Summary
granting summary judgment in favor of defendant
Summary of this case from Kollman v. Hewitt Associates, LLCOpinion
Civil Action No. 03-2034.
March 16, 2005
MEMORANDUM OF DECISION
Presently before the court is defendant Reconstructive Orthopaedic Associates, II, P.C.'s ("ROA") Motion for Summary Judgment on Counts Two through Seven of plaintiff's Second Amended Complaint (Document Nos. 46 and 47). After oral argument on January 11, 2005, and for the reasons set forth below, ROA's Motion for Summary Judgment is GRANTED, and judgment is entered in favor of ROA and against plaintiff.
I. FACTS
The following facts, except as specifically noted, are undisputed. On January 11, 1999, plaintiff was hired by Specialty Care Network ("SCN") as a medical assistant. At the time plaintiff was hired, she met with SCN's payroll supervisor, Marian Grasso, who explained the compensation and benefits available to plaintiff. (Grasso Dep. at 24-25.) Ms. Grasso informed plaintiff that within ninety days, she would be eligible to be covered by both a long term and a short term disability plan with NML. Id. at 39.
These disability plans were "non-contributory," meaning that the employer paid the entire premium and there were no deductions from the employees' pay in consideration for the coverage. (Grasso Dep. at 12.)
Ms. Grasso left SCN in January 1999, and was replaced by Maryann Maloney. (Grasso Dep. at 9, 23.) In spring 1999, ROA purchased certain assets of SCN, and ROA became plaintiff's employer. (West Dep. at 6-17.) A new long term disability plan was implemented in June 1999 and is at issue in this case (the "LTD Policy"). Under the new LTD Policy, the employees paid the premiums through payroll deductions. (West Dep. at 19; Melsi Dep. at 15.) ROA informed its employees of the change in disability plans. (Maloney Dep. at 21-22.) Employees were given thirty days to submit an enrollment card to ROA, which ROA then would forward to NML. (Melsi Dep. at 35, 58.) During this open enrollment period, employees who previously had been enrolled in SCN's disability plan and were part of the transition, would have been enrolled in the new plan without proof of insurability if they submitted an enrollment card. (Melsi Dep. at 31-41.)
Between April 1999 and February 2003, Maryann Maloney was controller of ROA. (Maloney Dep. at 12-13.)
At all times relevant hereto, Michael West was the Chief Executive Officer of ROA. (West Dep. at 9.)
Anthony Melsi was the NML agent who sold the disability policy to ROA. (Melsi Dep. at 8-10.)
ROA bore responsibility to explain the enrollment process to its employees, to collect the enrollment cards and to forward them to NML. Id. at 58. Ms. Maloney distributed enrollment cards "to managers with instructions to have all of their employees fill them out and return them." (Maloney Dep. at 21, 29.) Every employee was to return a card indicating his or her enrollment in the plan or his or her decision to waive enrollment. The original enrollment cards were kept in the possession of ROA and copies were sent to Mr. Melsi by facsimile. (Melsi Dep. at 41.) Ms. Maloney compared the enrollment cards in her possession to the list of employees who had been enrolled in SCN's disability plan. (Maloney Dep. at 30.) Since plaintiff had never been enrolled under SCN's disability plan, Ms. Maloney did not realize that she had not received an enrollment card from plaintiff, and did not contact plaintiff to ascertain whether she wanted disability coverage. Id. at 30-32. As discussed in greater detail below, plaintiff contends that she timely submitted an enrollment card to ROA. (Young Dep. at 99, 101, 131-33, 142.)
Mr. Melsi testified that plaintiff's name was never added to the list of employees covered under the disability policy. (Melsi Dep. at 78-79.) According to Mr. Melsi, it was SCN's responsibility to notify NML when a new employee was hired. Id. at 19-22.
In April 2000, plaintiff, with her immediate supervisor Beth DeLone, met with Ms. Maloney in her office. (Maloney Dep. at 56-57.) Plaintiff explained that she had just learned that no disability insurance deductions were being taken from her pay and requested an explanation. Id. at 57. Ms. Maloney checked her files and found no enrollment card for plaintiff. Id.
