Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_16-cv-03990/USCOURTS-cand-4_16-cv-03990-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1441 Petition for Removal

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ELLEN BENDER,

Plaintiff,

v.

UNUM GROUP, et al.,

Defendants.

Case No. 16-cv-03990-PJH 

ORDER DENYING MOTION TO 

REMAND

Re: Dkt. Nos. 10, 30

Plaintiff Ellen Bender’s motion to remand came on for hearing before this court on 

September 7, 2016. Plaintiff appeared through her counsel, Terrence Coleman. 

Defendants Unum Group (“Unum”) and Provident Life & Accident Insurance Company

(“Provident”) appeared through their counsel, Mike Schmidtke. Having read the papers 

filed by the parties and carefully considered their arguments and the relevant legal 

authority, and good cause appearing, the court hereby DENIES the motion, for the 

following reasons.

BACKGROUND

This is a dispute over whether Bender is entitled to benefits under her individual 

disability insurance policy (the “IDI policy”). See Compl. ¶¶ 21, 29 (Dkt. 1-1). The policy 

was issued by defendant Unum and its wholly owned subsidiary, Provident. Compl. ¶¶ 2, 

13.

Unum denied Bender’s claim for benefits on July 31, 2015. Compl. ¶ 21. Bender 

contested the denial, providing more documentation from her treating physicians, but 

Unum again denied the claim for benefits on April 4, 2016. Id. Bender filed a state court 

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action on June 10, 2016, asserting claims for breach of contract and breach of the 

covenant of good faith and fair dealing against Unum and Provident. Compl. ¶¶ 25–35.1

On July 14, 2016, Unum and Provident removed this action to federal court under 

28 U.S.C § 1441(a), maintaining that Bender’s claims arise under and are preempted by 

ERISA. Notice of Removal ¶¶ 9–10 (Dkt. 1). Bender now brings a motion to remand the 

case, arguing that ERISA preemption does not apply because her policy “was not part of 

any employee welfare benefit plan.” Mot. at 1 (Dkt. 10). Bender is a partner at the law 

firm of Pachulski Stang Ziehl & Jones LLP (“PSZJ”), and the motion centers on a factual 

dispute regarding the degree to which Bender’s IDI policy is related to the group disability 

policies offered to PSZJ employees.

DISCUSSION

A. Legal Standards

“[A]ny 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 . . . to the district 

court of the United States for the district and division embracing the place where such 

action is pending.” Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 7–

8 (1983) (citation omitted); see also 28 U.S.C. § 1441. 

However, federal courts are courts of limited jurisdiction. See, e.g., Kokkonen v. 

Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Accordingly, the burden of 

establishing federal jurisdiction for purposes of removal is on the party seeking removal, 

and the removal statute is construed strictly against removal jurisdiction. Valdez v. 

Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004); Gaus v. Miles, Inc., 980 F.2d 564, 

566 (9th Cir.1992). “Federal jurisdiction must be rejected if there is any doubt as to the 

right of removal in the first instance.” Gaus, 980 F.2d at 566.

 

1 Bender’s third claim sought a writ of mandamus from the California Commissioner of 

the Department of Insurance to “review and correct” Bender’s insurance policy to conform

with California law. Compl. ¶¶ 36–46. This claim was not removed as it is alleged to be 

“transactionally unrelated” to the claims against Unum/Provident, Notice of Removal ¶ 16, 

and the Commissioner did not join in the removal per 28 U.S.C. § 1441(c)(2). 

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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 show that the policy at 

issue is an ERISA plan.

To be an ERISA plan, an insurance policy must be part of: “(1) a ‘plan, fund or 

program’ (2) established or maintained (3) by an employer or by an employee 

organization, or by both, (4) for the purpose of providing medical, surgical, hospital care, 

sickness, accident, disability, death, unemployment or vacation benefits . . . (5) to the 

participants or their beneficiaries.” Kanne v. Connecticut Gen. Life Ins. Co., 867 F.2d 

489, 492 (9th Cir. 1988) (citation omitted); see also 29 U.S.C. § 1002(1) (defining 

“employee welfare benefit plan”).

