Olivo v. Elky

• Decision Date: 20 August 2009
• Docket Number: Civil Action No. 09-00298 (HHK).
• Citation: 646 F.Supp.2d 95
• Parties: Richard A. OLIVO, et al., Plaintiffs, v. Barbara ELKY, et al., Defendants.
• Court: U.S. District Court — District of Columbia

646 F.Supp.2d 95

Richard A. OLIVO, et al., Plaintiffs, v. Barbara ELKY, et al., Defendants.

Civil Action No. 09-00298 (HHK).

United States District Court, District of Columbia.

August 20, 2009.

COPYRIGHT MATERIAL OMITTED

James William Pressler, Jr., Marc Lindsey Wilhite, Pressler & Senftle, P.C., Washington, DC, for Plaintiffs.

Frank Charles Morris, Jr., Epstein, Becker & Green, P.C., Washington, DC, for Defendants.

MEMORANDUM OPINION

HENRY H. KENNEDY, JR., District Judge.

Plaintiffs Richard Olivo, John Hawkins, and Norman Boone are current and former employees of the National Museum of Women in the Arts ("Museum"). They bring this action against the Museum, the Museum's Defined Contribution Plan ("Plan"), and Plan administrator Barbara Elky, alleging violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1500 (2006), and asserting a common law negligence claim.

Before the Court is defendants' motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure [# 10]. Upon consideration of the motion, the opposition thereto, and the record of this case, the Court concludes that the motion must be granted.

I. BACKGROUND

ERISA regulates employee benefit plans, "requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto," "establishing standards of conduct, responsibility, and obligation to fiduciaries of employee benefit plans," and "providing for appropriate remedies, sanctions and ready access to the Federal Courts." 29 U.S.C. § 1001.

In 1991, the Museum established the Plan, a defined contribution pension plan under ERISA.¹ Pursuant to the Plan, eligible employees contribute a percentage of their earnings to the Plan as tax-deferred retirement savings and the Museum makes a matching contribution. A part-time employee is eligible to enroll in the Plan only if he or she is:

credited with 1,000 hours or more of service (including paid absence) during any 12-consecutive calendar month period commencing with his or her Date of Employment or any anniversary date, in which event he or she becomes an Eligible Employee as of the beginning of the 12-month period during which he or she was credited with at least 1,000 hours of service.

Compl. Ex. A, Art XI. The Plan provides, in pertinent part, that "[the Museum] will notify an Eligible Employee when he or she has completed the requirements necessary to become a Participant." Id. Art. II ¶ 2.2; Art. XI.

Olivo, Hawkins, and Boone allege that they became eligible to enroll in the Plan in 1994, 1999, and 2000, respectively, but that defendants failed to notify them of their eligibility until Elky notified them in February 2006. Plaintiffs all enrolled in the Plan after they were notified that they were eligible to do so. According to plaintiffs, in February 2006, Olivo asked Elky to investigate why he and the other employees had not been timely notified of their eligibility to enroll in the Plan and Elky agreed to do so. Subsequently, in May 2006, Olivo sent a memorandum to Judy Larson, the director of the Museum, inquiring about the investigation. Larson responded that Elky would address Olivo's concerns and that the Museum was seeking a fair resolution. Plaintiffs assert that Elky neither responded to their concerns nor attempted to remedy the problem. Plaintiffs allege that they have suffered economic injury due to defendants' untimely failure to notify them of their eligibility to enroll in the Plan.

II. ANALYSIS

Plaintiffs bring four claims. First, they allege that defendants owe them benefits due under the Plan for the years in which they were eligible, but were not informed that they could enroll pursuant to ERISA subsection 502(a)(1)(B). Second, they allege that defendants were negligent when they did not inform plaintiffs of their eligibility to enroll in the Plan. Third, they allege that defendants committed a fiduciary breach pursuant to ERISA subsections 502(a)(2) and (3) when they did not inform plaintiffs of their eligibility to enroll in the Plan. Fourth, they claim civil penalties pursuant to ERISA subsection 502(c)(1)(B) for defendants' alleged failure to comply with their request for information. Defendants move to dismiss all four claims under Rule 12(b)(6). The Court will address defendants' motion to dismiss with respect to each of plaintiffs' claims in turn.

