Hensley v. Philadelphia Life Ins. Co.

• Decision Date: 10 March 1995
• Docket Number: Civ. A. No. 95-AR-0148-E.
• Citation: 878 F. Supp. 1465
• Parties: Jerri Lynn HENSLEY, et al., Plaintiffs, v. PHILADELPHIA LIFE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

878 F. Supp. 1465

Jerri Lynn HENSLEY, et al., Plaintiffs, v. PHILADELPHIA LIFE INSURANCE COMPANY, et al., Defendants.

Civ. A. No. 95-AR-0148-E.

United States District Court, N.D. Alabama, Eastern Division.

March 10, 1995.

Marcel L. Debruge, Peter H. Burke, Cooper Mitch Crawford Kuykendall & Whatley, Birmingham, AL, for Jerri Lynn Hensley, Larry Hensley, Riteway Beauty Supply, Inc.

Ollie L. Blan, Jr., Thomas M. Eden, III, Spain Gillon Grooms Blan & Nettles, Birmingham, AL, for Philadelphia Life Ins. Co.

Terry McElheny, J. Fred Wood, Jr., Dominick Fletcher Yeilding Wood & Lloyd, Ollie L. Blan, Jr., Thomas M. Eden, III, Spain Gillon Grooms Blan & Nettles, Birmingham, AL, for Linda Baird.

MEMORANDUM OPINION

ACKER, District Judge.

Plaintiffs, Jerri Lynn Hensley, Larry Hensley and Riteway Beauty Supply, Inc., have presented an amended motion to remand their above-entitled case to the Circuit Court of Calhoun County, Alabama, from whence it was removed by defendants, Philadelphia Life Insurance Company and Linda Baird, based on defendants' allegation that the complaint is "related to" an "employee benefit plan" and is therefore preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., even though plaintiffs did not invoke ERISA in the state court, instead relying exclusively upon facially non-federal causes of action, in particular, allegations of state law fraud committed by defendants during the sale of insurance. Defendants predictably accompanied their notice of removal with motions reminiscent of La Buhn v. Bulkmatic Transp. Co., 644 F.Supp. 942, 948 (N.D.Ill.1986), affd., 865 F.2d 119 (7th Cir. 1988), in which that court said:

As is typical of these preemption cases, a removing defendants tows the case into the federal harbor only to try to sink it once it is in port.

On February 8, 1995, this court entered an order requiring Philadelphia Life to differentiate between the relief to which plaintiffs would be entitled (assuming that this is an ERISA plan and that plaintiffs' factual allegations are true) under ERISA's express terms, and the relief, if any, to which plaintiffs would be entitled under the federal common law of ERISA. The court further required Philadelphia Life to submit a draft complaint by which plaintiffs, on the same assumptions, could obtain such relief. This order was prompted by the thoughts expressed by this court in Fleming v. Life of the South TPA, Inc., 868 F.Supp. 1347 (N.D.Ala.1994). Philadelphia Life's attempt to comply with the court's said order only serves to emphasize defendants' intent to sink plaintiffs' ship in the federal harbor.

The parties are well aware of this court's constant and consistent insistence that the availability of ERISA's super-preemption as a basis for federal question jurisdiction pursuant to 28 U.S.C. §§ 1441(b) and 1331 cannot be triggered simply by calling a particular insurance policy an ERISA plan and alleging that the plaintiff's claim relates to it. A few examples will illustrate this court's well-advertised point of view.

In Jordan v. Reliable Life Ins. Co., 694 F.Supp. 822 (N.D.Ala.1988), this court said:

From the information here furnished by Reliable, Vulcan Materials Company, Mr. Jordan's employer, was both the "plan administrator" and the "plan sponsor," except that Reliable has not produced the written instrument required by 29 U.S.C. § 1102 for the creation of an "employee benefit plan." It is impossible to tell from the record in this case whether or not the subject insurance policy is even a part of an "employee welfare benefit plan," particularly when the "Accident Insurance Plan for Salaried Employees" attached to the complaint does not contain the requisites set out in 29 U.S.C. § 1102. For instance, the document does not "provide for one or more named fiduciaries who jointly or severally shall have authority to control and manage the operation and administration of the plan." For instance, the document does not "provide a procedure for establishing and carrying out a funding policy and method consistent with the objectives of the plan." For instance, the document does not "describe any procedure under the plan for the allocation of responsibilities for the operation and administration of the plan." For instance, the document does not "provide a procedure for amending such plan and for identifying the persons who have authority to amend the plan." For instance, the document does not "specify the basis on which payments are to be made to and from the plan." The document only constitutes the usual and customary form of a group policy of accident insurance.

Id. at 833-34.

