Woods v. Radiation Therapy Services, Inc.

Filing 31

OPINION AND ORDER denying 14 Plaintiff's Motion to Remand to State Court. Within fourteen days of the date of this Order, plaintiff shall file an amended complaint repleading those state law claims which could have been brought under ERISA Section 502(a), 29 U.S.C. 1132(a), as ERISA claims. Signed by Judge John E. Steele on 2/24/2017. (KP)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION

ANDREW L. WOODS,
Plaintiff,
v.

Case No: 2:16-cv-897-FtM-29MRM

RADIATION THERAPY SERVICES,
INC., a Florida Corporation,
Defendant.
OPINION AND ORDER
This matter comes before the Court on plaintiff's Motion to
Remand (Doc. #14) filed on January 18, 2017.

Defendant filed a

Memorandum in Opposition (Doc. #24) on February 1, 2017.
Court heard oral argument on February 6, 2017.

The

For the reasons

set forth below, the Motion to Remand is denied.
I.
On November 18, 2016, Plaintiff Andrew L. Woods (plaintiff or
Woods) filed a three-count Complaint (Doc. #2) against defendant
Radiation

Therapy

Services,

Inc.

d/b/a

21st

Century

Oncology

(defendant or 21st Century) in the Circuit Court of the Twentieth
Judicial Circuit in and for Lee County, Florida.

Count I alleges

numerous breaches of an employment agreement; Count II seeks a
declaratory

judgment

stating

that

plaintiff

is

excused

from

signing a release otherwise required under the agreement to collect
certain termination benefits; and Count III seeks a declaratory

judgment stating that plaintiff has not engaged in any “prohibited
activities” under the agreement.
There is no basis for federal jurisdiction explicitly pled on
the face of the Complaint.

Notwithstanding, on December 19, 2016,

defendant filed a Notice of Removal (Doc. #1) asserting that
federal subject matter jurisdiction exists because portions of
plaintiff’s

claims

are

completely

preempted

by

the

Employee

Retirement Income Security Act (ERISA) and thus “arise under”
federal law.
Plaintiff moves to remand his lawsuit to state court on the
ground that the Notice of Removal mischaracterizes his claims,
none of which are preempted by ERISA, and there thus exists no
basis for federal jurisdiction. Specifically, plaintiff contends
that he does not request an award of benefits due under an ERISAgoverned plan but rather seeks payments due under, and declarations
as

to

certain

obligations

employment contract.

imposed

by,

a

separate,

non-ERISA

(Doc. #14, pp. 3-4.)

Not surprisingly, defendant opposes remand.

Defendant argues

primarily that “the Employment Agreement is an ERISA plan” itself
(Doc. #24, p. 10), and that the relief plaintiff seeks is “akin to
that available” under ERISA.

(Id. p. 3.)

argues, in federal question jurisdiction.

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This results, Defendant
(Id.)

II.
Under the federal removal statute, “any civil action brought
in a State court of which the district courts of the United States
have original jurisdiction, may be removed by the defendant” to
federal

court.

28

U.S.C.

§

1441(a).

District

courts

have

original jurisdiction over claims “arising under the Constitution,
laws, or treaties of the United States.”
the

longstanding

well-pleaded

complaint

28 U.S.C. § 1331.
rule,

a

suit

Under
“arises

under” federal law “only when the plaintiff's statement of his own
cause of action shows that it is based upon [federal law].”

Vaden

v. Discover Bank, 556 U.S. 49, 60 (2009) (citation omitted).

As

such, “a complaint alleging only state law claims is not removable
to federal court based on federal subject matter jurisdiction.”
Gables Ins. Recovery, Inc. v. Blue Cross & Blue Shield of Fla.,
Inc., 813 F.3d 1333, 1337 (11th Cir. 2015).
There is, however, a narrow “qualification to the wellpleaded complaint rule . . . known as ‘complete preemption’ or
‘super preemption.’”

Kemp v. Int'l Bus. Machs. Corp., 109 F.3d

708, 712 (11th Cir. 1997).

Complete preemption exists where “the

law governing the complaint is exclusively federal,” Vaden, 556
U.S. at 61 (citation omitted), and “the preemptive force of a
federal statute is so extraordinary that it converts an ordinary
state law claim into a statutory federal claim.”

Conn. State

Dental Ass’n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1343

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(11th Cir. 2009) (citing Caterpillar, 482 U.S. at 393)).

