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McCall v. Prudential Insurance Co. of America

United States District Court, W.D. Louisiana, Lake Charles Division

April 19, 2017

DALE M. McCALL
v.
PRUDENTIAL INS. CO. OF AMERICA

          KATHLEEN KAY MAG. JUDGE

          MEMORANDUM RULING

          JAMES T.TRIMBLE, JR. UNITED STATES DISTRICT JUDGE

         Before the court is "Defendant's Motion to Dismiss or to Transfer Venue" (R. #10) wherein defendant, The Prudential Insurance Company of America ("Prudential") seeks to dismiss Plaintiffs complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Prudential maintains that Plaintiffs complaint should be dismissed because each of his claims is preempted by the Employee Retirement Income Security Act of 1974 ("ERISA").[1]

         FACTUAL ALLEGATIONS

         In his Complaint, [2] Plaintiff, Dale McCall, makes the following allegations. Mr. McCall, a resident of Westlake, Louisiana, is a plan participant and beneficiary of a group disability plan sponsored by Lake Charles Pilots, Inc. ("LCP") and an insured participant of a group disability policy[3] (the "Policy") issued by Prudential. Mr. McCall alleges he is disabled under the terms of the Policy; he alleges that he filed a claim for long-term disability benefits with Prudential who has denied said benefits. Mr. McCall is seeking past and future disability benefits under the terms of the Policy, plus interest, penalties, damages for physical and emotional distress, reasonable attorney fees and court costs under Louisiana state law and the Louisiana Insurance Code.

         Mr. McCall alleges the plan is a non-ERISA plan (or exempt from ERISA) because it is allegedly a "plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing."[4] The basis for Mr. McCall's position is that LCP was established by legislative acts, namely Louisiana Revised Statutes § § 34:1073 and 34:1075.

         RULE 12(b)(6) STANDARD

         Fed. R. Civ. P. 8(a)(2) requires that pleadings which state one or more claims for relief must contain "...a short and plain statement of the claim showing that the pleader is entitled to relief..." This "notice pleading" requirement is balanced against Fed.R.Civ.P. 12(b)(6), which provides that a court may dismiss one or more claims when the pleader fails to state a claim upon which relief may be granted.

         For the purpose of considering a motion to dismiss pursuant to Rule 12(b)(6), the court must take all well-pled factual allegations as true and must view them in the light most favorable to the plaintiff.[5] The pleading must allege facts which, when taken as true, raise the pleader's claim. A motion to dismiss for failure to state a claim should be denied unless "it appears to a certainty that the plaintiff would be entitled to no relief under any state of facts" alleged in the petition.[6]

         Only those facts which are well-pleaded and state a "plausible claim for relief" must be accepted.[7] A claim is plausible when the court can reasonably infer from the facts that the defendant is liable to the plaintiff; a claim is not plausible when it only states conclusions of a "formulaic recitation of the elements of a cause of action."[8] However, even those facts which are extremely doubtful are to be assumed correct.[9]

         LAW AND ANALYSIS

         In its motion, Prudential seeks to have the state law claims dismissed because the employee benefit plan is preempted by ERISA. Prudential informs the court that not only do the facts establish that the plan is governed by ERISA, but also the booklet issued by Prudential describing the benefits provided, expressly states that the benefits at issue are offered pursuant to ERISA.[10]

         ERISA comprehensively regulates employee benefit plans.[11] If a participant in an employee benefit plan could have brought his or her claim under ERISA, it completely preempts his or her cause(s) of action, and the Court has subject matter jurisdiction over the case.[12]Whether a participant could have brought their suit under ERISA turns on whether their employee benefit plan is an "ERISA plan."[13] If it is not, ERISA does not apply and this court lacks subject matter jurisdiction.[14]

         To better understand the relationship between the ABP and LCP, the court will rely on the following explanation found in CITGO Petroleum Corp. v. Louisiana Pub. Serv. Comrn'n, [15] cited by Plaintiff in his opposition:

The ten pilot members of Lake Charles Pilots, Inc., the duly incorporated association of the Associated Branch Pilots of the Port of Lake Charles, (LCPI), have sole authorization to pilot seagoing vessels on the navigable streams, channels, and boundary waters, within the Intracoastal Canal, Calcasieu and Sabine Rivers, bars, and passes, " except specified routes along the Mississippi River. La.Rev.Stat.34:1072, 1073. Pursuant to La. Rev. Stat. 34:1121-1127, the Associated Branch Pilots of the Port of Lake Charles Fee Commission (Fee Commission) has the exclusive right to establish the fees and rates charged by the LCPI pilots for pilotage service. The Fee Commission is comprised of eight members, four of whom represent the interests of the river pilots (the pilot fee commissioners) and four of whom represent the interests of the steamship industry (the industry fee commissioners).

