UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

WESLEY RYAN TRUMBLE,

Plaintiff,

VS.

LIBERTY LIFE ASSURANCE

COMPANY OF BOSTON,

Defendant.

)

)

)

) CIVIL ACTION NO.

)

) 3:05-CV-1549-G

)

)

)

)

MEMORANDUM OPINION AND ORDER

Before the court are (1) the motion of the plaintiff Wesley Ryan Trumble

(“Trumble”) to remand this case to state court and (2) the motion of the defendant

Liberty Life Assurance Company of Boston (“Liberty Life”) to dismiss this case for

failure to state a claim on which relief can be granted. For the reasons discussed

below, both motions are denied.

I. BACKGROUND

Trumble was hired by Darden Restaurants Inc. (“Darden”) in November 1998. 

In July 2002, he enrolled in a long-term disability plan (“Darden LTD plan”) which

 

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provided coverage through Liberty Mutual Assurance Company of Boston. Plaintiff’s

Original Petition (“Petition”) ¶¶ 6.1, 6.3, attached to Defendant’s Notice of Removal

(“Notice of Removal”) as Exhibit A. After leaving work due to illness on June 29,

2004, Trumble made a claim for long-term disability benefits. Id. ¶¶ 6.4-6.5. When

these benefits were denied by Liberty Life by letter dated November 20, 2004,

Trumble appealed the decision. The appeal was also denied in early 2005. Id. ¶ 6.6.

On July 1, 2005, Trumble filed suit against Liberty Life in the 134th Judicial

District Court of Dallas County, Texas. See id. The suit asserted claims for breach of

the duty of good faith; breach of contract; violations of the Texas Insurance Code,

articles 21.21 and 21.55; violation of the Texas Deceptive Trade Practices Act,

(“DTPA”), TEX. BUS. & COMM. CODE sections 17.46 and 17.50; and common law

fraud. Id. ¶¶ 71.-7.10.

Liberty Life timely removed this action on August 5, 2005, arguing that

Trumble’s claims are completely preempted by the Employee Retirement Income

Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., and, alternatively, that the

parties are of diverse citizenship. Notice of Removal at 1-2. Soon afterward, Liberty

Life filed its motion to dismiss pursuant to FED. R. CIV. P. 12(b)(6). See generally

Defendant’s Motion to Dismiss Plaintiff’s Original Petition. Immediately thereafter,

Trumble filed the instant motion to remand the case back to state court and to collect

his costs, including attorney’s fees, for improper removal. See Docket Sheet;

 

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1 There are two principal bases upon which a district court may exercise

removal jurisdiction: (1) the existence of a federal question and (2) complete

diversity of citizenship among the parties. See 28 U.S.C. §§ 1331, 1332; Aaron v.

National Union Fire Insurance Company of Pittsburg, Pennsylvania, 876 F.2d 1157, 1160

(5th Cir. 1989), cert. denied, 493 U.S. 1074 (1990). Because the parties agree that

diversity of citizenship is not a proper basis for subject matter jurisdiction, see

Defendant’s Brief in Support of its Response to Plaintiff’s Motion to Remand

(“Response Brief”) at 6 n.11 (“Based on Plaintiff’s assertion in his Motion to Remand

that Plaintiff seeks less than $75, 000, exclusive of interest and costs, Defendant

concedes that at this time, the Court does not have jurisdiction pursuant to 28 U.S.C.

§ 1332.”), the only issue before the court is whether the plaintiffs’ complaint presents

a federal question. 

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Plaintiff’s Motion to Remand and Brief in Support of Motion to Remand ¶11. The

jurisdictional issue before the court, therefore, is whether Trumble’s claims are

completely preempted by ERISA.1

 Resolution of this issue affects the court’s

disposition of Liberty Life’s motion to dismiss, so both motions will be decided

simultaneously.

