JPMorgan Chase Severance Pay Plan Adm'r v. Romo

• Decision Date: 28 September 2021
• Docket Number: CIVIL ACTION H-21-1685
• Parties: JPMORGAN CHASE SEVERANCE PAY PLAN ADMINISTRATOR, Plaintiff, v. PATRICIA ROMO, Defendant.
• Court: U.S. District Court — Southern District of Texas

JPMORGAN CHASE SEVERANCE PAY PLAN ADMINISTRATOR, Plaintiff,
v.
PATRICIA ROMO, Defendant.

CIVIL ACTION No. H-21-1685

United States District Court, S.D. Texas, Houston Division

September 28, 2021

MEMORANDUM AND OPINION

Lee H. Rosenthal Chief United States District Judge

Patricia Romo was a financial advisor with JPMorgan Chase for 14 years. (Docket Entry No. 6, at ¶¶ 8-9; Docket Entry No. 13, at 6). In 2018, JPMorgan Chase notified Romo that it was eliminating her position. (Docket Entry No. 6, at ¶ 8). JPMorgan Chase told Romo in writing that the JPMorgan Chase U.S. Severance Pay Plan entitled her to 42 weeks of severance-eligible compensation and paid her that amount in one lump-sum payment. (Id. ¶ 9; Docket Entry No. 71, at 3). In fact, Romo was entitled to only 34 weeks of severance-eligible compensation at a different compensation rate. (Docket Entry No. 6, at ¶¶ 8-9). The JPMorgan Chase U.S. Severance Pay Plan Administrator notified Romo of the error and asked her to remit the overpayment amount of $102,660.40. Romo refused. After multiple unsuccessful efforts to collect the overpayment, the Plan Administrator, as fiduciary of the Pay Plan, filed this suit under the Employment Retirement and Income Security Act of 1974 (ERISA), 29 U.S.C. 1132(a)(3). Romo moved to dismiss under Rules 12(b)(1) and 12(b)(6), the Plan Administrator responded, (Docket Entries Nos. 12, 13, 20), and the court heard argument. Each argument is addressed below. Based on the motion, the response, the pleadings, the record, the arguments of counsel,

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and the applicable law, the court denies the motion to dismiss under Rule 12(b)(1) and grants the motion to dismiss in part under Rule 12(b)(6), with leave to amend by October 8, 2021. The reasons are set out below.

I. Background

Romo worked as a financial advisor in the JPMorgan Chase International Financial Services division from 2004 until 2018. (Docket Entry No. 12, at 6). In an August 2, 2018, letter, JPMorgan Chase notified Romo that it was eliminating her position effective September 15, 2018. The letter stated that Romo was entitled to severance pay “based on the terms of the JPMorgan Chase Severance Pay Plan.” (Docket Entry No. 6, at ¶ 8; Docket Entry No. 7-1, at 2). The letter went on to state that Romo was “eligible for a payment equal to 42 weeks of severance-eligible compensation . . . in accordance with the terms of the Severance Plan.” (Docket Entry No. 7-1, at 3). The payment would be “in one lump sum,” conditioned on Romo’s timely execution of a “Release Agreement.” (Id.). That Agreement released JPMorgan Chase from legal claims “in exchange for severance pay and other severance-related benefits,” which would “exceed any pay and/or benefits [Romo] would be eligible to receive if [she] d[id] not sign the Release.” (Id., at 3, 14).

Romo executed the release and received 42 weeks of severance-eligible compensation. (Docket Entry No. 12, at 6). Shortly after, the Plan Administrator discovered in a “routine audit” that Romo was entitled only to 34 weeks of severance-eligible compensation. As a result of the error, Romo “was overpaid in the amount of $102,660.40.” (Docket Entry No. 6, at ¶¶ 9-10). The Plan Administrator “made multiple attempts to confer with [Romo] about the overpayment.” (Id., at ¶ 11). Despite these efforts, Romo “refused to remit the overpayment.” (Id., at ¶ 12).

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The Plan Administrator, as a fiduciary of the JPMorgan Chase Severance Pay Plan, sued Romo under ERISA, 29 U.S.C. § 1132(a)(3), claiming that Romo was “obligated to repay the overpayment balance under ERISA . . . the terms of the Policy, and equity.” (Docket Entry No. 6, at ¶ 13). The Plan Administrator sought “reimbursement . . . for the balance of the Plan benefits that were overpaid under the Policy in the amount of at least $102,660.40, plus interest,” and attorneys’ fees. (Id., at ¶¶ 19, 20-25).

Romo moved to dismiss under Rules 12(b)(1) and 12(b)(6). In her Rule 12(b)(1) motion, Romo argued that the payment she received from JPMorgan Chase following her termination was “not a general benefit provided by JPMC’s Severance Pay Plan,” but instead a private “agreement between JPMC and Romo” that ERISA did not govern. (Docket Entry No. 12, at 6-7; id., at 11 (“This is a cause of action to recover based on a promise distinct and independent of the Plan and does not implicate ERISA”)). Without an ERISA claim, Romo argued, the court lacks subject matter jurisdiction. (Id.).

