Romney v. Lin

Decision Date27 August 1996
Docket NumberD,No. 1602,1602
Citation94 F.3d 74
Parties20 Employee Benefits Cas. 1816, Pens. Plan Guide P 23924N Edgar ROMNEY, Manager-Secretary, Blouse, Skirt, Sportswear, Children's Wear & Allied Workers Union, Local 23-25, ILGWU, Plaintiff-Appellant, v. Alan LIN, Defendant-Appellee. ocket 95-9275.
CourtU.S. Court of Appeals — Second Circuit

Ira Jay Katz, New York City (Max Zimny, Eric B. Chaikin, Alan M. Elis, Chaikin & Chaikin, of counsel), for Plaintiff-Appellant.

Christopher J. Sullivan, New York City (Geri S. Krauss, Carol M. Goodman, Herrick, Feinstein LLP, of counsel), for Defendant-Appellee.

J. Davitt McAteer, Marc I. Machiz, Karen L. Handorf, Maria Makris-Gouvas, U.S. Department of Labor, Washington, DC, filed a brief for Amicus Curiae Secretary of Labor.

Before: NEWMAN, Chief Judge, JACOBS, Circuit Judge, and CHATIGNY, District Judge 1.

JACOBS, Circuit Judge:

Plaintiff Edgar Romney is a union official who holds an uncollected state court judgment against an employer that failed to make contributions to employee benefit funds. Romney brought a collection suit in state court under a state law, N.Y.Bus.Corp.Law § 630 (McKinney 1986) ("s 630"), which provides that, for certain corporations, such obligations may be enforced against the company's ten largest shareholders. The shareholder defendant, Alan Lin, removed the collection action to the United States District Court for the Southern District of New York, pleading federal question jurisdiction on the ground that the state-law cause of action is preempted by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461. Chief Judge Griesa dismissed the complaint. On appeal, Romney claims that the district court lacked subject matter jurisdiction.

For the reasons set forth below, we affirm the judgment of the district court.


When we review a district court's dismissal of a complaint pursuant to Fed.R.Civ.P. 12(b)(6), we take as true the facts that are alleged in the complaint and draw all reasonable inferences in favor of the plaintiff. Geller v. County Line Auto Sales, Inc., 86 F.3d 18, 20 (2d Cir.1996). The allegations of the complaint are as follows.

On July 1, 1990, Goodee Fashions (a New York corporation) entered into a collective bargaining agreement with the Blouse, Skirt, Sportswear, Children's Wear & Allied Workers Union, Local 23-25, ILGWU (the "Union"). Among other undertakings, Goodee Fashions was required to make contributions to four employee benefit funds. Three of these multi-employer funds are ERISA funds; the fourth was the subject of a settlement and is not at issue in this appeal. 2 Goodee Fashions failed to make contributions to the ERISA funds during the first half of 1992. Pursuant to the collective bargaining agreement, the Union sought arbitration of the contributions dispute. On October 9, 1992, the Union won a default arbitration award. On April 22, 1993, the award was confirmed by the New York State Supreme Court, New York County, and a judgment was entered in the amount of $70,647.17. Execution against Goodee Fashions was returned unsatisfied.

Romney, the Union's Manager-Secretary, commenced this action in New York State Supreme Court, New York County, on March 3, 1994. Romney claimed that defendant Lin, as one of the ten largest shareholders of Goodee Fashions, was liable under New York law for the company's unpaid contributions to the ERISA funds. See N.Y.Bus.Corp.Law § 630. Lin removed the action to federal district court on April 18, 1994, alleging jurisdiction on three independent grounds: (1) diversity of citizenship, (2) preemption under the Labor Management Relations Act ("LMRA"), 29 U.S.C. §§ 141-197, and (3) preemption under ERISA. 3 On June 13, 1994, Lin moved for dismissal of the complaint under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Romney cross-moved for an order remanding his case to state court.

In an opinion dated August 23, 1995, the district court denied Romney's cross-motion for remand, and granted Lin's motion to dismiss the complaint, on the ground that Romney's claim was preempted by ERISA. Romney v. Lin, 894 F.Supp. 163, 165-66 (S.D.N.Y.1995). Specifically, the district court reasoned that "ERISA contains a detailed provision regarding civil enforcement," and that the ERISA enforcement scheme "does not authorize any type of action against officers and stockholders of a corporate employer to recover contributions owed to an ERISA fund." Id. at 166. In so deciding, the district court acknowledged that its disposition conflicted with a ruling by the Court of Appeals of New York that § 630 is not preempted by ERISA, Sasso v. Vachris, 66 N.Y.2d 28, 34, 494 N.Y.S.2d 856, 860, 484 N.E.2d 1359, 1363 (1985). Lin, 894 F.Supp. at 165-66; accord Romney v. Cai, Nos. 94 CV 2546, 2547, 2548, 1996 WL 331184, at * 2-* 3 (E.D.N.Y. June 4, 1996).

