Rodriguez-Rosario et al v. Syntex (FP), Inc. et al

Filing 22

OPINION AND ORDER re 16 Motion to Remand to State Court. The Court GRANTS plaintiffs' motion to remand to state court. This case is remanded to the Court of First Instance of Puerto Rico, Humacao Superior Division. Judgment shall be entered accordingly. Signed by Judge Francisco A. Besosa on 02/09/2012. (brc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
ROBERTO RODRIGUEZ ROSARIO, et
al.,
Plaintiffs,
CIVIL NO. 11-1376 (FAB)

v.
SYNTEX (F.P.), INC., et als.,
Defendants.

OPINION AND ORDER1
BESOSA, District Judge.
Before the Court is plaintiffs’ amended motion to remand this
case to the Puerto Rico Court of First Instance, Humacao Superior
Division (Docket No. 16), and defendants Syntex (F.P.), Inc.’s and
Syntex Puerto Rico, Inc.’s (“Syntex”) opposition to the motion to
remand.

(Docket No. 20.)

For the reasons set forth below,

plaintiffs’ amended motion to remand is GRANTED.
DISCUSSION
I.

Background
A.

Facts
Roberto Rodriguez-Rosario, Ramon Gonzalez-Ortiz, Leocadio

Rivera-Velazquez, and Jose Ramon Santiago-Ortiz (“plaintiffs”)
allege that on or about November 14, 1996, Syntex notified them

1

Elizabeth Gray, a second-year student at the University of
New Hampshire Law School, assisted in the preparation of this
Opinion and Order.

Civil No. 11-1376 (FAB)

2

that the company was closing the plant in which they were employed.
(Docket No. 12-1 at p. 1, ¶ 3.)

Syntex informed its employees that

an enhanced severance payment would be available if they remained
in their positions while the company diminished operations.

(Id.)

Employees received a memo which detailed how the severance pay
would be calculated.

(Id. at p. 2, ¶ 3.)

The memo also mentioned

that employees would be required to sign a document to release the
company from “all claim” [sic].

(Id.)

On or about July 30, 1999,

the plaintiffs received the release document.

(Id. at p. 2, ¶ 5.)

The plaintiffs refused to sign the document because they did not
want to waive their rights in a separate pending lawsuit against
Syntex.

(Id.)

The plaintiffs were laid off on July 31, 1999, and

have not received payment from Syntex.
B.

(Id.)

Procedural History
On September 20, 1999, plaintiffs sued Syntex pursuant to

Puerto Rico law in the Puerto Rico Court of First Instance, Humacao
Superior Division (Civil No. HSCI2005-00911) for Syntex’s alleged
failure to perform under the terms of the Syntex Severance Pay Plan
(“Syntex Plan”).

(Docket No. 1-6.)

On March 15, 2011, the

plaintiffs filed an Informative Motion and Request for Order in
state court, requesting an interpretation of the Syntex Plan.
(Docket No. 12-5.)

On April 20, 2011, Syntex removed the case to

this forum, arguing that the Syntex Plan is an “employee welfare
benefit plan” covered by the Employee Retirement Income Security

Civil No. 11-1376 (FAB)

3

Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq., and as such, the
plaintiffs’ cause of action amounts to a claim for benefits under
ERISA § 502(a)(1)(B), 29 U.S.C. 1132(a)(1)(B).
pp.

3-5.)

Syntex

asserts

that

this

(Docket No. 1 at

Court

has

jurisdiction and that removal was therefore proper.

concurrent
(Id. at 3.)

Subsequently, plaintiffs moved to remand the case to the
Puerto Rico Court of First Instance, Humacao Superior Division on
June 17, 2011.

(Docket No. 17.)

is not an ERISA plan because:

They argue that the Syntex Plan

(1) it does not require “continuous

administrative and financial obligations” by the employer and
(2) it lacks “management discretion as to the eligibility of
participants.”
that:

(1)

(Docket No. 16 at pp. 5-6.)

ERISA’s

preemption

is

Plaintiffs also argue

limited

in

this

instance,

(2) there was a “serious defect” in Syntex’s Notice of Removal,
(3) Syntex delayed filing its Notice of Removal, and (4) removal is
barred due to res judicata.
On

July

5,

(Docket No. 16 at pp. 3-8.)

