:: Discovery Responses Do Not Support Removal & ERISA Preemption

In the case at bar, Plaintiff is no longer  a participant in Defendant’s ERISA plan and he does not allege a wrongful withholding of benefits.  . . . Plaintiff does not claim that Defendant promised him continued participation in an ERISA plan. Plaintiff stated at his deposition that he thought that Defendant was at least partially motivated to fire him in order to avoid paying him higher pension benefits, which he would have accrued had he continued to work for Defendant.  However, Plaintiff’s statement does not automatically give rise to ERISA preemption.

Black v. Lear, 2008 U.S. Dist. LEXIS 86985 ( E.D. Mich. Oct. 28, 2008)

Plaintiffs walk a fine line when asserting claims under the ADA and state wrongful discharge laws.  This recent district court opinion exemplifies a successful avoidance of ERISA preemption, but not without the trouble of removal and remand.

The problem lies in the natural consequence of termination.  Aside from loss of wages and compensation benefits, the plaitntiff will lose participation in employee benefit plans.  If that becomes an important aspect of the case, the defendant should remove the case as more properly stating an ERISA Section 510 claim.

The trade is not an even one.   ERISA will preempt state law claims while offering in return a weapon with less range, less punch and prone to frequent operator error.

The Snare Is Laid

The motion practice associated with removal of claims offers a journey through one of the last remaining wilderness preserves where trial by ambush may be robustly pursued.  The stakes are high on either side.  If the defendant does not remove within 30 days, the right is lost.  If the plaintiff inadvertently triggers removal, then the complaint is restated as a set of ERISA claims which, as noted above, have inherent limitations.

In this instance, the parties began stalking the issue in depositions.

On July 24, 2008, Defendant deposed Plaintiff. (Def.’s Br. 1). During the deposition Defendant asked Plaintiff whether he claimed that Defendant terminated him to avoid paying him higher pension benefits. (Black Dep. 94-95). Plaintiff answered: “Seems reasonable, yes, to assume that. I don’t know why Lear terminated me. I worked 35 years for the company.” (Id. at 95).

When Defendant asked Plaintiff a second time whether he claimed that he was fired to prevent him from earning higher pension benefits, Plaintiff responded, “That’s right.” (Id.at 98). Defendant followed up by asking Plaintiff if he knew of any facts that support his claim. (Id.) Plaintiff answered, “The only fact I know is that I’m not working there anymore.” Defendant pressed Plaintiff for other facts and Plaintiff said, “And I won’t accrue those benefits.”

In addition, the defendant developed the issue somewhat further by a set of requests for admissions directed a eliciting admissions as to the nature of claims asserted:

The second request asked Plaintiff to admit whether he alleges that Defendant intentionally terminated his employment with the purpose to deprive him of benefits under the Lear Corporation Pension Plan. (Id.) Plaintiff responded: “Denied, such may or may not have been the sole basis. The Complaint alleges multiple basis [sic] for Plaintiff’s termination.” (Id.)

The Claims Evaluated

The defendant having acquired all that could be adduced on the issue, then turned to federal court for an assessment of the results. The plaintiff filed a motion to remand.  The issue was then joined on whether the plaintiff had, in effect, plead an ERISA Section 510 claim.

The district court framed the issue with reference to the key Supreme Court opinion –

In Metropolitan Life Insurance, the United States Supreme Court held that ERISA preempts state common law claims when the action is to recover benefits, enforce rights, or clarify future benefits under an ERISA plan. 481 U.S. at 63-64.

– and then dialed in the applicable Sixth Circuit authority:

In accordance  with Metropolitan Life Insurance, the Sixth Circuit held in Peters v. Lincoln Electric Company, 285 F.3d 456, 467 (2002), that ERISA completely preempted the plaintiff’s state law breach of promise claim because the plaintiff asserted that the defendant breached a promise to continue his participation in an ERISA regulated benefit plan. In Peters, the plaintiff filed a complaint against his former employer alleging age discrimination, breach of contract, detrimental reliance and breach of public policy. Id. at 464.

