Lawrence et al v. Nation et al (JOINT ASSIGN)(MAG2)

Filing 41

MEMORANDUM OPINION AND ORDER: it is ORDERED as follows: 1. Defendants' Objections (Doc. # 29 ) are OVERRULED. 2. The Recommendation (Doc. # 28 ) is ADOPTED. 3. Plaintiffs' Motion to Remand (Doc. # 15 ) is GRANTED. 4. All remaining motion s (Docs. # 18 , 20 , 2 1, 32 , and 36 ) are DENIED for lack of subject-matter jurisdiction. 5. This case is REMANDED, pursuant to 28 U.S.C. § 1447(c), to the Circuit Court of Montgomery County, Alabama. 6. The Clerk of the Court is DIRECTED to effectuate remand. Signed by Chief Judge William Keith Watkins on 6/14/2016. (kh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
NANCY LAWRENCE, et al.,
Plaintiffs,
v.
ERIC M. NATION, et al.,
Defendants.

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CASE NO. 2:16-CV-61-WKW
[WO]

MEMORANDUM OPINION AND ORDER
On April 13, 2016, the Magistrate Judge filed a Recommendation in this case.
(Doc. # 28.) Defendant Guardian Life Insurance Company of America (“Guardian”)
filed Objections (Doc. # 29), in which Defendant Eric M. Nation (“Nation”) joined
(Doc. # 30). Plaintiffs Nancy Lawrence (“Lawrence”) and Freddrick A. Hardy Sr.
(“Hardy”) filed a Response to Defendants’ Objections (Doc. # 33), and Defendants
filed a Reply (Doc. # 34). Plaintiffs then sought and were granted leave to file a
Surreply. (Docs. # 35, 39, and 40.) Upon careful consideration, Defendants’
Objections will be overruled, the Recommendation will be adopted, and Plaintiffs’
Motion to Remand (Doc. # 15) will be granted. All other pending motions must be
denied for lack of subject-matter jurisdiction.

I. STANDARDS OF REVIEW
Where a party makes objections to the recommendation of the magistrate
judge, the portions of the recommendation to which objections are made are
reviewed de novo. 28 U.S.C. § 636(b)(1).
Federal courts have a strict duty to exercise the jurisdiction conferred on them
by Congress. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). At the
same time, “[f]ederal courts are courts of limited jurisdiction.” Burns v. Windsor
Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994). In removal actions, federal courts
must strictly construe removal statutes, resolve all doubts in favor of remand, and
place the burden of establishing federal jurisdiction on the removing party. See
Miedema v. Maytag Corp., 450 F.3d 1322, 1328–30 (11th Cir. 2006).
II. BACKGROUND
This action arises from a dispute over insurance benefits. The relevant facts
and procedural history will first be discussed.
A.

Facts
Kingdom Now Movement (“Kingdom Now”) is a faith-based organization

incorporated under the laws of Alabama. Its mission is to foster a community of
pastors, leaders, and other individuals who will work together to promote the
movement’s religious philosophy. The Kingdom Now network includes a number
of affiliate churches.
2

Guardian issued a group life insurance plan to Kingdom Now. The group
plan, by its terms, only allowed Kingdom Now employees to purchase coverage.
According to Lawrence and Hardy, Guardian, acting through its agent Nation,
approached affiliate churches within the Kingdom Now network seeking to sell
insurance policies under the Kingdom Now group plan. Lawrence and Hardy allege
that Nation represented to church members that, because Kingdom Now is a faithbased organization, Guardian could offer life insurance policies under the group plan
to all church members, including those who were not traditional paid employees of
Kingdom Now. Lawrence and Hardy both applied for life insurance policies based
on these representations.
Lawrence purchased life insurance policies for her mother and father, neither
of whom was a paid employee of Kingdom now. Lawrence was listed as the
beneficiary under both plans. She alleges that she made timely premium payments
on both policies, and that the policies were in full force and effect during the time
periods relevant to this action. When Lawrence’s mother and father died, Lawrence
made claims for death benefits under each policy. Guardian denied these claims
because the insureds were not paid employees of Kingdom Now.
Hardy similarly purchased a life insurance policy for his grandfather, who was
not a paid Kingdom Now employee. Hardy was listed as a beneficiary under the
plan. He contends that he made timely premium payments on the policy, and that
3

