McBride v. PLM Intern., Inc.

Decision Date04 June 1999
Docket NumberNo. 97-15433.,97-15433.
PartiesKevin McBRIDE, Plaintiff-Appellant, v. PLM INTERNATIONAL, INC., Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit


Christopher W. Katzenbach, W. Kent Khtikian, Katzenbach and Khtikian, San Francisco, California, for the plaintiff-appellant.

Randall J. Sunshine, Liner Yankelevitz Sunshine Weinhart & Regenstreif, Santa Monica, California, for the defendant-appellee.

Before: D.W. NELSON, BEEZER, and TROTT, Circuit Judges.


The Opinion filed in this case on August 20, 1998, is hereby WITHDRAWN. A new Opinion of this appeal is filed with this order.


TROTT, Circuit Judge:


Kevin McBride appeals the district court's order granting summary judgment in favor of his employer PLM International, Inc. The district court dismissed his case on the ground that McBride's discharge in conjunction with the termination of the employee benefit plan left him without the "participant" status required to give him standing to sue under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (1994). The district court relied on several Ninth Circuit cases which have held that a claimant's status is to be evaluated at the time of filing suit. These cases, however, do not control McBride's claim. Policy considerations stemming from ERISA mandate that participant status and standing under its whistleblower provision be adjudged at the time of the alleged ERISA violation. To hold otherwise would allow an employer simply by wrongfully firing a whistleblowing employee and then terminating the Plan, wrongfully or otherwise, to deprive that employee of the right to sue the employer for retaliation prohibited by ERISA. Such a holding would undercut the very protections ERISA was designed to afford. We have jurisdiction under 28 U.S.C. § 1291, and we reverse and remand for further proceedings.


Kevin McBride was hired by PLM International, Inc. ("PLM") in March of 1988 to work in its TEC department. Prior to his termination on August 9, 1994, he was promoted twice and received two bonuses in addition to several salary increases. During his employment, McBride's performance evaluations noted that his work was excellent or outstanding. Letters accompanying the bonuses commended him for his good work and significant contributions to the company.

In early April 1994, McBride met with Robert Tidball, President and CEO of PLM, and Douglas Goodrich, McBride's supervisor and a PLM Senior Vice President. They informed McBride that he had a bright future with the company and that he was in line for a promotion to the new position of Director of Operations for the TEC department. Also in April of 1994, McBride submitted a written request for payment of commissions earned during the previous three years. He met with his supervisor, Goodrich, to discuss the commissions. Goodrich informed McBride that he did not think PLM had to pay the commissions, but if the legal department believed it must, PLM would pay. The discussion became quite animated, culminating in McBride's threat to sue PLM if the commissions were not paid. After the meeting, Goodrich wrote a confidential memorandum to the PLM personnel department describing McBride's conduct and instructing that the letter be placed in McBride's file. After a few days, McBride apologized to Goodrich for his behavior. Goodrich informed McBride that if he was insubordinate again, he would be terminated. PLM paid the commissions to McBride one month after his written request.

After this incident, Goodrich requested that McBride prepare two reports for him. Goodrich testified that McBride never turned in the reports, only the raw data. McBride testified that he had turned in the two requested reports.

McBride was a participant in and beneficiary of both the PLM International Employee Profit Sharing and Tax Advantaged Savings Plan ("401-K Plan") and the PLM International Employee Stock Ownership Plan ("ESOP") (collectively "the Plans"). McBride was also an active member of the Employee ESOP Committee. In the spring of 1994, PLM announced its intention to terminate the ESOP and proposed to convert each share of PLM preferred stock held by the ESOP to one share of PLM common stock. McBride ardently opposed PLM's proposal and called for a meeting of employees to discuss the ESOP termination. He alleged that the preferred stock had a redemption price or value of $13.00 per share and the common stock had a market price of $3.06 per share. He argued that the conversion of the preferred shares to common stock would result in the loss of the guaranteed dividends payable on the preferred shares and the reduction in value equal to the difference between the redemption price of the preferred stock and the market price of the common stock. McBride expressed his opposition personally to both Tidball and Goodrich.

