Moore v. Keurig Dr. Pepper, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA

STATESVILLE DIVISION

CIVIL ACTION NO. 5:24-CV-00141-KDB-DCK

CHRISTOPHER MOORE,

Plaintiff,

v. ORDER

UNUM LIFE INSURANCE

COMPANY OF AMERICA AND

KEURIG DR. PEPPER, INC.,

Defendants.

THIS MATTER is before the Court on Defendants Unum Life Insurance Company

(“Unum”) and Keurig Dr. Pepper’s (“KDP”) Motions to Dismiss and to Strike Jury Demand (the

“Motions”) (Doc. Nos. 18, 19); the Memorandum and Recommendations (“M&R”) of the

Honorable United States Magistrate Judge David Keesler to in part grant and in part deny the

Motions (Doc. No. 33); and Defendants’ Objections to the M&R (Doc. Nos. 34, 35). The Court

has carefully considered the M&R, these Motions, and the parties’ briefs and exhibits. The Court

concludes after its de novo review that it will GRANT in part and DENY in part the Motions,

partially adopt the M&R as set forth below, and REMAND the matter to the North Carolina

Superior Court for Lincoln County.

I. LEGAL STANDARD

A district court may designate a magistrate judge to “submit to a judge of the court

proposed findings of fact and recommendations for the disposition” of dispositive pretrial matters,

including motions to dismiss. 28 U.S.C. § 636(b)(1). Any party may object to the magistrate

judge’s proposed findings and recommendations, and the court “shall make a de novo

determination of those portions of the report or specified proposed findings or recommendations

to which objection is made.” 28 U.S.C. § 636(b)(1). However, “in the absence of a timely filed

objection, a district court need not conduct a de novo review, but instead must only satisfy itself

that there is no clear error on the face of the record in order to accept the recommendation” and

need not give any explanation for adopting the M&R. Diamond v. Colonial Life & Acc. Ins. Co.,

416 F.3d 310, 315 (4th Cir. 2005); Camby v. Davis, 718 F.2d 198, 200 (4th Cir. 1983). After

reviewing the record, the court may accept, reject, or modify, in whole or in part, the findings or

recommendations made by the magistrate judge or recommit the matter with instructions. 28

U.S.C. § 636(b)(1).

Motion to Dismiss

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain a

“short and plain statement of the claim showing that the pleader is entitled to relief.” Rule 12(b)(6)

of the Federal Rules of Civil Procedure authorizes the dismissal of a complaint if it fails to state a

claim upon which relief can be granted. The purpose of Rule 12(b)(6) is to expose deficient

allegations “at the point of minimum expenditure of time and money by the parties and the

court.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007).

To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead facts sufficient to

“state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the pleaded factual

content 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). A claim will not survive a motion to

dismiss if it contains nothing more than “labels and conclusions, and a formulaic recitation of a

cause of action’s elements.” Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265,

286 (1986)). That said, “a well-pleaded complaint may proceed even if it strikes a savvy judge that

actual proof of those facts is improbable, and that a recovery is very remote and

unlikely.” Id. (internal citation and quotation marks omitted).

When deciding a motion to dismiss, “a court considers the pleadings and any materials

‘attached or incorporated into the complaint.’” Fitzgerald Fruit Farms LLC v. Aseptia, Inc., 527

F. Supp. 3d 790, 796 (E.D.N.C. 2019) (quoting E.I. du Pont de Nemours & Co. v. Kolon Indus.,

Inc., 637 F.3d 435, 448 (4th Cir. 2011)). The Court also considers documents attached to a motion

to dismiss when they are “integral and explicitly relied on in the Complaint,” and where “plaintiffs

do not challenge [the document’s] authenticity.”1 Zak v. Chelsea Therapeutics Int’l, Ltd., 780 F.3d

597, 606-7 (4th Cir. 2015). The Court, for the purposes of a Rule 12(b)(6) motion, takes all factual

allegations as true. See Ashcroft, 556 U.S. at 678. However, “[d]etermining whether a complaint

states a plausible claim for relief will ... be a context-specific task that requires the reviewing court

to draw on its judicial experience and common sense.” Id. (citation omitted).

