ERISA Removal Is No Longer Automatic

The first thing disability insurance companies do when hit with a claim in a state court that even mentions ERISA is to move it over into Federal District Court. It’s an almost knee-jerk reaction, no matter what the cause of action, because insurers seem to feel more comfortable in a federal court.

This feeling may be because a lot of plaintiff’s attorneys practice mostly in state courts and are unfamiliar with the practice and procedure in federal jurisdictions. Or, it may be that insurers get a warm and fuzzy feeling in federal courts because ERISA usually gives them a “deference” leg up in an ERISA matter.

Whatever the reason, automatic removal of such cases in the 2nd Circuit will no longer be a slam dunk after Stevenson v. The Bank of New York Company, Inc., . In Stevenson, the Federal District Court sent a case removed from the state court back to the state because the complaint did not make a claim about ERISA and its standards, or the conduct of any ERISA functionaries in their ERISA capacities.

In Stevenson, plaintiff sued Bank of New York because he alleged certain promises were made to him that if he worked abroad for the bank, his rights under certain ERISA plans would be maintained, and he would suffer no loss under those plans as a result of working abroad. His suit sounded in contract and tort law, having nothing to do with the interpretation of ERISA or his rights under ERISA.

Yet, the Bank of New York was able to remove the case from state to federal court, purportedly on the basis of ERISA jurisdiction, and further, to get the District Court to dismiss the complaint.

Holding that the claims in the complaint are neutral toward ERISA plans and that mention of ERISA in the complaint was just used to describe the underlying consideration for the contract, the 2nd Circuit remanded the case back to the District Court, with directions to remand the case back to the state courts for further proceedings.

So from now on, at least in New York, Connecticut and Vermont, insurers will have to do more than show that a complaint just mentions ERISA to get a removal into their warm and fuzzy place – the Federal District Court.