Pridy v. Piedmont Natural Gas Co.

• Decision Date: 01 May 2020
• Docket Number: Case No. 3:19-cv-00468
• Citation: 458 F.Supp.3d 806
• Parties: Darrell PRIDY et al., Plaintiffs, v. PIEDMONT NATURAL GAS COMPANY, INC., and Duke Energy Corporation, as the alter ego or successor in liability to Piedmont Natural Gas Company, Inc., Defendants.
• Court: U.S. District Court — Middle District of Tennessee

458 F.Supp.3d 806

Darrell PRIDY et al., Plaintiffs,

v.PIEDMONT NATURAL GAS COMPANY, INC., and Duke Energy Corporation, as the alter ego or successor in liability to Piedmont Natural Gas Company, Inc., Defendants.

Case No. 3:19-cv-00468

United States District Court, M.D. Tennessee, Nashville Division.

Filed May 1, 2020

Joey P. Leniski, Jr., Karla M. Campbell, Branstetter, Stranch & Jennings, PLLC, Nashville, TN, for Plaintiffs.

John E. B. Gerth, Paul Savage Davidson, Waller, Lansden, Dortch & Davis, LLP, Nashville, TN, for Defendant Duke Energy Corporation.

Paul Savage Davidson, Waller, Lansden, Dortch & Davis, LLP, Nashville, TN, for Defendant Piedmont Natural Gas Company, Inc.

MEMORANDUM

ALETA A. TRAUGER, United States District Judge

Following dismissal of the First Amended Complaint, plaintiffs Local Union 702 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industries (the "Union") and Union members Darrell Pridy, Gregory Nabors, Michael Sanders, and Randall Abston (the "individual plaintiffs"), on behalf of themselves and other similarly situated ("class members"), sought and were granted leave to file their Second Amended Complaint (Doc. No. 26). In it, they bring suit against Piedmont Natural Gas Company, Inc. ("Piedmont Gas" or "Piedmont") and Duke Energy Corporation ("Duke Energy") under Section 502 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a) ; the Tennessee Human Rights Act ("THRA"), Tenn. Code Ann. § 4-12-401; and Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. Now before the court is the defendants’ joint Motion to Dismiss the Second Amended Complaint. (Doc. No. 29.)

For the reasons set forth herein, the motion will be granted.

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

The First Amended Complaint named only Duke Energy as a defendant. The court granted Duke Energy's Motion to Dismiss the First Amended Complaint on the grounds that it failed to state a claim against Duke Energy directly and failed to allege facts that, if true, would establish that Duke Energy was the legal successor to Piedmont Gas or its alter ego. (Doc. Nos. 20, 21.)

Following dismissal of the First Amended Complaint without prejudice and with leave to amend, the plaintiffs filed their Second Amended Complaint ("SAC") on December 23, 2019, naming both Duke Energy and Piedmont Gas as defendants. (Doc. No. 26.) The factual allegations set forth in the SAC in support of the plaintiffs’ substantive claims are essentially identical to those set forth in the First Amended Complaint. The SAC, however, adds new allegations differentiating between Piedmont Gas and Duke Energy and attempting to support the plaintiffs’ claim that Duke Energy is liable for the wrongful acts of Piedmont Gas on the grounds that it is either Piedmont Gas's successor in interest or its alter ego. (Doc. No. 26 ¶¶ 6, 7, 10, 11, 17, 37–53.) And the SAC adds two new "Counts" or claims for relief: one "For Liability on Behalf of Defendant Duke Energy Under Veil-Piercing/Alter Ego Theory" (id. at Count VI and ¶¶ 96–100), and the second "For Liability on Behalf of Duke Energy as Successor In Interest to Defendant Piedmont Gas" (id. at Count V and ¶¶ 101–03).

Otherwise, like the First Amended Complaint, the SAC alleges that the individual plaintiffs are all over the age of forty, have all been employed by Piedmont Gas for many years, and have "participated in various employee benefit plans, including a welfare benefit plan for Company¹ employees providing sick leave and short-term disability benefits." (Doc. No. 26 ¶¶ 1–4.) During their employment, the individual plaintiffs were continuously members of the Union and represented by it in collective bargaining. (Id. ¶ 16.) The plaintiffs claim that, "[a]t all times during [the individual plaintiffs’] employment, [Piedmont Gas] was and continues to be a party to the collective bargaining agreement with [the Union]." (Id. ¶ 17.) It asserts that Duke Energy "is also a party to the collective bargaining agreements with [the Union] on the basis that it is an alter ego and/or successor in liability to Piedmont Gas." (Id. )

The collective bargaining agreement ("CBA") in effect from 1989 to 1992 ("1989 CBA") between Piedmont Gas and the Union "established a sick leave and short-term disability benefit plan (‘Plan’)" governed by Section X of that document. (Id. ¶ 19.) According to the plaintiffs, Section X of the 1989 CBA "and successive collective bargaining agreements are the governing Plan documents." (Id. )