Where

the doctrine applies, the defendant may remove the case to federal
court.

Kemp, 109 F.3d at 712.

“State law claims can be subject to the doctrine of complete
preemption under ERISA.”

Gables, 813 F.3d at 1383.

Complete

preemption exists under ERISA where the plaintiff asserts a state
law claim seeking relief otherwise available under ERISA’s civil
enforcement provision, 29 U.S.C. § 1132(a).
Ass’n, 591 F.3d at 1344.

Conn. State Dental

This provision – generally referred to

as Section 502(a) - creates a private right of action for a plan
participant or beneficiary “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.”

29 U.S.C. § 1132(a)(1)(B).

Where it is

determined that the plaintiff’s state law claims effectively seek
Section 502(a) relief, those claims “are recharacterized as ERISA
claims

and

purposes.

therefore

‘arise

under’

federal

law”

for

removal

Kemp, 109 F.3d at 712 (citations omitted).

Whether

complete

preemption

exists

under

ERISA

in

a

particular case is governed by the test described in Aetna Health
Inc. v. Davila, 542 U.S. 200 (2004), and adopted by the Eleventh
Circuit in Connecticut State Dental Association, 591 F.3d at 1345.
Ehlen Floor Covering, Inc. v. Lamb, 660 F.3d 1283, 1287 (11th Cir.
2011).

“The Davila test asks (1) whether the plaintiffs could

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have ever brought their claim under ERISA § 502(a) and (2) whether
no other legal duty supports the plaintiffs’ claim.”

Id.

Whether

a plaintiff could have brought his claim under Section 502(a)
itself “entails two inquiries: first, whether the plaintiff[’s]
claims fall within the scope of ERISA § 502(a), and second, whether
ERISA grants the plaintiff[] standing to bring suit.”
Conn. State Dental Ass’n, 591 F.3d at 1350).

Id. (citing

If a state law claim

satisfies the Davila test, the district court must recharacterize
the appropriate portion of the claim as an ERISA cause of action
and retain jurisdiction; if the claim does not satisfy Davila, no
federal question jurisdiction exists, and the case is remanded to
state court.

Stern v. Int'l Bus. Machs. Corp., 326 F.3d 1367,

1371 (11th Cir. 2003).
Because Woods’s claims are paramount in determining whether
complete preemption exists, the Court begins its jurisdictional
analysis by discussing the claims pled in his complaint, and then
turns to whether one or more of those claims satisfy Davila.
III.
A.

Plaintiff’s Claims
According to the Complaint, plaintiff is a former employee of

21st Century whose employment was terminated without cause on
September 23, 2016, as part of a corporate restructuring.
#2, ¶¶ 2, 60.)

(Doc.

The basis for plaintiff’s lawsuit is 21st Century’s

subsequent refusal to pay him certain post-termination sums he

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contends are due under the terms of the parties’ May 13, 2013
Amended and Restated Executive Employment Agreement (Employment
Agreement or Agreement) (Doc. #1-1), namely: (1) his $2 million
severance; (2) COBRA benefits applicable to him and his dependents,
and (3) earned but deferred incentive bonuses totaling $9 million.
(Doc. #2, ¶¶ 2, 5.)
In relevant part, the Employment Agreement provides for the
Employment of Woods by 21st Century during a Term of Agreement;
sets the Executive Compensation, which includes an Annual Base
Salary

and

certain

Performance

Incentives

and

Other

Bonuses;

provides for Additional Compensation and Benefits, which includes
Woods’

Participation

in

Benefit

Plans,

Vacation,

Business

Expenses, Equity, and Expenses of this Agreement; provides for
Payments upon Termination, which covers Involuntary Termination,
Termination for Cause, and Voluntary Termination by Woods, and
addresses Severance Payments, Disability, and a Release required
to obtain benefits other than Accrued Compensation; provides for
Protection

of

Confidential

Information;

Prohibition of Certain Activities. 1

and

describes

the

(Doc. #1-1, §§ 1-9.)

Under the Agreement’s Employment provision, Woods agreed to
serve as the Company’s Executive Vice President for Governmental
Affairs and Senior Vice President for Business Development.

1

(Id.

Certain words have been capitalized to reflect that they are
defined terms or section headings in the Employment Agreement.

- 6 -

§ 1.)

The Initial Term of his employment was five years, beginning

on May 1, 2013. (Id. § 2.)

