Johnson v. Trans World Airlines, Inc.

• Decision Date: 06 December 1983
• Citation: 196 Cal.Rptr. 896,149 Cal.App.3d 518
• Court: California Court of Appeals Court of Appeals
• Parties: John E. JOHNSON, Plaintiff and Appellant, v. TRANSWORLD AIRLINES, INC., Defendant and Respondent. Civ. 67696.

Page 896

196 Cal.Rptr. 896

149 Cal.App.3d 518

John E. JOHNSON, Plaintiff and Appellant, v. TRANSWORLD AIRLINES, INC., Defendant and Respondent.

Civ. 67696.

Court of Appeal, Second District, Division 4, California.

Dec. 6, 1983.

[149 Cal.App.3d 520] Fred L. Wright, Torrance, for plaintiff and appellant.

Kadison, Pfaelzer, Woodard, Quinn & Rossi, James C. Roberts and John L. Carlton, Los Angeles, for defendant and respondent.

AMERIAN, Associate Justice.

BACKGROUND

This is an appeal by John E. Johnson from a judgment of dismissal entered on April 20, 1982. The first amended complaint was dismissed after a demurrer by respondent, Transworld Airlines, Inc. (TWA), was sustained without leave to amend on July 14, 1981. ¹

In the original complaint filed by appellant on December 22, 1980, appellant sought to recover damages against TWA under common law theories of wrongful termination, bad faith, fraud and deceit arising TWA demurred to the complaint upon grounds that appellant's common law claims were preempted by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (ERISA), a federal statute, and that exclusive jurisdiction over the cause was vested in the federal courts. ² The demurrer was sustained on May 8, 1981.

from appellant's discharge as an employee of TWA on July 9, 1979. The complaint alleged that TWA terminated appellant's 18-year employment with TWA for the "sole purpose of depriving [him] of his pension benefits which would have accrued six months from the date of his termination."

Thereafter, on May 21, 1981, appellant filed a first amended complaint. The first cause of action is substantially similar to the original complaint with the exception that references to "pension benefits" in the original complaint are labeled in the first amended complaint as "employee benefits." Another difference between the two complaints is the allegation in the first amended complaint that the "employee benefits" which TWA promised to provide to appellant included five weeks paid vacation per year, annual accrued sick leave, free lifetime travel passes upon retirement, stock and thrift plan, medical and hospitalization plan, dental plan, $50,000 life insurance policy, disability policy and retirement plan.

The first cause of action alleges that appellant "was discharged from his employment with ... TWA for the sole purpose of depriving [him] of his employee benefits ... some of which benefits would have accrued six months from the date of his termination." The first amended complaint prays for damages for loss of earnings and loss of earning capacity, loss of employee benefits, general damages and punitive damages.

TWA again demurred contending that, changes in the amended complaint notwithstanding, the crux of appellant's claim remained the allegedly wrongful discharge for the sole purpose of interfering with the attainment of benefits provided in one or more employee benefit plans. TWA again urged that the state court lacked subject matter jurisdiction because the misconduct alleged in the first amended complaint was of the kind regulated by ERISA and that ERISA preempted appellant's state law claims.

The demurrer to the first cause of action of the first amended complaint was sustained on grounds that the complaint failed to state a cause of action.

ISSUE

The issue in this appeal is whether appellant's common law claims for wrongful termination, bad faith, fraud and deceit are preempted by the provisions of ERISA, where the alleged employer misconduct concerns discharge solely for the purpose of denying employee benefits to appellant.

PROVISIONS OF ERISA PERTINENT TO THE APPEAL

Before reaching the merits of this appeal it is necessary to recite the provisions of ERISA which are relevant in this case.

Section 1144(a) provides, inter alia, "the provisions of this subchapter [subchapter I--protection of employee benefit rights] and subchapter III [plan termination insurance] 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." Subdivision (c)(1) of this same section provides that "the term 'State Law' includes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State...."

