5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON 7 AT SEATTLE 8 ALEXIS HAMILTON, Case No. C24-916RSL 9
10 Plaintiff, ORDER DENYING 11 v. DEFENDANT LOGIC20/20’S MOTION TO DISMISS 12 LOGIC20/20, INC., PRUDENTIAL INSURANCE COMPANY OF AMERICA, 13 Defendants. 14
15 This matter comes before the Court on defendant Logic20/20’s motion to dismiss (Dkt. 16 # 33); plaintiff’s response (Dkt. # 38); defendant’s reply (Dkt. # 39); plaintiff’s surreply and 17 18 request to strike (Dkt. # 42); and the related declarations, notice of supplemental authority, and 19 objection to notice of supplemental authority (Dkts. # 34, 40, 48, 51).1 2 Having reviewed these 20 21 22 1 Plaintiff correctly objects to defendant Logic20/20 submitting as “supplemental authority” a 23 case that was decided in 2020, four years before defendant Logic20/20 filed its last brief in this matter. See Dkt. # 48. See also LCR 7(n). While the Court could provide plaintiff an opportunity to respond to 24 defendant’s improperly submitted supplemental authority, it declines to do so given that (1) the Court 25 independently found the case included as supplemental authority while researching the legal issues in this matter and (2) the Court has determined that the case, Guenther v. Lockheed Martin Corp., 972 F.3d 26 1043 (9th Cir. 2020), supports denying defendant Logic20/20’s motion to dismiss. See post, III.C. 27 2 Plaintiff’s motion to strike the Declaration of Bradley J. Krupicka that was filed in support of defendant Logic20/20’s reply is GRANTED. See Dkts. # 39, 40, 42. The Declaration of Bradley J. 28 1 filings and record herein, the Court DENIES defendant Logic20/20’s motion to dismiss and 2 GRANTS plaintiff’s request to strike. 3 I. Background 4 5 In February 2016, Prudential Insurance Company of America and Seattle employer 6 Logic20/20 entered into a Group Contract (G-22681-WA) to provide benefits to Logic20/20’s 7 employees pursuant to an agreed plan. Dkts. # 23 at ¶¶ 3–4; 34, Ex. 1 at 1–3, 11 and Ex. 2 at 56. 8 9 Plaintiff states that she began working full-time as a Customer Success Consultant for 10 Logic20/20 on January 7, 2019. Dkt. # 23 at ¶ 7. At that time, plaintiff was 25 years old. Id. at 11 ¶ 14. Plaintiff alleges that Logic20/20 instructed her not to sign up for benefits until her 26th 12 13 birthday because she was covered under her parents’ insurance plans until her 26th birthday. Id. 14 Plaintiff also alleges that Logic20/20 did not tell her that by waiting until her 26th birthday to 15 sign up for benefits, she would trigger a requirement that she fill out an “Evidence of 16 17 Insurability” (“EOI”) form. Id. That requirement would be triggered because, by the time of 18 plaintiff’s 26th birthday, more than 31 days would have elapsed since her eligibility for 19 enrollment. Id. See also Dkt. # 34, Ex. 2 at 14. 20 21 “Plaintiff had lived with Ankylosing Spondylosis her whole life, and would not have 22 knowingly agreed to forgo the ability to automatically enroll in disability benefits.” Id. at ¶ 14. 23 Plaintiff alleges that in August 2019, eight months after she began work at Logic20/20, she 24 25
26 Krupicka (Dkt. # 40) and the arguments in defendant’s reply that rely on that declaration (see Dkt. # 39 27 at 4:11) are STRICKEN because they impermissibly raise new evidence. See HDT Bio Corp. v. Emcure Pharms., Ltd., No. C22-0334JLR, 2022 WL 3018239, at *2 (W.D. Wash. July 29, 2022). 28 1 received and completed her new employee enrollment paperwork, singing up for “all insurance 2 available, including [short-term disability] insurance.” Id. Plaintiff alleges that she believed she 3 had signed up for long-term disability insurance, “but it appears that Logic20/20 failed to 4 5 provide her the form.” Id. “Nothing in the benefit election form mentioned a need for an EOI for 6 [long term disability] coverage.” Id. 7 Plaintiff alleges that she was not enrolled in long-term disability (“LTD”) coverage in 8 9 2019 or 2020, nor was she charged premiums for LTD coverage during that period. Id. Plaintiff 10 alleges that after she attempted to enroll in LTD benefits during the 2020 enrollment period, she 11 received a March 2020 email from Logic20/20 telling her to send an EOI to Prudential. Id. at 12 13 ¶ 15. See also Dkt. # 34, Ex. 1. Plaintiff did not submit an EOI. Dkt. # 23 at ¶¶ 54, 65–6, 76–7. 14 When, in late 2020, Logic20/20 moved to online benefits enrollment for the 2021 15 healthcare coverage year, plaintiff states that she “checked the box for LTD insurance, believing 16 17 it was a continuation of her prior insurance.” Id. at ¶ 16. At that point, “Logic20/20 and 18 Prudential accepted her enrollment and began charging her premiums for her LTD coverage.” 19 Id. “At no time did Plaintiff receive from Logic20/20 or Prudential a request to complete an 20 21 Evidence of Insurability (‘EOI’) as part of her 2021 or 2022 benefits enrollment.” Id. Plaintiff 22 states that Logic20/20 deducted premiums for LTD coverage from her paycheck from January 23 2021 through March 24, 2023, when she stopped working at Logic20/20. Id. at ¶ 25. 