2000 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-28-2000

Wood v Prudential Ins Co

Precedential or Non-Precedential:

Docket 99-5022

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Recommended Citation

"Wood v Prudential Ins Co" (2000). 2000 Decisions. Paper 69.

http://digitalcommons.law.villanova.edu/thirdcircuit_2000/69
Filed 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 guardians 

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 Appellants 
 Don 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 in a 

New Jersey state court against his former employer, The 

Prudential Insurance Company of America ("Prudential"). In 

his complaint, Wood pleaded four counts against 

Prudential: discrimination based on a New Jersey statute1; 

_________________________________________________________________ 

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

 2 

defamation; outrage; and discrimination based on the New 

Jersey constitution2. Wood alleged that Prudential 

discriminated against him by terminating his employment 

to avoid paying benefits3 to him and his dependents. In this 

state suit, Wood sought, inter alia, compensatory damages, 

damages for humiliation, pain and suffering, and punitive 

damages. Prudential removed the suit to the U.S. District 

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 Wood's 

claim of discrimination under the state statute and his 

claim of discrimination under the state constitution. In 

denying Wood's motion to remand the suit to state court, 

the United States District Court held that ERISA completely 

preempted those two claims. The court took supplemental 

jurisdiction over the claims of defamation and outrage and 

construed the claim of outrage as a claim of intentional 

infliction of emotional distress. 

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

1998 in the U.S. District Court of New Jersey alleging that 

Prudential's termination of Wood's employment violated 

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, consolidated the 

two cases, and granted Prudential's motion to submit all 

claims to arbitration. 

II. Issues 

Several questions are presented to us on appeal: 

 1) Is complete preemption of a state claim that is 

 subject to Section 510 of ERISA warranted even if the 

 state claim prays for relief arguably not provided 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 claim of 

discrimination based on the state statute. The District 

Court read that claim as an assertion "that depriving him 

of his retirement benefits was the motivating purpose for, 

and not merely a consequence of, his termination." We 

agree with this reading.4 

In his state complaint, Woods alleges generally that: 

 [T]he real reason that . . . Prudential terminated [his] 

 employment . . . was its knowledge that, because he 

 was fifty-one years old, and had more than twenty 

 years of service with Prudential, plaintiff Jim Wood was 

 about to become eligible for full retirement benefits. 
 Defendant Prudential knew that the vesting of those 

 benefits would require it to continue to be responsible 

 for the medical expenses of the plaintiff and of his 

 dependents, including the plaintiff's son, Matthew 

 Wood. 

State Complaint P4, A-16. He repeats this general allegation 

in each of his four state law claims. State Complaint PP 7, 

10, 13, 16, A-19-21. Since Wood's son suffers from severe 

head injuries due to a car accident, Wood alleges that the 

_________________________________________________________________ 

4. The District Court held that ERISA also completely preempted Wood's 

claim of discrimination based on the state constitution because that 

claim was substantially identical to the claim of discrimination based on 

the state statute. Both holdings are subject to appeal, but Wood has not 

challenged the District Court's holding as to the complete preemption of 

the claim of discrimination based on the state constitution. 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 age 

and disability discrimination entirely separate from 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 discrimination 

based on age because it referred directly to his age. The 

relevant portion of the allegation reads: "[B]ecause he was 

fifty-one years old, and had more than twenty years of 

service with Prudential, plaintiff Jim Wood was about to 

become eligible for full retirement benefits." State 

Complaint P 4, A-16. It seems obvious that Wood's 

reference to age, like the accompanying reference to his 

length of service, establishes the allegation that Wood was 

"about to become eligible for full retirement benefits." His 

age is relevant only insofar as it affected his eligibility 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 Wood's age 

had any bearing on Prudential's decision to terminate him." 

Wood also argues that his state court complaint alleges 

discrimination based on the disability of Wood's son. His 

complaint mentions the disability of his son only in the 

context of Prudential's potential obligation for the high 

medical expenses of his son. Since Wood's state 
discrimination claim provides no rationale for Prudential's 

treatment other than to avoid paying benefits to him and to 

his dependents, we read the complaint as alleging that 

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 section 

prohibits the "discharge of a participant or beneficiary for 

the purpose of interfering with the attainment of any right 

to which such participant may become entitled."S 510, 29 

 5 

U.S.C. S 1140. "Congress enacted this section to prevent 

unscrupulous employers from discharging or harassing 

their employees in order to prevent them from obtaining 

their statutory or plan-based rights." Zipf v. American 

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 terms 

it gains its enforcement vitality from Section 502. Section 

510 provides: "The provisions of [section 502] of this title 

shall be applicable in the enforcement of this section." 

