United States District Court, D. South Dakota, Western Division
JEFFREY L. VIKEN CHIEF JUDGE.
Isna Wica Owayawa, d/b/a Loneman School, filed an action
against defendant American United Life Insurance Company in
South Dakota state court. (Docket 1-2). Defendant removed the
case to this court and filed a motion to dismiss the
complaint. (Dockets 1 & 5). According to defendant, the
Employee Retirement Income Security Act (“ERISA”)
preempts plaintiff's claims and Rule 12(b)(6) of the
Federal Rules of Civil Procedure requires dismissal of the
complaint for failure to state a claim. (Docket 5);
see Fed.R.Civ.P. 12(b)(6).
also filed a motion to amend its notice of removal to correct
clerical errors. (Docket 4). Plaintiff did not submit a
filing in opposition. The court grants the motion to amend
the notice of removal.
Rule 12(b)(6), a plaintiff must plead “enough facts to
state a claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). Two “working principles” underlie Rule
12(b)(6) analysis. See Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). First, courts are not required to accept as
true legal conclusions “couched as . . . factual
allegation[s]” in the complaint. See id.
“[A] complaint must allege ‘more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.' ” Torti v.
Hoag, 868 F.3d 666, 671 (8th Cir. 2017) (quoting
Twombly, 550 U.S. at 555). The court does, however,
“take the plaintiff's factual allegations as
true.” Braden v. Wal-Mart Stores, Inc., 588
F.3d 585, 594 (8th Cir. 2009). Second, the plausibility
standard is a “context-specific task that requires the
reviewing court to draw on its judicial experience and common
sense.” Iqbal, 556 U.S. at 678 (citation
omitted). The complaint is analyzed “as a whole, not
parsed piece by piece to determine whether each allegation,
in isolation, is plausible.” Braden, 588 F.3d
is an educational facility charted by the Oglala Sioux Tribe,
and its grades range from kindergarten to eighth grade.
(Docket 1-2 at p. 2). In 2009, plaintiff entered into an
agreement with defendant on a 401(k) plan for plaintiff's
employees (referred to as “the plan”).
Id. at p. 3. The plan permitted employee
contributions “through salary deferrals and . . .
employer matching contributions.” Id.
Plaintiff alleges the implementation of the plan created
“operational errors, ” including:
A. For certain participants there was no election form, but
elective contributions were nevertheless made from payroll;
B. Certain participants had election forms, but deductions
were not made from payroll for the elective deferral
contributions they indicated on the election forms;
C. Certain participants had an incorrect percentage of pay
deducted from their wages for elective deferral
contributions, meaning that the percentage of pay deducted
was not the same percentage as indicated in the
participants' election forms;
D. The 2% non-discriminatory employer contribution was not
calculated correctly for some participants;
E. Participants who were eligible for the 2% employer
contribution did not receive on[e] and other participants who
were not eligible did receive one; F. Deposits of employee
elective deferral contributions were not made in a timely
manner; and G. Substitute teachers were not provided an
opportunity to participate in the plan.
asserts defendant made false representations about the plan.
Id. at pp. 3-4. Specifically, that defendant
“could efficiently sponsor and design” the plan;
“that it was fully familiar with efficiently running
these types of plans and could responsibly handle all
functions necessary to establish a successful and fiscally
responsible plan[;]” “that it was familiar with
the scope of benefits that should be provided” to
plaintiff's employees; and “that the Plan would be
appropriately designed to ensure the best interests” of
plaintiff's employees. Id.
the problems, plaintiff used “the Internal Revenue
Service Voluntary Correction Program, Self-Correction
Procedures (‘VCSC').” Id. at p. 4.
Plaintiff made a “corrective contribution” to the
plan totaling $23, 954.39. Id. Plaintiff incurred a
fee related to VCSC and attorney fees by addressing the
plan's issues. Id.
complaint advances three claims: fraud, negligent
misrepresentation and negligence. Id. at pp. 5-9.
They largely relate to the “false
representations” set forth above. See supra at
p. 3; (Docket 1-2 at pp. 5-9). Plaintiff seeks damages based
on its corrective contribution, the fee related to VCSC,
attorney fees and punitive damages. (Docket 1-2 at pp. 9-11).
argues ERISA preempts plaintiff's claims. (Docket 5).
“ERISA . . . is a comprehensive statute that sets
certain uniform standards and requirements for employee
benefit plans.” Minnesota Chapter of Associated
Builders & Contractors, Inc. v. Minnesota Dep't of
Pub. Safety, 267 F.3d 807, 810 (8th Cir. 2001) (internal
quotation marks omitted). “Congress' primary
concern was with the mismanagement of funds accumulated to
finance employee benefits and the failure to pay employees
benefits from accumulated funds. To that end, it established
extensive reporting, disclosure, and fiduciary duty
requirements to insure against the possibility that the
employee's expectation of the benefit would be defeated
through poor management by the plan administrator.”
Massachusetts v. Morash, 490 U.S. 107, 115 (1989)
(internal citation and footnote omitted). Plaintiff does not
dispute the 401(k) plan at issue in this case is an ERISA
plan. (Docket 18 at p.1); see Johnston v. Paul Revere
Life Ins. Co., 241 F.3d ...