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Anthony LAUTO in his capacity as the Executor of the Estate of Joseph F. Lauto, Plaintiff, v. MICHBI DOORS, INC. and Michele Bianculli, Defendants.
It is 1 ORDERED that defendants' motion to dismiss the second cause of action of the complaint herein is DENIED.
This action arises out of an alleged breach of an employment agreement. Joseph F. Lauto (JFL) was employed by defendant Michbi Doors, Inc. (Michbi) from May 2008 to February 2, 2019. On January 8, 2013, defendant Michele Bianculli executed an employment agreement with JFL on behalf of Michbi in which it was agreed, inter alia, that Michbi would pay the premiums for health and dental insurance coverage for JFL and his wife for the term of the contract, which was for a six-year period beginning January 8, 2013. From January 8, 2013 until September 29, 2014, Michbi paid the health insurance premiums for JFL and his family as called for by the agreement. On September 30, 2014, despite acknowledging its continuing duty to pay the premiums for health and dental insurance coverage for JFL and his wife, Michbi began withdrawing funds from JFL's weekly salary to cover the premiums for health and dental insurance, and it continued to do so until November 4, 2014, when JFL determined that Michbi had no intention of honoring its agreement to pay the premiums and its further promise to repay all amounts so deducted from his salary, JFL enrolled in Medicare. JFL died in early 2019. On December 18, 2019, plaintiff, the Executor of JFL's estate, commenced the current action, asserting two causes of action. The first cause of action alleges a claim for breach of contract against Michbi; the second cause of action, which is asserted against both defendants, alleges that the deduction of healthcare insurance premiums from JFL's weekly salary contrary to the terms of JFL's contract with Michbi violated New York Labor Law § 193, and that pursuant to BCL § 630(a), the defendants are jointly and severally liable for, among other things, the contra-contractual deductions and an equivalent amount in liquidated damages. Defendants now move to dismiss 2 the second cause of action on the ground that it is preempted by Section 514[a] of Title I of the Employee Retirement Income Security Act, 29 USC § 1001, et seq. (ERISA).
In support of their motion, defendants proffer, inter alia, the summons and verified complaint and two Opinion Letters from the Wage and Hour Division of the U.S. Department of Labor dated, respectively, July 14, 1994 and February 8, 2008. They contend that the propriety, vel non, of an employer's process for collecting health insurance premiums is governed exclusively by ERISA and that, therefore, plaintiff's second cause of action is preempted. In opposition, plaintiff argues that his Labor Law § 193 cause of action stems from the terms of his January 8, 2013 contract and does not, as such, implicate, affect or otherwise relate to an ERISA plan.
Preemption of state law by federal law will not lightly be assumed, for, as the Court of Appeals has written, “there is a presumption that Congress does not intend to supplant State law, and a claim traditionally within the domain of State law will not be superseded by Federal law ‘ “unless that was the clear and manifest purpose of Congress” ’ (Nealy v. U.S. Healthcare HMO, 93 N.Y.2d 209, 217, 689 N.Y.S.2d 406, 711 N.E.2d 621 , quoting New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654-655, 115 S.Ct. 1671, 131 L.Ed.2d 695 ). Section 514[a] of ERISA provides that ERISA “shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan described in § 1003[a] of this title and not excepted under § 1003[b]” (29 USCA § 1144). “[A] law ‘relates to’ an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan” (Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 8, 107 S.Ct. 2211, 96 L.Ed.2d 1 , quoting Shaw v. Delta Airlines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 77 L.Ed.2d 490 ). An action is not preempted where the action's outcome will not affect the terms of an ERISA plan (see Nealy v. U.S. Healthcare HMO, 93 N.Y.2d 209, 689 N.Y.S.2d 406, 711 N.E.2d 621 ; see e.g. Oxford Health Plans (N.Y.), Inc. v. Better Care Health Care Pain Mgt. & Rehab, 305 A.D.2d 223, 762 N.Y.S.2d 344 [1st Dept. 2003], citing Danca v. Private Health Care Sys., 185 F.3d 1, 5 [1st Cir.1999]; Tufino v. New York Hotel and Motel Trades Council and Hotel Associations of the New York City AFL-CIO Local 6, 223 A.D.2d 245, 646 N.Y.S.2d 799 [1st Dept. 1996]).
