Opinion ID: 2589754
Heading Depth: 1
Heading Rank: 1

Heading: ERISA Preemption Principles

Text: ERISA preemption of State law has been the subject of substantial recent litigation ( see generally , Gregory, ERISA Law in the Rehnquist Court , 42 Syracuse L Rev 945 [1991]). Controversy has centered on preemption of State law causes of action that offer remedies for the violation of rights expressly guaranteed by ERISA ( see, e.g. , Pilot Life Ins. Co. v Dedeaux , 481 US 41; Tingey v Pixley-Richards W. , 953 F.2d 1124 [9th Cir]). The question before us is different. None of the cases has considered the issue presented here  preemption of a State tax law of general application  which, nevertheless, is determined by settled ERISA preemption principles. Analysis begins with the presumption that State law has not been preempted by Federal statute in the absence of persuasive evidence to the contrary ( Sasso v Vachris , 66 N.Y.2d 28, 33). The focus is on congressional intent: `[t]he purpose of Congress is the ultimate touchstone.' ( Malone v White Motor Corp. , 435 US 497, 504, quoting Retail Clerks v Schermerhorn , 375 US 96, 103.) As the Supreme Court has noted, where Congress has expressly included a broadly worded pre-emption provision in a comprehensive statute such as ERISA, our task of discerning congressional intent is considerably simplified. ( Ingersoll-Rand Co. v McClendon , 498 US 133, 138.) ERISA's preemption clause is indeed broad: all State laws are superseded insofar as they may now or hereafter relate to any employee benefit plan (29 USC § 1144 [a] [emphasis added]). The clause was designed to establish pension plan regulation as exclusively a Federal concern. ( Ingersoll-Rand Co. v McClendon , 498 US, at 138.) Broad preemptive authority was intended to facilitate the emergence of a comprehensive and pervasive Federal interest and the interests of uniformity with respect to interstate plans (Statement of Senator Javits, 120 Cong Rec 29942 [1974]). That Federal interest was invoked, and ERISA promulgated, to address the concern that the soundness and stability of plans with respect to adequate funds to pay promised benefits may be endangered. (29 USC § 1001 [a].) The ERISA preemption clause is conspicuous for its breadth ( FMC Corp. v Holliday , 498 US 52, 58), virtually unique ( Franchise Tax Bd. v Laborers Vacation Trust , 463 US 1, 24, n 26), one of the broadest preemption clauses ever enacted. ( Evans v Safeco Life Ins. Co. , 916 F.2d 1437, 1439 [9th Cir]; see also , Gregory, The Scope of ERISA Preemption of State Law: A Study in Effective Federalism , 48 U Pitt L Rev 427, 431-432 [1987].) The scope of the preemption clause prompted one court to remark that in considering Congress' intent in the ERISA context, all roads lead to Rome. ( McCoy v Massachusetts Inst. of Technology , 950 F.2d 13, 17 [1st Cir].) Moreover, it is evident from the legislative history that Congress intended exactly this broad effect. As described by the Supreme Court: The bill that became ERISA originally contained a limited pre-emption clause, applicable only to state laws relating to the specific subjects covered by ERISA. The Conference Committee rejected these provisions in favor of the present language, and indicated that the section's pre-emptive scope was as broad as its language. ( Shaw v Delta Air Lines , 463 US 85, 98 [citing HR Conf Rep No. 93-1280, at 383 (1974); S Conf Rep No. 93-1090, at 383 (1974)].) State laws specifically designed to affect employee benefit plans are viewed as preempted by ERISA ( see , Mackey v Lanier Collection Agency & Serv. , 486 US 825, 829). If, as with the tax law at issue in the present case, the State law is not specifically designed to affect employee benefit plans  if it is a law of general application  the next step is to determine whether the law relate[s] to employee benefit plans ( Mackey v Lanier Collection Agency & Serv. , supra , at 830-831). The phrase relate[s] to must be given a `broad commonsense meaning' ( Ingersoll-Rand Co. v McClendon , 498 US, at 139, supra ). Does the law have a connection with or reference to such a plan ( Shaw v Delta Air Lines , 463 US, at 97, supra )? Even in the absence of an express link to an employee benefit plan, State law is preempted insofar as the law applies to benefit plans in particular cases ( Shaw v Delta Air Lines , supra , at 97, n 17). Thus, a State law may be preempted even though not specifically designed to affect such plans, and even though any effect is only indirect ( Ingersoll-Rand Co. v McClendon , 498 US, at 138-139, supra ). Two recent preemption cases, Ingersoll-Rand and FMC Corp. , have put to rest the contention that only laws relating to the terms, conditions or administration of a plan are preempted ( see , Ingersoll-Rand Co. v McClendon , supra ; FMC Corp. v Holliday , 498 US, at 58-60, supra [Congress did not intend to preempt only State laws dealing with subject matters covered by ERISA, such as reporting, disclosure and fiduciary duties]). Likewise, the argument that only State laws that purport to regulate an ERISA plan are preempted has been rejected ( Ingersoll-Rand Co. v McClendon , 498 US, at 141-142; see also , Smith v Dunham-Bush, Inc. , 959 F.2d 6, 9, n 3 [2d Cir]). It is apparent that the Supreme Court has consistently expanded the scope of ERISA preemption while identifying certain limits which allow for the independent operation of some narrowly prescribed state laws. ( Smith v Dunham-Bush, Inc. , 959 F2d, at 9, supra .) Despite the breadth of the preemption clause, certain State laws may affect employee benefit plans in too tenuous, remote, or peripheral a manner to warrant a finding that the law `relates to' the plan. ( Shaw v Delta Air Lines , 463 US, at 100, n 21.) Several Federal courts have referred to that language in upholding State laws of general application against challenges based on ERISA preemption ( see , Matter of Dyke , 943 F.2d 1435, 1447 [5th Cir]; see also , Gregory, op. cit. , 48 U Pitt L Rev 427, 465-466 [Unfortunately, the Court presented no principled formula by which to ascertain which state laws were so `tenuous, remote, or peripheral' as to avoid the broad scope of ERISA preemption.]). Thus, in the present case we must determine whether this tax law of general application relate[s] to benefit plans in more than a tenuous, remote or peripheral way so as to warrant preemption. We conclude that it does.