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Sheehan v. Kaiser Foundation Health Plan, Inc.

United States District Court, N.D. California

May 25, 2018





         Plaintiff Teresa Sheehan filed this action in the California Superior Court for Contra Costa County, bringing four claims related to the termination of her employment by Defendant Kaiser Foundation Health Plan, Inc. (“Kaiser”), all purportedly under state law. Kaiser removed to this Court asserting federal subject matter jurisdiction based on complete preemption under the Employee Retirement Income Security Act (“ERISA”). Sheehan now moves to remand on the basis that her claims are not subject to complete preemption. The Court held a hearing on May 18, 2018. For the reasons discussed below, the motion to remand is DENIED.[1]


         A. Allegations of the Complaint

         Sheehan worked for Kaiser from December 3, 2012 until March 13, 2017, most recently as a sales executive. Notice of Removal (dkt. 1) Ex. A (Compl.) ¶ 9. In the final months of her employment, Sheehan candidly discussed with her supervisors her need to care for her ailing father, including whether it would be necessary for her to take a leave of absence to do so. Id. ¶ 13. On January 12, 2017, Kaiser informed Sheehan that her employment would be terminated effective March 13 for reasons unrelated to her job performance. Id. ¶ 10. Sheehan was fifty-six years old at the time of her termination and had worked in the workers' compensation field for more than thirty years. Id. ¶ 9.

         Both Kaiser's management and its human resources department repeatedly told Sheehan that the termination would allow her to spend time with her father. Id. ¶ 14. Because Sheehan had not discussed her father's illness with the human resources department, she believes that her supervisors discussed it with human resources and that her potential need for family medical leave contributed to the decision to terminate her employment, as well as the decision not to place Sheehan in an open senior account manager position. Id. ¶¶ 14-15.

         A portion of Sheehan's compensation consisted of incentive pay, which sales executives received one year after a deal closed. Id. ¶ 11. Sheehan's termination deprived her of approximately $70, 000 of incentive pay for deals that she had substantially completed. Id. Of particular to importance to the present motion, Sheehan also alleges that “Kaiser timed [Sheehan's] termination so as to occur approximately three months before the June 24, 2017, date on which [her] retirement benefits otherwise would have vested, causing [her] enormous financial loss.” Id. ¶ 12.

         Sheehan's complaint includes four claims: (1) breach of the implied covenant of good faith and fair dealing, id. ¶¶ 17-20; (2) age discrimination and harassment in violation of the California Fair Employment and Housing Act (“FEHA”), id. ¶¶ 21-31; (3) discrimination, retaliation, and harassment based on family medical leave in violation of the California Family Rights Act (“CFRA”), id. ¶¶ 32-38; and (4) wrongful termination in violation of public policy, id. ¶¶ 39-45. Sheehan's first and fourth claims are based in part on Kaiser's alleged decision to terminate Sheehan to avoid paying pension benefits. See Id. ¶ 18 (listing, as one form of bad faith conduct, Kaiser “timing [Sheehan's] termination so that such termination would be a mere 3½ months prior to the June 24, 2017, date on which [her] Kaiser retirement benefits were scheduled to vest”); id. ¶ 42 (listing, as one policy violated by Sheehan's termination, “the public policy prohibiting an employer from depriving an employee of her retirement benefits via manipulating the employee's termination date to occur shortly before the retirement benefits vesting date, as set forth in the Employee Retirement Income Security Act (‘ERISA'), 29 U.S.C.A. § 1022”).[2]

         B. Procedural History and Parties' Arguments

         Sheehan filed this action in state court on March 1, 2018. See generally Compl. Kaiser removed to this Court on April 5, 2018, asserting that ERISA completely preempts “at least some of [Sheehan's] claims, ” and specifically noting Sheehan's allegations that Kaiser terminated her for the purpose of depriving her of retirement benefits. Notice of Removal ¶ 3.

         Kaiser's attorney Andrea Bednarova emailed Sheehan's attorney Daniel Bartley on Sunday, April 8, 2018 requesting the use of his electronic signature for a stipulation that the parties had reached but not filed while the case was in state court, and stating that she “presume[ed] [he] had received the Notice of Removal.” Bartley Decl. (dkt. 8) Ex. A. Bartley responded the same day that he had been out of the office the previous week, and asked Bednarova to email him the removal documents, which Bednarova did the following morning. Id. Bartley replied that afternoon with a demand that Kaiser stipulate to remand the case “without delay” on the grounds that Sheehan asserted only state law claims and that “ERISA preemption issues can be complicated, but understanding the difference between complete and conflict preemption is critical to the removal decision.” Id. Bednarova responded that she was busy with other commitments for the early part of the week but would review the cases Bartley cited and respond by the end of the week. Id. Bartley replied that he hoped another attorney at Bednarova's firm could look into the issue because he intended to file a motion to remand the next day, April 10, which he in fact did. Id.; see generally Mot. (dkt. 9).

         Sheehan's present motion asserts that the case should be remanded based on the test set forth in Aetna Health Inc. v. Davila, 542 U.S. 200 (2004), where the Supreme Court held that ERISA completely preempts claims where an “an individual brings suit complaining of a denial of coverage for medical care, where the individual is entitled to such coverage only because of the terms of an ERISA-regulated employee benefit plan, and where no legal duty (state or federal) independent of ERISA or the plan terms is violated.” Davila, 542 U.S. at 210; see Mot. at 5. Sheehan argues that this case is analogous to a Ninth Circuit decision holding that ERISA did not preempt a claim for breach of contract where the plaintiff hospital alleged that the defendant insurer failed to honor an oral agreement to pay a certain amount for a patient's treatment and instead paid a lower amount that would have otherwise been due under the patient's ERISA plan. Mot. at 5-6 (citing Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941 (9th Cir. 2009)). Sheehan seeks remand and an award of reasonable attorneys' fees. Id. at 7.

         Kaiser opposes remand, arguing that the Supreme Court's decision in Ingersoll-Rand v. McClendon, 498 U.S. 133 (1990), controls here, because the Court held in that case that a state law claim for wrongful termination to avoid paying retirement benefits was preempted by ERISA, and because the Court reaffirmed the holding of Ingersoll-Rand in its later Davila decision. Opp'n (dkt. 17) at 4-6. According to Kaiser, Sheehan's first and fourth claims are preempted, and thus properly subject to removal, because section 510 of ERISA prohibits terminating an employee “‘for the purpose of interfering with the attainment of any right to which such participant may become entitled'” under an ERISA benefits plan. Id. at 6 (quoting 29 U.S.C. ...

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