Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-4_14-cv-00114/USCOURTS-alnd-4_14-cv-00114-0/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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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

MIDDLE DIVISION

STEVEN HUNTER, et al,

Plaintiffs,

v.

W. HAL SHEPHERD, et al,

Defendants.

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Case No.: 4:14-CV-114-VEH

 

MEMORANDUM OPINION

On December 21, 2013, the plaintiffs, Steven Hunter, Christy Hunter, and

Steven Hunter, Jr. (collectively “the Hunters”), filed this civil action in the Circuit

Court of St. Clair County, Alabama. (Doc. 1-1 at 13). The complaint named as

defendants W. Hal Shepherd, Ed Thomason, The Kennion Group, Inc. (“Kennion

Group”), Academic Benefit Trust Corporation (“Academic Benefit”), Preferred

Health Alliance Corporation (“Preferred Health”), Planned Benefit Services, Inc.

(“Planned Benefit”), and the Alabama High School AthleticAssociation (“AHSAA”). 

(Doc. 1-1 at 13). All counts of the complaint arise out of an injury that Tanner Hunter

received while participating in an athletic event at his high school, and a claim for

benefits that he and Steve and Christy Hunter, his parents, made for benefits under

FILED

 2014 Apr-23 PM 04:29

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 4:14-cv-00114-VEH Document 17 Filed 04/23/14 Page 1 of 13
an allegedly applicable insurance policy or policies. (Doc. 1-1 at 15-17). The

complaint sets out claims under Alabama law for “Contract & Fiduciary Breach”

(Count One), Fraud (Count Two), Negligence/Wantonness (Count Three), Outrage

(Count Four), Bad Faith (Count Five), and Illusory Contract (Count Six). (Doc. 1-1

at 17-23).

On January 17, 2014, the defendants removed the action to this court. (Doc.

1). The case is before the court on the plaintiffs’ motion to remand. (Doc. 12). For

the reasons stated herein, the motion will be GRANTED, and this case will be

REMANDED to the Circuit Court of St. Clair County, Alabama.

I. STANDARD FOR REMAND

“Federal courts are courts of limited jurisdiction. They possess only that power

authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of

America, 511 U.S. 375, 377 (1994). For removal to be proper, the court must have

subject-matter jurisdiction in the case. “Only state-court actionsthat originally could

have been filed in federal court may be removed to federal court by the Defendant.” 

Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). In addition, the removal

statute must be strictly construed against removal, and any doubtsshould be resolved

in favor of remand. See, City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310,

1313 (11th Cir. 2012) (“[b]ecause removal jurisdiction raises significant federalism

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Case 4:14-cv-00114-VEH Document 17 Filed 04/23/14 Page 2 of 13
concerns, federal courts are directed to construe removal statutes strictly. Indeed, all

doubts about jurisdiction should be resolved in favor of remand to state court.”)

(citation omitted).

“In removal cases, the burden is on the party who sought removal to

demonstrate thatfederal jurisdiction exists.” Friedman v. NewYork Life Ins. Co., 410

F.3d 1350, 1353 (11th Cir. 2005) (citation omitted); Williams v. Best Buy Co., 269

F.3d 1316, 1319 (11th Cir.2001). 

That burden goes not only to the issue of federal jurisdiction, but also to

questions of compliance with statutes governing the exercise ofthe right

of removal. Albonetti v. GAF Corporation-Chemical Group, 520

F.Supp. 825, 827 (S.D. Texas 1981); Jennings Clothiers of Ft. Dodge,

Inc. v. U.S. Fidelity & Guaranty Co., 496 F.Supp. 1254, 1255 (D.Iowa

1980); Fort v. Ralston Purina Company, 452 F.Supp. 241, 242

(E.D.Tenn.1978). 

Parker v. Brown, 570 F.Supp. 640, 642 (D.C. Ohio, 1983)

While it is undoubtedly best to include all relevant evidence in the

petition for removal and motion to remand, there is no good reason to

keep a district court from eliciting or reviewing evidence outside the

removal petition. We align ourselves with our sister circuits in adopting

a more flexible approach, allowing the district court when necessary to

consider post-removal evidence in assessing removal jurisdiction. We

emphasize, as did the court in Allen, that “under any manner of proof,

the jurisdictional facts that support removal must be judged at the time

of the removal, and any post-petition affidavits are allowable only if

relevant to that period of time.” Allen, 63 F.3d at 1335.