1 Plaintiff challenges the authenticity of two documents in his Consolidated Response to

Defendants’ Motions to Dismiss. Doc. No. 24. First, he argues that a declaration (Doc. No. 19-2)

by KDP employee Veronica Cossette should not be considered because he did not have the

opportunity to “investigate or cross examine Ms. Cossette.” Doc. No. 24 at 4. However, the

objection appears to go toward the evidentiary weight of the document rather than its validity.

Without addressing Plaintiff’s objection, the Court does not find the document to be integral at the

12(b)(6) stage and will not consider it. Plaintiff also objects to the “Wrap Plan” document because

he has not had an “opportunity to review and inspect the existence of a Wrap Plan document ….”

Id. Nevertheless, Plaintiff references the “Wrap Plan” document several times when supporting

his opposition to the Motions. Thus, because the Court both finds the document integral to the

question of whether the plan is subject to ERISA, and because Plaintiff cannot object to its

authenticity in good faith when he has himself cited the document, the Court will consider the

document. Finally, Plaintiff references the remaining documents attached to the Motions and

asserts that they are not properly before the Court but does not otherwise specifically challenge

their authenticity. Thus, the Court will consider only those documents it deems integral to the

Complaint, including the letters (from Unum regarding Plaintiff’s Short Term Disability denials)

dated June 1, 2022, August 9, 2022, and February 1, 2024 (Doc. Nos. 19-6, 7, 8) as they relate to

Plaintiff’s Unfair and Deceptive Trade Practices Act claim against Unum.

II. FACTS AND PROCEDURAL HISTORY

No party has objected to the Magistrate Judge’s statement of the factual and procedural

background of this case. Therefore, the Court adopts the facts as set forth in the M&R and will

only briefly summarize them here. See Thomas v. Arn, 474 U.S. 140, 149–50 (1985) (explaining

the Court is not required to review, under a de novo or any other standard, the factual or legal

conclusions of the magistrate judge to which no objections have been raised). Plaintiff Christopher

Moore, a former employee of Dr. Pepper/Seven Up (“DPSU”), became disabled and unable to

work and sought short-term disability (“STD”) payments through his employer. Doc. Nos. 1-6 at

¶¶ 5, 18; 19-5 at 2. The STD benefit was administered by KDP, who delegated that authority to

Unum. Doc. No. 1-6 at ¶¶ 12-13. After Plaintiff received disability benefits for approximately

sixteen weeks, Unum denied further benefits to which Plaintiff believes he was entitled.2 Id. at ¶¶

19-22.

Ultimately, Plaintiff filed this action, alleging breach of contract and violation of the North

Carolina Wage and Hour Act against KDP, and violation of the North Carolina Unfair and

Deceptive Trade Practices Act (“UDTPA”) (as well as implied breach of contract according to

Unum) against Unum. Id. at ¶¶ 24-55. Defendants assert that the STD plan from which Plaintiff

sought benefits is a “welfare plan” subject to the Employment Retirement Income Security Act of

1974 (“ERISA”) and as a result Plaintiff’s state-law claims are preempted. Accordingly,

Defendants filed motions to dismiss and to strike Plaintiff’s jury demand. Doc. Nos. 19 at 1, 20 at

9. The Magistrate Judge found that Plaintiff had plausibly alleged the breach of contract, wage

violation, and UDTPA claims, and recommended denying the Motions. The Magistrate Judge also

2 The maximum benefit payment period allowed under the STD plan is twenty-six weeks,

thus ten weeks of STD pay is in dispute. Doc. No. 1-6 at ¶ 15.

recommended granting Defendant Unum’s Motion to Dismiss as related to any implied breach of

contract claims against it. Defendants timely filed their respective objections to the M&R and the

matter is ripe for this Court’s review.

III. DISCUSSION

Defendants assert that the STD plan at issue in Plaintiff’s Complaint is but one plan in a

group of plans called the “Wrap Plan.” Doc. No. 20 at 3. The Wrap Plan, administered and funded

by KDP, is a flexible benefit plan that includes programs such as health and dental insurance,

employee assistance, critical illness and accident assistance, STD, and long-term disability

benefits. Id. Five employers, presumably subsidiaries or business units of KDP, including DPSU,

participate in the plan.3 Doc. No. 1-2 at 5. KDP has a dedicated account from which it funds the

STD plan and other plans. Doc. No. 19-1 at 3. While the account is kept separate from KDP’s

general assets, it is at least partially funded by them. Doc. Nos. 1-2 at 4, 5, 22; 24 at 6. In addition,

“100% of the cost of the [STD] Plan is funded from [KDP’s] general assets. Doc. Nos. 1-2 at 5,

24 at 6-8.

