Opinion
Case No. CV 99-08862 MMM (RCx)
November 22, 2000
Defendant Continental Casualty Company ("CNA") is an insurance company that issued two disability income protection policies to plaintiff Vera Pierson, a former teacher with the Los Angeles Unified School District. Defendant Pacific Educators, Inc. ("PEI") is a third-party insurance marketing administrator that markets CNA insurance. Plaintiffs complaint, originally filed in Los Angeles Superior Court, alleges claims for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, negligent misrepresentation, intentional infliction of emotional distress, violation of California Civil Code § 1770, and violation of California Business Professions Code § 17200 based on CNA's denial of benefits under the policies. Defendants removed the action to this court on September 1, 1999, contending that it had subject matter jurisdiction because Pierson's claims arose under the Employee Retirement Income Security Act of 1974 ("ERISA").
Pierson has now moved for summary judgment on the jurisdictional issue and for immediate remand of the action to state court. She also seeks sanctions against CNA and PEI under Rule 11 of the Federal Rules of Civil Procedure and 28 U.S.C. § 1447 for their purportedly improper removal of the action to this court. CNA and PEI have filed cross-motions for summary judgment on the jurisdictional issue. They seek a ruling that Pierson's state law claims are preempted by ERISA and that PEI cannot be sued for denial of benefits under ERISA.
I. FACTUAL BACKGROUND
A. The Parties
The UTLA has since 1970 been the officially designated bargaining agent for certificated employees of the Los Angeles Unified School District ("LAUSD"). LAUSD employees must apply for UTLA membership to be entitled benefits that are available through UTLA but are not negotiated as part of UTLA's collective bargaining agreement with LAUSD. Only employees of LAUSD are eligible to be members of UTLA.
Defendants' Statement of Uncontroverted Facts and Conclusions of Law ("Defs.' Facts"), ¶ 1; Plaintiff's Statement of Genuine Issues ("Pl.'s Genuine Issues), ¶ 1.
Deposition of James V. Weber ("Weber Depo.") at 16:18-22. See Plaintiff's Uncontroverted Facts and Conclusions of Law in Support of Motion for Summary Judgment re Jurisdiction ("Pl.'s Facts"), ¶¶ 21, 36; Defendants' Statement of Genuine Issues of Material Fact in Opposition to Plaintiff Vera Pierson's Motion for Summary Judgment ("Defs.' Genuine Issues"), ¶¶ 21, 36.
PEI is a third-party insurance marketing administrator that markets CNA products. In this capacity, PEI solicits applications for insurance that it forwards to CNA. Once a policy has issued, PEI bills for and collects premium payments that it forwards to CNA after subtracting commissions and administration fees. It also provides claim forms to insureds who request them, receives completed claim forms and checks them to assure that all necessary information has been submitted. Ronald Furlong has been the president of PEI since 1971.
Pl.'s Facts, ¶ 2; Defs.' Genuine Issues, ¶ 2; Defs.' Facts, ¶ 3; Pl.'s Genuine Issues, ¶ 3. PEI receives a commission on each individual policy sold. (Pl.'s Facts, ¶ 5; Defs.' Genuine Issues, ¶ 5.)
Defs.' Facts, ¶ 6; Pl.'s Facts, ¶ 22; Defs.' Genuine Issues, ¶ 22. Although Pierson contends defendants' Fact 6 is disputed, she proffers no contrary evidence. (See Pl.'s Genuine Issues, ¶ 6.)
Pl.'s Facts, ¶ 1; Defs.' Genuine Issues, ¶ 1.
B. Pierson's Policy
Pierson is insured under two individual income protection policies issued by CNA. She is not insured under a group disability policy and there is thus no master policy that reflects the terms of the coverage to which she is entitled. Pierson pays 100% of the premiums for the policy; neither LAUSD nor UTLA pays any portion of the premium cost.
Complaint, Ex. A; Deposition of Ronald Furlong ("Furlong Depo.") at 54:10-21.
Pl.'s Facts, ¶ 4; Defs.' Genuine Issues, ¶ 4. See also Plaintiff's Supplemental Uncontroverted Facts and Conclusions in Support of Motion for Summary Judgment re Jurisdiction ("Pl.'s Supp. Facts"), ¶ 32; Defs.' Genuine Issues, ¶ 32. In support of Fact 4, Pierson cites the deposition testimony of Ronald Furlong. Defendants object that Furlong's references to "group short-term disability policy" and "master policy" are vague and ambiguous, and constitute legal conclusions. (Defs.' Genuine Issues, ¶ 4.) These terms have a generally understood meaning within the insurance industry, and Furlong is qualified, as PEI's president, to answer questions regarding the form of Pierson's policy. Defendants' objection is, accordingly, overruled.
Pl.'s Facts, ¶¶ 7, 21; Defs.' Genuine Issues, ¶¶ 7, 21; Pl.'s Supp. Facts, ¶ 37; Defs.' Genuine Issues, ¶ 37; Furlong Depo. at 41-42.
The policy under which Pierson is insured is available only to UTLA members, and is contingent upon her continued membership in the UTLA. PEI receives commissions on each individual policy sold. Income protection insurance of the type Pierson obtained was not a bargained-for benefit negotiated by the union (or any other employee organization) and LAUSD. Pierson's decision to purchase the policy was completely voluntary.
Pl.'s Facts, ¶ 21; Defs.' Genuine Issues, ¶ 21.
Defs.' Facts, ¶ 19; Pl.'s Genuine Issues, ¶ 19. Pierson objects to defendants' Fact 21 as irrelevant. It is, however, relevant to her argument that the policies are covered by the "governmental plan" exception to ERISA. Consequently, the objection is overruled.
Pl.'s Facts, ¶ 5; Defs.' Genuine Issues, ¶ 5.
Pl.'s Facts, ¶ 8; Defs.' Genuine Issues, ¶ 8; Defs.' Facts, ¶ 4; Pl.'s Supp. Facts, ¶¶ 28, 29; Defs.' Genuine Issues, ¶¶ 28, 29.
Neither UTLA nor PEI participates in the underwriting of CNA disability policies such as Pierson's. Thus, CNA was solely responsible for the decision to issue disability insurance to Pierson. CNA is also solely responsible for determining whether to pay a claim under the policy.
