Opinion
01-CV-1427
July 25, 2003
Thomas D. Buchanan, Esq., CUSICK HACKER MURPHY, Latham, New York, Attorneys for Plaintiff
Arthur J. Siegel, Esq., BOND SCHOENECK KING, L.L.P., Albany, New York, Attorneys for Defendant
MEMORANDUM-DECISION AND ORDER
I. INTRODUCTION
Plaintiff initially commenced this action for recovery of benefits allegedly due her under a disability insurance policy issued by defendant in the New York State Supreme Court for the County of Albany. Defendant removed the case to this District in accordance with 28 U.S.C. § 1441(b) citing original federal question jurisdiction pursuant to 28 U.S.C. § 1331. Specifically, defendant asserts that although not referenced in plaintiff's complaint which sounds in breach of contract, the case is governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiff objected to removal of the case and filed a motion for remand arguing that the disability insurance policy at the heart of this dispute does not fall within ERISA's definition of an "employee welfare benefit plan," and is thus exempt from governance by the federal statute. Based thereupon, plaintiff asserts that this Court lacks subject matter jurisdiction over her claim and requests that the case be returned to its birthplace in Albany County Supreme Court.
II. FACTUAL BACKGROUND
Plaintiff's complaint asserts she was Director of Human Resources for the Montgomery County chapter of the New York State Association for Retarded Children, Inc. ("ARC"). Plaintiff asserts in her complaint that the insurance policy under which she now claims entitlement to coverage was a "private disability policy of the group type insurance program offered by an insurer to employees under which no contributions were made by the employer or employee organization." Plaintiff also alleges in the complaint and in the affidavit she submitted in support of her motion for remand that participation in the disability insurance program was voluntary and she paid all premiums associated with the policy herself through payroll deduction after taxes. According to plaintiff, ARC "played no part in administering the [disability] insurance program." Plaintiff avers that the "only role [her] employer performed was to collect premiums through payroll deductions and to remit them to the insurer."
According to her complaint, on or before March 1999, plaintiff was diagnosed with "chronic pain in the right hand and wrist with secondary chronic pain in the left hand." Plaintiff alleges that this chronic pain condition limited her use of her right hand to the point where she could not grip, use a keyboard, pull files, use a calculator or write for longer than 10 minutes. Based on this alleged disability, in April 1999, plaintiff applied for and began receiving disability benefit payments from defendant. In March 2001, defendant terminated plaintiff's disability benefits on the ground that the company's medical review of plaintiff's claim did not support the disability diagnosis reported by her treating physician. Plaintiff's appeal of defendant's denial of her claim was denied in June 2001. This action followed.
III. DISCUSSION
A. Applicable Standard of Review
28 U.S.C. § 1441(a) provides:
[A]ny 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 the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.
Subsection (c) of Article 28 of the United States Code ("U.S.C."), Congress provides that "[i]f at anytime before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). Subsection 1447(c) authorizes remand of an action on the basis of any defect in removal procedure or because the district court lacks subject matter jurisdiction. See LaFarge Coppee v. Venezolana De Cementos, S.A.C.A., 31 F.3d 70, 72 (2nd Cir. 1994). On a motion to remand, a court must construe all factual allegations in favor of the party seeking the remand, see R.G. Barry Corp. v. Mushroom Makers, Inc., 612 F.2d 651, 655 (2d Cir. 1979), and the removing party has the "burden of establishing that a case falls within the [c]ourt's removal jurisdiction[.]" NASDAQ Mkt Makers Antitrust Litig., 929 F. Supp. 174, 178 (S.D.N.Y. 1996) (citation omitted).
Because federal courts are courts of limited jurisdiction and because removal of a case implicates significant federalism concerns, "[d]ue regard for the rightful independence of state governments, which should actuate federal courts, requires that they scrupulously confine their own jurisdiction to the precise limits which the statute has defined." Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 101, 109 (1941).
