1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 TREVOR LAROCQUE, Case No. 5:25-cv-02522-PCP
8 Plaintiff, ORDER GRANTING MOTION TO 9 v. DISMISS
10 LIFE INSURANCE COMPANY OF Re: Dkt. No. 22 NORTH AMERICA, 11 Defendant.
12 13 After defendant Life Insurance Company of North America (LINA) denied plaintiff Trevor 14 LaRocque’s claim for long term disability (LTD) benefits, LaRocque filed this lawsuit asserting 15 state law claims for breach of contract and breach of the implied covenant of good faith and fair 16 dealing and, in the alternative, a claim for benefits under the Employee Retirement Income 17 Security Act of 1974 (ERISA). LINA moves to dismiss the state law claims pursuant to Rule 18 12(b)(6). For the following reasons, the motion is granted. 19 BACKGROUND 20 LaRocque, a certified public account, is a partner and equity owner at 21 PricewaterhouseCoopers LLP (PwC). He was provided long term disability coverage through a 22 group disability insurance policy, the Partner Long Term Disability Plan (“the Policy”), which 23 LINA issued to the Trustee of the Group Insurance Trust for Employers in the Service Industry, 24 under which PwC is a subscriber. The Policy provides LTD coverage solely to “U.S. firm Partners 25 and Principals.” PwC also provides various benefits, including disability benefits, to its employees 26 through the PricewaterhouseCoopers LLP Health & Welfare Benefits Plan (“the Plan”). 27 In February 2023, LaRocque took medical leave because he was unable to perform his job 1 denied. 2 LaRocque alleges that LINA’s denial of his claim constituted a breach of contract and a 3 breach of the implied covenant of good faith and fair dealing. After LINA moved to dismiss those 4 claims on the ground that they are preempted by ERISA, LaRocque filed an amended complaint 5 asserting the same state law claims while also asserting in the alternative a claim for benefits under 6 ERISA. LINA now moves to dismiss the state law claims, contending again that they are 7 preempted by ERISA. 8 LEGAL STANDARD 9 Federal Rule of Civil Procedure 8(a)(2) requires a complaint to include a “short and plain 10 statement of the claim showing that the pleader is entitled to relief.” If the complaint fails to state a 11 claim, the defendant may move for dismissal under Federal Rule of Civil Procedure 12(b)(6). 12 Dismissal is required if the plaintiff fails to allege facts allowing the Court to “draw the reasonable 13 inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 14 678 (2009). “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a 15 cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. 16 Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) 17 motion, a plaintiff need only plead “enough facts to state a claim to relief that is plausible on its 18 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 19 In considering a Rule 12(b)(6) motion, the Court must “accept all factual allegations in the 20 complaint as true and construe the pleadings in the light most favorable” to the non-moving party. 21 Rowe v. Educ. Credit Mgmt. Corp., 559 F.3d 1028, 1029–30 (9th Cir. 2009). While legal 22 conclusions “can provide the [complaint’s] framework,” the Court will not assume they are correct 23 unless adequately “supported by factual allegations.” Iqbal, 556 U.S. at 679. Courts do not “accept 24 as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable 25 inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (quoting Sprewell 26 v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). 27 1 ANALYSIS 2 LINA argues that LaRocque’s state law claims are preempted by ERISA. It contends that 3 the Policy through which LaRocque received LTD coverage at the time his claims accrued was a 4 component of the Plan, which is governed by ERISA. LaRocque maintains that the Policy is 5 separate from the Plan and is not governed by ERISA because it covers only partners, not 6 employees. 7 ERISA applies to “employee benefit plan[s].” 29 U.S.C. § 1003(a). “An ERISA ‘employee 8 welfare benefit plan’ is (1) a plan, fund or program, (2) established or maintained by an employer 9 through the purchase of insurance or otherwise, (3) for the purpose of providing … benefits (4) to 10 its participants or their beneficiaries.” Patelco Credit Union v. Sahni, 262 F.3d 897, 907 (9th Cir. 11 2001); see 29 U.S.C. § 1002(1). A plan is not an “employee benefit plan” subject to ERISA—an 12 ERISA plan—if its participants do not include any employees. 29 C.F.R. § 2510.3-3(b) (“[T]he 13 term ‘employee benefit plan’ shall not include any plan, fund or program . . . under which no 14 employees are participants covered under the plan.”). Business owners are not considered 15 employees in determining whether a plan is an ERISA plan. 29 C.F.R. § 2510.3–3(c)(1), (c)(2); 16 Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1, 21 n.6 (2004) (“[I]f a 17 benefit plan covers only working owners, it is not covered by [ERISA].”); Kennedy v. Allied Mut. 18 Ins. Co., 952 F.2d 262, 264 (9th Cir. 1991) (“[A] plan whose sole beneficiaries are the company’s 19 owners cannot qualify as a plan under ERISA.”). However, an insurance policy covering only 20 owners or partners is governed by ERISA if it is a component of a broader employee benefit 21 program that, taken as a whole, constitutes an ERISA plan. See Peterson v. American Life & 22 Health Ins. Co., 48 F.3d 404, 407 (9th Cir. 1995). 