MEMORANDUM AND ORDER
I. INTRODUCTION
The plaintiff Eric Nadworny (“Nadwor-ny”) initially filed a complaint in the Massachusetts Superior Court sitting in and for the County of Plymouth against the defendants Shaw’s Supermarkets, Inc. (“Shaw’s”) and Albertson’s, Inc. (“Albert-son’s”), alleging breach of contract. Nad-worny alleges that his former employer, Shaw’s, which was later acquired by Al-bertson’s, breached its severance plan payment agreement with him by refusing to provide benefits enumerated in the agreement after Nadworny resigned from his position. Shaw’s and Albertson’s removed the action to this Court and now move to dismiss with prejudice pursuant to Fed. R.Civ.P. 12(b)(6) and 12(b)(1). The basis for Shaw’s and Albertson’s Rule 12(b)(6)
The parties’ motions present two questions to this Court. First, whether ERISA preempts the breach of contract claim because the parties’ severance agreement constitutes an “employee benefit plan” within the meaning of ERISA. Second, whether the suit ought be dismissed for failure to state a claim upon which relief may be granted.
II. BACKGROUND
This action commenced on September 16, 2005, when Nadworny filed a complaint against Shaw’s and Albertson’s in Plymouth Superior Court. [Doc. No. 6, Attach. 1]. On October 14, 2005, Shaw’s and Al-bertson’s filed a notice of removal to the United States District Court for the District of Massachusetts on the basis of complete preemption by ERISA. [Doc. No. 1]. On October 19, 2005, Shaw’s and Albert-son’s filed a motion to dismiss for failure to state a claim, arguing that, due to ERISA preemption, Nadworny was owed no relief for breach of contract. Defs.’ Mot. Dismiss [Doc. No. 4] at 1. On November 2, 2005, Nadworny filed an opposition to the motion to dismiss, and a motion for remand to the Plymouth County Superior Court, asserting that ERISA did not apply to the Shaw’s severance agreement. [Doc. Nos. 7, 8].
Nadworny was employed by Shaw’s Human Resources Department from November 30, 1998 through February 4, 2005. Compl. ¶¶ 6, 14. On April 30, 2004, Al-bertson’s acquired Shaw’s, thus becoming Nadworny’s employer. Id. ¶ 7. Prior to the acquisition, Nadworny’s title was “Vice President, Associate & Labor Relations”; after the acquisition, his title became “Vice President, Labor Relations in the Legal Department.” Id. ¶ 14. Nadworny alleges that his job responsibilities, in addition to his job title, changed after the Albertson’s acquisition. Id. ¶¶ 15-24. He details the changes in his complaint, to illustrate what he alleges to be substantial and material changes to his position, entitling him to severance benefits under the severance agreement he entered into with Shaw’s prior to the Albertson’s acquisition. Id.
Nadworny’s supervisory responsibilities were diminished following the change in control. Prior to the change, Nadworny reported directly to a member of the executive committee, whereas after the change, he reported to Tom Walter (“Walter”), Vice President of Labor Relations. Id. ¶ 15. Nadworny thereby became the only Vice President at Albertson’s who reported to a peer, rather than to a member of the executive committee. Id. In addition, subsequent to the change in control, the directors in Nadworny’s department who reported to him prior to the acquisition began reporting to Walter instead, making his the only department within Albertson’s in which the vice president and the directors reported to the same superior. Id. ¶ 16. In addition, human resources staff members, other than the directors, who were once under Nadworny’s supervision, did not report to him after the acquisition. Id. ¶ 17.
Nadworny contends that his responsibilities in other matters changed as well. Various other responsibilities assigned to
In anticipation of the Albertson’s acquisition, Shaw’s implemented a severance agreement, the purpose of which was to “ ‘provide certain severance benefits to Eligible Employees in the event that their employment with the Company or its successor is terminated under certain circumstances after the occurrence of the Change in Control.’ ” Id. ¶ 8. According to the agreement, an employee could be eligible for the benefits if terminated by the company “without Cause” within twelve months of the change in control, or if the employee resigned “for Good Reason” within twelve months of the change in control. Id. ¶ 9.