While KPD is designated as the employer, plan sponsor, plan administrator and claims

administrator of the Wrap Plan, Unum is the designated service provider, authorized by KDP to

provide “certain administrative claims handling services for the [STD] Plan.” Doc. No. 20 at 5.

When an employee who meets the plan’s basic eligibility criteria (such as being a full-time non-

union hourly employee and working at least 30 hours per week) files a claim for STD benefits,

Unum reviews the claim, determines whether the party is “disabled” under the plan’s criteria, and

pays out any approved disability claims. Id. at 5. Unum pays the employee directly but has access

3 The participating employers include Keurig Green Mountain, The American Bottling Co.,

Dr. Pepper/Seven Up Manufacturing Co., Dr. Pepper/Seven Up Inc., and Motts, LLP. Doc. No. 1-

2 at 5.

to the STD account at KDP and reimburses itself from the account for any payments it makes.

Doc. No. 19-1 at 3. Unum also performs reevaluations as to eligibility and will stop payments

when it considers an employee no longer disabled. Doc. No. 20 at 6.

A. The STD Plan and ERISA

As discussed above, the key to the Motions (and particularly, the Motions to Strike) is

determining whether the STD plan falls under ERISA. Defendants argue that the plan is subject to

ERISA; in turn, Plaintiff asserts that the STD plan is a “payroll practice” exempt from ERISA.

Congress passed ERISA in 1974 to protect employees from mismanagement of funds created by

employers to support employee benefit programs. Massachusetts v. Morash, 490 U.S. 107, 112

(1989). ERISA defines an “employee welfare benefit plan” or “welfare plan” to include any plan,

fund, or program “established or maintained by an employer . . . for the purpose of providing for

its participants or their beneficiaries, through the purchase of insurance or otherwise . . . benefits

in the event of sickness, accident, disability, death or unemployment,” among other things. 29

U.S.C. § 1002(1).

A plan exists for ERISA purposes when the benefits provided require “an ongoing

administrative program” or scheme. Donovan v. Branch Banking & Tr. Co., 220 F. Supp. 2d 560,

564 (S.D.W. Va. 2002) (quoting Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11 (1987)). “The

requirement of an ongoing scheme is minimal.” Sherwood v. Valley Health Sys., No. 5:23-CV-

00005, 2023 WL 2859126, at *4 (W.D. Va. Apr. 10, 2023) (quoting D.C. v. Greater Washington

Bd. of Trade, 506 U.S. 125, 130 n.2 (1992) (internal quotations omitted). While the Fourth Circuit

has not provided a specific framework for determining whether a plan requires an ongoing

administrative scheme, district courts consider a variety of factors, including:

the amount of managerial discretion granted in paying the benefits and whether a

case-by-case review of employees is needed; (2) whether payments are triggered

by a single, unique event in the course of business or on a recuring basis; (3)

whether the employer must make a one-time, lump-sum payment or continuous,

periodic payments; and (4) whether the employer undertook any long-term

obligations with respect to payments.

Id. (quoting Mullaly v. Ins. Servs. Off., Inc., 395 F. Supp. 2d 290, 295 (M.D.N.C. 2005) (collecting

cases)). Here, the STD plan requires (1) a case-by-case analysis of eligibility and the administrator

retains the discretion to grant or deny benefits; (2) payments are triggered on a recurring basis

(when considering that employees may apply for STD benefits at various times throughout their

employment); (3) payments are continuous and periodic for the eligible term of disability; and (4)

the administrator is required to periodically reevaluate each employee’s ongoing eligibility for

benefits, and must also handle appeals to unfavorable determinations of eligibility after payments

end. Thus, the STD plan, as reflected by the Wrap Plan documents, is clearly a “plan” for purposes

of ERISA.

The Court also agrees with Defendants’ arguments that the plan was “established or

maintained” to provide “benefits to its participants or their beneficiaries.” 29 U.S.C. § 1002(1). As

Defendants note, an ERISA plan “is established if, from the surrounding circumstances, a

reasonable person could ascertain the intended benefits, class of beneficiaries, source of financing,

and the procedures for receiving benefits.” Doc. No. 20 at 10 (quoting Donovan v. Dillingham,

688 F.2d 1367, 1372 (11th Cir. 1982)). The STD plan has clearly defined benefits and limits, a

stated eligible group of employees, along with the specific criteria for use of the program. Thus,

there is little doubt that a plan was “established” and “maintained” as contemplated in ERISA.

