Graham v. Hubbs Machine and Manufacturing, Inc. et al

Filing 28

MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that plaintiffs motion to remand [Doc. # 12 ] is denied. Signed by District Judge Carol E. Jackson on 6/16/14. (KJS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
TONYA GRAHAM,
Plaintiff,
vs.
HUBBS MACHINE AND
MANUFACTURING, INC. and
RICK BENWARD,
Defendants.

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Case No. 4:14-CV-419 (CEJ)

MEMORANDUM AND ORDER
This matter is before the Court on plaintiff’s motion to remand this action to the
Twenty-Third Judicial Circuit Court (Jefferson County, Missouri), from which it was
removed. Defendants oppose the motion, and the issues are fully briefed.
I.

Background

On August 26, 2013, plaintiff filed a one count complaint against defendants
Hubbs Machine and Manufacturing, Inc. (Hubbs Machine) and Rick Benward in the
Circuit Court of Jefferson County, alleging wrongful termination against Missouri public
policy.

On March 5, 2014, plaintiff filed an amended complaint, adding a citation to

the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001, et
seq., and asserting a second claim against Benward for tortious interference of a
business expectancy.
According to the amended complaint, plaintiff was employed by Hubbs Machine
from February 1996 through July 2013. At the time of her termination, she was the
Vice President and had held that position since July 2008. On May 5, 2013, Benward
was hired as the President and Chief Executive Officer (CEO) of Hubbs Machine.
Benward was also employed by New York Life Securities, LLC (NY Life) and acted as

NY Life’s third-party manager of employee and retirement benefits for the employee
retirement plans of Hubbs Machine.
Upon learning that Benward was hired as the President and CEO, plaintiff alleges
that she voiced concerns to both Benward and William Hubbs, the owner of Hubbs
Machine, about Benward’s concurrent employment with NY Life. Benward denied any
conflict of interest. On June 10, 2013, plaintiff contacted NY Life and she alleges that
a representative of the company’s compliance department informed her that Benward’s
concurrent employment was a conflict of interest and that it constituted outside
business activity in violation of Financial Industry Regulatory Authority Rules. On June
12, 2013, plaintiff again voiced her concerns to Benward. On June 17, 2013, Benward
announced that he would no longer manage the employee and retirement benefits for
Hubbs Machine.
Plaintiff alleges that immediately thereafter, she began to suffer retaliation for
her complaints, including unwarranted disciplinary action, reduction of duties and
responsibilities, and harassment. Plaintiff alleges that on July 29, 2013, she received
a letter from Benward threatening her employment and that on July 30, 2013, she
received a letter from William Hubbs accusing her of engaging in conduct which
violated the company’s reasonable standards and expectations. She was terminated
on July 31, 2013.
On March 6, 2014, defendants removed this action, contending that plaintiff’s
wrongful termination claim is completely preempted by ERISA.

[Doc. #1, ¶ 10].

Plaintiff filed the instant motion to remand, asserting that this Court lacks subjectmatter jurisdiction because her claims arise solely under Missouri state law.

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II.

Legal Standard

An action is removable to federal court if the claims could have originally been
filed in federal court. 28 U.S.C. § 1441; In re Prempro Products Liability Litigation, 591
F.3d 613, 619 (8th Cir. 2010). “The existence of federal question jurisdiction is
governed by the ‘well-pleaded complaint rule,’ which provides that, ‘federal question
jurisdiction exists only when a federal question is presented on the face of a plaintiff’s
properly pleaded complaint.’” Mayfield v. Luthern Senior Services, 2009 WL 3526361,
*2 (E.D. Mo. Oct. 26, 2009) (citing Avenevoli v. Lockton Companies, Inc., 2008 WL
509545, *2 (E.D. Mo. Feb 22, 2008)).
Preemption under ERISA is one narrow exception to the well-pleaded complaint
rule. Hutson v. Kohner Props., 2009 U.S. Dist. LEXIS 100359 (E.D. Mo. Oct. 28, 2009)
(citing Prudential Ins. Co. of Am. v. Nat’l Park Med. Ctr., Inc., 413 F.3d 897, 907 (8th
Cir. 2005)).

Under ERISA preemption, “a state law cause of action is subject to

removal only where the claim ‘relates to any employee benefit plan,’ 29 U.S.C. §
1144(a) . . . and the claim seeks to recover benefits due or enforce rights under the
terms of a plan, 29 U.S.C. § 1132(a) [or § 1144(a)], such that the exclusive cause of
action is under federal law.” Avenevoli, 2008 WL 509545, at *3 (citing Neumann v.
AT&T Communications, Inc., 376 F.3d 773, 780 (8th Cir. 2004)).
The defendant bears the burden of establishing federal jurisdiction by a
preponderance of the evidence. Altimore v. Mount Mercy College, 420 F.3d 763, 768
(8th Cir. 2005). All doubts about federal jurisdiction must be resolved in favor of
remand. In re Bus. Men’s Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993).
In the event that the federal court determines that it lacks subject-matter jurisdiction

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over a removed action, it must remand the action to the state court where it
originated. 28 U.S.C. § 1447(c).
III.