Sierminski v. Transouth Financial Corp., 216 F.3d 945, 949 (11th Cir. 2000). 

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II. APPLICABLE FACTS

A. Allegations in the Complaint

In pertinent part, the following allegations appear in the complaint:

11. On December 21, 2011, Tanner Hunter, while a student at the

Leeds Alabama public High School, received a permanent spinal

cord injury while participating in a wrestling tournament at St.

Clair High School in Odenville, St. Clair County, Alabama.

12. As a result of the accident, Tanner Hunter has no use of his legs

and[] a very limited use of his upper arm: a quadriplegic.

13. . . . Leeds High School, and every government funded public high

school in the state of Alabama, pays the [AHSAA] a premium

each year to purchase insurance . . . for all student athletes . . . in

their school, to cover a multitude of benefits for their athletes and

their families for insurance coverage for a catastrophic accident

. . ..

14. . . . [Such insurance] was purchased from[Kennion Group] and/or

[Academic Benefit] and/or [Preferred Health] and/or [Planned

Benefit] and/or [the AHSAA] . . . and/or . . . Shepherd and/or . .

. Thomason.

15. During Tanner Hunter’s initial course of treatment in critical

intensive care, the Hunter[s] were visited by a representative of

AHSAA and [were] assured that insurance wasin place to handle

a multitude of expenses arising from Tanner’s injury, covering

both Tanner, and expenses that arise for parents in the event of

such an accident including travel, earnings, training, and medical

expenses . . ..

16. Leeds High School executed paperwork for the claim for the

plaintiffs.

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17. Steven and Christy Hunter were contacted and met with

defendants . . . [Thomason] and . . . Shepherd from the Kennion

Group who offered themselvesin a claims representative capacity

for the insurance referenced above.

18. Steven and Christy[Hunter]were told specifically by [Thomason]

and Shepherd that expensesincurred for Tanner, including but not

limited to medical not covered by insurance, [f]amily [t]ravel,

[l]oss of [e]arnings, [f]amily [t]raining and other benefits that

would be covered.

19. The insurance coverage described by [Thomason] and Shepherd

would allow Tanner to seek additional immediate treatment

necessary outside of his parents insurance coverage; to optimize

the potential for a better recovery and current treatment; extra

rehabilitation costs and expenses; and other potential medical

treatments that would allow a better present and future outcome

for Tanner hunter and his family. This insurance coverage

described by [Thomason] and Shepherd would have allowed the

Hunter[s] to retain savings, wages [sic] and would have allowed

them to better assist their child. These benefits would have

assisted Tanner directly.

20. The Hunter[s] gathered and submitted information to [Thomason]

and Shepherd but were then told by [Thomason] that Tanner’s

injury[] was not considered to be permanent and catastrophic and

additionally that since there was family coverage, only the initial

Fifty Thousand Dollars ($50,000.00) of coverage already paid

was available under any of the areas of the insurance.

21. The policy of insurance is not what the AHSAA represented as

being purchased by AHSAA on behalf of Leeds High School and

Tanner Hunter and Steven and Christy Hunter.

22. . . . [T]he policy of insurance is not insured by “Lloyds of London

and Underwriters at Lloyds, Mutual of Omaha and other A or

higher rated carriers” as stated in the policy.

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23. The policy of insurance is not what [Thomason] and Shepherd

represented to the Hunters.

24. The policy of insurance appears not to confer the benefits

bargained for.

25. Due to the foregoing actions of the [d]efendants, the plaintiffs

were caused to pay sums amounts [sic] that they would not have

paid but for the statements of the defendants and/or insurance

policy language.

26. Due to the foregoing actions of the [d]efendants, the plaintiffs

were unable to obtain medical treatment that should have been

afforded under the policy.

(Doc. 1-1 at 15-17).

B. The Notice of Removal

The Notice of Removal notes:

15. As set forth in the Notice ofRemoval, AHSAA is a private agency

founded in 1921 and organized by its member schools to regulate,

coordinate, and promote the interscholastic athletic programs among its

member schools. AHSAA contracted with Planned Benefit to provide

accident coverage through a plan named “The Academic Benefit Trust”

(hereinafter referred to as “The Plan”). A true and correct copy of The

Plan entered into between AHSAA and Planned Benefit is attached to

the Notice of Removal as Exhibit C. As stated in The Plan, the

Managing General Agent (MGA) is Planned Benefit, the Managing

General Underwriter (MGU) is Kennion Group, and the Third Party

Administrator (TPA) is Preferred Health.

