Opinion
Cause No. 1:02-CV-165
July 10, 2002
MEMORANDUM OF DECISION AND ORDER
On April 17, 2002, the plaintiff in this case, Fred Parshley ("Parshley"), filed a complaint against his former employer, Allied Worldwide d/b/a North American Van Lines ("NAVL"), alleging that NAVL had failed to pay him severance owed in violation of the Indiana Wage Act. Parshley originally filed his complaint in the Allen County Superior Court. On May 15, 2002, NAVL removed the case to this Court on the basis that NAVL's severance plan was an employee welfare plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 28 U.S.C. § 1002(1). Accordingly, NAVL argued that ERISA preempted Parshley's state law claims and jurisdiction was proper in this court. Parshley filed a motion to remand on May 24, 2002, to which NAVL responded on June 11, 2002.
On June 14, 2002, before Parshley had replied to NAVL's response to his motion to remand and before this Court had had an opportunity to consider the motion to remand, NAVL filed a motion to dismiss Parshley's claims on the basis that because the severance plan at issue was governed by ERISA, Parshley's complaint — alleging only state law claims — failed to state a claim upon which relief should be granted. In addition, Defendant moved to strike Parshley's request for liquidated damages and a jury trial on the basis that such damages and jury trial are not allowed under ERISA. Parshley responded to these motions on June 19, 2002, and NAVL filed its reply on June 24, 2002.
For the following reasons, Plaintiff's motion to remand will be DENIED. Defendant's motion to dismiss and motion to strike will be DENIED.
FACTUAL BACKGROUND
Parshley was employed by NAVL for 21 years. On April 6, 2001, Parshley's employment was terminated due to a job elimination. Parshley is covered by the severance plan provided by NAVL to employees who were terminated due to a job elimination. As a result, Plaintiff seeks twenty-one (21) weeks of pay pursuant to NAVL's severance plan.
On or about November 5, 2001, Plaintiff sent an unfiled complaint to NAVL threatening to sue NAVL for violating ERISA. The draft complaint specifically alleged that NAVL had violated ERISA with respect to payment of Parshley's severance benefits. In response to Plaintiff's letter and draft complaint, Mark Witmer, in-house counsel for Defendant notified Plaintiff's counsel that the severance benefit plan was not a plan which qualifies as an ERISA plan. Parshley then revised his complaint and filed this lawsuit in state court, only alleging claims under the Indiana Wage Act.
DISCUSSION
I. Motion to Remand
28 U.S.C. § 1441 et seq. governs removal and remand. Section 1441(a) states, in relevant part, "[e]xcept as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or defendants, to the district court of the United States for the district and division embracing the place where such action is pending." Removal, then, is proper only if the action originally could have been brought in the federal courts. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987).
However, the Court may remand the action to state court "[i]f . . . it appears that the district court lacks subject matter jurisdiction. . . ." 28 U.S.C. § 1447(c). Generally, the party seeking a federal forum has the burden of establishing that jurisdiction in the federal courts is appropriate. See Wellness Community-National v. Wellness House, 70 F.3d 46, 49 (7th Cir. 1995). Indeed, when a federal court's exercise of jurisdiction is challenged following removal, the burden of establishing federal jurisdiction rests on the party seeking to preserve removal. See Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993); P.P. Farmer's Elevator Co. v. Farmers' Mutual Insurance Co., 395 F.2d 546, 548 (7th Cir. 1968) ("The burden of proof as to any material issue is upon the party who removed to show that the suit was properly removed.") In this case, Plaintiff seeks to have this case remanded to the Allen County Superior Court on the basis that no federal jurisdiction exists. He argues that NAVL has failed to meet its burden to show that the severance plan at issue qualifies as an ERISA plan, thereby precluding federal question jurisdiction.
ERISA's coverage provision reaches any employee benefit plan if it is "established or maintained by an employer." 29 U.S.C. § 1002(1); James v. National Business Sys., Inc., 924 F.2d 718, 719 (7th Cir. 1990). In order to constitute an established plan, "the plan need not be in writing, provided it is a `reality.'" James, 924 F.2d at 720. Thus, even if a plan is not in writing, a complaint still can set forth a claim covered by ERISA. See Donovan v. Dillingham, 688 F.2d 1367, 1372 (11th Cir. 1982) (holding that a written plan is not a prerequisite to coverage under ERISA). Thus, in this case, the relevant inquiry is whether NAVL had an "established plan" pursuant to ERISA.
