Court Opinion

ID: 9490615
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:49:23.467271+00
Date Added: 2024-06-11T17:54:12.832272
License: Public Domain

THOMAS, Circuit Judge,
concurring in part and dissenting in part:
I concur with Section II of the majority opinion concerning federal jurisdiction under *1316the False Claims Act, but respectfully dissent from Section I concerning the impact of ERISA and the judgment.
If ERISA preempts anything, it must preempt an independent claim for punitive damages based on an employer’s motive to deny pension benefits. ERISA preemptively regulates such an action by making it unlawful to discharge or discriminate against a plan participant “for the purpose of interfering with the attainment of any right to which such participant may become entitled.” 29 U.S.C. § 1140. Indeed, ERISA preempts all state law claims founded on alleged improper processing of pension or other plan benefits. See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 57, 107 S.Ct. 1549, 1558, 95 L.Ed.2d 39 (1987) (“Dedeaux’s state law suit asserting improper processing of a claim for benefits under an ERISA-regulated plan is not saved by § 514(b)(2)(A), and therefore is preempted by § 514(a).”); Kanne v. Connecticut Gen. Life Ins. Co., 867 F.2d 489, 493 (9th Cir.1988) (state common law claims arising from improper claims processing are preempted by ERISA, requiring vacation of judgment “insofar as it awards compensatory and punitive damages arising out of the common law claims”).
Under California law, punitive damages may only be awarded if the defendant acted with “fraud, oppression or malice.” Campbell sought exemplary damages because Aerospace allegedly acted with malice to reduce or deny his pension benefits. As Campbell acknowledged, he made this accusation to “recover punitive damages from the defendant.” Under California law, malice implicates motive. “ ‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is earned on by the defendant with a willful and conscious disregard of the rights or safety of others.” California Civil Code § 3294 (1992).
Federal preemption is ordinarily a federal defense to a plaintiffs suit. However, Congress may so completely preempt a particular area that any civil complaint raising this select group of claims is necessarily federal in character. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 1546-47, 95 L.Ed.2d 55 (1987). Complete preemption occurs when the preemptive force of a law is so “extraordinary” that it “converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.” Id. at 65, 107 S.Ct. at 1547.
ERISA is a complete preemption statute. Ingersoll-Rand v. McClendon, 498 U.S. 133, 138-39, 111 S.Ct. 478, 482-83, 112 L.Ed.2d 474 (1990). Congress intended it “to establish pension plan regulation as exclusively a federal concern.” Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 1906, 68 L.Ed.2d 402 (1981). Specifically, ERISA preempts any law which “relates to” an employee benefit plan covered by ERISA. Felton v. Unisource Corp., 940 F.2d 503, 508-09 (9th Cir.1991). In a wrongful termination claim, ERISA completely preempts any state law claim which “relates to” an employee benefit plan covered by ERISA. Ingersoll-Rand, 498 U.S. at 140, 111 S.Ct. at 483; Metropolitan Life, 481 U.S. at 67, 107 S.Ct. at 1548.
To be sure, “[n]o ERISA cause of action lies when the loss of pension benefits was a mere consequence of, but not a motivating factor behind, the termination of benefits.” Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1405 (9th Cir.1988)(quotation and alteration omitted). However, if the employer is alleged to have a pension-defeating motive in terminating the pension benefit, the cause of action “relates to” an ERISA plan and is preempted. Ingersoll-Rand, 498 U.S. at 140, 111 S.Ct. at 483.
The allegations which form the basis of Campbell’s independent punitive damage claim are founded on Aerospace’s improper motive in attempting to minimize or deny his pension benefits. As such, the independent punitive damage claim is subject to ERISA preemption and federal jurisdiction.
Campbell cites Rozzell v. Security Servs., Inc., 38 F.3d 819, 822 (5th Cir.1994) for the proposition that if only punitive damages are implicated, ERISA does not preempt the state cause of action. However, unlike the plaintiff in Rozzell, Campbell’s complaint specifically alleged that Aerospace was motivated by a desire to deprive him of pension and employee benefits in its termination decision. When motive is specifically implicated in alleged benefit denial, ERISA preempts. This *1317conclusion is unavoidable in this instance given the broad preemptive force of ERISA. See Ingersoll-Rand, 498 U.S. at 140, 111 S.Ct. at 483; Ethridge, 861 F.2d at 1404.
The majority views Campbell’s punitive claim as incidental to his wrongful termination claim, citing Ethridge for the proposition that a claim does not relate to ERISA “when the loss of pension benefits was a mere consequence of, but not a motivating factor behind the termination of benefits.” Ethridge, 861 F.2d at 1405. This may be a plausible construction of Campbell’s complaint, but one with which I must respectfully differ. If Campbell had simply used the word “benefits” in the context of his termination claim, as the plaintiff did in Ethridge, I would agree. However, Campbell has framed an independent damage claim based on his employer’s motive in denying or reducing his pension benefits. Under his theory, his entitlement to punitive damages was not the proximate result of his alleged wrongful discharge, but rather the manner in which Aerospace treated his pension. Campbell has not retreated from this position, nor attempted to reframe his complaint to align it more closely to Ethridge. He truly aims for a jury award based upon Aerospace’s alleged improper motives in administering his pension.
When a plaintiff seeks significant additional money damages on a theory founded on manipulation of his pension benefits, his claim rises beyond “mere consequence” and becomes subject to ERISA preemption. Thus, although I might personally prefer the rule espoused by the majority, I cannot in good conscience reconcile it with ERISA’s exceptionally broad preemptive language, nor with the Supreme Court’s and our construction of it.
In the real world of litigation, Fred Campbell has had his day in court. He was fired for alleged sexual harassment, racism, poor performance and running a consulting business out of his office. He countered with a wrongful termination suit, contending he had, in fact, been terminated for whistleblowing. An investigation revealed, among other matters, that he had printed business cards for his personal consulting business fisting his Aerospace telephone number; that office contained virtually no evidence of any work he was performing for Aerospace; that he had improperly touched a number of female employees and made inappropriate sexual remarks; that he had never engaged in any “whistleblowing” until he was suspended as a result of numerous complaints by co-workers; and that no fraud had occurred about which one might rightfully blow a whistle. His claims were fully aired before the district court, tried to a jury of his peers, and found to be without merit. I suspect the state trial judge may find it ironic that this case is being returned for litigation anew because the plaintiff has alleged an independent punitive claim, even though all the underlying causes of action have been rejected on the merits after thorough consideration.
The majority, in good faith, has reached a different conclusion. However, because I believe the district court was right on all counts and that our precedent compels a different result, I respectfully dissent from Section I of the opinion and the judgment.