Winter v. United Parcel Serv., Inc.

GREGORY WINTER, Plaintiff, v. UNITED PARCEL SERVICE, INC. DELAWARE and UNITEDPARCEL SERVICE, INC. OHIO, Defendants.

Case No. 14-10555

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

May 8, 2015

SENIOR U.S. DISTRICT JUDGE ARTHUR J. TARNOW

U.S. MAGISTRATE JUDGE MICHAEL HLUCHANIUK

ORDER PARTIALLY GRANTING AND PARTIALLY DENYING WITHOUT PREJUDICE DEFENDANTS' MOTION TO DISMISS [18]

Plaintiff brings claims against Defendants for fraudulent and innocent misrepresentation, alleging that agents of Defendants induced him to accept a supervisor position by misrepresenting the retirement benefits he would receive if he accepted the position. Defendants argue that Plaintiff's claims should be dismissed because they are preempted by the Employee Retirement Income Security Act (ERISA) and because they fail to state a claim on the merits.

For the reasons stated below, Defendants' Motion to Dismiss [18] is GRANTED as to all counts, except the claims for rescission, on which it is DENIED WITHOUT PREJUDICE.

FACTUAL BACKGROUND

Plaintiff's allegations, which are to be assumed true on this Motion to Dismiss, are as follows. Plaintiff works for Defendant UPS Delaware and/or Defendant UPS Ohio. Plaintiff initially worked as a driver for many years and received benefits under an ERISA plan called the UPS/IBT Full-Time Pension Plan (the Driver Plan). In February 2008, several UPS managers approached Plaintiff and offered him a supervisor position. The managers told Plaintiff that as a supervisor, he would receive a much more generous pension under the UPS Retirement Plan (the Supervisor Plan). One of the managers told Plaintiff that because Plaintiff had been hired before 2008, he would be eligible to have his retirement benefits calculated with the Final Average Compensation (FAC) formula. Relying on the managers' representations, Plaintiff accepted the supervisor position.

When Plaintiff was working as a supervisor, UPS told him that he was actually ineligible to have his benefits calculated under the FAC formula because he had not been made a supervisor before 2008. Plaintiff's benefits have been calculated under the Portable Account Formula (PAF) instead. Plaintiff's benefits under the PAF formula are lower than they would have been under the FAC formula or under theDriver Plan. However, Defendants allege that Plaintiff's promotion to supervisor carried other economic rewards. Plaintiff does not dispute this and wants to remain a supervisor.

Plaintiff filed his Complaint [1] on February 6, 2014. Defendants filed the instant Motion to Dismiss [18] on May 15, 2014. On June 19, 2014, Plaintiff filed a Corrected Response [34], to which Defendants filed a Reply [36] on June 23, 2014. With the Court's permission, Plaintiff filed a Supplemental Response [42] on February 26, 2015. On March 30, 2015, the Court held a hearing on Defendants' Motion to Dismiss [18], which the Court took under advisement.

ANALYSIS

Defendants have moved to dismiss Plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(6), which authorizes dismissal for "failure to state a claim upon which relief can be granted." FED. R. CIV. P. 12(b)(6). To survive a Rule 12(b)(6) challenge, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Hill v. Lappin, 630 F.3d 468, 471 (6th Cir. 2010) (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)).

I. Failure to State a Claim on the Merits

Defendants argue that Plaintiff's claims for fraudulent and innocent misrepresentation fail to state a claim on which relief can be granted. Defendants correctly note that under Michigan law, a misrepresentation claim generally must bebased on statements of past or existing fact, rather than on promises of future conduct. Derderian v. Genesys Health Care Systems, 263 Mich. App. 364, 378-79 (Ct. App. Mich. 2004) (citing Hi-Way Motor Co. v. Int'l Harvester Co., 398 Mich. 330, 336 (Mich. 1976)). Defendants argue that the recruiting managers' alleged misrepresentations were future promises (i.e., promises that Defendants would provide Plaintiff benefits under the FAC formula if he accepted the supervisor position). However, the alleged misrepresentations were not future promises, but instead were statements of existing fact: namely, statements of the then-existing terms of the Supervisor Plan. It is irrelevant that those terms could apply to Plaintiff only in the future. See Crook v. Ford, 249 Mich. 500, 504-05 (Mich. 1930) ("[T]he mere fact that statements relate to the future will not preclude liability for fraud if the statements were intended to be, and were accepted, as representations of fact, and involved matters peculiarly within the knowledge of the speaker."). Defendants' "future promise" argument fails.

