Peggy S. Crews v. General American

Peggy Crews, an employee of General American Life Insurance Company,
filed suit against the company in Missouri state court, on behalf of herself and other employees, alleging that General American did not provide them with promised
benefits. After General American removed the lawsuit to the United States District
Court for the Eastern District of Missouri, the district court denied Ms. Crews's
motion to remand.

Ms. Crews then filed an amended complaint containing three counts: Count I
alleged a violation of the Employee Retirement Income Security Act (ERISA), see
29 U.S.C. §§ 1001-1461, Count II alleged breach of contract, and Count III alleged
misrepresentation. The district court granted General American summary judgment
on Count I, and dismissed Counts II and III because, in its judgment, they were
preempted by ERISA. We agree with Ms. Crews that removal was improper, and we
therefore vacate the district court's judgment and remand the case to the district court
with instructions to remand it to the state court for further proceedings.

I.

A defendant has a right to remove a case from state to federal court if the
plaintiff's cause of action arose under federal law. See 28 U.S.C. § 1441(b). A cause
of action arises under federal law only when the plaintiff's well-pleaded complaint
raises issues of federal law, see Louisville and Nashville R.R. Co. v. Mottley, 211 U.S.
149, 152 (1908), so a cause is not removable simply because a federal defense like
preemption may be raised in it. See Franchise Tax Bd. v. Construction Laborers
Vacation Trust, 463 U.S. 1, 10-12 (1983). But the Supreme Court has held that for
the purposes of the "well-pleaded complaint" rule federal law "may so completely
pre-empt a particular area" that any civil complaint in that area, however it might be
pleaded, necessarily raises a federal question. Metropolitan Life Ins. Co. v. Taylor,
481 U.S. 58, 63-64 (1987). The Court has concluded that ERISA is such a law. See
id. at 63-67. Common-law causes of action filed in state court that come within the
scope of one provision of ERISA, 29 U.S.C. § 1132(a)(1)(B), and that are preempted
by another provision, 29 U.S.C. § 1144(a), are removable to federal court. See id. at
64-67.

Section 1132(a)(1)(B) provides that a beneficiary may bring a civil action in
federal court to recover benefits due to him or her under the terms of an employee
benefit plan. As relevant, § 1144(a), provides that ERISA preempts state laws insofar
as they "relate to any employee benefit plan." The central issue in this case is whether
General American's alleged promise to provide employees who stayed with the
company through a fixed date with benefits was premised on or constituted an
employee benefit plan. If so, Ms. Crews's action comes within the scope of
§ 1132(a)(1)(B) and is preempted by § 1144(a), and hence her action was removable
to federal court. If not, then removal was improper.

The district court concluded that the promised benefits were derived from an
employee benefit plan because they "were those contained" in General American's
"established severance pay plan." We believe, however, that there are significant
differences between the benefits allegedly promised to the employees here and the
undertakings in General American's established severance pay plan. To begin with,
the company's established plan provides for one week of severance pay for each
completed year of service for employees who have worked for more than two years;
Ms. Crews, in contrast, alleges that she and other employees were promised eight
weeks of severance pay in addition to one week of severance for each completed year
of service. General American's severance pay policy, moreover, is completely
discretionary, whereas the benefits allegedly promised here were not subject to any
discretion on the company's part. Finally, the company's severance policy is for
employees who have been terminated, but Ms. Crews contends that benefits were
promised to her and other employees as a "stay-on bonus" if they remained with the
company through a fixed date.

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Click the case caption above for the full text
of the Court's opinion.

In sum, we believe that General American's promised benefits were neither
premised on nor constituted an employee benefit plan. It follows that Ms. Crews's
action does not fall within the scope of § 1132(a)(1)(B) and is not preempted by
§ 1144(a). We hold, therefore, that the district court should not have assumed
jurisdiction, and we vacate the district court's judgment and remand the case to the
district court with directions that it remand the case to the state court from which it
was wrongly removed.

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Reported by Kent Morlan