Williams v. Ccpi, Inc.
| Decision Date | 13 October 2015 |
| Docket Number | Case No. 1:15-cv-269 |
| Parties | MICHAEL B. WILLIAMS, Plaintiff, v. CCPI, INC., Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
Litkovitz, M.J.
This matter is before the Court on plaintiff's motion to remand this case to state court (Doc. 8), defendant CCPI, Inc.'s memorandum in opposition to plaintiff's motion (Doc. 11), and plaintiff's reply memorandum in support of the motion (Doc. 12).1 For the reasons stated herein, plaintiff's motion should be granted.
A. Removal of the case
In March 2015, plaintiff Michael B. Williams filed a complaint for breach of contract, unjust enrichment, and declaratory judgment in the Clinton County, Ohio Common Pleas Court against his former employer, defendant CCPI, Inc. (hereafter "CCPI"). (Doc. 3). The complaint alleges that plaintiff is entitled to severance payments under the terms of an employment agreement between the parties. CCPI removed the case to this Court pursuant to 28 U.S.C. §§ 1331 and 1441(a) on the ground the severance provision in the employment agreement is an employee welfare benefit plan that is governed by the Employee Retirement Income and Security Act of 1974 (ERISA), 29 U.S.C. § 1001, et seq.; therefore, plaintiff's claims arise under federal law and the federal court has original jurisdictionover the case.2 (Doc. 1).
B. Plaintiff's motion for remand
Plaintiff filed his motion for remand on May 18, 2015. (Doc. 8). Plaintiff argues that the federal court lacks subject matter jurisdiction over his complaint because it alleges claims governed by Ohio law and no federal cause of action such as would vest the federal court with subject matter jurisdiction under 28 U.S.C. § 1331. (Id. at 1-2). Plaintiff alleges that the employment agreement at issue, which provides for severance payments in the event of plaintiff's termination without cause or his resignation for "Good Reason," is a contract that is governed by Ohio law, and not an ERISA plan. (Id. at 3). Plaintiff contends that because subject matter jurisdiction is lacking, defendant improperly removed the case to federal court and it must be remanded to state court. Defendant alleges that the severance provision of the parties' employment agreement is an employee welfare benefit plan as defined under ERISA, 29 U.S.C. § 1002(1)(B). (Doc. 11). Defendant contends that because plaintiff's claims concerning the payment of benefits under the purported ERISA plan raise issues of federal law, this case was properly removed. (Id.).
The issue to be resolved on a motion to remand is whether the district court lacks subject matter jurisdiction or, in other words, whether the case was properly removed from the state court. Weil v. Process Equipment Co. of Tipp City, 879 F. Supp.2d 745, 748 (S.D. Ohio 2012) (citing Provident Bank v. Beck, 952 F. Supp. 539, 540 (S.D. Ohio 1996)). The removal statute should be strictly construed and all doubts resolved in favor of remand. Her Majesty The Queen v. City of Detroit, 874 F.2d 332, 339 (6th Cir. 1989). The removing party bears the burden of demonstrating that the district court has jurisdiction over the case. Weil, 879 F. Supp.2d at 748 (citing Eastman v. Marine Mechanical Corp., 438 F.3d 544, 549 (6th Cir. 2006)).
"[W]hen ruling on a motion to remand, a court generally looks to the plaintiff's complaint, as it is stated at the time of removal, and the defendant's notice of removal." Gentek Bldg. Products, Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007). In determining the propriety of removal, courts apply the "well-pleaded complaint rule." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1983). Under the well-pleaded complaint rule, subject matter jurisdiction exists only when an issue of federal law exists on the face of the complaint. Id.; Husvar v. Rapoport, 430 F.3d 777, 781 (6th Cir. 2005). A corollary of the well-pleaded complaint rule is that "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Metropolitan Life Ins. Co., 481 U.S. at 63-64. A case alleging a state law claim can be removed "when a federal statute wholly displaces the state-law cause of action through complete pre-emption." Weil, 879 F. Supp.2d at 748-49 (quoting Aetna Health, Inc. v. Davila, 542 U.S. 200, 207 (2004) (quoting Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 8 (2003)).
