Opinion ID: 780505
Heading Depth: 3
Heading Rank: 1

Heading: Waivability of ERISA Preemption

Text: 36 Four circuits, as well as numerous state courts, have concluded that the defense of ERISA preemption in a benefits-due action may be waived if not timely raised. See, e.g., Wolf v. Reliance Standard Life Ins. Co., 71 F.3d 444, 448-49 (1st Cir.1995) (citing state and federal cases); Dueringer v. Gen. Am. Life Ins. Co., 842 F.2d 127, 129-30 (5th Cir.1988); Gilchrist v. Jim Slemons Imps., Inc., 803 F.2d 1488, 1497 (9th Cir.1986); Rehab. Rehabilitation Inst. of Pittsburgh v. Equitable Life Assurance Soc'y of the United States, 131 F.R.D. 99, 101 (W.D.Pa.1990), aff'd without op., 937 F.2d 598 (3d Cir.1991). In International Longshoremen's Association v. Davis, the Supreme Court made clear that preemption issues that dictate the choice of forum are jurisdictional and therefore may not be waived, but expressly stated that this rule does not extend to preemption issues that affect the parties' choice of law. See Davis, 476 U.S. 380, 390 & n. 9, 398-99, 106 S.Ct. 1904, 90 L.Ed.2d 389 (1986); see also Wolf, 71 F.3d at 448; Gilchrist, 803 F.2d at 1496-97. The circuits that have addressed the waiver issue have agreed that the converse of the Davis rule also holds: Where federal preemption affects only the choice of law, the defense may be waived if not timely raised. See Wolf, 71 F.3d at 448; Piekarski v. Home Owners Sav. Bank, F.S.B., 956 F.2d 1484, 1489 (8th Cir.1992); HECI Exploration Co. v. Holloway (In re: HECI Exploration Co. ), 862 F.2d 513, 521 & n. 13 (5th Cir.1988); Dueringer, 842 F.2d at 130; Gilchrist, 803 F.2d at 1497; see also Mauldin v. WorldCom, Inc., 263 F.3d 1205, 1211 (10th Cir.2001) (declining to decide whether ERISA or state contract law governs dispute because neither party briefed issue); Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1212 (11th Cir.1999) (stating that ERISA preemption can constitute an affirmative defense to certain state law claims). We join our sister circuits in reaching the same conclusion. 37 ERISA's jurisdictional provision governing benefits-due actions provides concurrent jurisdiction in state and federal district courts, see 29 U.S.C. § 1132(a)(1)(B), (e)(1), and thus ERISA prescribes the choice of law, not jurisdiction. As a result, we find that ERISA preemption in a benefits-due action is a waivable defense. See Wolf, 71 F.3d at 448-49; Dueringer, 842 F.2d at 130; Gilchrist, 803 F.2d at 1497; Rehab. Inst., 131 F.R.D. at 101. We note that other types of actions under ERISA are subject to the exclusive jurisdiction of federal courts; thus, our analysis here is limited to ERISA preemption of benefits-due actions. See 29 U.S.C. § 1132(e)(1). 38 We next turn to the question of when an ERISA preemption defense must be raised in order to be timely. Rule 8(c) of the Federal Rules of Civil Procedure requires that a responsive pleading must set forth certain enumerated affirmative defenses as well as any other matter constituting an avoidance or affirmative defense. Fed.R.Civ.P. 8(c). An affirmative defense is defined as [a] defendant's assertion raising new facts and arguments that, if true, will defeat the plaintiff's or prosecution's claim, even if all allegations in the complaint are true. Black's Law Dictionary 430 (7th ed.1999); see also Wolf, 71 F.3d at 449. It is well-established that, absent an express exception in ERISA, ERISA's preemption provision extinguishes a plaintiff's state contract claims if those claims relate to an employee benefit plan. See Devlin v. Trans. Communications Int'l Union, 173 F.3d 94, 101 (2d Cir.1999). Thus, we hold that ERISA preemption of state contract claims in a benefits-due action is an affirmative defense that is untimely, and therefore subject to waiver, if not pleaded in the defendant's answer. See Wolf, 71 F.3d at 449; Dueringer, 842 F.2d at 130; Rehab. Inst., 131 F.R.D. at 101-02; 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure, § 1271 (1990). 39 Appellees argue that they sufficiently pleaded the ERISA preemption defense by asserting in their answer the general defense of failure to state a claim under Fed.R.Civ.P. 12(b)(6). We disagree. One of the core purposes of Rule 8(c) is to place the opposing parties on notice that a particular defense will be pursued so as to prevent surprise or unfair prejudice. See Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 350, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971). A general assertion that the plaintiff's complaint fails to state a claim is insufficient to protect the plaintiff from being ambushed with an affirmative defense. See Wolf, 71 F.3d at 450; Rademacher v. Colo. Ass'n of Soil Conservation Dists. Med. Benefit Plan, 11 F.3d 1567, 1571 (10th Cir.1993); see also Satchell v. Dilworth, 745 F.2d 781, 784 (2d Cir.1984) (holding that a general denial of allegations is insufficient to plead an affirmative defense). Indeed, here Saks was left in the dark that the ERISA preemption defense was in the offing until the motion for summary judgment. 40 Franklin Covey also argues that an ERISA preemption defense was invoked in their answer by the statement that [t]he exclusions ... challenged by Saks are within the Safe Harbor provision of Section 501(c) of the ADA. The safe harbor provision of the ADA provides, in part, that ERISA plans are generally not covered by the provisions of the ADA. See 42 U.S.C. § 12201(c)(3). Therefore, Franklin Covey's citation to the safe harbor provision is reasonably understood as a defense only against Saks's ADA claim and not her other claims. Thus, we find no basis to conclude that Franklin Covey raised the ERISA preemption defense against the state law claims in its answer. 41 Notwithstanding a defendant's failure to timely plead the preemption defense, a district court may still entertain affirmative defenses at the summary judgment stage in the absence of undue prejudice to the plaintiff, bad faith or dilatory motive on the part of the defendant, futility, or undue delay of the proceedings. See Monahan v. New York City Dep't of Corr., 214 F.3d 275, 283 (2d Cir.2000), cert. denied, 531 U.S. 1035, 121 S.Ct. 623, 148 L.Ed.2d 533 (2000); Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir.1993). In such circumstances, the district court may construe the motion for summary judgment as a motion to amend the defendant's answer. See Monahan, 214 F.3d at 283; Wolf, 71 F.3d at 449. In this case, the district court stated that, [w]ere it necessary, ... this Court would, in an exercise of its discretion, permit the defendants to amend their answer to assert ERISA preemption, but the district court never ruled on that issue. See Saks, 117 F.Supp.2d at 330. Saks has asked us to hold that allowing such an amendment would be an abuse of discretion. However, we think it would be inappropriate to reach that question in the absence of a definitive ruling. Accordingly, we remand to the district court to determine whether defendants' motion for summary judgment should be construed as a motion to amend the answer, and, if so, to rule on that motion. In light of the fact that we are remanding this issue to the district court, we decline to reach Saks's further request to amend her complaint in order to raise an ERISA claim. That request should be directed to the district court in the first instance. 42 We have carefully considered appellant's other arguments and find them to lack merit.