Court Opinion

ID: 71590
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:20:16+00
Date Added: 2024-06-11T14:58:46.692949
License: Public Domain

United States Court of Appeals,

                           Eleventh Circuit.

                                No. 95-9223.

  Barbara J. KEMP; Maria G. Wilson;          Roger Wilson, Plaintiffs-
Counter-Defendants-Appellees,

                                     v.

 INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant-Counter-
Claimant-Appellant.

                             April 8, 1997.

Appeal from the United States District Court for the Northern
District of Georgia. (No. 1:94-CV-1225-MHS). Marvin H. Shoob,
District Judge.

Before BIRCH and CARNES, Circuit Judges, and MICHAEL*, Senior
District Judge.

     CARNES, Circuit Judge:

     After   International   Business       Machines   (IBM)   canceled   its

Retirement Education Assistance Program (REAP), the plaintiffs,

former REAP beneficiaries, brought state law claims for breach of

contract and fraud against IBM in state court.            IBM removed the

case to federal district court on federal question grounds, and

then sought dismissal of the plaintiffs' claims as preempted by the

Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.

(ERISA). The district court denied IBM's motion to dismiss, but it

granted   IBM's   motion   to     certify    the   preemption    issue    for

interlocutory appeal pursuant to 28 U.S.C. § 1292(b).            We granted

permission for the interlocutory appeal in order to decide whether

claims for REAP, a non-ERISA benefit, are nonetheless preempted by

ERISA because of REAP's inclusion in a multibenefit plan containing

     *
      Honorable James H. Michael, Senior U.S. District Judge for
the Western District of Virginia, sitting by designation.
ERISA benefits.

     For the reasons that follow, we hold that REAP's inclusion in

a multibenefit plan containing ERISA benefits does not make REAP

itself an "employee welfare benefit plan" governed by ERISA.

Likewise, its inclusion also fails to turn the plaintiffs' state

law claims for REAP benefits into claims for ERISA benefits under

29 U.S.C. § 1132(a).       Because the plaintiffs' state law claims may

not be "recharacterized" as federal claims for ERISA benefits, the

plaintiffs'    complaint     does   not    include   a   sufficient       federal

question to support removal jurisdiction.            Therefore, the federal

courts lack subject matter jurisdiction over this case, and it must

be remanded to state court for further proceedings.
                     I. FACTS AND PROCEDURAL HISTORY

     In 1992, IBM offered certain employees an early retirement and

leave program known as Individual Transition Options II (ITO-II).

In order to provide eligible employees with pertinent information

regarding the benefits in ITO-II, IBM created and distributed a

summary plan description (SPD).            The ITO-II SPD includes, among

other     things,    eligibility     requirements        for        participation,

administrative procedures, the name of the plan administrator, and

a list and description of benefits offered under the plan.                      The

first page of the SPD also contains a footnote, stating that ITO-II

is subject to ERISA.

        One of the benefits mentioned in the ITO-II SPD is REAP.                 At

the time ITO-II was implemented, the REAP benefit consisted of

reimbursements for certain educational expenses in an amount up to

$2,500.      IBM    had   voluntarily     provided   REAP      to    eligible   IBM
employees and their spouses prior to ITO-II.    The SPD states that

employees who elected to participate in ITO-II would continue to

have access to REAP.   In December 1992, IBM revoked or suspended

the REAP benefit.

     The plaintiffs are two former IBM employees who elected to

participate in ITO-II while it included REAP, and the spouse of one

of them.   They filed suit in state court.   In their complaint, the

plaintiffs allege that IBM fraudulently induced them to take early

retirement under ITO-II by offering continued access to REAP, and

that IBM breached its contract with the plaintiffs to continue

REAP.1   The plaintiffs seek relief on behalf of themselves and a

proposed class of persons consisting of ITO-II participants and

their spouses.

     IBM removed the case to federal district court on the ground

of ERISA preemption and moved to dismiss the plaintiffs' claims.

While conceding that some of the benefits provided in ITO-II, if

they were provided individually, would not be governed by ERISA,

IBM argued in its motion that ITO-II is, as a whole, an ERISA

employee welfare benefit plan. Based on this reasoning, IBM argued

that the plaintiffs' claims must be dismissed because they "relate

to" ITO-II and are therefore preempted.