S 510, 29 U.S.C. S 1140. Thus, any state claim that falls 

within Section 510 is necessarily within Section 502. 

C. 

Federal courts have jurisdiction over claims "arising 

under the Constitution, law or treaties of the United 

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. Metropolitan 

Life v. Taylor, 481 U.S. 58, 62 (1987) ("It is long-settled law 

that a cause of action arises under federal law only when 

the plaintiff's well pleaded complaint raises issues 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 an 

exception to the "well-pleaded complaint" rule. Metropolitan 

Life, 481 U.S. at 63-64. Under this complete preemption 

exception, the Court has held that "Congress may so

completely pre-empt a particular area that any civil 

complaint raising this select group of claims is necessarily 

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. at 66 

("Congress has clearly manifested an intent to make causes 

of action within the scope of 502(a) removable to federal 

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 the 

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 depend on 

the type of relief requested in a complaint. Complete 

preemption is an exception to the well-pleaded complaint 

rule. "[T]he pre-emptive effect of S 502(a) [is] so complete 

that an ERISA pre-emption defense provides a sufficient 

basis for removal of a cause of action to the federal 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 Section 

502(a) and thus be completely preempted even if the

plaintiff asks for relief that is not available under 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 such relief 

is not available under S 502(a), the Court held that ERISA 

completely preempted his claim and, thus, removal was 

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 clearly 

manifested an attempt to make causes of action within the 

scope of the civil enforcement provisions of S 502(a) 

removable to federal court.") 

Similarly, in Ingersoll-Rand, the Court discussed the 

interaction of Sections 510 and 502(a) in the context of a 

plaintiff's requested relief. See 498 U.S. at 145. It wrote: 

 Not only is S 502(a) the exclusive remedy for vindicating 

 S 510-protected rights, but there is no basis in 

 S 502(a)'s language for limiting ERISA actions only to 

 those which seek "pension benefits." . . . Consequently, 

 it is no answer to a pre-emption argument that a 

 particular plaintiff is not seeking recovery of pension 

 benefits. 

 7 
Id.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 inclusion of certain 

 remedies and the exclusion of others under the federal 

 scheme would be completely undermined if ERISA-plan 

 participants and beneficiaries were free to obtain 

 remedies under state law that Congress rejected in 

 ERISA. The six carefully integrated civil enforcement 

 provisions found in S 502(a) of the statute asfinally 

 enacted . . . provide strong evidence that Congress 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 citations and 

quotation marks omitted)). Were we to hold that Wood's 

claim is not preempted because he sought remedies not 

provided for in Section 502(a), we would undermine 

Congress' policy choices as reflected in the remedies it set 

forth in Section 502(a). Given that "Congress viewed 

[Section 510] as a crucial part of ERISA" Ingersoll-Rand Co., 

498 U.S. at 143, we are mindful of these policy choices. 

Cf. Franchise Tax Board v. Construction La borers Vacation 

Trust, 463 U.S. 1, 25-26 (1983) (finding state cause of 

_________________________________________________________________ 

5. While this quoted portion of the opinion in Ingersoll-Rand may be 

dicta, it is still sound analysis. The dissent argues that we should not 

give Ingersoll-Rand, 498 U.S. 133, any weight because 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 the activities which a 

state purports to regulate are protected by S 510 of ERISA, due regard 

for the federal enactment requires the state jurisdiction to yield," id. 

at 

145 (emphasis added), this is not a significant statement. 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 wanted 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 interaction found in the 

plain words of S 510, see 29 U.S.C.S 1140 -- that we find that Wood's 

claim is completely preempted. The dissent is reluctant to recognize that 

interaction. 

 8 

action not completely preempted where "State's right to 
enforce 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 same 

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 Congress' 

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 beneficiary 

cannot obtain punitive damages in an action for benefits, 

the prayer for punitive damages does not take [plaintiff's] 

claim out of the scope of [Section 502(a)]. If it did, any 

plaintiff could thwart Congress's intent to completely 

preempt claims arising out of the denial of ERISA benefits 

by artful pleading.") Complete preemption would be an 

empty doctrine if a plaintiff could plead his way into state 

court by seeking only money damages. See, e.g., Rice 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 recover 

damages is limited.") 

For these reasons, we find that ERISA preempted Wood's 

state claim of discrimination, that we have jurisdiction, 

and, thus, we affirm the District Court's denial of remand. 