16. The Plan provides it is covered under the Employee Retirement

Income Security Act of 1974, as amended (“ERISA”), 29 U.S.C. § 1001,

et. seq. Specifically, The Plan states in pertinent part:

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Case 4:14-cv-00114-VEH Document 17 Filed 04/23/14 Page 6 of 13
Plan Administrator - means the licensed Third Party

Administrator that administers the plan and is responsible

for its routine administration within the meaning ofsection

3(16) of ERISA. This Plan has elected to be covered under

ERISA.

Plan Sponsor - means the group thatsponsorsthe plan and

is responsible for its overall administration within the

meaning of Section 3(16) of ERISA. This Plan has elected

to be covered under ERISA.

([Doc. 1-3 at 5])(Emphasis added).

Conformity with State and Federal Statutes. This Plan

has elected to be covered under ERISA. Any provision of

this Plan of Benefits which, on its effective date, is in

conflict with the statutes of any state or federal regulation

is hereby amended to conform to the minimum

requirements of those statutes.

([Doc. 1-3 at 9])(Emphasis added).

The Plan Sponsor is ABT. Participating Members in the

Plan are the participating School, School District, System,

Association or other School established and organized

body recognized by the State in which it is located. The

Plan Administrator is Preferred Health Alliance

Corporation. Both the Plan Sponsor AND the Plan

Administrator are responsible for discharging all

obligations that ERISA and its regulations impose upon

plan sponsors and plan administrators, such as delivering

summary plan descriptions, annual reports, and other

notices when required by law.

([Doc. 1-3 at 12]) (Emphasis added).

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(Doc. 1 at 5-6) (emphasis added in original as noted). 

III. ANALYSIS

The case was removed by the defendants under the premise that this court has

jurisdiction pursuant to 28 U.S.C. § 1331, which statesthat “[t]he district courtsshall

have original jurisdiction of all civil actions arising under the Constitution, laws, or

treaties of the United States.” While the complaint appears to set out only Alabama

state law claims, in the Notice of Removal the defendants argue:

17. Because The Plan is covered under ERISA, the Plaintiffs’ claims

for benefits under The Plan arise under ERISA Section 502(a)(1)(B).

See 29 U.S.C. § 1132(a)(1)(B).

18. ERISA is a federal statute and confers jurisdiction on this Court.

Id. at § 1132(e).

19. ERISA preempts all state laws related to a covered plan. 29

U.S.C. § 1144(a). The Eleventh Circuit has held that “state law claims

relate to an ERISA plan for preemption purposes whenever the alleged

conduct at issue is intertwined with the refusal to pay benefits.” Hall v.

Blue Cross Blue Shield, 134 F. 3d 1063, 1065 (11 Cir. 1989). The

Defendants contend that all of the Plaintiffs’ claims are preempted by

ERISA. However, to the extent that Plaintiffs’ claims are not preempted

by ERISA, this Court can exercise supplemental jurisdiction over the

state law claims because these claims form part of the same case or

controversy as the ERISA claims. 28 U.S.C. § 1367(a).

(Doc. 1 at 5-6). 

ERISA preemption in the context of removal has been explained by the

Eleventh Circuit as follows:

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Case 4:14-cv-00114-VEH Document 17 Filed 04/23/14 Page 8 of 13
ERISA is one of only a few federalstatutes under which two types

of preemption may arise: conflict preemption and complete preemption. 

Conflict preemption, also known as defensive preemption, is a

substantive defense to preempted state law claims. Jones v. LMR Int'l,

Inc., 457 F.3d 1174, 1179 (11th Cir.2006). This type of preemption

arises from ERISA's express preemption provision, § 514(a), which

preempts any state law claim that “relates to” an ERISA plan. 29 U.S.C.

§ 1144(a). Because conflict preemption is merely a defense, it is not a

basis for removal. Gully v. First Nat'l Bank, 299 U.S. 109, 115–16, 57

S.Ct. 96, 99, 81 L.Ed. 70 (1936); see also Ervast v. Flexible Prods. Co.,

346 F.3d 1007, 1012 n. 6 (11th Cir.2003) (stating that “defensive

preemption ... provides only an affirmative defense to state law claims

and is not a basis for removal”). 

