Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_07-cv-00015/USCOURTS-cand-4_07-cv-00015-2/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MICHAEL KEATING, M.D.,

Plaintiff, No. C 07-0015 PJH

v. ORDER GRANTING 

MOTION TO REMAND AND

JEFFERSON PILOT FINANCIAL DENYING MOTION TO DISMISS

INSURANCE COMPANY, et al.,

Defendants.

_______________________________/

The motion of plaintiff Michael Keating, M.D., for an order remanding the aboveentitled action to the Superior Court of California, County of Alameda, and the motion of

defendants Jefferson Pilot Financial Insurance Company (“Jefferson Pilot”), Lincoln

National Corporation dba Lincoln Financial Group, and James Brady (“Brady”) to dismiss

the complaint, or in the alternative, motion for summary judgment, came on for hearing

before this court on March 28, 2007. Plaintiff appeared by his counsel Arnold R. Levinson

and Joel P. Waelty, and defendants appeared by their counsel Leslie C. Green. Having

read the parties’ papers and carefully considered the arguments of counsel and the

relevant legal authority, and good cause appearing, the court finds that the motion to

remand must be GRANTED. 

This is an action involving denial of benefits under a disability benefits insurance

policy. Plaintiff, a citizen of California, alleges that he purchased disability insurance

coverage from Jefferson Pilot while he was employed by Medical Anesthesiology

Consultants, Inc. (“MAC”). When be became disabled, plaintiff submitted a claim to

Case 4:07-cv-00015-PJH Document 31 Filed 03/28/07 Page 1 of 4
United States District Court

For the Northern District of California

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Jefferson Pilot, which denied the claim on the ground that plaintiff was not properly enrolled

under the policy. 

Plaintiff filed suit in Alameda County Superior Court, alleging nine causes of action

under state law. Defendants removed the case, asserting federal question jurisdiction. 

Defendants allege that the policy under which plaintiff claims benefits is an ERISA plan,

and that plaintiff’s state-law claims are therefore completely preempted. Defendants also

assert diversity jurisdiction, claiming that Brady (the only California defendant) is a “sham”

defendant. 

Any action commenced in state court is removable if it might have been brought

originally in federal court. 28 U.S.C. § 1441(a). The removal statutes are construed

restrictively, so as to limit removal jurisdiction. Shamrock Oil & Gas Corp. v. Sheets, 313

U.S. 100, 108-09 (1941); Hofler v. Aetna US Healthcare, 296 F.3d 764, 767 (9th Cir. 2002). 

Doubts as to removability are resolved in favor of remanding the case to state court. 

Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). There is

a “strong presumption” against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566

(9th Cir. 1992).

Any lawsuit that "'relate[s] to [an] employee benefit plan [governed by ERISA]"' is

removable to federal court. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 62, 66 (1987)

(quoting 29 U.S.C. § 1144(a)). Since the burden of establishing federal jurisdiction is on

the party seeking removal, a defendant removing a case on the basis that the plaintiff’s

state law claims necessarily invoke ERISA must prove, beyond any doubt, that the policy at

issue is an ERISA plan in order to survive a motion to remand. 

Here, defendants have not met their burden of establishing that the policy under

which plaintiff seeks benefits is an ERISA plan. While defendants have provided evidence

showing that Jefferson Pilot issued a group disability benefits policy to an entity known as

“The Anaesthesiologists Office” (or “TAO”), it has not shown that there is any connection

between TAO and plaintiff’s former employer, MAC, and has not shown that the policy in

which plaintiff was allegedly enrolled by Jefferson Pilot – and for which plaintiff was

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For the Northern District of California

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allegedly making premium payments – is the same policy that Jefferson Pilot issued in

connection with the TAO ERISA plan. Because defendants have not established that the

policy under which plaintiff seeks benefits is an ERISA plan, they have not established

federal question jurisdiction. 

The court also finds that defendants have not met their burden of showing that

Brady is a “sham” defendant. A nondiverse party named in a state court action that has

been removed to federal court may be disregarded if the federal court determines that the

party's joinder is a "sham" or " fraudulent" so that no possible cause of action has been

stated against the party. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir.

2001). 

The question in evaluating whether joinder was fraudulent is whether there is any

possibility that the plaintiff will be able to establish liability against the party in question. 

Ritchie v. Upjohn Drug. Co., 139 F.3d 1313, 1318-19 (9th Cir. 1998). Under this approach,

the joinder of a nondiverse defendant may be treated as "fraudulent" or "sham" only where

1) the complaint contains no cause of action whatsoever against the party, 2) the cause of

action is patently spurious, or 3) a nominal cause of action is stated, but there is no

reasonable basis for imposing liability. See Schwarzer, Tashima & Wagstaffe, Federal Civil

Procedure Before Trial (2007) § 2:672. 

Because there is a presumption against a finding of fraudulent joinder, the defendant

bears a heavy burden of proof. Nishimoto v. Federman-Bachrach & Assoc., 903 F.2d 709,

712 n. 3 (9th Cir. 1990); Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir.

1988). In making the determination, the court must resolve all disputed questions of fact,

ambiguous questions of state law, and ambiguous pleadings in the plaintiff's favor. Plute v.

Roadway Package Sys., Inc., 141 F. Supp. 1005, 1008 (N.D. Cal. 2001). 

The court finds that defendants have not established that the complaint states no

cause of action whatsoever against Brady, that all the causes of action alleged against him

are patently spurious, or that there is no reasonable basis for imposing liability. At a

minimum, plaintiff may be able to proceed against Brady on a theory of professional

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For the Northern District of California

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negligence. Accordingly, because Brady cannot be considered a “sham” defendant, there

is no complete diversity between plaintiff and all defendants. 

Because the court lacks subject matter jurisdiction over this case, plaintiff’s motion

to remand must be GRANTED, and the motion to dismiss must be DENIED. 

IT IS SO ORDERED.

Dated: March 28, 2007 ______________________________

PHYLLIS J. HAMILTON

United States District Judge

Case 4:07-cv-00015-PJH Document 31 Filed 03/28/07 Page 4 of 4