II. ANALYSIS

A. ERISA Preemption Generally

District courts have federal question jurisdiction over civil cases “arising under

the Constitution, laws, or treaties of the United States.” See 28 U.S.C. § 1331; Frank

v. Bear Stearns & Company, 128 F.3d 919, 922 (5th Cir. 1997). Typically, whether an

action should be remanded to state court must be resolved by reference to the

plaintiff’s pleading at the time of removal. State of Texas v. Alliance Employee Leasing

Corporation, 797 F. Supp. 542, 544 (N.D. Tex. 1992). If the court can make this

determination by reference to the plaintiff’s complaint alone, the court need not go

 

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further. However, should a district court need to go beyond the pleadings to assess

the propriety of removal, it may do so. Id.

In determining whether a claim arises under federal law, the well-pleaded

complaint rule allows a plaintiff to be the “master to decide what law he will rely

upon” in pursuing his claims. The Fair v. Kohler Die & Specialty Company, 228 U.S.

22, 25 (1913); see also Beneficial National Bank v. Anderson, 539 U.S. 1, 6-7 (2003);

Aaron v. National Union Fire Insurance Company of Pittsburg, Pa., 876 F.2d 1157, 1160-

61 (5th Cir. 1989), cert. denied, 493 U.S. 1074 (1990). Where potential remedies

exist under both state and federal law, a plaintiff may choose to proceed only under

state law and avoid federal court jurisdiction. Caterpillar, Inc. v. Williams, 482 U.S.

386, 392 (1987); Carpenter v. Wichita Falls Independent School District, 44 F.3d 362,

366 (5th Cir. 1995). “There is an exception to the well-pleaded complaint rule,

though, if Congress ‘so completely pre-empt[s] a particular area that any civil

complaint raising this select group of claims is necessarily federal in character.’” 

Arana v. Ochsner Health Plan, 338 F.3d 433, 437 (5th Cir. 2003) (en banc) (quoting

Metropolitan Life Insurance Company v. Taylor, 481 U.S. 58, 63-64 (1987)), cert. denied,

540 U.S. 1104 (2004).

The Supreme Court has held that state-law claims seeking relief within the

scope of ERISA § 502(a)(1)(B) must be recharacterized as arising under federal law,

and as such, are removable to federal court. Metropolitan Life, 481 U.S. at 60, 67; see

 

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also Ramirez v. Inter-Continental Hotels, 890 F.2d 760, 762 (5th Cir. 1989). According

to § 502(a)(1)(B), ERISA’s civil enforcement provision:

§ 1132. Civil enforcement

(a) Persons empowered to bring a civil

action

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 his rights

under the terms of the plan, or

to clarify his rights to future

benefits under the terms of the

plan . . . .

29 U.S.C. § 1132(a)(1)(B). When a claimant seeks relief “within the scope of

[ERISA’s] civil enforcement provisions,” his or her claims are subject to complete

preemption. Metropolitan Life, 481 U.S. at 66. Complete preemption “‘recharacterizes’

preempted state law claims as ‘arising under’ federal law for the purposes of . . .

making removal available to the defendant.” McClelland v. Gronwaldt, 155 F.3d 507,

516 (5th Cir. 1998); see also Johnson v. Baylor University, 214 F.3d 630, 632 (5th

Cir.), cert. denied, 531 U.S. 1012 (2000).

 

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2 While this “relate to” standard must be interpreted expansively to give

the words their broad common-sense meaning, see Egelhoff v. Egelhoff ex rel. Breiner, 532

U.S. 141, 146 (2001), “[s]ome state actions may affect employee benefit plans in too

tenuous, remote, or peripheral a manner to warrant a finding that the law ‘relates to’

the plan.” Shaw, 463 U.S. at 100 n.21.

3 Recently, the Fifth Circuit partially overruled McClelland and Copling.

(continued...)

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Another type of preemption, known as “conflict” or “ordinary” preemption,

“arises when a federal law conflicts with state law, thus providing a federal defense to

a state law claim, but does not completely preempt the field of state law so as to

transform a state law claim into a federal claim.” Arana, 338 F.3d at 439. Under

ERISA’s conflict preemption provision, § 514(a), “any and all State laws [are

displaced or superceded] insofar as they . . . relate to any employee benefit plan . . .”. 