However, even where an established or maintained plan exists, the Department of Labor

(“DOL”) has carved out an exception for “welfare benefit plans” whereby “payroll practices” are

excluded. See 29 C.F.R. § 2510.3-1(b). The DOL has defined payroll practices to include, among

other things, programs involving “payment of an employee’s normal compensation, out of the

employer’s general assets, on account of periods of time during which the employee is physically

or mentally unable to perform his or her duties or is otherwise absent for medical reasons.” §

2510.3-1(b)(2).

Since Morash was decided in 1989, “this regulation has been consistently upheld in the

courts.” Nardello v. Boehringer Ingelheim USA Corp., No. CV JKB-15-3792, 2016 WL 5940844,

at *2 (D. Md. Oct. 13, 2016) (citing Stern v. Int’l Bus. Machines Corp., 326 F.3d 1367, 1372 (11th

Cir. 2003)). In Nardello, the Court determined that a STD plan met the criteria for the payroll

practice exemption because the plan was a “substitute for the covered employee’s wages and [is]

paid from [the employer’s] general assets,” and noted that even though the benefit becomes

available “in the event of a contingency that is outside of the employee’s control,” the benefits in

the plan do not “accumulate over time” and thus do not “give rise to the same concern that

motivated ERISA’s passage.” 2016 WL 5940844, at *3. See also Langley v. DaimlerChrysler

Corp., 502 F.3d 475, 479 (6th Cir. 2007) (finding that “normal compensation paid to an employee

as a result of a disability and from the employer’s general assets does not constitute an employee

welfare benefit plan, but instead is considered a payroll practice” not subject to ERISA).

Defendants suggest that because the plan provides “short term disability income” to

“replace a portion of [a claimant’s] income” and is calculated based on a percentage of an

employee’s weekly earnings (but does not include certain commissions, overtime pay, etc., as part

of weekly earnings calculations), that the money provided is not normal compensation.4 Doc. Nos.

19 at 10, 20 at 12-13. However, the issue underlying the DOL’s payroll practices exemption is

“whether an employer is substituting normal modes of compensation with disability benefits, for

4 The actual payment amount provided is also subject to any applicable offsets and

deductions as a result of other payments, such as worker’s compensation. See Doc. No. 19-1 at 10.

example, while an employee is temporarily disabled.” Davis v. Old Dominion Tobacco Co. Inc.,

688 F. Supp. 2d 466, 471-72 (E.D. Va. 2010). “The [payroll] exemption is designed to exclude

from ERISA coverage the disbursement of funds that are analogous to ordinary wages, paid while

the employee is unable, but likely to return, to work, as opposed to those disbursements which are

analogous to retirement income.” Id. See also Bassiri v. Xerox Corp., 463 F.3d 927, 930 (9th Cir.

2006) (noting that “[s]ince 1979, the Department of Labor has penned eleven opinion letters

defining ‘normal compensation’ to include payments of less than full salary” and finding that a

disability plan providing 60% of an employee’s salary fell within the scope of the payroll

exemption to ERISA); Diederichs v. FCA US LLC, No. 23-CV-11287, 2024 WL 5168087, at *2–

3 (E.D. Mich. Dec. 19, 2024) (determining that a short-term disability plan which paid 100% of

an employee’s pay for the first 39 weeks, then 70% for the next 13 weeks was a payroll practice

exempt from ERISA because it was paid from the company’s general assets and was “tied to the

employee’s salary and end[s] with the employee’s termination.”).

Based on this authority, the Court readily concludes that Plaintiff’s STD payments were a

temporary substitute for his normal compensation as an active employee, even where, as is the

case here, the payment was only a percentage of the employee’s weekly earnings.5 KDP attempts

to misdirect the Court when it states that the STD plan is paid from a dedicated account, separate

from its general assets. While technically true, the account is funded, at least in part, from KPD’s

general assets and there is no dispute that the STD plan is 100% funded from KDP’s general assets.

