Court Opinion

ID: 183015
Source: CourtListenerOpinion
Date Created: 2011-01-19 18:01:07+00
Date Added: 2024-06-11T17:26:01.946111
License: Public Domain

FILED
                                                            United States Court of Appeals
                                                                    Tenth Circuit

                                                                 January 19, 2011
                     UNITED STATES COURT OF APPEALS
                                                  Elisabeth A. Shumaker
                                                                   Clerk of Court
                            FOR THE TENTH CIRCUIT

    DAVID CARROLL,

                Plaintiff!Appellant,
                                                         No. 10-2090
    v.                                        (D.C. No. 1:08-CV-00959-JB-ACT)
                                                           (D. N.M.)
    LOS ALAMOS NATIONAL
    SECURITY, LLC; THE LANS
    BENEFITS AND INVESTMENT
    COMMITTEE,

                Defendants!Appellees.

                            ORDER AND JUDGMENT *

Before KELLY and BALDOCK, Circuit Judges, and BRORBY, Senior
Circuit Judge.

         David Carroll appeals the district court’s grant of summary judgment in

favor of Los Alamos National Security, LLC (LANS) and the LANS Benefits and

Investment Committee on his state-law negligent misrepresentation claim.

Exercising jurisdiction under 28 U.S.C. § 1291, we AFFIRM.

*
       After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
                                         I.

      Mr. Carroll is employed at Los Alamos National Laboratories, which was

operated and managed by the University of California until LANS succeeded to

those functions in 2006. When LANS took over, employees were separated from

their employment with the university and were rehired by LANS. They had to

choose between two new benefits and compensation packages, Total

Compensation Plan 1 (TCP1) and Total Compensation Plan 2 (TCP 2). Both

TCP1 and TCP2 required participants to contribute to Social Security and

Medicare. As a state university employee Mr. Carroll had been exempted from

making such contributions for the majority of his career, so he anticipated that he

would not have enough time before retirement to accrue sufficient quarters of

coverage to become eligible for Social Security payments based on his earnings

record. LANS indicated to the transferring employees that reimbursement of

contributions might be available where a retiree would not be eligible for Social

Security benefits after retirement. The record on appeal indicates that the

reimbursement program was not a term of an ERISA-governed benefits plan, but

instead was a supplemental obligation assumed by LANS.

      Mr. Carroll was particularly interested in whether TCP2 included the

reimbursement program. A representative of LANS and/or the LANS Benefit

Committee informed him that TCP2 would include participation in the

reimbursement program. This assurance was incorrect, because the

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reimbursement program was offered only to TCP1 participants. Months after

Mr. Carroll elected to participate in TCP2, he learned that TCP2 participants were

not eligible for the reimbursement program.

      Mr. Carroll brought suit. In addition to claims under the Employee

Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461, and the Age

Discrimination in Employment Act, 29 U.S.C. §§ 621-634, he alleged a state-law

claim of negligent misrepresentation. The district court granted summary

judgment to LANS and the LANS Benefit Committee on all claims. Mr. Carroll

appeals only the disposition of his negligent misrepresentation claim.

                                         II.

      “We review a grant of summary judgment do novo with an examination of

the record and all reasonable inferences that might be drawn from it in the light

most favorable to the non-moving party.” Antonio v. Sygma Network, Inc.,

458 F.3d 1177, 1181 (10th Cir. 2006) (quotation omitted). “When exercising

jurisdiction over pendent state claims, we must apply the substantive law of the

forum state and reach the same decision we believe that state’s highest court

would, just as we would if our jurisdiction rested on diversity of citizenship.”

Lytle v. City of Haysville, 138 F.3d 857, 868 (10th Cir. 1998).

      Under New Mexico law, to recover for negligent misrepresentation, a

plaintiff must show that: (1) the defendant made an untrue statement, (2) the

defendant had no reasonable ground for believing that the statement made was

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true, (3) the defendant intended the plaintiff to rely upon the statement, (4) the

plaintiff did in fact rely on it, and (5) the reliance proximately caused the plaintiff

damages. See N.M. Stat. Ann. Civil Uniform Jury Instruction 13-1632; First

Interstate Bank of Gallup v. Foutz, 764 P.2d 1307, 1309-10 (N.M. 1988). In this

case, the parties focused on reliance, causation, and damages.