At the end of the five-year term, the

Employment Agreement would automatically extend for successive
two-year terms, subject to termination upon 120 days’ written
notice by either party.

(Id.)

Notwithstanding these provisions,

21st Century was entitled to immediately terminate the Employment
Agreement at any time before the end of the Initial Term or any
Renewal Term, but was required to make the payments discussed in
the Payments upon Termination provision. (Id.)

Upon receipt of

such Payments, plaintiff was contractually bound to abstain from
certain Prohibited Activities for two years.

(Id. § 9.)

As part of the Executive Compensation, plaintiff received an
annual base salary of not less than $1 million, payable in normal
payroll installments.

(Id. § 3(a).)

to the following incentive bonuses:

Plaintiff was also entitled
(1)

a $5 million incentive

bonus “for achievement during the Term of a freeze on reductions
in

Medicare

reimbursement

to

freestanding

radiation

therapy

centers except for those reductions negotiated on behalf of” 21st
Century; (2) a $2.5 million incentive bonus for “achievement during
the Term of adoption of a new, multi-bundled payment system for
freestanding radiation therapy centers, to which 21st Century
elects not to participate”; and (3) a $2.5 million incentive bonus
“upon [21st Century’s]

initial election to participate in any way

in the [new, multi-bundled payment system].”

- 7 -

(Id. § 3(b).)

Plaintiff was also entitled to five additional items of
Additional

Compensation

and

Benefits.

First,

plaintiff

was

eligible to participate in employee benefit plans and programs
maintained by 21st Century, including “life, medical, dental,
accidental and disability insurance and profit sharing, pension,
retirement, savings, stock option, incentive stock and deferred
compensation

plans.”

(Id.

§

4(a).)

entitled to at least six weeks’ vacation.

Second,

plaintiff

(Id. § 4(b).)

was

Third,

plaintiff was to be reimbursed for all reasonable expenses he
incurred in promoting 21st Century’s business.

(Id. § 4(c).)

Fourth, plaintiff was to be granted certain equity interests in
the Company, as provided for in a separate Letter Agreement.
§ 4(d).)

(Id.

Finally, plaintiff was entitled to reimbursement for up

to $15,000 of the reasonable attorneys’ fees incurred in connection
with his negotiation of the Employment Agreement.
The

Employment

Agreement

also

contains

a

(Id. § 4(e).)
Payments

Termination provision addressing multiple scenarios.

upon

In case of

any Involuntary Termination by 21st Century during the Term,
plaintiff was entitled to receive Accrued Compensation consisting
of his Base Salary, unreimbursed expenses, and any non-forfeitable
benefits already earned and payable to him under the terms of any
deferred

compensation,

incentive,

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or

other

benefits

plan

maintained

by

21st

Century. 2

(Id.

§5(a).)

In

case

of

a

Termination for Cause by 21st Century, plaintiff was entitled to
receive the Accrued Compensation only. 3

(Id. § 5(d).)

However,

if plaintiff’s employment was terminated by 21st Century without
Cause, then plaintiff was also entitled to receive any deferred
payments of performance incentive bonuses pursuant to Section
3(b), twenty-four monthly severance payments equal to 1/24 of his
Base Pay, and up to twelve months of COBRA premium payments. 4
§ 5(b).)

(Id.

In order to receive severance payments and benefits

other than Accrued Compensation however, plaintiff had to first
execute a Release of claims in favor of 21st Century within sixty
days of termination or otherwise waive the right to receive those
payments and benefits.
Plaintiff’s

first

(Id. § 5(f).)
cause

of

action,

breach

of

contract,

alleges that 21st Century has breached the Employment Agreement by
failing to pay him: 1) $2 million in severance payments, now due
in a lump sum; 2) twelve months of COBRA premiums, now due in a

2

The Employment Agreement also addresses Voluntary Termination by
the Executive (Doc. #1-1, § 5(e)), but that provision is not
relevant to whether complete preemption exists here.
3

The Employment Agreement defines “Cause” (id. § 5(d)), but the
definition is also immaterial to the issue now before the Court.
4

“[T]he Consolidated Omnibus Budget Reconciliation Act of 1985
(COBRA) authorizes a qualified beneficiary of an employer's group
health plan to obtain continued coverage under the plan when he
might otherwise lose that benefit for certain reasons, such as the
termination of employment.” Geissal v. Moore Med. Corp., 524 U.S.
74, 76 (1998).