ERISA is a statute that allows for complete preemption. Id. at 749 (citing Aetna Health, Inc., 542 U.S. at 207). ERISA broadly preempts state law claims insofar as they "relate to" any employee benefit plan as defined under the statute. 29 U.S.C. § 1144(a); see also Smith v. Commonwealth General Corp., 589 F. App'x 738, 744 (6th Cir. 2014). The phrase "relate to" is given broad meaning. Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1276 (6th Cir. 1991) (citing Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 730 (1985); Shaw v. Delta Airlines, Inc., 463 U.S. 85 (1983)). A state law claim is preempted by ERISA if "it has connection with or reference to that plan." Id. A claim brought by a plaintiff under state law is completely preempted by ERISA if the claim seeks "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan," as provided in 29 U.S.C. § 1132(a)(1)(B). Lockett v. Marsh USA, Inc., 354 F. App'x 984, 988 (6th Cir. 2009) (citations omitted).See also Wright v. Gen. Motors Corp., 262 F.3d 610, 613-14 (6th Cir. 2001). "Only if the claim is 'complete[ly] preempt[ed]' by ERISA, that is, when the action is to recover benefits, enforce rights or clarify future benefits under an ERISA plan, is the action subject to removal to the federal courts." Wright, 262 F.3d at 613 (quoting Warner v. Ford Motor Co., 46 F.3d 531, 534 (6th Cir. 1995)). "It is not the label placed on a state law claim that determines whether it is preempted, but whether in essence such a claim is for the recovery of an ERISA plan benefit." Peters v. Lincoln Elec. Co., 285 F.3d 456, 469 (6th Cir. 2002).
Thus, to determine whether remand of this case is warranted, the Court must decide whether plaintiff seeks to enforce an ERISA agreement or to recover benefits due under the terms of an ERISA plan, or whether he seeks to recover damages for breach of a contract that is governed by state law. If plaintiff's claims are not claims for benefits or rights under an ERISA plan, they are not completely preempted by ERISA and this Court lacks subject matter jurisdiction over the claims. In the event subject matter jurisdiction is lacking, the case was not properly removed and it must be remanded to state court. To make this determination, the Court must consider the allegations of the complaint in light of the law governing the definition of an ERISA plan.
C. Allegations of the complaint
Plaintiff makes the following allegations in the complaint: Plaintiff, a resident of Ohio, was employed by CCPI, a Delaware corporation with its headquarters and principal place of business in Ohio, from May 2001 through on or about November 8, 2014. (Doc. 3, ¶¶ 1, 2). In mid-2008, plaintiff was named CCPI's General Manger and shortly thereafter its President and CEO. (Id., ¶ 7).
On January 1, 2011, the two parties entered into an employment agreement governing the terms and conditions of plaintiff's employment (hereafter "Employment Agreement"). (Id., ¶ 8; Exh. 1). According to § 3(a) of the Employment Agreement, plaintiff's employment was to be for a five-yearterm ending on January 1, 2016. (Id., ¶ 9). The Employment Agreement included a Change-in-Control provision to motivate plaintiff to succeed in an effort to sell CCPI, which was an effort he had been asked to lead. (Id., ¶ 8).
In December of 2012, Prospect Capital Corporation (hereafter "Prospect") became the controlling shareholder of CCPI. (Id., ¶ 10). Prospect's acquisition of CCPI constituted a "Change in Control" under the terms of the Employment Agreement and triggered a "Change in Control" payment to plaintiff. (Id., ¶ 11). To ensure plaintiff's continued service to CCPI, CCPI and plaintiff entered into a First Amendment to Employment Agreement dated December 10, 2012. (Id.; Exh. 2). Section 3(b) of the Employment Agreement as amended provides that if, during the term of the Employment Agreement, CCPI "terminates Employee's employment . . . other than for Cause . . . or if Employee terminates employment for 'Good Reason', the Company shall pay Employee an amount equal to two (2) year's base salary as in effect on the date of termination. . . ." (Id., ¶ 12). Section 3(b) further specifies the following circumstances under which the employee shall have "Good Reason" to terminate his employment, provided certain conditions are not satisfied:
(B) a material diminution in the Employee's authority, duties or responsibilities; (C) a material diminution in the authority, duties or responsibilities of the supervisor to whom the Employee is required to report, including a requirement that the Employee report to a corporate officer or employee instead of reporting directly to the Company's Board of Directors. . . .
(Id., ¶ 13).
As of December 10, 2012, plaintiff served as CCPI's President and Chief Executive Officer. (Id., ¶ 14). On January 7, 2013, plaintiff was named Chairman of the Board and Secretary. (Id., ¶ 15). On July 10, 2014, CCPI's Board of Directors authorized CCPI to begin a lengthy restructuring program. (Id., ¶ 23). On information and belief, in the ensuing weeks, Prospect and its Directors decided to remove plaintiff from his role as CEO. (Id., ¶ 25). These parties informed plaintiff that his positionwould no longer be needed after their restructuring program was completed. (Id., ¶ 27). Plaintiff acknowledged this was true under their plan....
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