The opinion
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
GLORIA FERGUSON and }
CASSANDRA McCLINTON, }
individually and on behalf of all }
others similarly situated, }
} Case No.: 2:19-cv-01135-MHH
Plaintiffs, }
}
v. }
}
BBVA COMPASS BANCSHARES, }
INC., et al., }
}
Defendants. }
MEMORANDUM OPINION
In this ERISA action, plaintiffs Gloria Ferguson and Cassandra McClinton,
individually and on behalf of others similarly situated, allege that defendants BBVA
Bancshares, Inc., Compass Bancshares, Inc., and BBVA USA Bancshares, Inc.
breached their duties of loyalty and prudence as administrators and fiduciaries of an
employee pension plan. (Doc. 1, pp. 77–79, ¶¶ 140–45). BBVA moved to dismiss
under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Doc. 14, p. 1).
BBVA argues that the Court lacks subject matter jurisdiction because the plaintiffs
failed to exhaust their administrative remedies before filing suit. (Doc. 15, p. 6).
For the reasons discussed below, the Court denies BBVA’s motion to dismiss.
I. STANDARD OF REVIEW
Under Rule 12(b)(1), a defendant may move to dismiss a complaint for “lack
of subject-matter jurisdiction.” Fed. R. Civ. P. 12(b)(1). Courts lacking subject
matter jurisdiction lack “the power . . . to hear a case.” Scarfo v. Ginsberg, 175 F.3d
957, 961 (11th Cir. 1999). Accordingly, “[w]hen a Rule 12(b)(1) motion is filed in
conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1)
jurisdictional attack before addressing any attack on the merits.” Ramming v. United
States, 281 F.3d 158, 161 (5th Cir. 2001) (citing Hitt v. City of Pasadena, 561 F.2d
606, 608 (5th Cir.1977) (per curiam)).
Attacks on subject-matter jurisdiction under 12(b)(1) may be either facial or
factual. Carmichael v. Kellogg, Brown & Root Servs., Inc., 572 F.3d 1271, 1279
(11th Cir. 2009). “Facial attacks to subject matter jurisdiction require the court
merely to look and see if the plaintiff’s complaint has sufficiently alleged a basis
of subject matter jurisdiction, and the allegations in his complaint are taken as true
for the purposes of the motion.” Houston v. Marod Supermarkets, Inc., 733 F.3d
1323, 1335–36 (11th Cir. 2013) (citing Carmichael, 572 F.3d at 1279)); see also,
McElmurray v. Consol. Gov't of Augusta-Richmond Cty., 501 F.3d 1244, 1251 (11th
Cir. 2007). “Factual attacks, on the other hand, challenge the existence of subject
matter jurisdiction in fact.” McElmurray, 501 F.3d at 1251 (internal quotations and
citations omitted). “[W]here a defendant raises a factual attack on subject matter
jurisdiction, the district court may consider extrinsic evidence such as deposition
testimony and affidavits.” Carmichael, 572 F.3d at 1279. “In so doing, a district
court is “free to weigh the facts” and is “not constrained to view them in the light
most favorable” to the plaintiff.” Houston, 733 F.3d at 1336 (quoting Carmichael,
572 F.3d at 1279)). The defendants have asserted a factual challenge to subject
matter jurisdiction in this case.
Rule 12(b)(6) enables a defendant to move to dismiss a complaint for “failure
to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A Rule
12(b)(6) motion to dismiss tests the sufficiency of a complaint against the “liberal
pleading standards set forth by Rule 8(a)(2).” Erickson v. Pardus, 551 U.S. 89, 94
(2007). Pursuant to Rule 8(a)(2), 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)(2). “Generally, to survive a [Rule 12(b)(6)] motion to dismiss and meet the
requirement of Fed. R. Civ. P. 8(a)(2), a complaint need not contain ‘detailed factual
allegations,’ but rather ‘only enough facts to state a claim to relief that is plausible
on its face.’” Maledy v. City of Enterprise, 2012 WL 1028176, *1 (M.D. Ala. March
2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007)).
“Specific facts are not necessary; the statement need only ‘give the defendant fair
notice of what the . . . claim is and the grounds upon which it rests.’” Erickson, 551
U.S. at 93 (quoting Twombly, 550 U.S. at 555).
“Thus, the pleading standard set forth in Federal Rule of Civil Procedure 8
evaluates the plausibility of the facts alleged, and the notice stemming from a
complaint’s allegations.” Keene v. Prine, 477 Fed. Appx. 575, 583 (11th Cir. 2012).
“Where those two requirements are met . . . the form of the complaint is not
significant if it alleges facts upon which relief can be granted, even if it fails to
categorize correctly the legal theory giving rise to the claim.” Id.
When evaluating a Rule 12(b)(6) motion to dismiss, a district court accepts as
true the factual allegations in the complaint and construes them in the light most
favorable to the plaintiff. McCullough v. Finley, 907 F.3d 1324, 1330 (11th Cir.
