Opinion ID: 198799
Heading Depth: 2
Heading Rank: 2

Heading: Hampers's State Law Contract Claim

Text: 23 Hampers's complaint alleged a cause of action under ERISA based on precisely the same conduct that underlies his state law contract claim. In particular, in Count III of the complaint, entitled ERISA: The NMC SERP, Hampers asserted that by virtue of the 1991 Agreement, Grace had a duty to include Hampers as a participant in the NMC SERP, and breached that duty by causing him to be excluded from the NMC SERP. In Count II of the complaint, entitled, Contract: Retirement Benefit, Hampers argued that under the terms of the 1991 Agreement with Grace he was entitled to the full pension benefits of the NMC retirement plan as it existed on the date of his retirement, specifically including such benefits under the NMC qualified plan and the NMC SERP. Hampers contended that when a SERP for NMC senior executives . . . was created in or about November 15, 1995, Grace caused Dr. Hampers to be excluded from the NMC SERP, and NMC so excluded Dr. Hampers. According to Hampers, this conduct constituted a breach of the 1991 Agreement. That the very same conduct--Grace's failure to include Hampers in the NMC SERP--underlies both Hampers's state law contract claim and his ERISA-benefits claim suggests that the state law claim is an alternative mechanism for obtaining ERISA plan benefits. 24 As relief, Hampers primarily sought benefits under the NMC SERP. First, he sought a declaratory judgment that he is entitled to participate in the NMC SERP and is entitled to receive all such benefits as to which he is entitled under the NMC SERP, and he petitioned the court to order that Grace . . . cause Hampers to be enrolled in the NMC SERP forthwith and cause the NMC SERP to disburse to Hampers his rightful annuity as of January 1, 1997 at such amount as he would have been entitled to had Hampers been included in the SERP from the day of its creation on or about November 15, 1995. Moreover, even with respect to Hampers's state law claim for contract damages, he asserts that upon a Jury's finding that Grace is liable to Dr. Hampers under the 1991 Agreement . . . [,] the district court [would] have to face the issue of the appropriateness of an injunctive order directed to NMC and Fresenius that they enroll Hampers in the NMC SERP. 25 Hampers's complaint requested damages for the loss caused by [the defendants'] illegal conduct, including interest, costs and attorneys [sic] fees pursuant to 29 U.S.C. § 1132(g) [ERISA § 502(g)] and other applicable provisions of law. Hampers therefore linked his claim for damages to a request for attorneys' fees authorized under ERISA, but not authorized under state law. Moreover, in attempting to prove the illegal conduct--Grace's decision to deny him participation rights in the NMC SERP--Hampers relied on the terms of the NMC SERP, arguing that because the SERP defines its benefits with respect to the NMC qualified plan, the term NMC retirement plan in the 1991 Agreement must include both the qualified plan and the SERP. We have consistently held that a cause of action relates to an ERISA plan when a court must evaluate or interpret the terms of the ERISA-regulated plan to determine liability under the state law cause of action. See McMahon v. Digital Equip. Corp., 162 F.3d. 28, 38 (1st Cir. 1998); Boston Children's Heart Found., Inc. v. Nadal-Ginard, 73 F.3d 429, 440 (1st Cir. 1996); Carlo v. Reed Rolled Thread Die Co., 49 F.3d 790, 793-94 (1st Cir. 1995); Vartanian v. Monsanto Co., 14 F.3d 697, 698-99 (1st Cir. 1994). Finally, Hampers measured his damages by reference to the NMC SERP, contending that, as a participant, he would have been entitled to approximately $250,000 per year in additional annual pension benefits. We have held that ERISA preempts state law causes of action for damages where the damages must be calculated using the terms of an ERISA plan. See Carlo, 49 F.3d at 794. 26 Hampers concedes that as against defendants NMC and Fresenius, his breach of contract claim is properly preempted because the relief he seeks is inclusion in the NMC SERP. As against Grace, however, Hampers insists that he must necessarily and exclusively seek money damages due to the fact that Grace no longer has any authority or control over the NMC SERP, having transferred its ownership of NMC to Fresenius in August 1996 and relinquished all administrative duties relating to the NMC SERP. Thus, Hampers admits that his claim against Grace would have been preempted if Grace had not, subsequent to the time of its alleged breach of the 1991 Agreement, relinquished its responsibility over the NMC SERP. 27 The mere fortuity that Grace, subsequent to the occurrence of the conduct at issue in this case, relinquished its responsibility over the NMC SERP does not affect the ERISA preemption analysis. Hampers's claim is directed at Grace's alleged breach of its promise to enroll him in the NMC SERP. Specifically, Hampers argues that under the 1991 Agreement he was entitled to the full pension benefits of the NMC retirement plan as it existed on the date of his retirement, specifically including such benefits under the NMC qualified plan and the NMC SERP, but that Grace caused Dr. Hampers to be excluded from the NMC SERP, and NMC so excluded Dr. Hampers. Thus, the wrongful conduct alleged by Hampers involves a determination of whether benefits will be paid under an ERISA-governed plan. In deciding not to enroll Hampers in the NMC SERP, Grace was acting in its capacity as an ERISA employer and fiduciary with responsibility over the administration of the plan. 9 If Grace had not exercised discretion and authority or control respecting the management, disposition and administration of the NMC SERP, including but not limited to, the discretion of who is to be included for participation in the NMC SERP, as Hampers asserted in his complaint, Grace simply could not have been in breach by failing to use its discretion, authority, or control to include Hampers in the SERP. 28 Thus, it is only by virtue of Grace's status as an ERISA employer with direct control over the administration and operation of the NMC SERP that Grace could have breached the 1991 Agreement in the way Hampers insists that it did. Consequently, this is not a case where the defendant is being sued for wrongful conduct committed in its individual capacity, see, e.g., Wilson v. Zoellner, 114 F.3d 713, 715 (8th Cir. 1997) (claim of misrepresentation against an insurance agent); Stetson v. PFL Ins. Co., 16 F. Supp. 2d 28, 29 (D. Me. 1998) (same); see also Golas v. Homeview Inc., 106 F.3d 1, 4 (1st Cir. 1997) (Bownes, J., concurring) (claim brought against insurance broker acting in his individual capacity), nor is this a case where the defendant is a third party insurer or service provider who is not an ERISA entity--plan, employer, participant, beneficiary, fiduciary--at all, see, e.g., Woodworker's Supply, Inc. v. Principal Mut. Life Ins. Co., 170 F.3d 985, 991 (10th Cir. 1999) (claims against insurer for misconduct in selling life insurance); Geweke Ford v. St. Joseph's Omni Preferred Care, Inc., 130 F.3d 1355, 1357 (9th Cir. 1997) (contract claims against third party provider of insurance and administrative services); Arizona State Carpenters Pension Trust Fund v. Citibank Arizona, 125 F.3d 715, 717-18 (9th Cir. 1997) (claims against bank providing custodial services); Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1460-61 (4th Cir. 1996) (malpractice claim against insurance professionals).