Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_13-cv-00685/USCOURTS-almd-2_13-cv-00685-3/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1001 E.R.I.S.A.

---

IN THE UNITED STATES DISTRICT COURT 

FOR THE MIDDLE DISTRICT OF ALABAMA 

NORTHERN DIVISION 

GARNET TURNER

individually and on behalf of all others 

similarly situated, et al., 

)

)

)

) 

 Plaintiffs, )

) 

 v. ) 

) 

CASE NO. 2:13-CV-685-WKW 

(WO) 

ALLSTATE INSURANCE 

COMPANY, 

)

)

) 

 Defendant. ) 

JOHN E. KLAAS 

on behalf of himself and all others 

similarly situated, et al., 

)

)

)

) 

 Plaintiffs, )

) 

 v. ) 

) 

CASE NO. 2:15-CV-406-WKW 

(WO) 

ALLSTATE INSURANCE 

COMPANY, 

)

)

) 

 Defendant. ) 

MEMORANDUM OPINION AND ORDER

 Plaintiffs in these consolidated ERISA cases are former employees of 

Defendant Allstate Insurance Company. Plaintiffs allege that Allstate provided 

them with a benefit plan that was to provide them with permanent, paid-up retiree 

life insurance policies after retirement. On or about July 2, 2013, Allstate notified 

participants that it would no longer pay premiums on the retiree life insurance 

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policies after December 31, 2015. Plaintiffs filed suit to enjoin Allstate from 

depriving them of the permanent life insurance policies that they contend they 

were promised. Before the court is Allstate’s motion to dismiss Plaintiffs’ 

amended complaints. (Doc. # 63.) For the reasons stated in this memorandum 

opinion, the court concludes that the motion to dismiss is due to be granted in part 

and denied in part. 

I. STANDARD OF REVIEW

 When evaluating a motion to dismiss pursuant to Federal Rule of Civil 

Procedure 12(b)(6), the court must take the facts alleged in the complaint as true 

and construe them in the light most favorable to the plaintiff. Resnick v. AvMed, 

Inc., 693 F.3d 1317, 1321–22 (11th Cir. 2012). To survive Rule 12(b)(6) scrutiny, 

“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) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[F]acial 

plausibility” exists “when the plaintiff pleads factual content that allows the court 

to draw the reasonable inference that the defendant is liable for the misconduct 

alleged.” Id. (citing Twombly, 550 U.S. at 556). 

II. PROCEDURAL HISTORY

A. The Turner Complaint 

 On September 23, 2013, Garnet Turner filed a class action complaint against 

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Allstate.1 (Doc. # 1.) Turner has twice amended his complaint, and other 

individual named Plaintiffs have been added to the Turner case. (Collectively, all 

of the individuals named as Plaintiffs in the Turner case are referred to as “the 

Turner Plaintiffs.”) The Turner Plaintiffs seek to represent a class of 

[a]ll Allstate retirees who received a promise or representation from 

Allstate that their retiree life insurance benefit would continue for life 

and that Allstate would pay the premium from the date of their 

retirement until their death and/or received a promise or 

representation from Allstate that the retiree life insurance benefit was 

‘paid up,’ and to whom Allstate directed a pattern of 

misrepresentations, omissions, and concealment about the benefit 

which misled the Plaintiffs and Class and harmed them when Allstate 

decided to cancel the benefit. 

(Doc. # 44 at ¶ 22.) 

 The Turner Plaintiffs present two counts in their complaint. In Count I, the 

Turner Plaintiffs allege that Allstate violated ERISA and the terms of the benefit 

plan by failing to provide retiree life insurance at no cost to Plaintiffs for the rest of 

their lives. (Doc. # 44 at ¶¶ 71-73(b.)). In addition, the Turner Plaintiffs allege in 

Count I that they are entitled to a declaratory judgment that Allstate breached its 

ERISA fiduciary duty “by not communicating truthful information about their 

retiree life insurance benefits, by a pattern of misrepresentations concerning those 

benefits, and by acts of concealment and omissions which kept the truth of the 

                                                             1

 The lead case in this consolidated action, Case No. 2:13-CV-685, is referred to as “the 

Turner case.” All record cites refer to documents filed in the lead case unless otherwise noted. 

The Turner case was originally assigned to United States District Judge Mark E. Fuller and was 

reassigned to the undersigned on August 20, 2014. 

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matter from the Plaintiffs.” (Doc. # 44 at ¶ 73(c.-d.).) 

 In Count II, the Turner Plaintiffs allege that Allstate breached its ERISA 

fiduciary duty to communicate truthful information about the retiree benefit plan 

by representing that, upon retirement, Plaintiffs would receive life insurance 

benefits that “would remain until death at no cost to the retiree and/or that their 

retiree life insurance benefits were ‘paid up.’” (Doc. # 44 at ¶ 81.) The Turner 

Plaintiffs also allege that Allstate violated its ERISA fiduciary duties of disclosure 

by failing to inform the retirees that it could choose to cancel the no-cost-to-retiree 

life insurance benefit. (Doc. # 44 at ¶ 84.) 

 The Turner Plaintiffs seek declaratory and injunctive relief and attorneys’ 

fees. (Doc. # 44 at 38.) 

