Court Opinion

ID: 2964050
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:19:40.095475+00
Date Added: 2024-06-11T11:42:49.776973
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT

                              _________________________

          No. 95-2244

                                 WILLIAM DEGNAN, JR.,

                                Plaintiff, Appellant,

                                          v.

                         PUBLICKER INDUSTRIES, INC., ET. AL.,

                                Defendants, Appellees.

                              __________________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                       [Hon. Mark L. Wolf, U.S. District Judge]
                                           ___________________

                              _________________________

                                        Before

                            Selya and Cyr, Circuit Judges,
                                           ______________

                            and Gertner,* District Judge.
                                          ______________

                              _________________________

               Sydelle Pittas for appellant.
               ______________
               Thomas E. Shirley,  with whom Liam T.  O'Connell and Choate,
               _________________             __________________     _______
          Hall & Stewart were on brief, for appellees.
          ______________

                              _________________________

                                     May 1, 1996

                              _________________________

          ________________

          *Of the District of Massachusetts, sitting by designation.
                                           

                    SELYA, Circuit Judge.   William Degnan, Jr., the former
                    SELYA, Circuit Judge.
                           _____________

          president of Fenwal Electronics,  Inc., a wholly owned subsidiary

          of Publicker  Industries, Inc., initiated  this misrepresentation

          action  in  a  Massachusetts   state  court  against  Fenwal  and

          Publicker  on  November  14,  1994.    He  framed  his  complaint

          exclusively in terms of state law, alleging in substance that the

          defendants induced him to take early retirement at age fifty-five

          by promising to revise a corporate  retirement plan so as to make

          him  eligible for full retirement benefits at that age; and that,

          after he retired  (giving up  lucrative employment  opportunities

          elsewhere), the  defendants paid him  the agreed amount  for only

          eighteen months before they breached their promise (claiming that

          he did not  qualify for  full benefits under  the amended  plan).

          The defendants removed the case to the federal district court and

          sought dismissal on preemption grounds.

                    On September 8, 1995, the district court found that the

          Employee  Retirement  Income Security  Act  of  1974 (ERISA),  29

          U.S.C.    1001 et seq.,  and in particular,  ERISA's broad-gauged
                         __ ____

          preemption clause, 29 U.S.C.   1144(a) (1994), preempted Degnan's

          common law misrepresentation claims against the defendants.  Upon

          reviewing the  matter de novo, see  Correa-Martinez v. Arrillaga-
                                __ ____  ___  _______________    __________

          Belendez, 903 F.2d  49, 52  (1st Cir.  1990), we  agree that  the
          ________

          common law claims were preempted and that the complaint as framed

          courted  dismissal.   See Fed.  R. Civ. P.  12(b)(6) (authorizing
                                ___

          dismissal  for  the  pleader's  failure to  state  an  actionable

          claim).

                                          2

                    We  need  not  dwell  upon the  rationale  for  finding

          preemption.   Suffice it to say that,  in its order of dismissal,

          the district court characterized  the instant case as "analogous"

          in all material  respects to  a case previously  decided by  this

          court, namely, Carlo v. Reed Rolled  Thread Die Co., 49 F.3d 790,
                         _____    ___________________________

          793-95 (1st Cir. 1995)  (ruling that ERISA preempted a  state-law

          misrepresentation claim).   We readily agree  that Carlo controls
                                                             _____

          here, and add only that in his appellate briefs Degnan has failed

          to advance any plausible basis  for distinguishing this case from

          Carlo.
          _____

                    Under ordinary circumstances, this  would be the end of

          the matter.  Where, as here, the plaintiff chooses not to ask the

          trial court for permission to amend but stands upon his complaint

          in the face of an  order dismissing it, and thereafter loses  the

          ensuing  appeal, he  is  not entitled  to  a second  bite  of the

          banana.   See, e.g., Royal Business Group, Inc. v. Realist, Inc.,
                    ___  ____  __________________________    _____________

          933 F.2d 1056, 1066 (1st Cir. 1991) (explaining that when a party

          elects to appeal rather than attempt to amend a complaint, it ill

          behooves that party to suggest at a later date that it could have

          satisfied   the  district   court's  concerns  by   amending  the

          complaint);  James v.  Watt,  716 F.2d  71,  78 (1st  Cir.  1983)
                       _____     ____

          (admonishing that courts should not routinely allow plaintiffs to

          "pursue a  case to judgment and then, if they lose, to reopen the

          case by amending their  complaint to take account of  the court's

          decision"), cert. denied, 467 U.S. 1209 (1984).
                      _____ ______

