Panto v. Moore Business Forms, Inc.
| Citation | 676 F. Supp. 412 |
| Decision Date | 05 January 1988 |
| Docket Number | Civ. No. 87-13-D. |
| Court | U.S. District Court — District of New Hampshire |
| Parties | Anthony T. PANTO v. MOORE BUSINESS FORMS, INC. |
Richard M. Howland, Amherst, Mass., Kathleen L. Kerr, Concord, N.H., for plaintiff.
Daniel C. Hoefle, Portsmouth, N.H., Michael R. Brown, Boston, Mass., for defendant.
This Order addresses the issues raised by defendant's motion seeking judgment on the pleadings, dismissal of plaintiff's amended complaint, and withdrawal of this Court's previous Order of Certification to the New Hampshire Supreme Court (see Order of May 21, 1987). The Court also addresses plaintiff's motion to amend his amended complaint by adding two counts under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461, to the single state law count presently set forth.
On January 13, 1987, plaintiff Anthony T. Panto filed a breach of contract diversity action in this court. The gravamen of his complaint was that defendant Moore Business Forms, Inc. ("Moore"), entered into and then breached a contract with him. The purported breach occurred when Moore allegedly failed to provide plaintiff with severance pay and related benefits following the termination of his employment, in contravention of statements set forth in Moore's unilaterally promulgated written employee policy manual entitled "Layoffs and Recalls".
On March 12, 1987, Moore moved to dismiss the complaint pursuant to Rule 12(b)(6), Fed.R.Civ.P., contending that a unilaterally promulgated employment policy is not an enforceable contract under New Hampshire law. By Order of April 17, 1987, this Court certified the issue to the New Hampshire Supreme Court seeking "guidance as to whether the current state of the law of New Hampshire is such as to permit recovery on an implied contract of employment contained in a policy and procedure manual." Slip op. at 5 (Order Apr. 17, 1987). The New Hampshire Supreme Court declined to answer the questions as posed, but on October 16, 1987, agreed to answer reformulated questions and directed the parties to file briefs.
Memorandum in Support of Defendant's Motion for Judgment on the Pleadings at 2-3. Contemporaneously, Moore moved the New Hampshire Supreme Court to suspend its briefing schedule and delay oral argument on the certified questions until this Court ruled on the instant motion.
Having received plaintiff's memorandum in opposition on December 29, 1987, and mindful that the New Hampshire Supreme Court has set oral argument for February 1988, the Court moves to expeditiously address the issues raised by Moore's motion. These issues are: (1) whether ERISA preempts state laws regarding severance benefits of the type in contention here; and (2) if so, whether answers to questions of state law would continue to be relevant.
ERISA applies to any "employee benefit plan" if it is established "by any employer engaged in commerce or in any industry or activity affecting commerce." 29 U.S.C. § 1003(a)(1). The term "employee benefit plan" encompasses the term "welfare benefit plan", id. § 1002(3), which in turn encompasses employer programs which provide severance pay benefits, 29 U.S.C. § 1002(1)(B); 29 C.F.R. § 2510.3-1(a)(3) (1987); see also, e.g., Fort Halifax Packing Co. v. Coyne, ___ U.S. ___, 107 S.Ct. 2211, 2215, 96 L.Ed.2d 1 (1987); Gilbert v. Burlington Indus., 765 F.2d 320, 324-26 (2d Cir.1985), aff'd mem., 477 U.S. ___, 106 S.Ct. 3267, 91 L.Ed.2d 558 (1986). The severance pay plan at issue here being within the ERISA definition of "welfare benefit plan", and Moore clearly being an employer engaged in commerce, Moore's severance pay benefit plan is governed by ERISA. See, e.g., Adam v. Joy Mfg., 651 F.Supp. 1301, 1306 (D.N.H.1987) (and citations therein). Indeed, by seeking to add two ERISA counts to his complaint, plaintiff himself implicitly acknowledges that ERISA applies to this action.
Applicability of ERISA having been established, plaintiff's state law claim for breach of contract is subject to ERISA's preemption provision, section 514(a), which states in pertinent part that ERISA "supercedes any and all State laws insofar as they may now or hereafter relate to any employment benefit plan" covered by ERISA. 29 U.S.C. § 1144. For ERISA purposes, "state law" is broadly defined to include "all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." Id. § 1144(c)(1). Because plaintiff's breach of contract claim is based on "state law", and because the claim does not fall within one of the enumerated exceptions to section 514(a), see id. § 1144(b)(2)(A) (), plaintiff's state law claim is preempted. See Pilot Life Ins. Co. v. Dedeaux, ___ U.S. ___, 107 S.Ct. 1549, 1553, 1558 & n. 4, 95 L.Ed.2d 39 (1987); Blakeman v. Mead Containers, 779 F.2d 1146, 1151 (6th Cir.1985); Holland v. Burlington Indus., 772 F.2d 1140, 1146-48 (4th Cir.1985), aff'd mem., ___ U.S. ___, 106 S.Ct. 3267, 91 L.Ed. 559 (1986); Gilbert, supra, 765 F.2d at 328 (and citations therein). Thus, plaintiff's amended complaint, with its single state law count, does not state a claim upon which relief can be granted.