PLM filed a request with the IRS for a determination of whether the termination of the ESOP would affect the ESOP's tax status or qualification. In July 1994, McBride and other members of the Employee ESOP Committee sent a letter to the U.S. Department of Labor asking it to submit comments to the IRS on the proposed ESOP termination. In the letter, McBride and other committee members provided information on the ESOP and the effect its termination would have on PLM employees.

PLM management was upset by the committee's letter and offered to pay for an outside attorney to review the propriety of the ESOP termination if the committee would withdraw the letter to the Labor Department. All committee members, except McBride, agreed to this proposal. They withdrew the letter. On August 9, 1994, less than three weeks after the letter incident, PLM discharged McBride. The proffered reasons were McBride's insubordinate conduct toward his supervisors and his failure to produce the requested reports.

In January 1995, PLM terminated the ESOP. All participants, including McBride, received a lump sum distribution of their benefits under the Plan. They received the value of the common rather than the preferred stock. Also, after McBride's termination, Goodrich held an employee meeting in which he allegedly stated that McBride was not discharged because of his opposition to the ESOP termination, but because of his work performance and poor attitude.

In his original complaint, McBride alleged he was terminated by PLM in retaliation for his opposition to the prospective termination of the ESOP and the 401-K Plan. McBride asserted four claims for relief: (1) violation of section 1140 of ERISA, the "whistleblower" section; (2) a supplemental state law claim for wrongful termination in violation of public policy; (3) a supplemental state law claim for defamation arising from PLM's publication of statements criticizing McBride after his termination; and (4) another state law claim for breach of the covenant of good faith and fair dealing from the terms of the Certificate of Designations, governing the preferred shares of PLM stock held by the ESOP.

PLM successfully moved, under Federal Rule of Civil Procedure 12(b)(6), for dismissal of the fourth cause of action for breach of the covenant of good faith and fair dealing on the basis that the claim was preempted by ERISA. Subsequently, McBride submitted an amended complaint which excluded the fourth cause of action. However, McBride appeals the decision of the district court finding this cause of action preempted by ERISA.

PLM then brought a motion for summary judgment alleging that McBride lacked standing to bring the ERISA claim. The district court granted summary judgment and dismissed the suit, holding that McBride failed to qualify as a "participant" under ERISA at the time of filing the lawsuit and therefore lacked standing to assert a claim for relief in federal court. Further, the court vacated its earlier rulings and dismissed the state claims on the ground that it lacked jurisdiction.


Questions of federal subject matter jurisdiction are questions of law reviewed de novo. Kruso v. Int'l Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989). A grant of summary judgment is reviewed de novo. Covey v. Hollydale Mobilehome Estates, 116 F.3d 830, 834, amended by 125 F.3d 1281 (9th Cir.1997).

A. Standing to Sue Under ERISA

1. Participant Status Under Whistleblower Provision

ERISA allows a "participant" in an employee benefit plan to bring a civil action to enforce his rights under the terms of the plan or to enforce the provisions of ERISA. Section 1132, the civil enforcement provision of ERISA, provides that a civil action may only be brought by a participant, a beneficiary, a fiduciary, or the Secretary of Labor. See 29 U.S.C. § 1132 (1994). The list of potential claimants in section 1132 is exclusive. Harris v. Provident Life & Accident Ins. Co., 26 F.3d 930, 933 (9th Cir.1994).

ERISA defines the term "participant" to include "any employee or former employee of an employer, or any member or former member of an employee organization, who is or may become eligible to receive a benefit of any type from an employee benefit plan." 29 U.S.C. § 1002(7).

The Supreme Court has defined the term "participant" to mean "either employees in, or reasonably expected to be in, currently covered employment, or former employees who have . . . a reasonable expectation of returning to covered employment or who have a colorable claim to vested benefits." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) (citations and internal quotation marks omitted). The Court also construed the "may become eligible" for benefits language of section 1002(7) to mean that "a claimant must have a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements will be fulfilled in the future." Id. at 117-18, 109...

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