Pl.'s Facts, ¶¶ 9, 10; Defs.' Genuine Issues, ¶ 9, 10.
Pl.'s Facts, ¶ 11; Defs.' Genuine Issues, ¶ 11.
Pl.'s Facts, ¶ 22; Defs.' Genuine Issues, ¶ 22.
C. UTLA's Involvement
Prior to 1973, UTLA had an agreement with Educators Life Insurance Company ("Educators Life") to underwrite income protection insurance for its members. In or about 1973, Encino Insurance Associates ("EIA"), an insurance broker representing UTLA, approached PEI and asked it to identify a new insurer to write income protection insurance for UTLA's members. UTLA was dissatisfied with Educators Life, which had indicated its intention to raise premium rates and re-underwrite all UTLA insureds. In mid-1973, UTLA entered into a Memorandum of Understanding with CNA, pursuant to which CNA replaced Educators Life as the underwriter income protection coverage for UTLA members. As part of this agreement, CNA agreed to cover all existing Educators Life insureds, and not to change the terms of their coverage or the premiums they were charged for approximately one year. CNA was required to give UTLA notice of any changes in the scope of coverage or the premium amount charged, and to provide UTLA with data regarding experience under the policies. Further, CNA agreed that its communications with UTLA members and distribution of insurance materials would conform to the union's policies governing such communications.The Memorandum of Understanding also outlined various agreements regarding the scope of coverage CNA would provide. By way of example, the memorandum recited that substitute teachers could apply for life, but not disability, insurance; that teachers on sabbatical or personal leave who were previously insured by Educators Life would be given thirty days after their return to work to apply for coverage with CNA; and that associate members of UTLA who had not been insured by Educators Life could not apply for life and disability insurance.
See Id. at 2-3.
As respects administration of the policies, the memorandum provided that CNA would process all insurance claims, while PEI and EIA would perform all other administrative duties. UTLA undertook to provide a list of its members to CNA and to update that list to reflect terminations of union membership. It also agreed to forward premium payments collected through payroll deductions to CNA, and to make claim forms available to its members.
Id. at 3.
After the memorandum was signed, PEI sent a communication to all UTLA members who had been insured by Educators Life, advising that their coverage had been assigned to CNA, and that there would be a slight increase in premium and an extension of the elimination period. The notice PEI prepared was sent on UTLA letterhead and signed by Robert Ransom as President. PEI also prepared a memorandum to all UTLA members regarding the availability of life and disability insurance through CNA. The memorandum, which was sent on UTLA letterhead, as authorized by UTLA, informed members that a "UTLA-Approved Disability Income Protection Plan" was available "[t]hanks to the efforts of UTLA." Over the years, CNA has increased the benefits available under the disability policies at the request of UTLA.
Weber Depo., Ex. 3.
Defs.' Facts, ¶ 5; Weber Depo., Ex. 4 and 51:12-52:21.
Defs.' Facts, ¶ 7. The evidence cited supports the proffered fact, and Pierson's objection is overruled. (See Furlong Depo. at 33:4-11.)
Several years ago, the UTLA requested that CNA change the policy offered UTLA members to provide benefits for twelve months a year, rather than the nine months that comprise a traditional school year. The UTLA made the request because many LAUSD teachers work in year-round schools and would not be covered during the summer months if injured on the job. CNA declined to change its policy; therefore, UTLA selected Colonial Life as a UTLA-approved vendor because it was willing to offer members a twelve-month income protection policy. Both the CNA and Colonial Life policies are currently available to UTLA members.
Defs.' Facts, ¶ 8; Pl.'s Genuine Issues, ¶ 8; Weber Depo. at 22:12-14. The court overrules Pierson's objection that references to Colonial Life are irrelevant. The fact that there is more than one disability insurance plan available to UTLA members is potentially relevant in determining whether the CNA policy is a disability plan established and maintained by UTLA, and the union's dealings with Colonial Life shed light on the nature and purpose of the benefits it offers its members.
In 1990, the UTLA became concerned that several hundred vendors were allowed to come onto LAUSD campuses to promote their products or services. UTLA officials worried that some of these vendors might be "fly-by-night" organizations that would collect insurance premiums and refuse to pay claims when submitted. It thus decided to create a Membership Services Committee ("the Committee"), comprised of UTLA directors, that would investigate vendors to ensure they were solvent and met certain criteria.
Defs.' Facts, ¶ 9; Pl.'s Genuine Issues, ¶ 9. Pierson objects to the relevance of defendants' proffered fact, asserting there is no evidence that CNA's policy has ever been vetted by the Membership Services Committee. The court overrules this objection, as Weber testified that the Membership Services Committee periodically reevaluates vendors to determine if they should remain on UTLA's "approved" list, and that CNA has been reevaluated in this fashion. (See Weber Depo. at 30:6-31:9.)
Defendants assert that even before the creation of the Membership Services Committee, UTLA "endorsed" and "sponsored" CNA's disability policy, and argue that these terms are equivalent to the present "approved" status of the policy. Pierson disputes this, and the testimony of James Weber, UTLA's Treasurer, somewhat supports her. Other portions of Weber's testimony, however, indicate that UTLA has used the terms "endorsed" and "approved" interchangeably. The dispute is immaterial, however, since whether UTLA "endorsed" the policy, as that term is used in the ERISA context, depends upon the substance of UTLA's actions, and what reasonable UTLA members understood as a result, not upon the terminology UTLA employed.
Defs.' Facts, ¶ 10.
See Pl.'s Genuine Issues, ¶ 10; Pl.'s Supp. Facts, ¶ 33. Weber clearly differentiated between a product UTLA "endorses" and one it "approves" or "sponsors." He stated that a product or service "endorsed" by the union is "the official product of the organization" that it "run[s]" itself, something that the organization "actively work[s] to put . . . forward" and that "carries . . . its backing." By contrast, he stated, an "approved" product or service is one that UTLA has "investigated[,] . . . found to be solvent, [and] . . . found to stand up against [the union's] set of criteria . . . [I]t is then up to the member to do any further business that they wish." In a similar vein, Weber testified that a "sponsored" product is one "that is presented . . . by an outsider, and [that UTLA] choose[s] to extend . . . to the membership." (See Weber Depo. at 40:25-41:10; 56:23-57:7. See also Pl.'s' Supp. Facts, ¶ 34.)
