Cope v. Hudson's Bay Co. Severance Pay Plan for US Emps. Amended
| Decision Date | 12 January 2023 |
| Docket Number | Civil Action 20-6490 |
| Parties | ROXANNE COPE, individually, on behalf of herself and on behalf of all other similarly situated, Plaintiff, v. HUDSON'S BAY COMPANY SEVERANCE PAY PLAN FOR U.S. EMPLOYEES AMENDED and RESTATED AS HBC U.S. HOLDINGS LLC SEVERANCE PAY PLAN FOR U.S. EMPLOYEES, et al., Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Plaintiff Roxanne Cope (“Plaintiff”) brings this class action suit against Defendants Hudson's Bay Company Severance Pay Plan for U.S. Employees, amended and restated as HBC U.S. Holdings LLC Severance Pay Plan for U.S Employees, Hudson's Bay Company (“HBC”) and HBC U.S. Holdings LLC (“HBC Holdings”) and Jessica Arnold (“Plan Administrator”) (collectively, “Defendants”) under the Employee Retirement Income Security Act of 1947, as amended, 29 U.S.C §§ 1001-1461 (“ERISA”) and the Pennsylvania Wage Payment and Collection Law (“WPCL”), 43 P.S. § 260.1, et seq. Plaintiff alleges that she and her proposed class of former Lord & Taylor employees were wrongly denied benefits under Lord & Taylor's prior owner, Hudson's Bay Company's 2017 Company Severance Pay Plan for U.S. Employees in violation of ERISA and WPCL. Before the Court is Defendants' Motion to Dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). ECF No. 7. For the reasons set forth below, the Court will grant Defendants' Motion and dismiss this case with prejudice against these Defendants. An appropriate Order will follow.
Effective May 25, 2017, Hudson's Bay Company (“HBC”) enacted Hudson's Bay Company Severance Pay Plan for U.S. Employees (“2017 HBC Plan”). ECF No. 1 at Ex. A, Introduction. The 2017 HBC Plan “does not give any Employee any vested right to Plan benefits.” Id. at Ex. A § 5.1. Rather, the 2017 HBC Plan is an ERISA-governed employee welfare benefit plan meant to provide “Eligible Employees of the Employer with severance benefits in the event of a Covered Termination under the conditions specified” in the 2017 HBC Plan. Id. at Ex. A, Introduction, § 1.3. Therefore, to be entitled to severance benefits under the 2017 HBC Plan an individual must be an “Eligible Employee” of the “Employer” who incurs a “Covered Termination” of employment, as those terms are defined in the Plan. Id. at Ex. A §§ 2.6, 2.9, 2.11, 3.1-3.2. The 2017 HBC Plan defines an “Employer” as:
“Employer” shall mean each of the following during the period that each such entity is an Affiliate of the Company: (i) Hudson's Bay Company, (ii) Saks Incorporated, (iii) Saks & Company, LLC, (iv) Lord & Taylor Acquisition, Inc., (v) Lord & Taylor Holdings, LLC, (vi) Lord & Taylor LLC, (vii) GALERIA Kaufhof GmbH, (viii) Gilt Groupe Holdings, Inc., and (ix) their designated Affiliates.
Id. at Ex. A § 2.11 (emphasis added). The “Company” is defined as Hudson's Bay Company. Id. at Ex. A § 2.5. And an “Affiliate” of the Company is defined as:
[A] corporation that is a member of a controlled group of corporations that includes the Company or any trade or business that is under common control with the Company, in each case within the meaning of Sections 414(b) and (c) of the Internal Revenue Code. Any such entity shall be treated as an Affiliate hereunder only with respect to its period of affiliated status.
Id. at Ex. A § 2.1. The definition of “Affiliate” incorporates the conditions for being a “controlled group of corporations” and “under common control” from Section 414(b) and 414(c) of the Internal Revenue Code. Section 414(b) provides:
[A]ll employees of all corporations which are members of a controlled group of corporations (within the meaning of section 1563(a), determined without regard to section 1563(a)(4) and (e)(3)(C)) shall be treated as employed by a single employer. With respect to a plan adopted by more than one such corporation, the applicable limitations provided by section 404(a) shall be determined as if all such employers were a single employer, and allocated to each employer in accordance with regulations prescribed by the Secretary.
