Court Opinion

ID: 4197239
Source: CourtListenerOpinion
Date Created: 2017-08-18 16:01:33.675783+00
Date Added: 2024-06-11T07:47:24.440398
License: Public Domain

UNITED STATES DISTRICT COURT
                              FOR THE DISTRICT OF COLUMBIA

    VALERIE R. WHITE, et al.,
          Plaintiffs,
          v.
                                                             Civil Action No. 16-856 (CKK)
    HILTON HOTELS RETIREMENT
    PLAN, et al.,
          Defendants.

                            MEMORANDUM OPINION AND ORDER
                                   (August 18, 2017)

         Pending before the Court is Defendants’ [18] Motion to Dismiss the Amended Class Action
Complaint, brought pursuant Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). 1 Plaintiffs
Valerie R. White, Eva Juneau, and Peter Betancourt (“Named Plaintiffs”) bring this putative class
action under the Employee Income Security Act of 1974 (“ERISA”) with respect to certain vesting
determinations made by the Hilton Hotels Retirement Plan (the “Plan”). This matter was noticed
as related to Kifafi v. Hilton Hotels Retirement Plan, No. 98-cv-1517 (CKK) (“Kifafi”), an action
over which the Court concluded its jurisdiction in December 2015, after more than 17 years of
litigation. See Kifafi, Mem. Op., ECF No. 434, at 1. In Kifafi, the Court certified a benefit-accrual
class and certain vesting subclasses. See Kifafi, 701 F.3d 718, 723 (D.C. Cir. 2012); Kifafi, 616 F.
Supp. 2d 7, 21 (D.D.C. 2009).

        The instant action concerns claimants with alleged grievances that are not alleged to fall
within the narrow classes certified in Kifafi. Nonetheless, the Amended Complaint, ECF No. 17
(“Compl.”), is replete with allegations that the legal issues underlying this new putative class
action have already been decided by the Court in Kifafi, and that such determinations are binding
under the doctrines of res judicata and offensive collateral estoppel. For two of the Named
Plaintiffs and their associated categories of claims, the Court need not decide what if any effect its
prior rulings in Kifafi may have, because these claims are sufficient to survive a motion to dismiss
on their own accord. With respect to the third Named Plaintiff, Peter Betancourt, the Court finds
that his claim (and by extension, those of the associated putative subclass) are not plausible, and
that dismissal without prejudice is appropriate pursuant to Rule 12(b)(6). This conclusion is
unchanged by Plaintiffs’ arguments regarding the Court’s prior rulings.

                                         LEGAL STANDARD

        To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1),
Plaintiffs bear the burden of establishing that the Court has subject-matter jurisdiction over their

1
 In an exercise of its discretion, the Court finds that holding oral argument on this motion would not be of
assistance in rendering a decision. See LCvR 7(f).

                                                     1
claims. Moms Against Mercury v. FDA, 483 F.3d 824, 828 (D.C. Cir. 2007). Pursuant to Rule
12(b)(6), a party may move to dismiss a complaint on the grounds that it “fail[s] to state a claim
upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “[A] complaint [does not] suffice if
it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). Rather, a
complaint must contain sufficient factual allegations that, if accepted as true, “state a claim to relief
that is plausible on its face.” Twombly, 550 U.S. at 570.

       In deciding a Rule 12(b)(6) motion, a court may consider “the facts alleged in the
complaint, documents attached as exhibits or incorporated by reference in the complaint,” or
“documents upon which the plaintiff’s complaint necessarily relies even if the document is
produced not by the plaintiff in the complaint but by the defendant in a motion to dismiss.” Ward
v. District of Columbia Dep’t of Youth Rehab. Servs., 768 F. Supp. 2d 117, 119 (D.D.C.
2011) (internal quotation marks omitted). 2

                                               DISCUSSION

        For purposes of the pending motion, the Court assumes that the benefit determinations
underlying this matter must be assessed under a deferential standard of review. Foster v. Sedgwick
Claims Mgmt. Servs., Inc., 842 F.3d 721, 730 (D.C. Cir. 2016). Defendant Global Benefits
Administrative Committee is named as Plan Administrator pursuant to section 6.1(a) of the Plan.
2012 Plan, § 6.1(a). Under sections 7.1(a) and 7.3(a), the Committee is granted “the discretionary
authority to grant or deny benefits under the Plan[,]” and “the authority to act with respect to any
appeal from a denial of a claim for benefits.” Id. §§ 7.1(a), 7.3(a). Because “the terms of [the Plan]
confer such discretion, [the] administrator’s denial of benefits is reviewed under an abuse of
discretion or arbitrary and capricious standard, a standard which, in this particular context, [the
United States Court of Appeals for the District of Columbia Circuit has] referred to as
‘reasonableness.’” Foster, 842 F.3d at 730.