29 U.S.C. § 1144(a); see also Christopher v. Mobil Oil Corporation, 950 F.2d 1209,

1217 (5th Cir.), cert. denied, 506 U.S. 820 (1992). Any state law “relates to” an

ERISA plan “if it has a connection with or reference to” an employee benefit plan. 

Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983).2

 However, even if the court

were to find that Trumble’s state law causes of action against Liberty Life relate to an

ERISA plan within the meaning of § 514(a), conflict preemption is insufficient to

create federal jurisdiction. See McClelland, 155 F.3d at 516-19 (finding that a claim

that relates to an ERISA plan, but does not seek to enforce rights under § 502(a),

does not create federal removal jurisdiction); Copling v. Container Store, Inc., 174 F.3d

590, 594-95 (5th Cir. 1999).3

 To determine whether removal was proper, therefore,

 

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3

(...continued)

Arana, 338 F.3d at 440 n.11. Prior to Arana, courts in the Fifth Circuit required both

§ 502 complete preemption and § 514 conflict preemption before finding federal

jurisdiction. Id. at 439. The plaintiff in Arana argued that “even if his claim falls

within ERISA § 502 so that it is completely preempted, there is no [federal]

jurisdiction because his claim is not conflict-preempted as well.” Id. The Arana Court

disagreed, holding that “only complete preemption of a claim under ERISA § 502(a)

is required for removal jurisdiction; conflict preemption under ERISA § 514 is not

required; and we overrule the relevant portions of our precedent to the contrary.” Id.

at 440. Arana did not, however, overrule the portions of McClelland, 155 F.3d at

516-19, and Copling, 174 F.3d at 594-95, holding that conflict preemption is

insufficient to create removal jurisdiction. See also Ellis v. Liberty Life Assurance

Company of Boston, 394 F.3d 262, 275 n.34 (5th Cir. 2004) (“Conflict preemption

does not allow removal to federal court but is an affirmative defense against claims

that are not completely preempted under Section 1132(a).”) (citing Giles v. NYLCare

Health Plans, Inc. 172 F.3d 332, 337 (5th Cir. 1999)), cert. denied, U.S. , 125

S. Ct. 2941 (2005).

4 See discussion in part C, infra.

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the court must examine the contours of Trumble’s state law claims as they relate to

complete preemption.

The threshold jurisdictional issue is whether the employee benefit plan offered

by Darden, Trumble’s employer, constitutes an “employee welfare benefit plan”

within the meaning of ERISA. If so, Trumble has potentially asserted a federal cause

of action. The court has subject matter jurisdiction if at least one of Trumble’s state

law causes of action is completely preempted.4

 If, however, the plans do not fall

within the purview of ERISA or Trumble’s state law claims are preempted only via

ERISA § 514(a), then the court lacks jurisdiction and Trumble’s motion to remand

 

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5 Additional relevant definitions are provided in this section:

(3) The term “employee benefit plan” or “plan”

(continued...)

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must be granted. Hansen v. Continental Insurance Company, 940 F.2d 971, 973 (5th

Cir. 1991).

B. Applicability of ERISA

ERISA applies to any “employee benefit plan” if that plan is established or

maintained by any employer or employee organization engaged in interstate

commerce. 29 U.S.C. § 1003(a); Memorial Hospital System v. Northbrook Life Insurance

Company, 904 F.2d 236, 240 (5th Cir. 1990). There are two types of “employee

benefit plans”: “employee welfare benefit plans” and “employee pension benefit

plans.” 29 U.S.C. § 1002(3). This case concerns only the former.

Section 3(1) of ERISA, the definitional section, describes an “employee welfare

benefit plan” as:

any plan, fund, or program . . . established or maintained

by an employer or by an employee organization, or by

both, to the extent that such plan, fund, or program was

established or is maintained for the purpose of providing

for its participants or their beneficiaries, through the

purchase of insurance or otherwise, (A) medical, surgical,

or hospital care or benefits, or benefits in the event of

sickness, accident, disability, death or unemployment, or

vacation benefits, apprenticeship or other training

programs, or day care centers, scholarship funds, or prepaid

legal services . . .

