In re Reliance Standard Life Ins. Co.

Citation: 386 F. Supp. 3d 505Docket: CIVIL ACTION NOS. 19-331; 19-332; 19-333; 19-334; 19-335; 19-336; 19-338; 19-339; 19-340; 19-341; 19-342; 19-343

Court: District Court, E.D. Pennsylvania; June 24, 2019; Federal District Court

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Twelve individual foreign plaintiffs filed lawsuits against Reliance Standard Life Insurance Company and related entities in the Philadelphia Court of Common Pleas, alleging breach of contract and bad faith following the denial of their disability benefits. Reliance removed these cases to federal court, claiming federal-question jurisdiction under the Employee Retirement Income Security Act (ERISA). Eleven of the cases were reassigned to the same court as related cases. The plaintiffs subsequently moved to remand on the basis of lack of subject matter jurisdiction.

The facts surrounding the denial of benefits are largely undisputed, involving foreign nationals from Kosovo who worked in Afghanistan under contracts with AECOM/GSS Ltd., a Cayman Islands company affiliated with AECOM in the U.S. They were offered disability insurance policies issued by Reliance, which stated they were governed by Rhode Island law and ERISA. After allegedly becoming disabled, the plaintiffs' claims for short-term and long-term disability benefits were denied, depriving them of necessary medical funds.

Legal standards for removal and remand are outlined under 28 U.S.C. §§ 1441, 1446, and 1447, emphasizing that defendants must demonstrate that the case is properly before federal court, with statutes being strictly construed against removal. Reliance's notice of removal was based solely on federal-question jurisdiction under ERISA. While the plaintiffs’ claims are rooted in state law, they could be preempted by ERISA if they could have been brought under it. However, a prior ruling indicated that foreign nationals working outside the U.S. are not covered by ERISA, suggesting that the current claims may not fall under federal jurisdiction. The court has considered the motion to remand independently of this previous decision.

The Supreme Court's extraterritoriality doctrine stipulates that a statute lacks extraterritorial application unless Congress clearly expresses such intent. This principle, supported by a century of case law, applies to various employment-related statutes, establishing a presumption against extraterritoriality. Although Congress can extend a statute's reach beyond U.S. borders, the absence of such intention is crucial in legal interpretations.

The Employee Retirement Income Security Act (ERISA) aims to regulate employee welfare and pension plans within a uniform federal framework, granting employees the right to sue employers and plan administrators. Legislative history emphasizes ERISA's domestic focus, underscoring its goal of providing American workers with financial security in retirement. ERISA's definition of employee benefit plans requires them to be established or maintained by employers engaged in U.S. commerce, reinforcing its domestic intent.

Reliance argues that ERISA's foreign plan exemption, which excludes plans maintained outside the U.S. for nonresident aliens, signifies congressional intent for extraterritorial application. They contend this exemption implies ERISA should apply to plans in the U.S. for resident employees, possibly including foreign nationals. However, this interpretation overlooks the Supreme Court's directive that extraterritoriality must be expressly stated by Congress. While statutory context is relevant in determining extraterritorial application, it ultimately supports a presumption against such reach under ERISA.

The statutory language of employee benefit plans under ERISA is fundamentally domestic, requiring plans to be established or maintained by employers engaged in commerce. The foreign plan exemption is one of five provisions indicating what is not covered by ERISA, and it does not imply that foreign nationals working abroad are included within ERISA's scope. Courts emphasize that unless Congress explicitly states otherwise, ERISA is presumed to focus on domestic matters. For over forty years, no district court has permitted a foreign national working abroad to bring an ERISA claim. Prior cases, including Bajrami, Maurais v. Snyder, and Chong v. InFocus Corp., have consistently applied the presumption against extraterritoriality, stressing the lack of congressional intent for ERISA to extend beyond U.S. borders. Reliance's argument that disallowing claims from foreign nationals would undermine uniformity is countered by the reality that ERISA's reach is limited to what Congress allows. Consequently, the court will grant the Plaintiffs' motion to remand due to a lack of subject matter jurisdiction. The court also notes the related nature of the cases, which were assigned randomly, and has put motions to consolidate and dismiss on hold pending the remand decision.

Plaintiffs in the case referenced are employed in various roles such as Driver, Heavy Vehicle Mechanic, and Forklift Operator, all of which were based in Afghanistan, with no evidence suggesting engagement with U.S. commerce. Their claims of disability primarily arise from traumatic experiences, including exposure to ground and rocket attacks, and physical injuries from labor-intensive work. The Plaintiffs argue for remand due to Reliance's failure to promptly file a notice of removal with the Philadelphia Court of Common Pleas, as required by 28 U.S.C. § 1446. Reliance filed the notice in state court 11 days after the removal notice, but prior rulings indicate that delays of up to one month may be considered "prompt" and "harmless." Jurisdiction is not defeated by the failure to file this notice, as established in relevant case law. The presence of federal-question jurisdiction is determined by the "well-pleaded complaint rule," which mandates that federal jurisdiction arises only when a federal question is evident in the plaintiff's complaint. If a claim could potentially fall under ERISA, and no other independent legal duty is involved, it is completely preempted by ERISA. Both parties acknowledge Congress's authority to enforce laws beyond U.S. borders, referencing Supreme Court rulings regarding extraterritorial claims, such as Title VII, which was amended to extend its reach to U.S. citizens employed abroad. The definition of "employee" in this context encompasses U.S. citizens working overseas, holding employers accountable for discriminatory practices by foreign-incorporated corporations they control.

An "employee benefit plan" under ERISA is defined as any plan maintained by an employer for benefits, including disability benefits. Disability policies that provide short-term and long-term disability benefits, involve employee premium payments, and outline benefit claims processes qualify as a 'plan' under ERISA. The term "commerce" encompasses trade and activities that affect commerce, with the application of ERISA extending to various jurisdictions within the U.S. There is a dispute regarding whether the employer involved is engaged in commerce, specifically concerning AECOM/GSS Ltd., a Cayman Islands company, and AECOM, a U.S. company, particularly in relation to the foreign nationality of the plaintiffs. Despite this, the determination of ERISA's extraterritoriality is not contingent on the employer's status; rather, it focuses on whether ERISA applies to foreign plans that primarily benefit non-U.S. nationals. Previous cases illustrate that plans maintained outside the U.S. for non-U.S. citizens may fall under ERISA's foreign plan exemption, complicating the assessment of ERISA's reach. The legal discourse highlights ongoing challenges in interpreting ERISA’s applicability beyond U.S. borders, particularly in cases involving foreign employees.

Reliance contends that the Supreme Court has broadened ERISA coverage to include individuals not typically covered by the statute when the plan itself falls under ERISA's governance. They reference the case of Yates, which determined that a working owner of a business qualifies as a 'participant' in a pension plan under ERISA, allowing for claims under the statute. However, the interpretation of Yates by Reliance is criticized for overstating the decision's implications regarding ERISA's uniformity and suggesting a willingness to extend coverage beyond its intended scope. Excluding working owners from ERISA would create administrative complexities and contradict the goal of national uniformity. The primary focus of the Yates decision was on statutory context, emphasizing that ERISA's language indicates Congress's intent for working owners to be considered plan participants. Additionally, this case does not pertain to foreign nationals working outside the U.S. or the extraterritorial doctrine reaffirmed by the Supreme Court.