- 9 -

lump sum; 3) the $4 million balance of a deferred incentive bonus
for achievement of a freeze on reductions in Medicare reimbursement
to freestanding radiation therapy centers; (4) the $2.5 million
balance of another deferred incentive bonus for achievement of the
adoption of a new, multi-bundled payment system for freestanding
radiation therapy centers; and (5) the $2.5 million balance of a
third deferred incentive bonus earned for 21st Century’s election
to

participate

in

the

new,

multi-bundled

freestanding radiation therapy centers.

payment

system

for

(Doc. #2, ¶¶ 77, 80, 81.)

Plaintiff also asserts that 21st Century breached the agreement by
failing to grant him the certain equity interests.

(Id. ¶ 82.)

The Complaint’s two other causes of action seek declarations that,
in light of those breaches: i) plaintiff is excused from signing
the Release until he receives his severance benefits and the twelve
months of COBRA premium payments, and ii) the two-year period for
the Prohibited Activities provision remains tolled until 21st
Century makes the payments.
B.

Davila Step One: Could Plaintiff Have Brought His State Law
Claims under ERISA Section 502(a)?
As previously discussed, in order to show that a state law

claim is completely preempted under ERISA and therefore removable
to federal court, the defendant must first establish that the
plaintiff, “at some point in time, could have brought his claim
under ERISA § 502(a)(1)(B).”

Davila, 542 U.S. at 210.

This is a

two-pronged inquiry turning on both the nature of the claims and

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the plaintiff’s standing to pursue an ERISA action.

Ehlen, 660

F.3d at 1287.
1)

ERISA

First Step-One Inquiry: Is this a Suit for “Benefits”
Due Under an ERISA “Plan”
Section

502(a)(1)(B)

empowers

a

“participant

or

beneficiary” to bring a civil action “to recover benefits due 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.”

29 U.S.C. 1132(A)(1)(B).

As the statutory

language indicates, a relevant ERISA “plan” must exist before
ERISA’s civil remedies are implicated.

Butero v. Royal Maccabees

Life Ins. Co., 174 F.3d 1207, 1212 (11th Cir. 1999); see also Whitt
v. Sherman Int'l Corp., 147 F.3d 1325, 1330 (11th Cir. 1998).
Second, “the complaint must seek compensatory relief akin to that
available under [Section 502(a)],” that is, to recover benefits
due or enforce or clarify rights arising under the ERISA plan.
Butero, 174 F.3d at 1212 (citations omitted).
The parties dispute whether an applicable ERISA “plan” exists
under which plaintiff seeks to recover benefits due.

The statute

defines “plan” as “an employee welfare benefit plan or an employee
pension benefit plan or a plan which is both an employee welfare
benefit plan and an employee pension benefit plan.”

29 U.S.C. §

1002(3); see also Kemp, 109 F.3d at 712 (“The term ‘plan’ as used
in ERISA means an ‘employee welfare benefit plan’ (or an employee

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pension benefit plan[)] . . . .”).

“Employee welfare benefit

plan” specifically encompasses:
any
plan,
fund,
or
program
which
was
heretofore or is hereafter established or
maintained by an employer or by an employee
organization, or by both, to the extent that
such plan, fund, or program was established or
is maintained for the purpose of providing for
its participants or their beneficiaries,
through
the
purchase
of
insurance
or
otherwise, (A) medical, surgical, or hospital
care or benefits, or benefits in the event of
sickness, accident, disability, death or
unemployment,
or
vacation
benefits,
apprenticeship or other training programs, or
day care centers, scholarship funds, or
prepaid legal services or (B) any benefit
described in section 186(c) of this title
(other than pensions on retirement or death,
and insurance to provide such pensions).
29 U.S.C. §1002(1). 5
Defendant’s

Notice

of

Removal

bases

removal

largely

on

plaintiff’s group health benefit plan (Group Health Plan) (Doc.
#1-3), under which Woods received health coverage while employed
by 21st Century.

(Doc. #1, ¶ 6.)

The Notice also asserts that

“Plaintiff’s claim for Severance benefits is also squarely within
ERISA and is removable.”

(Id. ¶ 11.)

In moving to remand, plaintiff has not disputed that the Group
Health Plan is an ERISA plan but argues that he is not seeking any
benefits under that plan.

(Doc. #14, p. 7.)

5

Plaintiff argues

21st Century does not contend that the Employment Agreement
constitutes an “employee pension benefit plan” under 29 U.S.C. §
1002(2)(A).