B. The Klaas Complaint 

On March 11, 2015, John E. Klaas and several other named individuals 

(collectively, “the Klaas Plaintiffs”) filed suit against Allstate in the United States 

District Court for the Southern District of Florida. (Doc. #1 in the Klaas case.2

) 

On June 5, 2015, United States District Judge John E. Steele entered an order 

transferring the Klaas case to the Northern Division of the Middle District of 

Alabama on grounds that the Turner case was filed first and the putative class in 

the Klaas case is a subset of the putative class in the Turner case. (Doc. # 20 in the 

Klaas case.) Collegiate Licensing Co. v. Am. Cas. Co. of Reading, Pa., 713 F.3d 

                                                             2

 The member case in this consolidated action, Case No. 2:15-CV-406, is referred to as 

“the Klaas case.” 

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71, 78 (11th Cir. 2013) (“The first-filed rule provides that when parties have 

instituted competing or parallel litigation in separate courts, the court initially 

seized of the controversy should hear the case.”). The Turner and Klaas cases 

were subsequently consolidated. (Doc. # 61.) 

 The Klaas Plaintiffs are former Allstate home office employees who allege 

that, as an incentive to retire in 1995, they were offered a Special Retirement 

Opportunity (“SRO”) that included a promise of permanent life insurance benefits 

that would be “paid up for life” at no additional cost to them. (Doc. # 62 at ¶¶ 24, 

25.) The Klaas Plaintiffs seek to represent a class of “Allstate retirees who 

accepted Allstate’s [SRO] offer to eligible home office employees to take 

advantage of salary continuation, retiree medical and life insurance benefits, and an 

enhanced retirement benefit if they retired from Allstate on November 30, 1995.” 

(Doc. # 62 at ¶ 10.) Like the Turner Plaintiffs, the Klaas Plaintiffs seek relief 

under ERISA on grounds that Allstate (1) represented to them that they would 

receive permanent, paid-up life insurance policies but did not provide such 

policies; (2) failed to disclose that, at any time in the future, Allstate could cancel, 

terminate, or refuse to pay for the life insurance policies that were provided; and 

(3) Allstate cancelled the retiree life insurance policies. . 

 In their complaint, the Klaas Plaintiffs assert three counts. Count I of the 

Klaas complaint is substantially identical to Count I of the Turner complaint. (Doc. 

# 62 at ¶¶ 36-38.) Count II of the Klaas complaint is substantially identical to 

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Count II of the Turner complaint. (Doc. # 62 at ¶¶ 36-55.) In Count III, unlike the 

Turner Plaintiffs, the Klaas Plaintiffs assert a state law claim for breach of contract 

for Allstate’s failure to provide life insurance at no cost to the retirees for the 

remainder of their lives. 

 The Klaas Plaintiffs seek declaratory and injunctive relief, attorneys’ fees, 

and monetary award in an “amount . . . that will place the Plaintiffs and the Class 

in as satisfactory a position as they would have been had their contract with 

Allstate been performed.” (Doc. # 62 at 16-17.) 

C. The Motion to Dismiss and the Motion for Preliminary Injunction

 On September 9, 2015, Allstate filed a motion to dismiss the Turner and 

Klaas complaints. (Doc. # 63.) 

 On November 16, 2015, the Turner Plaintiffs filed a motion for a 

preliminary injunction to prevent Allstate from cancelling the named Turner 

Plaintiffs’ insurance policies on December 31, 2015. (Doc. # 74.) In briefing the 

motion for preliminary injunction, the parties referenced and incorporated 

arguments made in their briefs on the motion to dismiss. 

 On December 7, 2015, the Klaas Plaintiffs filed a motion to join the Turner

Plaintiffs’ motion for preliminary injunction. (Doc. # 82.) 

 On December 11, 2015, the court held a status conference at which Plaintiffs 

represented that they would seek to enlarge the request for injunctive relief to 

prevent Allstate from cancelling the life insurance policies of unnamed class 

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members. Allstate subsequently filed a motion to strike any motion for injunctive 

relief on behalf of unnamed class members. (Doc. # 89.) 

 On December 18, 2015, the court held a hearing on the motion to dismiss, 

the motion for preliminary injunction, the Klaas Plaintiffs’ motion to join the 

motion for injunctive relief, and Allstate’s motion to strike. (Doc. # 76; Doc. # 

91.) 

 By Order entered December 29, 2015, (Doc. # 92), the court granted the 

following motions: the Turner Plaintiffs’ motion for a preliminary injunction 

requiring Allstate to continue the life insurance benefits after December 31, 2015 

(Doc. # 74), the Klaas Plaintiffs’ motion to join the motion for preliminary 

injunction. (Doc. # 82), and Allstate’s motion to strike the motion for preliminary 

injunction as to unnamed members of the putative classes in both cases (Doc. # 

89). The December 29, 2015 Order also required 

that[,] on or before midnight, December 31, 2015, Plaintiffs shall 

execute individually and file signature bonds in the amount of $5,000 

each. The injunction will dissolve by operation of law as to any 

Plaintiff not filing a bond by midnight, December 31, 2015. Because 

the offices of the Court are closed December 31, 2015 and January 1, 

2016, counsel for Plaintiffs shall email or fax to counsel for Defendant 

a copy of the respective bonds and the injunction shall be effective as 

to the bonded Plaintiffs. 

(Doc. # 92 at 3.) 

 No bonds were filed by midnight, December 31, 2015. Therefore, on the 

record, it appeared that the injunction had dissolved by operation of law, and the 

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court did not supplement the December 29, 2015 Order with a Memorandum 

Opinion as it had intended. However, at an off-the-record status conference held 

on September 14, 2016, Plaintiffs stated that they timely executed the bonds and 

emailed or faxed them to Defendant’s counsel, but did not file them with the court. 

