Guardian has attached to its affidavit in opposition to this motion an application form of plaintiff referring specifically to ERISA and limiting eligibility to members of an employee plan. The correctness of this affidavit has not been controverted. Thus it now seems clear that federal jurisdiction does exist. That is not enough, however, to support removal.
Under 28 USC 1441 as construed in the cases cited above, removal must be based on the plaintiff's complaint or its necessary implications, not on subsequently established facts, at least unless federal jurisdiction is exclusive.
No such situation is presented here. ERISA creates exclusive federal substantive law where applicable. Metropolitan Life Ins Co v. Taylor, 481 U.S. 58, 64-67, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987); Lupo v. Human Affairs International, Dkt No 930-7719, Slip Op 5185, 5190 (2d Cir June 30, 1994); Smith v. Dunham-Bush, 959 F.2d 6, 10-12 (2d Cir 1992). ERISA also establishes exclusive federal judicial jurisdiction in many instances. Concurrent jurisdiction over most beneficiary claims for benefits under ERISA plans is, however, established by 29 USC 1132(a)(1)(B) and 1132(e)(1).
A further issue is presented by plaintiff's papers which call the court's attention to a provision in Guardian's agreement informing policyholders that they "may file suit in a state or federal court." This statement may be misleading and give rise to claims against Guardian where a policy of removal is followed, particularly given the existence of concurrent jurisdiction under 29 USC 1332(a)(1)(A) and 1332(e)(1). See Shea v. Road Carriers, 818 F. Supp. 631, 632 & n 2 (SDNY 1993).
But standing alone it is not enough to constitute a binding agreement that would preclude removal, even though beneficiary suits for benefits can be brought in state court under 29 USC 1132 (a)(1)(B) and 1132(e)(1). See id; McDermott International v. Lloyds Underwriters, 944 F.2d 1199 (5th Cir 1991).
Plaintiff's motion for sanctions against Guardian's counsel is denied. Under Fed.R.Civ.P. 11 as amended in 1993, it must be established in the moving papers that the matter was raised with opposing counsel before any application for sanctions is considered. Further, Guardian's removal, while invalid because not based on the face of the complaint, did have an underlying factual predicate as shown by the ERISA plan attached to Guardian's papers in opposition to the remand motion. To penalize Guardian for its unsuccessful notice of removal which appears to have been filed in good faith even though legally unsupportable would have an unjustifiable chilling effect on efforts to test or extend the scope of legal rules. See Stern v. Leucadia National Corp, 844 F.2d 997, 1005-06 (2d Cir), cert. denied 488 U.S. 852, 102 L. Ed. 2d 109, 109 S. Ct. 137 (1988); Riddick v. Summit House, 835 F. Supp. 137, 146 (SDNY 1993).
Although this litigation is remanded to state court, it would be unfortunate for it to generate legal costs in excess of the underlying insurance claim involved. The parties are requested to consider settlement including alternate dispute resolution. Since an independent ERISA suit by plaintiff in lieu of the state court action remains a possibility should it turn out to be in plaintiff's interest, it would remain appropriate for this court to assist in settlement efforts if requested by the parties.
Dated: White Plains, N.Y.
July 25, 1994
/s/ John S. Martin, USDJ for VINCENT L. BRODERICK, U.S.D.J.