Olson v. General Dynamics Corp.

• Citation: 951 F.2d 1123
• Decision Date: 20 December 1991
• Docket Number: No. 90-55688.,90-55688.
• Parties: Roger OLSON, Plaintiff-Appellant, v. GENERAL DYNAMICS CORPORATION, a foreign corporation; Allied Signal, Inc., a foreign corporation; Amex Systems Corporation (a wholly owned subsidiary of Allied Signal Inc.); Science Applications International Corporation, a foreign corporation; SAIC Range Systems, a California corporation and Does 1 through 50 inclusive, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

951 F.2d 1123

Roger OLSON, Plaintiff-Appellant, v. GENERAL DYNAMICS CORPORATION, a foreign corporation; Allied Signal, Inc., a foreign corporation; Amex Systems Corporation (a wholly owned subsidiary of Allied Signal Inc.); Science Applications International Corporation, a foreign corporation; SAIC Range Systems, a California corporation and Does 1 through 50 inclusive, Defendants-Appellees.

No. 90-55688.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 9, 1991.

Decided December 20, 1991.

Norman Allenby, Hillyer & Irwin, San Diego, Cal., for plaintiff-appellant.

Mark S. Pulliam and Matthew L. Lalli, Latham & Watkins, San Diego, Cal., for defendants-appellees.

Before TANG, REINHARDT and WIGGINS, Circuit Judges.

WIGGINS, Circuit Judge:

Roger Olson appeals the district court order granting summary judgment in favor of General Dynamics, Allied-Signal, Science Applications International Corporation ("SAIC"), and SAIC Range Systems (collectively, "the appellees"). The district court ruled that Olson's state law fraud claim relates to an employee benefit plan, and is therefore preempted by § 514(a), 29 U.S.C. § 1144(a), of the Employee Retirement Income Security Act ("ERISA"). 29 U.S.C. §§ 1001 et seq. The court also refused to grant Olson declaratory relief under 28 U.S.C. § 2201, holding that to formulate a federal common law remedy would defeat the purpose of the scheme Congress created in ERISA. Olson challenges both of these rulings in this appeal. The district court had jurisdiction under 29 U.S.C. § 1132(e), and we have jurisdiction under 28 U.S.C. § 1291. We affirm.

BACKGROUND

Roger Olson was an employee with the Range Systems product line of General Dynamics from July 1955 until April 1986, at which time General Dynamics sold that line to Amex Systems, Inc., a subsidiary of Allied-Signal Inc. At the time of the sale, executives of both General Dynamics and Amex told Olson and the other Range Systems employees that they would be offered jobs with Amex, and General Dynamics promised Amex that it would not attempt to rehire any of those employees for a two-year period following the sale. This case is based upon the following statement made by the President of Amex to the Range System employees at the time of the sale (and before Olson decided to accept Amex' job offer): "I commit to you that in no way will you be injured. On the bottom line, you will be equal or better to sic your present position."

Olson accepted the job with Amex in April 1986. In January 1988, Amex sold the Range Systems product line to SAIC, where Olson worked until his retirement in June 1988. Olson participated in the employee benefit plan while he was employed by each of these three companies — General Dynamics, Amex and SAIC. Olson claims that the benefits he received upon retirement from SAIC were less than he would have received had he retired from General Dynamics.

Olson filed suit in state court against General Dynamics, Amex and SAIC, alleging that the level of benefits he would receive upon retirement was misrepresented to him at the time Range Systems was sold by General Dynamics to Amex. The defendants removed the case to federal court and moved for summary judgment on the first amended complaint. The district court granted the motion on the ground that Olson's fraud claim is preempted by ERISA. The district court order reads in part:

The court finds that plaintiff's fraud claim is preempted by ERISA. A state claim, in this case a claim of fraud, is preempted if it relates to the employee benefit plan. "The phrase `relates to' is given its broad common-sense meaning, such that a state law `relates to' a benefit plan in the normal sense of the phrase, if it has a connection with or reference to such a plan." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 1553, 95 L.Ed.2d 39 (1987).

... Olson's claim relates to the benefit plan: he is claiming as a plan participant at AMEX or as a past participant at General Dynamics that he should be receiving a level of benefits which he is not. There is no allegation that he has been denied any benefits due him under either plan.

ER ex. 39 at 2-3. After distinguishing two Ninth Circuit cases upon which Olson relies, the district judge wrote:

Olson is suing as a participant in the AMEX plan who doesn't like the level of benefits and believes that the level of benefits was misrepresented. Even if there was a misrepresentation, and the court does not find that there was one, his claim arises as a participant in both ERISA plans and consequently relates to those plans and is preempted.