IV. Arbitration 

Before turning to the issue whether Wood's claims are 

arbitrable, we must consider our jurisdiction over the 

arbitration issue. We reject Prudential's contention that we 

do not have jurisdiction to consider the decision to compel 

arbitration. 

We have held that where a district court's dismissal of an 

action signifies that the arbitration is "not a part of any 

ongoing proceeding," the court of appeals has jurisdiction 

from a final order. Nationwide Ins. Co. of Columbus, Ohio v. 

Patterson, 953 F.2d 44, 46 (3rd Cir. 1991). In Nationwide, 

we reviewed a district court's decision to dismiss a case on 

the grounds that the parties were obliged to arbitrate. 

There, we stated: "[A]lthough the result of the district 

 9 

court's order is that the parties will arbitrate their dispute, 

the district court's dismissal of [the] action plainly signifies 

that this is not a part of any ongoing proceeding. Therefore, 

we hold that we have appellate jurisdiction." Id. In 

Nationwide, we held the matter a reviewablefinal order in 

spite of "the practical effect of the district court's order 

. . . that the parties will now submit their dispute to 
arbitration." 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 Nationwide 

granted a motion to dismiss and made no order to 

arbitrate. No matter how the motion is drawn, the District 

Courts' conclusions were the same: both in Nationwide and 

in this case, the District Court appropriately dismissed the 

action upon motion. 

We next consider the District Court's decision to compel 

arbitration. Our review is plenary. See Hoxworth v. Blinder, 

Robinson & Co., Inc., 980 F.2d 912, 925 (3rd Cir. 1992). 

The U.S. Supreme Court has held that: 

 [A]s a matter of federal law, any doubts concerning the 

 scope of arbitration should be resolved in favor of 

 arbitration, whether the problem at hand is the 

 construction of the contract language itself or an 

 allegation of waiver, delay, or a like defense 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 party seeking 

to avoid arbitration must demonstrate prejudice. See 

Hoxworth, 980 F.2d at 925 ("prejudice is the touchstone for 

determining whether the right to arbitrate has been

waived."). 

Wood argues that Prudential waived its right to arbitrate 

because, in a joint discovery plan filed June 12, 1988, 

Prudential "reserve[d] the right to file a motion to compel 

arbitration on or before August 1, 1998," and, then, did not 

act on that intention until September 24, 1998, when 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 not 

engage in significant litigation action that could have 

caused prejudice to Wood. It delayed seeking arbitration 

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 extensive: it had 

not taken any depositions nor served any discovery 

demands. Prudential does not appear to have been"able to 

use the Federal Rules to conduct discovery not available in 

the arbitration forum." Hoxworth, 980 F.2d at 926. While 

Prudential contested the merits of the claims in District 

Court, this is not enough to overcome the presumption of 
arbitrability. 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 states that 

his "counsel made key litigation decisions based upon his 

belief that Prudential had abandoned its initial intention to 

seek arbitration of this controversy," specifically that 

"counsel would have asked the District Court to withhold 

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 ERISA 

claim. Putting aside whether the District Court would have 

agreed to a request to withhold such a ruling, we do not 

understand how Wood could be prejudiced by the Court's 

having decided the matter. For this decision to be 

prejudicial, we would have to presume that an arbitrator 

would have decided the merits of the claim differently -- a 

presumption we cannot make. 

Wood argues that the arbitration agreement does not

apply to his claims of defamation and of intentional 

infliction of emotional distress because they both arose 

after the termination of his employment. The arbitration 

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 arbitrated 

under the rules . . . or by-laws of [the NASD]." A-246. It 

requires arbitration under the NASD Code of any claim 

 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 alleged 

violations of company rules. A-23. Since the alleged 

defamation was a description of Wood's activities while 

employed at Prudential and was contained in Wood's 

termination letter, we hold that the claim of defamation 

arose out of his employment and its termination. Thus, 

Wood's defamation claim is arbitrable. 

Wood's claim of intentional infliction of emotional distress 

also arises out of Wood's employment and its termination. 

He alleges that Prudential's actions "were outrageous, by 

reason of [its] use of false and defamatory allegations of 
wrongdoing 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 does 

not apply to his state law discrimination claim because 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." Rule 10201(b) 

of NASD Code of Arbitration Procedure, A-525. Because 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 arbitration 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 arbitration 

code as it existed at the time she filed suit."). 

