Grigg v. Griffith Co.
| Decision Date | 09 January 2014 |
| Docket Number | CASE NO. 1:13-CV-1379 AWI JLT |
| Court | U.S. District Court — Eastern District of California |
| Parties | RUSSELL GRIGG, Plaintiff v. GRIFFITH COMPANY, a California corporation, THOMAS FOSS, and DOES 1 through 50, inclusive, Defendants |
ORDER ON DEFENDANT'S MOTION
TO DISMISS
This is an employment related case brought by Plaintiff Russell Grigg ("Grigg") against his former employer Defendant Griffith Company ("Griffith") and his former supervisor Defendant Thomas Foss ("Foss"). This case was removed from the Kern County Superior Court on the basis of federal question jurisdiction. Griffith now moves to dismiss the first, second, and fifth causes of action. Because Griffith has filed an answer, its motion will be treated as a Rule 12(c) motion. For the reasons that follow, the motion will be granted in part and denied in part.
Grigg worked for Griffith for 33 years in various positions, but ultimately was promoted to Vice President/District Manager. Grigg was a participant in Griffith's Management Bonus Plan ("MBP") and Employee Stock Ownership Plan ("ESOP"). The structure of the MBP was that during any fiscal year, the amount of an employee's bonus would be computed and held for payout effective December 31 of that year, with 50% of the bonus amount being paid shortly afterthe year earned, and with 10% of the total bonus amount paid out each of the subsequent 5 years. Also, if there was a separation of employment based upon disability, the employee's Bonus Account would immediately fully vest and become payable without forfeiture. The ESOP is a company structured retirement plan. As a part of the terms of the ESOP, if an employee separates from Griffith due to disability, the employee's account is valued based upon the year end value of the stock for the year of departure. The employee then begins to receive payments one year after the employee's separation from employment.
Over the years, Grigg performed his job well and without difficulty until Foss was promoted as President and CEO of Griffith in January 2011. Once Foss was promoted, Grigg began experiencing difficulties in performing his job, and also began having health problems. Eventually, in October 2011, Grigg notified Griffith that he required a 12 week leave of absence for medical reasons. On December 5, 2011, Grigg sent an e-mail that indicated that he did not feel that he could continue working at Griffith due to his medical conditions and other reasons. The email also raised the issues of his interest in the MBP and ESOP. The e-mail was construed by Defendants as an immediately effective resignation.
Shortly after December 5, Grigg requested that Griffith make a finding that he was permanently disabled for purposes of the MBP and ESOP. After various correspondences and medical examinations, Defendants denied Grigg's request in September 2012 and refused to find him disabled under the MBP and the ESOP, even though Grigg met the criteria for disability under both plans. Grigg later wrote to Griffith and requested that Griffith follow the Review Procedure outlined by the ESOP and MBP. Griffith failed to respond to Grigg's request and has failed to follow the required Review Procedure. Grigg's vested MBP account balance is approximately $173,000. Griffith has refused to relinquish Grigg's MBP funds and refused to make payments under the ESOP.
When a defendant has filed an answer, and then files a Rule 12(b)(6) motion to dismiss, courts will treat the motion as a Rule 12(c) motion for judgment on the pleadings. Hoeft v.Tucson Unified Sch. Dist., 967 F.2d 1298, 1301 (9th Cir. 1992); Aldabe v. Aldabe, 616 F.2d 1089, 1093 (9th Cir. 1980). However, because the motions are functionally identical, the same standard of review applicable to a Rule 12(b)(6) motion applies to a Rule 12(c) motion. Cafasso v. General Dynamics C4 Sys., 637 F.3d 1047, 1055 n.4 (9th Cir. 2011); Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989); see also Grajales v. Puerto Rico Ports Auth., 682 F.3d 40, 44 (1st Cir. 2012). Judgment on the pleadings is appropriate when, taking all the allegations in the non-moving party's pleadings as true, the moving party is entitled to judgment as a matter of law. Ventress v. Japan Airlines, 486 F.3d 1111, 1114 (9th Cir. 2007); Honey v. Distelrath, 195 F.3d 531, 532 (9th Cir. 1999). The allegations of the nonmoving party must be accepted as true, while any allegations made by the moving party that have been denied or contradicted are assumed to be false. See MacDonald v. Grace Church Seattle, 457 F.3d 1079, 1081 (9th Cir. 2006); Hal Roach Studios v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir. 1989). The facts are viewed in the light most favorable to the non-moving party and all reasonable inferences are drawn in favor of that party. See Living Designs, Inc. v. E.I. DuPont de Nemours & Co., 431 F.3d 353, 360 (9th Cir. 2005); Turner v. Cook, 362 F.3d 1219, 1225 (9th Cir. 2004). To survive a motion for judgment on the pleadings based on failure to state a claim, the complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also Cafasso, 637 F.3d at 1055 & n.4. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Generally, in ruling on a Rule 12(c) motion, the court may not go beyond the pleadings to resolve an issue. See Hal Roach Studios v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989). However, courts may consider documents attached to the complaint, documents incorporated by reference in the complaint, and matters that may be judicially noticed. See Dichter-Mad Family Partners, LLP v. United States, 709 F.3d 749, 761 (9th Cir. 2013); Grajales, 682 F.3d at 44. While Rule 12(c) "does not expressly authorize 'partial' judgments, neither does it bar them, and it is common practice to apply Rule 12(c) to individual causes of action." Larsen v. Trader Joe's Co., 917 F.Supp.2d 1019, 1022 (N.D. Cal. 2013); Brown v. American Airlines, Inc., 285 F.R.D. 546, 551(C.D. Cal. 2011). Finally, although Rule 12(c) does not mention leave to amend, courts have the discretion in appropriate cases to grant a Rule 12(c) motion with leave to amend, or to simply grant dismissal of the action instead of entry of judgment. See Lonberg v. City of Riverside, 300 F.Supp.2d 942, 945 (C.D. Cal. 2004); Carmen v. San Francisco Unified Sch. Dist., 982 F.Supp. 1396, 1401 (N.D. Cal. 1997). The court need not grant leave to amend when doing so would be futile and the deficiencies in the complaint could not be cured by amendment. See Deveraturda v. Globe Aviation Sec. Servs., 454 F.3d 1043, 1046 (9th Cir. 2006); Gomez v. Winslow, 177 F.Supp.2d 977, 981 (C.D. Cal. 2001).
Griffith argues that the first, second, and fifth causes of action, which are state law causes of action, are completely preempted by ERISA. The Complaint alleges that the MBP and the ESOP provide for benefits in the event of a plan participant's disability. Thus, the MBP and ESOP are covered as "plans" under ERISA. ERISA provides the exclusive remedy to recover benefits due under a "plan" or to enforce rights under a "plan." Because the first, second, and fifth causes of action are all based on alleged violations of the MBP and the ESOP, and those are ERISA "plans," ERISA completely preempts these claims.
In reply, Griffith argues that the MBP is an ERISA "top-hat plan." The MBP is divided between an annual bonus plan and a nonqualified, deferred compensation plan. Half of each participant's bonus amount is paid out as an annual bonus and the other half is retained by Griffith as deferred compensation. The deferred compensation is non-elective and performance-based, and vests pursuant to a schedule. The unvested amount is held by Griffith and, with some exceptions, is forfeited when there is a separation of employment. By its own terms, the MBP expressly states that the nonqualified deferred compensation arrangement is intended to be a "top-hat plan." All of Grigg's claims involving the MBP relate to the top-hat portion of the MBP. Specifically, Grigg complains that Griffith improperly failed to deem the unvested amounts as fully vested when he became totally disabled. Because the MBP is a "top-hat plan," ERISA preemption applies.
Grigg argues that the MBP is not an ERISA plan. The MBP is a simple contractual bonus plan that is not governed by ERISA. The definitions of "employee welfare benefit plan" and "employee pension benefit plan" make it clear that the plans that are meant to apply post-retirement are governed by ERISA. Griffith does not explain which type of ERISA plan the MBP is, or otherwise explain how ERISA applies to the MBP. As a bonus plan, California law covers the MBP, and the first, second, and fifth causes of action are not preempted.
In sur-reply, Grigg argues that whether a plan is an ERISA plan is a question of fact. As such, Grigg would need to conduct discovery to determine the application of the rules that define a "top-hat plan" before a clear determination of the MBP's status can be determined. Nevertheless, Grigg argues that, despite the language in the MBP, the MBP is a bonus plan and not an ERISA plan. Griffith continues to fail to explain how the MBP relates to retirement or welfare as required by ERISA's owns terms. Courts recognize plans that are created to incentivize performance and not to provide retirement income, like the MBP, are not ERISA plans. The deferral aspect of the deferred compensation is not related to retirement, nor is it deferred compensation as required by ERISA. It is a bonus plan that has a payout structure that is not related to, nor is it governed by, a...
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