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ENGLER v. CENDANT CORPORATION

August 6, 2005.

BARRY ENGLER, Plaintiff,
v.
CENDANT CORPORATION, and INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendants.



The opinion of the court was delivered by: ARTHUR SPATT, District Judge

MEMORANDUM OF DECISION AND ORDER

Barry Engler ("Engler" or the "Plaintiff") filed this action in New York State Supreme Court, Nassau County, against two of his former employers, Cendant Corporation ("Cendant") and International Business Machines Corporation ("IBM"), alleging fraudulent inducement, negligent misrepresentation, and breach of contract. Cendant removed the action to this Court, pursuant to 28 U.S.C. § 1441, stating that the Plaintiff had asserted claims for employee benefits governed by the Employee Retirement Income Security Act ("ERISA"). Cendant and IBM then moved for dismissal of the complaint under Federal Rule of Civil Procedure 12(b)(6), on the ground that Engler's common law claims are preempted by ERISA.

I. BACKGROUND

  Engler was employed by Cendant and its predecessor Avis from 1976 to 2002, a period of more than twenty-five years. On December 17, 2001, Engler received a letter from IBM extending to him an offer of employment with IBM Global Services ("IBM Offer of Employment"). The complaint alleges, upon information and belief, that the IBM Offer of Employment was part of an outsourcing agreement between IBM and Cendant in which certain Cendant employees were offered employment with IBM.

  In conjunction with the offer of employment, Engler received a letter from Cendant advising him of special considerations that Cendant and IBM agreed he would be entitled to if he accepted the IBM offer of employment. In the letter, dated December 21, 2001, stated that "IBM will recognize all service credit that is recognized by Cendant today for all purposes including eligibility and vesting in an IBM pension plan." Compl. Ex. 4. The letter also references the outsourcing agreement between Cendant and IBM. On December 26, 2001, allegedly based upon the representations contained in the letters from Cendant and IBM, Engler accepted employment with IBM.

  On February 11, 2002, Engler commenced employment with IBM. On the same day, Engler received a letter from Cendant that congratulated him on his new opportunity with IBM and stated that "should IBM terminate your employment other than for `Cause' during the first 24 months following your employment with IBM, you shall receive severance pay from IBM under the greater of the severance pay plans (Cendant or IBM) based on combined credited service." Compl. Ex. 4. On March 26, 2002, Engler entered into an Agreement and General Release not to sue Cendant. In consideration for the Release, Cendant stated that there were "several benefits that Cendant and IBM have worked together to make available to you." Compl. Ex. 4. The letter went on to list benefits such as salary, a profit sharing bonus, stock options, health, welfare, and pension benefits, and severance pay.

  On May 3, 2004, more than two years after beginning employment at IBM, Engler received a notice that his employment would be terminated as of June 2, 2004. Attached to the notice of termination was the IBM Global Service Delivery Resource Action Summary Plan Description, which states that the Plan was subject to ERISA. Engler inquired about the severance plan referred to in the February 11, 2002 letter from Cendant and IBM advised him that it was not applicable because his termination occurred more than two years after his initial employment date with IBM.

  As to the benefits that Engler was entitled to at the time of his termination, the Plaintiff alleges that IBM failed to recognize his service at Cendant for purposes of calculating the amount of his severance and health benefits. Engler alleges that IBM offered him four weeks severance and three months transition medical benefits, which were conditioned upon Engler signing a General Release and Covenant Not to Sue IBM. Engler contends that if IBM had included his service with Cendant, he would have been entitled to twenty-six weeks severance and one year of transition medical benefits.

  Engler did not sign the IBM General Release and Covenant Not to Sue and IBM denied Engler severance and medical benefits. Instead, Engler commenced this law suit alleging New York State common law causes of action against Cendant for fraudulent inducement, negligent misrepresentation, and breach of contract. The complaint states no cause of action against IBM, but demands $50,000 from IBM and $100,000 from Cendant. After removing the case to this Court, IBM and Cendant both moved to dismiss, pursuant to Rule 12(b)(6), arguing that the Plaintiff's state law causes of action are preempted by ERISA.

  II. DISCUSSION

  A. The Motion to Dismiss Standard

  On a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court should dismiss the complaint only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his complaint which would entitle him to relief. King v. Simpson, 189 F.3d 284, 286 (2d Cir. 1999); Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996). The Court must accept all well-pled factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Koppel v. 4987 Corp., 167 F.3d 125, 127 (2d Cir. 1999); Jaghory v. N.Y. State Dep't of Educ., 131 F.3d 326, 329 (2d Cir. 1997). The issue is not whether the plaintiff will ultimately prevail but whether the plaintiff is entitled to offer evidence to support the claims. Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir. 1995).

  B. ERISA Preemption

  Congress enacted ERISA as a remedial statute to protect the interests of the beneficiaries of private retirement plans by reducing the risk of the loss of pension benefits. Geller v. County Line Auto Sales, Inc., 86 F.3d 18, 22 (2d Cir. 1996). "ERISA established a comprehensive federal statutory program intended to control abuses associated with pension benefit plans." Id. In order to achieve national uniformity in the regulation of such plans, ERISA expressly preempts "any and all ...


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