The Department of Labor has also established regulatory “safe harbors” that 

exclude certain types of plans from ERISA. See Stuart v. Unum Life Ins. Co. of Am., 217 

F.3d 1145, 1149 (9th Cir. 2000). Here, plaintiff relies on a safe harbor providing that a 

“group or group-type insurance program offered by an insurer to employees or members 

of an employee organization” will not be governed by ERISA if: 

(1) No contributions are made by an employer or employee 

organization; 

(2) Participation the program is completely voluntary for 

employees or members; 

(3) The sole functions of the employer or employee 

organization with respect to the program are, without 

endorsing the program, to permit the insurer to publicize the 

program to employees or members, to collect premiums 

through payroll deductions or dues checkoffs and to remit 

them to the insurer; and 

(4) The employer or employee organization receives no 

consideration in the form of cash or otherwise in connection 

with the program, other than reasonable compensation, 

excluding any profit, for administrative services actually 

rendered in connection with payroll deductions or dues 

checkoffs.

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29 C.F.R. § 2510.3-1(j).

B. Analysis

The crux of this motion is the parties’ factual dispute over the extent of the 

connection—if any—between Bender’s IDI policy and her employer’s group disability 

policy. On plaintiff’s account, the IDI policy was purchased separately from, and is 

completely independent of, her existing group disability coverage with PSZJ, and the only 

connection that her policy has to PSZJ is that her premiums were paid through payroll 

deduction. See Declaration of Ellen Bender (“Bender Decl.”), Dkt. 12 at ¶¶ 2–4. Unum’s 

account of the facts is quite different. Relying on a number of contemporaneous

documents purportedly related to the IDI policy, Unum argues that both PSZJ’s group 

disability policy and Bender’s IDI were part of a single disability benefit program that was 

established and maintained by PSZJ.

The court will first resolve this factual dispute, and then turn to whether, as a legal 

matter, Unum has met its burden to show that the IDI policy is governed by ERISA.

1. Plaintiff’s Evidentiary Objections

As a preliminary matter, plaintiff objects to several declarations submitted by 

Unum. Defendants rely extensively on declarations from Donna Novack and Tammi 

Roberts, both Unum employees, to authenticate several documents purportedly evincing 

a connection between Bender’s IDI policy and her employer’s group disability policy. See

Dkt. 25 (“Novack Decl.”), 26 (“Roberts Decl.”), 32 (“Supp. Novack Decl.”), 33 (“Supp. 

Roberts Decl.”). Plaintiff objects to this evidence, arguing that (1) the authentication of

the documents is “conclusory” because neither declaration contains adequate foundation, 

such as a description of the declarants’ duties at Unum, see Dkt. 27 at 1–2; and (2) the 

“supplemental declarations” submitted after Bender filed her reply brief should not be 

considered by the court, see Dkt. 34.

The court OVERRULES Bender’s objections to the Novack and Roberts 

declarations. While neither declaration provides detailed background on the job 

responsibilities of the declarants, each provides their job title and establishes that the 

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statements are made based on their personal knowledge. Novack is a “Multilife Case 

Administrator” and Roberts is the “Director, IDI Underwriting”; both work at Unum’s 

offices in Worchester, Massachusetts. Novack Decl. ¶ 1; Roberts Decl. ¶ 1. The 

declarations further aver that Unum Group provides “billing” and “underwriting” services 

for their polices. Novack Decl. ¶ 1; Roberts Decl. ¶ 1. The documents attached to each 

declaration are underwriting, policy, and billing records of the sort that Unum would 

retain. This is enough foundation to authenticate the documents.

Moreover, any defects in foundation were cured by the additional details provided 

in Unum’s motion for leave to file supplemental declarations in surreply. Dkt. 30. The 

supplemental Novack and Roberts declarations provide an overview of each declarant’s

job responsibilities and establish that the documents attached are regularly maintained 

and relied on as business records by Unum Group. See Supp. Novack Decl. ¶¶ 2–3; 

Supp. Roberts Decl. ¶¶ 2–3. Because the court finds that the supplemental materials are 

helpful in understanding the full factual record, and the plaintiff has been permitted an 

opportunity to respond, the court will GRANT Unum’s administrative motion (Dkt. 30) and 

consider these supplemental declarations.

2. Whether Bender’s Individual Policy Was Part of an ERISA Plan

a. Unum’s Burden of Proof

Before proceeding to address the factual dispute, the court must first clarify the 

applicable burden of proof. There is a “strong presumption” against removal in the Ninth 

Circuit, and that “jurisdiction must be rejected if there is any doubt as to the right of 

removal.” Gaus, 980 F.2d at 566. However, this language in Gaus does not establish, 

as plaintiff suggests, that the proof must be beyond all reasonable doubt in order to avoid 

remand. See Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 403–04 (9th Cir. 

