Searls v. Sandia Corp.

• Decision Date: 25 September 2014
• Docket Number: No. 1:14cv578 JCC/TCB.,1:14cv578 JCC/TCB.
• Parties: Nancy SEARLS and Craig Searls, Plaintiffs, v. SANDIA CORPORATION and Jane Farris, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

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Nancy SEARLS and Craig Searls, Plaintiffs
v.
SANDIA CORPORATION and Jane Farris, Defendants.

No. 1:14cv578 JCC/TCB.

United States District Court, E.D. Virginia, Alexandria Division.

Signed Sept. 25, 2014.

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Michael MacKager York, Wehner & York PC, Reston, VA, for Plaintiffs.

Michael Angelo Tilghman, Bailey & Ehrenberg PLLC, Washington, DC, for Defendants.

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MEMORANDUM OPINION

JAMES C. CACHERIS, District Judge.

This matter is before the Court on Defendant Sandia Corporation (“Sandia”) and Defendant Jane Farris' (“Farris”) (collectively “Defendants”) Motion to Dismiss Plaintiffs, Ms. Nancy Searls and Mr. Craig Searls' (collectively “Plaintiffs”), First Amended Complaint, [Dkt. 20], and Defendants' Motion to Strike Plaintiffs' Jury Demand, [Dkt. 23]. For the reasons set forth below, the Court will grant the Motion to Dismiss in part, and grant the Motion to Strike the Jury Demand.

I. Background ¹

This case arises from Plaintiffs' prior employment with Sandia, which first began on April 13, 1981. (Am. Compl. [Dkt. 18] ¶¶ 9, 10.) In October of 1997, Sandia offered Plaintiffs a Special Leave of Absence (“SLOA”) for a period of two years, to work for the Central Intelligence Agency (“CIA”) “as full-time employees while maintaining their connection to Sandia.” (Id. ¶ 11.) Under the SLOA, Plaintiffs employment at Sandia would be inactive, but Plaintiffs would continue to earn time of service credit with Sandia for purposes of future pension benefit calculations, so long as Plaintiffs returned to Sandia after the SLOA expired. (Id. ¶¶ 11–12; see also id., Ex. C [Dkt. 18–3] at 2–5.)² Plaintiffs allege that this rare³ pension benefit was conditioned on their return to full-time employment at Sandia, so that Sandia could benefit from “the Plaintiffs' considerable experience working as federal employees in areas critical to Sandia's operations.” (Am. Compl. ¶¶ 11, 13.) After the initial SLOA period began in October of 1997, Sandia renewed the SLOA agreement with Plaintiffs three times, in October of 1999, October of 2001, and October of 2003. (Id. ¶ 15.) After eight years of SLOA full-time employment with the CIA, Plaintiffs returned to employment with Sandia on October 10, 2005. (Id. ¶ 16.)

In November of 2006, Plaintiffs retired from employment with Sandia.⁴ (Id. ¶¶ 17, 21.) Immediately thereafter, Plaintiffs started receiving monthly pension payments from Sandia, which initially “reflected the inclusion of the Searls' federal service in their computed benefit” for the eight years of SLOA. (Id. ¶ 18.) Almost six years after the pension benefit payments began, on April 26, 2012, Plaintiffs received a letter from Defendant Jane Farris, Sandia's Senior Manager of the Pension Fund & Savings Plans, and were advised that after “a review of the pension treatment of employees who had been on SLOA,” their monthly pension payments would be decreased pursuant to the “non-duplication” provision in Sandia's Retirement Income Plan (the “Plan”). (Id. ¶¶ 19–21, Ex. A [Dkt. 18–1] at 2, 5.)

Sandia's pension payments to Ms. Nancy Searls were immediately decreased by 31 percent, and pension payments to Mr.

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Craig Searls would be reduced once he retired from the federal government. (Am. Compl. ¶¶ 20–21.) Plaintiffs sought timely review of Sandia's decision through Sandia's internal employee benefit appeals system. (Id. ¶ 22.) On November 21, 2012, Sandia's Employment Benefit Committee (“EBC”) denied Plaintiffs' initial appeal, (id. ¶ 23.), and on May 22, 2013, Sandia's Employee Benefits Claim Review Committee (“EBCRC”) issued Sandia's final decision denying Plaintiffs' claims. (Id. ¶¶ 24–25, Ex. B [Dkt. 18–2] at 2–11.)

