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. e du/thir dc ir c uit_2000/69Filed March 28, 2000

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 99-5022

JAMES W. WOOD

v.

PRUDENTIAL INSURANCE COMPANY OF AMERICA

(D.C. Civil No. 98-cv-02383)

JAMES W. WOOD; KAREN WOOD, individually and as Guardians of MATTHEW WOOD, incompetent

v.

PRUDENTIAL INSURANCE COMPANY OF AMERICA

(D.C. Civil No. 98-cv-02487)

James Wood; Karen Wood, individually and as guardia ns of Matthew Wood, incompetent

Appellants

On appeal from Orders entered in the
United States District Court for the District of New Jersey (D.C. Civil Action Nos. 98-2383 and 98-2487) (Consolidated Cases) Chief District Judge: Honorable Anne E. Thompson

Argued: November 16, 1999

Before: ALITO AND STAPLETON, Circuit Judges, and FEIKENS, District Judge.

(Filed: March 28, 2000)

G. Martin Meyers (argued) Law Offices of G. Martin Meyers,

P.C.
35 West Main Street
Suite 106 Denville, New Jersey 07834 Attorney for AppellantsDon A. Innamorato

Stephanie Wilson Reed Smith Shaw & McClay LLP 136 Main Street, Suite 250 Princeton, New Jersey 08543-7839

and
David Bennet Ross Peter A. Walker (argued)
Mara-Louise Anzalone Seyfarth, Shaw, Fairweather &

Geraldson
1270 Avenue of the Americas
Suite 2500 New York, New York 10020-1801 Attorneys for Appellee

OPINION OF THE COURT

FEIKENS, District Judge:

I. Background

In 1998, Appellant James Wood ("Wood") filed suit i n a New Jersey state court against his former employer, The Prudential Insurance Company of America ("Prudentia l"). In his complaint, Wood pleaded four counts against Prudential: discrimination based on a New Jersey st atute1;

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1. New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq.

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defamation; outrage; and discrimination based on th e New Jersey constitution2. Wood alleged that Prudential discriminated against him by terminating his employ ment to avoid paying benefits3 to him and his dependents . In this state suit, Wood sought, inter alia, compensatory d amages, damages for humiliation, pain and suffering, and pu nitive damages. Prudential removed the suit to the U.S. Di strict Court of New Jersey asserting that the Employee Retirement Insurance Security Act of 1974 ("ERISA") , 29 U.S.C. S 1001 et seq., completely preempted both Wo od's
claim of discrimination under the state statute and his
claim of discrimination under the state constitutio n. In denying Wood's motion to remand the suit to state c ourt,
the United States District Court held that ERISA co mpletely preempted those two claims. The court took suppleme ntal jurisdiction over the claims of defamation and outr age and construed the claim of outrage as a claim of intent ional
infliction of emotional distress.

Wood and his wife, Karen Wood, individually and onbehalf of their son, Matthew Wood, then filed suit later in

1998 in the U.S. District Court of New Jersey alleg ing that Prudential's termination of Wood's employment viola ted ERISA and, since Matthew Wood was disabled, that it violated the Americans with Disabilities Act ("ADA" ). For his ERISA claim, Wood sought equitable relief and, for his ADA claim, Wood sought compensatory and other damages. The District Court dismissed the ADA claim, consolidate d the two cases, and granted Prudential's motion to submi t all
claims to arbitration.

II. Issues

Several questions are presented to us on appeal:

1) Is complete preemption of a state claim t hat is subject to Section 510 of ERISA warranted ev en if the state claim prays for relief arguably not pr ovided for in Section 502(a) of ERISA?

___________________________________________________ ______________

2. New Jersey Constitution of 1947, Art. 1, P 1.

3. The parties define these benefits as health and retirement benefits.

3

2) Assuming that complete preemption applies , may the District Court compel arbitration of his claims
under the facts of this case?

3) In order to rule on these questions, did the District Court, and do we, have jurisdiction?

III. Complete Preemption

A.

The District Court denied Wood's motion to remand holding that ERISA completely preempted Wood's clai m of
discrimination based on the state statute. The Dist rict Court read that claim as an assertion "that deprivi ng him of his retirement benefits was the motivating purpo se for, and not merely a consequence of, his termination." We agree with this reading.4

In his state complaint, Woods alleges generally tha t:

[T]he real reason that . . . Prudential term inated [his] employment . . . was its knowledge that, bec ause he was fifty-one years old, and had more than t wenty years of service with Prudential, plaintiff Jim Wood was about to become eligible for full retirement benefits.Defendant Prudential knew that the vesting o f those

benefits would require it to continue to be responsible for the medical expenses of the plaintiff an d of his dependents, including the plaintiff's son, M atthew

Wood.

