Opinion ID: 196516
Heading Depth: 1
Heading Rank: 5

Heading: the banks plan

Text: 42 In 1985 or early 1986, the Board of Directors adopted a severance benefit plan, referred to as the Nadeau Plan, by written consent. 10 In early 1987, Nadal-Ginard presented the Board with what he claims was a reconstruction of the Nadeau Plan, a document that he contends was lost. In so doing, Nadal-Ginard did not inform the Board that the Banks Plan provided far more in benefits for Nadal-Ginard than the Nadeau Plan had. In 1992, upon Nadal-Ginard's initiative, the Banks Plan was terminated and Nadal-Ginard received benefits in the form of cash and securities valued at over $4,000,000. 43 The district court made several findings with respect to the creation and adoption of the Banks Plan. First, it found the terms of the plan to be so markedly different from the Nadeau Plan that Nadal-Ginard's actions could not be construed as a genuine effort to reconstruct the Nadeau Plan. Second, the district court found that Nadal-Ginard's benefits under the Banks Plan were of such a magnitude, and structured in such a way, that had they been disclosed at the time the plan was presented to the Board, the plan would not have been approved by the Board. The district court concluded that Nadal-Ginard breached his fiduciary duties to BCHF with respect to his involvement in the creation of the plan and its presentation to the Board. Accordingly, the court awarded damages to BCHF in the amount of $4,082,273.50. 44 While Nadal-Ginard disputes the district court's factual findings, he does not challenge them on appeal. Rather, Nadal-Ginard contends that ERISA explicitly exempts these types of severance benefit plans from its fiduciary duty provisions. Further, he alleges that 29 U.S.C. Sec. 1144, which provides for the preemption of state law by ERISA, precludes the evaluation of Nadal-Ginard's actions in light of fiduciary responsibilities defined by state law. 45 The district court did not address the issue of the whether the fiduciary provisions of ERISA applied to the Banks Plan or whether it fell within the category of unfunded plans which are excluded from the scope of those fiduciary standards. The court did find that the fiduciary obligations created under Massachusetts law were more favorable to Nadal-Ginard than those imposed by ERISA, and, therefore, that a fiduciary breach under Massachusetts law would necessarily constitute a breach of the ERISA fiduciary obligations, if applicable. As neither party challenges the conclusion that the Banks plan is exempt from ERISA's fiduciary provisions, we concentrate solely on whether ERISA preempts the application of state law in this instance. 46  'ERISA is a comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans.'  Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137, 111 S.Ct. 478, 481, 112 L.Ed.2d 474 (1990) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 2896, 77 L.Ed.2d 490 (1983)). In vast detail, ERISA imposes participation, funding, and vesting requirements on such plans, as well as establishes uniform standards for pension and welfare plans, including rules concerning reporting, disclosure, and fiduciary responsibility. See id. An inherent part of this system is section 514(a), which provides that ERISA supersedes any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.... 29 U.S.C. Sec. 1144(a); see also Ingersoll-Rand Co. v. McClendon, 498 U.S. at 137, 111 S.Ct. at 481. The statute defines the term State law to include all laws, decisions, rules, regulations, or other State action having the effect of law, of any State. 29 U.S.C. Sec. 1144(c)(1); see also Carlo v. Reed Rolled Thread Die Co., 49 F.3d 790, 793 (1st Cir.1995). Congress included Sec. 514(a) to ensure uniformity in such plans by preventing states from imposing divergent obligations upon them. See Simas v. Quaker Fabric Corp. of Fall River, 6 F.3d 849, 852 (1st Cir.1993). 47 The Supreme Court has repeatedly interpreted the preemption provision to cover any state law that has a connection with or reference to an ERISA plan. District of Columbia v. Greater Washington Board of Trade, 506 U.S. 125, 129, 113 S.Ct. 580, 583, 121 L.Ed.2d 513 (1992); see also Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 829, 108 S.Ct. 2182, 2185, 100 L.Ed.2d 836 (1988); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983). Indeed, this provision is to be read expansively, see Rosario-Cordero v. Crowley Towing & Transp. Co., 46 F.3d 120, 122 (1st Cir.1995), and has the effect of preempting any state law that refers to, or has a connection with, covered benefit plans, even if the law is not specifically designed to affect such plans, or the effect is only indirect. District of Columbia v. Greater Washington Board of Trade, 506 U.S. at 130, 113 S.Ct. at 583 (citations and internal quotation marks omitted). Such a preemption is also worked regardless of whether there is a 'comfortable fit between a state statute and ERISA's overall aims.'  