United States District Court, E.D. Kentucky, Northern Division, Covington
DOLORES JANE BODEN, et al. PLAINTIFFS
ST. ELIZABETH MEDICAL CENTER, INC., et al. DEFENDANTS
MEMORANDUM OPINION AND ORDER
L. SUNNING, UNITED STATES DISTRICT JUDGE
matter is before the Court on two motions to dismiss under
Federal Rule of Civil Procedure 12(b)(6). The first Motion
asks the Court to dismiss certain individuals (the
“Former Committee Members”) from this case. (Doc.
# 77). The second Motion asks the Court to dismiss
Defendants' Counterclaim for Declaratory Judgment. (Doc.
# 81). For the reasons stated herein, the Court will grant in
part and deny in part the Former Committee Members'
Motion to Dismiss (Doc. # 77), and grant the Plaintiffs'
Motion to Dismiss Defendants' Counterclaim (Doc. # 81).
FACTUAL AND PROCEDURAL BACKGROUND
St. Elizabeth Medical Center, Inc. (“St.
Elizabeth”) is a non-profit hospital system
headquartered in Edgewood, Kenton County, Kentucky, that
provides primary and advanced care physicians to Northern
Kentucky, Ohio, and Indiana. (Doc. # 74). St. Elizabeth
sponsors the St. Elizabeth Medical Center Employees'
Pension Plan (the “Plan”), which is an
“‘employee pension benefit plan' within the
meaning of ERISA § 3(35), 29 U.S.C. §
1002(35).” Id. at 1, 5-7. The Plan's named
fiduciary is St. Elizabeth Medical Center Employees'
Pension Plan Administrative Committee (the
“Committee”). Id. at 5. Plaintiffs
allege that the Committee is comprised entirely of members of
the St. Elizabeth board of trustees (the
“Board”), who are named as individual
defendants in this action. Id. Certain
individual defendants-the Former Committee
Members-ended their tenure on the Committee before
the filing of the Amended Complaint. Id. at 5-6.
to Plaintiffs Dolores Boden, Jeanine Godsey, and Patricia
Schaeffer, St. Elizabeth “established the Plan in
1966” to provide for its employees' retirement
income. Id. at 10. These Plaintiffs are
“current and former employees of [St.
March 17, 2016, Plaintiffs filed this putative class action
against Defendants. (Doc. # 1). Approximately one year into
the litigation, the Court stayed this action pending a
decision from the United States Supreme Court regarding
ERISA's exemption for church plans. See Advocate
Health Care Network v. Stapleton, 137 S.Ct. 1652 (2017).
Following the Supreme Court's decision, and with the
permission of the Court (Doc. # 73), Plaintiffs filed an
Amended Complaint on August 1, 2017. (Doc. # 74).
Amended Complaint alleges that the Defendants have violated
their duties as fiduciaries or sponsors of the Plan. (Doc. #
74 at 17-20). Specifically, Plaintiffs have alleged seven
counts against Defendants. Count One seeks a declaration that
the Plan is not a church plan and is pled against all
Defendants. Id. at 20. Counts Two (violation of
reporting and disclosure obligations), Five (breach of
fiduciary obligations under ERISA), and Six (breach of
fiduciary obligations under state law) are pled against all
Defendants as fiduciaries of the Plan. Id. at.
21-27. Counts Three (failure to provide minimum funding),
Four (failure to establish the Plan through a written
instrument), and Seven (breach of contract) are pled against
St. Elizabeth. Id. at 23-28. Plaintiffs bring these
claims under ERISA § 502(a)(3),  502(a)(1)(A), and 502(a)(2).
their Prayer for Relief, Plaintiffs request the following:
(1) certification of this action as a class action; (2) a
declaration that the Plan is an employee-benefit plan, a
defined benefit pension plan subject to ERISA, and is not an
ERISA-exempt church plan; (3) an order requiring Defendants
to bring the Plan into compliance with ERISA; (4) an order
requiring Defendants to make the Plan whole for past
contributions that should have been made pursuant to ERISA,
to pay interest and investment income on these payments, and
to disgorge any profits accumulated as a result of the
fiduciary breaches; (5) an order granting a preliminary and
permanent injunction removing Defendants from the Committee
and appointing independent fiduciaries in their place; (6) an
order requiring Defendants to pay $110 per day to each
Plaintiff and Class Member for failing to send them a funding
notice; (7) declaratory and injunctive relief to enjoin
Defendants from further violating ERISA; (8) any other
equitable or monetary relief the Court deems appropriate
under ERISA § 502(a); (9) an order requiring St.