Section 1003(a) provides, in part, "[subchapter I] shall apply to any employee benefit plan if it is established or maintained--[p ] (1) by any employer engaged in commerce or in any industry or activity affecting commerce; or [p ] (2) by any employee organization or organizations representing employees engaged in commerce or in any Section 1002 defines the terms " 'employee welfare benefit plan,' " " 'employee pension benefit plan,' " and " 'employee benefit plan.' " An employee welfare benefit plan is "any plan ... which ... is hereafter established or maintained ... for the purpose of providing for its participants or their beneficiaries ... (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits ...." (§ 1002(1).) An employee pension benefit plan is described as "any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program--[p ] (A) provides retirement income to employees, or [p ] (B) results in a deferral of income by employees for periods extending to the termination of covered employment or beyond, regardless of the method of calculating the contributions made to the plan, the method of calculating the benefits under the plan or the method of distributing benefits from the plan." (§ 1002(2).) " '[E]mployee benefit plan' or 'plan' means an employee welfare benefit plan or an employee pension benefit plan or a plan which is both an employee welfare benefit plan and an employee pension benefit plan." (§ 1002(3).)

industry or activity affecting commerce; or [p ] (3) by both."

Section 1140 provides in pertinent part that, "It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary ... [ ( ]of an employee benefit plan[ ) ] ... for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan ...."

Finally, section 1132(a) provides that "(a) A civil action may be brought-- [p] (1) by a participant or beneficiary--[p ] (A) for the relief provided for in subsection (c) of this section, or [p] (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan; [p] .... [p] (3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan; ..." Subdivision (e)(1) of section 1132 further provides that, "[e]xcept for actions under subsection (a)(1)(B) of this section, the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by the Secretary or by a participant, beneficiary, or fiduciary. State courts of competent jurisdiction and district courts of the United States shall have concurrent jurisdiction of actions under subsection (a)(1)(B) of this section."

DISCUSSION

In California an employee may bring a suit against a former employer for wrongful termination of employment contract and breach of the implied-in-law covenant of good faith and fair dealing in employment contracts. The employee is not limited to contractual remedies but may maintain a tort action and recover damages, including punitive damages, which are traditionally recoverable in such actions where discharge of the employee violates fundamental principles of public policy. (Tameny v. Atlantic Rich field Co. (1980) 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330; Cleary v. American Airlines, Inc. (1980) 111 Cal.App.3d 443, 168 Cal.Rptr. 722; Pugh v. See's Candies, Inc. (1981) 116 Cal.App.3d 311, 171 Cal.Rptr. 917.)

For purposes of this appeal, since the demurrer was sustained, the truth of the allegations of the first cause of action will be assumed. (See Glaire v. LaLanne-Paris Health Spa, Inc. (1974) 12 Cal.3d 915, 117 Cal.Rptr. 541, 528 P.2d 357; Serrano v. Priest (1971) 5 Cal.3d 584, 591, 96 Cal.Rptr. 601, 487 P.2d 1241; Tameny v. Atlantic Richfield Co., supra, 27 Cal.3d 167, 170, 164 Cal.Rptr. 839, 610 P.2d 1330.) Under this principle, the first cause of action of the first amended complaint does state a cause of action for wrongful termination, fraud, bad faith and deceit because it is alleged, inter alia, that appellant was discharged solely for the purposes of depriving him of various employee benefits; i.e., he was discharged without good cause.

The question thus presented is whether appellant's common law claims are preempted by ERISA. We conclude that, with the exception of his claims to lifetime travel passes and under the stock and thrift plan, his common law claims are preempted.

The first step of our inquiry here is whether the employee benefits enumerated in appellant's first amended complaint fall within the purview and regulation of ERISA. Under the definitions of employee benefit plan in section 1002 and its subdivisions, it is clear that most of the employee benefits enumerated in the first amended complaint are part of a comprehensive "employee benefit plan" provided by TWA to its employees. ³ Having reached this conclusion, the next step in our...