Smith v. Baker Hughes Intern. Branches, Inc., CIV. A. H-00-1632.

• Decision Date: 26 February 2001
• Docket Number: No. CIV. A. H-00-1632.,CIV. A. H-00-1632.
• Citation: 131 F.Supp.2d 920
• Parties: J.M. "Jim" SMITH, Plaintiff, v. BAKER HUGHES INTERNATIONAL BRANCHES, INC., d/b/a Baker Hughes INTEQ International Branches, Inc., Defendant.
• Court: U.S. District Court — Southern District of Texas

131 F.Supp.2d 920

J.M. "Jim" SMITH, Plaintiff, v. BAKER HUGHES INTERNATIONAL BRANCHES, INC., d/b/a Baker Hughes INTEQ International Branches, Inc., Defendant.

No. CIV. A. H-00-1632.

United States District Court, S.D. Texas, Houston Division.

February 26, 2001.

Michael H Johnston, Sullins Johnston et al, Houston, TX, for J M Jim Smith, plaintiffs.

James Alfred Southerland, Ogletree Deakins et al, Houston, TX, for Baker Hughes International Branches Inc dba Baker Hughes INTEQ International Branches Inc, defendants.

MEMORANDUM AND ORDER

LAKE, District Judge.

Plaintiff, J.M. "Jim" Smith, filed this action on June 16, 1999, against defendant, Baker Hughes International Branches, Inc. (doing business as Baker Hughes INTEQ International Branches, Inc.), in the 234th Judicial District Court of Harris County, Texas.¹ Plaintiff alleged claims against defendant for breach of employment contract and denial of severance pay. Defendant removed the action to this court on May 15, 2000, asserting federal jurisdiction under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461 (West 1999). Pending before the court is Plaintiff's Motion for Remand (Docket Entry No. 4). For the reasons set forth below, plaintiff's motion will be granted.

I. Standard of Review

28 U.S.C. § 1447(c) provides for two grounds for remand: (1) a defect in removal procedure or (2) lack of subject matter jurisdiction. Cuellar v. Crown Life Insurance Company, 116 F.Supp.2d 821, 825 (S.D.Tex.2000). When considering a motion to remand the removing party bears the burden of showing that removal was proper. Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir.1988), appeal after remand, 915 F.2d 965 (5th Cir.1990), aff'd, 503 U.S. 131, 112 S.Ct. 1076, 117 L.Ed.2d 280 (1992). This extends not only to demonstrating a jurisdictional basis for removal, but also necessary compliance with the requirements of the removal statute. Monterey Mushrooms, Inc. v. Hall, 14 F.Supp.2d 988, 990 (S.D.Tex.1998) (quoting Albonetti v. GAF Corporation-Chemical Group, 520 F.Supp. 825, 827 (S.D.Tex. 1981)).

Pursuant to statute, removal is generally available to a defendant in a "civil action brought in a State court of which the district courts of the United States have original jurisdiction" founded on the existence of a claim or right "arising under" federal law. 28 U.S.C. § 1441(a)-(b); McClelland v. Gronwaldt, 155 F.3d 507, 511 (5th Cir.1998). If at any time before final judgment, however, it appears that the district court lacks subject matter jurisdiction, the case must be remanded. 28 U.S.C. § 1447(c). Because removal jurisdiction "raises significant federalism concerns," Willy, 855 F.2d at 1164, courts must construe removal statutes "narrowly, with doubts resolved in favor of remand to the state court." Value Recovery Group, Inc. v. Hourani, 115 F.Supp.2d 761, 765 (S.D.Tex.2000) (quoting Jefferson Parish Hospital District No. 2 v. Harvey, 788 F.Supp. 282, 283-84 (E.D.La.1992)). If there is any doubt that a right to removal exists, ambiguities are to be construed against removal. J.R. Laughead, Inc. v. Air Dayco Corp., 942 F.Supp. 339, 340 (S.D.Tex.1996).

II. Background

Plaintiff, J.M. "Jim" Smith ("Smith"), was hired by Baker Hughes INTEQ International Branches, Inc. ("Baker Hughes") on December 12, 1997,² as manager of a joint venture company that Baker Hughes was creating in Algeria. Smith began working for the company on January 5, 1998.

In early 1999 Baker Hughes was suffering economic difficulties in Algeria. Company revenues had declined by over $100,000 in one quarter, and drilling activity had decreased by 50% between January 1998 and February 1999.³ As a result, Baker Hughes terminated a number of employees in Algeria as part of a reduction in force. Smith was terminated by Baker Hughes on April 23, 1999. Baker Hughes informed Smith that the reason for his termination was that his "position in the Mediterranean Region of Baker Hughes INTEQ has been made redundant due to changes in the business."⁴

In his Original Petition in state court Smith alleged a claim against Baker Hughes for breach of employment contract. In his First Amended Petition, Smith added an alternative claim for denial of severance pay. According to Smith, "under the policies and benefits of Baker Hughes," upon termination of his employment he was entitled to a severance package and other benefits in the amount of at least $22,000.⁵ Baker Hughes then removed the case to this court, claiming jurisdiction under ERISA on the basis of Smith's severance pay claim.

