Snyder, M.D. v. Neurological Surgery Practice of Long Island, PLLC
2:24-cv-06911
E.D.N.YMay 19, 2025Background
- Dr. Brian Snyder, a neurosurgeon, helped create the Neurological Surgery Practice of Long Island (NSP) and participated in a complex business transaction involving an Employee Stock Ownership Plan (ESOP) regulated by ERISA.
- Dr. Snyder sold his ownership interest in NSP via a §1042 tax-deferred exchange, receiving $3.4 million and promissory notes, and later continued with the practice as an employee and board member.
- Snyder was diagnosed with stage-four cancer and alleged he faced harassment and a reduction in his compensation, culminating in his termination before his ESOP benefits would fully vest.
- Plaintiffs alleged wrongful termination and interference with ERISA benefits (under §§ 502 and 510), as well as several state law contract claims.
- The Defendants moved to dismiss, arguing that Snyder’s §1042 election made him ineligible to participate in the ESOP under both the Plan and the Internal Revenue Code.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Eligibility for ESOP benefits post-§1042 election | Snyder was treated as eligible; Defendants' conduct constituted waiver | §1042 election and plan terms bar Snyder from ESOP participation | Snyder not eligible; claim dismissed under ERISA |
| ERISA § 510 discrimination for retaliatory discharge | Termination intended to deprive Snyder of ESOP benefits due to his illness | Termination for financial reasons; §1042 election made benefits claim moot | Even if facts accepted, §1042 election bars his claim |
| Court jurisdiction over remaining state claims | Federal question jurisdiction existed, so supplemental claims should continue | No federal jurisdiction after ERISA claim dismissed; no diversity exists | Declined to exercise supplemental jurisdiction |
| Waiver/Estoppel of plan prohibition | Company communications and accountant's statements constituted waiver | No express or intentional waiver alleged or supported by law | No waiver found; plan and law enforced as written |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Pleading standard for Rule 12(b)(6) motions)
- Ashcroft v. Iqbal, 556 U.S. 662 (Facial plausibility requirement for complaints)
- Dister v. Cont'l Group, Inc., 859 F.2d 1108 (ERISA § 510 requires specific intent to interfere with benefits)
- Koch v. Christie's Int'l PLC, 699 F.3d 141 (Rule 12(b)(6); assuming truth of well-pleaded facts)
- Shahriar v. Smith & Wollensky Rest. Grp., Inc., 659 F.3d 234 (Standard for supplemental jurisdiction under §1367)