ZGRABLICH v. CARDONE INDUSTRIES, INC.
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE R. BARCLAY SURRICK ON 2/3/16. 2/4/16 ENTERED AND COPIES E-MAILED.(kw, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CARDONE INDUSTRIES, INC.
FEBRUARY 3 , 2016
Plaintiff Frank Zgrablich was terminated by his employer, Defendant Cardone Industries,
Inc. (“Cardone Industries”), after serving as a corporate executive for more than seven years.
Cardone Industries refused to provide certain severance benefits to Zgrablich following his
termination. In an attempt to recover the unpaid benefits, Zgrablich sued Cardone Industries in
the Court of Common Pleas of Bucks County, Pennsylvania. Cardone Industries removed the
matter to this Court. (ECF No. 1.) In its Notice of Removal, Cardone Industries alleges that
Zgrablich’s state law claims, which are based on an employment agreement entered into with
Cardone Industries, are completely preempted by the Employment Retirement Income Security
Act of 1974 (“ERISA”). Presently before the Court is Plaintiff’s Motion to Remand. (ECF No.
6.) Plaintiff contends that this is not a case governed by ERISA and that this Court lacks subject
matter jurisdiction. For the following reasons, Plaintiff’s Motion to Remand will be denied.
The following facts are taken from Plaintiff’s Amended Complaint and the Employment
Agreement between Zgrablich and Cardone Industries that is attached thereto. 1
Frank Zgrablich was Cardone Industries’ global human resources leader until the
company promoted him to Executive Vice President of Latin America Operations in August of
2007. (Am. Compl. ¶ 30; Emp’t Agrm’t, Ex. A., ECF No. 5); Zgrablich accepted the promotion
after Cardone Industries decided to move many of its operations from Philadelphia, Pennsylvania
to Mexico. (Am. Compl. ¶¶ 29-30.) As Cardone Industries’ Executive Vice President of Latin
America Operations, Zgrablich was required to live near the Texas-Mexico border so that he
could oversee Cardone Industries’ business in Mexico and its expansion into Latin America. (Id.
¶ 30.) Zgrablich and Cardone Industries memorialized the terms of Plaintiff’s new role in an
Employment Agreement (the “Agreement”) that was signed by both parties on August 30, 2007.
The Agreement contains several provisions that detail the parties’ arrangement regarding
Plaintiff’s severance entitlements. (Id. at 2.) These provisions entitle Plaintiff to different
benefits depending upon whether Plaintiff was terminated “for cause,” “without cause,” “upon
death,” “upon disability,” etc. (Id.) The Agreement contemplates many more benefits for
without cause termination than it does for termination justified by cause. (Id. at 4.) For
example, under the Agreement, Zgrablich could collect the “continuation of the Executive’s then
In “[r]uling on whether an action should be remanded to the state court from which it
was removed, the district court must focus on the plaintiff's complaint at the time the petition for
removal was filed. In so ruling the district court must assume as true all factual allegations of the
complaint. . . .” Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir.
1987) (internal citation omitted).
annual salary for the five-year period” following without cause termination. (Id.) No such
benefit would be available to Zgrablich in the event of for cause termination. (Id.)
Cardone Industries terminated Zgrablich on November 17, 2014. (Am. Compl. ¶ 34.)
Zgrablich alleges that Cardone Industries fired him without cause, and that the Company
therefore owes him the benefits detailed in the Agreement’s “Termination By the Company
Without Cause” provision. (Id. ¶ 14.) Specifically, Zgrablich argues that the Agreement
establishes Cardone Industries’ contractual obligation to pay him $1,575,000, which is five times
the base annual salary that Zgrablich collected at the time of his termination. (Id.) Cardone
Industries has refused to pay Zgrablich any such benefits. (Id. ¶ 12.) Plaintiff asserts two
additional grounds for relief. In Count II of his Amended Complaint, Zgrablich alleges that
Defendant’s refusal to confer the benefits contemplated in the Employment Agreement
constitutes a violation of the Pennsylvania Wage Payment and Collection Law, 43 Pa. Cons. Stat.