All parties, including Allstate, agreed that the preliminary injunction remained in 

force despite Plaintiffs’ failure to timely file the bonds with the court. Plaintiffs 

have since filed the bonds. (Doc. # 117; Doc. # 119.) Accordingly, on September 

27, 2016, upon the parties’ agreement that the preliminary injunction did not 

dissolve by operation of law, the court issued a Memorandum Opinion. (Doc. # 

121.) 

III. FACTS3

 As part of an employee welfare benefit plan provided by Allstate, Allstate 

offered Plaintiffs a basic group life insurance plan during their employment. 

Plaintiffs allege and have presented evidence4

 that Allstate represented to them (1) 

                                                             3

 For purposes of ruling on the motion to dismiss, the Plaintiffs’ complaints are construed 

in a light most favorable to them and Plaintiffs’ factual allegations are taken as true. See Brooks 

v. Blue Cross & Blue Shield of Florida, Inc., 116 F.3d 1364, 1369 (11th Cir. 1997). 

4

 Plaintiffs have referenced certain documents in the complaint and attached those 

documents to the complaint. In support of the motion to dismiss, Allstate submitted plan 

documents that it contends are the governing plan documents referenced in the complaints and 

central to Plaintiff’s claims. (Doc. # 64 n.2; Doc. # 64-1 through Doc. # 64-6.) The documents 

attached to the complaint and the plan documents submitted by Allstate have been considered in 

ruling on the motion to dismiss. See Bickley v. Caremark Rx, Inc., 461 F.3d 1325, 1329 n.7 

(11th Cir. 2006) (“A court is generally limited to reviewing what is within the four corners of the 

complaint on a motion to dismiss. However, . . . where the plaintiff refers to certain documents in 

the complaint and those documents are central to the plaintiffs claim, then the Court may 

consider the documents part of the pleading for purposes of Rule 12(b)(6) dismissal, and the 

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that, and if they were enrolled in the basic group life insurance plan during their 

employment and fulfilled certain conditions, then, upon retirement, their basic 

group life insurance policies would terminate and they were “entitled”5

 to receive 

retiree life insurance policies; (2) that the retiree life insurance policies would 

provide a life insurance benefit equal to some specified percentage of their 

previous coverage or some specified multiple of their annual earnings; and (3) that 

the retiree life insurance benefit would be 

- permanent (Doc. # 44 15 ¶¶ 50, 62, 67, 69; Doc. # 62 at ¶¶ 32, 34); 

- “paid-up for life” (Doc. # 44 at ¶ 28-38, 40-46, 48-49, 52-53, 81; Doc. # 44-

2 at 1; Doc. # 44-3; Doc. # 44-4; Doc. # 62 at ¶¶ 24-25; Doc. # 44-10 at 1); 

- “in effect for the remainder” of Plaintiffs’ lives and “until death” (Doc. # 44 

at ¶¶ 42, 45, 53, 60-61, 65; Doc. # 62 at ¶¶ 13-16, 27); 

- “without premium for the remainder of [the retirees’] life” and with “no 

further premiums” due on the retiree life insurance policies (Doc. # 44 at ¶¶ 

33, 37, 42, 47-48); 

                                                                                                                                                                                               

defendant's attaching such documents to the motion to dismiss will not require conversion of the 

motion into a motion for summary judgment.” (citation and internal quotation marks omitted)). 

At times in this opinion, other evidence is cited, including evidence that was taken at the 

December 18, 2015 hearing on the motion to dismiss and motion for preliminary injunction. 

However, that evidence is noted for reference and exposition only, and, in the absence of that 

evidence, the court’s ruling on the motion to dismiss would be the same. Therefore, it is not 

necessary to convert the motion to dismiss to a motion for summary judgment before ruling on 

the motion. 

5

 (See, e.g., Doc. # 44 at ¶¶ 31, 36, 38, 47, 49, 55-56; Doc. # 44-1 at 2; Doc. # 44-6; Doc. 

# 44-12; Doc. # 44-13 at 1; Doc. # 44-14 at 2; Doc. # 44-16; Doc. # 44-18; Doc. # 44-19; Doc. 

44-20.) 

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- provided by Allstate upon Plaintiffs’ retirement with all associated 

premiums paid for by Allstate for life (Doc. # 44 at ¶ 60); and 

- provided by Allstate at “no additional cost” to and “without further 

contribution from” Plaintiffs. (Doc. # 44 at ¶¶ 25, 27, 36, 39, 42, 47-51, 53, 

58, 65, 67, 81; Doc. # 62 at ¶¶ 13-16, 24-25; Doc. # 44-1 at 1; Doc. # 44-5; 

Doc. # 44-7 at 2; Doc # 44-10 at 1; Doc. # 44-11 at 2; Doc. # 44-13 at 1; 

Doc. # 44-14 at 2; Doc. # 44-15 Doc. # 44-17 at 2; Doc #66 at ¶¶ 15-16.)6

 Allstate does not dispute that these representations were made, or that 

Plaintiffs relied on those representations.7

 (See Doc. # 91 at 121-122, 125.). In 

                                                             6

 (See also, e.g., Doc. # 87-1 at ¶¶ 3-5 (declaration of Turner Plaintiff Theodore 

Speiwack that Allstate promised him insurance that was “paid up for life” and that Allstate 

represented to him that “‘paid up for life’ mean that all premiums were paid on [his] retiree life 

insurance policy”); Doc. # 87-3 at ¶¶ 2-5 and page 6 (declaration of Turner Plaintiff James 

Cartrette stating that Allstate made oral and written representations that he would receive “paid 

up” retiree life insurance upon retirement, and attaching a copy of a letter from Allstate’s Human 

