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In re reliance Standard Life Insurance Co.

United States District Court, E.D. Pennsylvania

June 24, 2019

IN RE RELIANCE STANDARD LIFE INSURANCE CO., et al.

          MEMORANDUM OPINION

          Rufe, J.

         Twelve individual foreign Plaintiffs[1] each filed lawsuits in the Philadelphia Court of Common Pleas against Defendants Reliance Standard Life Insurance Company and RSL Group and Blanket Insurance Trust (collectively, “Reliance”), alleging breach of contract and bad faith claims that stem from Reliance's denial of their disability benefits. Reliance removed the actions to federal court, asserting federal-question jurisdiction under ERISA. Eleven of the cases were then reassigned to this Court as being related to the first docketed case, pursuant to Local Rule of Civil Procedure for the Eastern District of Pennsylvania 40.1.[2] Plaintiffs have filed a joint motion to remand on grounds that the Court lacks subject matter jurisdiction.[3] Upon consideration of Plaintiffs' motion to remand, and the responses thereto, the motion will be granted for the following reasons.

         I. BACKGROUND

         Except where noted, the relevant facts are generally undisputed, and involve a denial of disability benefits to foreign nationals working outside of the United States under disability insurance policies.[4]

         Plaintiffs are citizens of the Republic of Kosovo who each signed annual contracts to work various vehicle- and machine-related jobs in Afghanistan to support the American military effort.[5] These annual employment contracts were with AECOM/GSS Ltd., an offshore Cayman Islands company which is related to AECOM, a United States government contracting company based in Los Angeles, California. As part of their employment, Plaintiffs were offered a benefits package with voluntary short-term disability (“STD”) and long-term disability (“LTD”) insurance policies issued and administered by Reliance, an Illinois corporation with its principal place of business in Philadelphia, Pennsylvania. The Reliance-issued policies stated: “This policy is delivered in Rhode Island and is governed by its laws and/or the Employee Retirement Income Security Act of 1974 (“ERISA”) as amended, where applicable.”

         Plaintiffs each applied for and were accepted as insureds under the STD and LTD policies, and paid the premiums. During the course of their employment, Plaintiffs allegedly became disabled and unable to work.[6] Plaintiffs' claims for STD and LTD claims were denied by Reliance. According to Plaintiffs, they have been deprived of funds which could have helped them obtain necessary medical treatment in a timely fashion.

         II. LEGAL STANDARD

         Removal from and remand to state court are governed by 28 U.S.C. §§ 1441, 1446, and 1447. Section 1441 provides, in relevant part, that “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants . . . .”[7] After removal, a plaintiff may file a motion to remand based on either “any defect” in removal procedure, [8] or lack of subject matter jurisdiction.[9] “[T]he party asserting federal jurisdiction in a removal case bears the burden of showing, at all stages of the litigation, that the case is properly before the federal court.”[10] The statutes are strictly construed against removal.[11]

         III. DISCUSSION

         Reliance filed a notice of removal as to each of the actions solely based on federal-question jurisdiction under ERISA. Although Plaintiffs' breach of contract and bad faith claims arise out of state law, the cause of action is preempted if Plaintiffs, “at some point in time, could have brought [their] claim[s] under” the ERISA statute.[12] This rule is specific to the context of ERISA, and is far different from the typical “well-pleaded complaint rule, ”[13] because “Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character.”[14]

         Recently, in Bajrami v. Reliance Standard Life Insurance Co., this Court held that a foreign national working outside of the United States was not contemplated as falling under the scope of ERISA based on the extraterritoriality doctrine.[15] Nevertheless, the Court has fully considered the instant motion and responses, independent of this earlier decision.

         The Supreme Court has held under the extraterritoriality doctrine that “[w]hen a statute gives no clear indication of an extraterritorial application, it has none.”[16] This language is an extension of a longstanding principle in the law which has stated that “unless there is an affirmative intention of Congress clearly expressed” to give a statute extraterritorial reach, “[courts] must presume it is primarily concerned with domestic conditions.”[17] Over the last century, the Supreme Court has found there to be a presumption against extraterritoriality in various employment-related statutes, such as Title VII, [18] the National Labor Relations Act, [19] and the Federal Employees Liability Act.[20] The presumption does not prevent Congress from reaching outside the borders of the United States, when it manifests an intent to do so.[21]

         As neither the Supreme Court nor any court of appeals has yet addressed the extraterritoriality doctrine as it relates to ERISA, the Court examines its legislative history and statutory language.