See Doc. Nos. 1-2 at 4, 5, 22; 19-1 at 3; 24 at 6-8. Also, the regulation contemplates how the plan

5 The plan provides for either 80% or 100% of weekly earnings for the first eight weeks,

followed by 66.7% of weekly earnings for the remaining eighteen weeks with no maximum benefit

per week. Doc. Nos. 20 at 4, 1-2 at 6.

itself is funded, not whether the benefits are paid from an account that is kept separate from a

company’s general assets.

In further arguing against the STD plan falling into the payroll exemption, Defendants

suggest that because use of the STD plan is contingent upon the plan remaining in effect, which is

beyond an employee’s control, the plan must therefore not be a payroll practice. In support, KDP

offers Sullivan v. Cuna Mut. Ins. Soc., 683 F. Supp. 2d 918 (W.D. Wis. 2010), aff’d sub

nom. Sullivan v. CUNA Mut. Ins. Soc’y, 649 F.3d 553 (7th Cir. 2011). However, in Sullivan, the

Court found that the sick leave plan in question was subject to ERISA where upon retirement,

certain employees, who were not eligible for a sick leave payout, had their leave converted into an

account that paid their health insurance premiums, and noted that the employer retained the right

to cancel the plan, as they later ended up doing. 683 F. Supp. 2d at 933-34. Thus, not only are the

claims in Sullivan very different from the claims here but perhaps more importantly, KDP’s

argument would lead to absurd results if applied broadly. Many benefits offered by an employer

may be cancelled at the employer’s discretion. That discretion alone does not transform an ERISA-

exempt plan into one subject to ERISA. For example, the ability to cancel a bonus plan that would

otherwise fit within the DOL’s bonus exemption from ERISA would not suddenly convert it into

an ERISA plan. Similarly, KDP’s discretion to cancel the STD plan—a plan that fits squarely into

the DOL’s payroll exemption from ERISA—does not morph it into an ERISA plan.

Defendants also argue that the STD plan is but one component in the larger Wrap Plan

(which it treats as an ERISA plan) which is comprised of many different benefits, and that the STD

plan should be analyzed in that context. However, each component of the Wrap Plan is elected

separately by employees and at varying times throughout employment. Thus, the Court considers

the STD plan—the only plan at issue here—separately and independently from the Wrap Plan.

Importantly, analyzing the plan as suggested by Defendants could quickly become a recipe for

avoidance; employers could easily attribute a plan to ERISA (or circumvent it entirely) simply by

creating an “umbrella” program, such as the Wrap Plan, and listing desired plans under it. More

importantly, it would allow employers to undermine Congress’ intent as to ERISA, which is to

“ensure that employees will not be left empty-handed once employers have guaranteed them

certain benefits.” Lockheed Corp. v. Spink, 517 U.S. 882, 887 (1996).

Finally, Defendants urge the Court to consider that it treats the plan as an ERISA plan,

including in both the plan documents and in its annual reporting. Doc. No. 19-1 at 15-16. However,

neither an employer’s “belief” that a plan is covered by ERISA, see Bowser v. Gabrys, 746 F.

Supp. 3d 256, n.4 (W.D.N.C. 2024) (quoting Mazer v. Safeway, Inc., 398 F. Supp. 2d 412 (D. Md.

2005)), nor “labeling by a plan sponsor or administrator is [] determinative on whether a plan is

governed by ERISA.” Diederichs, 2024 WL 5168087, at *2 (quoting Langley, 502 F.3d at 481).6

Thus, this argument is irrelevant to the Court’s inquiry, and the Court finds that the STD plan is a

payroll practice exempt from ERISA.

B. The UDTPA Claim as against Unum

The Court next turns to Plaintiff’s assertion that Unum violated the North Carolina Unfair

and Deceptive Trade Practices Act under N.C. Gen. Stat. § 75-1.1 et seq. To establish a claim

under the statute, Plaintiff must allege that the Defendant (1) committed an unfair or deceptive act

or practice, that (2) was in or affecting commerce, which (3) proximately caused Plaintiff’s injury.

