Bush v. Liberty Life Assurance Co.

77 F. Supp. 3d 900, 59 Employee Benefits Cas. (BNA) 1846, 2015 U.S. Dist. LEXIS 550, 2015 WL 54418
CourtDistrict Court, N.D. California
DecidedJanuary 2, 2015
DocketCase No. 14-cv-01507-YGR
StatusPublished
Cited by9 cases

This text of 77 F. Supp. 3d 900 (Bush v. Liberty Life Assurance Co.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bush v. Liberty Life Assurance Co., 77 F. Supp. 3d 900, 59 Employee Benefits Cas. (BNA) 1846, 2015 U.S. Dist. LEXIS 550, 2015 WL 54418 (N.D. Cal. 2015).

Opinion

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS; SETTING CASE MANAGEMENT CONFERENCE

Re: Dkt. No. 21

YVONNE GONZALEZ ROGERS, United States District Court Judge

Plaintiff James L. Bush (“Bush”) brings this Employee Retirement Income Security Act of 1974, as amended (“ERISA”) putative class action against defendants Liberty Life Assurance Company of Boston (“Liberty Life”) and Hyundai Motor America (“Hyundai”). The dispute arises from Liberty Life’s decision to decrease the long-term disability benefits it paid to Bush by the amount he received from the Department of Veterans Affairs (“VA”). Bush brings six ERISA claims for: (1) disability benefits under section 502(a)(1)(B), against Liberty Life; (2) equitable relief pursuant to sections 102 and 502(a)(3), against both defendants; (3) equitable relief and disgorgement pursuant to section 502(a)(3), against Liberty Life; (4) violations of sections 104 and 402 and monetary penalties under sections 502(a)(1)(A) and 502(c), against both defendants; (5) violation of section 503, against both defendants; and (6) declaratory and injunctive relief pursuant to section 502(a)(3), against Liberty Life. (Dkt. No. 1 (“Complaint”).)

Pursuant to Federal Rule of Civil Procedure 12(b)(6), Liberty Life filed a Motion to Dismiss Counts Tl-V on the grounds that they: (1) can only be maintained against the designated plan administrator, Hyundai (Counts II, IV, and V) and (2) are impermissibly duplicative of the relief sought under Count I (Counts II, III, and V). (Dkt. No. 21 (“Mot.”).) Hyundai joins the second aspect of Liberty Life’s motion in part, seeking dismissal of Counts II and V as duplicative. (Dkt. No. 22.) Bush opposes the motion. (Dkt. No. 30 (“Oppo.”).) The Court heard argument on October 14, 2014.

Having carefully considered the papers submitted, the complaint, and the arguments of counsel, the Court hereby Grants in Part and Denies in Part the Motion to Dismiss.

I. BACKGROUND

Bush’s allegations center around Liberty Life’s decision to offset the long-term disability benefits he was otherwise owed by the amount he received in VA disability payments.1

In August 2008, Bush started working for Hyundai Capital America, Inc. (“HCA”), where he was an assistant manager of its Tustin, California office. (Complaint ¶ 39.) Through this role, he became a participant in an ERISA-governed em[903]*903ployee welfare benefit plan available to all Hyundai or HCA employees (the “Plan”). (Id. ¶ 7, 39-40.) Hyundai is purportedly the plan administrator as the term is defined in ERISA section 3(16)(A). (Id. ¶ 8.) As part of his Plan participation, Bush was insured under a long-term disability policy issued by Liberty Life (the “Policy”). (Id. ¶¶ 2, 39.)

After suffering a “severe nervous breakdown,” Bush went on medical leave from October 2011 through March 2014. (Id. ¶ 39.) On May 1, 2012, Liberty Life approved his claim for long-term disability with a gross monthly benefit of $3,468.27, effective as of October 30, 2011. (Id. ¶¶ 64, 67.)

Bush also filed a disability claim with the VA. The VA granted his claim for Veterans Disability Compensation on February 1, 2013 in the monthly amount of $3,354 (later increased to $3,409 with a cost-of-living adjustment), finding he was disabled as a result of post-traumatic stress disorder, peripheral neuropathy, and other service-related conditions. (Id. ¶¶ 69-70, 72.) He was eligible for these benefit payments as a result of his service in the U.S. Marine Corps during the Vietnam War. (Id. ¶ 38.)

In a letter dated August 14, 2013, Liberty Life notified Bush that his monthly disability benefits would be reduced by the amount of disability benefits he received from other sources, including his VA benefits. (Id. ¶¶ 75-76.) Liberty Life decreased his benefits to $346.83, the minimum monthly benefit available under the Plan. (Id. ¶¶ 80-81.) Without the VA offset, Bush’s monthly benefit payments from Liberty Life would have been $1,456.27 after accounting for an offset of the amount he received in Social Security Disability Insurance (“SSDI”) benefits.2 (Id. ¶¶ 80, 82.) In support of its position, Liberty Life quoted the following provision of the Policy:

Benefits from Other Income means those benefits shown below:
1. The amount for which the Covered Person is eligible under:
a. Workers’ or Workmen’s Compensation Law;
b. occupational disease law;
c. any compulsory benefit act or law; or
d. any other act or law of like intent [•••].

(Id. ¶ 75 (alteration in original).)

Bush appealed Liberty Life’s offset decision in August 2013. (Id. ¶ 83.) Liberty Life denied the appeal, citing sections 1(c) and 1(d) of the Policy excerpted above. (Id. ¶¶ 84-85 (“The Appeal Denial Letter explained only that VA benefits are considered obligatory compensation for injuries to service men and women during military service and are subject to offset under the applicable Policy provisions set forth above.’ ”).)

Liberty Life admits that even with the disputed offset in place, Bush is entitled to $346.83 per month. (Id. ¶ 86.) Liberty Life began withholding those payments, however, and applying them to the $27,450.90 amount Liberty Life claims it overpaid him prior to making its offset determination. (Id. ¶¶ 92-93.) As of October 9, 2013, Liberty Life had engaged a debt collector to recover the purported overpayment. (Id. ¶ 94.)

Bush’s employment terminated in March 2014. (Id. ¶ 39.) He filed the instant case on April 1, 2014. (Dkt. No. 1.) As part of his action, Bush proposes a “Liberty Life Class” of honorably discharged veterans who are residents of California, Montana, Oregon, or Washington participating in a [904]*904Liberty Life policy that includes the offset provision quoted above. (Id. ¶ 10.) He also proposes a “Hyundai Class” of honorably discharged veterans who are participants in the Hyundai Plan. (Id. ¶ 11.)

II. LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint may be dismissed as to a particular defendant for failure to state a claim upon which relief may be granted against that defendant. Dismissal may be based on either the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.1988); Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.1984). For purposes of evaluating a motion to dismiss, the court “must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the nonmoving party.” Usher v. City of Los Angeles,

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Bluebook (online)
77 F. Supp. 3d 900, 59 Employee Benefits Cas. (BNA) 1846, 2015 U.S. Dist. LEXIS 550, 2015 WL 54418, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bush-v-liberty-life-assurance-co-cand-2015.