the policy was in full force and effect during time periods relevant to this suit. When
Hardy’s grandfather died, Hardy made a claim for benefits under the plan. Guardian
denied the claim, reasoning that Hardy was not entitled to benefits under the plan
because the insured was not a paid employee of Kingdom Now. Guardian has not
paid Lawrence or Hardy any benefits under these policies.
B.

Procedural History
Plaintiffs filed this action in the Circuit Court of Montgomery County. Their

complaint (Doc. # 1-2) raises nine state-law causes of action:
misrepresentation;

(2)

fraudulent

suppression;

(3)

negligent

(1) fraudulent
or

wanton

misrepresentation and suppression; (4) negligent or wanton hiring or training; (5)
negligent or wanton procurement; (6) conversion; (7) breach of contract; (8) bad
faith; and (9) failure to investigate. They seek compensatory and punitive damages.
Guardian filed a notice of removal, in which Nation joined. They contend that
the insurance policies in question are governed by the Employee Retirement Income
Security Act (“ERISA”), 29 U.S.C. § 1001, et seq. According to Guardian and
Nation, the court has federal question subject-matter jurisdiction over Plaintiffs’
claims because ERISA completely preempts those claims. See 28 U.S.C. § 1331.
In response to the notice of removal, Plaintiffs filed a motion to remand. (Doc.
# 15.) Before responding to the motion to remand, Guardian filed a motion for
summary judgment. (Doc. # 18.) Plaintiffs filed a motion to strike the motion for
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summary judgment or, in the alternative, to hold the motion in abeyance until a
ruling could be made on the motion to remand. (Doc. # 20.) Plaintiffs also sought
an expedited ruling on the motion to strike. (Doc. # 21.) After the parties briefed
these related motions, the Magistrate Judge entered a Recommendation (Doc. # 28)
that Plaintiffs’ motion to remand be granted.
Guardian filed objections to the Recommendation, which included a motion
for jurisdictional discovery. (Doc. # 29.) Guardian then filed an amended motion
for jurisdictional discovery. (Doc. # 32.) The issues raised in the objections and
motions for jurisdictional discovery have been fully briefed. (See Docs. # 33, 34,
35, and 40.) Guardian requested oral argument (Doc. # 36), but this matter is
considered submitted on the briefing and will be decided without oral argument.
III. DISCUSSION
The Magistrate Judge found that this action is due to be remanded to the
Circuit Court of Montgomery County for two reasons. First, the Kingdom Now
insurance plan constitutes a “church plan” such that it is exempt from the ERISA
scheme. Second, Defendants failed to carry their burden of showing that Lawrence
and Hardy have ERISA standing. Defendants object to both of these findings,
arguing that Kingdom Now is not a church within the meaning of ERISA, and that
Plaintiffs are beneficiaries with ERISA standing.

5

The principles governing ERISA preemption generally will first be outlined.
Then the issue of whether Kingdom Now’s plan constitutes a church plan will be
considered. Finally, the issue of Plaintiffs’ ERISA standing will be addressed.
A.

ERISA Preemption Generally
Congress enacted ERISA with the overarching goals of expanding employee

benefit plans and protecting participants in those plans. 29 U.S.C. § 1001. By
implementing a comprehensive system of benefits plan regulation, ERISA ensures
that benefit plan administration will be uniform across the nation. See Aetna Health
Inc. v. Davila, 542 U.S. 200, 208 (2004). The uniformity of ERISA’s system is due
in large part to its preemption of most state laws relating to employee benefits plans.
See id. The statutory scheme allows for two forms of preemption: defensive and
complete.
Defensive preemption is a creature of ERISA’s express preemption provision.
29 U.S.C. § 1144. That portion of the statute provides preemption as an affirmative
defense to certain state-law claims.

