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Mathias v. Caterpillar, Inc.

United States District Court, C.D. Illinois

August 29, 2016

CATERPILLAR, INC., et al., Defendants.


          EDUARDO C. ROBRENO, J.

         This Employee Retirement Income Security Act, or ERISA, action arises out of a billing dispute related to the retirement of Plaintiff George Mathias. Plaintiff alleges that his health insurance plan, Defendant Caterpillar, Inc. Retiree Group Insurance Plan (the “RGIP”), which is sponsored by Defendant Caterpillar, Inc., mistakenly under-billed him for premium payments for several years. Then, when Plaintiff could not pay the accumulated sum that he owed, the RGIP improperly terminated his benefits.

         Before the Court is Defendants' motion to transfer this matter to the United States District Court for the Central District of Illinois, based on a forum selection clause in the RGIP. ECF No. 6. In the alternative, Defendants argue that this Court is an “inappropriate forum, ” because (1) Plaintiff lives and worked in York County, Pennsylvania, which is located within the Middle District of Pennsylvania, and (2) the administration of the ERISA plans primarily occurred in the Central District of Illinois, where Caterpillar's central offices are located. Still in the alternative, Defendants also move to dismiss Plaintiff's claims pursuant to Federal Rule of Civil Procedure 12(b)(6) as time-barred and otherwise not cognizable under ERISA. For the reasons that follow, the Court will enforce the RGIP's forum selection clause and transfer this matter, pursuant to 28 U.S.C. § 1404(a), to the Central District of Illinois.


         Plaintiff, who currently resides in Hanover, Pennsylvania, worked as a machine tool operator for Defendant Caterpillar, Inc., beginning in 1978, most recently in Caterpillar's York, Pennsylvania, plant. Compl. ¶¶ 1, 13. Defendants Caterpillar, Inc.; Caterpillar, Inc. Group Insurance Plan A; Caterpillar, Inc. Group Insurance Plan B; and Caterpillar, Inc. Retiree Group Insurance Plan are the “plan administrator” and “plan sponsor” within the meaning of ERISA, 29 U.S.C. § 1002(16)(A), (B). Id. ¶ 4. Caterpillar, Inc. is an Illinois corporation with its headquarters in Illinois. Id. ¶ 3.

         In the Complaint, Plaintiff alleges that he “went out on disability in 1997” due to chronic, severe chest pain that he suffered after undergoing a quintuple coronary artery bypass surgery, which required him to take narcotic drugs. Id. ¶¶ 13-17. From 1997 until approximately 2013, Plaintiff was covered “by Defendant's health insurance plans as an employee on long-term disability, and [paid] insurance premiums at the disabled employee rate.” Id. ¶ 18.

         On September 5, 2012, Plaintiff retroactively retired effective October 1, 2009. Compl. ¶¶ 28(a), 31; Compl. Ex. O at 2. Due to an “administrative oversight, ” Caterpillar continued to provide Plaintiff with “health care benefits under [one of the employee health care plans] as an employee on disability” through May 2013. Compl. ¶ 33(a), (c). For the period from October 1, 2009, to May 2013, Caterpillar billed Plaintiff for health insurance benefits at the lower employee premium rate, rather than at the higher premium rate charged to retirees. Id. ¶¶ 31-32.

         In May 2013, Caterpillar corrected the administrative error, and properly classified Plaintiff as a retiree on and after September 30, 2009. Id. ¶¶ 28(a), 33(c). Caterpillar then refunded Plaintiff his employee premiums and billed him for the higher retiree premiums he should have been paying beginning on October 1, 2009, the date of his retirement. Id. ¶¶ 21, 33; Ex. O at 3. The amount Plaintiff owed was $9, 513.13. Compl. ¶ 33(d); Ex. O at 3.

         Faced with this invoice, Plaintiff filed an administrative claim under the RGIP. Id. Ex. O at 1. On October 1, 2013, the Plan Administrator denied the claim. Id. The denial letter explained that upon Plaintiff's retirement, he became eligible for retiree benefits, which required higher premiums. Id. at 2-3. Although the Plan Administrator admitted that the billing error resulted from an “administrative oversight, ” Plaintiff was nonetheless obligated to pay the premium amounts he should have paid as a retiree. Id. at 3. The Plan Administrator extended the deadline for Plaintiff to make payment until a “final decision is made on appeal if Mr. Mathias files an appeal.” Id. at 3 n.5.