At this point in the recitation of facts, plaintiff and ROA offer differing versions of what transpired. ROA contends that plaintiff admitted to Ms. Maloney that she had not submitted an enrollment card. Id. at 58, 60. Ms. Maloney testified that Ms. DeLone asked if there was anything Ms. Maloney could do to help plaintiff. Id. at 59. Ms. Maloney stated that she met with Mr. West, ROA's CEO, and it was decided jointly to have plaintiff complete and backdate an enrollment card which ROA then would present to NML as timely received. Id. at 66-67. Ms. Maloney could not recall who devised the plan to backdate the enrollment card. However, she testified that both she and Mr. West agreed with this course of action, and that plaintiff also agreed to the backdating scheme. Id. at 66-67, 75-76, 79, 106. Ms. Maloney told her contact at NML that plaintiff had completed and timely submitted an enrollment card, and persisted in this falsehood when further questioned by NML. Id. at 86, 91-94. Mr. West admitted that he also lied to Mr. Melsi regarding this matter. (West Dep. at 48-50.)
Ms. Maloney testified that she wanted to help plaintiff because she understood that plaintiff was "having problems at home." (Maloney Dep. at 68-69.) She also testified that during the transition from SCN to ROA, employees had some negative feelings towards SCN. Id. at 68. She believed that helping plaintiff would show that ROA cared about its employees. Id.
Plaintiff disputes ROA's version of the facts. Plaintiff contends that she did, in fact, submit a timely enrollment card for the LTD Policy in June 1999. (Young Dep. at 99, 101, 131-33, 142.) At her deposition, plaintiff testified that she informed Ms. DeLone that deductions for disability premiums were not being taken from her pay. Id. at 98-99. According to plaintiff, Ms. DeLone spoke with Ms. Maloney. Subsequent to this conversation, Ms. Delone told plaintiff that a mistake had been made and the disability deductions would begin. Id. at 99-100. Plaintiff represented that, a few days later, Ms. Maloney personally reiterated this information. Id. Plaintiff denies she told Ms. Maloney that she had not completed and submitted the enrollment card in a timely manner. Id. at 131-32.
It is undisputed, however, that Mr. Melsi, on behalf of NML, did not receive an enrollment card for plaintiff during the enrollment period. (Melsi Dep. at 46-47, 61-62.) In April 2000, ROA began taking payroll deductions from plaintiff's pay for disability premiums. (Young Dep. at 100.) In light of the statements from Ms. Maloney and Mr. West, NML continued to investigate ROA's contention that plaintiff had enrolled in the disability plan in a timely manner. NML also requested that plaintiff submit an application and statement concerning her medical history so that it could determine whether plaintiff met the underwriting guidelines for coverage. (Gorsek Dep. at 21.) Plaintiff completed this application, and Ms. Maloney submitted it to NML on August 23, 2000.
When it was determined that plaintiff had not enrolled in the disability plan, the amounts deducted from plaintiff's pay were refunded by ROA. (Young Dep. at 104.)
Debra Gorsek was an associate disability benefits analyst for Standard Insurance Company. (Gorsek Dep. at 7.)
In November 2000, plaintiff became unable to work due to Parkinson's Disease. Plaintiff completed a claim form requesting the payment of benefits under the LTD Policy on November 24, 2000. (Pl.'s Mem. Opp. Summ. J., Ex. O.) On December 5, 2000, NML notified plaintiff that it denied her application for coverage under the LTD Policy because she had a history of cancer. Id. Ex. Q.
On January 3, 2001, Ms. Maloney sent a letter to NML in which she again misrepresented that plaintiff had completed an enrollment card and that ROA had submitted it to NML all in a timely manner. Id. Ex. R. Plaintiff received the final denial of her application from NML's quality assurance unit in a letter dated January 17, 2003. Id. Ex. U.
The letter attached as Exhibit R to plaintiff's memorandum of law in opposition to the motion for summary judgment is mistakenly dated January 3, 2000.
II. PROCEDURAL HISTORY
Plaintiff filed a Second Amended Complaint against ROA alleging breach of contract (Count Two), fraud and/or negligent misrepresentation (Count Three), negligence (Count Four), breach of the covenant of good faith and fair dealing (Count Five), violations of Pennsylvania's Wage Payment and Collection Law, pursuant to 43 Pa. Cons. Stat. Ann. § 2601, et seq. (Count Six), and breach of fiduciary duties pursuant to section 404 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1104 (Count Seven).