     Because IBM presented evidence beyond the pleadings in its

motion, the district court converted the motion into one for

summary judgment.   The district court then denied the motion.   The

     1
      The spouse-plaintiff could not participate in the early
retirement program but was entitled to use the REAP benefit. The
spouse-plaintiff alleges an injury similar to that alleged by the
employee-plaintiffs.
court held that the plaintiffs' claims were not preempted by ERISA,

even though their claims may relate to ITO-II, because ITO-II "as

a whole" is not an ERISA "plan."             The court explained:

     While it appears that ITO-II certainly provides numerous ERISA
     benefits, it also contains non-ERISA benefits. Defendant asks
     the Court to sweep the non-ERISA benefits up into the ERISA
     benefits and consider the entire benefits package as an ERISA
     plan. Defendant has cited no authority for the Court to do
     this.   In fact, defendant cites contrary authority.        In
     Williams v. Wright, 927 F.2d 1540, 1550 (11th Cir.1991), a
     case involving a multibenefit retirement package, the Eleventh
     Circuit treated the ERISA benefits as a "plan" subject to
     ERISA and the non-ERISA benefits as separate and subject to
     state law. The Court is compelled to follow Eleventh Circuit
     precedent and therefore concludes that state law should apply
     to non-ERISA benefits that are part of a multibenefit package
     containing ERISA and non-ERISA benefits.

Order of March 30, 1995, at 6 (footnote omitted).

     In    that   same     order,   the    district   court     also   denied   the

plaintiffs' motion to remand the case to state court for lack of

federal question jurisdiction.            The court stated that it could not

decide    whether    the    plaintiffs'      complaint   presented      a   federal

question,    because       the   court    lacked   sufficient    information     to

determine whether REAP is an ERISA benefit or a non-ERISA benefit.2

The court said it would allow plaintiffs to renew their motion for

remand after discovery.

     IBM filed a 28 U.S.C. § 1292(b) motion for interlocutory

appeal of the March 30, 1995 order and opinion.                   Pursuant to §

1292(b),    the     district      court    found    "substantial       ground   for

difference of opinion" on an issue, the resolution of which would

materially advance the termination of the case, and certified for

     2
      At that point, IBM had not conceded that REAP, standing
alone, is not an ERISA benefit. IBM made that concession during
oral argument before this Court.
appeal its holding that ERISA:

      does not preempt a claim involving an educational assistance
      program funded from general corporate assets which is part of
      a multibenefit plan containing ERISA and non-ERISA benefits.

Order     of   May   4,    1995    at   1.     We   granted   permission   for   the

interlocutory appeal.

      Because this appeal comes before us on the denial of summary

judgment, we review the district court's conclusions de novo.                    See

Menuel v. City of Atlanta, 25 F.3d 990, 994 n. 7 (11th Cir.1994)

(de novo review applies to denial of summary judgment certified for

appeal pursuant to 28 U.S.C. § 1292(b)).
                                    II. DISCUSSION

          In its order denying IBM's motion for summary judgment and

the   plaintiffs'         motion   for    remand,    the    district   court   first

analyzed IBM's argument for preemption and then addressed the

jurisdictional issue.             In contrast, we shall begin by addressing

the     plaintiffs'        contention        that   the    district    court   lacks

jurisdiction over this case.                 After deciding the jurisdictional

issue, we will consider as much of the preemption issue, which is

the issue certified by the district court, as our jurisdiction

permits.3

A. REMOVAL JURISDICTION

      A defendant may remove a case to federal court only if the

district court would have had jurisdiction over the case had the

      3
      As we have held before, the jurisdiction of this Court is
not confined to the precise question certified by the district
court, "because the district court's order, not the certified
question, is brought before the court" on a § 1292(b) appeal.
Aldridge v. Lily-Tulip, Inc., 40 F.3d 1202, 1207 (11th Cir.1994).
See also 1 Susan H. Black et al., Federal Appellate
Procedure—11th Circuit § 3:203 (1996).
case been brought there originally.        28 U.S.C. § 1441.   A federal

district court has original jurisdiction over diversity cases and

cases arising under federal law.          28 U.S.C. §§ 1331, 1332.    No

diversity exists between the plaintiffs and IBM, so we must decide

whether the plaintiffs' case arises under federal law.

      A case does not arise under federal law unless a federal

question is presented on the face of the plaintiff's complaint.

See Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S.
1, 11, 103 S. Ct. 2841, 2845, 77 L. Ed. 2d 420 (1983).         This is known

as the "well-pleaded complaint" rule, because it directs our focus

to the terms of the complaint as the plaintiff chooses to frame it.

If the plaintiff elects to bring only state law causes of action in

state court, no federal question will appear in the complaint that

could satisfy the well-pleaded complaint rule, and the case may not

be removed to federal court.        13B   Charles A. Wright, Arthur R.

