Allison v. L Brands, Inc.

DONNA ALLISON, Individually and as a representative of a class of similarly situated persons, on behalf of the L BRANDS, INC. 401 K SAVINGS AND RETIREMENT PLAN, Plaintiff, v. L BRANDS, INC., et al., Defendants.

No. 2:20-cv-6018

United States District Court, S.D. Ohio, Eastern Division

September 16, 2021

Chelsey M. Vascura Magistrate Judge

OPINION AND ORDER

EDMUND A. SARGUS, JR. UNITED STATES DISTRICT JUDGE

Currently before the Court is the Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction (ECF No. 7) and the Defendants' Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted (ECF No. 8). For the reasons stated below, the Court DENIES the Defendants' Motions.

I.

Plaintiff Donna Allison brings this putative class action against her former employer, L Brands, Inc., L Brands Service Company LLC, and the Retirement Plan Committee of the L Brands, Inc 401(k) Savings and Retirement Plan (collectively, “Defendants”). Ms. Allison participated in the L Brands, Inc. 401(k) Savings and Retirement Plan (“L Brands Plan”) that is regulated by Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001-1461. The L Brands Plan is a defined contribution, single-employer 401(k) plan, which allows participants to invest in a number of different options offered by the Plan, such as various mutual funds, collective trusts, L Brands stock, and a self-directed brokerage account. Wells Fargo Institutional Retirement and Trust was the designated recordkeeper of the L Brands Plan throughout the relevant period, and as such maintains records related to accounts in the Plan, and various other administrative functions associated with the Plan.

A. ERISA

ERISA is a “comprehensive and reticulated statute, ” which is designed to protect employee pensions and benefit plans by, among other things, “setting forth certain general fiduciary duties applicable to the management of both pension and non-pension benefit plans.” Mertens v. Hewitt Assocs., 508 U.S. 248, 251 (1993); Varity Corp. v. Howe, 516 U.S. 489, 496 (1996). “Congress enacted ERISA ‘after almost a decade of studying the nation's Private Pension Plans' and other employee benefit plans.'” In re Cardinal Health, Inc. ERISA Litig., 424 F.Supp.2d 1002, 1016 (S.D. Ohio 2006) (citing Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 569 (1985)). Employers are not required to establish employee benefit plans, but if they choose to do so, they must abide by ERISA. Id.

“Through ERISA, Congress endeavored to ensure that if an employee was promised a benefit, she would receive it.” Id. (citing Lockheed Corp. v. Spink, 517 U.S. 882, 887 (1996)). Thus, ERISA “protect[s] . . . the interest of participants in employee benefit plans and their beneficiaries . . ., by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and access to the federal courts.” Id. (citing 29 U.S.C. § 1001(b)). ERISA accomplishes this goal by mandating that private pension plan assets are to be held in trust for the exclusive benefit of plan participants and beneficiaries. Id. (citing 29 U.S.C. § 1103(a)).

ERISA requires such plans to name fiduciaries who have the authority to control and manage the operation and administration of the plan. Id. (citing 29 U.S.C. § 1102(a)(2)). These fiduciaries need not be independent parties; the employer or plan sponsor may appoint its own “officer, employee, agent, or other representative” to serve in a fiduciary capacity. Id. (citing 29 U.S.C. § 1108(c)(3)).

B. Plaintiff's Complaint and Defendants' Motions

Ms. Allison filed this purported class action that alleges violations of ERISA, and asks the Court for declaratory and injunctive relief pursuant to ERISA § 502, 29 U.S.C. § 1132. She also seeks equitable, legal, or remedial relief pursuant ERISA § 409 and 502, 29 U.S.C. §§ 1109 and 1132.

The Defendants' filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction (ECF No. 7), and Plaintiff filed a Memorandum in Opposition (ECF No. 10). The Defendants then filed their Reply Brief in Support of their Motion. (ECF No. 26.) On the same day as filing the first motion, the Defendants also filed a Motion to Dismiss for Failure to State a Claim Upon Which Relief May be Granted. (ECF No. 8.) Plaintiff filed her Memorandum in Opposition (ECF No. 11) and the Defendants filed their Reply Brief (ECF No. 27).

When a defendant seeks dismissal for both lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) and failure to state a claim under Fed.R.Civ.P. 12(b)(6), a court must consider the 12(b)(1) motion first because the 12(b)(6) motion will become moot if subject matter jurisdiction is lacking. Moir v. Greater Cleveland Regional Transit Authority, 895 F.2d 266, 269 (6th Cir. 1990); City of Heath, Ohio v. Ashland Oil, Inc., 834 F.Supp. 971, 975 (S.D. Ohio 1993).