24 25 Plaintiff alleges that in March 2022, she filed for short-term disability (“STD”) benefits 26 after a diagnosis of Long Covid, which aggravated her preexisting conditions of Irritable Bowel 27 28 1 Syndrome and Ankylosing Spondylitis. Id. at ¶ 20. “Plaintiff applied for and received the 2 maximum amount of STD benefits from Prudential.” Id. “At no time during this period did 3 either Logic20/20 or Prudential suggest that Plaintiff needed to submit a missing EOI . . . .” Id. 4 5 Plaintiff alleges that in June 2022, after paying LTD benefits for “the past 18 months,” she 6 submitted a claim for LTD benefits. Id. at ¶ 21. “On June 23, 2022, Prudential for the first time 7 informed Plaintiff that she had been required to complete an EOI form to qualify for LTD 8 9 insurance.” Id. “Prudential confirmed to her that she qualified medically for LTD benefits, but 10 denied her claim based on the lack of EOI form in her file. Prudential asserted that Plaintiff had 11 never had LTD coverage, despite paying premiums for it over the past year.” Id. 12 13 Plaintiff alleges that on Aug. 22, 2022, she asked Logic20/20 by email to provide her 14 with all plan documents. Id. at ¶ 22. “Logic 20/20 replied that it did not have them.” Id. Plaintiff 15 alleges that on Aug. 25, 2022, Prudential denied her appeal of Prudential’s initial LTD benefits 16 17 denial “but allowed Plaintiff to complete an EOI form.” Id. at ¶ 23. Plaintiff alleges that 18 Prudential “then denied her coverage again,” and then, after reviewing the matter once more at 19 the request of Logic20/20 and plaintiff, Prudential denied her coverage a third time in December 20 21 2022. Id. 22 Even so, plaintiff alleges, she was permitted to sign up for LTD coverage in late 2022 for 23 the 2023 coverage year, and Logic20/20 and Prudential “continued to take her premiums despite 24 25 informing her just a month earlier that she could not qualify for insurance.” Id. at ¶ 24. 26
27 28 1 II. Plaintiff’s Claims 2 Plaintiff’s First Amended Complaint (“FAC”) (hereafter referred to as “the complaint” 3 and “plaintiff’s complaint”) brings two claims against defendant Logic20/20 under the 4 5 Employee Retirement Income Security Act (“ERISA”). The first claim alleges a violation of 29 6 U.S.C. § 1132(a)(3)(B) and (g)(1). Dkt. # 23 at 14:22. Section 1132(a)(3)(B) allows a 7 participant, beneficiary, or fiduciary to obtain “appropriate equitable relief” to redress violations 8 9 of “any provision of this subchapter or the terms of the plan.” As relevant here, the term 10 “participant” means “any employee or former employee of an employer . . . who is or may 11 become eligible to receive a benefit of any type from an employee benefit plan which covers 12 13 employees of such employer . . . .” 29 U.S.C. § 1002(7). The equitable relief plaintiff seeks here 14 includes estoppel, waiver, reformation, and surcharge. Dkt. # 23 at 14:22. Plaintiff seeks this 15 equitable relief from Logic20/20 “in the alternative” to the relief she is seeking under a claim 16 17 brought in this action against Prudential. Dkt. # 23 at ¶ 42. The relief plaintiff seeks from 18 Prudential is payment of her plan benefits. Id. In her first claim against Logic20/20, plaintiff also 19 alleges that Logic20/20 breached its fiduciary duty to plaintiff and thereby caused her to incur 20 21 attorney fees that should be reimbursed. Dkt. # 23 at ¶ 61. Under 29 U.S.C. § 1132(g)(1), the 22 Court may in its discretion award reasonable attorney fees and costs to either party in “any 23 action under this subchapter.” 24 25 26 27 28 1 Plaintiff’s second claim against defendant Logic20/20 alleges that Logic20/20, as a plan 2 administrator, breached its duty under 29 U.S.C. § 1132(c) and § 1024(b)(4) to provide plan 3 documents upon request. Dkt. # 23 at 28:23. 4 5 III. Discussion 6 A. Pleading Standard Under Fed. R. Civ. P. 12(b)(6) 7 The question for the Court on a motion to dismiss is whether the facts alleged in the 8 9 complaint sufficiently state a “plausible” ground for relief. Bell Atl. Corp. v. Twombly, 550 U.S. 10 544, 570 (2007). In the context of a motion under Rule 12(b)(6), the Court must “accept factual 11 allegations in the complaint as true and construe the pleadings in the light most favorable to the 12 13 nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 14 2008) (citation omitted). The Court’s review is generally limited to the contents of the 15 complaint. Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). “We are not, however, 16 17 required to accept as true allegations that contradict exhibits attached to the Complaint or 18 matters properly subject to judicial notice, or allegations that are merely conclusory, 19 unwarranted deductions of fact, or unreasonable inferences.” Daniels-Hall v. Nat’l Educ. Ass’n, 20 21 629 F.3d 992, 998 (9th Cir. 2010). 22 To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege 23 “enough facts to state a claim to relief that is plausible on its face.” []Twombly, 24 550 U.S. [at 570]. A plausible claim includes “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct 25 alleged.” U.S. v. Corinthian Colls., 655 F.3d 984, 991 (9th Cir. 2011) (quoting 26 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Under the pleading standards of Rule 27 8(a)(2), a party must make a “short and plain statement of the claim showing that 28 1 the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). . . . A complaint “that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause 2 of action will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). 3 Thus, “conclusory allegations of law and unwarranted inferences are insufficient 4 to defeat a motion to dismiss.” Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 5 2004).