Weber testified that it was only after the formation of the Membership Services Committee that UTLA determined not to "endorse" benefits offered to the membership, but to give them "approved" status instead. He stated, however, that this did not represent a change in philosophy, and that the terms "endorsed" and "approved" took on separate meanings within UTLA only after the Membership Services Committee established approval criteria in 1990. (See Weber Depo. 74:12-75:11.)
D. UTLA's Approval Process
When a prospective vendor contacts UTLA, it sends the vendor a set of criteria that must be met in order to market products or services to UTLA members. The vendor makes a presentation before the Membership Services Committee, and the Committee makes a recommendation to the Board of Directors regarding the vendor's application. The Board then determines whether the vendor should be approved or rejected.
Defs.' Facts, ¶ 11; Pl.'s Genuine Issues, ¶ 11. The court overrules Pierson's objection that UTLA's approval process is irrelevant, since there is evidence that it has been used to evaluate CNA's continuing status as an "approved" vendor.
UTLA has "approved" many types of products and services, including tax shelter annuities, fleet automobiles, and term life, disability, cancer and catastrophic insurance coverage. Not every vendor that approaches the UTLA is granted "approved" status. Further, the UTLA reevaluates each of its vendors, including CNA, every several years to determine whether its products or services should remain "UTLA approved."
Defs.' Facts, ¶¶ 11, 16; Pl.'s Genuine Issues, ¶¶ 11, 16.
Defendants assert that UTLA "approves" only programs that meet criteria established by the Membership Services Committee. One requirement is that the vendor and UTLA execute a written agreement "setting forth the benefits and responsibilities of both parties in the approval relationship," and containing certain terms. There is no evidence in the record that CNA executed such an agreement with the union; the only writing between the entities appears to be the Memorandum of Understanding.
Defs.' Facts, ¶ 12; Weber Depo., Ex. 18, 101:11-15.
Id., Ex. 18-5.
Defs.' Facts, ¶ 14.
UTLA also has specific criteria for the approval of "Group Salary Protection Programs," including disability insurance policies. Weber testified that CNA's "approved" status reflected the fact that it had complied with each of these criteria to UTLA's satisfaction.
Defs.' Facts, ¶ 13.
Weber Depo. at 102:13-19.
Weber Depo. at 103:3-6. While Weber's testimony references Exhibit 17, it is clear that he was shown, and directed his testimony to, the Criteria for Vendors ultimately marked as deposition Exhibit 18. (See id. at 101:5-10.)
Approved vendors, including CNA, receive several benefits, including (1) permission to advertise (for a fee) in UTLA publications and through membership mailings on UTLA letterhead; (2) use of the "UTLA-Approved" logo; (3) indirect access to UTLA membership mailing lists through UTLA's mailing house; (4) invitations to attend UTLA leadership conferences; and (5) invitations to attend monthly area meetings (where vendors can in turn arrange invitations to chapter meetings on school campuses). An approved vendor must generally submit advertisements to UTLA for prior approval.
Defs.' Facts, ¶ 15. While Pierson disputes this proffered fact, she argues legal conclusions, and cites no evidence raising a triable issue of fact on this point. (See Pl.'s Genuine Issues, ¶ 15. See also Pl.'s Supp. Facts, ¶ 30 [the fact that CNA's disability policy is "approved" allows it to be advertised in the UTLA newspaper under the "UTLA-approved" logo].)
UTLA has personnel available to field complaints from members regarding UTLA-approved products and services. Weber has spoken with members who had complaints regarding CNA's insurance, and contacted PEI's Furlong regarding them. Furlong and he then contacted CNA.
Defs.' Facts, ¶ 17. The court overrules Pierson's relevance objection, since the fact is pertinent in deciding what level, if any, of administrative services UTLA performs with respect to "approved" products.
Weber Depo. at 34:12-35:23.
The income protection policies underwritten by CNA are UTLA-approved. Advertisements for the policies carry the "UTLA Approved" logo, and appear in UTLA mailers and publications, such as the UTLA calendar. UTLA charges a fee for the advertisements placed in the calendar.
Defs.' Facts, ¶ 18; Pl.'s Genuine Issues, ¶ 18. While Pierson contends that PEI places the advertisements and pays the fee, there is no question that the products being advertised are CNA's policies and that PEI acts as CNA's agent. Indeed, Pierson herself characterizes PEI as CNA's agent. (See Pl.'s Genuine Issues, ¶ 6 ["PEI is CNA's agent, not UTLA's"]; id., ¶ 8 ["The UTLA contacted CNA through PEI"]; id., ¶ 10 ["UTLA `endorsed' PEI as the `official representative of the CNA policy'"].)
II. ANALYSIS
A. Legal Standard Governing Motions For Summary JudgmentA motion for summary judgment must be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the pleadings and discovery responses which demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrert, 477 U.S. 317, 323 (1986). Where the moving party will have the burden of proof on an issue at trial, the movant must affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party. However, on an issue as to which the nonmoving party will have the burden of proof at trial, the movant can prevail merely by pointing out that there is an absence of evidence to support the nonmoving party's case. See Id. If the moving party meets its initial burden, the nonmoving party must then set forth, by affidavit or as otherwise provided in Rule 56, "specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 2S0 (1986); Fed.R.Civ.P. 56(e).
In judging evidence at the summary judgment stage, the court does not make credibility determinations or weigh conflicting evidence. Rather, it draws all inferences in the light most favorable to the nonmoving party. See T. W. Electric Service, Inc. v. Pacific Electric Contractors Ass'n, 809 F.2d 626, 630-31 (9th Cir. 1987). The evidence presented by the parties must be admissible. Fed.R.Civ.P. 56(e). Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment. See Falls Riverway Realty, Inc. v. Niagara Falls, 754 F.2d 49, 56 (2d Cir. 1985); Thornhill Pub. Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).
B. Existence of An ERISA Plan
1. General Requirements For Existence of An ERISA Plan
An ERISA "employee welfare benefit plan" is: (1) a plan, fund or program (2) established or maintained (3) by an employer, an employee organization, or both (4) for the purpose of providing medical, surgical, hospital, or sickness benefits (5) to participants or their beneficiaries. Steen v. John Hancock Mut. Life Ins. Co., 106 F.3d 904, 917 (9th Cir. 1997) (citations omitted). "The existence of an ERISA plan is a question of fact, to be answered in the light of all the surrounding circumstances from the point of view of a reasonable person." Zavora v. Paul Revere Life Insurance Co., 145 F.3d 1118, 1120 (9th Cir. 1998). It is defendants' burden to establish the existence of an ERISA plan. See Id. at 1120, n. 2.
