Aguirre-Santos et al v. Pfizer Pharmaceuticals LLC

Filing 42

OPINION AND ORDER GRANTING 9 MOTION to Remand to State Court of Guayama Superior Court filed by All Plaintiffs. Signed by Judge Jose A. Fuste on 10/21/2013.(mrj)

UNITED STATES DISTRICT COURT
DISTRICT OF PUERTO RICO

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EDDA M. AGUIRRE-SANTOS, et al.,
Plaintiffs,

Civil No. 12-1393 (JAF)

v.
PFIZER PHARMACEUTICALS, LLC,
Defendant.
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OPINION AND ORDER

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We are asked to determine whether an employer's severance-benefits package

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established an employee welfare benefit plan within the meaning of the Employee

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Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001-1461.I.

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I.

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Background

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The plaintiffs filed suit in Commonwealth court to reinstate certain wage and

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benefit claims that the defendant had allegedly required them to dismiss with prejudice.

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(Docket 1 at 2.) The defendants intend to defend against that claim on the basis of the

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plaintiffs’ severance package, which they allege the plaintiffs accepted voluntarily on

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condition that they dismiss any pending claims against the defendant. The defendant

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timely removed the case under federal question jurisdiction. (Id.). The plaintiffs moved

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to remand their case to Commonwealth court. (Docket No. 9.) The defendant asserts that

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removal was proper because the severance package that forms the basis of their defense is

Civil No. 12-1393 (JAF)

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a plan governed by ERISA, a federal statute. The plaintiffs disagree. We granted the

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plaintiffs’ motion to remand.

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reconsideration. (Docket No. 26.) We granted, in part, the motion for reconsideration.

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(Docket No. 33.)

(Docket No. 23.)

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II.

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The defendants moved for

Legal Standard

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A.

Motion to Remand

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“Any civil action of which the district courts have original jurisdiction founded on

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a claim or right arising under the Constitution, treaties or laws of the United States shall

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be removable without regard to the citizenship or residence of the parties.” 28 U.S.C.

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§ 1441(b); Rosello-Gonzalez v. Calderon-Serra, 398 F.3d 1, 10 (1st 2004). Once a suit

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has been removed from state court, the case is to be remanded if it was “removed

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improvidently and without jurisdiction.” Ochoa Realty Corp. v. Faria, 815 F.2d 812, 815

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(1st Cir. 1987) (citing 28 U.S.C. § 1447(c)). For purposes of this statute, Puerto Rico is

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equivalent to a state. Id. “A district court confronted with a matter of subject matter

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jurisdiction reviews a plaintiff’s complaint not to judge the merits, but to determine

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whether the court has authority to proceed.” BIW Deceived v. Local Union S6, Indus.

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Union of Marine & Shipbldg. Workers. Of Amer., IAMAW Dist. Lodge 4, 123 F.3d 824,

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832 (1st Cir. 1997).

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B.

Employee Benefits Plans Under ERISA

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ERISA aims to protect employees from losing their pensions and benefits due to

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employer mismanagement. Massachusetts v. Morash,490 U.S. 107, 112 (1989). ERISA

Civil No. 12-1393 (JAF)

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applies to “any employee benefit plan if it is established or maintained…by any employer

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engaged in commerce or in any industry or activity affecting commerce.”

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U.S.C. § 1002(3)(a)(1). Whether a benefit scheme qualifies as a plan under ERISA is a

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mixed question of law and fact. Gross v. Sun Life Assurance Company of Canada, 2013

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WL4305006 (1st Cir. 2013). Because “[t]he text of ERISA itself affords scant guidance

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as to what constitutes a covered ‘plan,’” Belanger v. Wyman–Gordon Co., 71 F.3d 451,

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454 (1st Cir.1995), we look to case precedent in deciding whether a plan exists. No

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single factor or list of factors is determinative, although some factors tend to be more

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indicative of a plan than others, including an employer’s ongoing administrative or

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financial obligations. New England Mut. Life Ins. Co., Inc. v. Baig, 166 F.3d 1, 3 (1st

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Cir. 1999). Provisions for severance pay may constitute an employee welfare benefit

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plan within the meaning of ERISA. See Belanger, 71 F.3d at 456; see also Scott v. Gulf

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Oil Corp., 754 F.2d 1499, 1503 (9th Cir.1985). ERISA’s preemption of state laws should

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be construed broadly, Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45-46, (1987), and the

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First Circuit has stated that such preemption extends to state common-law causes of

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action as well as regulatory laws. Zipperer v. Raytheon Co., Inc., 493 F.3d 50, 53 (1st

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Cir. 2007). Finally, when deciding whether the employer created or maintained an

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employee benefit plan, the court should consider the facts and circumstances from the

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perspective of a reasonable employee. Belanger, 71 F.3d at 455. (citing Johnson v. Watts

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Regular Co., 63 F.3d 1129, 1135 (1st Cir. 1995)).

