Opinion
No. 04 Civ. 3614 (DLC).
August 19, 2004
Joey Jackson, Koehler Isaacs LLP, New York, New York, for the Plaintiff.
Scott H. Casher, Edwards Angell, LLP, New York, New York, for the Defendants.
OPINION AND ORDER
The plaintiff asserts that he was harassed on the job and forced to retire. He seeks to set aside his retirement pursuant to his employer's "Income Protection Plan," to be reinstated in his job, and to obtain compensatory and other damages for age discrimination. This motion for remand raises the issue of whether plaintiff's claims, which are pleaded exclusively under state law, are preempted by federal law or otherwise present a federal question.
Plaintiff Thomas Nuzzo ("Nuzzo") brought this employment discrimination action in state court against defendant Verizon New York, Inc. ("Verizon") and four Verizon employees, alleging age discrimination in violation of the New York Human Rights Law ("NYHRL"). On May 11, 2004, the defendants filed a timely notice of removal on the ground that Nuzzo's claims are preempted by the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. ("ERISA"), or by the Age Discrimination in Employment Act, 29 U.S.C. § 621-634 ("ADEA") as amended by the Older Worker's Benefit Protection Act of 1990, Pub.L. No. 101-433, 104 Stat. 978 ("Older Worker's Act"). Nuzzo moves to remand this action to state court pursuant to 28 U.S.C. § 1447(c). For the reasons stated below, the motion to remand is granted.
Nuzzo's action is brought under Sections 296(1) (a), (3-a), and (6) of the NYHRL.
Background
The following facts are taken from the complaint. Nuzzo was employed by Verizon from January 6, 1969 until June 13, 2002, mostly in the position of Field Technician. He is currently 54 years old.
Nuzzo did not experience any problems at Verizon until November 2000, when defendant Thomas Freeman became Nuzzo's new supervisor. From the time Nuzzo began working for Freeman until the time he left Verizon, "a systematic pattern of coercion, abusiveness and hostility were directed at [him] in an effort to make his employment conditions intolerable." In April 2001, Nuzzo accepted a voluntary transfer into another work unit under the supervision of a different manager. In December, Nuzzo's new supervisor was replaced with defendant Barry Missing, whereupon "the hostility and isolation rose to new heights." From the fall of 2001 through the spring of 2002, Nuzzo filed several complaints with Verizon, but did not receive any response.
Starting in January 2002, Nuzzo took a six-week leave of absence from work due to an unspecified medical ailment. Upon his return to work in the latter part of February, defendant Grace Pipolo stated that Nuzzo could expect the further deterioration of his health due to his "advanced age," and that he might consider alternate employment.
In 2002, Missing cited Nuzzo for a work time violation. Nuzzo received a six week suspension without pay, was placed on two years probation, and was told that his employment would be terminated for any further transgressions. Upon his return to Verizon, Nuzzo spoke with "a number of managers who strongly suggested that he avail himself of [Verizon's] Income Protection Plan (IPP) rather than risk losing his full pension by being terminated, or worse still, face a losing court battle against a powerful `giant.'" On June 13, 2002, Nuzzo signed the IPP papers under extreme "stress, duress, anxiety, depression, and fear." Nuzzo subsequently attempted to withdraw his acceptance of the IPP, but the defendants would not allow him to do so.
Nuzzo brings state law claims for age discrimination, constructive discharge, and creation of a hostile work environment. He seeks a judgment setting aside his retirement and reinstating him to his former position at Verizon, as well as compensatory and punitive damages.
Discussion
A state court action may be only be removed to federal court if the action could originally have been filed in federal court.See 28 U.S.C. § 1441(a). Where, as here, neither party has alleged diversity jurisdiction, removal requires federal question jurisdiction. Defendants assert two grounds for federal subject matter jurisdiction: complete preemption by Sections 514(a) and 510(a) of ERISA, or alternately, preemption by the ADEA as amended by the Older Worker's Act.
Under the well-pleaded complaint rule, "federal question jurisdiction exists only when the plaintiff's own cause of action is based on federal law, and only when plaintiff's well-pleaded complaint raises issues of federal law." Marcus v. AT T Corp., 138 F.3d 46, 52 (2d Cir. 1998) (citation omitted). The "mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction." City of Rome, N.Y. v. Verizon Communications, Inc., 362 F.3d 168, 176 (2d Cir. 2004) (citing Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 813 (1986)). Even if a complaint anticipates a federal defense, there is no federal question jurisdiction where it pleads only state law causes of action.Marcus, 138 F.3d at 52-53. In Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987), the Supreme Court forcefully explained the rationale underlying the well-pleaded complaint rule:
[T]he presence of a federal question . . . in a defensive argument does not overcome the paramount policies embodied in the well-pleaded complaint rule — that the plaintiff is the master of the complaint, that a federal question must appear on the face of the complaint, and that the plaintiff may, by eschewing claims based on federal law, choose to have the cause heard in state court. . . . [A] defendant cannot, merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law, thereby selecting the forum in which the claim shall be litigated. If a defendant could do so, the plaintiff would be master of nothing. Congress has long since decided that federal defenses do not provide a basis for removal.Id. at 398-99 (emphasis in original). This rule generally persists even where Congress has preempted state regulation of an entire area of law since preemption would normally only be raised as a defense. Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003); Briarpatch Ltd., L.P v. Phoenix Pictures, Inc., 373 F.3d 296, 304 (2d Cir. 2004).