We hold, thus, that the arbitration agreement applies to 

Wood's state law claims of discrimination, defamation, and 

intentional infliction of emotional distress. Wood does not 

dispute that the arbitration agreement applies to his other 

 12 

claims. Thus, we affirm the District Court's ruling to 

compel arbitration over all the claims in these consolidated 

cases. 

V. Conclusion 

We affirm the District Court's decision to deny remand of 

Wood's state suit. We also affirm the District Court's 

decision to compel arbitration as to all claims in the 

consolidated suits. 

 13 

Stapleton, J., dissenting: 

Because I conclude that the District Court lacked 

jurisdiction, I respectfully dissent. 

I. 

Generally, "the `well-pleaded complaint rule' requires 

that, for removal to be appropriate, a federal question must 

appear on the face of the complaint." Joyce v. RJR Nabisco 

Holdings Corp., 126 F.3d 166, 171 (3d Cir. 1997). "Under a 
narrow exception to the well-pleaded complaint rule, 

however, Congress may `completely preempt' a particular 

area of law such that any claim that falls within this area 

is `necessarily federal in character.' " Id. "Complete 

preemption" must be distinguished from "ordinary 

preemption." Complete preemption is a jurisdictional 

doctrine, whereas ordinary preemption is merely a federal 

defense that does not create removal jurisdiction. See id. 

Absent diversity or some other independent basis for 

federal jurisdiction, a federal court has no jurisdiction to 

entertain a complaint removed from a state court that relies 

on state law ordinarily preempted by ERISA. Cf. Caterpillar 

Inc. v. Williams, 482 U.S. 386, 398 (1987) ("The fact that a 

defendant might ultimately prove that a plaintiff's claims 

are pre-empted under the NLRA does not establish that 

they are removable to federal court."); Goepel v. National 

Postal Mail Handlers Union, 36 F.3d 306, 316 (3d Cir. 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 perform 

that function' with regard to state law claims brought 

before them."). As a result, such a complaint, if removed, 

must be returned to state court. The defendant's remedy 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 preempted, 

however, it is treated as a federal claim; a district court has 

federal question removal jurisdiction to entertain it, and the 

claim, after removal, should go forward in the district court 

as a federal claim. See International Brotherhood of Elec. 

Workers, 481 U.S. 851, 862-63 (1987) (afterfinding 

 14 

complete preemption, considering the merits of plaintiff's 

suit "treated as a S 301 claim"); Antol v. Esposto, 100 F.3d 

1111, 1114-15 (3d Cir. 1997) (after determining that it had 

complete preemption removal jurisdiction, district court 

adjudicated claim on the merits); see also Pilot Life Ins. v. 

Dedeaux, 481 U.S. 41, 56 (1987) (complete preemption 

results from Congress' intent that suits "be treated as 

federal questions governed by S 502(a)"); Charles Alan 

Wright et al., Federal Practice and Procedure S 3722.1, at 

511 (3d ed. 1998) (explaining that complete preemption 

substitutes a federal cause of action for the preempted 

state cause of action). 

Section 514(a) of ERISA broadly preempts "any and all 

State laws insofar as they relate to any employee benefit 

plan," but this is ordinary preemption only, and does not 

create federal removal jurisdiction. Joyce, 126 F.3d at 171 
(quoting 29 U.S.C. S 1144(a)). "Only state claims that come 

within ERISA's civil enforcement provisions in S 502(a) are 

completely preempted such that removal to federal court is 

appropriate." Id. State causes of action for wrongful 

discharge motivated by the desire to prevent a pension 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 ERISA, 

without more, however, does not convert a state claim 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 civil 

enforcement provision in S 502(a)(1)(B) has complete 

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 preemptive 

 force of ERISA, however, we would be reluctant tofind 

 that extraordinary preemptive power, such as has been 

 found with respect to S 301 of the LMRA, that 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 intent, not 

 15 

merely to preempt state law, but to invoke the jurisdictional 

doctrine of complete preemption. In particular, the Court 

relied on the fact that "the language of the jurisdictional 

subsection of ERISA's civil enforcement provisions closely 

parallels that of S 301 of the LMRA," which the Court had 

already interpreted as giving rise to complete preemption 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 noted 

legislative history stating that: 

 [w]ith respect to suits to enforce benefit rights under 

 the plan or to recover benefits under the plan . .. they 

 may be brought not only in U.S. district courts but also 

 in state courts of competent jurisdiction. All 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-Management 

