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Caivano v. Production Workers Union Local 148 Welfare Fund

United States District Court, D. New Jersey

November 21, 2018

DAVID J. CAIVANO, Plaintiff,


          KEVIN MCNULTY. U.S.D.J.

         Before the Court are defendants' motions to dismiss the amended complaint. (DE 20, 21) The Court rules as follows:

         Plaintiff David Caivano's claims for breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel, and punitive damages are dismissed. Because those claims are entirely preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), further pleading would be futile, so this dismissal is with prejudice. Caivano's retaliation claim is also dismissed on preemption grounds, but without prejudice to submission of version of this claim that arises under ERISA (or is not preempted by ERISA).

         The counts seeking a declaratory judgment and alleging breach of fiduciary duty state viable causes of action under ERISA, and therefore will not be dismissed on the basis of preemption. However, the breach of fiduciary duty claim, which is only alleged against defendant Red Bank Pension Services, Inc. ("Red Bank"), will be dismissed for failure to state a claim. This dismissal is without prejudice.

         Finally, I will deny defendants' motions to dismiss based on a release in a 2015 settlement agreement and New Jersey's entire controversy doctrine. The complaint, read as it must be in the plaintiff's favor, adequately alleges that he did not learn of the termination of his benefits until 2017, and that this then-unknown claim was not encompassed by the 2015 settlement of the prior state lawsuit.

         I. Summary of the Allegations and Procedural History

          The allegations of the amended complaint (DE 3, cited as "AC ") are treated as true for purposes of these motions to dismiss. See Section II, infra.

         Defendant Production Workers Union Local 148 Welfare Fund ("Welfare Fund") administers health and welfare benefits for a labor union, Local 148.[1](AC ¶¶1, 12, 14, 2 5). The Welfare Fund employed Caivano as an administrator from January of 2007 until his termination on August 29, 2012. (Id. ¶¶16-18, 25). Caivano is a vested member of the Salaried Employees' Pension Plan ("SEPP") and the Production Workers Local 148 Pension Fund ("Pension Fund"). (Id. ¶1). The SEPP provides pension benefits to employees of the Welfare Fund. (Id. ¶20).[2]

         After his termination, on August 15, 2013, Caivano filed suit in New Jersey Superior Court against Local 148, the Welfare Fund, and the Pension Fund. (Id. ¶¶20, 26-27; DE 20-1, at 26-48 (Caivano v. Prod. Workers Union Local 148, Docket No. HUD-L-13928-13 ("State Court Litigation"))). The SEPP was not a named defendant in that matter.[3] Caivano brought claims based on the New Jersey Conscientious Employee Protection Act ("CEPA"), the New Jersey Law Against Discrimination ("LAD"), wrongful discharge, breach of contract, promissory estoppel, unjust enrichment, and breach of the implied covenant of good faith and fair dealing. (AC ¶¶27-30; 20-1, at 26-48). He sought lost wages and benefits, as well as severance pay and lifetime medical benefits. (DE 20-1, at 26-48). Caivano's claim for unjust enrichment asserted that he contributed to his pension fund, but that defendants retained those contributions despite his rightful attempt to withdraw them. [Id. at 47). Caivano's breach of the implied covenant of good faith and fair dealing asserted that defendants improperly denied Caivano access to his pension account, and failed to provide him information as to his balances and other matters. (Id. at 47). The State Court complaint did not allege that Caivano had been improperly terminated from the pension systems.

         The State Court Litigation settled in August of 2015. (AC ¶31; 20-1, at 50-53). Under the terms of the settlement agreement, Caivano was paid $125, 000. Caivano acknowledged in return that this figure "exceed[ed] any payment, benefit or other thing of value of which he would be otherwise entitled under any policy, plan or contract with defendants." (DE 20-1, at 50). As part of the settlement, Caivano released his claims against defendants. The release provision, which is at issue in the Local 148 defendants' motion in this case, reads as follows:

