Opinion ID: 519533
Heading Depth: 3
Heading Rank: 1

Heading: ERISA Preemption and the Avco Principle.

Text: 26 As the Supreme Court recently declared in Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987), common-law contract and tort claims based upon laws of general application, that is, not specifically related to insurance 2 or employee severance 3 or discrimination, 4 are preempted by ERISA, rather than section 301 of the NLRA, to the extent that they relate to an employee benefit plan. Moreover, when beneficiaries bring such claims to recover benefits from a covered plan, those claims fall under ERISA's 29 U.S.C. Sec. 1132(a)(1)(B), 5 which provides an exclusive federal cause of action for the resolution of such claims. See Shaw. Thus, the Court also held that in addition to preempting the state-law claims, ERISA's preemptive and civil enforcement provisions operate to recharacterize such claims into actions arising under federal law. 27 Such recharacterization of state-law claims for benefits under covered plans is made necessary by the following corollary to the well-pleaded complaint rule: Congress may so completely pre-empt a particular area, that any civil complaint raising this select group of claims is necessarily federal in character. Id. In the past, the Court has applied this corollary to suits brought against an employer for breach of a collective bargaining agreement--suits that are preempted by section 301 of the NLRA. See Avco Corp. v. Machinists, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968). These applications have given rise to what is now known as the Avco principle: 28 [T]he preemptive force of Sec. 301 is so powerful as to displace entirely any state cause of action 'for violation of contracts between an employer and a labor organization.' Any such suit is purely a creature of federal law, notwithstanding the fact that state law would provide a cause of action in the absence of Sec. 301. 29 Taylor, 481 U.S. at 64, 107 S.Ct. at 1546 (quoting Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 23, 103 S.Ct. 2841, 2853, 77 L.Ed.2d 420 (1983)). In Taylor, the Court concluded that the similarities in language between section 301 of the NLRA and ERISA's 29 U.S.C. Sec. 1132(f), 6 coupled with ERISA's legislative history, required application of the Avco principle to the plaintiff's state-law contract claims for benefits under an ERISA-covered plan. We do the same today. 30 Degan, however, challenges the preemptive effect of ERISA in this case on the ground that ERISA was not in effect when the promises in dispute here were made to him. He points to language in section 1144(b)(1) to the effect that ERISA's supersedure provision shall not apply with respect to any cause of action which arose, or any act or omission which occurred before January 1, 1975. Degan claims that the relevant acts or omissions that occurred in this case, namely, the oral assurances from Ford and union representatives that he would receive early-retirement benefits, occurred during the 1970 plant closing, and thus his cause of action is not preempted by ERISA and its limitations statutes. 31 We have held previously, however, that interpretations of the act or omission clause of section 1144(b)(1) are confined to acts or omissions that set in motion legal proceedings other than causes of action. Woodfork v. Marine Cooks & Stewards Union, 642 F.2d 966, 971 (5th Cir. Unit A Apr. 1981) (citing administrative and criminal proceedings as examples of proceedings other than causes of actions). Our reasons for so holding were two-fold: First, interpreting act or omission in the broad manner Degan desires, that is, as excepting from ERISA preemption any suit in which some of the facts occurred prior to 1975, would render the first clause of section 1144(b)(1) superfluous. Id. In other words, under Degan's interpretation it would not matter when the cause of action arose so long as the relevant acts or omissions occurred prior to 1975. 32 Second, we found that creating such a broad exception would conflict with Congress's goal of providing access to federal courts for litigants seeking to enforce their rights under a collectively-bargained pension plan. See id. (citing 29 U.S.C. Sec. 1132(a)(1)(B)). Degan therefore cannot include Ford's and the union's oral assurances as pre-1975 acts or omissions that would exempt his cause of action from ERISA's preemptive reach. 7 33 Thus, we are left with the question of whether Degan's cause of action arose on or after January 1, 1975. Our previous cases have fashioned a rule of interpretation for this exception as well. In Paris v. Profit Sharing Plan for Employees of Howard B. Wolf, Inc., 637 F.2d 357, 361 (5th Cir. Unit A Feb. 1981), cert. denied, 454 U.S. 836, 102 S.Ct. 140, 70 L.Ed.2d 117 (1981), we held that a cause of action does not become a presently enforceable demand until a claim is denied.... [Thus], for purposes of ERISA a cause of action does not accrue until an application is denied.However, applying even this clear-cut rule is made somewhat difficult in this case because Degan never formally submitted an application for early-retirement benefits. The document in the record that most closely resembles a denial of a claim is Ford's rejection of Degan's attorney's demand letter in 1982. Because that date falls well after the effective date of ERISA, we conclude, contrary to Degan's assertions, that ERISA governs this claim. However, it is not necessary for us to turn to an analysis of whether Degan's claim is time-barred under appropriate ERISA or state law provisions. Instead, we hold that Degan's claim, premised as it is upon oral modifications to a retirement plan, is not cognizable under ERISA. 34