Thibodeaux v. Trunkline Gas Co L L C

Filing 17

MEMORANDUM RULING denying 7 Motion to Remand. Signed by Magistrate Judge Kathleen Kay on 8/31/15. (crt,Kennedy, T)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION

LEONA THIBODEAUX

:

DOCKET NO. 15-cv-1755

VERSUS

:

JUDGE MINALDI

TRUNKLINE GAS CO., LLC

:

MAGISTRATE JUDGE KAY

MEMORANDUM RULING

Before the court is a Motion to Remand [doc. 7] filed on June 11, 2015, by the plaintiff,
Leona Thibodeaux (hereafter, “plaintiff”) in response to a Notice of Removal [doc. 1] filed on
May 26, 2015, by defendant, Trunkline Gas Co. LLC (hereafter, “defendant”). The defendant filed
an opposition to the instant motion and the plaintiff filed a reply thereto. For the reasons stated
below, the motion to remand is hereby DENIED.
I.
FACTS & PROCEDURAL HISTORY
This matter concerns plaintiff’s suit against defendant over payments the plaintiff claims
she was owed under Southern Union’s severance arrangement (hereafter, “arrangement”). 1
Plaintiff was an employee of defendant until her position was terminated by the merger of
defendant’s parent company on May 4, 2012. Doc. 7, att. 2, p. 1. The severance arrangement
creates an administrative committee with “sole discretionary authority and all powers necessary”
to carry out the functions of the arrangement and process all claims as they arise. Doc. 15, att. 3,
pp. at 6–7, 8–9. The arrangement, which first became effective in February 2005, applies to eligible

1

Plaintiff uses the term “contract” and defendant uses the term “plan.”
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employees who were involuntarily terminated by the defendant, subject to exceptions including
but not limited to:
•

“circumstances for which the Administrative Committee makes a
written determination that a severance benefit will not be paid,” and

•

terminations “for cause or misconduct . . . as such terms are construed
by the Company in its sole discretion.” Id. at 1–2.

Amount of payment is based upon years of service and base salary. Id. at 3. Upon a determination
of eligibility, severance payments are to be made “in a single sum payment as soon as
administratively feasible.” Id.
The arrangement conditions receipt of benefits upon the employee’s timely execution of a
separation agreement, which includes a waiver and release of all claims against the employer
arising from the employment and its termination. Doc. 15, att. 3, p. 3. Plaintiff did not sign the
separation agreement at the time of the merger because she was pursuing other claims against the
defendant but later offered to execute a waiver in exchange for her benefits under the arrangement
in lieu of an appeal of these claims before the Fifth Circuit. Doc. 7, pp. 1–2; Doc. 15, p. 5; Doc.
15, att. 6, p. 1.
Upon defendant’s rejection of the plaintiff’s offer, plaintiff sued defendant in the 14th
Judicial District Court in and for Calcasieu Parish, Louisiana, on May 1, 2015. Doc. 1, att. 3, p.
1. Plaintiff alleged that she was now owed severance benefits under the arrangement based on the
qualifying terms of her separation and her willingness to sign a release of her claims against
defendant. Id. at pp. 1–2. She further alleged that defendant’s failure to provide the severance
benefits under the arrangement was a breach of contract, making the claim a matter of state law.
Id. at 1.
In return, defendant filed a timely notice of removal to this court on May 26, 2015. Doc. 1.
Defendant asserts that this court has original and exclusive jurisdiction over the case because the
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arrangement is not a contract, but instead an employee benefit plan governed by the Employee
Retirement Income and Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., over which federal
courts have exclusive jurisdiction. 29 U.S.C. § 1132(e)(1). Plaintiff moves to remand, reasserting
that the arrangement was a contract and not a benefit plan governed by ERISA, thereby depriving
this court of subject matter jurisdiction. Doc. 7, pp. 1–2. Plaintiff grounds this claim in the
argument that the severance package is merely an employee benefit and not part of a benefit plan,
because it calls for “the calculation and payment of a one-time lump severance amount” with “no
ongoing administration or payment of benefits.” Doc. 7, att. 1, p. 5. The defendant has responded,
arguing that eligibility determinations and other administrative requirements sufficiently
distinguished the arrangement from cases used by the plaintiff as precedent and asserting that these
same features establish the plan as one that must be governed by federal law under ERISA. Doc.
15, pp. 4, 12–21. Plaintiff replied on July 9, 2015, strengthening the analogy between the present
case and other ERISA jurisprudence on the basis that a formula used to calculate the amount of a
severance payment does not necessitate the complexity or administrative scheme required to claim
ERISA preemption. Doc. 16, pp. 1–2.
II.
LAW & ANALYSIS
The sole issue before this court is whether subject matter jurisdiction is established by the
existence of a federal question, owing to the qualification of defendant’s severance arrangement
as an employee welfare benefits plan under ERISA. For the following reasons, we rule that the
arrangement does invoke ERISA and that this court therefore has subject matter jurisdiction over
the case.