 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 specific 

reference to the Avco rule can be expected and the rest of 
the legislative history consistently sets out this clear 

intention to make S 502(a)(1)(B) suits . . . federal questions 

for the purposes of federal court jurisdiction in like manner 

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

A similar analysis leads to the conclusion thatS 510 

standing alone does not have the "extraordinary" 

preemptive power that converts a state law claim into a 

federal one for jurisdictional purposes, and that therefore 

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 subsection 

on which Metropolitan Life relied for itsfinding of complete 

preemption is expressly defined in terms of the relief 

sought, rather than the nature of the cause of action. See 

29 U.S.C. S 1132(f) ("The district courts .. . shall 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 respect to 

suits to enforce benefit rights under the plan or to recover 

benefits under the plan," H.R. Conf. Rep. No. 93-1280, 

 16 

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 reference to 

complete preemption appears in the discussion of the 

protection against pension-defeating discharge. See id. at 

357. Thus neither the statute nor the legislative history 

provide any evidence of Congressional intent to expand the 

scope of ERISA's complete preemptive power beyond those 

actions that fall within the civil enforcement provisions of 

S 502(a) to actions under S 510 that seek impermissible 

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 prerequisites for a 

finding of complete preemption. "[C]omplete preemption 

applies only if `the statute relied upon by the defendant as 

preemptive contains civil enforcement provisions within the 

scope of which plaintiff's state claim falls," and there must 

also be a "clear indication of a Congressional intention to 

permit removal despite the plaintiff's exclusive reliance on 

state law." Goepel v. National Postal Mail Handlers Union, 

36 F.3d 306, 311 (3d Cir. 1994). Although ERISA provides 

a civil enforcement provision for violations ofS 510, 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 permit 
removal of actions within the scope of the civil enforcement 

provisions, which actions necessarily are potentially viable 

federal actions, there is no indication of Congressional 

intent to permit removal of actions that seek impermissible 

remedies and thus cannot be viable and must be 

dismissed. 

The Supreme Court's dicta in Ingersoll-Rand does not 

require a different result. Although Ingersoll-Rand was a 

case of ordinary preemption,1 after determining that 

S 502(a) provides the exclusive remedy for violations 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. 

 17 

be assumed that the activities which a State purports to 

regulate are protected' by S 510 of ERISA,`due regard for 

the federal enactment requires that state jurisdiction must 

yield.' " Id. (quoting Lingle v. Norge Division of Magic Chef, 

Inc., 486 U.S. 399, 409 n.8 (1988) (a case of ordinary, 

rather than complete preemption)). Although the majority 

reads this statement as suggesting that S 510 itself has 

complete preemptive effect, to be consistent with 

Metropolitan Life this statement must be read in context, 

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 jurisdiction 

that must yield when regulated activities fall within S 510, 

but rather the State's jurisdiction to regulate such 

activities, that is, mere ordinary preemption. Indeed, the 

dicta at issue immediately follows and supports the Court's 

holding that "the requirements of conflict pre-emption are 

satisfied in this case." Id. 

Contrary to the majority's assertion, Metropolitan Life 

does not stand for the proposition that state law claims 

may fall within S 502(a) and be completely preempted even 

if the plaintiff asks only for relief that is not available under 

S 502(a). While it is true that the plaintiff there claimed 

"compensation for mental anguish caused by breach of 

. . . contract" he also claimed "reimplementation of all 

benefits," the paradigm of S 502(a) relief. Metropolitan Life 

Ins. Co., 481 U.S. at 61. Accordingly, as the Court expressly 

pointed out, "General Motors and Metropolitan removed to 

federal court alleging federal question jurisdiction over the 

disability benefit claim by virtue of ERISA and pendant 

jurisdiction over the remaining claims." Id. Thus, it was the 

claim for reinstatement of benefits that gave the Court 

jurisdiction to consider whether the state law claims 
seeking impermissible remedies were ordinarily preempted 

by ERISA. 

The fact that the plaintiff seeks remedies in his state 

cause of action that are unavailable under the federal cause 

of action clearly does not preclude a finding of ordinary 

preemption; indeed, ordinary preemption of inconsistent 

state remedies is the very purpose of the ERISA's limited 

civil actions provision and its broad ordinary preemption 

 18 

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 under the 

federal scheme would be completely undermined if ERISAplan participants and beneficiaries were free to obtain 

remedies under state law that Congress rejected in 

ERISA."). Ordinary preemption, however, is for state courts 

to determine. 

II. 

Given that S 510 does not by itself have complete 

preemptive effect, it becomes necessary to determine 

whether Wood's claims fall within the civil enforcement 

provisions of S 502(a). Section 502(a) provides that: 

 A civil action may be brought-- 

 (1) by a participant or beneficiary-- 

 . . . 