State Complaint P4, A-16. He repeats this general a llegation in each of his four state law claims. State Complai nt PP 7, 10, 13, 16, A-19-21. Since Wood's son suffers from severe head injuries due to a car accident, Wood alleges t hat the

___________________________________________________ ______________

4. The District Court held that ERISA also complete ly preempted Wood's
claim of discrimination based on the state constitu tion because that claim was substantially identical to the claim of d iscrimination based on the state statute. Both holdings are subject to app eal, but Wood has not challenged the District Court's holding as to the c omplete preemption of
the claim of discrimination based on the state cons titution. Thus, we do not address this holding.

4

medical bills for his son run into the "millions of dollars." State Complaint P 5, A-17.

Wood argues that his complaint contains claims of a ge and disability discrimination entirely separate fro m this benefits-defeating allegation. But, we find nothing in his complaint other than an allegation that Prudential terminated Wood's employment to avoid paying health and
retirement benefits.

Wood argues that his complaint alleges discriminati on based on age because it referred directly to his ag e. The relevant portion of the allegation reads: "[B]ecaus e he was fifty-one years old, and had more than twenty years of service with Prudential, plaintiff Jim Wood was abo ut to become eligible for full retirement benefits." Stat e Complaint P 4, A-16. It seems obvious that Wood's reference to age, like the accompanying reference t o his length of service, establishes the allegation that Wood was "about to become eligible for full retirement benef its." His age is relevant only insofar as it affected his eli gibility for benefits. We agree with the District Court when it noted: "Aside from nearing early retirement age, there are no facts alleged in the Complaint to support a claim that Wo od's age had any bearing on Prudential's decision to termina te him."

Wood also argues that his state court complaint all eges discrimination based on the disability of Wood's so n. His complaint mentions the disability of his son only i n the context of Prudential's potential obligation for th e high medical expenses of his son. Since Wood's statediscrimination claim provides no rationale for Prud ential's

treatment other than to avoid paying benefits to hi m and to his dependents, we read the complaint as alleging t hat Prudential's termination of Wood's employment had a benefits-defeating motive.

B.

A claim of discharge based on a "benefits-defeating "
motive comes under Section 510 of ERISA. That secti on prohibits the "discharge of a participant or benefi ciary for the purpose of interfering with the attainment of a ny right to which such participant may become entitled."S 51 0, 29

5

U.S.C. S 1140. "Congress enacted this section to pr event unscrupulous employers from discharging or harassin g their employees in order to prevent them from obtai ning their statutory or plan-based rights." Zipf v. Amer ican Telephone and Telegraph Co., 799 F.2d 889, 891 (3rd Cir. 1986); see, also, Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 143 (1990).

Section 510 of ERISA does not stand alone; by its t erms it gains its enforcement vitality from Section 502. Section 510 provides: "The provisions of [section 502] of t his title shall be applicable in the enforcement of this sect ion." S 510, 29 U.S.C. S 1140. Thus, any state claim that falls within Section 510 is necessarily within Section 50 2.

C.

Federal courts have jurisdiction over claims "arisi ng under the Constitution, law or treaties of the Unit ed States." 28 U.S.C. S 1331. Under the well-pleaded complaint rule, a court determines whether a claim" arises under" federal law from a plaintiff's complaint. Me tropolitan Life v. Taylor, 481 U.S. 58, 62 (1987) ("It is long -settled law
that a cause of action arises under federal law onl y when the plaintiff's well pleaded complaint raises issue s of federal law."). A plaintiff is, thus, considered the"master of the complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 398- 99 (1987).

The United States Supreme Court has recognized the doctrine of complete preemption as a corollary or a n exception to the "well-pleaded complaint" rule. Met ropolitan Life, 481 U.S. at 63-64. Under this complete preemp tion exception, the Court has held that "Congress may so completely pre-empt a particular area that any civi l complaint raising this select group of claims is ne cessarily federal in character." Id. Since ERISA Section 502( a)completely preempts a state claim, removal of Wood' s state

claim to federal jurisdiction is proper. See id. a t 66 ("Congress has clearly manifested an intent to make causes of action within the scope of 502(a) removable to f ederal court."); Joyce v. RJR Nabisco Holdings Corp. , 126 F.3d 166, 172 (3rd Cir. 1997).

6

We reject Wood's contention that, because none of t he relief he requested in his state claim is available under Section 502, ERISA does not completely preempt his state
action. The relief Wood seeks is irrelevant to a determination of complete preemption. Complete

preemption, like ordinary preemption, does not depe nd on the type of relief requested in a complaint. Comple te preemption is an exception to the well-pleaded comp laint rule. "[T]he pre-emptive effect of S 502(a) [is] so complete that an ERISA pre-emption defense provides a suffic ient
basis for removal of a cause of action to the feder al forum notwithstanding the traditional limitations imposed by the "well-pleaded complaint" rule." Ingersoll-Rand, 498 U.S. at 145 (citing Metropolitan Life, 481 U.S. at 64-67).

