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United States District Court, Northern District of California

January 13, 2003


The opinion of the court was delivered by: Susan Illston, United States District Judge

On January 3, 2003, this Court heard argument on the motion by plaintiff to remand this action to San Francisco Superior Court where it was filed. Having carefully considered the arguments of counsel and the papers submitted, the Court hereby GRANTS the motion for the reasons set forth below.


On August 12, 2002, Plaintiff Ruth E. Smith filed a complaint in San Francisco Superior Court, against defendants Southwestern Bell Telephone Company, Pacific Bell Directory, Ameritech Advertising Services, and Does 1 through 10.*fn1 The complaint alleges three causes of action: 1) Age, Sex and Disability Discrimination and Retaliation in Violation of FEHA; 2) Breach of Implied Contract; and 3) Breach of Implied Covenant of Good Faith and Fair Dealing. See Complaint at ¶¶ 39, 50, 58. This action was removed to this Court on October 15, 2002. See Notice of Removal. Now before the Court is plaintiffs motion to remand this action to state court.


A suit filed in state court may be removed to federal court if the federal court would have had original subject matter jurisdiction over that suit. 28 U.S.C. § 1441(a); Snow v. Ford Motor Co., 561 F.2d 787, 789 (9th Cir. 1977). In this action, defendants assert federal question jurisdiction under 28 U.S.C. § 1331,*fn2 based on ERISA preemption.

A motion to remand is the proper procedure for challenging removal. Remand to state court may be ordered either for lack of subject matter jurisdiction or for any defect in removal procedure. See 28 U.S.C. § 1447(c). The court may remand sua sponte or on motion of a party, and the parties who invoked the federal court's removal jurisdiction have the burden of establishing federal jurisdiction. See Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988) (citing Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921)); Salveson v. Western States Bankcard Ass'n, 525 F. Supp. 566, 571 (N.D. Cal. 1981), aff'd in part. rev'd in part, 731 F.2d 1423 (9th Cir. 1984); Schwarzer, Tashima, Wagstaffe, Federal Civil Procedure Before Trial, ¶ 2:1093 (1992). In this case, defendants must meet this burden.

The removal statute is strictly construed against removal jurisdiction and doubt is resolved in favor of remand. Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979).

Existence of federal jurisdiction on removal must be determined on the face of the complaint. See Louisville & Nashville R.R. v. Mottley, 211 U.S. 149 (1908). A "cause of action arises under federal law only when the plaintiffs well pleaded complaint raises issues of federal law." Metropolitan Life Ins. Co v. Taylor, 481 U.S. 58, 63 (1987). However, the Court may examine the entire record to determine if the real nature of the claim is federal, notwithstanding plaintiffs characterization to the contrary, when the plaintiff has, by "artful pleading, " attempted to defeat defendant's right to a federal forum. See Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 397 n. 2 (1981); Salveson, 525 F. Supp. at 572. A complainant cannot "avoid federal jurisdiction simply by omitting from the complaint federal law essential to his claim, or by casting in state law terms a claim that can be made only under federal law." Harper v. San Diego Transit Corp., 764 F.2d 663, 666 (9th Cir. 1985).


Defendants' removal notice asserts that any state law claim which relates to a plan covered by the Employee Retirement Income Security Act of 1974 ("ERISA") is completely preempted, and as, plaintiffs common law claims in this action each relate to defendant Pacific Bell Directory's disability benefits plan (the Employees' Pensions, Disability Benefits and Death Benefits agreement), the claims are preempted by ERISA. Defendants also state in their opposition to this motion to remand that plaintiffs claims of breach of contract and breach of the covenant of good faith and fair dealing implicate ERISA, as the contract that underlies these allegations is a corporate plan for disability benefits, governed by ERISA.

Plaintiff asserts that she is not seeking to recover benefits under the terms of that ERISA plan or otherwise enforce rights that in any way impact that plan. Plaintiff cites Operating Engineers Health and Welfare Trust Fund v. JWJ Contracting Co., 135 F.3d 671, 677 (9th Cir. 1998), which states that in order to determine if a state law is connected with an ERISA benefit plan, courts must determine "whether the state law has a connection with or reference to employee benefit plans." (Internal quotation marks omitted). Plaintiff also cites Bui v. American Telephone & Telegraph Company Incorporated, 310 F.3d 1143, 1147 (9th Cir. 2002) which directs that courts must "look to the behavior underlying the allegations in the complaint to determine whether ERISA preempts a plaintiffs claims. If a claim alleges a denial of benefits, ERISA preempts it." Plaintiff then analyzes the claims in her complaint and asserts that the claims under FEHA, the California state law at issue, have no connection with or reference to employee benefit plans, and thus plaintiffs claims under FEHA do not implicate ERISA. Plaintiff further asserts that plaintiffs claims in the complaint that defendants deviated from their disability policies are not based on the ERISA plan, but rather defendants' policies and practices concerning leave of absence, work modifications, and other general employment issues.

The Court agrees with plaintiff that plaintiffs claims do not implicate ERISA. The FEHA claim has no connection with or reference to employee benefit plans, and neither the breach of contract claim nor the breach of the covenant of good faith and fair dealing claim is based on or connected to the ERISA plan. Therefore, the state claims are not preempted by ERISA, this Court does not have jurisdiction to hear these claims and plaintiffs motion for remand must be GRANTED.


For the foregoing reasons, the Court GRANTS plaintiffs motion to remand, and remands this action to the San Francisco Superior Court where it was originally filed.


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