United States District Court, S.D. Alabama, Southern Division
REPORT AND RECOMMENDATION
KATHERINE P. NELSON, UNITED STATES MAGISTRATE JUDGE
This
matter is before the Court on the Motion to Dismiss and to
Strike (Doc. 2), and separate supporting brief (Doc. 3),
filed by the Defendant, Symetra Life Insurance Company
(“Symetra”). The assigned District Judge referred
the motion to the undersigned Magistrate Judge for
appropriate action under 28 U.S.C. § 636(a)-(b), Federal
Rule of Civil Procedure 72, and S.D. Ala. GenLR 72(a).
See S.D. Ala. GenLR 72(b); (4/8/2019 electronic
reference). The Plaintiff, Cassandra Shears, has filed a
response (Docs. 12, 13) to the motion, and Symetra has filed
a reply (Doc. 14) to the response. The motion is under
submission. (See Doc. 6). Upon consideration, the
undersigned RECOMMENDS that Symetra's
Motion to Dismiss and Motion to Strike (Doc. 2) be
GRANTED in part and DENIED in
part as explained herein.
I.
Applicable Legal Standards
In
deciding a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6) for “failure to state a claim upon
which relief can be granted, ” the Court construes the
complaint in the light most favorable to the plaintiff,
“accepting all well-pleaded facts that are alleged
therein to be true.” Miyahira v. Vitacost.com,
Inc., 715 F.3d 1257, 1265 (11th Cir. 2013) (citing
Bickley v. Caremark RX, Inc., 461 F.3d 1325, 1328
(11th Cir. 2006)). “[G]enerally, the existence of an
affirmative defense will not support a rule 12(b)(6) motion
to dismiss for failure to state a claim. A district court,
however, may dismiss a complaint on a rule 12(b)(6) motion
when its own allegations indicate the existence of an
affirmative defense, so long as the defense clearly appears
on the face of the complaint.” Fortner v.
Thomas, 983 F.2d 1024, 1028 (11th Cir. 1993) (quotation
omitted)). Accord Murphy v. DCI Biologicals Orlando,
LLC, 797 F.3d 1302, 1305 (11th Cir. 2015) (“A
district court may dismiss a complaint for failure to state a
claim if an affirmative defense appears on the face of the
complaint.”).
Under
Federal Rule of Civil Procedure 12(f) a court “may
strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous matter. The
court may act on its own or on a motion made by a party
either before responding to the pleading…”
II.
Background
Shears
commenced this case in the Circuit Court of Mobile County,
Alabama, on February 28, 2019. (See Doc. 1-1 at 2 -
7). On March 6, 2019, Shears filed an amended complaint, the
operative pleading in this case, substituting Symetra as the
named Defendant. (Doc. 1-3 at 6 - 11). Her causes of action
arise from Symetra's denial of benefits under a $50, 000
spouse supplemental life insurance policy taken out by her
now-deceased husband and naming her as a beneficiary. Counts
One and Two of the amended complaint respectively allege
claims for breach of contract, and misrepresentation and
concealment. Count Three requests relief under the Employee
Retirement Income Security Act of 1974, 88 Stat. 891, as
amended, 29 U.S.C. § 1132(a) et seq.
(“ERISA”), but only “if th[e] policy is
deemed to be controlled by ERISA, ” which Shears
disputes. On April 2, 2019, Symetra removed the case to this
Court under 28 U.S.C. §1441 (see Doc. 1) and
filed the present motion to dismiss and strike.
III.
Analysis
A.
ERISA Preemption
Symetra
argues that Shears's state law claims in Counts One and
Two of her operative complaint are due to be dismissed
because they are preempted by ERISA. The undersigned agrees.
“Congress
enacted ERISA to ‘protect ... the interests of
participants in employee benefit plans and their
beneficiaries' by setting out substantive regulatory
requirements for employee benefit plans and to ‘provid
[e] for appropriate remedies, sanctions, and ready access to
the Federal courts.' 29 U.S.C. § 1001(b). The
purpose of ERISA is to provide a uniform regulatory regime
over employee benefit plans.” Aetna Health Inc. v.
Davila, 542 U.S. 200, 208 (2004).
ERISA is one of only a few federal statutes under which two
types of preemption may arise: conflict preemption and
complete preemption. Conflict preemption, also known as
defensive preemption, is a substantive defense to preempted
state law claims. This type of preemption arises from
ERISA's express preemption provision, § 514(a),
which preempts any state law claim that “relates
to” an ERISA plan. 29 U.S.C. § 1144(a)…
Complete preemption, also known as super preemption, is a
judicially-recognized exception to the well-pleaded complaint
rule. It differs from defensive preemption because it is
jurisdictional in nature rather than an affirmative defense.
Complete preemption under ERISA derives from ERISA's
civil enforcement provision, § 502(a), which has such
extraordinary preemptive power that it converts an ordinary
state common law complaint into one stating a federal claim
for purposes of the well-pleaded complaint rule.
Consequently, any cause of action within the scope of the
civil enforcement provisions of § 502(a) is removable to
federal court.
Connecticut State Dental Ass'n v. Anthem Health
Plans, Inc., 591 F.3d 1337, 1344 (11th Cir. 2009)
(quotations and some citations omitted). “Although
related, complete and defensive preemption are not
coextensive: ‘Complete preemption is [ ] narrower than
“defensive” ERISA preemption, which broadly
“supersede[s] any and all State laws insofar as they
... relate to any [ERISA] plan.” ERISA § 514(a),
29 U.S.C. § 1144(a) (emphasis added). Therefore, a
state-law claim may be defensively preempted under §
514(a) but not completely preempted under § 502(a).'