23 The parties do not dispute that LaRocque’s state law claims are preempted by ERISA if the 24 Policy is an employee benefit plan subject to ERISA. They also do not dispute that the Policy 25 covers only owners of PwC and therefore is not subject to ERISA standing alone. Likewise, the 26 parties do not dispute that the Plan is an ERISA plan. The question presented by LINA’s motion is 27 whether the Policy is a standalone plan not subject to ERISA or a component of the Plan and 1 because the relevant facts are undisputed here, the only question presented is the legal question of 2 whether, under those undisputed facts, the Policy is part of the Plan and thus governed by ERISA. 3 The Policy was originally issued in 1995. LINA does not argue or present any judicially 4 noticeable evidence showing that at the time the Policy was issued it was part of an ERISA plan.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 TREVOR LAROCQUE, Case No. 5:25-cv-02522-PCP
8 Plaintiff, ORDER GRANTING MOTION TO 9 v. DISMISS
10 LIFE INSURANCE COMPANY OF Re: Dkt. No. 22 NORTH AMERICA, 11 Defendant.
12 13 After defendant Life Insurance Company of North America (LINA) denied plaintiff Trevor 14 LaRocque’s claim for long term disability (LTD) benefits, LaRocque filed this lawsuit asserting 15 state law claims for breach of contract and breach of the implied covenant of good faith and fair 16 dealing and, in the alternative, a claim for benefits under the Employee Retirement Income 17 Security Act of 1974 (ERISA). LINA moves to dismiss the state law claims pursuant to Rule 18 12(b)(6). For the following reasons, the motion is granted. 19 BACKGROUND 20 LaRocque, a certified public account, is a partner and equity owner at 21 PricewaterhouseCoopers LLP (PwC). He was provided long term disability coverage through a 22 group disability insurance policy, the Partner Long Term Disability Plan (“the Policy”), which 23 LINA issued to the Trustee of the Group Insurance Trust for Employers in the Service Industry, 24 under which PwC is a subscriber. The Policy provides LTD coverage solely to “U.S. firm Partners 25 and Principals.” PwC also provides various benefits, including disability benefits, to its employees 26 through the PricewaterhouseCoopers LLP Health & Welfare Benefits Plan (“the Plan”). 27 In February 2023, LaRocque took medical leave because he was unable to perform his job 1 denied. 2 LaRocque alleges that LINA’s denial of his claim constituted a breach of contract and a 3 breach of the implied covenant of good faith and fair dealing. After LINA moved to dismiss those 4 claims on the ground that they are preempted by ERISA, LaRocque filed an amended complaint 5 asserting the same state law claims while also asserting in the alternative a claim for benefits under 6 ERISA. LINA now moves to dismiss the state law claims, contending again that they are 7 preempted by ERISA. 8 LEGAL STANDARD 9 Federal Rule of Civil Procedure 8(a)(2) requires a complaint to include a “short and plain 10 statement of the claim showing that the pleader is entitled to relief.” If the complaint fails to state a 11 claim, the defendant may move for dismissal under Federal Rule of Civil Procedure 12(b)(6). 12 Dismissal is required if the plaintiff fails to allege facts allowing the Court to “draw the reasonable 13 inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 14 678 (2009). “Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a 15 cognizable legal theory or sufficient facts to support a cognizable legal theory.” Mendiondo v. 16 Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 12(b)(6) 17 motion, a plaintiff need only plead “enough facts to state a claim to relief that is plausible on its 18 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 19 In considering a Rule 12(b)(6) motion, the Court must “accept all factual allegations in the 20 complaint as true and construe the pleadings in the light most favorable” to the non-moving party. 21 Rowe v. Educ. Credit Mgmt. Corp., 559 F.3d 1028, 1029–30 (9th Cir. 2009). While legal 22 conclusions “can provide the [complaint’s] framework,” the Court will not assume they are correct 23 unless adequately “supported by factual allegations.” Iqbal, 556 U.S. at 679. Courts do not “accept 24 as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable 25 inferences.” In re Gilead Scis. Secs. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (quoting Sprewell 26 v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). 