2. An Employee Welfare Benefit Plan May Be Funded Through Individual Policies
As a preliminary matter, Pierson argues that her disability policies cannot be part of an ERISA plan because they were individually underwritten and issued. Defendants admit that Pierson's policies were issued on an individual basis, and that PEI received a commission on each policy sold rather than on a group basis. Courts have recognized, however, that employee welfare benefit plans can be funded through the purchase of individual policies. See Agrawal V. Paul Revere Life Ins. Co., 205 F.3d 297, 301 (6th Cir. 2000) ("[C]ourts have recognized that an employee welfare benefit plan may be funded by group or individual policies" (emphasis added)); Massachusetts Casualty Ins. Co. v. Reynolds, 113 F.3d 1450, 1453 (6th Cir. 1997) (acknowledging that an ERISA plan can consist of individual disability policies covering each of the employer's employees rather than a group policy); Peterson v. American Life Health Ins. Co., 48 F.3d 404, 407 (9th Cir. 1995) (holding that an individual health insurance policy and a group policy together formed an ERISA plan); Morris v. Paul Revere Ins. Group, 986 F. Supp. 872 (D.N.J. 1997) (finding that individual disability policies constituted part of an ERISA plan). See also Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir. 1982) ("the purchase of a group policy or multiple policies covering a class of employees offers substantial evidence that a plan, fund, or program has been established" (emphasis added)). Therefore, the fact that Pierson was covered under an individual rather than a group policy does not prevent a finding that she was a participant in an ERISA plan if the requirements set forth in the statute are otherwise met.
Pl.'s Facts, ¶ 5; Defs.' Genuine Issues, ¶ 5.
At the hearing on this motion, Pierson argued that the policies issued by CNA to UTLA members could not constitute an ERISA welfare benefit plan because they failed to satisfy California's statutory requirement that "[g]roup disability insurance . . . [be w]ritten under a master policy." Cal. Ins. Code § 10270.5(a). Citing this statute, Pierson argued that, since there was no written agreement between UTLA and CNA, there could be no plan. Only "polic[ies] . . . issued to an association "formed and continuously maintained in good faith for purposes other than that of obtaining insurance'" constitute group disability insurance subject to § 10270.5. See Peterson, supra, 48 F.3d at 410 (quoting Cal. Ins. Code § 10270.5(a)(3)). Pierson's citation of this statute, therefore, is merely a reiteration of her argument that an employee welfare benefit plan can be funded only through the purchase of a group policy. As noted in text, this proposition is not the law. Moreover, concluding that an employee welfare benefit plan can be established or maintained under ERISA through the purchase of individual policies does not implicate the savings clause of U.S.C. § 1144(b)(2)(A) or the McCarran-Ferguson Act, 15 U.S.C. § 1011-15, since it in no manner undercuts California requirements governing group disability insurance.
3. The "Established and Maintained" Requirement
a. The "Safe Harbor" Regulation
To assist in determining whether a plan is "established or maintained" by an employer or employee organization, the Department of Labor has promulgated a "safe harbor" regulation that describes when and to what extent an employer may be involved in an employee welfare benefit plan without being deemed to have "established" or "maintained" it. See Johnson v. Watts Regulator Co., 63 F.3d 1129, 1133 (1st Cir. 1995); Levett v. American Heritage Life Insurance Company, 971 F. Supp. 1399, 1402 (M.D.Ala. 1997). The "safe harbor" regulation provides that an "employee welfare benefit plan"
"shall not include a group or group-type insurance program offered by an insurer to employees or members of an employee organization under which (1) No contributions are made by an employer or employee organization; (2) Participation [in] the program is completely voluntary for employees or members; (3) The sole functions of the employer or employee organization with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees or members, to collect premiums through payroll deductions or dues checkoffs and to remit them to the insurer; and (4) The employer or employee organization receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions or dues checkoffs." 29 C.F.R. § 2510.3-1 (j).
In order for a plan to fit within the "safe harbor," all four criteria spelled out in the regulation must be met. See Steen, supra, 106 F.3d at 916-17; Qualls v. Blue Cross of California, 22 F.3d 839, 843 (9th Cir. 1994).
In this case, defendants concede that the first and second "safe harbor" criteria are met, i.e., that UTLA pays no part of a member's premiums and that participation in the plan is completely voluntary. They contend, however, that UTLA "endorses" CNA's disability insurance, that it performs administrative functions beyond merely publicizing the policy and collecting and remitting premiums, and that the insurer's payment of an advertising fee constitutes "consideration . . . in connection with the program." Each of these contentions will be considered in turn.
i. Endorsement
"An employer [or employee organization] will be said to have endorsed a program within the purview of the Secretary's safe harbor regulation if, in light of all the surrounding facts and circumstances, an objectively reasonable employee would conclude on the basis of [its] actions that the [employee organization] had not merely facilitated the program's availability but had exercised control over it or made it appear to be part and parcel of [its] own benefit package." Johnson v. Watts Regulator Co., 63 F.3d 1129, 1135 (1st Cir. 1995). See also Zavora, supra, 145 F.3d at 1121-22 (holding that literature provided to employees "could lead a reasonable person to find that [the employer] served no function other than that of a conduit with regard to [the] insurance"); Thompson v. American Home Assurance Co., 95 F.3d 429, 436-37 (6th Cir. 1996) ("the relevant framework for determining if endorsement exists is to examine the employer's involvement in the creation or administration of the policy from the employees' point of view. . . . [E]mphasis should be placed on those circumstances which would allow an employee to reasonably conclude that the employer had compromised its neutrality in offering the plan"); Dep't. of Labor Opinion No. 94-26A (1994) (an employer's communications with its employees regarding a group insurance program will constitute an endorsement for purposes of § 2510.3-1(j)(3) if, together with other employer activities, it leads reasonable employees to believe that the program has been established or maintained by the employer). Defendants argue that no "reasonable employee" could conclude UTLA that remained neutral respecting CNA's income protection policy. They cite the Membership Services Committee's criteria for approved vendors, the UTLA's 1973 determination that CNA offered a better income protection policy than Educators Life, communications with the membership, and the use of the "UTLA Approved" logo in advertisements for CNA's policy.
