Wood v. Prudential Ins. Co. of AM..

• Decision Date: 16 November 1999
• Docket Number: No. 99-5022,99-5022
• Citation: 207 F.3d 674
• Parties: (3rd Cir. 2000) JAMES W. WOOD, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA JAMES W. WOOD; KAREN WOOD, individually and as Guardians of MATTHEW WOOD, incompetent v. PRUDENTIAL INSURANCE COMPANY OF AMERICA James Wood; Karen Wood, individually and as guardians of Matthew Wood, incompetent Appellants Argued:
• Court: U.S. Court of Appeals — Third Circuit

Page 674

207 F.3d 674 (3rd Cir. 2000)

JAMES W. WOOD, v. PRUDENTIAL INSURANCE COMPANY OF AMERICA

JAMES W. WOOD; KAREN WOOD, individually and as Guardians of MATTHEW WOOD, incompetent v. PRUDENTIAL INSURANCE COMPANY OF AMERICA

James Wood; Karen Wood, individually and as guardians of Matthew Wood, incompetent Appellants

No. 99-5022

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued: November 16, 1999

Filed March 28, 2000

On appeal from Orders entered in the United States District Court for the District of New Jersey (D.C. Civil Action Nos. 98-2383 and 98-2487) (Consolidated Cases) Chief District Judge: Hnorable Anne E. Thompson, (D.C. Civil No. 98-cv-02383)(D.C. Civil No. 98-cv-02487) G. Martin Meyers (argued) Law Offices of G. Martin Meyers, P.C. 35 West Main Street Suite 106 Denville, New Jersey 07834 Attorney for Appellants

Don A. Innamorato Stephanie Wilson Reed Smith Shaw & McClay LLP 136 Main Street, Suite 250 Princeton,

New Jersey 08543-7839 and David Bennet Ross Peter A. Walker (argued) Mara-Louise Anzalone Seyfarth, Shaw, Fairweather & Geraldson 1270 Avenue of the Americas Suite 2500 New York, New York 10020-1801 Attorneys for Appellee

Before: ALITO AND STAPLETON, Circuit Judges, and FEIKENS, District Judge.

OPINION FOR THE COURT

FEIKENS, District Judge:

I. Background

In 1998, Appellant James Wood ("Wood") filed suit in a New Jersey state court against his former employer, The Prudential Insurance Company of America ("Prudential"). In his complaint, Wood pleaded four counts against Prudential: discrimination based on a New Jersey statute¹; defamation; outrage; and discrimination based on the New Jersey constitution². Wood alleged that Prudential discriminated against him by terminating his employment to avoid paying benefits³ to him and his dependents. In this state suit, Wood sought, inter alia, compensatory damages, damages for humiliation, pain and suffering, and punitive damages. Prudential removed the suit to the U.S. District Court of New Jersey asserting that the Employee Retirement Insurance Security Act of 1974 ("ERISA"), 29 U.S.C. S 1001 et seq., completely preempted both Wood's claim of discrimination under the state statute and his claim of discrimination under the state constitution. In denying Wood's motion to remand the suit to state court, the United States District Court held that ERISA completely preempted those two claims. The court took supplemental jurisdiction over the claims of defamation and outrage and construed the claim of outrage as a claim of intentional infliction of emotional distress.

Wood and his wife, Karen Wood, individually and on behalf of their son, Matthew Wood, then filed suit later in 1998 in the U.S. District Court of New Jersey alleging that Prudential's termination of Wood's employment violated ERISA and, since Matthew Wood was disabled, that it violated the Americans with Disabilities Act ("ADA"). For his ERISA claim, Wood sought equitable relief and, for his ADA claim, Wood sought compensatory and other damages. The District Court dismissed the ADA claim, consolidated the two cases, and granted Prudential's motion to submit all claims to arbitration.

II. Issues

Several questions are presented to us on appeal:

1) Is complete preemption of a state claim that is subject to Section 510 of ERISA warranted even if the state claim prays for relief arguably not provided for in Section 502(a) of ERISA?

2) Assuming that complete preemption applies, may the District Court compel arbitration of his claims under the facts of this case?

3) In order to rule on these questions, did the District Court, and do we, have jurisdiction?

III. Complete Preemption

A.

The District Court denied Wood's motion to remand holding that ERISA completely preempted Wood's claim of discrimination based on the state statute. The District Court read that claim as an assertion "that depriving him of his retirement benefits was the motivating purpose for, and not merely a consequence of, his termination." We agree with this reading.⁴

In his state complaint, Woods alleges generally that:

[T]he real reason that . . . Prudential terminated [his] employment . . . was its knowledge that, because he was fifty-one years old, and had more than twenty years of service with Prudential, plaintiff Jim Wood was about to become eligible for full retirement benefits. Defendant Prudential knew that the vesting of those benefits would require it to continue to be responsible for the medical expenses of the plaintiff and of his dependents, including the plaintiff's son, Matthew Wood.

