Thrailkill v. Amsted Industries Inc.

• Decision Date: 31 May 2000
• Docket Number: No. 99-4244-CV-C-5.,99-4244-CV-C-5.
• Citation: 102 F.Supp.2d 1129
• Court: U.S. District Court — Western District of Missouri
• Parties: Mike THRAILKILL, et al., Plaintiffs, v. AMSTED INDUSTRIES INC., et al., Defendants.

Page 1129

102 F.Supp.2d 1129

Mike THRAILKILL, et al., Plaintiffs, v.AMSTED INDUSTRIES INC., et al., Defendants.

No. 99-4244-CV-C-5.

United States District Court, W.D. Missouri, Central Division.

May 31, 2000.

Angela K. Green, Niewald, Waldeck & Brown, P.C., Kansas City, MO, James B. Rice, Jr., Sedalia, MO, Julie J. Gibson, Niewald, Waldeck & Brown, P.C., Kansas City, MO, Michael E. Waldeck, Niewald, Waldeck & Brown, P.C., Kansas City, MO, for Mike Thrailkill, individually and on behalf of all others similarly situated, plaintiff.

Richard N. Bien, Lathrop & Gage, L.C., Kansas City, MO, Wilber H. Boise, McDermott Will & Emery, Chicago, IL, for Amsted Industries, Inc., defendant.

MEMORANDUM AND ORDER

LAUGHREY, District Judge.

Plaintiffs, Mike Thrailkill and Donald Teasdale, are former employees of Defendant the MacWhyte Company("MacWhyte").Plaintiffs brought this suit on behalf of themselves and others similarly situated, alleging that MacWhyte and other Defendants¹ enticed them into accepting lower wages in exchange for benefits under the Employee Stock Ownership Plan ("ESOP").Plaintiffs have asserted various state law claims as well a claim under the Employee Retirement Income Security Act("ERISA"), 29 U.S.C. § 1001, et seq.Pending before the Court is Defendants' Motion to Dismiss.Defendants assert that ERISA preempts Plaintiffs' state law claims.Also pending is Plaintiffs' Motion for Leave to File Second Amended Class Action Complaint.

Plaintiffs seek leave to file a Second Amended Class Action Complaint that would alter the relief they seek for their state law claims.²The motion to amend was filed after Defendants' motion to dismiss.Defendants oppose this amendment on the grounds of futility, and have asked the Court either to deny leave to amend or to grant leave to amend and subsequently dismiss the state law claims as preempted by ERISA.Rather than addressing the preemption issue twice, once when deciding the motion to amend and again when deciding the motion to dismiss, the Court will grant the motion to amend and proceed to consider whether the amended state law claims are preempted by ERISA.

I.Legal Standard

In considering a motion to dismiss on the pleadings based on lack of subject matter jurisdiction or failure to state a claim for which relief can be granted, the "complaint must be liberally construed in the light most favorable to the plaintiff."Coleman v. Watt,40 F.3d 255, 258(8th Cir.1994);Scheuer v. Rhodes,416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90(1974).The court must assume that "well pleaded factual allegations in the complaint are true."Westcott v. City of Omaha,901 F.2d 1486, 1488(8th Cir.1990)(citingMorton v. Becker,793 F.2d 185, 187(8th Cir.1986)).At the same time, the Court will not "blindly accept the legal conclusions drawn by the pleader from the facts."Westcott,901 F.2d at 1488(citingMorgan v. Church's Fried Chicken,829 F.2d 10, 12(6th Cir.1987)).

II.Factual Background

Plaintiffs' Second Amended Complaint asserts the following facts.DefendantAmsted Industries Inc.("Amsted") is an industrial manufacturer serving railroad, construction, and industrial markets.MacWhyte is an affiliate of Amsted, and manufactures wire rope products used in various industrial operations.MacWhyte operated a manufacturing plant in Sedalia, Missouri, known as the Broderick & Bascom Division of MacWhyte.

On October 1, 1984, an ESOP benefit was established as the primary source of retirement benefits for employees of Amsted and its affiliates.All non-union MacWhyte employees were participants in the ESOP.Participants received share allocations of up to 25 percent of their annual salaries for the year, making the ESOP plan appear to be a valuable benefit.

In the late 1990s, MacWhyte hired many new workers for the Sedalia plant.As a hiring tool, MacWhyte featured its ESOP as a reason why employees should work at the Sedalia plant.MacWhyte explained that while it paid lower wages than comparable employers, its benefits package brought total compensation above what other employers were paying.MacWhyte and Amsted promised Plaintiffs that they would be able to participate in ESOP and accumulate valuable retirement benefits.Defendants promised that Plaintiffs would have the opportunity to work until their benefits fully vested.Although Plaintiffs could have earned higher wages elsewhere, they elected to work at the Sedalia facility because of the promise of ESOP benefits.

While making these representations to Plaintiffs, MacWhite and Amsted were soliciting and negotiating the sale of the entire Sedalia plant, the MacWhyte warehouses, and customer service centers.The sale would result in termination of the ESOP before Plaintiffs' benefits had vested.Defendants failed to disclose these facts to Plaintiffs.