2011,

Syntex

filed

an

opposition

to

plaintiffs’ motion to remand, responding that (1) failure to notify
the Court of a previous case removed and subsequently remanded does
not constitute a defect under 28 U.S.C. § 1447(c), (2) their Notice
of Removal was filed in a timely manner, (3) res judicata does not
preclude the removal of the case, and (4) the Syntex Plan is an
ERISA covered plan.

(Docket No. 20 at pp. 2-4.)

address each argument in turn.

The Court will

Civil No. 11-1376 (FAB)
II.

4

Standards
A.

Removal
Removal of a case to federal court is allowed if a

defendant can “make a ‘colorable’ showing that a basis for federal
jurisdiction exists.”

Danca v. Private Health Care Sys., 185 F.3d

1, 4 (1st Cir. 1999) (citing BIW Deceived v. Local S6, 132 F.3d
824, 831 (1st Cir. 1997)).

One such instance occurs when the

plaintiff could have originally filed the action in federal court.
28 U.S.C. § 1441.

Uncertainty in the source of law should be

“resolved against removal.”

See Rossello-Gonzalez v. Calderon-

Serra, 398 F.3d 1, 11 (1st Cir. 2004) (citing Shamrock Oil & Gas
Corp. v. Sheets, 313 U.S. 100, 108-09 (1941)).
B.

Federal Question Jurisdiction and Preemption
“Federal question” jurisdiction exists in cases “arising

under the Constitution, laws, or treaties of the United States.”
28 U.S.C. § 1331.

The “federal question” must exist on the face of

the plaintiff’s complaint.

See Rossello–Gonzalez, 398 F.3d at 10.

Known as the “well-pleaded complaint” rule, courts must determine
if the “plaintiff’s claim to relief rests upon a federal right”
based solely upon their complaint.

Id. (quoting Hernandez-Agosto

v. Romero-Barcelo, 748 F.2d 1, 2 (1st Cir. 1984) (emphasis in
original); see Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 64–65
(1987).

Civil No. 11-1376 (FAB)

5

An exception to the “well-pleaded complaint” rule arises
when “Congress [] completely preempt[s] a particular area [of law]
such that any civil complaint raising this select group of claims
is necessarily federal in character.”

Metro. Life Ins. Co., 481

U.S. at 63–64. The “complete preemption” doctrine allows courts to
determine if a plaintiff has merely posed a “federal claim under
state-law colors.” BIW Deceived, 132 F.3d at 831 (citing Federated
Dep’t. Stores, Inc. v. Moitie, 452 U.S. 394, 397 (1981)).

Thus, a

plaintiff may not sidestep an appropriate removal by using an
“artful pleading” to present his or her claim based only on state
law.

Id.
C.

ERISA Provisions
ERISA

falls

into

the

category

of

federal

statutes

Congress intended to preempt state-law claims.

See Aetna Health

Inc. v. Davila, 542 U.S. 200, 208-09 (2004).

Congress enacted

ERISA to protect both employers and employees alike.

See Fort

Halifax v. Coyne, 482 U.S. 1, 11 (1987); New England Mut. Life Ins.
Co. v. Baig, 166 F.3d 1, 3 (1st Cir. 1999).

ERISA alleviates the

administrative burden associated with “employee benefit plans” by
providing a “uniform set of administrative procedures governed by
a single set of regulations.”

Fort Halifax, 482 U.S. at 11.

Those

regulations “safeguard employee interests by reducing the threat of
abuse or mismanagement of funds.” O’Connor v. Commw. Gas. Co., 251

Civil No. 11-1376 (FAB)

6

F.3d 262, 266 (1st Cir. 2001) (citing Mass. v. Morash, 490 U.S.
107, 115 (1989) (internal quotation omitted).
To reach its objectives, Congress made ERISA’s preemption
provisions far-reaching to “ensure that employee benefit plan
regulation would be ‘exclusively a federal concern.’” Aetna Health
Inc., 542 U.S. at 208 (quoting Alessi v. Raybestos-Manhattan, Inc.,
451 U.S. 504, 523 (1981)); see ERISA § 514, 29 U.S.C. § 1144.
ERISA’s preemption provisions can reach a state law that simply
“‘relate[s] to’ an ERISA covered welfare benefit plan.”

