Pane v. RCA Corp.

• Decision Date: 11 August 1987
• Docket Number: Civ. A. No. 87-1244.
• Citation: 667 F. Supp. 168
• Parties: Joseph PANE, Plaintiff, v. RCA CORPORATION, Defendant.
• Court: U.S. District Court — District of New Jersey

667 F. Supp. 168

Joseph PANE, Plaintiff, v. RCA CORPORATION, Defendant.

Civ. A. No. 87-1244.

United States District Court, D. New Jersey.

August 11, 1987.

Charles H. Nugent, Camden, N.J. and Rapp, White, Janssen & German, Ltd. by Henry S. Janssen (argued), Scott M. Morgan, Tanya M. Sweet, Philadelphia, Pa., for plaintiff.

Brown & Connery by John J. Mulderig, Westmont, N.J. and Morgan, Lewis & Bockius by Mark S. Dichter (argued), Kenneth D. Kleinman, Philadelphia, Pa., for defendant.

OPINION

COHEN, Senior District Judge:

In this action for damages and equitable relief, plaintiff Joseph Pane, Director of Special Programs for defendant RCA Corporation ("RCA"), alleges that RCA violated his rights under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., and under New Jersey tort and contract law. Presently before the Court are motions by defendant (1) to dismiss plaintiff's state law claims, pursuant to Fed.R.Civ.P. 12(b)(6), on the ground that they are preempted by ERISA, (2) to strike plaintiff's claim for punitive and exemplary damages because such damages are not recoverable under ERISA, and (3) to strike plaintiff's jury demand because ERISA claims do not afford a right to trial by jury.

Plaintiff's complaint charges that, on or about December 8, 1985, RCA adopted an employee severance plan, under which its Vice Presidents and General Managers were to receive lump sum termination benefits. Complaint ¶ 4. At the time this plan was adopted, RCA and General Electric Company ("GE") were engaged in merger negotiations. Complaint ¶ 5. Plaintiff maintains that on December 13, 1985, while he was serving as Vice President and General Manager of RCA's Aerospace and Defense Government Volume and Production Division, he was offered a severance agreement pursuant to this plan, which he accepted. He further asserts that he later received oral and written confirmations of this agreement. Complaint ¶¶ 5-11. He charges that defendant withheld from him the benefits of the severance plan and agreement, and that, when he attempted to exercise his rights thereunder defendant retaliated against him by, inter alia, demotions, reductions in compensation and false disparagements of his abilities to others. Complaint ¶¶ 13-15.

Count I of the complaint asserts that the plan adopted on December 8, 1985, is an employee benefit plan within the meaning of ERISA, and that defendant's conduct violated various provisions of ERISA. Count II charges a violation of defendant's agreement to provide plaintiff with a written severance agreement. Count III alleges a violation of the severance agreement itself, and Count IV seeks damages for the intentional infliction of emotional distress.

Defendant, in addition to filing its Answer denying that plaintiff was a participant in the plan in question, also filed the instant motions, which we shall discuss in turn.

I. Pre-emption of State Law Claims

Defendant maintains that Counts II, III, and IV of the complaint, which contain state law claims, are pre-empted by ERISA and should be dismissed. Count II alleges breach of a contract to provide plaintiff with a severance agreement; Count III, a breach of the terms of defendant's severance plan itself; and Count IV, intentional infliction of emotional distress. The only other count is Count I, which seeks relief under ERISA, and which is not the object of defendant's motion to dismiss.

ERISA pre-empts, with certain enumerated exceptions not applicable here,¹ "any and all state laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA, 29 U.S.C. § 1144(a). There are two steps to our analysis of whether plaintiff's state law claims are pre-empted. First, we must determine if defendant had an ERISA benefit plan as defined by the courts. If defendant did have such an employee benefit plan, then, second, we must analyze whether the state laws involved "relate to" this plan.

