Coggins v. Keystone Foods, LLC

• Decision Date: 27 May 2015
• Docket Number: Civil Action No. 15–480.
• Parties: John J. COGGINS et al., Plaintiffs, v. KEYSTONE FOODS, LLC, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

111 F.Supp.3d 630

John J. COGGINS et al., Plaintiffs,

v.KEYSTONE FOODS, LLC, Defendant.

Civil Action No. 15–480.

United States District Court, E.D. Pennsylvania.

Signed May 27, 2015.

Michael H. Rosenthal, Rosenthal Lurie LLC, Philadelphia, PA, for Plaintiffs.

Donald D. Gamburg, L. Evan Van Gorder, Ogletree Deakins Nash Smoak & Stewart PC, Philadelphia, PA, for Defendant.

MEMORANDUM

McHUGH, District Judge.

This action requires the Court to examine whether Plaintiffs' state law claims based on retirement agreements entered into with their employer are completely preempted by the Employment Retirement Income Security Act of 1974 (ERISA). See 29 U.S.C. §§ 1001 –1461. Defendant has removed the case on this theory, and the Court must now determine whether it has proper jurisdiction over the claims, as well as whether remand is appropriate.

I. Factual Background

Plaintiffs in this action are former executives of Defendant Keystone Foods, LLC (Keystone). Keystone was acquired by Marfrig Global Foods in 2010, and shortly thereafter, Keystone executed a "Retirement Agreement" with each Plaintiff in order to provide an incentive for Plaintiffs to stay with the company. These Retirement Agreements promised to provide each Plaintiff and their family with certain payments and benefits for life, including certain "Medical Benefits" in consideration of Plaintiffs' prior and future service to the company.

Specifically, the Medical Benefits provision of the agreements states that "Keystone also agrees to maintain the existing health care benefits, including medical, prescription, dental and vision, and the existing Medical Reimbursement Plan, for Employee and qualified dependents for life." Complaint Ex. A at 2(a).¹ In 2011, as active employees, Plaintiffs received all health care benefits at no cost to Plaintiffs, including prescription, dental, and vision. Plaintiffs received base healthcare benefits through Keystone's medical insurance plans, while Keystone allegedly paid the full cost of the premiums and any costs not covered or paid for by those insurance plans pursuant to the Medical Reimbursement Plan, such as copays and coinsurance. Plaintiffs describe their "existing health care benefit" in 2011 as "a fully paid, no cost, medical, prescription, dental and vision plan." Pl. Memorandum in Support of Motion to Remand at 3.

Plaintiffs allege that, under the terms of the Retirement Agreements, Keystone is obligated to provide the same benefits Plaintiffs received in 2011 to Plaintiffs and their dependents "for life." All Plaintiffs have now retired from Keystone and have satisfied the service requirements necessary to receive the medical benefits under the Retirement Agreements. However, Keystone has stated that it will no longer honor the Retirement Agreements beginning January 1, 2015 nor will Keystone reimburse Plaintiffs for their out-of-pocket costs after that date.

Plaintiffs filed this action in the Montgomery County Court of Common Pleas claiming breach of contract and violation of Pennsylvania's Wage Payment and Collection Law. Keystone removed the case to this Court on the theory that ERISA completely preempts the Plaintiffs' state law claims. Plaintiffs have moved to remand the case back to state court, and Defendants have separately moved to dismiss the action.

II. Standard of Review

Necessarily, I must address Plaintiffs' Motion to Remand first because I may not decide the pending Motion to Dismiss without subject matter jurisdiction. "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). Removal statutes are strictly construed against removal "and all doubts should be resolved in favor of remand." Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir.1987) (citing Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 29 (3d Cir.1985) ). On a motion to remand, the district court "assumes as true all factual allegations of the complaint." Id. (citing Green v. Amerada Hess Corp., 707 F.2d 201 (5th Cir.1983) ). The defendant has the burden of proving the action was properly removed. See Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 219 (3d Cir.2005) (citing Samuel–Bassett v. KIA Motors Am., Inc., 357 F.3d 392, 396 (3d Cir.2004) ). Keystone asserts that Plaintiffs' claims are completely preempted by ERISA, with the result that this Court has federal question jurisdiction under 28 U.S.C. § 1331. Plaintiffs argue that their claims are not completely preempted by ERISA, and that Defendant waived any right to remove this case to federal court based on language in the Retirement Agreements.