On January 21, 2005, Nadworny submitted his letter of resignation, indicating that he was ending his employment for “[g]ood [r]eason,” under the terms of the severance agreement. Id. ¶ 25. He continued working until February 4, 2005. Id. ¶ 26. On January 21, 2005, Nadworny, in writing, requested benefits under the severance agreement. Id. ¶ 27. Albertson’s denied his benefits claim on April 9, 2005. Id. ¶ 28. Nadworny appealed the benefits denial on May 18, 2005, and requested information to which he believed he was entitled pursuant to the severance agreement. Id. ¶ 29. On July 14, 2005, Albert-son’s denied the appeal and refused to provide most of the information Nadworny had requested. Id. ¶ 30. Nadworny thus exhausted the administrative appeal procedure available under the agreement. Id. ¶ 32.
Nadworny maintains that he is entitled to his annual salary plus 150% of his annual bonus in severance, pursuant to the severance agreement.
Id.
¶ 10. He maintains that he is an “[eligible [ejmployee,” as he worked in a corporate management capacity, primarily at the company’s headquarters.
Id.
¶ 12. Nadworny asserts that he is eligible for the severance benefits because his resignation was for “[g]ood [rjeason,” in that it was caused by a material diminution in his title, duties, and responsibilities, and a material reduction or
III. DISCUSSION
A. Standard of Review for ERISA Preemption
All factual allegations in Nadworny’s complaint are assumed to be true, and the Court draws inferences in Nadworny’s favor when considering Shaw’s and Albert-son’s motion to dismiss.
Coyne v. City of Somerville,
Although this dispute began with Shaw’s and Albertson’s moving to dismiss for both failure to state a claim upon which relief can be granted and lack of subject matter jurisdiction, having determined that Nad-worny has made factual allegations that support a cause of action, this Court need address only the jurisdictional issue raised under the Federal Rules of Civil Procedure.
Discerning whether federal jurisdiction over this matter is proper pursuant to Fed.R.Civ.P. 12(b)(1) is a mixed question of fact and law. Here, although the party seeking removal to federal court generally bears the burden of establishing that jurisdiction is proper,
In re County Collector,
B. ERISA Preemption
Albertson’s and Shaw’s argue that the breach of contract claim is entirely preempted by ERISA, while Nadworny asserts that the severance benefit agreement is not an “employee benefits plan” within the meaning of ERISA, and therefore is not preempted. See generally Def.’s Mem. Supp. Mot. Dismiss [Doc. No. 5]; Pl.’s Mem.
Section 1144(a) of ERISA provides that “the provisions of this title ... shall supersede any and all State laws insofar as they may now or hereafter relate to any em
Since the statutory language of ERISA is unclear on this point, the Court must resort to case law to discern whether a benefit program constitutes an ERISA plan.
O’Connor v. Commonwealth Gas Co.,
ERISA may preempt state court actions involving employee benefit
plans,
but will not reach adjudication of employee
benefits,
if the benefits are not part of a benefit
plan. Fort Halifax,
Questions of ERISA preemption require a court to view the benefit program before it in light of Congress’s purposes for enacting ERISA: the protection of employees’ and employers’ interests and rights with regard to employee benefits administration.
Belanger,
1. Purposes of ERISA
In determining whether ERISA preempts a state law, Congressional intent in passing ERISA, particularly the preemption provision, is paramount among the Court’s considerations.
Ingersoll-Rand Co.,
In the interest of protecting employers, Congress enacted the ERISA preemption provision to “ensure that plans and plan sponsors would be subject to a uniform body of benefits law ... [in order to] minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government.”
Ingersoll-Rand Co.,
Congress also intended for ERISA preemption to protect the interests of employee-beneficiaries of benefit plans. Specifically, ERISA is geared toward “safeguarding] the financial integrity of employee benefit funds, ... permitting] employee monitoring of earmarked assets, and ... ensuring] that employers’ promises are kept.”
Belanger,
2. Ongoing versus One Time Payment Obligations, Lump Sum versus Periodic Payments and Span of Time During which Employer is Obligated.
A “very important” consideration in ERISA preemption disputes is whether, in light of all the facts and circumstances, the employee reasonably could believe that the employer has an ongoing commitment to provide benefits.
