Court Opinion

ID: 2963730
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:14:24.294359+00
Date Added: 2024-06-11T11:42:45.192451
License: Public Domain

USCA1 Opinion

	

                            United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________

        No. 95-1440

                                    ALVAN H. WOLF,

                                 Plaintiff, Appellee,

                                          v.

                      RELIANCE STANDARD LIFE INSURANCE COMPANY,

                                Defendant, Appellant.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

               [Hon. Charles B. Swartwood, III, U.S. Magistrate Judge]

                                 ____________________

                                        Before

                                Torruella, Chief Judge,
                                           ___________
                           Stahl and Lynch, Circuit Judges.
                                            ______________

                                 ____________________

            James A.  Young with  whom  Michael J.  Burns, Christie,  Pabarue,
            _______________             _________________  ___________________
        Mortensen & Young, P.C. and Cheri L. Crow were on brief for appellant.
        _______________________     _____________
            William E. Bernstein  with whom Barbara S. Liftman and  Weinstein,
            ____________________            __________________      __________
        Bernstein & Burwick, P.C. were on brief for appellee.
        _________________________

                                 ____________________

                                  December 11, 1995
                                 ____________________

                      STAHL,  Circuit  Judge.   Plaintiff-appellee  Alvan
                      STAHL,  Circuit  Judge.
                              ______________

            Wolf prevailed  in  his jury-tried  contract  action  against

            defendant-appellant Reliance Standard Life  Insurance Company

            ("Reliance") for  denial of  disability  benefits.   Reliance

            appeals the trial court's ruling  that ERISA preemption is an

            affirmative defense which Reliance waived by failing to plead

            it timely.  We affirm.

                                          I.
                                          I.
                                          __

                                      BACKGROUND
                                      BACKGROUND
                                      __________

                      We begin by  reciting the facts  in the light  most

            favorable to the verdict.   See Aetna Cas. Sur. Co.  v. P & B
                                        ___ ___________________     _____

            Autobody, 43 F.3d 1546, 1552 (1st Cir. 1994).
            ________

                      Wolf  founded  Brookfield   Factory  Outlet,   Inc.

            ("Brookfield"), a  now-defunct chain of shoe  stores.  During

            Brookfield's  heyday, Wolf  earned  approximately $8,000  per

            month as its President  and Chief Executive Officer.   In the

            fall  of  1988,  he  was diagnosed  with  severe  depression,

            apparently resulting from business and personal difficulties.

            In  the  spring  of  1989, Wolf  experienced  heart  problems

            requiring   a  brief   hospitalization.     Thereafter,  Wolf

            continued  to work until April  24, 1989, when  he suffered a

            massive heart attack.

                      From the  time  of Wolf's  depression diagnosis  in

            1988  until his heart attack  in 1989, he  actually drew only

            $500  per  week  of  his  $8,000  per  month  salary  due  to

                                         -2-
                                          2

            Brookfield's   ongoing   financial  problems.      There  was

            conflicting testimony  at trial  as to whether  Wolf actually

            was entitled  to the  unpaid remainder  of his  salary, which

            Wolf asserted the company owed him as a debt payable.

                      The  insurance  policy  under  which   Wolf  sought

            recovery  took  effect  on  February  1,  1985.   The  policy

            provided a monthly  benefit to a  disabled employee equal  to

            sixty percent of "covered  monthly earnings," defined as "the

            insured's  basic monthly salary  received from [the employer]

            on the  day just before  the date of  total disability."   In

            September 1990,  Wolf filed a claim  for disability benefits.

            Reliance  denied the claim in May 1991, stating that Wolf had

            neither  proved  that he  was  a full-time  employee  when he

            became disabled  nor that he  was totally disabled,  and that

            Wolf was late giving notice of his claim.

                      In  January  1992, Wolf,  a  Massachusetts citizen,

            sued Reliance in Massachusetts state court alleging breach of

            contract and  unfair trade practices.   Reliance, an Illinois

            corporation  with   its  principal   place  of  business   in

            Pennsylvania, removed  the suit,  based on diversity,  to the

            United   States   District   Court  for   the   District   of

            Massachusetts.  28 U.S.C.    1441, 1332.

