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CORTES v. MIDWAY GAMES

October 13, 2004.

RIGOBERTO CORTES, Plaintiff,
v.
MIDWAY GAMES, INC., Defendant.



The opinion of the court was delivered by: MARK FILIP, District Judge

MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S EMERGENCY MOTION TO REMAND TO STATE COURT AND DISMISSING PLAINTIFF'S COMPLAINT WITHOUT PREJUDICE
Plaintiff filed suit against Defendant in Illinois state court alleging a state common law theory of recovery. Defendant removed the case to this Court under 28 U.S.C. §§ 1441 & 1446 on grounds that Plaintiff's claim is completely preempted by the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1002, et seq. ("ERISA"). On August 16, 2004, Plaintiff filed an emergency motion to remand the case to state court. On September 14, 2004, Defendant moved to dismiss Plaintiff's complaint with prejudice for failure to state a claim. For the reasons stated below, Plaintiff's motion to remand the case to the Illinois courts is denied. Defendant's motion to dismiss the case is granted in part: the complaint is dismissed without prejudice and Plaintiff may attempt to replead his case, as explained further herein.

BACKGROUND

  On January 22, 2004, Plaintiff filed an action against Defendant in the Northern District of Illinois, and that case, civil action number 04 C 0510, was assigned to Judge Marovich. In that suit, Plaintiff alleged that he was employed by and received his medical insurance through Defendant and that Defendant improperly changed medical insurance carriers in September 2003 with the result that Plaintiff and his family received lesser benefits. (D.E. 1 in 04 C 0510, ¶¶ 412.) More specifically, Plaintiff alleged that while the original terms of his employer-sponsored health plan (a Blue Cross/Blue Shield Plan) provided 112 hours/week of in-home health care from a registered nurse for the entire year, under the current terms of a new employer-sponsored health plan (a United Health Care Plan), Plaintiff receives coverage for only 16 hours/day of such nursing care for 120 days a year. (Id., ¶¶ 7-9.) Put differently, the Blue Cross/Blue Shield plan previously provided by Plaintiff's employer had 112 hours/week of home nursing care for the entire year, whereas the new United Health Care plan provides 112 hours/week of home nursing care for roughly 17 weeks/year. This benefits change seriously impacts Plaintiff and his family because Plaintiff's son has spinal muscular atrophy, which is a severe, chronic medical condition that requires Plaintiff's son to be constantly monitored on a home ventilator. (Id., ¶¶ 6, 13-14.)

  In case number 04 C 0510, Plaintiff asserted causes of action under 28 U.S.C. § 1983 and for breach of fiduciary duty under common law. In the Section 1983 claim, Plaintiff claimed that Defendant, his employer, deprived Plaintiff of "civil rights and privileges to which he is entitled" "[b]y refusing to provide Plaintiff and his family with the same medical insurance coverage they had received and relied upon for many months." (Id., ¶ 17.) In his fiduciary duty claim, which was not specified in the complaint as being advanced under any particular law, Plaintiff alleged that "[a]s Plaintiff's employer, Defendant owed Plaintiff a fiduciary duty of good faith and due diligence in obtaining adequate insurance for the Plaintiff and his family," and that "Defendant breached this fiduciary duty by failing to obtain and provide medical insurance which provides and pays for home health care from a registered nurse for 112 hours per week for the entire year instead of for just 120 days." (Id., ¶¶ 19-20.)*fn1 Defendant moved to dismiss for failure to state a claim and for lack of subject matter jurisdiction. (D.E. 6 in 04 C 0510 at 1-3.) In Defendant's reply brief in support of its motion to dismiss, Defendant stated that
The dearth of caselaw specifically holding that an employer does not have a state-law (or federal common law) duty to obtain "adequate insurance," much less "provide medical insurance which provides and pays for home health care from a registered nurse for 112 hours per week for the entire year instead of for just 120 days," (Compl. at ¶¶ 19-20), is readily understandable in light of the express preemption of such a claim by the Employee Retirement Income Security Act of 1974. See 29 U.S.C. § 1144(a). As noted in Midway's moving papers, Mr. Cortes' attempt to foment other claims must be based on the readily apparent fact that there is no basis to suggest any violation of ERISA.
(D.E. 10 in 04 C 0510 at 7 n. 4.) On July 15, 2004, Judge Marovich granted Defendant's motion to dismiss on the basis that Plaintiff had not established subject matter jurisdiction. (D.E. 11 in 04 C 0510 at 4, 6.)

