Date: 06-25-2018

Case Style:

Case Number: 17-1815

Judge: Loken

Court: United States Court of Appeals for the Eighth Circuit on appeal from the Western District of Arkansas (Washington County)

Plaintiff's Attorney: Nick Mote and Rick Woods

Defendant's Attorney: Brandon B. Cate, Kyle Burton Russell and Lindsey Carroll Pesek

Description: This is an interlocutory appeal under 28 U.S.C. § 1292(b) of an order of the
district court1 dismissing plaintiff Megan Moore’s (“Moore”) state law claims against
defendant Apple Central, LLC (“Apple Central”), as preempted by the remedial
1The Honorable P.K. Holmes, III, Chief Judge of the United States District
Court for the Western District of Arkansas.
provisions of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.
§ 1132(a). See Aetna Health Inc. v. Davila, 542 U.S. 200, 209 (2004). Moore
initially filed the action in Arkansas state court. Apple Central removed the action,
arguing the district court has federal question jurisdiction under 28 U.S.C. § 1331
based on ERISA preemption, and diversity jurisdiction under 28 U.S.C. § 1332.
Moore then filed an Amended Complaint in the district court, asserting diversity
jurisdiction over her state law claims. After ruling that the state law claims are
preempted, the district court held the motion to dismiss in abeyance, giving Moore an
opportunity to file a Second Amended Complaint asserting claims under ERISA.
Moore filed that complaint, which is pending in district court. Thus, a decision
reversing the district court’s preemption ruling, as Moore urges, will not deprive the
district court of federal jurisdiction. But this interlocutory appeal will establish
whether federal or state law governs the merits of Moore’s claims. Reviewing the
issue of ERISA preemption de novo, we affirm the district court’s order. See Painter
v. Golden Rule Ins. Co., 121 F.3d 436, 438 (8th Cir. 1997) (standard of review), cert.
denied, 523 U.S. 1074 (1998).
I.
Apple Central acquired the Applebee’s Neighborhood Grill & Bar in Rogers,
Arkansas, and offered its employees a benefits package that included life insurance
provided by The Guardian Life Insurance Company of America (“Guardian”). The
Amended Complaint alleges that employee James Moore “submitted an enrollment
form for voluntary life insurance to Apple as part of its employee benefits plan.” The
form, attached as Exhibit A to Moore’s state court complaint, reflected that James
Moore would have “basic life coverage” equal to 150% of his $62,000 annual salary,
and chose “voluntary term life coverage” equal to five times his salary ($310,000).
Moore was designated his primary beneficiary. The Amended Complaint alleges that
Apple Central then withheld premiums for the voluntary coverage from James
Moore’s salary until he died on March 12, 2013, but “failed to pay over those
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premiums” and forward Moore’s application to Guardian. After James Moore’s death,
Moore filed a proof of claim for life insurance benefits with Guardian. The Amended
Complaint alleges that Moore’s “claim for the elected voluntary life benefits was
denied and it was indicated to Megan Moore that premiums had not been received
from Apple.” Accordingly, the Amended Complaint alleges, Moore “is left without
appropriate insurance overage in the amount of $160,000.00, representing the
difference between the elected coverage and the guaranteed benefit voluntarily paid
by Guardian.”
Moore’s Amended Complaint asserts state law claims for breach of contract,
negligence, breach of fiduciary duty, and promissory estoppel and seeks actual and
punitive damages for Apple Central’s “failure to procure” $160,000 of voluntary life
insurance coverage under the Guardian policy. Apple Central filed a motion to
dismiss, arguing ERISA preempted all of Moore’s claims. The district court agreed:
Moore’s claims “are premised on the existence of an ERISA plan in which [Apple
Central] failed to enroll her husband.” The plan did not designate a plan administrator
so Apple Central, the plan sponsor, was the plan administrator and an ERISA entity.
See 29 U.S.C. §§ 1002(16)(A)(ii), (B)(i). Accordingly, the court concluded, Moore’s
