Fang v. Wells Fargo & Company

Background

Lei Fang filed a small-claims action against Wells Fargo & Company in the Superior Court for the County of Contra Costa on June 25, 2025. Fang alleged that Wells Fargo, through its Retirement Service Center, gave him incorrect information about health-insurance premiums and eligibility during a qualifying life event. He alleged that he received premium quotes in March 2025 and resigned from his job based on that information. He claimed that the resulting long-term loss would exceed $136,800 over 12 years, but sought $12,500 in damages.

Wells Fargo removed the case to federal court on July 29, 2025. It argued that Fang’s lawsuit arose from a retiree plan governed by the Employee Retirement Income Security Act of 1974, or ERISA. Wells Fargo then moved to dismiss, arguing that Fang lacked standing to sue under ERISA because he was neither a plan participant nor a beneficiary. Fang moved to remand, arguing that his claim was not completely preempted by ERISA and that the federal court therefore lacked jurisdiction.

Legal Standards

The court explained that a state-court case may be removed only if a federal district court could have exercised jurisdiction over it had it originally been filed there. The party seeking removal bears the burden of establishing federal jurisdiction, and doubts are resolved against removal.

Ordinary ERISA conflict preemption is a defense to a claim and does not create federal jurisdiction. Complete preemption under ERISA Section 502(a), by contrast, can create federal jurisdiction because it can convert a state-law claim into a federal claim. Under the two-part test from Aetna Health Inc. v. Davila, complete preemption requires both that the plaintiff could have brought the claim under ERISA Section 502(a)(1)(B) and that no independent legal duty is implicated by the defendant’s conduct.

Only participants, beneficiaries, and plan fiduciaries may bring claims under the ERISA provision at issue. An ERISA participant may include certain current or former employees with a reasonable expectation of returning to covered employment or a colorable claim to vested benefits. A beneficiary is a person designated by a participant or by the plan who is or may become entitled to plan benefits.

Court’s Analysis

The court focused on the first part of the Davila test: whether Fang could have brought his claim under ERISA Section 502(a). Wells Fargo argued, and Fang did not dispute, that Fang was not a participant or beneficiary under the plan. The parties’ filings also stated that Fang’s connection to Wells Fargo was through his spouse, who was a retired Wells Fargo employee, and that the spouse was not a participant.

Because Fang was not authorized to sue under ERISA Section 502(a), the court held that Wells Fargo had not shown that Fang’s claim was completely preempted. The court did not address the second part of the Davila test because both parts were required. The court also determined that Wells Fargo’s reliance on conflict preemption did not establish federal removal jurisdiction.

Disposition

The court held that it lacked jurisdiction over the suit and granted Fang’s motion to remand. It remanded the action to the Contra Costa Superior Court.

Because the federal court lacked jurisdiction, it did not address the substance of Wells Fargo’s motion to dismiss. The court denied that motion without prejudice to Wells Fargo asserting its ERISA conflict-preemption arguments in state court. The clerk was directed to transfer the file.