Court Opinion

ID: 8998422
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:51:35.38286+00
Date Added: 2024-06-11T17:11:06.880224
License: Public Domain

JOHNSON, Senior Circuit Judge,
dissenting:
This case presents two issues for decision: the sweep of ERISA preemption and the application of Alabama conflicts of law rules. I dissent from the majority’s decision not to address the ERISA preemption issue on the merits; the case should be remanded to the district court so that this issue may be properly resolved.
The majority concludes that this Court should not address on the merits the issue of ERISA preemption because the appellants failed to raise the issue prior to the entry of final judgment by the district court.1 The general rule in this Circuit is *1049that a Rule 59(e) motion is not a proper means of raising a new legal argument that could (and should) have been raised prior to the entry of final judgment. American Home Assurance Co. v. Glenn Estess & Associates, Inc., 763 F.2d 1237, 1238-39 (11th Cir.1985). However, like most general rules, this rule is subject to exceptions.
This Court will hold a district court’s refusal to entertain a new argument raised for the first time in a Rule 59(e) motion as an abuse of discretion where such a refusal impedes important federal law policies. See Lussier v. Dugger, 904 F.2d 661, 667-68 (11th Cir.1990). This exception to the general rule against considering new arguments raised through Rule 59(e) motions is applicable to the case at bar.
The appellants’ Rule 59(e) motion raises the congressionally-established policy in favor of a uniform federal regulatory scheme for certain employee benefit plans, known commonly as ERISA, and specifically, the discrete issue of preemption of state laws under ERISA. 29 U.S.C.A. § 1144(a) (1985). In ERISA Congress stated, in no uncertain terms, that “the provisions of this subchapter and subchapter III of the chapter shall supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.” 29 U.S.C.A. § 1144(a) (1985). In my opinion, this language constitutes a clear and express congressional command dictating that state law be preempted in order to protect a legitimate federal interest.2 Id. See U.S. Const. Art. VI, cl. 2. Because a district court is not free to apply preempted state law in direct contravention of a such a command, the majority should have addressed the issue of ERISA preemption on the merits.
Indeed, in somewhat similar circumstances, where a district court entered a judgment inconsistent with federal law, this Court took up the federal law issue sua sponte. See Sherman v. Burke Contracting Inc., 891 F.2d 1527, 1535 (11th Cir.) (“When a trial court has granted a party relief under a statute that provides the party no relief, we must set the court’s judgment aside as plain error.”), cert. denied, — U.S. -, 111 S.Ct. 353, 112 L.Ed.2d 317 (1990). In the more specific context of Rule 59(e) motions, this Court has not hesitated to hold that a lower court has abused its discretion where such a holding was necessary in order to vindicate an important federal policy. Lussier, 904 F.2d at 667-68 (holding district court abused its discretion by failing to consider arguments raising six-month old changes to Title VII that the moving party could have raised prior to judgment). Because the appellants’ ERISA preemption argument raises an important issue of public policy,3 this Court should consider the preemption question on the merits.4 See id.; *1050McKissick v. United States, 379 F.2d 754, 759-60 (5th Cir.1967). See also Hormel v. Helvering, 312 U.S. 552, 556-60, 61 S.Ct. 719, 721-23, 85 L.Ed. 1037 (1941).
Turning to the merits of the ERISA preemption claim, the appellants’ argument that Alabama law is preempted by operation of section 1144(a) seems to be without merit. To be sure, ERISA preempts “any and all state laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.” 29 U.S.C.A. § 1144(a) (1985) (emphasis added). However, the application of state law to an employee benefit plan cannot be inconsistent with section 1144(a) if the plan at issue is entirely exempted from the application of ERISA by operation of section 1003(b).
Section 1003(b) provides: “The provisions of this subchapter shall not apply to any employee benefit plan if ... such plan is maintained solely for the purpose of complying with the applicable workmen’s compensation laws or unemployment compensation laws or disability insurance laws. 29 U.S.C.A. § 1003(b)(3) (1985). Clopay argues that its “employee benefits plan” contains many benefits, including workmen’s compensation benefits. O’Neal responds that Clopay’s workmen’s compensation plan is separately administered from the rest of the Clopay employee benefit program, that it is underwritten by a company different from the other employee benefits programs, and that it is not even mentioned in Clopay’s literature describing its employee benefits.