6 Benavidez v. Cty. of San Diego, 993 F.3d 1134, 1144–45 (9th Cir. 2021). In addition, the factual 7 allegations in a complaint “must be enough to rise above the speculative level.” Twombly, 550 8 9 U.S. 544 at 555 (2007). 10 B. Plaintiff Has Statutory Standing 11 Defendant Logic20/20 argues that plaintiff’s claims should be dismissed for lack of 12 13 statutory standing because plaintiff is not a participant, beneficiary, or fiduciary under 29 U.S.C. 14 § 1132(a)(3)(B). Dkt. # 33 at 5. Plaintiff argues that she is indeed a participant and therefore has 15 statutory standing. Dkt. # 38 at 10–13. The U.S. Supreme Court has held that the term 16 17 “participant,” as defined in 29 U.S.C. § 1002(7), encompasses a former employee who has a 18 colorable claim that “he or she will prevail in a suit for benefits.” Firestone Tire & Rubber Co. 19 v. Bruch, 489 U.S. 101, 117–18 (1989). Here, as discussed below, plaintiff has a colorable claim 20 21 for LTD benefits and has sufficiently pled that defendant Logic20/20 is estopped from claiming 22 plaintiff is not eligible for the LTD benefits she seeks. See post, III.J.1. Therefore, plaintiff has 23 plausibly alleged statutory standing. Firestone, 489 U.S. 101 at 117–18 (1989). 24 25 26
27 28 1 C. Plaintiff’s Claim Is Not Time-Barred 2 Generally, a statute of limitations begins to run when the relevant cause of action 3 “accrues”—“that is, when ‘the plaintiff can file suit and obtain relief.’” Heimeshoff v. Hartford 4 5 Life & Acc. Ins. Co., 571 U.S. 99, 105 (2013). In the ERISA context, a participant’s cause of 6 action “does not accrue until the plan issues a final denial.” Id. Where, as here, an ERISA 7 plaintiff claims a breach of fiduciary duty by a defendant that is actionable under 29 U.S.C. 8 9 § 1132(a)(3)(B), a three-year statute of limitations begins to run “after the earliest date on which 10 the plaintiff had actual knowledge of the breach or violation.” 29 U.S.C. § 1113(2). 11 Demonstrating the “actual knowledge” aspect of this provision requires more than “evidence of 12 13 disclosure alone.” Intel Corp. Inv. Pol'y Comm. v. Sulyma, 589 U.S. 178, 186 (2020). It requires 14 demonstrating that plaintiff was “in fact” aware of the relevant information. Id. See also 15 Guenther v. Lockheed Martin Corp., 972 F.3d 1043, 1054 (9th Cir. 2020). Partial knowledge is 16 17 insufficient. Guenther, 972 F.3d 1043 at 1056 (9th Cir. 2020). To demonstrate a plaintiff’s 18 “actual knowledge of the breach,” a defendant must show the plaintiff was “actually aware of 19 the facts constituting the breach, not merely that those facts were available to the plaintiff,” and 20 21 must also show something “extra”: that plaintiff “was actually aware of the nature of the alleged 22 breach.” Id. at 1054–55 (quoting Sulyma v. Intel Corp. Inv. Policy Comm., 909 F.3d 1069, 23 1075–76 (9th Cir. 2018)). 24 25 Here, plaintiff claims a breach of fiduciary duty by defendant Logic20/20 that is 26 actionable under 29 U.S.C. § 1132(a)(3)(B). Dkt. # 23 at 14:23. Defendant Logic20/20 argues 27 28 1 that the claim is time-barred under § 1113(2) because plaintiff had “actual notice” of the EOI 2 requirement for LTD coverage by March 2020 at the latest, but did not file a complaint in this 3 matter until June 2024, more than four years later. Dkt. # 33 at 7 (citing FAC, ¶ 15). The “actual 4 5 notice” that defendant Logic20/20 alleges is an email that plaintiff received from Logic20/20 in 6 March 2020, after plaintiff attempted to enroll in LTD benefits, telling plaintiff to “mail an EOI 7 to Prudential, and to not provide a copy to Logic20/20.” FAC, ¶ 15. As an initial matter, the 8 9 relevant standard is “actual knowledge,” not “actual notice.” § 1113(2). More fundamentally, 10 accepting the factual allegations in the complaint as true, as the Court must at this stage, plaintiff 11 did not understand the effect of the March 2020 email on her eligibility for LTD benefits, 12 13 particularly given that Prudential subsequently “accepted her enrollment and began charging her 14 premiums for her LTD coverage.” Dkt. # 23 at ¶¶ 16–19. That makes this situation unlike the 15 situation in Guenther, where plaintiff was found to have actual knowledge of a fiduciary’s 16 17 alleged breach because he “unequivocally” stated that he understood that a particular 18 communication meant he was not entitled to the benefit he sought. 972 F.3d 1043 at 1050–51, 19 1055 (9th Cir. 2020). Thus, defendant Logic20/20 cannot show through the March 2020 email 20 21 alone that plaintiff had “actual knowledge” of the alleged breach of fiduciary duty with regard to 22 LTD benefits in March 2020. Id.3 Indeed, plaintiff’s complaint states that she was first made 23 24 3 Defendant Logic20/20 cites to Meagher v. Int’l. Assn. of Machinists & Aerospace Workers 25 Pension Plan, 856 F.2d 1418, 1422 (9th Cir. 1988) for the proposition that “[a]s a matter of law” 26 plaintiff’s breach of fiduciary duty claim against Logic20/20 “accrued as soon as Plainiff received actual notice of the evidence of insurability (‘EOI’) requirements in the Company’s long-term disability 27 (‘LTD’) plan (the ‘Plan’).” Dkt. # 39 at 2:3–11. In fact, to the extent that Meagher’s analysis of a § 1132(a)(1)(B) claim is relevant to the § 1132(a)(3)(B) claim at issue in this matter, defendant’s 28 1 aware that her claim for LTD benefits had been denied on June 23, 2022, with that denial 2 becoming final in December 2022 after an appeal and additional review. Dkt. # 23 at ¶¶ 21–23. 3 Therefore, on the facts as stated in the complaint plaintiff became “actually aware of the nature” 4 5 of the breach of fiduciary duty she is now alleging in 2022, which is less than three years before 6 she filed her complaint, making her claim for breach of fiduciary duty permissible under 7 § 1113(2). Guenther, 972 F.3d 1043 at 1054–55 (9th Cir. 2020) (quoting Sulyma, 909 F.3d 1069 8 9 at 1075–76 (9th Cir. 2018)). 10 D. Plaintiff May Seek Attorney Fees Under Section 1132(g)(1) 11 Defendant Logic20/20 argues that the “attorney fees that Plaintiff seeks as relief in the 12 13 Second Cause of Action” are legal, not equitable, relief and therefore are barred given that 14 plaintiff’s second cause of action is a claim under 29 U.S.C. § 1132(a)(3)(B). Dkt. # 33 at 7:10. 15 However, in her second cause of action plaintiff anchors the attorney fees she is seeking to 16 17 § 1132(g)(1). Dkt. #23 at ¶ 61. The caselaw defendant Logic 20/20 provides fails to support an 18 argument that attorney fees may not be sought under § 1132(g)(1) for fees incurred to bring a 19 claim under § 1132(a)(3)(B), Dkt. # 33 at 10–18, and “[p]leadings must be construed so as to do 20 21 justice.” Fed. R. Civ. P. 8(e). Therefore, the Court finds that defendant has sufficiently stated a 22 23 24
