Miller v. Ppg Industries, Inc.

Decision Date03 December 2002
Docket NumberCivil Action No. 3:02CV-534-H.
Citation237 F.Supp.2d 756
PartiesGary MILLER, Plaintiff, v. PPG INDUSTRIES, INC., Defendant.
CourtU.S. District Court — Western District of Kentucky

Donald L. Cox, John D. Cox, Lynch, Cox, Gilman & Mahan, P.S.C., Louisville, KY, for plaintiff.

Richard S. Cleary, Craig P. Siegenthaler, Greenebaum Doll & McDonald, Louisville, KY, for defendant.


HEYBURN, Chief Judge.

The Court now considers Plaintiff's Motion to Remand. Plaintiff filed his complaint against his employer, Defendant PPG Industries, Inc., in Jefferson Circuit Court, alleging that after he became disabled and could no longer work, Defendant failed to make proper contractual payments owed him. Defendant removed the case to federal court arguing that 29 U.S.C. § 1144(a), the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001, et seq, pre-empted all three of Plaintiff's claims and that jurisdiction in this Court was therefore proper.

This case raises difficult issues touching on both removal and preemption which are themselves distinct concepts. Zuniga v. Blue Cross and Blue Shield of Michigan, 52 F.3d 1395, 1399 (6th Cir. 1995). Removal under 28 U.S.C. § 1441 requires that the complaint contain a claim within the original subject matter jurisdiction of the federal district court.1 Syngenta Crop Protection, Inc. v. Henson, ___ U.S. ___, 123 S.Ct. 366, 370-71, 154 L.Ed.2d 368 (2002). "The fact that a defendant might ultimately prove that a plaintiff's claims are pre-empted — for example under § 1144(a) — does not establish that they are removable to federal court." Zuniga, 52 F.3d at 1399. Thus, only if the Court can discern a federal question, is removal proper. Wright v. General Motors Corp., 262 F.3d 610, 613-14 (6th Cir. 2001).

Plaintiff's complaint does not facially assert any federal claim. The doctrine of complete preemption, however, is an independent corollary to the well-pleaded complaint rule. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). The original subject matter jurisdiction required to support removal only exists if ERISA completely preempts any of the state law claims. Id. Complete preemption under ERISA can be invoked if two conditions are satisfied: (1) ERISA expressly preempts the state law cause of action under 29 U.S.C. § 1144(a), the provision creating "conflict preemption,"2 and (2) the cause of action is encompassed the ERISA civil enforcement provision, 29 U.S.C. § 1132(a)(1)(B).3 Metropolitan Life Ins., 481 U.S. at 63, 107 S.Ct. 1542; Warner v. Ford Motor Co., 46 F.3d 531 (6th Cir.1995).

Defendant raises three separate arguments against remand, which the Court will consider in turn. In the end, even though the Court finds that only one of Plaintiff's claims are pre-empted, the Court will deny remand on the basis of that claim augmented by the Court's supplemental jurisdiction.


ERISA preempts state law claims that "relate to" any "employee benefit plan." 29 U.S.C. 1144(a); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). In order to find federal preemption of Plaintiff's claims, this Court must therefore overcome two hurdles, finding that an "employee benefit plan" exists and that the state law claims "relate to" that plan.4 Plaintiff makes three state law claims, each of which Defendant contends is preempted. Because the three claims raise different legal issues, the Court considers them independently.5


Defendant's strongest case for pre-emption concerns Plaintiff's allegation that Defendant breached a contract by refusing "to pay certain vacation benefits which have been demanded and are due." (Pl's Compl. ¶ 8). In response, Defendant identifies the source of Plaintiff's vacation benefits as a vacation benefits plan which, on its face, is clearly controlled by Defendant's ERISA plan.6 (See Rowles Aff. ¶ 3; Def.'s Ex. B). At first glance, it appears this alone might be enough to show that Plaintiff's breach of contract claim "relates to" an "employee benefit plan." ERISA, however, does not apply to vacation plans which constitute "payroll practices," as defined by the Department of Labor. 29 C.F.R. § 2510.3-1(b). Elaborating on this regulation, the Supreme Court has held that a "multiemployer fund created to provide vacation benefits for union members who typically work for several employers during the course of a year ... undoubtedly falls within the scope of [ERISA]." Massachusetts v. Morash, 490 U.S. 107, 114, 109 S.Ct. 1668, 104 L.Ed.2d 98 (1989); Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 4, n. 2, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). ERISA preemption here, therefore, depends on the source of the funds underlying Plaintiff's vacation benefits.