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A. This court has federal question jurisdiction under ERISA because the plaintiff’s
claim relates to a qualifying employee benefit plan.
Any civil action brought in a State court of which the United States district courts have
original jurisdiction may be removed to the proper district court. 28 U.S.C. § 1441(a) (2013).
District courts have original jurisdiction over cases “arising under the Constitution, laws, or treaties
of the United States.” 28 U.S.C. § 1331. “[A] cause of action arises under federal law only when
the plaintiff's well-pleaded complaint raises issues of federal law.” Metropolitan Life Ins. Co. v.
Taylor, 481 U.S. 58, 63 (1987). The removing party bears the burden of showing that removal was
procedurally proper and that federal jurisdiction exists. See De Aguilar v. Boeing Co., 47 F.3d
1404, 1408 (5th Cir. 1995). “If the right to remove is doubtful, the case should be remanded.” Case
v. ANPAC Louisiana Ins. Co., 466 F. Supp. 2d 781, 784 (E.D. La. 2006); see also Shamrock Oil
& Gas Corp. v. Sheets, 313 U.S. 100 (1941) (removal is to be construed narrowly and in favor of
remand to state court); Perkins v. State of Miss., 455 F.2d 7 (5th Cir. 1972) (same).
In certain cases, however, a federal statute’s “preemptive force” can be great enough to
convert a claim brought under state law when Congress has acted with the requisite intent. Kramer
v. Smith Barney, 80 F.3d 1080, 1082–83 (5th Cir. 1996), citing Metropolitan Life Ins. Co., 481
U.S. at 63. Such is the situation when a state contract claim relates to an employee benefit plan
covered by ERISA, which includes under 29 U.S.C. § 1002(1)(A) plans that provide “benefits in
the event of . . . unemployment.” See, e.g., Whittemore v. Schlumberger Technology Corp., 976
F.2d 922, 923 (5th Cir. 1992); Epps v. NCNB Tex., 7 F.3d 44, 45 (5th Cir. 1994); Wilson v.
Kimberly-Clark Corp., 254 F. App’x 280, 282–84 (5th Cir. 2007) (all preempting state law claims
against severance packages found to qualify as employee benefit plans under ERISA). Because
the arrangement is an employee benefit plan under ERISA, as shown below, the plaintiff’s state
law claim on the arrangement is preempted and this court has federal question jurisdiction.