25 Meagher citation supports a different conclusion: plaintiff’s claim accrued upon defendant’s “application” of the EOI requirement to deny defendant LTD benefits. Meagher, 856 F.2d 1418 at 1422 26 (9th Cir. 1988) (italics in the original). However, the Court finds it more helpful to apply far more recent 27 case law, such as Guenther v. Lockheed Martin Corp., 972 F.3d 1043 (9th Cir. 2020), which analyzes the accrual question in the context of a breach of fiduciary claim under § 1132(a)(3). 28 1 claim for attorney fees under § 1132(g)(1). (The same provision defendant Logic20/20 has 2 invoked in asking for attorney fees. Dkt. # 39 at 1, 9.) 3 E. Plaintiff Is Seeking Allowable Remedies 4 5 Defendant Logic20/20 also argues that the benefits and interest “that Plaintiff seeks as 6 relief in the Second Cause of Action” are legal, not equitable, relief and therefore are barred 7 given that plaintiff’s second cause of action is a claim for equitable relief under 29 U.S.C. 8 9 § 1132(a)(3)(B). Dkt. # 33 at 7:10. Defendant is correct as to the general principle that “Money 10 damages are ‘the classic form of legal relief,’ and are not an available remedy under ERISA’s 11 equitable safety net” contained in § 1132(a)(3). Wise v. Verizon Commc'ns, Inc., 600 F.3d 1180, 12 13 1190 (9th Cir. 2010) (quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 255 (1993)). See also 14 Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210 (2002). However, defendant 15 Logic20/20 does not identify the portions of plaintiff’s second cause of action in which plaintiff 16 17 impermissibly seeks “benefits” and “interest.” Dkt. # 33 at 7:10–18. Plaintiff’s second cause of 18 action appears to seek equitable relief through “waiver,” “estoppel,” “reformation,” and 19 “surcharge.” Dkt. # 23 at 14:22 and 23:13, 20. These are allowable remedies under the statute. 20 21 See Skinner v. Northrop Grumman Ret. Plan B, 673 F.3d 1162, 1165 (9th Cir. 2012); Gabriel v. 22 Alaska Elec. Pension Fund, 773 F.3d 945, 955 (9th Cir. 2014); Salyers v. Metro. Life Ins. Co., 23 871 F.3d 934, 942 (9th Cir. 2017). 24 25 26
27 28 1 F. Plaintiff Has Not Engaged In “Improperly Duplicative” Pleading 2 Defendant Logic20/20 argues that plaintiff’s claims against Logic20/20 and Prudential 3 are “improperly duplicative and impermissible.” Dkt. # 33 at 7:19–8:17. For this proposition, 4 5 defendant again relies on Ninth Circuit caselaw that points in a different direction than 6 defendant claims. See supra, n.3. Specifically, defendant cites Moyle v. Liberty Mutual 7 Retirement Benefit Plan, 823 F.3d 948, 961 (9th Cir. 2016), in support of the proposition that 8 9 under Varity Corp. v. Howe, 516 U.S. 489, 512 (1996), “an ERISA § 502(a)(3) claim that does 10 not arise from a separate injury nor seek a different remedy than is available under ERISA 11 § 502(a)(1)(B) is improperly duplicative and impermissible.” Dkt. # 33 at 7:23–26. But as Moyle 12 13 explains, at the very pincite that is cited by defendant: “Varity did not explicitly prohibit a 14 plaintiff from pursuing simultaneous claims under § 1132(a)(1)(B) and § 1132(a)(3).” 823 F.3d 15 948 at 961 (9th Cir. 2016), as amended on denial of reh'g and reh'g en banc (Aug. 18, 2016). 16 17 “Rather,” what is prohibited is “duplicate recoveries when a more specific section of the statute, 18 such as § 1132(a)(1)(B), provides a remedy similar to what the plaintiff seeks under the 19 equitable catchall provision, § 1132(a)(3).” Id. (quoting Silva v. Metro. Life Ins. Co., 762 F.3d 20 21 711, 726 (8th Cir. 2014) (emphasis in original)). The bottom line is that a plaintiff may plead 22 simultaneous claims under § 1132(a)(1)(B) and § 1132(a)(3) in the alternative, because pleading 23 in the alternative “allows plaintiffs to plead alternate theories of relief without obtaining double 24 25 recoveries.” Id. Here, pleading in the alternative is exactly what plaintiff did, citing Moyle in 26 support. Dkt. # 23 at ¶¶ 42 and 64, n.2. See also id. at 2:23. Defendant’s argument that plaintiff’s 27 28 1 claims against Logic20/20 and Prudential are “improperly duplicative and impermissible” is 2 simply wrong, as is made clear by the very pincite on which defendant relies. See Dkt. # 33 at 3 7:25–26. 4 5 G. Plaintiff Has Sufficiently Alleged Logic20/20 Is a Fiduciary 6 ERISA establishes two types of fiduciaries. Depot, Inc. v. Caring for Montanans, Inc., 7 915 F.3d 643, 653 (9th Cir. 2019). A “named fiduciary” is a party designated “in the plan 8 9 instrument” as a fiduciary. Id. (citing 29 U.S.C. § 1101(a)(2)). A “functional” fiduciary is one 10 who, as relevant here, “exercises any discretionary authority or discretionary control respecting 11 management of such plan or exercises any authority or control respecting management or 12 13 disposition of its assets,” or “has any discretionary authority or discretionary responsibility in 14 the administration of such plan.” Id. (citing 29 U.S.C. § 1002(21)(A)). Thus, “[a]n entity is a 15 fiduciary under ERISA to the extent it has or exercises any discretionary authority, control, or 16 17 responsibility in the management or administration of an ERISA plan.” Bafford v. Northrop 18 Grumman Corp., 994 F.3d 1020, 1025 (9th Cir. 2021) (citing 29 U.S.C. § 1002(21)(A)(i), (iii)). 