                  Claim One: Valerie White (Use of the Elapsed Time Method)

      Plaintiff Valerie White was employed at the Washington Hilton between June 21, 1972 and
March 26, 1982. Her service prior to January 1, 1976 has been calculated pursuant to the “elapsed
time method,” 3 and her claim for retirement benefits was denied because she failed to meet the

2
  For purposes of the pending motion, the Court has reviewed the Hilton Hotels Retirement Plan, as
Amended and Restated Effective January 1, 2012, ECF No. 18-3 (the “2012 Plan”), and the correspondence
between the parties that is referenced and necessarily relied upon by the Complaint.
3
 An employee who is credited with 1,000 hours of service during an “eligibility computation period” must
generally be credited with one year of service. 29 C.F.R. § 2530.200b–1. However, under the elapsed time
method, “an employee’s years of service for vesting purposes is not based on an employee’s hours, but
rather, [is] based upon the total time elapsed while the employee is employed with the employer or
employers maintaining the plan.” Kifafi, 616 F. Supp. 2d at 13. Put differently, a “year of service in an
elapsed-time plan is a twelve-month period, or a bunch of shorter periods tacked together to add up to
twelve months, in which the employee was on the company’s payroll.” Coleman, 933 F.2d at 551. When
years are tacked together, there may be a remainder (e.g., if an employee works 3.7 years, and then works
4.8 years, their total will be 8.5). The question here is what to do with that remainder (i.e., the .5), because
                                                       2
minimum ten years of vesting service required under the Plan for employees who terminated their
employment prior to 1989. Compl. ¶¶ 41, 44. Plaintiffs contend that it was improper for the Plan
to use the “elapsed time method” for pre-1976 service, and consequently, that the denial of her
benefits was in error.

        As an initial matter, Defendants are correct that there is nothing inherently wrong about the
use of the elapsed time method. See Coleman v. Interco Inc. Divs.’ Plans, 933 F.2d 550, 552 (7th
Cir. 1991). The method is sanctioned by regulations promulgated by the Treasury Department,
which have been upheld upon appellate review. See 26 C.F.R. § 1.410(a)-7; Johnson v. Buckley,
356 F.3d 1067, 1072 (9th Cir. 2004). Nonetheless, Plaintiffs have plausibly alleged that the denial
of Ms. White’s claim was arbitrary and capricious. The issue here is not whether the elapsed time
method is appropriate in isolation, but rather, how time calculated originally under the elapsed
time method should be treated given that the Plan in January 1976 shifted away from the elapsed
time method to an hourly method. The permanent Treasury regulations promulgated in June 1980
provide some guidance, but apparently only apply to transfers between the two systems of
computation that occurred after December 31, 1983. See 26 C.F.R. §§ 1.410(a)-7(f); 1.410(a)-7(g).

        However, the Department of Labor promulgated temporary regulations in December 1976.
See Swaida v. IBM Ret. Plan, 570 F. Supp. 482, 485 (S.D.N.Y. 1983), aff’d, 728 F.2d 159 (2d Cir.
1984) (explaining that the permanent Treasury regulations were preceded by temporary
Department of Labor regulations, which were later withdrawn). The temporary regulations, like
the permanent Treasury regulations, provide guidance for how plans are to transfer vesting credit
between the elapsed time and hourly methods. See 41 Fed. Reg. 56,462 (1976); 29 C.F.R. §
2530.200b-9(f) (“Transfers between methods of crediting service”). Unlike the permanent
regulations, the temporary regulations do not have a delayed effective date with respect to the
transfer provisions. Furthermore, the temporary regulations suggest, to some degree, that when
vesting credit is transferred from the elapsed time system to an hourly system, fractional years
should be converted to an hourly amount. See, e.g., id. § 2530.200b-9(f)(2) (“all service required
to be credited under the plan to which the employee transfers shall be determined under the method
of determining service used by such plan”). This is not conclusive of the issue, but it does create
some doubt as to whether it was proper for the Plan not to convert Plaintiff White’s fractional year
to an hourly basis for the purposes of the Plan’s vesting determination. That doubt is coupled with
the allegation of inconsistent treatment by Defendants of employees with fractional years.
Nonetheless, the Court does not discount the possibility that the Plan’s decision not to convert
fractional years may have been reasonable. But without insight into how that decision was made,
and on what basis—information not available at this stage of the case—the Court cannot so
conclude.