II.

A. Federal Rule of Civil Procedure 12(b)(1)

“When a defendant moves to dismiss on grounds of lack of subject matter jurisdiction, the plaintiff has the burden of proving jurisdiction in order to survive the motion.” Nichols v. Muskingum College, 318 F.3d 674, 677 (6th Cir. 2003) (internal citations and quotations omitted). In reviewing a motion to dismiss for lack of subject matter jurisdiction, “the court may consider evidence outside the pleadings to resolve factual disputes concerning jurisdiction, and both parties are free to supplement the record by affidavits.” Id. (internal citations omitted). “However, where a defendant argues that the plaintiff has not alleged sufficient facts in her complaint to create subject matter jurisdiction, the trial court takes the allegations in the complaint as true.” Id. (internal citations omitted).

B. Analysis

The Defendants move to dismiss Ms. Allison's complaint, arguing that she lacks standing because, they posit, she released her claims under the terms of the Separation Agreement she entered into in 2019 with L Brands that contains a provision (set out in full infra) in which she relinquished any legal claims “with respect to any aspect of her employment” or her “separation of employment.” (Separation Agreement at 2, ECF No. 7-2; Defs' Mot. at 1, ECF No. 7-1). In response, Ms. Allison contends that her claims are brought pursuant to ERISA § 502(a)(2), which are “claims brought in a representative capacity on behalf of the Plan and therefore are not subject to the provisions of the release.” (Pl's Resp. at 3, 7, ECF No. 10).

1.Standing

When participants bring suit on behalf of the plan under ERISA § 502(a)(2), they must satisfy both a statutory and constitutional standing component. See Glanton ex rel ALCOA Prescription Drug Plan v. Advance PCS Inc., 465 F.3d 1123, 1127 (9th Cir. 2006) (holding that plaintiffs can bring claims on behalf of a plan “so long as plaintiffs otherwise meet the requirements for Article III standing.”); see also Loren v. Blue Cross & Blue Shield of Mich., 505 F.3d 598, 608 (6th Cir. 2007) (affirming the lower court's dismissal of plaintiff's claims under §502(a)(2) because the alleged injury was “too speculative to establish constitutional standing.”). Thus, to properly decide the Defendants' 12(b)(1) motion, it is necessary to analyze both forms of standing as they relate to the facts of this case.

a. Statutory Standing

Plaintiff was entitled to bring suit on behalf of the Plan because she is a “participant” within the statutory definition. Under ERISA, a “participant” is defined, in relevant part, as “any . . . former employee . . . who is or may become eligible to receive a benefit of any type from an employee benefit plan.” 29 U.S.C. § 1002(7). The Supreme Court has held that this definition encompasses former employees who may have a “colorable claim to vested benefits, ” particularly such that they would prevail in a suit concerning those benefits. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117-18 (1989).

In the context of ERISA § 502(a)(2) suits concerning defined contribution plans, “‘if the plaintiffs win their case by obtaining a money judgment . . ., the receipt of that money will constitute the receipt of a plan benefit.'” Bridges v. American Elec. Power Co., Inc., 498 F.3d 442, 445 (6th Cir. 2007) (citation omitted). Therefore, a judgment in favor of restoring plan benefits would directly inure to those harmed by the fiduciary breach. See Evans v. Akers, 534 F.3d 65, 73 (1st Cir. 2008). As such, it has been held that former participants of a defined contribution plan who were enrolled during the class period are “participants” pursuant to the statutory language of ERISA. Id. at 71; Bridges, 498 F.3d at 445.

Similarly here, the Plan in question is a defined contribution plan. Although Ms. Allison is a former participant in the Plan, she has participant standing under Section 502(a)(2) because she still retains a colorable claim for vested benefits. For instance, in the event that her lawsuit on behalf of the Plan is successful, a restoration of benefits back to the Plan would result in a financial benefit to individual participants. Thus, Plaintiff sufficiently meets the requirements for statutory standing under ERISA § 502(a)(2).

b. Constitutional Standing

The Constitution limits the jurisdiction of the federal courts to a “Case” or “Controversy.” U.S Const., art. III, § 2, cl. 1. One of the requirements of a case or controversy is that the plaintiff has standing to sue. Duncan v. Muzyn, 885 F.3d 422, 427 (6th Cir. 2018) (citing Spokeo, Inc. v. Robins, 578 U.S. 856 (2016)). Constitutional standing consists of three separate elements that must be satisfied. The plaintiff must have a (1) concrete and...