United States District Court, W.D. Texas, Austin Division
HERIBERTO CHAVEZ, EVANGELINA ESCARCEGA as legal representative of JOSE ESCARCEGA, and JORGE MORENO Plaintiffs,
PLAN BENEFIT SERVICES, INC., FRINGE INSURANCE BENEFITS, INC., and FRINGE BENEFIT GROUP, Defendants.
SPARKS SENIOR UNITED STATES DISTRICT JUDGE
REMEMBERED on this day the Court reviewed the file in the
above-styled cause, and specifically Defendants' Motion
to Dismiss [#56], Plaintiffs' Response [#63] in
opposition, and Defendants' Reply [#65] in support.
Having reviewed the documents, the governing law, and the
file as a whole, the Court now enters the following opinion
Heriberto Chavez, Evangelina Escarcega on behalf of her
disabled son Jose Escarcega, and Jorge Moreno bring this
action on behalf of themselves and a proposed class of
similarly situated participants and beneficiaries under the
Employee Retirement Income Security Act of 1974 (ERISA)
against Defendants Fringe Insurance Benefits, Inc., Plan
Benefit Services, Inc., and Fringe Benefit Group
(Defendants). Am. Compl. [#42] at 1.
market and administer retirement, health, and welfare benefit
plans to the employees of nonunion employers seeking to
compete for government contracts. Id. at 10.
Nonunion employers seeking to bid on such government
contracts are often required to pay their workers
"prevailing wages"-the wages and benefits paid to
the majority of similarly situated laborers in the area
during the relevant time period-in order to qualify for
government contracts. Id. at 10. Defendants offer a
"Contractors Plan" to such employers through which
the employers can affordably provide retirement, health, and
welfare benefits to their workers and thereby submit
competitive bids for government work. Id. at 10;
Resp. [#63] at 3.
they have enrolled in the Contractors Plan, employers can
offer retirement benefit plans to their employees through the
Contractors and Employee Retirement Trust (CERT) and can
offer health and welfare benefit plans to their employees
through the Contractors Plan Trust (CPT). Am. Compl. [#42] at
1, 10; Resp. [#63] at 3. CERT is a "master pension
trust, which sponsors a prototype defined contribution
plan" for employees, while CPT is a multiple-employer
trust that serves as a vehicle for marketing, administering,
and funding the provision of health and welfare benefits to
employees. Am. Compl. [#42] at 10-11. Defendants serve as
Master Plan Sponsor and Recordkeeper for both CPT and CERT.
Am. Compl. [#42] at 8-13. In their capacity as Master Plan
Sponsor, Defendants entered into trust agreements with
institutional trust companies for both CPT and CERT. American
National Bank of Texas Trust Division (ANB) served as Trustee
of CERT from June 2, 2014 until July 1, 2016, when it was
replaced by Pentegra Trust Company (Pentegra). Mot. Dismiss
[#56-7] Attach. G (ANB Master Trust Agreement) at 10;
id. [#56-8] Attach. H (Pentegra Master Trust
Agreement) at 10. Pentegra currently serves as the Trustee of
both CPT and CERT. Am. Compl. [#42] at 11.
employer, Training, Rehabilitation & Development
Institute, Inc. (TRDI) enrolled in Defendants'
Contractors Plan to facilitate the provision of retirement
benefits as well as health and welfare benefits to TRDI
employees. Id. at 1-2; Resp. [#63] at 3. Upon
enrolling in the Contractors Plan, TRDI established a health
and welfare plan (TRDI Health and Welfare Plan) and a
retirement plan (TRDI Retirement Plan) by executing adoption
agreements with CPT and CERT, respectively. Am. Compl. [#42]
at 11; Mot. Dismiss [#56-1] Attach. A (CPT Adoption
Agreement); id. [#56-2] Attach. B. (CERT Adoption
documents governing CERT, CPT, and the TRDI plans distribute
various responsibilities and duties among TRDI, the Trustee,
and Defendants. Relevant here, Plaintiffs allege Defendants
possessed the ability to (1) control disbursements from the
trusts and direct the Trustee to make disbursements,
including for Defendants' own fees; (2) select the
investment platform options made available to
employers; (3) appoint and remove the Trustee; and
(4) select and remove service providers. Am. Compl. [#42] at
Heriberto Chavez is employed by TRDI and was a participant in
the TRDI Health and Welfare Plan. Am. Compl. [#42] at 4-5. For
every hour Chavez worked for TRDI, TRDI contributed a certain
amount of money to a fringe benefit account. Id.