        Furthermore, although Defendants contend that Plaintiff White failed to meet the
contractual 180-day limitations period in the Plan for bringing suit, the complaint alleges that even
if that shortened limitations period were enforceable, it should be tolled because Plaintiffs had
allegedly requested that this Court adjudicate their claims in the Kifafi litigation, and because
Defendants had represented that a new lawsuit was the appropriate mechanism for Plaintiffs to

in some circumstances, if it is converted to an hourly basis, it may equate to a year (e.g., if the .5 is converted
to 1000 hours).

                                                        3
bring their new vesting claims. Compl. ¶ 85D. Because the propriety of tolling will turn on the
factual circumstances underlying these allegations, dismissal on statute of limitations grounds is
inappropriate at this procedural juncture. See Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C. Cir.
1996) (“because statute of limitations issues often depend on contested questions of fact, dismissal
is appropriate only if the complaint on its face is conclusively time-barred” (emphasis added)).

                 Claim Two: Plaintiff Eva Juneau (Non-Participating Service)

        Plaintiff Juneau seeks retirement benefits for alleged employment with Hilton properties
between April 22, 1991 and November 10, 2000. Compl. ¶ 4. Defendants informed Plaintiff Juneau
by letter dated February 24, 2015 that a portion of her claimed employment was not reflected in
their records, and asked her to submit additional evidence of that employment. ECF No. 18-6.
Despite this and another opportunity to do so, no additional evidence was provided, and the claim
was denied. ECF No. 18-7. However, a separate portion of Plaintiff Juneau’s employment was
discounted for vesting purposes because Defendants determined that she was employed at a “non-
participating property that is not a Related Company” from April 1991 to July 31, 1992. Compl. ¶
58. Plaintiffs contend that had that period been appropriately credited, then Plaintiff Juneau should
have been vested, regardless of whether the other contested period of employment was credited or
not. See ECF No. 18-9. Defendants oppose this claim primarily on the basis that the Court’s prior
rulings in Kifafi are inapposite. But, the fact that the Court did not address this claim in Kifafi does
not render it inactionable within the confines of this matter. Furthermore, Plaintiffs have pleaded
sufficient factual matter to stake out a plausible claim under Rule 12(b)(6). A letter sent to Plaintiff
Juneau informed her that the Reno Hilton was a non-participating property, and that she would not
receive credit for her employment there because the property was neither a Participating Employer
or a Related Company. Compl. ¶ 58. Plaintiffs allege, however, that records requested and received
from Defendants do not identify any non-participating property that is also not a Related Company.
Id. ¶¶ 61–62. Defendants have not contested this allegation (e.g., by submitting the referenced list).
Plaintiffs also allege that Defendants have made inconsistent determinations regarding vesting
credit for non-participating properties. Id. ¶¶ 65–66. Accordingly, this claim shall not be dismissed
pursuant to Rule 12(b)(6).

           Claim Three: Peter Betancourt (Beneficiaries of Deceased Participants)

        Plaintiff Betancourt seeks benefits as an alleged beneficiary of his father, Pedro Betancourt,
who worked for Hilton between 1947 and 1979, and died in 1985. His claim was denied by letter
dated June 3, 2015, which indicated that “the applicable Plan document does not provide for a
death benefit to anyone other than the surviving spouse,” and because Defendants determined that
his claim was untimely. The Complaint alleges that Pedro Betancourt is vested. Compl. ¶¶ 76–77.
Consequently, the question is purely one of whether Plaintiff Betancourt is entitled to benefits,
assuming his claim for them is timely, even though his father is deceased. To answer this question,
Plaintiffs principally rely on determinations that the Court made in fashioning relief with respect
to the narrow class claims that were certified in Kifafi. However, these remedial rulings, made in
the context of the narrow claims certified in Kifafi, are not determinative of whether Plaintiff
Betancourt is entitled to benefits on a claim not adjudicated in that litigation. Nor does the
Amended Complaint allege that Peter Betancourt was part of a Kifafi subclass.

                                                   4
        Moving beyond Kifafi, under the definition of “Beneficiary,” the Plan provides that a
“participant shall be required to designate a Beneficiary . . . only if the Participant elects to receive
his retirement benefit in the form of a Ten-Year Certain and Life Annuity described in Section
4.8(a)(iv) . . . .” 2012 Plan, at 4. Why is a designation necessary only in that circumstance? Because
otherwise, retirement benefits under the Plan are paid only until the participant’s death. See, e.g.,
2012 Plan § 4.5(a) (with respect to the “Normal Form of Retirement Benefit,” “the last payment
[is] made for the month in which the Participant’s death occurs”). Unless the participant elects the
payment option described in section 4.8(a)(iv), the only exception to this rule is the spousal death
benefit, described in section 4.7. Here, Plaintiff Betancourt has not alleged that his father made the
election in section 4.8(a)(iv) or an equivalent election; he is not the spouse; and he has not alleged
that prior versions of the Plan differed materially so that the terms of the 2012 Plan are not
sufficiently representative of the options that would have been available to his father. Furthermore,
although Plaintiffs rely heavily on section 4.13(e)(6), see Compl. ¶ 77., that provision only applies
to certain benefit increases, and Plaintiffs have not alleged that Peter Betancourt was entitled to an
increase. Accordingly, Plaintiff Betancourt’s claim, and those of the subclass associated with him,
are dismissed without prejudice. See Nelson v. Greenspan, 163 F. Supp. 2d 12, 19 (D.D.C. 2001).