III. Complete Preemption by ERISA

"[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." 28 U.S.C. § 1441(a). Cases involving a "federal question"—those "arising under the Constitution, laws, or treaties of the United States"—are one such category over which the district courts have jurisdiction. 28 U.S.C. § 1331. However, a cause of action ordinarily only arises under federal law where the plaintiff's well-pleaded complaint raises those issues of federal law in accordance with Louisville & N.R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908).

Federal preemption "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." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). Nonetheless, there are times where "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Id. at 63–64, 107 S.Ct. 1542. In Taylor, the Supreme Court determined that "Congress had clearly manifested an intent to make causes of action within the scope of the civil enforcement provisions of [ERISA's] § 502(a) removable to federal court." Id. at 66, 107 S.Ct. 1542. Taylor's treatment of § 502(a)² was based on comparison to § 301 of the Labor Management Relations Act (LMRA), which the Supreme Court had previously deemed "so powerful as to displace entirely any state cause of action for violation of contracts between an employer and a labor organization." Id. at 64, 107 S.Ct. 1542 (quoting Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 23, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) ). Thus, ERISA preemption operates on two fronts: Section 502(a) and Section 514(a). See In re U.S. Healthcare, Inc., 193 F.3d 151, 160 (3d Cir.1999). Section 502(a), ERISA's civil enforcement provision, is a "jurisdictional concept," while Section 514(a) expressly preempts state law and is the "substantive concept governing the applicable law." Id.

The Supreme Court further clarified complete preemption under ERISA in Aetna Health Inc. v. Davila, 542 U.S. 200, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). The Court noted that "if an individual, at some point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where there is no other independent legal duty that is implicated by a defendant's actions, then the individual's cause of action is completely preempted by ERISA § 502(a)(1)(B)." Id. at 210, 124 S.Ct. 2488. When a plaintiff asserts a state-law claim that "duplicates, supplements, or supplants the ERISA civil enforcement remedy," the state law claim is completely preempted. Id. at 209, 124 S.Ct. 2488. Thus, in the present case, (1) if Plaintiffs could have brought their claims under § 502(a)(1)(B); and (2) there is no other independent legal duty implicated by Defendant's actions; then ERISA completely preempts their state law claims and removal was proper.

As mentioned, § 502 provides the civil enforcement mechanisms of ERISA. Section 502(a)(1)(B) specifically provides:

A civil action may be brought—

(1) by a participant or beneficiary—

(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.

29 U.S.C. § 1132(a)(1)(B).

Plaintiffs assert that they do not seek any additional benefits from Keystone's Healthcare Benefits Plan, but rather seek the additional out of pocket costs that they are allegedly entitled to have reimbursed under the Retirement Agreements. To clarify, Plaintiffs receive medical benefits under Keystone's Healthcare Benefits Plan, and the Retirement Agreements allegedly entitle them to continued benefits under that plan, as well as reimbursement of all other out-of-pocket expenses related to those medical benefits, such as insurance premiums, copays, and coinsurance, pursuant to the Medical Reimbursement Plan. Plaintiffs' theory is that the Healthcare Benefits Plan and Medical Reimbursement Plan provide benefits covered by ERISA, but the separate Retirement Agreements merely define Plaintiffs' rights to continue receiving these benefits, rather than provide new benefits covered under ERISA. Plaintiffs urge the Court to view the Retirement Agreements as separate contracts which cannot be enforced under § 502(a)(1)(B).

IV. ERISA "Plans"

The purpose of ERISA is "to provide a uniform regulatory regime over employee benefit plans." Davila, 542 U.S. at 208, 124 S.Ct. 2488. An "employee benefit plan" under ERISA includes an "employee welfare benefit plan" established and maintained for the purpose of providing its participants or beneficiaries with medical benefits. 29 U.S.C. § 1002(1), (3). Whether the civil enforcement mechanisms of § 502(a)(1)(B) preempt Plaintiffs' claims will depend on whether the Retirement Agreements are "plans" governed by ERISA.

The Parties agree...