Opinion ID: 1803267
Heading Depth: 2
Heading Rank: 2

Heading: the federal decisions

Text: In Alessi v Raybestos-Manhattan, Inc, 451 US 504; 101 S Ct 1895; 68 L Ed 2d 402 (1981), the United States Supreme Court first considered the scope of the ERISA'S preemption provision. The state law at issue was a section of New Jersey's workers' compensation act prohibiting a setoff of workers' compensation benefits against employee retirement pension benefits. Id., pp 507-508. The New Jersey set-off provision precluded a reduction in workers' compensation payments, not pension payments. Nevertheless, the Supreme Court held that the New Jersey provision was preempted because it ultimately affected the administration of pension funds by indirectly interfering with the integration method for calculating benefits. [7] Id., p 524. Unfortunately for our purposes, the Alessi Court declined an invitation to determine the outer boundaries of ERISA preemption. Id., pp 524-525. ERISA preemption was next considered by the United States Supreme Court in the context of New York statutes forbidding discrimination in employment, including discrimination in employee benefit plans on the basis of pregnancy. Shaw v Delta Air Lines, Inc, supra, p 88. The Shaw Court unanimously held that New York law was preempted by the ERISA. The Court reasoned that the words relate to were used by Congress in a broad sense, including laws which directly regulated employee benefit plans as well as those affecting employee benefit plans by implication. Id., pp 96-99. Since the obvious implication of the New York statutes was to require disbursements under employee benefit plans for otherwise noncompensable, pregnancy-related disability, the state law did fall within the general ERISA preemption provision. [8] The Shaw Court was careful to note, however, that [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. Cf. American Telephone and Telegraph Co v Merry, 592 F2d 118, 121 (CA 2, 1979) (state garnishment of a spouse's pension income to enforce alimony and support orders is not preempted). [ Shaw, supra, p 100, n 21.] Two years later, in Metropolitan Life, supra, a Massachusetts statute, requiring certain minimum mental health care benefits in general health insurance policies, was upheld in a challenge under the ERISA preemption provision. [9] Again, the United States Supreme Court had no difficulty in finding that the statute fell within the general preemption provision of the ERISA, 29 USC 1144(a), in that the state law did relate to employee benefit plans. However, the Court also found an exception for insurance regulation to be applicable. See 29 USC 1144(b)(2)(A). [10] The Metropolitan Life Court acknowledged that certain disuniformities from state to state would result from its ruling, but concluded that these inevitably flowed from the decision of Congress to preserve local insurance regulation. Id., p 747. In Pilot Life Ins Co v Dedeaux, 481 US 41; 107 S Ct 1549; 95 L Ed 2d 39 (1987), a complaint was filed for tortious breach of contract, breach of fiduciary duties, and fraud in the inducement on the basis of Pilot Life's termination of Dedeaux's long-term disability benefits under a group plan. Pilot Life was both the insurer and administrator of the plan. Id., pp 43-44. All of Dedeaux's claims were based upon an allegedly improper processing of its claims under the plan. Dedeaux's complaint stated causes of action only under state law. None of the causes of action available under the ERISA was asserted by Dedeaux against Pilot Life. See 29 USC 1132. The unanimous Pilot Life Court held that Dedeaux's complaint did relate to an employee benefit plan and did not fall within any ERISA preemption exception. The Court concluded that the ERISA'S civil enforcement provisions were Dedeaux's exclusive remedy against the plan and its fiduciaries. Id., p 57. In the companion case of Metropolitan Life Ins Co v Taylor, 481 US 58; 107 S Ct 1542; 95 L Ed 2d 55 (1987), the United States Supreme Court considered the more specific, procedural question of removal jurisdiction under the ERISA in cases alleging improper administration of employee benefit plans. Taylor had filed common-law claims for breach of contract and mental anguish against Metropolitan Life as the administrator of his group disability plan. Taylor joined those claims with additional claims against his employer, General Motors, for wrongful termination and failure to promote on the basis of the alleged disability. The claims against both defendants were originally filed in state court. Metropolitan Life and General Motors petitioned for removal to federal court, alleging federal question jurisdiction over the disability benefits claims and pendent jurisdiction over the remaining claims. The United States Supreme Court upheld the removal, ruling that the ERISA preempted Taylor's common-law claims and also displaced them with the ERISA'S own civil enforcement provisions. See 29 USC 1132. It is important to note, however, that the Taylor Court was not required to address the question of ERISA preemption of the claims against the employer, since removal jurisdiction was not based upon those claims. [11] See Taylor v General Motors Corp, 826 F2d 452 (CA 6, 