Sanson v. General Motors Corp.

Citation966 F.2d 618
Decision Date15 July 1992
Docket NumberNo. 91-8528,91-8528
Parties, 15 Employee Benefits Cas. 1943, Unempl.Ins.Rep. (CCH) P 1943 Chester C. SANSON, Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Kirwan Goger Chesin & Parks, Allan Leroy Parks, Jr., Larry H. Chesin, Atlanta, Ga., for plaintiff-appellant.

Susan M. Royer, King & Spalding, William A. Clineburg, Jr., Atlanta, Ga., for defendant-appellee.

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

Before TJOFLAT, Chief Judge, BIRCH, Circuit Judge, and RONEY, Senior Circuit Judge.

RONEY, Senior Circuit Judge:

This case presents the question whether the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq., preempts a Georgia state law fraudulent misrepresentation claim based on reasonable reliance that causes a person a loss of benefits which would have been received under a special early retirement program. In light of Ingersoll-Rand Co. v. McClendon, --- U.S. ----, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990), we hold the plaintiff's state law fraud claims that relate to a qualified employee benefit plan are preempted by ERISA. Since there is no ERISA claim that could be pled, the district court did not abuse its discretion in denying leave to amend the complaint to allege a claim under ERISA. We, therefore, affirm the district court judgment.

Chester Sanson alleges that General Motors Corporation (GM) fraudulently represented to him that benefits under a special retirement program would not be offered to Lakewood assembly plant employees. Relying upon that representation, he voluntarily retired under the standard provisions of GM's early retirement program. Sanson claims that but for the representation, he would have continued his employment until it would have been clearer whether the special retirement program would be offered to Lakewood employees.

Shortly after Sanson's retirement, GM offered the special program to certain eligible employees. Sanson immediately contacted GM and demanded that his retirement benefits be increased to the level that the special program provided. GM denied his request, and this action commenced.

Sanson sought to recover the enhanced retirement benefits and compensatory and punitive damages. GM moved for summary judgment, asserting that ERISA preempts Sanson's state law claim. Initially, the district court denied GM's motion, holding the state law claim was not preempted.

ERISA expressly provides for the preemption of "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan...." 29 U.S.C. § 1144(a). State laws, however, that have only a tenuous effect on employee benefit plans are not preempted.... The fact that the misrepresentations concerned the availability of an employee benefit plan is only incidental to plaintiff's claim.... [Therefore] plaintiff's claim for intentional misrepresentation is not preempted by ERISA. (citations omitted).

Dist.Ct.Order, 1:88-cv-827-RCF, (June 28, 1989).

Thereafter, the Supreme Court held in Ingersoll-Rand Co. v. McClendon, supra, that ERISA's explicit language and its structure and purpose demonstrate a congressional intent to preempt a state common law claim that an employee was unlawfully discharged to prevent his attainment of benefits under an ERISA-covered plan. GM then requested the district court to consider the application of McClendon to its earlier ruling. After ordering GM to file a subsequent summary judgment motion, the district court reversed its prior ruling based on the belief that "a faithful application of the reasoning of McClendon to the facts of this case requires a finding that Plaintiff's cause of action under Georgia law is preempted under ERISA," and denied Sanson's request to amend his complaint as "futile." Dist.Ct.Order, 1:88-cv-827-RCF, (May 24, 1991).

Sanson contends that the district court read too much into the McClendon decision. Sanson argues that McClendon addresses whether ERISA preempts a claim under a pension-based state law, but that this case involves whether ERISA preempts a general fraud claim under a non-pension-based state law. He claims that the dividing line for purposes of determining ERISA preemption in this context is between claims that "relate to" an employee benefit plan and claims that "affect employee benefit plans too tenuously to be characterized fairly as relating to employee benefit plans." Howard v. Parisian, 807 F.2d 1560, 1564 (11th Cir.1987). Contrary to Sanson's argument, the facts of this case demonstrate more than a tenuous relationship to an employee benefit plan.