Id. at 4. And in the portion of the order granting summary judgment on Olson's claim for declaratory relief, the judge ruled as follows:

The court sees no reason to grant Olson's request for declaratory relief under 28 U.S.C. 2201, which is in essence a request to the court to devise a special remedy for Olson's fraud claim. Since the court has ruled that the fraud claim is preempted by ERISA, the court's creation of a remedy for this claim would defeat the scheme created by Congress in ERISA.

Id. at 5.¹ Olson filed a timely notice of appeal from the Order granting summary judgment.

DISCUSSION

We review a grant of summary judgment de novo. Kruso v. Int'l Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, ___ U.S. ___, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990). We must decide, viewing the evidence in the light most favorable to the Olson, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Tzung v. State Farm Fire & Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir.1989).

I.

Section 514(a) of ERISA provides that the Act "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). Section 514(c)(1) indicates that this preemption provision extends to all state common law causes of action — provided, of course, that they relate to an employee benefit plan. 29 U.S.C. § 1144(c)(1); Scott v. Gulf Oil Corp., 754 F.2d 1499, 1504 (9th Cir.1985). As the Supreme Court has noted, this preemption clause is "deliberately expansive, and designed to establish pension plan regulation as exclusively a federal concern." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987) (internal quotation omitted). Consistent with that purpose, "the phrase `relate to' is given its broad commonsense meaning, such that a state law `relates to' a benefit plan in the normal sense of the phrase, if it has a connection with or reference to such a plan." Id. at 47, 107 S.Ct. at 1553 (internal quotation omitted). We review de novo the district court's decision that ERISA preempts Olson's fraud claim. Nevill v. Shell Oil Co., 835 F.2d 209, 211 (9th Cir.1987).

Given the Supreme Court's directive that ERISA's preemption provision is to be construed broadly, it is difficult to see how Olson's fraud claim could be found not to "relate to" an employee benefit plan. We think that the district court's conclusion that Olson's allegations "relate to" an employee benefit plan are a straightforward application of the standard established by the Supreme Court. To state his claim in the most favorable manner, Olson is alleging that, upon retirement, he received benefits from Amex and SAIC that were "considerably less" than the benefits General Dynamics and Amex led him to believe he would receive. The district court ruled that this is a claim "that he should be receiving a level of benefits which he is not." Concluding that such a claim "has a connection with" and makes "reference to" a benefit plan, the judge ruled that the state law fraud claim is preempted by ERISA.

To escape this seemingly inexorable conclusion, Olson relies upon two Ninth Circuit cases that he argues support his position that his fraud claim is not preempted. Scott, 754 F.2d 1499; Martori Bros. Distributors v. James-Massengale, 781 F.2d 1349 (9th Cir.), amended, 791 F.2d 799, cert. denied, 479 U.S. 1018, 107 S.Ct. 670, 93 L.Ed.2d 722 (1986). Scott is easily distinguished. Olson argues that it establishes a rule that claims for prospective benefits are not preempted by ERISA. In fact, the only reason that the claim for prospective benefits was held not to be preempted was because the company for which the plaintiff-employees worked did not have an employee benefit plan. After noting that a claim cannot "relate to" a plan that does not exist, we allowed the employees to proceed with their tort claim because it was based upon the conduct which led to the non-existence of such a plan. Scott, 754 F.2d at 1505-06.

Olson's reliance on Martori is not so easily dismissed, as there is language in that case that appears to limit significantly the reach of ERISA's preemption clause. In the course of discussing the Act's preemptive power, the Court wrote:

The principle underlying all of these decisions would appear to be that the state law is preempted by section 514(a) if the conduct sought to be regulated by the state law is "part of the administration of an employee benefit plan"; that is, the state law is preempted if it regulates the matters regulated by ERISA: disclosure, funding, reporting, vesting, and enforcement of benefit plans.

Martori, 781 F.2d at 1357-58 (emphasis added). This language suggests two arguments in support of Olson's claim that his fraud action is not preempted. First, and most obviously, Olson might argue that his claim does not relate to the administration of a benefit plan. That is, Olson could argue that he is alleging not that the plans in which he participates are being administered improperly, but that the amount of benefits he would receive under those plans was misrepresented to him. Olson's second argument based on this passage would be that, because ERISA does not provide for a civil cause of action for...