Court Opinion

ID: 22374
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:55:00+00
Date Added: 2024-06-11T15:03:55.207503
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT

                             No. 99-10092

DAISY BROWN, In the Matter of
the Marriage of Daisy Brown and
Bobby Brown, and in the interest
of Tamela Laveria Brown and
Timberly Marie Brown, Children,

                                            Plaintiff-Appellant,

versus

UNITED PARCEL SERVICE, INC.; BOBBY BROWN,

                                            Defendants-Appellees.

                      --------------------
          Appeal from the United States District Court
               for the Northern District of Texas
                     USDC No. 4-97-CV-837-Y
                      --------------------
                        October 31, 2000

Before REYNALDO G. GARZA, HIGGINBOTHAM, and BENAVIDES, Circuit
Judges.

BENAVIDES, Circuit Judge:*

     Bobby Brown, a retired United Parcel Service (UPS) employee,

is a participant in the UPS Retirement Plan (Plan), which is

regulated by the Employee Retirement Income Security Act of 1974,

§ 514(a), 29 U.S.C. §§ 1001-1461, (ERISA).     In 1994, prior to

Bobby Brown’s retirement, his wife, appellant Daisy Brown (Brown)

filed a divorce suit in Tarrant County.     He retired the next year

     *
        Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
at the age of 51.   The parties entered into an Agreed Decree of

Divorce and a Qualified Domestic Relations Order (QDRO) in state

court.   The QDRO provided that Brown would receive sixty percent

of Bobby Brown’s UPS retirement benefits.   Prior to the entry of

this order, Brown’s attorney forwarded to the corporate benefits

department at UPS a copy of the proposed domestic relations order

for approval by the Plan as a qualified order.   In the

transmittal letter to Carol Hopkins, a clerk who worked in the

UPS corporate benefits department, Brown’s attorney stated that

it was his understanding that Bobby Brown was currently receiving

$2,162.19 per month from the Plan.   In that letter, he also

requested that Hopkins confirm that Brown would receive monthly

payments of $1,297.31 from the Plan.   Brown asserts that Hopkins

confirmed these figures.   According to UPS, there is nothing in

writing to establish that Hopkins (or anyone connected with UPS

or the Plan) made such a confirmation.

     After the close of the divorce proceedings, it was

determined that the monthly payments to be distributed to Brown

would be significantly less than the anticipated figure set forth

above.   Naming her former husband as the respondent, Brown filed

a motion in state court for enforcement and clarification of the

divorce decree and the QDRO.   She later amended her pleading to

include UPS as a respondent, alleging that it had not paid her

the benefits to which she believed she was entitled under the

Plan.

                                 2
     UPS removed the proceeding to the federal district court on

the ground that Brown’s claim was completely preempted by ERISA.

UPS thereafter filed a motion for summary judgment, seeking to

have Brown’s claim dismissed because UPS was neither the Plan nor

the administrator of the Plan and, thus, not a proper defendant

to the claims.

     Brown responded by moving both for leave to amend her

complaint and for a remand to state court.     Brown agreed that she

could not recover against UPS for the payment of retirement

benefits and sought to amend her complaint by deleting any such

allegation.    Instead, she asserted that she was seeking relief on

her theories of negligent misrepresentation and promissory

estoppel.1    According to UPS, Brown’s amended complaint asserted

that UPS had misrepresented to her the “amount of retirement

benefits that would be provided to Daisy Brown.”     Further, she

expressly requested that the court “make specific findings

awarding     [her] 60% of the [UPS Plan] proceeds paid since

February 29, 1996 and 60% of any future proceeds received from

     1
        Brown asserts that by amending her complaint, the district
court no longer properly exercised removal jurisdiction.        The
propriety of removal, however, hinges on the status of the
complaint at the time of removal.         Therefore, post-removal
amendments are irrelevant to the jurisdictional determination. See
McClelland v. Gronwaldt, 155 F.3d 507, 517 (5th Cir. 1998). In
Brown’s original complaint, she alleged, as a beneficiary under the
ERISA plan, that UPS improperly paid out her share of benefits
under the plan and demanded that UPS immediately pay the benefits
to which she is entitled.       Thus, Brown’s original claim was
completely preempted, rendering removal appropriate.

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that plan.”

     The district court issued an order: (1) denying Brown’s

motion to remand; (2) granting UPS’ motion for summary judgment

“to the extent that [Brown] has attempted to obtain ERISA plan

benefits from UPS;” (3)granting Brown’s motion to amend her

complaint; and remanding Brown’s remaining claims to state court

pursuant to 28 U.S.C. § 1441(c).

