Source: http://www.ecases.us/case/c721469/20-employee-benefits-cas-1580-pens-plan-guide-p-23922n-betty-jass-v/
Timestamp: 2020-08-13 02:26:05
Document Index: 208723913

Matched Legal Cases: ['§ 1331', '§ 301', '§ 502', '§ 514', '§ 502', '§ 502', '§ 502', '§ 502', '§ 502', '§ 514']

20-employee-benefits-cas-1580-pens-plan-guide-p-23922n-betty-jass-v, Seventh Circuit, US Court of Appeals Cases, Federal Courts, COURT CASE
For federal question jurisdiction to exist, a case must arise "under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Naturally courts begin with a review of the complaint. "Ordinarily a court determines whether there is federal question jurisdiction by examining the plaintiff's well-pleaded complaint, for '[i]t 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.' " Rice v. Panchal, 65 F.3d 637, 639 (7th Cir.1995) (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S. Ct. 1542, 1546, 95 L. Ed. 2d 55 (1987)). "Thus the defendant cannot cause a transfer to federal court simply by asserting a federal question in his responsive pleading." Rice, 65 F.3d at 639. The issues raised in the plaintiff's complaint, not those added in the defendant's response, control the litigation.
Although a preemption defense cannot be the basis for original federal jurisdiction, "the Supreme Court has fashioned an exception to this rule where Congress has completely preempted a given area of state law." Lister v. Stark, 890 F.2d 941, 943 (7th Cir.1989). This exception was first announced in Avco Corp. v. Aero Lodge No. 735, etc., 390 U.S. 557, 88 S. Ct. 1235, 20 L. Ed. 2d 126 (1968), when the Supreme Court held that state law claims within the scope of § 301 of the Labor Management Relations Act were removable to federal court.
In Rice, we sought to clarify the distinction between "complete preemption" and "conflict preemption" under ERISA. See also, Warner v. Ford Motor Co., 46 F.3d 531 (6th Cir.1995) (explaining the difference between "complete preemption" and "conflict preemption" under ERISA). We began by looking at the development of the "complete preemption" doctrine in general, and more specifically as applied to ERISA. Against that backdrop and citing Franchise Tax Bd. of State of Cal. v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1, 9-12, 103 S. Ct. 2841, 2846-48, 77 L. Ed. 2d 420 (1983), and Taylor, 481 U.S. at 63, 107 S.Ct. at 1546, we held that a claim brought "under ERISA, § 502(a) provides the basis for complete preemption whereas § 514(a) provides the basis for conflict preemption."4 Rice, 65 F.3d at 639-40. Three factors are relevant for determining whether a claim is within the scope of § 502(a): (1) whether the "plaintiff [is] eligible to bring a claim under that section;" id. at 641(2) whether the plaintiff's "cause of action falls within the scope of an ERISA provision that the plaintiff can enforce via § 502(a)," id.; and (3) whether the plaintiff's "state law claim cannot be resolved without an interpretation of the contract governed by federal law." Id. at 644.
The question, then, is whether Jass' claim against Margulis is "really" based on ERISA, Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1075 (7th Cir.1992), or in other words whether the claim is best recharacterized as a 502(a)(1)(B) claim to recover benefits due under the terms of the plan. Taylor, 481 U.S. at 64, 107 S.Ct. at 1547 (question is whether complaint that raises only state law causes of action is properly recharacterized as an action arising under federal law); Rice, 65 F.3d at 641 (the question is whether plaintiff's claim against defendant is within the scope of § 502(a), even though the complaint alleged only state common law contract and tort claims). This question requires us to apply the factors set forth in Rice, as listed above. See supra at 1488. And in applying these factors, as noted above, we are not limited by the complaint, but may look beyond it to assure ourselves "that the plaintiff has not by 'artful pleading' sought to defeat defendant's right to a federal forum." Oglesby, 752 F.2d at 277-78 (quoting Salveson v. Western States Bankcard Assoc., 525 F. Supp. 566, 572 (N.D.Cal.1981)).
Third, Jass' negligence claim against Margulis cannot be resolved without interpreting the benefits contract because that contract provided the benefits to which Jass was entitled. See Rice, 65 F.3d at 644 (where state law creates a quality standard by which performance of the contract is evaluated then that state law is completely preempted.) As the Supreme Court stated in Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56, 107 S. Ct. 1549, 1557-58, 95 L. Ed. 2d 39 (1987), "Congress ... ma[d]e clear its intention that all suits brought by beneficiaries or participants asserting improper processing of claims under ERISA-regulated plans be treated as federal questions governed by § 502(a)."