Resource Division Manager on Allstate Insurance Company (“Allstate® You’re in good hands”) 

letterhead stating that he would receive “paid up life insurance” upon retirement); Doc. # 87-4 at 

¶¶ 2-5 and page 7 (declaration of Turner Plaintiff Charlie Drake stating that Allstate executives 

made promises to him that, upon retirement, he would receive “paid up” life insurance, and 

attaching a form stating that the life insurance would be provided “at no cost”); Doc. # 87-5 at ¶¶ 

2-6 (declaration of Turner Plaintiff William Huff stating that he would receive a “‘paid up’ 

retiree life insurance policy” and that he received a form, which is attached to the declaration, 

showing that he was provided a “PAID UP” group life insurance policy); Doc. # 87-7 at ¶ 3 and 

page 6 (declaration of Turner Plaintiff Alberta Nixon attaching a letter from Allstate’s Human 

Resources Department on “Allstate® You’re in good hands” letterhead stating that she would 

receive retiree life insurance that would “remain [at a specified coverage amount] without 

premium for the remainder of [her] life”); Docs. ## 79-3 through 79-5 (summary plan 

descriptions providing that basic group life insurance policies would terminate upon retirement 

or upon the termination of the group life insurance policy, but that, “in some instances” life 

insurance may continue beyond that time if, for instance, the employee’s insurance terminated 

upon retirement and the employee was eligible for “Retiree Life Insurance”).) 

7

 Plaintiffs allege and have submitted evidence that they relied to their detriment on 

representations that Allstate provided permanent, fully paid, paid-up life insurance by, for 

example, accepting early retirement packages that included the allegedly paid-up insurance, 

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fact, at the hearing on the motion for preliminary injunction and the motion to 

dismiss, Allstate admitted that it did make the representations. (See, e.g., Doc. # 

91 at 121-22 (statement of Allstate’s attorney: “[W]hat I would say, Your Honor, is 

that the insurance [sic] said it was paid up at the time of retirement.”); id. at 128 

(“We told these employees they were going to receive the life insurance for life. 

That was the testimony today.”); id. at 117 (“Allstate used the words ‘paid up’ in 

certain communications, Your Honor.”)). 

 Allstate contends that its representations regarding the provision of paid-up, 

permanent life insurance were not misrepresentations, and that Allstate had no 

subjective intent to mislead Plaintiffs in making the representations. Allstate 

contends that any representation that the policies were “permanent” or “paid-up” 

simply meant that Allstate would be “paying the cost” of the life insurance 

premiums in the future. (Doc. # 91 at 118.) As the court noted at the hearing on 

the motion to dismiss, that is not what “paid up” means. Rather, “paid up” means 

insurance for which all premiums have been paid and no more premium payments 

are required,8

 and Plaintiffs allege that this is what they understood the term to 

                                                                                                                                                                                               

cancelling other life insurance policies, and deciding not to purchase additional life insurance. 

For purposes of ruling on the motion to dismiss, the fact of detrimental reliance is established 

without dispute. 

8

 For example, see Stowe Township v. Standard Life Insurance Co. of Indiana, 363 F. 

Supp. 341, 343-44 (W.D. Pa. 1973): 

“Ordinarily, by virtue of contract or statute, there is a provision upon default or 

termination of a contract of life insurance, that the insured shall be entitled to 

extended or paid-up insurance and a cash surrender value. In Couch on Insurance 

2d [Volume 6, Page 354], Section 32:137 the following appears: 

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mean when Allstate used it.9 It is reasonable to infer that, as an insurer 

                                                                                                                                                                                               

‘(P)aid-up insurance means that no more payments are required, 

and consists of insurance for life in such an amount as the sum 

available therefore, considered as a single and final premium, will 

purchase. In other words, ‘paid-up insurance’ is insurance for the 

life of the insured, upon which all the premiums have been paid.” 

See also, e.g., Eisen v. Nicholson, 23 Vet. App. 502, 2007 WL 1599657 at *1 n.3 (2007) 

(unpublished table memorandum decision) (“Paid-up insurance is insurance on which all 

premiums have already been paid, with no further premiums due. See Columbian Nat’l Life Ins. 

Co. v. Griffith, 73 F.2d 244, 246 (8th Cir. 1934) (observing that paid-up insurance ‘means 

insurance which has been fully paid for’)”); Luke v. IKON Office Sols. Inc., No. CIV.00-

2755(JRT/FLN), 2002 WL 1835645, at *6 (D. Minn. Aug. 1, 2002) (“In simplest terms, the plain 

meaning of the term ‘paid up’ means just what it says-that the object in question, in this case, the 

death benefit, is fully paid for. Webster’s Dictionary defines ‘paid up’ as something ‘that has 

satisfied or indicated an implied financial obligation.’ Webster’s Third New International 

Dictionary 1620 (1986). This definition is also wholly consistent with the Eighth Circuit’s 

observation in [Griffith, 73 F.2d 244] that ‘in simple language . . . “paid up insurance” means 

insurance which has been fully paid for.’ Id. at 246. Contrary to defendants’ insistence, the Court 

finds other terms incorporating the phrase ‘paid up’ such as ‘paid up policy’ and ‘paid up 

insurance’ highly relevant in determining the meaning of paid up death benefit in this case. Both 

phrases have been interpreted to mean insurance for which, at a certain point in time, no 

additional premiums are owed.”); 5 Couch on Ins. § 77:36 (“It may be stipulated . . . that upon 

default or termination of the original contract the insured shall be entitled to extended or paid-up 

insurance, or some other such benefit as that portion of the premium paid, over and above the 

amount actually earned during the period that the policy was active, will purchase. Extended 

insurance means that, upon default or termination of the original contract, the policy will 

continue in force for such period as the amount of unearned premium will cover; whereas paidup insurance means that no more payments are required, but the amount of the insurance is 

reduced to an amount corresponding to the premiums paid.” (footnotes and citations omitted)); 5 

Couch on Ins. § 77:36 n.3 (“A provision for paid-up insurance will not be construed to mean 

paid-up temporary insurance for the full amount of the policy.” (citation omitted)). 

