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Benson v. Innovis Health, LLC

United States District Court, D. North Dakota

October 26, 2015

Jonathan D. Benson, Plaintiff,
v.
Innovis Health, LLC, Defendant.

REPORT AND RECOMMENDATION

ALICE R. SENECHAL, Magistrate Judge.

Plaintiff Jonathan D. Benson (Benson) moves to remand this case against his former employer, Innovis Health, LLC (Innovis), to state court, contending this court lacks jurisdiction. Innovis asserts that this court has federal question jurisdiction under the Employee Retirement Income Security Act (ERISA).

In light of a split among court decisions as to whether motions to remand are case-dispositive, and the resulting disagreement over the authority of a magistrate judge to rule on those motions, this opinion is filed as a Report and Recommendation.[1]

Summary

Benson's employment agreement with Innovis provides for payment of severance benefits. The employment agreement provides that any severance benefits are to be calculated pursuant to the Innovis severance plan in effect at the time of employment termination. Benson challenges which severance plan was in effect when his employment was terminated. Regardless of which severance plan applies, the benefits will be calculated pursuant to a plan that is governed by ERISA. To avoid complete preemption under ERISA, there must be an alleged breach of a legal duty that arises independent of ERISA. Innovis has established that no qualifying independent legal duty exists, so Benson's claim is subject to complete preemption under ERISA. Removal to this court was proper, and the motion to remand should be denied. Because the motion to remand should be denied, the motion for attorney fees and the request for a hearing on that motion should also be denied. However, in the event the court grants the motion for remand, the motion for attorney fees should nonetheless be denied; there is no suggestion that Innovis acted improperly in removing the case, and the legal questions presented are fairly subject to debate.

Facts

From December 2010 until July 2014, Innovis employed Benson as Vice President and Executive Director of the Essentia Health-West Region Foundation.[2] In 2014, Innovis eliminated Benson's position and terminated his employment. Innovis advised Benson that he was eligible for severance benefits under its "applicable severance plan." (Doc. #17, p. 2). Benson and Innovis disagree, however, on which of several Innovis severance benefits plans defines Benson's benefits.[3] Benson asserts he is entitled to benefits under a plan providing the equivalent of eighteen months' compensation, while Innovis contends that he is entitled to benefits under a plan that provides a maximum of thirty-six weeks' compensation. (Doc. #16, pp. 2-3).

At the outset of Benson's employment in 2010, he and Innovis entered into a written employment agreement. The agreement provides that, if Innovis terminates Benson's employment without cause, he is entitled to "a continuation of his base salary plus benefits, to such extent and at such levels and for such period of time as is described in the Executive Benefit Plan in effect at the time of termination." (Doc. #15-1, p. 4). The agreement specifies application of North Dakota law and makes no reference to ERISA. Id. at 7.

Innovis submitted an affidavit of its human resource officer, explaining that, in 2013, Essentia (Innovis's parent entity) revised its incentive compensation and severance plans "on an enterprise-wide basis, with the goal of creating consistency across the operation based on the functional duties and responsibilities of the various executives and administrators." (Doc. #17, pp. 1-2). The affidavit states that Essentia then adopted four levels of severance plans and that its executive compensation committee determined that Benson's duties and responsibilities qualified him for the "lowest level severance plan." Id. at 2.

Procedural Posture

To resolve the dispute over which severance plan applies, Benson initiated a breach of contract claim in state court, and Innovis timely removed it to this court. Although Benson does not dispute that the various Innovis severance plans are ERISA plans, [4] it is his position that his claim is a straightforward breach of contract claim, that the parties have agreed is to be decided under North Dakota law. Benson asserts that the dispute does not involve interpretation, application, or enforcement of any ERISA plan, that the dispute can be resolved without referencing the language of any ERISA plan, and that federal question jurisdiction is therefore lacking. In Benson's view, the only question is which of the Innovis severance plans applies; he argues that, once that decision is made, there would be no dispute as to calculation of the severance benefits to which he is entitled.

It is the position of Innovis that, regardless of which plan applies, Benson seeks to recover benefits under a plan regulated by ERISA and that his state law breach of contract claim is therefore completely preempted by ERISA. Innovis argues the determination of which severance plan applies is "inextricably intertwined" with interpreting its severance plans. (Doc. #16, p. 9). In the view of Innovis, the calculation of alleged damages set out in his complaint demonstrates that Benson seeks to recover benefits under an ERISA plan.

Law and Discussion

Under 28 U.S.C. § 1441(a), a defendant in a state court civil action may remove that action to a federal court, if it is an action over which the federal court has original jurisdiction. One category of cases over which the federal district courts have original jurisdiction is "federal question" cases-those which arise under federal laws. See 28 U.S.C. § 1331. This case presents the question of ...


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