In McClendon, the United States Supreme Court reversed the Texas Supreme Court's holding that an employee could recover in a wrongful discharge action if he established that the "principal reason for his termination was the employer's desire to avoid contributing to or paying benefits under the employee's pension fund." McClendon, --- U.S. at ----, 111 S.Ct. at 481, 112 L.Ed.2d at 482. Even though other federal courts had held similar claims preempted by ERISA, the Texas Supreme Court attempted to distinguish McClendon's claims because he was "not seeking lost pension benefits but [was] instead seeking future lost wages, mental anguish and punitive damages as a result of the wrongful discharge." Id. To prevail, however, McClendon had to plead and the court had to find that an ERISA plan existed and the employer had a pension-defeating motive in terminating the employment. Because the court's inquiry was directed to the plan, the Supreme Court held that the cause of action related to an ERISA plan and was, therefore, preempted.

In this case, Sanson claims that GM's misrepresentations were made in furtherance of an objective of achieving a twenty-five percent reduction in salaried employees without the added expense associated with a financial incentive to the employees targeted for removal (e.g., the special retirement program). The measure of damages sought would be against GM and not against a pension plan. To prevail on his state law claims, Sanson would have to prove the existence of an ERISA plan. He would establish that GM intentionally misrepresented his ineligibility for the special retirement program and knew the plan would be available at the time it told him otherwise. He relied upon the misrepresentation and was damaged by the misrepresentation. See Allen v. Sanders, 176 Ga.App. 647, 648, 337 S.E.2d 428, 429 (1985). It can be assumed here that he would prevail on his factual claims to state law.

Whether federal law preempts a state action is a question of congressional intent, and "[t]o discern Congress' intent we must examine the explicit statutory language and the structure and purpose of the statute." McClendon, --- U.S. at ----, 111 S.Ct. at 482, 112 L.Ed.2d at 483; see also Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 208, 105 S.Ct. 1904, 1909-10, 85 L.Ed.2d 206 (1985). ERISA § 514(a) provides:

Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.

ERISA § 514(a), as codified in, 29 U.S.C. § 1144(a) (emphasis added). Under the plain language of § 514(a), only state laws that relate to benefit plans are preempted. McClendon, --- U.S. at ----, 111 S.Ct. at 483, 112 L.Ed.2d at 484. A law "relates to" an employee benefit plan when the law "has a connection with or reference to such a plan." Id.; Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983). Thus, "a state law may 'relate to' a benefit plan, and thereby be preempted, even if the law is not specifically designed to affect such plans, or the effect is only indirect." McClendon, --- U.S. at ----, 111 S.Ct. at 483, 112 L.Ed.2d at 484.

Based upon the Supreme Court's interpretation and application of ERISA in McClendon, the district court properly applied McClendon to hold that federal law preempts Sanson's state law claims. The existence of a pension plan subject to ERISA is a critical factor in both cases. It was critical in establishing liability under the state's wrongful discharge law in McClendon. In this case, the misrepresentation relates to Sanson's retirement benefits available under GM's special retirement plan. The measure of damages would be the amount of benefits Sanson would have received under the retirement plan. Such a determination of damages demonstrates the relationship between the lawsuit and the special retirement plan.

McClendon recognized certain limits to ERISA's preemption clause: that a law normally would not be preempted if the statute did not require the establishment or maintenance of an ongoing plan, or if a statute makes no reference to, or functions irrespective of, a plan. See e.g., Mackey v. Lanier Collection Agency & Serv., Inc., 486 U.S. 825, 841, 108 S.Ct. 2182, 2192-93, 100 L.Ed.2d 836 (1988); Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 12, 107 S.Ct. 2211, 2217-18, 96 L.Ed.2d 1 (1987). Although the fraud statute does not involve the existence of a pension plan, the statute would not apply to this case without the existence of the retirement plan. See also First Nat'l Life Ins. v. Sunshine-Jr. Food Stores, 960 F.2d 1546, 1549-50 (11th Cir.1992).

The district court correctly held that McClendon mandates preemption of the plaintiff's state law claim.

Sanson alternately contends that if ERISA preempts the state law, the district court abused its discretion in refusing to grant him leave to amend the complaint to state a claim under ERISA. The essential problem Sanson faces is...

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