§ 2601.1, et seq. (Id. ¶¶ 22-27.) Plaintiff also seeks damages based on his alleged reliance on
promises made to him by Defendant related to his move to Texas. (Id. ¶¶ 28-35.)
On July 5, 2015, Zgrablich filed this lawsuit in the Court of Common Pleas of Bucks
County. See Compl. Zgrablich v. Cardone Industries, Inc., No. 2015-0491 (Pa. Commw. Ct. Jul.
5, 2015). Zgrablich’s Complaint alleges three causes of action: breach of contract, violation of
the Pennsylvania Wage Payment and Collection Law, and promissory estoppel. Id. On August
17, 2015, Cardone Industries removed the case to this Court, asserting that this Court has federal
question jurisdiction under 28 U.S.C. § 1331. (Notice of Removal.) Specifically, the company
contends this Court has jurisdiction over Zgrablich’s breach of contract claim since it is
exclusively governed by ERISA. (Id. ¶ 16.) Cardone Industries’ Notice of Removal asks this
Court to exercise supplemental jurisdiction pursuant 28 U.S.C. § 1367 over any claims that are
not solely governed by ERISA. (Id. ¶ 20.) Zgrablich now seeks remand of this action,
contending that this Court does not have jurisdiction over this lawsuit for two reasons: (1) his
state law claims are not preempted by ERISA, and (2) the parties have agreed to have their
contractual disputes resolved exclusively under the laws of Pennsylvania. (Mot. to Remand ¶ 56, ECF No. 6.)
Removal of an action from state court is proper in “any civil action . . . of which the
district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). A case
removed from state court shall, however, be remanded “[i]f at any time before final judgment it
appears that the district court lacks subject matter jurisdiction.” 28 U.S.C. § 1447(c); see also
Tellado v. Roto-Die, Inc., No. 04-3382, 2005 WL 724094, at *1 (E.D. Pa. Mar. 29, 2005).
Jurisdiction in a federal district court may be based upon: (1) a federal question under 28
U.S.C. § 1331; or (2) diversity under 28 U.S.C. § 1332. The federal question jurisdiction
provision states: “The district courts shall have original jurisdiction of all civil actions arising
under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. In this case,
the parties disagree about whether this action arises under ERISA—a federal statute. Therefore,
the question before the Court is one of jurisdiction rather than a decision on the merits of the
case. Ingemi v. Pelino & Lentz, P.C., 866 F. Supp. 156, 160 (D.N.J. 1994).
In resolving the parties’ dispute, we must assume that all of the fact-based allegations in
the Complaint are true. Steel Valley Auth., 809 F.2d at 1010 (citing Green v. Amerada Hess
Corp., 707 F.2d 201, 205(5th Cir. 1983). The defendant as the removing party bears the burden
of proving to a legal certainty that federal subject matter jurisdiction exists. Samuel-Bassett v.
Kia Motors Am., Inc., 357 F.3d 392, 396 (3d Cir. 2004). Because the removal statutes are
strictly construed against removal, Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir.
1990), all doubts must be resolved in favor of remand. Samuel-Bassett, 357 F.3d at 403.
Complete Preemption of State Law Claims Under ERISA
Plaintiff argues that this matter should be remanded to the Court of Common Pleas
because the Complaint does not present a federal question that would support removal. (Mot. to
Remand ¶¶ 18-20.) Defendant contends that § 502(a) of ERISA requires that this Court hear the
issues raised in the Zgrablich Complaint. (Notice of Removal ¶ 18.) Specifically, the company
argues that § 502(a) completely preempts Plaintiff’s claims. (Id. ¶ 18.)