Neither the Supreme Court nor this Circuit has directly addressed the issue of when a workmen’s compensation plan provided along with other employee benefits is exempt from regulation under ERISA by operation of section 1003(b)(3). The Supreme Court has only noted that the test for the applicability of section 1003(b) “is not one of the employer’s motive, but whether the plan, as an administrative unit, provides only those benefits required by state law.” Shaw v. Delta Airlines, 463 U.S. 85, 107, 103 S.Ct. 2890, 2905, 77 L.Ed.2d 490 (1983). This language suggests that a proper application of section 1003(b)(3) requires courts to focus on particular administrative units within an employee benefits program rather than the program as a whole.
This tentative conclusion is strengthened by reference to cases from outside this Circuit that have considered the issue. In cases presenting similar facts, most courts have rejected appellants’ argument regarding the application of section 1003(b)(3). See Fears v. Luedke, 739 F.Supp. 327, 328 (E.D.Tex.1990); Gibbs v. Service Lloyds Ins. Co., 711 F.Supp. 874, 876-79 (E.D.Tex.1989); Foust v. City Ins. Co., 704 F.Supp. 752, 754 (W.D.Tex.1989). The approach taken in Gibbs is particularly persuasive.
The Gibbs court examined Shaw and concluded that, if a workmen’s compensation plan is a separate administrative unit, then an employer’s provision of separately administered plans providing other benefits does not automatically bring the regulation of the workmen’s compensation plan within ERISA’s regulatory scope. Gibbs, 711 F.Supp. at 878-79. When an employer provides benefits other than workmen’s compensation to its employees, Gibbs sets forth a three-part test for determining whether the workmen’s compensation plan constitutes a “separate administrative unit” and is therefore exempt from ERISA’s coverage. Under the Gibbs test:
[A plan falls outside of ERISA if] (1) the workman’s compensation insurance is provided through an insurance policy issued by one insurance carrier and all other types of insurance are provided through a separate policy, or policies, issued by another insurance carrier or carriers; (2) the workmen’s compensation insurance carrier exercises the sole authority to manage the premium income and funds relating to the workmen’s compensation insurance program and to review and approve or deny claims made pursuant to the workmen’s compensation insurance policy; and (3) the employer acts as a mere conduit for the transmit*1051tal of premiums, forms, and other information between the employees and the separate insurance carriers. Id. at 879.
The test suggested in Gibbs is both sensible and consistent with Shaw, and therefore I would adopt it as the law of this Circuit.
Applying Shaw and Gibbs to the instant case, the Court must first determine whether the Clopay workmen’s compensation plan exists solely to comply with state law.5 See 29 U.S.C.A. § 1003(b)(3) (1985). Clopay and Liberty Mutual do not claim that the workmen’s compensation plan at issue provides more than is required by Tennessee law.6 Next, the Court must determine whether Clopay offers its employees other benefits in addition to workmen’s compensation. See Gibbs, 711 F.Supp. at 878-79. If Clopay does not, the Court’s inquiry is at an end, because section 1003(b)(3) exempts from ERISA regulation workmen’s compensation plans that do nothing more than is required by state law. 29 U.S.C.A. § 1003(b)(3) (1985). On the other hand, if the Clopay-Liberty Mutual workmen’s compensation plan is co-administered with another employee benefit plan, then it is subject to ERISA. See id., Shaw, 463 U.S. at 106-07, 103 S.Ct. at 2904-05; Gibbs, 711 F.Supp. at 879. Workmen’s compensation is not the only employee benefit that Clo-pay provides its employees. Consequently, the section 1003(b)(3) analysis must proceed to the application of the three-factor Gibbs test, which examines whether a particular workmen’s compensation plan is co-administered with another plan, to determine whether section 1003(b)(3) exempts the workmen’s compensation benefit component of Clopay’s employee benefits program from regulation under ERISA, Gibbs, 711 F.Supp. at 879. See Shaw, 463 U.S. at 107-08, 103 S.Ct. at 2905-06.
On the facts before the Court, one of the three Gibbs criteria is clearly met: the plan is administratively separate.7 That leaves for resolution the two other prongs of the test, to wit, whether Liberty Mutual has the discretion to administer the plan, collect and rebate premiums, and carry out the daily tasks that arise under the plan, and whether Clopay acts as little more than a conduit for Liberty Mutual. Gibbs, 711 F.Supp. at 879.
Given the factual allegations contained in the parties’ appellate briefs, it seems highly probable that the ultimate conclusion in this case should be that the workmen’s compensation plan at issue is not governed by ERISA. However, this Court “cannot presume a fact that is not in the record.” Meadows v. Cagle’s, Inc., 954 F.2d 686, 693 (11th Cir.1992). In this case, the contract between Clopay and Liberty Life regarding the workmen’s compensation plan is not in the record. In addition, there is no clear evidence in the record regarding the day-today operation of the plan. Under these circumstances, the proper resolution of this issue requires a remand to the lower court.
In light of the necessity of a remand, I find it unnecessary to address the merits of *1052the conflicts of law arguments presented by the appellants.8

