Opinion ID: 891657
Heading Depth: 4
Heading Rank: 1

Heading: An action by our state courts to enforce the default judgment is an action under state law.

Text: {41} ERISA is a comprehensive statute, preempting all state laws relating to employee benefits plans. See § 1144(a); see also § 1144(c)(1) (The term `State law' includes all laws, decisions, rules, regulations, or other State action having the effect of law....). ERISA also retains original jurisdiction almost exclusively in the federal district courts to adjudicate employee benefits disputes; concurrent state court jurisdiction extends only to claims for wrongful denial of benefits under § 1132(a)(1)(B). See § 1132(e)(1). Kirby's suit against the Plan was one for wrongful denial of benefits, and so was properly prosecuted in state court, resulting in the default judgment in Kirby's favor. However, given the broad scope of ERISA's preemption provision, we first inquire whether application of our garnishment statute is rendered inappropriate by ERISA. [2] We conclude that ERISA does not preempt Kirby's garnishment action. {42} ERISA preemption analysis must operate from the starting presumption that Congress does not intend to supplant state law. N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). As the Supreme Court has held on several occasions, to determine whether a state law has the forbidden connection, we look both to `the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive,' as well as to the nature of the effect of the state law on ERISA plans. Egelhoff v. Egelhoff, 532 U.S. 141, 147, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001) (quoting Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 325, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997)). In enacting § 1144 of ERISA, Congress intended to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government [and to prevent] the potential for conflict in substantive law..., requiring the tailoring of plans and employer conduct to the peculiarities to the law of each jurisdiction. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990) (citation omitted). The United States Supreme Court has further clarified that a state law is preempted by ERISA when it [provides] a form of ultimate relief in a judicial forum that add[s] to the judicial remedies provided by ERISA, because such a law undermines ERISA's goal of assuring a predictable set of liabilities, under uniform standards of primary conduct and a uniform regime of ultimate remedial orders and awards when a violation has occurred. Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 379, 122 S.Ct. 2151, 153 L.Ed.2d 375 (2002). Thus, ERISA preemption depends on whether a state law creates a new cause of action, or authorizes a new form of ultimate relief, in conflict with ERISA's comprehensive enforcement scheme. Id. Application of our garnishment law to enforce Kirby's judgment against the Plan does neither. {43} First, Guardian's liability under the writ of garnishment is no greater than that of the Plan under the default judgment, and the Plan's liability was determined entirely under the law of ERISA. As the Plan's insurer, Guardian is responsible for payment of disability benefits to eligible employees, and the writ of garnishment does nothing to alter the amount a beneficiary may recover or the terms of eligibility provided for in the Policy in accordance with ERISA. By enforcing Guardian's obligations under the terms of the Policy, we impose no more liability upon Guardian than does ERISA itself: a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries ... in accordance with the documents and instruments governing the plan. Section 1104(a)(1)(D). That Guardian would be liable for paying benefits under the Policy, after a beneficiary prevails on an § 1132(a)(1)(B) action against the plan, is eminently predictable. {44} Second, application of our garnishment law does nothing to alter ERISA's remedial scheme or the form of ultimate relief that Kirby can obtain. Section 1132(a)(1)(B) allows for reinstatement of benefits wrongly denied and § 1132(g) allows for recovery of reasonable attorney's fees by the prevailing party. Kirby's ultimate relief reinstatement of benefits and recovery of attorney's feesis exactly the form of ultimate relief provided in ERISA. Garnishment is merely a means of enforcing the remedies awarded in a separate judgment. As such, ERISA's remedial scheme remains unaffected by our ruling today. {45} Guardian contends that § 1132(d)(2) expressly prohibits imposing liability on anyone other than the Plan. That provision states: Any money judgment under this subchapter against an employee benefit plan shall be enforceable only against the plan as an entity and shall not be enforceable against any other person unless liability against such person is established in his individual capacity under this subchapter. Section 1132(d)(2). While there is some authority supporting Guardian's interpretation, the federal courts are divided both as to the meaning and the effect of § 1132(d)(2). Compare Mote v. Aetna Life Ins. Co., 502 F.3d 601, 610 (7th Cir.2007) ([Consistent with § 1132(d)(2)], in a suit for ERISA benefits, the plaintiff is limited to a suit against the Plan. (Internal quotation marks and citation omitted.)), and Hackner v. Long Term Disability Plan, 81 Fed.Appx. 589, 593-94 (7th Cir.2003) (insurer dismissed because, under § 1132(d)(2), plan was the only party against whom a money judgment could be enforced), with Hunt v. Hawthorne Assoc., Inc., 119 F.3d 888, 908 (11th Cir.1997) ([N]othing in ERISA permits the district court to issue an injunctive order solely against the plan.... [A]n order enjoining the payment of benefits from an ERISA plan must issue against a party capable of providing the relief requested. (Citing § 1132(d)(2).)), and Sparks v. Duckrey Enters., Inc., No. 05-2178, 2007 WL 320260, at  (E.D.Pa. Jan. 