United States District Court, D. New Jersey
August 11, 2005.
UFCW Local 888 Health Fund, et al.
The opinion of the court was delivered by: WILLIAM J. MARTINI, District Judge
This matter comes before the Court on Defendant's motion to
dismiss. For the reasons set forth below, Defendant's motion is
GRANTED and the complaint is DISMISSED WITHOUT PREJUDICE.
Plaintiff Stephen Menendez brings this cause of action against
Defendant United Food & Commercial Workers Local 450T, AFL-CIO,
CLC & Welfare Fund and various unnamed Defendants to collect
severance benefits. (Compl. ¶¶ 2-4.) Plaintiff was terminated
after twenty-one years of service in June 2003, at which time he
held the position of Fund Administrator. (Compl. ¶ 6.) He
maintains that under a severance pay benefit adopted by Defendant
in November 1974 and further ratified in December 1995, Defendant
agreed to pay all employees two weeks' salary for every year of
employment upon termination. (Compl. ¶ 7.) Plaintiff now seeks
payment of $63,461.20 in severance benefits. (Compl. ¶ 11.) Plaintiff originally brought this cause of action on December
9, 2003 in the Superior Court of New Jersey, Law Division
alleging breach of agreement, which was removed to this Court on
April 12, 2004. This Court determined that Plaintiff's claim fell
squarely under the purview of ERISA, 29 U.S.C. § 1001, et seq.,
which requires exhaustion of internal administrative remedies.
See 29 U.S.C. 1133(2). Finding that Plaintiff had failed to
exhaust such remedies, this Court dismissed the complaint without
prejudice on September 27, 2004. (See 9/27/04 Opinion.)
On February 25, 2005, Plaintiff commenced the current cause of
action alleging violation of ERISA for failure to pay benefits,
for breach of fiduciary duty, and for failure to provide
requested documents, in addition to a state claim of breach of
agreement. Plaintiff claims he mailed a letter to the trustees of
the Local 888 Health & Welfare Fund inquiring as to the existence
of formalized procedures for filing his claim on October 12,
2004, and faxed the same letter on October 27, 2004, for which he
never received a response. (Pl.'s Br. at 2-3.)*fn1 Having
received no response to either communication, Plaintiff now
contends exhaustion of administrative remedies is futile. (Compl.
Defendant has again filed a motion to dismiss, seeking to
dismiss: (1) Count One alleging a violation of ERISA because
Plaintiff failed to exhaust the plan's internal administrative
remedies; (2) Count Two alleging breach of fiduciary duty because
it is merely a claim for benefits pursuant to the plan; (3) Count
Three alleging a violation of ERISA for failure to provide
documents because Plaintiff never made the requisite written
request for the documents sought; and (4) Count Four alleging
Plaintiff's breach of agreement because it is barred by res
judicata. All other defendants are unknown potential defendants;
thus, this is the only outstanding motion.
II. STANDARD OF REVIEW
In deciding a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6) all allegations in the complaint must be taken
as true and viewed in the light most favorable to the plaintiff.
See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels &
Casino Resorts, Inc., v. Mirage Resorts Inc., 140 F.3d 478, 483
(3d Cir. 1998); Robb v. Philadelphia, 733 F.2d 286, 290 (3d
Cir. 1984). In evaluating a Rule 12(b)(6) motion to dismiss for
failure to state a claim, a court may consider only the
complaint, exhibits attached to the complaint, matters of public
record, and undisputedly authentic documents if the plaintiff's
claims are based upon those documents. See Pension Benefit Guar.
Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir.
1993). If, after viewing the allegations in the complaint in the
light most favorable to the plaintiff, it appears beyond doubt
that no relief could be granted "under any set of facts which
could prove consistent with the allegations," a court may dismiss
a complaint for failure to state a claim. Hishon v. King &
Spalding, 467 U.S. 69, 73 (1984); Zynn v. O'Donnell,
688 F.2d 940, 941 (3d Cir. 1982). IV. DISCUSSION
A. Futility of Exhaustion of Internal Administrative Remedies
Defendant argues that the First Count of the complaint alleging
a violation of ERISA for failure to pay benefits should be
dismissed because Plaintiff failed to exhaust internal
administrative remedies. Federal courts will generally refuse to
hear ERISA claims if the claimant has not exhausted the ERISA
plan's internal administrative remedies. Wolf v. National
Shopmen Pension Fund, 728 F.2d 182, 185 (3d Cir. 1984). Failure
to exhaust internal administrative remedies is excused, however,
when such exhaustion is futile. See Harrow v. Prudential Ins.
Co. of America, 279 F.3d 244, 249 (3d Cir. 2002). "Whether to
excuse exhaustion on futility grounds rests upon weighing several
factors, including: (1) whether plaintiff diligently pursued
administrative relief; (2) whether plaintiff acted reasonably in
seeking immediate judicial review under the circumstances; (3)
existence of a fixed policy denying benefits; (4) failure of the
insurance company to comply with its own internal administrative
procedures; and (5) testimony of plan administrators that any
administrative appeal was futile." Harrow, 279 F.3d at 250. Not
all factors must weigh equally. Id. Given the policies
underlying the exhaustion requirement, including reducing
frivolous law suits and promoting efficient management of ERISA
plans, courts have been reluctant to grant the exception. Id.
at 249-250. In order to warrant waiver of the exhaustion
requirement, the party seeking waiver must provide more than bare
allegations; rather, the party must make a "clear and positive"
showing of futility. See Canale v. Yegen, 782 F. Supp. 963, 972
In the instant matter, the complaint merely makes a conclusory
statement that Plaintiff has been denied meaningful access to the
Plan's administrative procedures and that resorting to such
procedures would be futile because the Union has refused to
initiate the grievance procedure on his behalf. (Compl. ¶ 19.)