     UPS moved the district court to reconsider its order of

remand and to dismiss all of Brown’s claims against UPS because

they were preempted by ERISA.   The district court granted UPS’

motion for reconsideration and dismissed Brown’s claims against

UPS for the reasons stated in UPS’ motion (the claims were

completely preempted by ERISA).    The district court denied

Brown’s later motion to reconsider.    Brown now appeals.

                            DISCUSSION

     This Court reviews a district court’s ruling on a motion for

summary judgment de novo.   Thomas v. LTV Corp., 39 F.3d 611, 616

(5th Cir. 1994).   “A motion for summary judgment is properly

granted when competent evidence establishes the absence of a

genuine issue of material fact and that the movant is entitled to

judgment as a matter of law.”     Id. (citing Celotex Corp. v.

Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552 (1986)).     In

its order granting UPS’ motion for reconsideration and to

dismiss, the district court found that ERISA completely preempted

Brown’s “claims against UPS for negligent misrepresentation and

                                   4
promissory estoppel are preempted by [ERISA] for the reasons

urged by UPS.”    Because of this finding of complete preemption,

the district court had no power to remand the claims to state

court.   See Giles v. NYLCare Health Plans, Inc., 172 F.3d 332,

337 (5th Cir. 1999) (explaining that if a defendant demonstrates

that a claim is completely preempted by ERISA, the district court

may not remand).

     There are two types of preemption under ERISA.    Conflict, or

ordinary, preemption exists when a state law cause of action

“relate[s] to” an employee benefit plan governed by ERISA.     See

29 U.S.C. § 1144(a); McClelland v. Gronwaldt, 155 F.3d 507, 516

(5th Cir. 1998).   Conflict preemption is typically a defense to a

state cause of action and does not appear in the complaint.

McClelland, 155 F.3d at 516; Giles, 172 F.3d at 337.    Therefore,

conflict preemption, without more, does not allow a case to be

removed to federal court because it does not present a federal

question.   Id.

     Complete preemption, on the other hand, exists when a state

cause of action is conflict-preempted by ERISA (thus, an analysis

of conflict preemption is the first step in determining whether a

claim is completely preempted) and also comes within the scope of

29 U.S.C. § 1132(a).    See McClelland, 155 F.3d at 517-18 & n.34.

Specifically, § 1132(a)(1)(B) provides a remedy for beneficiaries

to recover benefits due under the terms of a plan, to enforce

                                  5
rights under a plan, or to clarify rights to future benefits

under a plan.   When a complaint raises a state cause of action

that is completely preempted, the district court may not decline

to exercise jurisdiction, because that cause of action actually

presents a federal question.     Giles, 172 F.3d at 337.    Thus, a

claim for benefits, to enforce rights to benefits, or to clarify

rights to benefits is completely preempted, regardless of how the

plaintiff’s characterizes her claims in the complaint.

     This Court has previously held that ERISA preempts state law

claims that have the effect of orally modifying an ERISA benefit

plan and increasing plan benefits for participants who claim to

have been misled.   See Lee v. E.I. DuPont de Nemours & Co., 894
F.2d 755, 757 (5th Cir. 1990); Cefalu v. B.F. Goodrich Co., 871
F.2d 1290, 1295 (5th Cir. 1989); Degan v. Ford Motor Co., 869
F.2d 889, 895 (5th Cir. 1989).    This Court has also found that

ERISA does not preempt a state law claim in the context of

negligent misrepresentation when the claim is brought by “an

independent, third-party (health care provider) against an

insurer.”   Transitional Hospitals Corp. v. Blue Cross and Blue

Shield of Texas, Inc., et. al., 164 F.3d 952, 954 (5th Cir.

1999).   In the instant case, Brown is not an independent third

party, but a beneficiary under the ERISA plan.      UPS, as the plan

sponsor, is also a ERISA entity.       See 29 U.S.C. § 1002(16)(B)

(“plan sponsor” means the employer who establishes or maintains

                                   6
the employee benefit plan); § 1002(8) (“beneficiary” means a

person who is entitled to a benefit under an employee benefit

plan).

