Stern v. International Business Machines Corp., No. 02-14740.

• Decision Date: 14 April 2003
• Docket Number: No. 02-14740.
• Citation: 326 F.3d 1367
• Parties: Robert STERN, Plaintiff-Appellant, v. INTERNATIONAL BUSINESS MACHINES CORPORATION (IBM), a New York corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

326 F.3d 1367

Robert STERN, Plaintiff-Appellant, v. INTERNATIONAL BUSINESS MACHINES CORPORATION (IBM), a New York corporation, Defendant-Appellee.

No. 02-14740.

United States Court of Appeals, Eleventh Circuit.

April 14, 2003.

COPYRIGHT MATERIAL OMITTED

Paul Martin Sullivan, Jr., West Palm Beach, FL, for Plaintiff-Appellant.

Lori Lynn Piechura, Laura Besvinick, Hogan & Hartson, LLP, Miami, FL, for Defendant-Appellee.

Adrienne Dwyer, U.S. Dept. of Labor, Washington, DC, for Dept. of Labor, Plan Benefits Sec. Div., Amicus Curiae.

Appeal from the United States District Court for the Southern District of Florida.

Before HULL, MARCUS and FARRIS^*, Circuit Judges.

FARRIS, Circuit Judge:

Plaintiff Robert Stern, supported by amicus curiae the Secretary of Labor, contends that this matter was improperly removed to federal court because his employer's sickness/accident program is exempted by regulation from being considered a "welfare benefits plan" under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001-1461. We agree. We vacate the summary judgment order, reverse the order denying Stern's motion to remand, and remand with an instruction to return this case to the state court.

I

In 1999, Robert Stern, an IBM employee, injured his hand, which rendered him unable to work. IBM has a "Sickness and Accident Income Plan," which provides up to 52 weeks of an employee's "regular salary" when he is unable to work due to sickness or an accident. The IBM Program defines "unable to work" as "unable to perform the duties of the job you held at the time of your sickness or accident, or the duties of any other job that IBM determines that you are capable of performing." IBM makes payments to employees who qualify for the program out of the company's general assets.

After IBM discontinued paying him Program benefits, Stern sued in state court for breach of his employment agreement. IBM removed the case to the federal district court, contending that the IBM Program is an ERISA "welfare benefit plan." IBM argued that because the Program constitutes an ERISA welfare benefits plan, the Act preempts Stern's state law action. IBM then moved to dismiss the complaint for failure to state a claim under ERISA.

The district court denied Stern's motion to remand. Without discussing whether the Program constitutes a "payroll practice" specifically exempted from ERISA by 29 C.F.R. § 2510.3-1(b)(2), the court found the IBM Program to be an ERISA plan. It granted IBM's motion to dismiss the state complaint and gave Stern leave to file an amended complaint asserting claims under ERISA. The court later found that IBM had not violated ERISA and granted summary judgment in favor of IBM. Stern appeals the court's denial of his motion to remand and is supported by amicus curiae the Secretary of Labor. We review de novo the orders denying Stern's motion to remand to state court and granting IBM's motion for summary judgment. See Henson v. Ciba-Geigy Corp., 261 F.3d 1065, 1068 (11th Cir.2001) (removal jurisdiction); Waddell v. Valley Forge Dental Assoc., Inc., 276 F.3d 1275, 1279 (11th Cir.2001) (summary judgment).

II

ERISA regulates "employee welfare benefit plans," which include plans that provide employees "benefits in the event of sickness, accident, [or] disability." 29 U.S.C. § 1002(1). ERISA also broadly preempts state laws relating to any employee benefit plan. 29 U.S.C. § 1144(a). However, the Secretary of Labor has promulgated a regulation that excludes certain "payroll practices" from the application of ERISA. That regulation provides that an "employee benefit welfare plan" shall not include:

Payment of an employee's normal compensation, out of the employer's general assets, on account of periods of time during which the employee is physically or mentally unable to perform his or her duties, or is otherwise absent for medical reasons....

29 C.F.R. § 2510.3-1(b)(2). The sole legal question presented here — one not considered by the district court — is whether IBM's Program is a payroll practice that is exempted from ERISA's coverage.