27 1 ANALYSIS 2 LINA argues that LaRocque’s state law claims are preempted by ERISA. It contends that 3 the Policy through which LaRocque received LTD coverage at the time his claims accrued was a 4 component of the Plan, which is governed by ERISA. LaRocque maintains that the Policy is 5 separate from the Plan and is not governed by ERISA because it covers only partners, not 6 employees. 7 ERISA applies to “employee benefit plan[s].” 29 U.S.C. § 1003(a). “An ERISA ‘employee 8 welfare benefit plan’ is (1) a plan, fund or program, (2) established or maintained by an employer 9 through the purchase of insurance or otherwise, (3) for the purpose of providing … benefits (4) to 10 its participants or their beneficiaries.” Patelco Credit Union v. Sahni, 262 F.3d 897, 907 (9th Cir. 11 2001); see 29 U.S.C. § 1002(1). A plan is not an “employee benefit plan” subject to ERISA—an 12 ERISA plan—if its participants do not include any employees. 29 C.F.R. § 2510.3-3(b) (“[T]he 13 term ‘employee benefit plan’ shall not include any plan, fund or program . . . under which no 14 employees are participants covered under the plan.”). Business owners are not considered 15 employees in determining whether a plan is an ERISA plan. 29 C.F.R. § 2510.3–3(c)(1), (c)(2); 16 Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1, 21 n.6 (2004) (“[I]f a 17 benefit plan covers only working owners, it is not covered by [ERISA].”); Kennedy v. Allied Mut. 18 Ins. Co., 952 F.2d 262, 264 (9th Cir. 1991) (“[A] plan whose sole beneficiaries are the company’s 19 owners cannot qualify as a plan under ERISA.”). However, an insurance policy covering only 20 owners or partners is governed by ERISA if it is a component of a broader employee benefit 21 program that, taken as a whole, constitutes an ERISA plan. See Peterson v. American Life & 22 Health Ins. Co., 48 F.3d 404, 407 (9th Cir. 1995). 23 The parties do not dispute that LaRocque’s state law claims are preempted by ERISA if the 24 Policy is an employee benefit plan subject to ERISA. They also do not dispute that the Policy 25 covers only owners of PwC and therefore is not subject to ERISA standing alone. Likewise, the 26 parties do not dispute that the Plan is an ERISA plan. The question presented by LINA’s motion is 27 whether the Policy is a standalone plan not subject to ERISA or a component of the Plan and 1 because the relevant facts are undisputed here, the only question presented is the legal question of 2 whether, under those undisputed facts, the Policy is part of the Plan and thus governed by ERISA. 3 The Policy was originally issued in 1995. LINA does not argue or present any judicially 4 noticeable evidence showing that at the time the Policy was issued it was part of an ERISA plan. 5 LINA argues, however, that the Policy was part of an ERISA plan at the time that LaRocque’s 6 claim accrued. LINA points to two documents dated from 2022 and 2023, both entitled 7 “Amendment to the PricewaterhouseCoopers LLP Employee Welfare Benefit Plans,” which refer 8 to the Partner Long-Term Disability Plan (the Policy), as a “component of” the 9 PricewaterhouseCoopers LLP Employee Welfare Benefit Plan (the Plan).1 While certain facts 10 about those documents are disputed—LaRocque understands them to purport to integrate the 11 Policy and other welfare benefit plans into a single ERISA plan, while LINA claims that they 12 merely describe a single ERISA plan that was in existence prior to the documents’ issuance—it is 13 clear that the Amendment documents present the Policy as part of the Plan. Accordingly, by at 14 least 2022, PwC intended for the Policy to be part of the Plan. 15 Existing precedents do not address whether an employer’s intent to integrate a non-ERISA 16 plan into a broader ERISA plan is sufficient to subject the non-ERISA plan to the requirements 17 and preemptive effect of ERISA. In Peterson v. American Life & Health Insurance Company, 48 18 F.3d 404 (9th Cir. 1995), for example, the Ninth Circuit held that an insurance policy covering 19 only owners may nonetheless be subject to ERISA if it is “just one component of [an] employee 20 benefit program and that … program, taken as a whole, constitutes an ERISA plan.” Id. at 407. 21 The court held that an ERISA plan did not cease being an ERISA plan simply because the 22 employees that it originally covered had departed and company owners were the only remaining 23 1 On a motion to dismiss pursuant to Rule 12(b)(6), the Court generally “may not consider 24 material outside the pleadings.” Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018). But the doctrine of incorporation by reference permits the Court to treat an extrinsic 25 document as if it were part of the complaint if the pleading “refers extensively to the document or the document forms the basis of the plaintiff’s claim.” Id. at 1002 (cleaned up). The Amendment 26 documents are incorporated by reference because LaRocque’s claim concerns the denial of benefits under his PwC LTD insurance policy and the Amendment documents set forth the PwC 27 benefits plan. See United States v. Ritchie, 342 F.3d 903 (9th Cir. 2003) (“The doctrine of 1 participants in the plan. Because the question was not presented, Peterson did not address whether 2 a policy that originally covered only owners and was not subject to ERISA could subsequently 3 become a component of a program that, taken as a whole, constitutes an ERISA plan. 4 In the other most potentially relevant case, LaVenture v. Prudential Insurance Company of 5 America, 237 F.3d 1042 (9th Cir. 2001), the Ninth Circuit held that “a benefit plan that 6 commenced as a non-ERISA plan is not converted into an ERISA plan simply because the 7 employer sponsors a separate benefits plan subject to ERISA.” Id. at 1046. In that case, the owners 8 of a company purchased a disability insurance policy for themselves. When the company later 9 hired its first full-time employees, the company purchased a health insurance policy for them but 10 not a disability insurance policy. The Ninth Circuit held that the owners’ disability insurance 11 policy did not automatically become an ERISA plan simply because the company had purchased 12 an ERISA-governed health insurance policy for its employees. In doing so, the Ninth Circuit 13 emphasized that there was no evidence “that the disability policy and health plan were intertwined 14 so as to constitute one overall benefit plan” and that there was no evidence that the company had 15 intended for the plans to constitute a single integrated ERISA plan. Id. at 1047. Here, by contrast, 16 the Amendment documents demonstrate just such an intent. 17 Four considerations lead the Court to conclude that where, as here, an employer integrates 18 a pre-existing non-ERISA policy into a broader ERISA-governed plan, the non-ERISA policy 19 becomes a part of the ERISA plan and is subject to the requirements and preemptive effect of 20 ERISA. First, the statutory definition of “employee welfare benefit plan” includes any plan 21 “established or maintained” by an employer. 29 U.S.C. § 1002(1). By considering not only the 22 purpose for which a plan was established but also the purpose for which it was maintained, this 23 statutory language suggests that whether a policy is governed by ERISA should not be determined 24 solely by the circumstances of its creation. Second, as noted above, LaVenture emphasized the 25 absence of evidence of the company’s intent for the plans at issue in that case to constitute a single 26 integrated plan. If intent were irrelevant to determining whether ERISA governed the plans, it is 27 unclear why the Ninth Circuit referenced its absence. While intent alone is not dispositive, 1 ERISA plan. Third, LaVenture underscored the complete lack of relationship between the two 2 || plans. 237 F.3d at 1047. It indicated that the “intertwine[ment]” of benefits policies, such as that 3 evidenced by the Amendment documents, could suggest that they constitute a single overall 4 || benefit plan. /d. Fourth, and finally, a rule that the circumstances at the time of a policy’s 5 establishment are dispositive could be easily circumvented by employers seeking to create a single 6 || integrated ERISA-governed plan for employees and non-employees. In this case, for example, 7 LINA could simply have allowed its older Policy to lapse and then purchased a new LTD policy 8 for its partners that was part of the Plan from the time of its establishment. It is hard to see why 9 employers should be required to undertake such a step to effectuate their intent to create a single 10 || integrated ERISA plan. 11 As noted already, the allegations of the amended complaint and Plan documents properly a 12 incorporated therein establish that, by at least 2022, PwC had documented its intent to offer
13 employee and non-employee welfare benefits, including the Policy benefits at issue here, under a
v 14 single integrated Plan. Under those circumstances, the Policy must be considered to have been a
15 || part of the Plan by the time LaRocque’s claim for benefits arose. As a result, his claim is governed 16 || by ERISA and his state law claims are preempted.
= 17 CONCLUSION
18 For the foregoing reasons, the motion to dismiss is granted. LaRocque’s claims for breach 19 || of contract and breach of the covenant of good faith and fair dealing are dismissed with prejudice 20 and without leave to amend.” 21 IT IS SO ORDERED. 22 || Dated: September 8, 2025 23 P. Casey Pitt United States District Judge 25 26 > The parties’ briefing on LINA’s motion contained relatively little analysis of the core legal 07 question addressed herein. For that reason, and pursuant to Civil Local Rule 7-9(a), the Court grants LaRocque leave to file a motion for reconsideration to the extent he is able to identify other recedents or caselaw suggesting that if an employer intentionally integrates a non-ERISA polic 28 || P gs g Ploy y integ policy into an ERISA plan, the former nonetheless remains outside ERISA’s coverage.