We affirm on the ground adopted by the district court.


On appeal, Romney argues that the district court erroneously assumed that it had removal jurisdiction based on ERISA preemption. We review de novo whether the district court had subject matter jurisdiction. Scelsa v. City Univ., 76 F.3d 37, 40 (2d Cir.1996).

A defendant in a state court civil action may remove a case over which the district court has original jurisdiction, 28 U.S.C. § 1441(a), including of course a civil action that "aris[es] under the ... laws ... of the United States." 28 U.S.C. §§ 1331, 1441(b). Although "[i]t is long settled law that a cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law," Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987), a state-law cause of action arises under federal law within the meaning of 28 U.S.C. § 1331, and is removable under 28 U.S.C. § 1441, if (1) the cause of action is based on a state law that is preempted by ERISA, and (2) the cause of action is "within the scope of the civil enforcement provisions" of ERISA § 502(a), 29 U.S.C. § 1132(a). Id. at 64-66, 107 S.Ct. at 1546-48; see also Greenblatt v. Delta Plumbing & Heating Corp., 68 F.3d 561, 573 (2d Cir.1995); Franklin H. Williams Ins. Trust v. Travelers Ins. Co., 50 F.3d 144, 149 (2d Cir.1995). That is because Congress specifically intended to exert "extraordinary pre-emptive power" when it adopted the detailed provisions of ERISA § 502(a). Metropolitan Life Ins., 481 U.S. at 64, 107 S.Ct. at 1546-47.

In this case, preemption is therefore one requisite of removal jurisdiction, as well as the key to the merits. We address preemption first. Then, because preemption alone is insufficient to support removal jurisdiction, we address the other requisite: whether Romney's suit under § 630 is "within the scope of the civil enforcement provisions" of ERISA § 502(a). Third, we consider the contrary decision in Sasso v. Vachris. Finally, we turn to two other arguments advanced by Romney on this appeal.

A. Preemption.

The preemption language of ERISA, contained in § 514(a), is purposefully sweeping:

Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.

29 U.S.C. § 1144(a) (emphasis added); see New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, ----, 115 S.Ct. 1671, 1677, 131 L.Ed.2d 695 (1995) (hereinafter, "Blue Cross ") (ERISA § 514(a) "is clearly expansive"). The exemptions spelled out in subsection (b)--such as state laws that regulate insurance, banking, or securities, and state criminal statutes--are inapplicable, as the parties agree. The question is therefore whether § 630 "relates to" ERISA plans. See Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 98, 103 S.Ct. 2890, 2900-01, 77 L.Ed.2d 490 (1983). "A law 'relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan." Id. at 96-97, 103 S.Ct. at 2900 (emphasis added). We have said that a state law "relates to" ERISA plans if it either (1) "makes explicit reference to ERISA plans," or (2) would disserve the basic purpose of preemption in ERISA § 514, "namely 'to avoid a multiplicity of regulation in order to permit the nationally uniform administration of employee benefit plans.' " Greenblatt, 68 F.3d at 574 (citation omitted). We conclude that § 630 is preempted on either ground.

1. Explicit Reference

A reference to ERISA plans may be explicit without actually using the term "ERISA plans." Travelers Ins. Co. v. Pataki, 63 F.3d 89, 94 (2d Cir.1995); see, e.g., District of Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130, 113 S.Ct. 580, 583-84, 121 L.Ed.2d 513 (1992) (statute that specified "the existing health coverage of the employee" referred to ERISA plans and was preempted); FMC Corp. v. Holliday, 498 U.S. 52, 59, 111 S.Ct. 403, 408, 112 L.Ed.2d 356 (1990) (same where statute specified "[a]ny program, group contract or other arrangement for payment of benefits"); cf. Ingersoll-Rand v. McClendon, 498 U.S. 133, 140, 111 S.Ct. 478, 483, 112 L.Ed.2d 474 (1990) (state common-law cause of action was preempted where plaintiff must plead "employer's desire to avoid contributing to, or paying benefits under, the employee's pension fund").

Even so, a state statute is not preempted by ERISA if it "affect[s] employee benefit plans in too tenuous, remote or peripheral a manner to warrant a finding that the law 'relates to' a plan." Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. at 2901 n. 21; see also Greater Wash. Bd. of Trade, 506 U.S. at 130 n. 1, 113 S.Ct. at 583 n. 1 (quoting Shaw ). "[T]he Supreme Court has never found a statute to be preempted...

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