Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-cv-01109/USCOURTS-cand-4_07-cv-01109-1/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1331 Fed. Question

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JOHN SUTTON,

Plaintiff,

v.

BRANDYWINE REALTY TRUST; DANIEL

CUSHING; and DOES 1 through 20,

Defendants.

 /

No. C 07-1109 CW

ORDER DENYING

PLAINTIFF's

MOTION TO REMAND

AND FOR COSTS AND

FEES

Plaintiff John Sutton originally brought this action in state

court. Defendants Brandywine Realty Trust and Daniel Cushing

removed the action and Plaintiff now seeks to remand this action to

state court. Defendants oppose the motion. The matter was decided

on the papers. Having considered all of the parties' papers, the

Court denies Plaintiff's motion. 

BACKGROUND

Defendant Brandywine is Plaintiff's former employer. 

According to Plaintiff's complaint, while he was working for

Defendant Brandywine, he learned that his direct supervisor,

Defendant Cushing, had his secretary take an online real estate

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exam, pretending to be him, in violation of California law. After

Plaintiff reported Defendant Cushing's illegal activity to

Defendant Brandywine's general counsel, Defendant Cushing

retaliated against Plaintiff. Defendant Cushing attacked

Plaintiff's personal and professional integrity, accusing him of

officer misconduct, and tried to force him into an early

retirement. It was made clear to Plaintiff that neither Defendant

Cushing nor any other high-level executive at Defendant Brandywine

wanted Plaintiff to continue working for Defendant Brandywine. 

Plaintiff's working conditions became intolerable.

Plaintiff submitted his Notice of Termination. He contended

that, because he was forced to leave his employment for "good

reason," he was entitled to a severance payment. Defendant

Brandywine disagreed. 

Under the Prentiss Properties Trust Change in Control

Severance Protection Plan for Key Employees (the Severance Plan),

participants who experience a "Qualifying Termination" are entitled

to a severance payment; participants who do not experience a

"Qualifying Termination" are not. "Qualifying Termination" is

defined as "termination of employment (1) by the Company for any

reason other than Cause" or "(2) by the Participant for Good

Reason." Koss Dec., Ex. A at § 2.20. The Severance Plan defines

"Good Reason" to mean:

(a) The Company requiring the Participant's relocation more

than fifty (50) miles from the Participant's primary office

subsequent to the Change in Control, without such

Participant's consent;

(b) A material adverse alteration in the nature of his or her

position, provided that (i) a change of title or (ii) a change

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of reporting and, in either case, a concomitant change of

duties, shall not be considered a material adverse alteration

unless the duties are materially inconsistent with the

Participant's duties at the time of the Change in Control took

place [sic];

(c) Exclusion from the Company's, or upon a Change of

Control, its successor's, long term incentive plan or

reduction by the Company of the Participant's (i) annual base

salary, or (ii) target bonus; or

(d) An assignment of duties to the Participant that are

materially inconsistent with his or her job description at the

time the Change in Control took place.

Id. at § 2.16. 

On January 24, 2007, Plaintiff filed this action in the

Alameda County Superior Court, alleging breach of contract,

wrongful termination and intentional infliction of emotional

distress. His breach of contract claim is based on Defendant

Brandywine's refusal to pay him under the Severance Plan. Less

than a month later, Defendants removed the action to this Court

pursuant to 28 U.S.C. § 1441(b). 

LEGAL STANDARD

A defendant may remove a civil action filed in state court to

federal district court so long as the district court could have

exercised original jurisdiction over the matter. 28 U.S.C.

§ 1441(a). Section 1447 provides that if at any time before

judgment it appears that the district court lacks subject matter

jurisdiction over a case previously removed from state court, the

case must be remanded. 28 U.S.C. § 1447(c). On a motion to

remand, the scope of the removal statute must be strictly

construed. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.

1992). "The 'strong presumption' against removal jurisdiction

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means that the defendant always has the burden of establishing that

removal is proper." Id. Courts should resolve doubts as to

removability in favor of remanding the case to state court. See

id.

DISCUSSION

Section 1441(b) provides, "Any civil action of which the

district courts have original jurisdiction founded on a claim or

right arising under the Constitution, treaties or laws of the

United States shall be removable without regard to the citizenship

or residence of the parties." 28 U.S.C. § 1441(b). Defendants

contend that the Severance Plan falls under the purview of the

Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.

§ 1001, and that, therefore, removal was proper because this is a

civil action arising under ERISA, a law of the United States. See

29 U.S.C. § 1144(a) (state law claims that relate to any employee

benefit plan, as defined by ERISA, are preempted and converted to

federal questions). Plaintiff argues that the Severance Plan is

not an employee benefit plan within the meaning of ERISA and that,

even if it is, his claims do not "relate to" an ERISA plan. 

The Ninth Circuit instructs that there is a "relatively simple

test" to determine whether a severance plan is covered by ERISA:

"does the benefit package implicate an ongoing administrative

scheme?" Delaye v. Agripac, Inc., 39 F.3d 235, 237 (9th Cir.

1994). In Bogue v. Ampex Corp, 976 F.2d 1319, 1321 (9th Cir.