      The district court found that there was a genuine dispute of material fact as

to reliance, but held that Mr. Carroll could not show that his reliance caused him

any damages. First, the district court noted that in his deposition Mr. Carroll did

not testify that he would have selected TCP1 if he had known the truth; instead,

“the most he could say was that he would have much more carefully considered

TCP1 if he knew that TCP2 participants would not receive Social

Security/Medicare reimbursements.” Aplt. App. at 226 (quotations and

alterations omitted). “[H]is indecision demonstrates that, at best, he does not

know if the Defendants’ conduct caused him any injury other than deprivation of

the right to make a fully informed choice – and possibly to still choose TCP2

even if the truth had been disclosed.” Id. Second, the court stated that

Mr. Carroll could never prove he suffered monetary damages from his selection of

TCP2, because even considering the lack of reimbursement, on the whole he was

significantly better off with TCP2 than he would have been with TCP1, and

appellees would be entitled to offset the benefits he had received under TCP2.

      On appeal, Mr. Carroll argues that the district court (1) failed to consider

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his deposition testimony in the light most favorable to him, and instead

considered it in the light most favorable to appellees; (2) evaluated damages

under a “benefit-of-the-bargain” theory rather than for out-of-pocket loss,

contrary to New Mexico law, and (3) considered matters preempted by ERISA

when it evaluated the value of the compensation packages in considering his

potential damages and when it held that appellees would be entitled to offset the

benefits he received under TCP2. * Because the damages arguments are

dispositive of the appeal, we need not consider the first argument.

      As Mr. Carroll asserts, in New Mexico “damages for negligent

misrepresentation are determined by out-of-pocket loss or reliance damages.”

First Interstate Bank of Gallup, 764 P.2d at 1309. Damages include “the

difference between the value of what [the plaintiff] has received in the transaction

and its purchase price or other value given for it” as well as “pecuniary loss

suffered otherwise as a consequence of the plaintiff’s reliance upon the

misrepresentation.” Id. (quotation omitted); see also id. at 1310. Mr. Carroll

asserts that the court erroneously applied a benefit-of-the-bargain analysis, and

instead submits that the proper damages analysis is as follows: because he will

*
       Mr. Carroll also briefly states that the district court relied on speculative,
future calculations. To the extent he intended to assert an argument based on
speculation, however, his failure to include legal argument or to cite to authority
results in a waiver. See Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 679
(10th Cir. 1998).

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have paid about $40,500 into Social Security and Medicare before he retires, and

he will receive nothing for those contributions, his out-of-pocket loss attributable

to the misrepresentation is $40,500.

      We agree with appellees, however, that it is Mr. Carroll who is seeking the

benefit of the bargain. The transaction at issue was the decision to participate in

TCP1 or in TCP2. The various components of the packages were not presented

à la carte, and Mr. Carroll could not have chosen to participate in the

reimbursement program alone. Rather, TCP1 offered certain benefits, and TCP2

offered other benefits. Having chosen TCP2, Mr. Carroll received benefits that

would not have been available to him through TCP1. Now, he would like to stay

in TCP2 and retain all of the benefits of participating in that package, ** while also

recouping his $40,500 in Social Security and Medicare contributions through the

reimbursement program. That is, he seeks to gain the benefit of his bargain.

      Further, we disagree with Mr. Carroll’s assertion that ERISA preempts any

consideration of the value of TCP1 and TCP2 to him in evaluating damages. ***

ERISA preemption is a question of law that is reviewed de novo. David P.

**
        The second amended complaint sought enrollment in TCP1, Aplt. App. at
127, but during the litigation Mr. Carroll voluntarily dismissed that request for
relief, id. at 142.
***
      Relying on Woodworker’s Supply, Inc. v. Principal Mutual Life Insurance
Co., 170 F.3d 985, 990-92 (10th Cir. 1999), the district court held that ERISA did
not preempt the negligent misrepresentation claim because the misrepresentation
preceded the plans. Neither party has appealed this ruling, and therefore we
address preemption only with regard to the calculation of damages.