state law claims are preempted. “Allowing state law claims premised on the existence
of an ERISA plan to proceed against the plan administrator would affect relations
between primary ERISA entities and impact the administration of the plan.”
Moore filed a Second Amended Complaint alleging claims under ERISA and
then obtained certification from the district court and from this court for her § 1292(b)
interlocutory appeal of the district court’s preemption ruling. The pending Second
Amended Complaint, which is not at issue on appeal, asserts claims against Apple
Central and Guardian under 29 U.S.C. §§ 1132(a)(1)(B) and (a)(3) for wrongful denial
of plan benefits, breach of fiduciary duty, and equitable estoppel. Guardian is not a
party to this appeal.
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II.
“ERISA is a comprehensive legislative scheme that includes an integrated
system of procedures for enforcement that are essential to accomplish Congress’
purpose of creating a comprehensive statute for the regulation of employee benefit
plans.” Dakotas & W. Minn. Elec. Indus. Health & Welfare Fund v. First Agency,
Inc., 865 F.3d 1098, 1101 (8th Cir. 2017) (quotations omitted), cert. denied, 138 S. Ct.
1285 (2018). As a threshold matter, Moore does not dispute that Apple Central’s plan
was a covered “employee welfare benefit plan” governed by ERISA. See 29 U.S.C.
§ 1002(1); 29 C.F.R. § 2510.3-1(a)(2). Indeed, her Amended Complaint alleges that
Apple Central offered James Moore voluntary life insurance “as part of its employee
benefits plan.”
Section 502(a) of ERISA, 29 U.S.C. § 1132(a), sets forth a comprehensive,
integrated civil enforcement mechanism that is “a distinctive feature of ERISA.”
Davila, 542 U.S. at 208. Among other remedies, these provisions allow a plan
participant or beneficiary to sue to recover benefits due under the plan and to seek
equitable relief for an ERISA fiduciary’s breach of fiduciary duty. See 29 U.S.C.
§§ 1132(a)(1)(B), (a)(3); Varity Corp. v. Howe, 516 U.S. 489, 507-15 (1996).
[“]The policy choices reflected in the inclusion of certain remedies and
the exclusion of others under the federal scheme would be completely
undermined if ERISA-plan participants and beneficiaries were free to
obtain remedies under state law that Congress rejected in ERISA. . . .[”]
Therefore, any state-law cause of action that duplicates, supplements, or
supplants the ERISA civil enforcement remedy conflicts with the clear
congressional intent to make the ERISA remedy exclusive and is
therefore pre-empted.
Davila, 542 U.S. at 208-09, quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54
(1987). ERISA preempts “‘state common law tort and contract actions asserting
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improper processing of a claim for benefits’ under an ERISA plan.” Thompson v.
Gencare Health Sys., Inc., 202 F.3d 1072, 1073 (8th Cir. 2000), quoting Pilot Life,
481 U.S. at 43. If the essence of a state law claim “relates to the administration of
plan benefits, it falls within the scope of ERISA.” Parkman v. Prudential Ins. Co. of
Am., 439 F.3d 767, 771-72 (8th Cir. 2006).
The Amended Complaint alleges that Moore’s claims are not preempted by
ERISA because “no employer-sponsored insurance policy was ever in place from
which to claim the benefits sought.” The pleadings establish that this is simply not
true. The Amended Complaint alleges that Apple Central’s failure to enroll James
Moore in voluntary term life insurance coverage, while representing that it had done
so by withholding premiums, caused Moore to lose voluntary term insurance benefits
in the amount of $160,000. Recall that James Moore’s enrollment form attached to
the complaint showed that he applied for $93,000 in basic, employer-paid coverage
and $310,000 in voluntary, employee-paid additional coverage -- all offered within
the same ERISA plan. Moore alleges that $160,000 “represent[s] the difference
between the elected coverage and the guaranteed benefit voluntarily paid by
Guardian.” Thus, from the face of the Amended Complaint, it is apparent that Moore
was paid plan benefits, a fact the record now confirms. In opposing this interlocutory
appeal, Apple Central submitted to the district court an August 2013 letter from