In consideration for the payment and commitments described in paragraph one, plaintiff further acknowledges, understands, and agrees that he releases, waives and discharges Production Workers Union Local 148, Productions Workers Union Local 148 Welfare Fund, and Production Workers Union Local 148 Pension Fund, and their parents, subsidiaries, affiliates, predecessors, successors and assigns, officers, directors, trustees, employees (including, former officers, directors, trustees and employees), owners, agents, insurers, and attorneys, but specifically excluding co-defendant International Union Of Allied Novelty And Production Workers, AFL-CIO (all of the foregoing are collectively referred to hereinafter as the "Releasees"), from all liability, actions, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions, claims and demands whatsoever, in law, admiralty or equity, which against Releasees, that Caivano, Caivano's heirs, executors, administrators, successors and assigns ever had, now have or hereafter can, shall or may have for, upon or by reason of any matter, cause or thing whatsoever, from the beginning of the world to the date of this agreement, including, but not limited to any claims arising out of Caivano's employment with, or providing services to, the Releasees, or the termination of that employment or other relationship, based upon any theory of tort, contract, partnership, corporate or other law, any express or implied agreement between plaintiff and Releasees, and any other prohibited acts under local, state or federal employment, corporate or benefits laws, including, but not limited to, any claims arising under Title VII of the Civil Rights Act of 1964, as amended; the Americans with Disabilities Act of 1990, as amended; the Family Medical Leave Act, as amended; the National Labor Relations Act or other federal labor laws; the Employee Retirement Income Security Act of 1974, as amended; the Equal Pay Act, as amended; the Fair Labor Standards Act, as amended; the Conscientious Employee Protection Act, as amended ("CEPA"); the New Jersey Law Against Discrimination; the New Jersey Workers' Compensation Act, N.J.S.A. 34:15-39.1 et seq., or any other claim of discrimination based on sex, age, religion, national origin, handicap, disability, veteran status, union activity, marital status, retaliation, or any other basis. This release shall cover all claims that plaintiff knows about and those he may not know about at this time.

(Id. at 51). Caivano further agreed to never "make a claim or file a complaint, charge, grievance, arbitration, or lawsuit against Releasees asserting any claims that" were released in the settlement agreement. (Id. at 52).

         About two and a half years later, on February 9, 2018, Caivano filed this action in federal court. (DE 1). That same day, he filed an amended complaint (DE 3), which is the pleading addressed by the motions to dismiss that are the subject of this opinion.

         Caivano claims that he regularly contributed to the Pension Fund and the SEPP from the date of his hiring in 2006 through die date of his termination in August of 2012. (Id. ¶¶32-34).[4] During his employment, Caivano received statements that confirmed his "vested" benefits in the SEPP. (Id. ¶35). He received annual statements from the SEPP and die Pension Fund, which showed his yearly contributions and die date upon which he would become vested in the pension. [Id. at 22). At the beginning of 2012, third-party administrator Red Bank stated that Caivano was "100%" vested in the SEPP, and that he would receive a monthly benefit of $773.75 beginning on April 1, 2020. (Id. ¶23).

         In 2017, Caivano sent a request to Red Bank and Local 1931, seeking a statement of his pension account. (Id. ¶37). In response, Caivano received a letter from Local 1931 stating that Caivano had been terminated from the SEPP and die Pension Fund based upon the settlement of the State Court Litigation. (Id. ¶39). Caivano alleges that the settlement agreement did not release any claim for future pension benefits. (Id. ¶¶40-41). Caivano claims that it was Local 148 or Amalgamated Local 1931 which directed Red Bank to terminate his pension account, and that Red Bank has refused to provide him with any documentation related to his account. (Id. ¶¶44-46).

         Caivano's amended complaint asserts six causes of action: (1) declaratory judgment; (2) breach of contract; (3) retaliation/punitive damages; (4) promissory estoppel; (5) breach of the implied covenant of good faith and fair dealing; and (6) breach of fiduciary duty against Red Bank. The thrust of these causes of action is that Caviano has been denied pension benefits to which he believes he is entitled.

         Count 1 seeks a declaratory judgment that Caivano is a vested member of the SEPP and the Pension Fund, and that defendants' actions are in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"). (Id. ¶¶51-54).

         Counts 2 and 5, the contract claims, assert that the SEPP "agreement" and Pension Fund are "contracts" that defendants have breached by refusing to acknowledge his vested status and terminating him from the pension plans. (Id. ¶¶55-61). Count 2 alleges an explicit breach; Count 5 alleges that the denial of pension benefits breached the implied covenant of good faith and fair dealing. (Id. ¶¶ 73-75).