19 “To state a claim for breach of fiduciary duty under ERISA, a plaintiff must allege that (1) the 20 21 defendant was a fiduciary; and (2) the defendant breached a fiduciary duty; and (3) the plaintiff 22 suffered damages.” Id. at 1026. 23 Here, plaintiff contends that Logic20/20 was both a functional and named fiduciary. Dkt. 24 25 # 23 at ¶¶ 44, 49. Additionally, plaintiff claims Logic20/20 “at all times relevant was the Plan 26 Sponsor” and “the Plan Administrator.” Id. at ¶ 4. Plaintiff also claims that, among other things: 27 28 1 Logic20/20 was responsible for the creation and/or maintenance of all Plan Documents. Logic20/20 administered benefits under the Plan as offered to its 2 employees at its home office in Seattle, Washington. Logic20/20 also acted as 3 Prudential’s agent concerning its employees’ enrollment in the Plan, the recordkeeping of the Plan, and the collection of premiums for such voluntary 4 additional coverage as that provided by the Plan. 5 Id. While an allegation that Logic20/20 is “the Plan Administrator” might be characterized as 6 7 conclusory, the allegation is supported by plan documents filed in this action by Logic20/20 as 8 part of its motion to dismiss. Dkt. # 34. These plan documents—a Group Contract between 9 Prudential and Logic20/20, a Certificate of Insurance, and a Summary Plan Description—are 10 11 repeatedly referenced in plaintiff’s complaint and form the basis for her claims. See Dkt. # 23 at 12 ¶¶ 3, 11, 18, 46. The Court has therefore considered these documents when determining the 13 sufficiency of plaintiff’s complaint. See Dkts. # 23, 34. See also Parrino v. FHP, Inc., 146 F.3d 14 15 699, 706 (9th Cir. 1998), as amended (July 28, 1998); Khoja v. Orexigen Therapeutics, Inc., 899 16 F.3d 988, 1002 (9th Cir. 2018). The plan documents filed by Logic20/20 show that Logic20/20 17 is the Contract Holder for a Group Insurance Contract with Prudential Insurance Company of 18 19 America; that Logic20/20 pays premiums to Prudential that are based on “the Employees then 20 insured” (making it plausible that Logic20/20 collects premiums from its employees, as plaintiff 21 alleges); and that Logic20/20 is the “Plan Sponsor” and “Plan Administrator.” See Dkt. # 34, Ex. 22 23 1 at 2, 5 and Ex. 2 at 56. Thus, plaintiff’s claims that Logic20/20 acted as a functional fiduciary 24 are plausible. See Acosta v. Brain, 910 F.3d 502, 518 (9th Cir. 2018) (noting that the central 25 inquiry is whether the party was acting as an ERISA fiduciary when taking the action subject to 26 27 the complaint); McIver v. Metro. Life Ins. Co., No. 23-55306, 2024 WL 4144075, at *1–2 (9th 28 1 Cir. Sept. 11, 2024) (finding that a Boeing employee had sufficiently pled that Boeing was 2 acting as a fiduciary where the employee alleged Boeing continued to “charge, deduct, and 3 collect premiums” for coverage for the employee’s ex-wife after Boeing was notified of their 4 5 divorce, which made the ex-wife ineligible for the relevant benefit, and that Boeing also failed 6 to investigate the ex-wife’s continued eligibility). The plan documents also allow the Court to 7 draw the reasonable inference that Logic20/20 was a functional fiduciary because Logic20/20 8 9 had some amount of “discretionary authority or discretionary responsibility in the administration 10 of [the] plan.” 29 U.S.C. § 1002(21)(A). Benavidez, 993 F.3d 1134 at 1144–45 (9th Cir. 2021). 11 In addition, to the extent that defendant Logic20/20 argues that plaintiff cannot claim 12 13 Logic20/20 is a fiduciary based on functions that Logic20/20 claims are ministerial (see Dkt. 14 # 33 9:15), the argument is premature. Where, as here, “a searching inquiry” is required to 15 determine whether the functions were, in fact, ministerial, the decision should not be made at the 16 17 motion to dismiss stage. See Dkt. # 38 at 16:4–11. See also Schonbak v. Minnesota Life, No. 18 16CV00295 DMS (JMA), 2016 WL 9525592, at *4 (S.D. Cal. Sept. 30, 2016) (stating: “[T]he 19 question of whether the conduct complained of was ministerial or fiduciary in nature is a factual 20 21 question that is inappropriate for resolution at the present moment.”); Rosenburg v. Int'l Bus. 22 Machines Corp., No. C 06-0430 PJH, 2006 WL 1627108, at *5 (N.D. Cal. June 12, 2006) 23 (stating: “Whether IBM assumed fiduciary status, including when and the extent to which it was 24 25 functioning in the capacity of a plan administrator, will require a searching inquiry into the facts 26 27 28 1 and is therefore inappropriate for resolution on a motion to dismiss.”). Therefore, plaintiff has 2 sufficiently alleged defendant Logic20/20 is a fiduciary for the purposes of this action. 3 H. Plaintiff Has Sufficiently Pled Breach of Fiduciary Duty 4 5 Defendant Logic20/20 argues that plaintiff “does not allege facts supporting that 6 Logic20/20 breached a fiduciary duty.” Dkt. # 33 at 10:2. This is plainly incorrect. See Dkt. # 23 7 at ¶¶ 1, 7–29, 41–61. Accepting the factual allegations in the complaint as true, plaintiff’s 8 9 complaint does include “factual content that allows the court to draw the reasonable inference 10 that the defendant is liable for the misconduct alleged” with regard to the breach of fiduciary 11 duty claim. See id. See also Benavidez, 993 F.3d 1134 at 1144–45 (9th Cir. 2021). To take one 12 13 example, plaintiff’s complaint alleges that plaintiff’s Employee Handbook “instructed her to 14 review the Summary Plan Description to learn about the specifics of the LTD plan.” Dkt. # 23 at 15 ¶ 14. The complaint further alleges that the Summary Plan Description “provided by Logic20/20 16 17 and made available to employees did not reference any EOI requirement or any penalty for late 18 enrollment in the LTD plan.” Id. Documents filed by Logic20/20 and incorporated into 19 plaintiff’s complaint by reference (see supra) show