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James M. Mitich v. Lehigh Valley Restaurant Group

December 12, 2012


The opinion of the court was delivered by: Baylson, J.


I. Introduction

Plaintiff James M. Mitich ("Plaintiff") brought this action against Defendants Lehigh Valley Restaurant Group, Inc. ("LVRG"), James Ryan ("Ryan"), Joseph Fusco ("Fusco"), and Luscinda Lobach ("Lobach") (collectively, "Defendants") alleging nine sundry state-law causes of action and two federal causes of action, eleven in total, arising out of his allegedly wrongful termination as President and Chief Operating Officer from LVRG.

Defendants filed a Motion to Dismiss (ECF Nos. 3 and 4) (the "Motion") requesting that the Court dismiss the case in its entirety according to the Rooker-Feldman doctrine or decline to exercise jurisdiction over it pursuant to Colorado River abstention. Defendants also argue that a number of Plaintiff's claims should be dismissed pursuant to res judicata and collateral estoppel, and that three of his state-law claims are preempted by federal law.

Review of the pleadings and parties' submissions revealed that all but one of Plaintiff's claims should be dismissed for reasons other than those raised by Defendants. For the reasons below, Defendants' Motion is GRANTED in part and DENIED in part. Plaintiff will need to file an amended complaint if he wishes to proceed with his one claim alleging violation of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq.

II. Summary of Facts and Background

This dispute orbits around the termination of Plaintiff's employment with LVRG.

According to Plaintiff, he was terminated from LVRG without cause and in violation of his employment contract after Defendants Ryan, Fusco, and Lobach engaged in a "scorched earth offensive against" against him, the object of which was to trump up charges of misconduct in order to permit termination of Plaintiff's employment with LVRG in order to reap personal gain. (Compl. ¶¶ 2, 30-31, 33.) Defendants ultimately terminated Plaintiff for cause due to Plaintiff's alleged misconduct, which also resulted in Plaintiff forfeiting his accrued benefits under LVRG's Stock Appreciation Rights Plan (the "SAR Plan"). (Id. ¶¶ 37-40.)

Defendants' campaign against Plaintiff allegedly continued after his termination from LVRG. Defendants allegedly improperly interfered with his other employment opportunities and illegally obtained his credit report in an effort to dig up dirt on him. (Id. ¶ 44, 82.)

Plaintiff brings eleven causes of action, nine based on state law, two on federal law. Plaintiff's state-law claims are all closely tied to his employment relationship with Defendants: breach of his employment contract with LVRG and the SAR Plan; tortious interference with his employment contract and the SAR Plan; violation of the Pennsylvania Wage Payment and Collection Law, 43 P.S. § 260.1 et seq.; violation of the Uniform Commercial Code,*fn1

conversion, and breach of contract arising from Defendants' sale of Plaintiff's LVRG stock; tortious interference with his employment with and prospective ownership of a third-party company; and conspiracy among the Defendants to engage in all of the unlawful conduct alleged in his Complaint. Plaintiff's federal claims are for violation of the Employee Retirement Income Security Act ("ERISA"), as amended, 29 U.S.C. § 1001 et seq., alleging improper denial of his SAR Plan benefits (the "ERISA Claim"), and violation of the FCRA, alleging that Defendants obtained Plaintiff's credit report under false pretenses (the "FCRA Claim").

The Court's jurisdiction over this case is based on federal question jurisdiction, 28 U.S.C. § 1331, and supplemental jurisdiction, 28 U.S.C. § 1367. (Compl. ¶ 10.) According to Plaintiff's Complaint, the parties in this action are not diverse; with the exception of Defendant Fusco, all parties are Pennsylvania residents. (Compl. ¶¶ 5-9.)

III. Plaintiff's Federal Claims

Because the Court's jurisdiction over Plaintiff's nine state-law claims is supplemental, the Court begins by addressing the viability of Plaintiff's two federal claims. Plaintiff's ERISA Claim is dismissed because the SAR Plan is not covered by ERISA. The Court will, however, allow his FCRA Claim to proceed, provided that Plaintiff amends his Complaint; as currently pleaded, Plaintiff's FCRA Claim does not meet the standards established by Twombly and Iqbal.*fn2

A. Rule 12(b)(6) Legal Standard

In deciding a motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6), courts may look only to the facts alleged in the complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). Courts must accept as true all well-pleaded allegations in the complaint and view them in the light most favorable to the plaintiff. Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir. 1985).

A valid complaint requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Iqbal clarified that the Court's decision in Twombly, which required a heightened degree of fact pleading in an antitrust case, "expounded the pleading standard for 'all civil actions.'" 555 U.S. at 684.