- 12 -

further that claims for severance benefits are not removable
because “ERISA does not preempt employee benefits, but employee
benefit plans.”

(Id. p. 9.)

In response, defendant contends that the “Complaint seeks
severance benefits and COBRA premiums that arise under both the
group health plan and the Employment Agreement” and asserts that
removal was proper because “[b]oth plans are ERISA Plans.”
#24, p. 12.)

(Doc.

At oral argument, the parties focused on whether the

Employment Agreement is an ERISA plan.

Accordingly, and because

it is dispositive on the jurisdictional issue, the Court discusses
complete preemption only as to the Employment Agreement, not the
Group Health Plan. 6
“ERISA coverage within a multibenefit plan does not reach
beyond the benefits described in § 1002(1).

That means non-ERISA

benefits do not fall within ERISA's reach merely because they are
included in a multibenefit plan along with ERISA benefits.”
109 F.3d at 713.

Kemp,

However, individual benefits contained in a

multibenefit document can themselves constitute a “plan” under
ERISA.
(treating

Williams
certain

v.

Wright,

retirement

927

F.2d

benefits

1540

(11th

contained

in

Cir.
a

1991)
letter

formalizing those benefits as ERISA “plans”); see also Kemp, 109

6

In any case, the Complaint does not appear to seek benefits due
under the Group Health Plan.
At most, certain of plaintiff’s
claims may be “related” to that plan, which would support only a
theory of non-jurisdictional “defensive preemption.”
See Conn.
State Dental Ass'n, 591 F.3d at 1344.

- 13 -

F.3d

at

713-14

(analyzing

whether

certain

ERISA

benefits

constituted a “plan within a plan”); cf. Massachusetts v. Morash,
490 U.S. 107, 116 (1989) (“[P]lans to pay employees severance
benefits, which are payable only upon termination of employment,
are employee welfare benefit plans within the meaning of the Act.”
(citations omitted)).

The question here is thus whether the $2

million severance and the COBRA premium payments set forth in the
Employment Agreement and described in Paragraphs 77a, 77b, and 81
of the Complaint constitute “employee welfare benefit plans” under
ERISA Section 1002(1). 7
The case of Donovan v. Dillingham, 688 F.2d 1367 (11th Cir.
1982) (en banc), “provides a useful framework for examining, in
light of all circumstances, whether an ERISA plan exists when that
question is in doubt.”

Stern, 326 F.3d at 1373.

Under Donovan,

five requirements must be established before a benefit arrangement
will be said to constitute an employee welfare benefit plan under
ERISA:

“(1)

a

‘plan,

fund,

maintained (3) by an employer

or

program’

(2)

established

or

. . . (4) for the purpose of

providing medical, surgical, hospital care, sickness, accident,
disability, death, unemployment or vacation benefits . . . or
severance benefits (5) to participants or their beneficiaries.”
688 F.2d at 1371.

This is a “flexible analysis consistent with

7

Defendant does not contend that plaintiff’s other breach of
contract theories seek benefits due under an ERISA plan.

- 14 -

the legislative approach to ERISA” that coverage “be construed
liberally to provide the maximum degree of protection to working
men and women.”

Williams, 927 F.2d at 1543 (quoting S.Rep. No.

93–127 (1973), reprinted in, 1974 U.S.C.C.A.N. 4838, 4854); see
also Whitt, 147 F.3d at 1330.

Even if all five criteria are

satisfied in theory, ERISA will only apply if the plan actually
provides benefits to at least one non-owner employee.

29 C.F.R.

§ 2510.3-3(b); Slamen v. Paul Revere Life Ins. Co., 166 F.3d 1102,
1104

(11th

Cir.

1999).

The

Court

now

considers

whether

application of Donovan’s flexible framework supports the existence
of an ERISA plan on which 21st Century properly based removal.
a)

“A Plan, Fund, or Program”

“[A] ‘plan, fund, or program’ under ERISA is established if
from

the

surrounding

circumstances

a

reasonable

person

can

ascertain the intended benefits, a class of beneficiaries, the
source

of

financing,

and

procedures

for

receiving

benefits.”

Stern, 326 F.3d at 1373 (quoting Donovan, 688 F.2d at 1373).

“[N]o

single act in itself necessarily constitutes the establishment of
the plan, fund, or program.”

Donovan, 688 F.2d at 1373.

“Rather,

‘it is the reality of a plan and not the decision to extend certain
benefits that is determinative.’”