                      The   parties  consented   to  trial   before  U.S.

            Magistrate Judge  Charles B. Swartwood  III.  On  October 25,

                                         -3-
                                          3

            1994,  one  week   before  trial,   Reliance  filed   several

            motions,1  each asserting,  for the  first time,  that Wolf's

            state law  claims were  preempted by the  Employee Retirement

            Income  Security Act of 1974  ("ERISA").  29  U.S.C.    1001-

            1461.   The trial court denied the motions, ruling that ERISA

            preemption was  an affirmative defense which  Reliance waived

            by  failing to plead it in a  timely manner.  The trial court

            then denied  Reliance leave  to amend its  pleadings, finding

            undue delay by Reliance and significant prejudice to Wolf if,

            on  the eve  of trial,  Reliance were  allowed to  change the

            entire  legal basis for its opposition to Wolf's claim by its

            introduction of an ERISA preemption defense.2

                        The breach of contract claim was tried to a  jury

            on November  2-4, 1994,  resulting in  a special  verdict for

            Wolf.   The jury found  that Wolf's basic  monthly salary was

            $8,000  per  month  on  the  day  before  he  became  totally

            disabled.  The trial court  entered judgment for Reliance  on

            the unfair  trade practices claim,  and Wolf does  not appeal

            from that judgment.  In December 1994, the trial court issued

            a  memorandum  decision  calculating  Wolf's  damages  to  be

                                
            ____________________

            1.  Specifically,  Reliance  filed  motions  to  dismiss  for
            failure to state a claim, to strike Wolf's jury trial demand,
            and to apply an arbitrary and capricious standard of review.

            2.  The  only  previous  indication  of  any  possible  ERISA
            preemption  argument in  this litigation  was an  exchange of
            letters dated May 31, 1991 and July 29, 1991 between Reliance
            and Wolf's  attorney, each making a  single passing reference
            to ERISA.

                                         -4-
                                          4

            $196,606.72  plus  interest and  future payments.3   Reliance

            then filed a renewed motion  for judgment as a matter  of law

            and, alternatively, a motion  for a new trial, and  both were

            denied.  This appeal followed.

                                         II.
                                         II.
                                         ___

                                      DISCUSSION
                                      DISCUSSION
                                      __________

                      The  principal issue  before  us  is whether  ERISA

            preemption is jurisdictional, and thus  may be raised at  any

            point in  litigation, or an affirmative  defense, waivable if

            not pleaded timely.   A  related issue is  whether the  trial

            court  abused its  discretion  in denying  Reliance leave  to

            amend its pleadings to add an ERISA preemption defense.

            A.  ERISA Preemption
            ____________________

                      Whether ERISA  preemption  is jurisdictional  or  a

            waivable  affirmative defense is a pure  question of law that

            we review de novo.  See Correa v. Hospital San Francisco, No.
                      __ ____   ___ ______    ______________________

            95-1167, 1995 WL 627505, at *6 (1st Cir. Oct. 31, 1995).

                      Reliance argues that because there is a "compelling

            policy"  in favor of application of federal ERISA law to this

            claim,  ERISA  preemption  is  jurisdictional4  and therefore

                                
            ____________________

            3.  The parties stipulated that  if Reliance was found liable
            to Wolf, the trial court would calculate the damages.

            4.  We note  that  although Reliance  did  not use  the  term
            "jurisdictional," that is the thrust of its argument.

