Darcangelo v. Verizon Communications, Inc.

• Decision Date: 28 May 2002
• Docket Number: No. 01-1679.,01-1679.
• Citation: 292 F.3d 181
• Parties: Frances DARCANGELO, Plaintiff-Appellant, v. VERIZON COMMUNICATIONS, INCORPORATED; CORE, Incorporated, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

292 F.3d 181

Frances DARCANGELO, Plaintiff-Appellant, v. VERIZON COMMUNICATIONS, INCORPORATED; CORE, Incorporated, Defendants-Appellees.

No. 01-1679.

United States Court of Appeals, Fourth Circuit.

Argued January 23, 2002.

Decided May 28, 2002.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

ARGUED: Edwin R. Burkhardt, Jr., Towson, Maryland, for Appellant. Karen Mary Wahle, O'Melveny & Myers, L.L.P., Washington, D.C., for Appellee Verizon; M. Natalie McSherry, Whiteford, Taylor & Preston, L.L.P., Baltimore, Maryland, for Appellee CORE.

Before LUTTIG, MICHAEL, and KING, Circuit Judges.

Affirmed in part, reversed in part, and remanded by published opinion. Judge MICHAEL wrote the opinion, in which Judge LUTTIG and Judge KING joined.

OPINION

MICHAEL, Circuit Judge.

Frances Darcangelo filed this case in Maryland state court against Verizon Communications, Inc., her employer, and CORE, Inc., the administrator of a disability benefits plan that Verizon sponsors for its employees. Darcangelo's complaint alleges violations of Maryland's medical record confidentiality statute, Md.Code Ann., Health-General §§ 4-302 and 4-307, and the state's unfair and deceptive trade practices statute, Md.Code Ann., Comm. Law §§ 13-301 and 13-303. Claims for invasion of privacy, negligence, and breach of contract are also included.¹ The nub of Darcangelo's complaint is that CORE, acting as the agent of Verizon, solicited and disseminated Darcangelo's private medical information in order to assist Verizon in its efforts to declare Darcangelo a "direct threat" to her coworkers so that she could be fired. Darcangelo, in other words, says that CORE did not obtain or disseminate her medical information for any appropriate purpose. Verizon filed a notice of removal, and the district court determined that removal was proper because Darcangelo's claims were completely preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. The court then dismissed all of Darcangelo's claims as preempted. We affirm only the dismissal of Darcangelo's breach of contract claim. The remaining four claims, relating to the confidentiality of medical records, unfair trade practices, privacy, and negligence, cannot be disposed of on preemption grounds at the motion to dismiss stage. This is because the complaint, in setting forth these four claims, charges CORE with conduct that is entirely unrelated to its duties under the ERISA plan. We therefore reverse the district court's dismissal of the four claims and remand the case for further proceedings.

I.

Because the preemption questions in this case are intertwined with the question of federal jurisdiction, we briefly discuss the basis of the district court's removal jurisdiction. In general, an action filed in state court may be removed to federal court "only if it might have been brought in [federal court] originally." 14B Wright, Miller & Cooper, Federal Practice & Procedure: Jurisdiction § 3721, at 292 (3d ed.1998). See also 28 U.S.C. § 1441. The district court, after concluding that Darcangelo's complaint raised federal claims under ERISA, determined that it had jurisdiction based on the presence of a federal question. Under the well-pleaded complaint rule, courts "ordinarily ... look no further than the plaintiff's complaint in determining whether a lawsuit raises issues of federal law capable of creating federal-question jurisdiction under 28 U.S.C. § 1331." Custer v. Sweeney, 89 F.3d 1156, 1165 (4th Cir.1996). Darcangelo's complaint, filed in Maryland state court, appears to rely only on state law. The district court determined, however, that all of Darcangelo's claims were preempted by ERISA and that both removal and dismissal were appropriate.

In considering the district court's jurisdiction over Darcangelo's complaint, we must distinguish between ordinary conflict preemption and complete preemption. Under ordinary conflict preemption, state laws that conflict with federal laws are preempted, and preemption is asserted as "a federal defense to the plaintiff's suit. As a defense, it does not appear on the face of a well-pleaded complaint, and, therefore, does not authorize removal to federal court." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). ERISA § 514 expressly states the scope of ordinary conflict preemption under ERISA: state laws are superseded insofar as they "relate to" an ERISA plan. 29 U.S.C. § 1144(a). Thus, when presented with claims under state law that are said to implicate ERISA, a court (be it state or federal) must determine whether the claims are preempted by ERISA § 514. But "ERISA pre-emption [of a state claim], without more, does not convert a state claim into an action arising under federal law." Taylor, 481 U.S. at 64, 107 S.Ct. 1542. Thus, when ERISA is simply asserted as a defense to a state law claim, the state claim is not converted into a federal claim, and there is no federal question giving rise to removal jurisdiction.