The 1989 CBA's Plan allowed participants to accrue sick leave days and to "bank" the accumulated days. (Id. ¶ 20.) The 1989 CBA refers to the accrued sick leave account as a "sickness allowance" (id. ), while subsequent CBAs refer to individual accrued sick leave accounts as "Leave Bank[s]." (Id. ¶ 21.) Nomenclature aside, the benefit plans described in subsequent CBAs in effect over the ensuing decade continued to adopt a similar sickness allowance policy, permitting the accrual of hours of unused sick leave and the banking of such time. The CBA adopted in 1999 and in effect until 2004 (the "1999 CBA") was the last CBA to allow the unlimited accrual of sick leave hours. (Id. ) The sickness allowance effectively rewarded individuals who did not take frequent sick leave by allowing them to continue to accrue an unused allotment by carrying over those hours from year to year. (Id. ¶ 25.)

The CBA that went into effect on December 31, 2004 ("2004 CBA"), eliminated the accumulation of hours in "Leave Banks" going forward, but it allowed participants with hours already accrued in their Leave Banks to carry over and use that time as described in the 2004 CBA. (Id. ¶ 26.) The Sick Leave provision in the 2004 CBA provided, in relevant part:

Employees are credited with 12 days of sick leave each January 1 to be taken as needed for any period of illness during the calendar year. They may also use any accrued sick days in their Leave Bank (sick leave earned before January 1, 2005) when all of their annual sick days have been used or for a certified FMLA Leave to care for an immediate family member. Banked days may also be used to cover the waiting period before short-term disability benefits begin.

(Id. ¶ 27.) According to the plaintiffs, the CBAs in effect from August 2008 through August 2012 ("2008 CBA") and from August 2012 through August 2018 ("2012 CBA") similarly recognized employees’ ability to use Leave Bank time accrued prior to January 2005. (Id. ¶ 28.)

The current CBA ("2018 CBA") went into effect on April 14, 2018. (Doc. No. 30-4.) The 2018 CBA is silent regarding Leave Banks and leave hours accrued prior to 2005. (See generally id. ) However, in April 2018, Piedmont Gas eliminated an online portal that had allowed employees to access their Leave Banks, and it began refusing to honor the accrued time in employees’ Leave Banks. The plaintiffs claim that Piedmont Gas provided no prior notice of this action. All of the individual plaintiffs and class members had accrued sick leave hours in their Leave Banks. At least one of the individual plaintiffs requested to use accrued leave time in late April 2018 but was informed by his supervisor that "the Company no longer allowed employees to use those benefits." (Doc. No. 26 ¶¶ 30–32.)

The plaintiffs allege that, during negotiations leading up to execution of the 2018 CBA, the "Company (represented by officials with both Piedmont Gas and Duke Energy)" and the Union did not bargain over sick leave and short-term disability benefits that were owed under prior CBAs. (Id. ¶ 33.) "[I]nstead, the Company unilaterally informed [the Union] that it would no longer honor accrued Leave Bank benefits in the new collective bargaining agreement, and unilaterally chose to deny accrued Leave Bank benefits" to the individual plaintiffs and the other 60 class members. (Id. ; see also id. ¶ 35.)

Based on these allegations, the plaintiffs claim that Piedmont Gas violated ERISA by wrongfully denying accrued and nonforfeitable rights to banked sick and disability leave benefits; discriminated against them on the basis of age, in violation of the THRA; and violated the LMRA by breaching binding CBAs. It asserts that Duke Energy should be held "jointly and severally liable with Piedmont Gas" because it is the "alter ego" of Piedmont Gas (id. ¶ 100) or is its "successor in interest to the applicable collective bargaining agreements" (id. ¶ 103).

The defendants now move for dismissal of the SAC on the grounds that (1) Duke Energy is not a proper party; (2) the claims brought by both the Union and the individual plaintiffs have not been exhausted "through the proper grievance and arbitration procedure" provided by the operative CBA; (3) the individual plaintiffs’ ERISA claim fails because "the program at issue was a ‘payroll practice,’ not an ERISA-governed welfare plan, and in any event the ‘benefits’ were not vested"; and (4) the individual plaintiffs’ age discrimination claim under the THRA is preempted by Section 301 of the LMRA. (Doc. No. 29, at 2; see generally Doc. No. 30.)

In their Response, the plaintiffs argue that the defendants’ Motion to Dismiss is improper under Rule 12(b)(6), as it asks the court to "make inferences about matters not contained in the [SAC] and to resolve disputes of fact." (Doc. No. 33, at 4.² ) More specifically, they contend that (1) the new allegations in the SAC are sufficient to establish that Duke Energy is a proper defendant in this action as either a legal successor to, or alter ego of, Piedmont Gas; (2) they should be excused from exhausting the contractual grievance procedure as it relates to their ERISA and LMRA claims on the grounds of futility; (3) whether the program at issue was a "payroll practice" rather than an ERISA-governed welfare plan raises issues of fact that cannot be resolved in the context of a motion to dismiss, and, alternatively, if the court determines as...