Romo also argued that the court lacks subject matter jurisdiction because a plan fiduciary cannot recover money damages from an employee under 29 U.S.C. § 1132(a)(3). (Id., at 16). “Claims by plans or their fiduciaries to recover payments made to participants are inhibited by the strictures of ERISA’s civil enforcement scheme.” (Id., at 18). Romo asserted that the “inapplicability of ERISA” to a fiduciary’s claim for money damages also means that the court “lacks subject matter jurisdiction and venue is improper.” (Id.).

Romo further argued that dismissal is appropriate under Rule 12(b)(1) because the Plan Administrator did not have standing to enforce what she asserted was a private agreement between JPMorgan Chase-not the Plan Administrator-and Romo. (Id., at 20-21). “Parties that are not in privity to a contract lack standing to sue.” (Id., at 20).

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Romo moved to dismiss under Rule 12(b)(6) for similar reasons. First, Romo asserted that the negotiated agreement on severance pay was a contract between JPMorgan Chase and Romo, and not the implementation of the ERISA Plan. (Docket No. 13, at 5, 10-16). Because “Plaintiff’s purported claim does not arise under ERISA,” Romo argued, the Plan Administrator did not state a claim upon which relief may be granted. (Id., at 16). Second, even if ERISA did apply, Romo argued that the Plan Administrator’s claim must fail because it “cannot recover monetary damages from Romo under § 1132(a)(3) as a matter of law.” (Id.). Section 1132(a)(3) limits a plan beneficiary’s “recovery to equitable relief.” (Id., at 18). “Monetary damages, such as the ones sought here, are not recoverable by a fiduciary under 29 U.S.C. § 1132(a)(3).” (Id., at 18-19). Finally, Romo asserted that “nothing in the Plan . . . obligates Romo to return the consideration she received,” because “[t]he Plan does [not] contain explicit[] requirements for repayment of severance pay,” that are applicable here. (Id. at 19). Without language in the Severance Plan or the termination letter requiring Romo to return an overpayment, she argued, the Plan Administrator failed to plausibly allege a violation of “any provision of ERISA or the Plan.” (Id., at 20).

The Plan Administrator responded to Romo’s motion to dismiss, arguing that “[t]he Complaint plausibly states a claim for relief as the Severance Plan establishes the proper severance benefit amount and ERISA authorizes plan beneficiaries, such as the Plan Administrator, to enforce the Plan terms and attain equitable relief to recoup improperly retained benefits.” (Docket Entry No. 20, at 3). The Plan Administrator argued that dismissal under Rule 12(b)(1) is inappropriate because, under Fifth Circuit precedent, it is sufficient that a complaint seek relief under ERISA; “whether a party has a valid ERISA claim does not implicate subject matter jurisdiction.” (Id., at 7).

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II. The Legal Standards

A. A Rule 12(b)(1) Motion to Dismiss

Under Rule 12(b)(1), “a claim is properly dismissed for lack of subject-matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the claim.” In re FEMA Trailer Formaldehyde Prods. Liab. Litig. (Miss. Plaintiffs), 668 F.3d 281, 286 (5th Cir. 2012) (quotation marks omitted). The plaintiff has the burden to establish subject matter jurisdiction. Id. “Courts may dismiss for lack of subject matter jurisdiction on any one of three different bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the complaint supplemented by undisputed facts plus the court’s resolution of disputed facts.” Clark v. Tarrant Cnty., 798 F.2d 736, 741 (5th Cir. 1986).

B. A Rule 12(b)(6) Motion to Dismiss

Under Rule 12(b)(6), a federal court dismisses a complaint if it fails “to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6); see also Fed. R. Civ. P. 8(a)(2) (requiring “a short and plain statement of the claim showing that the pleader is entitled to relief”). In reviewing a Rule 12(b)(6) motion, the court “accept[s] all well-pleaded facts as true and view[s] all facts in the light most favorable to the plaintiff.” Thompson v. City of Waco, 764 F.3d 500, 502 (5th Cir. 2014). “A court reviewing a motion to dismiss under Rule 12(b)(6) may consider ‘(1) the facts set forth in the complaint, (2) documents attached to the complaint, and (3) matters of which judicial notice may be taken under Federal Rule of Evidence 201.’” DZ Jewelry, LLC v. Certain Underwriters at Lloyds London, No. H-20-3606, 2021 WL 1232778 (S.D. Tex. Mar. 12, 2021) (quoting Inclusive Cmtys. Proj., Inc. v. Lincoln Prop. Co., 920 F.3d 890, 900 (5th Cir. 2019)).

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“To survive dismissal, a plaintiff must plead ‘enough facts to state a claim to relief that is plausible on its face.’” Thompson, 764 F.3d at 503 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The plaintiff’s factual allegations “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S....