Additionally, a state law claim may fall within Sec tion 502(a) and thus be completely preempted even if the plaintiff asks for relief that is not available und er Section 502(a). In Metropolitan Life, the plaintiff sought, inter alia, compensatory damages for mental anguish caused by a denial of benefits. 481 U.S. at 61. Even though suc h relief is not available under S 502(a), the Court held tha t ERISA completely preempted his claim and, thus, removal w as proper. Id. at 67. While the Court considered only Section 501(a)(1)(B), the Court's language applies broadly to all of Section 502(a). See id. at 66 ("Congress has clearl y manifested an attempt to make causes of action with in the scope of the civil enforcement provisions of S 502( a) removable to federal court.")

Similarly, in Ingersoll-Rand, the Court discussed t he interaction of Sections 510 and 502(a) in the conte xt of a plaintiff's requested relief. See 498 U.S. at 145. It wrote:

Not only is S 502(a) the exclusive remedy fo r vindicating S 510-protected rights, but there is no basi s in S 502(a)'s language for limiting ERISA actio ns only to those which seek "pension benefits." . . . C onsequently, it is no answer to a pre-emption argument th at a particular plaintiff is not seeking recovery of pension
benefits.

7Id.5

In explaining complete preemption in Ingersoll-Rand , the Court applied the rationale of ordinary preemption to complete preemption:

"The policy choices reflected in the inclusi on of certain
remedies and the exclusion of others under t he federal scheme would be completely undermined if ERI SA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejec ted in ERISA. The six carefully integrated civil en forcement provisions found in S 502(a) of the statute asfinally enacted . . . provide strong evidence that C ongress did
not intend to authorize other remedies that it simply forgot to incorporate expressly."

Ingersoll-Rand, 498 U.S. at 144 (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987) (internal citati ons and quotation marks omitted)). Were we to hold that Woo d's claim is not preempted because he sought remedies n ot provided for in Section 502(a), we would undermine Congress' policy choices as reflected in the remedi es it set forth in Section 502(a). Given that "Congress viewe d [Section 510] as a crucial part of ERISA" Ingersoll -Rand Co., 498 U.S. at 143, we are mindful of these policy cho ices.
Cf. Franchise Tax Board v. Construction La borers V acation Trust, 463 U.S. 1, 25-26 (1983) (finding state caus e of

___________________________________________________ ______________

5. While this quoted portion of the opinion in Inge rsoll-Rand may be dicta, it is still sound analysis. The dissent argu es that we should not give Ingersoll-Rand, 498 U.S. 133, any weight becau se the statements on which we rely are dicta. According to the dissent, when the Court stated, "when it is clear or may fairly be assumed that th e activities which a state purports to regulate are protected by S 510 o f ERISA, due regard for the federal enactment requires the state jurisd iction to yield," id.

at

145 (emphasis added), this is not a significant sta tement. We disagree. The Court, even though it did not have to make that statement in the Ingersoll-Rand case, did so, it seems, because it w anted to point out that S 510 does not stand alone and that S 502(a) and S 510 must be read together. It is because of this interaction -- an i nteraction found in the plain words of S 510, see 29 U.S.C.S 1140 -- that w e find that Wood's claim is completely preempted. The dissent is reluc tant to recognize that
interaction.

8

action not completely preempted where "State's righ t toenforce its tax levies is not of central concern to " ERISA).

We note that Wood, while seeking money damages for his allegedly improper termination in his state claim, see State Complaint, A-19, seeks equitable damages for the sa me termination in his federal ERISA claim. See Federal Complaint, A-103. Allowing such parallel claims to be tried
in both state and federal courts would undermine Co ngress' choice of remedies as reflected in Section 502(a). See, e.g., Engelhardt v. Paul Revere Life Ins., 139 F.3d 1346, 1354, n.11. (11th Cir. 1998) ("Although an ERISA benefici ary cannot obtain punitive damages in an action for ben efits, the prayer for punitive damages does not take [plai ntiff's] claim out of the scope of [Section 502(a)]. If it d id, any plaintiff could thwart Congress's intent to complet ely preempt claims arising out of the denial of ERISA b enefits by artful pleading.") Complete preemption would be an empty doctrine if a plaintiff could plead his way i nto state court by seeking only money damages. See, e.g., Ric e v. Panchal, 65 F.3d 637, 640 (7th Cir. 1995) ("[I]f a claim is within S 502(a) then a participant's ability to rec over damages is limited.")

For these reasons, we find that ERISA preempted Woo d's state claim of discrimination, that we have jurisdi ction, and, thus, we affirm the District Court's denial of remand.

IV. Arbitration

Before turning to the issue whether Wood's claims a re arbitrable, we must consider our jurisdiction over the arbitration issue. We reject Prudential's contentio n that we do not have jurisdiction to consider the decision t o compel
arbitration.