1996). The usual standard for proving facts supporting federal question jurisdiction is a 

preponderance of the evidence. McNutt v. Gen. Motors Acceptance Corp. of Indiana, 

298 U.S. 178, 189 (1936) (“jurisdictional facts” in support of removal must be established 

by “the party alleging jurisdiction” by “a preponderance of evidence”). This court 

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therefore evaluates the evidence presented under a preponderance standard, resolving 

doubts against removal jurisdiction. Under Gaus, the proponent of jurisdiction—here, 

Unum—bears the burden of proof. 

b. The Connection Between Bender’s IDI Policy and the 

“Contemporaneous Documents” Submitted by Unum

Plaintiff’s motion to remand relies primarily on two declarations: one by Bender 

herself and one by Megan Lorick, an administrative director at PSZJ. See Dkt. 12, 13. In 

plaintiff’s telling, her law firm, PSZJ, has maintained a group disability policy through 

Unum since 2008. Lorick Decl. ¶ 2. In 2013, Bender and her husband met with an 

insurance broker to discuss their insurance needs. Bender Decl. ¶ 2. The IDI policy she 

ultimately purchased—the one at issue in this case—was presented as being “separate 

from and completely independent from the existing group coverage.” Id. ¶ 3. PSZJ did 

not participate in the selection of the insurance, other than an arrangement whereby 

premiums were paid via paycheck deduction. Id. ¶ 4. Bender was ultimately responsible 

for the premiums. Id. Moreover, PSZJ did not file any plan summaries to comply with 

ERISA. Lorick Decl. ¶ 4. 

Bender’s IDI policy bears the policy number 06-675-79811290, the risk number 

00158725, and includes the name of her employer PSZJ on its first page. Bender Decl. 

Ex. A at 1. The listed monthly premium is $269.28. Id. The final page of the policy is an 

application form signed by Bender and dated April 4, 2013. Id. at 27. 

Contesting Bender’s account, Unum submits a number of “contemporaneous 

documents” to argue that Bender’s IDI policy was part of a “Supplemental Disability Plan” 

(the “Plan”), which was established by PSZJ and includes both individual policies and 

group policies. In defendant’s telling, PSZJ’s broker informed Unum in 2013 that it was 

seeking additional disability coverage through group policies and/or IDI coverage. 

Roberts Decl. ¶ 4 & Ex. B. One of the options was a “reverse combo option,” which is 

designed to offer disability coverage to employees and additional levels of disability 

coverage to highly compensated employees/partners. Id. On or around March 25, 2013, 

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PSZJ executed the “Supplemental Disability Plan.” See Roberts Decl. Ex. C. The plan 

includes a number of “tiers” for different PSZJ employees—partners, non-partners, et al. 

Id. at 1–2. Applications were to be submitted by June 25, 2013. Id. at 6. For highly 

compensated employees (Tiers 1, 2 and 5), PSZJ agreed to pay the required premiums 

in full. Id. In consideration for PSZJ’s establishment of the Supplemental Disability Plan, 

Unum offered a 25% premium discount. Roberts Decl. ¶ 5(g).

Pursuant to the Plan, personalized enrollment packets were prepared and sent to 

PSZJ partners and employees. The packet prepared for Bender bears her name, states 

that the coverage is “made available by Pachulski Stang Ziehl & Jones LLP,” and asks for 

a response by April 16, 2013. Supp. Roberts Decl. Ex. H at 1 (the “Enrollment Packet”).

The Enrollment Packet further explains that the policy is individually owned, and is 

offered at a discount. Id. at 2–3. It lists the “Supplemental IDI benefit” offered—which is 

in addition to an existing “group LTD Benefit”—as $5,000. Id. at 6. Regarding certain 

features of the IDI policy, the Packet states that PSZJ “has selected these features to add 

to your individual disability policy a higher level of protection and flexibility.” Id. at 9.

Unum also submits a “Premium Payment Authorization” form, bearing Bender’s

signature and dated April 4, 2013, which states that “I am applying for coverage under 

the [IDI] Plan available through [PSZJ].” Roberts Decl. Ex. G at 1. The authorization 

states that if coverage is approved, “I request [PSZJ] to pay the premiums shown below.” 

Id. The listed premium is $269.28 per month. Id.