Id.
at 455. A court’s finding that an employer has an obligation to disburse benefits on a long-term or periodic basis weighs in favor of ERISA preemption, while a finding that a benefit plan consists solely of an obligation to make a single, lump sum payment of benefits weighs against preemption.
Fort Halifax,
The Shaw’s severance agreement indicates that an eligible beneficiary “will receive his/her severance payment in a lump sum.” Compl.
Ex.
A (“Severance Pay Plan”) § IV.
1
Lump sum payments weigh against finding preemption in part because the amounts to be paid usually are determined by a straightforward calculation based upon the employees’ salaries and years of service with the organization.
See, e.g., Fort Halifax,
While it is true, as Nadworny argues, that Shaw’s and Albertson’s obligations under the severance agreement constitute a one-time, lump sum payment of benefits, as in other cases where the courts have determined that ERISA does not preempt a state law, Pl.’s Mem. at 6-7, several of the cases Nadworny cites in support of his argument are distinguishable from his own case. The holdings in
O’Connor, Rodowicz,
and
Belanger
for instance, were decided under different facts; in those cases, the employers offered early retirement packages indiscriminately to their employees as a means of encouraging attrition.
O’Connor,
While Shaw’s and Alberton’s severance package similarly provides for a lump sum payment of benefits when an employee leaves the employ of the company, Nad-worny’s case is distinguishable from Be-langer, Rodowicz, and O’Connor in that the circumstances under which each company offered the benefits speaks to the degree of discretion the plan administrator must exercise in determining employee eligibility for the benefits. Under the Shaw’s agreement, the plan administrator would have to determine the eligibility of each claimant on a case-by-case basis, whereas the Belanger, Rodowicz, and O’Connor employers were encouraging employees to accept the benefits and retire, and under the state statute in Fort Halifax, employers had no choice but to provide benefits. Here, in contrast, Shaw’s and Alberton’s have no evident motive or statutory obligation to disburse benefits to any laid-off or resigning employee. Therefore, it is to be expected that the Shaw’s plan administrator would evaluate each claim to ensure that the company does not pay more benefits than the administrator deems necessary according to the terms of the agreement. Indeed, Nadworny’s charge against Shaw’s and Albertson’s stems from his disagreement with the administrator’s determination, based upon the administrator’s interpretation of the facts of Nadworny’s case and the company’s obligations under the agreement, that Shaw’s and Albert-son’s are not obligated to disburse benefits to Nadworny. This is the very nature of a plan administrator’s discretionary decision.
Nadworny also relies i on the seminal
Fort Halifax
case to support his argument. Pl.’s Mem. at 5-9. In
Fort Halifax,
the Supreme Court held that ERISA did not preempt a Maine state statute that obligated all employers who closed or transferred their facilities to pay employees a lump sum based upon each employee’s weekly salary and years of service.
Although Nadworny argues to the contrary, the
Fort Halifax
decision alone cannot serve as adequate guidance to this Court, because the Supreme Court’s rationale for that ruling does not apply so readily here. In
Fort Halifax,
the Court ruled that the distribution of benefits in
No single factor dictates whether ERISA shall preempt. Rather, the various factors courts consider are meant merely to guide each court’s inquiry into whether the benefits program before it falls within the purview of an employee benefits plan for which Congress enacted ERISA, i.e., whether the purposes behind ERISA are furthered by applying it in that case.
Given that the Shaw’s agreement does not provide for automatic disbursement of benefits to a broad' class of employees upon the occurrence of a certain event, this Court rules the one-time, lump sum nature of benefits disbursement under the Shaw’s severance agreement is not determinative of the question of ERISA preemption.
3. Triggering Event
When the employer’s obligation to distribute benefits is triggered by the occurrence of a particular contingency, onetime, lump sum payments are an especially strong indication that the benefits do not fall within an employee benefit plan, within the meaning of ERISA.
Fort Halifax,
Nadworny’s point is well-taken; indeed, his case is similar to other cases in which single triggering events informed rulings that ERISA did not preempt another cause of action.
See Fort Halifax,
In
Simas v. Quaker Fabric Corp.,
the statute in question conditioned an entitlement to severance benefits upon a single, one-time occurrence: a corporate takeover.
