Hashimoto v. Bank of Hawaii, 92-15167

• Citation: 999 F.2d 408
• Decision Date: 05 November 1993
• Docket Number: No. 92-15167,92-15167
• Parties: 8 IER Cases 1126, 9 IER Cases 1430, 16 Employee Benefits Cas. 2751, Pens. Plan Guide P 23882G Jessica K. HASHIMOTO, Plaintiff-Appellant, v. BANK OF HAWAII, et al. Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 408

999 F.2d 408

8 IER Cases 1126, 9 IER Cases 1430,

16 Employee Benefits Cas. 2751,

Pens. Plan Guide P 23882G

Jessica K. HASHIMOTO, Plaintiff-Appellant, v. BANK OF HAWAII, et al. Defendants-Appellees.

No. 92-15167.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted May 7, 1993.

Decided July 15, 1993.

As Amended Nov. 5, 1993.

E. Cooper Brown and David K. Colapinto, Kohn, Kohn & Colapinto, and Kathleen T. Quinn, Washington, DC, for plaintiff-appellant.

Kenneth B. Hipp and Barbara A. Petrus, Goodsill Anderson Quinn & Stifel, Honolulu, HI, for defendants-appellees.

Appeal from the United States District Court for the District of Hawaii.

Before: GOODWIN, TANG and NOONAN, Circuit Judges.

NOONAN, Circuit Judge:

Jessica Hashimoto appeals the grant of summary judgment in favor of the Bank of Hawaii (the Bank) and its codefendants in her action for wrongful discharge and breach of contract. The basis of the judgment was preemption by the Employees Retirement Income Security Act of 1974 (ERISA) 29 U.S.C. §§ 1001, et seq. We agree in that conclusion but also hold that Hashimoto's complaint should be recharacterized as an ERISA claim under 29 U.S.C. § 1140. We remand for trial on this basis.

PROCEEDINGS

On January 10, 1991 Hashimoto began this case in a Hawaii state court with a complaint alleging that the Bank and Duane D. Feekin and Judith Wetzel and other employees of the Bank had violated the Hawaii Whistle Blowers' Protection Act, Haw.Rev.Stat. §§ 378-61, et seq. Section 378-62 states:

An employer shall not discharge, threaten, or otherwise discriminate against an employee regarding the employee's compensation, terms, conditions, location, or privileges of employment because:

(1) The employee, or a person acting on behalf of the employee, reports or is about to report to a public body, verbally or in writing, a violation or a suspected violation of a law or rule adopted pursuant to law of this State, a political subdivision of this State, or the United States, unless the employee knows that the report is false; ...

Hashimoto asserted that several times between April 1989 and October 12, 1990 she had complained to Feekin and Wetzel about "potential and/or actual violations by the Bank of the reporting and disclosure requirements and fiduciary standards of ERISA."

                Specifically, she noted that Feekin had directed her to reimburse a former employee from a profit-sharing plan for taxes that Hashimoto had "properly withheld from a lump sum distribution" of his account.   She also noted that Wetzel had instructed her "to recalculate a former employee's pension plan benefit and to use final pay, not final average pay" in violation of ERISA regulations.   Hashimoto contended that but for her objections she would not have been discharged from employment.   She also alleged that the Bank had failed to follow its own procedures manual in terminating her and so was in breach of contract
                

On February 11, 1991 the Bank moved to remove the case to the federal district court. Subsequently, the Bank moved for summary judgment on the grounds that Hashimoto's contract claim was without merit and that the whistle blower's count was preempted by ERISA. The court put the matter in these terms:

In the instant case, plaintiff's claim under the HWBPA does not easily fall on either side of the preemption line. Often, when a court has found ERISA preemption, the injury underlying the state cause of action resulted from the alleged improper administration of a benefit plan. Here, as in Authier [v. Ginsberg, 757 F.2d 796, 800 (6th Cir.), cert. denied, 474 U.S. 888, 106 S.Ct. 208, 88 L.Ed.2d 177 (1985) ], plaintiff's injury arises from an allegation of improper administration, whether or not the allegations were correct. Plaintiff contends that she was terminated solely in retaliation for "complaints" even though the complaints may have been unfounded. Even though plaintiff's claim under the HWBPA does not formally depend upon the existence of an ERISA plan, plaintiff's claim would require the court to evaluate the substance of the complaints.

To establish a wrongful discharge claim under the HWBPA, a plaintiff must prove, in part, that the employer terminated her employment because:

1. The employee or person acting on behalf of the employee, reports or is about to report to a public body, verbally or in writing, a violation or a suspected violation of law or rule adopted pursuant to [a] law of this State, ... unless the employee knows that the report is false; or

2. An employee is requested by a public body to participate in an investigation, hearing, ...

Haw.Rev.Stat. § 378-62. In adjudicating a claim under the HWBPA, a court is forced to evaluate the substance of the violation or suspected violation. For example, in order to determine whether an employee knew that the report was false, the court must decide whether the employee had reasonable grounds for believing that violations had occurred.

In this case, plaintiff alleges that her discharge was in retaliation for complaints she made as to violations of ERISA involving the Bank of Hawaii's (i) profitsharing plan, (ii) pension plan, and (iii) severance plan. As such, in order to determine whether her complaints were a motivating factor in her discharge, the court must find not only the existence of an ERISA plan but also must interpret ERISA to determine whether a violation of law existed or potentially existed. Therefore, plaintiff's HWBPA claim is preempted by ERISA because an adjudication of the claim necessarily requires an adjudication of ERISA-related issues.

The court also granted summary judgment against Hashimoto on her claim for breach of contract.

Hashimoto appeals.

ANALYSIS

Hashimoto had a contract terminable at will by the Bank. Absent a public policy exception, such a contract is terminable at will. See Parnar v. Americana Hotels, Inc., 65 Haw. 370, 652 P.2d 625, 631 (1982). Her breach of contract claim was therefore without merit. We turn to the difficult question of federal preemption of her tort claim. As is typical in cases involving federal preemption of state law, a line must be picked out by court decisions as to what is preempted and what is not preempted. The breadth of ERISA preemption is considerable:

"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." Under this "broad common- sense meaning," a state law may "relate to" a benefit plan, and thereby be pre-empted, even if the law is not specifically designed to affect such plans, or the effect is only indirect.

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 483, 112 L.Ed.2d 474 (1990) (citations omitted).

As we have summarized the matter:

To determine whether a state law is preempted we must look at whether it encroaches on the relationships regulated by ERISA. State tort and contract causes of action, for instance, don't apply to transactions between plans and their participants, see, e.g., Pilot Life [Ins. Co. v. Dedeaux], 481 U.S. at 47-48, 107 S.Ct. [1549] at 1552-1553 , because the relationship between plan and participant is, under ERISA, a matter of exclusively federal concern, FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, 407, 112 L.Ed.2d 356 (1990). Wrongful discharge laws don't apply to employee terminations carried out to avoid benefit payments, because the employer-employee relationship is--insofar as it deals with benefit plans--also an exclusively federal matter. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139...