                                         -5-
                                          5

            nonwaivable.5   The  foundation  of the  argument is  ERISA's

            broad  preemption provision: ERISA  [with a  few inapplicable

            exceptions] "shall  supersede any and all  State laws insofar

            as they may now  or hereafter relate to any  employee benefit

            plan .  . .  . "   29 U.S.C.    1144(a).   One of  Congress's

            intentions in enacting ERISA,  as divined through legislative

            history,  was to  encourage  the growth  of private  employee

            benefit  plans  by  replacing   diverse  state  laws  with  a

            nationally  uniform federal  common  law regulating  employee

            benefit   plans.6     Treating   ERISA  preemption   as  non-

            jurisdictional  and therefore waivable would, so the argument

            goes,  frustrate  that  intent, subjecting  employee  benefit

            plans to  regulation and  litigation under  fifty non-uniform

            bodies of state law.  The costs of adapting to and litigating

            under non-uniform  state law and the  potential for liability

            and  damages beyond  that permitted  under ERISA  would deter

            employers from enacting benefits  plans.  Thus, courts should

                                
            ____________________

            5.  See  Insurance Corp.  of Ireland,  Ltd. v.  Compagnie des
                ___  __________________________________     _____________
            Bauxites de Guinee, 456 U.S. 694, 702 (1982) (explaining that
            __________________
            subject  matter jurisdiction  is nonwaivable);  see generally
                                                            ___ _________
            George Lee Flint, Jr.,  ERISA: Nonwaivability of  Preemption,
                                    ____________________________________
            39 U. Kan.  L. Rev.  297 (1991) (arguing  that courts  should
            hold ERISA preemption nonwaivable).

            6.  ERISA's House sponsor, Representative Dent, described the
            "reservation  to Federal  authority  [of] the  sole power  to
            regulate  the field  of  employee benefit  plans" as  ERISA's
            "crowning  achievement."     120  Cong.  Rec.  29197  (1974).
            Senator Williams commented that ERISA's preemption  will have
            the  effect  of "eliminating  the  threat  of conflicting  or
            inconsistent State  and local regulation  of employee benefit
            plans."  Id. at 29933.
                     ___

                                         -6-
                                          6

            hold  that  ERISA   preemption  is  jurisdictional  and   not

            waivable, consistent with the congressional intent  to create

            and apply  a uniform federal law  regulating employee benefit

            plans.

                      While the  foregoing argument is not without merit,

            it  is precluded by precedent.  The Supreme Court analyzed at

            length  the legislative  history  behind  ERISA's  preemption

            provision in Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44-
                         ___________________    _______

            46, 52-57 (1987), focusing on the civil enforcement scheme of

              502(a) of ERISA  (29 U.S.C.   1132(a)), under which  a plan

            participant can bring  a suit  for benefits due.   The  Court

            concluded  that Congress  intended  to  create  an  exclusive

            federal remedy, with a "pre-emptive force . . . modeled after

              301"  of the  Labor Management  Relations Act  ("LMRA"), 29

            U.S.C.   185.  Pilot Life,  481 U.S. at 52.  Accordingly, the
                           __________

            Court held that ERISA preempts all state law causes of action

            for benefits due under an ERISA plan.  Id. at 57.  Pilot Life
                                                   ___         __________

            did not present the  question whether ERISA preemption was  a

            jurisdictional matter or a  waivable defense, but the Supreme

            Court  made clear  that courts  deciding  the scope  of ERISA

            preemption  should  look  to LMRA  preemption  decisions  for

            guidance.  Id. at 54-55.
                       ___

                      The  Pilot  Life  decision  explains  that  ERISA's
                           ___________

            preemption  clause  and  civil  enforcement  scheme  entirely

            displaced  state law  causes  of action  for benefits  claims

                                         -7-
                                          7

            under  ERISA  plans.    Id.  at  55-57.    If  state  law  is
                                    ___

            "displaced,"  then  arguably  there  is  no   subject  matter

            jurisdiction over  a state law  cause of action  for benefits

            due.   Lack of subject  matter jurisdiction is,  of course, a

            nonwaivable defense and may be raised at any time.  Insurance
                                                                _________

            Corp.  of Ireland, Ltd. v. Compagnie  des Bauxites de Guinee,
            _______________________    _________________________________

            456 U.S. 694,  702 (1982).   That jurisdictional argument  is

            unavailing, however, because  this Circuit has squarely  held

            that LMRA preemption is  waivable.  Sweeney v. Westvaco  Co.,
                                 __             _______    _____________

            926  F.2d 29, 40 (1st Cir.) (Breyer, C.J.), cert. denied, 502
                                                        _____ ______

            U.S. 899 (1991).  Given that  the Supreme Court in Pilot Life
                                                               __________

            explicitly  directed courts  to treat  ERISA  preemption like

            LMRA preemption, 481 U.S. 51-56, Judge (now Justice) Breyer's

            analysis  in   Sweeney  leads  us  to   conclude  that  ERISA
                           _______

            preemption is also waivable.