Defendant presents affidavits and exhibits showing that its vacation benefits are part of a comprehensive employee welfare benefit plan to which a number of affiliated employers contribute funds. Each employer contributes an amount equal to a percentage of each covered employee's salary. The plan, consequently, constitutes an independent separate fund used to pay welfare benefits for employees. Plaintiff cannot rebut these factual assertions or the legal conclusions which naturally follow. Based on the evidence in hand, therefore, the Court finds the Plaintiff's claim that he is owed vacation benefits is a state law claim that "relates to" an ERISA-governed "employee benefits plan," as contemplated by § 1144(a) and is therefore preempted.


Plaintiff next seeks relief for occupational taxes wrongfully withheld from his disability retirement payments. Plaintiff appears to contend that his disability benefits constitute "insurance payments" and, therefore, are not subject to the municipal occupational license tax on wages imposed by the City of Louisville and Jefferson County. More specifically, Section 2.3.B.1 of the Regulations of the Louisville/Jefferson County Revenue Commission, excludes all "insurance payments" from the occupational license tax and defines "insurance payments" to include "payments made to employees under a disability, sickness, or accident insurance plan." In terms of preemption, then, the question before the Court is whether 29 U.S.C. § 1144(a) preempts the "insurance payments" exception to the municipal occupational license tax.

Over the last 20 years the Supreme Court has attempted to balance the competing concerns of federalism and the expansive statutory pronouncement in 29 U.S.C. § 1144(a).7 In one line of cases, beginning with Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 98, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983), the Supreme Court has interpreted the words "relate to," concluding that a state law related to "an employee benefit plan, in the normal sense of the phrase, if it [had] a connection or reference to such a plan." Id. at 98, 103 S.Ct. 2890. In subsequent cases discussing the preemption provision, the Court has noted its extreme breadth, terming it "clearly expansive," "broad in scope," and "deliberately expansive." California Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997).

Apart from the line of cases applying the various doctrinal tests to assess whether a state law "relates to" an ERISA plan, the Supreme Court has also more recently sought to preserve the principle that "the preemption provision ... is not without limits," Kentucky Assoc. of Health Plans, Inc. v. Nichols, 227 F.3d 352, 358 (6th Cir.2000), and has critiqued the emphasis on the ERISA text as an "uncritical literalism" that makes ERISA preemption turn on "infinite connections." New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). Thus, in Travelers, the Supreme Court held that ERISA's "relate to" language was not intended to modify "the starting presumption that Congress does not intend to supplant state law." Id. at 705, 115 S.Ct. 1671. The preemption analysis therefore begins by first analyzing "whether the normal presumption against pre-emption has been overcome in a particular case." Id; see also De Buono v NYSA-ILA Medical and Clinical Services Fund, 520 U.S. 806, 814-15, 117 S.Ct. 1747, 138 L.Ed.2d 21 (1997).

To determine if this presumption has been overcome, the Supreme Court's approach requires courts to "go beyond the unhelpful text and the frustrating difficulty of defining its key term, and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive." De Buono, 520 U.S. at 813-14, 117 S.Ct. 1747; see also Egelhoff v. Egelhoff, 532 U.S. 141, 147, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001); Associated Builders and Contractors v. Perry, 115 F.3d 386, 392 (6th Cir. 1997) (noting that the "most recent Supreme Court approach" requires courts to look instead at the purpose of ERISA rather than the overly expansive "relate to" test). Applying the framework, the Court finds that the municipal occupational tax exception does not implicate an area of core ERISA concern, nor does it have any notable effects on an ERISA plan. Two Sixth Circuit cases, both dealing with issues of state and local taxation in the ERISA context, support this determination.

In Firestone Tire & Rubber Co. v. Neusser, 810 F.2d 550 (6th Cir.1987), the Sixth Circuit considered whether an Akron, Ohio occupational tax which included within its scope, though not explicitly, contributions made by employees to their employee benefit plans, was preempted by ERISA. 810 F.2d at 551-52. Declining to find preemption, the court relied on the fact that the "tax has no connection or reference to the benefit plans. The tax commissioner has not directed any action at the plan contribution or payments." Id. Moreover, the municipal occupational tax was...

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