     In Hubbard v. Blue Cross & Blue Shield Association, 42 F.3d
942 (5th Cir. 1995), this Court held that an ERISA plan

beneficiary’s claim for fraudulent inducement where “the essence

of [the] claim [was] that her benefits under the plan were

improperly denied” was completely preempted and thus provided a

basis for removal jurisdiction. Hubbard was a participant in an

ERISA-governed health benefit plan insured by Blue Cross.      She

contracted cancer, and the plan refused to provide coverage for

certain requested treatments.     Hubbard sued the Blue Cross and

Blue Shield Association, a third party that was not the insurer,

plan, or plan administrator, claiming that the Association

generated “secret” policy interpretation guidelines followed by

her insurer and that the Association wilfully concealed those

guidelines from her, causing her to fail to procure other

adequate health coverage.      Hubbard, 42 F.3d at 944.   This Court

held that because the essence of Hubbard’s claims were that her

benefits under the medical plan were improperly denied, and

because resolution of her claim would require an inquiry into the

interpretation and administration of the plan, her claim was

preempted by ERISA such that a federal question existed on that

claim.   See id. at 945-946.    Also, in Cefalu, the plaintiff

alleged he was misled by his employer, Goodrich, as to the amount

                                    7
of retirement benefits to which he was entitled.    He alleged that

he relied on the misrepresentation to his detriment by purchasing

a Goodrich franchise rather than continuing employment with a

successor following the sale of his former employer by Goodrich.

Cefalu, 871 F.2d at 1292.   This Court held in that Cefalu’s

claims were preempted by ERISA.       See id.

     Brown’s claims are analogous to both Hubbard and Celafu.

She alleges she is not seeking ERISA benefits, but asserts that

she relied on UPS’ misrepresentation regarding Plan benefits in

not negotiating for other property in the divorce settlement.

Like Cefalu, the precise damages Brown seeks were created by the

Plan, and to use any other source as a measure of damages would

force this Court to speculate on the amount of damages.    See id.

at 1294.   Though this court has found in certain instances that a

claim for fraudulent misrepresentation is not completely

preempted, this case does not fall within within that subtle

distinction.   See Smith v. Texas Children’s Hospital and UNUM

Life Insurance Co., 84 F.3d 152 (5th Cir. 1996).    In Smith, the

plaintiff sued her second employer for benefits she relinquished

due to her second employer’s misrepresentation.    In essence, the

Court held, that Smith was not suing for benefits under an ERISA

plan, but for damages because “Texas Children’s misled Smith when

it told her that she could keep what she had.”     Smith, 84 F.3d at

155-156.   In the instant appeal, like in Celafu, Brown is suing

                                  8
UPS for lost benefits under the UPS plan.2     Even in Smith, the

Court acknowledged that a claim against Texas Children’s for

ERISA benefits would be completely preempted by ERISA.

     Nevertheless, the Smith court concluded that Smith had a

claim based on vested benefits relinquished that was separate and

apart from a claim to ERISA benefits.      Smith, 84 F.3d at 155.

Moreover, the Smith Court noted that if “Smith had no benefits

before joining Texas Children’s, she could only claim relief

[against Texas Children’s] based upon benefits to which she was

entitled under Texas Children’s ERISA plan” and that “ERISA would

preempt such a claim.”     Id. at 157.   Though Brown argues in

district court that Smith controls this appeal, she never argues

that she had a vested right to anything other than the Plan

benefits. Brown merely speculates that she would have a better

bargaining position had she not relied UPS determintion of

benefits.     A better bargaining position is far from losing vested

benefits which the Smith Court found to be necessary to create a

fraudulent inducement claim separate and apart from ERISA.

         When read in its entirety, Brown’s complaint indicates she

believes she is due more benefits under the Plan than she is

     2
        The Smith court noted that “Cefula could not have asserted
a claim based upon benefits given up, since his termination, not
[the employers’] misrepresentation, caused the loss of additional
benefits . . .” Thus, “ERISA preempted Cefalu’s claim because he
sought to hold [the employer] liable in contract for additional
benefits beyond what he has under [the employer’s] ERISA plan.”
Smith, 84 F.3d at 156.

                                   9
currently receiving, in essence, a claim for benefits or at least

to clarify her right to benefits.    Brown currently has a right to

receive benefits from UPS, but because she thought she would be

receiving more, she is suing UPS for additional benefits.

Brown’s amendment did nothing to change her claims:    both her

amended complaint and original complaint are based on the same of

set of operative facts.    Brown has merely given her claim

against UPS a different name -- it is still the same claim she

brought in her original complaint against UPS which she concedes

is completely preempted.   As in Hubbard, a determination of

whether UPS made a misrepresentation as to the terms of the Plan

and the benefit to which Brown is entitled would require an

analysis and interpretation of the Plan itself.   Therefore, the

claim falls under § 1132(a)(1)(B) as an action to recover

benefits or clarify her right to future benefits.     See Hubbard,
42 F.3d at 945-946; see also Giles, 172 F.3d at 337.

      Therefore, Brown’s claims are completely preempted by ERISA

because they come within the purview of 29 U.S.C.

§ 1132(a)(1)(B).   Thus, the district court properly exercised

jurisdiction over this claim.   Accordingly, the judgment of the

district court is AFFIRMED.

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