2018). However, “conclusory allegations . . . are not entitled to an assumption of
truth—legal conclusions must be supported by factual allegations.” Randall v. Scott,
610 F.3d 701, 709–10 (11th Cir. 2010).
II. FACTUAL AND PROCEDURAL BACKGROUND
The plaintiffs in this case are participants in a defined contribution, individual
account, employee pension plan administered by BBVA. (Doc. 1, pp. 6–7, ¶¶ 3–4).1
BBVA administers and acts as fiduciary of the plan. “In this capacity, BBVA is
responsible . . . for selecting, monitoring, evaluating, and replacing the Plan’s
investment options.” (Doc. 1, p. 7, ¶ 4). To meet these obligations, the plan allows
BBVA to appoint a three-person “Retirement Committee” vested with the power to
1 Each plaintiff is an “eligible employee” of BBVA Compass Bancshares. (Doc. 15-1, p. 11).
“[c]onstrue and interpret the Plan”; “decide all questions of eligibility”; “[e]stablish
a funding policy for the Plan”; and manage, administer, and operate the plan. (Doc.
15-2, p. 7).
Section 8.7(a) of the retirement plan provides that a participant or beneficiary
may bring before the Retirement Committee a claim for benefits under the plan.
(Doc. 15-1, p. 71). If the Retirement Committee denies a claim, it must include in
writing, among other things, “[t]he specific reason(s) for the denial” and “[r]eference
to the specific Plan provision(s) on which the denial is based . . . .” (Doc. 15-1, p.
72).
A claimant may appeal the initial denial of a claim. On appeal, the Committee
must consider relevant information submitted by the claimant and must decide the
appeal “within a reasonable period of time.” (Doc. 15-1, p. 72). The Committee
must issue a written decision containing “[t]he specific reason(s) for the decision on
appeal”; “[r]eference to the specific Plan provision(s) on which the decision on
appeal is based”; [sup-¶ (c)]; and “[a] statement of the claimant’s right to bring a
civil action under ERISA Section 502(a).” (Doc. 15-1, pp. 72–73). Section 8.7(c)
provides that “[a]fter exhaustion of the claims and review procedure as provided
herein, nothing shall prevent the claimant from . . . bring[ing] a civil action under
Section 502(a) of ERISA.” (Doc. 15-1, p. 75, § 8.7(c)).
Consistent with ERISA’s requirements, BBVA provided to plan participants
a “Summary Plan Description.” (Doc. 15-3). The SPD outlines the plan’s general
claim procedures, using language that resembles the plan’s language, but the SPD
does not mention “exhaustion.” The SPD includes a summary of participants’
ERISA rights. The SPD provides that “[i]f plan fiduciaries misuse the plan’s assets,
. . . suit may be filed in federal court.” (Doc. 15-3, p. 20).
On May 16, 2019, Ms. Ferguson’s attorney sent a letter to BBVA’s Director
of Benefits, informing BBVA that Ms. Ferguson “ha[d] observed . . . that the costs
and expenses of administering the Plan[] are outside a normal range” and requesting
that BBVA provide to Ms. Ferguson a list of documents for review. (Doc. 18-1, pp.
7–8). The May 16, 2019 letter also asked BBVA to identify any administrative
process “for grievances regarding the Plan.” (Doc. 18-1, p. 8). In response, BBVA
provided to Ms. Ferguson six documents, including the “[c]urrent plan with
amendments” and the “[c]urrent SPD.” (Doc. 18-1, p. 10).
On July 18, 2019, Ms. Ferguson and Ms. McClinton sued BBVA, alleging
“that the Plan participants[] lost approximately $47,000,000 of their retirement
money as a result of BBVA’s mismanagement . . . .” (Doc. 1, p. 69, ¶ 124). Before
filing suit, Ms. Ferguson and Ms. McClinton did not avail themselves of the claim
procedures outlined in § 8.7 of the Plan. (See Doc. 1, p. 2, n. 2). BBVA argues that
this is a failure to exhaust administrative remedies that warrants dismissal. (Doc.
14).
III. ANALYSIS
“It is well-established law in [the Eleventh] Circuit that plaintiffs in ERISA
cases must normally exhaust available administrative remedies under their ERISA-
governed plans before they may bring suit in federal court.” Springer v. Wal-Mart
Assocsiates’ Group Health Plan, 908 F.2d 897, 899 (11th Cir. 1990). “The
exhaustion requirement applies to complaints for breach of fiduciary duty under
ERISA . . . .” Lanfear v. Home Depot, Inc., 536 F.3d 1217, 1224 (11th Cir. 2008).
The plaintiffs argue that they did not fail to exhaust because the BBVA plan
does not provide administrative remedies. (Doc. 18, p. 4). The plaintiffs base this
argument on the assertion that their attorneys “requested access to any [required]
administrative procedures and none were provided.” (Doc. 18, p. 4 (quoting Doc. 1,
pp. 5–6, ¶ 2, n. 2)). They also argue that even if they failed to exhaust available
administrative remedies, that failure is excused. The Court concludes that to the
extent the plaintiffs were required to exhaust available administrative remedies, the
failure is excused.
