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Luckett v. Sprint Communications, Inc.

United States District Court, W.D. Kentucky, Louisville Division

May 8, 2017

PATTY LUCKETT PLAINTIFF
v.
SPRINT COMMUNICATIONS, INC. DEFENDANT

          MEMORANDUM OPINION AND ORDER

          THOMAS B. RUSSELL, SENIOR JUDGE.

         This matter is before the Court upon Defendant Sprint Communications, Inc.'s motion to dismiss. [DN 16.] Plaintiff Patty Luckett responded, [DN 22], and Sprint replied, [DN 23]. Fully briefed, this matter is ripe for adjudication. For the following reasons, Sprint's motion [DN 16] is GRANTED IN PART and DENIED IN PART.

         I. Facts and Procedural History

         Relevant to Sprint's motion, the facts of this case are straightforward and undisputed. Patty Luckett was a full-time Sprint employee. [DN 1-1 at 5.] During her employment, Luckett participated in Sprint's short-term and long-term disability benefits plans. [Id.] At some point, Sprint denied Luckett's claim for short-term disability benefits. [Id.] Luckett filed suit, alleging Sprint's denial violated the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1001 et seq. (ERISA). [Id. at 6.] Luckett also claims that Sprint's denial of short-term benefits functioned as a de facto denial of long-term benefits. [Id. at 5-6.]

         Sprint removed Luckett's suit to this Court, see [DN 1], and then moved to dismiss, [DN 16]. Sprint argues that Luckett's short-term benefits claim must fail because that plan was not an ERISA plan, and Luckett's claim is therefore barred by the release agreement she signed upon leaving her employment at Sprint. See [DN 16-7 at 2-4.] Further, while Sprint acknowledges that Luckett's long-term benefits plan is subject to ERISA, it says Prudential Insurance Company of America, not Sprint, is the claims administrator with responsibility and control over Luckett's claim for long-term disability. Luckett responded, [DN 22], and Sprint replied, [DN 23].

         II. Standard of Review

         A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). In order to survive a motion to dismiss under Rule 12(b)(6), a party must “plead enough factual matter to raise a ‘plausible' inference of wrongdoing.” 16630 Southfield Ltd. P'ship v. Flagstar Bank, F.S.B., 727 F.3d 502, 504 (6th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A claim becomes plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)). Should the well-pleaded facts support no “more than the mere possibility of misconduct, ” then dismissal is warranted. Id. at 679. The Court may grant a motion to dismiss “only if, after drawing all reasonable inferences from the allegations in the complaint in favor of the plaintiff, the complaint still fails to allege a plausible theory of relief.” Garceau v. City of Flint, 572 F. App'x 369, 371 (6th Cir. 2014) (citing Iqbal, 556 U.S. at 677-79).

         III. Discussion

         A. Short-Term Disability Plan

         The parties agree that Luckett signed a release agreement wherein she “agreed to . . . release and forever discharge Sprint . . . from any and all liability, actions, and claims . . . arising out of [her] employment relationship with Sprint, ” including actions for breach of contract.[1] [DN 16-7 at 2.] In consideration for her release of claims, Sprint paid Luckett 38 weeks' salary, plus an additional $1, 000.00. [Id.] However, the release carves out Luckett's “claim[s] for benefits under . . . the Separation Plan or any other Sprint employee benefit plans governed by [ERISA].” [Id.] Luckett does not currently dispute the validity of her release, nor does she argue that if Sprint's short-term disability plan falls outside ERISA, her claim for short-term benefits could still proceed. See generally [DN 22.] Thus, with respect to the instant motion, the dispositive issue on Luckett's first claim is whether Sprint's short-term disability benefits plan is an ERISA plan.

         Luckett argues that Sprint's short-term plan is indeed governed by ERISA. Citing Workers v. Yardman, 716 F.2d 1476, 1483 (6th Cir. 1983), Luckett says that “[i]f an employer intends to supply benefits to an employee the benefits and plan that governs them are subject to ERISA.” [DN 22 at 3.] But Luckett paints with too broad a brush. The Sprint plan itself does not explicitly state that it is an ERISA plan, so the Court must first look to the statutory definition. ERISA defines an “employee welfare benefit plan” as

any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, [or] death.

29 U.S.C. § 1002(1).

         However, Department of Labor regulations remove from this definition certain “payroll practices, ” including “(1) [p]ayment of an employee's normal compensation, (2) out of the employer's general assets, (3) on account of periods of time during which the employee is physically or mentally unable to perform his or her duties, or is otherwise absent for medical reasons (such as pregnancy, a physical examination or psychiatric treatment).” 29 C.F.R. § 2510.3-1(b)(2) (subdivisions added). Sprint argues that its short-term disability ...


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