Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-02179/USCOURTS-casd-3_10-cv-02179-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.: Civil Enforcement of Employee Benefits

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

GEOFFREY MOYLE, et al.,

Plaintiffs,

CASE NO. 10CV2179 DMS (BLM)

ORDER GRANTING PLAINTIFFS’

MOTION FOR LEAVE TO

AMEND

vs.

LIBERTY MUTUAL RETIREMENT

BENEFIT PLAN, et al.,

Defendants.

In this action brought by retired employees pursuant to the Employees Retirement Income

Security Act (“ERISA”), Plaintiffs moved for leave to file a second amended complaint. Defendants

oppose the motion in part. The motion is currently set for hearing on Friday, September 16, 2011.

The matter is suitable for submission without oral argument pursuant to Local Civil Rule 7.1(d)(1).

For the reasons which follow, Plaintiffs’ motion is GRANTED.

Plaintiffs were hired by Golden Eagle Insurance Company (“Old Golden Eagle”) between

April 1988 and May 1990. (First Am. Compl. ¶ 34.) On or about October 1, 1997, Liberty Mutual

Insurance Company obtained control of the assets of Old Golden Eagle and subsequently formed

Golden Eagle Insurance Corporation (“GEIC”). (Id. at ¶¶ 24, 35.) During the purchase of Old Golden

Eagle and formation of GEIC, Plaintiffs were advised by Defendants that, if they remained in their

positions after the acquisition, they would be eligible to participate in the Retirement Plan with full

credit for their years of service with Old Golden Eagle. (Id. at ¶ 36.) On or around March 2002,

Moyle’s employment with GEIC ended. (Id. at ¶ 40.) Each of the other Plaintiffs’ employment with

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GEIC also concluded thereafter. (Id. at ¶¶ 40, 46-48.) Upon retirement, Plaintiffs were sent

documentation regarding their benefits under the Retirement Plan. (Id. at ¶ 41.) According to

Plaintiffs, “[a]ll Plan documents provided to Plaintiffs and others similarly situated should include

within ‘credited service’ those years employed with Old Golden Eagle.” (Id.) On May 23, 2002,

Defendants informed Moyle that he would not be provided with any credit for the years of

employment with Old Golden Eagle. (Id. at ¶ 45.) 

Plaintiffs filed a complaint on October 19, 2010, and a first amended complaint on October

21, 2010. The first amended complaint sets forth three claims for relief: (1) determination of terms

of Plan and clarification of rights to future benefits under 29 U.S.C. § 1132(a)(1)(B), (2) promissory

estoppel, and (3) violation of 29 C.F.R. 2560.503-1(h)(2). In the second amended complaint, they

propose to amend the second cause of action to add a request for remedies available under CIGNA

Corp. v. Amara, 131 S.Ct. 1866 (2011), and add a fourth cause of action for violation of 29 C.F.R. §§

2520.102-3(l) and 2520.102-2(a). Defendants oppose only the addition of the fourth cause of action.

Pursuant to Federal Rule of Civil Procedure 15(a), leave to amend should be freely given

“when justice so requires.” "This policy is to be applied with extreme liberality." Eminence Capital,

LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (internal quotation marks and citation

omitted). 

In the absence of any apparent or declared reason -- such as undue delay, bad faith or

dilatory motive on the part of the movant, repeated failure to cure deficiencies by

amendments previously allowed, undue prejudice to the opposing party by virtue of

allowance of the amendment, futility of amendment, etc. -- the leave sought should,

as the rules require, be "freely given."

Foman v. Davis, 371 U.S. 178, 182 (1962). 

Defendants argue the motion should be denied due to Plaintiffs’ undue delay because they have

known all along the facts underlying the fourth cause of action. “Undue delay by itself . . . is

insufficient to justify denying a motion to amend.” Bowles v. Reade, 198 F.3d 752, 758 (9th Cir.

1999). Denial is improper in the absence of “a contemporaneous specific finding of prejudice to the

opposing party, bad faith by the moving party, or futility of the amendment.” Id. Defendants do not

contend that they were prejudiced by the timing of Plaintiffs’ motion. Accordingly, to the extent they

rely on undue delay alone, their argument is rejected.