Complete preemption, also known as super preemption, is a

judicially-recognized exception to the well-pleaded complaint rule. It

differs from defensive preemption because it is jurisdictional in nature

rather than an affirmative defense. Jones, 457 F.3d at 1179 (citing

Ervast, 346 F.3d at 1014). Complete preemption under ERISA derives

from ERISA's civil enforcement provision, § 502(a), which has such

“extraordinary” preemptive power that it “converts an ordinary state

common law complaint into one stating a federal claim for purposes of

the well-pleaded complaint rule.” Taylor, 481 U.S. at 65–66, 107 S.Ct.

at 1547. Consequently, any “cause[ ] of action within the scope of the

civil enforcement provisions of § 502(a) [is] removable to federal

court.” Id. at 66, 107 S.Ct. at 1548. 

Although related, complete and defensive preemption are not

coextensive:

Complete preemption is [ ] narrower than “defensive”

ERISA preemption, which broadly “supersede[s] any and

all State laws insofar as they ... relate to any [ERISA]

plan.” ERISA § 514(a), 29 U.S.C. § 1144(a) (emphasis

added). Therefore, a state-law claim may be defensively

preempted under § 514(a) but not completely preempted

under § 502(a). In such a case, the defendant may assert

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Case 4:14-cv-00114-VEH Document 17 Filed 04/23/14 Page 9 of 13
preemption as a defense, but preemption will not provide

a basis for removal to federal court. 

Cotton v. Mass. Mut. Life Ins. Co., 402 F.3d 1267, 1281 (11th Cir.2005);

accord Ervast, 346 F.3d at 1012 n. 6 (“Super preemption is

distinguished from defensive preemption, which provides only an

affirmative defense to state law claims and is not a basis for removal.”).

Connecticut State Dental Ass'n v. Anthem Health Plans, Inc., 591 F.3d 1337, 1343-44

(11th Cir. 2009). As noted in Conn. State Dental, if complete preemption is not

applicable, there is no jurisdiction. Id. (“Because the propriety of removal is at issue,

our analysis concerns complete preemption.”).

In 2011 the Eleventh Circuit set out the standard for complete ERISA

preemption as follows:

A federal district court has original jurisdiction over cases arising

under federal law. 28 U.S.C. § 1331. Federal question jurisdiction

generally exists only when the plaintiffs' well-pleaded complaint

presents issues of federal law, but the complete preemption doctrine of

ERISA creates an exception to that rule. Conn. State Dental Ass'n v.

Anthem Health Plans, Inc., 591 F.3d 1337, 1344 (11th Cir.2009).

Regardless of its characterization as a state law matter, a claim will be

re-characterized as federal in nature if it seeks relief under ERISA.

Kemp, 109 F.3d at 712.

This court acknowledged in Conn. State Dental that the test

articulated by the Supreme Court in Aetna Health Inc. v. Davila, 542

U.S. 200, 210, 124 S.Ct. 2488, 2496, 159 L.Ed.2d 312 (2004), should

govern our inquiry into whether complete preemption under ERISA

exists. 591 F.3d at 1345. The Davila test asks (1) whether the plaintiffs

could have ever brought their claim under ERISA § 502(a) and (2)

whether no other legal duty supports the plaintiffs' claim. Id.

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Step one of Davila entails two inquiries: first, whether the

plaintiffs' claims fall within the scope of ERISA § 502(a), and second,

whether ERISA grants the plaintiffs standing to bring suit. Conn. State

Dental, 591 F.3d at 1350. ERISA § 502(a)(2) allows a civil action to be

brought by “a participant, beneficiary[,] or fiduciary for appropriate

relief under [29 U.S.C. § 1109].” 29 U.S.C. § 1132(a)(2). Section 1109

allows recovery against, “[a]ny person who is a fiduciary with respect

to a plan who breaches any of the responsibilities, obligations, or duties

imposed upon fiduciaries by this subchapter.” 29 U.S.C. § 1109(a).