A federal court generally does not have jurisdiction over a case unless it presents a
question based on federal law. Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). The
exception to this is cases based on diversity jurisdiction. Id. (“Absent diversity of citizenship,
federal-question jurisdiction is required.”). A cause of action ordinarily arises under federal law
only where the plaintiff’s well-pleaded complaint raises issues of federal law. Id.; see also In re
U.S. Healthcare., 193 F.3d 151, 160 (3d Cir. 1999). It follows that a civil action filed in state
court is removable to federal court if the claim is one “arising under,” inter alia, the laws of the
United States. 28 U.S.C. §§ 1331, 1441(a). On its face, Plaintiff’s Complaint does not present a
federal question. Rather, the Complaint asserts, inter alia, a state common law claim for breach
of contract. Defendant argues that, as an action preempted by ERISA, Plaintiff’s suit is
unaffected by the well-pleaded complaint rule and is governed by federal law.
“Federal pre-emption is ordinarily a federal defense to [a] plaintiff’s suit.” Metro. Life
Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). A defense that raises a federal question is usually
inadequate to invoke federal question jurisdiction because courts generally look only to the
complaint to search for federal question jurisdiction. See Merrell Dow Pharm., Inc. v.
Thompson, 478 U.S. 804, 808 (1986); Caterpillar, 482 U.S. at 392. “As a defense, [preemption]
does not appear on the face of a well-pleaded complaint, and, therefore does not authorize
removal to federal court.” Metro Life Ins. Co., 481 U.S. at 63. This general rule seems fatal to
Defendant’s attempt to remove this action on the basis that ERISA pre-emption establishes
federal question jurisdiction over Plaintiff’s state law claims. However, an exception to the wellpleaded complaint rule exists when “the pre-emptive force of a statute is so ‘extraordinary’ that it
‘converts an ordinary state common-law complaint into one stating a federal claim for purposes
of the well-pleaded complaint rule.’” Caterpillar, 482 U.S. at 392 (citing Metro. Life Ins. Co.,
481 U.S. at 67). Section 502 of ERISA has such preemptive force. See Pascack Valley Hosp.,
Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 399-400 (3d Cir. 2004).
State law causes of action that are “within the scope of the civil enforcement provisions of §
502(a) are removable to federal court.” Davila, 542 U.S. at 209 (citation and internal quotations
There are two variants of ERISA preemption: complete preemption under § 502(a), see
29 U.S.C. § 1132(a), and express preemption under § 514(a), see 29 U.S.C. § 1144(a). The
Third Circuit has clarified the differences. See In re U.S. Healthcare, 193 F.3d at 160-61.
Complete preemption is a jurisdictional concept. It “operates to confer original federal subject
matter jurisdiction notwithstanding the absence of a federal cause of action on the face of the
complaint.” Id. at 160. State law claims subject to complete preemption are “necessarily federal
in character” and, as such, are transformed into federal claims. Id. (citing Metro. Life Ins. Co.,
481 U.S. at 63). Express preemption on the other hand is a “substantive concept governing the
applicable law.” Id. It concerns state laws that “relate to” employee benefit plans. Id. “Unlike
the scope of § 502(a), which . . . creates a basis for removal to federal court, § 514(a) merely
“governs the law that will apply to state law claims, regardless of whether the case is brought in
state or federal court.” Lazorko v. Pa. Hosp., 237 F.3d 242, 248 (3d Cir. 2000). We must
therefore determine whether Plaintiff’s state law claims are preempted by § 502(a).
ERISA governs the rights of participants in employee benefit plans. The issues raised in
Plaintiff’s Complaint are precisely the kind that ERISA permits to be resolved in a federal forum.