Complete preemption arises from the

comprehensive nature of ERISA’s remedial scheme for claims of loss or denial of
benefits.

See 29 U.S.C. § 1132.

Because ERISA’s remedial provision

“comprehensively occupies” this field of law, any state-law claims that seek relief
available under that provision are necessarily federal in nature. Butero v. Royal
Maccabees Life Ins. Co., 174 F.3d 1207, 1211–12 (11th Cir. 1999).
6

Whether Plaintiffs’ state-law claims are subject to defensive or complete
preemption is central to whether the court has subject-matter jurisdiction over this
action. To invoke federal question jurisdiction, the complaint must raise a claim that
arises under federal law. 28 U.S.C. § 1331. That the defense to a claim is federal in
nature generally does not evidence a federal question. Franchise Tax Bd. v. Constr.
Laborers Vacation Tr., 463 U.S. 1, 11 (1983) (explicating the well-pleaded
complaint rule). Accordingly, under this rule, defensive ERISA preemption of a
plaintiff’s claims is insufficient to invoke federal jurisdiction under § 1331. Butero,
174 F.3d at 1212. Where a plaintiff’s claim falls within the remedial scheme
contemplated by 29 U.S.C. § 1132, however, such that it is subject to complete
ERISA preemption, it is entirely federal in nature and thus invokes federal question
jurisdiction. Id. at 1211–12.
Because federal question jurisdiction is the only basis under which this action
is properly removable, the motion to remand turns on whether ERISA completely
preempts Plaintiffs’ claims. Their claims are subject to complete preemption only
if they seek relief that is available under 29 U.S.C. § 1132(a). Butero, 174 F.3d at
1212. To show that Plaintiffs’ claims are completely preempted, and thus to
establish the propriety of removal, Defendants bear the burden of satisfying four
elements: (1) that there is a relevant ERISA plan; (2) that Plaintiffs have standing
to sue under ERISA; (3) that Guardian is an ERISA entity; and (4) that Plaintiffs’
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state law claims seek compensatory relief akin to the relief available under § 1132(a).
Id. The Magistrate Judge found that Defendants failed to carry their burden as to
two of these elements.
B.

Whether the Kingdom Now Plan is a Church Plan
The Magistrate Judge first found that Defendants failed to carry their burden

as to the first element of the complete preemption analysis. That is, because
Kingdom Now’s employee benefits plan qualifies as a “church plan” such that it is
exempt from ERISA’s regulatory scheme, there is no relevant ERISA plan at issue
in this action. See Butero, 174 F.3d at 1212.
Church plans are exempt from ERISA coverage unless the church elects to be
covered. 29 U.S.C. § 1003(b)(2). A plan qualifies for this exemption if it is
“established and maintained for its employees (or their beneficiaries) by a church or
by a convention or association of churches.” 29 U.S.C. § 1002(33)(C). In their
objections to Recommendation, Defendants raise three issues concerning whether
Kingdom Now’s plan is exempt as a church plan. First, Defendants contend that
Plaintiffs have not come forward with sufficient evidence to establish that Kingdom
Now is a church.

Second, they argue that the evidence they have produced

establishes that Kingdom Now is not a church. Third, they maintain that they are
entitled to jurisdictional discovery for the purpose of ascertaining whether Kingdom

