Shiffler v. Equitable Life Assur. Soc. of U.S.

• Decision Date: 26 January 1988
• Docket Number: No. 87-1407,87-1407
• Citation: 838 F.2d 78
• Parties: Shirley SHIFFLER, Administratrix of the Estate of John W. Shiffler, Deceased, and Shirley Shiffler, in her own right v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Westinghouse Electric Corporation, Westinghouse Insurance Plan. Appeal of Shirley SHIFFLER.
• Court: U.S. Court of Appeals — Third Circuit

Page 78

838 F.2d 78

Shirley SHIFFLER, Administratrix of the Estate of John W.

Shiffler, Deceased, and Shirley Shiffler, in her own right v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES,

Westinghouse Electric Corporation, Westinghouse

Insurance Plan.

Appeal of Shirley SHIFFLER.

No. 87-1407.

United States Court of Appeals, Third Circuit.

Argued Dec. 8, 1987.

Decided Jan. 26, 1988.

Fred D. Furman (argued), Kleinbard, Bell & Becker, Philadelphia, Pa., for appellees Westinghouse Elec. Corp. and Westinghouse Ins. Plan.

Michael R. Lastowski (argued), Saul, Ewing, Remick & Saul, Philadelphia, Pa., for appellee The Equitable Life Assur. Soc. of the U.S.

Michael T. McDonnell (argued), McDonnell & McDonnell, P.A., Drexel Hill, Pa., for appellant.

Before GREENBERG, SCIRICA, and HUNTER, Circuit Judges.

OPINION OF THE COURT

GREENBERG, Circuit Judge.

This appeal arises from a suit to recover proceeds of insurance policies allegedly due by reason of the death of an employee of the defendant Westinghouse Electric Corporation (Westinghouse). On defendants' motion, the district court granted summary judgment dismissing the action. Plaintiff appeals, raising issues relating to the district court's jurisdiction and the scope of the policies' coverage. For the reasons which follow we will affirm the district court's order.

I.

The facts in this case may be briefly recited. On June 9, 1980 the employee, John Shiffler, died of a heart attack while sitting at his desk at Westinghouse. ¹ At that time Mr. Shiffler was enrolled in two employee benefit plans providing coverage for accidental death offered by Westinghouse, the Personal Accident Insurance Plan (PAP) and the Westinghouse Insurance Plan (WIP). Westinghouse was the administrator and defendant, Equitable Life Assurance Society (Equitable) was the insurer for the plans. Mr. Shiffler's wife, plaintiff Shirley Shiffler, was the beneficiary under both policies issued pursuant to the plans.

Subsequently, Mrs. Shiffler filed a claim for benefits under the Pennsylvania Workmen's Compensation Statute, Pa.Stat.Ann. tit. 77, Sec. 751 (Purdon 1987), asserting that the heart attack was work related. At first Westinghouse denied liability but, after extended hearings, it agreed to pay workmen's compensation benefits.

Mrs. Shiffler then presented claims for accidental death benefits under the PAP and the WIP to Equitable which was authorized to determine whether to pay claimants. Equitable denied the claims as it found that Mr. Shiffler's death did not fall within the policies as it was not caused by "violent, external and accidental means," as required by both and, additionally, because the death was not "non-occupational" as required by the WIP. Mrs. Shiffler was, however, paid a substantial ordinary death benefit under the WIP.

In November, 1984 Mrs. Shiffler filed a complaint in the Court of Common Pleas for Philadelphia County, Pennsylvania, naming Equitable, Westinghouse and the Westinghouse Insurance Plan as defendants. On December 27, 1984 the Westinghouse defendants filed a petition removing the case to the United States District Court for the Eastern District of Pennsylvania. In its petition Westinghouse alleged that the district court had original jurisdiction to hear the action under 28 U.S.C. Sec. 1331 and under 29 U.S.C. Sec. 1132(e)(1), a provision of the Employee Retirement Income Security Act (ERISA). ² According to defendants, the purpose of Mrs. Shiffler's suit was to recover benefits and enforce rights under the employee benefit plans and, thus, the suit was essentially an ERISA action within district court jurisdiction. Equitable joined in the petition without stating any separate basis for district court jurisdiction.

Mrs. Shiffler thereafter filed two unsuccessful petitions to remand the action to the state court. In the second of these applications she argued that her action should not be characterized as a suit under ERISA as the complaint asserted only state law claims. She contended that because there was no cause of action under ERISA and there was not diversity between the parties, the district court could not properly exercise jurisdiction. The district court partially rejected her arguments as it found that the claims being asserted against the Westinghouse defendants were pre-empted by ERISA and thus the district court possessed federal question jurisdiction. Pending further briefing the court reserved decision on the issue of whether it had jurisdiction over the seemingly state law claims Mrs. Shiffler was asserting against Equitable. Subsequently, on June 18, 1986, the district court ruled that diversity existed between Mrs. Shiffler and Equitable and thus the court had an independent ground of jurisdiction over the claims asserted against Equitable.

