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Tcherneshoff v. Northrop Grumman Corp.

United States District Court, N.D. Alabama, Northeastern Division

July 8, 2019

LYNDON TCHERNESHOFF, Plaintiff,
v.
NORTHRUP GRUMMAN CORP., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          LILES C. BURKE UNITED STATES DISTRICT JUDGE.

         Defendants Northrop Grumman Corporation (“NGC”), the Northrop Grumman Benefits Plan Administrative Committee (the “Committee”), and the Northrup Grumman Electronic Systems Executive Pension Plan (“ESEPP”) (collectively, “defendants”) have filed a partial motion to dismiss (doc. 10) pursuant to Rule 12(b)(6) and 12(c) of the Federal Rules of Civil Procedure. Plaintiff filed a response (doc. 17), and defendants filed a reply (doc. 18). Therefore, this matter is ready for review. For the reasons stated herein, the partial motion to dismiss is granted.

         I. BACKGROUND

         Plaintiff brought this action pursuant to the Employment Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (“ERISA”). Plaintiff avers that he was employed by NGC from April 30, 1993, to October 2, 2009. (Doc. 1, p. 1). During his employment, plaintiff became vested in two pension plans, the ESEPP, as well as the Northrop Grumman Electronic Systems Pension Plan (“ESPP”). (Id.). Plaintiff states that he has been receiving his vested pension benefit pursuant to the ESPP in accordance with its terms. However, on April 26, 2018, plaintiff applied for benefits pursuant to the ESEPP. (Id. at 2). Plaintiff alleges that, on July 26, 2018, he was been denied ESEPP benefits. (Id. at 2). The ESEPP is subject to ERISA. Plaintiff asserts that he timely made an administrative appeal of the decision with respect to the denial of ESEPP benefits, and that, on November 19, 2018, the Committee - the body that administrates and operates the ESEPP - denied his administrative appeal. (Id. at 2-3).

         With respect to the ESEPP specifically, plaintiff alleges that he enrolled in the ESEPP plan on January 1, 2003, and became vested in same on January 1, 2008. (Id. at 4). Although it is not entirely clear to the Court, it appears that plaintiff alleges that one or all defendants amended or “aligned” its pension plans in July 2009, and it is not clear whether a “special layoff provision” was included in the ESEPP. (Id. at 5). Plaintiff contends that the “now current” ESEPP, as updated in 2012, supersedes all prior versions and does not preclude plaintiff from receiving ESEPP benefits. (Id. at 5-6). Plaintiff also asserts that he is eligible for benefits pursuant to the 2009 version of the ESEPP as well. (Id. at 7). Plaintiff also alleges that he was fully vested in the ESEPP at the time of his layoff in October 2009, and that, as part of his negotiated severance, he was guaranteed that he would receive the benefit of all pensions in which he was vested, including the ESEPP. (Id. at 6). Plaintiff claims that, to the extent any discrepancies exist, they must be resolved in his favor.

         Plaintiff therefore asserts the following claims. First, in Count I[1], plaintiff asserts a claim under Section 502(a)(3) of ERISA[2] for the denial of benefits under the ESEPP plan. Although the title of Count I requests both declaratory and injunctive relief, the body of Count I only requests injunctive relief. Therefore, the Court will assume that Count I requests injunctive relief, including payment of benefits, an accounting of all prior benefits due, disgorgement of profits earned on amounts wrongfully withheld, and injunction against further violations, among other things.

         In Count II, plaintiff asserts a claim under Sections 502(a)(1) and (3) of ERISA for the recovery, or payment, of past and future actuarially equivalent benefits under the ESEPP.

         In Count III, plaintiff asserts a claim under Sections 502(a)(3) and 1104[3] of ERISA for breach of fiduciary duty. In the body of Count III, plaintiff seeks declaratory relief, namely that the Court declare that “the Plan's established methodologies for calculating actuarial equivalence of Alternate Annuity Benefits violate ERISA because they do not provide an actuarially equivalent benefit.” (Doc. 1, p. 10). Plaintiff also seeks the same equitable relief requested in Count I, including payment of benefits, an accounting of all prior benefits due, disgorgement of profits earned on amounts wrongfully withheld, and an injunction against further violations, among other things.

         In Count IV, plaintiff asserts a claim under 29 U.S.C. § 1132(a)(3), i.e., Section 502(a)(3) of ERISA, for equitable reformation. It appears that plaintiff is alleging that defendants did not disclose to plaintiff that he was not vested in the ESEPP and/or continued to inform plaintiff that he was vested; however, plaintiff also alleges a breach of fiduciary duty by “failing to properly implement harmonization among plans.” (Doc. 1, p. 12). Plaintiff requests that the Court “equitably reform the ESEPP to reflect the material terms as disclosed to the participant and as participant reasonably understood those terms based on the Defendants' disclosures.” (Doc. 1, p. 12).

         Defendants filed the partial motion to dismiss, requesting that the Court dismiss Counts I, III, and IV of the complaint, as well as plaintiff's claim in Count II under Section 502(a)(3). In other words, defendants move to dismiss all claims under Section 502(a)(3), the catchall provision, leaving only one claim under Section 502(a)(1)(b) to be considered in this action. Alternatively, defendants argue that, even if the breach of fiduciary claim in Count III was actionable under Section 502(a)(3), it should still be dismissed because the ESEPP is exempted from the fiduciary liability provisions because it is a “top hat” plan. Defendants also argue that, even if the claim for equitable reformation in Count IV was actionable under Section 502(a)(3), it should be dismissed because it fails to state a claim for relief. The Court will address, as necessary, these arguments in more detail in the discussion section of this memorandum opinion.

         In response, plaintiff recites the standard for a motion to dismiss and claims that he has made a prima facie case for each count of the complaint, namely that he has pled his status as an employee, participant, and beneficiary, and that he is entitled to benefits or equitable reformation. Plaintiff does not, however, directly address the substance of defendants' arguments.

         In their reply, in addition to pointing out plaintiff's failure to address the substance of their arguments, defendants argue that plaintiff admits that what he is actually pursuing is a claim for benefits.

         II. STANDARD OF REVIEW

         Rule 12(b)(6) permits a party to move to dismiss a complaint for, among other things, “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When considering a motion to dismiss, the Court must “accept[] the allegations in the complaint as true and constru[e] them in the light most favorable to the plaintiff.” Mills v. Foremost Ins. Co., 511 F.3d 1300, 1303 (11th Cir. 2008) (quoting Castro v. Sec'y of Homeland Sec., 472 F.3d 1334, 1336 (11th Cir. 2006)). To survive a motion to dismiss, “a complaint must contain sufficient factual matter . . . to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim is facially 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.” Id. at 679. “When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id ...


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