Thus, it is not at all clear that the case law supports Nadworny’s argument that the contingency of the Shaw’s severance agreement has but one, single triggering event. Under the Shaw’s agreement, eligible employees might submit claims for benefits to Shaw’s and Albertson’s individually, over the course of a twelve-month period following the change in control.
See
Severance Pay Plan § III. Although Nadworny points to the change in control as the “triggering effect,” Pl.’s Mem. at 8, the events that ultimately might trigger an obligation to pay under the agreement would be either a dismissal of an employee without “cause” or an employee’s resignation for “good reason.” These factors render Nadworny’s case meaningfully different from
Fort Halifax,
where the employer was required to pay benefits to all employees immediately after the occurrence of a single event. The Shaw’s severance plan is more similar to the Massachusetts “tin parachute” statute at issue in
Simas,
in that both the Shaw’s agreement and the tin parachute statute allow for payment of benefits to employees who lose their jobs in the midst of a corporate takeover.
Similarly, in
Collins v. Ralston Purina Co.,
the Seventh Circuit determined that because the employer would have to consider individual claims during a one-year period, the severance agreement was an employee benefit plan within the meaning of ERISA.
The extent to which the benefits administrator must exercise discretion in the discharge of his duties is likewise a significant factor in determining a question of ERISA preemption because it is indicative of the complexity of the benefit program.
See O’Connor,
Nadworny argues that the administrator of the severance agreement benefits plan was not required to exercise significant discretion in determining whether he was eligible for benefits, and the extent of any such benefits for which he might be eligible. See Pl.’s Mem. at 9-15. Shaw’s and Albertson’s contend that the administrator was, in fact, required to “exercise considerable judgment in deciding whether benefits were payable.” Defs.’s Mem. Supp. Mot. Dismiss at 7.
Under the terms of the Shaw’s severance agreement, there are three areas in which the plan administrator might have to exercise discretion relevant to this particular case: (1) whether a given employee is “eligible” for consideration under the plan, (2) whether a lay-off was “without Cause,” and (3) whether an employee resigned “for Good Reason.” See Severance Pay Plan §§ II — III. Although the severance agreement provides definitions for all three of these terms, the definitions themselves evidence the amount of discretion the administrator might be required to use. For purposes of determining whether the émployer had “Cause” to discharge the employee, the administrator might consider the following:
(a) failure to substantially perform his or her job duties, after written notice from the Company ... provided however that such failure to perform shall not constitute “Cause” unless the Company can clearly establish that the employee’s performance level had materially declined from his performance level prior to the Change in Control as reflected in the Company’s personnel records; ... (c) conviction of ... a felony or a crime involving moral turpitude; (d) material or gross insubordination to the Company’s ... officers, managers or supervisory personnel; (e) the intentional, unauthorized disclosure ... of ... information ... that is significant and/or material to the respective entity’s operation; or (f) expressly threatening to cause, or repeatedly or intentionally causing, damage to the relations of the Company
Severance Pay Plan § V.
Whether the employee has resigned for “Good Reason” might require the administrator to discern what constitutes a “material change in the performance- criteria for
This portion of the contract defining “Cause” also suggests that the administrator might have to make factual determinations about the nature of an employee’s crime and the employee’s intent when disclosing confidential information about the company. Thus, the administration of benefits under the Shaw’s agreement would entail more than mere mechanical calculations, as Nadworny suggests. Pl.’s Mem. at 10. That the agreement provides for “administration and appeal of decisions,” Severance Plan Agreement § VI, and details the “claims procedure,” id. at § IX, also suggest that the administrator would be required to make individualized, discretionary assessments of each employee’s qualifications to receive benefits under the agreement.
The
Simas
court, in considering whether ERISA preempted a statute effective during a two-year period following a corporate change in control, and which required the administrator to determine whether employees were discharged for cause within the meaning of that statute, determined that “[t]he ‘for cause’ determination; in particular, is likely to provoke controversy and call for judgments based on information well beyond the employee’s date of hiring and termination.”
Similarly, in
Collins v. Ralston Purina Co.,
the court found an agreement requiring the employer to assess whether an employee’s job responsibilities were “substantially reduced” set a standard that was “hardly an easily discernible one” and ruled that ERISA preempted state law claims because the agreement necessitated an ongoing administrative scheme.