In Wright v. Sterling Investors Life Ins. Co., 747 F.Supp. 653 (N.D.Ala.1990), mandamus denied, No. 90-7678, slip op. (11th Cir. Oct. 11, 1990), this court said:

Assuming arguendo that the Eleventh Circuit is among those courts which recognize federal preemption as a substitute for federal jurisdiction, it is nevertheless incumbent on the removing party to allege facts to demonstrate the actual preemption, i.e., in this case the actual existence of an ERISA-related claim. If the well-pleaded complaint rule can be circumvented by a defendant so as to obtain removal in this context, at least that defendant must supply allegations of facts in his removal papers to indicate the existence of a federal preemption. No such facts are averred in this notice of removal. For instance, there is no averment that the policy of insurance was a part of an "employee welfare benefit plan," as required by 29 U.S.C. §§ 1002(1); or that the plan of which the policy is a part is established or maintained by: (i) an employer engaged in commerce or activity affecting commerce; (ii) an employee organization or organizations representing employees engaged in commerce or in an activity affecting commerce, as required by 29 U.S.C. § 1003. The court finds it strange that defendants cite in their brief Donovan v. Dillingham, 688 F.2d 1367, 1370 (11th Cir. 1982), for the proposition that ERISA cases are removable. The brief acknowledges that there are "five requirements which must be met in order to show the existence of an `employee benefit plan' within the meaning of ERISA." The five Donovan requirements are even listed by defendants. Defendants' brief, p. 3. However, defendants admitted that "each of these factors can be gleaned from the facts of the complaint." (emphasis supplied). Defendants' brief, p. 3. This is not true of the Wrights' complaint. Neither is it true of the removal papers filed by these defendants.

Id. at 655.

In Bryant v. Blue Cross and Blue Shield, 751 F.Supp. 968 (N.D.Ala.1990), this court said:

The notice of removal contains no allegation of fact, verified or otherwise, to reflect that the previous policy or the substitute policy issued by Blue Cross is governed by ERISA. As already pointed out, defendant's original allegation of ERISA governance takes the form of a bare legal conclusion. Only after plaintiff filed his motion to remand did Blue Cross file an affidavit with attachments which, for the first time, provides evidence arguably indicating that the Blue Cross contract for group health benefits constitutes an ERISA "plan". Inter alia, this affidavit asserts that all premiums for the Blue Cross coverage were paid by the employer, Byrd Construction. However, there are a number of unexplored factual matters which bear on whether or not ERISA actually applies to this controversy. A removal based on the existence of a federal question must allege all facts essential to the existence of that federal question. The existence of a federal question cannot be left to mere speculation.

* * * * * *

In other words, even if Blue Cross' post-removal affidavit can be considered by the court, Blue Cross has not adequately demonstrated a factual basis for ERISA application. It still leaves crucial "i's" undotted and "t's" uncrossed.

Id. at 969.

In Mitchell v. Investors Guar. Life Ins. Co., 868 F.Supp. 1344 (N.D.Ala.1994), this court said:

As this court has stated on previous occasions, the entrance to federal court does not swing wide, like Ali Baba's cave, at the mere invocation: "this is an ERISA plan." See e.g. Bryant v. Blue Cross and Blue Shield of Alabama, 751 F.Supp. 968 (N.D.Ala.1990); Jordan v. Reliable Life Ins. Co., 694 F.Supp. 822, 824-25 (N.D.Ala. 1988). Rather, a removing defendant must set forth with considerable specificity the necessary elements of an ERISA plan. Considering the profound preemptive effect of ERISA on both state courts and state law, federalism demands that federal courts apply super-preemption with care and thoughtful deliberation. This court is not among the courts that have been overly generous by construing bare conclusory allegations to prove the existence of an ERISA plan. See Wickman v. Northwestern Nat. Ins. Co., 908 F.2d 1077 (1st Cir.), cert. denied, 498 U.S. 1013, 111 S.Ct. 581, 112 L.Ed.2d 586 (1990).

Id. at 1346.

The Eleventh Circuit joins this court in requiring more than wishful thinking for the creation of an ERISA plan. In Donovan v. Dillingham, 688 F.2d 1367 (11th Cir.1982), while holding that ERISA does not "require a formal, written plan," the Eleventh Circuit proceeded to lecture the Secretary of Labor as follows:

The Secretary contends that "establish" means no more than an ultimate decision by an employer or an employee organization to provide the type of benefits described in ERISA § 3(1), 29 U.S.C. § 1002(1). This sweeps too broadly. A decision to extend benefits is not the establishment of a plan or program. Acts or events that record, exemplify or implement the decision will be direct or circumstantial evidence that the decision has become reality — e.g., financing or arranging to finance or fund the intended benefits, establishing a procedure for disbursing benefits, assuring employees that the plan or program exists — but it is the reality of a plan, fund or

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