Case 1:20-cv-00847-TWT Document 33 Filed 12/17/20 Page 1 of 8
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF GEORGIA
`ATLANTA DIVISION
`
`
`
`
`
` CIVIL ACTION FILE
` NO. 1:20-CV-847-TWT
`
`
`
`
`
`
`
` Defendants.
`
`
`
`
`
`CARA CHIAPPA, et al.,
`
` Plaintiffs,
`
` v.
`
`CUMULUS MEDIA, INC., et al.,
`
`
`
`
`
`
`
`
`
`
`OPINION AND ORDER
`
`This is an ERISA action. It is before the Court on Defendant Cumulus
`
`Media Inc.’s Motion to Dismiss [Doc. 19]. For the reasons set forth below, the
`
`Court GRANTS Defendant Cumulus Media Inc.’s Motion to Dismiss [Doc. 19].
`
`I.
`
`Background
`
`
`
`The Defendant Cumulus Media Inc.
`
`is a
`
`leading media and
`
`entertainment company that delivers premium content through 428 owned-
`
`and-operated radio stations across 87 markets, including nationally syndicated
`
`sports, news, talk, and entertainment programming. Compl., at ¶ 19. Cumulus
`
`provides its employees the opportunity to save for retirement by participating
`
`in the Cumulus Media 401(k) Plan. Id. at ¶ 2. The Plan is an Internal Revenue
`
`Code 401(k) plan that confers tax benefits on participating employees to
`
`incentivize saving for retirement. Id. at ¶ 2. Each Plan participant has a
`
`separate account, directs how his/her contributions are invested, and bears the
`T:\ORDERS\20\Chiappa\mtdtwt.docx
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF GEORGIA
`ATLANTA DIVISION
`
`
`
`
`
` CIVIL ACTION FILE
` NO. 1:20-CV-847-TWT
`
`
`
`
`
`
`
` Defendants.
`
`
`
`
`
`CARA CHIAPPA, et al.,
`
` Plaintiffs,
`
` v.
`
`CUMULUS MEDIA, INC., et al.,
`
`
`
`
`
`
`
`
`
`
`OPINION AND ORDER
`
`This is an ERISA action. It is before the Court on Defendant Cumulus
`
`Media Inc.’s Motion to Dismiss [Doc. 19]. For the reasons set forth below, the
`
`Court GRANTS Defendant Cumulus Media Inc.’s Motion to Dismiss [Doc. 19].
`
`I.
`
`Background
`
`
`
`The Defendant Cumulus Media Inc.
`
`is a
`
`leading media and
`
`entertainment company that delivers premium content through 428 owned-
`
`and-operated radio stations across 87 markets, including nationally syndicated
`
`sports, news, talk, and entertainment programming. Compl., at ¶ 19. Cumulus
`
`provides its employees the opportunity to save for retirement by participating
`
`in the Cumulus Media 401(k) Plan. Id. at ¶ 2. The Plan is an Internal Revenue
`
`Code 401(k) plan that confers tax benefits on participating employees to
`
`incentivize saving for retirement. Id. at ¶ 2. Each Plan participant has a
`
`separate account, directs how his/her contributions are invested, and bears the
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`
`
`Case 1:20-cv-00847-TWT Document 33 Filed 12/17/20 Page 2 of 8
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`risk of investment loss resulting from his/her exercise of control. Id. at ¶ 3.
`
`
`
`The Plaintiffs allege that Cumulus is a “named fiduciary” and the
`
`“Administrator” of the Plan. Id. at ¶ 21. The Plaintiffs Cara Chiappa and Dan
`
`Alfonso, individually and on behalf of all others similarly situated, filed their
`
`Complaint against Cumulus on February 24, 2020. The Plaintiffs allege that
`
`Cumulus breached its fiduciary duties to the participants in the Plan. Compl.,
`
`at ¶ 11, ¶¶ 117-30. Specifically, the Plaintiffs claim that Cumulus breached its
`
`duties of loyalty and prudence by offering an investment menu composed of
`
`unduly expensive mutual funds. Compl., at ¶¶ 11, 117-23. The Plaintiffs also
`
`maintain that Cumulus failed to monitor or control the allegedly excessive
`
`compensation paid to the Plan’s recordkeeper. Id. The Plaintiffs contend that
`
`the Plan and its participants suffered millions of dollars in losses because of
`
`these alleged breaches. Id. ¶¶ 122, 129.
