Smith v. Fidelity Workplace Services LLC

Background

The court had previously dismissed Timothy Smith’s original complaint on preemption grounds and allowed him to amend. Smith then filed a first amended complaint against AT&T Services, Inc., and Fidelity Workplace Services LLC. The amended complaint asserted claims under the Employee Retirement Income Security Act of 1974 (ERISA), a federal statute governing employee benefit plans. The defendants asked the court to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not adequately plead a legally sufficient claim.

Court’s analysis

The court concluded that the first amended complaint did not contain enough basic facts to plausibly allege an ERISA claim. It did not identify an ERISA-covered plan or allege facts showing that Smith was a designated beneficiary of his wife’s contributions to a plan. It also did not allege that Smith submitted a claim for benefits as a plan participant or beneficiary.

The court further found that the complaint did not plausibly show that Smith had a legal stake in the funds or that the defendants had acted wrongfully. The complaint alleged only that approximately $21,318.43 had been transferred from Smith’s wife’s plan in 2008 for unknown reasons. The court said that the transfer could just as likely have been proper, which did not meet the pleading standard requiring facts that make liability plausible rather than merely possible.

The court also noted that, assuming ERISA applied, the complaint did not establish that Smith had exhausted the plan’s administrative remedies. In addition, although statute-of-limitations issues generally were not suitable for resolution on a pleading motion, the court said the amended complaint should explain why Smith had no reason to believe he was a beneficiary between his wife’s death in 2007 and the notice he received from the Social Security Administration in 2020.

Ruling and case status

The court dismissed the first amended complaint with leave to amend. This was Smith’s final opportunity to amend. He could file an amended complaint by January 31, 2023, and the new complaint had to be consistent with the order. He could not add new claims or parties without prior court approval. If he did not amend by the deadline, the case would be dismissed under Rule 41(b). The case was stayed in all other respects pending further order. Judge James Donato also suggested that the parties consider settling the approximately $21,000 dispute, but stated that the court was not ordering the defendants to investigate the benefit records or settle.