United States District Court, D. Minnesota
H. Redden and John A. Fabian, III, FABIAN MAY & ANDERSON,
PLLP, for plaintiff.
Bradley Olsen and Scott A. Neilson, HENSON & EFRON, PA,
MEMORANDUM OPINION AND ORDER
R. TUNHEIM CHIEF JUDGE
Lawrence Miller brought breach of contract and promissory
estoppel claims in state court against his former employer
Starkey Laboratories, Inc. (“Starkey”), to
enforce certain terms of his employment contract. Starkey
removed the case to federal court, arguing that the
provisions at issue - together with related provisions in the
contracts of other top company managers - are an Employee
Retirement Income Security Act (“ERISA”) pension
benefit plan. Starkey now moves to dismiss the case on the
ground that Miller's state-law claims are completely
preempted by ERISA. Miller moves to remand and seeks
sanctions against Starkey. Because Starkey has not shown by a
preponderance of the evidence that the contracts establish an
ERISA pension plan or program, the Court must grant
Miller's Motion to Remand and deny Starkey's Motion
to Dismiss as moot. However, because Starkey's legal
position is not unreasonable, the Court will deny
Miller's Motion for Sanctions.
Miller worked for Starkey Laboratories from 1987 until he was
terminated on September 8, 2015. (Notice of Removal ¶ 1,
Ex. B (“Compl.”) ¶ 3, Aug. 28, 2017, Docket
No. 1.) Miller was Starkey's Senior Vice President of
Human Resources. (Id. ¶ 3.) On the same day
Starkey that fired Miller, it also fired its President, Chief
Financial Officer, Vice President of Operations, and
Miller's wife Julie, an administrative assistant.
(Id. ¶ 7.) Miller and three co-defendants are
presently standing trial for allegedly fraudulent conduct
involving Starkey. (See 3d Superseding Indictment,
United States v. Ruzicka, Jan. 8, 2018, Criminal No.
16-246, Docket No. 298.)
a Minnesota resident, brought this case against Starkey, a
Minnesota corporation, in state court. (Compl. ¶¶
1-2.) Miller stated two state-law causes of action, both
founded on Starkey's refusal to pay certain
post-separation benefits: Breach of Contract and Promissory
Estoppel. (Id. ¶¶ 9-17.) These claims are
based on Miller's employment contract (the
“Agreement”), dated July 1, 2006. (Id.
¶ 4; Decl. of David Bradley Olsen Supp. Mot. to Dismiss
(“1st Olsen Decl.”) ¶ 3, Ex. B
(“Agreement”), Aug. 28, 2017, Docket No. 6.) The
Agreement provided that Miller could only be terminated for
an “important reason” (the “termination
provision”), and promised a “long-term services
and loyalty bonus” (the “loyalty benefit”)
to be paid after Miller's separation, regardless of cause
(the “loyalty provision”). (Compl. ¶¶
5-6; Agreement §§ III(1)-(2), IX.) The loyalty
benefit was to be a percentage of Miller's base salary
for every year of service, to be paid in six annual
installments. (Compl. ¶ 6; Agreement § IX.) Miller
alleges that both the termination and loyalty provisions were
breached. (Compl. ¶¶ 7-8.)
removed the case to federal court claiming federal question
jurisdiction, arguing that the loyalty provision established
or is part of an ERISA pension plan, therefore giving rise to
complete preemption of the state-law claims. (Notice of
Removal ¶¶ 5-6.) Starkey has submitted contracts of
other top executives that contain related provisions.
(See 1st Olsen Decl. ¶¶ 4-5,
Exs. C-D; Decl. of David Bradley Olsen Opp. Remand Mot.
(“2d Olsen Decl.”) ¶¶ 4-9, Exs. F-K,
Oct. 19, 2017, Docket No. 27.) Starkey filed a Motion to
Dismiss for failure to state a claim, arguing that complete
preemption, express preemption, and Miller's failure to
exhaust his administrative remedies justify dismissal. (Mot.
to Dismiss (“MTD”), Aug. 28, 2017, Docket No. 3.)
timely filed a Motion to Remand, arguing that the loyalty
provision is not part of an ERISA plan, but is merely a
freestanding single-employee contract term. (Mot. to Remand
(“Remand Mot.”), Sept. 7, 2017, Docket No. 18;
Mem. Supp. Remand Mot. at 1, Sept. 28, 2017, Docket No. 20.)
Miller also alleges that he sought to arrange a
meet-and-confer with Starkey, but its counsel did not
respond. (Decl. of David H. Redden ¶ 2 & Ex. 1,
Sept. 28, 2017, Docket No. 21.) Subsequently, Miller filed a
Motion for Sanctions, arguing that Starkey's filings are
legally frivolous and designed to delay this case until after
Miller's trial. (Mot. for Sanctions (“Sanctions
Mot.”), Oct. 26, 2017, Docket No. 29; Mem. Supp.
Sanctions Mot., Oct. 26, 2017, Docket No. 31.)
three motions are now before the Court.
MOTION TO REMAND
moves to remand on the ground that the loyalty provision was
not part of an ERISA plan. Because the Motion to Remand
raises a jurisdictional question, the Court must deal with it
first. If the loyalty provision was part of an ERISA plan,
the Court has jurisdiction to consider Starkey's Motion
to Dismiss; otherwise, remand is required.
Standard of Review
28 U.S.C. § 1441, “[a] defendant's removal of
a case to federal court is appropriate ‘only if the
action originally could have been filed there.'”
Junk v. Terminix Int'l Co., 628 F.3d 439, 444
(8th Cir. 2010) (quoting In re Prempro Prods.
Liab. Litig., 591 F.3d 613, 619 (8th Cir.
2010)). Following removal, a “plaintiff may move to
remand the case if the district court lacks subject matter
jurisdiction.” Id. (citing 28 U.S.C. §
1447(c)). “[T]he defendant bears the burden of
establishing federal jurisdiction by a preponderance of the
evidence.” In re Prempro, 591 F.3d at 620. If
the defendant fails to meet that burden, the district court
must remand the case. § 1447(c); see Junk, 628
F.3d at 444-45. “All doubts about federal jurisdiction
should be resolved in favor of remand to state court.”
In re Prempro, 591 F.3d at 620.
only jurisdictional basis for removal here is federal
question jurisdiction. Such jurisdiction applies to actions
“arising under the Constitution, laws, or treaties of
the United States.” 28 U.S.C. § 1331. In assessing
whether federal question jurisdiction exists, the Court
employs the “well-pleaded complaint rule” and
looks only to the face of the complaint. Gore v. Trans
World Airlines, 210 F.3d 944, 948 (8th Cir.
2000) (citing Caterpillar Inc. v. Williams, 482 U.S.
386, 392 (1987)). Generally, a court cannot have federal
question jurisdiction based on a defense or counterclaim.
Id. However, there is an exception in cases of
complete preemption - where the statute “so completely
pre-empt[s] a particular area that any civil complaint
raising this select group of claims is necessarily
federal.” Johnson v. ...