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White v. Hilton Hotels Retirement Plan

United States District Court, District of Columbia

August 18, 2017

VALERIE R. WHITE, et al., Plaintiffs,



         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.


         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 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]


         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 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 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 ...

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