                      The  rationale behind  Sweeney's holding  that LMRA
                                             _________

            preemption  is waivable  applies  with equal  force to  ERISA

            preemption.   The Sweeney  court began  with  an analysis  of
                              _______

            International  Longshoremen's Ass'n  v. Davis,  476  U.S. 380
            ___________________________________     _____

            (1986), a  National Labor  Relations Act  ("NLRA") preemption

            case.   See 29  U.S.C.     157, 158.   In Davis,  the Supreme
                    ___                               _____

            Court  held  that  NLRA  preemption  is  jurisdictional,  and

            therefore  nonwaivable, because NLRA  preemption dictates the

            choice  of forum (i.e., whether a court or the National Labor
                       _____

            Relations Board ("NLRB") has  the power to hear the  case) as

                                         -8-
                                          8

            opposed to simply the  choice of law (i.e., whether  state or
                                             ___

            federal law applies).   See id. at 398-99.   Sweeney stressed
                                    ___ ___              _______

            that the  Supreme Court itself carefully  limited its holding

            in  Davis to    7  and 8 of the NLRA  and not other statutes.
                _____

            Sweeney,  926  F.2d  at  38.     Those  sections  evidence  a
            _______

            Congressional intent to "refuse[] to permit parties to submit

            such  a  dispute   to  the  courts  even  where  the  parties

            themselves wished to do so."  Id. at 38-39.  In Sweeney, this
                                          ___               _______

            court   determined   that   LMRA  preemption,   unlike   NLRA

            preemption, "concerns  what law a decision  maker must apply,
                                        ___

            not what  forum must decide  the dispute."   926 F.2d  at 39.
                      _____

            Based  on that  premise,  the panel  in  Sweeney applied  the
                                                     _______

            converse of  the Davis rule, holding that  LMRA preemption is
                             _____

            waivable because it affects the choice of law, not the choice

            of forum.  Id. at 39-40.
                       ___

                      Like  LMRA  preemption,   ERISA  preemption  in   a

            benefits-due  action does  not  affect the  choice of  forum,

            because ERISA's jurisdictional provision provides that "State

            courts of  competent jurisdiction and district  courts of the

            United States shall have concurrent jurisdiction of actions,"
                                     __________ ____________

            29  U.S.C.     1132(e)(1)  (emphasis added),  "brought  by  a

            participant  or beneficiary  to  recover benefits  due."   29

            U.S.C.   1132(a)(1)(B).   The plain language of    1132 tells

            us that  if a plaintiff  brought a  "benefits-due" action  in

            state court and the  defendant pleaded ERISA preemption, this

                                         -9-
                                          9

            would not deprive the court of  jurisdiction over the subject

            matter; rather,  ERISA  preemption in  that  situation  would

            dictate the applicable law.   Preemption is, as Sweeney says,
                                                            _______

            ultimately  "a matter  of Congressional intent,  as embodied,

            explicitly or implicitly, in  a particular federal  statute."

            Sweeney, 926 F.2d at 38.  In  considering that intent, we are
            _______

            guided by a number of factors.  It is instructive, though not

            necessarily  dispositive,  that ERISA,  like  the  statute in

            Sweeney,  is a choice  of law rather  than a  choice of forum
            _______

            statute.  We  also believe that  the interests in  uniformity

            which  Congress hoped  to serve  in ERISA  did not  extend to

            permitting defendant corporations,  often more  sophisticated

            about ERISA than individual plaintiffs, to sit on their hands

            and  not  claim  the defense  until  the  last  minute.   Cf.
                                                                      ___

            Williams  v. Ashland Eng'g Co.,  Inc., 45 F.3d  588, 593 (1st
            ________     ________________________

            Cir.)  (emphasizing the importance  of protecting against the

            strategic  use of  a last  minute ERISA  preemption defense),

            cert. denied, 116 S.  Ct. (1995).  That employers  were meant
            _____ ______

            to enjoy the benefits  of uniformity did not mean  they could

            not forego those benefits.

