Tronsgard v. FBL Fin. Grp., Inc., Case No. 17–2393–DDC–JPO

312 F.Supp.3d 982

Steve TRONSGARD & Medbor Chavez, individually and on behalf of all others similarly situated, Plaintiffs,

v.FBL FINANCIAL GROUP, INC., et al., Defendants.

Case No. 17–2393–DDC–JPO

United States District Court, D. Kansas.

Signed April 25, 2018

Aaron L. Kite, David J. Rebein, Rebein Bangerter Rebein PA, Dodge City, KS, Larkin E. Walsh, Rex A. Sharp, Ryan C. Hudson, Rex A. Sharp, PA, Prairie Village, KS, Paul H. Mose, Mose Law, LLC, Kansas City, KS, for Plaintiffs.

Adam S. Johnson, Pro Hac Vice, Dentons US, LLP, St. Louis, MO 63102, Brian P. Baggott, Gregory T. Wolf, Samantha Jo Wenger, Wade P. K. Carr, Dentons US, LLP, Kansas City, MO, Paul Swinton, Pro Hac Vice, Parker & McNeill, P.L.L.C, West Des Moines, IA, for Defendants.

MEMORANDUM AND ORDER

Daniel D. Crabtree, United States District JudgePlaintiffs Steve Tronsgard and Medbor Chavez are former insurance agents for defendants—a group of entities that plaintiffs call "the Farm Bureau family of companies." Doc. 41 at 12. The four defendants named in plaintiffs' Complaint are: (1) FBL Financial Group, Inc. ("FBL Financial"); (2) Farm Bureau Property & Casualty Insurance Co. ("FBP & C"); (3) Farm Bureau Life Insurance ("FB Life"); and (4) Western Agricultural Insurance Company ("WAIC"). Plaintiffs allege that defendants improperly classified them during their employment as independent contractors instead of employees. And plaintiffs, both individually and on behalf of all others similarly situated, bring this lawsuit asserting claims arising from defendants' alleged misclassification.

Defendants have responded to the lawsuit by filing a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6), asserting that plaintiffs' First Amended Class Action Complaint fails to state a claim for relief. Doc. 31. Plaintiffs filed an Opposition to that motion. Doc. 41. And defendants submitted a Reply. Doc. 54. After the briefing closed, the court granted plaintiffs' motion to file a surreply and also permitted defendant to file a sur-surreply. Doc. 59. On January 23, 2018, plaintiffs filed their Surreply. Doc. 60. And on January 31, 2018, defendants filed their Sur-surreply. Doc. 62. The matter, to say the least, is fully briefed, and the court is prepared to rule. After considering the arguments and authorities presented in the parties' papers,¹ the court grants defendants' Motion to Dismiss in part and denies it in part. The court explains why below.

I. Factual Background

The following facts are taken from plaintiffs' First Amended Class Action Complaint ("Complaint"). Doc. 23. The court accepts the facts asserted in the Complaint as true and views them in the light most favorable to plaintiffs. Burnett v. Mortg. Elec. Registration Sys., Inc. , 706 F.3d 1231, 1235 (10th Cir. 2013) (citing Smith v. United States , 561 F.3d 1090, 1098 (10th Cir. 2009) ).

From 2003 to 2014, plaintiff Steve Tronsgard worked as a Farm Bureau insurance agent in Kansas. From 2014 to 2016, plaintiff Medbor Chavez worked as a Farm Bureau insurance agent in Kansas. Both plaintiffs signed an Agent Contract that classified them as independent contractors, not employees. But, in reality, defendants retained the right to control the manner, method, and means of virtually every facet of their insurance agents' work. Defendants did so by imposing various regulations, policies, and procedures that governed all its insurance agents. Thus, plaintiffs contend, defendants misclassified plaintiffs and other similarly situated insurance agents as independent contractors. And through this practice of misclassification, plaintiffs allege, defendants shirked their legal obligations to provide health, retirement, and other benefits to its insurance agents while reaping the economic benefits of its captive workforce.

