DeVoll v. Burdick Painting, Inc.

• Decision Date: 08 September 1994
• Docket Number: No. 93-15366,93-15366
• Citation: 35 F.3d 408
• Parties: , 18 Employee Benefits Cas. 2106 Robert DeVOLL and Patricia M. DeVoll, Plaintiffs-Appellants, v. BURDICK PAINTING, INC. and Bay Area Painters and Tapers Health Fund, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 408

35 F.3d 408

63 USLW 2260, 18 Employee Benefits Cas. 2106

Robert DeVOLL and Patricia M. DeVoll, Plaintiffs-Appellants, v. BURDICK PAINTING, INC. and Bay Area Painters and Tapers

Health Fund, Defendants-Appellees.

No. 93-15366.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 14, 1994.

Decided Sept. 8, 1994.

Michael Willemsen, Palo Alto, CA and Elizabeth Bader, San Francisco, CA, for plaintiffs-appellants.

Muriel B. Kaplan, Saltzman & Johnson Law Corp., San Francisco, CA, for defendant-appellee Burdick Painting; Christina C. Bleuler, Wylie, McBride, Jesinger, Sure & Platten, San Jose, CA, for defendant-appellee Bay Area Painters and Tapers Health Fund.

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

Before: GOODWIN, PREGERSON, and RYMER, Circuit Judges.

GOODWIN, Circuit Judge:

Robert and Patricia DeVoll sued Burdick Painting, Inc., Robert's former employer, and the Bay Area Painters and Tapers Fund ("the Fund"), Robert's former health plan. The DeVolls' complaint set forth three claims: (1) that Burdick discharged Robert for the purpose of interfering with rights protected under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Sec. 1140; (2) that Burdick breached an enforceable promise to maintain certain medical benefits; and (3) that Burdick and the Fund failed to notify the DeVolls of their right under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), 29 U.S.C. Secs. 1161-67, to continue their medical coverage under the Fund. The district court granted summary judgment in favor of the defendants, and the DeVolls appealed. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291 and we affirm.

I. Background

Robert DeVoll is a house painter by trade. Robert's wife, Patricia, suffers from lupus erythematosus and myasthenia gravis. ¹ As of August 1990, Robert had been a member of the Bay Area Painters and Tapers Union ("the Union") for nine years, and had been employed by several different union employers during that time. One of the benefits of union membership was that Robert and his wife were provided medical coverage under the Bay Area Painters and Tapers Health Fund.

The Fund is a multiemployer health plan maintained pursuant to a series of collective bargaining agreements between employer associations in Northern California and the Union's parent organization. Under the collective bargaining agreements, signatory employers are required to pay monthly contributions into the Fund. The Fund is jointly administered by employer and union-appointed trustees, and provides medical coverage to the employees of signatory employers.

In July 1990, Robert went to work for one of the signatory employers, Burdick Painting, Inc., owned and operated by George Burdick. The collective bargaining agreement to which Burdick Painting was a party expired on July 15, 1990, and the Union called a strike. The Union and the employer association signed a new collective bargaining agreement shortly thereafter, but Burdick Painting declined to be a party to this agreement.

On August 9, 1990, George Burdick called a meeting of all his employees. At the meeting, Burdick announced his intention to become a nonunion employer. In response to concerns expressed at the meeting, Burdick assured his employees that if they would continue to work for him, they would receive the same level of wages and benefits they previously received as union workers.

Whether Burdick also held an employee meeting to vote on a private health plan is in dispute. Robert DeVoll testified by deposition that he was aware of no such meeting, and that he had been individually approached at his jobsite by John Cintas. Cintas encouraged Robert to enroll in the Kaiser plan, and said nothing when Robert declined for the stated reason that he believed he was still covered under the Union plan.

Counsel for the Fund determined that an impasse in negotiations between Burdick and the Union had been reached no later than November 1, 1990, whereupon the Fund notified George Burdick that it would no longer accept contributions from Burdick Painting. Robert and Patricia DeVoll received no notice, either from Burdick Painting or the Fund, that their medical coverage under the Fund would be terminated.

In January 1991, Patricia DeVoll called the Fund to inquire about coverage prior to seeking treatment at Stanford Hospital. The Fund informed her that the DeVolls' coverage had terminated as of November 1990. Patricia then made a series of phone calls to officials at both Burdick Painting and the Fund protesting the lack of coverage. George Burdick unsuccessfully tried to convince the DeVolls to enroll in the Kaiser plan, and eventually agreed to pay Robert in cash the monthly premium of $306.23 charged by Kaiser.

