Lewis v. LOCAL 382, IBEW

• Decision Date: 12 July 1999
• Docket Number: No. 24965.,24965.
• Citation: 518 S.E.2d 583,335 S.C. 562
• Parties: Michael O. LEWIS, As Personal Representative of the Estate of N.G. Lewis, Deceased, Petitioner, v. LOCAL 382, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS (AFL-CIO), Davis Self, Larry Poole, Jerome Jenkins, Doris M. Jones, Bill Davis, John C. Davis and Ronald Goodale, Defendants, Of Whom Local 382, International Brotherhood of Electrical Workers (AFL-CIO) is, Respondent.
• Court: South Carolina Supreme Court

335 S.C. 562

518 S.E.2d 583

Michael O. LEWIS, As Personal Representative of the Estate of N.G. Lewis, Deceased, Petitioner, v. LOCAL 382, INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS (AFL-CIO), Davis Self, Larry Poole, Jerome Jenkins, Doris M. Jones, Bill Davis, John C. Davis and Ronald Goodale, Defendants, Of Whom Local 382, International Brotherhood of Electrical Workers (AFL-CIO) is, Respondent.

No. 24965.

Supreme Court of South Carolina.

Heard December 15, 1998.

Decided July 12, 1999.

Rehearing Denied August 17, 1999.

Henry Hammer and Howard Hammer, of Hammer, Hammer, Carrigg & Potterfield, of Columbia, and Scott Elliott, of Elliott and Elliott, of Columbia, for petitioner.

Herbert Buhl, III, of Columbia, and Terry R. Yellig, of Sherman, Dunn, Cohen, Leifer, & Yellig, of Washington, D.C., for respondent.

WALLER, Justice:

We granted certiorari to review the Court of Appeals' opinion in Lewis v. Local 382, Int'l Brotherhood of Electrical Workers, 324 S.C. 412, 481 S.E.2d 135 (Ct.App.1997). We affirm in result.

FACTS¹

Lewis, an electrician,² was a member of the International Brotherhood of Electrical Workers (IBEW), Local # 382, for approximately 30 years. In 1987, his membership in the union lapsed when he continued to work for an employer which had been declared "in difficulty" by the IBEW.³ In February, 1988, the IBEW informed Lewis he was ineligible to receive retirement benefits from the IBEW Pension Benefit Fund because he was no longer a member in good standing.⁴ Lewis brought this action seeking damages for violation of the South Carolina Right-to-Work Act, S.C.Code Ann. §§ 41-7-10 through -90 (Rev.1986 & Supp.1997).⁵ The jury returned a verdict in favor of Lewis against the union and awarded $82,560.00 in actual damages and $25,000 in punitive damages. In a well reasoned opinion, Judge Anderson, writing for a majority of the Court of Appeals, held Lewis' claims were preempted by federal law. We agree and, accordingly, affirm in result.⁶

ISSUES

1. Is the federal court's order remanding to state court, preclusive on the preemption issue?

2. Is Lewis' claim preempted under 28 U.S.C. § 185 of the Labor Management Relations Act (LMRA)?

3. Should the Court of Appeals have addressed Lewis' claim under the South Carolina Right-To-Work Act?

4. Is Lewis' claim preempted under § 514(a) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1144(a)?

1. PRECLUSION

We concur in the Court of Appeals' holding that the federal court's order remanding to state court is not preclusive on the issue of preemption.⁷

As noted by the Court of Appeals, the Fourth Circuit has specifically held a district court's findings incident to an order of remand have no preclusive effect. Nutter v. Monongahela, 4 F.3d 319 (4th Cir.1993) (district court's holding that ERISA and LMRA did not preempt plaintiff's state-law claims did not prevent defendant from raising preemption as a defense in state court).⁸ Accordingly, the Court of Appeals properly held the federal court's remand order was not preclusive. Accord Nichols v. Amalgamated Clothing, 305 S.C. 323, 408 S.E.2d 237 (1991)

(addressing merits of preemption issue after remand from federal court).

2. PREEMPTION UNDER LMRA

If a state-law cause of action does not exist independently of a labor contract, it is pre-empted by Section 301 of the Labor Management Relations Act (LMRA). Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985); Nash v. AT & T Nassau Metals, 298 S.C. 428, 381 S.E.2d 206 (1989); Butts v. AVX Corp., 292 S.C. 256, 355 S.E.2d 876 (Ct.App.1987). In Nash v. AT & T Nassau Metals, 298 S.C. 428, 381 S.E.2d 206, 208 (1989), we stated:

This test is one of whether the state claim exists independently of the collective bargaining agreement or whether it is "inextricably intertwined" with a consideration of the terms of the agreement. If the state claim does not exist independently of the agreement, it is preempted by federal law.

