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Daley v. Lockheed Martin Corp.

United States District Court, N.D. California, San Jose Division

June 30, 2017

SHIRLEY DALEY, Plaintiff,
v.
LOCKHEED MARTIN CORPORATION, et al., Defendants.

          ORDER GRANTING MOTIONS TO DISMISS WITH LEAVE TO AMEND RE: DKT. NOS. 41, 45, 52

          LUCY H. KOH United States District Judge.

         Plaintiff Shirley Daley (“Plaintiff”) sues Defendants Lockheed Martin Corporation and Lockheed Martin Group Universal Life Plan (collectively, “Lockheed”), Marsh U.S. Consumer (“Marsh”), and the Prudential Insurance Company of America (“Prudential”) (all Defendants collectively, “Defendants”). Before the Court are Lockheed and Prudential's motions to dismiss the First Amended Complaint (“FAC”), in addition to Marsh's motion for joinder in Lockheed's motion to dismiss. See ECF No. 41, 45, 52. The Court finds these matters suitable for resolution without oral argument and hereby VACATES the motions hearings set for July 6 and 13, 2017. See Civil L.R. 7-1(b). Having considered the parties' submissions, the relevant law, and the record in this case, the Court hereby GRANTS Marsh's motion for joinder in Lockheed's motion to dismiss, and GRANTS with leave to amend Lockheed and Prudential's motions to dismiss.

         I. BACKGROUND

         A. Factual Background

         Plaintiff is the late wife of Bruce Daley (“Mr. Daley”), who passed away on October 7, 2015. ECF No. 16 (“FAC”), at ¶ 2, 6. Prior to his death, Mr. Daley worked for Lockheed for forty years. Id. During his employment, Mr. Daley acquired a life insurance policy pursuant to Lockheed's Group Universal Life Plan (“Plan”). The Plan was administered by Seabury & Smith, which is the parent company of Marsh. Id. The Plan was issued by Prudential. Id.

         Mr. Daley's Plan provided his beneficiary a death benefit of four times Mr. Daley's base pay. Id. ¶ 4. Plaintiff was Mr. Daley's beneficiary under the Plan. Id. ¶ 5. After Mr. Daley's death, Defendants told Plaintiff that Mr. Daley's Plan had lapsed and that Plaintiff would not be paid any benefits under the Plan. Id. ¶ 7. According to the FAC, “[a]ssuming [Mr. Daley's] [Plan] had lapsed, the lapse was caused by Defendants' breach of their fiduciary duty to Mr. Daley by allowing the [Plan] to lapse without Mr. Daley's informed knowledge or consent.” Id. Plaintiff exhausted her administrative remedies with Lockheed prior to filing suit. Id.

         B. Procedural History

         On July 14, 2016, Plaintiff filed a state court complaint against Lockheed Martin Corporation and unnamed Doe Defendants. See ECF No. 1-1. Plaintiff alleged three state law causes of action: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; and (3) breach of fiduciary duty. Id.

         On December 13, 2016, Lockheed removed Plaintiff's state court complaint to this Court. ECF No. 1. As a basis for removal, Lockheed asserted that, because Plaintiff's complaint sought benefits under a life insurance plan that was governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, Plaintiff's state law claims arose under ERISA and thus Plaintiff's claims were removable to federal court. Id. at 3.

         On December 20, 2016, Lockheed filed a motion to dismiss Plaintiff's state court complaint. ECF No. 13. The motion asserted that Plaintiff's state law claims were preempted by ERISA and thus must be dismissed. Id. Further, the motion argued that Plaintiff had failed to allege that she exhausted her administrative remedies prior to filing suit. Id.

         On January 3, 2017, Plaintiff filed an opposition. ECF No. 14. Plaintiff's opposition argued only that “the deficits cite[d] in Lockheed's motion may be cured by amendment.” Id. Specifically, Plaintiff argued, Plaintiff “could allege a[n] ERISA claim, ” and Plaintiff “could allege that [Plaintiff] exhausted her administrative remedies” prior to filing suit in state court. Id.

         On January 10, 2017, Lockheed filed a reply, which again requested dismissal of the original complaint because Plaintiff in effect conceded in her opposition that the original complaint was deficient. ECF No. 15.

         Also on January 10, 2017, Plaintiff filed a FAC. See FAC. Plaintiff's FAC added Lockheed Martin Group Universal Life Plan, Marsh, and Prudential as Defendants. Id. Plaintiff's FAC also alleged that Plaintiff exhausted her administrative remedies prior to filing suit against Defendants. Id. ¶ 7. Plaintiff alleged a single “claim for relief, ” which asserted that “Defendants' breach[ed] their fiduciary duty to [Plaintiff] by allowing the [Plan] to lapse without Mr. Daley's informed knowledge or consent.” Id. Plaintiff did not cite ERISA in her FAC. See id.

         On February 7, 2017, the Court denied as moot Lockheed's motion to dismiss the original complaint. ECF No. 24. The Court found that Plaintiff's FAC was a timely amendment as of right under Federal Rule of Civil Procedure 15(a)(1)(B). Id. The Court noted that, in Plaintiff's opposition to Lockheed's motion to dismiss, Plaintiff recognized that her [state court] complaint was deficient.” Id. The Court thus stated that “if the Court grants any future motion to dismiss the amended complaint based on” ...


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