Young v. W.-Se. Agency, Inc.

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RANDY YOUNG, Plaintiff, v. WESTERN-SOUTHERN AGENCY, INC., et al., Defendants.

Civil Action No. 2:23-cv-00764

United States District Court, S.D. West Virginia, Charleston Division

September 20, 2024

MEMORANDUM OPINION AND ORDER

THOMAS E. JOHNSTON, UNITED STATES DISTRICT JUDGE.

Pending before the Court is Plaintiff Randy Young's (“Plaintiff”) Motion to Remand, (ECF No. 9); and Defendants Western-Southern Agency, Inc., and Western-Southern Life Assurance Company's (collectively “Defendants”) Motion to Dismiss, (ECF No. 3). For the reasons discussed more fully below, the Court DENIES Plaintiff's Motion to Remand (ECF No. 9). The Court also DENIES Defendants' Motion to Dismiss, (ECF No. 3) WITHOUT PREJUDICE.

I. BACKGROUND

Plaintiff worked as an employee for Defendants for nearly 13 years, until he was terminated from his position in 2019. (ECF No. 1-5.) While an employee, Plaintiff enrolled in Defendants' Long-Term Incentive Retention (“LTIR”) Plan. (Id.) The plan included a “cliff vesting” program. (Id.) According to the Amended Complaint, the program is intended to incentivize top employees to stay with the company. (Id.) Under the “cliff vesting” program, units are granted to top employees, and those units become fully vested seven years after they are given, so long as the employee is still with the company. (Id.)

By April 2019, when Plaintiff was terminated, Plaintiff had 48 vested LTIR units, totaling $257,472. (Id.) Plaintiff had also acquired an additional 30 units, which were set to vest when Plaintiff turned 55-years-old. (Id.) Plaintiff alleges that because the 48 units were fully vested, they were considered taxable wages under IRS regulations, and as a result, he paid taxes on them. (Id.) These taxes were automatically deducted from Plaintiff's paycheck. (Id.)

Upon Plaintiff's termination, Plaintiff alleges that Defendants refused to pay him the 48 fully vested units of LTIR benefits. (Id.) Defendants asserted that because Plaintiff was involuntarily terminated, Plaintiff forfeited all of his benefits under the LTIR Plan. (Id.)

On March 31, 2021, Plaintiff filed his initial complaint in the Circuit Court of Kanawha County, West Virginia. (ECF No. 10 at 1; ECF No. 1-1.) The original complaint alleged tortious interference with business relations, intentional misrepresentation and fraud, and intentional infliction of emotional distress. (ECF No. 1-1.) After Defendants filed a Motion to Dismiss that original complaint, Plaintiff filed a Petition for Arbitration. (Id. at 1.) At arbitration, Plaintiff sought a pay-out of a portion of his LTIR benefits. (Id. at 1-2.) The arbitration concluded in the arbitrator issuing an interim award, holding in part that Plaintiff's claim for LTIR benefits was “beyond the scope of the Arbitration Agreement.” (Id.)

As a result, Plaintiff amended his original complaint to add a claim for his vested LTIR benefits. (Id. at 2; ECF No. 1-5.) The Amended Complaint initially contained three counts. Counts One and Two were dismissed, leaving only Count Three, which is a claim to recover Plaintiff's vested LTIR benefits under the West Virginia Wage and Payment Collection Act, W.Va. Code § 25-5-1. (ECF Nos. 1-4; 1-5.)

With only one count remaining, Defendants filed a Notice of Removal to remove the case to federal court based on federal question jurisdiction under 28 U.S.C. § 1331. Defendants assert that Plaintiff's Amended Complaint is “completely preempted by section 502(a) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a).

On November 29, 2023, Defendants filed a Motion to Dismiss. (ECF No. 3.) Plaintiff timely responded on January 30, 2024, (ECF No. 17), and Defendants timely replied, (ECF No. 19). As such, this motion is fully briefed and ripe for adjudication.

Additionally, around the same time, on December 27, 2023, Plaintiff filed a Motion to Remand, (ECF No. 9), arguing that this Court lacks jurisdiction because Plaintiff's claim only involves the West Virginia Wage and Payment Collection Act, W.Va. Code § 21-5-1, (ECF No. 10). Defendants filed a response on January 9, 2024, (ECF No. 11), and Plaintiff timely replied, (ECF No. 12). Therefore, this motion is also fully briefed and ripe for adjudication.

II. LEGAL STANDARD

Congress has provided a right of removal from state to federal court if a case could have originally been brought in federal court. 28 U.S.C. § 1441(a). Under 28 U.S.C. § 1331, “district courts shall have original jurisdiction over all civil actions arising under the Constitution, laws, or treaties of the United States.” Generally, “a cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law.” Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). A corollary to the well-pleaded complaint rule arises in the context of complete preemption.

