The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
MARY E. CAGGIANO, et al,
Plaintiffs,
v. CIVIL ACTION
NO. 19-3074
TEVA PHARMACEUTICALS USA, INC., et al,
Defendants.
MEMORANDUM OPINION
Schmehl, J. /s/JLS September 9, 2020
I. INTRODUCTION
Plaintiffs in this matter filed a Complaint against Defendant, Teva
Pharmaceuticals, Inc. in the Court of Common Pleas of Montgomery County,
Pennsylvania, setting forth two causes of action under Pennsylvania law: 1) breach of
contract and 2) violation of the Pennsylvania Wage Payment and Collection Law, 43 P.S.
§ 206.1, et seq (“WPCL”). Defendant removed the matter to this Court, alleging that
Plaintiffs’ claims of contractual entitlement to separation pay are “properly brought under
and completely preempted by” ERISA Section 502(a). Plaintiffs filed a Motion to
Remand, arguing that the Severance Benefit Plan upon which their claims are based is
not a “plan” governed by ERISA. Teva opposes remand, arguing that Plaintiffs’ claims
for benefits are based upon its Separation Benefits Plan (“SBP”), Supplemental
Unemployment Benefits Plan (“SUB Plan”) and Transition Plan, which are all one plan
governed by ERISA. A period of discovery was ordered regarding the relationship of the
SBP, the SUB Plan and the Transition Plan to each other, and the parties filed
supplemental briefing. For the reasons that follow, I will grant Plaintiffs’ motion and
remand this matter back to the Court of Common Pleas of Montgomery County.
II. BACKGROUND AND STATEMENT OF FACTS
Teva provided Plaintiffs with benefits pursuant to a Separation Benefits Policy,
which sets out specific eligibility rules and a formula for calculating the amount of
separation pay based on certain criteria. (ECF No. 1, pp. 42-45.) Pursuant to the SBP,
“[a] full- or part-time US-based, non-union Teva employee” is eligible to receive
separation pay in the case of, inter alia, “elimination of position” and/or “reduction in
force.” (Id. at p. 1.)
Plaintiffs are all former non-union, full-time employees of Teva whose positions
were related to facilities management. (Complaint, ¶¶ 29, 33, 34.) Plaintiffs were
terminated by Teva after it decided to contract facilities management duties to a service
provider. (Id., at ¶¶ 39-42.) Plaintiffs claim that they are therefore entitled to separation
pay pursuant to the SBP, which Teva refuses to pay.
III. LEGAL STANDARD
28 U.S.C. §1441(b) provides 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, to the district court of the United States for the district and
division embracing the place where such action is pending.” The district courts shall have
original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of
the United States. 28 U.S.C. § 1331. In the case of a motion to remand, the court “must
assume as true all factual allegations of the complaint.” Yellen v. Teledyne Cont’l Motors,
Inc., 832 F.Supp.2d 490, 493 (E.D. Pa. 2011) (quoting Steel Valley Auth. V. Union Switch
& Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987). The removal statute “is to be strictly
construed against removal.” Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392, 396
(3d Cir. 2004). All doubts are to be resolved in favor of remand, and the moving party
bears the burden of showing that federal jurisdiction exists, and that removal was proper.
Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990).
ERISA is one of the areas of federal law where “Congress intended the complete
preemption doctrine to apply to state law causes of action which fit within the scope of
ERISA’s civil enforcement provisions.” Dukes v. U.S. Healthcare, Inc., 57 F.3d 350, 353
(3d Cir. 1995). Therefore, when a plaintiff’s complaint contains an action to recover
benefits due under an employee benefit plan, this will be considered a federal action,
regardless of the cause of action pled in the complaint. Id., 57 F.3d at 353 n.2, 354
(citations omitted). In this matter, Plaintiffs argue that the SBP is not an ERISA plan, and
therefore, jurisdiction is not proper in federal court. Accordingly, the resolution of the
motion to remand turns on whether or not the SBP is an ERISA plan.
III. DISCUSSION
Plaintiffs’ motion to remand argues that they are entitled to separation pay pursuant
to the SBP. In response, Teva asserts that Plaintiffs’ action challenges the denial of
benefits under the SBP, which is a welfare benefit plan subject to the Employee
Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq, and that
Plaintiffs’ state law claims are therefore preempted by ERISA. In their supplemental
briefing, Plaintiffs argue that the SBP is not an ERISA plan, and therefore, their claims
are not subject to this Court’s jurisdiction.
For ERISA to govern a benefit arrangement, there are five factors that must be
met. The benefit arrangement must be: 1) a plan, fund, or program; 2) established or
maintained; 3) by an employer or employee organization; 4) for the purpose of providing
qualifying benefits; 5) to participants or beneficiaries. Donovan v. Dillingham, 688 F.2d
1367, 1371 (11th Cir. 1982); accord Smith v. Hartford Ins. Grp., 6 F.3d 131, 136 (3d Cir.
1993). In the instant matter, the pertinent question is whether the SBP, together with the
SUB and the Transition Plan, are a qualifying “plan” under ERISA.
Teva contends that the SBP, SUB and Transition Plan are in fact “one Severance
Plan.” (Dep. of Elaine McGee, pp. 14-17.) However, after a thorough review of the three
documents in question, it is clear that they cannot be considered one plan.
First, a detailed comparison of the three documents show that they contain
multiple contradictions and discrepancies. The SUB Plan and Transition Plan both
contain extremely detailed sections setting forth a seven-step process for participants to
exercise their rights under the Plan. See Summary Plan Description for SUB and
Transition Plans, ECF No. 23, Exh. E, pp. 10-13. The SBP has no such procedure, merely
stating that before providing severance to employees, managers must “obtain approval
from their immediate supervisor(s), department Vice President and Human Resources.”
