Court Opinion

ID: 196743
Source: CourtListenerOpinion
Date Created: 2011-02-07 03:13:05+00
Date Added: 2024-06-11T15:10:56.325086
License: Public Domain

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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