Plaintiff further argues in his brief that exhaustion would be
futile because his letter and fax inquiring about the formal
procedures were ignored by Defendant. (Pl.'s Reply. Br. at 3.)
However, the complaint is devoid of any allegations referring to
this letter or fax, and as previously noted, contains only a
conclusory statement that amounts to nothing more than a bare
allegation of futility, which is insufficient to excuse the
Even if the complaint contained allegations regarding the
letter and the fax, this Court could not conclude exhaustion is
futile. Plaintiff only made two attempts to pursue administrative
relief, one purportedly to the wrong office, before instituting
this ERISA action and never followed up on either communication.
See Harrow, 279 F.3d at 251-252 (holding that rejection of
claimant's single inquiry did not excuse exhaustion of
administrative remedies as futile). As former Fund Administrator,
Plaintiff had reason to know the administrative procedures to
follow in order to process his claim, and his letter and fax
merely constitute a pro forma attempt to exhaust administrative
remedies. Since Plaintiff does not argue that any of the four
remaining Harrow factors applies, this Court finds that
exhaustion of internal administrative remedies was not futile and
the First Count of the Complaint is dismissed. B. Breach of Fiduciary Duty
Defendant next argues that the Second Count of the complaint
alleging breach of fiduciary duty should be dismissed because it
is merely a claim for benefits, and thus subject to the same
remedy-exhaustion requirement. Claimants need not exhaust
internal administrative remedies when alleging a breach of
fiduciary duty as long as the duty breached is independent of the
denial of claimants' benefits. See Harrow, 279 F.3d at 254.
See also Zipf v. American Telephone and Telegraph Co.,
799 F.2d 889, 893 (3d Cir. 1986). "A claim for breach of fiduciary duty is
`actually a claim for benefits where the resolution of the claim
rests upon an interpretation and application of ERISA.'"
Harrow, 279 F.3d at 254.
Plaintiff asserts a claim for breach of fiduciary duty for
"wrongly withholding employee benefit plan benefits." (Compl. ¶
22.) This Court finds that this claim is merely a claim for
benefits because the alleged breach of fiduciary duty is clearly
not independent of the denial of benefits. See Harrow,
279 F.3d at 254. Thus, Plaintiff's failure to exhaust internal
administrative remedies is not excused. As already discussed,
Plaintiff has failed to adequately plead exhaustion or futility;
therefore, the Second Count of the complaint is dismissed.
C. Failure to Provide Requested Information to Plaintiff
Defendant also argues that the Third Count of the complaint
alleging Defendant violated ERISA by failing to provide certain
unspecified documents should be dismissed because Plaintiff is
not entitled to receive said documents. ERISA requires the plan
administrator to "furnish a copy of the latest updated summary,
plan description, and the latest annual report, any terminal
report, the bargaining agreement, trust agreement, contract, or
other instruments under which the plan is established or
operated" upon written request. 29 U.S.C. 1024(b)(4). In the
instant matter, Plaintiff fails to specify the documents he
requested and defendant failed to provide. In fact, Plaintiff
merely states in his complaint that following his termination he
requested "information which the administrator is required by
ERISA to furnish to a participant." (Compl. ¶¶ 24-27.)
Furthermore, neither the complaint nor the brief filed in
opposition to this motion suggests that a written request was
ever made. Thus, the Third Count of the complaint is dismissed.
D. Breach of Agreement Claim
Finally, Defendant argues that the Fourth Count of the
complaint alleging breach of agreement should be dismissed
pursuant to res judicata because this Court previously
determined this claim was preempted by ERISA. (9/27/04 Opinion
and Order.) Although Defendant argues res judicata, collateral
estoppel is the appropriate doctrine to apply. Collateral
estoppel applies where the same issue was litigated, was
determined by a valid final judgment, and was essential to that
judgment. See Haize v. Hanover Ins. Co., 536 F.2d 576, 579 (3d
Cir. 1976). The issue was previously presented to this Court by
both parties, whereupon the Court concluded the breach of
agreement claim was preempted by ERISA. (9/27/04 Opinion at 3.)
This was an adjudication on the merits, see Fed.R.Civ.P.
41(b), and became final when Plaintiff failed to appeal. U.S. v. Government of Virgin Islands, 363 F.3d 276, 292
(3d Cir. 2004). Therefore, the Fourth Count of the complaint is
dismissed as this Court already decided this issue.
Even if this issue were not precluded pursuant to collateral
estoppel, the breach of agreement claim is preempted under ERISA.
ERISA "supercede[s] any and all State laws insofar as they may
now or hereafter relate to any employee benefit plan."
29 U.S.C. § 1144(a). As stated in this Court's prior opinion, this
severance plan constitutes an employee welfare benefits plan
within the ambit of ERISA. (See 9/27/04 Opinion.) Thus,
Plaintiff's breach of agreement claim is preempted by ERISA.
For the foregoing reasons, Defendant's Motion to Dismiss is
GRANTED and Plaintiff's Complaint is DISMISSED WITHOUT
PREJUDICE. Any further refiling of this complaint should fully
comply with the requirements of ERISA for the reasons set forth
herein. An appropriate order accompanies this Letter Opinion.