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Armstrong v. United States Steel Corp.

April 12, 2006


The opinion of the court was delivered by: Ambrose, Chief District Judge.



A group of retired employees assert breach of contract, fraudulent inducement and misrepresentation claims against their former employer in connection with statements made about an early retirement package. The employees seek a remand of this action to state court, arguing that their claims are not completely preempted under either ERISA or the LMRA. I agree that a remand of this case is required.


The Plaintiffs (hereinafter referred to as the "Employees") were employed by the Defendant United States Steel ("USS") in 2002 and worked at the USS Clairton Works. The Employees were all members of the Collective Bargaining Unit of the United Steelworkers of America ("USWA"), Local 1557. A 2003 USS-USWA Basic Labor Agreement ("BLA") contemplated a workplace restructuring which called for the reduction in the number of employees at the Clairton Plant.

A "Transition Assistance Program" ("TAP") was developed to facilitate the reduction in the workforce by encouraging the voluntary early retirement of certain pension eligible employees. According to the Employees, USS then issued a memo dated June 30, 2003 regarding the TAP. The June 30, 2003 memo, which the Employees characterize as an "offer," informed recipients that they had a "one-time opportunity" to elect to retire under the terms of the TAP. The Employees further contend that the "offer" explained that all employees would be treated in an identical fashion. Each of the Employees involved in this action received the June 30, 2003 memo and timely completed the application for participation in the TAP -i.e., they "accepted" the offer. USS then approved and consented to the applications in accordance with the TAP.

According to the Employees, USS then materially breached these individual contracts. The Employees contend that, contrary to its promise, USS subsequently agreed to provide enhanced benefits and extended retirement dates to a different group of employees ("Group II employees"). The enhanced benefits included, among other things, a pay-out of additional vacation and a use of higher wage earnings for lifetime pension calculations. The Employees contend that USS's material breach caused them to suffer a loss of enhanced lifetime pension benefits; a loss of continued employment and increased wages, vacations and profit-sharing pay; and a loss of seniority and continued employment rights.

The Employees also argue that USS knew that the TAP was not a one-time only voluntary retirement plan and knew that the TAP would be changed and enhanced for lower seniority employees, when it falsely represented to them that no changes would be made. The Employees contend that USS made this material false representation with the intent to induce them to sign the TAP agreements and waive their rights to continued employment.

Accordingly, the Employees initiated this action in the Court of Common Pleas of Allegheny County, Pennsylvania, asserting claims for breach of contract, fraudulent inducement and misrepresentation. USS thereafter removed the action to this Court, arguing that the claims were completely preempted by the Employee Retirement Income Security Act ("ERISA") of 1974, 29 U.S.C. § 1001 et seq., and / or the Labor Management Relations Act ("LMRA") of 1947, 29 U.S.C. § 185(a). The Employees counter that the doctrine of complete preemption is inapplicable and have filed a Motion to Remand. See Docket No. 6.*fn1

For the reasons set forth below, I find that the doctrine of complete preemption is inapplicable here. Consequently, I am without the subject matter jurisdiction necessary to preside over this case. This action is remanded to state court.


The central issue before me is whether USS properly removed this action to federal court. "A civil action filed in state court may be removed to federal court if the claim is one 'arising under' federal law." Pascack Valley Hospital, Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393, 398 (3d Cir. 2004), citing, 28 U.S.C. § 1331, 1441(a). "Under the 'well-pleaded complaint' rule, the plaintiff is ordinarily entitled to remain in state court so long as its complaint does not, on its face, affirmatively allege a federal claim." Pascack, 388 F.3d at 398, citing, Beneficial Nat'l. Bank v. Anderson, 539 U.S. 1, 6 (2003). "To support removal, a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action." Id., quoting, Franchise Tax Bd. Of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 10-11 (1983) (internal quotation marks and brackets omitted).

Here, the Employees' Complaint does not assert a claim under the Constitution or federal law. Instead, the Employees assert claims for a breach of contract, fraudulent inducement and misrepresentations. The Complaint does not expressly refer to ERISA or the LMRA. That USS might assert, as a defense to these claims, that they are preempted by ERISA or the LMRA, is an insufficient basis for removal. Id. Accordingly, the Employees' Complaint is not removable under the well-pleaded complaint doctrine.

A corollary to the well-pleaded complaint rule, however, allows for the removal of an action from state court, "if it falls within the narrow class of cases to which the doctrine of 'complete pre-emption' applies." Id., at 399, citing, Aetna Health Inc. v. Davilla, 124 S.Ct. 2488 (2004). The doctrine of complete preemption is based upon the recognition that, in certain instances, Congress has so completely preempted a particular area of law that any civil complaint that comes within the scope of this area necessarily arises under federal law, and is thus removable. Id., and Felix v. Lucent Technologies, Inc., 387 F.3d 1146, 1155 (10th Cir. 2004). The Supreme Court has applied the doctrine of complete preemption both in the context of ERISA and the LMRA. See Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557, 88 S.Ct. 1235 (1968) (holding that a state court suit to enjoin a union strike under state law was properly removed because the claim was completely preempted by ...

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