The Supreme Court of the United States in Davila noted that “Congress enacted ERISA to
‘protect . . . the interests of participants in employee benefit plans . . .’ and to ‘provid[e] . . .
ready access to the Federal courts.’” Davila, 542 U.S. at 208 (citing 29 U.S.C. § 1001(b)). “To
this end, ERISA includes expansive pre-emption provisions which are intended to ensure that
employee benefit plan regulation would be exclusively a federal concern.” Id. (citation and
internal quotation marks omitted). “[I]f an individual at some point in time could have brought
his claim under ERISA § 502(a)(1)(B) and . . . there is no other independent legal duty that is
implicated by a defendant’s actions, then the individual’s cause of action is completely preempted by ERISA . . . .” Davila, 542 U.S. at 210; see also Pascack Valley Hosp., 388 F.3d at
Section 502(a)(1)(B) of ERISA, establishes a cause of action under ERISA, by providing,
in relevant part, that:
[a] civil action may be brought by a 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
29 U.S.C. § 1132(a)(1)(B). In order to bring an action under § 502(a)(1)(B), the litigant must be
a participant or beneficiary of the plan and the action must be brought to enforce the participant’s
rights due under the plan.
Whether the Severance Agreement is an ERISA Plan
Whether the civil enforcement mechanisms of § 502(a)(1)(B) preempt Plaintiff’s claims
will depend on whether the Employment Agreement between Plaintiff and Defendant is a plan
governed by ERISA.
There are two types of employee benefit plans under ERISA: (1) “welfare benefit” plans,
which provide medical benefits and any benefits “other than pensions on retirement or death;”
and (2) employee “pension benefit” plans, which “provide retirement income” or “results in a
deferral of income [until retirement].” 29 U.S.C. § 1002(1)-(2); see also Koenig v. Automatic
Data Processing, 156 F. App’x 461, 466 (3d Cir. 2005). Defendant argues that the severance
portion of the Agreement is an employee pension benefit plan as defined by § 1002(2). (Notice
of Removal ¶ 16).
“[A] comparison of the statutory definitions of a welfare plan and a pension plan reveals
that the only significant difference between these varieties of employee benefit plans is the
nature of the benefit furnished—a pension plan provides retirement income or other deferred
income, while a welfare plan provides benefits upon the occurrence of various specified
contingencies.” Colarusso v. Transcapital Fiscal Sys., Inc., 227 F. Supp. 2d 243, 251 (D.N.J.
2002). Plaintiff argues that Defendant never established or maintained an ERISA plan of any
ERISA does not define the term “plan.” However, the Third Circuit has observed that
“[a]n employer can establish an ERISA plan rather easily.” Gruber v. Hubbard Bert Karle
Weber, Inc., 159 F.3d 780, 789 (3d Cir. 1998) (citation omitted). In deciding whether the
Employment Agreement’s severance provisions constitute an ERISA plan, we must determine
whether “’from the surrounding circumstances a reasonable person could ascertain the intended
benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits.’”
Shaver v. Siemens Corp., 670 F.3d 462, 475 (3d Cir. 2012) (quotingDonovan v. C.H. Dillingham,
688 F.2d 1367, 1373 (11th Cir. 1982)). The parties here have provided a written agreement that
satisfies all the requirements of an ERISA plan. 2
The “Severance” provisions included in the Agreement provide a comprehensive
description of the plan benefits available to Plaintiff at termination. (Emp’t Agm’t 2-6.) The
provisions set forth in a clear fashion the precise benefits that are available, who is entitled to
those benefits, the requirements to receive such benefits, and the limits on claims to the benefits
contemplated by the Agreement. (Id.) This information is clearly ascertainable by reading the
document. Any executive who received a copy of this Agreement could easily ascertain not only
the benefits offered under the plan, but also the intended beneficiaries under the plan. The
source of funding is clearly the employer, Cardone Industries, which has established the
Agreement to provide the enumerated benefits to the Plaintiff and his beneficiaries. (Id.) In
addition, the Agreement specifically lists the company as having coexisting obligations. (Id.)
The final requirement for establishing the existence of an ERISA plan is also met. The
severance provisions describe when and how benefits are to be distributed to Plaintiff or his
In determining whether a plaintiff has artfully pled his suit so as to couch a federal
claim in terms of state law, the Court is permitted to look beyond the face of the complaint.