8

Now in fact qualifies as a church for purposes of this ERISA exemption. These three
issues will be addressed in turn.
First, to the extent Defendants contend that Plaintiffs have failed to establish
that Kingdom Now is a church subject the church plan exemption, this argument
admits of a misunderstanding of the burden of persuasion on issues of removal.
Defendants, as the removing parties, bear the burden of establishing that this court
has subject-matter jurisdiction over the claims raised in the action. See Miedema,
450 F.3d at 1328. That Plaintiffs came forward with no evidence relating to
Kingdom Now’s status as a church is of no moment. This particular objection to the
Recommendation is without merit.
Second, Defendants argue that the evidence of record is sufficient to establish
that Kingdom Now is not a church, and thus Kingdom Now’s plan does not fall
within the church plan exemption. In support of this position, Defendants first point
to Kingdom Now’s Articles of Incorporation, which establish that Kingdom now is
a corporation organized under the laws of Alabama. (Doc. # 18-1.) Defendants
seem to suggest that, because Kingdom Now is a corporation, it cannot also be a
church. But Defendants cite no authority supporting the proposition that “church”
and “corporation” are mutually exclusive statuses, and it is doubtful that any such

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authority exists.1 Defendants also note that, in Kingdom Now’s application for a
plan of group insurance with Guardian, Kingdom Now listed “church” under nature
of business. (Doc. # 18-8.) According to Defendants, this fact supports the finding
that Kingdom Now is not a church. This argument defies logic.
Defendants also submitted new evidence, in conjunction with their objections,
to support their argument that Kingdom Now is not a church. An exhaustive review
of Defendants’ submissions and arguments reveals that none of this evidence is
availing. Defendants note that Hardy is listed as “Bishop” on Kingdom Now’s
application for a Guardian group insurance plan (Doc. # 18-2), but that Hardy
actually acts as Bishop of Faith Christian Church, which is part of the Kingdom Now
network. (See Doc. # 29-2.) Hardy is also listed in Kingdom Now’s Articles of
Incorporation as “President.” (Doc. # 18-1.) According to Defendants, the fact that
Hardy is listed as the president of Kingdom Now, but as Bishop of Faith Christian
Church, means that Kingdom Now cannot be a church. This argument beggars
belief. As Plaintiffs astutely note, a corporation organized under the laws of
Alabama must designate a president. See Ala. Code § 10A-3-2.21. That Hardy is
listed as the president of Kingdom Now is of no relevance to the organization’s status
as a church vel non.

1

Plaintiffs note in their briefing that many churches are registered as corporations under
the laws of Alabama.
10

Defendants additionally note that the address of record for Kingdom Now is
identical to the address of record for Faith Christian Church. (Docs. # 18-1 and 292.) This matters, by Defendants’ reasoning, because churches must have physical
locations where congregants can meet and worship. Because Kingdom Now has no
separate location in which its congregants can meet, according to Defendants, it
cannot be a church within the meaning of ERISA. Tellingly, Defendants cite no
authority, legal or otherwise, in support of this proposition. This evidence, which in
fact suggests direct affiliation with a house of worship, more logically supports the
finding that Kingdom Now is a church. Suffice it to say that Defendants’ argument
on this point is unpersuasive. The evidence of record is insufficient to establish that
Kingdom Now is not a church.
Third, Defendants seek jurisdictional discovery to determine conclusively
whether Kingdom Now is a church such that its plan is exempt from ERISA’s
requirements. It is true that Defendants face difficulty proving that Kingdom Now
is not a church without the benefit of conducting further discovery, though it must
be noted that the evidence currently available supports the finding that Kingdom
Now qualifies as a church. Where further factual development is necessary to
resolve issues of subject-matter jurisdiction, district courts may allow jurisdictional
discovery. See Eaton v. Dorchester Dev., Inc., 692 F.2d 727, 729 (11th Cir. 1982).
Even so, Defendants only request jurisdictional discovery to the extent it would aid
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them in establishing that Kingdom Now’s plan does not fall within the church plan
exemption. And as discussed in Part III.C, infra, this action is due to be remanded
on the separate ground that Plaintiffs lack standing to sue under ERISA. The issue
of Kingdom Now’s status as a church is ultimately unnecessary for the resolution of
this matter, and jurisdictional discovery will not be permitted.
Accordingly, as they relate to the Magistrate Judge’s finding that Kingdom
Now’s plan is exempt as a church plan, Defendants’ objections are due to be
overruled. Defendants’ evidence is insufficient to show that Kingdom Now is not a
church within the meaning of ERISA. Though jurisdictional discovery might
otherwise be appropriate under these circumstances, it will not be allowed here
because the motion to remand is due to be granted for an independent reason.
C.