A trade practice is unfair “when it offends established public policy or is immoral,

unethical, oppressive, unscrupulous, or substantially injurious to consumers,” and deceptive “if it

6 This is in concurrence with our sister circuits, including the First, Sixth, and Eleventh

Circuits. See McMahon v. Digital Equip. Corp., 162 F.3d 28, 38 (1st Cir. 1998); Langley, 502 F.3d

at 481; Stern, 326 F.3d at 1374.

has the capacity or tendency to deceive....” S. Atl. Ltd. P’ship of Tennessee, L.P. v. Riese, 284 F.3d

518, 535 (4th Cir. 2002) (quoting Marshall v. Miller, 302 N.C. 539, 548 (1981)). And while there

is “no doubt that the North Carolina courts have construed the U[D]TPA liberally, there are some

limits on its application.” Id. (quoting Gilbane Bldg. Co. v. Fed. Reserve Bank of Richmond, 80

F.3d 895, 903 (4th Cir.1996)). For example, “only practices that involve [s]ome type of egregious

or aggravating circumstances are sufficient to violate the U[D]TPA.” Id. (quoting Dalton v. Camp,

353 N.C. 647, 548 S.E.2d 704, 711 (2001)) (internal quotations omitted).

Plaintiff alleges that Unum’s “egregious” behavior stems from how it processed claims,

including that Unum reviewed claims with the intent to deny benefits; consulted with medical

personnel who would support Unum’s preferred outcome, discounted Plaintiff’s treating

physicians; did not have “reasonable standards” for claim investigation, refused to pay claims

without a reasonable investigation, and acted in bad faith as related to claim settlements. Doc. No.

1-6 at 14-15. In support of his conclusions, Plaintiff states that the opinions of his physicians were

ignored in favor of those who had never treated him and his claim for STD benefits summarily

denied. Id. at 15. He also states that “upon information and belief” Unum has a “general business

practice of basing claims decisions on its own . . . medical doctors” and has “committed further

unfair and deceptive practices that will be discovered during litigation.” Id.

When Plaintiff first became disabled, he applied for STD benefits, which Unum approved.

Id. at ¶ 19. After sixteen weeks of STD benefits, Plaintiff’s claim was reevaluated and denied. See

id. at ¶¶ 19-20. In its denial letter, Unum stated that it relied on the information from his medical

providers, including his neurosurgeon, who had discharged him from care post-spinal surgery and

cleared him to work, while acknowledging that Plaintiff still experienced chronic pain. Doc. No.

19-6 at 3. Plaintiff appealed the decision and took approximately eight months to provide medical

records to Unum. Id. at 5. Unum advised Plaintiff that the appeal review conducted was

independent from previous decisions and included a vocational rehabilitation consultant along with

a clinical consultant and physician, both of whom were board certified in family medicine. Id. at

5-6. The review also included consideration of Plaintiff’s medical providers and their notes,

spanning from approximately July 2022 to June 2023. Id. On December 20, 2023, Unum provided

Plaintiff with a copy of the information it considered, and as part of the appeals process, gave

Plaintiff the opportunity to review and respond. Id. at 8. Ultimately, Unum denied the appeal on

February 1, 2024, and provided an eleven-page letter that described its lengthy medical record

review and rationale for the denial. See Doc No. 19-8.

In support of his UDTPA claim, Plaintiff largely makes conclusory allegations using

UDTPA “buzz words” as evidence of a violation.7 Moreover, the only facts alleged by Plaintiff

(that his medical team was ignored in favor of consultants who were hired to deny his and other

claims) are contradicted by his own admission to being approved for STD benefits for over sixteen

weeks. Doc. No. 1-6 at ¶ 19. Further, it was only after Unum received updated information from

Plaintiff’s own medical providers that any payments were denied. See Doc. Nos. 1-6 at ¶¶ 16-19,

19-6. The denial letters show that Unum carefully considered the entire medical record before

determining that Plaintiff was not disabled, and that Plaintiff, not Unum, delayed the appeals

process by seeking multiple extensions of time to provide medical records. This is not the type of

egregious behavior that the UDTPA statute was intended to protect against. Therefore, Plaintiff

7 Plaintiff uses phrases such as “discounting … claimant’s … treating physicians without a

reasonable basis,” “conducting review … calculated to … deny benefits,” “failing to adopt

reasonable standards for [] prompt investigation of claims,” “has a practice of basing claims

decisions on its own … doctors,” and “refusing to pay claims” as evidence of egregious behavior.

From this, Plaintiff concludes that “Unum committed [] unfair and/or deceptive practices.” Doc.

No. 1-6 at 14-15.

has not plausibly alleged any UDTPA violations and the Court will dismiss this claim. To the

extent that there is an implied breach of contract claim against Unum connected to the UDTPA

claim, Plaintiff did not plausibly allege it in his Complaint, so it will also be dismissed.

