Boyle et al v. SEIU Local 200 United Benefit Fund et al

Filing 25

MEMORANDUM-DECISION and ORDER - That plaintiffs' 10 Motion to Remand to State Court is DENIED. That Local 200's 15 Cross Motion for Judgment on the Pleadings is GRANTED. That the Clerk close this case. Signed by Senior Judge Gary L. Sharpe on 7/12/2016. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________
KEVIN BOYLE, as Trustee
and as President of the United
Public Service Employees
Benefit Fund and Union (as the
Collective Bargaining
Representative of the Western
Regional Off Track Betting
Supervisory Bargaining Units)
et al.,
Plaintiffs,

5:15-cv-517
(GLS/DEP)

v.
SEIU LOCAL 200 UNITED
BENEFIT FUND et al.,
Defendants.
________________________________
APPEARANCES:
OF COUNSEL:
FOR THE PLAINTIFFS:
Rothman, Rocco Law Firm
3 West Main Street
Suite 200
Elmsford, NY 10525
Office of Richard M. Greenspan
220 Heatherdell Road
Ardsley, NY 10502
FOR THE DEFENDANTS:
Blitman, King Law Firm
Franklin Center
443 North Franklin Street

MATTHEW P. ROCCO, ESQ.

RICHARD M. GREENSPAN,
ESQ.

BRIAN J. LACLAIR, ESQ.
MICHAEL R. DAUM, ESQ.

Suite 300
Syracuse, NY 13204-1415
One Penn Plaza, Suite 2601
New York, NY 10119-2699

JONATHAN M. CERRITO, ESQ.

Gary L. Sharpe
Senior District Judge
MEMORANDUM-DECISION AND ORDER
I. Introduction
Plaintiff Kevin Boyle, as Trustee and President of the United Public
Service Employees Benefit Fund and Union (as the Collective Bargaining
representative of the Western Regional Off Track Betting Supervisory
Bargaining Units) (“UPSEU” and “UPSE”), as well as plaintiffs Joyce Melfi
and Donald Herland, on behalf of themselves and all other members of the
Western Regional Off Track Betting Supervisory Bargaining Units, filed this
suit against defendants SEIU Local 200 United Benefit Fund and its
trustees (collectively, “Local 200”) in New York State Supreme Court,
Onondaga County. On April 28, 2015, defendants removed the action to
this court pursuant to 28 U.S.C. §§ 1441 and 1446, invoking the court’s
federal question jurisdiction. Presently before the court are plaintiffs’
motion seeking remand, (Dkt. No. 10), and Local 200’s cross motion for

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judgment on the pleadings, (Dkt. No. 15). For the reasons that follow, the
court denies plaintiffs’ motion and grants Local 200’s cross motion.
II. Background1
Melfi and Herland are employees of Western Regional Off Track
Betting (OTB) Corporation and members of the Western Regional OTB
Supervisory Units. (Compl. ¶ 15, Dkt. No. 1, Attach. 1.) Before February
2014, Local 200 represented plaintiffs as its labor union and jointly
administered a benefit fund, the Local 200 fund, for which it maintained
health reimbursement accounts (HRAs) that provided Melfi and Herland
and other employees with payment for medical expenses in retirement.
(Id. ¶¶ 3-6, 15-16.) The Local 200 fund was established by an Agreement
and Declaration of Trust, also referred to as the Trust Agreement. (Id.
¶¶ 16, 19.) A description of the Local 200 fund benefits was found in a
summary plan description (SPD), which is a synopsis of Local 200’s
employee benefit plan. (Dkt. No. 10, Attach. 8.)
On February 28, 2014, union members of the Western Regional OTB
Supervisory Units voted in an election conducted by the New York State

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The facts are drawn from the complaint and presented in the light most favorable to

plaintiffs.

