724 F.Supp.3d 366
D.N.J.2024Background
- Plaintiff Catherine Verdone sued her sister Nancy Rice, Rice's law firm (Rice and Rice, P.C. d/b/a Rice and Quattrone, P.C.), Rice’s partner Pamela Quattrone, and CTARP LLC in New Jersey state court.
- Verdone alleged breach of an oral “Retirement Agreement” promising her income from CTARP’s profits upon retirement, whistleblower retaliation under CEPA, and unjust enrichment.
- After working at the law firm for nearly 20 years and investing in CTARP, Verdone was terminated by Rice (her sister) and Quattrone following disputes over the Retirement Agreement and firm accounting practices.
- Defendants removed the case to federal court, arguing ERISA preemption (federal question) and diversity jurisdiction, also asserting fraudulent joinder of New Jersey defendants to defeat removal.
- Verdone moved to remand the case back to state court and sought sanctions, contending ERISA did not apply and removal was barred by the forum defendant rule.
- The Court ruled on the motions to remand, to dismiss, and for sanctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Federal question jurisdiction (ERISA preemption) | Retirement Agreement is not an ERISA plan; no federal question | Agreement is an ERISA benefit plan; preempted, supports federal jurisdiction | ERISA does not apply—no federal question jurisdiction |
| Diversity jurisdiction (forum defendant rule) | Forum defendant rule bars removal as defendants are NJ citizens | Forum defendant rule does not apply due to fraudulent joinder | Forum defendant rule applies; removal was improper |
| Fraudulent joinder | Joined valid New Jersey defendants; claims against them colorable | Joinder fraudulent—claims against them are baseless | Not fraudulently joined; claims have a reasonable basis |
| Motion for sanctions | Defendants lacked basis for removal | Removal was objectively reasonable | No fees/costs; removal was not unreasonable under the facts |
| Motion to dismiss | No subject matter jurisdiction post-remand | Sought dismissal on grounds of ERISA preemption & failure to state a claim | Motion denied as moot due to lack of jurisdiction |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (Complete ERISA preemption doctrine for removal jurisdiction)
- Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987) (Administrative scheme requirement for ERISA applicability)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) (Plaintiff is master of the claim; state law claims avoid federal jurisdiction)
- Liberty Mut. Ins. Co. v. Ward Trucking Co., 48 F.3d 742 (3d Cir. 1995) (Federal courts’ obligation to confirm jurisdiction)
- Maimone v. City of Atl. City, 903 A.2d 1055 (N.J. 2006) (Causation in CEPA cases can be inferred from circumstances)
- Battaglia v. United Parcel Serv., Inc., 70 A.3d 602 (N.J. 2013) (CEPA is remedial and construed liberally)