Gardner v. Verizon Commc'ns Inc.

HELEN T. GARDNER, Plaintiff, v. VERIZON COMMUNICATIONS INC., Defendant.

16-CV-814 (RRM) (RML)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

March 17, 2017

MEMORANDUM AND ORDER

ROSLYNN R. MAUSKOPF, United States District Judge.

Plaintiff pro se Helen T. Gardner seeks life insurance benefits for her daughter's death, pursuant to a policy issued by Gardner's former employer, defendant Verizon Communications Inc. ("Verizon").¹ Before the Court is Verizon's motion to dismiss Gardner's first amended complaint pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6) for failure to state a claim upon which relief can be granted. (See Mot. Dismiss (Doc. No. 19-2).) Specifically, Verizon seeks to dismiss (1) Gardner's stale law claims because they are preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), and (2) Gardner's claims for compensatory and punitive damages because ERISA limits her legal relief to the $5,000 life insurance benefits due under her life insurance plan, which have already been paid to Gardner. (See id.)

For the reasons that follow, Verizon's motion to dismiss is granted. However, Gardner is granted thirty (30) days from the date of this Memorandum and Order to seek leave to amend her complaint to include a claim for contractual damages for interest accrued on the delayed disbursement of benefits.

BACKGROUND

The following facts, liberally construed, are taken from Gardner's first amended complaint and considered to be true for purposes of this motion to dismiss. Gardner worked for "New York Telephone/ Atlantic/ NYNEX/ Verizon" from 1971 until 2006. (First Am. Compl. (Doc. No. 11) at 1.)² After retiring in 2006, Gardner made monthly payments to her former employer, Verizon, "for a $5,000 supplemental insurance policy for [her] daughter" under the Verizon Dependent Group Life Insurance Plan for New York and New England Associates (the "Plan"). (See id.) When Gardner's daughter passed away on November 15, 2016, Gardner "called the Verizon Benefit Center to advise them of [her] daughter's passing in order to collect the supplemental policy." (Id. at 1-2.) Gardner was advised that her daughter "had 'no policy.'" (Id. at 2.) Gardner alleges that Verizon deliberately falsified online records to state that the supplemental policy had been terminated on January 1, 2015, before her daughter's death. (See id. at 2-4.)

Gardner alleges that Verizon refused to pay life insurance benefits under the Plan. (See id. at 3-4; Mot. Dismiss at 5.) Gardner concedes in her first amended complaint that the Plan is an employee benefit plan under ERISA,³ and asserts causes of action under ERISA and related state law claims of deceptive acts and practices, breach of contract, and "intentional misrepresentation/fraud." (See id. at 3-4.) Gardner's first amended complaint seeks compensatory damages in the amount of the life insurance policy of $5,000 and punitive damages in the amount of $1,000,000. (See id.)

It is undisputed that on or about May 31, 2016, following the filing of the instant action, Gardner received the $5,000 in life insurance benefits due under the Plan. (See Mot. Dismiss at 12-13; Pl.'s Mem. in Supp. (Doc. No. 19-6) at 9.) Verizon subsequently moved to dismiss Gardner's first amended complaint, on the grounds that she received her benefits due under the Plan and was not entitled to further relief (See Mot. Dismiss.)

On July 5, 2016, Gardner opposed Verizon's motion and subsequently filed a motion to amend her complaint for a second time. (See Notice of Mot. to Amend (Doc. No. 19-5); Pl.'s Mem. in Supp.)⁴ In her proposed second amended complaint, Gardner asserts claims for damages under ERISA for (1) "improperly denying benefits to current or former employees"; (2) "breach of fiduciary duty toward employees covered by plans"; and (3) "interference with the right of employees covered by plans." (See Pl.'s Mem. in Supp. at 5.) Gardner also seeks additional civil and criminal penalties pursuant to the following federal statutes: (1) 18 U.S.C. § 1027, entitled False Statements and Concealment of Facts in Relation to Documents Required by ERISA; (2) 29 U.S.C. § 1140, entitled Interference with Protected Rights; (3) 29 U.S.C. § 1149, entitled Prohibition on False Statements and Representations; (4) the Computer Fraud and Abuse Act, 18 U.S.C. § 1030; (5) Section 802 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. §§ 1501, 1519, 1520; and (6) Section 904 of the Sarbanes-Oxley Act of 2002, 29 U.S.C. § 1131. (See Pl's Mem. in Supp. at 5-10.)⁵

STANDARD OF REVIEW

Pursuant to Rule 12(b)(6), a party may move to dismiss a cause of action that "fail[s] to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). In order to withstand a motion to dismiss, a complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir. 2010). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d Cir. 2011) (quoting Iqbal, 556 U.S. at 678). The Court assumes the truth of the facts alleged, and draws all reasonable inferences in the nonmovant's favor. See Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009). Although all factual allegations contained in the complaint are assumed to be true, this tenet is "inapplicable to legal conclusions." Iqbal 556 U.S. at 678.

