Vlahos v. Alight Solutions Benefit Payment Servs., LLC

DANIELLE VLAHOS, Plaintiff, v. ALIGHT SOLUTIONS BENEFIT PAYMENT SERVICES, LLC, JOHNSON CONTROLS,INC., and FIDELITY INVESTMENTS EMPLOYER BENEFITS SERVICES CORP., Defendants.

Civil Action No. 17-cv-12505-ADB

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS

August 8, 2018

MEMORANDUM AND ORDER GRANTING MOTION TO DISMISS

BURROUGHS, D.J.

On October 26, 2017, Plaintiff Danielle Vlahos filed this action alleging state law claims for breach of contract, breach of implied warranty, negligence, and breach of fiduciary duty against all Defendants for failing to protect her interest in 401(k) retirement funds accrued by her former husband, Mark Vlahos, during their marriage. [ECF No. 1-1]. Currently pending before the Court is Defendants'¹ motion to dismiss. [ECF No. 10]. For the following reasons, the motion to dismiss is GRANTED. Plaintiff, however, may file an amended complaint to state her claims under ERISA within twenty-one days of the entry of this order.

I. BACKGROUND

The following facts are drawn from the complaint [ECF No. 1-1 at 4-14] (the "Complaint"), the well-pleaded allegations of which are taken as true for purposes of evaluating Defendants' motion to dismiss. See Ruivo v. Wells Fargo Bank, 766 F.3d 87, 90 (1st Cir. 2014).

From 2002 until approximately 2015, Plaintiff was married to Mr. Vlahos. Compl. ¶ 5; [ECF No. 14 at 9-10]. During their marriage, Mr. Vlahos was employed by Defendant Johnson Controls. Compl. ¶ 5. In connection with his employment, Mr. Vlahos participated in a 401(k) retirement savings plan (the "Plan"), which established a retirement savings account (the "Account"). Id. ¶ 6. The funds in the Account were provided by Defendant Johnson Controls, serviced by Defendant Alight, and maintained by Defendant Fidelity as custodian. Id. ¶¶ 6-8.

On approximately May 15, 2013, Plaintiff filed for divorce from Mr. Vlahos. Id. ¶ 9. On June 12, 2014, the Account had a balance of approximately $125,000.00. Id. ¶ 10. On November 5, 2014, the Account balance was approximately $25,000.00. Id. ¶ 11. Defendants did not provide Plaintiff with prior notice of Mr. Vlahos's $100,000.00 withdrawal from the Account. Id. ¶ 13.

Plaintiff filed this action in the Norfolk County Superior Court on October 11, 2017. [ECF No. 1-1 at 15]. On December 19, 2017, Defendants removed the case to federal court, without objection from Plaintiff, on the basis of federal question jurisdiction. [ECF No. 1]. Defendants asserted that Plaintiff, as a beneficiary of an employee benefits plan controlled by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §1001 et seq. ("ERISA"), alleged state law claims that were preempted by ERISA and thus subject to federal jurisdiction. Id.; see 28 U.S.C. § 1331.

II. STANDARD OF REVIEW

On a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must accept as true all well-pleaded facts, analyze those facts in the light most hospitable to the plaintiff's theory, and draw all reasonable inferences from those facts in favor of the plaintiff. U.S. ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 383 (1st Cir. 2011). The factsalleged must be sufficient to "state a claim to relief that is plausible on its face." A.G. ex rel. Maddox v. Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The plausibility standard invites a two-step analysis. Id. "At the first step, the court 'must separate the complaint's factual allegations (which must be accepted as true) from its conclusory legal allegations (which need not be credited).'" Id. (quoting Morales-Cruz v. Univ. of P.R., 676 F.3d 220, 224 (1st Cir. 2012)). "At the second step, the court must determine whether the remaining factual content allows a reasonable inference that the defendant is liable for the misconduct alleged." Id. (internal quotations and citation omitted). "[T]he combined allegations, taken as true, must state a plausible, not a merely conceivable, case for relief." Sepúlveda-Villarini v. Dep't of Educ. of P.R., 628 F.3d 25, 29 (1st Cir. 2010).

III. DISCUSSION

Plaintiff brings state law claims against all Defendants, all premised on the allegation that Defendants failed to protect her interests as a plan beneficiary in the Account during the couple's pending divorce. Defendants argue that Plaintiff's claims for breach of contract, breach of implied warranty, negligence, and breach of fiduciary duty should be dismissed because they are preempted by ERISA.