The Court of Appeals found Lewis' claim was substantially dependent upon an analysis of the IBEW constitution because interpretation of the constitution was essential to a determination of whether Lewis had any property rights in the pension benefit fund. We agree. Lewis' tort claim intrinsically relates to the nature of the IBEW constitution. His complaint states that the IBEW, "in violation of the Right-To-Work Act, attempted to interfere with [Lewis'] exercise of his Right-To-Work and did, thereby cause him to lose his pension benefits," and that as a result Lewis "has suffered the loss of his pension benefits." It is impossible to ascertain, without reference to IBEW's constitution, whether the union acted properly in denying Lewis his pension benefits. Accordingly, we concur with the Court of Appeals' analysis that resolution of the case was "substantially dependent" upon the union's constitution so as to be preempted under the LMRA.⁹

Finally, Lewis relies on this Court's opinion in Layne v. Int'l Brotherhood of Elec. Workers, 271 S.C. 346, 247 S.E.2d 346 (1978), in which we held, under similar facts, the plaintiffs state law claim under the Right-To-Work Act was not preempted by the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA), 29 U.S.C. s 411 et seq. Layne dealt with Section 413 of the LMRDA which specifically states, "Nothing contained in this subchapter (29 U.S.C. §§ 411-415) shall limit the rights and remedies of any member of a labor organization under any State or Federal law or before any court or other tribunal, or under the constitution and bylaws of any labor organization." However, Section 413 of the LMRDA limits its application to that subchapter of the LMRDA.¹⁰ Section 413 of the LMRDA does not apply to Section 301 of the LMRA. To hold otherwise would completely eviscerate the preemption provisions of Section 301 of the LMRA.¹¹

3. PREEMPTION UNDER ERISA

Finally, a majority of the Court of Appeals held Lewis' claim was preempted by Section 514(a) of ERISA as his claim for damages "related to" an employee benefit plan within the scope of ERISA's preemption clause.¹² It held the resolution of Lewis' claim directly affected the pension fund as it "potentially alters the criteria for receipt of benefits." 481 S.E.2d at 142. We agree.

Any and all State laws insofar as they relate to employee benefit plans are preempted by ERISA. 29 U.S.C. § 1144(a); Duncan v. Provident Mut. Life Ins. Co. of Philadelphia, 310 S.C. 465, 427 S.E.2d 657 (1993). This Court has recognized that the pre-emptive effect of ERISA is a broad one. Baker Hosp. v. Isaac, 301 S.C. 248, 391 S.E.2d 549 (1990). A state law "relates to" an ERISA-governed employee benefit plan, "if it has a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 2896, 77 L.Ed.2d 490 (1983). Further, a state law "relates to" an ERISA plan if the rights or restrictions it creates are predicated on the existence of such a plan. Ingersoll-rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990). However, those state actions which affect employee benefit plans in "too tenuous, remote or peripheral a manner" do not relate to the plan. Shaw v. Delta Air Lines, supra.

A state rule of law may be preempted even though it has no direct nexus with ERISA plans if its effect is to dictate or restrict the choices of ERISA plans with regard to their benefits, structure, reporting and administration, or if allowing states to have such rules would impair the ability of a plan to function simultaneously in a number of states. Keystone Chapter, Assoc. Builders v. Foley, 37 F.3d 945, 955 (3d Cir.1994), cert. denied, 514 U.S. 1032, 115 S.Ct. 1393, 131 L.Ed.2d 244 (1995).

Here, it is inescapable that Lewis' claim is predicated upon the existence of IBEW's plan, i.e., is premised on the notion that the union's violation of the Right-To-Work Act resulted in the loss of his pension. Accordingly, we affirm the Court of Appeals' ruling.

In dissent, Judge Cureton points to a recent United States Supreme Court opinion narrowing the scope of ERISA pre-emption. New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655-657, 115 S.Ct. 1671, 1677, 131 L.Ed.2d 695 (1995). In Travelers, the Court noted the "starting presumption that Congress does not intend to supplant state law," 514 U.S. at 654,115 S.Ct. at 1676, stating if "relate to" were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes pre-emption would never run its course, for "really, universally, relations stop nowhere." The Travelers court acknowledged, however, that "a state law might produce such acute, albeit indirect, economic effects, by intent or otherwise, as to force an ERISA plan to adopt a certain scheme of substantive coverage or effectively restrict its choice of insurers, and that such a state law might indeed be pre-empted under § 514." 514 U.S. at 668,115 S.Ct. at 1683. Even under the more narrow view of Travelers, allowing Lewis' claim in this case would essentially render the union liable for the benefits, notwithstanding its constitutional provisions to the effect that only members in good standing are entitled to benefits. As such, it would, by indirect means, force the union to adopt a certain scheme of substantive coverage contrary to its constitutional provisions. Such a holding is contrary to Travelers.

Finally, the dissent cites several cases for the proposition that ERISA does not preempt state claims where employees merely seek lost pension benefits as a measure of damages. See Pizlo v. Bethlehem Steel Corp., 884 F.2d 116 (4th Cir. 1989)

; Hospice of Metro Denver, Inc. v. Group Health Ins. of Oklahoma, Inc., 944 F.2d 752 (10th Cir.1991); Howard v. Indiana Michigan Power Co., 812 F.Supp. 135 (S.D.Ind.1992); Schlenz v. United Airlines, Inc., 678 F.Supp. 230 (N.D.Cal. 1988). We are unpersuaded by...