Source: https://www.lrrc.com/Complete-Versus-Conflict-Preemption-In-ERISA-Cases-01-09-2014
Timestamp: 2019-06-26 10:32:05
Document Index: 308957370

Matched Legal Cases: ['§ 1441', '§ 1331', '§ 502', '§ 502', '§ 502', '§ 502', '§ 514', '§ 502', '§ 502', '§ 502', '§ 1447']

Complete Versus Conflict Preemption In ERISA Cases | Lewis Roca Rothgerber Christie LLP
Under the removal statute, "any civil action brought in a State court of which the district courts have original jurisdiction may be removed by the defendant" to federal court. 28 U.S.C. § 1441(a). The "original jurisdiction" referred to is federal question jurisdiction, which covers cases "arising under the Constitution, laws, or treaties of the United States." Id.§ 1331.
Complete Preemption: A Corollary to the Well-Pleaded Complaint Rule
A corollary or exception to the well-pleaded complaint rule exists "[w]hen a federal statute wholly displaces [a] state-law cause of action through complete pre-emption." Davila, 542 U.S. at 207 (quoting Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8 (2003)). Under the complete-preemption doctrine, a select collection of claims, regardless of how they are pled, are "necessarily federal" and removable to federal court. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 64-65 (1987). For these claims, federal law does not simply preempt state law—it replaces it. One court explained that "[p]reemption is what wipes out the state law, but the foundation of removal [under complete preemption] is the creation of federal law to replace state law." Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1075 (7th Cir. 1992); see also Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009) (complete preemption displaces state law claims and substitutes a federal claim). Therefore, where a plaintiff's state-law cause of action is removed on the basis of complete preemption, the federal court will "re-characterize" the claim as a federal claim, thereby making the claim "arise under" federal law. Cavallaro v. UMass Mem'l Healthcare, Inc., 678 F.3d 1, *4 (1st Cir. 2012).
ERISA can preempt state law in two ways. First, as discussed, it can occupy an entire field, i.e., "complete preemption." Second, it can provide a defense to a state law claim, i.e., "conflict preemption." Which form of preemption applies to a plaintiff's state law claims is vital to the decision and consequence of removal.
ERISA § 502(a) enumerates ten scenarios in which a civil action may be brought under ERISA. The most typical scenario (§ 502(a)(1)(B)) authorizes a civil action by a participant or beneficiary to recover benefits due under the terms of a plan, to enforce or clarify rights to future benefits under the terms of a plan, or to enforce the terms of a plan. In Taylor, the Supreme Court looked to Congressional intent and found that the legislative history evinced Congress's intent to displace state law actions falling within § 502(a)(1)(B). 481 U.S. at 64-66. The Court ruled that, because the employee was a beneficiary of an ERISA-regulated plan and had brought suit to essentially enforce the terms of that plan, the claims fell within the ambit of § 502(a)(1)(B) and were therefore completely preempted and subject to removal. Id. at 66-67.
Conflict Preemption under ERISA § 514(a). The second form of ERISA preemption, which is commonly referred to as "ordinary," "conflict," or "defense" preemption, constitutes true preemption. It "allows a defendant to defeat a plaintiff's state-law claim on the merits by asserting the supremacy of federal law as an affirmative defense." Cmty. State Bank v. Strong, 651 F.3d 1241, 1261 n.16 (11th Cir. 2011).
Case Studies Post-Davila
The first part of the Davila test is whether the plaintiff "could have brought his claim under § 502(a)(1)(B)." This prong is satisfied upon a showing that: (a) the claimant is the type of party who can bring a claim pursuant to § 502(a)(1)(B) and (b) the actual claim asserted can be construed as a colorable claim for benefits pursuant to § 502(a)(1)(B). Montefiore, 642 F.3d at 328. Where a claimant is not a party that could bring a claim pursuant to ERISA's civil enforcement mechanism, the first part of the Davila cannot be not satisfied and complete preemption will not exist. Similarly, where a claim is brought "solely pursuant to an independent duty that has nothing to do with ERISA," the claim fails the first part of the Davila test. Id.
Stevenson sued for breach of contract, arguing that the bank's promise was independent of the plan. The Second Circuit agreed, finding that the bank's obligation to maintain Stevenson's status as a participant did not derive from the plan, but instead arose from a "separate promise" made by the bank. 609 F.3d at 60. Although the bank's promise referred to its plan "as a means of establishing the value of that promise," the court concluded that the promise was not dependent on the plan for purposes of complete preemption. Id. at 60–61. The plan's terms were relevant to the "extent of [Stevenson's] damages," but not to the existence of the duty itself. Id. at 61. The court consequently vacated the trial court's ruling on a motion to dismiss (as the Court lacked jurisdiction) and ordered the matter remanded.
ERISA preemption issues can be complicated, but understanding the difference between complete and conflict preemption is critical to the removal decision. An incorrect removal decision, where the two-part Davila test is not satisfied, will likely result in remand and may result in an award of attorneys' fees incurred as a result of the improper removal. See 28 U.S.C. § 1447(c) ("An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.").