Elizabeth to fund the Plan in accordance with the Plan
Document; (10) an award of attorneys' fees and expenses;
and (11) any other relief the Court determines is just and
proper. Id. at 28-29.
their Answer, Defendants filed a Counterclaim for Declaratory
Judgment, asking the Court to declare that the Plan is a
“church plan” within the definition found in
ERISA § 3(33), and is therefore exempt from ERISA's
requirements. (Doc. # 76). The Former Committee Members then
filed a Motion to Dismiss them from the case under Rule
12(b)(6). (Doc. # 77). Plaintiffs having responded (Doc. #
80), and the Former Committee Members having replied (Doc. #
83), the Former Committee Members' Motion is ripe for the
responding to the Former Committee Members Motion to Dismiss,
Plaintiffs also filed Motion to Dismiss Defendants'
Counterclaim. (Doc. # 81). Defendants having responded (Doc.
# 84), Plaintiffs having replied (Doc. # 85), and Defendants
having surreplied (Doc. # 88), this Motion is also ripe for
the Court's review.
Standard of Review
survive a Rule 12(b)(6) motion to dismiss, “a complaint
must contain sufficient factual matter, accepted as true, to
state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The
plausibility standard is met when the facts in the complaint
allow “the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Id. The complaint need not contain “detailed
factual allegations, ” but must contain more than mere
“labels and conclusions.” Id. Put
another way, the “[f]actual allegations must be enough
to raise a right to relief above the speculative
level.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007). In reviewing a motion to dismiss under Rule
12(b)(6), the court must “accept[ ] all factual
allegations [in the Amended Complaint] as true and draw[ ]
all reasonable inferences in favor of the plaintiff.”
Logsdon v. Hains, 492 F.3d 334, 340 (6th Cir. 2007)
(citing Gazette v. City of Pontiac, 41 F.3d 1061,
1064 (6th Cir. 1994)).
Defendants' Motion to Dismiss is granted in part and
denied in part.
the Former Committee Members' Motion to Dismiss is not a
model of clarity. (Doc. # 77-1). In addition, it suffers from
a serious procedural flaw.
motion to dismiss under Rule 12(b)(6) is untimely if made
after the moving party has made a responsive pleading.
McGlone v. Bell, 681 F.3d 718, 728 n.2 (6th Cir.
2012). The Former Committee Members' Motion (Doc. # 77)
was filed after the Answer filed by all Defendants (Doc. #
76), thereby rendering the Motion untimely. However, Rule
12(h)(2)(B) allows a party to bring a motion to dismiss for
failure to state a claim upon which relief may be granted
under Rule 12(c), which may be raised “[a]fter the
pleadings are closed.” The Court will therefore
construe the Former Committee Members' Rule 12(b)(6)
motion as a Rule 12(c) motion, noting that the standard of
review is the same. Jelovsek v. Bredesen, 545 F.3d
431, 434 (6th Cir. 2008).
Counts One, Three, Four, and Seven.
no legal support and little persuasive argument, the Former
Committee Members request that this Court dismiss Count
One-which seeks equitable and declaratory relief under ERISA
and 28 U.S.C. § 2201, et seq., the Declaratory
Judgment Act. (Doc. # 77-1 at 2) (stating only that their
“actions or inactions have no bearing on church plan
status.”). The Former Committee Members buttress their
argument in their Reply, suggesting that any liability they
might have if the Court were to declare the Plan a church
plan would be under specific statutes, “which are
separate stand-alone claims for relief.” (Doc. # 83 at
8). Plaintiffs' argument in opposition to dismissing
Count One is equally unsupported by legal citation or
analysis. (Doc. # 80). According to Plaintiffs, their request
for “redress” will include “redressing
violations that took place while [the former Committee
Members] were on the Committee, such as the failure to send
proper Plan disclosures.” Id. at 3. Accepting
the allegations in the Amended Complaint as true, and drawing
all reasonable inferences in Plaintiffs' favor, the Court
declines to find that this Count should be dismissed.