30, 2007) (citing several district courts as holding that the proper defendants to a claim brought under § 502(a)(1)(B) ... are the plan itself and its fiduciaries). {46} The one consistent interpretation of § 1132(d)(2) we can discern from the federal cases is that the statute envisions a money judgment against the Plan as an entity, and not against any individual representatives of the Plan in their individual capacities. See, e.g., Leonelli v. Pennwalt Corp., 887 F.2d 1195, 1199 (2d Cir.1989) (barring suit against individual corporate representatives because [i]n a recovery of benefits claim, only the plan and the administrators and trustees of the plan in their capacity as such may be held liable); Davis v. Bante, No. 07-CV-12270, 2007 WL 2875244, at  (E.D.Mich. Sept. 28, 2007) (dismissing plaintiff's suit because named defendant, in individual capacity as Benefits Advisor, was an improper party under § 1132(d)(2)). This reading of § 1132(d)(2) is also consistent with the immediately preceding provision of § 1132(d)(1), which provides: An employee benefit plan may sue or be sued under this subchapter as an entity. Service of summons, subpoena, or other legal process of a court upon a trustee or an administrator of an employee benefit plan in his capacity as such shall constitute service upon the employee benefit plan. (Emphasis added.) Read together, the provisions of § 1132(d) authorize suit by and against the ERISA plan, while generally protecting individual decision-makers from liability. Critically, however, we do not read § 1132(d) as precluding a suit against another entity, such as an insurer like Guardian. {47} In contrast to the inconsistency between cases interpreting § 1132(d), the United States Supreme Court has spoken clearly that state judgment enforcement mechanisms do not violate ERISA's preemption provision. In Mackey, the Supreme Court held that while garnishment of ERISA benefits affects and involves ERISA plans, it is a state judgment enforcement mechanism that does not relate to an ERISA plan for pre-emption purposes. Mackey, 486 U.S. at 834, 108 S.Ct. 2182. The Mackey court held that state-law methods for collecting money judgments must, as a general matter, remain undisturbed by ERISA; otherwise, there would be no way to enforce such a judgment won against an ERISA plan. Id. Guardian's approach would have this Court endorse the paradoxical result of rendering unenforceable legitimate judgments against insured ERISA plans, an approach entirely at odds with Congressional intent. [3] Id. at 831, 108 S.Ct. 2182 (indicating that Congress did not intend to forbid the use of state-law mechanisms of executing judgments against ERISA welfare benefit plans). We conclude that ERISA does not preempt or preclude a state law garnishment action against an ERISA insurer to enforce a judgment entered against an ERISA plan. {48} Our conclusion today also follows closely upon the direction of the federal district court in this very matter. Seeking to collect its judgment against the Plan, Kirby went to federal court to assert a new claim against Guardian for wrongful denial of benefits under ERISA, § 1132(a)(1)(B), based on Guardian's refusal to pay the default judgment. Kirby also asserted an additional claim against Guardian for breach of fiduciary duty under ERISA, § 1132(a)(3). The federal court rejected Kirby's claims on a simple, practical ground. Since both claims arose out of Guardian's failure to pay the default judgment, appropriate relief could be found in state court by way of a garden-variety judgment enforcement action under state law. Kirby-Federal, slip op. at 15-25. {49} Specifically, with regard to the claim for wrongful denial of benefits, the federal court stated: [A]lthough the terms of the Plan related to whether Guardian should pay benefits on behalf of the Plan will be at issue [in the state judgment enforcement action], it is a collection and enforcement issue that only the state court can resolve. Id. at 18. With regard to Kirby's claim for breach of fiduciary duty, the federal court ruled that, while reinstatement of benefits would qualify as equitable relief under ERISA, such relief would be inappropriate because state enforcement of the default judgment would provide adequate alternative relief. Id. at 24. The federal court thus deferred to New Mexico state law for a method of enforcing the judgment against the Plan. In doing so, the federal court acknowledged that the terms of the Plan would be at issue, and to some extent ERISA law, but did not find such incidental inquiry to raise preemption concerns. Thus, in issuing the writ of garnishment our district court was, in a certain sense, simply following the very course that the federal court had previously described for Ms. Kirby to follow. {50} Our garnishment statute requires an evaluation of the judgment debtor's right of action against the garnishee. In the context of an ERISA plan arrangement, this determination will inevitably involve the terms of the plan document, and will affect the parties to the plan arrangement. Nevertheless, as a part of our state's garnishment analysis, that determination does not involve or upset the comprehensive enforcement scheme of ERISA, § 1132. As one federal district court opinion explains, [i]n order for pre-emption to even come into play, there must be some express or implied provision of ERISA which addresses the matter. Local Union 212 Int'l Bhd. of Elec. Workers Vacation Trust Fund v. Local 212 IBEW Credit Union, 549 F.Supp. 1299, 1302 (D.Ohio 1982). Both Mackey and Kirby-Federal make clear that judgment enforcement mechanisms, and garnishment in particular, are not addressed under ERISA. We agree, and in proceeding to apply state garnishment law, we see ourselves acting in harmony with what the federal court has already said about the role of state courts and state law in the enforcement of ERISA judgments.