ERISA

§ 514(a), 29 U.S.C. § 1144(a); Combined Mgmt. v. Superintendent of
the Bureau of Ins., 22 F.3d 1, 3 (1st Cir. 1994).2

The statute

considers “state laws” as “all laws, decision, rules, regulations,
or other State action having the effect of law.”
§ 1144(c)(1).
of “state.”

29 U.S.C.

The statute includes Puerto Rico in its definition
29 U.S.C. § 1002(10).

The civil-enforcement provision of ERISA enforces the
“expansive preemption provisions of the statute.”

Aetna Health

Inc., 542 U.S. at 208-09; see ERISA § 502(a)(1)(B), 29 U.S.C.
§ 1132(a)(1)(B).

2

The provision provides that “a plan participant

Section 514(a) provides in pertinent part that ERISA:

Shall supersede any and all State laws insofar as
they may now or hereafter relate to any employee benefit
plan described in section 1003(a) of this title and not
exempt under section 1003(b) of this title.
29 U.S.C. § 1144(a).

Civil No. 11-1376 (FAB)

7

or beneficiary may sue to recover benefits due under the plan, to
enforce the participant’s rights under the plan, or to clarify
rights to future benefits.”

29 U.S.C. § 1132(a)(1)(B).

Available

relief includes “accrued benefits due, a declaratory judgment on
entitlement

to

benefits,

or

an

injunction

against

a

plan

administrator’s improper refusal to pay benefits.” Pilot Life Ins.
Co. v. Dedeaux, 481 U.S. 41, 53 (1987).
A state law which serves as an “alternative enforcement
mechanism” of the civil-enforcement provision will warrant complete
preemption.

Danca, 185 F.3d at 5.

The state law must have a

connection to an ERISA plan which is not merely “tenuous, remote,
or peripheral.”

Combined Mgmt., 22 F.3d at 3 (internal citations

omitted).
For preemption purposes under ERISA, the Court must
undertake a two-part analysis.

First, the Court must determine if

the purported plan is “an employee benefit plan” within the scope
of ERISA. Rosario-Cordero v. Crowley Towing & Transp. Co., 43 F.3d
120, 124 (1st Cir. 1995).

Plans that pay severance benefits are

included in ERISA’s definition of an “employee benefit plan.”
29 U.S.C. § 1002; see Fort Halifax, 482 U.S. at 7, n. 5.

Second,

the Court must determine whether the claim relates to the plan.
Rosario, 46 F.3d at 124.

If both inquiries are affirmative, the

plaintiff’s claims are preempted by ERISA.

Colon-Rodriguez v.

Astra-Zeneca Pharms., LP, No. 11-1495, 2011 U.S. Dist. LEXIS

Civil No. 11-1376 (FAB)

8

143239, at *10 (D.P.R. Dec. 13, 2011) (Besosa, J.) (citing Galindez
v. Ortho Pharm., 328 F. Supp. 2d 213, 231 (D.P.R. 2004) (internal
citations omitted)).
The parties do not dispute whether the Syntex Plan was
properly accepted.

The plaintiffs concede that although they did

not sign the Syntex Plan and waiver, they accepted the Syntex Plan
by adhering to the conditions of the offer that was made in writing
on November 14, 1996.

(See Docket No. 12-1 at p. 3.)

Thus,

because plaintiffs concede they accepted the Syntex Plan, removal
to federal court was proper if (1) the Syntex Plan is an employee
benefit plan within the scope of ERISA and (2) the plaintiffs’
claim relates to the Syntex Plan.
67.

See Metro. Life, 481 U.S. at 66-

The Court now turns to the question of whether the Syntex Plan

is an ERISA employee benefit plan.
III. Discussion
A.

ERISA COVERAGE
Fort Halifax remains the seminal case in determining

whether a plan is an employee benefit plan within the scope of
ERISA.

Rodowicz v. Mass. Mut. Life Ins. Co., 192 F.3d 162, 170

(1st Cir. 1999).