26 U.S.C. § 414(b). Section 1563(a) of the Internal Revenue Code in turn states:
26 U.S.C. § 1563(a). Section 414(b) applies the same test to determine whether companies are “under common control.” See 26 C.F.R. § 1.414(c)-2 (listing 80% test and five or fewer “individuals, estates or trusts” test to determine whether “two or more trades or businesses [are] under common control....”).
In November 2019, HBC sold Lord & Taylor to Le Tote. ECF No. 1 ¶ 59. The 2017 HBC Plan was amended and restated effective March 26, 2020. Id. at Ex. B, Introduction. Notably, in amending the 2017 HBC Plan, HBC removed Lord & Taylor from the list of entities in the definition of “Employer.” Id. at Ex. B § 2.11.
Beginning in 2013, Plaintiff was employed in the Lord & Taylor Wilkes-Barre location as a sales staffing coordinator. Id. ¶ 8. On March 31, 2020, Plaintiff was laid off from Lord & Taylor. Id. ¶ 47. She was offered and she accepted severance from her employer at that time, Lord & Taylor. Id. at Ex. D. On April 16, 2020, Plaintiff also submitted a severance claim under the terms of the 2017 HBC Plan. Id. ¶ 43. On June 4, 2020, Defendant Plan Administrator Jessica Arnold emailed Plaintiff's Counsel indicating Plaintiff's claim for severance benefits had been denied because by the terms of the 2017 HBC Plan: (i) the claim was untimely “since ‘an initial claim for benefits must be made within 60 days of termination of employment' which the Plan maintains was November 1, 2019”; (ii) Plaintiff was offered a comparable position by the acquirer of Lord & Taylor, which caused her to be ineligible under the Plan; and (iii) Lord & Taylor was no longer an “Affiliate” of HBC. Id. ¶ 43. On August 1, 2020, Plaintiff appealed this denial of benefits asserting that her claim was timely, that she was not offered comparable employment with Le Tote, and that “the denial of [Plaintiff's] claim was erroneous, was a violation of the Plans' provisions, was a breach of fiduciary duties, and constituted an arbitrary and capricious determination.” Id. ¶¶ 34, 44; Ex. C. On September 29, 2020, Defendant Plan Administrator Arnold denied Plaintiff's appeal. Id. ¶¶ 40, 44; Ex. C. In denying the appeal, Plan Administrator Arnold noted that: (i) as Plaintiff was terminated in conjunction of a sale of an Employer and was offered a comparable position with the acquirer of the new employer, Plaintiff was ineligible for severance under the Plan; (ii) Plaintiff's claim for benefits was untimely, because contrary to Plaintiff's argument that Lord & Taylor was not specifically removed from the definition of Employer till March 26, 2020 Amended Severance Plan, Lord & Taylor ceased being an Affiliate of the Company as of November 1, 2019 when the sale of Lord & Taylor to Le Tote closed. Id. at Ex. C. Additionally, Defendant Plan Administrator Arnold explained that to the extent Plaintiff was claiming entitlement to benefits in connection with her March 31, 2020 termination from Lord & Taylor/Le Tote, the claim was denied because Lord & Taylor was not an Affiliate of HBC and Plaintiff's argument that HBC and Le Tote are joint employers was frivolous. Id. at Ex. C. On December 24, 2020, Plaintiff filed this Complaint alleging: (1) denial of benefits claim under 29 U.S.C. § 1132(a)(1)(B) (Count I); (2) breach of fiduciary duty under 29 U.S.C. § 1132(a)(3) (Count II); (3) interference with the attainment of plan benefits rights under 29 U.S.C. § 1140 (Count III); and (4) violations of the Pennsylvania Wage Payment and Collection Law (“WPCL”), 43 P.S. § 260.1, et seq. (Count IV). ECF No. 1. At that time, ...
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