Smith v. I.A.T.S.E. Local 16 Pension Plan
| Decision Date | 26 November 2019 |
| Docket Number | Case No. 19-cv-03573-DMR |
| Parties | KIM SMITH, Plaintiff, v. I.A.T.S.E. LOCAL 16 PENSION PLAN, Defendant. |
| Court | U.S. District Court — Northern District of California |
On June 19, 2019, Plaintiff Kim Smith filed a complaint on behalf of a putative class against Defendant I.A.T.S.E. Local 16 Pension Plan (the "Plan"), alleging various violations of the Employment Retirement Income Security Act ("ERISA"). [Docket No. 1 ("Compl.").] The Plan now moves to dismiss the complaint pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6). [Docket Nos. 7 ("Mot"), 14 ("Reply").]. Smith timely opposed. [Docket No. 13 ("Opp.").] The court held a hearing on October 24, 2019.
Having considered the parties' briefs and oral arguments, the court grants in part and denies in part the Plan's motion.
The following facts are taken from Smith's complaint. The Plan is an employee pension benefit plan covered by ERISA and Smith has been a participant in the Plan since 1988. Compl. ¶¶ 1-3, 6. After Smith's entitlement to pension benefits vested, she retired in 2010 and the Plan began paying her pension benefits. Id. ¶¶ 1, 6-7. At the time Smith retired, the Plan provided that post-retirement benefits would be suspended if participants returned to "full-time Covered Employment." Id. ¶ 8. The Plan defined "Covered Employment" as "employment for which an employer was obligated to make contributions to the Trust Fund (i.e., union work)." Id. ¶ 8. Under the terms of the Plan in 2010, a participant's pension benefits would be suspended if they engaged in Covered Employment for more than 480 hours per year. Id.
In July 2017, participants in the Plan received notice of amendments that would take effect on August 1, 2017 (the "Amendment"). Compl. ¶ 9; see Docket No. 13-1 ("Canty Decl."), Ex. 3 ("Notice"). At issue in this case is the Plan's new definition of "Prohibited Employment," which (according to the Notice) "has a broader meaning [than the prior definition] and will result in suspension for work in the industry regardless of whether it is covered work for which contributions are made." Notice at 2. The Amendment provides:
Compl. ¶ 10; Canty Decl., Ex. 1 ("2017 Plan") ¶ 1.19.
Smith alleges that in early 2019, the Plan sent her a form affidavit that required her to report information about the post-retirement work she performed in 2018. Compl. ¶ 12. Smith called the Plan office for information about the affidavit. Id. She was informed by an unidentified person that the Plan had been amended and that the Amendment applied to her. Id. According to Smith, the Plan informed her that "the union had every right to change the Plan rules if they wanted to," and instructed her to complete the affidavit and submit it for evaluation. Id. Smith claims that other retired participants of the plan were issued similar letters and affidavits. Id. ¶ 13. She avers that the Plan intended to apply the Amendment to all plan beneficiaries, including participants like Smith who retired prior to August 2017. Id.
Smith completed and submitted the affidavit in March 2019. Compl. ¶ 14. She provided the requested information about the work she performed in 2018, which she claims was not Covered Employment as defined by the Plan prior to the Amendment. Id. On April 2019, the Plan sent hera letter informing her that her 2018 work was "considered Prohibited Employment as defined by the Plan." Id. ¶ 15; see Canty Decl., Ex. 4 ("Benefit Letter"). The Plan directed her to submit her 2018 paystubs, W-2s, and tax return to determine whether she exceeded the 480 allowable hours. Id. ¶ 15; Benefit Letter.
On May 23, 2019, Smith's counsel sent a letter to the Plan, asserting that the Amendment as applied to her violated ERISA's"anti-cutback" provisions. Compl. ¶ 16. She accordingly requested that the Plan rescind its adverse determination that her 2018 employment was "Prohibited Employment" as defined by the Plan. Id. On June 18, 2019, counsel for the Plan responded. Id. ¶ 17; see Canty Decl., Ex. 5 ("Plan Letter"). The Plan stated that the provisions of the Plan as amended to January 1, 2010 applied to Smith, and that the provisions of the 2010 Plan "govern the determination as to whether Ms. Smith's benefit payment will cease due to employment." Plan Letter at 2. The Plan also reiterated the request in the Benefit Letter that Smith provide her financial information so that it could complete a determination on Smith's benefits. Id.
