Smith v. Belk, Inc.
| Decision Date | 26 November 2013 |
| Docket Number | No.: 3:13-CV-332-TAV-CCS,: 3:13-CV-332-TAV-CCS |
| Parties | GEORGE DAVID SMITH, Plaintiff, v. BELK, INC. and BELK DEPARTMENT STORES, LP, Defendants. |
| Court | U.S. District Court — Eastern District of Tennessee |
This civil action is before the Court on plaintiff's Motion to Remand [Doc. 9], to which defendants responded [Doc. 10], and defendants' motion for summary judgment [Doc. 11], to which plaintiff responded [Doc. 18] and defendants replied [Doc. 19]. The Court has thoroughly considered the arguments of the parties, the relevant documents and exhibits, and the controlling law. For the reasons stated herein, plaintiff's motion to remand [Doc. 9] will be DENIED, and defendants' motion for summary judgment [Doc. 11] will be GRANTED.
Plaintiff, who is a resident of Tennessee, began his employment with Parks-Belk, a predecessor to defendants, on October 1, 1965, and worked in its Kingsport, Tennessee store until that store closed on June 17, 1995, retiring roughly two weeks later on June 30, 1995 [Docs. 9-1 ¶¶ 1, 7, 10-1 ¶ 4]. Defendant Belk, Inc. is the successor-in-interest to Parks-Belk, where plaintiff was employed, and the parent company to Belk StoresServices, Inc., which administers the pension plan at issue in this action ("Plan Administrator") [Doc. 10-1 ¶¶ 1, 4]. It is somewhat unclear how defendant Belk Department Stores, LP is related to Belk, Inc. or the Plan Administrator, if at all.1 In any event, Belk, Inc. is a Delaware corporation with its principal office in Charlotte, North Carolina, and Belk Department Stores, LP is a North Carolina limited partnership with its principal office in Charlotte as well [Doc. 3-1 pp. 16-18]. Both defendants are registered to do business in Tennessee [Id.].
In July 1996, plaintiff completed an "Application for Pension Benefits" in which he selected a pension plan through which he would receive a monthly benefit payment as a result of his long-time employment with Parks-Belk [Doc. 9-1 ¶ 2]. This pension plan ("Plan") was established on January 1, 1969, by the Plan Administrator, which has administered the Plan since that date for the purpose of providing retirement income to defendants' employees, and has been exclusively funded by employer contributions [Doc. 10-1 ¶¶ 1, 6-7]. The Plan is governed by a supporting document ("Plan Document") that is distributed to defendants' employees upon request, and which sets forth in detail the Plan's terms, benefits, beneficiaries, source of financing, and procedures [Id. ¶ 7-8].
When plaintiff completed his application for pension benefits on July 10, 1996, he selected a 100 percent "joint-and-survivor payment option" ("J&S Option"), which meant that in exchange for a lesser monthly benefit, plaintiff's designated beneficiary would receive 100 percent of the monthly benefit payment plaintiff received for the remainderof the beneficiary's lifetime if plaintiff predeceased the beneficiary [Docs. 9-1 ¶ 4, 10-4]. The default joint-and-survivor payment option was the 50 percent option under which the beneficiary would receive 50 percent of the deceased employee's monthly benefit for the remainder of the beneficiary's lifetime. [Docs. 9-1 ¶ 4, 10-1 ¶ 11]. Each month since July 1996, plaintiff has received his monthly benefit payment [Doc. 9-1 ¶¶ 4, 8].
In July 1996, plaintiff was married to Joyce Marie Smith ("J.M. Smith") and he designated her as his beneficiary on his application for benefits [Id. at ¶ 5, Doc. 10-4]. On the application, J.M. Smith could have signed "I hereby consent to my spouse's designation of another beneficiary to receive such death benefits," but she did not, and there is no other signature [Doc. 10-4]. On November 25, 2000, J.M. Smith passed away [Doc. 3-1 p. 5].
On June 2, 2001, plaintiff married Loye Anne Pearson Smith ("L.A.P. Smith") and he now seeks to substitute her as his beneficiary under the Plan [Id. at 5-6]. Plaintiff asserts that he is "paying for [the right to assign his beneficiary rights to L.A.P.] each and every month" [Doc. 9-1 ¶ 6]. Plaintiff contacted defendants or the Plan Administrator and attempted to assign his beneficiary rights to L.A.P. Smith, but they have refused, citing the terms of the Plan Document [Id., Doc. 10-1 ¶ 20].
