The opinion of the court was delivered by: MCAVOY
Plaintiffs McDermott Food Brokers, Inc. ("McDermott"), McDermott Food Brokers, Inc., 401(k) Plan ("401(k)"), and McDermott Food Brokers, Inc., Employee Stock Ownership Plan ("ESOP"), along with two individual plaintiffs, originally commenced this action in New York State Supreme Court, Albany County. By notice of removal dated May 15, 1995, defendants F. Philip Kessler, Jr. ("Kessler"), F.P. Kessler, Jr. & Associates ("Associates"), and New England Mutual Life Insurance Company ("Mutual Life") removed the case to this Court pursuant to 28 U.S.C. § 1441. Subsequently, plaintiffs filed an amended complaint with the Court that withdrew the two individuals as plaintiffs in this action, leaving only the three plaintiffs named above. Plaintiffs moved to remand the case to Albany County Supreme Court based on improper removal by defendants. Defendants opposed the remand and cross-moved to dismiss the Amended Complaint under Fed. R. Civ. P. 12(b)(6).
The Court heard oral argument on these motions on August 14, 1995. At that time the Court granted plaintiffs' Motion to Remand and denied Defendants' Motion to Dismiss. Defendants immediately moved, however, for an opportunity to submit a supplemental brief on the issue of plaintiff McDermott's standing to sue pursuant to the civil enforcement provisions of ERISA. The Court granted the motion and suspended its judgment pending the resolution of defendants' arguments. The following constitutes the Court's findings of fact and conclusions of law with respect to the issues raised.
Plaintiff McDermott is a New York State corporation with its principal place of business located in Albany, New York. McDermott was at all times relevant for these motions the employer and sponsor of plaintiff 401(k) and plaintiff ESOP. Defendant Kessler is the owner and general partner of defendant Associates, a partnership based in Syracuse, New York. Kessler and Associates were general agents of defendant Mutual Life, which is a New England insurance company that operates within New York.
Plaintiff McDermott alleges that it retained defendants Kessler and Associates to act as "third-party administrator" for plaintiff 401(k) and plaintiff ESOP during the general period 1987-93. Defendants' duties under the contract are alleged to have included, inter alia, (1) gathering and collecting information from the ESOP, 401(k), and McDermott; (2) preparing required annual reports to be filed with the Internal Revenue Service ("IRS"); (3) allocating and accounting for ESOP and 401(k) assets; (4) preparing statements of account for ESOP and 401(k) participants; and (5) determining the amount of assets to be paid to or for the benefit of ESOP and 401(k) participants. (See Pl.'s Mem. Supp. Rem. at 3-4.)
The thrust of plaintiffs Amended Complaint is that "despite their contractual obligations," defendants Kessler and Associates were negligent in discharging their duties. For example, defendants may have (1) failed to verify the total wages of employees to the IRS; (2) incorrectly included or excluded certain employees from the ESOP; (3) failed to include "non-deferring" but eligible participants from the 401(k); and (4) failed to allocate properly 401(k) matching contributions to eligible participants. (See id.) As an apparent result of defendants' "disregard of their responsibilities," plaintiff McDermott was forced to expend large sums of money to remedy the mistakes. Moreover, both the ESOP and the 401(k) may be officially disqualified by the IRS and the United States Department of Labor. Such disqualification allegedly will expose McDermott to significant liability and damages.
The Second Circuit recently limited removal based on ERISA to causes of action that both "relate to" an employee benefit plan within the meaning of 29 U.S.C. § 1144(a) and fall within the Act's civil enforcement provisions, 29 U.S.C. § 1132(a). Smith v. Dunham-Bush, Inc., 959 F.2d 6, 8 (2d Cir. 1992). If the party that has sought removal cannot establish that both parts of this two-prong test are satisfied, a federal court has no subject-matter jurisdiction and must remand the case back to state court. See 28 U.S.C. § 1447(c). The Court initially will address the issue of whether plaintiffs' claims in this case are covered by the enforcement provisions of 29 U.S.C. § 1132(a).
In order for a plaintiff's causes of action to fall within ERISA's civil enforcement provisions, the plaintiff must have standing to sue under the Act. Under ERISA, a civil action may be brought in federal court by a "participant, beneficiary, or fiduciary" of an ERISA retirement plan for relief under various sections of the Act. See 29 U.S.C. § 1132(a)(3). Outside of this "clear legislative mandate" courts are not to infer a grant of jurisdiction. Pressroom Unions-Printers League Income Sec. Fund v. Continental Assurance Co., 700 F.2d 889, 892 (2d Cir.), cert. denied, 464 U.S. 845, 78 L. Ed. 2d 138, 104 S. Ct. 148 (1983). Any doubt should be resolved in favor of the absence of subject-matter jurisdiction and in favor of remand. See, e.g., 28 U.S.C. 1447(c) (dictating that remand is required if it "appears" that the court lacks jurisdiction); St. Francis Hosp. & Med. Ctr. v. Blue Cross & Blue Shield, Inc., 776 F. Supp. 659, 661 (D. Conn. 1991).
The Second Circuit has adopted a strict construction of 29 U.S.C. § 1132(a) and consequently has taken a narrow view of the district courts' jurisdiction in these cases. Id. As a result, because Section 1132 does not expressly provide for civil actions by employers, plaintiff here -- as an employer -- does not have standing as an enumerated party to bring a cause of action in federal court. Tuvia Convalescent Ctr., Inc. v. National Union of Hosp. & Healthcare Employees, 717 F.2d 726, 730 (2d. Cir. 1983); Pressroom Unions, 700 F.2d at 892. Of course, a party that ordinarily would qualify as an "employer" may obtain standing by suing in its capacity as, for example, a fiduciary to the employee retirement plan. See United States Steel Corp. v. Pennsylvania Human Relations Comm'n, 669 F.2d 124, 126-28 (3d Cir. 1982).
Defendants argue that, even though plaintiff McDermott is an employer, it is also a plan fiduciary and thus falls within the jurisdictional grant afforded to fiduciaries under Section ...