a Summary Plan Description that does not 20 21 reference any EOI requirement. Dkt. # 34, Ex. 2 at 56–61. Defendant argues that the Summary 22 Plan Description was “attached to” a Certificate of Coverage that does discuss the EOI 23 requirement (Dkt. # 39 at 2:16), and therefore plaintiff’s mention of the Summary Plan 24 25 Description is “both disingenuous and a red herring” (Dkt. # 33 at 10:21). Plaintiff contests this. 26 Dkt. # 38 at 16:12–17:17. The Court cannot settle this dispute based on the pleadings, nor need 27 28 1 it settle the dispute at this stage because, taking the factual allegations in plaintiff’s complaint as 2 true, plaintiff has plausibly alleged that Logic20/20 breached its fiduciary duty by not complying 3 with ERISA’s disclosure requirements (see Dkt. # 23 at ¶ 13) and failing to convey “complete 4 5 and accurate information material to the beneficiary’s circumstance.” Barker v. Am. Mobil 6 Power Corp., 64 F.3d 1397, 1403 (9th Cir. 1995), as amended (Nov. 15, 1995). Therefore, 7 plaintiff has sufficiently pled breach of fiduciary duty by defendant Logic20/20. 8 9 I. Plaintiff Has Sufficiently Pled Damages 10 Plaintiff’s complaint alleges that Logic20/20’s alleged breach of its fiduciary duty 11 “proximately caused the denial of Plaintiff’s benefits.” Dkt. # 23 at ¶ 60. The complaint 12 13 also alleges that Logic20/20’s alleged breach of its fiduciary duty proximately caused 14 Plaintiff to incur attorney fees “to pursue this action.” Id. at ¶ 61. Finally, the complaint 15 alleges that plaintiff “would have secured insurance coverage from a different provider 16 17 but for” Logic20/20’s alleged breach of its fiduciary duty. Id. at ¶ 81. 18 Defendant Logic20/20 contests causation here, arguing that because plaintiff was 19 advised by email in March 2020 that she needed to provide an EOI to Prudential in order 20 21 to receive LTD benefits, and plaintiff then “failed to submit the EOI” in response to the 22 email, defendant Logic20/20’s alleged failure to inform plaintiff of the EOI requirement 23 before March 2020 and defendant Logic20/20’s “deductions of premium payments 24 25 between January 2021 and June 2022” are “legally irrelevant.” Dkt. # 33 at 12:4–16. But 26 it is far from clear that defendant Logic20/20’s deductions of premium payments—which 27 28 1 plaintiff alleges continued “from January 2021 through March 2023” (see Dkt. # 23 at 2 ¶ 25)—are legally irrelevant. McIver v. Metro. Life Ins. Co., No. 23-55306, 2024 WL 3 4144075, at *1–2 (9th Cir. Sept. 11, 2024). See also, Jackson v. Guardian Life Ins. Co. of 4 5 Am., No. 22-CV-03142-JSC, 2023 WL 2960290, at *1 (N.D. Cal. Apr. 13, 2023) (case 6 proceeded to summary judgment on facts similar to those alleged here). 7 As an additional argument, defendant Logic20/20 claims there is no causation here 8 9 because “Prudential’s coverage denial was inevitable.” Dkt. # 33 at 12:13–16. “Given 10 Plaintiff’s underlying medical disorder which she knowingly had her whole life, the fate 11 of her LTD application was set well before Logic20/20 deducted premiums from her 12 13 paycheck.” Id. Defendant Logic20/20 cites no caselaw or evidence to support the 14 application of this inevitability theory to a motion to dismiss, and in any event defendant 15 Logic20/20 admits deducting premiums. Id. Plaintiff claims she “would have secured 16 17 insurance coverage from a different provider but for” defendant Logic20/20’s alleged 18 breach of its fiduciary duty, and she claims that the acceptance of premiums by 19 Prudential (premiums that the complaint alleges were deducted by Logic20/20) led 20 21 plaintiff to “reasonably believe she was covered under the Plan.” Id. at ¶¶ 35–36, 81. 22 Therefore, accepting the factual allegations in the complaint as true, plaintiff has 23 sufficiently pled damages. 24 25 26
27 28 1 J. Plaintiff Is Seeking Appropriate Equitable Relief 2 Defendant argues that even if plaintiff can establish a prima facie claim under 3 § 502(a)(3)(B), plaintiff is not seeking “appropriate equitable relief” and her complaint should 4 5 be dismissed for that alternative reason. Dkt. # 33 at 14:18 (citing Gabriel v. Alaska Elec. 6 Pension Fund, 773 F.3d 945, 954 (9th Cir. 2014)). With this in mind, the Court now examines 7 the specific equitable relief sought by plaintiff. Dkt. # 23 ¶¶ 62–82. 8 9 1. Estoppel 10 Plaintiff claims defendant Logic20/20 is equitably estopped from asserting plaintiff’s lack 11 of coverage because Logic20/20 “confirmed coverage through their deductions and subsequent 12 13 acceptance of premiums for LTD coverage.” Dkt. # 23 at ¶ 62. 14 Equitable estoppel “holds the fiduciary to what it had promised and operates to 15 place the person entitled to its benefit in the same position he would have been in had the representations been true.” Gabriel v. Alaska Elec. Pension Fund, 773 16 F.3d 945, 955 (9th Cir. 2014) (internal quotation marks and citations omitted). 17 Under this theory of relief, a plaintiff must allege the traditional equitable estoppel requirements: “(1) the party to be estopped must know the facts; (2) he must 18 intend that his conduct shall be acted on or must so act that the party asserting the 19 estoppel has a right to believe it is so intended; (3) the latter must be ignorant of the true facts; and (4) he must rely on the former's conduct to his injury.” Id. 20 (citations omitted). In the ERISA context, the plaintiff must allege three additional 21 requirements: “(1) extraordinary circumstances; (2) that the provisions of the plan at issue were ambiguous such that reasonable persons could disagree as to their 22 meaning or effect; and (3) that the representations made about the plan were an 23 interpretation of the plan, not an amendment or modification of the plan.” Id. at 957 (internal quotation marks and citations omitted). “[E]xtraordinary 24 circumstances” in this context may be established by alleging facts that show a 25 defendant made a promise that they reasonably should have expected to induce action or forbearance on the plaintiff's part, combined with a showing of repeated 26 misrepresentations over time. Id. (internal citations and quotation marks omitted). 