Smith v. Fidelity Workplace Services LLC

Background

Timothy Smith originally filed this pension-plan dispute in Alameda County Superior Court. He asserted claims for breach of contract, common counts of money had and received, and an open book account for money due. AT&T Services, Inc. and Fidelity Workplace Services LLC removed the case to federal court, arguing that the claims were completely preempted by the Employee Retirement Income Security Act of 1974 (ERISA). Defendants then moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that ERISA preempted the claims and that the claims were barred by the statute of limitations.

ERISA preemption

The court distinguished between two kinds of ERISA preemption. Complete preemption concerns federal subject-matter jurisdiction and treats certain state-law claims as federal claims. Defensive preemption concerns whether the claim is displaced by ERISA’s remedial scheme.

The court held that it had subject-matter jurisdiction because Smith sought benefits allegedly due under the terms of his wife’s employee pension benefit plan. The court concluded that the claims could have been brought under ERISA section 502(a)(1)(B), which permits a participant or beneficiary to seek benefits due under a plan, enforce rights under the plan, or clarify rights to future benefits. The court also found that the defendants’ alleged conduct implicated no legal duty independent of the pension plan or ERISA and that the only contract identified in the complaint was an agreement to contribute under the plan.

The court further held that Smith’s breach-of-contract claim concerned administration of an employee benefit plan and was preempted by ERISA. The common-count claims sought the same recovery based on the same facts and therefore also had to be dismissed. Smith’s assertion that he was a beneficiary with standing did not resolve the preemption issue.

Ruling

The court granted the motions to dismiss with leave to amend. It dismissed the state-law claims as preempted by ERISA. It denied dismissal based on the statute of limitations without prejudice to renewal as circumstances might warrant. Smith could file an amended complaint consistent with the order by March 22, 2022; the court stated that failure to meet that deadline could result in dismissal of the case with prejudice under Rule 41(b).