`
`
`
`As required under ERISA, Cumulus issues a Summary Plan Description
`
`(“SPD”) describing the terms of the Plan in language the average participant
`
`can understand. The Plaintiffs received copies of the SPD before filing their
`
`Complaint. The SPD describes the internal review process that is available for
`
`participants who seek to challenge Cumulus’ management of the Plan. The
`
`SPD sets forth different limitation periods for lawsuits filed against Cumulus,
`
`depending on whether participants have first exhausted the Plan’s internal
`
`review procedures. The Plan states:
`
`You may file a lawsuit regarding the denial of an appeal after
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`Case 1:20-cv-00847-TWT Document 33 Filed 12/17/20 Page 3 of 8
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`following the claims and review procedures above. You must file
`any lawsuit within 12 months after the date of the Plan
`Administrator issued its final decision on an appeal. If you do not
`file a claim or exhaust the claims review process for any reason,
`any lawsuit must be filed within 12 months of the date of the
`conduct at issue in the lawsuit (which includes, among other
`things, the date you became entitled to any Plan benefits at issue
`in the lawsuit). If you fail to file a lawsuit within these
`timeframes, you will lose your right to bring the lawsuit at any
`later time.
`
`Id. at Section X(C). Under the Plan’s limitation provision, a Plan participant
`
`who exhausts a claim through the Plan’s internal review process has a right to
`
`file a lawsuit within one year after the conclusion of the internal review. Id. If
`
`the Plan participant does not exhaust the Plan’s internal review process,
`
`his/her lawsuit is limited to conduct that occurred within the year prior to the
`
`date on which the lawsuit was filed. Id. The Plaintiffs do not dispute that
`
`Plaintiff Chiappa’s employment at Cumulus ended in August 2012 and she
`
`retained her investments in the Cumulus Plan until 2016, when she
`
`transferred them into an Individual Retirement Account and cashed out of the
`
`Plan. Decl. of Lindy Nodine, at ¶¶ 12-13. The Plaintiffs also do not dispute that
`
`Chiappa and Dan Alfonso, whose employment with a Cumulus affiliate ended
`
`in May 2019, did not submit any of the claims asserted in the Complaint
`
`through the Plan’s internal review process. Id. at ¶ 15.
`
`II.
`
`Legal Standard
`
`
`
`A complaint should be dismissed under Rule 12(b)(6) only where it
`
`appears that the facts alleged fail to state a "plausible" claim for relief. Ashcroft
`
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`3
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`Case 1:20-cv-00847-TWT Document 33 Filed 12/17/20 Page 4 of 8
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`v. Iqbal, 129 S.Ct. 1937, 1949 (2009); Fed. R. Civ. P. 12(b)(6). A complaint may
`
`survive a motion to dismiss for failure to state a claim, however, even if it is
`
`"improbable" that a plaintiff would be able to prove those facts; even if the
`
`possibility of recovery is extremely "remote and unlikely." Atlantic v. Twombly,
`
`550 U.S. 544, 556 (2007). In ruling on a motion to dismiss, the court must
`
`accept the facts pleaded in the complaint as true and construe them in the light
`
`most favorable to the plaintiff. See Quality Foods de Centro America, S.A. v.
`
`Latin American Agribusiness Dev. Corp., S.A., 711 F.2d 989, 994-95 (11th Cir.
`
`1983); see also Sanjuan v. American Bd. of Psychiatry and Neurology, Inc., 40
`
`F.3d 247, 251 (7th Cir. 1994) (noting that at the pleading stage, the plaintiff
`
`“receives the benefit of imagination”). Generally, notice pleading is all that is
`
`required for a valid complaint. See Lombard’s, Inc. v. Prince Mfg., Inc., 753
`
`F.2d 974, 975 (11th Cir. 1985), cert. denied, 474 U.S. 1082 (1986). Under notice
`
`pleading, the plaintiff need only give the defendant fair notice of the plaintiff’s
`
`claim and the grounds upon which it rests.
`
`III. Discussion
`
`
`
`The Court agrees with the Defendant that the Plaintiffs’ claims are
`
`barred by the terms of the Plan to the extent that they are based on conduct
`
`that occurred prior to February 24, 2019, one year before this case was filed.
`
`Here, the Plan contains a 12-month limitations period for participants who fail
`
`or refuse to exhaust the Plan’s administrative process for any reason. Because
`
`the Plaintiffs chose not to exhaust their claims before filing this suit, the terms
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`Case 1:20-cv-00847-TWT Document 33 Filed 12/17/20 Page 5 of 8
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`of the Plan documents bar the Plaintiffs’ claim based on conduct more than one
`
`year prior to the filing of the Complaint.