Discussion

In the notice of removal, defendants contend that federal question jurisdiction
exists because plaintiff’s claim of wrongful discharge is preempted by ERISA. Their
argument is premised upon plaintiff’s allegations in paragraphs 30 and 32 of the
amended complaint, which state:
30. In complaining about and reporting Defendant Benward’s conflict of
interest and outside business activities, which were orchestrated,
sanctioned and condoned by Defendant Hubbs Machine, Plaintiff Graham
exercised her rights to report violations of law, regulations, administrative
rules, and or public policy, including but not limited to violations of
Financial Industry Regulatory Authority (“FINRA”) rules, ethical codes,
and regulations, including, but not limited to, FINRA Rules 3270, 2010
and those governing conflicts of interest; the Employee Retirement
Income Security Act of 1974, 29 U.S.C. § 1001, et. seq., including but
not limited to 29 U.S.C. § 1106; and Chapter 409 of the Missouri Revised
Statutes[.]
32. Defendant Hubbs Machine engaged in a pattern of harassment and
ultimate termination of Plaintiff Graham’s employment in retaliation for
her complaining about and reporting violations of: FINRA rules, ethical
codes, and regulations, including, but not limited to, FINRA Rules 3170,
2010 and those governing conflicts of interest; the Employee Retirement
Income Security Act of 1974, 29 U.S.C. § 1001, et seq., including but not
limited to 29 U.S.C. § 1106; and Chapter 409 of the Missouri Revised
Statutes, governing the regulation of securities, including but not limited
to Mo. Rev. Stat. 409.810 and 409.5-501, et seq., and the implementing
regulations promulgated in 15 CSR 30-51.169 to 30-51.173.
Doc. #8, ¶¶ 30 and 32 (emphasis added).
In the instant motion to remand, plaintiff argues that her citations to ERISA are
insufficient to convey federal jurisdiction over her state law claims because she is not
seeking to recover ERISA benefits, exercise any rights under ERISA, or clarify the
provisions of an ERISA plan.

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Section 514 of ERISA preempts all state laws that “relate to” employee benefit
plans. 29 U.S.C. § 1144(a). ERISA preemption has been interpreted to have an
extremely broad application. Mayfield, 2009 WL 3526361, at *2 (emphasis added).
“The phrase ‘relate to’ was given its broad common-sense meaning, such that a state
law ‘relate[s] to’ a benefit plan in the normal sense of the phrase, if it has a connection
with or reference to such a plan.” Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1983).
“In those cases where federal courts have decided that preemption is not mandated,
the rationale often advanced is that the state law in question impacts upon ERISA in
an indirect manner that is too tenuous or too remote to warrant preemption.”
Greenblatt v. Budd Co., 666 F.Supp. 735, 741 (E.D.Pa. Aug. 5, 1987).
In the instant case, plaintiff alleges two state law causes of action: (1) wrongful
termination in violation of Missouri public policy; and (2) tortious interference with a
business expectancy. However, included within the wrongful termination claim, are
allegations that plaintiff’s objections to Benward’s concurrent employment was an
exercise of her rights to report ERISA violations and that her termination was in
retaliation for reporting ERISA violations. [Doc. #8,¶¶ 30 and 32]. The Court finds that
these allegations sufficiently implicate ERISA preemption.
Similar to the instant case, the plaintiff in McLean v. Carlson Companies, Inc.,
777 F. Supp. 1480, 1483 (D. Minn. Nov. 25, 1991), brought a wrongful discharge claim
against her previous employer, alleging that she was wrongfully discharged because
she “reported a violation or suspected violation of federal and state laws including, but
not limited to, [a] violation of ERISA.” The court in McLean held that “state common
law or statutory causes of action for wrongful discharge premised on allegations that
the employer discharged an employee because the employee asserted rights under an

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employee benefit plan are preempted by ERISA.” McLean v. Carlson Companies, Inc.,
777 F. Supp. 1480, 1483 (D. Minn. Nov. 25, 1991) (emphasis added) (citing IngersollRand Co. v. McClendon, 498 U.S. 133, 138 (1990)). Other courts have also reached
the same conclusion. See DeFelice v. Heritage Animal Hospital, Inc., 2010 U.S. Dist.
LEXIS 103075 (E.D. Mich. Sept. 29, 2010) (ERISA preempted plaintiff’s claim brought
under Michigan’s whistleblower act to the extent that plaintiff alleged that she was
terminated for reporting a suspected ERISA violation); Anderson Electric Data Sys.
Corp., 11 F.3d 1311, 1314 (5th Cir. 1994) (plaintiff’s “wrongful discharge claim is
preempted insofar as it is based on his refusal to carry out violations of ERISA, and
reporting such violations to management.”).
Thus, although plaintiff’s amended complaint technically pleads two state law
causes of action, her claims “relate to” an ERISA plan as a result of her allegations that
she was wrongfully terminated in retaliation for reporting violations of ERISA.
Accordingly, defendant has a right to remove plaintiff’s claims to federal court.
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For the reasons discussed above,
IT IS HEREBY ORDERED that plaintiff’s motion to remand [Doc. #12] is
denied.

___________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 16th day of June, 2014.

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