To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead factual allegations sufficient to raise the right to relief beyond the speculative level when the court assumes all allegations in the complaint to be true. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A defendant may raise an affirmative defense in a 12(b)(6) motion where the "facts that give rise to the defense are clear from the face of the complaint." Walker v. Pharm. Research & Mfrs. of Am., 569 F.Supp.2d 209 216 (D.D.C.2008) (holding that the court may dismiss a claim on statute of limitations grounds where "no reasonable person could disagree on the date on which the cause of action accrued") (internal citations omitted); see also Stewart v. Nat'l Educ. Ass'n, 471 F.3d 169, 173 (D.C.Cir.2006) (affirming the trial court's dismissal of state law claims based on a showing of ERISA preemption).

A. Plaintiffs May Not Recover Benefits Due Under the Plan Pursuant to ERISA Subsection 502(a)(1)(B) Because They Did Not Accrue Benefits Under the Plan.

Plaintiffs contend that they may recover the benefits they should have earned under the Plan under ERISA Subsection 501(a)(1)(B). Defendants argue that plaintiffs' claim under subsection 502(a)(1)(B) for benefits owed under the Plan must be dismissed because plaintiffs seek benefits they would have earned had defendants notified them of their eligibility to enroll in the Plan as opposed to benefits earned under the Plan. Plaintiffs do not respond to this argument.

Subsection 502(a)(1)(B) provides that "[a] civil action may be brought—(1) by a participant or beneficiary—(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). This subsection allows a plan participant to assert her contractual rights under a benefit plan. Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1133 (7th Cir.1992). Recovery under subsection 502(a)(1)(B) is limited to benefits already accrued under a benefit plan. See Eichorn v. AT & T Corp., 484 F.3d 644, 652 (3d Cir.2007) (holding that plaintiffs may not bring a claim under subsection 502(a)(1)(B) for benefits they would have earned if not for defendants' interference); Tolle, 977 F.2d at 1134 (7th Cir.1992) ("In order to enforce the terms of a plan under Section 502, the participant must first qualify for the benefits provided in that plan."). Where the plaintiff "seeks past-due contributions never made to his account, and not accrued benefits, that is, the balance of his account ... he cannot maintain a suit under section 502(a)(1)(B)." Yoon v. Fordham Univ. Fac. & Admin. Ret. Plan, 2004 WL 3019500, at * 14 (S.D.N.Y. Dec.29, 2004).

Plaintiffs' 502(a)(1)(B) claim must be dismissed because plaintiffs do not seek benefits due to them under the terms of the Plan. Under the terms of the Plan, employees must enroll in the Plan and contribute a portion of their income to the Plan in order to accrue benefits under the Plan. See Compl. Ex. A, Art. II ¶¶ 2.3, 3.1. Here, plaintiffs did not enroll in or make contributions to the Plan prior to February 2006. Plaintiffs argue that they were unable to enroll in the Plan and accrue benefits under the Plan because defendants failed to notify them of their eligibility. This claim is not properly brought under subsection 502(a)(1)(B), however, because it does not assert a contractual claim for accrued benefits. Instead, it asserts an equitable claim for past-due contributions based on a breach of a fiduciary duty properly brought under a different section of ERISA, a claim that will be discussed later in this memorandum opinion. Therefore, the Court grants defendants' motion to dismiss plaintiffs' claim for benefits due under the Plan pursuant to subsection 502(a)(1)(B).

B. ERISA Preempts Plaintiffs' Common Law Negligence Claim.

Plaintiffs bring a common law negligence claim against the Museum and Elky, alleging that these defendants acted negligently when they failed to notify plaintiffs of their Plan eligibility, causing plaintiffs' economic loss. The Museum and Elky rejoin that plaintiffs' common law negligence claim must be dismissed because ERISA preempts common law claims that relate to an employee benefit plan and because plaintiffs rely on a duty that does not exist at common law. Plaintiffs respond that their negligence claim is not preempted because it falls within an area of traditional state authority and because the parties are not principal ERISA entities.

ERISA contains a broad preemption clause, which states that ERISA's provisions "shall supersede any and all State laws insofar as they ... relate to any employee benefit plan...." 29 U.S.C. § 1144(a); Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 732, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985). Preemption extends to common law causes of action that relate to an employee benefit plan. Coleman v. Pension Benefit Guar. Corp., 196 F.R.D. 193, 197 (D.D.C.2000). Where a plaintiff relies on a benefit plan to establish a duty on the part of the defendant, ERISA preempts her common law claim because the claim relates to a benefit plan within the meaning of ERISA. See Aetna Health Inc. v. Davila, 542 U.S. 200, 210, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004) (holding that a claim falls within ERISA's scope where the plaintiff is only entitled to the benefit in question under the terms of a benefit plan); Coleman, 196 F.R.D. at 197 (holdi...