We have held that where a district court's dismissa l of an action signifies that the arbitration is "not a par t of any ongoing proceeding," the court of appeals has juris diction
from a final order. Nationwide Ins. Co. of Columbus , Ohio v. Patterson, 953 F.2d 44, 46 (3rd Cir. 1991). In Nati onwide,
we reviewed a district court's decision to dismiss a case on the grounds that the parties were obliged to arbitr ate. There, we stated: "[A]lthough the result of the dis trict

9

court's order is that the parties will arbitrate th eir dispute, the district court's dismissal of [the] action plai nly signifies that this is not a part of any ongoing proceeding. Therefore, we hold that we have appellate jurisdiction." Id. I n Nationwide, we held the matter a reviewablefinal or der in spite of "the practical effect of the district cour t's order . . . that the parties will now submit their disput e toarbitration." Id. at 45.

To distinguish Nationwide, Prudential seeks to make the point that the District Court in this case faced a motion to compel arbitration while the District Court in Nati onwide granted a motion to dismiss and made no order to arbitrate. No matter how the motion is drawn, the D istrict
Courts' conclusions were the same: both in Nationwi de and in this case, the District Court appropriately dism issed the action upon motion.

We next consider the District Court's decision to c ompel arbitration. Our review is plenary. See Hoxworth v. Blinder, Robinson & Co., Inc., 980 F.2d 912, 925 (3rd Cir. 1 992). The U.S. Supreme Court has held that:

[A]s a matter of federal law, any doubts con cerning the scope of arbitration should be resolved in f avor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defen se to arbitrability.

Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983) (emphasis added). In order to obtain a finding that arbitration is waived, a part y seeking to avoid arbitration must demonstrate prejudice. Se e Hoxworth, 980 F.2d at 925 ("prejudice is the touchs tone for determining whether the right to arbitrate has been waived.").

Wood argues that Prudential waived its right to arb itrate because, in a joint discovery plan filed June 12, 1 988, Prudential "reserve[d] the right to file a motion t o compel arbitration on or before August 1, 1998," and, then , did not act on that intention until September 24, 1998, whe n it filed its motion to compel arbitration.

10

We hold that Prudential did not waive its right to arbitrate; the delay was short and Prudential did n ot engage in significant litigation action that could have caused prejudice to Wood. It delayed seeking arbitr ation only by one-and-a-half months. Cf. Hoxworth, 980 F. 2d at 926 (finding waiver where delay was eleven months). Prudential's litigation tactics had not been extens ive: it had not taken any depositions nor served any discovery demands. Prudential does not appear to have been"ab le to use the Federal Rules to conduct discovery not avai lable in the arbitration forum." Hoxworth, 980 F.2d at 926. While
Prudential contested the merits of the claims in Di strict Court, this is not enough to overcome the presumpti on ofarbitrability. See Moses H. Cohn, 460 U.S. at 24-25

.

To establish prejudice, Wood argues that Prudential 's delay put him at a strategic disadvantage. He state s that his "counsel made key litigation decisions based up on his
belief that Prudential had abandoned its initial in tention to seek arbitration of this controversy," specifically that
"counsel would have asked the District Court to wit hhold any ruling on the defendant's motion to dismiss. . .." The
District Court considered that motion and dismissed the Americans with Disability Act claim but not the ERI SA claim. Putting aside whether the District Court wou ld have agreed to a request to withhold such a ruling, we d o not understand how Wood could be prejudiced by the Cour t's having decided the matter. For this decision to be prejudicial, we would have to presume that an arbit rator
would have decided the merits of the claim differen tly -- a presumption we cannot make.

Wood argues that the arbitration agreement does not apply to his claims of defamation and of intentiona l infliction of emotional distress because they both arose after the termination of his employment. The arbitr ation agreement applicable to this case is contained in a National Association of Securities Dealers ("NASD") Uniform Application for Securities Industry Registration (" U-4 Form") and calls for arbitration of any dispute, claim or controversy between Wood and Prudential "to be arbi trated under the rules . . . or by-laws of [the NASD]." A- 246. It requires arbitration under the NASD Code of any cla im

11

"arising out of the employment or termination of employment of such associated person(s) with such

member. . . ." A-254, NASD Manual (CCH) S10201.

Wood's claim of defamation is based on Prudential's forwarding of Wood's termination letter to the New Jersey Department of Insurance. State Complaint PP 6, 11, A-17, 19. In that letter, Prudential referenced Wood's al leged violations of company rules. A-23. Since the allege d defamation was a description of Wood's activities w hile employed at Prudential and was contained in Wood's termination letter, we hold that the claim of defam ation arose out of his employment and its termination. Th us, Wood's defamation claim is arbitrable.