Guardian to Moore explaining that it had paid Moore $243,000 in life insurance
benefits -- $93,000 in basic benefits and $150,000 in voluntary term coverage.
Guardian did not pay the additional $160,000 Moore claims in this lawsuit.2
2Though not before the district court when it dismissed Moore’s state law
claims, this document is part of the § 1292(b) record on appeal. Moreover, it may be
considered under Rule 12(b)(6) because it contains facts related to an alleged breach
of contract that are “necessarily embraced by the complaint.” Enervations, Inc. v.
Minn. Mining & Mfg. Co., 380 F.3d 1066, 1069 (8th Cir. 2004).
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These undisputed facts establish that Moore’s claims for additional plan
benefits are within the purview of ERISA’s exclusive remedies. As Guardian’s
payment of benefits confirms, James Moore was a “participant” in Apple Central’s
employee welfare benefit ERISA plan. See 29 U.S.C. § 1002(7). Moore, as James
Moore’s designated plan beneficiary, is a person who may bring an action to recover
ERISA remedies. See id. §§ 1002(8), 1132(a). The plan’s life insurance benefits are
funded by Guardian’s group policy. Construing its policy, Guardian has paid
$243,000 in plan benefits and declined to pay an additional $160,000. If Guardian
misapplied the policy, Moore has a claim for plan benefits under § 1132(a)(1)(B)
(assuming no other defenses apply). On the other hand, if Guardian properly denied
the $160,000 claim because Apple Central as plan administrator failed to properly
submit required information, Moore may assert a claim under § 1132(a)(3) alleging
that Apple Central breached its fiduciary duty as plan administrator. Recent cases
make clear that such a claim may seek the amount of benefits denied as an equitable
make-whole or “surcharge” remedy if Apple Central breached its fiduciary duty by
failing to obtain voluntary term life coverage James Moore applied and paid for. See
Silva v. Metro. Life Ins. Co., 762 F.3d 711, 720-21, 724-25, 728 n. 12 (8th Cir. 2014),
applying CIGNA Corp. v. Amara, 563 U.S. 421, 442-44 (2011).
Moore argues her state law claims against Apple Central are not ERISApreempted
because, in Davila’s terms, they implicate legal duties independent of
Apple Central’s ERISA duties. 542 U.S. at 210. We disagree. Moore’s “claims
implicate no independent legal duty that [Apple Central] owed [and] concern only the
way in which [Apple Central] . . . breached [its plan-administrator] duties while
administering [James Moore’s] benefits.” Prince v. Sears Holdings Corp., 848 F.3d
173, 178 (4th Cir. 2017); accord Parkman, 439 F.3d at 771-72. Any promise Apple
Central made or duty it owed to procure James Moore’s elected voluntary insurance
derived from its role as ERISA plan administrator. See 29 U.S.C. §§ 1002(16)(A)(ii),
(B)(i); Silva, 762 F.3d at 716 n.8 (describing a plan administrator’s fiduciary
responsibilities). Indeed, the enrollment form Guardian provided expressly instructed
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Apple Central employees to return the form “to your employer,” reflecting Apple
Central’s role as a primary ERISA entity.
Apple Central’s role as ERISA administrator and fiduciary distinguishes this
case from our decision in Wilson v. Zoellner, 114 F.3d 713 (8th Cir. 1997), on which
Moore heavily relies. In Wilson, the plaintiff sued an independent insurance agent for
negligently misrepresenting the coverage offered by the employer’s health insurance
policy. Id. at 715. We concluded that the claim was not ERISA preempted because
it would not “affect[] the relations between primary ERISA entities . . . includ[ing] the
employer, the plan, the plan fiduciaries, and the beneficiaries” or “impose new duties
on plan administrators.” Id. at 718-19 (quotation omitted). Here, Moore’s claims
affect relations between primary ERISA entities and the scope of Apple Central’s
duties as plan administrator.

Outcome: Moore’s state law claims against Apple Central are preempted by the exclusive
ERISA remedies in 29 U.S.C. § 1132(a). Accordingly, the district court’s February 8, 2017 order is affirmed.

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