Moorman v. UnumProvident Corp.,

464 F.3d 1260, 1265 (11th Cir. 2006) (quoting Donovan, 688 F.2d at
1373).

The employer need not “play any role in administering the

[benefits in order for there to be] an ERISA employee welfare

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benefit plan,” Randol v. Mid-W. Nat. Life Ins. Co. of Tenn, 987
F.2d 1547, 1550 n.5 (11th Cir. 1993) (citing Donovan, 688 F.2d at
1374), and the existence of a plan, fund, or program does not does
not turn on whether the plan provider intended the provisions at
issue be subject to ERISA; the question is instead whether the
provider intended to establish or maintain a plan to provide
benefits to an employee as part of the employment relationship.
Anderson v. UNUM Provident Corp., 369 F.3d 1257, 1263–64 (11th
Cir. 2004); Donovan, 688 F.2d at 1372–74.
Consequently,
characterizes

its

although

“[t]he

plan

be

may

one

way

in

factor,

which
among

an

employer

others,

in

determining ERISA coverage,” neither the employer’s treatment of
the plan nor the “mere labeling of the plan . . . determine[s]
whether ERISA applies.”

Stern, 326 F.3d at 1374; see also McMahon,

162 F.3d at 38; Whitt, 147 F.3d at 1331.

Thus, so long as 21st

Century created “a system of providing benefits pursuant to a
written instrument,” then there exists an applicable “plan, fund
or program,” even though the Employment Agreement is not labeled
as an ERISA plan, and regardless of whether 21st Century intended
for ERISA to apply when it contracted to provide certain posttermination benefits to Woods.

Donovan, 688 F.2d at 1372; see

also Stern, F.3d at 1374.
The Court concludes that the $2 million severance and the
COBRA premium payments provided for in the Employment Agreement

- 16 -

and described in Paragraphs 77a, 77b, and 81 of the Complaint
satisfy Donovan’s definition of a “system of providing benefits
pursuant to a written instrument” and thus constitute a “plan,
fund or program.”

First, a reasonable person can deduce that the

intended benefits are twenty-four monthly severance payments and
up to twelve monthly COBRA premium payments.

Second, a reasonable

person can ascertain that the “class of beneficiaries” consists of
Woods,

the

sole

Employment

Agreement

participant. 8

Third,

a

reasonable person can ascertain that the source of the financing
is 21st Century’s general corporate assets, since it is “the
Company” which agrees to pay the benefit amounts. 9
5(b).)

Fourth,

a

reasonable

person

can

(Doc. #1-1, §

ascertain

the

clear

procedures for receiving the benefits, which are set forth in
Section 5(f) of the Employment Agreement. 10
Plaintiff argues that the Supreme Court’s decision in Fort
Halifax Packing Co., Inc. v. Coyne precludes a finding that these
benefits constitute an ERISA plan, since, in plaintiff’s view,
neither payment is part of an “ongoing administrative program.”

8

Under ERISA, only a single identifiable employee is required for
a “class of beneficiaries” to exist. Williams, 927 F.2d at 1545;
see also Slamen, 166 F.3d at 1104.
9

Financing through the general assets of a company “does not
affect the threshold question of ERISA coverage.” Williams, 927
F.2d at 1544.
10

Indeed, plaintiff seemingly attempted to follow these procedures
upon termination. (Doc. #2, ¶ 88; pp. 57-59.)

- 17 -

(Doc. #14, pp. 9-12.)

In that case, the state of Maine sued to

enforce a state statute requiring an employer to provide a onetime severance payment to certain employees after the employer
closed its plant.

Fort Halifax, 482 U.S. at 4-5.

Seeking to

avoid that obligation, the defendant-employer argued, inter alia,
that because severance is a benefits covered in the ERISA statute,
Maine’s law was preempted and thus unenforceable. 11
Supreme Court disagreed.

Id. at 6.

The

Although the Court acknowledged that

severance is an ERISA benefit, it concluded that “[t]he theoretical
possibility

of

a

one-time

obligation

in

the

future”

–

the

arrangement imposed under the Maine statute – “simply creates no
need for an ongoing administrative program for processing claims
and paying benefits” and thus does not “constitute[] the operation
of a benefit plan” under ERISA.
Where,
continuing

in

contrast,

obligation

Id. at 12.

payment

of

necessitating

a

benefit

ongoing,

procedures,” Fort Halifax does not apply.