Section 1.7 of the Plan Document designates the Plan participant's "Benefit Commencement Date" as "[t]he first day of the first month for which a retirement benefit is payable to the Participant" [Doc. 11-2 p. 11]. For plaintiff, this was July 1, 1996 [Doc. 10-1 ¶ 13]. Section 4.7(a) of the Plan Document states that the plan participant maychange his or her designated beneficiary by filing the proper documents, but that "[t]o be effective, each designation or revocation [of a beneficiary] must be . . . signed and filed . . . before the Participant's Benefit Commencement Date" [Doc. 11-2 p. 37].
According to defendants, the reasoning behind this restriction is that "the pricing and determination of the monthly benefit amount are made on or around the 'Benefit Commencement Date,' [and thus] allowing [beneficiary] changes [based on changes in the participant's personal circumstances] would create adverse actuarial results" [Doc. 10-1 ¶ 20]. An employee for a subsidiary of the Plan Administrator offers the example that, if after-the-fact changes were allowed, "a participant whose 'Spouse' becomes terminally ill would presumably change to a larger lifetime benefit for the participant" [Id. ¶ 20]. Accordingly, when plaintiff requested that his beneficiary be changed to L.A.P. Smith, the Plan Administrator did not allow such a change because the Plan Document does not permit plaintiff to change his beneficiary after his Benefit Commencement Date [Id. ¶ 21]. To this end, "[t]he Plan Document gives the Plan Administrator the power to construe the Plan and to decide all questions arising under the Plan" [Id. ¶ 9].
After the Plan Administrator refused to allow plaintiff to change his beneficiary, plaintiff filed a complaint in the Chancery Court for Knox County, Tennessee, on May 3, 2013 [Doc. 3-1 p. 2]. In his complaint, plaintiff states that defendants are violating the Tennessee Consumer Protection Act ("TCPA") by holding themselves out to the public as simply "Belk," without any corporate descriptors, and that defendants have engaged in"unfair or deceptive acts" in administering the Plan [Id. at 5, 8]. As a result, plaintiff demanded "damages in a sum not less than Twenty-five Thousand Dollars ($25,000.00) representing the value of his pension rights under his pension contract and his present wife's life expectancy," treble damages under the TCPA, attorneys' fees, and costs [Id. at 9]. Defendants removed the action to this Court on June 13, 2013, asserting that the action is removable under 28 U.S.C. § 1441(a) on two grounds: (1) because the Employee Retirement Income Security Act ("ERISA") completely preempts plaintiff's purported state law claims, rendering the action removable based on 28 U.S.C. § 1331 jurisdiction, and (2) because it involves completely diverse parties and an amount in controversy in excess of $75,000, giving this Court original jurisdiction pursuant to 28 U.S.C. § 1332(a) [Doc. 1 ¶¶ 21-22].
Plaintiff subsequently filed a motion to remand this action to state court, citing in support his assertion that ERISA does not preempt his claims because: (1) that legislation was passed after plaintiff began working for Parks-Belk and therefore after the "contract and privity" between the parties; (2) the matter of diversity is "questionable" because defendants were formed after 1996, have places of business in Tennessee, and are registered to do business here; and (3) the amount in controversy in plaintiff's complaint is only $25,000 because the treble damages are sought as a penalty, not as part of the amount in controversy, though plaintiff also notes in his motion that the amount in controversy is "at least $28,000" [Doc. 9]. Plaintiff asserts his complaint is based in Tennessee contract law and upon the provisions of the TCPA and should thus beremanded to state court [Id.]. Defendants contemporaneously filed a response to the motion to remand and a motion for summary judgment, reasserting that ERISA preempts plaintiff's state-law claims and that diversity jurisdiction exists, adding that under ERISA, defendants are entitled to judgment as a matter of law [Docs. 10, 11].
Plaintiff responded to defendants' motion for summary judgment by reiterating his previous arguments in favor of remanding this action to state court and liability on defendants' part under the TCPA and Tennessee contract law [Doc. 18]. Plaintiff further asserts that: (1) "it has not been established . . . who the Defendant really is" given that there is not a corporate entity named simply "Belk," which is how defendants' stores hold themselves out to the public in Tennessee; (2) the blank signature line on plaintiff's application for pension benefits below the phrase "I hereby consent to my spouse's designation of another beneficiary" implies that defendants allow such changes; (3) if the defendants were forced to allow plaintiff to substitute his beneficiary, the amount in controversy would be $0; and (4) plaintiff contracted for the right to change his beneficiary [Id.]. Defendants replied by citing case law supporting the proposition that ERISA preempts plaintiff's state-law causes of action, contending that it is well established who defendants are and that they are not responsible for administering the Plan, pointing out that participants in the Plan "are entitled to change their beneficiaries . . . before the participant's [Benefit Commencement Date]," and submitting that plaintiff does not have the right under the Plan Document to change his beneficiary [Doc. 19].
The Court first addresses plaintiff's motion to remand. Because the Court declines to grant this motion, the Court then considers defendants' motion for summary judgment.
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