Roma Concrete Corp. v. Pension Assocs.
384 F. Supp. 3d 507
| E.D. Pa. | 2019Background
- Roma Concrete (employer) engaged Pension Associates as third‑party administrator (TPA) and actuary for a defined benefit plan (DB Plan); plaintiff Scarduzio is a Roma owner and plan trustee/participant.
- Over years Pension Associates produced reports and lump‑sum calculations; plaintiffs allege material misrepresentations and incorrect assumptions (interest, mortality) that overstated others’ benefits and underreported Scarduzio’s, causing > $400,000 loss to his expected pension.
- Plaintiffs sued for professional negligence (Count I), breach of contract (Count II), and breach of fiduciary duty (Count III) in state court; defendant removed and moved to dismiss in federal court.
- Defendant moved to dismiss on three grounds: (1) arbitration clause in a later (2017) contract covers the dispute; (2) Scarduzio’s claims are preempted by ERISA (§ 502(a) and § 514(a)); and (3) tort claims barred by Pennsylvania’s “gist of the action” doctrine.
- The parties dispute which contract governs (plaintiffs rely on an alleged 2007 contract they cannot produce); defendant attached a 2017 contract but the court declined to consider it on the motion to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration applies | 2007 contract governs claims; plaintiffs did not allege the 2007 contract contained arbitration | 2017 contract contains an arbitration clause covering these claims | Court cannot compel arbitration at this stage because the complaint relies on an earlier (2007) contract and plaintiffs do not allege it has an arbitration clause |
| Whether claims are completely preempted under ERISA §502(a) | Scarduzio seeks economic damages, not ERISA plan benefits, and thus claims are outside §502(a) | Scarduzio is a plan participant seeking recovery for lost benefits; claims could have been brought under §502(a) | Court held Scarduzio’s claims fall within §502(a) and are completely preempted because duties asserted depend on the DB Plan |
| Whether claims are expressly preempted under ERISA §514(a) | As a trustee, Scarduzio’s claim is like a plan claim and seeks losses to the plan, so not preempted | Claims "relate to" the ERISA plan because they involve calculation and payment of participant benefits | Court held Count I–III as to Scarduzio are expressly preempted: the negligence and other claims "go to the essence" of plan benefit calculation and are preempted |
| Whether tort claims barred by the gist‑of‑the‑action doctrine | Tort claims arise from broader social duties of an actuary/TPA and therefore are not contract‑confined | Tort duties arise from the parties’ contractual relationship and so should be converted to contract claims | Court declined to dismiss on gist grounds at this stage, noting absence of the 2007 contract prevents concluding the tort claims cannot transcend contractual duties; decision rested on ERISA preemption instead |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleadings must contain sufficient factual matter to state a plausible claim)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)
- Pascack Valley Hosp. Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir. 2004) (§502(a) complete preemption converts state law claim to federal claim)
- Kollman v. Hewitt Associates, LLC, 487 F.3d 139 (3d Cir. 2007) (malpractice claim that is essentially calculation/payment of benefits preempted under §514)
- Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266 (3d Cir. 2001) (negligence concerning plan administration preempted by §502(a))
- Menkes v. Prudential Ins. Co. of Am., 762 F.3d 285 (3d Cir. 2014) (contract and fiduciary claims preempted when they involve denial/improper processing of ERISA benefits)
- Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) (ERISA §514 express preemption: state law that relates to an ERISA plan is superseded)