Wood's claim of intentional infliction of emotional distress also arises out of Wood's employment and its termin ation. He alleges that Prudential's actions "were outrageo us, by reason of [its] use of false and defamatory allegat ions ofwrongdoing as a pretext for the termination of the plaintiff.

. . ." State Complaint P 14, A-20. Again, the claim centers on Wood's termination and is, thus, covered by the arbitration agreement.

Wood also contends that the arbitration agreement d oes not apply to his state law discrimination claim bec ause of an amendment to the NASD rules. We disagree. The amendment, effective January 1, 1999, exempts from mandatory arbitration "claim[s] alleging employment
discrimination . . . in violation of a statute." Ru le 10201(b) of NASD Code of Arbitration Procedure, A-525. Becau se the amendment was not effective until January 1, 1999, it did not affect the arbitration agreement between these two parties which requires Wood to comply with arbitrat ion as defined by the NASD Code at the time he filed suit in 1998. See Seus v. John Nuveen & Co., Inc., 146 F.3d 175, 187 (3rd Cir. 1998) ("[The] Form U-4 compliance clause obligates a registrant to comply with the NASD arbi tration code as it existed at the time she filed suit.").

We hold, thus, that the arbitration agreement appli es to Wood's state law claims of discrimination, defamati on, and
intentional infliction of emotional distress. Wood does not dispute that the arbitration agreement applies to h is other

12

claims. Thus, we affirm the District Court's ruling to compel arbitration over all the claims in these con solidated

cases.

V. Conclusion

We affirm the District Court's decision to deny rem and of
Wood's state suit. We also affirm the District Cour t's decision to compel arbitration as to all claims in the
consolidated suits.

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Stapleton, J., dissenting:

Because I conclude that the District Court lacked jurisdiction, I respectfully dissent.

I.

Generally, "the `well-pleaded complaint rule' requi res that, for removal to be appropriate, a federal ques tion must appear on the face of the complaint." Joyce v. RJR Nabisco Holdings Corp., 126 F.3d 166, 171 (3d Cir. 1997). " Under anarrow exception to the well-pleaded complaint rule
,

however, Congress may `completely preempt' a partic ular area of law such that any claim that falls within t his area is `necessarily federal in character.' " Id. "Compl ete preemption" must be distinguished from "ordinary preemption." Complete preemption is a jurisdictiona l doctrine, whereas ordinary preemption is merely a f ederal defense that does not create removal jurisdiction. See id.

Absent diversity or some other independent basis fo r federal jurisdiction, a federal court has no jurisd iction to entertain a complaint removed from a state court th at relies on state law ordinarily preempted by ERISA. Cf. Cat erpillar Inc. v. Williams, 482 U.S. 386, 398 (1987) ("The fa ct that a defendant might ultimately prove that a plaintiff's claims are pre-empted under the NLRA does not establish th at they are removable to federal court."); Goepel v. N ational Postal Mail Handlers Union, 36 F.3d 306, 316 (3d Ci r. 1994) (" `State courts are competent to determine whether state law has been preempted by federal law,' and, absent complete preemption, `they must be permitted to per form that function' with regard to state law claims brou ght before them."). As a result, such a complaint, if r emoved,

must be returned to state court. The defendant's re medy is to seek dismissal or summary judgment in the state court on the grounds of preemption.

If a claim based on state law is completely preempt ed, however, it is treated as a federal claim; a distri ct court has federal question removal jurisdiction to entertain it, and the claim, after removal, should go forward in the dist rict court
as a federal claim. See International Brotherhood o f Elec. Workers, 481 U.S. 851, 862-63 (1987) (afterfinding

14

complete preemption, considering the merits of plai ntiff's suit "treated as a S 301 claim"); Antol v. Esposto, 100 F.3d 1111, 1114-15 (3d Cir. 1997) (after determining tha t it had complete preemption removal jurisdiction, district court adjudicated claim on the merits); see also Pilot Li fe Ins. v. Dedeaux, 481 U.S. 41, 56 (1987) (complete preemptio n results from Congress' intent that suits "be treate d as federal questions governed by S 502(a)"); Charles A lan Wright et al., Federal Practice and Procedure S 37 22.1, at 511 (3d ed. 1998) (explaining that complete preempt ion substitutes a federal cause of action for the preem pted state cause of action).

Section 514(a) of ERISA broadly preempts "any and a ll State laws insofar as they relate to any employee b enefit plan," but this is ordinary preemption only, and do es not create federal removal jurisdiction. Joyce, 126 F.3 d at 171(quoting 29 U.S.C. S 1144(a)). "Only state claims t hat come

within ERISA's civil enforcement provisions in S 50 2(a) are completely preempted such that removal to federal c ourt is appropriate." Id. State causes of action for wrongf ul discharge motivated by the desire to prevent a pens ion from vesting fall squarely within the ambit of S 510 and are ordinarily preempted by ERISA. See Ingersoll-Rand, 498 U.S. at 140, 142-45. Ordinary preemption under ERIS A, without more, however, does not convert a state cla im into one that is necessarily federal for jurisdictional purposes. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 64 (1987).