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Public Employment Relations Board to disaffiliate from Local 200. (Id.
¶¶ 6, 22.) Members, instead, designated the United Public Service
Employees Union as their representative. (Id. ¶¶ 6, 23; Dkt. No. 10,
Attach. 6.) Thereafter, Local 200 removed the members from the Local
200 benefit fund and informed them that they forfeited their individual
HRAs to the fund according to the terms of the employee benefit plan.
(Compl. ¶ 7; Dkt. No. 10, Attach. 8 at 4.) Melfi and Herland requested that
Local 200 return their monies from the HRAs, but Local 200 refused and
retained all of the contributions. (Compl. ¶ 8.) As a result, Melfi and
Herland no longer have access to the HRAs in the Local 200 fund, which
hold contributions to be used for their medical expenses in their retirement.
(Id. ¶ 9.) Melfi and Herland requested a partition of the reserves from the
fund and a transfer of those contributions to their benefit fund with UPSE.
(Id. ¶ 10.)
On April 1, 2015, plaintiffs Melfi, Herland, and UPSE, the new union
for Western Regional OTB Supervisory Bargaining Units, filed an action in
New York State Supreme Court in Onondaga County alleging unjust
enrichment, wrongful withholding of contractual benefits, conversion, and
breach of fiduciary duty and sought an equitable division, an accounting,
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and damages. (See generally Compl.) Local 200 removed the action to
this court under federal question jurisdiction on the grounds of preemption
by the Employee Retirement Income Security Act (ERISA).2 (Dkt. No. 1.)
Now pending before the court are plaintiffs’ motion to remand the action to
state court, (Dkt. No. 10), and Local 200's motion for judgment on the
pleadings, (Dkt. No. 15).
III. Standard of Review
A.

Remand
With respect to cases removed to federal court from state court, 28

U.S.C. § 1447(c) provides that “[i]f at any time before final judgment it
appears that the district court lacks subject matter jurisdiction, the case
shall be remanded.” “It is well-settled that the party asserting federal
jurisdiction bears the burden of establishing jurisdiction.” Blockbuster, Inc.
v. Galeno, 472 F.3d 53, 57 (2d Cir. 2006) (citation omitted). Accordingly,
“[o]n a motion to remand, the party seeking to sustain the removal, not the
party seeking remand, bears the burden of demonstrating that removal was
proper.” Wilds v. UPS, Inc., 262 F. Supp. 2d 163, 171 (S.D.N.Y. 2003)
(internal quotation marks and citation omitted). “Unless that burden is met,
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See 29 U.S.C. §§ 1001-1461.

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the case must be remanded back to state court.” Id. (internal quotation
marks and citation omitted).
B.

Judgment on the Pleadings
“The standard for addressing a Rule 12(c) motion for judgment on

the pleadings is the same as that for a Rule 12(b)(6) motion to dismiss for
failure to state a claim.” Wright v. Monroe Cmty. Hosp., 493 F. App’x 233,
234 (2d Cir. 2012) (internal quotation marks and citation omitted). For a
full discussion of the governing standard, the court refers the parties to its
prior decision in Ellis v. Cohen & Slamowitz, LLP, 701 F. Supp. 2d 215,
218 (N.D.N.Y. 2010), abrogated on other grounds by J.C. Christensen &
Assocs., Inc., 786 F.3d 191 (2d Cir. 2015).
V. Discussion
A.

Motion for Remand
Plaintiffs argue that remand is necessary because Local 200 failed to