Although ERISA's preemption provisions are “expansive” (Arditi v. Lighthouse Int'l, 676 F.3d 294, 299 [2d Cir. 2012] (quoting Aetna Health Inc. v. Davila, 542 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 ), they are not without limit. Thus, in Abernethy v. EmblemHealth, Inc., 790 Fed Appx 250 [2d Cir. 2019][summary order], the Second Circuit Court of Appeals held that the plaintiffs, retired officers of the defendants, who contended that they were entitled under their separation agreements with the defendants to the same health insurance plan benefits as the defendants' active officers and that those benefits could not be unilaterally changed by the defendants, were not precluded by ERISA from prosecuting their state-law contract claims:
Under the Supreme Court's two-part test as set forth in Davila, ERISA preempts a cause of action if (1) “an individual, at some point in time, could have brought his claim under ERISA § 502(a)(1)(B);” and (2) “no other independent legal duty ․ is implicated by a defendant's actions.” Davila, 542 U.S. at 210, 124 S.Ct. 2488; see also Arditi, 676 F.3d at 299. Here, the contractual claims are not preempted because they derive from an independent legal duty—a contractual right to parity with EmblemHealth's active officers—as opposed to a particular benefit plan.
(Abernethy v. EmblemHealth, Inc., supra, 790 Fed. Appx. at 255.) Noting that, as in Stevenson v. Bank of New York Co., 609 F.3d 56 [2d Cir. 2010], the Abernathy plaintiffs' “claims derive[d] from a separate promise to confer a benefit to which they were not otherwise entitled” (id.), the federal Court of Appeals held that the District Court, in dismissing the Abernathy plaintiffs' claims as preempted, had incorrectly reasoned that “the parties' obligations under the Plan are ‘inextricably intertwined with the interpretation of Plan coverage and benefits.’ ” ․ (quoting Arditi, 676 F.3d at 299). As discussed above, the contractual claims are not grounded upon “obligations under the Plan”; they are instead derived from a separate promise in the employment and separation agreements. Accordingly, “[w]hatever rights [the Abernathy plaintiffs'] had arose not from the [benefit] plan, but from the independent agreement[s] that gave [them] benefits even though [they] had no right to them under the plan.”
(Id. at 256, quoting Arditi v. Lighthouse Int'l, supra, 676 F.3d at 300.) Accordingly, the Court of Appeals, although affirming the District Court's dismissal of the Abernathy plaintiffs' ERISA and breach of fiduciary duty claims — because those plaintiffs had “identified no language in the employment agreements, separation agreements, or applicable SPDs that is reasonably capable of being interpreted as promising vested benefits” (id., 790 Fed. Appx. at 255) — it disagreed with the District Court's determination that their contractual claims were preempted by ERISA 3 .