Defendants also attempt to recast Plaintiff's misrepresentation claims as a claim to estop Defendants from applying the Supervisor Plan to Plaintiff. They proceed to cite an en banc decision of the Sixth Circuit acknowledging that reliance on misrepresentations must be reasonable or justifiable to support estoppel, and stating that "reliance can seldom, if ever, be reasonable or justifiable if it is inconsistent with the clear and unambiguous terms of plan documents available to or furnished to theparty." Sprague v. General Motors Corp., 133 F.3d 388, 404 (6th Cir. 1998) (en banc). They argue that Plaintiff's claims fail under Sprague because the alleged misrepresentations were at odds with the written terms of the Supervisor Plan.

Reasonable reliance is an essential element of a misrepresentation claim under Michigan law. MacDonald v. Thomas M. Cooley Law School, 724 F.3d 654, 663 (6th Cir. 2013) (citing Novak v. Nationwide Mut. Ins. Co., 599 N.W.2d 546, 553-54 (Ct. App. Mich. 1999)). However, Defendant's authority on reasonable reliance concerns misrepresentations that conflict with written terms in documents "available to or furnished to the party." Sprague, 133 F.3d at 404; see also MacDonald, 724 F.3d at 665 ("Unreasonable reliance includes relying on an alleged misrepresentation that was expressly contradicted in a written contract that a plaintiff reviewed and signed.") (citing Novak, 599 N.W.2d at 553-54) (emphasis added). Here, Plaintiff asserts that he had no access to the written plan terms when he relied on the recruiting managers' representations. Accepting this factual allegation as true, as the Court must, the Court declines to hold Plaintiff's reliance on the misrepresentations unreasonable as a matter of law. Defendants thus have not demonstrated that Plaintiff has failed to state a claim upon which relief can be granted.

II. Preemption

Defendants argue that Plaintiff's claims are preempted by ERISA. Plaintiff anticipated this challenge and, according to Plaintiff's counsel, modeled his complaintoff of the complaint in Thurman v. Pfizer, Inc., 484 F.3d 855 (6th Cir. 2007). Plaintiff argues that under Thurman, his claims are not preempted to the extent that he seeks "reliance damages" and rescission of his participation in the Supervisor Plan. The Sixth Circuit in Thurman separately addressed two statutory sources of ERISA preemption, which the Court will address in turn.

A. 29 U.S.C. § 1132

29 U.S.C. § 1132 authorizes participants or beneficiaries of ERISA plans to sue to recover wrongfully withheld benefits or to challenge breaches of fiduciary duty. A plaintiff's cause of action is preempted by § 1132 if it could have been brought under § 1132 and the defendant's actions implicate no independent legal duty. Thurman, 484 F.3d at 860 (quoting Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004)). A defendant's actions implicate an independent legal duty if a plaintiff could sue for the alleged breach "even if the [defendant] had never sponsored an ERISA-covered plan." Briscoe v. Fine, 444 F.3d 478, 500 (6th Cir. 2006) (denying preemption defense on a claim that defendants violated their duty to disclose the financial condition of the company that sponsored the plan).

Defendants argue that Plaintiff's misrepresentation claims are preempted because they could have been brought as a § 1132 claim for breach of fiduciary duty and they implicate no independent legal duty. Defendants rely primarily on Briscoe, which held a "state-law cause of action for failing to disclose the financial conditionof the plan" preempted by ERISA because "any obligation that the defendants may have had to provide such information stem[med] from the plan and not from an independent legal duty." 444 F.3d at 499-500. Plaintiff, on the other hand, analogizes this case to Gardner v. Heartland Indus. Partners, LP, 715 F.3d 609 (6th Cir. 2013). The Sixth Circuit in Gardner held that a claim for tortious interference with contract under Michigan law implicated an independent legal duty, reasoning that the defendant's duty not to interfere with the contract was "not derived from, or conditioned upon, the terms of the [plan]" and "[n]obody need[ed] to interpret the plan to determine whether that duty exists." 715 F.3d at 614.

Plaintiff's analogy is more apt. Plaintiff's claims are not premised in a duty to disclose the financial condition of an ERISA plan. Instead, they are premised on Defendants' duty to refrain from inducing Plaintiff to accept the supervisor position by misrepresenting the position's terms. That duty is imposed by Michigan tort law, and it is unnecessary to interpret any ERISA plan to determine that the duty exists. See McMurtry v. Wiseman, 445 F. Supp. 2d 756, 767 (W.D. Ky. 2006) ("The legal duty not to misrepresent the plan did not arise from the plan itself, but from an independent source of law; state tort law within Tennessee."). Because Plaintiffs' claims are premised on an independent legal duty, they are not preempted by § 1132.

B. 29 U.S.C. § 1144

29 U.S.C. § 1144 preempts state-law tort claims insofar as they "relate to" ERISA plans. Thurman, 484 F.3d at 861....