State Complaint P4, A-16. He repeats this general allegation in each of his four state law claims. State Complaint PP 7, 10, 13, 16, A-19-21. Since Wood's son suffers from severe head injuries due to a car accident, Wood alleges that the medical bills for his son run into the "millions of dollars." State Complaint P 5, A-17.

Wood argues that his complaint contains claims of age and disability discrimination entirely separate from this benefits-defeating allegation. But, we find nothing in his complaint other than an allegation that Prudential terminated Wood's employment to avoid paying health and retirement benefits.

Wood argues that his complaint alleges discrimination based on age because it referred directly to his age. The relevant portion of the allegation reads: "[B]ecause he was fifty-one years old, and had more than twenty years of service with Prudential, plaintiff Jim Wood was about to become eligible for full retirement benefits." State Complaint P 4, A-16. It seems obvious that Wood's reference to age, like the accompanying reference to his length of service, establishes the allegation that Wood was "about to become eligible for full retirement benefits." His age is relevant only insofar as it affected his eligibility for benefits. We agree with the District Court when it noted: "Aside from nearing early retirement age, there are no facts alleged in the Complaint to support a claim that Wood's age had any bearing on Prudential's decision to terminate him."

Wood also argues that his state court complaint alleges discrimination based on the disability of Wood's son. His complaint mentions the disability of his son only in the context of Prudential's potential obligation for the high medical expenses of his son. Since Wood's state discrimination claim provides no rationale for Prudential's treatment other than to avoid paying benefits to him and to his dependents, we read the complaint as alleging that Prudential's termination of Wood's employment had a benefits-defeating motive.

B.

A claim of discharge based on a "benefits-defeating" motive comes under Section 510 of ERISA. That section prohibits the "discharge of a participant or beneficiary for the purpose of interfering with the attainment of any right to which such participant may become entitled."S 510, 29 U.S.C. S 1140. "Congress enacted this section to prevent unscrupulous employers from discharging or harassing their employees in order to prevent them from obtaining their statutory or plan-based rights." Zipf v. American Telephone and Telegraph Co., 799 F.2d 889, 891 (3rd Cir. 1986); see, also, Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 143 (1990).

Section 510 of ERISA does not stand alone; by its terms it gains its enforcement vitality from Section 502. Section 510 provides: "The provisions of [section 502] of this title shall be applicable in the enforcement of this section." S 510, 29 U.S.C. S 1140. Thus, any state claim that falls within Section 510 is necessarily within Section 502.

C.

Federal courts have jurisdiction over claims "arising under the Constitution law or treaties of the United States." 28 U.S.C. S 1331. Under the well-pleaded complaint rule, a court determines whether a claim "arises under" federal law from a plaintiff's complaint. Metropolitan Life v. Taylor, 481 U.S. 58, 62 (1987) ("It is long-settled law that a cause of action arises under federal law only when the plaintiff's well pleaded complaint raises issues of federal law."). A plaintiff is, thus, considered the "master of the complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 39899 (1987).

The United States Supreme Court has recognized the doctrine of complete preemption as a corollary or an exception to the "well-pleaded complaint" rule. Metropolitan Life, 481 U.S. at 63-64. Under this complete preemption exception, the Court has held that "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Id. Since ERISA Section 502(a) completely preempts a state claim, removal of Wood's state claim to federal jurisdiction is proper. See id. at 66 ("Congress has clearly manifested an intent to make causes of action within the scope of 502(a) removable to federal court."); Joyce v. RJR Nabisco Holdings Corp. , 126 F.3d 166, 172 (3rd Cir. 1997).

We reject Wood's contention that, because none of the relief he requested in his state claim is available under Section 502, ERISA does not completely preempt his state action. The relief Wood seeks is irrelevant to a determination of complete preemption. Complete preemption, like ordinary preemption, does not depend on the type of relief requested in a complaint. Complete preemption is an exception to the well-pleaded complaint rule. "[T]he pre-emptive effect of S 502(a) [is] so complete that an ERISA pre-emption defense provides a sufficient basis for removal of a cause of action to the federal forum notwithstanding the traditional limitations imposed by the "well-pleaded complaint" rule." Ingersoll-Rand, 498 U.S. at 145 (citing Metropolitan Life, 481 U.S. at 64-67).

Additionally, a state law claim may fall within Section 502(a) and thus be completely preempted even if the plaintiff asks for relief that is not available under Section 502(a). In Metropolitan Life, the plaintiff sought, inter alia,...