United States District Court, N.D. California
ORDER ON PLAINTIFF'S MOTION TO DISMISS
DEFENDANTS' FIRST AMENDED COUNTERCLAIM RE: DKT. NO.
M. Ryu, United States Magistrate Judge.
case arises under the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1001 et seq.
Plaintiff Linda Koeplin filed this suit against Defendants
Bayside Solutions Long-Term Incentive & 401(k)
Restoration Plan and Robert Klotz, an individual, asserting
an ERISA claim for benefits. Defendants answered and
counterclaimed against Koeplin. Koeplin now moves pursuant to
Federal Rule of Civil Procedure 12(b)(6) to dismiss
Defendants' first amended counterclaim. [Docket No. 23.]
This matter is appropriate for resolution without a hearing
pursuant to Civil Local Rule 7-1(b). For the following
reasons, Koeplin's motion is granted.
action, Koeplin brings a single claim under ERISA for
benefits she claims she is owed under the terms of the
Bayside Solutions Long-Term Incentive & 401(k)
Restoration Plan (“Bayside Plan” or “the
Plan”). [Docket No. 15 (First Amended Complaint).]
Defendants and counter-claimants Bayside Plan and Klotz make
the following allegations in their first amended
counterclaim, all of which are taken as true solely for
purposes of Koeplin's motion to dismiss. [See
Docket No. 18 (First Amended Counterclaim,
“FACC”).] Bayside Plan is an unfunded,
nonqualified deferred compensation plan adopted and
administered on behalf of Bayside Solutions, Inc.
(“Bayside Solutions”), a California business.
FACC ¶ 2. Participation in the Bayside Plan is limited
to a “select group of management or highly compensated
Employees.” Id. at ¶ 8; Scott Decl., June
14, 2017, Ex. 1 (Nonqualified Supplemental Deferred
Compensation Plan-Plan Document (“Plan Document”)
§ 1.1. Bayside Solutions adopted the Bayside Plan and
designated Klotz as the plan administrator in 2011. FACC
¶ 7. Defendants allege that Klotz is also a fiduciary of
the Bayside Plan. Id. at ¶ 3.
terms of the Bayside Plan include a forfeiture clause,
whereby “‘[p]articipants terminated from
employment prior to becoming 100% vested will forfeit the
forfeitable percentage of their Accounts as indicated in
accordance with the vesting schedule selected' for
employer contributions.” Id. at ¶ 10;
Scott Decl. Ex. 2 (Nonqualified Supplemental Deferred
Compensation Plan Adoption Agreement (“Adoption
Agreement”) § 17. The provision also states that
“‘[p]articipants may also forfeit 100% of their .
. . Employer Contribution Accounts” for
“[m]isconduct (termination for Cause) . . . [a]s
described under code of conduct in employee handbook.”
FACC ¶ 11; Adoption Agreement § 17. Defendants
allege that because Bayside Solutions did not have an
operative employee handbook definition of
“misconduct” at relevant times, “Klotz was
required to make factual determinations under the Bayside
Plan as to circumstances of misconduct.” FACC ¶
was a Bayside Solutions employee from 2006 to 2016, holding
the positions of Director of Accounting and Chief Financial
Officer. She had previously worked as an
independent contractor for Bayside Solutions from 2001 to
2006. Id. at ¶ 12. Plaintiff enrolled in the
Bayside Plan in August 2011, and between 2011 and 2013,
Bayside Solutions made total employer contributions of $125,
000 to her Bayside Plan account. Id. at ¶¶
August 2016, Bayside Solutions terminated Koeplin's
employment as Chief Financial Officer “for cause based
on her misconduct and poor performance.” Id.
at ¶ 16. Defendants allege that following her
termination, Bayside Solutions learned of other instances of
“past misconduct and poor management that would have
justified terminating her employment for cause.”
Id. at ¶¶ 16, 17. According to Defendants,
Koeplin forfeited 100% of the $125, 000 in employer
contributions Bayside Solutions made on her behalf to the
Bayside Plan “because she was terminated for cause,
based on Klotz's determination of misconduct under the
Bayside Plan.” Id. at ¶¶ 18, 19.
Defendants allege on information and belief that Koeplin has
received some or all of those contributions, and that Koeplin
has not reimbursed Bayside Solutions for any of the forfeited
contributions that she has received since her termination.
Id. at ¶¶ 13, 19.
amended counterclaim is organized into four “counts,
” but they allege one claim for relief under 29 U.S.C.
§ 1132(a)(3). That provision authorizes a suit by a
“participant, beneficiary, or fiduciary” to
enforce the Bayside Plan's terms; specifically,
Koeplin's forfeiture of 100% of the contributions made by
Bayside Solutions on her behalf due to her termination for
cause. They seek three forms of relief: declaratory judgment,
equitable lien, and/or constructive trust. Id. at
¶¶ 22. Koeplin moves to dismiss the counterclaim
pursuant to Rule 12(b)(6).
motion to dismiss under Rule 12(b)(6) tests the legal
sufficiency of the claims alleged in the complaint. See
Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480,
1484 (9th Cir. 1995). When reviewing a motion to dismiss for
failure to state a claim, the court must “accept as
true all of the factual allegations contained in the
complaint, ” Erickson v. Pardus, 551 U.S. 89,
94 (2007) (per curiam) (citation omitted), and may dismiss a
claim “only where there is no cognizable legal
theory” or there is an absence of “sufficient
factual matter to state a facially plausible claim to
relief.” Shroyer v. New Cingular Wireless Servs.,
Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (citing
Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009);
Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).
A claim has facial plausibility when a plaintiff
“pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678
(citation omitted). In other words, the facts alleged must
demonstrate “more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action
will not do.” Bell Atl. Corp. v. Twombly, 550
U.S. 554, 555 (2007) (citing Papasan v. Allain, 478
U.S. 265, 286 (1986)); see Lee v. City of L.A., 250
F.3d 668, 679 (9th Cir. 2001), overruled on other grounds by
Galbraith v. Cty. of Santa Clara, 307 F.3d 1119 (9th
Cir. 2002). Courts evaluate motions to dismiss counterclaims
brought pursuant to Federal Rule of Civil Procedure 12(b)(6)
under the same standard as a motion to dismiss a complaint.
Swingless Golf Club Corp. v. Taylor, 679 F.Supp.2d
1060, 1066 (N.D. Cal. 2009).
general rule, a court may not consider “any material
beyond the pleadings” when ruling on a Rule 12(b)(6)
motion. Lee, 250 F.3d at 688 (citation and quotation
marks omitted). However, “a court may take judicial
notice of ‘matters of public record, '”
id. at 689 (citing Mack v. S. Bay Beer
Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986)), and may
also consider “documents whose contents are alleged in
a complaint and whose authenticity no party questions, but
which are not physically attached to the pleading, ”
without converting a motion to dismiss under Rule 12(b)(6)
into a motion for summary judgment. Branch v.
Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled
on other grounds by Galbraith v. Cty. of Santa Clara,
307 F.3d 1119 (9th Cir. 2002). The court need not accept as
true allegations that contradict facts which may be
judicially noticed. See Mullis v. U.S. Bankr. Ct.,
828 F.2d 1385, 1388 (9th Cir. 1987).
bring their counterclaim against Koeplin under 29 U.S.C.
§ 1132(a)(3). That ...