         ERISA provides a uniform federal structure for regulating the administration of employee welfare and pension benefit plans.[22] In relevant part, it grants employees the right to bring claims against employers and plan administrators to protect and enforce obligations owed under those plans.[23] During ERISA's enactment, the House Committee on Education and Labor stated that its “most important purpose w[ould] be to assure American workers that they may look forward, with anticipation, to a retirement with financial security and dignity, and without fear that this period of life will be lacking in the necessities to sustain them as human beings within our society.”[24] More generally, ERISA was referred to by legislators as “the greatest development in the life of the American worker since the Social Security Act of 1935.”[25]

         ERISA's domestic intentions are further indicated by its broad statutory language regarding what constitutes an employee benefit plan. Under ERISA, an employee benefit plan[26]must be “established or maintained . . . by any employer engaged in commerce or in any industry or activity affecting commerce [in the United States].”[27] This statutory rule lends context to the overarching question, which is whether any other language counters the presumption against extraterritoriality.[28]

         Reliance argues that ERISA's foreign plan exemption to employee benefit plans shows the congressional intent to extend the reach of ERISA beyond the United States.[29] This exemption excludes from ERISA's reach employee benefit plans which are “maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens.”[30] Based on this language, Reliance contends that “Congress gave extraterritorial effect to ERISA unless” the foreign plan exemption applies.[31] According to Reliance, the exemption alludes to the fact that ERISA “must apply to all plans maintained in the United States primarily for the benefit of persons who are residents, ” which then inferentially may include some foreign nationals.[32]

         Reliance's interpretation of the foreign plan exemption, as it relates to the general employee benefit plan rule, begins with the mistaken premise that extraterritoriality can be implied, when the Supreme Court has directed that “unless there is an affirmative intention of Congress clearly expressed” to give a statute extraterritorial reach, “[courts] must presume it is primarily concerned with domestic conditions.”[33] It is true that when analyzing whether a statute applies extraterritorially, statutory context may be considered as well.[34] However, the relevant context under ERISA assists in finding a presumption against extraterritoriality.

         As previously noted, the broad statutory language regarding employee benefit plans is inherently domestic in nature, as the plans must be “established or maintained . . . by any employer engaged in commerce or in any industry or activity affecting commerce.”[35] The foreign plan exemption is only one of five provisions that state when a plan will be exempted under ERISA, [36] and therefore serves as a narrow indication of what is not explicitly considered an ERISA-covered plan. It is mere speculation to conclude that this exemption means that foreign nationals working in a foreign country are within the scope of ERISA.[37] “The question is not whether we think ‘Congress would have wanted' a statute to apply to foreign conduct ‘if it had thought of the situation before the court,' but whether Congress has affirmatively and unmistakably instructed that the statute will do so.”[38] As ERISA does not contain any explicit language clearly expressing extraterritorial reach, the Court must “presume [ERISA] is primarily concerned with domestic conditions.”[39]

         It is equally telling that within the last four decades of ERISA's enactment, no district court has held that a foreign national working abroad can bring a claim under ERISA. The Court previously addressed two cases in its Bajrami decision that persuasively applied the presumption against extraterritoriality to claims brought by foreign nationals.[40]

         Briefly noted, the court in Maurais v. Snyder held that a foreign plaintiff's state law claims were not preempted by ERISA on the merits since “there is absolutely no language in ERISA which evinces a clearly expressed intent on behalf of Congress to legislate extraterritorially.”[41] The court in Chong v. In Focus Corp. held that a foreign national working outside of the United States had no claim under ERISA “absent clear evidence of congressional intent that ERISA be applied extraterritorially, ” and focused on plaintiff's place of employment and other events and facts relevant to the plaintiff's denial of benefits.[42] Although Reliance now contests the application of these cases based on certain differing facts, it is the principle of these cases regarding the presumption against extraterritoriality that also applies in the instant cases of foreign nationals working abroad.[43]

         Finally, Reliance argues that holding that foreign nationals working abroad cannot assert claims under ERISA would undermine the uniformity Congress sought when it enacted the statute. Indeed, Congress attempted to “provide a uniform regulatory regime over employee benefits.”[44] The broad-encompassing ERISA statute, however, can only extend so far as Congress allows it, before it crosses paths with the extraterritoriality doctrine.[45] Without an affirmative intention of Congress that clearly expresses that ERISA applies extraterritorially, the Court must therefore presume that ...


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