Sherfel v. Gassman

Citation748 F.Supp.2d 776
Decision Date27 September 2010
Docket NumberNo. 2:09–cv–871.,2:09–cv–871.
PartiesJoan SHERFEL, et al., Plaintiffs,v.Roberta GASSMAN, et al., Defendants.
CourtUnited States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio

OPINION TEXT STARTS HERE

Melanie Anne Houghton, Littler Mendelson P.C., Columbus, OH, for Plaintiffs.Jack Wilson Decker, Susan C. Walker, Ohio Attorney General's Office, Columbus, OH, Richard B. Moriarty, Wisconsin Department of Justice, Madison, WI, Steven Carl Kilpatrick, State of Wisconsin Department of Justice, Madison, WI, for Defendants.

OPINION AND ORDER

JAMES L. GRAHAM, District Judge.

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”), an Ohio corporation; the Benefits Administrative Committee (“the Committee”), Plan Administrator of the Nationwide–Sponsored Health and Welfare Employee Benefit Plans; and Joan Sherfel, a member of the Committee. Nationwide is the Plan Sponsor of the Plans, and the Committee is the named fiduciary of the Plans within the meaning of 29 U.S.C. § 1002(21). The Plans are administered in Columbus, Ohio.

The defendants are Roberta Gassman, Secretary of the State of Wisconsin Department of Workforce Development (DWD); Jennifer Ortiz, Administrator of the Equal Rights Division of the DWD; and John Byron Van Hollen, Attorney General of the State of Wisconsin, (collectively referred to in the complaint as the State of Wisconsin or the state). The Equal Rights Division of the DWD administers the Wisconsin Family and Medical Leave Act (“WFMLA”), Wis. Stat. § 103.10. 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, the WFMLA does provide 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(b).

The original complaint in this case was filed on October 5, 2009. On November 18, 2009, defendants filed a motion to dismiss the complaint. However, on February 1, 2010, plaintiffs filed a first amended complaint. Therefore, the motion to dismiss (Doc. No. 30) filed on November 18, 2009, is now moot. In the first amended complaint, plaintiffs allege that Nationwide is the sponsor of the Nationwide Insurance Companies and Affiliates Plan for Your Time and Disability Income Benefits (“the Plan”), which is available to associates of Nationwide and its affiliated entities in the forty-nine states in which they are employed. The Plan provides short-term disability (“STD”) income benefits and long-term disability (“LTD”) income benefits for employees who become disabled, as that term is defined in the Plan. The STD and LTD Programs do not provide accrued paid leave; rather, they provide disability income benefits to associates who become disabled and are unable to work. The Plan also includes the Your Time Program, which provides paid time off, upon a manager's approval, for any purpose, including vacation, sick leave, and leave under the Family and Medical Leave Act “FMLA” or any similar state law such as the WFMLA. These Plans are alleged to be ERISA plans.

The Plans are funded through the Nationwide Insurance Companies & Affiliates Employee Health Care Trust (“the Trust”), and Nationwide and its affiliates, as well as Nationwide associates, make contributions to the Trust to fund the Plans. The Committee, as Plan Administrator, is given the authority under the Benefits Administrative Committee Charter and the Plan to interpret and administer the Plan in accordance with ERISA and the terms of the Plan, and to authorize the payment of benefits from the Trust.

Plaintiffs further allege that on April 18, 2007, Katharina Gerum, a Nationwide associate employed in Wisconsin, filed a complaint with the DWD against Nationwide alleging that she made a request to receive STD benefits during intermittent time off from work to bond with her newborn child, and that the request was refused. Nationwide had approved her request to take intermittent WFMLA leave and also approved her use of Your Time accrued leave to pay her for the time off, but her request for STD benefits was denied because she was not disabled. The Plan and the Committee were not parties to the Wisconsin administrative proceedings. The matter was assigned to an administrative law judge (“ALJ”) for the Equal Rights Division. In a final decision and order dated August 14, 2009, the ALJ concluded that Nationwide violated the WFMLA by not permitting Ms. Gerum to substitute paid STD benefits for unpaid leave under the WFMLA. The ALJ ordered Nationwide to permit Ms. Gerum to substitute paid leave under the STD plan for the eight days of leave she took under the WFMLA, and to restore the eight days of Your Time benefits which she took to cover her leave. The ALJ rejected Nationwide's argument that the associate had no remedy under the STD Plan because Nationwide lacked the authority to order payment from the Plan, and further stated that if there was no provision in the Plan to make the payments required by the WFMLA, then Nationwide must pay for the benefits. Plaintiff alleges that the same ALJ issued a decision in another matter on January 30, 2002, which ordered the substitution of STD benefits for unpaid WFMLA leave.

