Penrose v. New York Life Insurance Company

Background

Frederick Penrose sued New York Life Insurance Company and Life Insurance Company of North America (LINA) under the Employee Retirement Income Security Act of 1974, or ERISA. He alleged that the defendants failed to pay benefits owed under the Wipro Health and Welfare Plan, an employee welfare benefit plan. LINA insured and underwrote the plan’s group long-term-disability policy.

Penrose stopped working in September 2018 because of Periodic Limb Movement Disorder. LINA approved his application for long-term-disability benefits, and he began receiving payments in March 2019. LINA terminated the benefits in March 2021. Penrose appealed and submitted medical evidence, including evidence from several doctors and medical providers located in Utah.

Defendants’ motion

The defendants moved to dismiss the amended complaint on several grounds. They sought dismissal of the claims against New York Life for failure to state a claim, dismissal of the claims against LINA for lack of personal jurisdiction, and dismissal for improper venue. Alternatively, they asked the court to transfer the case to the District of Utah or a district in Pennsylvania under 28 U.S.C. § 1404(a), which permits transfer for the convenience of the parties and witnesses and in the interest of justice.

Although the motion was styled primarily as a motion under Rule 12(b), the court treated it as also seeking transfer under Section 1404(a). The court considered the transfer request without deciding whether the defendants had properly presented their dismissal defenses after filing an answer.

Transfer analysis

The court first determined that the District of Utah was a district where the case could have been brought. ERISA’s venue provision permits an action in a district where the plan is administered, where the alleged violation occurred, or where a defendant resides or may be found. Penrose lived and worked in Utah, received benefit checks there, and experienced the termination of his benefits while residing there.

The court then considered the factors used to decide whether transfer was appropriate. The convenience of the witnesses favored transfer because Penrose identified multiple relevant witnesses in Utah, including family members and treating doctors, and identified no witness residing in the Southern District of New York. The court gave this factor less weight than it might receive in a case not involving ERISA but did not disregard it.

The convenience of the parties also favored transfer. Penrose resided in Utah, and the defendants had affirmatively stated that they would not be inconvenienced by litigating there. The location of relevant documents was neutral because neither side identified specific documents or evidence located in either district.

The location of the operative events strongly favored Utah. The court found that Penrose’s employment, application for benefits, receipt of payments, treatment, and denial of benefits were connected to Utah. The court found that the Southern District of New York’s only relevant connection was New York Life’s location there. The plan, however, was underwritten and administered by LINA, which the opinion states is located in Pennsylvania, and New York Life acquired LINA only shortly before the benefits were terminated.

The ability to compel unwilling witnesses was either neutral or slightly favored transfer. No party showed that a potential nonparty witness would refuse to appear voluntarily, but more identified witnesses appeared to live in Utah and beyond the Southern District of New York’s subpoena range. The parties’ relative financial means was either neutral or favored transfer because the defendants were corporate entities while Penrose alleged that he had been unemployed because of his disability and had not received disability benefits since March 2021.

The court considered its familiarity with ERISA law neutral because federal courts are presumed to be sufficiently familiar with that law. It gave Penrose’s choice of the Southern District of New York little or no weight because that district was not his home and the operative facts had no connection to it. Finally, transfer would not harm efficiency or prejudice Penrose because the case was still at an early stage and formal discovery had not occurred.

Ruling

The court held that the transfer factors either favored transfer or were neutral, with the convenience of witnesses and location of operative facts being the most important factors. It concluded that transfer to the District of Utah was appropriate under 28 U.S.C. § 1404(a).

The court granted the defendants’ motion to transfer the case to the District of Utah. Because the case should be heard in another district, the court did not reach the merits of the defendants’ arguments for dismissal. The dismissal portion of the motion was denied without prejudice to being refiled in the District of Utah under the rules of the judge assigned there. The clerk was directed to close the motion docket entry and transfer the case.