through SmithKline. SmithKline maintains that termination was permitted under the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), 29 U.S.C. §§ 1161-1168.
On January 10, 1992, Jacob filed a motion for leave to amend his complaint in state court. The proposed amended complaint attached to the motion sought leave to add a second count based on SmithKline's termination of Jacob's health benefits. On February 1, 1992, SmithKline removed the action to this Court.
In its removal petition, SmithKline contended that Count II of the proposed amended complaint was preempted by ERISA, thereby creating federal question jurisdiction.
This case was reassigned to my docket on September 11, 1992. On October 6, 1992, the Court held a status conference with counsel for the parties. At that time, both parties agreed that removal was timely and that Count II was preempted by ERISA. Since that time, Jacob changed his mind on the question of ERISA preemption. Jacob now seeks remand of this action, contending that this Court has no jurisdiction to hear this claim because Count II is not preempted by ERISA.
Under 28 U.S.C. § 1441, a defendant may remove any state court action over which the federal courts have "original jurisdiction." Generally, removal is proper only if plaintiff's claim establishes the basis for original jurisdiction. This long established rule, commonly referred to as the "well pleaded complaint" rule, precludes a defendant from removing a complaint grounded in state law if the only basis for federal jurisdiction is a defense arising out of federal law. Taylor v. Anderson, 234 U.S. 74, 75-6, 34 S. Ct. 724, 724, 58 L. Ed. 1218 (1914). The rule is grounded in federalism concerns, Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1395 (9th Cir. 1988), recognizing that a plaintiff, as "master of the complaint," can choose to avoid a federal forum by "exclusive reliance on state law." Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 2429, 96 L. Ed. 2d 318 (1987).
The well pleaded complaint rule applies with full force even when the defense involved is one of federal preemption; i.e. federal courts are without jurisdiction to adjudicate a state law claim even if the defendant argues that the claim is preempted by federal law. Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 14, 103 S. Ct. 2841, 2848, 77 L. Ed. 2d 420 (1983). Of course, the well pleaded complaint rule does not state that such a defense is barred. To the contrary, the well pleaded complaint rule allows for preemption determinations to be made by state courts, recognizing that state courts are perfectly competent to evaluate whether a state claim is federally preempted. See Lister v. Stark, 890 F.2d 941, 943, n.1 (7th Cir. 1989), cert. denied, 498 U.S. 1011, 111 S. Ct. 579, 112 L. Ed. 2d 584 (1990).
Application of the well pleaded complaint rule, however, is subject to the doctrine of "complete preemption." First approved by the United States Supreme Court in Avco Corp. v. Aero Lodge No. 735, Int'l Ass'n of Machinists & Aerospace Workers, 390 U.S. 557, 88 S. Ct. 1235, 20 L. Ed. 2d 126 (1968), the complete preemption rule allows a defendant to remove when plaintiff's ostensibly state law claim arises out of an area of law in which Congress has manifested an intent to "occupy the field." In such a situation, it is said that plaintiff's cause of action has been "completely preempted" because it is really a federal claim dressed in state law clothing. The state law claim, accordingly, must be "recharacterized" as federal. Railway Labor Executives Association v. Pittsburgh & Lake Erie Railroad Co., 858 F.2d 936, 942 (3d Cir. 1988). Allowing removal in this context is consistent with the policy underlying the well pleaded complaint rule since plaintiff's state law complaint is, in reality, federal in nature.
Applying the well pleaded complaint rule and its complete preemption exception, there are two circumstances under which removal of Jacob's case is permissible. First, removal is proper if Jacob's claim "relies upon a federal law ground as a ground for recovery." Allstate Insurance Co. v. 65 Secur. Plan, 879 F.2d 90, 93 (3d Cir. 1989). If not, removal is appropriate only if the complaint "makes a claim that is 'completely preempted.'" Id. ; see also Lister, 890 F.2d at 944.
Count II of Jacob's complaint stems from paragraph 6 of the agreement. In relevant part, paragraph 6 states as follows:
Health and dental insurance coverage will be continued for three months following termination (to July 30, 1989). SmithKline Beckman health and dental benefits may be continued beyond that point for a period of 18 months through individual arrangements with Blue Cross and Aetna. A special payment of $ 8,000 will be provided to you on April 30, 1989 to cover costs of health and dental insurance through January 31, 1991. This payment includes gross up for taxes.