Fiduciary duties imposed by ERISA include “proper management,

administration, and investment offund assets, the maintenance of proper

records, the disclosure of specified information, and the avoidance of

conflicts of interest.” Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134,

142–3, 105 S.Ct. 3085, 3090, 87 L.Ed.2d 96 (1985).

. . . 

Step two of Davila looks to whether the plaintiffs' claims

implicate a duty independent of ERISA. In Davila, the Supreme Court

found that although respondents' claim asserted a breach of duty under

the Texas Health Care Liability Act (THCLA), the “interpretation of the

terms” of the benefit plan “form[ed] an essential part of their THCLA

claim,” such that there was no independent claim to defeat preemption.

542 U.S. at 213, 124 S.Ct. at 2498. Similarly, in Borrero v. United

Healthcare of N.Y., Inc., appellants argued that their contractual duties

were defined by state law, but this court found that even though the

appellants' assertion was “true in the abstract,” “the content ofthe claims

necessarily require[d] the court to inquire into aspects of the ERISA

plans because of the invocation of terms defined under the plans.” 610

F.3d 1296, 1304 (11th Cir.2010). This court held that if some of a party's

claims “implicate legal duties dependent on the interpretation of an

ERISA plan,” the claims are completely preempted. Id. at 1304–5.

Ehlen Floor Covering, Inc. v. Lamb, 660 F.3d 1283, 1287-88 (11th Cir. 2011).

The Notice of Removal does not cite to or discuss the Davila two-part analysis.

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Case 4:14-cv-00114-VEH Document 17 Filed 04/23/14 Page 11 of 13
It undertakes no analysis regarding “whether the plaintiffs’ claims fall within the

scope of ERISA § 502(a), [and/or] whether ERISA grants the plaintiffs standing to

bring suit.” Ehlen Floor Covering, 660 F.3d at 1287-88 (part one of the Davila

analysis). It also does not “look[] to whether the plaintiffs’ claims implicate a duty

independent of ERISA.” Id. (part two of the Davila analysis).

The defendants’ argument section of their opposition to the motion to remand

begins with a quote from Conn. State Dental. (Doc. 15 at 4). But, the quote is not

to the part of that opinion that discusses or adopts the Davila analysis. The

opposition then continues:

The Hunters claim they are entitled to a remand of this case to

state court because: (1) the Plan’s choice of Alabama law outweighs its

choice to be governed by ERISA and federal law; (2) the Plan’s election

to allow venue in state or federal court vitiates the Plan’s determination

to be governed by ERISA; (3) the Plan failed to properly file ERISA

reports, thereby effectively waiving its election to be governed by

ERISA; (4) the Plan’s choice to be an “excess” plan for certain

beneficiaries excludesit from ERISA; (5) the Plan utilizes “government

funds” excluding the Plan from ERISA; and (6) there is no employeremployee relationship creating an ERISA plan. The Hunters fail to

provide the Court with any legal authority supporting these arguments,

other than references to the ERISA statutes themselves without further

explanation or examination. In addition to the Hunters’ failure to

provide this Court with any legal authority for their arguments, the

Motion to Remand should be denied because each of the asserted

arguments is incorrect. Each argument is discussed below.

(Doc. 15 at 4-5). Thereafter, the defendants, over the next 14 pages of their brief,

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Case 4:14-cv-00114-VEH Document 17 Filed 04/23/14 Page 12 of 13
address those specific issues. (Doc. 15 at 5-18). Nowhere in those pages is the

Davila analysis mentioned or discussed. The burden of establishing subject matter

jurisdiction for the purposes of removal to this court is on the removing defendants. 

See Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir. 2001) (emphasis added)

(“Because this case was originally filed in state court and removed to federal court

by Best Buy, Best Buy bears the burden of proving that federal jurisdiction exists.”). 

The court will not attempt to satisfy their burden for them by opining as to whether

some unidentified portion of the argument made in the opposition brief might relate

to some unknown portion of the Davila analysis. 

IV. CONCLUSION

The defendants have failed to satisfy their burden. In keeping with the

principle that “all doubts about jurisdiction should be resolved in favor of remand to

state court,” City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310, 1313 (11th

Cir. 2012), by separate order the motion to remand will be GRANTED, and this case

will be REMANDED to the Circuit Court of St. Clair County, Alabama.

DONE and ORDERED this 23rd day of April, 2014.

 

 VIRGINIA EMERSON HOPKINS

United States District Judge

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