Under 28 U.S.C. § 1441(a), subject to certain exceptions that are not applicable here, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction[] may be removed by the defendant" to federal court. In "federal question" cases such as the one at bar, the "well-pleaded complaint rule" holds that a federal defense to a state law claim generally is insufficient to satisfy the requirements of 28 U.S.C. § 1331. Instead, the federal question must "necessarily appear[] in the plaintiff's statement of his own claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may interpose." Oklahoma Tax Comm'n v. Graham, 489 U.S. 838, 841, 109 S.Ct. 1519, 103 L.Ed.2d 924 (1989); see also Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); Taylor v. Anderson, 234 U.S. 74, 75-76, 34 S.Ct. 724, 58 L.Ed. 1218 (1914); Louisville & N.R. Co. v. Mottley, 211 U.S. 149, 152-54, 29 S.Ct. 42, 53 L.Ed. 126 (1908). As we have said in Whitt v. Sherman Int'l Corp., "a case does not arise under federal law unless a federal question is presented on the face of the plaintiff's complaint." 147 F.3d 1325, 1329 (11th Cir.1998) (citing Kemp v. Int'l Bus. Machs. Corp., 109 F.3d 708, 712 (11th Cir.1997)).

As binding as the "well-pleaded complaint rule" is, however, it permits an extremely narrow exception in cases implicating the doctrine of complete preemption. As we recently explained in Geddes v. Am. Airlines, Inc.:

Preemption is the power of federal law to displace state law substantively. The federal preemptive power may be complete, providing a basis for jurisdiction in the federal courts, or it may be what has been called "ordinary preemption," providing a substantive defense to a state law action on the basis of federal law. More specifically, ordinary preemption may be invoked in both state and federal court as an affirmative defense to the allegations in a plaintiff's complaint. Such a defense asserts that the state claims have been substantively displaced by federal law. Complete preemption, on the other hand, is a doctrine distinct from ordinary preemption. Rather than constituting a defense, it is a narrowly drawn jurisdictional rule for assessing federal removal jurisdiction when a complaint purports to raise only state law claims. It looks beyond the complaint to determine if the suit is, in reality, purely a creature of federal law, even if state law would provide a cause of action in the absence of the federal law, thus creating the federal question jurisdiction requisite to removal to federal courts.

321 F.3d 1349, 1352-53 (11th Cir.2003) (internal punctuation and citations omitted); see also Behlen v. Merrill Lynch, 311 F.3d 1087, 1090 (11th Cir.2002) ("Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law."); Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1211-12 (11th Cir.1999) (describing the doctrine of "complete" or "super preemption"); Whitt, 147 F.3d at 1329-30 (same).

Although the doctrine of complete preemption is extremely limited, and has been found by the Supreme Court to exist in only two substantive contexts, one of these is section 502 of ERISA, 29 U.S.C. § 1132(a). See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 67, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) ("[T]his [ERISA] suit, though it purports to raise only state law claims, is necessarily federal in character by virtue of the clearly manifested intent of Congress."); Anderson v. H & R Block, Inc., 287 F.3d 1038, 1042 (11th Cir.2002). Accordingly, if Stern "is seeking relief that is available under 29 U.S.C. § 1132(a)," then the district court was correct to "recharacterize [his] claim as an ERISA claim, and removal jurisdiction exist[ed]." Whitt, 147 F.3d at 1330. "Conversely, if [Stern] is not seeking relief that is available under section 1132(a), no federal question jurisdiction exist[ed]" and the district court erred by asserting jurisdiction over this action. Id.

The IBM Program fits within the express terms of the Secretary's payroll practices regulation. It pays out of IBM's general assets an employee's normal compensation during periods when the employee is physically or mentally unable to work. The Secretary is specifically authorized to define ERISA's "accounting, technical and trade terms," 29 U.S.C. § 1135, and her reasonable views are given deference by the courts. See Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The Secretary contends that the IBM Program is covered by the payroll practices regulation, a view consistent with numerous advisory opinions on sick leave and disability plans analogous to the IBM Program. See Department of Labor Advisory Opinion 93-27A (Oct. 12, 1993); Department of Labor Advisory Opinion 93-20A (July 16, 1993); Department of Labor Advisory Opinion 93-02A (Jan. 12, 1993); Department of Labor Advisory Opinion 92-18A (Sept. 30, 1992). Although such opinion letters are not binding, the views of the agency entrusted with interpreting and enforcing ERISA carry considerable weight. See Williams v. Wright, 927 F.2d 1540, 1545 (11th Cir.1991). Put bluntly, for IBM to prevail, it must show the Secretary's application of the payroll practices regulation to the Program to be unreasonable.¹ See, e.g., Massachusetts v. Morash, 490 U.S. 107, 120-21, 109 S.Ct. 1668, 104 L.Ed.2d 98 (1989) ("It is sufficient for this case that the Secretary's determination that a single employer's administration of a vacation pay policy from its general assets does not possess the characteristics of a welfare...