 (B) to recover benefits due to him under the 

 terms of his plan, to enforce rights under the 

 terms of the plan, or to clarify his rights to 

 future benefits under the terms of the plan;

 . . . 

 (3) by a participant, beneficiary, or fiduciary (A) to 

 enjoin any act or practice which violates any 

 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 enforce any 

 provisions of this subchapter or the terms of the 

 plan . . . . 

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

Section 510 of ERISA prohibits employers from 

discharging employees for the purpose of preventing a 
pension from vesting. See Ingersoll-Rand Co. v. McClendon, 

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

 It shall be unlawful for any person to discharge . .. a 

 participant or beneficiary . . . for the purpose of 

 interfering with the attainment of any right to which 

 19 

 such participant may become entitled under the plan 

 . . . . The provisions of section 1132 of this title[S 502 

 of ERISA] shall be applicable in the enforcement of this 

 section. 

29 U.S.C. 1140. Claims under S 510 are enforced under 

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 stating that 

S 502(a) provides the remedy for violations ofS 510). Since 

this is not a suit to recover benefits or to enforce rights 

under a plan, the only potential avenue for finding Wood's 

state law claims are completely preempted is if they are 

claims under S 502(a)(3) to obtain "appropriate equitable 

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 state 

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 vesting. 

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 Unisys Corp. 

Retiree Med. Benefit "ERISA" Litig., 57 F.3d 1255, 1268-69 

(3d Cir. 1995); Spinelli v. Gaughan, 12 F.3d 853, 857 (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 tortious 

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 because 

the money sought is not being wrongfully held by the 

employer. Nor can the damages sought accurately be 

characterized as incidental to or intertwined with injunctive 

relief (and thus equitable in nature) because no equitable 

relief is sought. Finally, a monetary award here cannot be 
 20 

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 reinstatement is 

unfeasible and, more importantly, because reinstatement 

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 interference with 

advantageous relations, and Wood is accordingly not

seeking an equitable remedy. Case law from our court 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 that they 

were not entitled to a jury trial. The Court concluded to the 

contrary, observing: 

 [B]ecause we conclude that the remedy respondents 

 seek has none of the attributes that must be present 

 before we will find an exception to the general rule and 

 characterize damages as equitable, we find that the 

 remedy sought by respondents is legal. 

 First, we have characterized damages as equitable 

 where they are restitutionary, such as in "action[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' grievances 

 properly. Such relief is not restitutionary.

 Second, a monetary award "incidental to or 

 intertwined with injunctive relief may be equitable. 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 restitutionary). 

 Because respondents seek only money damages, this 

 characteristic is clearly absent from the case. 

 21 

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

the Title VII cases that characterize backpay awards as a 

form of "equitable relief." First, the Court pointed out that 

Congress had specifically characterized backpay under Title 

VII as "equitable relief." Id. at 572. Second, and most 

important for present purposes, the Court noted that 

"backpay sought from an employer under Title VII would 

generally be restitutionary in nature . . ., in contrast to the 

damages sought here from the Union" to compensate for 

income the plaintiff would have received from the employer 

had there been no breach of the duty of fair representation. 

Id.; see also Woodell v. International Bd. of Elec. Workers, 

502 U.S. 93, 97-98 (1981) (holding in a suit by a union 

member against his union for discrimination in job referrals 

in the operation of its hiring hall that a "claim for lost 

wages cannot be treated as restitutionary . . . as the 

damages sought are for pay for jobs to which the union 

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. 1990), 

where we explained that a restitutionary award 

representing wages earned but not paid is to be 

distinguished from an award compensating for the inability 

to earn an income from another source due to tortious 

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 to the 

statutory amendment that made damages available under 

Title VII. See Goss v. Exxon Office Systems Co., 747 F.2d 

885 (3d Cir. 1984). Goss does not help Wood, however. As 

Goss and the ADEA cases (the ADEA has always authorized 

legal and equitable remedies) recognize, a front pay remedy 

is available only where reinstatement is not an available 

remedy. See, e.g., Maxfield v. Sinclair Intern., 766 F.2d 788 

(3d Cir. 1985). Moreover, unlike front pay, recovery 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. 

 22 

Based on the foregoing, I conclude that the District Court 

had no jurisdiction over the claims made in the state 

complaint and should have remanded those claims to the 

state court, where Prudential may raise its preemption 

defense. 

A True Copy: 

Teste: 
 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 23