Richards v. Appalachian Power Co.

• Decision Date: 26 May 2011
• Docket Number: Civil Action No. 2:11–cv–00144.
• Citation: 836 F.Supp.2d 436
• Court: U.S. District Court — Southern District of West Virginia
• Parties: William David RICHARDS, Plaintiff, v. APPALACHIAN POWER COMPANY, et al., Defendants.

836 F.Supp.2d 436

William David RICHARDS, Plaintiff,

v.APPALACHIAN POWER COMPANY, et al., Defendants.

Civil Action No. 2:11–cv–00144.

United States District Court, S.D. West Virginia.

May 26, 2011.

John J. Polak, Atkinson & Polak, Charleston, WV, Matthew M. Hatfield, Hatfield & Hatfield, Madison, WV, for Plaintiff.

Bryan R. Cokeley, Steptoe & Johnson, Charleston, WV, Sara E. Hauptfuehrer, Steptoe & Johnson, Bridgeport, WV, for Defendants.

MEMORANDUM OPINION AND ORDER

JOSEPH R. GOODWIN, Chief Judge.

Pending before the court is the plaintiff's Motion to Remand this action to the Circuit Court of Kanawha County, West Virginia [Docket 5]. For the following reasons, the court FINDS that the plaintiff's claims are not completely preempted and GRANTS the plaintiff's motion to remand.

I. Background

The plaintiff, William David Richards, worked as a union employee for the defendant Appalachian Power Company (“APCO”), which is part of American Electric Power Company (“AEP”), for just under 37 years. In early March 2010, as his 62nd birthday approached, Richards considered retirement. Accordingly, Richards approached an APCO human resources representative and asked whether the defendants contemplated offering any severance packages to retirees. The representative told Richards that no severance programs were contemplated and that no negotiations between AEP and/or APCO and the union were pending concerning severance programs for union employees. Richards alleges that he relied on this information in electing to retire, and did so effective March 31, 2010. Shortly thereafter, on April 14, 2010, AEP announced a severance program, available to employees who had been actively employed as of April 1, 2010, one day after Richards's retirement. Consequently, Richards was not eligible for the severance benefits package. Richards avers that the defendants should have told him about the impending severance program, and that, had they done so, he would have delayed his retirement in order to be eligible for the severance benefits.

On February 1, 2011, Richards filed suit against APCO and AEP in the Circuit Court of Kanawha County, West Virginia. In his Complaint, Richards seeks damages based on claims of negligent misrepresentation and constructive fraud under state law. On March 4, 2011, the defendants removed the action to this court based on federal question jurisdiction. In their notice of removal, the defendants assert that the severance plan referenced in the Complaint is an employee benefits plan governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). The defendants contend that Richards's state-law claims “relate to” the plan and thus are removable under the doctrine of “complete preemption.” On April 1, 2011, Richards filed a Motion to Remand, primarily arguing that the severance plan is not an “employee welfare benefit plan” subject to ERISA. The motion has been fully briefed and is now ripe for review.

II. Standard of Review

Because federal courts are courts of limited jurisdiction, the burden of establishing jurisdiction rests on the party seeking to invoke the court's jurisdiction. Barbour v. Int'l Union, 640 F.3d 599, 604–05 (4th Cir.2011) (en banc). In a removed case, such as this one, that burden falls on the party seeking removal. See id. Moreover, removal jurisdiction is to be strictly construed, “inasmuch as the removal of cases from state to federal court raises significant federalism concerns.” Id. Thus, any doubts as to the existence of federal jurisdiction must be resolved in favor of remanding the action to state court. See Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816 (4th Cir.2004) (en banc).

III. Discussion

An action filed in state court can only be removed to federal court if the “the district courts of the United States have original jurisdiction” over the matter. 28 U.S.C. § 1441(a). In other words, the question is whether the action could have originally been brought in federal district court. See King v. Marriott Int'l, Inc., 337 F.3d 421, 424 (4th Cir.2003). Typically, that occurs in one of two circumstances: where the requirements for diversity jurisdiction are met or where the face of the complaint raises a federal question. See Lontz v. Tharp, 413 F.3d 435, 439 (4th Cir.2005). The defendants do not contend that this case implicates the court's diversity jurisdiction. Thus, the only issue is whether the action falls within the ambit of federal question jurisdiction.