Defendants' Memorandum of Points and Authorities in Support of Motion for Summary Judgment ("Defs. Mem.") at 15:4-25.
UTLA's Treasurer, Weber, testified that UTLA had determined CNA met the criteria established for "approval" and that the union had periodically reevaluated the insurer's "approved" status. The issue, however, is whether a reasonable employee would have concluded, based on information he or she received from UTLA, that the union had not merely facilitated the availability of CNA-underwritten insurance, but had exercised some measure of control over it. See Johnson, supra, 63 F.3d at 1135. UTLA members received information regarding CNA disability insurance through advertisements in UTLA's calendar, mailers, and publications. Each advertisement contained a prominent "UTLA Approved" logo, language encouraging teachers to consider "UTLA approved" disability income protect plans, language introducing PEI as an "endorsed" company, or the like. In a July 28, 1998 letter to new teachers on UTLA letterhead, for example, UTLA president Day Higuchi stated:
Weber Depo. Exs. 4, 5, 6, 7-16, 8, 9, 14-17, 15-16, and 16.
Id., Exs. 7-16, 14-17, 15-16, 16.
Id., Exs. 4, 8.
Id., Ex. 9.
"United Teachers Los Angeles stands committed to protecting and advancing your professional and economic interests. Part of that commitment includes providing you with a choice of membership service programs which are tailored to meet your needs as an educator. . . .
The enclosed brochure information will introduce you to the UTLA approved life and disability plans along with a cancer plan which is also available. If you have questions about the plans or need assistance completing the applications, please contact Pacific Educators, Inc., the Plan Administrator at 800/722-3365."
Id., Ex. 8.
Based on this and similar uncontroverted evidence, the court concludes as a matter of law that UTLA endorsed CNA's disability insurance. A reasonable employee reviewing these mailers and advertisements would have concluded that UTLA had investigated CNA's insurance, evaluated it, and determined that it was worthy of UTLA's official seal of approval. Any other finding would do violence to the common meaning of the word "approved."
The present case, infact, resembles Hansen v. Continental Insurance Co., 940 F.2d 971 (5th Cir. 1991), where a booklet distributed in the employer's name encouraged employees to "give [an accident insurance] program careful consideration," as it could be "a valuable supplement to your existing coverages." Id. at 977. Coupled with the fact that the employer had a full time benefits administrator who accepted claim forms from employees and submitted them to the insurer, the court held that it had done more than merely publicize the program. Id. Here, the evidence mandates same conclusion. UTLA not only allowed CNA/PEI to advertise the availability of disability insurance in its publications; it promoted the policies by authorizing use of a "UTLA-approved" logo. While UTLA's Weber distinguishes between "endorsed" and "approved," a reasonable member of the union would understand that a benefit approved by the organization was one that had been investigated by it and had favorably impressed the leadership. See WEBSTER'S NEW WORLD DICTIONARY (1998) ("approve" means "to sanction," "to be favorable toward; [to] think or declare to be good, satisfactory"). This is particularly true since UTLA specifically told its members that benefits such as the CNA policy were designed to protect them and advance their interests.
Similarly, there is evidence that UTLA staff members fielded complaints from members regarding CNA's insurance and communicated with PEI about them.
The Membership Services Committee approved brochures before they were sent to members, as well as letters regarding benefits sent on UTLA letterhead and signed by the union's president. The wordings of the letters encouraged members to purchase the insurance coverage, noting that it was "valuable protection designed to help guarantee [their] family's financial security," that it was designed to "protect and advance" their professional and economic interests, and that it had been "tailored" to meet their needs as educators. These statements are active promotion that constitute "endorsement" for purposes of the "safe harbor" regulation. See Hansen, supra, 940 F.2d at 977; O'Reilly v. Hartford Life Acc. Ins. Co., 1999 WL 156351, * 4 (N.D.Ill. 1999) (finding that an ERISA plan existed, inter alia, because the employer "provided employees with newsletters and pamphlets on the Plan, embossed with [its] logo"); Stoudemire v. Provident Life and Accident Ins. Co., 24 F. Supp.2d 1252, 1258 (M.D.Ala. 1998) (finding that a disability policy constituted an ERISA plan, inter alia, because it was "described and promoted in two separate employee benefits handbooks distributed to . . . employees" and "[a] reasonable employee would have examined the employee benefits handbooks to determine what benefits were provided and/or made available by [the] employer and understood the Policy to be part of the benefits package established and maintained by [the employer]"). In short, UTLA took steps to "ma[k]e [the policy] appear to be part and parcel of the [union's] own benefit package." Johnson, supra, 63 F.3d at 1135. Accordingly, the undisputed evidence supports a finding that UTLA endorsed the CNA policy.
See Weber Depo. at 46:23-47:22; 52:22-53:54:1; 71:23-72:5.
Id., Ex. 4.
Id., Ex. 8.
But see Johnson, supra, 63 F.3d at 1135-36 (the court declined to hold that an employer had endorsed a group disability plan despite the fact that it "recommended enrollment via a cover letter . . . written on [the company's] letterhead[,] signed by its vice-president for financial matters[, and incorporated into the insurer's sales brochure]. . ." since enrollment was entirely within the employee's discretion and the brochure "nowhere suggested that [the company] had any control over, or proprietary interest in, the group insurance program").
ii. Administrative Functions
The evidence also shows that, in addition to communicating to the membership its "approval" of CNA's disability insurance, UTLA applied its established criteria for the approval of benefit plans to evaluate CNA's disability product on a periodic basis. These criteria included requirements that there be a continuation of coverage for members transferring from one insurer to another, that members' coverage be reinstated after an approved leave of absence, that members not eligible to receive disability payments from the State Teachers Retirement System be covered through age 60, and that coverages be "substantial enough" to provide adequate benefits. While there is no direct evidence that UTLA negotiated specific terms of coverage with CNA, the fact that it applied these criteria periodically to evaluate whether CNA's policy should remain an "approved" benefit demonstrates that UTLA exercised control over the level of benefits provided by the policy.
See Weber Depo., Ex. 18-6.