Bender disputes that any of these records relate to her IDI policy, but the 

documents themselves make clear that there is a connection. The Enrollment Packet 

lists precisely the same benefit ($5,000) and premium ($269.28 per month) as Bender’s 

IDI policy. Compare Roberts Decl. Ex. H at 6, 17 with Bender Decl. Ex. A at 1. The 

Premium Payment Authorization form is signed by Bender on precisely the same date 

that she signed the application for her IDI policy. Compare Roberts Decl. Ex. G with

Bender Decl. Ex. A at 27. The Plan lists the “GSI maximum benefit” for Tier 1 (partners 

residing in California, which would include Bender) as $5,000, the same benefit as 

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Bender’s IDI policy. Roberts Decl. Ex. C at 1. Moreover, the Plan documents list “T1” 

(presumably Tier 1) as Risk Number 158725, which is the very same risk number used 

on Bender’s policy. Compare Roberts Decl. Ex. D at 1 with Bender Decl. Ex. A at 1; see

also Supp. Roberts Decl. ¶ 4 (risk numbers were “uniquely assigned to PSZJ”).

Moreover, the dates of the documents submitted by Unum corroborate its account. 

It is undisputed that Bender applied for her IDI policy on April 4, 2013. Bender Decl. Ex. 

A at 27. The timing is consistent with Unum’s account. PSZJ and Unum agreed to offer 

the Plan to PSZJ employees on March 25, 2013. Roberts Decl. Ex. C. The Enrollment 

Packet asks for a response by April 19, 2013. Supp. Roberts Decl. Ex. H at 1. While it is 

of course possible that Bender happened to separately purchase an IDI policy on her 

own at the same time one was offered through her employer, the much more natural 

inference from the documents is that the IDI policy at issue was the same one that was 

offered by PSZJ.

Plaintiff’s attempts to create doubts about the connection between the 

contemporaneous documents and her IDI policy are not persuasive. First, plaintiff argues 

that “Tier 1” of the Supplemental Disability Plan has a “100% participation requirement for 

33 lives”, see Roberts Decl. Ex. C at 1, yet Bender had the right to cancel her policy and 

the billing records show only 12 insureds under this Tier, see Dkt. 25-1 at 35. However, 

Unum explained at the hearing—and the documents reflect—that a number of the 

partners in Tier 1 had too much existing coverage to be eligible for an IDI policy. See

Roberts Decl. Ex. D at 6. Moreover, a policy can require enrollment yet still offer a right 

to later cancel. See Supp. Roberts Decl. ¶ 5. 

Second, Bender argues that the Plan states that the individual and group policies 

“will coordinate” with each other, yet Bender’s group plan and IDI plan do not refer to 

each other. However, the policies do not need to explicitly reference one another to 

coordinate. As the Enrollment Packet makes clear, the $5,000 IDI benefit is intended to 

supplement the existing group disability coverage. See Supp. Roberts Decl. Ex. H at 5–6 

(“[T]his is how supplemental IDI works together with your current group LTD coverage”).

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Third, Bender argues that the Plan indicates that there will be an ongoing review 

process, whereas her IDI is not subject to review or modification. However, Unum 

explains that the modification right refers to the Plan itself—i.e., whether Unum will 

continue to offer policies to PSZJ employees—not a right to modify policies already 

issued. See Supp. Roberts Decl. ¶ 6.

2

In sum, the court credits Unum’s account and finds that the contemporaneous 

documents do in fact relate to Bender’s IDI policy, and show that this policy was issued 

pursuant to PSZJ’s Supplemental Disability Plan. 

3. Whether Bender’s Policy is Governed by ERISA

Even if Bender’s IDI policy is part of the PSZJ Plan, it does not necessarily follow 

that Bender’s claims are preempted by ERISA. As a partner at PSZJ, Bender was an 

owner and not an “employee” under ERISA. The Ninth Circuit has made clear that “a 

company may offer more than one benefit plan, one covering only the owner of the 

business and the other covering the business's employees, and maintain those two plans 

as independent plans under ERISA.” LaVenture v. Prudential Ins. Co. of Am., 237 F.3d 

1042 (9th Cir. 2001). So long as the two plans are not “intertwined so as to constitute 

one overall benefit plan,” id. at 1047, ERISA may govern the employees’ plans, but not 

the separate and independent plan of the owners. On the other hand, an individual policy 

covering only a partner may be “one component” of an “employee benefit program” that 

“taken as a whole, constitutes an ERISA plan.” Peterson v. Am. Life & Health Ins. Co., 

48 F.3d 404, 407 (9th Cir. 1995). Unum bears the burden to show that Bender’s IDI 

policy was part of a plan covered by ERISA. 

///

 

2

The remainder of plaintiff’s objections—that the policy does not include a catastrophic 

disability benefit, and that the Enrollment Packet states an incorrect premium and 

benefit—were based on an admittedly incorrect enrollment packet submitted with Unum’s 

opposition. See Roberts Decl. Ex. E. These discrepancies were resolved when 

defendants submitted the correct Enrollment Packet in their supplemental filings. See

Supp. Roberts Decl. Ex. H.

