Opinion
Civil No. 03-1053 (PG).
November 18, 2003
REPORT AND RECOMMENDATION
The plaintiff's Motion to Remand for Lack of Subject Matter Jurisdiction and defendant's opposition were referred by the Court after denial of leave to file supplemental memorandum (D.E. # 16, 20).
Defendant has removed this action filed initially with the state courts alleging plaintiff's claim was based on ERISA and thus preempted. Succinctly, this entails a dispute between the employer (defendant) and former unionized retired employee (plaintiff) for payment under a severance play plan filed with the courts of the Commonwealth of Puerto Rico, Bayamón Part, as a salary suit. Defendant obtained removal upon claiming that the true nature of the claim was essentially a federal question. 28 U.S.C. § 1441. Once removed, in the amended answer to the complaint, defendant raised, among its defenses, that plaintiff was not entitled to participate in the severance plan, which was only available to managerial employees and not union employees. Defendant refers therein to a separation pay plan available in 1996 which specifically excluded Union employees at the Cataño terminal where plaintiff worked as an office clerk. When plaintiff sent a letter to the defendant company on July 18, 2000, informing his interest in early retirement based on the separation plan at issue, he was informed in writing and verbally that same was available only to those employees covered under the terms of the plan and that he was covered by the Cataño terminal collective bargaining agreement. Insofar as a severance payment that might be available under the bargaining agreement, neither was same applicable to plaintiff because he was not being laid-off or terminated (D.E. #13).
Employment Retirement Income Security Act (ERISA), 29 U.S.C.A. § 1132.
Plaintiff's Motion to Remand the action removed from the Bayamón Superior Court included some documentation in support, although it refers mainly to a request for dismissal under the standards of Fed.R.Civ.P. 12(b)(1). There are also claims that plaintiff was induced to retire by a severance pay offered by defendant in the amount of $53,380.00. However, plaintiff was already eligible for a pension since he had thirty years of service with the defendant company. A letter tendered to the Union on July 3, 2000, acknowledged there was a severance payment offered to management employees and any similar benefit for Union employees had to be negotiated. After a proposal was received from the Union to that effect, the Human Resources Department replied that only those employees whose positions were going to be terminated for business reason were expected to receive severance payment. The collective bargaining agreement provided economic reasons or lack of work for entitlement to severance compensation equivalent to a third of the regular monthly salary multiplied per each year or fraction thereof of employment with the company. Plaintiff informed that he would retire on August 11, 2000, in lieu of severance payment offered. On August 21, 2000, the Human Resources informed that plaintiff's position was not going to be eliminated. It is plaintiff's contention that an agreement was reached on September 18, 2000, subsequently ratified with the Union and the Company, for payment of severance. Plaintiff has also submitted a sworn statement that he had been offered a severance pay by the defendant company as an inducement to retire, which has not been honored and is the basis of his claim. He is already receiving a pension payment until age 62, as part of the pension plan he belonged while he worked for the defendant company from July 25, 1970, and up to September 29, 2000. (D.E. #16).
Defendant's Opposition to Remand reinstates the existence of federal jurisdiction under ERISA and the issue of complete preemption under such federal statute. Insofar as allegations to support that remand would be improper, defendant refers to the company's severance pay plan as the basis for subject matter federal jurisdiction. Defendant characterizes plaintiff's request for severance as a benefit payable only under the company's "Enhanced Benefits" provision of its ERISA plan, which plaintiff failed to obtain under the early retirement program.
The doctrine of complete preemption as to ERISA's civil enforcement provisions provides for federal removal jurisdiction over any state law claims that in substance seek relief that is otherwise within the scope of ERISA remedy provisions. 29 U.S.C. § 1132(a). See Metro Life Ins. Co. v. Taylor, 481 U.S. 58, 63-67, 107 S.Ct. 1542 (1987). ERISA permits a federal action by a beneficiary "to recover benefits due . . . under the terms of [the] plan, to enforce . . . rights under the terms of the plan, or to clarify . . . rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). As such, "the beacon by which we must steer" to determine whether the benefit at issue is covered by an ERISA "plan" is the Supreme Court's opinion inFort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S.Ct. 2211 (1987). The Highest Court stated therein that an employee's benefit package is such a "plan" only if its "provision by nature requires an ongoing administrative program to meet the employer's obligation." See District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130 n. 2, 113 S.Ct. 580 (1992) (plan requires "some minimal, ongoing `administrative' scheme or practice"). See also Rodowicz v. Massachusetts Mut. Life Ins. Co., 192 F.3d 162, 169-170 (1st Cir. 1999).
