Supreme Court, Suffolk County, November 17, 2020

Jackson Lewis P.C., Melville, for defendants.

Silverman Acampora LLP, Jericho, for plaintiff.

It is^[FN1] 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, and 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 health care insurance premiums from JFL's weekly salary contrary to the terms of{**70 Misc 3d at 552} JFL's contract with Michbi violated Labor Law § 193, and that pursuant to Business Corporation Law § 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^[FN2] the second cause of action on the ground that it is preempted by section 514 (a) of [*2]title I of the Employee Retirement Income Security Act of 1974 (ERISA) (29 USC § 1001 et seq.; 29 USC § 1144 [a]).

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 US Healthcare HMO, 93 NY2d 209, 217 [1999], quoting New York State Conference of Blue Cross & Blue Shield Plans v Travelers Ins. Co., 514 US 645, 654-655 [1995]). 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 section 1003 (a) of this title and not exempt under section 1003 (b)" (29 USC § 1144 [a]). "[A] law {**70 Misc 3d at 553}'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. v Coyne, 482 US 1, 8 [1987], quoting Shaw v Delta Air Lines, Inc., 463 US 85, 96-97 [1983]). An action is not preempted where the action's outcome will not affect the terms of an ERISA plan (see Nealy v US Healthcare HMO, 93 NY2d 209 [1999]; see e.g. Oxford Health Plans [NY] v BetterCare Health Care Pain Mgt. & Rehab, 305 AD2d 223 [1st Dept 2003], citing Danca v Private Health Care Sys., Inc., 185 F3d 1, 5 [1st Cir 1999]; Tufino v New York Hotel & Motel Trades Council & Hotel Assns. of N.Y. City AFL-CIO Local 6, 223 AD2d 245 [1st Dept 1996]).

Although ERISA's preemption provisions are "expansive" (Arditi v Lighthouse Intl., 676 F3d 294, 299 [2d Cir 2012], quoting Aetna Health Inc. v Davila, 542 US 200, 208 [2004]), 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., 790 Fed Appx at 255.)

Noting that, as in Stevenson v Bank of N.Y. Co., Inc. (609 F3d 56 [2d Cir 2010]), the Abernethy plaintiffs' "claims derive[d] from a separate promise to confer a benefit to which they were not otherwise entitled" (Abernethy v EmblemHealth, Inc., 790 Fed Appx at 255), the federal Court of Appeals held that the District Court, in dismissing the Abernethy plaintiffs' claims as preempted, had{**70 Misc 3d at 554}

"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 Abernethy 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 Intl., 676 F3d at 300.)

Accordingly, the Court of Appeals, although affirming the District Court's dismissal of the Abernethy 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. at 255)—disagreed with the District Court's determination that their contractual claims were preempted by ERISA.^[FN3]

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., 2012 WL 4068576, *2, 2012 US Dist LEXIS 132528, *6 [SD NY, Sept. 17, 2012, No. 12 Civ. 0881(LTS)], quoting Montefiore Med. Ctr. v Teamsters Local 272, 642 F3d 321, 328 [2d Cir 2011]; see Aetna Health Inc. v Davila, 542 US at 210). Nor can it be said, without more, that the making or enforcement of such an{**70 Misc 3d at 555} 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., plaintiff's claims here "are not grounded upon 'obligations under the Plan'; they are instead derived from a separate promise in the employment[*3]. . . 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 Intl., 676 F3d 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.