         Count 3, the retaliation claim, asserts that Caivano was terminated from the pension plans for filing a State lawsuit related to his termination. (Id. 163). The statutory or common law source of this claim is not specified.

         Count 4, promissory estoppel, asserts that defendants promised Caivano pension benefits, that he has been "100%" vested since 2009, and that he relied to his detriment on defendants' promises to receive these benefits. (Id. ¶¶ 67-71).

         Count 6, the fiduciary claim, is asserted against third-party administrator Red Bank only. It alleges that Red Bank breached its fiduciary duty to Caivano by terminating him from the SEPP and Pension Fund. (Id. ¶81).

         II. Standard

         Rule 12(b)(6) provides for the dismissal of a complaint if it fails to state a claim upon which relief can be granted. The defendants, as the moving parties, bear the burden of showing that no claim has been stated. Animal Science Products, Inc. v. China Minmetals Corp., 654 F.3d 462, 469 n.9 (3d Cir. 2011). For the purposes of a motion to dismiss, the facts alleged in the complaint are accepted as true and all reasonable inferences are drawn in favor of the plaintiff. New Jersey Carpenters & the Trustees Thereof v. Tishman Const. Corp. of New Jersey, 760 F.3d 297, 302 (3d Cir. 2014).

         Federal Rule of Civil Procedure 8(a) does not require that a complaint contain detailed factual allegations. Nevertheless, "a plaintiffs obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." BellAtl Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus, the complaint's factual allegations must be sufficient to raise a plaintiffs right to relief above a speculative level, so that a claim is "plausible on its face." Id. at 570; see also West Run Student Hous. Assocs., LLC v. Huntington Nat. Bank, 712 F.3d 165, 169 (3d Cir. 2013). That facial-plausibility standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). While "[t]he plausibility standard is not akin to a 'probability requirement'. . . it asks for more than a sheer possibility." Iqbal, 556 U.S. at 678.

         When deciding a motion to dismiss, a court typically does not consider matters outside the pleadings. However, a court may consider documents that are "integral to or explicitly relied upon in the complaint" or any "undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiffs claims are based on the document[.]" In re Rockefeller Ctr. Props., Inc. Sec. Litig., 184 F.3d 280, 287 (3d Cir. 1999) (emphasis and citations omitted); see In re Asbestos Prods. Liab. Litig. (No. VI), 822 F.3d 125, 133 n.7 (3d Cir. 2016); Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014).

         In that regard, courts may consider matters of public record, including prior judicial proceedings. Schmidt, 770 F.3d at 249 ("To decide a motion to dismiss, courts generally consider only the allegations contained in the complaint, exhibits attached to the complaint and matters of public record"); Iacaponi v. New Amsterdam Cos. Co., 379 F.2d 311, 311-12 (3d Cir. 1967) (considering previous litigation referred to in complaint); Arcand v. Brother Int'l Corp., 673 F.Supp.2d 282, 292 (D.N.J. 2009) (court may consider documents referenced in complaint that are essential to plaintiffs claim).

         Reliance on these types of documents does not convert a motion to dismiss into a motion for summary judgment. "When a complaint relies on a document... die plaintiff obviously is on notice of the contents die document, and the need for a chance to refute evidence is greatly diminished." Pension Benefit Guar. Corp. v. White Consol Indus., Inc., 998 F.2d 1192, 1196-97 (3d Cir. 1993).

         III. Discussion

         The Local 148 defendants and Red Bank have filed separate motions to dismiss, both of which seek dismissal of Caivano's amended complaint under Rule 12(b)(6). The bases of the motions differ and will be addressed separately.

         A. Red Bank's Motion

         Red Bank moves to dismiss Caivano's amended complaint on two grounds, discussed in subsections III.A(i) and A(ii), infra.

         First, Red Bank asserts tiiat Caivano's state law claims are preempted by ERISA's preemption provision (express, or complete preemption), or else by ERISA's civil enforcement mechanism, which is exclusive (conflict preemption). Preemption, although asserted only by Red Bank, applies with equal force to the other defendants as a matter of law. The counts dismissed on preemption grounds will therefore be dismissed as against all defendants.