C. Jurisdiction over the State Law Claims

Finally, the Court will consider whether it has subject matter jurisdiction over the

remaining state law claims.8 Subject matter jurisdiction “can be raised by a party, or by the court

sua sponte, at any time prior to final judgment.” In re Kirkland, 600 F.3d 310, 314–15 (4th Cir.

2010) (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006)).

The two primary sources of subject matter jurisdiction in federal courts are diversity

jurisdiction and federal question jurisdiction. Diversity jurisdiction generally permits individuals

to bring claims in federal court where the claim exceeds $75,000 and the parties are citizens of

different states. See 28 U.S.C. § 1332. Federal question jurisdiction permits an individual,

regardless of the value of the claim, to bring a claim in federal court if it arises under federal law,

including the U.S. Constitution. See 28 U.S.C. § 1331. Federal question jurisdiction requires that

“the federal question appears on the face of a well-pleaded complaint.” Am. Nat’l Red Cross v.

S.G., 505 U.S. 247, 258 (1992). When a complaint asserts a federal question and raises state law

claims, the Court may exercise supplemental jurisdiction over the state law claims. See 28 U.S.C.

§ 1367(c)(3). However, a court may decline to exercise supplemental jurisdiction when the court

has “dismissed all claims over which it has original jurisdiction.” 28 U.S.C. § 1367(c)(3). Courts

typically have “wide latitude in determining whether or not to retain jurisdiction over state claims

8 The case was removed to this Court under both federal question and diversity jurisdiction.

The Motion to Remand was denied largely due to the question of whether the STD plan was subject

to ERISA (it is not) and because the UDTPA claim allowed for treble damages, thus pushing the

amount in controversy above $75,000, the minimum threshold for diversity jurisdiction.

when all federal claims have been extinguished,” and consider factors including “convenience and

fairness to the parties, the existing of underlying issues of federal policy, comity, and

considerations of judicial economy.” Shanaghan v. Cahill, 58 F.3d 106, 110 (4th Cir. 1995)

(citations omitted). After weighing those factors, the Court concludes that it will decline to exercise

supplemental jurisdiction over the state law claims in the absence of a viable federal question.

The only possible remaining basis for jurisdiction is diversity. Given that the UDTPA

claim, which carries treble damages if proven, will be dismissed, there are only two state law

claims, both involving the same ten weeks of STD pay, for which Plaintiff seeks at least $25,000

but less than $75,000. Doc. No. 1-6 at ¶¶ 33, 40. As such, while the parties are diverse, the amount

in controversy is now less than the $75,000 threshold and the Court lacks diversity jurisdiction

over the remaining state law claims. Thus, the Court will deny Defendants’ Motions to Dismiss as

to the breach of contract and North Carolina wage violation claims without expressing any

opinions as to the merits of those claims and will remand the claims to the North Carolina Superior

Court for Lincoln County.

In conclusion, the Court finds that the STD plan is not an ERISA plan and will deny

Defendants’ Motions to Strike Plaintiff’s Jury Demand. It will grant Defendant Unum’s Motion to

Dismiss as to the UDTPA claim. It will also adopt the M&R to the extent that it recommends

denying Defendants’ Motions to Dismiss as related to the breach of contract and North Carolina

wage violations as against KDP and granting Defendant Unum’s Motion to Dismiss as to any

implied breach of contract claim.

IV. ORDER

NOW THEREFORE IT IS ORDERED THAT:

1. The M&R (Doc. No. 33) is ADOPTED in part and DENIED in part, as set forth

above;

2. Defendant Unum’s Motion to Dismiss as to the UDTPA claim and any implied

breach of contract claims (Doc. No. 18) is GRANTED;

3. Defendant Unum’s Motion to Strike Jury Demand (Doc. No. 18) is DENIED;

4. Defendant KDP’s Motions to Dismiss and to Strike Jury Demand (Doc. No. 19) are

DENIED;

5. The case is REMANDED to the North Carolina Superior Court for Lincoln County

for further proceedings; and

6. The Clerk is directed to close this matter in accordance with this Order.

SO ORDERED ADJUDGED AND DECREED.

Signed: March 27, 2025

Kenneth D. Bell

United States District Judge woe

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