To determine whether a plan is "established" pursuant to ERISA, courts analyze a number of factors. Courts consider the "surrounding circumstances" to determine whether "a reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and procedures for receiving benefits." Courts consider whether the employer made a decision to extend benefits on a regular and long term basis, or whether the plan was intended for implementation in the future. See Diak v. Dwyer, Costello Knox, P.C., 33 F.3d 809, 811 (7th Cir. 1994).
Here, Plaintiff's Complaint indicates that he had known about NAVL's severance pay "arrangement" for twenty-one years, and in fact, during that time period, NAVL had been paying other employees the severance benefit he is seeking. (Complaint ¶ 6, 10, 12). Moreover, Parshley has had no difficulty in ascertaining the intended benefits of NAVL's severance plan. According to the Complaint, "[t]he severance pay amount NAVL promised its employees, including Parshley, was one week of pay for each year of employment with NAVL," and "[a]s an earned benefit of Parshley's twenty-one (21) years of employment with NAVL, he was entitled to receive twenty-one (21) weeks of severance pay at the time of his termination." (Complaint ¶¶ 5, 9).
In addition, Plaintiff's complaint shows that Plaintiff was able to ascertain the "beneficiaries" of NAVL's plan: He states that NAVL "promised its employees . . . that [they] would be paid a severance pay amount if NAVL terminated [their] employment for certain reasons which included the job elimination reason for Parshley's termination." (Complaint ¶ 4). Indeed, Parshley's complaint repeatedly references promises NAVL made to its "employees" with respect to severance payments. (Complaint ¶¶ 4, 5).
Parshley's complaint also states that he was responsible for calculating and ensuring payment to other employees whose jobs had been eliminated by NAVL over the years during Parshley's employment. (Complaint ¶ 10). Therefore, the procedures for obtaining a severance benefit must have been established and known among terminated employees.
Finally, Parshley alleges that he was asked to sign a Release and Separation Agreement "that NAVL had never previously required of any other employees who had similarly earned and received the severance pay benefits." (Complaint ¶ 12). By comparing himself to other employees who had earned and received the severance benefit, Parshley essentially describes and ERISA severance plan benefit (i.e. all plan participants being entitled to the same terms for the same benefit). As a result, this Court is satisfied that the NAVL severance pay arrangement qualifies as an employee welfare plan under ERISA. Therefore, ERISA preempts Plaintiffs' state law claims and removal to this Court was appropriate. Plaintiff's motion to remand will be denied.
II. Motion to Dismiss and Motion to Strike
NAVL has also moved to dismiss this action on the basis that because Parshley's Complaint only states claims under the Indiana Wage Act, no federal jurisdiction exists. NAVL also seeks to strike Parshley's request for liquidated damages and a jury trial on the basis that such damages and jury trial are not allowed under ERISA.
Defendant has correctly identified defects in Parshley's complaint were it to stand in its current form. However, this Court does not believe dismissal at this stage is appropriate. Parshley has indicated that if his motion to remand is denied, he "intends to and is entitled to file an amended complaint," which will "cure every defect the Defendant relies upon." (Plaintiff's Opposition to Defendant's Motion to Strike and Dismiss, p. 2). Therefore, if this Court now dismissed this case, Parshley would simply revise and re-file a new complaint to assert claims under ERISA.
Therefore, to avoid this rigamarole and in the interest of efficiency, this Court will grant Plaintiff thirty (30) days in which to file an amended complaint in this case. Fed.R.Civ.P. 15(a) reads, "a party may amend the party's pleading . . . by leave of court . . . and leave shall be freely given when justice so requires," and authorizes this Court to grant Parshley an opportunity to amend his complaint. Because this Court will allow Parshley to amend his complaint, NAVL's motion to dismiss and motion to strike will be denied as moot.
CONCLUSION
Based on the foregoing, Parshley's motion to remand is hereby DENIED. NAVL's motions to strike and to dismiss are hereby DENIED. Parshley will have thirty (30) days from the date of this Order to file an amended complaint.