Kemp v. International Business Machines Corp.
| Decision Date | 08 April 1997 |
| Docket Number | No. 95-9223,95-9223 |
| Citation | 109 F.3d 708 |
| Parties | , 20 Employee Benefits Cas. 2814, 97 FCDR 2115, Pens. Plan Guide (CCH) P 23934V, 10 Fla. L. Weekly Fed. C 813 Barbara J. KEMP; Maria G. Wilson; Roger Wilson, Plaintiffs-Counter-Defendants-Appellees, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, Defendant-Counter-Claimant-Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
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.
Before BIRCH and CARNES, Circuit Judges, and MICHAEL *, Senior District 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.
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 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 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) ().
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 defendant may remove a case to federal court only if the district court would have had jurisdiction over the case had the 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 (). 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...
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