Opinion
ORDER DENYING PLAINTIFFS' MOTION TO REMAND; VACATING HEARING
MAXINE CHESNEY, District Judge.
Before the Court is plaintiffs' motion to remand the above-titled action. Defendant has filed opposition, to which plaintiffs have replied. Additionally, defendant has, pursuant to the Court's order of July 6, 2004, filed a surreply. Having considered the papers filed in support of and in opposition to the motion, the Court deems the matter appropriate for decision on those submissions, VACATES the hearing scheduled for August 6, 2004, and rules as follows.
BACKGROUND
Plaintiffs, who are five individuals formerly employed by defendant, assert in their First Amended Complaint ("FAC") that they "were terminated without cause, based on allegations (which they were not warned about) relating to unauthorized e-mailing, in violation of their contracts and due to an invasion of their Privacy Rights." (See FAC ¶ 2.) Plaintiffs, proceeding individually and on behalf of a putative class, allege five causes of action under state law arising from the terminations, specifically, claims for wrongful termination, breach of contract, invasion of privacy, fraud, and intentional infliction of emotional distress.
Defendant, in its Notice of Removal, alleges that plaintiffs' claims are completely preempted by the Employee Retirement Income Security Act ("ERISA"). In support of this assertion, defendant relies on the deposition testimony of two of the plaintiffs, specifically, Ruth Williams ("Williams") and Elaine McMaster ("McMaster"). Defendant states that Williams and McMaster testified that their claims were based on the theory that defendant's reason for their respective terminations was to deprive plaintiffs of ERISA benefits. (See Def.'s Notice of Removal ¶¶ 25-28.)
DISCUSSION
"It is well-settled in this circuit that a wrongful termination claim based on the theory that the employer intended to avoid paying pension or insurance payments is preempted by ERISA, " specifically, by § 510 of ERISA, 29 U.S.C. § 1140. See Felton v. Unisource Corp. , 940 F.2d 503, 508-09 (9th Cir. 1991). A claim for wrongful termination, however, is not preempted by ERISA "if the loss of benefits was an incidental result of wrongful termination." See id. at 510; see also, e.g., Ethridge v. Harbor House Restaurant , 861 F.2d 1389, 1404-05 (9th Cir. 1988) (holding where plaintiff alleged wrongful termination and sought "lost benefits" as a remedy therefor, and did not allege "the true purpose of his discharge was to deprive him of his pension rights, " plaintiff's state law claim not preempted by ERISA).
Section 510 provides, in relevant part: "It shall be unlawful for any person to discharge... a participant... for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan." See 29 U.S.C. § 1140.
Plaintiffs, in their moving papers, seek remand of the above-titled action on the ground the removal was untimely. In their reply, plaintiffs assert, apparently in the alternative to their untimeliness argument, that plaintiffs' claims "do not stem from interference with or nonpayment of ERISA benefits, " (see Pls.' Reply at 2:8-9), and that any issues concerning "termination benefits" are "tangential to the claim of wrongful termination, " (see id. at 2:25-27). The Court will consider these arguments, in turn.
A notice of removal must be filed within 30 days of defendant's receipt of the initial pleading or, where "the case stated by the initial pleading is not removable, " within 30 days of defendant's receipt of "an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." See 28 U.S.C. § 1446(b). In support of their untimeliness argument, plaintiffs rely on the FAC and plaintiffs' answers to interrogatories, and assert such documents establish that "plaintiffs have contended from the very beginning... that [d]efendant's actions were designed to deprive them of benefits." (See Pls.' Notice of Mot. at 2:15-25, 4:21-23.)
Plaintiffs state, and defendant does not dispute, that defendant received the FAC and the answers to interrogatories more than 30 days before filing the Notice of Removal.
A defendant must remove an action within 30 days of its receipt of the complaint where the complaint gives the defendant "notice of the federal question raised by [the] complaint." See Cantrell v. Great Republic Ins. Co. , 873 F.2d 1249, 1256 (9th Cir. 1989). Here, plaintiffs, in their FAC, characterize defendant's actions as follows:
Plaintiffs do not contend any allegations in their original complaint are sufficient to make defendant aware that plaintiffs were alleging a federal claim.
