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Poe v. United Association of Journeyman

United States District Court, M.D. Louisiana

September 30, 2019

MICHAEL D. POE ET AL.
v.
UNITED ASSOCIATION OF JOURNEYMAN AND APPRENTICES OF THE PLUMBING AND PIPEFITTING INDUSTRY OF THE UNITED STATES OF AMERICA AFL-CIO LOCAL 198 HEALTH AND WELFARE FUND ET AL.

          RULING AND ORDER

          BRIAN A. JACKSON, JUDGE UNITED STATES DISTRICT COURT

         Before the Court is the United Association of Journeyman and Apprentices of the Plumbing and Pipefitting Industry of the United States of America AFL-CIO Local 198 Union Health and Welfare Fund[1] and the Local 198 Board of Trustees' (collectively, "Defendants") Motion to Dismiss Plaintiffs' Complaint Pursuant to FRCP 12(b)(6). (Doc. 19). Oral argument is not necessary. For the reasons stated below, the court GRANTS in part and DENIES in part Defendants' motion.

         I. BACKGROUND

         Plaintiffs worked as employees for the Plumbers and Steamfitters Local No. 106 ("Local 106"), a union located in Lake Charles, Louisiana. (Doc. 1 at p. 11). Local 106 maintained the Local 106 Health and Welfare Fund ("106 Fund"), a trust fund established in Louisiana for the specific purpose of providing ancillary benefits to its numerous Local 106 members. (Id.) Under the terms of the 106 Fund, Local 106 members were provided Health Reimbursement Accounts ("HRAs"). (Id.) As part of Local 106 employees' compensation, contractors made monetary contributions to the HRAs on behalf of each employee while Local 106 was in existence. (Id.) All employer/contractor contributions were deposited into individual employee HRAs for the purpose of paying the medical expenses of individual employees in retirement. (Id.)

         In January of 2014, Local 106 merged with Plumbers and Steamfitters Local No. Local 198 ("Local 198"), which also had a Health and Welfare Fund ("Local 198 Fund"). (Doc. 1 at p. 12). The health and welfare funds of both entities remained separate. (Id.) However, in November of 2014, the entities began to consider merging the Local 106 and Local 198 Funds. A study prepared by a consulting firm revealed that the Local 198 Fund had a deficit of $330, 762, while the Local 106 Fund had net assets totaling $4, 536, 316. At a board meeting in December of 2014, the business manager for Local 198 assured the Trustees of Local 106 that the Local 106 members would be able to maintain their health reimbursement accounts when the plans merged. (7c?.) By 2015, the Local 106 Fund had grown to ten million dollars in assets. At that time, a majority of the trustees negotiating the merger voted that five million dollars would be paid out to Local 106 members, while the remaining funds would be transferred to the Local 198 Fund. The funds were distributed to Local 106 members through their HRAs.

         Plaintiffs contend that at the time of the merger, Local 198 had not established HRAs for its preexisting members. (Doc. 1 at p. 15). The new Plan document for the new Local 198 Plan, which governed pre-existing Local 198 members and former Local 106 members, provided that Local 106 members' HRA account balances were to be carried over to the UA Local 198 Plan. However, Plaintiffs assert that the attorneys who drafted the Plan also included language indicating that the Board of Trustees of Local 198 reserved the "right to amend or terminate all or any part of the HRA at any time for any reason," despite earlier representations to Local 106 trustees. In July of 2017, the Local 198 Board of Trustees voted to terminate the HRAs for all Local 198 members. This decision only affected former Local 106 members, because Local 198 members who joined the union prior to the merger did not have HRA accounts.

         II. LEGAL STANDARDS

         A Rule 12(b)(6) motion to dismiss tests the sufficiency of a complaint against the legal standard set forth in Rule 8, which requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."' Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Ail. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "Determining whether a complaint states a plausible claim for relief [is] ... a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. "[F]acial plausibility" exists "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 678 (citing Twombly, 550 U.S. at 556). Hence, a complaint need not set out "detailed factual allegations," but something "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action" is required. Twombly, 550 U.S. at 555.

         III. DISCUSSION

         A. Claims Based on 29 U.S.C. § 1132(a)(1)(b) (Count I)

         Under 29 U.S.C. § 1132(a)(1)(B), a plaintiff may bring a civil action to (1) recover benefits due to him under the terms of an ERISA plan, (2) enforce his rights under the plan, (3) or clarify his rights to future benefits under the plan. Plaintiffs assert that they are eligible for continuing HRA benefits from the Local 198 Plan. (Doc. 1 at p. 18). Defendants argue that this claim must be dismissed because the plain language of the Plan documents indicates that Local 198 Trustees had the authority to terminate Plaintiffs' HRA benefits at any time for any reason. (Doc. 19-1 at p. 7). In their opposition, Plaintiffs agree with this assertion and now seek to amend their complaint to remove or otherwise dismiss claims arising under 29 U.S.C. § 1132(a)(1)(B). Given that both parties agree on this issue, Plaintiffs' claims under 29 U.S.C. § 1132(a)(1)(B), as alleged in Count I of the complaint, are dismissed.

         B. Claims Based on 29 U.S.C. § 1132(a)(2) (Count II)

         Defendants seek dismissal of Plaintiffs' claim under § 1132(a)(2), which provides that "[a] civil action may be brought by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title." Section 1109 provides:

(a) Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary. A fiduciary may also be removed for a violation of section 1111 of this title.
(b) No fiduciary shall be liable with respect to a breach of fiduciary duty under this subchapter if such breach was committed before he became a fiduciary or after he ceased to be a fiduciary.

         Plaintiffs allege that Defendants breached their fiduciary duties by retaining money earned exclusively by former Local 106 members for workers who were Local 106 members prior to the merger of the two unions. (Doc. 1 at p. 18). Defendants assert that this claim must be dismissed because § 1132(a)(2) only addresses breaches of fiduciary duties that harm the Plan as a whole. (Doc. 19-1 at p. 17). Defendants claim that not only are Plaintiffs' claims not made on behalf of the Plan, but also, on the contrary, that ...


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