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B. The arrangement qualifies as an employee benefit plan under ERISA because the
employer’s discretion to determine eligibility necessitates an administrative scheme.
Not every severance package invokes ERISA. Plaintiff relies heavily on Fort Halifax
Packing Co. v. Coyne, which involved the guarantee of a one-time payment to employees in the
event that the defendant plant closed, the Court noted that ERISA was intended to apply only to
benefit plans and not to all forms of employee benefits. 482 U.S. 1, 9 (1987). The Court
distinguished a plan from other benefits programs by the presence of an administrative scheme,
reflecting Congress’s intent with ERISA of providing a uniform set of rules for governing their
administration and protecting them from abuse. Id. at 15. Under the Fort Halifax precedent, the
Fifth Circuit has held that other severance packages do not qualify as employee benefit plans under
ERISA where there is no administrative scheme, commonly based on cases where the simplicity
of eligibility determinations, benefits calculations, or dispensation of those benefits negates the
need for administrative oversight or discretion.
Even though the Fort Halifax holding has commonly been extended to other cases
involving severance packages crafted in contemplation of one-time events, the thrust of the
analysis in many of the Fifth Circuit cases cited by plaintiff remains on whether there is a need for
ongoing administrative review and discretion. E.g., Wells v. Gen. Motors Corp., 881 F.2d 166,
175–76 (5th Cir. 1989); Tinoco v. Marine Chartering Co., Inc., 311 F.3d 617, 621–23 (5th Cir.
2002). For instance, in Peace v. Am. Gen. Life Ins. Co., a Fifth Circuit case cited by plaintiff, the
court held that an annuity purchased by the employer for the employee, where the eligibility was
automatic upon the employee reaching a certain age and required no further exercise of discretion
or administration, did not qualify as a benefit plan under ERISA. 462 F.3d 437, 440–41 (5th Cir.
2006). The time-limited nature of the Fort Halifax closing and its progeny remains relevant,
however, when it constrains discretion to such an extent that little to no administrative review is
required. In Fontenot v. NL Industries, Inc., another case relied on by plaintiff and distinguished
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by defendant, the court declined to apply ERISA to a “golden parachute” plan because, like the
Fort Halifax plan, it dealt with a lump sum payment “triggered by a single event [and requiring]
no administrative scheme to meet the employer’s obligation.” 953 F.2d 960, 962 (5th Cir. 1992).
As plaintiff observes, the level of administrative review under qualifying Fifth Circuit cases
entails more than the one-time calculation of benefits, even if those benefits can be received in
installment payments. E.g., Wells, 881 F.2d at 175–76; Peace, 462 F.3d at 441. Instead, it is usually
more a question of eligibility than of determining or dispensing the amount of severance. In our
review of Cantrell v. Briggs & Veselka Co., another case cited by plaintiff, we note that the Fifth
Circuit found the need for an administrative scheme where the administrator must exercise its
discretion to determine what kinds of separations qualify for severance benefits or whether the
applicant has met other eligibility conditions. 728 F.3d 444, 451 (5th Cir. 2013), citing Bogue v.
Ampex Corp., 976 F.2d 1319, 1321 (9th Cir. 1992) (remarking that, unlike Bogue, the severance
plan in Cantrell did not involve administrative discretion such as determining whether the
applicant had received “substantially equivalent employment”).
In Clayton v. ConocoPhilips Co., cited by defendant, the Fifth Circuit recently held that
there was sufficient need for administrative review where a severance arrangement gave the trustee
eligibility discretion, including determining whether good reason had existed for the separation,
and the two-year window for claims after the triggering event created a need for “an ongoing
administrative program.” 722 F.3d 279, 295–96 (5th Cir. 2013), citing Crowell v. Shell Oil Co.,
541 F.3d 295, 302–07 (5th Cir. 2008).
In Wilson v. Kimberly-Clark Corp., cited by defendant, the severance package was held to
qualify as a benefit plan under ERISA because it “set forth specific eligibility criteria that
disqualified some participants,” thus calling for administrative discretion even in light of some
guidelines. 254 Fed. App’x at 283. Plaintiff also cites Aguirre-Santos v. Pfizer Pharmaceutical
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Co., where a severance package found not to qualify as an ERISA plan gave the administrator
discretion to determine when an employee had been terminated for cause, but was “largely
governed by specific criteria” and allowed for such determinations to be made efficiently, negating
the need for ongoing review. 2013 WL 5724061 at *2 (D.P.R. Oct. 21, 2013). Though both
Aguirre-Santos and Wilson differ from the preceding cases by the existence of more guidelines in
determining eligibility, we distinguish the two based on Aguirre-Santos’ emphasis on the lack of
need for an ongoing administrative mechanism to make for-cause determinations. As the Fifth
Circuit found in Clayton, when the plan administrator must make eligibility determinations as they
arise, then there is as a matter of course a need for ongoing administrative review. 722 F.3d at
295–96.
It is not clear from the record whether the merger that resulted in plaintiff’s involuntary
separation might have been contemplated at the time the arrangement went into effect in 2005. In
any event, the arrangement does not limit its scope to merger lay-offs and had, in fact, been in
existence for over seven years when the plaintiff received notice of termination in 2012. Attempts
by the plaintiff to analogize the arrangement to Fort Halifax, Fontenot, Wells, and other singleevent severance package cases are misguided. We are more persuaded by defendant’s analogies to
ongoing severance packages of general applicability. Whittemore, 976 F.2d at 923 (5th Cir. 1992);
Wilson, 254 F. App’x at 282. Even in cases tied to a one-time event, the Fifth Circuit has already
found a two-year claims window to create sufficient need for an ongoing administrative scheme
in Clayton, also cited by defendant. 722 F.3d at 295. Therefore, given the long duration and general
applicability of defendant’s severance arrangement, we are not persuaded by plaintiff’s attempt to
link it to the Fort Halifax line of reasoning by tying the plan to a single event.
Furthermore, it appears that the severance arrangement grants the company sufficient
discretion in determining eligibility to necessitate an administrative plan and all attendant ERISA
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requirements. As with Bogue and Clayton, the administrators here made case by case
determinations on eligibility of plan recipients without the “specific criteria” afforded in AguirreSantos. The administrative committee had sole discretion to interpret the terms of eligibility,
including dismissal for cause. The administrative committee also wielded considerable authority
through the clause authorizing it to terminate employment with a concurrent written determination
that a severance benefit would not be paid. This power is evidently the kind contemplated by
Congress in enacting ERISA and distinguished by the Court in its holding in Fort Halifax, as it
gives the employer or plan administrator considerable latitude in determining access to severance
benefits on which an employee might rely.
Therefore, given the length of the plan’s existence, the potential scope of separations it
covered, and the amount of discretion it granted to its administrators, this court finds that under
existing precedent, it qualifies as an employee welfare benefit plan under ERISA and federal
question jurisdiction necessarily exists.
III.
CONCLUSION
For the reasons stated above, the plaintiff’s Motion to Remand [doc. 7] is hereby DENIED.
THUS DONE this 31st day of August, 2015.

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