“involve[s]
though

a

simple,

Williams, 927 F.2d at

1544 (ERISA plan existed where benefits were paid monthly and
employer retrained ability to revise benefits).
here.

Such is the case

The benefit distribution schemes set forth in the parties’

Employment Agreement create ongoing obligations similar to that in
Williams and distinct from the one-time payment at issue in Fort

11

Fort Halifax involved defensive preemption under 29 U.S.C. §
1144(a), not complete preemption. 482 U.S. at 8.

- 18 -

Halifax. 12

Specifically, Section 5(b) provides for i) distribution

of severance benefits in 24 monthly payments, each equal to 1/24
of Woods’s annual Base Salary, and ii) payment by 21st Century on
a monthly basis of “the same monthly premium costs for COBRA
continuation coverage as it pays of the monthly premium costs for
medical

coverage

for

senior

executives

and

their

dependents

generally,” during the period Woods actually continued his COBRA
coverage, but not to exceed twelve months.

(Doc. #1-1, § 5(b).)

Each severance payment is conditioned upon plaintiff’s continued
compliance with his obligations under Sections 8 (Protection of
Confidential

Information)

and

9

(Prohibition

Activities) of the Employment Agreement.

of

Certain

21st Century also has

the right to “unilaterally eliminate or amend [the COBRA premium
payments] in its sole discretion,” if it believes the payments
violate the Public Health Service Act. (Id.)
In

light

of

these

continuing

obligations

–

over

which

defendant is afforded a measure of discretion – the Court concludes
that Fort Halifax does not preclude a finding that the severance
and

COBRA

premium

provisions

in

the

Employment

Agreement

constitute a “plan, fund, or program” under Donovan.

12

Due to the passage of time since his termination, plaintiff now
seeks payment of his severance benefits and COBRA premiums in a
lump sum, but the Agreement itself provides for continuous monthly
payments over a period of months or years.

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b)

“Established or Maintained”

“A plan is ‘established’ when there has been some degree of
implementation by the employer going beyond a mere intent to confer
a benefit.”

Butero, 174 F.3d at 1214 (citing Whitt, 147 F.3d at

1331; Donovan, 688 F.2d at 1373).
means to “continue” a plan.

To “maintain” a plan simply

Anderson, 369 F.3d at 1265.

21st

Century indisputably “established” a plan, fund or program when it
executed the Employment Agreement containing the severance and
COBRA

premium

payment

provisions.

Id.

Given

that

those

provisions remained in effect through plaintiff’s termination and
their validity was endorsed by 21st Century’s attorney subsequent
to plaintiff’s termination (Doc. #2, p. 61), the Court finds 21st
Century also “maintained” that benefit plan.
c)

“By an Employer”

“ERISA does not apply unless the employer itself established
or maintained the plan.”

Anderson, 369 F.3d at 1263.

This

requirement “is designed to ensure that the plan is part of an
employment relationship.”

Id.

There is no dispute that the

entity who established and maintained the Employment Agreement –
21st Century – was plaintiff’s employer, and that the Agreement
itself was established and maintained in the context of plaintiff’s
employment with 21st Century.

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d)

“For the Purpose of Providing” Specific Types of
Benefits

A plan is an “employee welfare benefit plan” to the extent and only to the extent - that it is maintained for the purpose of
providing the types of benefits that Congress decided to protect
when enacting ERISA.

Kemp, 109 F.3d at 713.

The two types of

benefits 21st Century contends constitute an ERISA plan - the COBRA
premiums and the severance payments - each comes under ERISA’s
protective

umbrella.

“severance

benefits”

Donovan,
among

688

those

F.2d

at

protected

1371

under

(listing
ERISA)

13

;

Williams, 927 F.2d at 1542 n.3, 1549 n.17 (concluding that certain
life and health insurance benefits provided for in a multibenefit
written instrument – including a promise to pay “all premiums [for
the

plaintiff

and

his

wife]

on

the

company’s

group

medical

insurance plan” - were “entitled to ERISA coverage”); see also
O'Connor v. Commonwealth Gas Co., 251 F.3d 262, 270 (1st Cir. 2001)
(“[T]he payment of COBRA premiums . . . probably falls within
ERISA's protections. If the mere continuation of coverage under
COBRA would implicate ERISA, then an employer's premium payments
to

facilitate

that

coverage

seemingly

would

as

well.”).

Accordingly, the fourth Donovan requirement is satisfied.