Jass, however, failed to request relief available under ERISA, instead seeking only compensatory damages for her injury, resulting medical expenses, pain and suffering and lost wages. Section 502(a) provides that a beneficiary may only "recover benefits due 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." Thus, "if a claim is within the scope of § 502(a), then a participant's ability to recover damages is limited." Rice, 65 F.3d at 640. Monetary damages also do not constitute "other appropriate equitable relief" under ERISA. Mertens v. Hewitt Assoc., 508 U.S. 248, 113 S. Ct. 2063, 124 L. Ed. 2d 161 (1993) (holding that "equitable relief" under section 502(a)(3) of ERISA does not include a damages remedy).
We need not concern ourselves with the intricacies involved here, however, because when the district court subsequently remanded Jass' claim against Dr. Anderson to state court it cured the jurisdictional problem by in effect dismissing the non-diverse party. While federal jurisdiction "ordinarily depends on the facts as they exist when the complaint is filed," Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830, 109 S. Ct. 2218, 2222, 104 L. Ed. 2d 893 (1989), or where an amended complaint is filed based on the amended complaint, Wellness Community-National v. Wellness House, 70 F.3d 46, 49, 50 (7th Cir.1995), both district courts and appellate courts have the authority to dismiss a nondiverse party to retain diversity jurisdiction. Newman-Green, 490 U.S. 826, 109 S. Ct. 2218. The district court inadvertently achieved this result when it remanded the malpractice claim against Dr. Anderson. In this appeal, the parties remaining in the underlying lawsuit are diverse, and federal question jurisdiction remains over two of the claims as well.
The Supreme Court explained in FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S. Ct. 403, 407-08, 112 L. Ed. 2d 356 (1990), that this "relate to" clause "is conspicuous for its breadth" and that "[i]t establishes as an area of exclusive federal concern the subject of every state law that 'relate[s] to' an employee benefit plan governed by ERISA." Central States v. Neurobehavioral Assoc., 53 F.3d 172, 174 (7th Cir.1995) ("The structure and legislative history indicate that the words 'relate to' are intended to apply in their broadest sense."). "ERISA preemption is, therefore, not limited to displacement of state laws affecting employee benefit plans, but rather extends to any state cause of action that has a '[c]onnection or reference to' an ERISA plan." Id. (quoting Pilot Life, 481 U.S. 41, 107 S. Ct. 1549). Moreover, "a state law may 'relate to' a benefit plan, and thereby be pre-empted, even if the law is not specifically designed to affect such plans, or the effect is only indirect." Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S. Ct. 478, 483, 112 L. Ed. 2d 474 (1990).
Such recovery would also conflict with Congress' intent that a plan not be subject to a myriad of state laws applying to employee benefit plans. Safeco Life Ins. Co. v. Musser, 65 F.3d 647, 651 (7th Cir.1995). In Safeco, we explained that "[w]hat Congress meant, ... was to eliminate the prospect of conflict among the federal, state, and local laws applying to employee benefit plans by making the regulation of such plans exclusively a federal matter." Id. "By establishing benefit plan regulation as exclusively a federal concern, Congress minimized the need for interstate employers to administer their plans differently in each State in which they have employees." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 105, 103 S. Ct. 2890, 2904, 77 L. Ed. 2d 490 (1983). "Consistent with that purpose, the Court in prior cases had deemed preempted state laws that had the effect of regulating the structure or administration of ERISA plans or providing avenues outside of the ERISA framework to vindicate employees' rights under these plans." Safeco, 65 F.3d at 651-52. To allow a vicarious liability claim against an ERISA Plan for the alleged negligence of a listed physician would require multi-state plans to vary their plan administration to avoid strict vicarious liability under differing state laws. See Corcoran, 965 F.2d at 1332-33 (allowing negligence suit against utilization review service would contravene Congress' intent that plans be subject to a uniform body of law). This has been described by the Supreme Court as "particularly disruptive." Ingersoll-Rand, 498 U.S. at 142, 111 S.Ct. at 484. "It is foreseeable that state courts, exercising their common law powers, might develop different substantive standards applicable to the same employer conduct, requiring the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction. Such an outcome is fundamentally at odds with the goal of uniformity that Congress sought to implement." Id.; see also, Anderson v. Humana, Inc., 24 F.3d 889, 891 (7th Cir.1994) (holding that employee's claim of violation of state anti-deception laws arising from information provided in benefit literature was "related to" benefit plan and preempted because one set of rules should apply to all plans).