In Metropolitan Life, the Court did find that the c ivil enforcement provision in S 502(a)(1)(B) has complet e preemptive power, but in doing so, it stated that:

[e]ven with a provision such as S 502(a)(1)( B) that lies at the heart of a statute with the unique pr eemptive force of ERISA, however, we would be relucta nt tofind that extraordinary preemptive power, such as has been found with respect to S 301 of the LMRA, tha t converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.

Id. at 65. The Court based its finding of complete preemption on strong evidence of Congressional inte nt, not

15

merely to preempt state law, but to invoke the juri sdictional doctrine of complete preemption. In particular, the Court relied on the fact that "the language of the jurisd ictional subsection of ERISA's civil enforcement provisions closely parallels that of S 301 of the LMRA," which the Cou rt had already interpreted as giving rise to complete pree mption at the time that ERISA was drafted. Id. (citing 29 U.S .C. S 1132(f) and 29 U.S.C. S 185(a)). The Court also n oted legislative history stating that:

[w]ith respect to suits to enforce benefit r ights under the plan or to recover benefits under the pl an . .. they may be brought not only in U.S. district cou rts but also in state courts of competent jurisdiction. A ll such actions . . . are to be regarded as arising under the
laws of the United States in similar fashion to those brought under section 301 of the Labor-Manag ement
Relations Act of 1947.

Id. at 65-66 (quoting H.R. Conf. Rep. No. 93-1280, p. 327 (1974)). The Court concluded that "[n]o more specif ic reference to the Avco rule can be expected and the rest ofthe legislative history consistently sets out this clear

intention to make S 502(a)(1)(B) suits . . . federa l questions for the purposes of federal court jurisdiction in l ike manner

as S 301 of the LMRA." Id. at 66.

A similar analysis leads to the conclusion thatS 51 0 standing alone does not have the "extraordinary" preemptive power that converts a state law claim in to a federal one for jurisdictional purposes, and that t herefore claims that seek impermissible relief for a pension -defeating
termination and thus fall within S 510 but notS 502 (a) are not removable. The scope of the jurisdictional subs ection on which Metropolitan Life relied for itsfinding of complete preemption is expressly defined in terms of the rel ief sought, rather than the nature of the cause of acti on. See 29 U.S.C. S 1132(f) ("The district courts .. . shal l have jurisdiction . . . to grant the relief provided for in subsection (a) of this section in any action.). Moreover, the House Report cited by Metropolitan Life expressly invokes the doctrine of complete preemption twice: "[w]ith resp ect to suits to enforce benefit rights under the plan or t o recover benefits under the plan," H.R. Conf. Rep. No. 93-12 80,

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1974 U.S.C.C.A.N. 5038, 1974 WL 11542, at 166, and "suit[s] to recover benefits denied contrary to the terms of [the] plan," id. at 356-57. No such express referen ce to complete preemption appears in the discussion of th e protection against pension-defeating discharge. See id. at 357. Thus neither the statute nor the legislative h istory provide any evidence of Congressional intent to exp and the scope of ERISA's complete preemptive power beyond t hose actions that fall within the civil enforcement prov isions of S 502(a) to actions under S 510 that seek impermiss ible
relief.

This Court's precedent also supports the conclusion that claims seeking legal relief for violations of S 510 are only ordinarily preempted, and that federal jurisdiction is thus improper. This Court has recognized two prerequisit es for a finding of complete preemption. "[C]omplete preempt ion applies only if `the statute relied upon by the def endant as preemptive contains civil enforcement provisions wi thin the scope of which plaintiff's state claim falls," and there must also be a "clear indication of a Congressional inte ntion to permit removal despite the plaintiff's exclusive re liance on state law." Goepel v. National Postal Mail Handlers Union, 36 F.3d 306, 311 (3d Cir. 1994). Although ERISA pro vides a civil enforcement provision for violations ofS 51 0, if Wood's claims do not seek equitable relief, they do not fall "within the scope" of that provision. Furthermore, although there is clear evidence of Congressional intent to permitremoval of actions within the scope of the civil en forcement

provisions, which actions necessarily are potential ly viable federal actions, there is no indication of Congress ional intent to permit removal of actions that seek imper missible
remedies and thus cannot be viable and must be
dismissed.

The Supreme Court's dicta in Ingersoll-Rand does no t require a different result. Although Ingersoll-Rand was a case of ordinary preemption,1 after determining tha t S 502(a) provides the exclusive remedy for violatio ns of S 510 the Court stated that " `when it is clear or may fairly

___________________________________________________ ______________

1. The case had been decided in Texas state courts, and thus federal jurisdiction was not at issue. See Ingersoll-Rand, 498 U.S. at 481.