On May 13, 1999, MacWhyte sold the company to the Wire Rope Corporation of America ("WireCo.").Shortly before the sale became effective, MacWhyte and Amsted terminated Plaintiffs.Plaintiffs were told that they could no longer participate in ESOP and that their nonvested account balances would be forfeited.They were also told that no ESOP shares would be allocated for the period between October 1, 1998, and May 13, 1999.WireCo rehired many of MacWhyte's employees, but it did not offer an ESOP plan or any similar benefits.

Plaintiffs' Complaint lists several claims, most of which arise under Missouri common law.The claims are as follows: Count I—Violation of ERISA; Count II— Negligent and/or Intentional Misrepresentation; Count III—Equitable and/or Promissory Estoppel; Count IV—Fraudulent Inducement; and Count V—Breach of Good Faith and Fair Dealing.As damages for the state law claims, Plaintiffs seek lost wages, punitive damages, and any other damages available under Missouri law.

III.Discussion

A. ERISA's Preemption Clause

ERISA was designed to "establish pension plan regulation as exclusively a federal concern."Alessi v. Raybestos-Manhattan, Inc.,451 U.S. 504, 523, 101 S.Ct. 1895, 68 L.Ed.2d 402(1981).Therefore, ERISA preempts state laws that "relate to" any employee benefit plan described in the statute.29 U.S.C. § 1144(a).³This statutory language is far from clear, and the scope of ERISA"relat[ing] to" preemption has "troubled the courts of appeals and the Supreme Court."Prudential Ins. Co. of Am. v. Nat'l Park Med. Ctr., Inc.,154 F.3d 812, 818(8th Cir.1998).

Preemption analysis turns on congressional intent.New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co.,514 U.S. 645, 654-55, 115 S.Ct. 1671, 131 L.Ed.2d 695(1995);accordAllis-Chalmers Corp. v. Lueck,471 U.S. 202, 208, 105 S.Ct. 1904, 85 L.Ed.2d 206(1985)(Congressional intent is the "ultimate touchtone" of preemption analysis).Congress's intent in passing ERISA was to protect participants in employee benefits plans.29 U.S.C. § 1001(b)(stating purpose of statute).

In ERISAcases, courts must begin "with the starting presumption that Congress does not intend to supplant state law."Travelers,514 U.S. at 654, 115 S.Ct. 1671.The Court must also assume that Congress did not "intend to bar state action in fields of traditional state regulation or historic police powers."Id. at 655, 115 S.Ct. 1671.However, the Supreme Court has "long acknowledged that ERISA's preemption provision is clearly expansive."California Div. of Labor Standards Enforcement v. Dillingham Constr.,519 U.S. 316, 117 S.Ct. 832, 136 L.Ed.2d 791(1997)(quotingTravelers,514 U.S. at 655, 115 S.Ct. 1671).The preemption clause has "a broad scope, and an expansive sweep, and [is] broadly worded, deliberately expansive, and conspicuous for its breadth."Id.Nevertheless, "[i]f `relate to' were taken to extend to the furthest stretch of indeterminacy, then for all practical purposes preemption would never run its course, for `[r]eally, universally, relations stop nowhere.'"Travelers,514 U.S. at 655, 115 S.Ct. 1671.Thus, "[t]he mere mention of an ERISA plan in a complaint is not, in and of itself, sufficient to warrant a finding that state law relates to a plan."In Home Health Inc. v. Prudential Ins. Co. of Am.,101 F.3d 600, 604(8th Cir.1996).

"Congress did not define what it meant by state laws that `relate to' an ERISA benefit plan anywhere in the statute."National Park,154 F.3d at 819.However, the term should be given its broad, common sense meaning.Shaw v. Delta Air Lines, Inc.,463 U.S. 85, 97, 103 S.Ct. 2890, 77 L.Ed.2d 490(1983).In Shaw,the Supreme Court developed a two-prong analysis for determining whether state law "relates to" an ERISA plan.463 U.S. at 96-97, 103 S.Ct. 2890.A law relates to an employee benefit plan if it either has a "connection with" or makes "reference to" such a plan.Id.;accordPrudential,154 F.3d at 819(noting that this two-prong analysis is still applied by the Supreme Court).ERISA's preemption clause "is not limited to state laws specifically designed to affect employee benefit plans."Pilot Life Ins. Co. v. Dedeaux,481 U.S. 41, 47-48, 107 S.Ct. 1549, 95 L.Ed.2d 39(1987).

B.Whether Plaintiffs' State Law Claims Have a Prohibited "Connection With" an ERISA Plan

In this case, Plaintiffs argue that ERISA should not preempt their common law claims related to the time period before they accepted employment with the Defendants.⁴Plaintiffs allege that Defendants lured them into accepting employment at lower wages by promising them benefits under an ERISA plan.Defendants allegedly knew at that time that Plaintiffs' benefits under that plan would never vest, because the company was going to be sold.Defendants' wrongful conduct allegedly convinced Plaintiffs to accept employment at the Sedalia plant and to forego higher paying employment elsewhere, and Plaintiffs therefore seek lost wages as compensation.

Neither party asserts that the common law invoked by Plaintiffs makes "reference to" employee benefit plans....