Additionally, there is evidence that when CNA was first selected to provide insurance to UTLA's members, the organization entered into a Memorandum of Understanding with the carrier, requiring that it cover all existing Educators Life insureds, that it maintain existing coverage terms and premiums in force for approximately one year, that it advise UTLA of any intention to change the scope of coverage or premium charged, and that it conform to UTLA's policies regarding communications with the membership. The memorandum also outlined requirements that CNA offer coverage to associate members and substitute teachers. These terms connote a level of involvement in the creation and administration of the plan beyond merely publicizing the policy and collecting and remitting premiums. See 29 C.F.R. § 2510-3.1(j)(3). See, e.g., Thompson, supra, 95 F.3d at 436 (the "safe harbor" provision does not apply when "there is some factual showing on the record of substantial employer involvement in the creation or administration of the plan"); Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1213 (11th Cir. 1999) (holding that the third "safe harbor" criterion had not been met because the employer advised its employees that life insurance "would be provided by a new carrier starting on a certain date" and that "employees insured by the old carrier would be automatically `enrolled,'" and additionally "decided on key terms, such as portability and the amount of coverage"); Custer v. Pan American Life Ins. Co., 12 F.3d 410, 417 (4th Cir. 1993) (noting, inter alia, that a company had "determined the benefits to be provided by the policy [and] negotiated the terms of the policy" in concluding that an ERISA plan had been established); Wickman v. Northwestern National Ins. Co., 908 F.2d 1077, 1083 (1st Cir. 1990) (considering, inter alia, the employer's role in devising eligibility requirements for insurance coverage in determining that a plan fell outside the "safe harbor"); Bonestroo v. Continental Life and Accident Co., 79 F. Supp.2d 1041, 1048 (N.D.Iowa 1999) (holding that an employer "endorsed" a group insurance plan, inter alia, because it "determined which employees were eligible for coverage under the policy and also dictated the benefits an employee could obtain"). For this reason too, the court concludes that CNA's disability program does not fall within the Department of Labor's "safe harbor." See Kanne v. Connecticut General Life Insurance Co., 867 F.2d 489, 493 (9th Cir. 1988) (because an employer group was "more than a mere advertiser of group insurance," it "endorsed" the plan and took it outside the "safe harbor").
Id., Ex. 2. Pierson contends that actions taken more than twenty years ago are not relevant in evaluating whether UTLA currently maintains an ERISA plan. To the contrary, UTLA's election to replace the Educators' Life coverage with CNA's policy reflects its active involvement in structuring benefits for its members, as does its recent decision to add a second disability offering when CNA declined to expand its coverage to twelve months. The fact that Pierson may not have been a member of the UTLA in 1973 does not alter the relevance of the decisions that were made at that time. Employee welfare benefits plans are frequently in existence long before a given employee becomes an eligible participant.
Because the court concludes that the third "safe harbor" criterion is not satisfied, it need not address whether requiring that vendors pay for advertisements in the UTLA calendar constitutes consideration received "in connection with a plan." See 29 C.F.R. § 2510-3.1(j)(4).
b. Whether Failure To Satisfy All of The "Safe Harbor" Criteria Establishes The Existence of An ERISA Plan
In Zavora, the Ninth Circuit stated that the fact an employer had "failed in one particular to limit itself to the activities specified in a subsection of the "safe harbor' regulation is not conclusive; it is [merely] evidence of the establishment of a plan. . . . That evidence must be considered along with all the surrounding circumstances to determine whether an ERISA plan exists." Zavora, supra, 145 F.3d at 1121 (quoting Crull v. Gem Ins. Co., 58 F.3d 1386, 1390, n. 2 (9th Cir. 1995) and Silvera v. Mutual Life Ins. Co., 884 F.2d 423, 426 (9th Cir. 1989) (internal quotations omitted)). See Id. (distinguishing the fact that a plan fell outside the "safe harbor" from the "ultimate issue," which was "whether th[e] plan [was] `established or maintained' by the employer). These statements in Zavora were arguably inconsistent with other Ninth Circuit decisions. See Steen v. John Hancock Mut. Life Ins. Co., 106 F.3d 904, 917 (9th Cir. 1997) ("If any of the ["safe harbor"] criteria is not satisfied, the . . . Plan is not excluded from ERISA coverage"); Sarraf, supra, 102 F.3d at 993 ("Because [the employer group was] not exempted by the regulation, its involvement in the plan [was] significant enough to make the plan an `employee benefit plan' subject to ERISA"); Pacificare Inc. v. Martin, 34 F.3d 834, 837 (9th Cir. 1994) ("A plan failing to meet any one of these ["safe harbor"] criteria cannot be excluded from ERISA coverage"); Qualls, supra, 22 F.3d at 843 ("Unless all four of the . . . requirements [of the "safe harbor" regulation] are met, the employer's involvement in a group insurance plan is significant enough to constitute an `employee benefit plan' subject to ERISA").Recently, the Ninth Circuit harmonized these holdings. See Stuart v. UNUM Life Ins. Co. of America, 217 F.3d 1145, 1153 (9th Cir. 2000). Stuart stated that, read in context, the court's statements in Zavora were not inconsistent with the standard articulated in Qualls, Pacificare, Steen and Sarraf. Id. at 1152. Rather, it said, "Zavora merely recognized that the employer's failure to limit itself to the activities explicitly outlined in the third requirement of the safe harbor regulation (i.e, being named the plan administrator) was not conclusive to determining whether an ERISA plan was established because the evidence presented by the insured still allowed a reasonable person to conclude that the employer satisfied the third requirement of the safe harbor regulation." Id. at 1152-53. The court concluded:
". . . [D]etailed review of our prior opinions demonstrates that we have uniformly adopted the position that a group insurance plan cannot be excluded from ERISA coverage when an employer fails to satisfy any one of the four requirements of the safe harbor regulation." Id. at 1153 (citations omitted).
Under Stuart, the fact that the UTLA plan does not fall within the "safe harbor" conclusively determines that it is an ERISA plan.
