The opinion of the court was delivered by: Honorable Paul A. Crotty, United States District Judge
This action for breach of an employment contract and violations of New York State and New York City anti-discrimination laws was filed in State court on May 31, 2006. Defendant timely removed to this Court on June 28, 2006 on the theory that the employment contract severance provisions fell within the pre-emptive powers of ERISA, 29 U.S.C. § 1132, et seq. On August 18, 2006, Plaintiff filed a motion to remand the matter to state court. For the reasons below, the Court grants the motion.
Plaintiff Arie Sheer ("Sheer") was hired by Defendant Israel Discount of New York ("Bank") in 1996 to serve as its President and CEO, pursuant to an employment contract. The contract provided a severance package for Sheer of one year's base salary ($480,000) payable in a lump-sum. Additionally, Sheer received a supplemental benefit under the "Supplemental Executive Retirement Plan" ("SERP") if a "change in control" were to occur.
Sheer was terminated in the spring of 2006. He alleges that he was fired "without cause" and therefore, under the contract, he is owed one year's base salary. Sheer further alleges that the Bank changed control prior to his termination so he is also owed the lump-sum payment under that provision of the SERP. The Bank denies that Sheer is entitled to any relief. The Bank removed the State court action on the ground that Sheer's claim is "dependent upon and constitutes a claim for severance benefits pursuant to plans established and maintained by [the Bank] and in accordance with.ERISA." Sheer contends that there is no federal question jurisdiction because neither the SERP nor the contract constitute a "plan" under ERISA. In the alternative, the Bank should be equitably estopped from invoking ERISA.*fn1
A defendant may remove "[a]ny civil action of which the district courts have original jurisdiction founded on a claim or right arising under the constitution, treaties or laws of the United States.." 28 U.S.C. § 1441(a). On a motion to remand, "the defendant bears the burden of demonstrating the propriety of the removal." Cal. Pub. Employee's Ret. Sys. v. WorldCom, Inc., 368 F.3d 86, 100 (2d Cir. 2004) (quoting Grimo v. Blue Cross/Blue Shield of Vt., 34 F.3d 148, 151 (2d Cir. 1994)).
Typically, the basis for federal jurisdiction must be alleged in the complaint itself; however, an exception to this well-pleaded complaint rule is the "complete preemption" exception under which "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in nature." Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987). ERISA completely pre-empts any state law cause of action which falls within its civil enforcement provisions. See id.
Pursuant to ERISA, federal jurisdiction lies where a recipient of an "employee welfare benefit plan" seeks to "recover benefits due to him under the terms of his plan." 29 U.S.C. §§ 1002(1), 1132(a)(1)(B) & (e)(1). Whether a particular program is a "plan" under ERISA depends in part upon whether that program "requires an ongoing administrative program to meet the employer's obligation." Kaskow v. New Rochelle Radiology, 274 F.3d 706, 736 (2d Cir. 2001) (quoting Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987)). Most, but not all, employer undertakings or obligations to pay severance benefits are "plans" under ERISA. Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d 72, 75 (2d Cir. 1996). The Second Circuit has held that a "plan" may exist (1) where an employer's undertaking required managerial discretion, that is, where the undertaking could not be fulfilled without ongoing, particularized, administrative analysis of each case; (2) where a reasonable employee would perceive an ongoing commitment by the employer to provide some employee benefits; (3) where the employer was required to analyze the circumstances of each employee's termination separately in light of certain criteria.
Kaskow, 274 F.3d at 737 (quoting Schonholz, 87 F.3d at 76) (internal citations and quotes omitted). The court has not decided "which one or more of these factors will be determinative in every case," nor did it "preclude the possibility that other factors might be relevant in different factual settings." Tischmann v. ITT/Sheraton Corp., 145 F.3d. 561, 566 (2d Cir. 1998). Contract provisions that call for a simple, "one-time, lump-sum payment triggered by a single event," are not "plans" under ERISA because they require "no administrative scheme" to meet the employer's obligation. Fort Halifax, 482 U.S. at 12.
In Schonholz, the court held that an employer had created a "plan" under ERISA because of its promise to pay severance benefits to discharged senior employees in amounts based upon each employee's length of employment and prospects for reemployment. 87 F.3d at 76-77. In Tischmann, the court found a "plan" where the [plan] clearly contemplates application of significant managerial discretion, and case-by-case analysis of each termination, by [the employer].. [The employer] is required under the plan to examine the circumstances of each covered employee's termination and to determine whether it was 'for cause'; if so, the employee is ineligible for benefits." 145 F.3d. at 567. In James v. Fleet/Norstar Fin. Group, Inc., the court held that an employer's undertaking to give employees 60 days of pay following the last day of work, if employees would remain on the job until internal consolidation was completed, did not create a "plan" within meaning of ERISA. 992 F.2d 463 (2d Cir. 1993). "Simple arithmetical calculations," do not amount to an "ongoing, particularized, administrative, discretionary analysis." Id. at 468.
In applying the three Schonholz factors here, the Court concludes that neither the employment contract nor the SERP constitute "plans" under ERISA.
First, the Bank's undertaking did not require ongoing managerial discretion. There is no discretion as to the amount of the severance benefits. Although the amounts may be different for all three executives because their base salaries may be different, nothing more than simple arithmetic calculations are needed to ascertain those amount. In short, "there does not appear to be anything discretionary about the ...