Taylor v. Carter

• Decision Date: 19 December 1996
• Docket Number: No. MO-96-CA-121.,MO-96-CA-121.
• Citation: 948 F.Supp. 1290
• Parties: Michael D. TAYLOR, Plaintiff, v. Dee K. CARTER, Individually and as Agent for Lincoln Financial Group, Inc., and Employers Health Insurance Company, Defendants.
• Court: U.S. District Court — Western District of Texas

948 F.Supp. 1290

Michael D. TAYLOR, Plaintiff, v. Dee K. CARTER, Individually and as Agent for Lincoln Financial Group, Inc., and Employers Health Insurance Company, Defendants.

No. MO-96-CA-121.

United States District Court, W.D. Texas, Midland-Odessa Division.

December 19, 1996.

Steven Lance Clack, Andrews, TX, for Plaintiff.

David R. Pierce, El Paso, TX, W. Clark Lea, Midland, TX, Richard G. Foster, Corpus Christi, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

FURGESON, District Judge.

Procedurally, the question addressed by this Memorandum and Order is whether Defendants properly removed Plaintiff's state law claims to federal court. Defendants argue that the basis for removal is federal question jurisdiction, namely that Plaintiff's state law claims are completely preempted by ERISA. See 28 U.S.C. § 1441(b) ("Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties.") After hearing oral argument on Plaintiff's Motion to Remand, and upon review of the case law in this area, the court finds that it is without jurisdiction to entertain Plaintiff's claims. See 28 U.S.C. § 1447(c) ("If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.").

BACKGROUND

The facts giving rise to this lawsuit are not in dispute. Plaintiff was involved in an accident and incurred medical expenses. At the time of the accident, Plaintiff's employer, J.T. Meter and Valve Repair, Inc. (J.T. Meter) had in place a group insurance policy with either Employers Health Insurance Company or Lincoln Financial Group, Inc.¹ Plaintiff was a named beneficiary on the policy. For reasons yet unknown to this court, Plaintiff's claims were dishonored. Plaintiff then filed suit in the 109th District Court of Andrews County against Dee K. Carter, individually and as agent for Lincoln Financial Group, Inc. (Carter) and Employers Health Insurance (EHI). In his original petition, Plaintiff alleged that all three Defendants violated the Texas Deceptive Trade Practices Act (DTPA), the Texas Insurance Code (TIC) and the common law duty of good faith and fair dealing. After each defendant filed an answer in state court, the case was timely removed to this court. Plaintiff immediately moved to have the case remanded.

In their joint notice of removal, Defendants argue that removal to federal court is proper under ERISA which covers the insurance policy in question and completely preempts Plaintiff's state law claims. In response, Plaintiff argues that even if the employee benefit plan is governed by ERISA, which Plaintiff contests, he could not have brought suit in federal court under ERISA in the first place because he is neither a participant nor a beneficiary as defined in the statute. In order for Defendants to refute Plaintiff's argument, they must show this court that Plaintiff is not an "employer," as defined by ERISA. To that end, Defendants argue that the corporation, as a separate legal entity, is Plaintiff's employer and that Plaintiff is necessarily its employee. For example, Defendants point out that Plaintiff is only a minority shareholder, owning no more than 25.2% of the corporation during the relevant time period. Plaintiff's title within the company was that of Vice-President. Finally, Plaintiff's salary was always less than that of the company's President. As a fall back position, Defendants maintain that even if Plaintiff is a statutory "employer," he is nevertheless a beneficiary under the plan and thus subject to ERISA.

This, then, is a case whose outcome depends on the court's application of several statutory definitions. To that end, this court is very mindful that "the meaning of the statute must, in the first instance, be sought in the language in which the act is framed, and if that is plain, ... the sole function of the courts is to enforce it according to its terms." Meredith v. Time Ins. Co., 980 F.2d 352, 356 (5th Cir.1993) (citing Caminetti v. United States, 242 U.S. 470, 37 S.Ct. 192, 61 L.Ed. 442 (1917)). Finding the crucial statutory definitions in ERISA to be relatively clear, and not subject to undue speculation and conjecture on the part of the courts, this court holds that while the plan in question is governed by ERISA, because Plaintiff is neither a "participant" nor a "beneficiary" of the plan, he could not have maintained his original causes of action in federal court under ERISA. Thus, the court is devoid of subject matter jurisdiction and orders that Plaintiff's Motion to Remand be GRANTED.

