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Sahdev v. Empire Comfort Systems

February 8, 2010


The opinion of the court was delivered by: Herndon, Chief Judge


I. Introduction and Background

Pending before the Court is Plaintiff's motion to remand (Docs. 26 & 27). Defendants oppose the motion (Doc. 31). Based on the following, the Court grants the motion to remand.

On October 16, 2009, Dalbir Sahdev filed a three-count complaint against Empire Comfort Systems, Inc., Brian H. Bauer, Pamela A. Bauer, Empire Group, Inc., American Hearth Systems, Inc., Empire Properties, Inc., Hearthrite, Inc. and Skypark Airport Parking, LLC in the Circuit Court of St. Clair County, Illinois (Doc. 2-1). Count I is a breach of contract claim against Empire Comfort Systems, Inc.; Count II is a breach of guaranty claim against Brian H. Bauer and Pamela A. Bauer; and Count III is declaratory judgment claim against all Defendants. In a nutshell, Sahdev's complaint alleges that his former employer Empire Comfort Systems, Inc. broke its promise to him in a written employment contract to pay him specified damages upon his constructive discharge from employment.*fn1

The Complaint alleges that on September 13, 2007, Sahdev and Empire Comfort Systems, Inc. entered into an Employment and Executive Supplemental Income Agreement ("Agreement"), which provided for monetary and other damages in the event Sahdvev was either terminated without cause or resigned due to conditions called triggering events.*fn2 As to triggering events, the Agreement specifically provided that "Upon termination of this Agreement by Employee pursuant to this Section V.E., this Agreement shall terminate and Employee shall be paid the Deferred Benefit in one lump sum..." The Agreement defined Deferred Benefit as "an amount equal to three time the average annual compensation paid to Employee pursuant to Section IV.A. above in the three (3) fiscal years immediately proceeding the date of the termination of the Employment Period." The Agreement also contained a guaranty clause in which Brian Bauer and Pamela Bauer personally guaranteed the obligations of Empire Comfort Systems, Inc. under the Agreement.

The Complaint further alleges that, from July 2007 through the date of Sahdev's termination on February 27, 2009, a series of acts taken by Brian Bauer, Pamela Bauer, Nick Bauer, Brian and Pamela Bauer's son and Vice President of Product Development, and Joe Brueggmann, Vice President of Sales Management, constituted triggering events under the Agreement which resulted in Sahdev's constructive discharge. Sahdev alleges that these acts constituted a change in the number of persons reporting to Sahdev which resulted in him having reduced management control and authority and that Nick Bauer became a de facto member of the Executive Team which also changed his reporting responsibilities with Empire Comfort Systems, Inc. in that Sahdev was no longer reporting to the Executive Team.*fn3

On November 17, 2009, Defendants removed this case to this Court pursuant to 28 U.S.C. § 1441 based on 28 U.S.C. § 1331, federal question jurisdiction (Doc. 2). Specifically, Defendants' notice of removal asserts federal question jurisdiction under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1332(a)(1)(B). Defendants claim that Sahdev's claims could have been brought pursuant to ERISA as the employment contract is a "top hat" ERISA plan and his claims do not implicate any legal duties independent of ERISA.

Thereafter on December 12, 2009, Sahdev filed his motion to remand arguing that the case should be remanded for lack of subject matter jurisdiction as he is not asserting an ERISA claim but only an ordinary state law claim for breach of contract (Docs. 26 & 27). Defendants filed their opposition on January 18, 2010 (Doc. 31). Based on the pleadings and the applicable case law, the Court agrees with Sahdev and grants the motion to remand.

II. Analysis

Pursuant to the removal statute, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district or division embracing the place where such action is pending."

28 U.S.C. § 1441(a). The removal statute is construed narrowly, and doubts concerning removal are resolved in favor of remand. Doe v. Allied-Signal, Inc., 985 F.2s 908, 911 (7th Cir. 1993). The party seeking removal has the burden of establishing jurisdiction of the district court. See In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599, 607 (7th Cir. 1997). "A defendant meets this burden by supporting [its] allegations of jurisdiction with 'competent proof,' which in [the Seventh Circuit] requires the defendant to offer evidence which proves 'to a reasonable probability that jurisdiction exists.'" Chase v. Shop 'N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997)(citations omitted). However, if the district court lacks subject matter jurisdiction, the action must be remanded to state court pursuant to 28 U.S.C. § 1447(c).

Defendants do not contend that Sahdev's cause of action presents diversity jurisdiction, thus, the sole issue is whether Sahdev's complaint presents a federal question removable pursuant to 28 U.S.C. § 1441(b). In general, district courts have "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. The defendant cannot remove a case to federal court by simply asserting a federal question in his responsive pleading. Rice v. Panchal, 65 F.3d 637, 639 (7th Cir. 1995). The issues raised in the plaintiff's complaint, not those added in the defendant's response, control the litigation. Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1486 (7th Cir. 1996). For the most part a "suit arises under the law that creates the cause of action." Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 821 (1988).

In determining whether an action was properly removed to federal court, the court examines the plaintiff's complaint as it existed at the time the defendants filed their notice of removal. See Shannon v. Shannon, 965 F.2d 542, 545 (7th Cir. 1992). In its notice of removal, Defendants state that federal jurisdiction is present in this action because Sahdev's claims are subject to "complete preemption" by ERISA. While, Sahdev maintains that his claims are not subject to ERISA preemption.

At the outset, it is helpful to distinguish between two types of preemption that can occur under ERISA. A party's state law claims involving an ERISA plan may be subject to both "complete preemption" and "conflict preemption" by ERISA. The two doctrines are often confused, but the distinction between them is crucial for purposes of removal jurisdiction. "Complete preemption" is a doctrine of federal subject matter jurisdiction, while "conflict preemption" is a defense to state law claims. See Rice, 65 F.3d at 639. Under complete preemption, "federal subject matter jurisdiction exists if the complaint concerns an area of law 'completely preempted' by federal law, even if the complaint does not mention a federal basis of jurisdiction." Speciale v. Seybold, 147 F.3d 612, 615 (7th Cir.), cert. denied, 525 U.S. ...

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