Pascack, 388 F.3d at 400 (citing Pryzbowski v. U.S. Healthcare, Inc., 245 F.3d 266, 268, 274
(3d Cir. 2001)); see also Davila, 542 U.S. at 211 (noting that to determine whether a cause of
action falls within the scope of § 502(a)(1)(B), courts must examine the complaint, the statute
on which the state law claims are based, and the various plan documents).
beneficiaries. (Id.) A reasonable person could easily ascertain all information required to
establish a plan directly from the Agreement.
Our analysis does not end here, however, because “severance benefits do not implicate
ERISA unless they require the establishment and maintenance of a separate and ongoing
administrative scheme.” Angst v. Mack Trucks, Inc., 969 F.2d 1530, 1538 (3d Cir. 1992); see
also Menkes v. Prudential Ins. Co. of Am., 762 F.3d 285, 290-91 (3d Cir. 2014). The Supreme
Court discussed this requirement in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987). In
Fort Halifax, the Court held that a state statute requiring employers to make a one-time, lumpsum severance payment to terminated employees did not implicate ERISA. Id. at 12. The Court
stated that “[t]he requirement of a one-time, lump-sum payment triggered by a single event
requires no administrative scheme whatsoever to meet the employer’s obligation . . . . To do little
more than write a check hardly constitutes the operation of a benefit plan.” Id. The critical
question is whether “the employer, to determine the employee’s eligibility for and level of
benefits, must analyze each employee’s particular circumstances in light of the [policy’s]
criteria.” Menkes, 762 F.3d at 291 (alteration in original) (citation omitted); see also Coggins v.
Keystone Foods, LLC, No. 15-480, 2015 WL 3400938, at *6 (E.D. Pa. May 27, 2015); Middleton
v. Phila. Elec. Co., 850 F. Supp. 348, 352 (E.D. Pa. 1994).
The Third Circuit has had several opportunities to apply Fort Halifax. The analyses of
the Third Circuit have focused on the amount of employer discretion involved in determining an
employee’s right to benefits. See, e.g., Angst, 969 F.2d at 1530; Pane v. RCA, Corp., 868 F.2d
631 (3rd Cir. 1989). A plan is said to require the establishment and maintenance of a separate
and ongoing administrative scheme only if the plan administrator must determine an employee’s
right to collect benefits based on subjective criteria. For example, in Pane, the Third Circuit
affirmed the district court’s ruling that a severance plan set up to retain a select group of
company executives was an ERISA plan. 868 F.2d at 635. The trial court relied on the fact that,
under the severance plan, the employee was entitled to benefits only if he or she was terminated
for reasons other than for cause. Therefore, “the circumstances of each employee’s termination
[had to] be analyzed in light of [certain] criteria, and an ongoing administrative system
constituting an ERISA plan exist[ed].” Pane v. RCA Corp., 667 F. Supp. 168, 171 (D.N.J.
1987), aff’d, 868 F.2d 631 (3d Cir. 1989).
Here, as in Pane, Plaintiff’s eligibility to collect the severance benefits as set forth in the
Agreement turns on whether he was terminated with or without cause—a standard requiring the
exercise of judgment on a case-by-case basis. (Emp’t Agm’t 4.) Standing alone, this fact is
strong proof that the plan at issue “involve[s] a separate determination of each individual’s
eligibility for benefits” and is therefore governed by ERISA. See Pane, 667 F. Supp. at 170. In
addition to providing benefits that vary based on the reason for termination, the Agreement has
language demonstrating the ongoing need for administration of the plan. For example, Cardone
Industries is not obligated to provide Plaintiff with medical coverage if “the Executive obtains
comparable substitute coverage from another employer.” (Emp’t Agm’t 2-4.) In addition, all
severance and medical benefits provided by the Agreement terminate “[i]n the event the
Executive breaches any of the restrictions or provisions in the Agreement’s Non-Compete; NonSolicitation clause.” (Emp’t Agm’t 10.) Because eligibility to benefits under the plan turns on
the subjective circumstances of Plaintiff’s termination and requires an “administrative apparatus
that would analyze each employees’ situation in light of particular criteria,” Angst, 969 F.2d at
1539, the law requires a finding that the Agreement created an ERISA benefits plan.
