Cheung De Wong v. Laurine Lu Cheng, Altice USA, Inc.

Background

Yuet Ngor Cheung De Wong sued Laurine Lu Cheng and Altice USA, Inc. in New York state court. Wong alleged that her son participated in Altice’s employee-benefits plan, which provided life-insurance death benefits through The Lincoln National Life Insurance Company. In September 2021, her son named Wong and Cheng as equal beneficiaries. The complaint stated that he later removed Wong as a beneficiary, increased Cheng’s share to 80%, named another person for the remaining 20%, and eventually named Cheng as the sole beneficiary. After the son died in March 2023, the insurer paid the entire death benefit to Cheng.

Wong’s state-court complaint asserted conversion and unjust enrichment claims against Cheng, breach-of-contract claims against Altice and Lincoln, and a request for a declaration that Wong was entitled to 50% of the death benefit. Altice removed the case to federal court and filed a motion to dismiss for failure to state a claim. Wong later voluntarily dismissed Lincoln. She also sought default judgment against Cheng, but the court denied that request because the damages were not for a specific, certain amount. Cheng subsequently appeared and filed an answer and counterclaim for legal fees and costs.

Jurisdictional Issue

The court first addressed subject-matter jurisdiction, meaning its legal authority to hear the case. A defendant may remove a state-court case only when the federal court would have original jurisdiction. One possible basis is federal-question jurisdiction. Ordinarily, that question is determined from the plaintiff’s complaint, but a federal statute can completely preempt certain state-law claims, making them federal claims for removal purposes.

The court explained that the Supreme Court has held that claims within Section 502(a) of the Employee Retirement Income Security Act, or ERISA, are completely preempted and may be removed to federal court. The court therefore considered whether Wong was someone who could have sued under ERISA Section 502(a)(1)(B), which permits plan participants and beneficiaries to seek plan benefits.

Court’s Analysis

The court concluded that Wong lacked standing under ERISA. ERISA defines a beneficiary as a person designated by a plan participant or by the plan terms who is or may become entitled to benefits. Although Wong had once been named as a 50% beneficiary, the complaint admitted that her son later removed her and named Cheng as the sole beneficiary. The complaint also stated that the death benefit was paid entirely to Cheng.

Wong alleged that Cheng had used undue influence to cause the beneficiary change. The court nevertheless found that Wong had not alleged facts showing that Altice’s limited involvement in the change amounted to an ERISA violation. The court stated that whether Altice acted improperly concerned the merits of the dispute, which it could address only after determining that Wong had standing to sue under ERISA. Because Wong was not a beneficiary when her son died, she lacked ERISA standing, and her state-law claims were not completely preempted.

Disposition

The court concluded that it lacked federal-question jurisdiction. It also found no other apparent basis for original federal jurisdiction and declined to exercise supplemental jurisdiction over the remaining state-law claims. Supplemental jurisdiction is a federal court’s authority to hear related state-law claims after the federal basis for the case is unavailable.

The court directed the clerk to terminate Altice’s pending motion and remanded the action to the Supreme Court of the State of New York, County of New York. Because the court lacked subject-matter jurisdiction, it did not decide Wong’s letter motion asking for reconsideration of the denial of default judgment against Cheng. The opinion did not decide whether Wong was entitled to any portion of the death benefit or whether any defendant was liable on the state-law claims.