Defendant [ ] breached its Covenant of Good Faith and Fair Dealing by trumping up a charge of utilization of computers for personal reasons to fire Plaintiffs, and have done this to a nation-wide class of Plaintiffs by invading privacy rights of Plaintiffs throughout the Country, and fired them in a means to cut costs to employees that they had promised full employment through retirement at age 65.
Discharging Plaintiffs for an improper utilization of their computer [sic] and violation of their privacy rights by looking into their personal thoughts placed on their computers is a fundamental right protected under [state law] and is termination in violation of public policy that has been longstanding and provides a public policy benefit to persons in the State of California, and across the United States in not having their privacy rights invaded
(See FAC ¶¶ 17-18.)
Although plaintiffs do not specify why the above passages, or any other passages in the FAC, are sufficient to give defendant notice that plaintiffs are alleging an ERISA claim, it appears plaintiffs are relying on their allegation that they were terminated "in a means to cut costs." Such allegation, however, is, at best, ambiguous and does not suffice to give defendant notice that plaintiffs are claiming the terminations were made for "the purpose of interfering with the attainment of any right to which [plaintiffs] may become entitled under [defendant's ERISA] plan." See 29 U.S.C. § 1140. Accordingly, the Court finds defendant was not required to remove the action within 30 days of receipt of the FAC.
Plaintiffs also rely on their answers to defendant's interrogatories, specifically, statements by each of the five plaintiffs indicating that each plaintiff's "damages" include the value of health, medical, severance, and other employment benefits plaintiffs state they would have received if they had not been terminated. (See Pls.' Notice of Mot. at 3:1-4:16.) As discussed above, however, where a plaintiff seeks lost ERISA benefits as a remedy for a state law claim of wrongful termination, the plaintiff has not, solely by reason of seeking such remedy, stated an ERISA claim. See Ethridge , 861 F.2d at 1404-05. Accordingly, the Court finds defendant was not required to remove the instant action within 30 days of receipt of plaintiffs' answers to defendant's interrogatories.
Defendant, within 30 days of receiving the transcripts of the depositions of plaintiffs Williams and McMaster, removed the action on the ground the transcripts clarify that the claims made by plaintiffs are ERISA claims.
Defendant took the depositions of the other three plaintiffs, Charles Cherolis ("Cherolis"), Gordon Hominick ("Hominick"), and Varick Dawson ("Dawson"), after the above-titled action was removed to federal district court. In its opposition and surreply, defendant states that the transcripts of the Cherolis, Hominick and Dawson depositions clarify that these plaintiffs, as well, are alleging ERISA claims.
Where a complaint does not allege "why the termination was wrongful, " the Ninth Circuit has held that "it is appropriate to take into consideration [the plaintiff's] deposition testimony." See Felton , 940 F.2d at 507. Where such testimony "[makes] it apparent that the action falls within the complete preemption area of ERISA, " a district court, upon removal, has subject matter jurisdiction over the complaint. See id. (holding district court had jurisdiction over plaintiff's wrongful termination claim where plaintiff testified at his deposition that defendant "discharged [plaintiff] because it desired to avoid medical insurance payments to him"). Similarly, where a plaintiff has alleged what appear to be state law claims and clarifies at his deposition that one such claim is based on an allegation that "falls squarely" within ERISA, a district court, upon removal, has federal question jurisdiction over that claim and may exercise supplemental jurisdiction over the state law claims. See Peters v. Lincoln Electric Co. , 285 F.3d 456, 469 (6th Cir. 2002).
Here, at least two of the plaintiffs, at their depositions, indicated that the claim for wrongful termination was based, at least in part, on a theory that defendant had terminated them in order to avoid having to pay employment benefits.
Plaintiff Williams testified as follows:
Q: Do you think the reason that was given to you [for the termination] was the true reason?
A: No.
Q: What do you think was the true reason?
A: The true reason I think I was terminated is because I was four months away from being 54, I was six months away from being at retirement age, and I think they were cleaning house
....
Q: So you think the company terminated you so they wouldn't have to provide you medical benefits for life?
A: Medical, life - medical and - I know there was a healthy severance package and for being there for 20 years, but I never figured out what it would be. I knew - being there 20 years, I knew it would be a healthy one.
(See Nakabayashi Decl., filed June 18, 2004, Ex. B at 281, 282.)