In sum, while "[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," id., that is not the case here. Types of cases considered "too tenuous, remote, or peripheral" include: a state garnishment of a spouse's pension income to enforce alimony and support orders, Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. at 2901 n. 21 (citing American Tel. and Tel. Co. v. Merry, 592 F.2d 118, 121 (2d Cir.1979)); a defamation lawsuit against a plan by a doctor, Mackey v. Lanier Coll. Agency & Serv., Inc., 486 U.S. 825, 833, 108 S. Ct. 2182, 2187, 100 L. Ed. 2d 836 (1988) (citing Abofreka v. Alston Tobacco Co., 288 S.C. 122, 341 S.E.2d 622 (1986)); a suit against an ERISA plan for unpaid rent, Mackey, 486 U.S. at 833, 108 S.Ct. at 2187 (citing Morris v. Local 804, Delivery & Warehouse Employees Health & Welfare Fund, 116 Misc. 2d 234, 455 N.Y.S.2d 517 (1982)); or a suit against an ERISA plan for unpaid attorneys' fees, Mackey, 486 U.S. at 833, 108 S.Ct. at 2187 (citing Luxemburg v. Hotel & Restaurant Employees & Bartenders Int'l Union Pension Fund, 91 Misc. 2d 930, 398 N.Y.S.2d 589 (1977)). Or as we speculated in Pohl v. National Benefits Consult., Inc., 956 F.2d 126, 128 (7th Cir.1992), a participant who slipped on a banana peel in an plan administrator's office would not be preempted by § 514(a). These cases are all "run-of-the-mill" tort claims. Mackey, 486 U.S. at 833, 108 S.Ct. at 2187. None involved a suit by a plan participant against a plan. Nor did they concern allegations of negligence based on a failure to treat where the plan denied benefits for the proposed treatment. They also involve relationships arising from something other than a benefit plan, while here the sole basis for any relationship between PruCare and Jass, PruCare and Anderson, and Anderson and Jass arises solely from the health benefit plan PruCare provided Jass.
In her motion to remand, Jass claimed that diversity of jurisdiction did not exist because both she and Dr. Anderson were citizens of Illinois. But at the time she filed her motion to remand, Dr. Anderson was not a party in the lawsuit, but merely a respondent-in-discovery. Thus, his citizenship for purposes of diversity was irrelevant. See, e.g., Murphy v. Schering Corp., 878 F. Supp. 124, 125-26 (N.D.Ill.1995) (ignoring citizenship of respondent in discovery for purposes of determining jurisdiction, while noting that later joinder of respondent in discovery may destroy diversity)
DocketNumber： 95-2471
Citation Numbers： 88 F.3d 1482
Arthur Lister v. H. Allan Stark , 890 F.2d 941 ( 1989 )
Michael MacIosek and Kathleen MacIosek and Marjan R. Kmiec, ... , 930 F.2d 536 ( 1991 )
Emil J. Bartholet v. Reishauer A.G. (Zurich) and Reishauer ... , 953 F.2d 1073 ( 1992 )
Matthew Burda v. M. Ecker Company , 954 F.2d 434 ( 1992 )
first-national-life-insurance-company-an-alabama-corporation-v , 960 F.2d 1546 ( 1992 )
christen-m-shannon-a-minor-by-her-guardian-ad-litem-v-james-p-shannon , 965 F.2d 542 ( 1992 )
Schultz v. Aviall, Inc. Long Term Disability Plan , 670 F.3d 834 ( 2012 )
Pens. Plan Guide (Cch) P 23944l Rosemary Riordan v. ... , 128 F.3d 549 ( 1997 )
Kimberly Speciale v. Katherine Seybold, Administrative ... , 147 F.3d 612 ( 1998 )
jeffrey-d-hull-v-richard-h-fallon-md-individually-prudential , 188 F.3d 939 ( 1999 )
William L. Clair and John D. O'malley, for Themselves and ... , 190 F.3d 495 ( 1999 )
Debra C. Moran, and State of Illinois, Intervenor-Appellant ... , 230 F.3d 959 ( 2000 )
Peter G. Mein v. Carus Corporation, a Corporation, M. ... , 241 F.3d 581 ( 2001 )
Lyn Everhart v. Allmerica Financial Life Insurance Company, ... , 275 F.3d 751 ( 2001 )