The opinion of the court was delivered by: JEROME SIMANDLE, District Judge
This matter comes before the Court upon Defendant Ohio Casualty
Insurance Company's motion for judgment on the pleadings as well
as Plaintiff Anne Way's alternative motion for leave to file an
amended complaint and motion to remand. The key issue presented,
and that upon which all three motions turn, is whether
Defendant's Separation Pay Plan qualifies as an employee benefits
plan under the Employment Retirement Income Security Act
("ERISA"). Because this Court determines that ERISA covers the
plan at issue and for the reasons discussed herein, Defendant's
motion for judgment on the pleadings will be granted in part,
Plaintiff's related claims arising under state law are preempted
and dismissed, Plaintiff's motion for leave to file an amended
complaint will be granted and Plaintiff's motion to remand will
Plaintiff Anne B. Way filed a Complaint in the Superior Court
of New Jersey, Law Division, on July 29, 2004. On September 13,
2004, Defendant filed a notice of removal with the Camden County
Superior Court. Plaintiff claims that Defendant Ohio Casualty
Insurance Company ("Ohio Casualty") wrongfully refused to pay her
severance pay benefits in accordance with Ohio Casualty's
Separation Pay Plan after her employment ended with the company
on February 11, 2004. Plaintiff's Complaint alleges three claims
against Ohio Casualty arising from the denial of separation pay.
Count I is a claim for breach of contract, Claim II alleges a
claim for fraud and/or misrepresentation, and Claim III alleges a
claim for the tort of outrage.
Plaintiff was employed as an adjuster by Ohio Casualty in its
Voorhees, New Jersey office until her employment ended on
February 11, 2004 as part of the continued implementation of a
sale and transfer of a business division to Proformance Insurance
Company ("Proformance"). (Compl. ¶¶ 2-3.) Ohio Casualty
administers what it considers to be an ERISA benefits plan,
entitled "Separation Pay Plan," which provides employees
nationwide, including Plaintiff, an opportunity to receive
certain severance pay where eligible in accordance with its
terms. The plan under which Plaintiff would be covered is that
which bears an effective date of April 6, 2000. The plan is
administered by Defendant's Welfare Plan Committee. The
Separation Pay Plan provides, inter alia, that an employee
laid off because of a sale is eligible for separation pay unless
the employee is offered employment with the purchaser within
fifty (50) miles of the employee's last worksite in a job paying
eighty-five percent (85%) or more of the employee's present rate
of pay. (Id. at ¶ 4.) This is the provision implicated in
At the end of her employment with Ohio Casualty, Plaintiff did
not receive severance benefits under the Plan. (Id. at ¶ 6.)
Defendant's Welfare Plan Committee determined that the Plan was
not obligated to provide Plaintiff with severance benefits as
Plaintiff was offered employment by Proformance within fifty (50)
miles of her last worksite in a job paying at least eighty-five
percent (85%) of her last rate of pay at Ohio Casualty. Plaintiff
argues that these conditions were not met and that she was
therefore eligible for severance pay in the amount of $14,473.05,
together with accumulated unused vacation pay. This Court heard
oral argument on these motions on November 22, 2004.
A. Defendant's Motion for Judgment on the Pleadings
1. Is this an ERISA Benefits Plan?
Defendant moves, pursuant to Fed.R.Civ.P. 12(c), for
judgment on the pleadings, arguing that Plaintiff's claims are
preempted by the Employee Retirement Income Security Act
("ERISA"). Federal Rule of Civil Procedure 12(c) states, in
relevant part, "After the pleadings are closed but within such
time as not to delay the trial, any party may move for judgment
on the pleadings. . . ." Fed.R.Civ.P. 12(c). Here, the
Separation Pay Plan was attached to the Answer and thus
constitutes part of the pleadings to be construed in this Rule
12(c) motion. Defendant argues that Plaintiff's state law claims
are preempted by ERISA, that Plaintiff can thus prove no set of
facts in support of those claims that would entitle her to
relief, and that judgment on the pleadings is appropriate.
Section 514 of ERISA, 29 U.S.C. §§ 1132, et seq., provides
for broad preemption of state laws serving as the basis of claims
relating to employee benefit plans governed by ERISA:
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). In the Third Circuit, courts are to conduct
a two-part analysis for determining whether state law claims are
indeed preempted by ERISA. First, a court must determine whether
the plan at issue qualifies as an ERISA benefits plan. Second, a
court must determine whether the applicable state laws "relate
to" that plan. Alston v. Atlantic Elec. Co., 962 F. Supp. 616,
622 (D.N.J. 1997).
Thus, this Court first considers whether Ohio Casualty's
Separation Pay Plan constitutes an ERISA plan. ERISA defines an
employee welfare benefit plan, in pertinent part, as:
any plan, fund, or program which was heretofore or is
hereafter established or maintained by an employer . . .
to the extent that such plan, fund, or program
was established or is maintained for the purpose of
providing for its participants or their beneficiaries
. . . (A) medical, surgical or hospital care or
benefits, or benefits in the event of sickness,
accident, disability, death or unemployment, or
vacation benefits, apprenticeship or other training
programs, or day care centers, scholarship funds, or
prepaid legal services. . . .
29 U.S.C. § 1002(1). Although severance benefits are not
specifically mentioned in § 1002(1), courts have determined that
most, but not all, severance packages qualify as ERISA plans.
See, e.g., Schonholz v. Long Island Jewish Med. Ctr.,
87 F.3d 72, 75 (2d Cir. 1996). In Fort Halifax Packing Co. v.
Coyne, 482 U.S. 1
(1987), however, the Supreme Court held that
severance benefits do not implicate ERISA unless they require the
establishment and maintenance of a separate and ongoing
administrative scheme. Id. at 11-12. See also Pane v. RCA
Corp., 667 F. Supp. 168, 170 (D.N.J. 1987), aff'd,
868 F.2d 631
(3d Cir. 1989).
Defendant argues that its Separation Pay Plan was established
or is maintained for the purpose of providing for its
participants benefits in the event of "unemployment" and thus
those benefits are of the kind described in 29 U.S.C. § 1002(1).
See Alston, 962 F. Supp. at 623; Pane, 868 F.2d at 635;
LaFata v. Raytheon Co., 223 F. Supp. 2d 668, 676 (E.D. Pa.
2002)). In addition, Defendant contends that Ohio Casualty's plan
creates an ongoing administrative scheme because it is national
in scope, applies to various types of separation from employment,
is administered by the Welfare Plan Committee, and requires
analysis and investigation when determining eligibility for and
amount of benefits, thereby implementing a set of administrative
Plaintiff, in contrast, contends that Defendant's severance
plan is not governed by ERISA because payment to an employee
turns on simple calculations based on objective criteria i.e.
whether the employee was offered a job with the purchaser within
50 miles of the last worksite and at an amount that is at least
85% of her previous pay, thereby resulting in an amount of
severance pay calculated as simply one ...