29 U.S.C. § 1002(1).5

 

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5

(...continued)

means an employee welfare benefit plan or an

employee pension benefit plan or a plan which is

both an employee welfare benefit plan and an

employee pension benefit plan.

* * *

(5) The term “employer” means any person

acting directly as an employer, or indirectly in

the interest of an employer, in relation to an

employee benefit plan; and includes a group

or association of employers acting for an

employer in such capacity. 

(6) The term “employee” means any

individual employed by an employer. 

(7) The term “participant” means any

employee or former employee of an employer,

or any member or former member of an

employee organization, who is or may become

eligible to receive a benefit of any type from

an employee benefit plan which covers

employees of such employer or members of

such organization, or whose beneficiaries may

be eligible to receive any such benefit. 

(8) The term “beneficiary” means a person

designated by a participant, or by the terms of

an employee benefit plan, who is or may

become entitled to a benefit thereunder. 

29 U.S.C. § 1002(3)-(8).

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Whether a set of insurance arrangements constitutes an “employee welfare

benefit plan” is a question of fact governed by legal standards promulgated by the

Department of Labor and the Fifth Circuit. Hansen, 940 F.2d at 976. The

Department of Labor has issued regulations establishing criteria by which certain

 

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plans are excluded from ERISA’s coverage. 29 C.F.R. 2510.3-1(j). If insurance

arrangements satisfy all these criteria, then ERISA does not govern that plan and the

inquiry ends. Edwards v. Prudential Insurance Company of America, 213 F. Supp. 2d

1376, 1382-83 (S.D. Fla. 2002) (citing Thompson v. American Home Assurance

Company, 95 F.3d 429, 435 (6th Cir. 1996); Hansen, 940 F.2d at 977; Love v. Fortis

Benefits Insurance Company, 120 F. Supp. 2d 997, 1002 (M.D. Ala. 2000); Riggs v.

Smith, 953 F. Supp. 389, 393 (S.D. Fla. 1997)). If, however, the plan does not

satisfy the criteria for exclusion, a further test must be applied: the court must

determine whether the plan meets the standard adopted in the Fifth Circuit for what

plans are governed by ERISA. Hansen, 940 F.2d at 976.

1. Department of Labor Regulations

The Department of Labor, pursuant to authority granted to it by Congress,

issued regulations regarding exclusion of certain plans from ERISA’s coverage. These

regulations expressly provide that “employee welfare benefit plan[s]”

. . . shall not include a group or group-type insurance

program offered by an insurer to employees or members of

an employee organization, under which

(1) No contributions are made by an employer or employee

organization;

(2) Participation [in] the program is completely voluntary

for employees or members;

(3) The sole functions of the employer or employee

organization with respect to the program are, without

 

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endorsing the program, to permit the insurer to publicize

the program to employees or members, to collect premiums

through payroll deductions or dues checkoffs and to remit

them to the insurer; and

(4) The employer or employee organization receives no

consideration in the form of cash or otherwise in

connection with the program, other than reasonable

compensation, excluding any profit, for administrative

services actually rendered in connection with payroll

deductions or dues checkoffs.

29 C.F.R. 2510.3-1(j). As stated previously, a plan must satisfy each of these criteria

to be excluded from ERISA’s governance. Hansen, 940 F.2d at 976-77 (citing Kidder,

932 F.2d at 351; Gahn v. Allstate Life Insurance Company, 926 F.2d 1449, 1452 (5th

Cir. 1991); Memorial Hospital, 904 F.2d at 241 n.6).

In this case, the first two criteria of the Department of Labor safe harbor

regulations are met: (1) no contributions are made by the employer Darden, Darden

Restaurants Inc. LTD Benefit Plan Document (“Darden LTD”) at 40, attached to

Exhibit A as Exhibit 2 in Appendix in Support of Defendant’s Response to Plaintiff’s

Motion to Remand and Brief in Support (“Response Appendix”) (cost funded by

100% employee contributions), and (2) participation by the employee is completely

voluntary. Darden Restaurants Inc. Summary Plan Description (“Darden SPD”) at

7-9 (discussing eligibility and enrollment), attached to Exhibit A as Exhibit 1 in

Response Appendix. In addition, no evidence has been presented by either party

suggesting that Darden received any consideration in connection with the long-term

 

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6 Even if the other three criteria are met, the safe harbor provision is not

applicable unless the plan satisfies all four criteria. In this case, the third criterion

turns out to be dispositive.

