Eide v. Grey Fox Technical Services Corp.

Decision Date22 May 2003
Docket NumberNo. 02-1572.,02-1572.
Citation329 F.3d 600
PartiesLinda M. EIDE, Anita J. Barber, Jack T. Chandler, John E. Coss, Alice M. Hruska, Veronica R. Mathison, Dale E. Miller, Robert J. Pechmann, David F. Ross, Kathleen J. Sheehan, Sandra K. Skrove, Reed T. Weseloh, Plaintiffs/Appellants, Dorothy E. Woodington, Plaintiff, Larry A. Block, Robert S. Boyum, Lawrence D. Bross, Betty J. Carlson, Plaintiffs/Appellants, Fu-Gin Chen, Plaintiff, William P. Cress, Charles Debevec, Richard E. Kulla, Plaintiffs/Appellants, David M. Lee, Plaintiff, Sandra K. Lyke, Joseph Marquardt, Sandra M. Nelson, Tuan Nguyen, Dale A. Severude, Sharon Skaiem, Shirley A. Stene, Ronald W. Sweezo, Plaintiffs/Appellants, Suzanne A. Tuenge, Nancy J. Wikre, Plaintiffs, v. GREY FOX TECHNICAL SERVICES CORPORATION, formerly known as Grey Fox Technology; General Dynamics Information Systems, Inc.; Grey Fox Technology Acquisition Corporation, jointly and severally, Defendants/Appellees.
CourtU.S. Court of Appeals — Eighth Circuit

Dorene R. Sarnoski, argued, Minneapolis, MN, for appellant.

Craig C. Martin, argued, Chicago, IL, for appellee.

Before LOKEN,1 Chief Judge, LAY, and WOLLMAN, Circuit Judges.

WOLLMAN, Circuit Judge.

Former employees (Employees) of Ceridian Corporation's Computing Device International division (Ceridian) initiated this action in Minnesota state court against Grey Fox Technical Services Corporation and Grey Fox Technology Acquisition Services (Grey Fox) and General Dynamics Information Systems (General Dynamics), Ceridian's successor in interest, to recover severance benefits allegedly owed to them by Ceridian. Grey Fox and General Dynamics removed the case to federal district court, asserting jurisdiction based on the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461. See 28 U.S.C. § 1441(b). The district court held that Employees' state law claims were preempted by ERISA and thus were properly removed to federal court. Employees appeal the district court's grant of summary judgment in favor of Grey Fox and General Dynamics and assert that removal was improper, as their claims are not preempted by ERISA. We agree, and we therefore vacate the district court's judgment and remand the case to the district court with instructions to remand to the state court for further proceedings.

I. Background

Twenty-seven former employees of Ceridian's Technology Center initiated this action in Minnesota state court under the provisions of the Minn.Stat. § 181.64, alleging breach of contract and implied contract, promissory estoppel, and false statements as inducement to entering employment. Employees sought to recover severance pay and compensation for paid days off accrued during their tenure at Ceridian. While employed at Ceridian's Technology Center, Employees participated in a benefits plan, the Ceridian Corporation Severance Pay Plan (Ceridian plan), pursuant to which they received paid days off and were guaranteed severance payments. Only "active, full-time employees who ... are employed by Ceridian or any one of the affiliate operations which have adopted the Plan" were eligible to participate in the Ceridian plan and receive consequent benefits.

In late 1995, Ceridian management announced that it was negotiating with Grey Fox to sell the Technology Center. On April 26, 1996, M.L. Dyste, Ceridian's Vice President, wrote to Employees, informing them that Grey Fox offered them employment at their "current job descriptions, responsibilities, and base rate of pay." Employees, the majority of whom had been employed by Ceridian for more than a decade, some for more than thirty years, had accrued substantial severance benefits, as well as compensation for paid days off. Employees were concerned that the sale of the Technology Center would adversely affect the value of and their ability to obtain their severance benefits.

Employees allege that Ceridian management, aware of Employees' concerns, guaranteed that if they accepted employment with Grey Fox, and Grey Fox subsequently terminated them within their first year of employment, Ceridian would pay them severance equal to that which they would have received under the Ceridian plan. Dyste's April 26, 1996, letter to Employees informed them that should they decline to become employees of Grey Fox, they would be ineligible for severance under the Ceridian Plan: "As a matter of company policy, when employees receive an offer of employment from the buyer of a Ceridian business and refuse such an offer, those employees are considered to have terminated voluntarily from the Company and are ineligible for severance." The letter did not address Ceridian's statements concerning covering severance benefits for employees who transferred to Grey Fox.