Iqbal explained that although a court must accept as true all of the factual allegations contained in a complaint, that requirement does not apply to legal conclusions; therefore, pleadings must include factual allegations to support the legal claims asserted. Id. at 678-79 ("While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations."). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678 (citing Twombly, 550 U.S. at 555); accord Phillips v. County of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008) ("We caution that without some factual allegation in the complaint, a claimant cannot satisfy the requirement that he or she provide not only 'fair notice,' but also the 'grounds' on which the claim rests." (citing Twombly, 550 U.S. at 555 n.3)). Accordingly, to survive a motion to dismiss, a plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556).

"[A]fter Iqbal, when presented with a motion to dismiss for failure to state a claim, district courts should conduct a two part analysis":

1. "[T]he factual and legal elements of a claim should be separated. The District Court must accept all of the complaint's well-pleaded facts as true, but may disregard any legal conclusions"; and

2. "[A] District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a 'plausible claim for relief.'"

Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009) (quoting Iqbal, 556 U.S. at 679). In sum, "a complaint must do more than allege the plaintiff's entitlement to relief. A complaint has to 'show' such entitlement with its facts." Id. at 211 (citing Phillips, 515 F.3d at 234-35).

B. Plaintiff's ERISA Claim Is Dismissed Because ERISA Does Not Cover the SAR Plan.

Although the issue is not raised by Defendants in their Motion,*fn3 Plaintiff's Response (ECF No. 9) expressed uncertainty as to whether ERISA applies to the SAR Plan, stating that he pleaded "common law claims in the alternative [to his ERISA Claim] in the event that the SAR[] Plan is determined to not be subject to enforcement under ERISA." (Pl.'s Resp. at 37.) Although Plaintiff did not provide any basis for his uncertainty, it is well founded: the Third Circuit, and numerous other courts, have held that plans similar to the SAR Plan are bonus or incentive plans that are not covered by ERISA. Oatway v. AIG, Inc., 325 F.3d 184, 189 (3d Cir. 2003) (adopting what the court referred to as "the unbroken line of cases" following the holding in Murphy v. Inexco Oil Co., 611 F.2d 570 (5th Cir.1980), that bonus or incentive plans are not subject to ERISA). *fn4

When determining whether compensation plans similar to the SAR Plan fall within ERISA's ambit, the Third Circuit has instructed "that an ERISA plan is only a plan 'designed for the purpose of paying retirement income whether as a result of [its] express terms or surrounding circumstances.'" Id. at 188 (alteration in original) (quoting Murphy, 611 F.2d 570). A plan is not an ERISA plan if it evinces intent to provide discretionary performance incentives in addition to employees' usual compensation, and payouts are available upon the occurrence of non-retirement events. Houston v. Aramark Corp., 112 F. App'x 132, 134-36 (3d Cir. 2004); Oatway, 325 F.3d 184; Hahn, 99 F. Supp. 2d at 279-80; see also Bandy v. LG Indus., Inc. Equivalent Ownership Plan, No. Civ. A. 02-7359, 2003 WL 21499017, at *2-3 (E.D. Pa. June 23, 2003) (Hart, J.) (even though the plan allowed for redemption "only upon retirement, death, separation from employment, or change of control," it was still not covered by ERISA because it was intended to provide incentives to retain key personnel and "make up for . . . salary cuts"). This is true even if the plan "happens to provide payments after the end of an individual's employment and thus provides a source of retirement income." Hahn, 99 F. Supp. 2d at 279; accord Aramark, 112 F. App'x at 135-36 ("As the Fifth Circuit noted in a leading case on ERISA's applicability to key employee bonus plans, 'Any outright conveyance of property to an employee might result in some payment to him after retirement.'" (quoting Murphy, 611 F.2d at 575)); Oatway, 325 F.3d at 189 (holding that a plan was not covered by ERISA where post-retirement payments "were only incidental to the goal of providing current compensation").

According to Paragraph 1 of the SAR Plan, titled "Purpose," the SAR Plan is intended to:

1. "[P]rovide deferred compensation to a select group of highly compensated key managers who impact the long-term growth and profitability of" LVRG;

2. "[B]enefit [LVRG] by creating incentives for Participants." (LVRG SAR Plan ¶ 1.) SARs are awarded annually, but participation in the plan and the amount of each annual award are entirely at the discretion of LVRG; the SAR Plan contains neither criteria for determining whether an award should be granted in any particular year, nor a method of calculating the amount of an award. (Id. ¶¶ 1(d), (l), 2 (LVRG or its designee "shall have the exclusive power to select Eligible Persons to be granted [SARs and] to determine the Amount of the [SARs] to be granted to each eligible person ...

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