                      Other  courts,   including  the  Fifth   and  Ninth

            Circuits have held  that ERISA preemption  is waivable.   See
                                                                      ___

            Dueringer v. General  Am. Life  Ins. Co., 842  F.2d 127,  130
            _________    ___________________________

            (5th Cir. 1988) (holding  that ERISA preemption is waivable);

            Gilchrist  v. Jim Slemons Imports,  Inc., 803 F.2d 1488, 1497
            _________     __________________________

                                         -10-
                                          10

            (9th Cir. 1986) (same); Rehabilitation Inst. of Pittsburgh v.
                                    __________________________________

            Equitable Life  Assur. Soc'y,  131 F.R.D. 99,  101 (W.D.  Pa.
            ____________________________

            1990) (same), aff'd, 937 F.2d 598 (3d Cir. 1991).
                          _____

                      An apparent majority of state courts addressing the

            question have  reached the  same conclusion.   See  Gorman v.
                                                           ___  ______

            Life Ins. Co. of N. Am., 811  S.W.2d 542, 546 (Tex.) (holding
            _______________________

            that  ERISA preemption is waivable when it does not deprive a

            state  court of  jurisdiction),  cert. denied,  502 U.S.  824
                                             _____ ______

            (1991); Curry  v. Cincinnati  Equitable Ins. Co.,  834 S.W.2d
                    _____     ______________________________

            701,  703 (Ky. Ct. App. 1992) (same); Hughes v. Blue Cross of
                                                  ______    _____________

            N. Cal., 263 Cal. Rptr. 850, 861 (Cal. Ct. App. 1989) (same),
            _______

            cert. dismissed, 495 U.S. 944  (1990); Associates Inv. Co. v.
            _____ _________                        ___________________

            Claeys, 533  N.E.2d 1248, 1251 (Ind. Ct. App. 1989).  But see
            ______                                                _______

            Chestnut-Adams Ltd.  Partnership  v. Bricklayers  and  Masons
            ________________________________     ________________________

            Trust  Funds of  Boston,  Mass., 612  N.E.2d 236,  238 (Mass.
            _______________________________

            1993) (holding  that the  preemption intended by  Congress in

            enacting ERISA is so  broad as to make it  jurisdictional and

            therefore nonwaivable); Barry v. Dymo Graphic Sys., Inc., 478
                                    _____    _______________________

            N.E.2d 707, 712 (Mass. 1985) (same).7

                      Accordingly,  we hold  that ERISA  preemption in  a

            benefits-due action is  waivable, not jurisdictional, because

                                
            ____________________

            7.  We are, of course, not bound by the Massachusetts Supreme
            Judicial Court's  interpretation of a federal  statute or the
            Congressional intent behind it.

                                         -11-
                                          11

            it  concerns  the  choice of  substantive  law  but does  not

            implicate the power of the forum to adjudicate the dispute.8

                      We  now   turn  to  the   question  whether   ERISA

            preemption   must  be  pleaded  as  an  affirmative  defense.

            Federal  Rule  of  Civil   Procedure  8(c)  requires  that  a

            responsive pleading set  forth certain enumerated affirmative

            defenses  as  well  as  "any  other  matter  constituting  an

            avoidance or affirmative defense."  Fed. R. Civ. P. 8(c); see
                                                                      ___

            generally  5 Charles  A. Wright  & Arthur R.  Miller, Federal
            _________                                             _______

            Practice and Procedure   1271 (1990).  The First Circuit test
            ______________________

            for  whether  a given  defense  falls  within  the Rule  8(c)

            "residuary" clause is whether  the defense "shares the common

            characteristic of  a bar to the right of recovery even if the

            general complaint were  more or less admitted  to."  Jakobsen
                                                                 ________

            v.  Mass.  Port Auth.,  520 F.2d  810,  813 (1st  Cir. 1975).
                _________________

            ERISA preemption  shares  this characteristic  insofar as  it

            would bar  Wolf  from recovering  on his  state law  contract

            claim   even  if   Reliance   admitted  Wolf's   allegations.

