Gates v. E.M. Hundley Hardware Co.

Background

Richard M. Gates sued E.M. Hundley Hardware Co., alleging two claims under the Employee Retirement Income Security Act (ERISA): failure to provide plan information and denial of benefits. Gates alleged that the company agreed to pay him retirement benefits, initially at $3,400 per month and later at $3,700 per month, through the rest of his life. He alleged that the agreement was never documented in writing because Mr. Hundley died before the parties reviewed and signed documents. Gates moved for default judgment.

Jurisdictional concern

The court explained that federal courts have limited subject-matter jurisdiction, meaning they may hear only cases authorized by law. Although Gates alleged that the court had exclusive jurisdiction over his ERISA claims, the court found that he had not alleged facts showing the existence of a valid ERISA plan.

ERISA requires each employee benefit plan to be established and maintained under a written instrument. The instrument must address matters including funding, plan administration, amendments, and the basis for payments. The court acknowledged that informal commitments can create an ERISA plan in limited circumstances even without a written instrument. But it stated that only a written instrument satisfying the statutory requirements can vest lifetime benefits. Because Gates alleged lifetime benefits but did not identify such a written instrument, the court stated that he appeared unable to establish a valid ERISA plan and that the court therefore appeared to lack jurisdiction.

Order

The court ordered Gates to show cause why the case should not be dismissed for lack of subject-matter jurisdiction. It directed him to file a declaration by January 5, 2023. If he filed a response, the court said it would either issue an order based on the declaration or conduct a hearing by videoconference on January 19, 2023. The opinion does not state that the case was dismissed or that the court ruled on Gates’s motion for default judgment.