Townes Telecomms., Inc. v. Nat'l Telecomms. Coop. Ass'n

391 F. Supp. 3d 585
CourtDistrict Court, E.D. Virginia
DecidedJuly 9, 2019
DocketCivil No. 1:19-cv-436
StatusPublished
Cited by4 cases

This text of 391 F. Supp. 3d 585 (Townes Telecomms., Inc. v. Nat'l Telecomms. Coop. Ass'n) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Townes Telecomms., Inc. v. Nat'l Telecomms. Coop. Ass'n, 391 F. Supp. 3d 585 (E.D. Va. 2019).

Opinion

T. S. Ellis, III, United States District Judge

This removed action is a dispute over whether plaintiffs-seven employers seeking to withdraw from a pension plan-must pay a multi-million-dollar withdrawal liability to defendants-the trade association that offers the plan and the plan *588trustee. Plaintiffs object to defendants' imposition and calculation of the withdrawal liability. To vindicate their view, plaintiffs filed suit in Virginia state court, claiming that defendants' imposition and calculation of withdrawal liability violate Virginia law. Defendants then removed this case to federal court on the ground that plaintiffs' state law claims involve an important, disputed federal question.

At issue now is plaintiffs' Motion to Remand the case to state court. For the reasons that follow, the motion must be denied; plaintiffs' state law claims require adjudication of a federal issue that is necessarily raised, actually disputed, substantial, and capable of resolution in federal court without disrupting the federal-state balance.

I.

According to the Complaint, plaintiffs are seven telecommunications companies1 that are members of the National Telecommunications Cooperative Association ("NTCA"), a trade association that represents approximately 800 independent telecommunications companies operating in rural areas of the United States. The NTCA offers its members access to a multiple employer pension plan ("the Plan"), and plaintiffs have elected to participate in the Plan for the benefit of their employees. Defendant NTCA Retirement and Security/Savings Plan Trustee Committee ("NTCA Committee") serves as the plan fiduciary. Importantly, the Plan is governed by the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq.

Plaintiffs seek to withdraw from the Plan and transfer their employees' pension funds to a different plan because they contend the Plan has become increasingly costly. The NTCA informed plaintiffs that if they withdraw from the Plan, they must pay approximately $10 million in withdrawal liability. Defendants contend that the imposition of this withdrawal liability is authorized-indeed, mandated-by the document establishing the Plan, which is entitled "Specifications of the Retirement and Security Program for Employees of NTCA [a]nd Its Members" ("Program Specifications").

Plaintiffs disagree with this contention. According to plaintiffs, contract provisions that violate a state or federal statute are unenforceable under Virginia law. See, e.g., Blick v. Marks, Stokes & Harrison , 234 Va. 60, 360 S.E.2d 345, 348 (1987) ("Generally, a contract based on an act forbidden by [state] statute is void and no action will lie to enforce the contract."). Plaintiffs further contend that the provisions of the Program Specifications authorizing the imposition of withdrawal liability violate ERISA. This, plaintiffs argue, is because ERISA permits the imposition of withdrawal liability on employers participating in multiemployer plans, but contains no such authorization with respect to multiple employer plans.2 Plaintiffs also contend that defendants' method for calculating the withdrawal liability violates ERISA. As such, plaintiffs allege that both *589defendants' planned imposition of withdrawal liability and method of calculating that liability are invalid and unenforceable under Virginia law because they are contrary to ERISA. Accordingly, plaintiffs brought this action in the Circuit Court for Arlington County, Virginia, seeking a declaration that defendants are barred from imposing withdrawal liability and, alternatively, a declaration that defendants are barred from calculating the withdrawal liability as they propose.

Defendants subsequently removed the action to federal court, alleging that both federal question and diversity jurisdiction supported removal. Defendants have since abandoned their diversity jurisdiction argument and now proceed solely on the theory that jurisdiction exists pursuant to 28 U.S.C. § 1331. In this regard, defendants' Notice of Removal alleges that the "action is properly removed ... because it arises under federal law by alleging as an essential element of the claims a violation of federal law." Notice of Removal ¶ 12. Specifically, defendants argue that jurisdiction exists because plaintiffs' state law claims necessarily raise the disputed and substantial federal issue whether the imposition of withdrawal liability or the method used to calculate that liability violates ERISA.3

II.

Section 1441 of Title 28 of the United States Code provides for the removal of "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." As such, removal is proper where the state court action could have been initiated in federal district court. Merrell Dow Pharm. Inc. v. Thompson , 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986). Congress has granted "[t]he district courts ... original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Ordinarily, an action "arises under" federal law within the meaning of § 1331 when federal law creates the cause of action. Gunn v. Minton , 568 U.S. 251, 257, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013). But this is not the only circumstance in which a claim may "arise under" federal law. Specifically, " § 1331 confers federal jurisdiction over state-law causes of action ... in a special and small class of cases." Burrell v.

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Bluebook (online)
391 F. Supp. 3d 585, Counsel Stack Legal Research, https://law.counselstack.com/opinion/townes-telecomms-inc-v-natl-telecomms-coop-assn-vaed-2019.