Here, defendants point to no provision of ERISA that prohibits an employer from contractually undertaking to pay all of an employee's health insurance costs or that precludes the contracting employee - or his estate - from bringing suit against an employer to enforce that obligation or to recover damages for the employer's breach of its undertaking. No less important, there is no suggestion here by the defendants that “ ‘the actual claim that the plaintiff asserts can be construed as a colorable claim for benefits pursuant to § 502(a)(1)(B)’ ” of ERISA (Barton v. Martha Stewart Living Omnimedia, Inc., 54 Employee Benefits Cas 2090, 2012 WL 4068576 [S.D.N.Y. Sept. 17, 2012], quoting Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 328 [2d Cir.2011]; see Aetna Health Inc. v. Davila, supra, 542 U.S. at 210, 124 S.Ct. 2488). Nor can it be said, without more, that the making or enforcement of such an undertaking affects the terms or administration of Michbi's health care plan. Thus, the defendants' reliance upon the July 14, 1994 and February 8, 2008 opinion letters is misplaced, as is their assertion that plaintiff's decedent's remedy for defendants' breach of their agreement was to “stop participating in the insurance plans or make a claim under the insurance plan's dispute resolution procedures to recover the premiums.” Plaintiff's dispute is not with the health insurance plan; it is with defendants, who, he claims, breached their agreement to pay for health insurance coverage for plaintiff's decedent and for plaintiff's decedent's wife, as a consequence of which, plaintiff claims, the decedent was forced to bear those costs himself, including, ultimately, the cost of participating in Medicare. Thus, as in Abernethy v. EmblemHealth, Inc., supra, plaintiff's claims here “are not grounded upon ‘obligations under the Plan’; they are instead derived from a separate promise in the employment ․ agreement[ ]. Accordingly, ‘[w]hatever rights [plaintiff's decedent] had arose not from the [benefit] plan, but from the independent agreement[ ] that gave [him] benefits’ ” — that is, fully employer-paid health insurance coverage for himself and his wife — “ ‘even though [he] had no right to them under the plan’ ” (790 Fed. Appx. at 256, quoting Arditi v. Lighthouse Int'l, supra, 676 F.3d at 300). Plaintiff's invocation of Labor Law § 193 to augment the enforcement of that contractual right cannot be said to trench upon any interest within the preemptive ambit of ERISA.
The court has considered the remaining contentions of the parties and finds that they do not require further discussion.
Accordingly, and for all of the foregoing reasons, the defendants' motion is denied.
The foregoing constitutes the decision and order of the court.
1. By separate cover, defendants electronically filed a Decision and Order dated July 28, 2020 in the case of Anthony Lauto v. Michbi Doors, Inc. and Michele Bianculli, Index No. 624560/2019, in which the defendants' motion for similar relief was granted. Although the defendants named in this action and in Index No. 624560/2019 are the same, the facts are not, Anthony Lauto brought that action in his personal capacity, whereas he brings the current action solely as personal representative of JFL's estate. Hence, the Decision and Order in Index No. 624560/2019 is not per se binding in this action (see People v. Evans, 94 N.Y.2d 499, 706 N.Y.S.2d 678, 727 N.E.2d 1232 ; McGrath v. Gold, 36 N.Y.2d 406, 369 N.Y.S.2d 62, 330 N.E.2d 35 ).
2. Presumably, defendants intend that their motion be considered pursuant to CPLR 3211(a), although they cite only to federal substantive law in their notice of motion. Absent a showing of prejudice to the non-moving party, however, there is “no requirement that a movant identify a specific statute or rule in the notice of motion, only that the notice “specify ․ the relief demanded and the grounds therefor’ (CPLR 2214[a])” (Matter of Blauman-Spindler v. Blauman, 68 A.D.3d 1105, 1106, 892 N.Y.S.2d 143 [2d Dept. 2009]), and even then — again, in the absence of a showing of prejudice to the non-moving party — a movant's “failure to state the ground in the notice of motion should be disregarded as a technical deficiency in the interests of justice and expediency” (Matter of LiMandri, 171 A.D.2d 747, 567 N.Y.S.2d 303 [2d Dept. 1991]).
3. Although the defendants here cite the District Court's decision for it's dismissal of the Abernathy plaintiffs' claim under Labor Law § 193, the Court of Appeals did not address that question, which was not brought up on appeal, except to state that “the claim for violations of New York Labor Law § 193 failed because Appellants” — who were retirees when their claims arose — “were no longer employees of [defendant] EmblemHealth” (790 Fed. Appx. at 252 and fn. 3); i.e., they were not receiving wages, and, therefore, they could state no claim under Labor Law § 193 for improper wage deductions.
Sanford Neil Berland, J.
Response sent, thank you
Docket No: 624563/2019
Decided: November 17, 2020
Court: Supreme Court, Suffolk County, New York.
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