In most cases, “if a plan participant failed to take advantage of an available
administrative appeal by pursuing it in compliance with a reasonable filing deadline,
she has failed to exhaust her administrative remedies and that bars federal court
review of her claim.” Watts v. Bell Telecomms., Inc., 316 F.3d 1203, 1207 (11th Cir.
2003) (citations omitted). But most cases is not all cases, and a claimant’s failure to
exhaust an administrative remedy provided for in a plan is excused if she “reasonably
believed, based upon what the summary plan description said, that she was not
required to exhaust her administrative remedies before filing a lawsuit.” Watts, 316
F.3d at 1207. “The reasonableness of [a plaintiff’s interpretation of plan documents]
must be judged from the perspective of the average plan participant.” Watts, 316
F.3d at 1207 (citing 29 U.S.C. § 1022(a)).
Under the heading “Applying for Benefits” and the sub-heading “General
Claim Procedure,” the SPD provides that after a claim is wholly or partially denied,
plan participants or their authorized representative “may appeal the Retirement
Committee’s decision denying the claim within 60 days” of receiving notice of the
denial. (Doc. 15-3, p. 15). Five pages later, under the heading “ERISA rights,” the
SPD states that “[i]f a claim for a benefit is denied in whole or in part, an employee
has the right to have the plan reviewed and the plan reconsidered”; that “[i]f a claim
for benefits is denied or ignored, in whole or in part, suit may be filed . . . in federal
court”; and that “[i]f plan fiduciaries misuse plan assets, . . . suit may be filed in
federal court.” (Doc. 15-3, pp. 19–20).
These provisions of the SPD provide to plan participants alternative avenues
of recourse, none of which is mandatory. In each instance, the SPD tells plan
participants that they “may,” or that they “have the right” to, pursue a particular
option. The SPD does not describe the claims procedures or ERISA rights as
mandatory prerequisites to filing suit in federal court. The word “exhaustion” does
not appear in the SPD. Consequently, a reasonable person reading the SPD likely
would conclude that the “General Claim Procedure” provisions and the provision
providing for filing suit in federal court offer an either-or proposition.
BBVA argues that the “SPD language regarding ‘misuse [of] the plan’s assets’
does not cover Plaintiffs’ claims here.” (Doc. 20, p. 8 (alteration in original)).
BBVA argues that “[m]issue of plan assets is a distinct breed of claim under ERISA,
which equates to self-dealing, fraud, theft, or the like.” (Doc. 20, p. 8 (citing LaScala
v. Scrufari, 479 F.3d 213, 222 (2d Cir. 2007)). BBVA contrasts that with ERISA
“claims based on a fiduciary’s procedural imprudence in choosing a plan’s
investment options[,]” which, BBVA argues, “ha[s] nothing to do with ‘misuse’ of
the plan’s assets, in the normal sense of the word.” (Doc. 20, p. 9). According to
BBVA, the phrase “misuse of the plan’s assets” covers the former and not the latter.”
(Doc. 20, p. 9). The Court disagrees.
In ERISA cases, courts should “first look to the plain and ordinary meaning
of the policy terms to interpret the contract.” Alexandra H. v. Oxford Health Ins.
Inc. Freedom Access Plan, 833 F.3d 1299, 1307 (11th Cir. 2016) (citations omitted).
On its face, the word “misuse” indicates only incorrect use, failing to distinguish
between intentional fraud and inadvertent squandering. See Misuse, MERRIAM-
WEBSTER.COM, https://www.merriam-webster.com/dictionary/misuse (last visited
May 6, 2020). Context normally would indicate whether “misuse” referred to the
former or the latter. But the provision “[1i]f plan fiduciaries misuse the plan’s assets,
... Suit may be filed in federal court” provides no such context here. (Doc. 15-3, p.
20). As a result, interpreting “misuse the plan’s assets” as “the costs and expenses
of administering the Plan [being] outside a normal range,” (Doc. 18-1, p. 7), is
reasonable, and the plaintiffs’ failure to avail themselves of the administrative
remedies provided for in § 8.7 of the BBVA plan is excused. Besides, as noted,
under the language of the SPD, “misuse” is not the only key that opens the door to a
lawsuit in federal court.
IV. CONCLUSION
For the reasons above, the Court denies BBVA’s motion to dismiss, (Doc. 14).
BBVA also has moved to strike Ms. Ferguson’s and Ms. McClinton’s jury demand,
(Doc. 16). The Court sets the motion for oral argument at 3:00 p.m. on May 28,
2020.
DONE and ORDERED this May 12, 2020.
adits Bi Hosa
Madliss.
UNITED STATES DISTRICT JUDGE
10