27 28 1 Beverly Oaks Physicians Surgical Ctr., LLC v. Blue Cross & Blue Shield of Illinois, 983 F.3d 2 435, 442 (9th Cir. 2020). Accepting the factual allegations in the complaint as true and drawing 3 all reasonable inferences in favor of plaintiff, the Court finds it plausible that (1) Logic20/20 4 5 knew of the EOI requirement, knew that plaintiff had not satisfied the EOI requirement, and 6 knew that Logic20/20 was nevertheless collecting LTD premiums from plaintiff; (2) plaintiff 7 had a right to believe that she had LTD coverage in the circumstances alleged; (3) plaintiff was 8 9 ignorant of the true facts of the EOI requirement; and (4) plaintiff was injured by her reliance on 10 Logic20/20’s conduct. Plaintiff has also adequately pleaded facts to satisfy the three equitable 11 estoppel requirements specific to the ERISA context. Plaintiff has adequately pleaded 12 13 extraordinary circumstances, alleging that she received “documentation and ongoing paycheck 14 deductions from Logic20/20 confirming that she was covered by her LTD insurance beginning 15 January 2021” and that Logic20/20 took her premiums for LTD insurance from January 2021 16 17 through March 2023. See Dkt. # 23 at ¶ 25. See also Gabriel v. Alaska Elec. Pension Fund, 773 18 F.3d 945, 957 (9th Cir. 2014). Plaintiff has pleaded that relevant plan language was ambiguous. 19 See Dkt. # 23 at ¶¶ 11; 35–36; 54; 64, n.2; 71. Plaintiff has pleaded that representations 20 21 Logic20/20 made about the plan were an interpretation of the plan, not an amendment or 22 modification of the plan. See Dkt. # 23 at ¶¶ 54, 57, 69, 77. “That was sufficient.” Beverly Oaks, 23 983 F.3d 435 at 442 (9th Cir. 2020). 24 25 26
27 28 1 2. Waiver 2 Plaintiff claims defendant Logic20/20 waived its right to assert plaintiff’s lack of 3 coverage because Logic20/20 “confirmed coverage through their deductions and subsequent 4 5 acceptance of premiums for LTD coverage.” Dkt. # 23 at ¶ 62. 6 A waiver occurs when “a party intentionally relinquishes a right” or “when that 7 party’s acts are so inconsistent with an intent to enforce the right as to induce a reasonable belief that such right has been relinquished.” See Intel Corp. v. 8 Hartford Accident & Indem. Co., 952 F.2d 1551, 1559 (9th Cir. 1991). Courts 9 have applied the waiver doctrine in ERISA cases when an insurer accepted premium payments with knowledge that the insured did not meet certain 10 requirements of the insurance policy. See, e.g., Gaines v. Sargent Fletcher, Inc. 11 Grp. Life Ins. Plan, 329 F.Supp.2d 1198, 1222 (C.D. Cal. 2004) (holding that an insurer waived its right to rely on evidence of insurability requirement as grounds 12 for denial of benefits by receiving payments without “giving any indication” that 13 the insured had failed to submit evidence of insurability); Pitts v. Am. Sec. Life Ins. Co., 931 F.2d 351, 357 (5th Cir. 1991) (finding waiver in ERISA action where 14 insurer continued accepting payments after learning of plan participant’s breach of 15 policy requirements).
16 Salyers v. Metro. Life Ins. Co., 871 F.3d 934, 938 (9th Cir. 2017). In Salyers, the Ninth Circuit 17 found that an employer, Providence, and an Insurer, MetLife, had created a “compartmentalized 18 19 system” in which “Providence was responsible for interacting with plan participants and 20 MetLife remained largely ignorant of individual plan participants’ coverage elections.” Id. To 21 prevent the use of “a compartmentalized system to escape responsibility,” Salyers applied the 22 23 federal common law of agency to the situation, finding that Providence had acted as MetLife’s 24 agent in deducting premiums for life insurance from the plaintiff’s paycheck absent a required 25 “evidence of insurability,” and therefore “Providence’s knowledge and conduct” was 26 27 attributable to MetLife. Id. at 936–41. Accordingly, MetLife was found to have waived the 28 1 evidence of insurability requirement and could not contest coverage on that basis. Id. at 936–41. 2 Plaintiff here claims that the same type of “compartmentalized system” is being deployed by 3 defendant Logic20/20 in this matter to “escape responsibility” regarding the EOI requirement 4 5 and premium deductions from plaintiff’s paycheck. Dkt. # 23 at ¶ 54. 6 However, as defendant points out (Dkt. # 33 at 14–15), a difference between Salyers and 7 this case is that the Group Contract between Logic20/20 and Prudential is available in this 8 9 matter, along with a copy of a Certificate of Coverage and Summary Plan Description, whereas 10 in Salyers, the contract between Providence and MetLife was not in the record. 871 F.3d 934 at 11 939 (9th Cir. 2017). Without the contract and “other relevant communications” available to the 12 13 Salyers court, that court relied on what a plan participant “would have reasonably believed” 14 about Providence’s authority, reaching the conclusion that Providence had apparent authority 15 and therefore was MetLife’s agent “for the purposes of enforcing the evidence of insurability 16 17 requirement.” Id. at 941. Here, in contrast, the available Group Contract states that the contract 18 holder (Logic20/20) “is not the agent or representative of Prudential” (Dkt. # 34, Ex. 1 at 9); the 19 available Certificate of Coverage states that “[u]nder no circumstances will your Employer be 20 21 deemed the agent of Prudential” (Dkt. # 34, Ex. 2 at 16); and the available Summary Plan 22 Description also states that “[u]nder no circumstances” will the employer be deemed an agent of 23 Prudential “absent a written authorization of such status executed between the 24 25 Employer/Policyholder and The Prudential Insurance Company of America. Nothing in these 26 27 28 1 documents shall, of themselves, be deemed to be such written execution.” (Dkt. # 34, Ex. 2 at 2 57). 