Summary
In Walker v. Simon, 21 La.Ann. 669, the Supreme Court of Louisiana held that an intervenor must establish a sufficient interest, before he can plead prescription as against plaintiff's demand.
Summary of this case from Ernest M. Loeb Co. v. Avoyelles Drainage Dist., Etc.Opinion
NO. 4:01-CV-0060-A
June 28, 2001
MEMORANDUM OPINION and ORDER
After reviewing the motion of plaintiff, Richard U. Simon, Jr., to remand, the response of defendant, UNUM Life Insurance Company of America ("UNUM"), and the reply thereto, the court determines that the motion should be denied.
I. Background
Plaintiff commenced this action in state court on December 11, 2000, naming Phillip W. Walker ("Walker") and UNUM as defendants, and alleging the following:
Plaintiff was an equity partner in the law firm of McLean, Sanders, Price, Head Ellis, P.C. (the "Firm") from 1985 through 1999. The Firm's name has changed several times since 1985 and is now called Brackett Ellis. In 1987, Walker, an insurance agent, sold to the Firm a disability insurance policy issued by UNUM, and in doing so, misrepresented that the policy had benefits it did not actually have. After plaintiff became disabled with Meniere's Disease in 1999, UNUM wrongfully denied him benefits owed under the policy.
Plaintiff asserts causes of action against UNUM for breach of contract, breach of the duty of good faith and fair dealing, negligence, and negligent misrepresentation. He also asserts causes of action against Walker for negligence, negligent misrepresentation, breach of implied warranties, professional negligence, breach of fiduciary duty, and breach of the Texas Deceptive Trade Practices Act ("DTPA"). Judgment for actual damages, punitive damages, attorneys' fees, pre- and post-judgment interest, and costs of suit is sought from each defendant.
On January 12, 2001, UNUM removed the action to this court. UNUM subsequently filed an amended notice of removal on January 16, 2001, alleging that:
(a) This court has original jurisdiction pursuant to 29 U.S.C. § 1132(e)(1) and 28 U.S.C. § 1331 because plaintiff's claims are completely preempted by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 — 1461;
(b) This court also has diversity jurisdiction pursuant to 28 U.S.C. § 1332 because the amount in controversy exceeds $75,000, plaintiff is a Texas citizen, UNUM is a Maine corporation with its principal place of business in Portland, Maine, and, although Walker is a Texas citizen, his citizenship may be disregarded for purposes of diversity because he was fraudulently joined; and,
(c) This action is further removable pursuant to 28 U.S.C. § 1441 (c) as a separate and independent claim.
II. Grounds for Remand
Plaintiff asserts this action should be remanded on the grounds that:
(a) UNUM's removal is defective because Walker did not personally sign the consent to removal;
(b) UNUM has failed to meet its burden of establishing federal question jurisdiction because:
(1) UNUM has not shown ERISA applies to the plan;
(2) Even if UNUM can show ERISA applies, plaintiff's claims are not preempted by ERISA; and
(3) Even if ERISA applies to the plan, and plaintiff's claims are preempted by ERISA, plaintiff does not have standing to bring an ERISA claim.
(c) UNUM cannot meet its burden of establishing diversity jurisdiction because UNUM has failed to demonstrate Walker was fraudulently joined; and,
(d) UNUM cannot remove this action under 28 U.S.C. § 1441(c) because plaintiff's claims are not separate and independent.
III. Analysis
A. Walker's Consent to RemovalAll served and properly joined defendants are required to join in the removal of an action within thirty days after service of summons upon the removing party. 28 U.S.C. § 1446(b); Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254, 1263 (5th Cir. 1988). Plaintiff contends UNUM's removal was defective because Walker's attorney, rather than Walker himself, signed the consent to removal. This argument is frivolous. All that was required of Walker was to provide some timely written indication, either from himself or from a representative, purporting to have authority to formally act on his behalf, showing that he had actually consented to the removal. Id. at 1262 n. 11. Here, Walker's consent was proper because he timely provided written indication of his consent to removal by and through his counsel.
B. Federal Question Jurisdiction Under ER1SA
Title 28 U.S.C. § 1441(b) permits removal of "[a]ny civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties, or laws of the United States. . . ." Removal jurisdiction must be strictly construed, however, because it implicates important federalism concerns. Frank v. Bear Stearns Co., 128 F.3d 919, 922 (5th Cir. 1997). Further, "any doubts concerning removal must be resolved against removal and in favor of remanding the case back to state court." Cross v. Bankers Multiple Line Ins. Co., 810 F. Supp. 748, 750 (N.D. Tex. 1992). The burden of establishing federal jurisdiction is on the party seeking removal.Frank, 128 F.3d at 921-22.