Smith alleges that, based on the "incomprehensible and inconsistent" communications from the Plan, she "cannot reliably ascertain whether her pension benefits are endangered due to the 2010 Plan document, the 2017 Amendment, and the Plan's April 29, 2019 adverse determination." Compl. ¶¶ 17, 37. She states that she is "now faced with uncertainty as to whether the Plan will suspend her pension benefits based on her past employment, and consequently is unable to reliably ascertain as to where she stands with respect to the Plan and her pension." Id. ¶ 18.
According to Smith, the Plan violates 29 U.S.C. § 1054(g), which provides that "[t]he accrued benefit of a participant under a plan may not be decreased by an amendment of the plan" (the "anti-cutback" rule). Id. ¶ 33. She seeks relief under 29 U.S.C. § 1132(a)(1)(b) (ERISA § 502(a)(1)(B)) and 29 U.S.C. § 1132(a)(3) (ERISA § 502(a)(3)). Smith also alleges that the Plan has "attempted to enforce the terms of the Amendment on other retirees not lawfully subject to it," and she proposes to represent a class of all Plan participants who retired prior to August 2017 and have been subjected to the Amendment. Id. ¶¶ 19, 23.
On behalf of herself and the class, Smith seeks declaratory relief clarifying the past and future rights of pre-Amendment retirees under the Plan; an order enjoining the Plan from enforcingthe Amendment against her and the putative class; an order that the Plan pay all benefits that have been unlawfully suspended by reason of the alleged ERISA violations; pre- and post-judgment interest; and attorneys' fees and costs.
A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in the complaint. See Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). When reviewing a motion to dismiss for failure to state a claim, the court must "accept as true all of the factual allegations contained in the complaint," Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) (citation omitted), and may dismiss a claim "only where there is no cognizable legal theory" or there is an absence of "sufficient factual matter to state a facially plausible claim to relief." Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (citing Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)) (quotation marks omitted). A claim has facial plausibility when a plaintiff "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citation omitted). In other words, the facts alleged must demonstrate "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 554, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)); see Lee v. City of L.A., 250 F.3d 668, 679 (9th Cir. 2001), overruled on other grounds by Galbraith v. Cty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002).
As a general rule, a court may not consider "any material beyond the pleadings" when ruling on a Rule 12(b)(6) motion. Lee, 250 F.3d at 688 (citation and quotation marks omitted). However, "a court may take judicial notice of 'matters of public record,'" id. at 689 (citing Mack v. S. Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)), and may also consider "documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading," without converting a motion to dismiss under Rule 12(b)(6) into a motion for summary judgment. Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith, 307 F.3d at 1125-26. The court need not accept as true allegations that contradict facts which may be judicially noticed. See Mullis v. U.S. Bankr. Court, 828 F.2d1385, 1388 (9th Cir. 1987).
The Plan moves to dismiss Smith's complaint on five grounds: (1) that Smith did not exhaust her administrative remedies prior to commencing this action; (2) that Smith has not alleged facts sufficient to state a claim under section 502(a)(1)(B); (3) that Smith has not adequately pleaded a violation of ERISA's anti-cutback rule; (4) that Smith is not entitled to equitable relief under section 502(a)(3); and (5) that Smith has not pleaded that she is entitled to injunctive relief.
The Plan argues that Smith failed to exhaust her administrative remedies under the Plan as required before seeking judicial relief. Mot. at 10. The ERISA statute does not explicitly contain an exhaustion requirement. Amato v. Bernard, 618 F.2d 559, 566 (9th Cir. 1980). However, the Ninth Circuit has held that "federal courts have the authority to enforce the...
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