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Russell v. CVS Caremark Corp.

United States District Court, D. Arizona

March 23, 2017

Kristine Russell, Plaintiff,
v.
CVS Caremark Corporation, et al., Defendants.

          ORDER

          Paul G. Rosenblatt United States District Judge

         Pending before the Court is Defendants' Rule 12(b)(6) Motion to Dismiss First Amended Complaint (Doc. 16). Having considered the parties' memoranda, the Court finds that the motion to dismiss should be denied.[1]Background In a previous order (Doc.11), the Court dismissed plaintiff Kristine Russell's complaint with leave to amend on the ground that the state law claims raised therein were preempted by ERISA.

         In her First Amended Complaint (“FAC”) (Doc. 12), the plaintiff raises ERISA claims pursuant to 29 U.S.C. § 1132(a) against defendants CVS Caremark Corporation, CVS RX Services, Inc., and 401(k) Plan and the Employee Stock Ownership Plan of CVS Caremark Corporation and Affiliated Companies (collectively “CVS”); all of the plaintiff's claims arise from an allegedly improper distribution from her 401(k) Plan.

         The plaintiff, a former CVS employee, alleges that in the first week of July 2015, she directed CVS to distribute $99, 786.24 from her 401(k) Plan account to her bank account but that CVS erroneously caused her funds to be deposited in the wrong bank account, resulting in a loss of those funds. She further alleges as follows: that upon discovery of the error on August 7, 2015, she contacted CVS by telephone and requested assistance in correcting the error; that she was advised by CVS' agents that such errors had occurred before and that this one would be corrected shortly; that she was later advised that CVS was looking into the error; that when the error was not corrected, that she again contacted CVS and asked for assistance in fulfilling any necessary requirements or procedures for correcting the error and recovering the distributed funds; that CVS' agents failed or refused to provide her with the requested information regarding procedures available under the 401(k) Plan for correcting the erroneous distribution or for recovering erroneously distributed funds, and that they ultimately advised her that they would no longer accept any communications from her; that despite her demand, CVS refused to return the distributed funds to her and it failed or refused to identify the person who received the funds distributed from the plaintiff's account; that due to CVS' failure and refusal to provide information, the plaintiff could not exercise any administrative remedies under the plan; and that the funds distributed from the plaintiff's account have not been returned or otherwise recovered.

         The FAC, which does not contain any separate enumerated causes of action, alleges that CVS (1) breached its fiduciary duties as the plan administrator, in violation of 29 U.S.C. § 1109; (2) failed to discharge its duties with respect to the plan in accordance with the documents and instruments governing the Plan, in violation of 29 U.S.C. § 1104(a)(1)(D); (3) failed to discharge its duties with respect to the Plan solely in the interest of the participants and beneficiaries and failed to do so with the care, skill, prudence and diligence that a prudent person would have used, in violation of 29 U.S.C. § 1104(a)(1)(A) and (B); and (4) failed to discharge its duties of disclosure, in violation of 29 U.S.C. § 1133. As a result of these alleged ERISA violations, the plaintiff seeks to recover civil penalties pursuant to 29 U.S.C. §1132(c)(1), as well as her costs and attorney's fees pursuant to 29 U.S.C. § 1132(g)(1).

         Relevant Plan Provisions

         The 401(k) Plan (“the Plan”) (Exhibit A to CVS' motion) provides in relevant part in Section 13.13, entitled Claims and Appeals from Denial of Claims, that “[c]laims for benefits and inquires [sic] concerning the Plan shall be submitted to the Administrative Subcommittee or its designated agent in writing.” The section also provides

that the procedure for the resolution of claims for benefits arising under the Plan shall be as follows. Any claim for benefits under the Plan shall initially [sic] submitted in writing to the Administrative Subcommittee or its delegate in accordance with such procedures that may be established from time to time by the Administrative Subcommittee. If any such claim for benefits is wholly or partially denied, the claimant shall be given notice in writing within a reasonable period of time after receipt of the claim by the Plan not to exceed 90 days after receipt of the claim[.]

         The section further provides that by the end of the 90-day period,

the claimant shall be given written notice of the decision with respect to such claim, which notice shall be written in a manner calculated to be understood by the claimant setting forth the following information:
(a) the specific reasons for such denial,
(b) specific reference to pertinent Plan provisions on which the denial is based,
(c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation ...

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