Miller & Edward H. Cooper, Federal Practice and Procedure § 3566

(1984).

      Because a federal question must appear on the face of the

plaintiff's complaint to satisfy the well-pleaded complaint rule,

a defense which presents a federal question can not create removal

jurisdiction.     Thus, a case may not be removed to federal court on

the ground of a federal question defense alone, even if that

defense is valid.    See, e.g., Franchise Tax Board, 463 U.S. at 25-

28, 103 S. Ct. at 2854-56 (holding that ERISA preemption defense,

without   more,    does   not   create    removal   jurisdiction).   The

plaintiffs in this case brought only state law claims. IBM removed

this case to federal court on the ground of ERISA preemption, a
federal law defense.      Under the general terms of the well-pleaded

complaint rule, the removal of this case to federal court was

improper, because the preemption defense is not presented on the

face of the complaint.

     However,    there    is    a    qualification    to    the   well-pleaded

complaint rule:       a doctrine known as "complete preemption" or

"super preemption."      Under that doctrine, Congress may preempt an

area of law so completely that any complaint raising claims in that

area is necessarily federal in character and therefore necessarily

presents   a    basis    for    federal      court   jurisdiction.       E.g.,

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S. Ct.
1542, 1546, 95 L. Ed. 2d 55 (1987) (citing Avco Corp. v. Machinists,

390 U.S. 557, 88 S. Ct. 1235, 20 L. Ed. 2d 126 (1968)).                      Such

"complete preemption" will convert state law claims into federal

claims   for   the   purposes    of    the   well-pleaded    complaint   rule,

allowing a defendant to remove the case to federal court. Congress

has accomplished this "complete preemption" in 29 U.S.C. § 1132(a),

which provides the exclusive cause of action for the recovery of

benefits governed by an ERISA plan.           Metropolitan Life, at 65-67,
107 S. Ct. at 1547-48.      State law claims seeking relief available

under § 1132(a) are recharacterized as ERISA claims and therefore

"arise under" federal law.          Id. at 67, 107 S.Ct. at 1548.     See also

1 William W. Schwarzer et al, Federal Civil Procedure Before Trial

§§ 2:768-2:769 (1996).

     To sum up, the jurisdictional issue in this case turns on

whether the plaintiffs are seeking relief that is available under

29 U.S.C. § 1132(a).     If they are, Metropolitan Life requires us to
recharacterize the plaintiffs' claims as an ERISA claim and hold

that removal jurisdiction exists.     But if the plaintiffs are not

seeking relief available under § 1132(a), then the plaintiffs'

claims may not be recharacterized as a claim under § 1132(a), and

no federal question jurisdiction exists.

      Section 1132(a) states that a participant or beneficiary of a

"plan" may bring suit "to recover benefits due to him under the

terms of his plan...."   29 U.S.C.A. § 1132(a)(1)(B) (West 1985).

The term "plan" as used in ERISA means an "employee welfare benefit

plan" (or an employee pension benefit plan, which is not at issue

in this case).   See 29 U.S.C.A. § 1002(3) (West Supp.1996).      IBM

conceded at oral argument that REAP, standing alone, is not an

employee welfare benefit plan covered by ERISA.    According to the

plaintiffs, that concession is determinative. The plaintiffs argue

that REAP is the "plan" from which they seek benefits, and because

REAP is not an employee welfare benefit plan, their claims are

outside the scope of § 1132(a).   In response, IBM argues that:   (1)

ITO-II, as a whole, is an employee welfare benefit plan;   (2) REAP

cannot be severed from the ITO-II multibenefit package;           and,

therefore, (3) claims for REAP are claims for ITO-II benefits that

fall within the scope of § 1132(a).

      So, in order to determine whether the plaintiffs are stating

claims under § 1132(a), which will determine whether federal

question jurisdiction exists, we must decide if REAP became an

ERISA-covered plan as a result of IBM's inclusion of REAP in ITO-

II.    The district court addressed this "plan within a plan"

subissue in the process of addressing whether the plaintiffs'
claims for REAP benefits are preempted by ERISA. Although we agree

that subissue must be addressed, we believe that it should be done

in the context of deciding federal question jurisdiction (and thus

removal jurisdiction).     An ordinary ERISA preemption defense, even

if valid, is not enough to create federal question jurisdiction.

E.g.,   Franchise   Tax   Board,   at   25-28, 103 S. Ct.   at   2854-56.

Therefore, we decide the "plan within a plan" subissue, which is

determinative of the § 1132(a) issue and therefore of the "complete

preemption" question, as a means of deciding if this case was

properly removed to federal court.