The Fort Halifax court, however, did not provide

a specific set of criteria to determine ERISA eligibility of a
plan, and as a result, the determination is one based on degrees.
See O’Connor, 251 F.3d at 267 (citing Simas v. Quaker Fabric Corp.,
6 F.3d 849, 853 (1st Cir. 1993) (“It is a matter of degrees but

Civil No. 11-1376 (FAB)

9

under Fort Halifax degrees are crucial.”)).

The Court will first

determine if the Syntex Plan imposed a “continuous administrative
and financial obligation[]” upon Syntex.

Then the Court will

consider if the Syntex Plan lacks “management discretion as to the
eligibility of participants.”

Finally, the Court will examine

Syntex’s intent to create an ERISA-covered plan. The First Circuit
Court of Appeals has acknowledged that a Fort Halifax analysis will
require line drawing and “close cases will approach the line from
both sides.”
1.

Simas, 6 F.3d at 854.
The Syntex Plan does not require continuous and
administrative financial obligations
The plaintiffs first argue that the Syntex Plan did

not have the “continuous administrative and financial obligations”
required of an ERISA plan.

(Docket No. 16 at pp. 5-6.)

Syntex

responds that an ongoing administrative scheme is present because
the severance payment could be received in installments over time.
(Docket No. 20 at p. 9.)

The “nature and extent of an employer’s

benefit obligations” examines if there is an “undertaking of
continuing administrative and financial obligations” which benefit
the employee.

See Belanger v. Wyman-Gordon Co., 71 F.3d 451, 454

(1st Cir. 1993) (citing Fort Halifax, 482 U.S. at 12) (holding that
a severance payment made as a “one-time, lump-sum payment” did not
create the need for an administrative operation). The Fort Halifax
court reasoned that a solitary severance payment conditioned on the
closing of a plant amounted to “little more than writ[ing] a

Civil No. 11-1376 (FAB)
check.”

10

482 U.S. at 11.

take-it-or-leave-it
supervision.

A benefit which involves a “one-shot,

incentive”

reduces

O’Connor, 251 F.3d at 267.

the Syntex Plan is such a benefit.

the

need

for

ERISA

The severance payment in

See O’Connor, 251 F.3d at 267.

The Syntex Plan is analogous to the Fort Halifax plan because
neither payment required the administration of a plan.
U.S. at 12.

See 482

Here, the lump-sum payment option is triggered solely

by the closing of the plant.

(Docket No. 1-6.)

As such, Syntex

does not undertake a “responsibility to pay benefits on a regular
basis, and thus faces no assets that create a need for financial
coordination and control.”

See Fort Halifax, 482 U.S. at 12.

Syntex argues that an employee’s ability to receive
payments

in

installments

administrative scheme.”

is

indicative

of

an

(Docket No. 20 at pp. 8-9.)

“ongoing
This Court

has previously held, however, that a plan which provided payments
to employees for over three months and up to one year was not a
continuing administration.

Melendez v. Wyeth Pharms. Co., No. 09-

1353, 2009 U.S. Dist. LEXIS 84721, at *2-*3 (D.P.R. Sept. 16,
2009); (Docket No. 14-7) (the “scheduling of payments does not
evoke Congress’ purpose in establishing ERISA’s protections.”); see
also Wells v. General Motors Corp., 881 F.2d 166, 176 (5th Cir.
1989) (finding that an early-retirement incentive program where
payment could be made in installments over a two-year period was
not ongoing and there was no need for continuing administration).

Civil No. 11-1376 (FAB)

11

Next, Syntex argues that the Managing Director’s
duty to maintain records related to the Syntex Plan and the
detailed claim procedure outlined by the Syntex Plan necessitate an
“ongoing administrative scheme.”

(Docket No. 20 at p. 9.)

The

Massachusetts district court’s finding that a “company’s ongoing
commitment to plan participants, not the amount of short-term
paperwork” was essential in demonstrating a plan’s administrative
burden, was upheld by the First Circuit Court of Appeals. Rodowicz
v. Mass. Mut. Life Ins. Co., 915 F. Supp. 486, 489 (D. Mass. 1996);
see also Rodowicz, 192 F.3d at 171. Accordingly, the Syntex Plan’s
“one-shot, take-it-or-leave-it” administrative scheme, not the
Managing Director’s routine administrative duties, is the relevant
focus.
at 489.

