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Sobh v. Phoenix Graphix Inc.

United States District Court, D. Arizona

August 22, 2019

Sam Sobh, Plaintiff,
Phoenix Graphix Incorporated, et al., Defendants.


          Dominic W. Lanza United States District Judge.


         In this lawsuit, Plaintiff Sam Sobh sues his former employer, Phoenix Graphix Incorporated (“PGI”), as well as PGI's profit-sharing plan, president, and vice-president (collectively, “Defendants”). In a nutshell, Sobh contends that, after he was terminated, Defendants improperly rejected his request to “cash out” the benefits he was owed under the profit-sharing plan, failed to pay him the bonuses and paid time-off he'd earned prior to his termination, and failed to provide any documentation concerning these denials. Based on these allegations, Sobh asserts various claims under the Employee Retirement Income Security Act (“ERISA”), as well as state-laws claim for unlawful retention of wages and unjust enrichment.

         Now pending before the Court is Defendants' motion to dismiss. (Doc. 12.)[1] For the following reasons, the motion will be granted.


         I. The Complaint

         The complaint (Doc. 1) contains the following factual allegations, which the Court accepts as true for the purpose of resolving Defendants' motion to dismiss:

         Sobh is a former employee of PGI, an Arizona corporation. (Id. ¶¶ 13, 18.) PGI's president and vice-president are Brian and Anne Kotarski. (Id. ¶¶ 15-16.)

         While employed by PGI, Sobh became a beneficiary of the PGI Profit Sharing Plan (“the Plan”). (Id. ¶ 20.) PGI later “terminated” Sobh's employment because their relationship had become “untenable.” (Id. ¶¶ 5, 19.)

         Following his termination, Sobh “requested that his benefits under [the Plan] be cashed out.” (Id. ¶ 22.) This request “was denied” by an unspecified person or entity. (Id. ¶ 23.) Afterward, Sobh “requested the corresponding documentation regarding the reason for his denial, procedure for appeal, and supporting paperwork as required under [the Plan] and as required by ERISA, ” but this request “was refused” by an unspecified person or entity. (Id. ¶¶ 24-25.) Additionally, “PGI” refused to pay Sobh the “bonuses and paid time off” he had earned “prior to his termination.” (Id. ¶ 31.)[2]

         II. The Plan Documents Subject To Judicial Notice

         “Generally, the scope of review on a motion to dismiss for failure to state a claim is limited to the contents of the complaint.” Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). However, “[a] court may consider evidence on which the complaint ‘necessarily relies' if: (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion.” Id.

         Here, the complaint refers repeatedly to the Plan, the Plan is central to Sobh's ERISA-based claims, and Defendants have enclosed, as exhibits to their motion to dismiss, (1) the Plan (Doc. 12-1 at 2-57) and (2) the Summary Plan Description (“SPD”) (Doc. 12- I at 59-75). In his opposition, Sobh doesn't contest the authenticity of these documents. (Doc. 15.) Accordingly, the Court will consider them when ruling on Defendants' motion. Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010).[3] These documents reveal the following additional facts that are relevant to the Court's analysis:

         The Plan designates “the Employer” as the Plan Administrator unless the board of directors designates a new Plan Administrator and the designation is accepted in writing. (Doc. 12-1 at 12 [Art. II § 2.22].) PGI is the default Plan Administrator, and Brian and Anne Kotarski are the named trustees. (Doc. 12-1 at 5, 55.) Under the Plan, a participant may receive benefits through, among other methods, a “Cash-Out”[4] or a “Hardship Distribution.” (Doc. 12-1 at 30-31 [Art. VII §§ 7.1-7.1A.) A Cash-Out “shall be made as soon as administratively feasible in the Plan Year following the Plan Year of termination of employment . . . .” (Doc. 12-1 at 32 [Art. VII § 7.2].)[5]

         In contrast, the Plan Administrator retains discretion to immediately disburse a Hardship Distribution if the participant demonstrates “immediate and heavy financial need” and the distribution is “necessary” to satisfy that need. (Doc. 12-1 at 30-31 [Art. VII § 7.1A].) However, the Plan imposes various limitations on Hardship Distributions. Among other things, (1) such a distribution must be limited to the precise amount required to alleviate the hardship and (2) “financial hardship” is limited to medical expenses, purchase of a principal residence, payment of tuition or other educational fees, rent or mortgage payments necessary to prevent eviction or foreclosure, and “such other financial needs as prescribed by the Commissioner of the Internal Revenue Service.” (Id.) Additionally, the Plan Administrator's hardship determination is “final and binding.” (Id.)


         “[T]o survive a motion to dismiss, a party must allege ‘sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” In re Fitness Holdings Int'l, Inc., 714 F.3d 1141, 1144 (9th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (quoting Iqbal, 556 U.S. at 678). “[A]ll well-pleaded allegations of material fact in the complaint are accepted as true and are construed in the light most favorable to the non-moving party.” Id. at 1144-45 (citation omitted). However, the court need not accept legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 679-80. The court also may dismiss due to “a lack of a cognizable legal theory.” Mollett v. Netflix, Inc., 795 F.3d 1062, 1065 (9th Cir. 2015) (citation omitted).


         I. ERISA Claims

         “ERISA is a comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983) (citations omitted). Any plan “established or maintained by an employer” is defined as an employee welfare benefit plan under ERISA to the extent it “was established or is maintained for the purpose of providing for its participants or their beneficiaries . . . medical, surgical, or hospital care ...

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