Opinion
Civil Action No. 3:01-CV-0091-D
March 21, 2001
MEMORANDUM OPINION AND ORDER
Following his termination from employment, plaintiff James M. McLaren ("McLaren") sued his former employers — defendants RailAmerica, Inc. ("RailAmerica") and Minnesota Northern Railroad, Inc. ("MNRR") — in county court. McLaren sought to recover for inter alia breach of contract and specific performance of a severance package. Defendants removed the case based on ERISA preemption, and McLaren now moves to remand. For the reasons that follow, the court grants the motion.
Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001-1461.
In a separate motion, MNRR moves to dismiss for lack of personal jurisdiction. Because the court grants McLaren's motion to remand, it does not reach MNRR's motion.
I
McLaren was employed from December 1996 until March 8, 2000 as General Manager of railroads owned by MNRR. His employment was terminated as part of a layoff when RailAmerica was being acquired by RailTex, Inc. ("RTI"). McLaren's county court lawsuit included claims for breach of contract, specific performance of a severance package, quantum meruit, and attorney's fees. He based his breach of contract claim on the allegation that defendants had improperly denied him coverage under the company health plan. See Pet. ¶ 14. His request for reimbursement of that expense has now been satisfied, however, because RailAmerica has paid him $230.00 in response to his attorney's demand. Following removal of the case to this court, McLaren moved to file a first amended complaint to drop his claim for the medical expense. The motion was unopposed, and the court granted it.McLaren moves to remand this case on the ground that none of his claims is preempted by ERISA. He contends the severance plan at issue is not an ERISA plan, and that, even if his claim for reimbursement of medical expenses is preempted, he is not pursuing that claim.
II
Because McLaren has dropped his claim for medical coverage, his motion to remand turns on whether his claim for specific performance of the severance plan is preempted by ERISA.
A
Although the propriety of removal is usually determined by examining the case at the time of removal, see Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 292 (5th Cir. 2000), a district court retains the discretion to remand a case after the claims that gave rise to federal jurisdiction, and, in turn, to removal, have dropped out of the case. See Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 357 (1988); Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 339 (5th Cir. 1999) (affirming remand of state claims after plaintiff's amended complaint dropped claim that was completely preempted by ERISA); Pyle v. Beverly Enters.-Tex., Inc., 826 F. Supp. 206, 211-12 (N.D. Tex. 1993) (Fitzwater, J.). This case was removed on January 12, 2001. Despite the fact that the case may have been removable initially, if McLaren's claim for specific performance of the severance plan is not preempted under ERISA, the court will in its discretion remand the case to county court.
B
The court must therefore decide whether McLaren's claim for specific performance of the severance plan is preempted by ERISA. Ordinarily, federal question jurisdiction is determined by the well-pleaded complaint rule, which holds that "[r]emoval is not possible unless the plaintiff's `well pleaded complaint' raises issues of federal law sufficient to support federal question jurisdiction." Rodriguez v. Pacificare of Tex., Inc., 980 F.2d 1014, 1017 (5th Cir. 1993). The well-pleaded complaint rule makes the plaintiff "the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). Therefore, even if federal claims are available, the plaintiff may remain in state court by relying exclusively on state law. See id.This principle, however, is not without exception. One such exception to the well-pleaded complaint rule — the complete preemption doctrine — applies to areas "in which Congress has `so completely preempt[ed] a particular area that any civil complaint raising this select group of claims is necessarily federal in character.'" Rodriguez, 980 F.2d at 1017 ( quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987)). "Because they are recast as federal claims, state law claims that are held to be completely preempted give rise to `federal question' jurisdiction and thus may provide a basis for removal." McClelland v. Gronwaldt, 155 F.3d 507, 512 (5th Cir. 1998). The complete preemption doctrine is narrow. See Richardson v. United Steelworkers of Am., 864 F.2d 1162, 1169 (5th Cir. 1989). It is warranted only where the statute at issue (1) contains a civil enforcement provision; (2) includes a specific grant of federal subject matter jurisdiction; and (3) reflects a clear manifestation of congressional intent to make preempted state-law claims removable to federal court. See Hart v. Bayer Corp., 199 F.3d 239, 245-46 (5th Cir. 2000) (citing Aaron v. National Union Fire Ins. Co., 876 F.2d 1157, 1163-66 (5th Cir. 1989)).
The Supreme Court has held that the doctrine of complete preemption applies to certain claims preempted by ERISA. See Metropolitan Life, 481 U.S. at 66-67. Whether ERISA applies to a particular severance agreement depends on the existence of an ongoing administrative program to meet the employer's obligation under the plan. See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11-12 (1987). Without an ongoing administrative scheme, a severance agreement is not a qualifying employee benefit plan and is therefore not preempted by ERISA. See Wells v. General Motors Corp., 881 F.2d 166, 176 (5th Cir. 1989); Fontenot v. NL Indus., Inc., 953 F.2d 960, 963 (5th Cir. 1992) (holding that "golden parachute" plan for company executives was not ERISA plan); cf. Perdue v. Burger King Corp., 1 F.3d 1251, 1253 (5th Cir. 1993) (holding that plan requiring administrative setup to monitor and facilitate provision of benefits was ERISA plan); Whittemore v. Schlumberger Tech. Corp., 976 F.2d 922, 923 (5th Cir. 1992) (holding that severance plan that had been in place for some time and had not been created with any particular closing in mind was ERISA plan).
Defendants argue that "[e]ligible employees could receive severance pay and benefits pursuant to Rail America's severance pay plan . . ., which was implemented in connection with the merger of RailAmerica and [RTI]." Not. Rem. 2. This assertion suggests, however, that the severance package was established on an ad hoc basis, in response to the one time event of the merger between RailAmerica and RTI. Defendants posit that the severance plan requires several ongoing administrative procedures: (1) determining employee eligibility on an employee-by-employee basis; (2) calculating the applicable deductions and withholdings from the benefit payments; (3) calculating and determining employee eligibility for participating in continued medical, dental, and vision insurance; and (4) continuing medical, dental, and vision benefits according to federal regulations for a specific time period after employment. The requirement that an employer perform calculations to determine employee eligibility either for money or for continued benefits does not convert a severance package into an ERISA plan, especially where, as here, the calculations need only be performed once for each employee. See McLemore v. United States Fidelity Guar. Co., 829 F. Supp. 192, 197 (S.D. Miss. 1993) (holding that employer's "need to make such simple arithmetical calculations and clerical determinations did not require the establishment of the type of ongoing administrative scheme which Fort Halifax directs is governed by ERISA"). Absent ongoing administrative duties, the severance agreement that McLaren seeks to enforce is not an ERISA plan. His claim for specific performance is therefore not preempted under ERISA.
* * *
The court therefore grants McLaren's motion to remand and remands this case to County Court at Law No. 1 of Dallas County, Texas. The clerk of court shall effect the remand in accordance with the usual procedure.
Because the case was arguably removable initially based on McLaren's voluntarily-dismissed breach of contract claim for denial of benefits under the company health plan, and because McLaren does not appear to request an award attorney's fees and costs in connection with his motion to remand this action to county court, the court will not make such an award.
SO ORDERED.