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RIVERA v. PIONEER FUTURES

United States District Court, S.D. New York


September 8, 2004.

DENNIS P. RIVERA Plaintiff,
v.
PIONEER FUTURES, INC., as a plan affording long-term disability benefits, PIONEER FUTURES, INC., as the plan administrator of a plan affording long-term disability benefits, and FIRST UNUM LIFE INSURANCE CO., as the claims administrator and underwriter of a plan affording long-term disability benefits, Defendants.

The opinion of the court was delivered by: HAROLD BAER, JR., District Judge

MEMORANDUM ORDER

Plaintiff Dennis P. Rivera ("Rivera") moves for an order pursuant to 28 U.S.C. § 1447(c) to remand this case to the Supreme Court of the State of New York, County of New York, and also requests costs and expenses, including attorney's fees, and any further relief that the Court deems appropriate. Rivera commenced this action on May 14, 2004. Rivera's complaint alleges that First Unum denied him benefits, in breach of their contract, misrepresented to him that he was entitled to benefits through the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. ("ERISA"), when in he fact he is not, and acted deceptively, in violation of General Business Law § 349. In his fourth cause of action, expressly written as an "Alternative Cause of Action," Rivera asserts a claim for benefits pursuant to ERISA, in the event that the Court finds that his claim is in fact governed by ERISA. (Patrick F. Foley Affidavit ("Foley Aff.") Exh. A (Verified Complaint ("Compl."))). On June 15, 2004, defendant First Unum Life Insurance Co. ("First Unum") filed a notice of removal to bring the case to this Court, on the basis of federal question jurisdiction, stemming from the fourth cause of action. Rivera contests the removal and seeks remand because (1) First Unum, by failing to seek the consent of the second defendant, Pioneer Futures, Inc. ("Pioneer"), the long-term provider and plan administrator, First Unum has failed to comply with the "rule of unanimity," and (2) the asserted basis of federal question jurisdiction, ERISA, is inapplicable. On the basis of First Unum's failure to comply with the procedural requirements of removal, namely the requirement that all defendants must join in the application for removal, remand to New York Supreme Court is warranted.

Notwithstanding the potential existence of original federal jurisdiction here, based on ERISA, this Court may not retain jurisdiction because First Unum failed to acquire Pioneer's consent to removal. "Except as otherwise expressly provided by Act of Congress, any 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 or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a)(2004). Further, pursuant to 28 U.S.C. § 1446(a) (1994), "[a] defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action." The Second Circuit has construed the removal statutes to "require the unanimous consent of the defendants." Cal. Pub. Employees' Ret. Sys. v. Worldcom, Inc., 368 F.3d 86, 103 (2d Cir. 2004). "Exceptions to this general rule that all defendants must join or consent to the petition for removal have been recognized where: (1) the non-joining defendants have not been served with service of process at the time the removal petition is filed; (2) the non-joining defendants are merely nominal or formal parties; and (3) the removed claim is a separate and independent claim as defined by 28 U.S.C. § 1441(c). Ell v. S.E.T. Landscape Design, Inc., 34 F. Supp. 2d 188, 194 (S.D.N.Y. 1999) (citations omitted). First Unum asserts that Pioneer's consent to removal was not required because Pioneer is merely a nominal party.*fn1

  First Unum argues that Pioneer is a nominal party because (1) Rivera only asserts that he is entitled to benefits under the policy issued by First Unum, and only demands payment from First Unum, (2) Rivera does not assert that Pioneer is at all responsible for First Unum's decision to deny his claim, (3) three of Rivera's four causes of action seek relief only from First Unum, and (4) only Rivera's fourth alternative cause of action, based on ERISA, asserts that Pioneer is jointly liable with First Unum. "A party is `nominal' when that party has little or no interest in the outcome of the litigation and no cause of action or claim for relief is or could be stated against [it]." Still v. DeBuono, 927 F. Supp. 125, 129 (S.D.N.Y. 1996) (internal quotations and citations omitted). While First Unum is correct that Rivera's first three causes of actions seek relief solely from First Unum, not Pioneer, and only assert that it, not Pioneer, acted badly, the fourth cause of action seeks relief against Pioneer directly, and demands that Pioneer and First Unum "are liable to RIVERA for the sum of all long term disability benefits wrongfully withheld from him since October 19, 2003, together with prejudgment interest at a rate to be established by the Court." (Compl. ¶ 30). And, notably, the fourth cause of action is the one from which federal jurisdiction allegedly springs

  Further, Pioneer is the plan administrator — hardly a nominal party in an ERISA action. See, e.g., Partsinevelos v. Tropical Machines, Inc., 78 Fed. Appx. 782 (2d Cir. 2003) (suit against plan administrator); Campanella v. Mason Tenders' District Council Pension Plan, 299 F. Supp. 2d 274 (S.D.N.Y. 2004) (same). Pioneer has not only answered in the state action, but it has also asserted eleven affirmative defenses and a cross-claim against First Unum for indemnification or contribution. In short, First Unum has failed to meet its "heavy burden of persuasion" to prove that Pioneer is a nominal party. Raphael v. 18 Restaurant, 954 F.Supp. 549, 551 (E.D.N.Y. 1996) (citing, inter alia, McKay v. Point Shipping Corp., 587 F. Supp. 41, 42-43 (S.D.N.Y. 1984)).

  Since First Unum has failed to establish that Pioneer is a nominal party, its failure to attain Pioneer's consent to removal necessitates remand, notwithstanding the possibility that this Court would have otherwise had jurisdiction. While this Court finds for plaintiff on remand, and the Court has the power pursuant to 28 U.S.C. § 1447(c) to "require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal," the Court declines to order such an award. See Caribbean Fertilizers Group, Ltd. v. Fersan Fertilizantes Santo Domingo, C. por A., 02 Civ. 9919, 2003 U.S. Dist. LEXIS 14236 (S.D.N.Y. Aug. 13, 2003) (declining to order costs and fees even though the "[a]ssessment of costs and fees against the removing defendants is within the discretion of the court and does not require a finding of bad faith or frivolity.") (citing Morgan Guar. Trust Co. v. Republic of Palau, 971 F.2d 917, 924 (2d Cir. 1992)).

  It is hereby:

  ORDERED that Rivera's motion to remand the case back to the New York State Supreme Court is granted; and it is further

  ORDERED that Rivera's request for attorney's fees and costs in conjunction with the advancement of this motion is denied; and it is further

  ORDERED that the Clerk of the Court is instructed to close this motion, remove this case from my docket, and remand this action to New York State Supreme Court.

  SO ORDERED.


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