On the other hand, Nadworny does make a plausible argument that simply requiring the exercise of “discretion” by a severance agreement administrator is insufficient to transmute the severance package into an ERISA plan. Pl.’s Mem. at 9. Nadworny relies heavily on two unpublished opinions to support his assertion that discretionary decisions as to whether employees are eligible for benefits do not usually support a finding that a benefits program is an ERISA plan.
See id.
at 9-10 (citing
Lettes v. Kinam Gold, Inc.,
To the extent Donovan reaches a different conclusion than Simas and Collins based on similar facts, this Court is faced with conflicting precedent and the question is an extremely close one.
This Court follows the
Simas/Collins
line, albeit with misgivings, given that
Si-mas
was decided by the First Circuit Court of Appeals and both
Simas
and
Collins
appear to be the more widely accepted decisions. Moreover, this Court is obliged to defer to ERISA’s broad, sweeping powers of preemption as articulated by the Supreme Court.
See Ingersoll-Rand Co.,
IV. CONCLUSION
As is the case in many similar disputes, the answer to the question whether the parties’ severance agreement constitutes an employee benefit plan is an extremely close one. Were the existence of a one-time, lump sum payment of benefits upon the occurrence of a particular event the sole criterion to which this Court was directed to look, Nadworny might be correct in his argument that ERISA does not preempt his breach of contract claim. There are, however, various other factors for this Court to consider in making its ultimate determination, especially the extent to which the benefit plan administrator is required to exercise discretion in distributing benefits. Furthermore, here there is not truly one, single contingency triggering Albertson’s and Shaw’s obligation to pay benefits. That obligation to disburse benefits may be triggered each time an eligible employee is laid-off or resigns from the company within twelve months of the change in control.
While the fact that the Shaw’s severance agreement provides for a lump sum payment weighs in favor of a holding that ERISA does not preempt, the fact that, under the terms of the agreement, the administrator must make decisions as to the eligibility of each employee claiming benefits on a case-by-case basis weighs more heavily in favor of ERISA preemption. In light of all of the facts and circumstances of this case and governed by First Circuit precedent, this Court holds that the Shaw’s Severance Pay Plan is an employee benefit plan.
The result may seem perverse: this Court seemingly is saving Nadworny from himself, where Nadworny expressly does not want the protections of ERISA and the federal jurisdiction that Congress designed for such situations. Nevertheless, Congress did not draft ERISA so that it would be optional to each claimant. As this Court rules that the severance agreement meets the ERISA criteria of being an employee benefit plan, it must maintain jurisdiction over the matter.
Accordingly, Nadworny’s Motion to Remand [Doc. No. 7] is DENIED.
This Court also DENIES Shaw’s and Albertson’s motion to dismiss [Doc. No. 4], provided Nadworny, within 30 days of the date of this decision, amends his complaint to drop his claim for breach of contract and to request judicial review of Shaw’s and Albertson’s denial of benefits under the Severance Pay Plan, pursuant to ERISA.
While Nadworny’s complaint will not be dismissed, it is important to focus on what he has lost now that ERISA governs. Most important, it appears he has lost his right to trial by jury, with all the concomitant public values that right ensures.
See Andrews-Clarke v. Travelers Ins. Co.,
Surely this is not the procedure Congress envisioned. This Court follows it only because it is mandated from above.
Commentators increasingly argue that the Supreme Court envisions a role for the jury here.
See
Donald T. Bogan,
ERISA: Re-thinking
Firestone
in light of
Great-West
—Implications for Standard of Re
Notes
. Although courts generally may not consider the weight of evidence in ruling on a motion to dismiss, it is proper for this Court to consider the contract between the parties on this motion to dismiss because it was included as an exhibit appended to Nadworny's complaint. It was also cited by Shaw's and Al-bertson's in their memoranda in support of their motion to dismiss and in opposition to plaintiff’s motion to remand. It is well established that, under these circumstances, the Court’s consideration of the appended documents does not convert a motion to dismiss into a motion for summary judgement.
See LoCicero v. Leslie,
. The fact that these two decisions are unpublished does not, of course, subtract from their persuasive authority.
See Anastasoff v. United States,