Universal Checks & Forms, Inc. v. Pencor, Inc.
| Decision Date | 11 October 2013 |
| Docket Number | No. 5D12–3593.,5D12–3593. |
| Citation | 123 So.3d 121 |
| Parties | UNIVERSAL CHECKS & FORMS, INC., et al., Appellants, v. PENCOR, INC. and William H. Shurm, Appellees. |
| Court | Florida District Court of Appeals |
OPINION TEXT STARTS HERE
Neal J. Blaher, of Law Office of Neal J. Blaher, Altamonte Springs, for Appellants.
Scott A. Cole and Kathryn L. Smith, of Cole, Scott & Kissane, P.A., Miami, for Appellees.
Universal Checks & Forms, Inc., Universal Print Management, Inc., and Brian Thornton (collectively “Universal”) appeal a final judgment dismissing their complaint against Pencor, Inc., and William Shurm (collectively “Pencor”). The trial court dismissed the complaint on the basis that Universal's claims were preempted by the Employment Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. Because they only peripherally involve ERISA, Universal's claims are not preempted and, accordingly, we reverse.1
Universal filed a complaint for breach of fiduciary duty and negligence in connection with Pencor's recommendation and sale to Universal of a defined benefit plan.2 According to the complaint, Pencor failed to disclose a critical feature of the defined benefit plan, namely, the impact of the age of employees on those employees' share of the plan.
The complaint alleged that in 2005, Pencor presented Universal with the idea of establishing a defined benefit plan as a tax shelter and retirement savings vehicle. Pencor represented that Universal's 71–year–old clerical employee would be entitled to only a small benefit while Universal's principal, Brian Thornton, would “reap the lion's share” from the plan. Pencor did not explain that because of the clerical employee's age, her share of the benefits would rapidly increase. In reliance on Pencor's representations, Universal implemented the recommended plan. Pencor received a commission/fee for the transaction.
When the clerical employee retired in 2011, Universal was obligated to pay her $96,700 from the plan even though she had never been paid more than $20,000 annually. Universal alleged that but for Pencor's recommendation and representations, Universal would not have subscribed to a defined benefit plan but would have opted for some other form of retirement plan through which it would have only been required to pay the clerical employee approximately $15,000, at most, toward her retirement. It is Universal's position that Pencor recommended a defined benefit plan that was unsuitable for Universal. The complaint requested compensatory damages of no less than $80,000, disgorgement of commissions, prejudgment interest, costs, and fees.
Pencor moved to dismiss the complaint on the basis that the claims were preempted by ERISA. The motion was granted and the trial court entered a final judgment of dismissal.
ERISA was passed by Congress in 1974 to “safeguard employees from the abuse and mismanagement of funds that had been accumulated to finance various types of employee benefits.” Massachusetts v. Morash, 490 U.S. 107, 112, 109 S.Ct. 1668, 104 L.Ed.2d 98 (1989). The United States Supreme Court has described ERISA as “a comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983).
In enacting ERISA, Congress intended to make the regulation of pension plans solely a federal concern. Firestone Tire & Rubber Co. v. Neusser, 810 F.2d 550, 552 (6th Cir.1987). Consequently, ERISA preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan....” 29 U.S.C. § 1144(a) (emphasis added).
Initially, the Supreme Court gave a broad dictionary interpretation to the “relate to” preemption language, stating that a law “relates to” an employee benefit plan “if it has a connection with or reference to such a plan.” Shaw, 463 U.S. at 96–97, 103 S.Ct. 2890. However, the Shaw court also recognized that some state actions may affect employee benefit plans “in too tenuous, remote, or peripheral a manner to warrant a finding that the law ‘relates to’ the plan.” Id. at 100 n. 21, 103 S.Ct. 2890.
Later, in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645, 656, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995), the Court narrowed its broad dictionary definition, describing the statute's “relate to” language as “unhelpful.” Instead, the Court decided that in determining preemption issues, it would look to the objectives of the ERISA statute. Specifically, the Court concluded that Congress intended
to ensure that plans and plan sponsors would be subject to a uniform body of benefits law; the goal was to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government ..., [and to prevent] the potential for conflict in substantive law ... requiring the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction.
Id. at 656–57, 115 S.Ct. 1671 (quoting Ingersoll–Rand Co. v. McClendon, 498 U.S. 133, 142, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)).
In the instant case, we do not believe that permitting Universal to proceed with its action against Pencor would, in any way, interfere with Congress's intent to ensure that plans and plan sponsors are subject to a uniform body of benefits law. Universal is not asserting wrongdoing in the administration of the employee benefit plan, nor is it challenging the terms and conditions of the plan as created. Rather, Universal is alleging that Pencor engaged in tortious conduct by recommending that Universal create an employee benefit plan as a retirement investment vehicle and tax shelter. The recommendation, and the tortious conduct allegedly associated with it, necessarily occurred before the plan was even formed.
In Bertoni v. Stock Building Supply, 989 So.2d 670 (Fla. 4th DCA 2008), our sister court, citing to Firestone, applied a three-part test to determine whether the plaintiff's state law claim related to an ERISA plan or was so remote and peripheral as to not be preempted. This test requires a court to determine:
(1) whether the state law represents a traditional exercise of state authority;
(2) whether the law affects relations between principal ERISA entities; and
(3) the effect that state law, if applied, would have on the plan.
Here, the application of this test supports Universal's contention that...
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