Plaintiff argues that Pane is not controlling here. Plaintiff cites Fort Halifax and Angst
and several other out-of-circuit authorities in arguing that the Agreement does not create an
ERISA plan. He argues that the severance arrangement at issue here provides only a single
payment of an amount that can be determined by a “simple one-time calculation.” (Br. in Supp.
of Mot. to Remand ¶¶ 5-6, ECF No. 6.) This is simply not the case. The provisions at issue
provide for the continuation of Plaintiff’s salary and health care coverage for at least five years
following a no-cause termination and subject to other criterion mentioned above. In addition,
Plaintiff cites Fifth and Ninth Circuit cases, asserting that a “for cause” termination provision is
not sufficient to turn a severance agreement into an ERISA plan. (Id. ¶ 6.) As previously
discussed, the Agreement is unlike the statute at issue in Fort Halifax and the plan discussed in
Angst because it contemplates much more than a uniform one-time, lump-sum severance
payment. Instead, the provisions in the Agreement clearly demonstrate the need for an
administrative apparatus as required by the Third Circuit. (See supra § III.A.1.)
In addition, Plaintiff argues that “an individual one-person employment agreement does
not constitute a ‘plan’ under ERISA.” (Br. in Supp. of Mot. to Remand ¶ 6.) We reject this
argument. The Agreement itself recognizes that other senior company executives made similar
agreements. (See Emp’t Agm’t 2 (“[T]he Executive shall be entitled to participate in all of the
Company’s employee benefit plans on the same basis as those benefits that are generally made
available to other senior executives of the Company. . . .”).) Plaintiff’s suggestion that an
employment agreement does not constitute an ERISA plan if only a single employee is a signee
of the agreement is simply wrong. See e.g., Pane, 868 F.2d at 633 (recognizing that individual
employment and severance agreements between the defendant and company executives may
constitute ERISA plans).
The Agreement here is a plan governed by ERISA. We will determine whether
Plaintiff’s specific causes of action are within the scope of claims that may be brought under §
The Davila Analysis
The Supreme Court’s analysis in Davila may initially be divided into two inquires. First,
the Court must determine whether the Plaintiff is a participant or beneficiary of an ERISA
employee benefit plan. Second, the court must determine whether Plaintiff seeks to recover
benefits due to him under the terms of his plan. See Pascack Valley Hosp., 388 F.3d at 400. As
discussed above, Defendant here established an ERISA plan. See supra § III.A.1. Moreover,
Plaintiff is a party that can bring a claim pursuant to § 502(a)(1)(B). A “participant” is “any
employee or former employee of an employer . . . who is or may become eligible to receive a
benefit of any type from an employee benefit plan which covers employees of such employer . . .
” N.J. Brain & Spine Ctr. v. Aetna, Inc., 801 F.3d 369, 372 (3d Cir. 2015) (citing 29 U.S.C. §
1002(7)). The Agreement explicitly lists Plaintiff as an executive who is entitled to recover
under the plan. (Emp’t Agm’t 1.) Plaintiff is a “participant” of an ERISA plan.
In addition, Plaintiff is seeking benefits due to him under the plan. In analyzing this
requirement, courts have distinguished “between claims involving the ‘right to payment’ and
claims involving the ‘amount of payment’-that is, on the one hand, claims that implicate
coverage and benefits established by the terms of the ERISA benefit plan, and, on the other hand,
claims regarding the computation of contract payments or the correct execution of such
payments.” Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 331 (2d Cir. 2011); see
also Pascack Valley Hosp., 388 F.3d at 403-04 (finding no ERISA preemption of claims where
the dispute was over the amount of payment rather than the right to payment). Only the former
may “constitute claims for benefits that can be brought pursuant to § 502(a)(1)(B) . . .”