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disability plan. Therefore, the only issue is whether the Darden LTD plan meets the

third criteria -- limited involvement of the employer.6

Several cases discuss the fact that availability of the safe harbor exclusion often

turns on this third criterion. Edwards, 213 F. Supp. 2d at 1382 (citing Johnson v.

Watts Regulator Company, 63 F.3d 1129, 1134 (1st Cir. 1995)). In the analysis of the

employer’s involvement, much depends on a court’s characterization of the

employer’s endorsement of the plan. Recognizing this, the Department of Labor has

issued some guidance on this point:

An endorsement . . . occurs if the employer or employee

organization urges or encourages employee or member

participation in the program or engages in activities that

would lead an employee or member reasonably to conclude

that the program is part of a benefit arrangement

established or maintained by the employer or employee

organization.

Advisory Op. No. 94-24A, 1994 WL 317906 (expressing the opinion that a brochure

from the employee organization which displays the organization’s logo, address, and

characterization of the plan as “[the organization’s] plan” reflects the organization’s

“expressions of [the organization’s] positive, normative judgement regarding the

program.”); see also Johnson, 63 F.3d at 1134 (noting that the advisory opinion dealt

with an employee organization and finding no reason not to apply a similar rationale

 

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to involvement by an employer). In essence, “the hallmark of endorsement is a lack

of employer neutrality with respect to the insurance plan or policy.” B-T Dissolution,

Inc. v. Provident Life & Accident Insurance Company, 101 F. Supp. 2d 930, 943 (S.D.

Ohio 2000).

When analyzing whether an employer’s involvement constitutes an

endorsement, the viewpoint is to be from an “‘objectively reasonable employee’

viewing the circumstances as a whole.” Edwards, 213 F. Supp. 2d at 1383 (quoting

Johnson, 63 F.3d at 1135). From this point of view, it is evident that the employer’s

involvement in this plan precludes application of the safe harbor provision. First, the

Darden Restaurants Inc. summary plan description bears the name of the employer in

large, bold letters at the bottom of the cover. Darden SPD at cover. This in

combination with the Darden SPD introduction indicates Darden’s encouragement of

the insurance arrangement:

Protection to help cushion against the hardships that can

accompany sickness, accident or death is important to all

of us. To make this protection available to you, Darden

Restaurants offers a comprehensive Group Life and Health

Benefit Plan. Our complete program of benefits is one of

the most valuable packages in the restaurant industry.

Id. at 1 (emphasis added). See also Advisory Op. No. 94-24A, 1994 WL 317906

(employee organization’s logo and address on cover in combination with reference to

plan as the organization’s plan precludes application of the safe harbor provision);

Edwards, 213 F. Supp. 2d at 1383-1385 (designation of plan as “our” plan held by

 

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several courts to be indicia of employer behavior exceeding the scope of safe harbor

regulations); Johnson, 63 F.3d at 1137 (distinguishing Hansen, where the corporate

logo was embossed on the plan booklet and the booklet described the insurance

policy as the company’s plan, from the case before court) This introductory language

could be compared to the “prodding language” used by the employer in Hansen such

that a reasonable employee would interpret it as encouraging enrollment in Darden’s

benefit plan. See Edwards, 213 F. Supp. 2d at 1385 (quoting language from the

employer’s booklet in Hansen, 940 F.2d at 974).

Perhaps more persuasive than the employer’s encouragement in the first few

pages of Darden’s summary plan description are the multiple references to ERISA

contained therein. Darden SPD at 75, 83-85 (detailing the employee’s “Rights and

Protection under ERISA”); Darden LTD at 41-45, 47. Although not dispositive, such

references have become an important factor in courts’ analysis of the application of

the safe harbor provision. See Johnson, 63 F.3d at 1136; Thompson, 95 F.3d at 437

(“Thus, . . . where the employer provides a summary plan description that specifically

refers to ERISA in laying out the employee’s rights under the policy . . ., the employee

is entitled to presume that the employer’s actions indicate involvement sufficient to

bring the plan within the ERISA framework.”).