An examination of the claim as raised by plaintiff relates to a one time, lump sum severance pay, either under the collective bargaining agreement or the severance pay offered to managerial employees, which was not applicable to plaintiff, or to a labor contract to pay such severance agreed upon by the parties. There is no evidence, argument, pleading, or provision under which such a payment would constitute a plan for purposes of ERISA or wherein such payment requires the existence of "some minimal, ongoing `administrative scheme or practice". District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. at 130. See Fort Halifax Packing Co. v. Coyne, 482 U.S. at 11. The likelihood or even certainty of defendant raising a colorable ERISA preemption defense, without more, does not convert a state law claim into an action arising under federal law. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 64, 107 S.Ct. 1542 (1987).
As required, we assume for this purpose the truth of plaintiff's factual allegations. Martin v. Applied Cellular Tech., Inc., 284 F.3d 1, 5-6 (1st Cir. 2002). Under the doctrine of "complete preemption," ERISA's civil enforcement provisions, 29 U.S.C. § 1132(a), have been construed to establish federal removal jurisdiction over any state law claims that in substance seek relief that is otherwise within the scope of those ERISA remedy provisions. See Metro. Life Ins. Co. v. Taylor, 481 U.S. at 63-67.
Likewise, in Danca v. Private Health Care Systems, Inc., 185 F.3d 1 (1st Cir. 1999), removal jurisdiction was found over plaintiff's state tort claim alleging that the defendant's insurer was negligent when it approved treatment at a mental hospital different from the hospital recommended by the referring physician. It was therein found that such a claim fell within the ambit of 29 U.S.C. § 1132(a)(1)(B) because it challenged "the process used to assess a participant's claim for a benefit payment under the plan." Danca, 185 F.3d at 6. See also Hotz v. Blue Cross and Blue Shield of Mass., Inc., 292 F.3d 57, 59-60 (1st Cir. 2002).
In 1995, Belanger v. Wyman-Gordon Co., 71 F.3d 451 (1st Cir. 1995), clarified the circumstances under which benefits given to employees would constitute a "plan" for purposes of ERISA. As such, to establish federal jurisdiction, facts must be alleged to show the establishment or maintenance of a "plan", fund, or program" of the type covered by ERISA. A severance pay benefit, as the one at issue herein, where the federal regulatory concerns of an ERISA plan are not implicated, is not subject to participation, vesting, and funding requirements of ERISA. See Pension and Retirement Funds, § 47 — Determination of Whether Severance-Pay Arrangements were Contingent on Retirement, 60A Am.Jur.2d (September 2003). Thus, there is no federal jurisdiction as to the ERISA claim.
Additionally, defendant now claims there is federal jurisdiction under the Labor Management Relations Act of 1947 ( 29 U.S.C. § 185), a matter not addressed in the complaint, answer, motion to remove, nor amended answer to the complaint.
When discussing the Labor Management Relations Act (LMRA), defendant refers to a breach of the collective bargaining agreement that would be preempted under its Section 301, since plaintiff could be invoking rights under the collective bargaining severance payment clause. However, such averment has never been raised in defendant's affirmative defenses, and as such, insufficient pleading of this federal jurisdiction has not placed this Court in a position to evaluate the claim as one granting federal jurisdiction under LMRA. Whether the controversy now raised by defendant would fall within the collective bargaining provisions or from a negotiated labor contract can neither be assessed at this juncture neither the collective bargaining agreement or evidence of a contract are part of the documents before this Court. The pleadings and documents attached would initially show that defendant has denied plaintiff would be entitled to severance under the collective bargaining agreement since the position he held was not going to be eliminated nor was he to be laid-off. Plaintiff has not submitted a state claim for interpretation or for breach of the collective bargaining, but one of a contract by the defendant company to pay him severance. Since there are insufficient grounds to consider the above issues, there is no need to delve further into these contentions. Federal jurisdiction discussed above would be constricted to the pleaded grounds for remand that can be properly assessed from the uncontroverted documents in the case and applicable law. Fed.R.Civ.P. 12(b)(1) and (b)(6).
There being no subject matter jurisdiction for not stating a cause of action under ERISA, no reason should appear for this court to exercise pendent jurisdiction as to other claims, for which remand would be appropriate. United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130 (1966). Thus, it is recommended that plaintiff's motion to remand BE GRANTED and the federal case herein be DISMISSED.
The parties have ten (10) days to file any objections to this report and recommendation. Failure to file same within the specified time waives the right to appeal this order. Henley Drilling Co. v. McGee, 36 F.3d 143, 150-151 (1st Cir. 1994);United States v. Valencia, 792 F.2d 4 (1st Cir. 1986). See Paterson-Leitch Co. v. Mass. Mun. Wholesale Elec. Co., 840 F.2d 985, 991 (1st Cir. 1988) ("Systemic efficiencies would be frustrated and the magistrate's role reduced to that a mere dress rehearser if a party were allowed to feint and weave at the initial hearing, and save its knockout punch for the second round").