Even if a "totality of the circumstances" test were used, the undisputed evidence supports the conclusion that UTLA established or maintained a disability insurance plan. The "established or maintained" requirement is designed to ensure that a plan is "part of the employment relationship." Gaylor, supra, 112 F.3d at 464; Peckham v. Gem State Mutual of Utah, 964 F.2d 1043, 1049 (10th Cir. 1992). Whether a plan is part of the employment relationship in turn depends on "whether the employer has engaged in `a meaningful degree of participation' in the plan and whether the `purchase of an insurance policy constituted an expressed intention to provide benefits on a regular and long-term basis." Peckham, supra, 964 F.2d at 1049. See also Hansen, supra, 940 F.2d at 978 (an employer will be held to have "established or maintained" a plan if it has had "some meaningful degree of participation . . . in the creation or administration of the plan" and if it has "a purpose to provide . . . specified types of benefits to its employees"); Wickman, supra, 908 F.2d at 1083 ("The crucial factor in determining whether a `plan' has been established is whether the purchase of the insurance policy constituted an expressed intention by the employer to provide benefits on a regular and long term basis"); 29 U.S.C. § 1002 (1) ("The terms `employee welfare benefit plan' and `welfare plan' mean any plan, fund, or program . . . established or maintained by an employer . . . for the purpose of providing [benefits] for its participants . . ."). Weber testified that UTLA established its approval process for vendors because it wanted to provide a service to its members, and ensure that they received the products promised. (Weber Depo. at 50:8-12, 59:4-60:5.) UTLA's purpose, therefore, is consistent with the establishment and maintenance of an ERISA plan. Moreover, the union has taken an active role in shaping the disability coverage available to its members. It negotiated the replacement of Educators Life with CNA as the underwriter of income protection insurance. It has a regular procedure, employing comprehensive written criteria, by which it investigates "approved" vendors like CNA, and reevaluates them periodically to determine whether their products or services should remain "UTLA Approved." Weber testified that CNA remained on the "approved" list because UTLA's re-evaluation demonstrated that it had satisfied these criteria, which relate, among other things, to coverage terms and premiums.
4. The Governmental Plan Exception
This does not end the inquiry, however. Even a plan "established" or "maintained" by UTLA would be exempt from ERISA if it were a "governmental plan." Defendants argue the exemption is not available here, since a "governmental plan" is one that is "established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing." 29 U.S.C. § 1002 (32). They assert that the UTLA is a labor union that is neither an agent nor an instrumentality of the federal or state government. Pierson counters that any involvement UTLA has had in creating, negotiating or maintaining the plan is solely for the benefit of the LAUSD's full-time, governmental employees. Consequently, she contends, the plan qualifies for the exemption.
The fact that UTLA is a labor union, rather than a school district or other governmental entity, does not conclusively demonstrate that the plan falls outside the "governmental plan" exemption. A plan established by a union pursuant to a collective bargaining agreement with a governmental entity can qualify as a governmental plan. See, e.g., Feinstein v. Lewis, 477 F. Supp. 1256, 1260-62 (S.D.N.Y. 1979), aff'd., 622 F.2d 573 (2d Cir. 1980) (holding that an employee welfare plan established pursuant to a collective bargaining agreement between a union and associated townships and school districts constituted a governmental plan). See also Dep't. of Labor ERISA Op. Letter No. 99-15A (Nov. 19, 1999), 1999 ERISA LEXIS 20 at * 6 ("The term `governmental plan' also includes a plan administered by an `employee organization,' . . . that provides benefits exclusively to employees of a political subdivision, agency, or instrumentality of local government who are also the only members of the employee organization, provided that the plan is funded exclusively by the government and by the government's employees who are members of the sponsoring employee organization"); Dep't. of Labor ERISA Op. Letter No. 86-23A (Sept. 9, 1986), 1986 ERISA LEXIS 6 at * 6 ("the Department has interpreted the term `governmental plan' to include plans established or maintained pursuant to a collective bargaining agreement between a governmental entity and a labor union where such plans are funded by and cover only employees of governmental entities"); Dep't. of Labor ERISA Op. Letter No. 86-10A (Feb. 18, 1986), 1986 ERISA LEXIS 18 at *3 ("the Department has interpreted the term `governmental plan' to include plans established or maintained pursuant to a collective bargaining agreement between a governmental entity and a labor union where such plans are funded by and cover only employees of governmental entities"). Here, however, it is undisputed that Pierson's disability policies were not a bargained-for benefit negotiated by UTLA and LAUSD.
Pl.'s Facts, ¶ 8; Defs.' Genuine Issues, ¶ 8.
Pierson cites no authority for the proposition that a union plan not mandated by a collective bargaining agreement qualifies for the governmental plan exception, and the court can find none. All reported cases analyzing the governmental plan exception in the context of a union plan appear to involve plans organized as a result of collective bargaining. See, e.g., Triplett v. United Behavioral Health Sys., Inc., 1999 WL 238944 (E.D. Pa. March 29, 1999) (concluding that the Pennsylvania Employees Benefit Trust was a governmental plan created as the result of a collective bargaining agreement between a state government and an employee union); Lovelace v. Prudential Ins. Co., 775 F. Supp. 228, 229 (S.D.Ohio 1991) (holding that a plan established by a government employer through the collective bargaining process constitutes a governmental plan); Canady v. Washington Metropolitan Area Transit Auth., 909 F. Supp. 324, 327 (D.Md. 1985) (holding that a plan that was the result of collective bargaining between a public employer and a union was a governmental plan); Feinstein v. Lewis, 477 F. Supp. 1256, 1260 (S.D.N.Y. 1979) (holding that employee welfare plans established pursuant to a collective bargaining agreement between public employers and a union for benefit of public employees were governmental plans), aff'd., 622 F.2d 573 (2d Cir. 1980). See also Kirkpatrick v. Merit Behavioral Care Corp., 70 F. Supp.2d 443, 446-47 (.D.Vt. 1999) (finding that a plan established by the Vermont National Education Association, a teachers' union, to manage a health insurance program initiated by the Vermont School Boards Insurance Trust, in which three hundred school districts participated was a governmental plan, because the union's "involvement in forming [the plan did not] remove [it] from the governmental plan exception"); Even Department of Labor ERISA Opinion Letter No. 99-15A, on which Pierson relies in reply, concerned a plan that was the product of collective bargaining.