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Civil No. 12-1393 (JAF)

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III.

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Discussion

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The question presented is whether the severance benefits offered to the plaintiffs

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constitute an employee benefit plan governed by the terms of ERISA, thus providing

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federal subject matter jurisdiction. We find that the benefits do not constitute a plan.

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An employee benefit plan exists if an arrangement between an employee and an

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employer requires an ongoing administrative program. Fort Halifax Packing Co., Inc. v.

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Coyne, 482 U.S. 1, 11 (1987).

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employer retains discretion in administering the severance agreement, and (2) whether

Two principles guide our inquiry: (1) whether an

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benefits are provided on a regularly occurring basis or on a single occasion.

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See

Rodowicz v. Massachusetts Mut. Life Ins. Co., 192 F.3d 162, 170 (1st Cir. 1999).

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Pfizer’s predecessor, Wyeth, established the Plan in March of 2008. The Plan is

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open to “virtually all full-time employees, with the exception of certain categories of

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employees set forth in the plan document.” (Docket 8-1 at 6-7.) In order to receive

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compensation, an employee must have been involuntarily terminated as a result of: (1) a

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reduction in work force; (2) job elimination; (3) job restructuring; or (4) discontinuance

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or relocation of operations. (Id.) Additionally, employees must also: (1) execute a

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written waiver of all claims arising out of the employee’s employment with Wyeth;

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(2) return all company property; (3) hold confidential all proprietary information; (4) not

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engage in any activity that, in the company’s sole discretion, amounts to gross

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misconduct; (5) continue to be employed through the date assigned by Pfizer as the

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employee’s “work through” or termination date. (Id. at 13.)

Civil No. 12-1393 (JAF)

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Pfizer may deny an employee severance benefits for: (1) failing to satisfactorily

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perform the duties of employment through his or her “termination date,” and

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(2) termination for cause, as determined by the company in its sole discretion. (Id. at 35.)

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Under the Plan’s provisions, an employee is determined to be terminated “for cause” for

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a variety of acts—including theft, lying, gross negligence—but may be for any reason

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that the “Plan Administrator, in its sole discretion, shall deem appropriate.” (Id.) Here,

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unlike in Simas v. Quaker Fabric Corp. of Fall River, 6 F.3d 849 (1st Cir. 1999), the “for

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cause” determination happens once, up front, largely governed by specific criteria. While

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not a rote algorithm, the Plan does not require the administrator to make exclusion

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determinations over time.

Cf. Id. (ongoing administrative mechanism needed to

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determine whether an employee discharged for cause is otherwise ineligible for

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unemployment compensation under Massachusetts law).

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determination of an employee’s eligibility is not the kind of ongoing administrative

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discretion that ERISA governs.

Under the Plan, the

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Much like in Fort Halifax, where the purported plan offered “a temporary ‘one-

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time only’ lump sum payment,” the Plan disburses pre-determined benefit payments over

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twelve, twenty-six or fifty-two weeks. The amount of transition benefit compensation

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paid to an eligible employee is calculated according to an employee’s base salary and

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years of service. (Docket 8-1 at 14-16.) While the First Circuit has held previously that

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an employee benefit plan involving a single payment may be considered an employee

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benefit plan for ERISA purposes when eligibility is based on at least “one non-

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mechanical criterion, over a prolonged period,” Belanger, 71 F.3d at 455, n.2, here,

Civil No. 12-1393 (JAF)

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however, there is nothing discretionary about the timing, amount or form of the payment.

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Sending a terminated employee a check every month plus continuing to pay his insurance

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premiums for the time specified in the employment contract does not rise to the level of

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an ongoing administrative scheme.

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Because the severance benefit scheme is not a “plan” governed by ERISA, the

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plaintiffs’ claim does not present a federal question. We lack jurisdiction to resolve this

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dispute.

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IV.

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Conclusion

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For the foregoing reasons, Plaintiffs’ motion to remand proceedings to Guayama
Superior Court, (Docket No. 9), is GRANTED.

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IT IS SO ORDERED

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San Juan, Puerto Rico, this 21st day of October , 2013.

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S/José Antonio Fusté
JOSE ANTONIO FUSTE
U. S. DISTRICT JUDGE