Whether Plaintiffs Have ERISA Standing
The Magistrate Judge also found that Defendants failed to carry their burden

as to the second element of the complete ERISA preemption analysis. See Butero,
174 F.3d at 1212. Because the insureds were not employees of Kingdom Now, they
were not plan participants. And because the insureds were not plan participants,
Lawrence and Hardy are not beneficiaries within the meaning of ERISA’s standing
provision.
ERISA’s civil enforcement provision narrowly limits the categories of parties
with standing to sue under an ERISA plan. That portion of the statute provides that
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only a “participant” or a “beneficiary” may bring a civil enforcement action
thereunder. 29 U.S.C. § 1332(a); see also Engelhardt v. Paul Revere Life Ins. Co.,
139 F.3d 1346, 1351 (11th Cir. 1998) (“ERISA’s civil enforcement section permits
two categories of individuals to sue for benefits under an ERISA plan—plan
beneficiaries and plan participants.”).
The statute defines “participant” as “any employee or former employee of an
employer, or any member or former member of an employee organization, who is or
may become eligible to receive a benefit of any type from an employee benefit plan
which covers employees of such employer or members of such organization, or
whose beneficiaries may be eligible to receive any such benefit.” 29 U.S.C. §
1002(7). It further defines “beneficiary” as “a person designated by a participant, or
by the terms of an employee benefit plan, who is or may become entitled to a benefit
thereunder.” 29 U.S.C. § 1002(8).
In their objections, Defendants contend that the Magistrate Judge “conflated
ERISA standing with the Plaintiffs’ entitlement to benefits” under the relevant plans.
(Doc. # 29, at 6.)

This broad objection comprises two more focused issues.

Defendants first argue that Hardy and Lawrence have ERISA standing as plan
beneficiaries because they have at least colorable claims to benefits under the
Kingdom Now plan. Defendants also argue that, because Kingdom Now has some

13

employees, the insureds under the plans at issue in this action were participants under
ERISA.
The first issue raised in Defendants’ broad objection regarding standing is
whether Plaintiffs qualify as beneficiaries within the meaning of ERISA by virtue of
the fact that they have “colorable” claims that they are entitled to benefits under the
Kingdom Now plan. The gravamen of Defendants’ position is that, merely because
Plaintiffs brought this action claiming they are entitled benefits under the relevant
plans, they qualify as beneficiaries within the meaning of 29 U.S.C. § 1002. The
legal authority on which Defendants rely for this position is inapposite, and this
particular aspect of their objections is due to be overruled.
Defendants first reference Firestone Tire & Rubber Co. v. Bruch for the
proposition that anyone with a colorable claim to plan benefits has standing to sue
under ERISA. 489 U.S. 101, 117 (1989). The Firestone Court held no such thing.
In fact, it considered and rejected the theory that any claimant, by virtue of making
a claim for benefits under an ERISA plan, has ERISA standing. Id. Declining to
follow a lower court decision that endorsed such a theory, the Court in Firestone
held that only those plaintiffs meeting the statutory definitions of participant or
beneficiary have standing to sue under ERISA. Id. The Court went on to explain
that the term participant, as defined in § 1002(7), refers only to persons who are
current or former employees of the plan employer. Id.
14

The language Defendants quoted from Justice Scalia’s concurring opinion,
which references the concept of colorable claims, likewise does not support
Defendants’ position on this point. Justice Scalia wrote separately to note his
understanding of the statutory definition of participant as including “those whose
benefits have vested, and those who (by reason of current or former employment)
have some potential to receive the vesting of benefits in the future . . . .” Id. at 119
(Scalia, J., concurring). It simply does not follow from Justice Scalia’s reasoning
that anyone who claims to be entitled to payment has standing merely by virtue of
his making a claim related to an employee benefit plan. The proper standing analysis
turns, as the majority of the Firestone Court held, on whether the plaintiff meets the
statutory requirements as either a participant or a beneficiary.
The second case on which Defendants principally rely is Daughtry v.
Birdsong Peanuts.

