Lister v. Stark

• Citation: 890 F.2d 941
• Decision Date: 28 November 1989
• Docket Number: No. 89-1821,89-1821
• Parties: 11 Employee Benefits Ca 2362 Arthur LISTER, Plaintiff-Appellant, v. H. Allan STARK, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

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890 F.2d 941 11 Employee Benefits Ca 2362 Arthur LISTER, Plaintiff-Appellant,
v.
H. Allan STARK, et al., Defendants-Appellees. No. 89-1821. United States Court of Appeals,
Seventh Circuit. Argued Sept. 27, 1989.
Decided Nov. 28, 1989.

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Terrence Buehler, Susman, Saunders & Buehler, Chicago, Ill., Joseph S. Buehler, Franks & Filler, Marengo, Ill., for plaintiff-appellant.

Alan S. Gilbert, Jay Conison, Sonnenschein, Carlin, Nath & Rosenthal, Chicago, Ill., for defendants-appellees.

Before CUMMINGS, CUDAHY and FLAUM, Circuit Judges.

CUMMINGS, Circuit Judge.

Arthur Lister sued the Sun Electric Corporation, the Sun Electric Corporation Pension Trust ("Trust") and two trustees of the Trust in state court, seeking a declaration that he was entitled to "uninterrupted service credit for the period from July 1964 to January 1971 for the purpose of calculating his pension benefits." Complaint paragraphs 20(a) and 25(a). The defendants removed the case to federal district court, alleging that Lister's claims were preempted by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Secs. 1001-1461. The defendants then moved to have the case dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. Lister moved to have the case remanded to state court on the ground that his claims were not preempted by ERISA. The district court denied Lister's motion and granted the defendants' motion. We affirm.

I. Facts

Arthur Lister worked for the defendant, Sun Electric Corporation, from July 1964 until March 1970. In March 1970 he left Sun Electric but returned nine months later.

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Lister's complaint alleges that his return was induced in part by Sun Electric's promise that, contrary to the terms of the Sun Electric pension plan, Lister would receive pension service credit for the years 1964 through 1970, as well as for any years he was employed by Sun Electric after 1970.

In 1982, Lister was retired from Sun Electric as part of a cost-cutting program. Because he found employment elsewhere, Lister did not seek his Sun Electric pension benefits until 1987. Upon application for his benefits, Lister was informed by Allan Stark, Vice President and General Counsel of Sun Electric and Trustee for the Sun Electric Corporation Pension Trust, that the calculation of his benefits would not include his years of service prior to his rehiring in 1971. Exclusion of credit for the earlier years is consistent with the terms of Sun Electric's pension plan but not consistent with the alleged oral promise to include these prior years of service in the calculation.

In conformity with Hishon v. King & Spalding, 467 U.S. 69, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984), the district court accepted these factual allegations of the complaint, along with all reasonable inferences therefrom, as true. See also Banner Indus., Inc. v. Central States, Southeast and Southwest Areas Pension Fund, 875 F.2d 1285 (7th Cir.1989). Nevertheless, the district court determined that Lister's claims were preempted by ERISA. Because ERISA does not allow oral modifications of pension plans, the district court dismissed the case.

II. Discussion

A. Removal to Federal Court

"[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. Sec. 1441(a). The parties to this lawsuit are not diverse; hence the original jurisdiction necessary for removal, if any, must be based on "federal question" jurisdiction. Federal question jurisdiction requires that the case arise "under the Constitution, laws, or treaties of the United States." 28 U.S.C. Sec. 1331. As a general matter, a cause of action can only be said to arise under the laws of the United States if the plaintiff's complaint raises a federal issue. Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908). Since federal preemption is most commonly raised as a defense to a plaintiff's claim, the federal issue does not appear on the face of the plaintiff's complaint in cases where this defense is raised. Therefore, a preemption defense cannot be the basis of the original federal jurisdiction necessary for removal to federal court. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987). But the Supreme Court has fashioned an exception to this rule where Congress has completely preempted a given area of state law. This "complete preemption" exception permits recharacterization of a plaintiff's state-law claim to a federal claim so that removal is proper. ¹ Determination of whether a cause of action has been completely preempted is based on the intent of Congress. Id. at 66, 107 S.Ct. at 1547-1548. In Taylor, the Supreme Court held that the language of the jurisdictional

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subsection of ERISA's civil enforcement provisions ² clearly indicates a Congressional intent to make all suits that are cognizable under ERISA's civil enforcement provisions federal question suits. Id.

Thus, proper resolution of the jurisdictional aspect of this case requires two inquiries. The first is whether Lister's complaint raises a federal issue. If it does, then federal jurisdiction is clear and removal was proper. If Lister's complaint does not raise a federal issue, then the second inquiry is whether removal was nevertheless proper under the complete preemption doctrine. Count I of Lister's complaint alleges fraud and Count II alleges breach of an oral contract. Neither count explicitly refers to ERISA although each count asks the court to declare that Lister is entitled to "uninterrupted service credit ... for the purpose of calculating his pension benefits." Plaintiff's complaint at 5 and 6. Although Lister claims entitlement to additional pension benefits, no federal cause of action explicitly appears on the face of his complaint. Nevertheless, Lister's case was properly removed to federal court because under Taylor, Lister's claims are completely preempted. Lister is an ERISA plan participant. ERISA's civil enforcement provisions specifically provide plan participants and beneficiaries with a cause of action to seek increases in their pension benefits. ³ Lister's claims are thus cognizable under ERISA's civil enforcement provisions and are therefore completely preempted. Since this complete preemption confers the necessary original federal jurisdiction, removal of Lister's claims to federal court was proper. ⁴

B. Preemption

Having determined that Lister's claims are completely preempted for federal jurisdiction purposes, it is evident that they are substantively preempted as well. ⁵ Therefore, it is not necessary to analyze the particulars of this substantive preemption. Nevertheless, since the parties to this action relied primarily on cases in which the courts by-passed the jurisdictional issue and focused on substantive preemption, a discussion of these cases is warranted.

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Several circuits have held that ERISA preempts suits alleging breaches of oral modifications of pension plans. See, e.g., Cefalu v. B.F. Goodrich...