`
`
`
`Courts may consider the terms of Plan documents when ruling on a
`
`Motion to Dismiss when they are central to the pleadings and undisputed in
`
`the sense that the authenticity of the document is not challenged. See Horsley
`
`v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002). Contractual limitations periods
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`in ERISA plan documents are enforceable so long as they are reasonable, even
`
`where those contractual provisions shorten an otherwise applicable limitations
`
`period. See Heimeshoff v. Hartford Life & Acc. Ins. Co., 571 U.S. 99, 105–06
`
`(2013); Northlake Reg’l Med. Ctr. v. Waffle House Sys. Emp. Benefit Plan, 160
`
`F.3d 1301, 1302–04 (11th Cir. 1998) (enforcing limitations period that shortens
`
`otherwise applicable 4-year period to 90 days). The Court must give effect to
`
`the Plan’s limitations provision unless it determines either that the period is
`
`unreasonably short or that a controlling statute prevents the limitations
`
`provisions from taking effect. Heimeshoff, 571 U.S. at 109. In Northlake Reg’l
`
`Med. Ctr., the Eleventh Circuit enforced a 90-day limitations period prescribed
`
`by the Defendant’s System Employee Benefit Plan because there was no
`
`evidence that the Plan’s limitations period was a subterfuge to lawsuits, the
`
`limitation period was commensurate with other Plan provisions; and the suit
`
`followed completion of an ERISA-required internal appeals process. 160 F.3d
`
`at 1302–04.
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`5
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`Case 1:20-cv-00847-TWT Document 33 Filed 12/17/20 Page 6 of 8
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`
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`Here, the Plan’s one-year period only applies to situations where the
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`Plan participant chooses not to submit his or her claims to the administrative
`
`process. Most of the Plaintiffs’ Response focuses on why the Court should
`
`excuse the Plaintiffs from exhausting their administrative remedies. The
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`Plaintiffs also state that enforcement of the Plan’s one-year limitations period
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`for unexhausted claims would be “particularly egregious” because the
`
`otherwise applicable repose period is six years and that doing so would “conflict
`
`with ERISA and strong judicial policy.” Response, at 11-14. Recently in
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`Secretary, U.S. Dept. of Labor v. Preston, 873 F.3d 877 (11th Cir. 2017), the
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`Eleventh Circuit held that the six-year repose period contained in ERISA
`
`Section 413(1) may be waived and thus extended by agreement. The court
`
`distinguished ERISA’s limitations provisions from limitations periods in other
`
`federal statutes that include substantive rights that may not be prospectively
`
`waived, emphasizing that an ERISA plan is nothing more than a contract. Id.
`
`In Heimeshoff,, the United States Supreme Court also noted that a “controlling
`
`statute to the contrary” means an express statutory prohibition against
`
`agreements that substitute a shorter limitation period. 571 U.S. at 107. Here,
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`an express statutory prohibition against a shorter limitations period does not
`
`exist. The Plaintiffs fail to identify how the contractual limitations would
`
`conflict with ERISA, especially when the one-year period only applies when
`
`the Plan participant chooses not to submit his or her claims through the
`
`administrative process. Thus, the Court finds that any allegations concerning
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`Case 1:20-cv-00847-TWT Document 33 Filed 12/17/20 Page 7 of 8
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`conduct occurring before February 24, 2019 are time-barred and dismissed for
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`failure to state a claim.
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`
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`The Court also agrees with the Defendant that Plaintiff Chiappa should
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`be dismissed for lack of standing because she ceased to be a Plan participant
`
`in 2016. The Plaintiffs concede that if the Court enforces the Plan’s limitations
`
`provision then Chiappa lacks standing. To establish statutory standing under
`
`ERISA, a plaintiff must be a plan participant beneficiary, fiduciary or the
`
`Secretary of Labor. See In re ING Groep, N.V. ERISA Litigation, 749 F. Supp.
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`2d 1338, 1345 (N.D. Ga. March 31, 2010). Since Chiappa stopped participating
`
`in the Plan in 2016 and ceased to hold any investment in the Plan from that
`
`point forward, Chiappa is not a “participant” under ERISA from 2016 forward
`
`and lacks statutory standing to advance claims based on alleged ERISA
`
`violations that occurred after 2016. Because the Plaintiffs’ claims are limited
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`to the period from February 24, 2019 forward, Chiappa lacks standing to assert
`
`any timely claim. Thus, the Court dismisses Plaintiff Chiappa from this suit.
`
`IV. Conclusion
`
`
`
`For the reasons stated above, this Court GRANTS Defendant Cumulus
`
`Media Inc.’s Motion to Dismiss [Doc. 19] with respect to the Plaintiff Chiappa
`
`and any claims arising prior to February 24, 2019.
`
`
`
`
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`7
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`Case 1:20-cv-00847-TWT Document 33 Filed 12/17/20 Page 8 of 8
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`SO ORDERED, this 16 day of December, 2020.
`
`/s/Thomas W. Thrash
`THOMAS W. THRASH, JR.
`United States District Judge
`
`
`
`
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`8
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