Is LCP, Inc. a governmental entity?

         Mr. McCall worked for LCP as a Pilot Boat Captain. LCP is a voluntary association "authorized by La. R.S. 34:1073 and 1075." LCP is wholly owned by its member pilots.[16] Mr. McCall maintains that LCP is a "governmental entity" because it was "establish by legislative act."[17] Whereas, Mr. McCall contends that pursuant to 29 U.S.C. § 1002(32), the plan is exempt from ERISA, Prudential maintains that the long term disability plan is governed by ERISA.

         ERISA expressly exempts "governmental plans" from its coverage.[18] Prudential argues that even though the pilots perform duties sanctioned by legislative acts, LCP is a private business corporation, and not a governmental entity. In other words, Prudential posits that these statutes did not create LCP, but merely permitted river pilots to form associations and create a state-sanctioned monopoly for each locality.

         Louisiana Revised Statute 34:1073 provides as follows:

There shall be a body of pilots known as the Associated Branch Pilots for the Port of Lake Charles whose duty it shall be to pilot seagoing vessels within the state of Louisiana, on all navigable streams, canals, channels, rivers, and boundary waters within the Intracoastal Canal, Calcasieu, and Sabine Rivers, and across the bars and passes...

         Louisiana Revised Statute 34:1075 provides that:

The pilots may form themselves into associations as they may see fit, not in conflict with any special or general law of the State or of the United States, except that since competitive associations of pilots is detrimental to the public interest, only one association of pilots shall be formed in each locality served by the same general waterway.

         A plan may be considered to be a governmental plan where a party can prove that it was either (1) established by a governmental entity that falls within that definition, or (2) that it is currently maintained by such an entity.[19] Louisiana Revised Statute § 34:1075 permits river pilots to form associations and create a state-sanctioned monopoly for each locality. However, allowing an association to form does not equate to establishing or creating an association. Even though Louisiana Revised Statute § 34:1073 permits a body of pilots to form, the statute does not create or establish an association. The Fifth Circuit has stated that boat pilot associations are "long-standing, peculiarly conducted institutions recognized by statute, owned and governed by their member pilots, and serving as a clearinghouse and dispatching service for river pilots."[20]Accordingly, we find that LCP, Inc. is not a governmental entity.

         Is the Plan sponsored or maintained by a political subdivision of the State of Louisiana ?

         In his complaint, Plaintiff alleges that the LCP's disability plan is a "plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing"[21] and therefore exempt from ERISA.

         Prudential maintains that the facts alleged in the complaint along with the documents incorporated therein establish that the long-term disability plan sponsored by LCP is not a government plan and is thus subject to ERISA.

         Plaintiff argues that it is a subdivision of the Associated Branch Pilots that is allowed to exist solely because of Louisiana Revised Statute 34:1075. Alternatively, Plaintiff contends that LCP is a political subdivision under ERISA relying on National Labor Relations Board v. Natural Gas Utility District of Hawkins County, Tenn.[22] to support its position. The NRLB test contains two prongs, only one of which need be satisfied.[23] An entity is deemed a political subdivision if it is '"either (1) created directly by the state, so as to constitute departments or administrative arms of the governments, or (2) administered by individuals who are responsible to public officials or to the general electorate."[24] Plaintiff maintains that LCP is administered by individuals who are responsible to public officials or to the general electorate. Plaintiff remarks that the articles of incorporation specify that the purpose of the company is to perform services for the River Pilots of the Port of Lake Charles [a/k/a] the Associated Branch created by legislative act La. R.S. 34:1073(2012). . .[25] The articles further specify that shareholders of LCP must be duly qualified and commissioned River Port Pilots who have taken an oath of office and furnished the bond required by Louisiana Revised Statute 34:1071 et seq. . . [and] and that in performing their professional piloting ...


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