Beyond such documentary evidence of the employer’s involvement in this plan,

certain administrative functions performed by the employer here indicate more

 

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employer involvement than the limited amount allowed by the Department of

Labor’s safe harbor regulations. Darden is the listed Plan Sponsor, Darden LTD at

40, and the Plan Administrator is its Employee Services Department. Darden SPD at

75. Enrollment services are furnished through the Employee Services Department,

Darden SPD at 8, which -- along with Liberty Life -- also answers questions regarding

long term disability benefits. Id. at 1, 58. Darden also provides employees seeking

benefits under the Darden LTD Plan with the required claim forms and additional

information. Affidavit of Debbie Craig at 2, attached to Response Appendix as Exhibit

A; Exhibit 3 attached to Exhibit A in Response Appendix (forms and additional

information sent to employees).

In summary, Darden’s role in this plan goes beyond that of a neutral employer,

thereby precluding application of the Department of Labor’s safe harbor regulations.

2. Fifth Circuit ERISA Plans

Since the insurance arrangement is not excluded from ERISA’s governance via

the Department of Labor’s safe harbor regulations, 29 C.F.R. 2510.3-1(j), the court

must now determine whether the plan falls within the Fifth Circuit’s definition of an

ERISA plan. There are two elements to this inquiry: first, the plan must be

established or maintained by the employer and second, the employer must have a

specific purpose -- the intent to provide benefits to its employees. Hansen, 940 F.2d

at 977.

 

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However, before undertaking this two step inquiry, the court must first

ascertain whether there is in fact a “plan.” Id. Here, the court must determine

whether “from the surrounding circumstances a reasonable person could ascertain the

intended benefits, beneficiaries, source of financing, and procedures for receiving

benefits.” Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir. 1982) (en banc);

see also Memorial Hospital, 904 F.2d at 240-41 (citing Donovan with approval). The

Darden LTD plan clearly meets these criteria: a reasonable person would easily

conclude that the intended benefits were for long-term disability, the beneficiaries

were Darden employees and their dependents, the insurance premiums were to be

paid by the individual employees via payroll deductions, and benefits could be

received by submitting claims and other documentation to Liberty Life.

The next step in the inquiry is to apply the Fifth Circuit test for ERISA plans. 

To determine whether an employer “established or maintained” an employee benefit

plan, “the court should [focus] on the employer . . . and [its] involvement with the

administration of the plan.” Gahn, 926 F.2d at 1452. In other words, “bare

purchases of health insurance where . . . the purchasing employer neither directly nor

indirectly owns, controls, administers, or assumes responsibility for the policy or its

benefits” does not qualify as an ERISA plan. Taggart Corporation v. Life & Health

Benefits Administration, Inc., 617 F.2d 1208, 1211 (5th Cir. 1980), cert. denied, 450

U.S. 1030 (1981). Beyond this meaningful involvement with the administration of

 

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the plan, the employer must also have a purpose to provide insurance for the benefit

of its employees. Hansen, 940 F.2d at 978.

Darden’s LTD plan, when analyzed under these standards, is governed by

ERISA. Similar to the plan in Hansen, Darden did not purchase the insurance for its

employees, but it did assume some responsibility in the administration of benefits by

designating the Employee Services Department as its Plan Administrator and by

distributing the necessary claim forms to its employees. Darden also distributed its

summary plan description, detailing the multiple insurance offerings for its employees

as “Group Insurance Plans,” and encouraging its employees to participate. In

addition, as stated in the above discussion of the Department of Labor regulations,

the Darden summary plan description contained multiple references to ERISA and

employee rights thereunder. Such references indicate a purpose and intent of the

employer to provide benefits to its employees as well as to be governed by ERISA. 

