Sherfel v. Gassman

• Decision Date: 28 September 2012
• Docket Number: Case No. 2:09–cv–871.
• Citation: 899 F.Supp.2d 676
• Parties: Joan SHERFEL, et al., Plaintiffs, v. Roberta GASSMAN, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

899 F.Supp.2d 676

Joan SHERFEL, et al., Plaintiffs,

v.Roberta GASSMAN, et al., Defendants.

Case No. 2:09–cv–871.

United States District Court,

S.D. Ohio,

Eastern Division.

Sept. 28, 2012.

Preempted

W.S.A. 103.10(5)(b)Daniel W. Srsic, Melanie Anne Houghton, Littler Mendelson P.C., Columbus, OH, James J. Oh, Littler Mendelson, P.C., Chicago, IL, Susan Katz Hoffman, Littler Mendelson, P.C., Philadelphia, PA, for Plaintiffs.

Timothy Alan Lecklider, Ohio Attorney General's Office, Susan C. Walker, Columbus, OH, Richard B. Moriarty, Steven Carl Kilpatrick, Wisconsin Department of Justice, Madison, WI, for Defendants.

MEMORANDUM OPINION AND ORDER FINDINGS OF FACT AND CONCLUSIONS OF LAW

JAMES L. GRAHAM, District Judge.

I. History of the Case

This is an action for declaratory and injunctive relief brought pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., and the Declaratory Judgment Act, 28 U.S.C. § 2201. The plaintiffs are Nationwide Mutual Insurance Company (“Nationwide”), the Benefits Administrative Committee (“the Committee”), and Joan Sherfel, a member of the Committee. Nationwide is a mutual corporation incorporated in the State of Ohio, with its principal place of business in Columbus, Ohio. Doc. 74, ¶ 4. Nationwide is the plan sponsor of the Nationwide Insurance Companies and Affiliates Plan for Your Time and Disability Income Benefits (“the Plan”). Doc. 74, ¶ 1. The Committee is the Plan Administrator of the Plan, and the Committee members reside and administer the Plan in the Southern District of Ohio. Doc. 74, ¶ 3.

The defendants are Roberta Gassman, Secretary of the State of Wisconsin Department of Workforce Development (“DWD”); LeAnna Ware, Administrator of the Equal Rights Division (“ERD”) of the DWD; and John Byron Van Hollen, Attorney General of the State of Wisconsin. The DWD is charged with receiving and investigating complaints under the Wisconsin Family and Medical Leave Act (“WFMLA”), Wis. Stat. § 103.10, holding hearings on those complaints, rendering a decision on the complaint, and ordering remedies for violations, including providing requested family or medical leave, reinstating an employee, providing back pay and paying reasonable attorney fees to the complainant. Wis. Stat. § 103.10(12). The DWD is also authorized to bring a civil action in a Wisconsin circuit court against an employer to recover damages caused by an employer's violation of Wis. Stat. § 103.10(11), which prohibits interference with an employee's exercise of his or her rights under the WFMLA or retaliation for exercising those rights. SeeHarvot v. Solo Cup Co., 320 Wis.2d 1, 15–16, 768 N.W.2d 176 (2009).

The ERD is the division of the DWD which administers the WFMLA and investigates complaints of violations of the WFMLA. When probable cause for a violation is found, the ERD investigator refers the complaint to an Administrative Law Judge (“ALJ”). The ALJ conducts hearings and issues final and enforceable orders against employers who are found to be in violation of the WFMLA. Leave under the WFMLA is generally unpaid leave. Wis. Stat. § 103.10(5)(a) (“This section does not entitle an employee to receive wages or salary while taking family leave or medical leave.”). However, in the subsection commonly referred to as the “substitution provision,” the WFMLA provides that “[a]n employee may substitute, for portions of family leave or medical leave, paid or unpaid leave of any other type provided by the employer.” Wis. Stat. § 103.10(5)(b).

Defendant Van Hollen is the head of the Wisconsin Department of Justice is authorized by statute to appear for and represent the state or any state agency, or to prosecute or defend any agency or official in any matter, civil or criminal, in any court. Wis. Stat. § 165.25(1)(m).

In their first amended complaint filed on February 1, 2010, plaintiffs allege that Katharina Gerum, a Nationwide associate employed in Wisconsin, filed a complaint with the ERD against Nationwide on April 18, 2007, claiming that Nationwide violated the substitution provision of the WFMLA by denying her request to receive benefits under the Plan's Short–Term Disability Income Benefit Program (“STD Program”) during intermittent time off from work to bond with her newborn child on the ground that she was not “disabled” within the meaning of the Plan. The ALJ assigned to the complaint ruled in favor of Gerum, and ordered Nationwide to pay Gerum benefits “under its STD Program,” or, if that was not possible, from Nationwide's general assets. See Plaintiffs' Ex. 14.

