Opinion ID: 572652
Heading Depth: 2
Heading Rank: 1

Heading: ERISA Preemption: An Overview.

Text: 14 Out of respect for the distinct spheres of authority inherent in our federal system, preemption of state law is generally disfavored. See, e.g., Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 522, 101 S.Ct. 1895, 1905, 68 L.Ed.2d 402 (1981). But, this presumption is not inviolable. If the nature of the regulated subject matter permits no other conclusion, or ... Congress has unmistakably so ordained, federal preemption of state law is mandated under the Supremacy Clause. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963). 15 ERISA preemption is, as a general matter, extensive in its scope. ERISA governs employee benefit plans. 29 U.S.C. § 1001. As part of the statutory structure established to regulate such plans, Congress formulated a sweeping preemption clause. This clause, ERISA § 514(a), commands that ERISA shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan. 29 U.S.C. § 1144(a). For preemption purposes, State laws are all laws, decisions, rules, regulations, or other State action having the effect of law. 29 U.S.C. § 1144(c)(1). 16 Under the provisions of section 514(a), if a state law relates to an employee benefit plan, it is preempted. A law 'relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983). [A] state law may 'relate to' a benefit plan, and thereby be preempted, even if the law is not specifically designed to affect such plans, or the effect is only indirect. Ingersoll-Rand Co. v. McClendon, --- U.S. ----, 111 S.Ct. 478, 483, 112 L.Ed.2d 474 (1990); see also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47-48, 107 S.Ct. 1549, 1553, 95 L.Ed.2d 39 (1987); Shaw, 463 U.S. at 98, 103 S.Ct. at 2900. 17 At the bottom line, the question whether a certain state action is pre-empted by federal law is one of congressional intent. Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 208, 105 S.Ct. 1904, 1909-10, 85 L.Ed.2d 206 (1985); Malone v. White Motor Corp., 435 U.S. 497, 504, 98 S.Ct. 1185, 1190, 55 L.Ed.2d 443 (1978). While fathoming congressional intent can sometimes be an imprecise venture, section 514(a)'s bold and capacious language provides a particularly incisive manifestation of congressional purpose, thus easing the judicial chore. See Ingersoll-Rand, 111 S.Ct. at 482 (Where, as here, Congress has expressly included a broadly worded pre-emption provision in a comprehensive statute such as ERISA, our task of discerning congressional intent is considerably simplified.); Shaw, 463 U.S. at 96, 103 S.Ct. at 2899 (similar). 18 In considering Congress' intent in the ERISA context, all roads lead to Rome. The legislative history of section 514(a), like its language, counsels against a crabbed interpretation of the statute. As the Shaw Court observed, the bill that became ERISA originally contained a much narrower preemption clause that Congress rewrote more panoramically, indicating that the section's pre-emptive scope was as broad as its language. Shaw, 463 U.S. at 98, 103 S.Ct. at 2901. Senator Williams, a principal sponsor of the bill, stated that the ERISA preemption clause, in its final form, was intended to apply in its broadest sense to all actions of State or local governments, or any instrumentality thereof, which have the force or effect of law. 120 Cong.Rec. 29,933 (1974). 19 Exhibiting great deference to the statutory language and legislative history, the Court has consistently acknowledged the far-ranging scope of section 514(a)'s phraseology and interpreted section 514(a) expansively. See, e.g., Ingersoll-Rand, 111 S.Ct. at 482; Pilot Life, 481 U.S. at 44-47, 107 S.Ct. at 1551-53; Shaw, 463 U.S. at 96-100, 103 S.Ct. at 2899-2902; see also FMC Corp. v. Holliday, --- U.S. ----, 111 S.Ct. 403, 407, 112 L.Ed.2d 356 (1990) (observing that [ERISA's] pre-emption clause is conspicuous for its breadth); Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 24 n. 26, 103 S.Ct. 2841, 2854 n. 26, 77 L.Ed.2d 420 (1983) (describing ERISA's commodious preemption provision as virtually unique). 20 Despite the fact that section 514(a) casts a long shadow, ERISA preemption is not limitless. Some 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, 103 S.Ct. at 2901 n. 21; see also Retirement Fund Trust, Etc. v. Franchise Tax Bd., 909 F.2d 1266, 1281 (9th Cir.1990) (ERISA held not to preempt a state income tax levy); Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 147 (2d Cir.) (ERISA held not to preempt a state escheat law), cert. denied, 493 U.S. 811, 110 S.Ct. 57, 107 L.Ed.2d 25 (1989); Firestone Tire & Rubber Co. v. Neusser, 810 F.2d 550, 556 (6th Cir.1987) (ERISA held not to preempt a municipal income tax of general applicability); Rebaldo v. Cuomo, 749 F.2d 133, 139 (2d Cir.1984) (ERISA held not to preempt a state law regulating hospital fees), cert. denied, 472 U.S. 1008, 105 S.Ct. 2702, 86 L.Ed.2d 718 (1985). By the same token, ERISA does not preempt state judgment-enforcing laws of general application. Thus, in Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836 (1988), a state's general garnishment statute evaded preemption even when used to satisfy judgments against ERISA plan participants. See id. at 841, 108 S.Ct. at 2188. 21 We do not pretend that it is always easy to draw the line separating those state statutes that fall prey to ERISA preemption from those that stand fast. But, to the extent that gray areas exist, the policy rationales that permeate ERISA and its preemption clause can afford sound guidance in determining what state laws may survive. See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 15, 107 S.Ct. 2211, 2219, 96 L.Ed.2d 1 (1987). The drafters of section 514(a) wished, among other things, to protect the rights and expectations of plan participants, Ingersoll-Rand, 111 S.Ct. at 482, and 22 to ensure that plans and plan sponsors would be subject to a uniform body of benefit law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government. Otherwise, the inefficiencies created could work to the detriment of plan beneficiaries. 23 Id. at 484. Indeed, the Court has often justified section 514(a)'s elongated reach by citing Congress' desire to avoid a patchwork scheme of regulation [which] would introduce considerable inefficiencies in benefit program operation. Fort Halifax, 482 U.S. at 11, 107 S.Ct. at 2217; see also FMC, 111 S.Ct. at 408-09; Shaw, 463 U.S. at 105, 103 S.Ct. at 2904. 24