Webb v. Gardner, Carton &A Douglas LLP Long Term Disability Plan

• Decision Date: 22 October 2012
• Docket Number: Case No. 12 C 2152.
• Citation: 899 F.Supp.2d 788
• Court: U.S. District Court — Northern District of Illinois
• Parties: Edward WEBB, Plaintiff, v. GARDNER, CARTON & DOUGLAS LLP LONG TERM DISABILITY PLAN, Unum Life Insurance Company of America, and Drinker Biddle & Reath LLP, f/k/a Gardner, Carton & Douglas LLP, Defendants.

899 F.Supp.2d 788

Edward WEBB, Plaintiff,

v.GARDNER, CARTON & DOUGLAS LLP LONG TERM DISABILITY PLAN, Unum Life Insurance Company of America, and Drinker Biddle & Reath LLP, f/k/a Gardner, Carton & Douglas LLP, Defendants.

Case No. 12 C 2152.

United States District Court,

N.D. Illinois,

Eastern Division.

Oct. 22, 2012.

Martina Frank Brendel, Daley, Debofsky & Bryant, Mark D. DeBofsky, Chicago, IL, Attorney for Plaintiff.

Daniel J. Delaney, Drinker Biddle & Reath LLP, Kimberly Ann Jones, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Chicago, IL, David R. Levin Drinker Biddle & Reath, LLP, Washington, D.C., Mark E. Schmidtke, Eric P. Mathisen, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Valparaiso, IN, Attorney for Defendants: Gardner, Carton & Douglas LLP Long Term Disability Plan + Drinker Biddle & Reath LLP.

MEMORANDUM OPINION AND ORDER

MILTON I. SHADUR, Senior District Judge.

Edward Webb (“Webb”), formerly an equity partner in law firm Gardner, Carton & Douglas LLP (“Gardner Carton”) (now merged into Drinker Biddle & Reath LLP (“Drinker”)), has brought an action under the Employee Retirement Income Security Act (“ERISA,” 29 U.S.C. §§ 1001–1461) ¹ against Gardner, Carton & Douglas LLP Long Term Disability Plan (the “Plan”), Unum Life Insurance Company of America (“Unum”) and Drinker. Drinker and the Plan have filed a joint motion to dismiss under Fed.R.Civ.P. (“Rule”) 12(b)(6), and Unum has filed its own Rule 12(b)(6) motion. For the reasons explained in this opinion, all three of Webb's claims are dismissed as untimely.

Rule 12(b)(6) Standards

Under Rule 12(b)(6) a party may move for dismissal of a complaint for “failure to state a claim upon which relief can be granted.” By now it is stale news that over five years ago Bell Atl. Corp. v. Twombly, 550 U.S. 544, 562–63, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) repudiated as overly broad the then half-century-old formulation in Conley v. Gibson, 355 U.S. 41, 45–46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) “that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Instead Twombly,id. at 555, 127 S.Ct. 1955 teaches that a complaint must provide “only enough facts to state a claim to relief that is plausible on its face.” Or put otherwise, “[f]actual allegations must be enough to raise a right of relief above the speculative level” ( id. at 555, 127 S.Ct. 1955).Erickson v. Pardus, 551 U.S. 89, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam) and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) have since provided further Supreme Court enlightenment on the issue.

Familiar Rule 12(b)(6) principles—still operative under the new pleading regime—require this Court to accept as true all of Webb's well-pleaded factual allegations, with all reasonable inferences drawn in his favor (Christensen v. County of Boone, 483 F.3d 454, 457 (7th Cir.2007) (per curiam)). What follows in this opinion adheres to those principles.²

Background

Until May 16, 2002 Webb was an equity partner at Gardner Carton (Cmplt. ¶ 14) and was also a member of the ERISA-regulated Plan—a group policy issued by Unum and administered by Gardner Carton ( id. ¶¶ 10, 34). In the event of a plan participant's long term disability, the Plan provided monthly cash benefits based on the participant's salary and—before 2002, anyway—capped at $15,000 (Ex. G).

In January 2002 Gardner Carton equity partners gained access to an individual disability income policy (the “IDI Plan”) that provided a monthly payment of $6,500 to the disabled ( id.; Cmplt. ¶ 10). Defendants do not dispute that the IDI Plan payments were a supplement to the Plan (see U. Mem. 2; D. Mem. 2), but the parties disagree about the maximum allowable benefits. After the 2002 alteration to the insurance scheme, the Plan language still indicated that its payments were capped at $15,000 (Ex. A), suggesting a total monthly disability cap of $21,500 for equity partners.

To the contrary, defendants have continually asserted that the post-January 2002 Plan was actually supposed to have a monthly cap of $8,500 and that the $15,000 Plan maximum was a drafting error (Cmplt. ¶ 20). That is evidenced, defendants suggest, by two letters allegedly sent to the plan participants—one in December 2001 and one in April 2002—explaining the changes to the insurance scheme and placing the Plan's monthly maximum at $8,500 (Exs. F and G). But Webb contends that he never saw those letters until January 2003 (W. Resp. U. 2).

