Moline Machinery, Ltd. v. Pollsbury Co.

• Decision Date: 25 March 2003
• Docket Number: No. CIV.00-2352 MJD/RLE.,CIV.00-2352 MJD/RLE.
• Citation: 259 F.Supp.2d 892
• Parties: MOLINE MACHINERY, LTD., Plaintiff, v. THE PILLSBURY CO., Defendant.
• Court: U.S. District Court — District of Minnesota

259 F.Supp.2d 892

MOLINE MACHINERY, LTD., Plaintiff, v. THE PILLSBURY CO., Defendant.

No. CIV.00-2352 MJD/RLE.

United States District Court, D. Minnesota.

March 25, 2003.

COPYRIGHT MATERIAL OMITTED

Joseph J. Mihalek, Duluth, MN, for plaintiff.

Stephen P. Lucke, Minneapolis, MN, for defendants.

ORDER

DAVIS, District Judge.

The above entitled matter comes before the Court upon the Plaintiffs and Defendant's Objections to the Report and Recommendation of United States Magistrate Judge Raymond Erickson, dated February 14, 2003. The Defendant objects to the Magistrate's recommendation to grant Plaintiffs Motion to Remand. The Plaintiff objects to the Magistrate's recommendation to deny its informal Motion for Costs and Attorney's Fees.

Pursuant to statute, the Court has conducted a de novo review of the record. 28 U.S.C. § 636(b)(1); Local Rule 72.1(c). Based on its review, the Court ADOPTS the Report and Recommendation dated February 14, 2003.

IT IS HEREBY ORDERED that

1. Plaintiffs Motion to Remand (Docket No. 45) is GRANTED.

2. Plaintiffs Motion to Amend the Complaint (Docket No. 45) is deferred to the State Court upon remand.

3. Plaintiffs informal Motion for Costs and Attorney's Fees is DENIED.

4. The parties Cross-Motions for Summary Judgment (Docket Nos. 54 & 59) are deferred to the State Court upon remand.

REPORT AND RECOMMENDATION

At Duluth, in the District of Minnesota, this 14th day of February, 2003.

I. Introduction

This matter came before the undersigned United States Magistrate Judge pursuant to a special assignment, made in accordance with the provisions of Title 28 U.S.C. § 636(b)(1)(B), upon the Plaintiffs Motion to Remand, the Plaintiffs Motion to Amend the Complaint, and the parties' cross Motions for Summary Judgment. A Hearing on the Motions was conducted on October 24, 2002, at which time, the Plaintiff appeared by Joseph J. Mihalek, Esq.; and the Defendant appeared by Stephen P. Lucke, Esq., and Matthew Klein, Esqs.

For reasons which follow, we recommend that the Plaintiffs Motion to Remand on jurisdictional grounds be granted, that the Plaintiffs request for attorneys' fees be denied, and that the remaining Motions of the parties be deferred to the State Court on remand.¹

II. Factual and Procedural Background

On September 27, 1991, the Defendant, The Pillsbury Company ("Pillsbury"), sold one of its divisions to the Plaintiff Moline Machinery Ltd. ("Moline"). With that sale, those of Pillsbury's employees, who accepted the transfer, became Moline employees. One such employee was Andrew Horvath ("Horvath") who, at the time of the sale, was 51 years of age, and who had worked for Pillsbury for 19 years. In July of 2000, Horvath retired from Moline, and began drawing a monthly retirement benefit from Pillsbury, under its Group Insurance Plan for Pillsbury General Hourly Employees ("Plan").

However, when Moline requested that Pillsbury pay retiree health benefits for Horvath, the request was denied. Along with that denial, Moline was informed of the Plan's internal review process, through which an appeal of that decision could be made to the Plan's fiduciaries. Instead of pursuing the administrative process, however, in September of 2000, Moline filed this action in Minnesota District Court, seeking a declaration that Pillsbury was obligated to pay the retiree health benefits of Horvath, and other similarly situated employees, and that Moline be allowed to recoup the monies that it had previously paid for Horvath's medical expenses. Thereafter, on October 20, 2000, Pillsbury filed a Notice of Removal which transferred this action to this Court. As the basis for the removal, Pillsbury asserted that Moline's claims arose under the civil enforcement provision of the Employee Retirement Income Security Act of 1974 ("ERISA"), which completely pre-empted the State law claims, that had been asserted by Moline, and thereby had vested this Court with Federal question jurisdiction. See, Title 28 U.S.C. § 1331. Until its Motion to Remand, Moline has not contested Pillsbury's Notice of Removal.