Under the well-pleaded complaint rule, which applies equally to original and removal jurisdiction, a federal question must appear from the face of the plaintiff's well-pleaded complaint. Louisville & Nasvhille R.R. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 53 L.Ed. 126 (1908); see Discover Bank v. Vaden, 489 F.3d 594, 609 (4th Cir.2007) (Goodwin, J., dissenting), maj. op. rev'd,556 U.S. 49, 129 S.Ct. 1262, 173 L.Ed.2d 206 (2009). In short, a federal right must be an essential element of the plaintiff's claim; the mere existence of a federal defense will not suffice. See Lontz, 413 F.3d at 439. Thus, as a general matter, the plaintiff may avoid federal jurisdiction by exclusively relying on state law in the complaint. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987).

There is, however, a “narrow exception” to the well-pleaded complaint rule—the doctrine of “complete preemption.” Lontz, 413 F.3d at 439. A careful distinction must be drawn between complete preemption and ordinary, or “conflict,” preemption. Sonoco Prods. Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 370 (4th Cir.2003). Because conflict preemption is simply a defense to a state-law claim, the Supreme Court has ruled that it does not appear on the face of a well-pleaded complaint and thus does not authorize removal of an action to federal court. See Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).

Complete preemption, by contrast, “is not a distinct type of preemption at all, but rather is a jurisdictional rule positing that all claims on a given topic arise under federal law, thereby paving the way for removal of an action to federal court pursuant to 28 U.S.C. § 1441(b).” Smith v. BAC Home Loans Servicing, LP, 769 F.Supp.2d 1033, 1039 n. 7 (S.D.W.Va.2011). Thus, “the doctrine of complete preemption has but one purpose—that is, the recharacterization of a plaintiff's state complaint so that it may be considered federal for the purposes of the well-pleaded complaint rule.” Vaden, 489 F.3d at 611 (Goodwin, J., dissenting) (emphasis omitted); see Sonoco Prods., 338 F.3d at 371 (“[W]hen complete preemption exists, the plaintiff simply has brought a mislabeled federal claim ....” (internal quotation marks omitted)). Complete preemption is rarely applied. Because the Supreme Court presumes that Congress did not intend to displace a whole panoply of state law, it has been “reluctant” to find complete preemption. See Lontz, 413 F.3d at 440–41.¹

The distinction between the defense of ordinary preemption and the jurisdictional doctrine of complete preemption is often confused in the context of ERISA. Section 514 of ERISA defines the scope of ordinary preemption under the Act: state law claims are preempted insofar as they “relate to” any employee benefit plan governed by ERISA. 29 U.S.C. § 1144(a). The fact that a claim may be preempted under § 514 of ERISA, however, does not provide a basis for removal of an action to federal court. See Sonoco Prods., 338 F.3d at 371 (“[C]onflict preemption under § 514 does not provide a basis for federal jurisdiction.”). Rather, complete preemption under ERISA—and thus a proper basis for removal—only arises if a state-law claim can be recharacterized as a claim under ERISA's civil enforcement provision, § 502(a). Id.;see also Darcangelo v. Verizon Commc'ns, Inc., 292 F.3d 181, 187 (4th Cir.2002) (observing that § 502(a) converts all claims coming within its scope into federal claims).

The “threshold requirement” for determining whether a claim falls within the scope of § 502(a) of ERISA is whether the plaintiff possesses standing to assert a claim under that provision. Sonoco Prods., 338 F.3d at 372. Section 502(a) empowers a “ participant or beneficiary ” of an ERISA-governed plan to bring a civil action to recover benefits due under the terms of a plan or to enforce rights under the terms of a plan, 29 U.S.C. § 1132(a)(1)(B) (emphasis added), and authorizes a “ participant, beneficiary, or fiduciary ” to bring a civil action to “obtain other appropriate equitable relief,” id. § 1132(a)(3) (emphasis added). Because the defendants in this case do not maintain that Richards is a “beneficiary” or “fiduciary” of an ERISA-covered plan, the question is whether he has standing as a “participant” to bring a claim under § 502(a).² ERISA defines a “participant” as “any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan.” 29 U.S.C. § 1002(7). To be classified as a “participant” under this definition, the Supreme Court has explained that a former employee who has no “reasonable expectation of returning to covered employment” must instead have “a colorable claim to vested benefits” under a plan. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) (internal quotation marks omitted).

The defendants maintain that Richards is a “participant” under ERISA because he “is a former employee of APCO who may become eligible to receive a benefit of some kind from the Plan.” (Defs.' Notice of Removal [Docket 1] ¶ 6.) I disagree with the defendants' analysis.³ First, the defendants have not established that Richards has any reasonable expectation of returning to covered employment. He is approximately 62–years–old and retired from a company that was, at that...