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Simmons v. Service Credit Union

United States District Court, D. New Hampshire

March 12, 2018

Gordon Simmons and Siegelinde Simmons
v.
Service Credit Union

          Debra Weiss Ford, Esq., Eileen P. Kavanagh, Esq., Paul McEachern, Esq., Bethany P. Minich, Esq., K. Joshua Scott, Esq., Martha Van Oot, Esq.

          MEMORANDUM AND ORDER

          Paul Barbadoro United States District Judge

         Gordon Simmons sued his former employer, Service Credit Union (SCU), in state court for breach of contract and a declaratory judgment.[1] SCU removed the case contending that this court has subject matter jurisdiction because Simmons' state law claims are completely preempted by the Employee Retirement Income Security Act of 1974 (ERISA). Simmons challenges SCU's contention in a motion to remand.

         I. BACKGROUND

         Simmons served as SCU's CEO for twenty-one years. Doc. 1-1 at 3. During that time, he had multiple employment contracts, the most recent of which he signed in 2014. Id. at 3-4. The relevant portion of that contract states,

3.2 Post-Retirement Medical Coverage - The Credit Union [SCU] agrees to provide the President [Simmons] and his spouse . . . medical, vision and dental insurance throughout the term of his Presidency and thereafter until the death of both, as limited herein. The Credit Union will provide and pay for the medical, vision and dental insurance with the insurance company(s) through which the Credit Union contracts to provide its employee group health plan. Should such medical, vision and dental insurance not be available to the Credit Union for the President and his spouse . . . through the company providing such coverage for Credit Union employees, the Credit Union will contract with another company to provide comparable or equivalent medical, dental and vision insurance, again, paid for by the Credit Union . . . . The Credit Union will not terminate or change this Post Retirement Medical Coverage benefit for any reason other than the termination of the President's employment prior to his voluntary retirement or resignation . . .

Doc. 12-2 at 2.

         On January 28, 2016, while the contract was in effect, Simmons submitted a written letter of resignation. Doc. 1-1 at 5. The parties disagree as to the circumstances that led to Simmons' resignation. Simmons claims that he resigned voluntarily, but SCU argues that Simmons was forced out after the company's board of directors learned that he had engaged in a sexual relationship with an employee. Doc. 12-1 at 3, Doc. 1-1 at 5.

         SCU informed Simmons in February, 2016 that it would no longer pay for his healthcare coverage. Doc. 1-1 at 5. This prompted Simmons to sue SCU in Rockingham County Superior Court. Id. at 2, 7. SCU then removed the case to this court. Id. at 1.

         II. ANALYSIS

         Simmons argues that I must remand his complaint to state court because this court lacks subject matter jurisdiction over his state law claims. SCU responds by contending that the court has federal question jurisdiction because Simmons' claims are completely preempted by ERISA.[2] As a general rule, ERISA completely preempts state law causes of action that “relate to any employee benefit plan.” See Pilot Life v. Dedeaux, 481 U.S. 41, 45 (1987)(quoting 29 U.S.C. § 1144(a)). Because Simmons' claims derive from SCU's agreement to provide him with lifetime post-retirement medical coverage, his claims clearly relate to that agreement. Accordingly, the parties' ERISA preemption dispute turns on whether the agreement is an “employee benefit plan” as that term is used in ERISA.

         ERISA defines the term “employee benefit plan” as “an employee welfare benefit plan or an employee pension benefit plan or a plan which is both an employee welfare benefit plan and an employee pension benefit plan.” 29 U.S.C. § 1002(3). The First Circuit, in turn, has borrowed from the 11th Circuit's en banc opinion in Donovan v. Dillingham, 688 F.2d 1367, 1370-1371 (11th Cir. 1982) in holding that an ERISA employee welfare benefit plan has “five essential constituents”:

(1) a plan, fund, or program (2) established or maintained (3) by an employer or an employee organization, or by both (4) for the purpose of providing medical, surgical, hospital care, sickness, accident, disability, death, unemployment, or vacation benefits, apprenticeship or other training programs, day care centers, scholarship funds, prepaid legal services, or service benefits (5) to participants or their beneficiaries.

Wickman v. Northwestern Nat'l Ins. Co., 908 F.2d 1077, 1082 (1st Cir. 1990) (quoting Dillingham, 688 F.2d at 1371) (en banc). To determine whether an agreement is a “plan, fund, or program, ” the court again followed Dillingham and noted that a “‘plan, fund or program' under ERISA is established if, from the surrounding circumstances, a reasonable person can ascertain the intended benefits, a class of beneficiaries, the source of financing, and procedures for receiving benefits.” Wickman, 908 F.2d at 1082 (quoting Dillingham, 688 F.2d at 1373). The court then applied its own gloss to the Dillingham test by stating that “[t]he crucial factor in determining if a ‘plan' has been established is ...


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