Declaratory Judgment Act permits a court to “declare
the rights and other legal relations” of parties to a
controversy. Plaintiffs have alleged that the Plan is not a
church plan and therefore subject to ERISA's
requirements. (Doc. # 74 at 11-17). Plaintiffs have
additionally pled this action against the Defendants as
fiduciaries of the Plan. Id. at 1. Because, under
ERISA, fiduciaries can be “personally liable to make
good” on a plan “any losses to the plan resulting
from [the fiduciaries'] breach, ” ERISA § 409,
common sense and logic dictate that a declaration by the
Court as to whether the Plan is a church plan will
necessarily involve the rights and legal relations of
Plaintiffs as against the Former Committee Members. If the
Plan is determined to not be a church plan, then accepting
the allegations in the Amended Complaint as true and drawing
all reasonable inferences in Plaintiffs favor, the Former
Committee Members may be liable for breaches of their
fiduciary duties. Accordingly, the Former Committee
Members' Motion to Dismiss Count One is denied.
to the other Counts, the Former Committee Members argument
for dismissal of Counts Three, Four, and Seven is also
unsupported by legal citation or discussion. (Doc. # 77-1 at
2) (“Along these same lines, claims Three, Four, and
Seven do not involve these Defendants, or any Committee
members, and are aimed by Plaintiffs solely at St.
Elizabeth.”). Plaintiffs are even more succinct in
their argument on these Counts. (Doc. # 80 at 4)
(“Movants seek their dismissal by simply arguing
Plaintiffs' claims do not pertain to them. This argument
should be rejected outright.”) (internal citations
Former Committee Members are correct that they are not named
as defendants in Counts Three, Four, and Seven, and Plaintiff
has therefore failed to state a claim against them for these
Counts. (Doc. # 74 at 23-24, 27-28). See, e.g., Kimes v.
S. Health Partners, No. 4:16-cv-129-JHM, 2017 WL 374482
(W.D. Ky. Jan. 25, 2017) (allowing the plaintiff to file an
amended complaint, but holding that “[i]f Plaintiff
fails to amend his complaint to name these individuals as
Defendants in their individual capacities, then these claims
will also be dismissed for failure to state a claim upon
which relief may be granted.”); see, e.g., Andreson
v. Diorio, et al., 349 F.3d 8, 17-18 (1st Cir. 2003)
(affirming the lower court's dismissal of Diorio from a
defamation claim when Diorio was not named as a defendant in
the defamation count in the complaint). Accordingly, the
Former Committee Members Motion to dismiss Counts Three,
Four, and Seven will be granted.
The ERISA Inadequate Funding Claim
ERISA, Congress set up a program that “governs employee
benefit plans and establishes both the obligations of plan
fiduciaries and the remedies for any breach of those
duties.” Tullis v. UMB Bank, N.A., 515 F.3d
673, 676 (6th Cir. 2008). ERISA allows a civil action to be
brought by “the Secretary [of Labor], or by a
participant, beneficiary, or fiduciary for appropriate relief
under section 409 (29 U.S.C. § 1109)” for breach
of a fiduciary's duty. Id. at 676-77 (citing 29
U.S.C. § 1132(a)(2)). In Count Five, Plaintiffs allege
that Defendants breached their fiduciary duties by failing to
“create and enforce adequate funding policies, ”
leading to a loss to the Plan “equal to the foregone
funding and earnings thereon.” (Doc. # 74 at 25-26).
Former Committee Members argue that Plaintiffs' ERISA
breach-of-fiduciary-duty claim should be dismissed because
Plaintiffs do not have standing to bring such a claim, as
they have sustained no injury-in-fact, but instead allege
only “contingent and speculative” injury. (Doc. #
77-1 at 3-6). The Former Committee Members argue that
Plaintiffs do not allege that St. Elizabeth has “failed
to pay any required plan benefits to Plaintiffs, ” and
that they “have no liability under ERISA” for
“speculative risk of loss.” Id. at 3-5.
In summary, the Former Committee Members argue that
“[t]he possible risk of an unknown and unascertainable
loss of benefits cannot support” an ERISA