Even when a complaint pleads only state law claims, it may nonetheless be removed to federal court in two circumstances: where Congress has expressly so provided or where a federal statutory scheme completely preempts an area of the law. City of Rome, 362 F.3d at 176-77. Where there has been "complete preemption" such that any claim based on the preempted state law must be considered a federal claim, then removal may be appropriate even if a well-pleaded complaint does not implicate the federal statutory scheme. See, e.g., id. at 176;Plumbing Industry Board v. E.W. Howell Co., 126 F.3d 61, 66 (2d Cir. 1997). The Supreme Court has found complete preemption in only two types of cases: certain causes of action under the Labor Management Relations Act and ERISA. See City of Rome, 362 F.3d at 177. Complete preemption "must be applied sparingly and with great restraint." Spielman, 332 F.3d at 123 n. 5.
The Second Circuit has also found complete preemption in cases arising under the Securities Litigation Uniform Standards Act. Spielman v. Merrill Lynch, Pierce, Fenner Smith, Inc., 332 F.3d 116, 124 n. 5 (2d Cir. 2003).
I. ERISA
The defendants argue that Nuzzo's age discrimination claims, which are brought under the NYHRL, are preempted by ERISA because they "relate to" an employee benefit plan and come within the scope of ERISA's civil enforcement provisions. "ERISA preemption provides a valid basis for removal jurisdiction only if (1) the state law cause of action is preempted by ERISA, and (2) that cause of action is "within the scope" of the civil enforcement provisions of ERISA Section 502(a), 29 U.S.C. § 1132(a)." E.W. Howell, 126 F.3d at 66. See also Romney v. Lin, 94 F.3d 74, 78 (2d Cir. 1996); Franklin H. Williams Insurance Trust v. Travelers Ins. Co., 50 F.3d 144, 149 (2d Cir. 1995). Whether ERISA preempts a state law "is a question of law." Devlin v. Transportation Communications Intern. Union, 173 F.3d 94, 98 (2d Cir. 1999).
The Supreme Court addressed the question of whether ERISA preempts the NYHRL over twenty years ago in Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983). In Shaw, the Court found that the NYHRL fell within ERISA Section 514(a), which preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." Shaw, 463 U.S. at 91, 100 (citing 29 U.S.C. § 1144(a)). The Court found, however, that the NYHRL was exempted from preemption by Section 514(d), which provides that Section 514(a) preemption shall not be "construed to alter, amend, modify, invalidate, impair, or supersede any law of the United States," in light of the "significant role" state laws play in the enforcement of Title VII. Id. at 101. According to the Court, interpreting ERISA to preempt the NYHRL with respect to covered benefit plans "would frustrate the goal of encouraging joint state/federal enforcement of Title VII," and would therefore impair federal law in violation of Section 514(d).Id. at 102. Accordingly, the NYHRL is "pre-empted with respect to ERISA benefit plans only insofar as it prohibits practices that are lawful under federal law." Id. at 108 (emphasis supplied). See also Humana Inc. v. Forsyth, 525 U.S. 299, 310-11 (1999); New York State Conference of Blue Cross Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656 (1995). "To the extent the New York law prohibited practices also prohibited under federal law . . . the New York law was not preempted." Humana, Inc., 525 U.S. at 310 (1999) (explainingShaw).
In Shaw, Delta Air Lines sought a declaratory judgment against state agencies and officials that the NYHRL and the New York Disability Benefits Law, as they applied to pregnancy, were pre-empted by ERISA. Shaw, 463 U.S. at 85.
Using the Supreme Court's analysis in Shaw, the Second Circuit has held that "no portion of the [New York] Human Rights Law — as it relates to . . . age discrimination claims — will be pre-empted by ERISA." Devlin, 173 F.3d at 101. In so holding, the Second Circuit observed that "the preemptive power of ERISA is not without limit," and that courts could not "completely read the presumption against pre-emption out of the law." Id. at 98 (citation omitted).
Nuzzo's complaint alleges that the defendants discriminated against him because of his age, in violation of the NYHRL. Because NYHRL age discrimination claims enjoy protection from preemption under ERISA Section 514(d), removal is not proper on this basis.
The defendants' assertion that Nuzzo's allegations are preempted by Section 510(a) of ERISA is also without merit. Section 510(a) provides:
It shall be unlawful for any person to discharge . . . a participant or beneficiary . . . for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan. . . . The provisions of section 1132 [§ 502] shall be applicable in the enforcement of this section.29 U.S.C. § 1140(a). The defendants argue that Nuzzo's statements regarding his coerced acceptance of the early retirement plan "suggest that a reason for [Nuzzo's] discharge was that Verizon wanted to avoid paying his full pension due under its employee benefit plans." The defendants rely on Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990), and Harris v. Michigan Consol. Gas Co., 117 F. Supp. 2d 642 (E.D. Mich. 2000), in support of their argument. Both cases, however, are inapposite.
