Rosen v. UBS Financial Services Inc.

Background

Emily Rosen sued UBS Financial Services Inc. (UBS), Alight Solutions LLC, Michael O’Connor, and Christopher Ferrara. The lawsuit concerned employee-benefit and deferred-compensation plans belonging to Erich Frank, Rosen’s domestic partner. Frank participated in a $150,000 life-insurance policy, a UBS 401(k) plan valued at $137,717.68, and the UBS PartnerPlus Plan (PPP), a non-qualified deferred-compensation plan. Alight served as UBS’s plan servicer.

Rosen alleged that Frank wanted to name her as beneficiary of his life-insurance policy, 401(k), and other benefits during a December 20, 2018 phone call with UBS and Alight personnel. After the call, employees exchanged emails and forms concerning beneficiary changes. Rosen and Frank’s attorney did not complete and return the beneficiary certification for the life-insurance policy and 401(k). Rosen also did not complete and return the PPP beneficiary-designation form. Frank died on January 6, 2019.

In earlier related proceedings, the court determined that Frank had not substantially complied with the beneficiary-designation requirements for the life-insurance policy and 401(k), and that Phyllis Frank, the original beneficiary, was entitled to those proceeds. The court also determined that Rosen was entitled to proceeds from a separate UBS resource-management account. No party appealed that decision.

Rosen brought four state-law claims in this case: negligence, breach of fiduciary duty, breach of the duty of good faith and fair dealing against UBS, and negligence based on respondeat superior against UBS. She sought damages at least equal to the amount under each plan. Defendants moved for summary judgment on all claims.

Life-Insurance Policy and 401(k)

The court granted summary judgment on Rosen’s claims concerning the life-insurance policy and 401(k) because the claims were expressly preempted by the Employee Retirement Income Security Act (ERISA). ERISA preemption means that certain state laws and state-law claims that relate to employee-benefit plans cannot be used to impose conflicting requirements on those plans.

The court explained that Rosen’s claims expressly referred to the plans and their terms, challenged how Defendants administered the plans and processed beneficiary designations, and sought damages equal to the benefits she claimed she should have received. The court concluded that the claims were attempts to recover benefits under ERISA plans through state common-law theories rather than through ERISA’s statutory framework.

The court rejected Rosen’s argument that Defendants owed her duties independent of the plans. It found that the alleged assurances and phone conversations occurred during administration of the plans and were closely connected to the plan requirements. The court also rejected her argument that seeking damages rather than the benefits themselves avoided preemption, explaining that the substance of the claims—not the label or requested remedy—controlled.

Accordingly, the court granted Defendants’ motion for summary judgment as to Rosen’s claims based on the life-insurance policy and 401(k).

PartnerPlus Plan

Defendants argued that Rosen’s PPP claims failed because Frank never designated a PPP beneficiary, the PPP passed through his estate, adjudicating the claims could interfere with pending probate proceedings, and Rosen lacked standing. Rosen did not address those arguments in her opposition, so the court held that she waived arguments that her PPP claims could proceed.

The court further held that, even if it considered the PPP claims, Rosen lacked standing to assert them. The opinion states that Frank did not designate a beneficiary for the PPP. Although Rosen may have an interest in Frank’s estate under his will, the court stated that beneficiaries generally do not have an independent cause of action to recover estate property or damages resulting from a reduced inheritance.

The court therefore granted Defendants’ motion for summary judgment as to Rosen’s PPP claims.

Disposition

The court granted Defendants’ motion for summary judgment. It dismissed the Complaint, directed the Clerk of Court to terminate the motion at ECF No. 39, and closed the case. Because Defendants were entitled to summary judgment on all claims for the stated reasons, the court did not reach their additional arguments for dismissal.