            Therefore  we hold  that ERISA  preemption in  a benefits-due

            action  is an affirmative defense and, as such, it is subject

            to waiver if not timely pleaded.

                                
            ____________________

            8.  Our holding  is limited to ERISA  preemption of benefits-
            due  actions.   ERISA permits  several other  types of  civil
            actions (e.g., for injunctive relief, for breach of fiduciary
            duty, etc.) subject to  exclusive jurisdiction in the federal
            courts rather than concurrent jurisdiction.  See 29 U.S.C.   
                                                         ___
            1132(a)(1)(A), 1132(a)(2)-(6), 1132(e)(1).

                                         -12-
                                          12

                      Several courts, including  this Circuit in  dictum,
                                                                  ______

            have held that ERISA  preemption in benefits-due actions must

            be pleaded timely as an affirmative defense.  See Williams v.
                                                          ___ ________

            Ashland Eng'g Co.,  Inc., 45 F.3d  588, 593 & n.7  (1st Cir.)
            ________________________

            (stating, in dictum, that  ERISA preemption is an affirmative
                         ______

            defense, but finding no waiver when pleaded six months before

            summary  judgment),  cert.  denied,  116 S.  Ct.  51  (1995);
                                 _____  ______

            Dueringer, 842 F.2d at 129-130 (5th Cir.  1988) (holding that
            _________

            ERISA preemption must be  pleaded as an affirmative defense);

            Rehabilitation Inst.,  131 F.R.D.  at 100-01 (W.D.  Pa. 1990)
            ____________________

            (same), aff'd,  937  F.2d 598  (3d  Cir. 1991);  Gorman,  811
                    _____                                    ______

            S.W.2d  at 546 (Tex. 1991)  (same); Curry, 834  S.W.3d at 703
                                                _____

            (Ky.  Ct.  App. 1992)  (same);  but  see Chestnut-Adams,  612
                                            ___  ___ ______________

            N.E.2d at 238 (Mass. 1993)  (holding that ERISA preemption is

            jurisdictional and therefore not waivable).

            B.  Amendment of the Pleadings
            ______________________________

                      Having  concluded  that  ERISA  preemption   is  an

            affirmative  defense,  it   follows  that  the   trial  court

            correctly   treated   Reliance's  attempt   to   raise  ERISA

            preemption   as  a   motion  seeking   leave  to   amend  the

            pleadings.9   We now address  whether the trial  court abused

            its discretion in denying Reliance leave to amend.

                                
            ____________________

            9.  At  oral argument on  the eleventh-hour motions, Reliance
            conceded the true goal  of the motions: "It's not  to dismiss
            the complaint per se,  it's just to substitute ERISA  for the
                          ___ __
            breach of contract under state law."

                                         -13-
                                          13

                      Whether  or  not  to   grant  leave  to  amend  the

            pleadings is within the discretion of the trial court and the

            court's  decision will  be reversed  only upon  a showing  of

            abuse of that discretion.  Manzoli v. Commissioner, 904  F.2d
                                       _______    ____________

            101, 107 (1st Cir. 1990).

                      Failure to  plead an affirmative  defense generally

            results in waiver of  the defense and its exclusion  from the

            case.  Conjugal Partnership  v. Conjugal Partnership, 22 F.3d
                   ____________________     ____________________

            391, 400 (1st  Cir. 1994).   An affirmative  defense must  be

            pleaded in the  answer in  order to give  the opposing  party

            notice  of the defense and  a chance to  develop evidence and

            offer arguments to controvert the defense.  Knapp Shoes, Inc.
                                                        _________________

            v. Sylvania Shoe  Mfg. Corp.,  15 F.3d 1222,  1226 (1st  Cir.
               _________________________

            1994).