         Second, Red Bank has moved to dismiss Count 6, the breach of fiduciary duty claim, because the amended complaint fails to plead that Red Bank is a fiduciary under ERISA. This argument is particular to Red Bank, the only defendant named in Count 6.

         i. Preemption standards

         ERISA is a comprehensive legislative scheme for federal regulation of private employee benefit plans, which is intended to ensure that the regulation of employee benefit plans would "exclusively [be] a federal concern." Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 2495 (2004). There may be express or complete preemption of State law pursuant to ERISA's preemption provision; alternatively, there may be conflict preemption of State law to the extent it conflicts or interferes with the ERISA scheme.

         Congress "expressly included a broadly worded pre-emption provision" in ERISA's statutory scheme. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 138, 111 S.Ct. 478, 482 (1990); see Egelhoff v. Egelhoff ex rel Breiner, 532 U.S. 141, 146, 121 S.Ct. 1322 (2001) (noting that Supreme Court has "observed repeatedly that [ERISA's] broadly worded [preemption] provision is 'clearly expansive.™). That express preemption provision, ERISA § 514, provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" that is covered by ERISA. 29 U.S.C. §1144(a) (herein, "§ 514"). "State law" includes "all laws, decisions, rules, regulations or other State action having the effect of law, of any State." 29 U.S.C. § 1144(c)(1). "State Law ... is 'not limited to state laws specifically designed to affect employee benefit plans." Menkes v. Prudential Ins. Co. of Am., 762 F.3d 285, 294 (3d Cir. 2014) (quoting Pilot Life Ins. Co. v. Dedeawc, 481 U.S. 41, 47-48, 107 S.Ct. 1549 (1987)). Nor is "state law" limited to formal enactments; "State common law claims, . . . routinely fall within the ambit of § 514." Menkes, 762 F.3d at 294 (citing Ingersoll-Rand, 498 U.S. at 140; Natl Sec. Sys., Inc. v. Iola, 700 F.3d 65, 83 (3d Cir. 2012)).

         The Supreme Court has explained that "[t]he key to § 514(a) is found in the words 'relate to.' Congress used those words in their broad sense, rejecting more limited pre-emption language." Ingersoll-Rand, 498 U.S. at 138. "But at the same time, ... the term 'relate to' cannot be taken 'to extend to the furthest stretch of its indeterminacy,' or else 'for all practical purposes preemption would never run its course." Egelhoff, 532 U.S. at 146 (quoting N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655, 115 S.Ct. 1671 (1995)); see Menkes, 762 F.3d at 293-94 ("*Relate to' has always been given a broad, common-sense meaning.")

         A state law "relates to" an ERISA plan, and is thus expressly preempted, "if it has a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97, 103 S.Ct. 2890 (1983). In determining if a state law has "the forbidden connection," courts evaluate "the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive, as well as to the nature of the effect of the state law on ERISA plans." Egelhoff, 532 U.S. at 147. The ERISA preemption provision does not apply "if the state law has only a tenuous, remote, or peripheral connection with covered plans, as is the case with many laws of general applicability." District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130 n.l, 113 S.Ct. 580 (1992).

         Conflict preemption, as applicable here, is more focused on civil remedies. "Congress intended for the causes of action and remedies available under ERISA § 502 [ERISA's civil enforcement provision] to be the exclusive vehicles for actions by ERISA plan participants asserting improper plan administration." Menkes, 762 F.3d at 294 (citing Pilot Life, 481 U.S. at 54). §502 of ERISA confers a cause of action for a plan beneficiary or participant "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a).

         A claim is deemed to conflict with ERISA § 502, and is therefore preempted, "when it 'duplicates, supplements, or supplants the ERISA civil enforcement remedy.''' Menkes, 762 F.3d at 294 (quoting Aetna Health, 542 U.S. at 209); see also Barber v. UNUM Life Ins. Co. of Am.,383 F.3d 134, 140 (3d Cir. 2004) (recognizing that § 502 preempts any claim that "provides a form of ultimate relief in a judicial forum that add[s] to the judicial remedies provided by ERISA."). Section 502 preemption has two requirements: that (1) a plaintiff could have brought the claim under § 502(a) ["ERISA availability"]; and (2) "no other legal duty supports [the plaintiffs] claim" ["ERISA dependence"]. Pascack Valley Hosp., Inc. v. Local 464A UFCW Welfare Reimbursement Plan,388 F.3d 393, 400 (3d Cir. 2004) ...

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