” Id. (quoting Cotton v. Mass. Mut. Life
Ins. Co., 402 F.3d 1267, 1281 (11th Cir.
2005)).[1]
“The
[defensive] preemption provision of ERISA provides that it
‘shall supersede any and all state laws insofar as they
may now or hereafter relate to any employment plan'
covered by ERISA.” Variety Children's Hosp.,
Inc. v. Century Med. Health Plan, Inc., 57 F.3d 1040,
1042 (11th Cir. 1995) (quoting 29 U.S.C. § 1144(a)).
“A state law ‘relates to' a covered employee
benefit plan ‘if it has a connection with or reference
to such a plan.' ” Id. (quoting
District of Columbia v. Greater Wash. Bd. of Trade,
506 U.S. 125, 129 (1992)). Defensive preemption requires
dismissal of state-law claims. Butero v. Royal Maccabees
Life Ins. Co., 174 F.3d 1207, 1212 (11th Cir. 1999). As
defensive preemption is an affirmative defense, it is
Symetra's burden to demonstrate its applicability.
See id (“Defensive preemption provides only an
affirmative defense to certain state-law claims.”);
In re Rawson Food Serv., Inc., 846 F.2d 1343, 1349
(11th Cir. 1988) (“[I]t is well established that the
party asserting an affirmative defense usually has the burden
of proving it.” (quotation omitted)). Moreover, to
dismiss a claim under Rule 12(b)(6), the “affirmative
defense” of defensive preemption must “clearly
appear[] on the face of the complaint.”
Fortner, 983 F.2d at 1028.
Shears
disputes that the subject life insurance policy was issued as
part of an ERISA-covered plan, pleading the ERISA claim in
Count Three only as an alternative to her state law claims
“if th[e] policy is deemed to be controlled by
ERISA…” (Doc. 1-3 at 36).[2] “For
present purposes, an ‘employee welfare benefit
plan' governed by ERISA is any (1) plan, fund or program,
(2) established or maintained (3) by an employer, (4) to
provide beneficiaries (5) death benefits through an insurance
policy.” Butero, 174 F.3d at 1214 (some
quotation marks omitted). Here, it is undisputed that this
case involves an insurance policy providing death benefits to
beneficiaries. Moreover, the language of the policy itself
(Doc. 3-1), [3] which states that the policyholder is NHS
Management, LLC and that only certain “full-time Active
Employees” are eligible for coverage (Doc. 3-1 at 3 -
4), sufficiently demonstrates that the policy was issued as
part of a “plan” or “program”
“established or maintained” “by an
employer.”[4]
Shears
invokes 29 C.F.R. § 2510.3-1(j), “a ‘safe
harbor' provision that excludes some programs for group
insurance from the ‘employee welfare benefit plans'
governed by ERISA.” Smith v. Jefferson Pilot Life
Ins. Co., 14 F.3d 562, 568 (11th Cir.
1994).[5] Under that regulation, for ERISA purposes
“the terms ‘employee welfare benefit plan'
and ‘welfare plan' shall not include a group or
group-type insurance program offered by an insurer to
employees or members of an employee organization, under which
(1) [n]o contributions are made by an employer or employee
organization; (2) [p]articipation the program is completely
voluntary for employees or members; (3) [t]he sole functions
of the employer or employee organization with respect to the
program are, without endorsing the program, to permit the
insurer to publicize the program to employees or members, to
collect premiums through payroll deductions or dues checkoffs
and to remit them to the insurer;
and (4) [t]he employer or employee
organization receives no consideration in the form of cash or
otherwise in connection with the program, other than
reasonable compensation, excluding any profit, for
administrative services actually rendered in connection with
payroll deductions or dues checkoffs.” 29 C.F.R. §
2510.3-1(j) (emphasis added).
However,
the subject group insurance program does not satisfy the
“safe harbor” provision's first requirement,
as the policy's terms indicate that the employer made
contributions towards some of the coverage offered under the
plan. (See Doc. 3-1 at 4, 8 - 9, 11 (providing for
both “contributory coverage” - “coverage
for which [the insured] was required to contribute toward the
cost” - and “non-contributory coverage -
“coverage for which [the insured is] not required to
contribute toward the cost”), and stating that the
“Employer will automatically enroll” the insured
in non-contributory coverage)). Thus, even if, as Shears
claims, she and her husband paid all premiums for the
Supplemental Life Insurance coverage themselves, the fact
that the employer contributed towards the premiums for other
plan coverage defeats application of the “safe
harbor” provision. See Jefferson Pilot, 14
F.3d at 568 (“The regulation applies only to programs
where no contributions are made by an employer; yet under the
Plan the defendant contributed all of the premium except for
the dependent coverage contribution. The employer must not
subsidize the purchase of insurance for this safe harbor
provision to apply.” (citing Randol, 987 F.2d
at 1550)).
Accordingly,
the undersigned finds that the subject insurance policy is
governed by ERISA, and that Shears's claims for breach of
contract, misrepresentation, and concealment in Counts 1 and
2 of the operative complaint are therefore due to be
dismissed with prejudice as preempted by ERISA. See
Butero, 174 F.3d at 1215 (state-law bad faith, breach of
contract, and fraud claims are all preempted under §
1144(a) (citing Pilot Life Ins. Co. v. Dedeaux, 481
U.S. 41, 47-48 (1987)); Williams v. Wright, 927 F.2d
1540, 1549-50 (11th Cir. 1991) (“With regard to state
law breach of contract claims specifically, this court and
others have unanimously held that such claims are preempted
by ERISA.”); Variety Children's Hosp., 57
F.3d at 1042 ...