851 F.2d 1262 (10th Cir. 1988), 85-2624, Straub v. Western Union Telegraph Co.

• Citation: 851 F.2d 1262
• Party Name: George STRAUB, Plaintiff-Appellant, v. WESTERN UNION TELEGRAPH COMPANY, Defendant-Appellee.
• Case Date: July 15, 1988
• Court: United States Courts of Appeals, U.S. Court of Appeals — Tenth Circuit

Page 1262

851 F.2d 1262 (10th Cir. 1988)

George STRAUB, Plaintiff-Appellant,

v.

WESTERN UNION TELEGRAPH COMPANY, Defendant-Appellee.

No. 85-2624.

United States Court of Appeals, Tenth Circuit

July 15, 1988

Lloyd O. Bates, Jr. of Pickett, Bates & Holmes, Las Cruces, N.M., for plaintiff-appellant.

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Charles C. High, Jr. and Dan C. Dargene of Kemp, Smith, Duncan & Hammond, El Paso, Tex., for defendant-appellee.

Before LOGAN, ANDERSON, and TACHA, Circuit Judges.

LOGAN, Circuit Judge.

George Straub appeals from the dismissal of his claims against Western Union Telegraph Company (defendant) for breach of contract and negligent misrepresentation. ¹ The district court dismissed these claims as preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Sec. 1001 to Sec. 1461. On appeal Straub argues that there is no ERISA preemption, and, alternatively, that he has stated a claim under ERISA.

Straub's claims arise from a dispute concerning pension benefits. Defendant employed Straub from October 1947 to April 1978. During this time, Straub was covered by defendant's pension plan. In April 1978, Straub accepted an offer of employment from Western Union Space Communications, Inc. (WUSCI), a wholly owned subsidiary of defendant, and terminated his employment with defendant. As a WUSCI employee, however, Straub continued to participate in defendant's pension plan.

In June 1980, defendant sold fifty percent of its ownership interest in WUSCI to Fairchild Industries, Inc. and Continental Telephone Corporation. WUSCI was then reorganized into a partnership called Space Communications Company (SpaceCom). In July 1980, a meeting was held with the SpaceCom employees to explain the effect of the sale and reorganization upon the employees' benefits. Representatives from both defendant and SpaceCom conducted the meeting. These representatives told the SpaceCom employees, including Straub, that they would continue to participate in the same pension plan as before the sale. Under defendant's pension plan at this time, benefits were determined by the following formula: (one percent) x ("average final pay") x ("pension service").

In July 1982, defendant agreed during collective bargaining negotiations to increase the one percent factor to 1.3 percent. The SpaceCom board of directors did not adopt the increase in the pension formula, however, and for that reason the increase did not apply to any of the SpaceCom employees, including Straub. On July 1, 1983, defendant sold its remaining fifty percent ownership in SpaceCom, and SpaceCom employees ceased participating in defendant's plan. Straub applied for his pension on July 13, 1983, and has been receiving benefits on the one percent rather than the 1.3 percent factor.

Straub brought an action in New Mexico state court asserting a breach of contract claim against defendant for not including him in the increase in pension benefits, and a negligent misrepresentation claim for defendant's failure to inform him that his pension benefits might be affected by his transfer of employment to WUSCI or SpaceCom. Straub did not assert any claim against the pension plan under ERISA. Defendant removed the action to the United States District Court for the District of New Mexico. The district court then granted defendant's motion for summary judgment, finding that Straub's claims were preempted by ERISA and that Straub had failed to state a claim under ERISA.

I

Straub first argues that his common law claims for breach of contract and negligent misrepresentation are not preempted by ERISA. The scope of ERISA preemption, however, is very broad. Under ERISA Sec. 514(a), 29 U.S.C. Sec. 1144(a), ERISA supersedes "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan...." As the Supreme Court recently noted, "the express preemption provisions of ERISA

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are deliberately expansive, and designed to 'establish pension plan regulation as exclusively a federal concern.' " Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, ----, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (U.S. April 6, 1987) (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 1906, 68 L.Ed.2d 402 (1981)). As defendant's pension plan is indisputably an "employee benefit plan" as that term is used in Sec. 1144(a), see 29 U.S.C. Sec. 1002(2)(A), (3), the only question is whether Straub's state law claims "relate to" that plan.

The Supreme Court stated in Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983), that "[a] law 'relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan." The Court then reviewed the legislative history of ERISA and concluded that Congress intended to use the words "relate to" in this broad sense, so that state law may be preempted even if it does not specifically concern subjects covered by ERISA. Id. at 98-100, 103 S.Ct. at 2900-02.

Other circuits have found ERISA preemption in situations analogous to that before us. In Anderson v. John Morrell & Co., 830 F.2d 872 (8th Cir.1987), the plaintiff brought an action similar to Straub's against his former employer, alleging

"that the oral representations of 'policy' amounted to an offered promise, accepted by the employee's performance of work. He argues that a contract resulted, under which, whenever the Company improved benefits in the plan covering retired employees from the bargaining unit, it was obliged to make the same improvement in its plan for other retired employees."

Id. at 873-74. The court rejected this...