A. Existence of an ERISA Plan

The Supreme Court very recently addressed the meaning of "employee benefit plan" in the context of ERISA pre-emption in Fort Halifax Packing Co., Inc. v. Coyne, ___ U.S. ___, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987). In Fort Halifax, the Court ruled that a Maine statute requiring employers to provide a one-time severance payment to workers in the event of a plant's relocation or closing was not preempted by ERISA. The Court held that the Maine statute did not establish an employee benefit "plan," and that only state laws relating to such plans were pre-empted by ERISA. The Court stated that a plan entails ongoing administrative systems to meet the employer's obligations, and that the purpose of ERISA pre-emption was to avoid the confusing and conflicting application of different state schemes. "Only a plan embodies a set of administrative practices vulnerable to the burden that would be imposed by a patchwork scheme of regulation," the Court stated. 107 S.Ct. at 2217. A company's program mandated by the Maine statute, requiring a single "lump-sum payment triggered by a single event requires no administrative scheme whatsoever," id. at 2218, and was held not to constitute a plan, and so the statute was not pre-empted by ERISA.

The Court distinguished the Maine statutory program from a situation in which an employer agreed to pay severance benefits to each employee as he or she leaves the company's employ. In the latter case, an ongoing administrative scheme was necessary, since the employer made a separate analysis of each employee's eligibility for benefits and schedule of payments, and thus an ERISA plan was in existence. Id. at 2221 n. 10.

Defendant urges that an ERISA plan existed in the case presently before us, since its severance program entailed individual payments to each employee, based on that employee's eligibility. The severance agreement, which is attached as Exhibit A to the complaint, provides that an employee is entitled to these benefits only if a "triggering event" occurs, such as termination of an employee for reasons other than for cause. Thus, the circumstances of each employee's termination must be analyzed in light of these criteria, and an ongoing administrative system constituting an ERISA plan exists.

Plaintiff maintains that the severance agreement attached to his complaint does not embody the terms of defendant's severance program, but is merely a contract issued pursuant to the overall program. Plaintiff asserts that defendant is withholding information regarding the terms of the severance program, and that without that information the court cannot evaluate whether an ERISA plan, see 29 U.S.C. § 1002(1), as defined in Fort Halifax, existed.² However, there is no doubt that, whatever the specific provisions of the defendant's severance program, they surely involve a separate determination of each individual's eligibility for benefits. This is not a situation, like that in Fort Halifax, where the company was obligated to make a single set of payments to all employees, and thus did not need an ongoing administrative system. Defendant did maintain a program to provide employees with "benefits in the event of ... unemployment," 29 U.S.C. § 1002(1), and thus had an ERISA plan. Accordingly, we proceed to the second step in our analysis, whether the state laws under which plaintiff seeks recovery "relate to" this plan.

B. Relation of State Law Claims to the Plan

The Supreme Court has held that a state law "relates to" an employee benefit plan if it "has a connection with or reference to such plan," and that the scope of this preemption clause is therefore not restricted to state laws dealing specifically with employee benefit plans. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-98, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983). The ERISA pre-emption clause should be construed broadly, and is designed to "establish pension plan regulation as exclusively a federal concern." Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 1906, 68 L.Ed.2d 402 (1981).

In April, 1987, the Supreme Court addressed ERISA pre-emption in Pilot Life Ins. Co. v. Dedeaux, ___ U.S. ___, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) and Metropolitan Life Ins. Co. v. Taylor, ___ U.S. ___, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). In Pilot Life, the plaintiff alleged that his disability benefits from an employee benefit plan were improperly terminated, and he filed a complaint containing three counts: tortious breach of contract, breach of fiduciary duties, and fraud in the inducement. The Court held that these common law tort and contract claims were pre-empted by ERISA, and did not fall within the exception for laws regulating insurance, as plaintiff had argued. The Court noted that there was no dispute that these state causes of action "relate to" an employee benefit plan and are thus pre-empted; the Court relied on the Shaw Court's definition of "relate to" as "having a connection with or reference to" an ERISA plan, 463 U.S. at 97, 103 S.Ct. at 2900, quoted above. The Court recalled the legislative history of the pre-emption clause, and Congress' rejection of a more limited clause in favor of a much broader one. The balance of the discussion in Pilot Life then concerned whether these apparently pre-empted claims were "saved" by the exception regarding insurance laws. In Metropolitan Life, which also involved an employee whose disability benefits were terminated, the Court held that state common law claims asserting improper termination of benefits could form the basis for removing an action filed in state court to federal court, since these claims were preempted by ERISA.

The parties in the instance case vigorously disagree as to whether plaintiff's state law claims are pre-empted. Plaintiff urges that, at this preliminary stage in the proceedings, he can plead alternative grounds of relief, pursuant to Fed.R.Civ.P. 8(e)(2) and 18(a),³ even if those grounds...