9

 (See, e.g., Doc. # 44 ¶ 33 (“Allstate used the term ‘paid up’ to convey to [Plaintiff Bill] 

Huff that no further premiums for the benefit would be due and that upon Mr. Huff’s death, his 

beneficiary would receive $30,000. The term ‘paid up’ was used by Allstate to convey that the 

promised benefit would be certain, not contingent in any way, and particularly not contingent on 

payment of future premiums by Allstate or anyone else, including the retiree.”); ¶ 37 (“‘Paid up’ 

was represented to mean that Allstate had already paid all owed premiums for Kathryn Shepherd 

and Class members’ retiree life insurance and that no further premiums would be due. This 

meant that upon a retiree’s death, the promised amount was payable without further action by 

anyone. ‘Paid up’ meant that the retiree’s beneficiary would receive payment no matter what 

Allstate did or did not do after retirement.”); ¶ 40 (“[Plaintiff Vernon Bentley] was never 

informed that Allstate reserved any right to cancel the benefit, and such a right and cancellation 

would have been contrary to the definition of ‘paid up.’”); ¶ 42 (“Allstate represented to 

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13 

communicating with insurance company employees, Allstate understood and 

expected the recipients of its communications to understand that “fully paid-up 

permanent life insurance” referred to life insurance policies upon which no further 

premiums were due. See supra note 5. Plaintiff’s allegations of intentional 

misrepresentation and suppression are only bolstered by Allstate’s admission that it 

promised “permanent,” “paid up” policies while harboring the subjective intent to 

purchase and indefinitely pay for policies that were not paid up and were 

permanent only so long as Allstate, in its discretion, continued to make premium 

payments. Accordingly, Plaintiffs have sufficiently alleged that Allstate 

knowingly misrepresented the terms of the plan. 

 “In 2013, Allstate changed its mind”10 about whether to continue paying 

premiums for the retiree life insurance policies. (Doc. # 91 at 128 (statement of 

Allstate’s counsel).) In July 2013, Allstate notified Plaintiffs that Allstate had been 

“fully paying [Plaintiffs’] premium” for the life insurance since their retirement 

and that Allstate had “made the decision to no longer pay the premium for [the] life 

insurance benefit” effective December 31, 2015. (Doc. # 44 ¶ 64; Doc. # 62-4.) 

Plaintiffs were informed that they would be allowed to purchase “conversion” life 

                                                                                                                                                                                               

[Plaintiff Ted Spiewack], and Class members in attendance, at various seminars that ‘paid up for 

life’ meant that all premiums were paid on the policy and that the retiree’s beneficiary would 

receive the proceeds independently of any action or inaction by Allstate.”); ¶ 48 (similar 

allegation as to Plaintiff Charlie Drake)). 

10 Indeed, Allstate takes the position – as it must – that it could have “changed its mind” 

the next day after hundreds of its home office employees took advantage of a generous special 

retirement opportunity (“SRO”) that Allstate offered to the Klaas Plaintiffs. (Doc. # 91 at 114-

15.) 

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insurance policies from a new carrier at their own expense.11 (Doc. # 44 ¶ 64; Doc. 

# 62-4.) The undisputed evidence, including the July 2013 letter, establishes that 

Allstate did not provide Plaintiffs a fully paid-up life, permanent insurance policy 

upon retirement for which no future premiums were due and that would 

“permanently” remain in force for the remainder of Plaintiffs’ lives. Instead, 

despite its representations to the contrary, Allstate provided a policy that was not 

“paid up” or “permanent,” that would not necessarily be in force for the rest of 

Plaintiffs’ lives, and for which premium payments were regularly made by Allstate 

so long as Allstate decided to keep the policy in force. 

IV. DISCUSSION 

A. Count I of the Turner and Klaas Complaints: Request for Declaratory 

 Judgment 

1. ERISA § 502(a)(3) and Allstate’s Failure to Communicate 

 Accurate Information About the Plan 

An ERISA participant has a right to accurate information, and, under ERISA 

§ 502(a)(3), 29 U.S.C. § 1132(3), an ERISA plan administrator’s misrepresentation 

or omission of material information may give rise to a cause of action for breach of 

fiduciary duty. Jones v. Am. Gen. Life & Acc. Ins. Co., 370 F.3d 1065, 1072 (11th 

Cir. 2004). In Count I of their complaints, Plaintiffs seek a declaratory judgment 

that Allstate breached its fiduciary duty to communicate truthfully about the terms 

                                                             11 Premiums for the conversion life insurance increase with age and are subject to change 

after 2018. (Doc. # 74-1; Doc. # 74-2 at 3.) 

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15 

of the plan. Allstate does not dispute that it had a fiduciary duty to communicate 

truthfully about the plan. Further, for the reasons stated in Section III. of this 

Memorandum Opinion, Plaintiffs have alleged facts which, if true, are sufficient to 

establish that Allstate failed to communicate truthfully about the plan. 

 Allstate contends that its arguments for dismissal of Count II of the 

complaint, which also falls under § 502(a)(3), should be applied to the portion of 

Count I seeking a declaratory judgment with respect to the alleged breach of 

fiduciary duty to communicate truthfully about the plan. (Doc. # 64 at 14 n.4.) 