On June 24, 1987 the district court entered an order granting motions for summary judgment filed by Equitable, Westinghouse and the Westinghouse Insurance Plan. The court found that Mr. Shiffler's death was clearly not covered by the terms of the policies at issue and, accordingly, Mrs. Shiffler could not establish, as required by our decision in Struble v. New Jersey Brewery Employees' Welfare Trust Fund, 732 F.2d 325 (3d Cir.1984), that the denial of benefits under the ERISA plan was "arbitrary and capricious." This appeal followed.

II.

Mrs. Shiffler first challenges the district court's exercise of jurisdiction over her complaint. She asserts that the complaint contains only state law claims and accordingly should not have been removed to federal court.

Under 28 U.S.C. Sec. 1441(a) "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." The removal of Mrs. Shiffler's action to the district court was proper, therefore, if the district court had original jurisdiction over her complaint. The district court found that it possessed original jurisdiction over the complaint as it had federal question jurisdiction over the claims against Westinghouse and the Westinghouse Insurance Plan and diversity jurisdiction over the claims against Equitable.

Determination of whether there is federal question jurisdiction requires us to consider the pre-emptive effect of ERISA found in 29 U.S.C. Sec. 1144(a) as Mrs. Shiffler's characterizes her claims as being under state law. That section contains three clauses commonly referred to as the pre-emption clause, the savings clause and the deemer clause. ³ The Supreme Court recently described the interrelationship of these provisions:

If a state law 'relate[s] to ... employee benefit plan[s],' it is pre-empted. Sec. 514(a). The saving clause excepts from the pre-emption clause laws that 'regulat[e] insurance.' Sec. 514(b)(2)(A). The deemer clause makes clear that a state law that 'purport[s] to regulate insurance' cannot deem an employee benefit plan to be an insurance company. Sec. 514(b)(2)(B).

Pilot Life Ins. Co. v. Dedeaux, --- U.S. ----, ----, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987).

This case primarily implicates the pre-emption clause. The Supreme Court has noted the expansive sweep of this clause. Pilot Life, --- U.S. at ----, 107 S.Ct. at 1553; Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 759, 105 S.Ct. 2380, 2389, 85 L.Ed.2d 728 (1985). Specifically, the phrase "relate to" has been given the broadest common sense meaning, such that a state law "relates to" a benefit plan if it has a connection with or reference to such a plan. Pilot Life, --- U.S. at ----, 107 S.Ct. at 1553; Metropolitan Life v. Massachusetts, 471 U.S. at 739, 105 S.Ct. at 2389. In addition, the Supreme Court has emphasized that the pre-emption clause is not limited to state laws specifically designed to affect employee benefit plans. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 98, 103 S.Ct. 2890, 2900, 77 L.Ed.2d 490 (1983). For example, in Pilot Life the Court held that the common law causes of action of "tortious breach of contract" and "the Mississippi law of bad faith" were related to the employee benefit plan which was the focus of the litigation and accordingly the claims fell under the ERISA pre-emption clause. --- U.S. at ----, 107 S.Ct. at 1553.

Mrs. Shiffler's second and third causes of action were asserted against Westinghouse and the Westinghouse Insurance Plan. Her second cause of action alleged that Westinghouse as "plan administrator" breached its duty to compel Equitable to pay the benefits due to her and breached its duty to bring an action against Equitable for the insurance proceeds. The third cause of action specifically alleged that the Westinghouse Insurance Plan had failed to see that Mrs. Shiffler was paid the benefits due under the WIP, had, in effect, denied her a benefit due, earned and paid for by Mr. Shiffler and had breached its contractual duty to Mr. Shiffler by failing to make the payments due. Mrs. Shiffler in both the second and third causes of action sought to recover proceeds under the insurance policies together with interest, attorney's fees and costs.

Thus while Mrs. Shiffler would have us consider her claims as setting forth state common law causes of action, clearly they "relate to" the employee benefit plans when that phrase is given its broad common sense meaning, for no matter how her action is characterized her goal was to recover the proceeds claimed under the PAP and the WIP. Accordingly, to the extent that Pennsylvania recognizes the causes of action alleged by Mrs. Shiffler against Westinghouse and the Westinghouse Insurance Plan, her common law claims are pre-empted by ERISA. It therefore follows that the district court had jurisdiction over these claims under 29 U.S.C. Sec. 1132(e)(1) and thus they were properly removed to the district court. Mrs. Shiffler's...