                    The  rule,  however,  is   not  inflexible.    We  have

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          recognized that, even if  the pleader has  elected to dig in  his

          heels,  appealing  from  a  judgment  of  dismissal  rather  than

          endeavoring to reframe his complaint, "an appellate court has the

          power, in the interest of justice, to grant leave to amend if the

          circumstances warrant."  Rivera-Gomez v. de Castro, 843 F.2d 631,
                                   ____________    _________

          636 (1st Cir. 1988).  This approach finds ample  support in other

          appellate authority, see,  e.g., Bryan v.  Austin, 354 U.S.  933,
                               ___   ____  _____     ______

          933 (1957) (per  curiam); Whitelock v. Leatherman, 460  F.2d 507,
                                    _________    __________

          515 (10th Cir. 1972);  Moviecolor Ltd. v. Eastman Kodak  Co., 288
                                 _______________    __________________

          F.2d 80, 88 (2d Cir.), cert.  denied, 368 U.S. 821 (1961),  among
                                 _____  ______

          the commentators, see, e.g., 3 J. Moore, Moore's Federal Practice
                            ___  ____              ________________________

            15.11  at 15-109 (1983),  in the Code,  see, e.g., 28  U.S.C.  
                                                    ___  ____

          2106  (1994)  ("[A] court  of appellate  jurisdiction  may .  . .

          direct  the entry of  such appropriate judgment  . . .  as may be

          just under  the circumstances."), and in the spirit that pervades

          the Civil Rules,  see, e.g.,  Fed. R. Civ.  P. 15(a)  (counseling
                            ___  ____

          that  leave to  amend  "shall be  freely  given when  justice  so

          requires").

                    This is  a suitable  instance  in which  to invoke  the

          exception  to  the general  rule.   The  appeal  is  in a  highly

          idiosyncratic  posture.  On March 19, 1996, after the parties had

          briefed  this  appeal but  two  weeks before  oral  argument, the

          Supreme Court issued its opinion in Varity Corp. v. Howe, 116  S.
                                              ____________    ____

          Ct. 1065 (1996).   Varity shed new light  on the Court's  earlier
                             ______

          holding  in Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S.
                      ________________________________    _______

          134  (1985), and  indicated  that, in  certain circumstances,  an

                                          4

          individual plan participant or beneficiary may be able to  obtain

          equitable relief under  the ERISA statute itself  for harm caused
                           _______________________________

          by an  employer's  breach  of  its fiduciary  obligations.    See
                                                                        ___

          Varity, 116  S. Ct.  at 1075-79;  see  also 29  U.S.C.    1132(a)
          ______                            ___  ____

          (1994) (enumerating equitable remedies  under ERISA).  Because we

          deemed Varity to have possible applicability here, we immediately
                 ______

          called the opinion to the parties' attention and directed them to

          be prepared  to discuss it.   We heard oral argument  on April 2,

          1996.   We then ordered  the parties to  file supplemental briefs

          addressing  the potential  applicability  (if any)  of Varity  to
                                                                 ______

          Degnan's situation.1

                    We  have examined the record  in this case  in light of

          Varity  and of  the parties'  supplemental briefs.   We  see both
          ______

          procedural  and  substantive  problems.   The  procedural problem

          stems from the  fact that Degnan framed his suit  as a common law

          cause of action for misrepresentation rather  than as a statutory

          ERISA-based claim for breach  of a fiduciary duty.   The district

          court  treated  the  claim  as  asserted  and,  under  our  Carlo
                                                                      _____

          precedent, correctly  found the  pleaded  cause of  action to  be

          preempted.  The plaintiff neither asked the court to consider the

          possibility of a statutorily based claim nor sought leave to file

          an amended complaint.   As we have said, these failings  would be

          fatal in the typical case.  See, e.g., Royal Business Group,  933
                                      ___  ____  ____________________

          F.2d at 1066.
                              
          ____________________

               1Simultaneous with the filing of his supplemental brief, the
          appellant also moved to enlarge the record on appeal.  In view of
          our disposition today, the motion is moot.

                                          5

                    This case, however, is  atypical.  When Degnan eschewed

          amendment  in the district court, Varity had not yet been decided
                                            ______

          and the state of the law was in flux.  We think it is appropriate

          for  an  appellate   court  to  consider  granting  the  type  of

          extraordinary  relief   that  the  plaintiff   requests  here    

          permitting an  amendment even  after affirmance  of  an order  of

          dismissal     when an  important  new decision  intervenes.   See
                                                                        ___

          Dartmouth  Review v. Dartmouth College, 889 F.2d 13, 23 (1st Cir.
          _________________    _________________

          1989) (suggesting  that such  an amendment  should be  allowed if

          "some  new  concept  has  surfaced,  making  workable  an  action

          previously  in the doldrums"); Pross  v. Katz, 784  F.2d 455, 460
                                         _____     ____

          (2d  Cir.  1986) (similar).    That  scenario, broadly  speaking,

          appears to exist here.

