SCUDDER v. COLGATE PALMOLIVE COMPANY
3:16-cv-07433
D.N.J.May 31, 2017Background
- New Jersey Treasurer Ford M. Scudder (plaintiff), as administrator under the New Jersey Uniform Unclaimed Property Act (NJUUPA), filed a state-court action seeking to examine Colgate-Palmolive's records and recover unclaimed property from the company’s health benefits plan.
- Colgate timely removed the case to federal court, asserting federal-question jurisdiction based on ERISA complete preemption of the State’s claims.
- Plaintiff moved to remand, arguing the Court lacks subject-matter jurisdiction because New Jersey retains Eleventh Amendment sovereign immunity and has not waived it for federal-court suits.
- Colgate responded that (1) ERISA §502(a) completely preempts the State’s claims because they arise from an ERISA-regulated plan and (2) a state plaintiff cannot invoke sovereign immunity to block removal when valid federal grounds for removal exist.
- The core dispute: whether the State’s NJUUPA-based enforcement action is actually an ERISA claim removable to federal court under the complete-preemption doctrine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Eleventh Amendment bars removal | Scudder: State sovereign immunity prevents removal; no clear waiver | Colgate: State, as plaintiff, cannot use immunity to prevent removal when federal grounds exist | Denied — Eleventh Amendment does not bar removal here because federal question exists via ERISA preemption |
| Whether ERISA completely preempts the NJUUPA-based claim | Scudder: This is a state custody/escheat action outside ERISA; federal defense of preemption insufficient | Colgate: State seeks to determine/enforce participants’ benefit rights under an ERISA plan, satisfying ERISA §502(a) complete-preemption test | Held — Claim is completely preempted by ERISA §502(a)(1)(B) |
| Application of Pascack Valley two-part test for ERISA preemption | Scudder: NJUUPA duty is independent; state law governs escheat | Colgate: (1) State could have brought ERISA §502 claim standing in participants’ shoes; (2) NJUUPA duty depends on plan rights, not independent | Held — Both Pascack Valley prongs satisfied: claim could be brought under §502(a) and the NJUUPA duty is not independent |
| Proper basis for federal jurisdiction / removal | Scudder: Remand required because state sovereign immunity and state-law character of the claim | Colgate: Removal proper under 28 U.S.C. §§1441/1446 because ERISA presents an "arising under" federal question | Held — Removal proper; federal-question jurisdiction exists due to ERISA complete preemption |
Key Cases Cited
- Frederico v. Home Depot, 507 F.3d 188 (3d Cir.) (burden on removing party to show proper jurisdiction)
- Samuel-Bassett v. Kia Motors Am., Inc., 357 F.3d 392 (3d Cir.) (removing party’s burden to establish jurisdiction)
- Abels v. State Farm Fire & Cas. Co., 770 F.2d 26 (3d Cir.) (removal statutes strictly construed)
- Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006 (3d Cir.) (doubts resolved in favor of remand)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (federal jurisdiction via well-pleaded complaint rule)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (ERISA §502(a) can completely preempt state-law claims)
- Pascack Valley Hosp. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir.) (two-part test for ERISA complete preemption)
- N.J. Carpenters v. Tishman Constr. Corp. of N.J., 760 F.3d 297 (3d Cir.) (application of ERISA complete-preemption doctrine)
- Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (ERISA’s comprehensive remedial scheme)
- Lapides v. Board of Regents of the Univ. Sys. of Ga., 535 U.S. 613 (state plaintiff who invokes state court may be subject to removal if federal grounds exist)