During the plaintiff’s deposition, the defendant asked the plaintiff a series of questions designed to uncover the specific “unbroken promises” for which the plaintiff sought relief. Id. The plaintiff testified that one of the promises he sued to enforce was the defendant’s promise to continue his participation in its supplemental executive pension plan. Id. at 466.

The Facts Differ

The district court found the Peters case distinguishable.  In the court’s view, the plaintiff had avoided the preemption trip wire and thus was entitled to return to state court.

In the case at bar, Plaintiff is no longer a participant in Defendant’s ERISA plan and he does not allege a wrongful withholding of benefits. See Sears, 884 F.Supp. at 1131-32. Moreover, unlike in Peters, Plaintiff does not claim that Defendant promised him continued participation in an ERISA plan. 285 F.3d at 468. Plaintiff stated at his deposition that he thought that Defendant was at least partially motivated to fire him in order to avoid paying him higher pension benefits, which he would have accrued had he continued to work for Defendant. (Black’s Dep. 95, 98).

However, Plaintiff’s statement does not automatically give rise to ERISA preemption. Plaintiff’s wrongful discharge and age discrimination claims may give rise to an award of damages based on the value of the increased pension benefits Plaintiff would have received if he was not terminated, but he is only seeking the value of the employment he lost, not the benefits themselves. See Morningstar, 662 F.Supp. at 557. The gravamen of Plaintiff’s complaint is his claim that he was discharged in violation of his employment contract, against public policy and as a result of age discrimination. Plaintiff assures the Court that he is not asserting a purposeful deprivation  of benefits claim. (Plaintiff’s Br. 4).

Because the essence of Plaintiff’s state law claims are not for the recovery of an ERISA plan benefit, and Plaintiff only seeks to recovery the value of the benefits he lost as a consequence of his termination, there is no ERISA cause of action. Defendant, therefore, has failed to show that subject matter jurisdiction lies with this Court, and this matter must be remanded to the Wayne County Circuit Court.

Note: The case gives a good discussion of the line of demarcation.  The issue turns on the facts, so analogy to caselaw can be difficult.  This excerpt probably offers the most important guidance that may be gleaned from the opinion and, for that reason, I’ll quote the entire passage:

Both the Sixth Circuit and courts in the Eastern District of Michigan have held that a plaintiff’s state sex, age and race employment discrimination claims are not preempted when the action is merely peripherally related to the ERISA plan in question. See Wright, 262 F.3d at 613 (”‘[e]ven if an action refers to a plan, . . . the action will not relate to the plan for preemption purposes when the action only peripherally affects the plan.” (quoting Crabbs v. Copperweld Tubing Products Company, 114 F.3d 85 (6th Cir. 1997)); Yageman v. Vista Maria, Sisters of the Good Shepherd, 767 F.Supp. 144, 145 (E.D. Mich. 1991)  (Duggan, J.) (holding that plaintiff’s loss of pension benefits was a mere consequence of, and not a motivating factor behind, his termination and, therefore, no ERISA action existed); Sears v. Chrysler Corp., 884 F.Supp. 1125, 1131-32 (E.D. Mich. 1995) (Rosen, J.) (holding that a former employee, who sought to recover the value of the benefits she would have received under the ERISA plan, is not a plan participant and cannot state a § 1132(a)(1)(B) ERISA claim); Morningstar v. Meijer, Inc., 662 F.Supp. 555, 556-57 (E.D. Mich. 1987) (Churchill, J.) (concluding that the plaintiff’s state law claim for breach of employment contract was not preempted when the plaintiff was not a plan participant, did not allege that the defendant fired her to prevent her benefits from vesting, to keep her from exercising rights under the plan or for any other improper purpose, and only sought to recover the value of the benefits).

Thus, in instances where a plaintiff is not a plan participant and is not alleging a wrongful withholding of benefits but seeks damages for the loss of ERISA benefits, an ERISA cause of action does not exist, and removal is improper.