  On July 29, 2004, Plaintiff filed suit against Defendant in Illinois state court, alleging essentially the same underlying facts as he did in case number 04 C 0510, but this time asserting a fiduciary duty claim under Illinois common law. (D.E. 1, Exhibit A, ¶¶ 15-16.) Plaintiff alleges that "[a]s Plaintiff's employer, Defendant owed Plaintiff a fiduciary duty of good faith and due diligence in obtaining adequate insurance for the Plaintiff and his family which provided the same or similar coverage to the coverage previously provided and upon which the Plaintiff and his family had become dependent." (Id., Ex. A, ¶ 15.) As relief, Plaintiff has requested the "entry of preliminary and permanent injunctions requiring Defendant to provide Plaintiff with a medical insurance plan that provides coverage for his son for 112 hours per week of in home health care from a registered nurse for the entire year. In the alternative, Plaintiff prays that Defendant be ordered to obtain at its own expense home health care from a registered nurse for 112 hours per week for the entire year." (Id. at 3-4.) On August 10, 2004, Defendant removed Plaintiff's state action to this Court under 28 U.S.C. §§ 1441 & 1446 on grounds that Plaintiff's claim is completely preempted by ERISA. (D.E. 1 at 1-2.) On August 16, 2004, Plaintiff filed an emergency motion to remand this case to state court. (D.E. 3.)

  The parties proceeded to brief both the remand motion and a related motion to dismiss filed by Defendant, in which Defendant argues that Plaintiff's complaint should be dismissed with prejudice for failure to state a claim. Briefing on the motion to dismiss was completed on October 5, 2004. Plaintiff has requested an expedited ruling in the case, and this opinion resolves both of those pending motions.

  As explained further below, despite Plaintiff's best efforts and the obvious emotional appeal of Plaintiff's situation, precedent instructs that Plaintiff's state law fiduciary duty claim — by which Plaintiff seeks an order "requiring Defendant to provide Plaintiff with a medical insurance plan that provides coverage for his son for 112 hours per week of in home health care from a registered nurse for the entire year" (D.E. 1. Ex. A, at 3-4) — is preempted under ERISA and was properly removed to federal court. In addition, because of the preemptive force of ERISA, Plaintiff's state law fiduciary duty claim cannot survive as currently pleaded. Accordingly, Plaintiff's complaint is dismissed without prejudice. Because it is at least possible, as discussed further below, for Plaintiff potentially to succeed under other recognized ERISA theories, Defendant's request that the case be dismissed with prejudice is denied. Plaintiff may, if he chooses, attempt to replead. DISCUSSION

  I. Plaintiff's Motion to Remand the Case to the Illinois Courts Is Denied.

  Plaintiff argues that this case should be remanded to state court because (1) no federal question appears on the face of the complaint, (2) complete preemption does not exist here because ERISA does not provide a remedy for claims like the one asserted by Plaintiff, and (3) ERISA is irrelevant to cases like this, where Plaintiff is not suing for benefits allowed under the current terms of his medical insurance plan, but is instead alleging that his employer "fail[ed] to obtain a new medical insurance policy which provided the same benefits that were provided to the Plaintiff under a previous policy." (D.E. 6 at 3; see also D.E. 3 at 3-4.) The Court respectfully disagrees.