Montefiore, 642 F.3d at 331; see also Pascack Valley Hosp., 388 F.3d at 403-04; Lone Star
OB/GYN Assocs v. Aetna Health Inc., 579 F.3d 525, 531 n.6 (5th Cir. 2009). Here, Counts I and
II of Plaintiff’s Complaint are “right to payment claim[s].” Indeed, Plaintiff brought this
litigation to challenge Cardone Industries’ determination that he has no right to payment under
Moreover, removal is proper only if Defendant’s actions have not implicated an
independent legal duty. Pascack Valley Hosp., 388 F.3d at 400. The inquiry here asks whether
Defendant’s refusal to provide severance benefits to Plaintiff gives rise to a duty that is separate
and apart from Defendant’s obligations under the plan. Plaintiff has not attempted to identify
another independent legal duty, and we are aware of none based upon the allegations in
Count I alleges that Defendant’s refusal to provide severance benefits to Plaintiff
constitutes a breach of the Employment Agreement. (Am. Compl. ¶¶ 1-21.) Count II alleges
that Defendant retains such compensation in violation of the Pennsylvania Wage Payment and
Collection Law. (Id. ¶¶ 22-27.) Both of these claims are completely preempted since they are
completely “within the scope of” ERISA § 502(a)(1)(B). As a result, this Court has federal
question jurisdiction under 28 U.S.C. § 1331, and removal was proper. Accordingly, Plaintiff’s
Motion to Remand will be denied. 3
Contractual Waiver of ERISA Preemption
Zgrablich also argues that removal is unavailable here because the parties agreed to the
exclusive application of Pennsylvania law. The Employment Agreement states, in relevant part:
Defendant has not suggested and we do not hold that Plaintiff’s promissory estoppel
claim (Count III) requires interpretation of the federally regulated plan.
This Agreement and all rights, remedies and obligations hereunder . . . shall be
governed by the laws of the Commonwealth of Pennsylvania. To the full extent
lawful, each of the Company and the Executive hereby consents irrevocably to
personal jurisdiction, service and venue in connection with any claim or
controversy arising out of this Agreement in the courts of the Commonwealth of
Pennsylvania located in Philadelphia County, Pennsylvania and in the federal
courts in [the] District of Pennsylvania.
(Emp’t Agm’t 11.) Plaintiff contends that this choice-of-law provision constitutes a waiver of
ERISA preemption and requires that this case be resolved under Pennsylvania law rather than
under federal law. (Mot. to Remand ¶ 22.)
Initially, we note that the Agreement’s “Governing law; Jurisdiction” provision does not
proscribe federal court jurisdiction. (Emp’t Agm’t 11.) The parties agreed to jurisdiction in both
state and federal courts. (Id.) The Agreement also provides a choice-of-law provision, which
provides that Pennsylvania’s substantive law will govern disputes arising out of the Agreement.
(Id.) Since § 502(a) “‘converts an ordinary state common law complaint into one stating a
federal claim . . . ,’” we address Plaintiff’s contractual waiver argument. Pascack Valley Hosp.,
388 F.3d at 399 (citing Davila, 542 U.S. at 209).
The Third Circuit has never recognized the right of a party to contractually choose state
law as the law governing an ERISA plan. Plaintiff has cited no Third Circuit authority in support
of this proposition, and we are aware of none. It is beyond dispute that ERISA presents
complete preemption pursuant to the broad and expansive sweep of § 502(a)(1)(B), and that
“causes of action within the scope of the civil enforcement provisions of § 502(a) [are]
removable to federal court.” Davila, 542 U.S. at 209 (alteration in original) (citing Metro. Life
Ins. Co., 481 U.S. at 66). The instant case was properly removed based upon complete
preemption. Plaintiff’s contention that preemption under § 502(a)(1)(B) is subject to contractual
waiver despite the provision’s “extraordinary pre-emptive power” is novel and unconvincing.
