McClean v. Solano/Napa Counties Electrical Workers Profit Sharing Plan

Background

The McCleans brought an action under the Employee Retirement Income Security Act (ERISA), a federal law governing employee benefit plans. Rodney McClean alleged that he had worked for many years, earned pension service credit, applied for disability retirement benefits in 2009, and later submitted a benefits application in 2021. The Pension Plan ultimately approved the 2021 application but determined that he was entitled to less than $600 per month. He appealed that determination, but the Pension Plan Board had not decided the appeal when the lawsuit was filed.

Rodney also alleged that approximately $200,000 was taken from his Solano/Napa Counties Electrical Workers Profit Sharing Plan account through unauthorized hardship-withdrawal requests and that the defendants failed to provide the backs of canceled checks. The amended complaint asserted claims involving plan benefits, fiduciary duties, failure to monitor, failure to maintain and provide records, statutory penalties for withholding documents, and related conduct. Joanna McClean was alleged to be Rodney McClean’s spouse and a beneficiary of his pension accounts.

Judicial notice

The court granted the Local 180 defendants’ unopposed request for judicial notice. The court took notice of the existence of the listed plan documents, correspondence, account statements, distribution-approval letters, and other materials. It did not treat that ruling as resolving the claims.

Local 180 defendants’ motion

The court denied the motion to dismiss the first cause of action based on failure to exhaust administrative remedies as to the 2021 benefits application. Exhaustion means completing the plan’s internal review process before suing. The court found that the appeal had remained undecided for an extended period, that the governing rules contemplated a decision no later than the third board meeting after the appeal, and that the defendants had not shown why the delay was justified. The court denied as moot the motion concerning the 2009 application because the plaintiffs clarified that the first claim did not concern that application.

The court granted the motion to dismiss the second through sixth causes of action. It found that the fiduciary-duty claims did not distinguish adequately among the different alleged duties or identify the specific facts supporting each legal theory. The court also found that the allegations did not plausibly show disloyal self-dealing, a failure to act prudently, or violations of plan documents. The sixth claim additionally failed because the allegations concerning the alleged theft were implausible as pleaded, particularly in light of the plaintiffs’ opposition stating that Rodney had made some hardship withdrawals but later could not identify which withdrawals were unauthorized. The court stated that a future complaint would need to identify which withdrawals Rodney made and which were allegedly unauthorized.

Because the fourth and fifth causes of action depended on the underlying fiduciary-duty claims, the court dismissed them as well. The court denied the motion to dismiss the seventh cause of action, which sought statutory penalties for allegedly withholding plan documents. The court held that the allegations identifying categories of requested and withheld records were sufficient at the pleading stage and that any justification for withholding particular documents was premature to decide on a motion to dismiss.

The court allowed the first cause of action to remain against Benesys and Richard McClaskey. It concluded that discovery could show whether they had the responsibilities and discretion needed to qualify as proper defendants or fiduciaries, given the allegations about McClaskey’s involvement. Claims two, three, five, and six against them were dismissed for the reasons already stated.

The court granted the motion to dismiss Joanna McClean as a plaintiff. The amended complaint did not identify the plan provisions supporting her claims, clarify the capacity in which she was suing, or allege that she had exhausted administrative remedies for her own claims.

Local 6 defendants’ motion

The Local 6 defendants moved to dismiss the eighth cause of action, which was asserted against them under ERISA section 502(a)(3). The court treated the alleged lack of ERISA statutory standing as a failure to state a claim under Rule 12(b)(6), rather than as a subject-matter-jurisdiction issue. Statutory standing asks whether the plaintiff belongs to the group authorized by the statute to sue.

The court granted the motion because the amended complaint did not plausibly allege that Rodney McClean was a participant or beneficiary of the Northern California Electrical Workers Pension Plan. Although he alleged that employers had sent contributions to that plan for work he performed in its geographic area, he also alleged that he had submitted paperwork to transfer those contributions to the Local 180 plan. The complaint did not allege facts showing that he remained entitled to benefits from the Local 6 plan. The court also granted the motion as to any claim by Joanna McClean for the reasons stated in connection with her claims against the Local 180 defendants.

Disposition

The court held that the Local 180 defendants’ motion to dismiss was GRANTED IN PART AND DENIED IN PART. The Local 6 defendants’ motion to dismiss was GRANTED. The plaintiffs may file a second amended complaint curing the stated deficiencies within 21 days, but they may not add new claims without the consent of all parties or leave of court.