B. Federal Subject Matter Jurisdiction
Defendant removed the present case on the basis of original "federal question" jurisdiction asserting that plaintiff's claim, although couched entirely in state contract law, "aris[es] under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. To wit, defendant asserts that review of the policy which is the subject of plaintiff's claim demonstrates by its plain language that: 1) plaintiff's employer is the policyholder, not plaintiff herself; 2) plaintiff's employer applied for the policy, had sole authority to terminate it and was required to pay all premiums associated with it with no contribution from plaintiff; and 3) the policy is a "classic" employee benefit plan governed exclusively by the tenets of ERISA.
Under 29 U.S.C. § 1002(1) an employee benefit plan is defined as:
[A]ny plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or an employee organization, or by both, to the extent that such plan, fund or program was established or is maintained for the purpose of providing its participants or their beneficiaries, through the purchase of insurance or otherwise, . . . medical, surgical, or hospital care or benefits in the event of sickness, accident, disability, death or unemployment.29 U.S.C. § 1002(1).
In this case, plaintiff has not cited or made a single reference to ERISA in her complaint. It is long-settled that a cause of action arises under federal law only when the plaintiff's "well-pleaded complaint" raises issues of federal law. Gully v. First Nat'l Bank, 299 U.S. 109, 113 (1936). The "well-pleaded complaint rule" is the basic principle marking the boundaries of the federal question jurisdiction of the federal district courts. Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 9-12 (1983). Federal pre-emption of a state law cause of action by a statute such as ERISA is ordinarily a federal defense to the plaintiff's suit. As a defense, it does not appear on the face of a well-pleaded complaint, and, therefore, does not authorize removal to federal court. Gully v. First Nat'l Bank, 299 U.S. at 113. A plaintiff may avoid federal jurisdiction by pleading only state law claims, even where federal claims are also available, and even if there is a federal defense. See Marcus v. ATT Corp., 138 F.3d 46, 52 (2d Cir. 1998); Hernandez v. Conriv Realty Assoc., 116 F.3d 35, 38 (2d Cir. 1997). One corollary of the well-pleaded complaint rule developed in the case law, however, is that when Congress so completely pre-empts a particular area, "any civil complaint raising this select group of claims is necessarily federal in character." Met. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987).
It is evident after reviewing the "Certificate of Coverage" attached to plaintiff's complaint that the insurance policy at issue herein was purchased by plaintiff's employer for her as an employee benefit. Plaintiff's allegations concerning who purchased and/or owned the disability insurance policy are belied by the Certificate of Coverage which defines plaintiff's employer as the "policyholder" and states that the "cost of your insurance is paid entirely by your employer." In Met. Life Ins. Co. v. Taylor, the Supreme Court held that an action for breach of contract under state law commenced by an employee seeking to recover benefits under a disability insurance policy was preempted by ERISA even though the plaintiff did not refer to or cite the federal statute in his complaint. 481 U.S. at 62 ("This lawsuit `relate[s] to [an] employee benefit plan.' . . . Accordingly, the suit is preempted by § 514 [of ERISA]. . . . Moreover, as a suit by a beneficiary to recover benefits from a covered plan, it falls directly under § 502(a)(1)(B) of ERISA, which provides an exclusive federal cause of action for resolution of such disputes.") (internal citations omitted). 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 § 502(a), 29 U.S.C. § 1132(a). Greenblatt v. Delta Plumbing Heating Corp., 68 F.3d 561, 573 (2d Cir. 1995).
Because it is clear from review of the complaint and the exhibits attached thereto that plaintiff's claim of entitlement to benefits under the disability insurance plan which is the subject of this action is the type of plan contemplated in the exclusive federal enforcement scheme of ERISA, plaintiff `s common law contract claims are pre-empted. Met. Life Ins. Co. v. Taylor, 481 U.S. at 62. (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987)). Accordingly, this suit, though it purports to raise only state law claims, is necessarily federal in character by virtue of the clearly manifested intent of Congress. It, therefore, "arise[s] under the . . . laws . . . of the United States," 28 U.S.C. § 1331, and is removable to federal court by defendant. 28 U.S.C. § 1441(b).
VI. CONCLUSION
Based on the foregoing, plaintiff's motion for remand of this matter is DENIED.
IT IS SO ORDERED.