demonstrate federal question jurisdiction. (Dkt. No. 10, Attach. 1 at 8-18.)
Plaintiffs assert that Local 200 cannot meet the test to demonstrate that
ERISA preempts their state law claims under 29 U.S.C. § 1132(a)(1)(B).
(Id., citing Aetna Health Inc. v. Davila, 542 U.S. 200 (2004).) First,
plaintiffs contend that they are not the type of parties who have standing to
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sue under ERISA. (Id. at 12-14.) Second, plaintiffs maintain that their
claims are not colorable claims for benefits under the statute. (Id. at 1415.) Finally, plaintiffs argue that Local 200’s legal duty is predicated on
state law, which is independent of ERISA. (Id. at 15-18.)
Local 200 counters that plaintiffs’ state law claims are completely
preempted by ERISA because they “attempt[] to duplicate or supplant an
ERISA breach of fiduciary duty claim.” (Dkt. No. 15, Attach. 1 at 21.)
As mentioned above, the party seeking removal bears the burden of
proof to establish federal jurisdiction. See Montefiore Med. Ctr. v.
Teamsters Local 272, 642 F.3d 321, 327 (2d Cir. 2011). Because of
ERISA’s comprehensive legislative scheme, “any state-law cause of action
that duplicates, supplements, or supplants the ERISA civil enforcement
remedy conflicts with the clear congressional intent to make the ERISA
remedy exclusive and is therefore pre-empted.” Davila, 542 U.S. at 209.
Accordingly, “ERISA provides that it ‘shall supersede any and all State
laws insofar as they may now or hereafter relate to any employee benefit
plan.’” Gerosa v. Savasta & Co., Inc., 329 F.3d 317, 323 (2d Cir. 2003)
(quoting 29 U.S.C. § 1144(a)). “Although a plain reading of this statute
lends itself to an extremely broad interpretation, the Supreme Court has
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greatly narrowed the scope” of ERISA to only apply to state law claims that
have a “‘connection with’” or a “‘reference to’” an employee benefit plan.
Hattem v. Schwarzenegger, 449 F.3d 423, 428 (2d Cir. 2006) (quoting
N.Y.S. Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,
514 U.S. 645, 656 (1995)). As such, “state laws that would tend to control
or supersede central ERISA functions-such as state laws affecting the
determination of eligibility for benefits, amounts of benefits, or means of
securing unpaid benefits-have typically been found to be preempted.”
Gerosa, 329 F.3d at 324 (citations omitted). Claims rooted in either state
statutes or state common law theories “may . . . be expressly preempted if
they relate to an employee benefit plan.” Star Multi Care Servs., Inc. v.
Empire Blue Cross Blue Shield, 6 F. Supp. 3d 275, 291 (E.D.N.Y. 2014)
(citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48 (1987)).
In their motion for remand, plaintiffs point to Davila to rebut that
jurisdiction under 29 U.S.C. § 1132(a)(1)(B) is established in this case.
(Dkt. No. 10, Attach. 1 at 9-18.) However, actions brought under this
statutory section typically seek relief from a denial of benefits under an
employee benefit plan. See, e.g., Montefiore Med. Ctr. v. Teamsters Local
272, 642 F.3d 321 (2d Cir. 2011); Baackes v. Kaiser Found. Health Plan,
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Inc., 990 F. Supp. 2d 228 (N.D.N.Y. 2014). Here, in contrast, plaintiffs ask
the court to direct Local 200 to transfer funds that were contributed on
plaintiffs’ behalf to individual HRAs to the fund of plaintiffs’ new union,
UPSE. (See generally Compl.) Plaintiffs contend that Local 200
improperly retained these funds. (Id.) Accordingly, plaintiffs’ suit is not a
claim to recover denied benefits but rather a challenge to Local 200's
administration of plan assets. And thus, although plaintiffs characterize
their claims under several state common law theories3 through artful
pleading, the gravamen of their complaint alleges that Local 200 breached
its fiduciary duty. As such, the applicable ERISA statutory section from
which plaintiffs seek relief is 29 U.S.C. § 1132(a)(2) and not
§ 1132(a)(1)(B). See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 53
(1987) (noting “[a] participant or beneficiary may also bring a cause of
action for breach of fiduciary duty” under 29 U.S.C. § 1132(a)(2)); see also
Cummings v. Teachers Ins. & Annuity Ass’n of Am.-Coll. Ret. & Equities
Fund, No. 1:12-CV-93, 2015 WL 1137769, at *4 (D. Vt. Mar. 13, 2015).
Plaintiffs complaint is completely preempted under 29 U.S.C. § 1144

3

Plaintiffs allege claims of unjust enrichment, wrongful withholding of contractual
benefits, conversion, and breach of fiduciary duty and sought an equitable division, an
accounting, and damages. (See generally Compl.)