        We will now analyze whether claims for a benefit plan not

covered by ERISA fall within the scope of § 1132(a) as a result of

that non-ERISA plan being provided in a multibenefit plan along

with ERISA-covered employee welfare benefit plans.

B. THE PARAMETERS OF AN ERISA "PLAN"

        We begin with the language of ERISA's definitional statute.

According to ERISA, an "employee welfare benefit plan" governed by

ERISA includes:

     any plan, fund, or program which was heretofore or is
     hereafter established or maintained by an employer or by an
     employee organization, or by both, to the extent that such
     plan, fund, or program was established or is maintained for
     the purpose of providing for its participants or their
     beneficiaries, through the purchase of insurance or otherwise,
     (A) medical, surgical, or hospital care or benefits in the
     event   of   sickness,   accident,   disability,    death   or
     unemployment, or vacation benefits, apprenticeship or other
     training programs, or day care centers, scholarship funds, or
     prepaid legal services....

29 U.S.C.A. § 1002(1) (West.Supp.1996) (emphasis added).            In other

words, a plan is an "employee welfare benefit plan" to the extent,

and only to the extent, that it is maintained for the purpose of
providing the types of benefits that Congress decided to protect in

ERISA ( hereinafter,   the   "ERISA   benefits").    Or,    as    we   have

explained before:

     [a] plan, fund or program furnishing both benefits listed in
     ERISA § 3(1), 29 U.S.C. § 1002(1) or § 302(c) of the Labor
     Management Relations Act, 29 U.S.C. § 186(c), and benefits not
     listed in those sections, is subject to ERISA to the extent
     the plan, fund or program has as its purpose the providing of
     the enumerated benefits.

Donovan v. Dillingham, 688 F.2d 1367 n. 5 (11th Cir.1982) (en

banc).   The language of our Donovan decision indicates that ERISA

coverage within a multibenefit plan does not reach beyond the

benefits described in § 1002(1).      That means non-ERISA benefits do

not fall within ERISA's reach merely because they are included in

a multibenefit plan along with ERISA benefits.

     We applied the     Donovan   interpretation    of   the     statutory

language in Williams v. Wright, 927 F.2d 1540 (11th Cir.1991), a

case that involved issues of ERISA coverage in a multibenefit plan.

We held in Williams that certain non-ERISA benefits, e.g., payment

of a country club membership, promised by an employer to an

employee in a multibenefit retirement package that also provided

ERISA benefits, were not covered by ERISA.     See 927 F.2d at 1549 n.

17, 1550.   In so holding, we cited 29 U.S.C. § 1002, which provides

the definition of an employee welfare benefit plan.        Id.    Williams

establishes that an employer's decision to provide a non-ERISA

benefit in a multibenefit plan containing ERISA benefits does not

turn the non-ERISA benefit into an employee welfare benefit plan.

     The parties agree that ERISA does not govern REAP. It follows

that according to the ERISA definition of an employee welfare

benefit plan, as interpreted in Donovan and Williams, REAP is not
part of an employee benefit plan as a result of its inclusion in

ITO-II.     Because the plaintiffs are not seeking benefits from an

employee welfare benefit plan, their claims do not fall within the

scope of 29 U.S.C. § 1132(a).    Since the plaintiffs' claims do not

fall within § 1132(a), those claims may not be recharacterized as

an ERISA claim under that section, and no "complete preemption"

exists. For that reason, there is no federal question jurisdiction

and this case was improperly removed to federal court.

C. DEFENSIVE PREEMPTION:    THE "RELATES TO" TEST

        IBM strenuously argued before this Court that the plaintiffs'

claims must be preempted because those claims "relate to" an ERISA

plan.     ERISA supersedes "any and all State laws" that "relate to

any employee benefit plan."    29 U.S.C.A. § 1144(a) (West 1985).   If

the plaintiffs' claims sufficiently relate to an ERISA plan,

ordinary preemption principles would bar the plaintiffs' state law

action. We can not decide whether the plaintiffs' claims relate to

an ERISA plan, however, because we have no jurisdiction over this

case.     The defense of ordinary ERISA preemption, by itself, does

not create federal question jurisdiction. See Franchise Tax Board,
463 U.S. at 7, 27-28, 103 S. Ct. at 2845, 2855-56.        Without any

basis for federal jurisdiction over a case, a federal court can not

decide a preemption defense.     Any defensive preemption arguments

IBM seeks to raise will have to be decided, if at all, in state

court.
                           III. CONCLUSION

     We VACATE the district court's order denying summary judgment

and REMAND to the district court with instructions to REMAND this
case to state court.