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be assumed that the activities which a State purpor ts to regulate are protected' by S 510 of ERISA,`due rega rd for the federal enactment requires that state jurisdict ion must yield.' " Id. (quoting Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399, 409 n.8 (1988) (a case of ordin ary, rather than complete preemption)). Although the maj ority reads this statement as suggesting that S 510 itsel f has complete preemptive effect, to be consistent with Metropolitan Life this statement must be read in co ntext, which is that Ingersoll-Rand was a case of ordinary preemption in which federal jurisdiction was not at issue. This context suggests that it is not state court j urisdiction that must yield when regulated activities fall with in S 510, but rather the State's jurisdiction to regulate suc h activities, that is, mere ordinary preemption. Inde ed, the dicta at issue immediately follows and supports the Court's holding that "the requirements of conflict pre-empt ion are
satisfied in this case." Id.

Contrary to the majority's assertion, Metropolitan Life does not stand for the proposition that state law c laims may fall within S 502(a) and be completely preempte d even if the plaintiff asks only for relief that is not a vailable under S 502(a). While it is true that the plaintiff there claimed "compensation for mental anguish caused by breach o f . . . contract" he also claimed "reimplementation o f all benefits," the paradigm of S 502(a) relief. Metropo litan Life Ins. Co., 481 U.S. at 61. Accordingly, as the Court expressly pointed out, "General Motors and Metropolitan remov ed to federal court alleging federal question jurisdictio n over the disability benefit claim by virtue of ERISA and pen dant jurisdiction over the remaining claims." Id. Thus, it was the claim for reinstatement of benefits that gave the C ourt jurisdiction to consider whether the state law clai msseeking impermissible remedies were ordinarily pree mpted

by ERISA.

The fact that the plaintiff seeks remedies in his s tate
cause of action that are unavailable under the fede ral cause of action clearly does not preclude a finding of or dinary preemption; indeed, ordinary preemption of inconsis tent state remedies is the very purpose of the ERISA's l imited civil actions provision and its broad ordinary pree mption

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provision. See Pilot Life Ins. Co. v. Dedeaux , 481 U.S. 41, 51-54 (1987) ("The policy choices reflected in the inclusion
of certain remedies and the exclusion of others und er the federal scheme would be completely undermined if ER ISAplan participants and beneficiaries were free to ob tain remedies under state law that Congress rejected in ERISA."). Ordinary preemption, however, is for stat e courts
to determine.

II.

Given that S 510 does not by itself have complete preemptive effect, it becomes necessary to determin e whether Wood's claims fall within the civil enforce ment provisions of S 502(a). Section 502(a) provides tha t:

A civil action may be brought--

(1) by a participant or beneficiary--

. . .

(B) to recover benefits due to him under t he terms of his plan, to enforce rights under t he terms of the plan, or to clarify his rights to future benefits under the terms of the plan;

. . .

(3) by a participant, beneficiary, or fiduci ary (A) to enjoin any act or practice which violates an y provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforc e any provisions of this subchapter or the terms o f the plan . . . .

29 U.S.C. 1132(a).

Section 510 of ERISA prohibits employers from discharging employees for the purpose of preventing apension from vesting. See Ingersoll-Rand Co. v. McC lendon,

498 U.S. 133, 143 (1990). Section 510 provides that :

It shall be unlawful for any person to disch arge . .. a participant or beneficiary . . . for the pur pose of interfering with the attainment of any right to which

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such participant may become entitled under t he plan . . . . The provisions of section 1132 of th is title[S 502 of ERISA] shall be applicable in the enforce ment of this
section.

29 U.S.C. 1140. Claims under S 510 are enforced und er S 502(a)(3). See Zipf v. American Tel. & Tel. Co., 799 F.2d 889, 891 (3d Cir. 1986); see also Ingersoll Rand , 498 U.S. at 143-44 (quoting only S 502(a)(3) and then statin g that S 502(a) provides the remedy for violations ofS 510 ). Since
this is not a suit to recover benefits or to enforc e rights under a plan, the only potential avenue for finding Wood's state law claims are completely preempted is if the y are claims under S 502(a)(3) to obtain "appropriate equ itable relief to redress [a] violation[ ] of[S 510]." 29 U .S.C. 1132(a)(3).

In the instant case, it may well be that Wood's sta te
causes of action include a claim that falls within the ambit of S 510, in that they assert that Wood's discharge was motivated by a desire to prevent his pension from v esting. I would conclude, however, that any such claim does not fall within S 502(a)(3), which reaches only claims for equitable relief. See 29 U.S.C. 1132(a)(3); Mertens v. Hewitt Assocs., 508 U.S. 248, 255-62 (1993) (holding that compensatory damages are unavailable under S 502(a) (3), which provides for equitable relief only); In re Un isys Corp. Retiree Med. Benefit "ERISA" Litig., 57 F.3d 1255, 1268-69 (3d Cir. 1995); Spinelli v. Gaughan, 12 F.3d 853, 8 57 (9th Cir. 1993) (recognizing that Mertens' holding that damages are not available under S 502(a)(3) applies toS 510 claims).

