Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-02482/USCOURTS-casd-3_09-cv-02482-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1104 Recovery of Benefits to Employee

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cal 

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

STANLEY HOFFMAN, Individually,

and on behalf of the Estate of PHYLLIS

HOFFMAN,

Plaintiffs,

v.

AMERICAN SOCIETY FOR

TECNNION-ISRAEL INSTITUTE OF

TECHNOLOGY, INC., et. al.,

Defendants. 

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Civil No. 09cv2482 AJB (CAB)

ORDER GRANTING MOTION 

TO DISMISS AND MOTION 

TO SUBSTITUTE ATTORNEY

[Doc. Nos. 13, 24 and 25]

Defendants’ AMERICAN SOCIETY FOR TECHNION-ISRAEL INSTITUTE OF TECHNOLOGY, INC. also known as AMERICAN TECHNION SOCIETY (hereinafter “ATS”) and RONNIE

PALLAY filed a motion to dismiss, [Doc. No. 13], seeking dismissal of: (1) Plaintiff’s third, forth, fifth

and sixth causes of action, and (2) individually named Defendant RONNIE PALLAY as an improper

defendant where Plaintiff seeks benefits under an ERISA plan. Within the motion to dismiss, the

Defendants’ also move to strike Plaintiff’s claim for economic or punitive damages and Plaintiff’s

demand for jury trial. Based upon the parties moving papers and for the reasons stated below, the

Defendants’ motion to dismiss and motion to strike are hereby GRANTED. 

The Plaintiffs also filed a motion to substitute attorney, [Doc. Nos. 24 and 25], which are hereby

GRANTED for good cause shown.

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Background

Plaintiff commenced this action individually and on behalf of his deceased wife, Ms. Hoffman,

seeking to recover life insurance benefits from any of the defendants and severance pay from ATS under

the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1101. [Doc. No. 1.] On March

22, 2010, Defendants filed a motion to dismiss Plaintiff’s complaint in part, as set forth above; on April

19, 2010, Plaintiff filed an opposition to Defendants’ motion to dismiss, [Doc. No. 17], and on April 26,

2010, Defendants filed a reply. 

Legal Standard 

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) (2009). A motion to dismiss pursuant to Rule 12(b)(6) of the

Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint.

Fed.R.Civ.P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir.2001). The court must accept all

factual allegations pled in the complaint as true, and must construe them and draw all reasonable

inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336,

337–38 (9th Cir.1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual

allegations, rather, it must plead “enough facts to state a claim to relief that is plausible on its face.” Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim has “facial

plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable

inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, ––– U.S. ––––, 129

S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 556).

However, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief’ requires

more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not

do.” Twombly, 550 U.S. at 555 (citation omitted). A court need not accept “legal conclusions” as true.

Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). In spite of the

deference the court is bound to pay to the plaintiff's allegations, it is not proper for the court to assume

that “the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the ...

laws in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council

of Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983).

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Discussion

1. Plaintiff’s Third through Sixth Causes of Action 

Plaintiff’s third cause of action for breach of fiduciary duty against defendants ATS and

PALLAY relies on Defendants’ duty to act as fiduciaries with respect to the ERISA plan, but fails to

point to any specific ERISA section permitting Plaintiff to obtain relief. Even Plaintiff’s Opposition to

Defendants’ Motion to Dismiss fails to cure this defect. [Doc. No. 17.] Nevertheless, Plaintiff’s claim

for damages in the form of life insurance and severance payments pursuant to section 502(a)(1)(b)

precludes Plaintiff from utilizing either ERISA section 502(a)(2) or 502(a)(3) to recast his arguments in

the form of a breach of fiduciary duty even in the alternative. 

First, Defendants point out that section 502(a)(2) allows a beneficiary of an ERISA plan to bring

an action for damages against the plan’s fiduciaries only if the damages “inure to the benefit of the plan

and not to a single person’s benefit.” See Massachusetts Mut. Life Ins. Co. V. Russell, 473 U.S. 134

(1985). [Doc. No. 13-1.] Although the specific language in Russell applies to a defined contribution

plan, and here there is no evidence that Plaintiff participated in a defined contribution plan, Plaintiffs’

still cannot bypass the limitation against pursuing individual claims under section 502 (a)(2). See

Coriale v. Xerox Corp., 775 F. Supp. 2d 583 (W.D.N.Y. 2011). What Plaintiff seeks in essence is

redress of Plaintiff’s individual grievance against the plan’s administrators in the form of restoring

Plaintiff’s plan benefits.

Second, Plaintiff cannot rely on section 502(a)(3) to bring a breach of fiduciary duty claim

against Defendants, because what Plaintiffs ultimately seeks in the form of declaration, is in reality

monetary compensation for Plaintiff’s lost benefits. See Phelan v. Wyoming Associated Builders, 574

F.3d 1250, 1254 (10th Cir. 2009) (warning against disguising legal remedies in equitable clothing.). In

addition, Plaintiff is not permitted to plead equitable remedies even in the alternative because, as several

courts have determined, the Federal Rules of pleading are “irrelevant” here.1

1 See Jurgoran v. ITI Enterprises, No. 03C4627, 2004 WL 1427115, at *4 (N.D. Ill. June 23,

2004) ( “the existence of a claim for relief under section 502(a)(1)(B) means that relief under section

502(a)(3) is not available as a matter of law”); Katz v. Comprehensive Plan of Group Ins., 197 F.3d

1084, 1089 (11th Cir. 1999).