Plaintiffs filed their original complaint in this matter on May 21, 2014. [Dkt. 1] Plaintiffs timely amended their complaint as a matter of right under Rule 15(a) of the Federal Rules of Civil Procedure by filing the First Amended Complaint on July 3, 2014. In the First Amended Complaint, Plaintiffs invoke this Court's jurisdiction pursuant to 28 U.S.C. §§ 1331, 1332(a)(1), and raise four claims under Virginia law—breach of contract, unjust enrichment, fraudulent inducement, and constructive fraud—and one claim under the Employee Retirement Income Security Act of 1974 (“ERISA”). (Am. Compl. ¶¶ 26–62.)

Defendants move to dismiss this matter pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, and to strike the Plaintiffs' jury demand. Defendants argue that Plaintiffs' four state law claims are preempted by ERISA, and that the one ERISA claim fails to state a claim for relief. In response, Plaintiffs contend the state law claims should survive as not related to an employment benefit plan, and ask the Court to deny both motions.

The motions have been fully briefed and argued, and are now before the Court.

II. Standard of Review

“The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint; importantly, [it] does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Butler v. United States, 702 F.3d 749, 752 (4th Cir.2012) (citations and internal quotation marks omitted). A court reviewing a complaint on a Rule 12(b)(6) motion must accept well-pleaded allegations as true, and must construe all allegations in favor of the plaintiffs. See Randall v. United States, 30 F.3d 518, 522 (4th Cir.1994). However, the court need not accept as true legal conclusions disguised as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 679–81, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The plaintiffs' facts must “be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Extrinsic evidence is not typically considered when determining the sufficiency of a complaint, although the court “may properly take judicial notice of matters of public record ... [and] may also consider documents attached to the complaint ... as well as those attached to the motion to dismiss, so long as they are integral to the complaint and authentic.” Philips v. Pitt Cnty. Mem'l Hosp., 572 F.3d 176, 180 (4th Cir.2009) (citations omitted).

III. Analysis

A. Motion to Dismiss

Defendants move to dismiss Plaintiffs' First Amended Complaint for failure to state a claim. Plaintiffs' four claims under Virginia law, and one claim under ERISA, arise from Plaintiffs' eight-year SLOA period, and the effect of that period on Sandia's pension payments to Plaintiffs. After Plaintiffs both retired from Sandia in November of 2006, Sandia's pension benefit payments to Plaintiffs reflected a time of service credit that included the SLOA period with the CIA. After April 26, 2012, however, Sandia's pension payments to

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Plaintiffs decreased, because the SLOA period was now excluded from their time of service credit calculation. Sandia decreased Plaintiffs' time of service credit in accordance with section six of the Plan, the “non-duplication provision.” Under that provision, “no person shall accrue benefits under this Plan if at the time such benefits are accrued he is entitled to accrued benefits under another employer's pension plan for the same service.” (Am. Compl. Ex. B at 3.)

After Plaintiffs exhausted Sandia's internal appeals process challenging Sandia's application of the non-duplication provision, in its final decision, the EBCRC explained that Sandia's non-duplication provision applied to Plaintiffs during the SLOA period. The EBCRC noted, however, that Sandia amended the Plan so that it now “provides a limited exception for [Plaintiffs and two] similarly situated individuals.” (Am. Compl. Ex. B at 5, 9–10.) The Plan “amendment allows [Plaintiffs] to receive a benefit under the Plan for the time that [they] spent on SLOA, which Plan benefit amount [will be/is] reduced by the amount of your Federal Employees Retirement Service benefit that is attributable solely to your SLOA service.” (Id. at 5, 10.) In other words, Sandia specifically tailored an amendment to Plaintiffs and two other former employees so they would receive a total benefit equivalent to the expected benefit under the Plan had Plaintiffs not taken the SLOA. The EBCRC described this as “an equitable solution.” (Id. ) Plaintiffs argue they are entitled to a full pension benefit from Sandia, including the eight years of SLOA, plus a full pension benefit from the federal government.

Thus, Plaintiffs initiated this matter, bringing four causes of action under Virginia law “for legal and equitable relief for breach of contract, unjust enrichment and fraud.” (Id. ¶ 1.) Even though “Plaintiffs submit that the Employee Retirement Income Security Act of 1974 (ERISA) has no relevance or bearing on their claims and that their state-law and common law claims are not preempted,” Plaintiffs also brought one claim under ERISA § 502(a)(3). (Id. ) Defendants argue that the Plaintiffs' state law claims should be dismissed as preempted by ERISA because those...