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Tennessee Tractor, LLC v. WH Adminstrators, Inc.

United States District Court, W.D. Tennessee, Eastern Division

March 12, 2018

TENNESSEE TRACTOR, LLC, on behalf of itself and the Tennessee Tractor, LLC Health and Welfare Benefit Plan, and KERRY YOUNG, on behalf of himself and all similarly situated persons, Plaintiffs,
v.
WH ADMINISTRATORS, INC., Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S THIRD MOTION TO COMPEL ARBITRATION

          S. THOMAS ANDERSON, CHIEF UNITED STATES DISTRICT COURT JUDGE

         Before the Court is the Third Motion of Defendant WH Administrators, Inc., to Compel Arbitration (ECF No. 24) in this action combining state-law claims brought by an employer and class-action claims brought by its employees under the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. (“ERISA”). The employer, Plaintiff Tennessee Tractor, LLC (“Tennessee Tractor”), and the employee bringing the class-action claims on behalf of himself and the other employees that were participants in the plan giving rise to this action, Plaintiff Kerry Young (“Young”), seek to respectively enforce contractual obligations and duties owed under federal law. Defendant, however, avers to the Court that all parties are bound to arbitrate any dispute surrounding its management of the ERISA plan. For reasons set forth below, the instant Motion is GRANTED IN PART AND DENIED IN PART. Plaintiff Tennessee Tractor is compelled to arbitrate its claims against Defendant in accordance with their agreement. Young and the other beneficiaries, however, may continue to pursue their claims before this Court. Therefore, Tennessee Tractor's claims against Defendant are hereby STAYED. Further, the stay of Plaintiffs' Motion for Preliminary Injunction (ECF No. 10) is hereby LIFTED. Defendant has twenty (20) days from the entry of this Order to respond to Plaintiffs' Motion.

         I. BACKGROUND

         A. Procedural Posture

         On November 10, 2017, Plaintiffs filed a Class Action Complaint (ECF No. 1) based on alleged violations of ERISA. On November 27, 2017, Plaintiffs filed their Second Motion for Preliminary Injunction (ECF No. 10). On December 4, 2017, Defendant filed its First Motion to Compel Arbitration (ECF No. 14). And then on December 6, 2017, Defendant filed its Second Motion to Stay Plaintiffs' Second Motion for Preliminary Injunction (ECF No. 18) pending the resolution of the First Motion to Compel Arbitration. The Court granted Defendant's Motion to Stay in its December 8, 2017 Order (ECF No. 21). But then on December 11, 2017, Plaintiffs filed their First Amended Class Action Complaint (“Amended Complaint”) (ECF No. 22), which rendered the initial Complaint, and therefore also the First Motion to Compel, moot. Defendant filed the instant Motion on December 19, 2017 (ECF No. 24). And now Plaintiffs have a filed a Response in Opposition (ECF No. 25). The Court entered an Order (ECF No. 27) on December 28, 2017, that extended the stay from its December 8, 2017 Order until the resolution of the Motion now before the Court. On December 29, 2017, Defendant filed a Motion for Leave to Reply (ECF No. 28), which the Court granted that same day (ECF No. 29). Defendant filed its Reply (ECF No. 30) on January 5, 2018. But then, on January 9, 2018, Plaintiff filed its own Motion (ECF No. 32) seeking leave to file a sur-reply. The Court granted Plaintiff's Motion in its January 10, 2018 Order (ECF No. 33). And on January 17, 2018, Plaintiff filed its Sur-Reply (ECF No. 34).

         B. Material Facts

         The following facts are alleged by Plaintiffs in their Amended Complaint. Tennessee Tractor is a west Tennessee-based John Deere dealer engaged in the sale and service of John Deere tractors, mowers, and their respective parts. Tennessee Tractor also established the Tennessee Tractor LLC Health and Welfare Benefit Plan (the “Plan”) for the benefit of its employees and their eligible dependents. Young is and, at all times relevant to this lawsuit, was a full-time employee of Tennessee Tractor. Defendant is and, at all times relevant to this lawsuit, was a third-party provider of ERISA plan administration and claims services. In February 2016, Defendant, through its own actions in Tennessee and those of its agent and broker, marketed a self-funded group health plan in Tennessee to Tennessee Tractor for the benefit of its employees. This health plan would be and indeed was an employee welfare benefit plan as defined under ERISA. On or about April 18, 2016, Tennessee Tractor entered into a Patient Protection and Affordable Care Act Compliance Service Agreement (the “Agreement”) with Defendant WH Administrators, Inc., to administer the Plan. Under the Agreement, Defendant was to, among other things, ensure Tennessee Tractor's compliance with the Patient Protection and Affordable Care Act and administer the Plan. The Plan was to commence on June 1, 2016. Tennessee Tractor was named as Plan Sponsor. Defendant was the duly appointed Plan Administrator and named fiduciary. Tennessee Tractor's employees, including Young, were participants in the Plan and therefore eligible to receive benefits under it. Over the course of the parties' contractual relationship, Tennessee Tractor performed all of its duties and obligations under the Agreement. But in December 2016, Defendant abruptly and without explanation ceased processing or paying the claims of Tennessee Tractor's employees, including those of Young. Young now brings statutory claims under ERISA on behalf of himself and the other Plan participants. And Tennessee Tractor further brings claims of breach of contract, fraud and misrepresentation, and indemnification under Tennessee law.

         C. The Agreement

         Plaintiffs attached a copy of the Agreement to the Amended Complaint. The Agreement was made between and entered into by Tennessee Tractor and Defendant. The Agreement contains an arbitration provision that states as follows:

12. ARBITRATION. Any controversies or disputes arising out of or relating to this Agreement shall be resolved by binding arbitration in accordance with the then-current Commercial Arbitration Rules of the American Arbitration Association, including the rules applicable to discovery, however all other discovery methods under Maryland law are also authorized. . . . The arbitration shall take place in the State of Maryland, unless otherwise mutually agreed upon by the parties. . . . The decision rendered by the arbitrator(s) shall be final and binding on the parties, and judgment may be entered in conformity with the decision in any Maryland court having jurisdiction. The agreement to arbitration shall be specifically enforceable under prevailing arbitration law. . . .

PPACA Compliance Service Agreement, ¶ 12, Apr. 18, 2016, ECF No. 22-1 [hereinafter “Service Agreement”]. The Agreement also states it confers no rights or benefits upon any party besides the signatories to its terms:

21. NO THIRD PARTY RIGHTS. Nothing in this Agreement is intended to confer any rights or remedies on anyone other than the parties to the Agreement and their respective successors, representatives[, ] and assigns. The provisions of this Agreement shall not entitle any person not a signatory to this Agreement to any rights as a third[-]party beneficiary . . . .

Id. ¶ 21.

         II. ...


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