Los Angeles ERISA team Ronald K. Alberts and Jennifer L. Ghozland obtained a second successive win to dismiss certain causes of action from plaintiff's complaint that would allow for alternative theories of recovery for life insurance benefits, including equitable estoppel and surcharge. The Southern District of California agreed with defendant's argument, under well established case law, that a plaintiff seeking benefits under an ERISA plan is not entitled to any other theory of recovery, where a claim for benefits exists.
This case derives from a widower's claim that he is entitled to life insurance benefits and severance pay from his deceased wife's employer. In addition to life insurance benefits and severance pay, plaintiff originally also brought claims for breach of fiduciary duty, interference with protected rights, fraud and negligent misrepresentation. On March 22, 2010, Gordon & Rees, on behalf of the employer, moved to dismiss each of the later enumerated causes of action, sought dismissal of an individually named defendant and asked the court to strike plaintiff's claims for economic and punitive damages, as well as plaintiff's request for a jury trial. Over a year and a half later, on November 16, 2011, Honorable Anthony J. Battaglia granted the Motion in its entirety, finding that all the later enumerated claims were preempted by ERISA.
On November 18, 2011, new counsel for plaintiff filed a First Amended Complaint for Relief under ERISA asserting claims for life insurance benefits, severance benefits, life insurance benefits under a theory of equitable estoppel, and life insurance benefits under a theory of surcharge. Plaintiff's claim for life insurance benefits was pled under ERISA section 502(a)(1)(b), while the alternative theories of relief were pled under ERISA section 1132(a)(3). In bringing these alternative claims, Plaintiff relied on the recent Supreme Court case of CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011) to assert that a plaintiff is allowed to plead in the alternative under both ERISA sections.
On December 16, 2011, Gordon & Rees again moved to dismiss plaintiff's claims seeking alternative theories of recovery under equitable estoppel and surcharge. At the time defendant moved to dismiss these alternative theories, there was no Ninth Circuit case law distinguishing Amara. Relying in part on a case from the Northern District of Indiana, Biglands v. Raytheon Emp. Sav. Inv. Plan, 801 F. Supp. 2d 781, 786 (N.D. Ind. 2011) (finding that plaintiffs in Amara were allowed to proceed with their claims under section 1132(a)(3) because they had no claim for relief under section 1132(a)(1)(B)), Gordon & Rees distinguished Amara and argued that the Southern District of California should similarly uphold the longstanding case law as established by the Supreme Court in Varity Corp. v. Howe ("where Congress elsewhere provided adequate relief for a beneficiary's injury, there will likely be no need for further equitable relief"). 516 U.S. 489, 515 (1996).
On August 22, 2012, eight months after filing the second motion to dismiss, a new district judge, Honorable Roger T. Benitez, granted the Motion in its entirety, finding that plaintiff’s alternative theories of recovery are barred by Varity and distinguishable from Amara. Judge Benitez found that in Amara, plaintiffs were only allowed to seek relief under section 1132(a)(3) because they had no cognizable claim under section 1132(a)(1)(B). Since plaintiff had a right to life insurance benefits under the terms of the plan in the instant case, Amara was not applicable.
This is a victory for the defense, since plaintiffs’ counsel in ERISA litigation have been relying heavily on the Amara decision for a number of different propositions, since the ruling came down in 2011.
The published opinion on Gordon & Rees’s Motion to Dismiss the First Amended Complaint can be found at Hoffman v. American Society for Technion, 2012 U.S. Dist. LEXIS 119857.