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Anderson v. The Fraternal of Police-Legal Plan Inc.

United States District Court, N.D. Oklahoma

March 24, 2017

THE FRATERNAL OF POLICE-LEGAL PLAN, INC., a corporation, Defendant.



         Before the Court is plaintiff Gary Anderson's Motion to Remand and Brief in Support (the “Motion”) (Doc. 10), which defendant the Fraternal Order of Police-Legal Plan, Inc. has opposed (Doc. 11). For the reasons discussed below, plaintiff's Motion is denied.

         I. Background

         Plaintiff initiated this lawsuit in the Tulsa County District Court on May 20, 2016. (Doc. 1, Exh. 1). Plaintiff's state court petition alleges that he was employed as a law enforcement officer by the City of Miami, Oklahoma until his termination in 2010. During his employment, plaintiff was a member of the Fraternal Order of Police (“FOP”), which offers its members the opportunity to participate in a self-funded legal plan (the “Plan”) that covers certain legal defense costs. In 2010, plaintiff initiated legal proceedings challenging his termination. In accordance with his Plan membership, plaintiff routinely submitted legal billing expenses to defendant. Plaintiff's lawsuit alleges that defendant failed to pay for a portion of his legal expenses, which caused him to suffer damages exceeding $10, 000. (Id., ¶¶ 3-5). Plaintiff also seeks punitive damages in an amount over $10, 000.

         Defendant removed the case on May 24, 2016, asserting that this Court has federal question jurisdiction over plaintiff's claim. (Doc. 1 at 2). Specifically, defendant's Notice of Removal states that plaintiff's lawsuit claims recovery of benefits pursuant to an employee benefits plan that is “exclusively governed” by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. (Id.). Defendant asserts that this Court has original jurisdiction under 28 U.S.C. § 1331 under the complete preemption doctrine. Plaintiff's Motion does not address preemption, but instead argues that ERISA does not govern the Plan and thus the case should be remanded. (Doc. 10 at 2).

         II. Legal Standard

         “Federal courts are ‘courts of limited jurisdiction, ' possessing ‘only that power authorized by Constitution and statute.'” Sunshine Haven Nursing Operations, LLC v. U.S. Dep't of Health & Human Servs., 742 F.3d 1239, 1246 (10th Cir. 2014) (quoting Devon Energy Prod. Co., L.P. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195, 1201 (10th Cir. 2012)). District courts have original jurisdiction over federal question cases, that is, those cases “arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. In a defendant's removal action based on federal question jurisdiction, the defendant bears the burden of establishing that removal was proper on this basis. Karnes v. Boeing Co., 335 F.3d 1189, 1193 (10th Cir. 2003).

         “In determining the existence of federal question jurisdiction, courts are ‘guided generally by the ‘well-pleaded complaint' rule, under which a suit arises under federal law only when the plaintiff's statement of his own cause of action shows that it is based on federal law.'” Salzer v. SSM Health Care of Oklahoma Inc., 762 F.3d 1130, 1134 (10th Cir. 2014) (quoting Turgeau v. Admin. Rev. Bd., 446 F.3d 1052, 1060 (10th Cir. 2006)). A plaintiff may therefore “‘prevent removal to federal court by choosing not to plead a federal claim even if one is available.'” Id. (quoting Turgeau, 446 F.3d at 1060). However, the doctrine of complete preemption is “‘a corollary or an exception to the well pleaded complaint rule, ' under which ‘a state law cause of action may be removed to federal court on the theory that federal preemption makes the state law claim necessarily federal in character.'” Id. (quotation omitted); Felix v. Lucent Techs., Inc., 387 F.3d 1146, 1154 (10th Cir. 2004). The Supreme Court has recognized “only a few federal statutes that so pervasively regulate their respective areas that they have complete preemptive force; ERISA is one.” Hansen v. Harper Excavating, Inc., 641 F.3d 1216, 1221 (10th Cir. 2011). Thus, the complete preemption doctrine allows a state law claim to be converted into a federal claim for purposes of federal question jurisdiction and the well-pleaded complaint rule. Felix, 387 F.3d at 1156.

         III. Discussion

         First, the Court must assess whether the Plan is governed by ERISA. If the answer is yes, the dispositive question before the Court becomes whether plaintiff's claim is completely preempted by ERISA. See Salzer, 762 F.3d at 1134. It is defendant's burden to demonstrate that removal is proper under the ERISA doctrine of complete preemption. See Karnes, 335 F.3d at 1193.

         A. ERISA-Regulated Plan

         A plan is subject to ERISA regulation if it is “established or maintained by an employer or by an employee organization . . . for the purpose of providing for its participants or their beneficiaries . . . prepaid legal services.” 29 U.S.C. § 1002(1). ERISA does not apply to government plans, defined as plans “established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing.” ERISA § 3(32), 29 U.S.C. § 1002(32); see McGraw v. Prudential Ins. Co. of Am., 137 F.3d 1253, 1257 (10th Cir. 1998).

         Plaintiff's Motion attaches as exhibits the Legal Defense Plan Brochure and Legal Defense Plan Description (“Plan Description”). (Doc. 10, Exh. 1). The Plan Description provides that participation in the Plan is limited to “active FOP members in good standing” who are employed with federal, state, or local government law enforcement agencies. (Id. at 4). The Plan offers its participants three options for coverage of legal defense costs related to administrative, civil, and criminal proceedings arising “directly out of the Participant's activities in the scope of employment.” (Id. at 8). In particular, Coverage A applies to the “[l]egal defense or . . . other appropriate legal challenge to administrative discipline, sanction or proceeding” including the participant's dismissal, “where such discipline or sanction arises directly out of the Participant's activities in the scope of employment.” (Id.).

         While plaintiff's Motion appears to allege that ERISA does not govern because the governmental plan exception applies, his Reply asserts that he “did not argue defendant was a government plan and therefore not governed by ERISA.”[1] (Doc. 12 at 2, ¶ 3). It is unclear precisely what plaintiff attempts to argue, nor do the two cases cited by plaintiff support his argument for remand. Both cases are distinguishable because the plans at issue were not legal services plans, nor did they limit eligibility to members in good standing with a particular organization. See Wis. Educ. Asso. Ins. Tr. v. Iowa State Bd. of Pub. Instruction, 804 F.2d 1059, 1061 (8th Cir. 1986) (tax exempt trust was not an employee benefit plan for purposes of ERISA because 30% of individuals receiving benefits were not members of the labor union maintaining the trust); National Business Conference Employee Benefit Association v. Anderson, 451 F.Supp. 458 (S.D. Iowa 1977) (medical insurance plan open to any individual in an ...

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