                                           OTHER ISSUES

        Two provisions of ERISA underlie the allegations of the Complaint: sections 502(a)(1)(B)
and 502(a)(3) (codified respectively as 29 U.S.C. §§ 1132(a)(1)(B) and 1132(a)(3)). Section
502(a)(1)(B) creates a civil cause of action for “a participant or beneficiary . . . to recover benefits
due to him under the terms of his plan . . . .” Section 502(a)(3) provides for injunctive relief against
a fiduciary, and other forms of equitable relief. Courts in this circuit, in agreement with the majority
of circuits to have addressed this issue, have uniformly held that a claim pursuant to section
502(a)(3) cannot stand where an adequate remedy is provided through a claim for benefits under
section 502(a)(1)(B). See Lewis v. Pension Benefit Guar. Corp., 197 F. Supp. 3d 16, 22 (D.D.C.
2016) (collecting cases). However, at this procedural juncture, the Court cannot conclude that
Plaintiffs will necessarily receive adequate and complete relief pursuant to section 502(a)(1)(B),
which would make relief under 502(a)(3) merely duplicative. Accordingly, the section 502(a)(3)
claims of Plaintiffs White and Juneau survive as alternative bases of relief. See Silva v. Metro. Life
Ins. Co., 762 F.3d 711, 727 (8th Cir. 2014) (permitting alternative pleading of claims under sections
502(a)(1)(B) and 502(a)(3) because “[a]t the motion to dismiss stage . . . it is difficult for a court
to discern the intricacies of the plaintiff’s claims to determine if the claims are indeed duplicative,
rather than alternative, and determine if one or both could provide adequate relief”). 4

        Defendants also challenge the “class standing” of Plaintiffs White and Juneau, relying on
out-of-circuit authority. In particular, the United States Court of Appeals for the Second Circuit
has held that a putative class representative must plausibly allege “(1) that he personally has
suffered some actual injury as a result of the putatively illegal conduct of the defendant, and (2)
that such conduct implicates the same set of concerns as the conduct alleged to have caused injury
to other members of the putative class by the same defendants.” Ret. Bd. of the Policemen’s

4
 As a result of this determination, the Court does not reach Defendants’ contention that certain Defendants
must be dismissed, because that argument is predicated on section 502(a)(1)(B) being Plaintiffs’ only
avenue of redress.

                                                    5
Annuity & Ben. Fund of the City of Chicago v. Bank of New York Mellon, 775 F.3d 154, 161 (2d
Cir. 2014) (internal quotation marks omitted). First, even if this authority were controlling,
Plaintiffs White and Juneau have satisfied the two criterions. In both instances, Plaintiffs have
plausibly alleged that the named plaintiff and the putative class were denied benefits on the same
allegedly erroneous principle. Furthermore, Defendants’ challenge, at heart, is to the typicality of
these named plaintiffs vis-à-vis the putative class; an issue that, in this Court’s view, should be
decided upon a motion for class certification.

        Finally, Defendants’ laches argument is not appropriately resolved upon a motion to
dismiss, given the fact-intensive nature of this equitable defense, and because dismissal based on
the defense is not self-evident from the face of the complaint. See Major v. Plumbers Local Union
No. 5 of United Ass’n of Journeymen & Apprentices of Plumbing & Pipe-Fitting Indus. of U.S. &
Canada, AFL-CIO, 370 F. Supp. 2d 118, 128 (D.D.C. 2005) (concluding that it was inappropriate
to resolve laches defense upon a motion to dismiss because “the circumstances of any delay or the
prejudice suffered by the defendant is fundamentally a factual inquiry”).

                                 CONCLUSION AND ORDER

       For the foregoing reasons, Defendants’ [18] Motion to Dismiss is GRANTED-IN-PART
and DENIED-IN-PART. The claims of Plaintiffs White and Juneau, and those of the putative
subclasses associated with those claims, may proceed pursuant to ERISA sections 502(a)(1)(B)
and 502(a)(3). All other claims are DISMISSED WITHOUT PREJUDICE.

       SO ORDERED.
                                                         /s/
                                                     COLLEEN KOLLAR-KOTELLY
                                                     United States District Judge

                                                 6