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because they seek relief under state common law theories that have
connection with or reference to the SPD, a synopsis of Local 200’s
employee benefit plan. See Travelers Ins. Co., 514 U.S. at 656. Plaintiffs
complain that Local 200 improperly retained funds intended for them. (See
generally Compl.) Plaintiffs ask the court to direct Local 200 to transfer
these funds into the UPSE fund. (Id. ¶ 36.) The terms of plaintiffs’
individual HRAs are explained in the SPD and found in the employee
benefit plan, and it is apparent that such plan is governed by ERISA. (Dkt.
No. 10, Attach. 8 at 4-5.) Because plaintiffs allege Local 200 improperly
administered HRA assets — a central ERISA function connected with an
employee benefit plan governed by ERISA — their claims are preempted.
See Hattem, 449 F.3d at 428; Gerosa, 329 F.3d at 324; Star Multi Care, 6
F. Supp. 3d at 291. Consequently, plaintiffs’ motion for remand is denied.
B.

Judgment on the Pleadings
Local 200 argues that it is entitled to judgment on the pleadings

because plaintiffs “do not seek remedies on behalf of [the benefit plan] or
for the restoration of losses to the [benefit plan], which is required [by 29
U.S.C. §§ 1109(a), 1132(a)].” (Dkt. No. 15, Attach. 1 at 27.) Moreover,
Local 200 contends that plaintiffs UPSEU and UPSE lack standing
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because they are not enumerated parties under ERISA. (Id.) Plaintiffs
respond arguing again that their claims are not preempted because they
are not seeking benefits under the employee benefit plan and their claims
do not have a connection to the employee benefit plan. (Dkt. No. 19 at 813.) Additionally, plaintiffs assert that UPSEU and UPSE have standing
because it represents the OTB supervisors and labor unions may sue to
enforce provisions of their members’ collective bargaining agreements.
(Id. at 7-8.)
Under 29 U.S.C. § 1132(a)(2), only the Secretary of Labor, or “a
participant, beneficiary or fiduciary” may commence a civil action for
breach of fiduciary duty. 29 U.S.C. § 1132(a)(2); see Long Island Head
Start Child Dev. Servs., Inc. v. Econ. Opportunity Comm’n of Nassau Cty.,
Inc., 710 F.3d 57, 63 (2d Cir. 2013); see also Connecticut v. Physicians
Health Servs. of Connecticut, Inc., 287 F.3d 110, 121 (2d Cir. 2002).
“‘[T]he term participant is naturally read to mean either employees in, or
reasonably expected to be in, currently covered employment, or former
employees . . . who have a colorable claim to vested benefits.’” Long
Island Head Start, 710 F.3d at 65 (quoting Firestone Tire & Rubber Co. v.
Bruch, 489 U.S. 101, 117 (1989)). Such actions “may not be made for
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individual relief, but instead are brought in a representative capacity on
behalf of the plan.” Id. (internal quotation marks and citations omitted).
The court agrees with Local 200 that plaintiffs only seek individual
relief to transfer plan assets to their current union fund and do not seek a
remedy on behalf of Local 200 fund. Therefore, plaintiffs cannot recover
under 29 U.S.C. §§ 1109, 1132(a)(2). See Long Island Head Start, 710
F.3d at 65. Furthermore, as Local 200 correctly points out, neither plaintiff
UPSEU nor UPSE, as labor unions, have standing to sue for ERISA relief.
See Physicians Health, 287 F.3d at 121 (collecting cases for the
proposition that only statutorily enumerated parties have standing in ERISA
cases). Plaintiffs’ argument to the contrary is misguided. See id.; see also
Toussaint v. JJ Weiser & Co., No. 04 Civ. 2592, 2005 WL 356834, at *6
(S.D.N.Y. Feb. 13, 2005) (holding a union was “not a participant as defined
by ERISA, because it is not an employee, former employee, member, or
former member of an employee organization with eligibility to receive
benefits”). Consequently, because plaintiffs do not have a cognizable
cause of action, the court grants Local 200's cross motion for judgment on
the pleadings.
V. Conclusion
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WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that plaintiffs’ motion for remand (Dkt. No. 10) is
DENIED; and it is further
ORDERED that Local 200’s cross motion for judgment on the
pleadings (Dkt. No. 15) is GRANTED; and it is further
ORDERED that the Clerk close this case; and it is further
ORDERED that the Clerk provide a copy of this MemorandumDecision and Order to the parties.
IT IS SO ORDERED.
July 12, 2016
Albany, New York

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