Provience v. Valley Clerks Trust Fund
Decision Date | 25 February 1981 |
Docket Number | Civ. No. S-80-885 MLS. |
Citation | 509 F. Supp. 388 |
Parties | John A. PROVIENCE, Plaintiff, v. VALLEY CLERKS TRUST FUND et al., Defendants. |
Court | U.S. District Court — Eastern District of California |
Jerry L. Rowley, Loomis, Cal., for plaintiff.
J. Thomas Bowen, Davis, Cowell & Bowe, San Francisco, Cal., for defendants.
The first amended complaint herein (hereinafter "complaint"), naming as defendants Valley Clerks Trust Fund, Ramona L. Gilmore as Administrator, and Does I through XXX, was filed in state court on October 8, 1980, and is framed in four purported causes of action denominated as follows:
The complaint, in essence, alleges that defendant trust fund and its officers and agents (1) fraudulently misrepresented the nature of benefits available under defendants' medical plan (first cause of action); (2) refused in bad faith to pay a legitimate claim for medical benefits (first cause of action); (3) intentionally inflicted severe emotional distress upon plaintiff in so refusing (second cause of action); (4) violated federal regulations (29 C.F.R. § 2560.503-1) in failing to establish a reasonable claims procedure (third cause of action); and (5) violated provisions of the California Consumers' Legal Remedies Act ( ), and provisions of the California Business and Professions Code (Cal.B.&P. Code §§ 17200 and 17500) regulating unfair business practices (fourth cause of action).
It is somewhat difficult to fully understand defendants' theory. Apparently they concede that the first cause of action does in fact state valid claims for relief, but only to the extent that such relief does not exceed the "benefits due to plaintiff under the terms of his plan," in accordance with 29 U.S.C. § 1132(a)(1)(B). Seemingly, defendants are contending that the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., preempts the state laws under which plaintiff's first, second and fourth causes of action are nominally brought, but acknowledge that the court should view the first cause of action, under the rules of liberal pleading construction, as stating a federally-created cause of action under 29 U.S.C. § 1132(a)(1)(B) "to recover benefits due to him under the terms of his plan" or "to enforce his rights under the terms of the plan" or "to clarify his rights to future benefits under the terms of the plan." Hence, defendants urge dismissal or striking as to all requested relief in the first cause of action to the extent it exceeds that specified in § 1132(a)(1)(B). Insofar as pertains to the second and fourth causes of action, defendants interpose the same preemption defense; however, since these two causes of action seek only compensatory and punitive damages, and do not include claims to recover benefits under the plan, defendants ask that these causes of action be dismissed in their entirety. As to the third cause of action, it is impossible to determine the nature of defendants' preemption argument.
In addressing the question of whether and to what extent plaintiff's claims herein are foreclosed, the court notes that the scope of the ERISA preemption is very broad. Under the provisions of 29 U.S.C. § 1144(a), "any and all state laws insofar as they may now or hereafter relate to any employee benefit plan" are superseded. General preemption analysis1 is thus simplified by this specific statement of Congress' intent to broadly occupy the field of pension fund operation, which in turn is further clarified by the legislative history of ERISA.2
The precise question here, insofar as pertains to all but the third cause of action, is whether the specified state laws (fraud, bad faith, intentional infliction of emotional distress, and the special statutory provisions specified in the fourth cause of action) "relate to" the ERISA-controlled employee benefit plan here involved. Court decisions addressing this question have uniformly held that a state law which directly regulates the content or operation of an ERISA plan is preempted by § 1144(a).3
The holdings have not been as consistent or as easy to rationalize where the state law is found to indirectly affect, or tangentially impact upon, an ERISA plan, as opposed to directly regulating it.4 However, it now seems settled that where the state law has only an indirect effect on the plan and where it is one of general application which pertains to an area of important state concern, the court should find there has been no preemption.5
This conclusion finds analogy in New York Telephone Co. v. New York State Department of Labor, 440 U.S. 519, 99 S.Ct. 1328, 1337, 59 L.Ed.2d 553 (1979) (plurality opinion) ( )6 and Linn v. Plant Guard Workers, 383 U.S. 53, 86 S.Ct. 657, 15 L.Ed.2d 582 (1966) ( ).
The court is satisfied (1) that California's laws, both statutory and judicially determined, relating to fraud, breach of the duty of good faith and fair dealing inherent in all contracts ("bad faith"), and intentional infliction of emotional distress are laws of general application in the state and are matters of important state concern, and (2) that such laws indirectly affect, but do not directly regulate the ERISA plan here involved. The court is not so persuaded in the case of the special laws (consumers' legal remedies and unfair business practices statutes) invoked in the fourth cause of action. Finally, the court finds that there is no discernible basis for defendants' contention that the federal regulations specified in the third cause of action are preempted; in fact, such regulations (29 C.F.R. § 2560.503-1) were enacted pursuant to and in implementation of ERISA.
The court now makes the following determinations:
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