See O’Connor, 251 F.3d at 267; Rodowicz, 915 F. Supp.
Therefore, because the Syntex Plan is triggered by the

one-time event of the closing of the plant, it does not create
“continuous

administrative

and

financial obligations”

for

the

defendants.
2.

The Syntex Plan lacks management discretion as to
the eligibility of participants
The plaintiffs also argue that the Syntex Plan lacks

“management discretion as to the eligibility of participants.”
(Docket No. 16 at p. 6.)

Specifically, the plaintiffs assert that

the eligibility criteria only requires employees to remain in their
positions until their termination date and sign a release.

(Id.)

Syntex counters that language in the Syntex Plan specifically

Civil No. 11-1376 (FAB)

12

provides that a Managing Director has full discretion to determine
if an employee meets the eligibility criteria of the Syntex Plan.
(Docket No. 20 at pp. 8-9.)
claim

procedure

and

Syntex also asserts that the detailed

appeals

determinations and discretion.

process

require

individual

(Id.)

If a plan calls for eligibility determinations with
“non-mechanical,

subjective

criteria,”

the

mismanagement increases the need for ERISA.

possibility

of

O’Connor, 251 F.3d

at 268. For that reason, the level of discretion the employer uses
in administering the plan is an important factor.

Id. at 267.

The

severance plan at issue in Rodowicz is almost identical to the
Syntex Plan.

See 192 F.3d at 171-72.

In Rodowicz, the Voluntary

Termination Program (“VTP”) was (1) open to most of the company’s
employees, (2) provided a one-time, lump sum severance payment
based on years of service, (3) contained an appeals procedure for
denied employees, and (4) allowed the VTP administrator to exclude
“involuntarily terminated” employees “for any reason or no reason
at all.”

Id.

The Rodowicz court held that the VTP did not

constitute an ERISA covered plan.

Id. at 172.

The Syntex Plan states that in order to qualify,
employees need only:

(1) be terminated due to the closing of

operations in Puerto Rico, (2) sign an Agreement and Release and
Payment Option Form, and (3) remain with the company until they are
terminated.

(Docket No. 1-6 at p. 4.)

The Syntex Plan excludes

Civil No. 11-1376 (FAB)

13

employees who are “terminated for any other reason, including
disciplinary or performance reasons.” (Id. at 5.) The Syntex Plan
defines an “employee” as a “regular, full-time employee, or a
regular, part-time employee.”
the

Managing

Director

has

(Id. at 2.)
“full

It also provides that

discretionary

authority

to

administer and interpret this Plan, determine eligibility for
Severance Pay benefits, and maintain records.”
Eligibility
mechanical and objective.

criteria

for

(Id. at 7.)

the

Syntex

(Docket No. 1-6 at pp. 4-5.)

Plan

is

Similar to

the early retirement plan in Rodowicz, the Syntex Plan was open to
most full-time employees with limited, straightforward exclusions.
See

Rodowicz,

192

F.3d

at

171

(finding

that

plan

which

had

exclusions was “somewhat less mechanical and unthinking” but did
not require “individualized determinations”); (Docket No. 1-6 at
p. 4.)

Additionally, the calculation of the benefits for the

Syntex Plan does not require managerial discretion. (Docket No. 16 at p. 5.)

Although the benefit payment amount is based on a

years-of-service

calculation,

which

requires

individual

determinations, only “simple arithmetic” is needed to determine the
payment

amount.

individualized

O’Connor,

251

F.3d

determinations do not

at

268

(reasoning

automatically

mean

that
ERISA

coverage); Belanger, 71 F.3d at 455 (plan with “purely mechanical
determination

of

eligibility”

which

“required

no

complicated

administrative apparatus either to calculate or to distribute” the

Civil No. 11-1376 (FAB)

14

benefit did not implicate ERISA); see also James v. Fleet/Norstar
Fin. Grp., 992 F.2d 463, 467 (2d Cir. 1993) (finding that payments
made to employees with different termination dates and eligibility
criteria required only “simple arithmetical calculations.”)
Furthermore, even though the Managing Director has
full discretion to make exclusions and administer the Syntex Plan
and appeals process, it does not reach the level of individualized
determinations indicative of an ERISA-covered plan.