This purpose, in conjunction with affidavits from Darden and Liberty Life employees,

bolsters the conclusion that this is an ERISA welfare benefit plan. Affidavit of

Debbie Craig at 2 (“The Darden LTD Plan is established and maintained by Darden

for the purposes of providing long term disability benefits to its participating

employees.”); Affidavit of Paula McGee at 2, attached to Response Appendix as Exhibit

B (“As the disability plan that is the subject of this litigation (Exhibit 2) was procured

 

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7 The plaintiff specifically objects to these affidavits as impermissible

hearsay. Plaintiff’s Reply and Objections to Defendant’s Response to Plaintiff’s

Motion to Remand ¶¶ 2.1, 2.4. Although these affidavits are admittedly self-serving

and conclusory, the court has considered them.

- 18 -

by Darden for the benefit of its employees, including Wesley Ryan Trumble, this plan

is an ERISA plan.”).7

As the discussion above indicates, the Darden LTD Plan was an employee

welfare benefit plan within the meaning of ERISA. Accordingly, the next step in the

inquiry is to determine whether the plaintiff’s state law claims are completely

preempted by ERISA.

C. Preemption of Trumble’s State Law Claims

The Fifth Circuit, in Memorial Hospital System, 904 F.2d at 245, outlined two

unifying characteristics of cases finding ERISA preemption of a plaintiff’s state law

causes of action. See also Cypress Fairbanks Medical Center Inc. v. Pan-American Life

Insurance Company, 110 F.3d 280, 283 (5th Cir.), cert. denied, 522 U.S. 862 (1997);

Foley v. Southwest Texas HMO, Inc., 226 F. Supp. 2d 886, 894 (E.D. Tex. 2002). 

Preemption of a plaintiff’s state law causes of action has been found when: (1) the

state law claim addresses areas of exclusive federal concern, and (2) the claim directly

affects the relationship between traditional ERISA entities -- the employer, the plan

and its fiduciaries, and the participants and beneficiaries. Memorial Hospital, 904 F.2d

at 245; Foley, 226 F. Supp. 2d at 894.

 

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8 “[L]awsuits against ERISA plans for run-of-the-mill state-law claims such

as unpaid rent, failure to pay creditors, or even torts committed by an ERISA plan . . .

are relatively commonplace. Petitioners and the United States (appearing here as

amicus curiae) concede that these suits, although obviously affecting and involving

ERISA plans and their trustees, are not pre-empted by ERISA § 514(a).” Mackey v.

(continued...)

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First, preemption is appropriate, according to Memorial Hospital, where the

state law addresses areas of exclusively federal concern, including the right to receive

benefits under the terms of an ERISA plan. 904 F.2d at 245. Congress’ purpose in

enacting ERISA was “to promote the interests of employees and their beneficiaries in

employee benefit plans, . . . and to protect contractually defined benefits.” Firestone

Tire & Rubber Company v. Bruch, 489 U.S. 101, 113 (1989) (internal citations and

quotations omitted). The Supreme Court has cautioned, however, that it has

“addressed claims of [ERISA] pre-emption with the starting presumption that

Congress [did] not intend to supplant state law.” New York State Conference of Blue

Cross and Blue Shield Plans v. Travelers Insurance Company, 514 U.S. 645, 654 (1995);

see also Fort Halifax Packing Company, Inc. v. Coyne, 482 U.S. 1, 19 (1987) (“ERISA

pre-emption analysis ‘must be guided by respect for the separate spheres of

governmental authority preserved in our federalist system.’”) (quoting Alessi v.

Raybestos Manhattan, Inc., 451 U.S. 504, 522 (1981)). Therefore, lawsuits against

ERISA plans for commonplace, run-of-the-mill state-law claims -- although obviously

affecting and involving ERISA plans -- are not preempted by ERISA. Mackey v. Lanier

Collection Agency & Service, Inc., 486 U.S. 825, 833 (1988).8

 

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8

(...continued)

Lanier Collection Agency & Service, Inc., 486 U.S. 825, 833 (1988) (footnote omitted).