Later, on August 16, 2001, Moline submitted a claim, to the Plan's fiduciaries, for an administrative review of Pillsbury's denial of Horvath's benefits. Upon that submission, Pillsbury moved this Court to stay this action until Pillsbury had an opportunity to administratively address Moline's claim on Horvath's behalf. Moline opposed the Motion to Stay and, by Order dated December 21, 2001, we granted that Motion. Moline Machinery Ltd. v. The Pillsbury Co., 2001 WL 1766339 *4-5 (D.Minn., December 21, 2001). Moline took no appeal from that Order. Now that the parties have exhausted the administrative remedies available to them, the Plaintiff moves to remand the matter to Minnesota State Court, and both parties seeks Summary Judgment. Since Moline's Motion to Remand goes to our jurisdiction to hear the parties respective claims, and defenses, we first consider that Motion for if, as the Plaintiff contends, we are without the requisite subject matter jurisdiction to entertain the case, then our further consideration of the matter is precluded. While we have considered some loosely associated issues, in the context of our Order granting a Stay, this is the first occasion that we have had to directly address the jurisdictional issue.

III. Discussion

As noted, the Plaintiff seeks a remand on jurisdictional grounds, and an award of attorney's fees pursuant to Title 28 U.S.C. § 1447(c). This case was removed under Title 28 U.S.C. § 1441(a), which allows a defendant to remove a case from State Court if the action could have originally been brought in Federal Court. As noted, the Plaintiff claims that we are without subject matter jurisdiction and, therefore, that the case must be returned to the State Court. In turn, the Defendant argues that, even though the Plaintiff did not originally plead a Federal cause of action, its claims are preempted by Federal law and, therefore, a Federal question is presented, and we are jurisdictionally positioned to rule on all of the pending Motions.

A. Standard of Review. A case will be remanded to State Court "`[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction* * *.'" Blaylock v. Hynes, 104 F.Supp.2d 1184, 1186 (D.Minn.2000), quoting Title 28 U.S.C. § lW(c). `"Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant'" and, "[a]bsent diversity of citizenship, federal-question jurisdiction is governed by the `well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiffs properly pleaded complaint." Magee v. Exxon Corp., 135 F.3d 599, 601 (8th Cir.1998), quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); see also, Blaylock v. Hynes, supra at 1187. "A case may not be removed on the basis of a federal defense, such as preemption, even if the defense is anticipated in the complaint and both parties concede that it is the only question at issue." Id.; citing Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust, 463 U.S. 1, 12, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); see also Magee v. Exxon Corp., supra at 601.

"That said, the Supreme Court has recognized a corollary to the well-pleaded complaint rule known as the complete preemption doctrine." Id., citing Caterpillar Inc. v. Williams, supra at 393, 107 S.Ct. 2425; see also, Blaylock v. Hynes, supra at 1187 ("[An] exception to the well-pleaded complaint rule is the doctrine of complete preemption"). "Under this doctrine, `[o]nce an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law.'" Id. ("The complete preemption doctrine applies only when a federal statute possesses `"extraordinary pre-emptive power," a conclusion courts reach reluctantly,'" quoting Gaming Corp. of America v. Dorsey & Whitney, 88 F.3d 536, 543 (8th Cir.1996), quoting in turn, Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65,107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)); see also, Blaylock v. Hynes, supra at 1187.

"Removal is proper when Congress clearly manifests its intent to make such causes of action removable." Blaylock v. Hynes, supra at 1188. As the Court in Blaylock noted, "[t]he Supreme Court has extended the doctrine of complete preemption to actions under § 502(a) of ERISA, the statute's civil enforcement provision, codified at 29 U.S.C. § 1132(a)." Id., citing Metropolitan Life Ins. Co. v. General Motors Corp., supra at 66, 107 S.Ct. 1542; see also, Crews v. General American Life Ins. Co., 274 F.3d 502, 505 (8th Cir.2001).

"To determine whether state-law claims fall within the scope of the provision, a court must first discern whether the plaintiff is eligible to bring a claim under the section." Id. at 1188. "After standing is established, a court must then determine whether the subject matter of the plaintiffs state law claim falls within the scope of § 502(a)." Id. at 1189. "A third factor used in determining whether a state-law claim falls within the scope of § 502(a)(1)(B) is whether the state-law claims can be resolved without an interpretation of the plan documents." Id.

B. Legal Analysis. To be completely preempted, Moline's claims must be within the scope of Section 502(a) of ERISA. As mentioned, we must first determine whether Moline has standing, under Section 502(a), to bring an ERISA claim and, then, decide whether the subject matter of Moline's claim falls within the scope of that Section. See Blaylock v. Hynes, supra at 1188.

1. Standing. To have standing under ERISA, a plaintiff must be "`a participant, beneficiary or fiduciary.'" Kahler Corp. v. John Hancock Mutual Life Ins. Co., 1989 WL 119176 at *5 (D.Minn.,...