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Plaintiff’s fourth cause of action for interference with protected rights under the ERISA plan

seeks to vindicate a right that is exclusively protected by ERISA section 510.2

 Section 510 prohibits the

discharge of a plan participant “for the purpose of interfering with [her] attainment of any right . . .

under the plan.” 29 U.S.C. §1140. As the court in Bullock v. Equitable Life Assur. Soc. of U.S.

explained, section 502(a) provides the exclusive enforcement mechanism for section 510 rights and, as

such, preempts any state cause of action seeking such relief “no matter how awfully pled.” 259 F. 3d

395 (5th Cir. 2001). 

Plaintiff’s fifth and sixth causes of action for fraud and negligent misrepresentation also fall

within ERISA’s broad statutory preemption provision. Section 514(a) provides that a state law that

relates to employee benefit plans is preempted unless the ERISA savings clause applies. See Pilot Life

Ins. Co. V. Dedeaux, 481 U.S. 41 (1987). Whether a particular state law claim is pre-empted by ERISA

is a question of congressional intent. Id at 45. The Plaintiffs have not pointed to a distinct injury from

Defendants’ refusal to pay under the plan, which is fully redressed by the statutory scheme. Farr v. U.S.

West, Inc., 58 F.3d 1361 (9thCir. 1995); Serpa v. SBC Communications, Inc., 318 F. Supp. 2d 865 (N.D.

Cal. 2004)

2. Individually Named Defendant Ronnie Pallay as an Improper Defendant Where Plaintiff Seeks

Benefits under an ERISA Plan 

The Plaintiffs’ have named Ronnie Pallay as a Defendant in the first and third through sixth

causes of action in the Complaint. The Plaintiffs’ first cause of action is brought pursuant to

§1132(a)(1)(B), which only allows claims against the plan as an entity and is not enforceable against

any other person unless liability against that person is established in their individual capacity.

§1132(d)(2). See Gelardi v. Pertec Computer Corp., 761 F.2d 1323, 1324 (9th Cir. 1985)(finding that a

plaintiff may only assert a claim for disability benefits under §1132(a)(1)(B) against the ERISA plan as

an entity; Ford v. MCI Communications Corp. Health and Welfare Plan, 399 F.3d 1976, 1981 (9th Cir.

2005). Since Ronnie Pallay is not the plan administrator or the plan fiduciary, Ronnie Pallay is not a

proper party for the purposes of the Plaintiffs’ first cause of action.

2

 See Lawford v. New York Life Ins. Co., 739 F. Supp. 906 (S.D.N.Y. 1990) (Court held that any

of the Plaintiff’s claims that were associated with benefits-defeating motive were preempted by ERISA). 

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Since this Court has dismissed Plaintiff’s third though sixth causes of action as preempted by

ERISA, the Defendants’ motion to strike Ronnie Pallay as an improper defendant under Plaintiff’s first

and third though sixth causes of action is GRANTED on the same analysis. 

3. Plaintiff’s Claim for Economic or Punitive Damages 

Plaintiffs seek economic damages and punitive damages in the fifth and sixth causes of action. 

(Comp., at ¶¶ 49, 50, 53 and Prayer ¶¶ 5 and 6.) These damages are not recoverable under ERISA. 

ERISA § 502(a) provides for the exclusive remedies to recover benefits due or to enforce or clarify

rights under an ERISA plan, thereby preempting state law remedies. Under this provision, state law

claims seeking relief available under ERISA are completely preempted because this provision provides

the exclusive remedy for loss or denial of ERISA benefits. Metropolitan Life Ins. Co. v. Taylor, 481

U.S. 58, 63-4 (1987); Sokol v. Bernstein, 803 F.2d 532, 538 (9th Cir. 1986). Based upon the foregoing,

the Defendants’ motion to strike Plaintiff’s claim for economic and/or punitive damages in the fifth and

sixth causes of action is hereby GRANTED.

4. Plaintiff’s Demand for Jury Trial 

ERISA does not provide for a jury trial and Ninth Circuit authority is clear on this point. See

Thomas v. Oregon Fruit Prods. Co., 228 F.3d 991, 996 (9th Cir. 2000); Spinelli v. Gaughan, 12 F.3d

853, 857-8 (9th Cir. 1993). Based upon the foregoing, the Defendants’ motion to strike the Plaintiff’s

demand for jury trial is GRANTED.

Conclusion

For the reasons set forth above, Defendants’ motion to dismiss and motion to strike, [Doc. No.

13] are hereby GRANTED. The Plaintiffs’ motion to substitute attorney, [Doc. Nos. 24 and 25], is

GRANTED for good cause shown. If Plaintiffs wish to amend the dismissed claims, they must file a

Second Amended Complaint within twenty (20) days of the date this Order.

IT IS SO ORDERED.

DATED: November 16, 2011

Hon. Anthony J. Battaglia

U.S. District Judge

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