Opinion ID: 1775774
Heading Depth: 1
Heading Rank: 2

Heading: applicability of erisa

Text: Mike contends that under the provisions of ERISA the state court lacks subject matter jurisdiction. He asserts that even if the state court exercised concurrent jurisdiction, the action would be preempted by ERISA. Subject matter jurisdiction over controversies involving profit-sharing plans under ERISA is provided for in 29 U.S.C. § 1132(e)(1) (1985), which reads: Except for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, or fiduciary. State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under subsection (a)(1)(B) of this section. Subsection (a)(1)(B) provides that a civil action may be brought by a participant or beneficiary 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) (1985). The facts present a novel issue: whether the provisions of ERISA continue to control after a plan is terminated and funds are distributed to some beneficiaries but the funds of two other beneficiaries are converted by the plan trustee? It is undisputed in the record that the Threaded Steel employees profit-sharing plan had been terminated prior to the deposit of R.E.'s and R.G.'s benefits into a CD at Heights State Bank. Mike distributed plan benefits to other employees, but he did not distribute R.E.'s or R.G.'s benefits to them. Instead, he placed their plan benefits in a separate account bearing his name as trustee. The funds, which the jury found that Mike had wrongfully converted to his own use, were distributed from the plan after its termination. When he failed to distribute the benefits owed his brothers, he breached the fiduciary duty owed them under state common law and not under ERISA. The provisions of ERISA no longer governed his actions. [4] The record shows that R.E. and R.G., as participants and beneficiaries of the plan, sought to recover benefits owed them under the plan. Their cause of action arose out of the failure or refusal of the trustee of a terminated plan to convey benefits, not the violation of fiduciary duty created by ERISA in the continuing administration of a retirement plan. Given these circumstances, the state court properly exercised jurisdiction. Preemption under ERISA is governed by 29 U.S.C. § 1144(a) (1985) which reads: Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title. This section shall take effect on January 1, 1975. The rationale for federal preemption of state remedies and causes of action covered by ERISA is so that trustees of plans will not be subject to the threat of conflicting and inconsistent federal and state regulations. Hoffman v. Chandler, 431 So.2d 499 (Ala.1983); Smith v. Crowder Jr. Co., 280 Pa.Super. 626, 421 A.2d 1107 (1980). Generally, ERISA preempts any state law which regulates the content or operation of the plan. Therefore, the question is whether R.E.'s and R.G.'s lawsuit relates to the profit-sharing plan in such a way that it is an attempt to regulate areas explicitly governed by ERISA or whether it only indirectly relates to the plan so that it does not conflict with the purpose of ERISA. Shaw v. Westinghouse Elec. Corp., 276 Pa.Super. 220, 419 A.2d 175 (1980). Lukus v. Westinghouse Elec. Corp., 276 Pa.Super. 232, 419 A.2d 431 (1980). R.E. and R.G. sought to recover benefits due them under the plan after its termination. Their claims were directed at recovery of benefits under the terms of the plan and did not involve regulation of the plan. They instituted a lawsuit under Texas common law for recovery of their benefits which Mike had converted. Since the plan had terminated, we are not faced with interpreting the terms or conditions of the plan. Hence, the lawsuit did not relate to the employee benefit plan within the meaning of 29 U.S.C. § 1144(a) (1985). Because we have concluded that ERISA does not apply and that if applicable the state court would have concurrent jurisdiction, we hold that the state court properly exercised jurisdiction over the action.