That the exception would not apply to a plan negotiated by the union outside the collective bargaining context makes sense given the legislative purpose behind it. Congress enacted the governmental plan exception because it believed that "the ability of the governmental entities to fulfill their obligations to employees through their taxing powers" was an adequate substitute for both minimum funding standards and plan termination insurance. S.Rep. No. 383, 93d Cong., 2d Sess., reprinted in, 1974 U.S. Code Cong. Ad. News 4890, 4965; H.R. Rep. No. 807, 93d Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. Ad.News 4670, 4756-57. See also Rose v. Long Island R.R. Pension Plan, 828 F.2d 910, 914 (2d Cir. 1987). Where, as here, a union negotiates a plan on behalf of its members outside the collective bargaining context, the taxing power of the governmental entity is not available to ensure minimum funding standards. Congress was further concerned that the imposition of minimum funding and other standards "would entail unacceptable cost implications to governmental entities." H.R. Rep. No. 807, 1974 U.S. Code Cong. Ad.News at 4830. See also H.R. Rep. No. 533, 1974 U.S. Code Cong. Ad.News at 4668; Rose, supra, 828 F.2d at 914. Where, as here, no governmental funding is involved, no cost problems could arise. For these reasons, the court concludes that the governmental plan exception does not apply to an employee welfare benefit plan negotiated outside the collective bargaining context. Because Pierson's policy was not a product of collective bargaining, the governmental plan exception does not take it outside ERISA.
C. Preemption of Pierson's State Law Claims
Because the CNA policies were an employee welfare benefit plan governed by ERISA, Pierson's state law claims for breach of contract and breach of the covenant of good faith and fair dealing against CNA are preempted. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987); Zavora, supra, 145 F.3d at 1120; Qualls, supra, 22 F.3d at 842, 844. The parties, however, have not provided adequate briefing as to whether ERISA also preempts Pierson's state law claims for negligent misrepresentation, fraud, and intentional infliction of emotional distress. Compare Bast v. Prudential Ins. Co. of Am., 150 F.3d 1003, 1008 (9th Cir. 1998) (citing with approval cases holding that ERISA preempts negligent misrepresentation and fraud claims which are based on interference with attainment of benefits) and Tingey v. Pixley-Richards West, Inc., 953 F.2d 1124, 1131 (9th Cir. 1992) (holding intentional infliction of emotional distress claim preempted by ERISA), with Scott v. Gulf Oil Corp., 754 F.2d 1499, 1505 (9th Cir. 1985) (holding preemption depends on whether challenged conduct was part of administration of employee benefit plan) and Walsh v. Emerson, 1990 WL 47319 (D.Or. 1990) (finding no ERISA preemption where state fraud and negligent misrepresentation claims focused on defendants' wrongful conduct and business motives, not on administration of plans). Therefore, the court declines to decide the issue of ERISA preemption in the context of this motion.
D. State Law Claims Against PEI
PEI argues that the negligent misrepresentation claim against it is preempted by ERISA, and thus that it must be dismissed as a defendant, because a suit to recover benefits may proceed only against the plan as an entity. "ERISA permits suits to recover benefits only against the Plan as an entity, and suits for breach of fiduciary duty only against the fiduciary." Gelardi v. Pertec Computer Corp., 761 F.2d 1323, 1324-25 (9th Cir. 1985). See also Gibson v. Prudential Ins. Co. of America, 915 F.2d 414, 417 (9th Cir. 1990). Under ERISA, an entity is deemed a fiduciary if it "exercises discretionary authority or control respecting the management or administration of an employee benefit plan." Kyle Railways, Inc. v. Pacific Administration Services, Inc., 990 F.2d 513, 516 (9th Cir. 1993); 29 U.S.C. § 1002 (21)(A). Third-party administrators are not fiduciaries if they merely perform ministerial functions. CSA 401(k) Plan v. Pension Professionals, Inc., 195 F.3d 1195, 1138 (9th Cir. 1999).
As currently pled, Pierson's claim against PEI seeks the recovery of damages caused by alleged misrepresentations that she would receive needed income protection if she purchased CNA's disability policies. At least some circuits have held that negligent misrepresentation claims against an insurance agent are not preempted by ERISA. See, e.g., Wilson v. Zoellner, 114 F.3d 713, 721 (8th Cir. 1997) ("[W]e hold that ERISA does not preempt [plaintiffs] suit against [an insurance agent] for the Missouri state common-law tort of negligent misrepresentation"); Coyne Delany Co. v. Selman, 98 F.3d 1457, 1467 (4th Cir. 1996) ("`We hold that [plaintiff's] malpractice claim [against the insurance professionals] is not preempted because it does not `relate to' an employee benefit plan within the meaning of ERISA's preemption provision"); Perkins v. Time Ins. Co., 898 F.2d 470, 473 (5th Cir. 1990) ("[W]e conclude that a claim that an insurance agent fraudulently induced an insured to surrender coverage under an existing policy, to participate in an ERISA plan which did not provide the promised coverage, `relates to' that plan only indirectly"). See also Woodworker's Suppy, Inc. v. Principal Mutual Life Ins. Co., 170 F.3d 985, 991-92 (10th Cir. 1999) (claim against insurer for pre-plan misrepresentations regarding scope of coverage was not preempted); Morstein v. National Ins. Serv., Inc., 93 F.3d 715, 723 (11th Cir. 1996) (en banc) ("When a state law claim involves the reliance on an insurer's promise that a particular treatment is fully covered under a policy, . . . a claim of promissory estoppel is not `related to' the benefits plan").
Because neither party has briefed in any depth whether Pierson's negligent misrepresentation claim against PEI is preempted, the court denies PEI's motion for summary judgment without prejudice to its renewal at a later stage in the proceedings or in a pleading responsive to Pierson's amended complaint.
E. Pierson's Request For Sanctions
In light of the court's conclusion that defendants' arguments regarding the applicability of ERISA have merit, it denies Pierson's request that sanctions be imposed for the improper removal of this case to federal court.
III. CONCLUSION
Pierson's motion for summary judgment on the issue of jurisdiction is denied. CNA's motion for partial summary judgment on the issue of jurisdiction is granted, as is PEI's motion to the extent it seeks a determination that the CNA policies constitute an ERISA plan. CNA's and PEI's motions seeking an order that all of Pierson's state law claims are preempted, and that PEI is not a proper defendant, are denied without prejudice to their renewal in a subsequent summary judgment motion or in a motion to dismiss the amended complaint. Pierson is directed to file an amended complaint consistent with this order within twenty (20) days.