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Defendants also contend the motion should be denied with respect to the fourth cause of action

because amendment would be futile in this respect. A district court does not abuse discretion by

“denying leave to amend where the amendment would be futile or where the amended complaint

would be subject to dismissal.” Saul v. United States, 928 F.2d 829, 843 (9th Cir. 1991). 

In the proposed second amended complaint, Plaintiffs allege that the Summary Plan

Descriptions (“SPD”) failed to comply with 29 C.F.R. §§ 2520.102-3(l) and 2520.102-2(a), which

require employers to disclose, “in a manner calculated to be understood by the average plan

participant,” any “circumstances which may result in disqualification, ineligibility, or denial, loss,

forfeiture, suspension offset, reduction or recovery . . . of any benefits that a participant might

otherwise reasonably expect the plan to provide.” During the purchase of Old Golden Eagle and

formation of GEIC, Defendants represented to Plaintiffs that, if they remained in their positions after

the acquisition, they would receive full credit for their years of service with Old Golden Eagle. While

Plaintiffs were granted credit for purposes of eligibility and vesting, Defendants dispute Plaintiffs are

entitled to credit for the purpose of calculating benefits under the Retirement Plan. (Opp’n at 3 & 4.)

Plaintiffs contend this distinction is not apparent from the SPD. 

Relying on Carver v. Westinghouse Hanford Co., 951 F.2d 1083, 1088-89 (9th Cir. 1991),

Defendants argue they were not obligated to explain this distinction because ERISA does not require

a successor employer to add prior service with the predecessor employer to the benefits calculation.

Carver is unavailing to support this argument because it did not address the requisite disclosure under

29 C.F.R. §§ 2520.102-3(l) and 2520.102-2(a). Even if Defendants are not required to credit Plaintiffs

with their years of service with Old Golden Eagle, they do not contend they are prohibited from doing

so. Plaintiffs’ theory of the case is that in light of Defendants’ representations, which did not

distinguish between credit for purposes of benefits calculation as opposed to credit for purposes of

eligibility and vesting, a general statement in the SPD is insufficient under 29 C.F.R. §§ 2520.102-3(l)

and 2520.102-2(a) to inform an “average plan participant” that he or she would not receive credit for

purposes of benefits calculation. Defendants’ futility argument with respect to this legal theory is

rejected.

/ / /

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Defendants also contend that the fourth cause of action is futile because the “vague statement

of what the ‘average plan participant would understand’ . . . fails to constitute a factual allegation

under Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009).” (Opp’n at 7.) Federal Rule of Civil Procedure

8(a)(2) requires a "short and plain statement of the claim showing that the pleader is entitled to relief."

Fed. R. Civ. Proc. 8(a)(2). In this regard, factual allegations in the complaint must provide fair notice

of the nature of the claim and grounds on which the claim rests. Bell Atl. Corp. v. Twombly, 550 U.S.

544, 556 n.3 (2007). As long as the complaint meets this standard, it need not include the facts

necessary to carry the plaintiff's burden, Al-Kidd v. Ashcroft, 580 F.3d 949, 977 (9th Cir. 2009),

reversed on other grounds, __ U.S. __, 131 S.Ct. 2074 (2011), or detailed factual allegations,

Twombly, 550 U.S. at 555. In the context of the allegations regarding the nature of Defendants’

representations, Plaintiffs’ allegation that the SPD was insufficient for an average plan participant to

understand he or she would not receive service credit for purposes of benefit calculation is sufficiently

specific to meet the pleading requirements of Rule 8(a).

Finally, Defendants also contend leave to add the fourth cause of action should be denied

because it is merely a new legal theory based on the same facts and seeking the same relief as the

second cause of action. This argument is rejected because Rule 8(d)(2) expressly permits the pleading

of alternative claims.

For the foregoing reasons, Plaintiffs’ motion for leave to amend is GRANTED. No later than

September 21, 2011 Plaintiffs shall file and serve the proposed amended complaint attached to their

motion as Exhibit A. Defendants' response to the second amended complaint, if any, must be filed

and served within the time set forth in Federal Rule of Civil Procedure 15(a)(3). 

IT IS SO ORDERED.

DATED: September 14, 2011

HON. DANA M. SABRAW

United States District Judge

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