In their amended complaint, plaintiffs allege that the Plan qualifies as an ERISA plan, and that the WFMLA substitution provision is pre-empted by ERISA insofar as an associate seeks under the WFMLA to substitute benefits provided under the Plan. Plaintiffs rely on the Supremacy Clause of the United States Constitution and ERISA's pre-emption provision, 29 U.S.C. § 1144(a), which states that ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” covered by ERISA. 29 U.S.C. § 1144(a). Plaintiffs allege that the WFMLA substitution provision conflicts with and is pre-empted by ERISA because, as interpreted, it requires payment of STD income benefits to associates who are not disabled rather than deferring to Plan documents, interferes with the exclusive claims administration procedure established under ERISA, and prevents the Committee from determining eligibility for benefits pursuant to ERISA and the terms of the Plan.

In Count I of the first amended complaint, plaintiffs assert a claim for injunctive relief, alleging that the State of Wisconsin's application of the WFMLA substitution provision to the Plan has caused and will cause irreparable harm to plaintiffs by putting plaintiffs in the position of choosing between violating Wisconsin law and violating ERISA and the terms of the Plan by paying short-term disability (“STD”) benefits to plan participants who do not qualify for those benefits. Plaintiffs request an order prohibiting defendants from processing, investigating and adjudicating claims for benefits that are governed exclusively by ERISA, and from initiating or participatingin a state court action that attempts to apply or enforce the WFMLA substitution provision against plaintiffs with regard to STD benefits.

In Count II of the first amended complaint, plaintiffs seek a declaratory judgment that the Plan is an ERISA plan, that the substitution provision of the WFMLA is pre-empted to the extent that it is interpreted and applied to require the payment of disability income benefits to associates who are not entitled to benefits under the terms of the Plan and/or ERISA, that the Committee is not required to grant substitution requests for STD income benefits to associates who are not disabled, and that Nationwide is not required to pay substitution requests for STD income benefits made by non-disabled associates out of general assets.

In Count III of the first amended complaint, the Committee, as Plan Administrator and a fiduciary under ERISA, requests instructions from the court as to whether it may continue to administer the Plan in accordance with Plan documents and ERISA without regard to the WFMLA.

By order dated September 27, 2010, 748 F.Supp.2d 776 (S.D.Ohio 2010) this court denied defendants' motion to dismiss under Fed.R.Civ.P. 12(b)(6). At a telephone conference held on October 1, 2010, the court discussed consolidating the hearing on plaintiffs' motion for a preliminary injunction with the hearing on the merits of the case pursuant to Fed.R.Civ.P. 65(a)(2). The parties agreed to this procedure, and a final hearing on the merits was held on October 20, 2010. The parties have submitted post-trial briefs, and this matter is now before the court for a final decision on the merits.

II. Findings of Fact

The material facts underlying the instant case are not in dispute. On October 18, 2010, the parties filed a stipulation of facts. See Doc. 74. Evidence was also offered at the hearing on October 20, 2010, including documentary evidence and the testimony of Joanna McGoldrick, Nationwide Vice President of Benefits Planning; Joan Sherfel, Nationwide Associate Vice President of Human Resources; LeAnna Ware, Administrator of the State of Wisconsin Department of Work Force Development, Equal Rights Division; and Larry Jakubowski, Administrative Law Judge for the Equal Rights Division.¹

A. The Nationwide Plan

Nationwide conducts business in forty-nine states and has over thirty-two thousand employees. Hearing Tr., p. 15. Approximately two hundred of those employees reside in Wisconsin. Hearing Tr., p. 16. Through the Plan, Nationwide provides a standard set of benefits to all associates. Maintaining the same level of benefits aids in the administration of benefits and assists Nationwide in estimating funding needs. Hearing Tr., p. 17. As the sponsor of the Plan, Nationwide has filed tax and reporting documents with the federal government. Doc. 74, ¶ 11. The record includes a Form 5500 Annual Return/Report of Employee Benefit Plan for the year 2009 which Nationwide filed on behalf of the Plan. See Plaintiffs' Ex. 7.

The features of the Plan are outlined in the Plan documents contained in Plaintiffs' Ex. 1, as well as summary plan documents. Hearing Tr., p. 72. The Nationwide Plan includes three benefits programs: 1) the Your Time Program; 2) the Short–Term Disability Income Benefit Program (“STD Program”); and 3) the Long–Term Disability Income Benefit Program (“LTD Program”). See Plaintiffs' Ex. 1; Doc. 74, ¶ 6. The Summary Plan Description for the STD Program is included in the record as Plaintiffs' Ex. 2.

The Plan is a funded plan. Under § 12.03 of the Plan, Nationwide and its affiliates must make contributions to the Plan on behalf of active associates sufficient to cover all costs of the Plan in excess of the contributions...