Ceridian sold the Technology Center to Grey Fox in May 1996. Employees accepted employment with Grey Fox. Employees contend that they relied upon Ceridian's guarantee that they would receive severance pay should Grey Fox terminate them within their first year of employment with Grey Fox. At the time of the sale, Employees had accumulated in aggregate more than $800,000 in severance payments and were owed $116,100 as compensation for paid days off.

Between October and December 1996, Employees were terminated by Grey Fox. Both Grey Fox and Ceridian refused to pay Employees severance benefits. On December 31, 1997, General Dynamics purchased Ceridian's Computing Device International division and assumed Ceridian's liability in this litigation.

The district court granted summary judgment in favor of Grey Fox and General Dynamics, holding that Employees' state common law and statutory claims to recover severance benefits were preempted by ERISA. The court determined that Employees could not recover severance pay based on Ceridian's alleged oral promise because such a delivery of benefits would be inconsistent with the terms of the Ceridian Plan and because ERISA does not permit oral modifications of existing plans. The court declined to grant summary judgment to either party on the issue of remuneration for paid days off, holding that Grey Fox and General Dynamics did not dispute that Employees were owed compensation reflecting paid days off accrued while at Ceridian. The parties stipulated to a settlement of the claims concerning paid days off. A final judgment was entered concerning the grant of summary judgment on the ERISA issue, from which Employees now appeal.

II.

Our jurisdiction is founded on the district court's determination that Employees' claims relate to an ERISA plan and are preempted by ERISA. We therefore must consider first whether the promise of severance payments was premised on or amended an ERISA plan. Shea v. Esensten, 107 F.3d 625, 627 (8th Cir.1997). We review de novo the district court's determination of ERISA preemption. Emmenegger v. Bull Moose Tube Co., 197 F.3d 929, 931 (8th Cir.1999); Wilson v. Zoellner, 114 F.3d 713, 715 (8th Cir.1997).

We review de novo a district court's grant of summary judgment. Toghiyany v. AmeriGas Propane, Inc., 309 F.3d 1088, 1091 (8th Cir.2002). "We will affirm a grant of summary judgment if `the evidence, when viewed in the light most favorable to the nonmoving party, indicates that no genuine issue of any material fact exists and that the moving party is entitled to judgment as a matter of law.'" Id. (quoting Fisher v. Pharmacia & Upjohn, 225 F.3d 915, 919 (8th Cir.2000)); Fed.R.Civ.P. 56(c). If, however, "the evidence presents a sufficient disagreement. . . [and is not] so one-sided that one party must prevail as a matter of law[,]" summary judgment should not have been granted, and we must reverse the district court. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

A.

The Ceridian Plan is an "employee welfare benefit plan" as defined by ERISA. 29 U.S.C. § 1002(1) (defining employee welfare benefit plan as "any plan... established or maintained by an employer... for the purpose of providing for its participants . . . benefits in the event of. . . unemployment . . . or any benefit described in section 186(c) of this title"). ERISA "supersede[s] any and all State laws [that] relate to any employee benefit plan . . . ." 29 U.S.C. § 1144(a); Shea, 107 F.3d at 627. ERISA, therefore, preempts state common law causes of action that reference or pertain to an ERISA plan. Shea, 107 F.3d at 627 (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987)). Actions initiated in state court that are within the scope of and are preempted by ERISA may be removed to federal court. Crews v. Gen. Am. Life Ins. Co., 274 F.3d 502, 505 (8th Cir.2001) (citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 64-67, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)).

The district court held that removal of Employees' claims was proper because it determined that Employees' claims were related to the Ceridian plan and thus were preempted by ERISA. See id. Thus, the threshold question that we must decide is whether Ceridian's alleged promise to pay Employees severance was premised on or amended an employee benefit plan, such that any state common law or statutory causes of action to enforce Ceridian's alleged promise would "relate to" an ERISA plan.

A company's delivery of benefits to employees or former employees constitutes an ERISA benefit plan when the payment arrangement has specific characteristics. See Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 11-12, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987). An arrangement to provide benefits to employees does not invoke ERISA's protections solely because it delivers benefits; not all policies, or disbursement schemes, providing severance payment benefits are ERISA plans. Fort Halifax, 482 U.S. at 11-12, 107 S.Ct. 2211; Crews, 274 F.3d at 506-07; Velarde v. PACE Membership Warehouse, 105 F.3d 1313 (9th Cir.1997); Kulinski v....

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