On May 15, 2002 Webb experienced a heart attack—his second—and permanently ceased his work at Gardner Carton (Cmplt. ¶ 14). He began receiving both the Plan and IDI Plan benefits on December 20, 2002 (retroactive to November 12, 2002), but his request for waiver of life insurance premiums was denied ( id. ¶ 16). Unum calculated that Webb would receive $14,124.95 monthly under the Plan and $6,500 monthly under the IDI Plan ( id.). In January 2003 Gardner Carton informed both Webb and Unum that it believed Webb was being overpaid ( id. ¶ 19), with Gardner Carton's executive director Michael Marget (“Marget”) sending a January 15 letter to Unum explaining that the Plan contained a drafting error, that Gardner Carton intended the maximum monthly benefit under the Plan to be $8,500 and that he wanted to amend the Plan accordingly effective on January 12 ( id. ¶ 20). Marget also requested that Unum waive Webb's obligation to pay life insurance premiums ( id.).

On January 16 Marget told Webb that in return for waiving any right to higher benefits under the allegedly faulty language of the Plan, Unum would not seek recovery of the two overpayments that Webb had already received ( id. ¶ 21). Marget also threatened to withdraw Gardner Carton's support of Webb's application for a life insurance premium waiver and suggested that Webb's disability benefits would be revisited entirely if Webb challenged a reduction to his benefits ( id.). Webb did not back down, but he nonetheless received reduced benefits starting in January 2003 ($8,500 under the Plan, for a monthly total of $15,000) ( id. ¶ 22).

On April 1, 2003 Webb sent an email appealing the reduction ( id. ¶ 23). That appeal was rejected, but Webb's obligation to pay his life insurance premium was in fact waived ( id. ¶¶ 26, 28). Webb did not seek further review, assertedly because he feared retaliation based on Marget's threats ( id. ¶ 28). On July 15, 2003 the Plan was amended—retroactive to January 1, 2002, before Webb's disabling event—to reflect Gardner Carton's asserted original understanding of both plans ( id. ¶ 27).

Webb's benefits from the Plan and the IDI Plan ran out on January 20, 2012, and he then filed suit against defendants ( id. ¶ 28). In addition to his injury based on his lost benefits ( id. ¶ 31), Webb also alleges an injury pursuant to Unum's and Gardner Carton's distribution of a misleading Summary Plan Description (“SPD”) ( id. ¶ 36). ERISA requires plan administrators to distribute accurate SPDs (§ 1021(a)), and Webb maintains that even if this Court finds the retroactive amendment to the Plan to be valid, he will still have received a misleading SPD in which the maximum payment under the Plan was stated to be $15,000, a communication that caused him harm ( id. ¶ 35–36). Webb seeks to recoup those injuries through three claims, one for benefits unpaid under Section 1132(a)(1)(B), another for recovery based on a breach of fiduciary duty under Section 1132(a)(3) and the third for recovery due to a retaliatory employment action under Section 1140.

Count I: Section 1132(a)(1)(B)

Section 1132(a)(1)(B) permits an ERISA plan participant to sue for recovery of benefits due under the plan to which he belongs. Webb claims that the version of the Plan in place at the time his disability began awarded a maximum monthly payment of $15,000. Because he received only $8,500 per month for all but two months of his benefits period, he is seeking the balance of benefits allegedly owed. Defendants' motions to dismiss respond, and this Court agrees, that Webb's Section 1132(a)(1)(B) claim is untimely.³

ERISA does not contain a statute of limitations for suits brought pursuant to Section 1132(a)(1)(B), so the general practice is “to borrow the limitations period of the most analogous state or federal statute” (Abena v. Metro. Life Ins. Co., 544 F.3d 880, 883 (7th Cir.2008)). But if a contractual limitations period is established by an ERISA plan, it must be enforced if reasonable ( Doe v. Blue Cross & Blue Shield United of Wis., 112 F.3d 869, 874 (7th Cir.1997)).

Here defendants contend that Webb's Section 1132(a)(1)(B) claim is barred by the contractual limitations period established in the Plan, which states, “You can start legal action regarding your claim ... up to 3 years from the time proof of claim is required ...” (Ex. A). Under other provisions of the Plan, proof of claim is required 90 days after the elimination period (that is, the period of continuous disability that must be satisfied to receive benefits—in this case, 180 days) (Ex. A). With Webb's disabling event having taken place on May 16, 2002, putting the end of his elimination period at November 12, 2002 and the due date for his proof of claim at February 9, 2003, defendants' position is that a Section 1132(a)(1)(B) claim filed after February 9, 2006 must be deemed untimely.

Webb responds with several arguments that would render his Section 1132(a)(1)(B) claim timely. Those will be discussed here seriatim.

First Webb maintains that the contractual limitations period on which defendants rely is not applicable to his Section 1132(a)(1)(B) claim. For support he cites Withrow v. Halsey, 655 F.3d 1032, 1039 (9th Cir.2011) which held that a similarly worded limitations clause applied only to disputes as to the threshold question of entitlement to benefits, not...