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If the state law addresses an issue exclusively of federal concern, preemption is

appropriate, according to Memorial Hospital, where the state law also directly affects

the relationship among the traditional ERISA entities -- the employer, the plan and

its fiduciaries, and the participants and beneficiaries. 904 F.2d at 245. Otherwise,

the law’s effect on an employee benefit plan is “too tenuous, remote, or peripheral . . .

to be preempted.” Id. at 249 (quoting Sommers Drug Stores Co. Employee Profit Sharing

Trust v. Corrigan Enterprises, Inc., 793 F.2d 1456, 1467-68 (5th Cir. 1986), cert. denied,

479 U.S. 1034 (1987)).

Here, Trumble seeks to recover for the allegedly wrongful denial of benefits

under the Darden LTD Plan. See Petition ¶¶ 6.1-6.8. He claims that “[t]he conduct

of Defendant [Liberty Life] constitutes a breach of the contract of insurance between

Plaintiff and Defendant.” Id. ¶ 7.2. Such a cause of action “to recover benefits due

to him under the terms of his plan,” 29 U.S.C. § 1132(a)(1)(B), affects a matter of

exclusive federal concern and directly affects the relationship between traditional

ERISA entities: the participant and the plan. Thus, this claim is completely

preempted by ERISA and renders Liberty Life’s removal to federal court proper. See

Ellis, 394 F.3d at 276 n.34 (the district court properly found that, for the purposes of

removal, the plaintiff’s state breach of contract claim was completely preempted by

ERISA).

 

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When a complaint raises both completely-preempted claims and arguably

conflict-preempted claims, the court may exercise removal jurisdiction over the

completely-preempted claims and supplemental jurisdiction over the remaining

claims. Giles, 172 F.3d at 337-338. The balance of Trumble’s state law claims are

arguably conflict-preempted, so the court will exercise supplemental jurisdiction over

those causes of action. See Ellis, 394 F.3d at 276 (ERISA preempts the plaintiff’s

common law claim under Texas law for breach of the duties of good faith and fair

dealing); Ellis, 394 F.3d at 278 (the plaintiff’s claims under Texas Insurance Code

articles 21.21 and 21.55 are preempted by ERISA); Burgos v. Group & Pension

Administrators, Inc., 286 F. Supp. 2d 812, 818-19 (S.D. Tex. 2003) (the plaintiff’s

claims under DTPA §§ 17.46, 17.50 are preempted by ERISA); Perdue v. Burger King

Corporation, 7 F.3d 1251, 1255 (5th Cir. 1993) (ERISA preempts the plaintiff’s state

common law fraud claim because the only recoverable damages “relate to” the value

of ERISA benefits); see also Kentucky Association of Health Plans, Inc. v. Miller, 538 U.S.

329, 341-42 (2003) (for a state law to be deemed a “law . . . which regulates

insurance” under § 1144(b)(2)(A) and thus saved from ERISA preemption, it must --

even though it “relates to” an ERISA plan -- satisfy two requirements: it must be

specifically directed toward entities engaged in insurance and it must substantially

affect the risk pooling arrangement between the insurer and the insured).

 

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D. Motion to Dismiss

Since Trumble drafted his complaint for a Texas state court, the court

concludes that amendment of the complaint will serve the interests of justice and will

not unduly prejudice Liberty Life. Liberty Life’s motion to dismiss is based

exclusively on the fact that Trumble’s complaint contains only claims for relief under

state law, a fact entirely understandable in light of the causes of action Trumble

sought to pursue. Therefore, the court will deny Liberty Life’s motion to dismiss

under Rule 12 without prejudice and afford Trumble the opportunity to amend his

complaint in light of this memorandum opinion and order. See Rooney v. United

Services Automobile Association, No. SA-04-CV-137-RF, at 5 (W.D. Tex. May 10,

2004)), attached to Defendant’s Response to Plaintiff’s Motion to Remand.

III. CONCLUSION

Accordingly, Trumble’s motion to remand is DENIED.

Liberty Life’s motion to dismiss is DENIED without prejudice. Trumble is

granted leave to amend his complaint on or before November 21, 2005. Failure to

file an amended complaint by that date may result in dismissal of this case without

further notice.

 

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SO ORDERED.

October 31, 2005.

 

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