In Ingersoll-Rand, the Supreme Court concluded that the plaintiff's state law claim for wrongful discharge was preempted by Section 510(a). Ingersoll-Rand, 498 U.S. at 135, 140. In so holding, however, the Court relied on the fact that Texas recognized a common law tort of wrongful discharge where an employer fires an employee "primarily because of the employer's desire to avoid contributing to, or paying benefits under, the employee's pension fund." Id. at 140. The cause of action was not a "generally applicable statute that makes no reference to, or indeed functions irrespective of, the existence of an ERISA plan"; rather, it was "premised on" the existence of a pension plan such that there would be "no cause of action if there [was] no plan." Id. at 139-40.
In Harris, the court similarly found preemption under Section 510(a) of ERISA where the plaintiff alleged that she was fired because her employer wanted to avoid paying her benefits under its ERISA plan. Central to the Harris court's ruling was its determination that the plaintiff's complaint specifically alleged that "the only reason for her discharge was that [the defendant-employer] wanted to avoid paying her benefits due under its employee benefit plans." Harris, 117 F. Supp. 2d at 645 (emphasis supplied). The court noted that the employer's "intention to interfere with her benefits is not incidental to her claim; it is her claim, and is thus a straightforward claim under § 510 of ERISA [and] falls within the enforcement provisions of § 502." Id.
Unlike the plaintiff in Ingersoll-Rand, Nuzzo's age discrimination claim is made pursuant to a generally applicable state anti-discrimination law that is not premised on the existence of an ERISA plan. Moreover, Nuzzo's complaint does not allege that he was constructively discharged solely or even principally because Verizon wished to avoid paying him benefits under its ERISA plan. Unlike Ingersoll-Rand and Harris, the existence of an ERISA plan is at best incidental to this dispute. Nuzzo's action would exist even if Verizon did not maintain an ERISA plan.
The present case is similar to Warner v. Ford Motor Co., 46 F.3d 531 (6th Cir. 1995) (en banc), on which both parties also rely. In Warner, the plaintiff claimed that the defendant threatened to discharge him unless he took early retirement and asked the court to set aside the early retirement agreement. The Sixth Circuit held that ERISA did not preempt such an action because it was not an action to "recover" under the plan or to "enforce" or "assert rights to future benefits under the terms of the plan." Id. at 534. Instead, the action was "a straight state age discrimination case which has no counterpart or superseding cause of action in ERISA." Id. It was an action "to set aside and escape from the early retirement plan," and there was no cause to believe "that hostile state courts will somehow subvert enforcement of ERISA in such cases." Id.
As in Warner, Nuzzo is not seeking to recover benefits under ERISA or to challenge the quality of his retirement benefits under Verizon's ERISA plan. Nuzzo's central allegation, which is repeated throughout his complaint, is that the defendants discriminated against him because of his age and coerced his early retirement.
II. ADEA and the Older Worker's Act
Defendants alternatively claim that Nuzzo's lawsuit is preempted because it raises a question of federal law under the ADEA as amended by the Older Worker's Act. Where, as here, the basis for removal is the purported presence of a federal question, as described above, courts must heed the "well-pleaded complaint" rule.
The defendants do not assert that the exceptions to the well-pleaded complaint rule apply to the ADEA.
The Older Worker's Act allows an individual knowingly and voluntarily to waive her right to sue her employer under the ADEA and to waive the right to recover in a suit brought by the EEOC on her behalf. E.E.O.C. v. Kidder, Peabody Co., Inc., 156 F.3d 298, 302 n. 4 (2d Cir. 1998), abrogated by E.E.O.C. v. Waffle House, Inc., 534 U.S. 279 (2002). Whether a waiver is knowing and voluntary is subject to an eight factor test. See 29 U.S.C. § 626(f) (2). The defendants rely on Nuzzo's allegation that he was coerced into signing and accepting the retirement plan, and that Verizon rejected Nuzzo's attempted withdrawal of his acceptance, to support their assertion that Nuzzo satisfies the well-pleaded complaint rule. According to the defendants, Nuzzo "in essence [asks] the Court to examine whether plaintiff's waiver was knowing and voluntary, which would require the Court to consider whether all the factors in [the Older Worker's Act] were satisfied."
Nothing on the face of Nuzzo's complaint states a claim under the ADEA or the Older Worker's Act. Nuzzo's claims for age discrimination, constructive discharge, and hostile work environment are all brought under state law. Nuzzo's complaint is not properly construed as alleging a violation of the Older Worker's Act. Removal on the basis of the Older Worker's Act therefore is not proper.
Conclusion
For the reasons stated above, the motion is granted and this case is remanded to state court. The Clerk of Court shall close the case.
SO ORDERED.