Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_14-cv-01679/USCOURTS-cand-4_14-cv-01679-5/pdf.json

Parties Involved:
Marie E. Horn
Plaintiff
Northrop Grumman Benefit Plan Administrative Committee
Defendant
Northrop Grumman Benefits Center
Defendant
Northrop Grumman Corporation
Defendant
Northrop Grumman Retirement Plan B
Defendant

Document Text:

United States District Court 

For the Northern District of California 

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IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

MARIE E. HORN, 

 

 Plaintiff, 

 

 v. 

NORTHROP GRUMMAN RETIREMENT PLAN 

and NORTHROP GRUMMAN BENEFIT PLAN 

ADMINISTRATIVE COMMITTEE, 

 Defendants. 

________________________________/ 

No. C 14-1679 CW 

ORDER GRANTING 

MOTION TO DISMISS 

(Docket No. 54) 

 Plaintiff Marie E. Horn has filed her Second Amended 

Complaint (2AC) bringing this fraud cause of action1 against 

Defendants Northrop Grumman Corporation (Northrop) and Northrop 

Grumman Benefit Plan Administrative Committee (the Administrative 

Committee) in relation to estimates of pension benefits due to her 

through her participation in the Northrop Grumman Retirement Plan 

(the Plan). Plaintiff previously filed a complaint and a first 

amended complaint (1AC). The Court granted Defendants’ motion to 

dismiss the 1AC, and Plaintiff was granted leave to amend. In the 

current motion, Defendants move to dismiss the 2AC (Docket No. 

54). Plaintiff has filed a response. Defendants have filed a 

reply. 

 1 The 2AC alleges a sole cause of action for 

“misrepresentation.” However, the claim sounds in fraud, and 

Plaintiff uses the word “fraud” several times to describe 

Defendants’ actions (e.g., “Ms. Horn was unaware of the fraudulent 

nature of the pension estimates that she received,” see 2AC ¶ 11; 

“The overstatement of pension benefits was intended to and did 

defraud Ms. Horn,” see 2AC ¶ 13.) Accordingly, the Court 

construes Plaintiff’s sole cause of action as one for fraud. 

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Having considered the papers, the Court GRANTS the motion to 

dismiss without leave to amend. 

BACKGROUND 

 The following facts are alleged in the 1AC and the 2AC, and 

are taken as true for the purposes of this motion. 

 Plaintiff Marie Horn was employed as an attorney by Litton 

Industries beginning in 1988. 2AC ¶ 6. Litton was subsequently 

acquired by Northrop. Plaintiff continued to work at Northrop 

through August 25, 2002. Id. During the time she was employed 

with Litton, she participated in the Litton Retirement Plan, and 

the Litton Financial Security and Savings Program. Id. After 

Northrop’s acquisition of Litton, Plaintiff’s plans were merged 

with Northrop Grumman Retirement Plan B. Id. Plaintiff does not 

know if she is “correctly considered a participant” in the Plan, 

but relies on Defendants’ representation that she is. Id. The 

Plan is subject to ERISA, 28 U.S.C. § 1101 et seq. 

 On April 1, 2003, in connection with the end of her 

employment with Northrop, the company presented Plaintiff with a 

“termination package” which included a letter signed by “Lisa T. 

Sanders, Northrop Grumman Benefits Center.” 2AC ¶ 9. Attached to 

the letter was a retirement benefit summary which stated that if 

Plaintiff “transferred her Part 1 Account Balance but did not 

withdraw her Litton Retirement Plan deposits, she would be 

entitled, upon reaching the benefit commencement date of July 1, 

2014,” to a “Straight Life” monthly benefit payment of $2,296.75. 

Id. In October 2009, Plaintiff received a similar retirement 

benefit summary, which contained similar estimates. Id. 

 Plaintiff received updated estimates in 2011 and 2012. Id. 

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¶ 10. The 2011 and 2012 estimates, as well as the pension she 

actually received, were significantly lower than the estimates she 

received in 2003 and 2009. Id. 

Plaintiff retired in 2013. Id. ¶ 7. Plaintiff does not 

state if she was employed by another company between 2002 when she 

left Northrup and 2013 when she retired. She alleges that she 

retired because she “could no longer rely upon the computation of 

the value of her retirement benefits by defendants.” Id. 

Plaintiff alleges that a Plan administrator explained to her 

that the estimates she had been receiving over the years had at 

least three calculation errors built into them, including that the 

benefit due had been erroneously multiplied by 1.7. Id. ¶ 9. 

