McDonald v. Artcraft Elec. Supply Co.

• Decision Date: 09 October 1991
• Docket Number: Civ. A. No. 90-3051.
• Citation: 774 F. Supp. 29
• Parties: Douglas McDONALD, et al., Plaintiffs, v. ARTCRAFT ELECTRIC SUPPLY COMPANY, a/k/a Consolidated Electric Supply, et al., Defendants.
• Court: U.S. District Court — District of Columbia

774 F. Supp. 29

Douglas McDONALD, et al., Plaintiffs, v. ARTCRAFT ELECTRIC SUPPLY COMPANY, a/k/a Consolidated Electric Supply, et al., Defendants.

Civ. A. No. 90-3051.

United States District Court, District of Columbia.

October 9, 1991.

Lynn Miller, James R. Klimaski, Thomas A. Beckett, Klimaski, Miller & Smith, Washington, D.C., for plaintiffs.

Gil A. Abramson, Hogan & Hartson, Baltimore, Md., for defendants.

MEMORANDUM OPINION

FLANNERY, District Judge.

I. Introduction

In March of 1989, Defendant Artcraft Electrical Supply ("Artcraft") hired Plaintiff Douglas McDonald ("McDonald") as a sales representative. One year later, in March of 1990, Artcraft terminated McDonald's employment. Plaintiffs allege, and Defendants do not dispute, that while McDonald was employed by Artcraft, his compensation included enrollment in the Consolidated Electric Supply Employee Group Medical Plan ("the Plan"). The Plan, which is self-insured, is funded, operated and administered by Defendant Wilcox and Gibbs. All Parties agree that the Plan is governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461.

In October of 1989, Mr. McDonald was diagnosed as having esophageal cancer.¹ He underwent surgery in November of 1989 and returned to work in February of 1990. A month later, Mr. McDonald was required to spend an additional week in the hospital for treatment of post-surgical complications. On March 12, 1990, the day he returned to work following his second hospitalization, Artcraft informed Mr. McDonald that his employment had been terminated as of March 9, 1991.

Mr. McDonald filed this action against his employer and its parent corporations on December 17, 1990. He alleged that he was fired because Artcraft did not want to continue to pay for his medical expenses. He further alleged that Artcraft failed to provide him with timely, complete or accurate information regarding the status of his continuing medical and life insurance coverage. Additionally, Mr. McDonald claimed that Artcraft failed to pay him all of his accrued compensation.

In this suit, based both on diversity and federal question jurisdiction, McDonald raises numerous state law claims² in addition to alleging that Artcraft violated ERISA.³ Defendants have moved for partial summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Pursuant to that Rule, the Court, for the purposes of this motion, will view the facts in the light most favorable to Defendants.

II. Preemption

Defendants argue that they are entitled to summary judgment on each of the state law claims on the grounds that they are preempted by the federal ERISA statute. With the exception of Mr. McDonald's claim for wages due and owing, the Court agrees with Defendants for the reasons set forth below.

The preemption clause of ERISA provides that ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA. 29 U.S.C. § 1144(a). The Supreme Court has repeatedly ruled that Congress intended for this clause to be read expansively. "The breadth of ERISA's pre-emptive reach is apparent from that section's language. A law `relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan.... Congress used the words `relates to' ... in their broad sense." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-900, 77 L.Ed.2d 490 (1983) (footnotes omitted).

"The pre-emption clause is conspicuous for its breadth." FMC Corp. v. Holliday, 498 U.S. ___, ___, 111 S.Ct. 403, 407 112 L.Ed.2d 356 (1990). Its "deliberately expansive" language was designed to "establish pension plan regulation as an exclusively federal concern." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987) (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523, 101 S.Ct. 1895, 1906, 68 L.Ed.2d 402 (1981)).

Ingersoll-Rand Co. v. McClendon, ___ U.S. ___, ___, 111 S.Ct. 478, 482, 112 L.Ed.2d 474 (1990).

Not only has "relates to" been read broadly, but "State law" has a comprehensive statutory definition. "To underscore its intent that ERISA's preemption clause be expansively applied, Congress used equally broad language in defining the `State law' that would be pre-empted. Such laws include `all laws, decisions, rules, regulations, or other State action having the effect of law.' 29 U.S.C. § 1144(c)(1)." Id., 111 S.Ct at 483.⁴

The facts in Ingersoll-Rand are similar to those in this case. Ingersoll-Rand fired Perry McClendon who had worked as a salesperson for the company for over nine years. McClendon brought a state law wrongful discharge claim based in contract and tort law, claiming that the reason for his termination was the company's desire to avoid making contributions to his pension fund.