Plaintiff's complaint alleges only violations of Texas law. As a general rule, "a cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law,"Metro. Life Ins. Co. v. Taylor. 481 U.S. 58, 63 (1987). An exception to the well-pleaded complaint rule is "that Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character."Taylor, 481 U.S. at 63-64. Cases implicating these preempted areas may be removed to federal court "even if the complaint is artfully pleaded to include solely state law claims for relief. . . ."Heimann v. Nat'l Elevator Ind. Pension Fund, 187 F.3d 493, 500 (5th Cir. 1999). In other words, complete preemption converts a state law cause of action into a federal claim, resulting in the establishment of federal question jurisdiction. Taylor, 481 U.S. at 64-67. Complete preemption exists when the federal statute contains specific enforcement provisions for the claim at issue. See Vega v. Nat'l Life Ins. Servs., Inc., 188 F.3d 287, 291 n. 3 (5th Cir. 1999). Plaintiff's claims readily fit into the ERISA enforcement provisions. See 29 U.S.C. § 1132.
In this case, UNUM alleges that ERISA completely preempts plaintiff's state law claims and grants this court federal question jurisdiction pursuant to 29 U.S.C. § 1132 (e)(1) and 28 U.S.C. § 1331. To prevail on the issue of ERISA preemption, UNUM must establish that (a) the insurance coverage at issue is an employee welfare benefit plan governed by ERISA, (b) plaintiff has standing to sue as a participant or beneficiary of that employee benefit plan; and (c) the state law claims involved in the lawsuit "relate to that plan." Vega, 188 F.3d at 291.
1. Whether the Plan Qualifies as an Employee Benefit Plan under ERISA:
In determining whether a particular plan qualifies as an "employee welfare benefit plan" under ERISA, the court asks whether: (1) a plan actually exists, (2) it falls within the safe harbor established by the Department of Labor, and (3) the plan was established or maintained by an employer intending to benefit employees. Meredith v. Time Ins. Co., 980 F.2d 352, 355 (5th Cir. 1993).
a. Whether a Plan Actually Exists:
In determining whether a plan exists, the court inquires "whether from the surrounding circumstances a reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and procedure for receiving benefits." Id. (citation omitted). Applying this standard, it is clear that a plan exists. The insurance coverage upon which plaintiff bases his claim is in the form of an insurance contract that recites on the first page "UNUM Life Insurance Company of America insures the employees of MCLEAN, SANDERS, PRICE, HEAD ELLIS, A PROFESSIONAL CORPORATION under the legal Services Group Insurance Trust Policy #37700." UNUM's App. at 04. The required information can be discerned from that document, the summary of benefits UNUM provided to the Firm, and booklets UNUM issued to each of the Firm's covered employees, as they all describe the intended benefits, class of beneficiaries, sources of financing, and procedures for making a claim and receiving benefits under the plan. Additionally, the Firm maintained claim forms for its employees, assisted in the completion of the claim forms, and submitted the claim forms on behalf of its employees.
b. Whether the Plan Falls Outside of the Department of Labor's Safe Harbor:
In order for a plan to be exempt from ERISA, it must meet all four of the following safe harbor provisions: (i) the employer does not contribute to the plan; (ii) participation is voluntary; (iii) the employer's role is limited to collecting premiums and remitting them to the insurer; and (iv) the employer received no profit from the plan.Meredith, 980 F.2d at 355.
The court need consider only the first element. The record makes clear that the Firm pays the premiums for the coverage provided by the insurance contract. The certificate booklets issued to the covered employees state that "[t]he cost of insurance is paid entirely by your employer." UNUM's App. at 31. Further, the summary of benefits issued by UNUM to the Firm expressly states that no employee contributions are required. Additionally, the listing of employees initially covered under the plan states that such individuals are "non-contributing." Id. at 01. Moreover, plaintiff admits the Firm pays the premiums due on the plan.
Plaintiff argues that because the Firm treats the premiums as taxable income to the employees, the premium payments to UNUM are treated as though the employees made the premium payments themselves for tax purposes. In other words, plaintiff argues that even though the Firm pays the premiums, the premiums should be deemed to have been paid by the employees because an amount equivalent to the premiums is treated as compensation received by the employees for tax purposes. That is somewhat like saying that an employee pays his own salary because he pays tax on the salary he receives. Plaintiff cites no authority for such a proposition.
c. Whether the Plan was Established or Maintained by the Firm with Intent to Benefit the Firm's Employees:
The Firm's own legal administrator testified by deposition that the plan is intended as a benefit for the Firm's employees, and that she used the long-term disability plan as a selling point in recruiting potential employees to the Firm. Further, the Firm maintains claim forms and directly submits the claim forms on behalf of its employees. Moreover, the parties do not dispute the fact that the plan is intended as a benefit to the Firm's employees. Accordingly, it is clear that the plan is intended to benefit the Firm's employees.