As a result of her reliance on the 2002 and 2003 

miscalculated estimates, Plaintiff alleges a cause of action for 

fraud. She alleges that she suffered the following damages: 

(1) “she worked for a lower rate of compensation than she had been 

promised by her employer”; (2) “in 2005, she purchased a home in 

Florida which has since lost value in the economic downturn”; and 

(3) “she continued to work for Northrup Grumman Corporation or 

entities affiliated with it instead of seeking better paying work 

elsewhere.” Id. ¶ 15. As relief, she requests “compensation due 

in accord with the estimates provided to [her] between 2003 and 

2009.” Id. at 6. 

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). The plaintiff must proffer “enough facts to state a 

claim to relief that is plausible on its face.” Ashcroft v. 

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Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 570 (2007)). A claim is facially 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.” Id. 

In considering whether the complaint is sufficient to state a 

claim, the court will take all material allegations as true and 

construe them in the light most favorable to the plaintiff. 

Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061 

(9th Cir. 2008). The court’s review is limited to the face of the 

complaint, materials incorporated into the complaint by reference, 

and facts of which the court may take judicial notice. Id. 

However, the court need not accept legal conclusions, including 

“threadbare recitals of the elements of a cause of action, 

supported by mere conclusory statements.” Iqbal, 556 U.S. at 678 

(citing Twombly, 550 U.S. at 555). 

 When granting a motion to dismiss, the court is generally 

required to grant the plaintiff leave to amend, even if no request 

to amend the pleading was made, unless amendment would be futile. 

Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 

F.2d 242, 246-47 (9th Cir. 1990). However, the Court has 

discretion to deny leave to amend, especially where a plaintiff 

has previously amended the complaint. See Allen v. City of 

Beverly Hills, 911 F.2d 367, 373-74 (9th Cir. 1990). 

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DISCUSSION 

 Defendants move to dismiss the complaint in its entirety. 

I. ERISA preemption 

 In the 2AC, Plaintiff abandons her original Employee 

Retirement Income Security Act (ERISA), 29 U.S.C. § 1132(a)(3), 

cause of action to assert a cause of action for fraud. Defendants 

argue that this cause of action is preempted by ERISA. 

 Plaintiff concedes that she does not have a viable cause of 

action under ERISA. Instead, she contends that “when Northrop 

Grumman . . . issued computations of future pension values which 

it had no reason to believe were true, it was not acting as an 

ERISA fiduciary, but as an employer . . .” Opp. Mot. Dismiss, 

Docket No. 55 at 1. 

 “A state law claim is preempted by ERISA if it has a 

‘connection with’ or a ‘reference to’ an ERISA-governed benefit 

plan.” Wise v. Verizon Commc’ns, Inc., 600 F.3d 1180, 1190 (9th 

Cir. 2010)(citing Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 

724, 739 (1985)). “Stated another way, where ‘the existence of 

[an ERISA] plan is a critical factor in establishing liability’ 

under a state cause of action, the state law claim is preempted.” 

Id. 

 The plaintiff in Wise brought allegations similar to those 

Plaintiff asserts here. Wise sued her employer, alleging that it 

fraudulently promised her benefits pursuant to her ERISA welfare 

benefits plan. The Ninth Circuit held that all of Wise’s state 

law claims for fraud, misrepresentation and negligence were 

preempted because her complaint necessarily referred to an ERISA 

plan. 

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The state law theories of fraud, misrepresentation, and 

negligence all depend on the existence of an ERISA-covered 

plan to demonstrate that Wise suffered damages: the loss of 

insurance benefits. Because Wise must allege the existence 

of an ERISA plan to state her claims . . . the claims are 

preempted. 

Wise, 600 F.3d at 1191. 

 Similarly, Plaintiff’s fraud cause of action necessarily 

arises from her ERISA retirement benefits plan and is, thus, a 

“critical factor” in establishing liability. Plaintiff alleges 

that Northrop intentionally and fraudulently miscalculated her 

pension benefits, leading her to rely upon those estimates to her 

detriment. She refers to the plan as part of the “compensation” 

she believes she was promised, and requests damages “in accord 

with the estimates provided to [her] in 2003 and 2009.” 2AC at 6. 

 The cases Plaintiff cites, from which she extracts lengthy 

quotes, do not support her conclusions. For example, Plaintiff 

cites Farr v. United States West, Inc., 58 F.3d 1361 (9th Cir. 

1995), for the contention that “state law fraud and negligent 

misrepresentation were not subject to ERISA preemption.” Opp. 