3 As a result, it is not clear to the Court on this record which party could relinquish (i.e., 4 5 waive) the EOI requirement in this plan. As noted above, plaintiff has plausibly pled that there is 6 ambiguity in this plan as to the particular responsibilities of Prudential and Logic20/20. Dkt. 7 # 23 at ¶ 11. In addition, “[a]llowing insurers . . . to essentially vitiate Salyers and the good 8 9 behaviors it seeks to promote” by inserting “a non-waiver clause into the operative policy” 10 would be “unfair and unjust.” Cho v. First Reliance Standard Life Ins. Co., 852 F. App’x 304, 11 305 (9th Cir. 2021). The Court thus finds that there are factual issues regarding the existence of 12 13 an agency relationship—notwithstanding defendants’ contractual disavowal of an agency 14 relationship—and that because of this the waiver issue is not suitable for resolution at the 15 motion to dismiss stage. 16 17 3. Reformation 18 Plaintiff pleads entitlement to reformation based on alleged fraud by defendant 19 Logic20/20. Dkt. # 23 at ¶¶ 74–79. 20 21 Under a fraud theory, a plaintiff may obtain reformation when either (1) “[a trust] was procured by wrongful conduct, such as undue influence, duress, or fraud,” or 22 (2) a “party's assent [to a contract] was induced by the other party's 23 misrepresentations as to the terms or effect of the contract” and he “was justified in relying on the other party's misrepresentations.” 24
25 Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945, 955 (9th Cir. 2014) (citing Skinner v. 26 Northrop Grumman Ret. Plan B, 673 F.3d 1162, 1116 (9th Cir. 2012)). Here, plaintiff alleges 27 28 1 Logic20/20 “committed equitable fraud” when it misrepresented her LTD coverage by 2 repeatedly deducting and accepting premium payments while knowing that plaintiff had not 3 submitted an EOI. Dkt. # 23 at ¶ 77. This “lulled Plaintiff into a false sense of security that her 4 5 coverage had been approved and remained in place when it did not under the Plan’s terms.” Id. 6 As a result, “Plaintiff reasonably but mistakenly expected that she would be covered under the 7 Plan.” Id. Thus, accepting the factual allegations in the complaint as true, including plaintiff’s 8 9 allegations concerning “ambiguity” as to the roles of Logic20/20 and Prudential in the 10 administration of this benefits plan (see Dkt. # 23 at ¶¶ 11, 35–6, 54, 71), plaintiff has 11 sufficiently pled entitlement to reformation. Gabriel, 773 F.3d 945 at 955 (9th Cir. 2014) (citing 12 13 Skinner, 673 F.3d 1162 at 1166 (9th Cir. 2012)). Accord Baker v. Save Mart Supermarkets, 684 14 F. Supp. 3d 980, 991 (N.D. Cal. 2023) (sufficient pleading of entitlement to reformation on a 15 motion to dismiss where plaintiffs alleged misrepresentation about a benefit and justified 16 17 reliance on the misrepresentation). 18 4. Surcharge 19 Plaintiff pleads entitlement to surcharge. Dkt. # 23 at ¶¶ 80–82. Surcharge may be used in 20 21 response to a breach of fiduciary duty as a means of gaining compensatory damages for the 22 breach that “will put the beneficiary in the position he or she would have attained but for the 23 [fiduciary’s] breach.” Skinner, 673 F.3d 1162 at 1167 (9th Cir. 2012). Here, plaintiff contends 24 25 that she would have secured LTD benefits from a different provider but for Logic20/20’s breach 26 of its fiduciary duty to, among other things, “property notify Plaintiff of the inability to cover 27 28 1 her for her LTD coverage.” Dkt. # 23 at ¶ 81. Plaintiff contends that as a result, she has “been 2 actually harmed in the amount of the LTD benefits she is entitled to collect.” Id. Thus, accepting 3 the factual allegations in the complaint as true, plaintiff has adequately pled the elements of 4 5 surcharge: that Logic20/20 breached a fiduciary duty and that she was harmed by the breach. 6 Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945, 958 (9th Cir. 2014). 7 K. Plaintiff Has Plausibly Pled a violation of 29 U.S.C. § 1024(b)(4) and 8 9 § 1132(c) 10 A plan administrator “shall, upon written request of any participant or beneficiary, 11 furnish a copy of the latest updated summary, plan description, and the latest annual report, any 12 13 terminal report, the bargaining agreement, trust agreement, contract, or other instruments under 14 which the plan is established or operated.” 29 U.S.C. § 1024(b)(4). In addition, § 1132(c)(1)(B) 15 establishes financial liability for “[a]ny administrator” who “fails or refuses to comply with a 16 17 request for any information which such administrator is required by this subchapter to furnish to 18 a participant or beneficiary . . . within 30 days after such request.” 19 Here, plaintiff claims that in an email dated Aug. 22, 2022, she asked defendant 20 21 Logic20/20, the plan administrator, to provide her with “the relevant Plan documents governing 22 the LTD Plan.” Dkt. # 23 at ¶ 84. “Logic20/20 responded that it did not believe it had those 23 documents, and Plaintiff would need to obtain them from Prudential.” Id. Plaintiff claims that 24 25 ultimately, defendant Logic20/20 never provided her with a copy of the Group Contract in 26 response to her request. Dkts. # 23 at ¶ 85; 38 at 14. Therefore, accepting the factual allegations 27 28 1 in the complaint as true, plaintiff has plausibly alleged a violation of 29 U.S.C. § 1024(b)(4) and 2 § 1132(c) by Logic20/20. 3 IV. Conclusion 4 5 For all to foregoing reasons, defendant Logic20/20’s motion to dismiss (Dkt. # 33) is 6 DENIED. Plaintiff’s motion to strike (Dkt. # 42) is GRANTED. The Declaration of Bradley J. 7 Krupicka (Dkt. # 40) and the arguments in defendant’s reply that rely on that declaration (see 8 9 Dkt. # 39 at 4:11) are STRICKEN because they impermissibly raise new evidence. 10
11 IT IS SO ORDERED. 12 13 14 DATED this 29th day of December, 2025. 15
17 Robert S. Lasnik 18 United States District Judge 19 20 21 22 23 24 25 26 27 28