Plaintiff argues that the court should consider the fact that the Firm did not intend to establish a qualified ERISA plan. However, ERISA protection and coverage turns on whether the plan itself satisfies the statutory definition of an "employee welfare benefit plan," not whether the entity that established and maintained the plan intended ERISA to govern the plan. MDPhysicians Assocs.. Inc. v. State Bd. of Ins., 957 F.2d 178, 183 n. 7 (5th Cir. 1992).
2. Whether Plaintiff Has Standing Under ERISA:
Having concluded that there is a plan governed by ERISA, the court must next determine whether plaintiff has standing to sue as either a participant or beneficiary of the plan. Vega, 188 F.3d at 291. To have standing to bring suit under ERISA, a person must be either a "participant" or a "beneficiary" of an ERISA plan. Id. Plaintiff asserts that because he is a shareholder/partner, and not an employee, of the Firm, he is neither a participant nor a beneficiary.
To be considered a "participant" of an ERISA plan, a claimant must be an "employee or former employee of an employer . . . who is or may become eligible to receive a benefit. . . ." 29 U.S.C. § 1002(7);Vega, 188 F.3d at 291. However, so long as there is at least one employee of the Firm participating in the plan, other than a shareholder or a spouse of the shareholder, plaintiff is a "participant" notwithstanding his status as a shareholder/partner. Id. at 294. And, the plan at issue does cover at least one employee of the Firm; therefore, plaintiff is a "participant" of the plan with standing to sue under ERISA. Id.
Additionally, plaintiff is a "beneficiary" under the plan. A "beneficiary" is defined as "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." 29 U.S.C. § 1002(8); Vega., 188 F.2d at 291. The summary of benefits of the plan designates plaintiff as a person potentially able to receive benefits, and he has submitted a claim for benefits under the plan, the denial of which is the subject of this litigation. Therefore, under the plain language of 29 U.S.C. § 1002(8), plaintiff is a "beneficiary" with standing to sue under ERISA. See Vega, 188 F.2d at 291; Englehardt v. Paul Revere Life Ins. Co., 139 F.3d 1346, 1351 (11th Cir. 1998) (holding that plaintiff's status as a shareholder did not preclude him from being a beneficiary under ERISA plan).
3. Whether Plaintiff's State Law Claims Relate to the Plan:
Finally, the court must determine whether plaintiff's state law claims "relate to" the plan. If so, they are preempted. 29 U.S.C. § 1144(a);Hermann Hosp. v. MEBA Med. Benefits Plan, 845 F.2d 1286, 1290 (5th Cir. 1988).
ERISA's preemption clause states that ERISA "shall supercede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a); Hubbard v. Blue Cross Blue Shield Assoc., 42 F.3d 942, 945 (5th Cir. 1995). Plaintiff's state law causes of actions are preempted by § 1144(a) if (1) the state law claims address an area of exclusive federal concern, such as the right to receive benefits under the terms of an ERISA plan; and (2) the claim directly affects the relationship between the traditional ERISA entities — the employer, the plan and its fiduciaries, and the participants and beneficiaries. Id. "The language of the ERISA preemption clause is deliberately expansive, and has been construed broadly by federal courts." Id. (citingCorcoran v. United Healthcare, Inc., 965 F.2d 1321, 1328-29 (5th Cir. 1992)).
All of plaintiff's state law claims against UNUM clearly relate to the plan. Hubbard, 42 F.3d at 946.
C. Claims Against Walker
So far, the record casts doubt on the validity of plaintiff's claims against Walker. However, the court need not deal with that issue now, nor does the court need to deal with the issue of whether plaintiff's claims against Walker are preempted. If they are not preempted, the court is exercising supplemental jurisdiction over such claims pursuant to 28 U.S.C. § 1367. Coplin v. Container Store, 174 F.3d 590, 594 (5th Cir. 1999) (holding that "[o]nce the court has proper removal jurisdiction over a federal claim, it may exercise supplemental jurisdiction over state law claims" under 28 U.S.C. § 1367).
D. Plaintiff's Remaining Removal Grounds
Having determined that federal question jurisdiction exists, the court will not discuss the remaining grounds for removal asserted by plaintiff other than to note the court's tentative view that Walker was fraudulently joined as a defendant for the purpose of trying to avoid diversity jurisdiction.
IV. ORDER
For the reasons discussed herein,
The court ORDERS that plaintiff's motion to remand be, and is hereby, denied.