Mot. Dismiss at 4. Farr involved a suit by former employees 

against a plan administrator who gave erroneous tax advice that 

induced the plaintiffs to participate in the benefits plan. The 

Ninth Circuit found that the tax consequences of the advice and 

the causes of action for fraud and negligent misrepresentation did 

not relate to the administration of the plan itself; thus, it was 

not preempted by ERISA. 

 However, pursuant to intervening Supreme Court precedent in 

Varity Corp. v. Howe, 516 U.S. 489 (1996), the Ninth Circuit 

concluded that even tax recommendations given by plan 

administrators “clearly ‘relate to’ plan administration because 

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they are part of the overall mix of information relied upon by 

Plaintiffs in making their decisions to participate in the plan.” 

Farr v. United States West Commc’ns, Inc., 151 F.3d 908, 913 (9th 

Cir. 1998). A cause of action arising from benefits estimates 

bears an even closer relationship to plan administration than does 

tax advice. Thus, the cases Plaintiff cites do not save her cause 

of action from preemption by ERISA. 

 Accordingly, Defendants’ motion to dismiss Plaintiff’s sole 

cause of action for fraud is GRANTED. Because this is Plaintiff’s 

second failed attempt to state a claim, the motion is granted 

without leave to amend. 

II. Failure to state a claim for fraud 

 Even if Plaintiff’s fraud cause of action did not fail due to 

ERISA preemption, it fails because it does not state a claim. 

 “A cause of action for fraud contains the following elements: 

(1) a knowingly false representation by the defendant; (2) an 

intent to deceive or induce reliance; (3) justifiable reliance by 

the plaintiff; and (4) resulting damages.” Hasso v. Hapke, 227 

Cal. App. 4th 107, 127 (2014). “In all averments of fraud or 

mistake, the circumstances constituting fraud or mistake shall be 

stated with particularity.” Fed. R. Civ. P. 9(b). While 

Plaintiff pleads with particularity that Northrop made knowingly 

false statements in 2003 and 2009 by providing benefits estimates 

that were inflated by a factor of 1.7, she has not sufficiently 

plead the other elements of a fraud cause of action with the 

required particularity. 

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 A. Intent to deceive or induce reliance 

 Plaintiff alleges that “the overstatement of pension benefits 

was intended to and did defraud Ms. Horn into working for a lower 

compensation rate than she had been promised by defendants.” Opp. 

Mot. Dismiss at 10, 2AC ¶ 12. She also alleges that “she 

continued to work for Northrop Grumman Corporation or entities 

affiliated with it instead of seeking better paying work 

elsewhere.” Id. ¶ 15. However, as Defendants point out, these 

alleged facts are implausible. 

 Plaintiff does not allege that she received pension estimates 

prior to the termination of her employment with Northrup on August 

25, 2002. Indeed, she claims to have received her first pension 

benefits estimate on April 1, 2003. Thus, taking all her facts to 

be true, she does not state facts to support her allegation that 

her decision to work at Northrop was in any way influenced by the 

inaccurate pension benefits estimate. The first such estimate was 

provided after she ceased her employment. 

 Accordingly, Plaintiff has not plead any facts to support 

her allegation that Northrop intended to deceive her or to induce 

her reliance on the erroneous estimates. Thus, her claim must 

fail for this reason as well. 

 B. Justifiable reliance and damages 

 As discussed above, Plaintiff does not plead any facts to 

support her contention that her employment at Northrop was 

influenced by the erroneous pension benefit estimates she received 

in 2003 and 2009. Plaintiff appears to allege that she purchased 

a home in Florida in 2005 in reliance on the pension estimates she 

received in 2003. However, Plaintiff pleads that her damages with 

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regard to the home is that it “has since lost value in the 

economic downturn.” 2AC ¶ 15. It is not clear how the lost value 

in the home has any relationship to the erroneous pension 

estimates. It is possible Plaintiff is alleging that she 

purchased the home relying on the erroneous pension estimate she 

received in 2003. However, Plaintiff did not retire, and was not 

entitled to any benefits, until 2013. The connection between the 

purchase of the home and the receipt of pension benefits ten years 

later is tenuous, at best. 

 Accordingly, Plaintiff has not plead any facts to support her 

allegations of justifiable reliance or damages. Thus, her claim 

must fail for this reason as well. 

CONCLUSION 

 For the foregoing reasons, the Court GRANTS Defendants’ 

motion to dismiss the 2AC (Docket No. 54). The dismissal is 

without leave to amend. The Clerk shall enter a judgment of 

dismissal and close the file. Defendants shall recover their 

costs from Plaintiff. 

IT IS SO ORDERED. 

Dated: 07/01/2015 

CLAUDIA WILKEN 

United States District Judge 

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