For the reasons Allstate’s argument for dismissal of Count II are rejected in 

Section IV.B. of this Memorandum Opinion, Allstate’s arguments for dismissal of 

Count I are also rejected. 

 To recover on § 502(a)(3) claims, Plaintiffs must allege and prove that the 

plan did not include paid-up life insurance as Allstate had represented; whereas, to 

recover for a breach of the terms of the plan, Plaintiffs must allege and prove that 

the plan did include (or was at least ambiguous about including) terms that 

obligated Allstate to provide paid-up life insurance. See Jones, 370 F.3d at 1071. 

The fact that Plaintiffs ultimately cannot simultaneously recover on both types of 

claims does not require dismissal of one or both claims at this stage of the 

proceedings. See Fed. R. Civ. P. 8(d)(2) – (3) (“A party may set out 2 or more 

statements of a claim . . . alternatively or hypothetically, either in a single count or 

defense or in separate ones. If a party makes alternative statements, the pleading is 

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sufficient if any one of them is sufficient. . . . A party may state as many separate 

claims or defenses as it has, regardless of consistency.”). 

2. ERISA § 502(a)(1)(B) and Allstate’s Alleged Breach of the Terms of 

 the Welfare Benefit Plan 

Under Count I of their complaints, Plaintiffs seek a declaratory judgment 

that Allstate breached a duty under the terms of the plan to provide permanent, 

paid-up retiree life insurance that would continue “for life.” Actions for breach of 

ERISA plan terms fall under ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), 

which authorizes “ERISA participants and beneficiaries to bring a civil action in 

order to recover benefits, enforce rights to benefits, or clarify rights to future 

benefits due under the terms of an ERISA-governed welfare benefit plan.” Jones, 

370 F.3d 1065, 1069 (11th Cir. 2004). 

 The Eleventh Circuit recognizes two types of action under § 502(a)(1)(B). 

The first type of § 502(a)(1)(B) action is “akin to common law breach of contract 

causes of action” and is based on “[t]he remedies explicitly authorized in Section 

502(a)(1)(B).” Id. In a breach-of-contract type of action, the plaintiff may seek to 

enforce rights or recover benefits under the terms of the plan. Id. Because the 

doctrine of contra proferentem governs resolution of ambiguities in ERISAgoverned plans, “an ERISA plaintiff is generally not required to demonstrate his 

[or her] entitlement to benefits in clear and express language in the relevant 

provisions of his plan in order to make out a [§] 502(a)(1)(B) ‘breach of contract’ 

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claim.” Id. at 1070. However, to succeed on a “breach of contract” ERISA claim, 

the plaintiff must establish that the terms of the plan at issue are “at least 

ambiguous” as to whether he is entitled to the benefits he seeks to recover or 

enforce. Id. 

 As for the second type of § 502(a)(1)(B) action, the Eleventh Circuit “has 

recognized a very narrow common law doctrine . . . for equitable estoppel, which 

is available where the plaintiff can show that (1) the relevant provisions of the plan 

at issue are ambiguous, and (2) the plan provider or administrator has made 

representations to the plaintiff that constitute an informal interpretation of the 

ambiguity.” Id. 

 Allstate contends that, at various times between 1990 and 2013, Allstate 

disclosed in the written plan documents that, although it intended to continue the 

benefit plan indefinitely, it reserved the right to change, amend, or terminate the 

benefit plan, the terms of the plan, and the benefits provided under the plan at any 

time.12 (Doc. # 64 at 13.) Allstate further argues that this reservation of right to 

modify, terminate, or amend the plan, including benefits provided under the plan, 

unambiguously included a reservation of the right to terminate the retiree life 

insurance policies after those policies were issued. 

 As Allstate points out, under Jones, employee welfare benefits such as life 

insurance “do not vest simply because they continue into retirement, particularly 

                                                             12 It is undisputed that Allstate reserved the right to modify, amend, or terminate the 

employee benefit plans at any time. 

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when other plan provisions establish that benefits are generally terminable.” 370 

F.3d at 1070. Language merely indicating that benefits will continue into 

retirement (such as a statement that an employee “will get to keep” insurance after 

retirement, that “coverage will continue” after retirement, or that the employer has 

an “intention of continuing [a plan] indefinitely”) is “not inconsistent” with an 

employer’s reservation of the right to unilaterally modify or terminate an employee 

benefit plan, and such language does not create vested, irrevocable rights under the 

terms of the plan to benefits upon retirement. Id. at 1070-71. Where the employer 

uses such language while reserving the right to change or terminate the plan, the 

retiree does not have a cause of action for breach of the terms of the plan under 

ERISA § 502(a)(1)(B). 

 Allstate’s reliance on Jones is misplaced. Jones did not involve 

representations promising “paid-up,” “permanent” life insurance “for life” upon 

retirement, with no further premiums due. In this case, Plaintiffs are not alleging 

that the life insurance vested simply because they received a promise that the 

insurance would continue into retirement. Plaintiffs are alleging (1) that Allstate 

violated the terms of the plan by failing to provide permanent, paid up insurance 

and by cancelling the plans; or, alternatively, (2) that Allstate’s representations to 

the Plaintiff that they would receive “paid up,” “permanent” policies “for life” 

constituted an informal interpretation of an ambiguity about whether the retiree life 

insurance policies were among the benefits that could potentially be terminated at 

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Allstate’s discretion. 