Wood seeks solely money damages. To the extent that his claim falls within the scope of S 510, the damages claimed are to compensate him for injuries inflicted by tor tious behavior -- i.e., interference with a relationship that would ultimately have brought him pension benefits from a third party, the ERISA plan. Wood's claim cannot be characterized as an equitable one for restitution b ecause the money sought is not being wrongfully held by th e employer. Nor can the damages sought accurately be
characterized as incidental to or intertwined with injunctive relief (and thus equitable in nature) because no eq uitable relief is sought. Finally, a monetary award here ca nnot be20

viewed as an alternative to the equitable remedy of reinstatement (by analogy to a Title VII front pay award) both because Wood does not allege that reinstatemen t is unfeasible and, more importantly, because reinstate ment would not result in his receiving pension benefits from the employer. What we have here, plain and simple, is a tort action seeking compensatory damages for interferenc e with advantageous relations, and Wood is accordingly not seeking an equitable remedy. Case law from our cour t and the Supreme Court dictates, in my judgment, that we so hold.

In Teamsters v. Terry, 494 U.S. 558 (1990), union members sought damages against the union for breach of the duty of fair representation. The union insisted that the plaintiffs were seeking an equitable remedy and tha t they were not entitled to a jury trial. The Court conclu ded to the contrary, observing:

[B]ecause we conclude that the remedy respon dents
seek has none of the attributes that must be present before we will find an exception to the gene ral rule and characterize damages as equitable, we find t hat the remedy sought by respondents is legal.

First, we have characterized damages as equi table where they are restitutionary, such as in "a ction[s] for disgorgement of improper profits," Tull, 481 U.S., at 424. See also Curtis v. Loether, supra , at 197; Porter v. Warner Holding Co., 328 U.S. 395, 402 (1946) . The backpay sought by respondents is not money wrongfully held by the Union, but wages and benefits they would have received from McLean [, the employer,] had the Union processed the employees' griev ances properly. Such relief is not restitutionary.

Second, a monetary award "incidental to or intertwined with injunctive relief may be eq uitable. Tull, supra, at 424. See, e.g., Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 291-292 (1960) (District Court had power, incident to its injunctive powers, to award backpay in that case was restitutionar y). Because respondents seek only money damages, this characteristic is clearly absent from the ca se.

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Teamsters, 494 U.S. at 570-71.The Terry Court distinguished on a number of ground s

the Title VII cases that characterize backpay award s as a form of "equitable relief." First, the Court pointe d out that Congress had specifically characterized backpay und er Title VII as "equitable relief." Id. at 572. Second, and most important for present purposes, the Court noted tha t "backpay sought from an employer under Title VII wo uld generally be restitutionary in nature . . ., in con trast to the damages sought here from the Union" to compensate f or income the plaintiff would have received from the e mployer had there been no breach of the duty of fair repres entation. Id.; see also Woodell v. International Bd. of Elec. Workers, 502 U.S. 93, 97-98 (1981) (holding in a suit by a u nion member against his union for discrimination in job referrals in the operation of its hiring hall that a "claim f or lost wages cannot be treated as restitutionary . . . as the damages sought are for pay for jobs to which the un ion failed to refer him").

This Court followed a similar line of reasoning in Richel v. Commissioner, 900 F.2d 655, 664, n.16 (3d Cir. 1 990), where we explained that a restitutionary award representing wages earned but not paid is to be distinguished from an award compensating for the in ability
to earn an income from another source due to tortio us interference.

There is one Third Circuit case that recognizes the availability of front pay in a Title VII case as"an alternative to the traditional remedy of reinstatement" prior t o the statutory amendment that made damages available und er Title VII. See Goss v. Exxon Office Systems Co., 74 7 F.2d 885 (3d Cir. 1984). Goss does not help Wood, howeve r. As Goss and the ADEA cases (the ADEA has always author ized legal and equitable remedies) recognize, a front pa y remedy is available only where reinstatement is not an ava ilable remedy. See, e.g., Maxfield v. Sinclair Intern., 76 6 F.2d 788 (3d Cir. 1985). Moreover, unlike front pay, recover y on the
claim here asserted would not be a substitute for a reinstatement remedy since reinstatement would not call for the defendant to pay Woods' pension benefits.

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Based on the foregoing, I conclude that the Distric t Court had no jurisdiction over the claims made in the sta te complaint and should have remanded those claims to the state court, where Prudential may raise its preempt ion

defense.

A True Copy:

Teste:Clerk of the United States Court of Appeals

for the Third Circuit

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