Simas v. Quaker Fabric Corp. of Fall River, 6 F.3d at 852 (quoting McCoy v. MIT, 950 F.2d 13, 18 (1st Cir.1991), cert. denied, 504 U.S. 910, 112 S.Ct. 1939, 118 L.Ed.2d 545 (1992)). 48 State laws that have merely a tenuous, remote, or peripheral connection with a covered benefit plan may not be preempted by ERISA. Rosario-Cordero v. Crowley Towing & Transp. Co., 46 F.3d at 123 (citation and internal quotation marks omitted). Such is normally the case with respect to laws of general applicability. See District of Columbia v. Greater Washington Board of Trade, 506 U.S. at 130 n. 1, 113 S.Ct. at 583 n. 1; Rosario-Cordero v. Crowley Towing & Transp. Co., 46 F.3d at 123; Combined Mgt., Inc. v. Superintendent of the Bureau of Insurance, 22 F.3d 1, 3 (1st Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 350, 130 L.Ed.2d 306 (1994). A court cannot conclude that a state law is one of general applicability, and as such is not preempted by ERISA, based on the form or label of the law, however. See Carlo v. Reed Rolled Thread Die Co., 49 F.3d at 794 n. 3; Zuniga v. Blue Cross and Blue Shield of Michigan, 52 F.3d 1395, 1401 (6th Cir.1995). Absent precedent on a closely related problem, the inquiry into whether a state law relates to an ERISA plan or is merely tenuous, remote, or peripheral requires a court to look at the facts of particular case. See Rosario-Cordero v. Crowley Towing & Transp. Co., 46 F.3d at 125 n. 2. 49 Here, the alleged breach of fiduciary duty relates to Nadal-Ginard's action in establishing the Banks Plan without disclosing information that a self-interested fiduciary would be required to reveal to his fellow directors. Nadal-Ginard's misconduct preceded the formal adoption of the plan. The legal determination that Nadal-Ginard's conduct constitutes a fiduciary breach does not require the resolution of any dispute about the interpretation or administration of the plan. Further, the application of state law in this instance does not raise the core concern underlying ERISA preemption. Indeed, the fact that Nadal-Ginard chose an ERISA plan rather than some other form of compensation is peripheral to the underlying claim that Nadal-Ginard breached his corporate responsibilities. 50 This being the case, it cannot be said that Massachusetts fiduciary law must be preempted in this instance. Therefore, we turn to address the merits of the district court's conclusion that Nadal-Ginard's actions violated his fiduciary duties. 51 As Nadal-Ginard does not allege error with respect to the law which the district court applied in reaching its conclusion, we need not revisit the duties of good faith and full disclosure arising in self-interested transactions. See supra part III.A. Instead, we turn without delay to review the validity of the district court's factual findings which served as the basis for its legal conclusion, keeping in mind, once again, that we do so in light of the clearly erroneous standard. See Texaco Puerto Rico, Inc. v. Department of Consumer Affairs, 60 F.3d at 874. 52 The district court made several findings of fact on which it grounded its conclusion that Nadal-Ginard breached his fiduciary duties. Chief among these was that Nadal-Ginard intentionally had the Banks plan drafted in two parts in order that the other Board members might enact the plan without learning of the magnitude of his blatantly disproportionate share of the benefits. The court determined that this effort met with success, as it found that the other Board members did not learn all the terms of the Banks plan until the fall of 1993. The court reached these factual conclusions on the basis of the testimony of the witnesses and an examination of the plan itself. Further, the court expressly discredited Nadal-Ginard's assertions. 53 In reviewing the vast record from the district court, we find that Nadal-Ginard fails to meet the heavy burden which the law places on him. That is, Nadal-Ginard offers no evidence to suggest that the district court's findings were clearly in error. As much of the court's findings are based on credibility determinations of the witnesses who testified at trial, we decline to reverse the conclusions reached below.