109 F.3d 708 (11th Cir. 1997), 95-9223, Kemp v. International Business Machines Corp.

Docket Nº:95-9223.
Citation:109 F.3d 708
Party Name:2814, 97 FCDR 2115, Barbara J. KEMP; Maria G. Wilson; Roger Wilson, Plaintiffs-Counter-Defendants-Appellees, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant-Counter-Claimant-Appellant.
Case Date:April 08, 1997
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
FREE EXCERPT

Page 708

109 F.3d 708 (11th Cir. 1997)

2814, 97 FCDR 2115,

Barbara J. KEMP; Maria G. Wilson; Roger Wilson,

Plaintiffs-Counter-Defendants-Appellees,

v.

INTERNATIONAL BUSINESS MACHINES CORPORATION,

Defendant-Counter-Claimant-Appellant.

No. 95-9223.

United States Court of Appeals, Eleventh Circuit

April 8, 1997

Page 709

John F. Wymer, III, Powell, Goldstein, Frazer & Murphy, Atlanta, GA, Michael S. Horne, Jennifer R. Meron, Covington & Burling, Washington, DC, Theresa K. Mohan, Howard G. Ziff, IBM Corp., White Plains, NY, for appellant.

Roy E. Barnes, Jerry A. Landers, Jr., Marietta, GA, David Eugene Hudson, Augusta, GA, for appellees.

Appeal from the United States District Court for the Northern District of Georgia.

Page 710

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 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,

Page 711

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 court held that the plaintiffs' claims were not preempted by...

To continue reading

FREE SIGN UP