1987) (addressing the pendent claims on remand). Most recently, in the watershed opinion of Fort Halifax Packing Co, Inc v Coyne, 482 US 1; 107 S Ct 2211; 96 L Ed 2d 1 (1987), the United States Supreme Court rejected an ERISA preemption challenge to a Maine statute requiring a one-time severance payment to employees in the event of a plant closing. Fort Halifax is particularly significant for two reasons. First, it is the first United States Supreme Court opinion in which a statute survived an express ERISA preemption challenge without reference to a specific ERISA preemption exception and therefore represents the first United States Supreme Court opinion defining the outer boundaries of the general ERISA preemption provision. Second, Fort Halifax contains the most detailed and explicit United States Supreme Court discussion of the purposes underlying the ERISA preemption provision. The Fort Halifax Court emphasized that an ERISA preemption analysis must be guided by respect for the separate spheres of governmental authority preserved in our federal system. Fort Halifax, supra, 482 US 19. Citing Alessi, supra, the Court explained the federal interest as follows: ERISA'S preemption provision was prompted by recognition that employers establishing and maintaining employee benefit plans are faced with the task of coordinating complex administrative activities. A patch-work scheme of regulation would introduce considerable inefficiencies in benefit program operation, which might lead those employers with existing plans to reduce benefits, and those without such plans to refrain from adopting them. Preemption ensures that the administrative practices of a benefit plan will be governed by only a single set of regulations. See, e.g., HR Rep No. 93-533, p 12 (1973) ([A] fiduciary standard embodied in Federal legislation is considered desirable because it will bring a measure of uniformity in an area where decisions under the same set of facts may differ from state to state). [ Fort Halifax, supra, 482 US 11.] On the other hand, the Court also noted a state interest in the serious economic consequences of plant closings. Id., 482 US 19, n 13. The Fort Halifax Court found that federal and state interests were properly reconciled in the Maine statute, explaining: Fort Halifax found no need to respond to passage of the Maine statute by setting up an administrative scheme to meet its contingent statutory obligation, any more than it would find it necessary to set up an ongoing scheme to deal with the obligations it might face in the event that some day it might go bankrupt. The company makes no contention that its statutory duty has in any way hindered its ability to operate its retirement plan in uniform fashion, a plan that pays retirement, death, and permanent and total disability benefits on an ongoing basis.... The obligation imposed by the Maine statute thus differs radically in impact from a requirement that an employer pay ongoing benefits on a continuous basis. The Maine statute therefore creates no impediment to an employer's adoption of a uniform benefit administrative scheme. Neither the possibility of a one-time payment in the future, nor the act of making such a payment, in any way creates the potential for the type of conflicting regulation of benefit plans that ERISA preemption was intended to prevent. As a result, preemption of the Maine law would not serve the purpose for which ERISA'S preemption provision was enacted. [ Fort Halifax, supra, 482 US 14-15.] From the foregoing authority we conclude that a preemptive relationship to an ERISA plan is established when state law interferes with a plan by: 1) altering the level of benefits which would be paid out under a given plan from state to state, 2) altering the terms of a plan, such as the requirements for eligibility, or 3) subjecting the fiduciaries of a plan to claims other than those provided for in the ERISA itself. Thus, in Alessi, the New Jersey set-off preclusion for workers' compensation benefits was preempted by the ERISA because it altered the level of benefits which would be paid to a beneficiary under a plan in New Jersey. The New York law in Shaw was preempted because it had the effect of altering the terms of a disability plan to include coverage for pregnancies. Finally, in Pilot Life and Metropolitan Life Ins Co, the common-law claims were preempted because they subjected the fiduciaries of the plans to liability apart from that expressly created by the ERISA. Our conclusion that the boundaries of the ERISA'S express preemption are demarcated by these relations is consistent with both the purpose and method of Congress in creating the ERISA. The purpose, as noted in the United States Senate Finance Committee's report, was to encourage the development of employee benefit plans. However, the method chosen by Congress was not a direct requirement that employers provide certain benefits, Shaw, supra, p 91, but the creation of a uniform national body of law regulating such plans. Id., p 99, quoting 120 Cong Rec 29197, 29933. With these purposes and methods in mind, we turn to the question whether the ERISA preempted this plaintiff's claim for future pension benefits as damages in her wrongful discharge claim.