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Coldesina, D.D.S., P.C., Emp. Profit Sharing Plan & Trust v. Estate of Simper,

407 F.3d 1126, 1135 (10th Cir. 2005) (Coldesina).

      State-law claims that “relate to” an employee benefit plan are preempted by

ERISA. 29 U.S.C. § 1144(a). “A law ‘relates to’ an employee benefit plan, in

the normal sense of the phrase, if it has a connection with or reference to such a

plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983). But while this

pronouncement is “clearly expansive,” it is not limitless. N.Y. State Conf. of Blue

Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655-62 (1995).

“Some state actions 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,

463 U.S. at 100 n.21; see also N.Y. State Conf., 514 U.S. at 659-62. Thus, the

Supreme Court has “go[ne] beyond the unhelpful text and the frustrating

difficulty of defining its key term” in favor of “look[ing] instead to the objectives

of the ERISA statute as a guide to the scope of the state law that Congress

understood would survive.” De Buono v. NYSA-ILA Med. & Clinical Servs. Fund,

520 U.S. 806, 813-14 (1997) (quotations omitted); see also Coldesina, 407 F.3d at

1136. Under this line of analysis,

      the Tenth Circuit has recognized four categories of state laws that are
      preempted by ERISA:

             (1) laws regulating the type of benefits or terms of ERISA
             plans;

             (2) laws creating reporting, disclosure, funding or vesting

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             requirements for such plans;

             (3) laws providing rules for calculating the amount of benefits
             to be paid under such plans; and

             (4) laws and common-law rules providing remedies for
             misconduct growing out of the administration of such plans.

Coldesina, 407 F.3d at 1136.

      In Hospice of Metro Denver, Inc. v. Group Health Insurance of Oklahoma,

Inc., 944 F.2d 752, 756 (10th Cir. 1991) (per curiam), this court held that ERISA

did not preempt a hospice’s promissory estoppel claim against an insurer even

though the hospice’s damages were based upon the amount of potential plan

benefits. “When a state law does not affect the structure, the administration, or

the type of benefits provided by an ERISA plan, the mere fact that the law has

some economic impact on the plan does not require that the law be invalidated.”

Id. at 754 (alterations and quotation omitted). “If Hospice prevails, merely

because its damages would be based upon the amount of potential plan benefits

does not implicate the administration of the plan, and is not consequential enough

to connect the action with, or relate the action to, the plan.” Id. at 755.

      Here, the district court’s actions did not implicate the structure or

administration of the ERISA plans, did not affect the type of benefits provided by

the plans, and did not impose rules for calculating the amount of benefits to be

paid from the plans. And the claim at issue does not seek to remedy misconduct

growing out the administration of the plans, given that the misrepresentation was

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made before the plans were effective. The court simply examined the two

compensation packages, including their ERISA plan components, to evaluate

whether Mr. Carroll could establish all the elements of his negligent

misrepresentation claim. These circumstances are too attenuated from

accomplishing ERISA’s objectives to require preemption. See also Funkhouser v.

Wells Fargo Bank, N.A., 289 F.3d 1137, 1143 (9th Cir. 2002) (“[A] claim does

not ‘relate to’ an ERISA employee benefit plan simply because a court would

refer to the plan in calculating damages.”); Forbus v. Sears Roebuck & Co., 30

F.3d 1402, 1406-07 (11th Cir. 1994) (“[T]he mere fact that the plaintiffs’

damages may be affected by a calculation of pension benefits is not sufficient to

warrant preemption.”).

      The district court did not err in concluding that Mr. Carroll cannot prevail

on his negligent misrepresentation claim because he suffered no damages by

choosing to participate in TCP2 instead of TCP1. The judgment of the district

court is AFFIRMED.

                                                    Entered for the Court

                                                    Wade Brorby
                                                    Senior Circuit Judge

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