Under the jurisdictional doctrine of complete preemption, where “‘Congress so completely preempt[s] a particular area that any civil complaint raising this select group of claims is necessarily federal in character,' the state law claims are converted into federal claims, which may be removed to federal court.” Sonoco Prods. Co. v. Physicians Health Plan, Inc., 338 F.3d 366, 371 (4th Cir. 2003) (quoting Darcangelo v. Verizon Commc'ns, Inc., 292 F.3d 181, 186-87 (4^th Cir. 2002)).

When there is complete preemption, “‘the plaintiff simply has brought a mislabeled federal claim, which may be asserted under some federal statute.'” Sonoco Prods. Co., 388 F.3d at 371 (quoting King v. Marriott Int'l, Inc., 337 F.3d 421, 425, No. 02-2139, slip op. at 5 (4th Cir. 2003)). Complete preemption differs from conflict preemption, which only creates a federal defense to a plaintiff's suit but does not provide removal jurisdiction. Sonoco Prods. Co., 388 F.3d at 371.

In the ERISA context, the only state law claims that can properly be removed to federal court are the ones that are completely preempted by ERISA's civil enforcement provision, § 502(a).^[1]Id. (citing Darcangelo, 292 F.3d at 187). As relevant here, “[h]ow a plaintiff denominates his claim does not determine whether it is within the scope of § 502(a).” Warren, Jr. v. Blue Cross and Blue Shield of S. Carolina, No. 97-1374, 1997 WL 701413, at *2 (4th Cir. Nov. 12, 1997) (citing Metro. Life, 481 U.S. at 64 (action completely preempted although complaint “purported to raise only state law causes of action”)).

Because federal courts are courts of limited jurisdiction, a defendant seeking to invoke federal jurisdiction through removal “carries the burden of alleging in his notice of removal and, if challenged, demonstrating the court's jurisdiction over the matter.” Strawn v. AT&T Mobility LLC, 530 F.3d 293, 296 (4th Cir. 2008). Initially, this burden parallels a plaintiff's pleading burden and is not heavy. See Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 200 (4th Cir. 2008). However, once a plaintiff challenges jurisdictional allegations, “[t]he party seeking removal bears the burden of demonstrating that removal jurisdiction is proper.” Id. (alteration in original) (quoting In re Blackwater Sec. Consulting, LLC, 460 F.3d 576, 583 (4th Cir. 2006)).

“When removal is challenged, the defendant must establish jurisdiction by a preponderance of the evidence.” S. v. Marion Cty. Coal Co., Civil Action No. 1:15CV171, 2015 WL 6964651, at *2 (N.D. W.Va. Nov. 10, 2015) (citing Strawn, 530 F.3d at 297-98).

In general, statutes providing for removal must be strictly construed “in light of the federalism concerns that animate the policy of strictly confining federal jurisdiction within the congressionally-set limits.” Ashworth v. Albers Med., Inc., 395 F.Supp.2d 395, 402 (S.D. W.Va. 2005) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941)). “If federal jurisdiction is doubtful, a remand is necessary.” Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994). At the same time, however, “[t]he very fact that Congress has provided defendants with the right of removal indicates that the removal right ‘is at least as important as the plaintiff's right to the forum of his choice,' and the statutory right to removal should not be ‘easily overcome by tactical maneuvering by plaintiffs.'” Linnin v. Michielsens, 372 F.Supp.2d 811, 816-17 (E.D. Va. 2005) (quoting McKinney v. Bd. of Trs. of Mayland Cmty. Coll., 955 F.2d 924, 927 (4th Cir. 1992)).

III. DISCUSSION

The Court begins by addressing Plaintiff's Motion to Remand, (ECF No. 9). Plaintiff argues that this Court should remand this case because Plaintiff's claim is not completely preempted by ERISA. (ECF No. 10.) Before determining whether the LTIR Plan is completely preempted, the Court first must determine whether the LTIR Plan is an ERISA-governed plan, i.e., whether ERISA even applies here.

A. The LTIR Plan is an ERISA-Governed Plan

The threshold question is whether the LTIR Plan is governed by ERISA. While Plaintiff does not explicitly argue that the LTIR Plan is not an ERISA-governed plan, and in fact, sometimes concedes that it is, (see ECF No. 12 at 2 (referring to Defendants' LTIR Plan as “Defendant's ERISA plan”)), Plaintiff does contest whether ERISA governs this case. (ECF Nos. 10; 17.)

ERISA governs disputes that arise under an “employee benefit plan if it is established or maintained . . . by any employer engaged in commerce or in any industry affecting interstate commerce.” 29 U.S.C. § 1003(a)(1). An “employee benefit plan” means either an “employee welfare benefit plan” or an “employee pension benefit plan,” or a plan which is a combination of both. § 1002(3). ERISA's definition of an “employee pension benefit plan” is intentionally broad, see Ingersoll-Rand Co....