This fringe benefit account was used to help pay Chavez's
premiums incurred through his enrollment in health and
welfare plans provided through TRDI. Id.
charged by Defendants in connection with the administration
of Chavez's account were deducted directly from Mr.
Chavez's account. Id. Though Chavez did not make
any contributions to the TRDI Retirement Plan, Plaintiffs
contend contributions should have been made to the plan on
Chavez's behalf because excess funds in Chavez's
account were supposed to be contributed to an individual CERT
retirement account in his name. Id. Plaintiffs
allege Chavez received no such contribution because of the
excessive fees charged by Defendants. Id.
Escarcega and Jorge Moreno are employed part-time as
custodians for TRDI. Id. at 6-8. From August 2014
through May 2015, Escarcega and Moreno were participants in
the TRDI Retirement Plan, and from June 2015 through July
2016, they were participants in the TRDI Health and Welfare
Plan. Id. For every hour Escarcega and Moreno
worked, TRDI made contributions to their fringe benefit
accounts under either the TRDI Retirement Plan or the TRDI
Health and Welfare Plan. Id. With respect to both
plans, Defendants' fees for plan administration services
were subtracted from Escarcega and Moreno's individual
accounts. Id. Plaintiffs allege that if Defendants
had not charged excessive fees, Escarcega and Moreno would
have accrued greater retirement savings in their accounts.
2017, Plaintiffs filed this suit against Defendants in
federal court alleging violations of ERISA. Compl. [#1]. In
October 2017, Defendants filed a motion to dismiss
Plaintiffs' original complaint, which the Court granted.
Mot Dismiss [#27]; Order of November 6, 2017 [#36].
Plaintiffs subsequently filed an amended complaint. Am.
Compl. [#42]. Defendants now move to dismiss Plaintiffs
amended complaint. Mot. Dismiss [#56]. This pending motion is
ripe for review.
Federal Rules of Civil Procedure require each claim in a
complaint include "a short and plain statement.. .
showing that the pleader is entitled to relief."
Fed.R.Civ.P. 8(a)(2). The claims must include sufficient
factual allegations, accepted as true, to state a claim for
relief that is facially plausible. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009); Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 570 (2007). "A claim has
facial plausibility when the plaintiff pleads sufficient
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged." Iqbal, 566 U.S. at 678. Although a
plaintiffs factual allegations need not establish the
defendant is probably liable, they must establish more than a
"sheer possibility" a defendant has acted
unlawfully. Id. Determining plausibility is a
"context-specific task, " and must be performed in
light of a court's "judicial experience and common
sense." Id. at 679.
to dismiss for failure to state a claim are appropriate when
a defendant attacks the complaint because it fails to state a
legally cognizable claim. Fed.R.Civ.P. 12(b)(6). When a
district court reviews a motion to dismiss pursuant to Rule
12(b)(6), it must construe the complaint in favor of the
plaintiff and take all well-pleaded facts as true.
Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009).
However, a court is not bound to accept legal conclusions
couched as factual allegations. Papasan v. Allain,
478 U.S. 265, 286 (1986). While all reasonable inferences
will be resolved in favor of the plaintiff, the plaintiff
must plead "specific facts, not mere conclusory
allegations." Tuchman, 14 F.3d at 1067. In
deciding a motion to dismiss, courts may consider the
complaint, as well as other sources such as documents
incorporated into the complaint by reference and matters of
which a court may take judicial notice. Tellabs, Inc. v.
Makor Issues & Rights, Ltd., 551 U.S. 308, 322