III. Analysis

The issue before this court is whether the court has jurisdiction under ERISA over Smith's claims. Baker Hughes contends that Smith's state-law claims are completely preempted by ERISA. Smith argues that this court has no federal question jurisdiction over this action because Baker Hughes's severance policy does not fall within ERISA's definition of an "employee welfare benefit plan." Smith also argues that this court lacks jurisdiction under ERISA because he is not a "participant, beneficiary, or fiduciary" under any plan. See Franchise Tax Board of the State of California v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 103 S.Ct. 2841, 2855, 77 L.Ed.2d 420 (1983) (only participants, beneficiaries, or fiduciaries are entitled to seek relief under ERISA's civil enforcement provisions).

Baker Hughes responds that Smith is indeed a "participant" under ERISA, since that term means "any employee or former employee of an employer ... who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer." 29 U.S.C. § 1002(7). To determine whether federal jurisdiction exists in this case, however, the court must first decide whether Baker Hughes's severance policy constitutes an "employee benefit plan."

A. Federal Jurisdiction Under ERISA

A defendant may not remove an action from state court to federal court unless the plaintiff could have originally filed his action in federal court. See 28 U.S.C. § 1441(a)-(b); Caterpillar, Inc. v. Williams, 482 U.S. 386, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987). Absent complete diversity of the parties, a federal question must be present in order for removal to be proper. See Caterpillar, Inc., 107 S.Ct. at 2429. Federal courts typically determine the existence of federal question jurisdiction by applying the well-pleaded complaint rule. McClelland, 155 F.3d at 512. Under the well-pleaded complaint rule the federal question forming the basis of the federal court's subject matter jurisdiction must appear on the face of the complaint. See Anderson v. American Airlines, Inc., 2 F.3d 590, 593 (5th Cir.1993). A defense premised on federal law, including the defense of preemption, will not support removal even if the complaint facially anticipates the defense and all parties concede that it is the sole issue in dispute. See Caterpillar, Inc., 107 S.Ct. at 2430; Aaron v. National Union Fire Insurance Company, 876 F.2d 1157, 1161 (5th Cir.1989); Messina v. Tri-Gas Inc., 816 F.Supp. 1163, 1166 (S.D.Tex.1993).

The Supreme Court has recognized as an independent corollary to the well-pleaded complaint rule, however, the complete preemption exception. Caterpillar, Inc., 107 S.Ct. at 2430. This exception applies when Congress defines limited categories of state law claims that are so completely preempted that any civil complaint raising this select group of claims is necessarily federal in character, no matter how it is characterized in the relevant pleading. Kramer v. Smith Barney, 80 F.3d 1080, 1082 (5th Cir.1996) (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987)); see also Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 118 S.Ct. 921, 925, 139 L.Ed.2d 912 (1998). In such cases removal is proper because Congress has manifested an intent to make them removable. See Messina, 816 F.Supp. at 1166. Under the complete preemption exception "a statute's preemptive force may convert an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." Kramer, 80 F.3d at 1082-83.

ERISA preempts virtually all state laws relating to employee benefit plans. See ERISA § 514(a), 29 U.S.C. § 1144(a) ("[T]he provisions of this subchapter ... shall supersede any and all State laws insofar as they may now or hereafter relate to an employee benefit plan."). It does not follow, however, that any state court petition that alleges state law causes of action, but which implicates at some level an employee benefit plan, is removable from state to federal court. Gabner v. Metropolitan Life Ins. Co., 938 F.Supp. 1295, 1300 (E.D.Tex.1996). To be preempted by ERISA a state-law claim must be redressable under the civil enforcement provisions of ERISA § 502(a), 29 U.S.C. § 1132(a). See Metropolitan Life Ins. Co., 107 S.Ct. at 1548. Thus, for a state claim to be removable under ERISA it must:

(1) "relate to" an employee benefit plan within the meaning of ERISA § 514(a), and

(2) be redressable under the civil enforcement provisions contained in ERISA § 502(a).

See id. at 1546; Kramer, 80 F.3d at 1083; Anderson v. Electronic Data Systems Corp., 11 F.3d 1311, 1313 (5th Cir.1994). When both of these conditions appear, a federal court has subject-matter jurisdiction even though a well-pleaded complaint alleges only state-law claims.

B. Baker Hughes's Severance Policy

Baker Hughes contends that Smith has alleged a claim for denial of severance pay pursuant to Baker Hughes's written severance policy. Baker Hughes argues that its severance policy is an "employee welfare benefit plan" within the meaning of ERISA and that this court therefore has federal jurisdiction over all of Smith's claims. Smith does not deny that he has raised claims for severance payments. He argues instead that the severance plan at...