According to defendant, Williams also answered, "Yes, " in response to the question, "Is it your understanding that people throughout the United States were terminated by [defendant] for cause when there really wasn't cause and for savings of benefits." (See Def.'s Surreply at 9.) Defendant, however, has not offered the page of the deposition transcript purportedly corresponding to such testimony. Consequently, the Court has not considered that testimony.
Plaintiff Cherolis testified:
Q: Do you think [defendant] had some other reason for terminating you besides these jokes that you sent around and received?
A: Yes, I do.
Q: What do you think is the reason that they terminated your employment?
A: To save money on not having me go through the severance package and being laid off.
Q: You think they fired you so they wouldn't have to provide you severance benefits?
A: Correct.
(See id. Ex. C at 434.)
As noted, the FAC alleges that the terminations were "a means to cut costs." (See FAC ¶ 17.) The above-quoted testimony clarifies that the word "costs" as used in the paragraph of the FAC cited by plaintiffs refers to employment benefits, at least to the extent such allegation is made on behalf of plaintiffs Williams and Cherolis. As discussed above, a wrongful termination claim based on the allegation a termination occurred for the purpose of avoiding payment of employment benefits is preempted by ERISA. See Felton , 940 F.2d at 508-09. Accordingly, the Court finds the wrongful termination claim asserted on behalf of Williams and Cherolis is preempted, to the extent such claim is based on the allegation that defendant terminated them for the purpose of avoiding payment of employment benefits. Such claim is, for the purposes of removal, "recharacterized" as an ERISA claim. See Stewart v. U.S. Bancorp , 297 F.3d 953, 959 (9th Cir. 2002) (holding where defendant establishes plaintiff's state law claim is preempted by ERISA, such claim is "recharacterized" for removal purposes as a federal claim). Consequently, the Court finds that the FAC includes a federal question.
In light of this finding, the Court need not decide whether the deposition testimony of the other three plaintiffs is sufficient to indicate that the wrongful termination claim alleged on behalf of such plaintiffs is properly recharacterized, for removal purposes, as including an ERISA claim. The presence of at least one federal claim in the FAC is sufficient to support the removal. See 28 U.S.C. § 1367(a).
Because the wrongful termination claim asserted on behalf of Williams and Cherolis is, in part, properly characterized for removal purposes as an ERISA claim, and because defendant removed the instant action within 30 days of receiving the transcript of the Williams' deposition, the Court finds the removal proper. See 28 U.S.C. § 1441(b) (providing civil action founded on federal question is removable); 28 U.S.C. § 1446(b) (providing removal must occur within 30 days of receipt of "other paper from which it may first be ascertained that the case is one which is or has become removable").
Plaintiffs allege that the terminations were wrongful for at least one reason not implicated by ERISA, specifically, that the terminations were in violation of a contractual term "that they would be employed until retirement at age 65, unless they intentionally acted to the detriment of their employer, and caused [their employer] severe damage, such as stealing, causing a disturbance or other intentional act that would allow firing or they grossly neglected their duties." (See FAC ¶ 1.) Plaintiffs also allege that the terminations occurred under circumstances that violated plaintiff's right to privacy under state law, (see FAC ¶¶ 12, 28-30), that defendant fraudulently induced plaintiffs into entering into employment agreements, (see FAC ¶¶ 25-26), and that defendant's violations of state law constituted "outrageous conduct" defendant "knew" would cause plaintiffs "a great deal of emotional distress, " (see FAC ¶¶ 33-34).
Plaintiffs, in their reply, argue that "[i]f removal is granted, " defendant should be required to "stipulate" to certain facts, such as that benefits would have been paid to plaintiffs "but for the termination." (See Pls.' Reply at 4:22-5:3.) Removal, however, is not contingent on the presence or absence of a defense, but rather on the plaintiffs' allegations. See Ethridge , 861 F.2d at 1395 (holding "defendant may not remove a case to federal court unless the plaintiff's complaint establishes that the case arises under federal law" and may not remove "merely by asserting a federal defense") (emphasis in original).
Accordingly, plaintiffs are not entitled to remand of the action.
CONCLUSION
For the reasons stated above, plaintiffs' motion to remand is hereby DENIED.
This order closes Docket No. 8.
IT IS SO ORDERED.