                      Reliance  conceded  at  oral  argument  that  ERISA

            preemption was  an affirmative defense.   It argued, however,

            that having raised in its answer a  broad "failure to state a

            claim  upon which relief may be granted" defense, see Fed. R.
                                                              ___

            Civ.  P. 12(b)(6), this defense  allowed it to  later, a week

            before trial, raise the specific defense of ERISA preemption.

            Cf.  Williams, 45  F.3d  at 593.    In Williams,  this  court
            ___  ________                          ________

            enunciated a  test to determine when  a general, non-specific

            defense of  failure to state  a claim,  see Fed.  R. Civ.  P.
                                                    ___

            12(b)(6),  as Reliance  originally  filed, is  sufficient  to

            preserve the affirmative defense  of ERISA preemption.  "[A]n

                                         -14-
                                          14

            inquiring   court   must   examine   the  totality   of   the

            circumstances  and make  a practical,  commonsense assessment

            about  whether  Rule  8(c)'s core  purpose  --  to  act as  a

            safeguard against  surprise and unfair prejudice  -- has been

            vindicated."   Id.  In  Williams, the defendant  raised ERISA
                           ___      ________

            preemption well before the close of discovery, and six months

            prior to  the filing  of cross-motions for  summary judgment.

            Id.  The issue was  briefed by both sides on summary judgment
            ___

            and thus we found that no "ambush" had occurred.  Id.  In the
                                                              ___

            instant  case,   however,  Reliance  did   not  raise   ERISA

            preemption  in its answer,  at the pretrial  hearings, in the

            pretrial  memoranda, or  at any  point during  discovery, but

            rather  raised it  only five  days before  trial.10   As this

            Circuit  recently  said in  another  case  of waiver,  "[t]he

            chronology  of the  case  speaks volumes  about  the lack  of

            timeliness."  Correa v.  Hospital San Francisco, No. 95-1167,
                          ______     ______________________

            1995 WL 627505, at *8 (1st Cir. Oct. 31, 1995).

                      The trial  court denied  leave to amend  because of

            the  undue delay by Reliance  in raising the  issue11 and the

                                
            ____________________

            10.  Reliance argues that the previously  referenced exchange
            of letters was sufficient to put Wolf on notice that Reliance
            intended to  pursue an ERISA  preemption defense.   See supra
                                                                ___ _____
            note 2.  We cannot agree that the passing references in those
            letters  are the  legal equivalent of  pursuing a  defense in
            court.

            11.  When the trial judge asked Reliance at oral argument why
            ERISA preemption  was not raised earlier,  counsel explained:
            "I   sat  down  a  couple  weeks  ago  to  start  doing  jury
            instructions and things  in the case  and realized that  this

                                         -15-
                                          15

            substantial prejudice to Wolf if amendment  were allowed.  It

            is well within  a court's discretion to find  prejudice where

            the amendment "substantially changes  the theory on which the

            case  has been proceeding and is proposed late enough so that

            the opponent would  be required to engage  in significant new

            preparation."  See 6 Wright & Miller,  supra,   1487, at 623.
                           ___                     _____

            This  is precisely such a case: Reliance sought to change the

            theory of the case  five days before trial, which  would have

            forced  Wolf to conduct  additional discovery,  research, and

            preparation  on the  ERISA-related issues.12   We  hold that,

            based  on  these  considerations,   there  was  no  abuse  of

            discretion in denying leave to amend.

            C.  Reliance's Other Arguments
            ______________________________

                      We have considered appellant's other  assertions of

            error and find them to be without merit.

                                         III.
                                         III.
                                         ____

                                      CONCLUSION
                                      CONCLUSION
                                      __________

                      For the foregoing reasons, the judgment of the

            trial court is Affirmed.  Costs to appellees.
                           Affirmed   Costs to appellees
                           ________   __________________

                                
            ____________________

            was a case that  should be done by ERISA . . .  .  I had made
            myself . . .  knowledgeable about ERISA in the last couple of
            weeks.  It's not an area of my normal practice."

            12.  Despite the  briefing by both  parties on the  merits of
            ERISA preemption,  we have  no occasion to  reach the  issue,
            because we find that the argument was waived.

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