When a plaintiff proceeds pro se, the plaintiff's pleadings should be held "to less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) (quoting Estelle v. Gamble, 429 U.S. 97, 104-05 (1976)); see Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (noting that even after Twombly, the court "remain[s] obligated to construe a pro se complaint liberally"). Notwithstanding the liberal pleading standards granted to a pro se plaintiff, if "the allegations in a complaint, however true, could not raise a claim of entitlement to relief," dismissal is warranted. Twombly, 550 U.S. at 558.

DISCUSSION

I. Express Preemption Under ERISA

In 1974, Congress enacted ERISA to provide comprehensive and uniform regulation of employee benefit plans - including employee welfare benefit plans - in order to protect"participants in employee benefit plans and their beneficiaries." See 29 U.S.C. §§ 1001(b), 1002(1), 1003(1). ERISA defines an employee welfare benefit plan, in pertinent part, as "any plan, fund or program . . . established or maintained by an employer or by an employee organization . . . for the purpose of providing its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care . . . or benefits in the event of sickness, accident or disability . . . ." 29 U.S.C. § 1002(1).

When a plaintiff brings a cause of action that relates to an employee benefit plan, that cause of action is governed by ERISA's civil enforcement provision. See 29 U.S.C. § 1132; Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65-66 (1987). ERISA expressly preempts any and all state law claims that "relate to" an employee welfare benefit plan. 29 U.S.C. § 1144 ("[T]he provisions of this title and title IV shall supersede any and all State laws insofar as they may . . . relate to any employee benefit plan described in section 1003(a) . . . ."); see also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 48-51 (1987); Metro. Life, 481 U.S. at 62-63; Smith v. Dunham-Bush, Inc., 959 F.2d 6, 8-10 (2d Cir. 1992). A state law "relates to" an employee benefit plan "if it has a connection with or reference to such a plan." Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 147 (2001) (internal quotation marks and citation omitted); HMI Mech. Sys., Inc. v. McGowan, 266 F.3d 142, 148 (2d Cir. 2001) ("A state law relates to employee benefit plans . . . whenever it purports to regulate, directly or indirectly, the terms and conditions of employee benefit plans.") Because ERISA expressly preempts state law in a "deliberately expansive" manner, courts give a broad commonsense meaning to the phrase "relate to." See Pilot Life, 481 U.S. at 45-46.

Specifically, state statutory claims are preempted by ERISA "where they provide an alternative cause of action to employees to collect benefits protected by ERISA, refer specifically to ERISA plans and apply solely to them, or interfere with the calculation of benefits owed to anemployee." Paneccasio v. Unisource Worldwide, Inc., 532 F.3d 101, 114 (2d Cir. 2008) (finding plaintiff's state statutory claim of unfair trade practices preempted because the claim was premised on the termination of an employee benefit plan and denial of plan benefits). Similarly, state common law claims are preempted where they "seek to rectify a wrongful denial of benefits promised under ERISA-regulated plans." Id. (internal quotation marks and citations omitted) (applying preemption to plaintiff's state common law claims of breach of contract and reckless misrepresentation); see also Smith, 959 F.2d at 10 (applying preemption to breach of contract and negligent misrepresentation claims).

In her first amended complaint, Gardner asserts a cause of action under ERISA, seeking life insurance benefits under the Plan as a result of her daughter's death. (See First Am. Compl. at 3; Mot. Dismiss at 5.) There is no dispute that the Plan constitutes an employee welfare benefit plan within the meaning and intent of ERISA. (See First Am. Compl, at 3; Mot. Dismiss at 5-6, 9); see also 29 U.S.C. § 1002(1). As such, ERISA preempts Gardner's second, third, and fourth claims because the state statutory and common law claims "relate to" the Plan.

Gardner's second claim, for relief alleging...