168 F. Supp. 2d 1287 (M.D. Ala. 2001).

According to

Defendants, this case also supports the notion that anyone claiming benefits under
an employee benefits plan is a “beneficiary” within the meaning of § 1002(8). A
full reading of the background facts underlying the decision in Daughtry, however,
reveals that it does not support such a sweeping principle.
The plaintiffs in that case, in order to avoid ERISA coverage, claimed that
they should not be treated as beneficiaries of the relevant plan despite overwhelming
evidence indicating that they were in fact designated as beneficiaries. The Daughtry
15

court did note that a plaintiff who has a colorable claim to benefits cannot avoid the
exercise of federal jurisdiction by claiming that he is not a beneficiary of the relevant
plan. Id. at 1293. In that case, however, it was clear that the plaintiffs were the
intended beneficiaries of plans for which the insured qualified as a participant under
ERISA.
In the case at bar, it is far from clear that the insureds under the relevant plans
in fact qualify as plan participants. In fact, Defendants have taken the position that
the insureds under the Lawrence and Hardy policies were not Kingdom Now
employees, foreclosing the possibility that the insureds were plan participants within
the meaning of § 1002(7). As will be addressed in more detail below, where the
insureds do not qualify as plan participants under § 1002(7), the named beneficiaries
do not qualify as statutory beneficiaries within the meaning of § 1002(8). Though
the bare language of Daughtry ostensibly supports Defendants’ position regarding
Plaintiffs’ standing, a proper reading of the case reveals that it is inapposite.
Defendants also cite Glass v. United of Omaha Life Ins. Co., but that case is
unpersuasive. See 33 F.3d 1341 (11th Cir. 1994). According to Defendants, the
plaintiff in Glass “argued against ERISA preemption, asserting that he was not a
beneficiary under ERISA because the deceased ‘was not working 30 hours per week
at any time after the plan became effective and thus was not eligible for the plan.’”
(Doc. # 29, at 8 (quoting Glass, 33 F.3d at 1345).) Defendants severed this quotation
16

from its proper context and, in doing so, have wholly mischaracterized the holding
of the case. The number of hours the deceased was working per week was not the
focus of the preemption analysis at all. Instead, that fact was relevant to the court’s
holding that the insurer did not wrongfully deny plan eligibility.2 Nothing in the
Glass opinion suggests that the plaintiff at any time argued that she was not a
beneficiary within the meaning of § 1002(8). Examined in its proper context, Glass
lends no support to Plaintiffs’ objections.
After stripping away the unpersuasive legal authority on which Defendants
rely, all that remains for examination is the clear import of the statutory text
regarding ERISA standing. Only participants and beneficiaries have standing to sue
under ERISA. 29 U.S.C. § 1332(a). Despite Defendants’ objections to the contrary,
Plaintiffs are not considered “beneficiaries” under ERISA merely by virtue of the
fact that they have colorable claims to benefits. Under § 1002(7), as expounded by
the Supreme Court in Firestone, a party only qualifies as a plan participant if he is,
or at some point was, in an employer-employee relationship with the plan employer.
See 29 U.S.C. § 1002(7); Firestone, 489 U.S. at 117. And to qualify as a beneficiary

