Peggy S. Crews v. General American , 274 F.3d 502 ( 2001 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 00-3931/3963
___________
Peggy S. Crews, *
on behalf of herself *
and others similarly situated, *
*
Appellant/Cross-Appellee, *
* Appeal from the United States
v. * District Court for the Eastern
* District of Missouri.
General American Life *
Insurance Company, *
a corporation, *
*
Appellee/Cross-Appellant. *
___________
Submitted: November 12, 2001
Filed: December 17, 2001
___________
Before WOLLMAN, Chief Judge, MORRIS SHEPPARD ARNOLD, Circuit Judge,
and SMITH,1 District Judge.
___________
MORRIS SHEPPARD ARNOLD, Circuit Judge.
Peggy Crews, an employee of General American Life Insurance Company,
filed suit against the company in Missouri state court, on behalf of herself and other
1
The Honorable Ortrie D. Smith, United States District Judge for the Western
District of Missouri.
employees, alleging that General American did not provide them with promised
benefits. After General American removed the lawsuit to the United States District
Court for the Eastern District of Missouri, the district court denied Ms. Crews's
motion to remand.
Ms. Crews then filed an amended complaint containing three counts: Count I
alleged a violation of the Employee Retirement Income Security Act (ERISA), see
29 U.S.C. §§ 1001-1461, Count II alleged breach of contract, and Count III alleged
misrepresentation. The district court granted General American summary judgment
on Count I, and dismissed Counts II and III because, in its judgment, they were
preempted by ERISA. We agree with Ms. Crews that removal was improper, and we
therefore vacate the district court's judgment and remand the case to the district court
with instructions to remand it to the state court for further proceedings.
I.
A defendant has a right to remove a case from state to federal court if the
plaintiff's cause of action arose under federal law. See 28 U.S.C. § 1441(b). A cause
of action arises under federal law only when the plaintiff's well-pleaded complaint
raises issues of federal law, see Louisville and Nashville R.R. Co. v. Mottley, 211 U.S.
149, 152 (1908), so a cause is not removable simply because a federal defense like
preemption may be raised in it. See Franchise Tax Bd. v. Construction Laborers
Vacation Trust, 463 U.S. 1, 10-12 (1983). But the Supreme Court has held that for
the purposes of the "well-pleaded complaint" rule federal law "may so completely
pre-empt a particular area" that any civil complaint in that area, however it might be
pleaded, necessarily raises a federal question. Metropolitan Life Ins. Co. v. Taylor,
481 U.S. 58, 63-64 (1987). The Court has concluded that ERISA is such a law. See
id. at 63-67. Common-law causes of action filed in state court that come within the
scope of one provision of ERISA, 29 U.S.C. § 1132(a)(1)(B), and that are preempted
by another provision, 29 U.S.C. § 1144(a), are removable to federal court. See id. at
64-67.
-2-
Section 1132(a)(1)(B) provides that a beneficiary may bring a civil action in
federal court to recover benefits due to him or her under the terms of an employee
benefit plan. As relevant, § 1144(a), provides that ERISA preempts state laws insofar
as they "relate to any employee benefit plan." The central issue in this case is whether
General American's alleged promise to provide employees who stayed with the
company through a fixed date with benefits was premised on or constituted an
employee benefit plan. If so, Ms. Crews's action comes within the scope of
§ 1132(a)(1)(B) and is preempted by § 1144(a), and hence her action was removable
to federal court. If not, then removal was improper.
The district court concluded that the promised benefits were derived from an
employee benefit plan because they "were those contained" in General American's
"established severance pay plan." We believe, however, that there are significant
differences between the benefits allegedly promised to the employees here and the
undertakings in General American's established severance pay plan. To begin with,
the company's established plan provides for one week of severance pay for each
completed year of service for employees who have worked for more than two years;
Ms. Crews, in contrast, alleges that she and other employees were promised eight
weeks of severance pay in addition to one week of severance for each completed year
of service. General American's severance pay policy, moreover, is completely
discretionary, whereas the benefits allegedly promised here were not subject to any
discretion on the company's part. Finally, the company's severance policy is for
employees who have been terminated, but Ms. Crews contends that benefits were
promised to her and other employees as a "stay-on bonus" if they remained with the
company through a fixed date.
