Company v. Clendon, INGERSOLL-RAND

• Citation: 498 U.S. 133,112 L.Ed.2d 474,111 S.Ct. 478
• Decision Date: 03 December 1990
• Docket Number: INGERSOLL-RAND,No. 89-1298,89-1298
• Parties: COMPANY, Petitioner v. Perry McCLENDON
• Court: United States Supreme Court

498 U.S. 133

111 S.Ct. 478

112 L.Ed.2d 474

INGERSOLL-RAND COMPANY, Petitioner

v Perry McCLENDON.

No. 89-1298.

Argued Oct. 9, 1990.

Decided Dec. 3, 1990.

Syllabus

After petitioner company fired respondent McClendon, he filed a wrongful discharge action under various state law tort and contract theories, alleging that a principal reason for his termination was the company's desire to avoid contributing to his pension fund. The Texas court granted the company summary judgment, and the State Court of Appeals affirmed, ruling that McClendon's employment was terminable at will. The State Supreme Court reversed and remanded for trial, holding that public policy required recognition of an exception to the employment-at-will doctrine. Therefore, recovery would be permitted in a wrongful discharge action if the plaintiff could prove 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." In distinguishing federal cases holding similar claims pre-empted by the Employee Retirement Income Security Act of 1974 (ERISA), the court reasoned that McClendon was seeking future lost wages, recovery for mental anguish, and punitive damages rather than lost pension benefits.

Held: ERISA's explicit language and its structure and purpose demonstrate a congressional intent to pre-empt a state common law claim that an employee was unlawfully discharged to prevent his attainment of benefits under an ERISA-covered plan. Pp. 137-145.

(a) The cause of action in this case is expressly pre-empted by § 514(a) of ERISA, which broadly declares that that statute supersedes all state laws (including decisions having the effect of law) that "relate to" any covered employee benefit plan. In order to prevail on the cause of action, as formulated by the Texas Supreme Court, a plaintiff must plead, and the trial court must find, that an ERISA plan exists and the employer had a pension-defeating motive in terminating the employment. Because the existence of a plan is a critical factor in establishing liability, and the trial court's inquiry must be directed to the plan, this judicially created cause of action "relate[s] to" an ERISA plan. Cf. Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 828, 108 S.Ct. 2182, 2184, 100 L.Ed.2d 836. Id., at 841, 108 S.Ct., at 2191, and Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 12, 23, 107 S.Ct. 2211, 2217-18, 2223-24, 96 L.Ed.2d 1 distinguished. In arguing that the plan is irrelevant to the cause of action because all that is at issue is the employer's improper motive, McClendon misses the point, which is that under the state court's analysis there simply is no cause of action if there is no plan. Similarly unavail- ing is McClendon's argument that § 514(c)(2)—which defines "State" to include any state instrumentality purporting to regulate the terms and conditions of covered plans—causes § 514(a) to pre-empt only those state laws that affect plan terms, conditions, or administration and not those that focus on the employer's termination decision. That argument misreads § 514(c)(2) and consequently misapprehends its purpose of expanding ERISA's general definition of "State" to "include " state instrumentalities whose actions might not otherwise be considered state law for pre-emption purposes; would render § 514(a)'s "relate to" language superfluous, since Congress need only have said that "all" state laws would be pre-empted; and is foreclosed by this Court's precedents, see Mackey, supra, at 828, and n. 2, 829, 108 S.Ct., at 2184, and n. 2, 2185. Pre-emption here is also supported by § 514(a)'s goal of ensuring uniformity in pension law, since allowing state based actions like the one at issue might subject plans and plan sponsors to conflicting substantive requirements developed by the courts of each jurisdiction. Pp. 138-142.

(b) The Texas cause of action is also pre-empted because it conflicts directly with an ERISA cause of action. McClendon's claim falls squarely within ERISA § 510 which prohibits the discharge of a plan participant "for the purpose of interfering with [his] attainment of any right . . . under the plan." However, that in itself does not imply pre-emption of state remedies absent "special features" warranting pre-emption. See, e.g., English v. General Electric Co., 496 U.S. 72, 87, 110 S.Ct. 2270, ----, 110 L.Ed.2d 65. Such a " 'special featur[e]' " exists in the form of § 502(a), which authorizes a civil action by a plan participant to enforce ERISA's or the plan's terms, gives the federal district courts exclusive jurisdiction of such actions, and has been held to be the exclusive remedy for rights guaranteed by ERISA, including those provided by § 510, Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52, 54-55, 107 S.Ct. 1549, 1555-56, 1556-57, 95 L.Ed.2d 39. Thus, the lower court's attempt to distinguish this case as not one within ERISA's purview is without merit. Moreover, since there is no basis in § 502(a)'s language for limiting ERISA actions to only those which seek "pension benefits," it is clear that the relief requested here is well within the power of federal courts; the fact that a particular plaintiff is not seeking recovery of pension benefits is no answer to a pre-emption argument. Pp. 142-145.