2

The actual quotation from that case reads as follows: “Several of appellant’s claims
warrant little discussion. First, it is clear that Hostetter was not working 30 hours per week at any
time after the plan became effective and thus was not eligible for the plan. Thus, there was no
wrongful denial of eligibility under ERISA.” Glass, 33 F.3d at 1345.
17

under § 1002(8), a party must have been designated as a beneficiary under the plan
by a qualified plan participant. 29 U.S.C. § 1002(8).
As the Magistrate Judge found, a party’s status as beneficiary depends on the
insured’s status as participant.3 If, as was the case with the Lawrence and Hardy
plans, the insureds were not paid employees of the plan employer, the named
beneficiaries do not have standing to sue under ERISA. Defendants denied benefits
to Lawrence and Hardy, at least in part, because the insured decedents were not paid
employees of Kingdom Now. (Doc. # 18-5, at 33; Doc. # 18-7, at 44.) They seek
removal by operation of ERISA preemption, but the fact that the insureds were not
paid employees forecloses this possibility. In this sense, Defendants are hoisted on
their own petard4 back to state court.
The second issue Defendants raise with respect to ERISA standing deals with
Kingdom Now’s status generally as an employer. Apparently recognizing that
Plaintiffs cannot be considered beneficiaries if the insureds were not participants

3

Hardy is listed as the president of Kingdom Now, which leaves open the possibility that
he is a participant under the Kingdom Now plan. Defendants offer no argument suggesting that
Hardy is a participant by virtue of his status as a paid employee, nor do they point to any evidence
in the record indicating that Hardy is a plan participant with standing to sue with respect to his
grandfather’s plan. In the absence of any relevant argument or evidence, this tenuous possibility
cannot form the basis of federal subject-matter jurisdiction. See Burns v. Windsor Ins. Co., 31
F.3d 1092, 1095 (11th Cir. 1994) (holding that jurisdictional doubts must be resolved in favor of
remand).
4

See WILLIAM SHAKESPEARE, HAMLET, PRINCE OF DENMARK act 3, sc. 4 (“Let it work; For
‘tis the sport to have the engineer Hoist with his own petard . . . .”).
18

under § 1002, Defendants argue in their reply brief that Kingdom Now has some
plan participants because it has some employees. It is unremarkable that Kingdom
Now has some employees—ERISA standing depends on something different. The
relevant inquiry, under §§ 1002 and 1132, is whether the insureds were employees.
This is essential to the finding that the insureds are plan participants, and by
extension that Plaintiffs are plan beneficiaries.
Defendants’ evidence is insufficient to show that the decedent insureds were
in an employer-employee relationship with Kingdom Now. In the Kingdom Now
application for group coverage, in response to the question whether any employees
were “currently not actively at work,” Hardy, as representative for Kingdom Now,
responded “no.” (Doc. # 18-8, at 2.) The only import of this evidence is that, with
respect to Kingdom Now generally, Hardy represented that all persons employed by
Kingdom Now were actively at work. This application response in no way indicates
that Lawrence’s parents or Hardy’s grandfather were ever employed by Kingdom
Now. And evidence in the record shows that Defendants took the position, in
denying benefits to Plaintiffs, that the decedent insureds were not paid employees of
Kingdom Now. (Doc. # 18-5, at 33; Doc. # 18-7, at 44.)
Upon careful consideration, Defendants’ objections regarding ERISA
standing are due to be overruled.

The Magistrate Judge correctly found that

Plaintiffs do not qualify as plan beneficiaries within the meaning of § 1002(8).
19

Because Plaintiffs do not have ERISA standing, this action is not completely
preempted under ERISA’s civil enforcement provision. See Butero, 174 F.3d at
1212. Defendants failed to carry their burden of establishing the court’s subjectmatter jurisdiction, and Plaintiffs’ motion to remand is due to be granted.
IV. CONCLUSION
Accordingly, it is ORDERED as follows:
1.

Defendants’ Objections (Doc. # 29) are OVERRULED.

2.

The Recommendation (Doc. # 28) is ADOPTED.

3.

Plaintiffs’ Motion to Remand (Doc. # 15) is GRANTED.

4.

All remaining motions (Docs. # 18, 20, 21, 32, and 36) are DENIED

for lack of subject-matter jurisdiction.
5.

This case is REMANDED, pursuant to 28 U.S.C. § 1447(c), to the

Circuit Court of Montgomery County, Alabama.
6.

The Clerk of the Court is DIRECTED to effectuate remand.

DONE this 14th day of June, 2016.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE

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