In the case of complete preemption, however, Congress "so completely pre-empt[s] a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Taylor, 481 U.S. at 63-64, 107 S.Ct. 1542. That is to say, the doctrine of complete preemption "converts an ordinary state common law complaint into one stating a federal claim." Id. at 65, 107 S.Ct. 1542. Thus, the doctrine of complete preemption serves as a corollary to the well-pleaded complaint rule: because the state claims in the complaint are converted into federal claims, the federal claims appear on the face of the complaint. Id. at 63-65, 107 S.Ct. 1542. The Supreme Court has determined that ERISA's civil enforcement provision, § 502(a) (29 U.S.C. § 1132(a)), completely preempts state law claims that come within its scope and converts these state claims into federal claims under § 502. Id. at 65-66, 107 S.Ct. 1542. Thus, when a complaint contains state law claims that fit within the scope of ERISA's § 502 civil enforcement provision, those claims are converted into federal claims, and the action can be removed to federal court.

As explained in greater detail in part II, we conclude that four of Darcangelo's claims, as currently alleged in her complaint, are neither preempted by ERISA nor transformed into ERISA § 502 claims. Thus, these four claims are not federal in nature and do not themselves give rise to federal jurisdiction. Darcangelo's fifth claim, for breach of contract, is completely preempted and is transformed into a federal claim under ERISA § 502. The contract claim, then, gives rise to federal question jurisdiction, and the removal to federal court was proper. Because federal jurisdiction exists for the contract claim, the district court also had supplemental jurisdiction under 28 U.S.C. § 1367 over Darcangelo's non-preempted state law claims. Accordingly, the district court's exercise of jurisdiction over the complaint was proper.²

II.

Darcangelo argues that under the rules of ordinary conflict preemption, ERISA does not preempt the state law claims alleged in her complaint. In this part we address Darcangelo's first four claims as a group because the same preemption analysis applies to all of them. (These are the claims alleging negligence, invasion of privacy, violation of Maryland's medical record confidentiality statute, and violation of the state's unfair and deceptive trade practices statute.) Briefly stated, our conclusion with respect to the first four claims is as follows. If CORE obtained Darcangelo's medical information in the course of processing a benefits claim or in the course of performing any of its administrative duties under the plan, these claims would be "related to" the ERISA plan under § 514 and would therefore be preempted. If, on the other hand, CORE was not performing any of its duties as plan administrator, but obtained the information solely to assist Verizon in establishing that Darcangelo posed a threat to her coworkers, then Darcangelo's first four claims would not be related to the plan. Reading the complaint in the light most favorable to Darcangelo, we conclude that she alleges conduct by CORE that is not related to its duties under the plan. Accordingly, Darcangelo's first four claims are not related to the plan and therefore are not preempted. Darcangelo's fifth claim, for breach of contract, merits a somewhat different analysis, so we will address it separately in part III.

A.

In her complaint Darcangelo bases her first four claims on the allegation that CORE, acting as Verizon's agent and without Darcangelo's consent, "either improperly disseminated to or solicited from" her medical providers "personal and confidential information" about her "mental health condition and treatment." She further alleges that CORE did not have any justification for seeking this information and that CORE did not make any "appropriate use of th[e] information;" rather, CORE was assisting Verizon in its attempt "to have Plaintiff declared a `direct threat' under the ADA so [Verizon] could terminate her." (Presumably, Darcangelo is suggesting that Verizon planned to fire her but feared liability under the Americans with Disabilities Act of 1990(ADA), 42 U.S.C. § 12101 et seq. If that was Verizon's fear, it would have had an affirmative defense against an ADA discrimination claim if it could have proven that Darcangelo posed a "direct threat," specifically, "a significant risk to the health or safety of others that [could not] be eliminated by reasonable accommodation," 42 U.S.C. § 11211(3). See 42 U.S.C. § 12113(b).) Simply put, we read Darcangelo's complaint as alleging that CORE solicited her private medical information for the sole purpose of helping Verizon establish that she posed a sufficient threat to her coworkers to warrant her discharge.

After the case was removed, both Verizon and...