See Metro. Life Ins. Co., 481 U.S. at 65-66. Moreover, the cases cited by Plaintiff in support of
his claim are easily distinguished.
Precedent in this circuit could not be clearer. Our Court of Appeals has said: “[S]tate
law causes of action that are within the scope of . . . § 502(a) are completely pre-empted and
therefore removable to federal court,” Pascack, 388 F.3d at 400, and that “state laws that
supplement ERISA’s civil enforcement scheme conflict with Congress' intent to make the
ERISA remedy exclusive, Barber v. Unum Life Ins. Co. of Am., 383 F.3d 134, 140 (3d Cir. 2004)
(internal citation and quotation marks omitted).
Moreover, federal appellate courts that have considered whether parties may contract
around ERISA preemption have uniformly held they may not. See, e.g., Tompkins v. United
Healthcare of New England, Inc., 203 F.3d 90, 97 (1st Cir. 2000) (“Although in some
circumstances contractual waiver of statutory rights is permissible . . . we find no case holding
that parties may contractually waive the right to assert ERISA preemption.”); Prudential Ins. Co.
of Am. v. Doe, 140 F.3d 785, 791 (8th Cir. 1998) (“[P]arties may not contract to choose state law
as the governing law of an ERISA-governed benefit plan.”); Morton v. Smith, 91 F.3d 867, 871
(7th Cir. 1996) (noting that choice-of-law provision does not limit trustees of an ERISA plan to
the confines of state law). We reject Plaintiff’s contractual waiver argument.
Under 28 U.S.C. § 1367(a), district courts “shall have supplemental jurisdiction over all
other claims that are so related to claims in the action within such original jurisdiction that they
form part of the same case or controversy.”
In order to exercise supplemental jurisdiction over a state law claim, a federal court must
first have before it a claim sufficient to confer subject matter jurisdiction. See United Mine
Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966). Furthermore, the federal claim and state
claim must stem from the same “common nucleus of operative fact;” in other words, they must
be such that the plaintiff “would ordinarily be expected to try them all in one judicial
As discussed above, two of the claims for reimbursement brought by Plaintiff are
completely preempted by ERISA and therefore give rise to federal subject matter jurisdiction.
See Pryzbowski, 245 F.3d at 276 (noting where district court has jurisdiction over one claim by
virtue of preemption under § 502(a), it has discretion to decide whether to exercise supplemental
jurisdiction over claims arising from the same factual predicate or remand to state court).
Therefore the question is whether the other state law claim arises from the same common
nucleus of operative fact. Gibbs, 383 U.S. at 725. Here, the parties do not dispute that all of the
claims asserted by Plaintiff involve the Cardone Industries’ refusal to pay severance benefits to
Zgrablich in connection with his tenure as a company executive. Therefore, this Court has
Plaintiff’s Costs and Attorney’s Fees
Finally, we will deny Plaintiff’s request for attorney’s fees and costs. Under 28 U.S.C. §
1447(c), district courts have authority to award plaintiff attorney’s fees and costs incurred as a
result of removal. 28 U.S.C. § 1447(c) (“An order remanding the case may require payment of
just costs and any actual expenses, including attorney fees, incurred as a result of the removal.”).
“Awarding attorney’s fees and costs is usually limited to situations where nonremovability is
obvious or where a defendant did not act in good faith.” Campbell v. Oxford Elecs., Inc., No.
07-541, 2007 WL 2011484, at *11 (E.D. Pa. July 5, 2007). Defendant has successfully argued in
support of removal and in opposition to remand. Accordingly, there will be no award of fees and
For the foregoing reasons, Plaintiff’s Motion to Remand will be denied.
An appropriate Order follows.
BY THE COURT:
R. BARCLAY SURRICK, J.
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