MEMORANDUM AND ORDER
Lifland, District Judge
Presently before the Court is plaintiff's motion to remand this action to state court. Defendants oppose the motion. For the reasons set forth below, the Court will grant plaintiff's motion.
On January 7, 1993, plaintiff James Ryan ("Ryan") filed this action in the Superior Court of New Jersey, Law Division, Middlesex County, New Jersey. On February 16, 1993, defendants removed this action to the U.S. District Court for the District of New Jersey. The basis for removal of the action was diversity of citizenship.
On July 22, 1993, Ryan amended the Complaint to add Puerto Rico Marine Management Incorporated ("PRMMI"), Ryan's former employer, as a defendant. The addition of PRMMI destroyed diversity because Ryan is a resident of New Jersey and PRMMI is a Delaware corporation which has its principal place of business in New Jersey. On July 27, 1993, Ryan served defendants with its notice of motion to remand the case.
Ryan's Retaliatory Discharge Claim
Defendant PRMMI operates and manages defendant Puerto Rico Maritime Shipping Authority's ("PRMSA") shipping line. (Amended Complaint P 11; Cannon Cert. P 4). Ryan was employed as Vice President of Security for PRMMI. (Amended Complaint P 12; Cannon Cert. P 4). Pursuant to his duties as Vice President of Security, Ryan was involved in the internal investigation of both PRMSA and PRMMI employees. (Amended Complaint P 16). The Amended Complaint enumerates investigations by Ryan which resulted in the criminal prosecution of PRMSA-appointed PRMMI employees or their removal from employment. (Amended Complaint P 16(a)-(f)). Ryan alleges that PRMSA initiated harassing investigations of him and the PRMMI security department in mid-1988 after Ryan discharged the friend of the Director of Security for PRMSA. (Amended Complaint PP 17, 18).
Ryan alleges that defendants fraudulently induced him into accepting early retirement at PRMMI by misrepresenting to him that his position as Vice President of Security was to be eliminated. (Amended Complaint P 19). In connection with the early retirement, Ryan executed a Part One Waiver and Release of Liability on January 10, 1992 and a Part Two Waiver and Release of Liability on June 30, 1992 ("Part One and Part Two Releases"). (Amended Complaint PP 21, 22). Ryan's early retirement was effective on June 30, 1992. (Amended Complaint P 21). Ryan learned in July 1992 that PRMSA had not in fact eliminated Ryan's position and instead, had hired a new Vice President of Security who commenced his employment on July 1, 1992, the day after Ryan's early retirement. (Amended Complaint P 23). Ryan alleges that but for the defendants' knowing, intentional and material misrepresentation regarding the elimination of his position, he would not have taken early retirement. (Amended Complaint P 24).
Based on those allegations, Ryan alleges that defendants violated the New Jersey Conscientious Employee Protection Act, N.J.S.A. 34:19-1, et seq.
Ryan seeks equitable relief rescinding the Part One and Part Two Releases, an injunction restraining PRMSA from any further retaliation against Ryan or continuing violations of the Conscientious Employee Protection Act, reinstatement to his position as Vice President of Security, reinstatement of full fringe benefits, seniority rights and lost wages since July 1, 1992, and punitive damages. Ryan also alleges other common law claims including tortious interference with contractual rights, tortious interference with his prospective economic expectations, defamation, intentional infliction of emotional distress, and invasion of his privacy. (Amended Complaint Counts II - VI).
28 U.S.C. § 1447(e) provides:
If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to state court.
By order dated July 13, 1993, Magistrate-Judge Hedges allowed Ryan to amend his Complaint to add PRMMI as a defendant. Ryan argues that when PRMMI, a non-diverse party, was joined as a defendant in the Amended Complaint, the basis of this Court's subject matter jurisdiction over the matter (i.e. diversity) was destroyed. Ryan argues that 28 U.S.C. § 1447(e) mandates that this Court remand this action to the Superior Court of New Jersey since it no longer has subject matter jurisdiction over this action. See Steel Valley Authority v. Union Switch & Signal Div., 809 F.2d 1006, 1010-11 (3d Cir. 1987), cert. dismissed, 484 U.S. 1021 (1988) ("when a nondiverse party is added to a federal proceeding and that party's presence is indispensable to the furnishing of complete relief, remand is mandated where federal subject matter jurisdiction depends on diversity jurisdiction, even though removal was originally proper.").
In opposing Ryan's motion to remand, defendants argue that this Court has subject matter jurisdiction over this action under ERISA, because Ryan's principal cause of action relates to the early retirement plan, an employee benefit plan governed by ERISA. Defendants contend that Ryan's action seeks reconfiguration of his pension rights. Defendants argue that ERISA was designed to bring within its scope all state law causes of action for breach of contract, tort claims for bad faith, and state common law claims for fraud, misrepresentation, and tortious interference with contractual relations. (See cases cited in Def. Br. at p. 7). Therefore, defendants argue that Ryan's sole remedy is under ERISA which preempts his state common law causes of actions.
Defendants also argue that this Court has another independent basis for jurisdiction -- PRMMI's counterclaim against Ryan for breach of his ERISA-governed early retirement plan asserts ERISA as a basis for jurisdiction. Because the well-pleaded complaint rule requires that the federal question be presented on the face of the plaintiff's properly pleaded complaint, defendant PRMMI's counterclaim based on ERISA cannot form the basis of this Court's subject matter jurisdiction over Ryan's complaint.
Furthermore, it appears that PRMMI's counterclaim is based on breach of contract, not on ERISA. PRMMI alleges that Ryan signed two releases releasing defendants from any claims he had against them, and that Ryan breached those releases by bringing this suit. Therefore, PRMMI's counterclaim is not based on ERISA and cannot, as defendants argue, provide an independent basis of subject matter jurisdiction over this action.
A court determines whether a cause of action arises under federal law by examining the well-pleaded complaint to determine whether it alleges violations of federal law. See Gully v. First National Bank, 299 U.S. 109, 81 L. Ed. 70, 57 S. Ct. 96 (1936). Federal preemption which is offered as a defense to an action does not appear on the face of a well-pleaded complaint, and therefore, does not authorize removal to federal court. Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 63, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987). However, the Supreme Court determined that an action is removable (though the Complaint asserts only state law causes of action) if the state law claims asserted in the complaint are completely preempted by ERISA and fall within the scope of ERISA's civil enforcement provision, section 502(a). Id. at 63-66.
The Court must first determine whether ERISA preempts the New Jersey Conscientious Employee Protection Act, N.J.S.A. 34:19-3(a). The parties do not cite any cases in which any court has addressed this issue and the Court's own independent research has revealed none.
ERISA § 514(a) provides:
Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.
29 U.S.C. § 1144(a). The Supreme Court held that "[a] law 'relates to' an employee benefit plan . . . if it has a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 77 L. Ed. 2d 490, 103 S. Ct. 2890 (1983). The Supreme Court has stated that Congress used the words "relate to" in their broad sense:
Under this 'broad common-sense meaning,' a state law may 'relate to' a benefit plan, and thereby be preempted, even if the law is not specifically designed to affect such plans, or the effect is only indirect.