779 S.W.2d 69 (Tex.1989), reversed.

O'CONNOR, J., delivered the opinion for a unanimous Court with respect to Parts I and II-B, and the opinion of the Court with respect to Part II-A, in which REHNQUIST, C.J., and WHITE, SCALIA, KENNEDY, and SOUTER, JJ., joined.

Hollis T. Hurd, Pittsburgh, Pa., for petitioner.

Christopher J. Wright, Washington, D.C. for the U.S., as amicus curiae, in support of the petitioner, by special leave of Court.

John W. Tavormina, Houston, Tex., for respondent.

Justice O'CONNOR delivered the opinion of the Court.^*

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., pre-empts a state common law claim that an employee was unlawfully discharged to prevent his attainment of benefits under a plan covered by ERISA.

I

Petitioner Ingersoll-Rand Company employed respondent Perry McClendon as a salesman and distributor of construction equipment. In 1981, after McClendon had worked for the company for nine years and eight months, the company fired him citing a companywide reduction in force. McClendon sued the company in Texas state court, alleging that his pension would have vested in another four months and that a principal reason for his termination was the company's desire to avoid making contributions to his pension fund. McClendon did not realize that pursuant to applicable regulations, see 29 CFR § 2530.200b-4 (1990) (break-in-service regulation), he had already been credited with sufficient service to vest his pension under the plan's 10-year requirement. McClendon sought compensatory and punitive damages under various tort and contract theories; he did not assert any cause of action under ERISA. After a period of discovery, the company moved for, and obtained, summary judgment on all claims. The State Court of Appeals affirmed, holding that McClendon's employment was terminable at will. 757 S.W.2d 816 (1988).

In a 5 to 4 decision, the Texas Supreme Court reversed and remanded for trial. The majority reasoned that notwithstanding the traditional employment-at-will doctrine, public policy imposes certain limitations upon an employer's power to discharge at-will employees. Citing Tex.Rev.Civ.Stat.Ann., Title 110B (Vernon 1988 pamphlet), and § 510 of ERISA, the majority concluded that "the state has an interest in protecting employees' interests in pension plans." 779 S.W.2d 69, 71 (1989). As support the court noted that "[t]he very passage of ERISA demonstrates the great significance attached to income security for retirement purposes." Ibid. Accordingly, the court held that under Texas law a plaintiff 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." Ibid. The court noted that federal courts had held similar claims pre-empted by ERISA, but distinguished the present case on the basis that McClendon was "not seeking lost pension benefits but [was] instead seeking lost future wages, mental anguish and punitive damages as a result of the wrongful discharge." Id., at 71, n. 3 (emphasis in original).

Because this issue has divided state and federal courts, we granted certiorari, 494 U.S. 1078, 110 S.Ct. 1804, 108 L.Ed.2d 935 (1990), and now reverse.

II

"ERISA is a comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 2896, 77 L.Ed.2d 490 (1983). "The statute imposes participation, funding, and vesting requirements on pension plans. It also sets various uniform standards, including rules concerning reporting, disclosure, and fiduciary responsibility, for both pension and welfare plans." Id., at 91, 103 S.Ct. at 2896 (citation omitted). As part of this closely integrated regulatory system Congress included various safeguards to preclude abuse and "to completely secure the rights and expectations brought into being by this landmark reform legislation." S.Rep. No. 93-127, p. 36 (1973). Prominent among these safeguards are three provisions of particular relevance to this case: § 514(a), 29 U.S.C. § 1144(a), ERISA's broad pre-emption provision; § 510, 29 U.S.C. § 1140, which proscribes interference with rights protected by ERISA; and § 502(a), 29 U.S.C. § 1132(a), a " 'carefully integrated' " civil enforcement scheme that "is one of the essential tools for accomplishing the stated purposes of ERISA." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52, 54, ...