Plaintiffs further allege that Nationwide asked the Committee whether Ms. Gerum could be permitted to receive STD income benefits for leave under the WFMLA and whether the eight days could be restored to her Your Time account so as to comply with the ALJ's order. The Committee denied these requests. Nationwide alleges that if the Committee paid the STD benefits or restored the time off to Ms. Gerum's Your Time account, it would violate its fiduciary duty to the Plan participants and beneficiaries by acting contrary to the terms of the Plan. Since Nationwide was unable to pay benefits under the STD plan or to credit Ms. Gerum's Your Time account, Nationwide settled the matter with Ms. Gerum, but did not pay her STD benefits or credit her Your Time account.

Plaintiffs allege that the State of Wisconsin's continuing enforcement position is that the WFMLA is not pre-empted by ERISA, and that therefore Nationwide associates in Wisconsin will continue to make demands to substitute STD benefits for unpaid WFMLA leave. Plaintiffs allege that on October 5, 2009, another associate in Wisconsin inquired about substituting STD benefits for unpaid WFMLA leave during the period of her maternity leave, which commenced on January 15, 2010. Nationwide alleges that it has over 200 employees in Wisconsin who participate in the STD Program and who may claim a right to receive the payment of STD benefits under the WFMLA.

In Count I of the first amended complaint, plaintiffs assert a claim for injunctive relief. Plaintiffs allege 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. Plaintiffs allege that the State's interpretation and application of the substitution provision forces plaintiffs to violate the terms of the Plan by paying STD benefits to plan participants who do not qualify for those benefits. Plaintiffs rely on the Supremacy Clause of the United States Constitution and ERISA's preemption 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 preempted 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.

Plaintiffs allege that they face additional claims by Nationwide's 200 Wisconsin associates in the future, as well as an immediate and continuing threat of enforcement actions under the WFMLA. Plaintiffs allege that if an injunction is not issued, Nationwide will have to expend time and resources defending itself during hearings in which the State of Wisconsin will assert jurisdiction under the WFMLA despite ERISA preemption. Plaintiffs allege that since the Equal Rights Division hearings apply only to employers, the Committee has no opportunity to protect its interests as Plan Administrator. Plaintiffs allege that since Oregon also has a substitution provision, but excludes disability benefits from the definition of accrued paid leave, plaintiffs are faced with having to administer the terms of the Plan and pay benefits from the Trust in a non-uniform manner, thereby violating ERISA's goal of uniform plan design and administration. Plaintiffs request an order prohibiting defendants from processing, investigating and adjudicating claims for benefits that are governed exclusively by ERISA, and prohibiting defendants from initiating or participating in 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 preempted 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,...

To continue reading

Request your trial
5 cases
  • Dickten Masch Plastics, LLC v. Williams
    • United States
    • U.S. District Court — Southern District of Iowa
    • August 10, 2016
    ...for violations of Iowa law that would affect the Plan.The Southern District of Ohio considered a similar situation in Sherfel v. Gassman, 748 F.Supp.2d 776 (S.D.Ohio 2010), a case involving claims based on ERISA preemption relating to potential enforcement actions by a Wisconsin state admin......
  • Sherfel v. Gassman
    • United States
    • U.S. District Court — Southern District of Ohio
    • September 28, 2012
    ...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, t......
  • Dickten Masch Plastics, LLC v. Williams, 4:16-cv-00104 - JEG
    • United States
    • U.S. District Court — Southern District of Iowa
    • August 10, 2016
    ...violations of Iowa law that would affect the Plan. The Southern District of Ohio considered a similar situation in Sherfel v. Gassman, 748 F. Supp. 2d 776 (S.D. Ohio 2010), a case involving claims based on ERISA preemption relating to potential enforcement actions by a Wisconsin state admin......
  • Edwards v. Santander Consumer USA, Inc.
    • United States
    • U.S. District Court — Eastern District of North Carolina
    • June 14, 2011
    ...Ltd. ex rel. Tamiami Dev. Corp. v. Miccosukee Tribe of Indians, 177 F.3d 1212, 1220 n.5 (11th Cir. 1999); Sherfel v. Gassman, 748 F. Supp. 2d 776, 791 (S.D. Ohio 2010); In re Am. Online, Inc., 168 F. Supp. 2d 1359, 1367 (S.D. Fla. 2001); see also E. Shore Markets v. J.D. Assocs, Ltd., 213 F......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT