Gates v. E.M. Hundley Hardware Co. ( 2022 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 RICHARD M. GATES, Case No. 22-cv-04663-TSH 8 Plaintiff, ORDER TO SHOW CAUSE 9 v. 10 E.M. HUNDLEY HARDWARE CO., 11 Defendant. 12 13 On August 12, 2022, Plaintiff Richard Gates filed the present action against his former 14 employer, Defendant E.M. Hundley Hardware Co., alleging two causes of action under the 15 Employee Retirement Income Security Act: (1) failure to provide plan information; and (2) denial 16 of benefits. He now moves for default judgment. ECF No. 13. 17 Federal courts are courts of limited jurisdiction and are presumptively without jurisdiction. 18 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A federal court may 19 dismiss an action on its own motion if it finds that it lacks subject matter jurisdiction. Fiedler v. 20 Clark, 714 F.2d 77, 78-79 (9th Cir. 1983); see also Fed. R. Civ. P. 12(h)(3) (“If the court 21 determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the 22 action.”). Here, Gates alleges the Court has subject matter jurisdiction because district courts have 23 exclusive jurisdiction over cases relating to employee benefit plans and cases filed to collect 24 covered benefits from an ERISA plan. 29 U.S.C. § 1001. However, he fails to allege any facts 25 that show the existence of a valid ERISA plan. 26 Section 1132(a)(1)(B) of ERISA “provides a right of action for plan participants or 27 beneficiaries ‘to recover benefits due . . . under the terms of [a] plan, to enforce [ ] rights under the 1 CVS Pharmacy, Inc., 982 F.3d 1204, 1213 (9th Cir. 2020) (alterations in original) (quoting 29 2 U.S.C. § 1132(a)(1)(B)). ERISA requires a formal “written instrument” for each employee benefit 3 plan. 29 U.S.C. § 1102(a)(1) (“Every employee benefit plan shall be established and maintained 4 pursuant to a written instrument.”). “Each such plan must (1) provide a policy and a method for 5 funding the plan, (2) describe a procedure for plan operation and administration, (3) provide a 6 procedure for amending the plan, and (4) specify a basis for payments to and from the plan.” 7 Watkins v. Westinghouse Hanford Co., 12 F.3d 1517, 1523 n.1 (9th Cir. 1993), as amended on 8 denial of reh’g (Mar. 22, 1994); 29 U.S.C. § 1102(b). 9 Gates alleges “Hundley Hardware maintained an employee benefit plan for employees for 10 the purpose of providing retirement benefits.” Compl. ¶ 45, ECF No. 1. He also alleges “Hundley 11 Hardware entered into a contract under which Hundley Hardware agreed to pay Mr. Gates 12 retirement benefits in the amount of $3,700.00 per month from the date that his employment ended 13 through the balance of his life.” Id. ¶ 48. However, he alleges no facts concerning a formal 14 written instrument that created the employee benefit plan. Instead, he alleges Mr. Hundley “told” 15 him in February 2016 that Hundley Hardware would provide him retirement benefits of $3,400.00 16 per month. Id. ¶ 14. When he asked Mr. Hundley for a written statement confirming the promise 17 to provide retirement benefits sometime in mid-2016, “Mr. Hundley acknowledged that he 18 intended to document the agreement to provide retirement pay to Mr. Gates.” Id. ¶ 15. Gates 19 further alleges that in March 2017 Mr. Hundley “advised Mr. Gates that Hundley Hardware would 20 increase his retirement benefits to $3,700.00 per month,” and in early 2018, he restated the 21 agreement to provide Mr. Gates with retirement benefits. Id. ¶¶ 17, 19. At that time, he “advised 22 Mr. Gates that he planned to document Hundley Hardware’s agreement to pay retirement benefits 23 to Mr. Gates. Mr. Hundley stated that they would get together in July 2018 to review and sign 24 documents.” Id. ¶ 19. That never happened. Mr. Hundley passed away in September 2018 25 “without having documented the agreement to provide retirement benefits to Mr. Gates.” Id. ¶ 21. 26 It is true that in “limited” circumstances, “informal commitments to provide benefits c[an] 27 create an ERISA-governed plan in circumstances where there is no written instrument, lest 1 Warmenhoven y. NetApp, Inc., 13 F.4th 717, 724 (9th Cir. 2021) (quoting Cinelli v. Sec. Pac. 2 Corp., 61 F.3d 1437, 1503 (9th Cir. 1995) and citing Donovan v. Dillingham, 688 F.2d 1367, 1372 3 (11th Cir. 1982) (holding that a plan exists, whether “pursuant to a writing or not,” where “a 4 reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and 5 || procedures for receiving benefits”)). However, “only a written instrument satisfying the § 1102(b) 6 || criteria can vest lifetime benefits.” /d. Thus, as Gates alleges Mr. Hundley promised to pay him 7 $3,700 “through the balance of his life,” and he has alleged no facts to show a written instrument 8 that satisfies the § 1102(b) criteria, it appears he is unable to establish the existence of a valid 9 ERISA plan, leaving this Court without jurisdiction. Warmenhoven, 13 F.4th at 725 (Plaintiff 10 “bears the burden to prove that a specific written instrument vested lifetime benefits.”). i Accordingly, the Court ORDERS Plaintiff Richard Gates to show cause why this case 10 should not be dismissed for lack of subject matter jurisdiction. Plaintiff shall file a declaration by B January 5, 2023. If a responsive declaration is filed, the Court shall either issue an order based on 4 the declaration or conduct a hearing on January 19, 2023 at 10:00 a.m. by Zoom video conference. S The webinar link and instructions are located at https://cand.uscourts.gov/judges/hixson-thomas-s- 615 16 IT IS SO ORDERED. = 17 Z 18 Dated: December 28, 2022 19 T \ | □ 20 THOMAS S. HIXSON United States Magistrate Judge 22 23 24 25 26 27 28