         On March 28, 2014, Plaintiff filed an appeal of the denial. On April 25, 2014, the Caterpillar Benefits Appeals Committee denied the appeal. Kyleen Martin Decl. Ex. F at 1, ECF Nos. 6-10.[1] The Committee determined that the administrative mistakes “were the result of processing a retroactive retirement, which is an atypical process, ” and that Plaintiff was still required to pay the retiree premium amounts for the period beginning on October 1, 2009. Id. at 3. The Committee further noted that it “has the authority and the fiduciary obligation to interpret and enforce the terms of [the Plans] as written, including the provisions regarding the determination of and the payment of premiums, and the authority and obligations to decide questions of eligibility for participation in the plans.” Id.

         The appeal denial letter pointed out to Plaintiff that “[p]ursuant to the terms of the [RGIP], any court action to (a) recover plan benefits or (b) enforce or clarify rights under Section 502 of ERISA[] must be commenced within six months after the date of this letter and such action must be brought in the U.S. District for the Central District of Illinois where RGIP is administered.” Id. at 6. As discussed below, this directive was contained in the plan documents in effect at the time Plaintiff agreed to accept benefits under the RGIP.

         Plaintiff did not file this action until nearly two years later, on April 19, 2016. See ECF No. 1. He brings two counts in his complaint. First, he alleges that the termination of his health care benefits was “arbitrary and capricious” because, among other things, the “accumulation of premiums was due to [Defendants'] own mistake, and not any misconduct on the part of the Plaintiff.” Compl. ¶ 41. He therefore seeks payment of his health insurance premiums, reinstatement of his health insurance benefits, reimbursement for health care expenses which should have been paid under the Plan, and attorney's fees and costs pursuant to 29 U.S.C. §§ 1132(a)(1)(B), (a)(3), and (g)(1). Second, he alleges, pursuant to 29 U.S.C. § 1132(1)(1)(A), that Defendants breached their fiduciary duty by, among other things, “ignor[ing] uncontradicted evidence of Mathias having paid all of his premiums required under the circumstances”; “terminat[ing] benefits where there was no evidence to support a change in the Defendants' prior determination of Mathias' status as a beneficiary of the Plan”; “allow[ing] the existence of a conflict of interest, namely, the fact that Defendants' benefits are funded directly out of Caterpillar's operating income, to adversely impact the neutrality of the decision making process”; and “breach[ing] numerous procedural errors that adversely [a]ffected the decision making process.” Id. ¶ 44.


         On April 19, 2016, Plaintiff filed an application to proceed in forma pauperis, attaching the Complaint. ECF No. 1. The following day, the Court granted Plaintiff leave to proceed in forma pauperis, and Plaintiff filed his Complaint. ECF Nos. 2, 3.

         Defendants filed a joint Motion to Transfer or Dismiss on July 7, 2016. ECF No. 6. Plaintiff filed a response in opposition thereto on July 20, 2016. ECF No. 7.

         The Court held a hearing on Defendants' motion on August 17, 2016. ECF Nos. 9, 10. At the hearing, the Court explained that it would consider only the motion to transfer at this time, because arguments made in connection with the motion to dismiss would be better addressed by the transferee forum in the event that transfer was ordered.[2]


         Defendants submit that the RGIP contains a forum selection clause requiring this suit to be brought in the United States District Court for the Central District of Illinois. They explain that the RGIP, Martin Decl. Ex. A at § 5, ECF No. 6-3, incorporates the claims procedure found in the Caterpillar Retiree Benefit Plan, Id. Ex. C at §§ 10.1-10.5. The claims procedure, in turn, contains a forum selection clause requiring that “[a]ny court action to recover Program benefits, or to enforce or clarify rights under the Program under section 502 of ERISA . . . be brought in the U.S. District Court for the Central District of Illinois, where the Program is administered.” Id. at § 10.5. Defendants ask the Court to enforce the RGIP's forum selection clause and transfer this case to the Central District of Illinois. Defs.' Mot. Transfer at 7, ECF No. 6.

         Pursuant to 28 U.S.C. § 1404, a district court may transfer an action to any other district “where it might have been brought, ” so long as the transfer is “[f]or the convenience of parties and witnesses” and “in the interest of justice.” 28 U.S.C. § 1404(a).

         Ordinarily, in a case not involving a forum selection clause, a court evaluates a § 1404(a) motion using such factors as the convenience of the parties and the relevant public interests. Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. Tex.,134 S.Ct. 568, 581 (2013). “The calculus changes, however, when the parties' contract contains a valid forum-selection clause, which ‘represents the parties' agreement as to the most proper forum.'” Id. (quoting Stewart Org., Inc. v. Ricoh Corp.,487 U.S. 22, 31 (1988)). Because forum selection clauses are “‘bargained for by the parties, '” “‘a valid ...

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