United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER GRANTING DEFENDANT'S MOTION TO
DISMISS PLAINTIFFS' FOURTH AMENDED COMPLAINT (Dkt. 68)
AND DISMISSING CASE WITH PREJUDICE
A. GOLDSMITH, UNITED STATES DISTRICT JUDGE
Kimberly Cox and Heather Claus initiated this putative class
action under the Employment Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1001 et
seq., alleging that Defendant Blue Cross Blue Shield of
Michigan (“BCBSM”) breached its fiduciary duty as
a third-party administrator by charging Plaintiffs'
respective ERISA healthcare plans “hidden” fees.
BCBSM filed a motion to dismiss Plaintiffs' fourth
amended complaint (Dkt. 68), claiming that Plaintiffs lack
standing to bring this action. The issues have been fully
briefed. Because oral argument will not aid the decisional
process, the motion will be decided based on the parties'
briefing. See E.D. Mich. LR 7.1(f)(2). As discussed
below, the Court grants the motion and dismisses this case
Court addressed the factual and procedural background of this
case in an opinion and order granting BCBSM's prior
motion to dismiss Plaintiffs' third amended complaint.
See Cox v. Blue Cross Blue Shield of Mich., 166
F.Supp.3d 891, 893-894 (E.D. Mich. 2015). To avoid needless
repetition, the Court sets forth a brief statement of the
necessary facts to provide context for this opinion.
June 2005 to December 2013, Cox was a participant and
beneficiary of a BCBSM-administered plan provided by her
employer, Genesys Regional Medical Center (the “Genesys
plan”). 4th Am. Compl. ¶¶ 11-12, 22 (Dkt.
65). From October 1996 to present, Claus has been a
beneficiary of a BCBSM-administered plan through her late
husband's membership in Operating Engineers Local 324
(the “Operating Engineers plan”). Id.
¶¶ 13-14, 25. Plan sponsors for the Genesys plan
and the Operating Engineers plan entered into Administrative
Services Contracts (“ASCs”) with BCBSM, which
“set forth the rights and responsibilities of each
party with regard to BCBSM's administration of the
Plans.” Id. ¶ 1.
allege that BCBSM engaged in self-dealing and breached its
fiduciary duties by illegally paying itself additional
administrative fees, which Plaintiffs refer to as
“hidden” fees, and failing to disclose the
misappropriated funds to its principals, contrary to the ASCs
and in violation of ERISA. Id. ¶¶ 3, 4. On
September 12, 2014, Plaintiffs filed this putative class
action pursuant to 29 U.S.C. § 1132(a)(3). Plaintiffs seek
both injunctive relief under § 1132(a)(3)(A) and
“other appropriate equitable relief” under §
1132(a)(3)(B) in the form of restitution, disgorgement,
surcharge, and the imposition of a constructive trust or
equitable lien. 4th Am. Compl. at 37-39 (prayer for
opinion granting BCBSM's motion to dismiss the third
amended complaint, the Court concluded that Plaintiffs failed
to set forth sufficient allegations in their third amended
complaint to establish statutory standing to pursue their
requested equitable relief under § 1132(a)(3)(B).
Cox, 166 F.Supp.3d at 899. The Court also held that
the complaint lacked sufficient allegations to establish
constitutional standing to pursue Plaintiffs' requested
injunctive relief under § 1132(a)(3)(A). Id.
While dismissing the third amended complaint, the Court
granted Plaintiffs leave to file a motion to amend their
complaint, see id. at 900, which they did,
see Pls. Mot. for Leave (Dkt. 59). After the Court
granted the motion to amend in part, see 4/28/2016
Order (Dkt. 64), Plaintiffs filed their fourth amended
complaint, see 4th Am. Compl. (Dkt. 65), which was
followed by BCBSM's present motion to dismiss.
pursue their ERISA claims, Plaintiffs must possess both
constitutional and statutory standing. Bender v.
Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986).
BCBSM's motion to dismiss contends that Plaintiffs still
lack both types of standing. Because the Court agrees with
BCBSM that Plaintiffs lack constitutional standing to bring
this action, it will not address whether Plaintiffs possess
requirement for constitutional standing is derived from
Article III of the United States Constitution, which limits
the jurisdiction of federal courts to justiciable cases and
controversies. Hollingsworth v. Perry, 133 S.Ct.
2652, 2661 (2013) (citing U.S. Const. art. III, § 2);
Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 37
(1976) (“No principle is more fundamental to the
judiciary's proper role in our system of government than
the constitutional limitation of federal-court jurisdiction
to actual cases or controversies.”). An essential
feature of this requirement “is that any person
invoking the power of a federal court must demonstrate
standing to do so.” Hollingsworth, 133 S.Ct.
at 2661; see also DaimlerChrysler Corp. v. Cuno, 547
U.S. 332, 342 (2006) (“The core component of the
requirement that a litigant have standing to invoke the
authority of a federal court is an essential and unchanging
part of the case-or-controversy requirement of Article
III.”). The doctrine of standing ensures that a federal
court's exercise of power is not “gratuitous”
or “inconsistent” with the limitations imposed by
Article III. See Simon, 426 U.S. at 38; Clinton
v. City of New York, 524 U.S. 417, 429-430 (1998)
(stating that standing “serves to identify those
disputes which are appropriately resolved through the
judicial process”). As the parties invoking federal
jurisdiction, Plaintiffs bear the burden of establishing
standing. Lujan v. Defenders of Wildlife, 504 U.S.
555, 561 (1992).
plaintiff must satisfy three requirements to establish
Article III standing: “The plaintiff must have (1)
suffered an injury in fact, (2) that is fairly traceable to
the challenged conduct of the defendant, and (3) that is
likely to be redressed by a favorable judicial
decision.” Spokeo, Inc. v. Robins, 136 S.Ct.
1540, 1547 (2016). As this case is at the pleading stage,
Plaintiffs “must clearly allege facts demonstrating
each element.” Id.
seeking an injunction in federal court must satisfy a fourth
requirement to have constitutional standing - the party must
generally show “a non-speculative threat that he [or
she] will again experience injury as a result of the alleged
wrongdoing.” Werner v. Primax Recoveries,
Inc., 365 F. App'x 664, 668 (6th Cir. 2010); see
also City of Los Angeles v. Lyons, 461 U.S. 95, 102
(1983) (the plaintiff must show a “real and immediate
threat of repeated injury” demonstrated by more than
“past exposure to illegal conduct”);
O'Shea v. Littleton, 414 U.S. 488, 495-496
(1974) (explaining that “[p]ast exposure to illegal
conduct does not in itself show a present case or controversy
regarding injunctive relief”). Moreover, “while
past illegal conduct might constitute evidence regarding
whether there is a real and immediate threat of repeated
injury, where the threat of repeated injury is speculative or
tenuous, there is no standing to seek injunctive
relief.” Taylor v. Mich. Dep't of Natural
Res., 502 F.3d 452, 464-465 (6th Cir. 2007);
Grendell v. Ohio Supreme Court, 252 F.3d 828, 833
(6th Cir. 2001) (same).
is some relaxation of standing requirements in the ERISA
context. An ERISA plan participant or beneficiary seeking
injunctive relief under § 1132(a)(3)(A) need not
demonstrate his or her own individual harm as part of
establishing an injury in fact. Loren, 505 F.3d at
609-610. By contrast, a plan participant or beneficiary
seeking “other appropriate equitable relief”
under § 1132(a)(3)(B) is still obliged to do so.
See, e.g., Perelman v. Perelman, 793 F.3d
368, 373 (3d Cir. 2015) (“Claims demanding a monetary
equitable remedy . . . require the plaintiff to allege an
individualized financial harm traceable to the
defendant's alleged ERISA violations.”); Faber
v. Metro. Life Ins. Co., 648 F.3d 98, 102 (2d Cir. 2011)
(disgorgement requires showing of individual harm); Cent.
States Se. & Sw. Areas Health & Welfare Fund v.
Merck-Medco Managed Care, L.L.C., 433 F.3d 181, 199-200
(2d Cir. 2005) (“Obtaining restitution or disgorgement
under ERISA requires that a plaintiff satisfy the strictures
of constitutional standing by demonstrating individual
loss.”); Horvath v. Keystone Health Plan E.,
Inc., 333 F.3d 450, 456 (3d Cir. 2003)
(“[R]estitution and disgorgement . . . are individual
in nature and therefore require [the plaintiff] to
demonstrate individual loss.”). And an ERISA plan
participant or beneficiary seeking an injunction must still
establish that the threat of repeated illegality is
non-speculative in nature. Werner, 365 F. App'x
explained below, Plaintiffs cannot meet the injury-in-fact
requirement for the non-injunctive equitable relief they
seek, because they do not allege individual harm; they have
also failed to allege any likelihood of repeated injury or