A. ERISA Preemption

ERISA expressly preempts all state laws that "relate to any employee benefit plan," including common law claims. 29 U.S.C. § 1144(a); see Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 41-42, 48 (1987) (holding that state common law claims relating to ERISA plans are preempted unless they qualify for an exception). The parties do not dispute that the Plan at issue here is an employee benefit plan covered by ERISA. Therefore, the survival of the Complainthinges on whether Plaintiff's claims "relate to" the Plan and, if so, whether they qualify for an exemption.

A state law relates to an employee benefit plan if it (1) has "a connection with" or (2) makes "reference to such a plan." Cal. Div. of Labor Standards Enforcement v. Dillingham Const., N.A., 519 U.S. 316, 324 (1997) (internal quotation marks and citation omitted). Because Plaintiff alleges common law claims, only the "connection with" test is relevant here. Id. Under this test, the court must look to "the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive." Zipperer v. Raytheon Co., 493 F.3d 50, 53 (1st Cir. 2007) (quoting Hampers v. W.R. Grace & Co., 202 F.3d 44, 51 (1st Cir. 2000)). ERISA's objectives include uniformity of administration of ERISA plans and "avoiding inconsistent state regulation of such plans." Id.; see also Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 151 (2001) (holding that state law that removed named beneficiary spouse from former spouse's life insurance policy upon divorce was preempted because "[t]his 'tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction' is exactly the burden ERISA seeks to eliminate" (quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142 (1990))). "[A]ny state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore pre-empted."² Aetna Health Inc. v. Davila, 542 U.S. 200, 209-10 (2004) (holding that if entitlement to benefits exists "only because of the terms of an ERISA-regulated employee benefit plan, and where no legal duty (state or federal) independent ofERISA or the plan terms is violated, then the suit [is preempted]"). "There is a strong presumption that common-law claims that intrude on ERISA's civil enforcement regime are preempted." Anthony v. JetDirect Aviation, Inc., 725 F. Supp. 2d 249, 256 (D. Mass. 2010).

In Hampers, 202 F.3d at 53, the First Circuit held that state common law claims were preempted by ERISA because the defendant was "an ERISA employer and fiduciary with responsibility over the administration of the plan" and it was only because of this relationship to the ERISA-governed plan that the defendant could have breached the agreement in the way the plaintiff alleged. Similarly, a judge of this court held that common law claims are preempted "if the relationship between the plaintiff and defendant is based on a plan governed by ERISA." Cuoco v. NYNEX Inc., 722 F. Supp. 884, 886-87 (D. Mass. 1989) (determining there was no preemption because parties' relationship was "not based directly on the . . . plan but on verbal misrepresentations which were not part of the plan").

Here, Plaintiff's claims are premised on her relationship with Defendants, which is established exclusively through the Plan, given Defendants' administration of the plan and her claim that she is "a beneficiary to" the Account. Compl. ¶¶ 54, 58, 62. Because Plaintiff alleges that Defendants acted improperly by distributing funds to Mr. Vlahos in contravention of their obligations to protect her interests "as a beneficiary of the contract" and "as beneficiary to" the Account, id. ¶¶ 16, 54, her claims relate directly to the administration of benefits under the Plan. Therefore, here, as in Hampers, "it is only by virtue of [defendant's] status as an ERISA [related entity] with direct control over the administration and operation of the [benefits account] that [defendant] could have breached the . . . agreement in the way [plaintiff] insists that it did." 202 F.3d at 53. Thus, Plaintiff is seeking to enforce her rights under the Plan as a beneficiary, which puts her claims directly within the scope of ERISA preemption. See 29 U.S.C. § 1144(a).

B. Qualified Domestic Relations Order Exemption

Plaintiff argues in her opposition that her claims should survive because she is "ask[ing] the Court to enforce her legal rights under Massachusetts domestic relations laws" and not under the Plan. [ECF No. 14 at 4]. Plaintiff does not cite to a specific provision of the Massachusetts domestic relations laws as the source of her claim to the Account, but she appears to be referring to Mass. Supp. R. Dom. Rel. P. 411, which provides that the filing of a complaint in a divorce action triggers the issuance of an automatic restraining order prohibiting either party from "sell[ing], transfer[ring], encumber[ing], conceal[ing], assign[ing], remov[ing] or in any way dispos[ing] of any property, real or personal, belonging to or acquired by, either party" during the pendency of the action, and Mass. Gen. Laws ch. 208, § 34, which grants the probate court the authority to assign to either spouse "all or any part of the estate of the other, including . . . all vested and nonvested benefits, rights and funds accrued during the marriage and which shall...