However, as stated above, plaintiff has moved to amend his complaint pursuant to Rule 15(a), Fed.R.Civ.P., to add two ERISA counts. It is mandated that leave to amend "shall be freely given when justice so requires." Rule 15(a), Fed.R.Civ.P.; Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). Moreover, the Federal Rules of Civil Procedure "reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits." United States v. Hougham, 364 U.S. 310, 317, 81 S.Ct. 13, 18, 5 L.Ed.2d 8 (1960), reh'g denied, 364 U.S. 938, 81 S.Ct. 376, 5 L.Ed.2d 372 (1961) (quoting Conley v. Gibson, 355 U.S. 41, 48, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957)).
The amendments at issue here were sought in a timely manner — within thirty days of receiving Moore's motion for judgment on the pleadings. Moore can hardly fault Panto for having missed the ERISA preemption issue when Moore admits that it only discovered the issue while preparing its brief to the New Hampshire Supreme Court. Defendant's Memorandum at 2. Furthermore, amendment would change only the legal theory of recovery; additional fact witnesses would not be required, nor would further delay result if amendment were allowed. In sum, justice would be served by allowing amendment, and the Court therefore exercises its sound discretion to do so. See Tiernan v. Blyth, Eastman, Dillon & Co., 719 F.2d 1, 4 (1st Cir.1983); see also Scott v. Gulf Oil Corp., 754 F.2d 1499, 1506 (9th Cir.1985) (). At the same time, in conformity with the discussion set forth above, plaintiff's state law breach of contract claim must be and is herewith dismissed.1
Having dismissed plaintiff's state law claim, the Court must consider the propriety of proceeding with certification. For the purposes of ERISA, answers provided by the New Hampshire Supreme Court through the certification process will be "state law", see 29 U.S.C. § 1144(c)(1); therefore, at first blush it would appear that ERISA's preemption provision would apply, negating the value of any answers received. The Court finds that in light of Fort Halifax Packing Co., supra, certification on the questions previously posed to the New Hampshire Supreme Court is necessary to achieve proper resolution of this action.
In Fort Halifax, the United States Supreme Court faced the issue of whether ERISA preempted a Maine statute requiring employers to provide a one-time severance payment to employees in the event of a plant closing.2Fort Halifax Packing Co. supra, 107 S.Ct. at 2213-14. The Court found that, considering "the plain language of ERISA's pre-emption provision, the underlying purpose of that provision, and the overall objectives of ERISA itself," id. at 2215, ERISA's preemption provision did not foreclose Maine's state legislation regarding employee benefits.
The heart of the Supreme Court's analysis was the distinction it drew between the words "plan" and "benefit". The Court defined "plan" as the ongoing administrative program or set of practices an employer must follow in order to guide the processing of claims and disbursement of benefits. Id. at 2216-17. On the other hand, the Court defined "benefits" in terms of employer obligation: the responsibility of an employer to make payment upon the happening of a contingency, an obligation which might be satisfied by a onetime lump-sum payment, or which might never materialize if particular predicate conditions are not met and therefore might not require establishment of a "plan" at all. Id. at 2217-18.
Examining Congressional intent, the Court found that although Congress had intended ERISA to preempt state laws relating to plans, "to afford employers the advantages of a uniform set of administrative procedures governed by a single set of regulations," id. at 2217, Congress had not intended ERISA to preempt state laws relating to benefits. The Court wrote:
Only a plan embodies a set of administrative practices vulnerable...
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Panto v. Moore Business Forms, Inc., 87-197
...§§ 1001-1461. Panto's response was a second motion to amend, by adding a claim under ERISA. The district court granted Panto's motion to amend, 676 F.Supp. 412, and dismissed the State count previously alleged. Despite the demise of the State law claim, the district court denied Moore's fur......
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...benefit plans may, under certain circumstances, constitute employee benefit plans within ERISA's meaning. Panto v. Moore Business Forms, Inc., 676 F.Supp. 412 (D.N.H. 1988). As the Supreme Court noted in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987), the......