See Rodowicz,

192 F.3d at 172 (finding that a plan which allowed “exclusions and
deferrals, as well as appeals by disappointed employees”, did not
reach level of “ongoing, individualized determinations present in
an ERISA plan.)

Moreover, the Rodowicz plan administrator’s

discretion to “exclude all employees who had been terminated ‘for
any reason or no reason at all’” did not reach the requisite level
because the determination did not require a “careful assessment of
cause.”

Id.

eligibility

at

171.

and

assess

By

contrast,
disputed

in

Simas,

to

terminations,

determine
the

plan

administrator had to cross-reference state law requirements and
determine if the discharge was “for cause.”

6 F.3d at 853.

The

Simas court reasoned that the “for cause” determination required
the subjective discretion of the employer, thus evoking the need
for ERISA coverage.

Id. at 853-54.

Consequently, because the

Syntex Plan gives the Managing Director full discretion in both the
appeals process and in excluding employees who are “terminated for

Civil No. 11-1376 (FAB)

15

any other reason,” the Managing Director’s determination does not
require sufficient “individualized determination[s]” because there
is “no careful assessment of ‘cause’.”

See Rodowicz, 192 F.3d

at 172; (Docket No. 1-6 at pp. 5, 8-9.)
The Syntex Plan lacks managerial discretion as to
eligibility

because:

(1)

the

Syntex

Plan

was

open

to

most

employees with limited, straightforward exclusions, (2) calculation
of the benefits was mechanical, and (3) the Managing Director’s
full discretion to make exclusions and administer the appeals
process did not reach the level of individualized determinations
and subjective assessment of cause, as required by the First
Circuit Court of Appeals in Simas.
3.

Syntex did not intend to create an ERISA Plan
An employer’s intent has been characterized as “the

crucial factor in determining if a ‘plan’ has been established.”
O’Connor, 251 F.3d at 272 (citing Wickman v. Northwestern Nat’l.
Ins. Co., 908 F.2d 1077, 1083 (1st Cir. 1990).

Less weight is

given to those intentions when evidence of contrary intent is
present.

Id.

The Syntex Plan provides that the Director and the

Board are “Named Fiduciary as that term is used in the Employee
Retirement Income Security Act of 1974 . . . ”

(Docket No. 1-6 at

p. 8.) Several pages later, however, the Syntex Plan provides that
“nothing contained in the Plan nor any action taken hereunder shall
create, or be construed to create a trust of any kind, or a

Civil No. 11-1376 (FAB)

16

fiduciary relationship between the Company or an Employer and
Members or any other persons.”

(Id. at 11.) (emphasis added).

Thus Syntex’s “ambiguous intent [] [does] not outweigh the nonERISA nature of the severance provision.”

O’Connor, 251 F.3d

at 272.
B.

Relation of Plaintiffs’ Claim to the Syntex Plan
Having determined that the Syntex Plan is not an employee

benefit

plan

within

the

scope

of

ERISA,

the

Court

finds

it

unnecessary to determine whether the plaintiffs’ claim relates to
the Syntex Plan.
C.

Supplementary Arguments
Lastly, the plaintiffs argue that (1) ERISA’s preemption

is limited in this instance, (2) there was a “serious defect” in
the Syntex’s Notice of Removal, (3) Syntex delayed filing its
Notice of Removal, and (4) removal is barred due to res judicata.
(Docket No. 16 at pp. 3-8.)

Because the Court holds that the

Syntex Plan is not an ERISA covered plan, there is no reason to
consider those arguments.
IV.

CONCLUSION
The Syntex Plan is not an employee benefit plan within the

scope

of

ERISA

because

it

does

not

(1)

require

continuous

administrative and financial obligations, and (2) lacks management
discretion as to the eligibility of participants.

Civil No. 11-1376 (FAB)

17

For the reasons expressed, the Court GRANTS plaintiffs’ motion
to remand to state court.

This case is remanded to the Court of

First Instance of Puerto Rico, Humacao Superior Division. Judgment
shall be entered accordingly.
IT IS SO ORDERED.
San Juan, Puerto Rico, February 9, 2012.
s/ Francisco A. Besosa
FRANCISCO A. BESOSA
UNITED STATES DISTRICT JUDGE