Moore v. Menasha Corp.

• Decision Date: 22 June 2009
• Docket Number: File No. 1:08-cv-1167.
• Citation: 634 F.Supp.2d 865
• Parties: Robert MOORE, et al., Plaintiffs, v. MENASHA CORPORATION, Defendant.
• Court: U.S. District Court — Western District of Michigan

634 F.Supp.2d 865

Robert MOORE, et al., Plaintiffs, v. MENASHA CORPORATION, Defendant.

File No. 1:08-cv-1167.

United States District Court, W.D. Michigan, Southern Division.

June 22, 2009.

COPYRIGHT MATERIAL OMITTED

Stuart M. Israel, Martens Ice Klass Legghio & Israel PC, Royal Oak, MI, for Plaintiffs.

Brian Mark Schwartz, Miller Canfield Paddock & Stone PLC, Detroit, MI, Charles S. Mishkind, Miller Canfield Paddock & Stone PLC, Grand Rapids, MI, Pamela Chapman Enslen, Miller Canfield Paddock & Stone PLC, Kalamazoo, MI, for Defendant.

OPINION

ROBERT HOLMES BELL, District Judge.

This matter is before the Court on Defendant Menasha Corporation's motion to dismiss the case pursuant to Rules 12(b)(7) and 19 of the Federal Rules of Civil Procedure, or in the alternative to transfer the case to an alternate forum, pursuant to 28 U.S.C. § 1404(a). (Dkt. No. 7.) The Court heard oral argument on April 23, 2009. At the motion hearing, the Court denied Defendant's motion to transfer the case for the reasons stated on the record. For the reasons stated herein, the Court will also deny Defendant's motion to dismiss the case.

I.

Plaintiffs are retirees and their spouses and a worker's union. Plaintiffs sued Defendant Menasha Corporation claiming violation of collective bargaining agreements ("CBAs") that allegedly require Defendant to provide free healthcare coverage to Plaintiffs for life. Count I alleges violation of the CBAs pursuant to § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. Count II seeks to enforce the terms of a welfare benefit plan pursuant to § 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). The benefit plan is not a party to this action. Defendant argues that Plaintiffs' action should be dismissed pursuant to Rules 12(b)(7) and 19 of the Federal Rules of Civil Procedure because the benefit plan is a necessary and indispensable party to this action.

II.

Rule 12(b)(7) of the Federal Rules of Civil Procedure requires dismissal of a case "for failure to join a party under Rule 19." Rule 19 provides a three-step test for determining whether an absent party must be joined:

First, the court must determine whether the party is necessary and should be joined under Rule 19(a). If the person or entity is a necessary party, the court looks to whether joinder is feasible, or if a lack of subject matter or personal jurisdiction makes joinder impossible. Third, if joinder is not possible, the court must weigh the equities of the situation pursuant to Rule 19(b) and determine if the suit can continue in the party's absence or if the case should be dismissed because the party is indispensable.

Am. Express Travel Related Servs. Co. v. Bank One-Dearborn, N.A., No. 05-1900, 195 Fed.Appx. 458, 460 (6th Cir.2006) (unpublished) (citing Hooper v. Wolfe, 396 F.3d 744, 747 (6th Cir.2005)).

According to Rule 19, a party subject to service of process, whose joinder will not deprive the court of subject-matter jurisdiction, "must be joined" if (a) "in that person's absence, the court cannot accord complete relief among the parties," or (b) "that person claims an interest" such that disposing of the action in that person's absence may "impair or impede the person's ability to protect the interest" or "leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest." Fed.R.Civ.P. 19(a)(1). If that person cannot be joined, the Court must consider whether the action should proceed, based on the following four factors: "(1) the extent to which a judgment rendered in the person's absence might prejudice that person or the existing parties; (2) the extent to which any prejudice could be lessened or avoided ...; (3) whether a judgment rendered in the person's absence would be adequate; and (4) whether the plaintiff would have an adequate remedy if the action were dismissed for non-joinder." Fed.R.Civ.P. 19(b).

Defendant contends that its health and welfare benefits programs, including the program providing the benefits at issue in this case, are part of its global Basic Benefit Plan ("BBP"). Defendant first argues that BBP is a necessary party because the employer is generally not a proper party-defendant to an ERISA claim for recovery of benefits, citing Daniel v. Eaton Corp., 839 F.2d 263, 266 (6th Cir. 1988), and Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1490 (7th Cir. 1996). However, Daniel does not hold that the benefit plan is the only proper defendant to an ERISA claim, or that an employer is never a proper defendant. In Daniel, the Sixth Circuit noted that, "Unless an employer is shown to control administration of a plan, it is not a proper party defendant in an action concerning benefits." Daniel, 839 F.2d at 266 (emphasis added).

