When Does an ERISA Complaint Fail? A New Jersey Court Dismisses Disability Benefits and Retaliation Claims

In Magdalasov v. ByteDance Inc., No. 25-13824 (ES) (JBC), 2026 WL 2017269 (D.N.J. July 13, 2026), the United States District Court for the District of New Jersey, per U.S. District Judge Esther Salas, granted the defendants’ motions to dismiss a pro se ERISA claimant’s short-term disability suit and to compel arbitration of his retaliation claim. The decision addresses what an ERISA complaint must contain to survive a motion to dismiss, when a third-party claims administrator qualifies as a fiduciary, and when an ERISA retaliation claim falls within an employment arbitration agreement.

Plaintiff, a participant in ByteDance’s Short-Term Disability Plan administered by Sedgwick Claims Management Services, Inc., received disability benefits for part of a medical leave beginning in March 2025 but was denied benefits for the period from April 12 through May 12, 2025. After his administrative appeals were denied, Plaintiff filed suit asserting three ERISA claims: denial of benefits under Section 502(a)(1)(B), retaliation under Section 510, and equitable relief under Section 502(a)(3).

What must a plaintiff plead to state an ERISA Section 502(a)(1)(B) benefits claim?

The Court held that a plaintiff seeking to recover benefits under Section 502(a)(1)(B) must identify the specific plan provisions that allegedly entitle him to the benefits sought and explain how the administrator’s decision contravened that language. Citing Third Circuit authority that “only the words of the Plan itself can create an entitlement to benefits,” the Court found that Plaintiff alleged only that he applied for benefits, that his physician certified his disability, and that the defendants improperly denied benefits, without pointing to any provision of the Short-Term Disability Plan entitling him to benefits beyond April 11, 2025. Because the complaint offered “little more than the conclusory assertion” that Plaintiff was entitled to additional benefits and that the defendants reached the wrong result, the Court dismissed the benefits claim against ByteDance.

When is a third-party claims administrator an ERISA fiduciary?

The Court dismissed the benefits claim against Sedgwick for an additional reason. A Section 502(a)(1)(B) claim may be maintained only against the plan or an entity that exercises control over the administration of benefits, and fiduciary liability attaches to a claims administrator only where it exercises more discretion and control than a mere claims processor. The complaint alleged only that Sedgwick was the third-party claims administrator and did not allege that Sedgwick exercised discretionary authority over eligibility determinations. Plaintiff’s assertions that Sedgwick controlled the appeal process appeared for the first time in his opposition briefing, and the Court declined to consider allegations raised for the first time in a brief. The Court therefore found that Plaintiff failed to state a claim against Sedgwick.

Can an ERISA claimant pursue equitable relief under Section 502(a)(3) alongside a benefits claim?

The Court dismissed the Section 502(a)(3) equitable-relief claim against both defendants. As to Sedgwick, the claim failed because Plaintiff had not adequately alleged that Sedgwick was a fiduciary. As to ByteDance, the Court found the claim duplicative of the benefits claim, resting on the same alleged injury, the wrongful denial of short-term disability benefits. Although Plaintiff characterized his requested relief as addressing “systemic flaws” and sought structural remedies including revisions to plan procedures and appointment of a compliance monitor, the Court concluded those requests stemmed from the same injury underlying the benefits claim. Because Plaintiff identified no distinct injury and no violation for which ERISA fails to provide a remedy through its other enforcement provisions, the Court held the claim was duplicative and dismissed it.

When is an ERISA Section 510 retaliation claim subject to arbitration?

The Court addressed the retaliation claim differently as to each defendant. As to Sedgwick, the Court dismissed the claim because Section 510’s scope is limited to actions affecting the employer-employee relationship, and the complaint identified ByteDance, not Sedgwick, as Plaintiff’s employer. As to ByteDance, the Court compelled arbitration under the parties’ Mutual Agreement to Arbitrate. Applying the Rule 12(b)(6) standard because Plaintiff raised only legal challenges to the arbitration agreement, the Court held that the retaliation claim fell within the agreement’s broad coverage of disputes arising out of or relating to the employment relationship, including enumerated claims of retaliation and discrimination. The agreement carved out only claims for employee benefits, which the Court found did not encompass a Section 510 retaliation claim. The Court rejected Plaintiff’s arguments that the agreement was procedurally and substantively unconscionable, finding that his procedural challenge concerned how ByteDance invoked the agreement rather than the circumstances of its formation, and that the agreement did not limit his substantive rights or remedies in the arbitral forum.

The Court granted the motions to dismiss and to compel arbitration. Count I was dismissed without prejudice as to both defendants; Count III was dismissed without prejudice as to both defendants; and Count II was dismissed without prejudice as to Sedgwick and referred to arbitration as to ByteDance, with the action stayed as to that claim pending completion of arbitration. Because Plaintiff proceeds pro se, the Court granted leave to file an amended complaint curing the identified deficiencies within thirty days.