  A. Complete Preemption Under ERISA

  Under what is known as the well-pleaded complaint rule, "a defendant may not [generally] remove a case to federal court unless the plaintiff's complaint establishes that the case `arises under' federal law." Aetna Health Inc. v. Davila, 124 S.Ct. 2488, 2495 (2004) (quoting Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 10 (1983)) (brackets and emphasis in Aetna Health Inc.). However, "[t]here is an exception . . . to the well-pleaded complaint rule. `[W]hen a federal statute wholly displaces the state-law cause of action through complete pre-emption,' the state claim can be removed." Aetna Health, 124 S.Ct. at 2495 (quoting Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8 (2003)); see also Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1488 (7th Cir. 1996) (discussing ERISA preemption and stating that "a federal court may, in some situations, look beyond the face of the complaint to determine whether a plaintiff has artfully pleaded his suit so as to couch a federal claim in terms of state law") (internal quotation omitted). As explained by the Supreme Court, when a "federal statute completely pre-empts the state-law cause of action, a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law. ERISA is one of these statutes." Aetna Health, 124 S.Ct. at 2495 (internal quotation and citation omitted); accord, e.g., Klassy v. Physicians Plus Ins. Co., 371 F.3d 952, 957 (7th Cir. 2004) (affirming removal of case from state court and stating that "ERISA provides a remedy for plan participants wrongfully denied benefits. However, such claims must be brought under ERISA and creatively pleading a denial of benefits claim as a state law claim does not defeat the broad preemptive force of ERISA")

  Furthermore, "the availability of a federal remedy is not a prerequisite for federal preemption." Lister v. Stark, 890 F.2d 941, 946 (7th Cir. 1989) (affirming removal and stating, "The Supreme Court has specifically rejected such an argument. `The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA'") (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987)); accord, e.g., Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64-65 (1987) (quoting same language in Pilot Life and finding removal proper under complete preemption doctrine); Rogers v. Tyson Foods, Inc., 308 F.3d 785, 789 (7th Cir. 2002) ("[C]omplete preemption can exist even where a particular plaintiff seeks a remedy that Congress chose not to provide when it effected complete preemption.")*fn2; Thomason v. Aetna Life Ins. Co., 9 F.3d 645, 646-47 (7th Cir. 1993); Pohl v. Nat'l Benefits Consultants, Inc., 956 F.2d 126, 128 (7th Cir. 1992).*fn3 Thus, ERISA may preempt Plaintiff's claim and provide a basis for federal jurisdiction despite the fact that, on its face, his complaint does not raise a federal question and regardless of whether ERISA provides an avenue on which Plaintiff can ultimately prevail on his claim.*fn4 In his remand papers, Plaintiff appears to contend that his case involves a novel situation and asserts that there is no ERISA precedent "where a federal court exercised jurisdiction over a claim similar to the one brought by the Plaintiff." (D.E. 6 at 3.) However, a review of the precedent of the Seventh Circuit and its sister circuits reveals substantial guidance to illuminate the situation here.

  For example, in Vallone v. CNA Financial Corp., 375 F.3d 623 (7th Cir. 2004), the Seventh Circuit recently canvassed precedent concerning ERISA Section 502(a) and complete preemption and stated:
[W]e note that claims by a beneficiary for wrongful denial of benefits (no matter how they are styled) have been held by the Supreme Court to `fall[] directly under § 502(a)(1)(B) of ERISA, which provides an exclusive federal cause of action for resolving such disputes.' Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 62-63 (1987). Recent decisions of both this Circuit and the Supreme Court have held that state law claims, such as the plaintiffs' breach of common law contract claim here, are pre-empted by ERISA. See Aetna Health Inc. v. Davila, [. . .] [124 S.Ct. 2488, 2499-2500 (2004)] ("Congress' intent to make the ERISA civil enforcement mechanism exclusive would be undermined if state causes of action that supplement the ERISA § 502(a) remedies were permitted, even if the elements of the state cause of action did not precisely duplicate the elements of an ERISA claim.").
Id., at 638-39.

  In addition, the Seventh Circuit has taught that three factors are relevant for determining whether a claim is completely preempted by ERISA: (1) whether the plaintiff is eligible to bring a claim under ERISA, 29 U.S.C. § 1132 (a/k/a "§ 502(a)"), (2) "whether the plaintiff's cause of action falls within the scope of an ERISA provision that the plaintiff can enforce via § 502(a), and (3) whether the plaintiff's state law claim cannot be resolved without an interpretation of the contract governed by federal law." Klassy v. Physicians Plus Ins. Co., 371 F.3d 952, 955 (7th Cir. 2004) (internal ...


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