 Logically, as Plaintiffs point out, a statement that an employer could, at 

some point in the future, modify or terminate the plan or plan benefits would not 

necessarily place a retiree on notice that he or she could lose (or one day be 

required to pay for) a permanent retiree life insurance policy that had already been 

purchased and “fully paid up” and at the date of retirement, and upon which no 

further premiums were due. Under the circumstances, the reservation of rights 

could reasonably be understood to apply to other benefits under the plan (such as 

employee group life insurance policies) or to the potential to modify or terminate 

the retiree life insurance offered to existing employees, but not to retiree life 

insurance that (according to Allstate’s representations) the retirees received upon 

their retirement, fully paid up, with no further premiums due. 

 Accordingly, for the purpose of the motion to dismiss, upon consideration of 

the evidence attached to the complaint and the motion to dismiss, and construing 

the allegations in the complaint in Plaintiffs’ favor, the court concludes that 

Plaintiffs have stated a claim (1) that the plan did not include (or was ambiguous as 

to whether it included) a provision under which Allstate reserved the right to 

cancel the retiree life insurance policies; and, alternatively, (2) that Allstate’s 

representations that the retiree life insurance was “permanent” and “paid-up” upon 

retirement constituted an informal interpretation of the ambiguity as to whether the 

retiree life insurance policies could be cancelled at Allstate’s discretion. 

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Therefore, Allstate’s arguments for dismissal of Count I are without merit. 

B. Count II of the Turner and Klaas Complaints: Breach of Fiduciary 

 Duty 

1. Breach of Fiduciary Duty Under ERISA § 502(a)(3) 

 Under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3), a plan participant may 

have an equitable cause of action for breach of fiduciary duty against an ERISA 

plan provider or administrator if the plan provider or administrator fails to provide 

accurate information about the plan. Jones, 370 F.3d at 1072. Even if a benefit is 

not vested under the terms of the plan, a retiree may have an equitable cause of 

action if the administrator terminates the benefit after engaging in a systematic 

pattern of misrepresentation that causes the plan participants to believe and rely on 

representations that the insurance benefit will not be changed during their 

retirement. Id., at 1071-74. 

 Allstate argues that it made no misrepresentations that the retiree life 

insurance policies would be permanent and paid up upon retirement (and, thus, 

could never be cancelled once issued) because (1) Allstate had no subjective intent 

misrepresent the nature of the policies because, when Allstate represented that the 

policies would be permanent, paid-up policies “for life,” it fully intended to 

provide – and indefinitely make premium payments on – retiree life insurance 

policies that were not paid up; (2) under the terms of the plan, Allstate reserved the 

right to modify, terminate, or cancel the plan or benefits offered under the plan; 

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and (3) under Jones and other cases, statements that the employer intends to 

continue an employee benefit plan are not inconsistent with a reservation of right 

to later modify or terminate the plan. 

 For the reasons stated in Section III. of this Memorandum Opinion and in 

Section II.A. of the September 27, 2016 Memorandum Opinion and Order on the 

motion for preliminary injunction (Doc. # 121 at 4-14), Allstate’s arguments 

regarding fraudulent intent and the scope of its reserved right to cancel or terminate 

the plan, as well as its reliance on Jones, are misplaced. Allstate’s reliance on 

cases from other Circuits is also misplaced because those cases are distinguishable. 

In each of those cases, an employer’s honest statement of its current intent to 

indefinitely continue a plan or benefit was not retroactively made fraudulent by the 

employer’s subsequent change of heart in accordance with a written reservation of 

the right to change, modify, or terminate the plan or plan benefits. This case, 

however, involves an alleged promise of paid up insurance that (1) by Allstate’s 

own admission, Allstate never intended to provide; and (2) by definition, once 

issued, could not be cancelled or terminated at Allstate’s discretion.13 Even the 

                                                             13 As already noted in Sections III. and IV.A. of this opinion, and in Section II.A. of the 

September 27, 2016 Memorandum Opinion and Order on the motion for preliminary injunction 

(Doc. # 121 at 4-14): (1) a statement that the employer will provide paid-up, permanent 

insurance is a knowingly and intentionally false statement if made with the knowledge and the 

subjective intent that the employer will instead procure and make indefinite payments on 

insurance that is not paid up and that will continue for life only at the employer’s discretion and 

continuing payment of premiums; and (2) Allstate’s reservation of a right to modify, terminate, 

or cancel the plan or benefits under the plan at some future time cannot reasonably be understood 

to refer to retiree life insurance that (according to Allstate’s representations) the retirees had 

already received upon their retirement, fully paid up, with no further premiums due. 

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cases upon which Allstate relies expressly recognize the significance of these 

distinctions.14

 Accordingly, Plaintiffs’ § 502(a)(3) claims for breach of fiduciary duty are 

not subject to dismissal for failure to allege misrepresentations or omissions on the 

part of Allstate. 

 2. Statute of Limitations 

 Allstate argues that Plaintiffs’ § 502(a)(3) claims for breach of fiduciary 

duty are due to be dismissed because they are barred by the applicable statute of 

limitations found in ERISA § 413, 29 U.S.C. § 1113. For the reasons stated in 

Section II.B. of the September 27, 2016 Memorandum Opinion and Order on the 

                                                                                                                                                                                               

14 See Armbruster v. K-H Corp., 206 F. Supp. 2d 870, 894 (E.D. Mich. 2002) (“The 

summary plan descriptions issued to the Plaintiffs over the years unambiguously reserved to [the 

employer] the right to amend or terminate the plan. . . . [I]n the face of this clearly stated right to 

amend, reliance on statements allegedly suggesting the contrary, was not, and could not be, 

reasonable or justifiable as a matter of law. This is particularly true, where, as here, [the 

employer] never told the Plaintiffs that the plan would never be changed or that their benefits 

were fully paid-up. . . . . [The employer] did not give Plaintiffs inaccurate information 

concerning retiree medical benefits when they were considering retirement. The information they 

were given was, at the time it was given, accurate. [The employer] not having given out 

inaccurate information, there was no breach of fiduciary duty.” (emphasis added; citations and 

internal quotation marks omitted)); see also Frahm v. Equitable Life Assur. Soc. of U.S., 137 

F.3d 955, 961 (7th Cir. 1998) (“Representations about plans and intentions could be false if, at 

the time the statements were made, the speaker actually had a different intention (Ballone v. 