The district court, in its order granting summary judgment on Count I, appears
to account for these differences by characterizing the promises allegedly made to the
-3-
employees as attempted oral amendments to the company's severance plan. If the
alleged promises were simply an attempt to amend the existing plan, then it follows
that they were based on that plan and Ms. Crews's action would fall within
§ 1132(a)(1)(B) and would be preempted by § 1144(a). But we discern nothing in the
record to indicate that the alleged promises constituted a change in the company's
plan as opposed to a distinct, one-time offer of benefits. In fact, Ms. Crews alleges
that General American did not even mention the severance pay plan when promising
the "stay-on bonus." In short, the significant differences between the company's
existing plan and the promised benefits, as well as the lack of any evidence linking
them to each other, lead us to conclude that the promised benefits were free-standing
and were not premised in any way on the existing plan.
We turn, then, to the question of whether the promised benefits themselves
constituted an ERISA plan. Severance benefits are characterized as a plan when they
"require[] an ongoing administrative program to meet the employer's obligation," Fort
Halifax Packing Co. v. Coyne, 482 U.S. 1, 11 (1987). When determining whether
payments require an ongoing administrative scheme, we consider whether the
payments are one-time lump sum payments or continuous payments, whether the
employer undertook any long-term obligation with respect to the payments, whether
the severance payments come due upon the occurrence of a single, unique event or
any time that the employer terminates employees, and whether the severance
arrangement under review requires the employer to engage in a case-by-case review
of employees. See Emmenegger v. Bull Moose Tube Co., 197 F.3d 929, 934-35 (8th
Cir. 1999); Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d 254, 256-58 (8th Cir.
1994).
It is clear on the record before us that the promise allegedly made to the
plaintiffs required a one-time lump sum payment, that General American did not
undertake any long-term obligations under it, and that it was made in response to a
-4-
single, unique event, namely, the termination of General American's contract with the
Health Care Finance Administration. We believe that Emmenegger, 197 F.3d at 935,
on which the defendant relies, is therefore inapposite because in that case the relevant
severance plan required continuous payments, it imposed long-term obligations on
the employer, and payments became due under it whenever an employee was fired.
We believe, moreover, that General American did not need to conduct a case-
by-case review to determine whether an employee qualified for the promised benefits.
The facts in this case are different from those in Collins v. Ralston Purina Co., 147
F.3d 592 (7th Cir. 1998), which the district court cited for the proposition that paying
retention benefits may necessitate a case-by-case review. In Collins, 147 F.3d at 597,
the employer had an agreement with certain employees promising them benefits if
their duties were "substantially reduced," which created the need for case-by-case
review and an administrative scheme. In contrast, here any General American
employee who was a Medicare Part B associate and who stayed through a fixed date
was eligible for the promised benefits; determining eligibility was "simple" and
"mechanical." See Kulinski, 21 F.3d at 258.
In short, we believe that all four of the considerations that we have identified
as relevant militate in favor of a holding that General American's promised benefits
did not constitute an ERISA plan. The promised benefits are analogous to the "stay-
on bonus" involved in Velarde v. PACE Membership Warehouse Inc., 105 F.3d 1313,
1315 (9th Cir. 1997), which the Ninth Circuit held was a one-time promise to
employees and did not constitute an ERISA plan, see id. at 1317. Ms. Crews relies
heavily on this case, but the district court did not believe that it was on point because
the employer in Velarde, unlike General American, did not have an existing severance
pay plan. While this distinction is relevant in assessing whether General American's
promised benefits were premised on its severance plan, it is not relevant in assessing
whether the company's promised benefits, by themselves, constitute a plan. In our
-5-
judgment, therefore, the reasoning in Velarde provides additional support for our
holding.
III.
In sum, we believe that General American's promised benefits were neither
premised on nor constituted an employee benefit plan. It follows that Ms. Crews's
action does not fall within the scope of § 1132(a)(1)(B) and is not preempted by
§ 1144(a). We hold, therefore, that the district court should not have assumed
jurisdiction, and we vacate the district court's judgment and remand the case to the
district court with directions that it remand the case to the state court from which it
was wrongly removed.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
-6-