Plaintiffs' Complaint asserts that defendants' misclassification gives rise to six causes of action: (1) Racketeer Influenced and Corrupt Organization Act ("RICO") violations under 18 U.S.C. §§ 1341, 1343, 1962(c) ; (2) Employee Retirement Income Security Act ("ERISA") violations under 29 U.S.C. § 1132(a)(1)(B) ; (3) Kansas Wage Payment Act ("KWPA") violations under Kan. Stat. Ann. §§ 44–313 et seq. ; (4) quantum meruit/rescission; (5) unjust enrichment; and (6) declaratory relief. Defendants assert that none of these claims states a plausible cause of action. Defendants thus ask the court to dismiss plaintiffs' Complaint under Rule 12(b)(6). The court considers defendants' request below.

II. Legal Standard

Fed. R. Civ. P. 8(a)(2) provides that a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Although this Rule "does not require ‘detailed factual allegations,’ " it demands more than "[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action’ " which, as the Supreme Court explained simply, "will not do." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).

For a complaint to survive a motion to dismiss under Rule 12(b)(6), the pleading "must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face.’ " Iqbal , 556 U.S. at 679, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 570, 127 S.Ct. 1955 ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, 129 S.Ct. 1937 (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ); see also Christy Sports, LLC v. Deer Valley Resort Co., Ltd. , 555 F.3d 1188, 1192 (10th Cir. 2009) ("The question is whether, if the allegations are true, it is plausible and not merely possible that the plaintiff is entitled to relief under the relevant law." (citation omitted) ).

When considering whether a plaintiff has stated a plausible claim, the court must assume that the complaint's factual allegations are true. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). But, the court is " ‘not bound to accept as true a legal conclusion couched as a factual allegation.’ " Id. (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ). " ‘Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice’ " to state a claim for relief. Bixler v. Foster , 596 F.3d 751, 756 (10th Cir. 2010) (quoting Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 ). Also, the complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955 (citations omitted).

When evaluating a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the court "may consider not only the complaint itself, but also attached exhibits and documents incorporated into the complaint by reference." Smith v. United States , 561 F.3d 1090, 1098 (10th Cir. 2009). A court "may consider documents referred to in the complaint if the documents are central to the plaintiff's claim and the parties do not dispute the documents' authenticity."

Id. (quoting Alvarado v. KOB–TV, L.L.C. , 493 F.3d 1210, 1215 (10th Cir. 2007) ).

When deciding the motion to dismiss here, the court considers plaintiff Tronsgard's January 1, 2013 Farm Bureau Property & Casualty Insurance Company/Western Agricultural Insurance Company Agent Contract ("Agent Contract") (Doc. 23–1). It does so because plaintiffs refer to the Agent Contract in their Complaint, and they have attached it to the Complaint as an exhibit. See Doc. 23 ¶¶ 43–45, 53, 57–58, 79, 118–24; Doc. 23–1 (the Agent Contract). The Agent Contract also is central to plaintiffs' claims, specifically plaintiffs' RICO claim (see Doc. 23 ¶¶ 118–24). The parties do not dispute its authenticity. For all these reasons, the court considers the Agent Contract when deciding defendants' Motion to Dismiss under Rule 12(b)(6).

III. Analysis

Defendants ask the court to dismiss plaintiff's claims for four reasons. First, defendants argue that the statute of limitations bars each of plaintiff Tronsgard's claims. Second, defendants assert that plaintiffs' ERISA claims fail as a matter of law because plaintiffs have not pleaded exhaustion of administrative remedies. Third, defendants contend that plaintiffs' Complaint fails to state a plausible RICO claim. Finally, defendants argue, plaintiffs' Complaint fails to state a plausible claim for quantum meruit/rescission.² The court addresses each argument, below. The court begins with the RICO claim.

A. Have Plaintiffs Stated a Plausible RICO Claim?

Defendants assert that plaintiffs' Complaint fails to state a violation of RICO. Subsection 1962(c) of RICO makes it:

unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.

18 U.S.C. § 1962(c). Subsection 1962(d) makes it "unlawful for any person to conspire to violate" subsection 1962(c). Id. § 1962(d). RICO provides a private civil cause of action for those who are injured by violations of § 1962 and allows recovery of treble damages, costs, and attorney fees. Id. § 1964(c).

When addressing plaintiffs' RICO claim below, the court is mindful that "RICO is to be read broadly." Sedima, S.P.R.L. v. Imrex Co., Inc. , 473 U.S. 479, 497, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985). "To successfully state a RICO claim, a plaintiff must allege four elements: (1) conduct (2) of an...