13

Although “severance” is not among the benefits listed by name
in Section 1002(1), it is a “benefit described in [29 U.S.C. §]
186(c)” and thus constitutes an enumerated ERISA benefit under 29
U.S.C. § 1002(1)(B). See Morash, 490 U.S. at 113 n.8; Donovan,
688 F.2d at 1371 n.4.

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e)

“To Participants or Their Beneficiaries”

The identity of the recipient of severance benefits and COBRA
premium

payments

plaintiff Woods.
identifiable

plan

under

the

Employment

Agreement

is

clear:

As noted earlier, ERISA requires only a single
participant.

Williams,

927

F.2d

at

1545;

Slamen, 166 F.3d at 1104.
The Court finds that all five Donovan requirements are met
here.

The

severance

and

COBRA

premium

provisions

of

the

Employment Agreement constitute “employee welfare benefit plans”
affording plaintiff the ability to pursue a claim under ERISA
Section 502(a) for breaches of the contractual obligation to pay
those benefits. 14

And because plaintiff actually attempted to

collect payment of those benefits, the first prong under Davila
step one is satisfied.

See 29 C.F.R. § 2510.3-3(b); Slamen, 166

F.3d at 1104.
2)

Second Step-One Inquiry – Does Plaintiff Have Standing?

The second component of the first Davila step is that a
plaintiff have standing to assert a claim under ERISA Section
502(a).

Neither party disputes that Woods, as the “beneficiary”

under the Employment Agreement, has standing under ERISA.
Court agrees.

The

29 U.S.C. § 1132(a)(1); Borrero, 610 F.3d at 1301.

14

Insofar as Counts II and III of the complaint seek declarations
of Woods’s “rights under the terms of” those benefit provisions,
they too could have been brought under ERISA Section 502(a). 29
U.S.C. § 1132(a)(1)(B).

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C.

Davila Step Two: Does
Plaintiff’s Claims?

a

Separate

Legal

Duty

Support

Although the court has concluded that Woods’s breach of
contract claim satisfies step one under Davila, such claim will
not

be

completely

preempted,

and

federal

subject

matter

jurisdiction will not exist, unless there is “no other independent
legal

duty

that

is

implicated

by

[21st

Century’s]

actions.”

Davila, 542 U.S. at 212; see also Borrero, 610 F.3d at 1304 (“The
test in Davila is conjunctive – both conditions must be satisfied
for a claim to be completely preempted.”).
The question, therefore, is whether 21st Century’s failure to
pay Woods the severance and COBRA premiums he claims are due
violates a legal duty that exists independently of ERISA and the
Employment

Agreement.

Plaintiff

argues

that

“there

is

an

independent legal duty implicated by [21st Century’s] actions –
namely, breach of contract.”
Because

the

provisions

Court
21st

has

Century

(Doc. #14, p. 2.)

concluded
is

that

accused

of

the

But there is not.
very

breaching

contractual
themselves

constitute “employee welfare benefit plans,” the denial of those
ERISA benefits and the contractual obligation to provide those
benefits are “inextricably intertwined,” negating the existence of
any independent contractual duty.

Arditi v. Lighthouse Int'l, 676

F.3d 294, 299 (2d Cir. 2012), as amended (Mar. 9, 2012) (breach of
contract claims completely preempted under Davila); see also Conn.
State Dental Ass'n, 591 F.3d at 1353 (breach of contract claims

- 23 -

based on denial of payment of ERISA benefits “arise solely under
ERISA or ERISA plans and not from any independent legal duty”);
Borrero, 610 F.3d at 1304 (concluding that “state law claims[]
based predominately on contracts” sufficiently “implicate[d] legal
duties dependent on the interpretation of an ERISA plan” and were
thus completely preempted).
Because the Court concludes that at least a portion of the
Complaint is completely preempted under ERISA, to the extent
plaintiff wishes to continue this lawsuit, he is directed to file
an amended complaint repleading those portions of his claims as
ERISA claims, within fourteen days of the date of this Order.
Accordingly, it is hereby
ORDERED:
1.

Plaintiff's Motion to Remand (Doc. #14) is DENIED.

2.

Within fourteen days of the date of this Order, plaintiff

shall file an amended complaint repleading those state law claims
which could have been brought under ERISA Section 502(a), 29 U.S.C.
1132(a), as ERISA claims.
DONE and ORDERED at Fort Myers, Florida, this 24th day of
February, 2017.

Copies:
Counsel of Record

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