Eastman Kodak Co., 109 F.3d 117 (2d Cir.1997), appears to have concerned such a situation), 

but the district court found that plaintiffs had not proved lies of this kind. Instead the evidence 

showed that the statements were honest (if at times incautious) projections of present plans into 

the future. As it happened, higher management . . . changed course in 1992, but this did not make 

the earlier statements false.”); Gable v. Sweetheart Cup Co., 35 F.3d 851, 857 (4th Cir. 1994) 

(holding that an explanation of “a company’s current intentions with respect to [a] plan . . . 

cannot be expected to foreclose the possibility that changing financial conditions will require a 

company to modify welfare benefit plan provisions at some point in the future”); Bunnion v. 

Consol. Rail Corp., 108 F. Supp. 2d 403, 412 (E.D. Pa. 1999), aff’d, 230 F.3d 1348 (3d Cir. 

2000) (finding that “honest declarations of [a defendant’s] present intent to do a future act” were 

not fraudulent);. 

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motion for preliminary injunction (Doc. # 121 at 14-22), Plaintiffs’ § 502(a)(3) 

claims for breach of fiduciary duty are not barred by the applicable statute of 

limitations. 

3. Allstate’s Status as a Plan Fiduciary

 Allstate argues that Plaintiffs’ claims for breach of fiduciary duty are due to 

be dismissed because Plaintiffs did not adequately plead facts sufficient to support 

a legal conclusion that the persons making representations about the plan were 

fiduciaries, and because the plan documents do not name Allstate as a fiduciary. 

See ERISA § 3(21)(A), 29 U.S.C. § (21)(A) (defining “fiduciary”). Plaintiffs 

specifically identified several of the individuals who made representations to them 

about receiving permanent, paid-up policies. Plaintiffs also allege that documents 

from Allstate itself indicated that they would receive paid up policies.15 (Doc. # 44 

at ¶ 34; Doc. # 44-4 (document marked “Allstate® You’re in Good Hands” stating 

that a “group life paid up policy” in a specified amount was available upon 

retirement).) Plaintiffs allege that Allstate that the persons making the 

representations were authorized to do so on behalf of Allstate, and that Allstate 

retained the responsibility for administering the plan. (Doc. # 44 at ¶¶ 54, 77-79; 

Doc. # 62 at ¶ 42-43.) 

                                                             15 At the hearing on the motion to dismiss, Allstate admitted that it represented that the 

plans would be paid up for life. (See, e.g., Doc. # 91 at 121-22 (statement of Allstate’s attorney: 

“[W]hat I would say, Your Honor, is that the insurance [sic] said it was paid up at the time of 

retirement.”); id. at 128 (“We told these employees they were going to receive the life insurance 

for life. That was the testimony today.”); id. at 117 (“Allstate used the words ‘paid up’ in certain 

communications, Your Honor.”)). 

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 Taking these factual allegations as true for the purpose of the motion to 

dismiss, Plaintiffs have adequately alleged facts sufficient to support a legal 

finding that Allstate was a fiduciary and acted as such when communicating with 

Plaintiffs about the employee benefit plan. See Varity Corp. v. Howe, 516 U.S. 

489, 496-505 (1996) (holding that an employer who retained administrative control 

over a plan acted as a plan fiduciary when the employer made representations to 

the employees about the likely future security of a benefit plan in order to help 

them decide whether to remain with the plan); Hamilton v. Allen-Bradley Co., 244 

F.3d 819, 824, 828 (11th Cir. 2001) (holding that an employer who retained 

administrative control over plan benefits was a plan administrator, and therefore a 

fiduciary, notwithstanding the language of the plan booklet). 

C. Count III of the Klaas Complaint: State Law Claim for Breach of 

 Contract 

 Allstate argues that the Klaas Plaintiffs’ state law breach of contract claim is 

subject to dismissal because it is defensively preempted by ERISA. “A state law 

claim is defensively preempted under ERISA if it relates to an ERISA plan.” 

Jones v. LMR Int'l, Inc., 457 F.3d 1174, 1179 (11th Cir. 2006); 29 U.S.C. § 

1144(a) (ERISA “supersede[s] any and all State laws insofar as they may now or 

hereafter relate to any employee benefit plan described in section 1003(a) of this 

title and are not exempt under section 1003(b) of this title.”). The Klaas Plaintiffs’ 

breach of contract claim relates to an ERISA benefit plan and is, therefore, due to 

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be dismissed. 

V. CONCLUSION 

 Accordingly, it is ORDERED that Defendant Allstate insurance company’s 

motion to dismiss (Doc. # 63) is GRANTED as to Count III of the Klaas Plaintiffs’ 

complaint; DENIED as to all other claims asserted by the Klaas Plaintiffs; and 

DENIED as to the Turner Plaintiffs’ claims. 

 DONE this 27th day of September, 2016. 

 /s/ W. Keith Watkins 

 CHIEF UNITED STATES DISTRICT JUDGE 

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