On March 3, 1991, general manager John Cintas fired Robert. Cintas claimed that Robert was fired both because of a work slowdown and because Robert had performed unsatisfactory work for two different clients. On October 2, 1992, the DeVolls brought this action in federal district court against both Burdick Painting and the Fund.

II. ERISA Sec. 510

The DeVolls claim that Burdick Painting discharged Robert for the purpose of interfering with a right protected under Sec. 510 of ERISA--namely, Robert and Patricia's entitlement to medical coverage under the Fund. The district court found that the DeVolls failed to establish a prima facie case under ERISA because they failed to produce any evidence of Burdick's specific intent to engage in conduct proscribed by Sec. 510. ² The DeVolls respond that the district court erred because there were triable issues of fact that precluded summary judgment. Specifically, the DeVolls point to (1) the proximity between the dispute over the DeVolls' loss of benefits under the Fund and the termination of Robert's employment, and (2) Robert's deposition testimony regarding Burdick's motive.

The DeVolls argue correctly that a plaintiff has a very low threshold in establishing a prima facie case under ERISA. See, e.g., Kimbro v. Atlantic Richfield Co., 889 F.2d 869, 881 (9th Cir.1989), cert. denied, 498 U.S. 814, 111 S.Ct. 53, 112 L.Ed.2d 28 (1990); cf. Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981) (discussing parties' burdens of proof under Title VII where there is no direct evidence of a specific intent to discriminate). However, appellants focus on the wrong issue. The DeVolls' claim is that Burdick interfered with their rights under the Union Fund, not under the subsequent nonunion plan carried by Kaiser. Federal law does not prohibit an employer from altering the package of medical benefits that it provides its employees, but only from interfering with an employee's use of the benefits provided. See, e.g., Serrato v. John Hancock Life Ins. Co., 31 F.3d 882, 884 (9th Cir.1994) (health care benefits not vested under ERISA); Joanou v. Coca-Cola Co., 26 F.3d 96, 98 (9th Cir.1994) (employers providing employees with ERISA-qualified welfare plans "remain free to unilaterally amend or eliminate such plans without considering the employees' interests.") (emphasis in original). Therefore the district court properly granted summary judgment in favor of the defendants on this claim.

III. The DeVolls' Breach of Promise Claim

The DeVolls argue that Burdick breached a promise he made at the August 9, 1990 meeting (and relied upon by Robert) to provide his workers with health benefits "comparable" to benefits they were then receiving under the Fund. The district court held that this claim, based on state contract law, was preempted by Sec. 514 of ERISA. Section 514 provides that ERISA "supersedes any and all state laws insofar as they may now or hereafter relate to any employee benefit plan ..." 29 U.S.C. Sec. 1144(a).

The DeVolls argue that the district court erred for a number of reasons. First, they contend that, even though this Circuit has held that certain state contract law claims are preempted by ERISA, a "larger and growing" body of out-of-circuit authority has held that state law claims based on promissory estoppel are not preempted. ³ Second, they argue that, because this Court has held that claims based on equitable estoppel are not preempted by ERISA, it would be inconsistent to hold that a claim based on the very similar theory of promissory estoppel is preempted. ⁴ Third, the DeVolls claim that, even if a state law claim based on promissory estoppel is preempted, Congress contemplated that the courts would develop a federal body of common law under ERISA; and this Court, in the interest of justice, should recognize promissory estoppel as a valid claim under ERISA.

The Supreme Court has repeatedly declared the sweep of ERISA preemption to be broad:

"The pre-emption clause is conspicuous for its breadth." Its "deliberately expansive" language was "designed to 'establish pension plan regulation as exclusively a federal concern.' " The key to Sec. 514(a) is found in the words "relate to." Congress used those words in their broad sense, rejecting more limited pre-emption language that would have made the clause "applicable only to state laws relating to the specific subjects covered by ERISA."

Ingersoll-Rand v. McClendon, 498 U.S. 133, 138, 111 S.Ct. 478, 482, 112 L.Ed.2d 474 (1990) (citations omitted). Accordingly, we have also endorsed a broad view of ERISA preemption. "The Ninth Circuit has held that ERISA preempts common law theories of breach of contract implied in fact, promissory estoppel, estoppel by conduct, fraud and deceit, and breach of contract." Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1095 (9th Cir.1985) (citing Blau v. Del Monte Corp., 748 F.2d 1348, 1356-57 (9th Cir.1984), cert. denied, 474 U.S. 865, 106 S.Ct. 183, 88 L.Ed.2d 152 (1985)). We are not free to revisit Ellenburg on this score, and agree with the district court that ERISA...