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The court finds that Unum has sufficiently shown that all five elements of the 

statutory definition are met here. See Kanne, 867 F.2d at 492; Zide v. Provident Life & 

Acc. Ins. Co., No. SACV 10-00393-JVS, 2011 WL 12566818 at *5–*7 (C.D. Cal. Apr. 13, 

2011) (finding ERISA preemptions on similar facts). Because Bender’s IDI was issued 

pursuant to the PSZJ Plan, it is part of a program that provides disability benefits. Nor 

does Bender dispute that PSZJ was an employer. The two remaining two elements, 

then, are that the plan was “established by” PSZJ and that the Plan includes participants 

that are employees—not just partners like Bender. But as the documents submitted by 

Unum show, Bender’s IDI was part of the larger Supplemental Disability Plan that was 

established by PSZJ. See Robert Decl. Ex. C (“Unum is pleased to partner with [PSZJ] 

to provide these benefits to your employees.”); Supp. Roberts Decl. Ex. H (“This 

coverage is made available by [PSZJ].”). It is also clear that some non-partner 

employees were covered under the group policies of the Plan. Roberts Decl. ¶ 5(c); 

Novack Decl. Ex. A at 1.

The final issue is whether the “safe harbor” applies to exempt Bender’s IDI policy 

from ERISA. The regulation on which Bender relies has four requirements: (1) there is 

no premium “contribution” by the employer; (2) participation is completely voluntary; (3) 

the employer does not “endors[e]” the program; and (4) the employer receives “no 

consideration” in connection with the program. 29 C.F.R. § 2510.3-1(j). Here, Unum

argues that none of the first three requirements are met. Opp’n at 20–21. However, 

because the court concludes that PSZJ “endorsed” the plan, it need not consider the 

other elements of the safe harbor. See Stuart v. UNUM Life Ins. Co. of Am., 217 F.3d 

1145, 1150 (9th Cir. 2000) (“[F]ailure to satisfy one of the safe harbor's four requirements 

conclusively demonstrates that an otherwise qualified group insurance plan is an 

employee welfare benefit plan subject to ERISA.”).3

 

3

In particular, the parties engage in an extended debate over whether Bender or PSZJ 

paid for the first three months of premiums, and on the divisive legal issue of whether the 

25% premium “discount” offered to Bender constitutes an employer “contribution.” 

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An employer must remain neutral in order to avoid endorsing a plan. See

Thompson v. Am. Home Assur. Co. 95 F.3d 429, 436 (6th Cir. 1996). The test is whether 

“upon examining all the relevant circumstances, there is some factual showing on the 

record of substantial employer involvement in the creation or administration of the plan.” 

Id. at 436. Here, because Bender’s policy was part of the Supplemental Disability Plan, 

PSZJ “negotiat[ed] the terms of the policy” and participated in its creation and selection. 

Id. at 436–37. Indeed, the Enrollment Packet explicitly states that the coverage is “made 

available” by PSZJ and that PSZJ “selected” certain “features to add to your individual 

disability policy.” See Roberts Decl. Ex. H at 1, 9. This is enough constitute 

“endorsement.” Cf. Kanne, 867 F.2d at 493 (distribution of “plan brochure” that 

“describes the plan as an ERISA plan” met that employer was more than a “mere 

advertiser” and thus safe harbor requirement was not met). 

CONCLUSION

For the foregoing reasons, plaintiff’s motion to remand is DENIED. As the state 

law claims in the operative complaint are preempted by ERISA, see Pilot Life Ins. Co. v. 

Dedeaux, 481 U.S. 41, 47–54 (1987), the court will provide plaintiff leave to re-file her 

complaint to assert causes of action under ERISA. Plaintiff shall file any amended 

complaint within 28 days of the date of this order.

IT IS SO ORDERED.

Dated: September 28, 2016

__________________________________

PHYLLIS J. HAMILTON

United States District Judge

 

Compare Rosen v. Provident Life & Acc. Ins. Co., No. 2:14-CV-0922-WMA, 2015 WL 

260839 at *12 (N.D. Ala. Jan. 21, 2015) (discount offered in exchange for payroll 

premium deduction is not an employer contribution) with Zide, 2011 WL 12566818 at *7

(C.D. Cal. Apr. 13, 2011) (safe harbor does not apply because premium discount was an 

employer contribution). The court finds that it need not resolve these issues—even if 

Bender paid all of the premiums, the safe harbor would not apply in light of PSZJ’s 

endorsement of the IDI policy.

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