ECF No. 23, Exh. B, p. 2. Similarly, the SUB Plan and the Transition Plan have a formal
“Plan Administrator” to adjudicate claims and appeals (ECF No. 23, Exh. E, p. 13,) but
the SBP only states generally that “these guidelines shall be administered by Teva
Human Resources and such other person or persons as Teva shall delegate from time to
time. . .” ECF No. 23, Ex. B, p. 4.
The documents have different titles, different effective dates and different
purposes. The SBP has an effective date of April 4, 2018, amending an earlier version
dated January 1, 2018, and the SUB and Transition Plans are effective February 12, 2018.
ECF No. 23, Exs. B and E. Further, the SBP does not contain a specific stated purpose,
while the SUB Plan states that its purpose is to provide supplemental unemployment
compensation benefits to assist former employees who suffered involuntary termination
in their transition to new full-time employment. (ECF No. 23, Ex. C, p. 1.) Similarly, the
Transition Plan contains a stated purpose, claiming that it is intended to provide payments
to eligible employees in addition to and in lieu of benefits paid under the SUB. (ECF No.
23, Ex. D, p. 1.)
Further, the three documents have a plethora of inconsistencies as to eligibility
and ineligibility requirements. For example, only non-union employees are eligible under
the SBP, while the SUB and Transition Plans do not include that limitation. ECF No. 23,
Exs. B, p. 1; C, pp. 4-8; D, pp. 2-4; E, pp. 1-4, 6-8. Eligibility under the SUB Plan
requires an employee to apply for unemployment, while the SBP and the Transition Plans
do not. Id. All three documents contain different language regarding age of employees in
terms of eligibility. The SBP makes no mention of age in eligibility or ineligibility
requirements, while the SUB Plan states that employees age 62 or older are ineligible and
the Transition Plan states that an employee becomes eligible for benefits when he or she
reaches the age of 62. Id.
Lastly, the three documents in question provide for different numbers of
maximum and minimum weeks of pay an eligible employee is entitled to receive. Id. An
employee could be entitled to different amounts of money, depending on which
document is applied. It is hard to fathom how three documents with this many
discrepancies and contradictions could be constitute one severance plan.
Teva supports its argument that all three documents make up one severance plan
by relying on language in the SBP that references the SUB and Transition Plans
regarding how benefits will be paid. The SBP states:
Payment Schedule. All amounts paid under this policy will be paid bi-
weekly, and subject to all applicable deductions and offsets, including
without limitation federal, state and local taxes as well as any state
unemployment benefits. All Separation Payments will be made in accordance
with the terms and conditions of the Teva Pharmaceuticals USA, Inc.
Supplemental Unemployment Benefit Plan or Teva Pharmaceuticals USA,
Inc. Employment Transition Plan, whichever is applicable (see below). All
payments made under this policy are processed and paid based upon the
employee’s election of either direct deposit or manual check, in accordance
with all applicable federal, state and local laws, and in coordination with
Company’s payroll schedule.
Supplemental Unemployment Benefit Plan (SUB)
Teva severance will be paid through the Teva Supplemental Unemployment
Benefit Plan (the “SUB Plan”). The Teva Supplemental Unemployment
Benefit Plan (the “SUB Plan”) provides a structured payout of severance
benefits to eligible employees who experience an involuntary loss of
employment. Under this program, the employee will receive weekly SUB
Plan payments which are equal to 100% of the weekly Base Pay, minus any
unemployment insurance pay (commonly referred to an “unemployment
pay”) received from the state or federal government, for the weekly
severance period. For each week the employee remains eligible, the
employee will receive a payment from Teva for the SUB Plan payment and
any applicable payment from the state or federal government for
unemployment insurance pay. Added together, these two components will
equal 100% of your Weekly Base Pay. The Summary Plan Description for
the SUB plan or Employment Transition Plan, whichever is applicable, can
be provided upon request.
ECF No. 23, Ex. B, p. 3. However, the mere fact that the SBP references the SUB and
Transition Plans does not mean that all three documents constitute one plan. Teva’s
argument would be more convincing if the SBP incorporated the SUB and Transition
Plans, but it does not. It merely references them. That is hardly the type of compelling
evidence that meets Teva’s burden in this matter.
In addition, the Transition Plan states that it “and the SUB Pay Plan are separate
and distinct plan arrangements.” ECF No. 3, Ex. D. The SBP, the SUB Plan and the
Transition Plan cannot be considered all one plan, when the Transition Plan clearly states
the exact opposite. Teva cannot point to a single document that states that the SBP, the
SUB Plan and the Transition Plan all make up one severance plan. The SBP was
amended after Teva adopted the SUB Plan and the Transition Plan. If these three
documents were intended to be one severance plan, Teva could easily have included
language to that effect in the SBP amendment but failed to do so.
Clearly, Teva has failed to offer sufficient evidence to meet its burden of proof in
this matter. There is insufficient evidence for the Court to find that the SBP, together with
the SUB and Transition Plans, form one severance plan governed by ERISA over which
this Court would have jurisdiction. Accordingly, we must conclude that the SBP is a
separate contract not governed by ERISA and Plaintiffs’ motion to remand must be
granted.
IV. CONCLUSION
For all the reasons set forth above, Plaintiffs’ action against Teva must proceed in
state court. Accordingly, I will grant Plaintiffs’ motion to remand, returning this matter to
the Court of Common Pleas of Montgomery County.