                    We  find  added  impetus  for  applying  the  exception

          because of the  nature of the case.  ERISA  is a remedial statute

          designed to fashion anodynes  that protect the interests  of plan

          participants  and  beneficiaries.     See  29  U.S.C.     1001(b)
                                                ___

          (articulating  policy  "to  protect  .   .  .  the  interests  of

          participants in employee benefit  plans and their beneficiaries .

          . . by  providing for appropriate remedies,  sanctions, and ready

          access to the  Federal courts"); see also  Varity, 116 S.  Ct. at
                                           ___ ____  ______

          1078; Johnson v.  Watts Regulator  Co., 63 F.3d  1129, 1132  (1st
                _______     ____________________

          Cir. 1995).  Courts  should not hasten to employ  technical rules

          of  pleading and practice to defeat that  goal.  In this respect,

          Fitzgerald  v.  Codex Corp.,  882 F.2d  586  (1st Cir.  1989), is
          __________      ___________

          instructive.   There the  state law remedies  that the  plaintiff

                                          6

          sought were held  to have been entirely displaced  by ERISA.  See
                                                                        ___

          id. at  588.  Although the plaintiff had not attempted to state a
          ___

          federal claim in the district court, we nonetheless  proceeded to

          inquire  whether his complaint could be read to contain a federal

          claim  upon which  relief  might be  granted.   See  id. at  589.
                                                          ___  ___

          Answering that question in the affirmative, we reversed the order

          of dismissal.  See id.
                         ___ ___

                    The  short of it is  that in Fitzgerald,  as in Rivera-
                                                 __________         _______

          Gomez, we departed from our usual praxis to avoid injustice.   We
          _____

          believe that, given the purport and timing of the Court's opinion

          in  Varity, the same result  should obtain here.   The procedural
              ______

          barrier to permitting an amendment is, therefore, superable.

                    The substantive problem is whether or not the plaintiff

          can  state a claim  under Varity.2   At this  juncture, we simply
                                    ______

          cannot tell.  Because the plaintiff  has not yet tried to plead a

          Varity claim, we  do not know  how well the  shoe fits, or if  it
          ______

          fits at  all.  Rather  than guessing at what  facts the plaintiff

          conceivably could allege  in an amended complaint,  we think that

          the course of prudence is to give the plaintiff an opportunity to

          supplement  his  factual  allegations  with  whatever  additional

          averments  he believes  would buttress  Varity-type  claims, and,
                                                  ______

          once  an amended complaint is filed, to permit the district court

          to address the substantive problem, i.e., the  sufficiency of the
                              
          ____________________

               2We  note  that  the  substantive  and  procedural  problems
          interlock because leave to  file an amended complaint  should not
          be granted  if it is clear  that the amendment would  be in vain.
          See  Foman v. Davis,  371 U.S. 178,  182 (1962); Correa-Martinez,
          ___  _____    _____                              _______________
          903 F.2d at 59.

                                          7

          amended complaint, in the first instance.

                    We  need go no further.   We remand  with directions to

          grant  the  plaintiff permission  to  file  an amended  complaint

          limited  to whatever  Varity-type  claims he  may envision  under
                                ______

          ERISA.  From that  point forward, the district court  can proceed

          in the ordinary course.  For our part, we take no view of whether

          the plaintiff's case fits the Varity mold from the perspective of
                                        ______

          either pleadings or proof.

                    We affirm the dismissal of the complaint insofar as  it
                    We affirm the dismissal of the complaint insofar as  it
                    _______________________________________________________

          purports to state claims based on the common law or on state law,
          purports to state claims based on the common law or on state law,
          _________________________________________________________________

          and we  remand the  case to the  district court  with an  express
          and we  remand the  case to the  district court  with an  express
          _________________________________________________________________

          direction  that  it permit  the  plaintiff  to  file  an  amended
          direction  that  it permit  the  plaintiff  to  file  an  amended
          _________________________________________________________________

          complaint limited to his claim(s) under ERISA.  The parties shall
          complaint limited to his claim(s) under ERISA.  The parties shall
          _____________________________________________   _________________

          bear their own costs.
          bear their own costs.
          ____________________

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