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TENER v. HOAG

October 21, 1988

GARY TENER, BARBARA ANN PULPAN, GAYLE M. KARPUSZKA, EDWARD A. KOSTORNY, BARBARA FORTY, JUSTIN PIKUTIS, JAMES E. DUBANIEWCZ, RONALD PHILLIPS, STEPHANIE C. PRATO, RITA MAGNES, MARGARET CAMPAS AND BARBARA SCHELLHASE, Plaintiffs,
v.
DAVID H. HOAG and RAYMOND A. HAY, Defendants



The opinion of the court was delivered by: ROSENBERG

 LOUIS ROSENBERG, UNITED STATES DISTRICT JUDGE

 The plaintiffs in this case are employees terminated from Jones & Laughlin Steel Corporation as a result of a plant closing. The plaintiffs are seeking severance payments and liquidated damages under Sections 260.9a and 260.10 of the Pennsylvania Wage Payment and Collection Law, 43 PS. § 260.1 et seq.

 The defendants are officers of the LTV - Jones & Laughlin Steel Corporation and LTV Inc. The defendants have brought this case before this court as a result of a removal petition under Section 1144(a) of the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq. (ERISA). The section provides in part:

 
Except as provided in subsection b of this section, the provisions of this subchapter and subchapter 3 of this chapter shall supercede any and all State laws in so far as they now or hereafter relate to any employee benefit plan. . . .

 The defendants argue that the Pennsylvania Wage Payment and Collection Law of 1961 (WPCL) is pre-empted by ERISA. The purpose of WPCL is to permit employees to enforce agreements with their employers to pay wages and fringe benefits. The WPCL also provides for the Secretary of the Department of Labor and Industry to seek civil and criminal sanctions against employers who do not pay wages and fringe benefits. The WPCL provides in part:

 
Every employer who by agreement . . . agrees to pay or provide fringe benefits or wage supplements . . . must pay or provide the fringe benefits or wage supplements, as required, . . . within ten days after such payments are required to be made directly to the employee, or within sixty days of the date when proper claim was filed by the employee in situations where no required time for payment is specified. 43 PS. Section 260.3(b)

 The issue in this case is whether such severance payments and liquidated damages claims are pre-empted by ERISA, 29 U.S.C. § 1144(a). This court finds that these severance payments and liquidated damages claims do not "relate to any employee benefit plan" under 29 U.S.C. § 1144(a) and, therefore, are not pre-empted. For the reasons given below the case will be remanded to Allegheny County Common Pleas Court.

 Twelve employees, plaintiffs, of the Jones & Laughlin Steel LTV. Corporation were terminated as a result of a plant closing in Pittsburgh. The corporation is now in bankruptcy proceedings in the Southern District of New York. As a result of an agreement made between the Corporation and the terminated employees, the employees were each entitled to a separation benefit of varying amounts based on years of service. The payments were in most cases less than the $ 10,000 minimum requirement to satisfy diversity jurisdiction by this court. The severance benefits are on a one-time only basis. No further obligation by the defendant is required either in terms of bookkeeping or payment to plaintiffs.

 The defendants, David Hoag and Raymond Hay, are respectively the Chief Executive Officer of LTV Steel and Chairman of the Board of LTV Corporation, the parent corporation. It is averred that the defendants failed to make the required payments as contracted.

 The defendants removed the case to this court asserting that ERISA 29 U.S.C. § 1001 et seq., as amended, pre-empted enforcement of the WPCL. The defendants have also asserted that this court has no personal jurisdiction over them and the case must be dismissed.

 The second assertion will be answered first because it is less complex. This court has personal jurisdiction over the defendants. Under Carpenters Health and Welfare Fund of Philadelphia v. Kenneth Ambrose, 727 F.2d 279 (3d Cir. 1983), questioned in McMahon v. McDowell, 794 F.2d 100 (3d Cir. 1986), this Circuit reviewed the liability of executive officers under the WPCL. That court reviewed the definition of "employer" under 43 PS § 260.2A (1981). The Pennsylvania law "includes every person . . . corporation, receiver or other officer . . . employing any person in this commonwealth." The 3rd Circuit went on to say that:

 
"The legislature intended to impose civil liability on persons who hold corporate executive positions such as occupied by the Ambroses. . . ." Id. at 283.

 The court recognized that although the result seemed harsh, the legislature intended to hold corporate officers personally liable: "Although imposing liability for unpaid pension benefits on persons who have not contractually agreed to make the payments seems a harsh result, in the absence of other available decisions on the issue, we will affirm the district courts decision holding the Ambroses personally ...


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