It is true that, in the Seventh Circuit, an ERISA claim for benefits is "generally limited to" a suit against the benefit plan rather than the employer. Blickenstaff v. R.R. Donnelley & Sons Co. Short Term Disability Plan, 378 F.3d 669, 674 (7th Cir.2004) (citing Jass). But see Black v. Long Term Disability Ins., 373 F.Supp.2d 897, 899 (E.D.Wis.2005) (citing Blickenstaff and noting that "the court has never explained the basis for the rule" and "neither the language of § 1132(a)(1)(B) nor any other section of ERISA appears to require it"). Nevertheless, Seventh Circuit opinions decided after Jass also recognize that an ERISA action seeking recovery of benefits may proceed against the employer where the plan and the employer are "closely intertwined." Mein v. Carus Corp., 241 F.3d 581, 585 (7th Cir.2001). In Mein, the court allowed an ERISA claim against an employer and the benefit plan to proceed because the employer was also the plan administrator. Id. ("While it is silly not to name the plan as a defendant in an ERISA suit, we see no more reason to have this case stand starkly for the proposition that the plan is always the only proper defendant....").

Defendant also relies on ERISA § 502(d)(2), which provides that:

Any money judgment under this subchapter against an employee benefit plan shall be enforceable only against the plan as an entity and shall not be enforceable against any other person unless liability against such person is established in his individual capacity under this subchapter.

29 U.S.C. § 1132(d)(2) (emphasis added). Some courts have interpreted this section to mean that a claim for recovery of benefits pursuant to § 502(a)(1)(B) may only be brought against the benefit plan. See, e.g., Hall v. Lhaco, Inc., 140 F.3d 1190, 1196 (8th Cir.1998) ("Benefits due under the terms of [the plan], can only be obtained against the Plan itself."). But see Musmeci v. Schwegmann Giant Super Markets, Inc., 332 F.3d 339, 351 (5th Cir.2003) (citing § 502(d)(2) and noting that "other Circuits [including the Sixth Circuit] have allowed employees to maintain actions against their employers for the denial of benefits").

By its terms, § 502(d)(2) applies to "money judgments against an employee benefit plan," and limits the enforceability of such judgments to the plan "as an entity[.]" 29 U.S.C. § 1132(d)(2). Thus, in Jass, the Seventh Circuit held that the plaintiff could not recover benefits from an employee of the plan that was sued in her individual capacity. Jass, 88 F.3d at 1490 ("The [ERISA] claim was nonetheless properly dismissed because Jass sued Margulis in an individual capacity and `ERISA permits suits to recover benefits only against the Plan as an entity ....'")(emphasis added) (quoting Gelardi v. Pertec Computer Corp., 761 F.2d 1323, 1324 (9th Cir.1985)). While § 502(d)(2) clearly limits the enforceability of money judgments against a benefit plan, there is no authority from the Sixth Circuit for the interpretation of § 502(d)(2) argued by Defendant, i.e. that in an ERISA action to recover benefits can only be brought against the benefit plan. Section 502(d)(2) itself provides that another person may be liable for a money judgment where "liability is established in his individual capacity...." 29 U.S.C. § 1132(d)(2).

Plaintiffs contend that Defendant Menasha Corporation controls BBP,¹ and is the "administrator" and "sponsor" of BBP.² (Compl. ¶ 31.) Plaintiffs also contend, citing evidence submitted by Defendant, that Defendant made the relevant decisions to change the benefits provided to Plaintiffs.³ See Sweet v. Consol. Aluminum Corp., 913 F.2d 268, 272 (6th Cir.1990) (allowing an ERISA claim for benefits against an employer that had "some control over whether to pay the benefit"). Defendant does not respond to these contentions, except to argue that BBP is a separate entity from Defendant. Thus, applying the Sixth Circuit standard in Daniel and Sweet, there is sufficient evidence to indicate Defendant's control over BBP, and the decision to provide the benefits at issue, such that this action may proceed against Defendant.

Nevertheless, the Court is faced with a slightly different question than that faced by the courts in Daniel, Jass, and Mein. In those cases, the courts examined whether a party other than the benefit plan was a proper party to the ERISA action. In the instant case, the Court must decide whether the benefit plan is a necessary party under Rule 19.

The instant case is also distinguishable from Daniel, Jass, and Mein because of the underlying claims. Those cases involved the denial of benefits arising from administration of the plan. Thus, Daniel states that a plaintiff can bring an ERISA claim against an entity shown to "control administration" of the plan. Daniel, 839 F.2d at 266. Plaintiffs' complaint asserts in the preamble that Plaintiffs seek "benefits due and damages for unpaid and denied retiree healthcare benefits" pursuant to § 502(a)(1)(B) of ERISA.⁴ (Dkt. No. 1, Compl. 1.) However, Plaintiffs allege that Defendant altered or terminated the benefits at issue, in...