STANDARD OF REVIEW FOR REMAND

It is well established that Defendants, as the removing parties, have the burden of establishing federal subject matter jurisdiction under 28 U.S.C. § 1441. See Tennessee Gas Pipeline v. Houston Casualty Ins. Co., 87 F.3d 150, 152 (5th Cir.1996) (citing Gaitor v. Peninsular & Occidental Steamship Co., 287 F.2d 252, 253-54 (5th Cir.1961)). Where removal jurisdiction is predicated on the existence of a federal question, the federal question generally must appear on the face of the plaintiff's complaint. Caterpillar, Inc. v. Williams, 482 U.S. 386, 391, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987); Baker v. Farmers Electric Cooperative, Inc., 34 F.3d 274, 278 (5th Cir.1994). The removing defendant's interjection of a federal defense is normally insufficient to remove the case. Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430. One exception to this rule, however, occurs where an area of state law has been completely preempted by federal law. Id. Complete preemption exists when the federal law occupies an entire field, rendering any claim a plaintiff may raise necessarily federal in character. See Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 24, 103 S.Ct. 2841, 2854, 77 L.Ed.2d 420 (1983). Because ERISA's preemption is so comprehensive, it can provide a sufficient basis for removal to federal court even though it is raised as a defense, notwithstanding the "well-pleaded complaint" rule. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66, 107 S.Ct. 1542, 1547-48, 95 L.Ed.2d 55 (1987). The ERISA preemption clause, 29 U.S.C. § 1144(a), provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title."

It is important to note that although the existence of an ERISA plan is a necessary requirement for preemption, the converse is not true. Weaver v. Employers Underwriters, Inc., 13 F.3d 172, 176 n. 9 (5th Cir.1994). The existence of an ERISA plan does not mean that there must be ERISA preemption. Id. State law causes of action are barred by § 1144(a) if

(1) the state law claims address areas of exclusive federal concern, such as the right to receive benefits under the terms of an ERISA plan; and

(2) the claims directly affect the relationship between the traditional ERISA entities — the employer, the plan and its fiduciaries, and the participants and beneficiaries.

Id. at 176; Memorial Hosp. System v. Northbrook Life Ins. Co., 904 F.2d 236, 245 (5th Cir.1990) (footnotes omitted). The court in Weaver held that state law claims by a nonparticipant and nonbeneficiary to a plan do not affect the relationship between the traditional ERISA entities. Weaver, 13 F.3d at 177. As such, those claims are not preempted by ERISA. Because, as will soon be detailed, this court likewise finds that Plaintiff is neither a beneficiary nor a participant of the plan, and because both parts of the test must be met in order for § 1144(a) to apply, this court finds that Plaintiff's state law claims are not preempted by ERISA. That being the case, Defendants have improvidently removed Plaintiff's claims to federal court.

The United States Supreme Court has held that ERISA's preemptive force is so strong that where state law claims seek relief available under ERISA's civil enforcement provisions (ERISA § 502(a), 29 U.S.C. § 1132(a)(1)-(3)), federal preemption is "complete," i.e., state law is entirely displaced so that the only claim assertable is the ERISA claim. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54-55, 107 S.Ct. 1549, 1556-57, 95 L.Ed.2d 39 (1987) (emphasis in original) (cited in D. HITTER ET AL., FEDERAL CIVIL PROCEDURE BEFORE TRIAL, § 2D-68 (1996)). On the other hand, since only a plan participant, beneficiary, fiduciary, or the Secretary of Labor has standing to maintain an ERISA action under § 1132(a), claims by "non-ERISA entities" are not subject to complete preemption.

Here Plaintiff was neither the plan administrator, nor its fiduciary, beneficiary or participant. The court takes judicial notice that Plaintiff is not the Secretary of Labor. Under such circumstances, even though the plan happens to meet the requirements of an ERISA plan, Plaintiff would not have standing to maintain an enforcement action under ERISA in federal court. If Plaintiff was to initially bring such a claim, this court would be without jurisdiction to hear it. Having found that Plaintiff could not have maintained a civil enforcement action in federal court, and that ERISA does not completely preempt Plaintiff's state law claims, the court lacks subject matter jurisdiction to consider the removed action and will order that it be remanded to state court.

ANALYSIS

A. IS THE PLAN GOVERNED BY ERISA

Whether Plaintiff is a beneficiary or a participant is relevant for purposes of removal jurisdiction only if the employee benefit plan in question is governed by ERISA. If it is, then the court will proceed to the second step of the analysis, the determination of whether or not Plaintiff is an "employer." If the plan is not, then the analysis stops there, and the case can...