The Court ruled that ERISA's remedies are exclusive. While the state law did not purport to regulate employee benefit plans and conditions, the state law claims were related to an ERISA plan and were, therefore, preempted by ERISA.

The purpose of ERISA's preemption clause is to ensure uniformity of employee benefits law. The Court held that allowing a state claim based on an employee benefit-evading motive would undermine that congressional purpose.

Allowing state based actions like the one at issue here would subject plans and plan sponsors to burdens not unlike those that Congress sought to foreclose.... Particularly disruptive is the potential for conflict in substantive law. It is foreseeable that state courts, exercising their common law powers, might develop different substantive standards applicable to the same employer conduct.... Such an outcome is fundamentally at odds with the goal of uniformity that Congress sought to implement.

Id. at 484. In fact, ERISA explicitly "protects plan participants from termination motivated by an employer's desire" to avoid paying benefits. Id. at 485.

Nor is Ingersoll-Rand the only case in which the Court has found state claims preempted by ERISA. The Court has consistently reached this result. In Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987), the plaintiff employee had taken a two-month leave of absence due to emotional problems. His employer refused to pay his medical expenses for the period during which he was absent and ultimately fired him when, in protest, he did not return to work. The employee then brought suit for breach of contract, emotional distress, recovery of money owed, wrongful termination and wrongful failure to promote the employee. The Supreme Court held that the employee's state contract and tort claims were preempted by ERISA. Id. at 62-63, 107 S.Ct. at 1545-46. See also, Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987) (claims of "tortious breach of contract," "breach of fiduciary duty," and "fraud in the inducement" to join employee medical benefits plan were preempted by ERISA because they related to employer's administration of employee benefit plan.); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983) (ERISA preempted New York Human Rights Law, which was broader in scope than federal anti-discrimination law, where claim was based on failure to provide medical benefits to pregnant employees.)

Plaintiffs attempt to distinguish this line of cases, first, by arguing that the state claims were preempted in those cases because they were brought in lieu of an ERISA action whereas in the present case, Plaintiffs have brought their state claims in addition to ERISA claims. Plaintiffs, however, have not pointed to language in any of the Supreme Court cases cited above which would indicate that the state law claims could somehow be resurrected by simply joining them to an ERISA claim based on the same employer conduct underlying the state claims. Nor is such a result desirable. The Supreme Court has held that ERISA's legislative history makes clear that Congress was concerned with uniformity in the laws governing employer conduct related to employee benefits. This goal cannot be achieved if an employer is bound not only by ERISA, but also by the substantive law of each state. Rather, the lesson of the Supreme Court cases is that when a claim relates to an ERISA-governed plan, the plaintiff's sole avenue of relief is to bring an ERISA action.

Secondly, Plaintiffs urge the Court to look to § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, the law on which the ERISA preemption clause was modeled. Based on LMRA case law, Plaintiffs conclude that the preemption issue should turn on whether resolution of the state law issue necessitates reference to the Plan document. The problem with Plaintiffs' argument is that the Supreme Court was conscious of the LMRA case law when it determined the breadth of ERISA preemption. In fact, the Court specifically cited the LMRA in ruling that ERISA's preemptive force is broad enough to reach not only claims based directly on plan documents, but any claim even indirectly related to the administration of an ERISA plan.

"The conclusion that ERISA's civil enforcement section was intended to be exclusive is supported, first, by the language and structure of the civil enforcement provisions, and second, by legislative history in which Congress declared that the preemptive force of 29 U.S.C. § 1132(a) was modeled on the exclusive remedy provided by § 301 of the LMRA." Pilot Life, supra, 481 U.S. at 52, 107 S.Ct. at 1555. The Court went on to hold that the analogy to LMRA did not lead to the conclusion, as Plaintiffs argue, that only controversies over the plan documents are preempted. In fact, the LMRA analogy led the Court to rule that all related state law claims are preempted by ERISA: "The expectations that a federal common law of rights and obligations under ERISA-regulated plans...