. The lower court summarily refused to consider the ERISA preemption argument after the appellants presented it to the court through a *1049timely filed Rule 59(e) motion to amend the court’s final judgment. The district court overruled the motion on its face without any explanation.

.ERISA may not, in fact, preempt the state laws at issue in this case; indeed, ERISA probably does not govern the workmen’s compensation plan at issue. See infra at 1050-1051. See also 29 U.S.C.A. § 1003(b)(3) (1985). However, the fact that ERISA preemption may not actually apply is irrelevant to the Court’s consideration in the first instance of whether the lower court’s refusal to consider the preemption issue in the context of a timely filed Rule 59(e) motion constituted an abuse of discretion. Simply put, the Court is not at liberty to peek at the merits when deciding whether or not a lower court erred in refusing to consider a potentially dis-positive issue that implicates important federal law policies.

. Namely, ERISA preemption of state regulation of certain employee benefit plans.

. I am by no means unconcerned about the appellants’ failure to raise this issue prior to the entry of final judgment. It cannot be gainsaid that the appellants failed to raise this issue at the proper time, and apparently without any good reason. However, the timeliness of appellants’ argument is beside the point. The question for the Court is whether express federal preemption was an issue that a lower court could ignore when it was timely raised in a Rule 59(e) motion. The Court's duty when analyzing the question of whether to take up the ERISA preemption argument is not to weigh the merits of the Rule 59(e) movants’ procedural disposition, but rather to consider the importance of the public policy issue presented and the correctness of the district court’s action in light of *1050the relevant public policies. See McKissick, 379 F.2d at 758-59.

.Appellants argue that Gibbs is inapplicable to the plan at issue because, strictly speaking, Clo-pay did not purchase workmen’s compensation insurance from Liberty Mutual. See Gibbs, 711 F.Supp. at 879 (exemption from ERISA regulation created by section 1003(b)(3) applies when an employer "through [the] purchase of insurance” secured workmen’s compensation coverage). This argument is utterly without merit. Whether the plan at issue is largely self-funded or constitutes an "insurance policy" is irrelevant to the determination of the application of section 1003(b)(3). By its own terms, section 1003(b)(3) applies to “any employee benefit plan." 29 U.S.C.A. § 1003(b)(3) (1985) (emphasis added). This necessarily includes plans created under retrospectively rated insurance contracts with stop-loss provisions, the kind of plan at issue in this case. The Gibbs court erred to the extent that it suggested otherwise. See Gibbs, 711 F.Supp. at 879.

. Indeed, in their reply brief, the appellants tacitly concede that the workmen’s compensation plan was specifically tailored to comply with Tennessee law. Moreover, the affidavits of both Clopay and Liberty Mutual employees contained in the record also support this conclusion.

. The record contains a copy of the Clopay Employee Benefits Plan handbook. The handbook makes no mention of workmen’s compensation, and the section styled "General Plan Information” indicates that the other employee benefit programs are administered by companies other than Liberty Mutual.

. Although it seems unlikely that ERISA regulates the plan at issue, see supra, because the facts necessary to support this conclusion are not in the record, any opinion as to the merits of the conflicts issue would be merely advisory. See United States v. Fruehauf, 365 U.S. 146, 157, 81 S.Ct. 547, 553, 5 L.Ed.2d 476 (1961); Muskrat v. United States, 219 U.S. 346, 362, 31 S.Ct. 250, 256, 55 L.Ed. 246 (1911).