff's three remaining allegations fail to identify any request — written or otherwise — that she made upon defendants for disclosure of "governing plan documents." Nonetheless, plaintiff asserts that she is entitled to civil penalties for her remaining claims because "[d]efendants are equitably estopped from raising as a defense that [p]laintiff was required to request in writing a copy [of the relevant plan documents]." Pl.'s Compl. at 9-11. Plaintiff fails to cite a single authority that would support applying the doctrine of equitable estoppel under these circumstances. Indeed, to do so would ignore the Supreme Court's admonition that statutory penalties must be strictly construed See Ivan Allen Co., 422 U.S. at 627; see also Haberern, 24 F.3d at 1505 (noting that this rule of strict construction applies to 29 U.S.C. § 1132(c)). Accordingly, the court reaffirms its holding that a plaintiff seeking to obtain civil penalties for a violation of 29 U.S.C. § 1024(b)(4) "must identify a specific, written request for plan documents."Serpa II, 2004 WL 2002444, at *7 n. 6 (emphasis in original). Because plaintiff's latest attempt to amend her pleadings has failed to identify any such request, the court must once again conclude that plaintiff's attempt to state a claim for civil penalties under ERISA fails as a matter of law.
II. Leave to Amend
Having granted defendants' motion to dismiss, the court must decide whether to grant plaintiff leave to amend her pleadings. In determining whether leave to amend should be granted, the court must consider five factors: (1) bad faith; (2) undue delay; (3) prejudice to the opposing party; (4) futility of amendment; and (5) whether the plaintiff has previously amended his or her complaint. Nunes v. Ashcroft, 375 F.3d 805, 808 (9th Cir. 2004) (citing Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995)),petition for cert. filed, ___ U.S.L.W. ___, No. 04-6713 (Oct. 5, 2004). However, "[f]utility alone can justify the denial of a motion for leave to amend." Id. As noted above, plaintiff has had three opportunities to amend her complaint to plead a viable cause of action for violations of ERISA and has thus far failed to do so. Any further attempt that plaintiff might make to amend her complaint would be futile. Furthermore, plaintiff's untimely filing of her third-amended complaint is merely the latest evidence of how her attorney's inability to comply with basic procedural rules has unduly delayed the adjudication of this action. In light of these facts, the court finds no reason why plaintiff should be given the opportunity to file a fourth amended complaint. The court therefore denies plaintiff leave to amend.
CONCLUSION
For the reasons stated above, the court GRANTS defendants' motion to dismiss plaintiff's third-amended complaint for failure to state a claim. Plaintiff is DENIED leave to file an amended complaint. Plaintiff's action is hereby DISMISSED WITH PREJUDICE.
IT IS SO ORDERED.