1992), the special compensation program provided for severance

benefits for ten executives if they were not offered "substantially

equivalent employment" after they were terminated. Substantially

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equivalent employment was defined as job that included

responsibilities similar to those in the employee's previous job. 

The court found that this program required more than the

"theoretical possibility of a one-time obligation in the future";

rather, it required a "case-by-case, discretionary application." 

976 F.2d at 1322-23. Because the employer was obliged "to apply

enough particularized, administrative, discretionary analysis to

make the program. . . a 'plan,'" the Ninth Circuit concluded that

the severance plan was covered under ERISA. 976 F.2d at 1323. 

In Delaye, however, the Ninth Circuit concluded the opposite. 

39 F.3d at 236. There, the employee was required to pay the

plaintiff his yearly base compensation if he was terminated for

cause and to pay him a larger benefits package if he was terminated

without cause. The court found that this contract between the

employer and the plaintiff did not implicate an ongoing

administrative scheme because "there is nothing discretionary about

the timing, amount or form of the payment." Id. at 237. The court

explained that the situation there was different than that in Bogue

in two ways. First, determining whether a terminated employee was

offered "substantially similar employment" required "ongoing

administrative analysis"; whereas, once Delaye's employer

terminated him, the severance calculation was "a straight forward

computation of a one-time obligation." Id. Second, the severance

package in Bogue covered ten executives, requiring the employee to

make ten separate discretionary determinations; the severance

package in Delaye covered only the plaintiff. Id.

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At issue in Velarde v. PACE Membership Warehouse, Inc., 105

F.3d 1313 (9th Cir. 1997), was a "stay on letter'" offered to at

least twenty-five employees. The letter provided that employees,

who stayed with the company until a specified date and who were not

terminated for cause and who did not voluntarily resign, would

receive a severance package and a bonus. 105 F.3d at 1315. In

concluding that this also was not a severance plan covered by

ERISA, the Ninth Circuit examined both Bogue and Delaye:

Here, as in Delaye, the employer was simply required to make a

single arithmetical calculation to determine the amount of the

severance benefits. While in both cases, a “for cause”

termination would change the benefits due to the employee, the

Delaye court did not deem this minimal quantum of discretion

sufficient to turn a severance agreement into an ERISA plan 

. . . . [T]he key to our holding in Bogue was that there was

“enough ongoing, particularized, administrative discretionary

analysis,” to make the plan an “ongoing administrative

scheme,” not that the agreement simply required some modicum

of discretion. The level of discretion, if any, which PACE

was required to exercise in implementing the agreement was

slight. It failed to rise to the level of ongoing

particularized discretion required to transform a simple

severance agreement into an ERISA employee benefits plan.

Id. at 1317 (emphasis in original and inner citation omitted).

 Plaintiff argues that the Severance Plan here is akin to those

in Delaye and Velarde, not Bogue. He contends that "Good Reason"

is similar to "for cause" and, therefore, the plan here lacks the

required ongoing administrative scheme necessary to be covered by

ERISA. This argument, however, is not persuasive: Plaintiff's

reliance on Delaye and Velarde is misplaced.

 "Good Reason," as defined in the Severance Plan, is not

equivalent to "for cause." As noted above, "Good Reason" has four

different meanings. It does not require an "ongoing administrative

scheme" to determine whether a participant is relocated more than

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fifty miles without her consent or whether a participant has her

salary reduced. See Koss Dec., Ex. A at § 2.16 (a), (c). If "Good

Reason" were defined to include solely those two definitions, the

Court would conclude that the "minimal quantum of discretion

sufficient to turn a severance agreement into an ERISA plan" is not

present. Velarde, 105 F.3d at 1317. But, under the Severance

Plan, "Good Reason" also includes "a material adverse alteration in

the nature of a participant's position" and an assignment of duties

to the participant that is "materially inconsistent with his or her

job description at the time the Change in Control took place." 

Koss Dec., Ex. A at § 2.16 (b), (d). Just as it was impossible in

Bogue to determine whether new employment was "substantially

equivalent" to terminated employment without an ongoing

administrative scheme, here, it is also impossible to determine

whether there has been a "material adverse alteration" or an

assignment of new duties that are "materially inconsistent" with

former duties without an ongoing administrative scheme. The

quantum of discretion required under these two definitions of "Good

Reason" is sufficient to turn a severance agreement into an ERISA

plan.

In other words, the answer to whether the Severance Plan here

implicates an ongoing administrative scheme is, "yes." See Delaye,

39 F.3d at 237. Therefore, the Court concludes that the Severance

Plan is an "employee benefit plan" for the purposes of ERISA. 

Further, the Court concludes that Plaintiff's breach of contract

claim "relates to" an ERISA plan because it is a claim for payment

under the plan. Because removal was proper, Plaintiff's motion to

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remand is denied. 

CONCLUSION

Defendants meet their burden of establishing that removal is

proper; therefore, the Court DENIES Plaintiff's motion to remand

and for costs and fees (Docket No. 22). The hearing scheduled for

August 16, 2007 is VACATED.

IT IS SO ORDERED.

Dated: 8/7/07 

CLAUDIA WILKEN

United States District Judge

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