The Second Amended Complaint also contained a cause of action against NML alleging breach of fiduciary duty in violation of ERISA, citing section 502, 29 U.S.C. § 1132 (Count One). By Memorandum and Order dated January 19, 2005, this court granted NML's Motion for Summary Judgment on Count One of the Second Amended Complaint. As noted in the Memorandum, plaintiff admitted at the oral argument on the motion that she had no evidence that ROA timely submitted an enrollment card for plaintiff to NML and, therefore, she had no "cognizable claim again NML." (N.T., 1/11/05, at 15.)
In its Motion for Summary Judgment, defendant ROA argues that: (1) plaintiff's state law causes of action in Counts Two through Six are preempted under section 514 of ERISA; and (2) summary judgment should be granted on plaintiff's claim under ERISA (Count Seven) because the relief she seeks is not available under any part of section 502 of ERISA, 29 U.S.C. § 1132.
In the alternative, ROA also alleges that even if these claims were not preempted under ERISA, they fail as a matter of law. Because the court finds that plaintiff's state law claims are preempted by ERISA § 514, the court need not address ROA's alternative argument.
III. SUMMARY JUDGMENT STANDARD
Pursuant to Fed.R.Civ.P. 56(c), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The Supreme Court has ruled that Rule 56(c) requires "the threshold inquiry of determining whether there is a need for a trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). An issue is genuine only if there is a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party. Id. at 248. A factual dispute is material only if it might affect the outcome of the suit under governing law. Id. See also Lozada v. Reading Hosp. and Med. Ctr., No. 00-CV-4081, 2001 WL 438418, at *2 (E.D. Pa. Apr. 27, 2001) (same).
The moving party has the initial burden of informing the court of the basis for the motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 325 (1986). To defeat summary judgment, the non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The non-moving party cannot rest on the pleadings, but rather must go beyond the pleadings and present "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The non-moving party also has the burden of producing evidence to establish,prima facie, each element of his claim. Celotex, 477 U.S. at 322-23. "If the evidence [offered by the non-moving party] is merely colorable or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50. On the other hand, "if reasonable minds can differ as to the import of the proffered evidence that speaks to an issue of material fact," summary judgment should not be granted. Burkett v. Equitable Life Assurance Soc'y of the United States, No. 99-CV-1, 2001 WL 283156, at *3 (E.D. Pa. Mar. 20, 2001), aff'd, 287 F.3d 293 (3d Cir. 2002). In considering a motion for summary judgment, the evidence must be considered in the light most favorable to the non-moving party, and all inferences must be drawn in that party's favor. Celotex, 477 U.S. at 322. IV. DISCUSSION A. The Relevant ERISA Statutes
Of particular relevance to this case are ERISA §§ 502(a) and 514(a), 29 U.S.C. §§ 1132(a) and 1144(a). Preemption is addressed in both of these sections. Preemption under section 502, often called "complete preemption," is relevant to determining jurisdiction. "Complete preemption occurs when federal law so completely preempts an entire area of law that the state cause of action is entirely displaced by federal law." Joyce v. RJR Nabisco Holdings Corp., 126 F.3d 166, 171 (3d Cir. 1997). With respect to ERISA's civil enforcement provisions in section 502(a), state law claims that come within that provision are completely preempted such that removal to a federal court is required. Id. See Aetna Health Inc. v. Davila, 124 S.Ct. 2488, 2495 (2004) (To further its goal, "ERISA includes expansive pre-emption provisions . . . which are intended to insure that employee benefit plan regulation would be `exclusively a federal concern.'") (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981)).
Section 502(a) — ERISA's civil enforcement mechanism — provides in relevant part as follows:
(a) Persons empowered to bring a civil action
A civil action may be brought —
(1) by a participant or beneficiary —
(A) for the relief provided in subsection (c) of this section [concerning requests to the administrator for information], or
(B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;
(2) by the Secretary, or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title [breach of fiduciary duty];
(3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan;29 U.S.C. § 1132(a).
Preemption under section 514, referred to as express preemption, Barber v. UNUM Life Ins. Co. of Am., 383 F.3d 134, 137 (3d Cir. 2004), constitutes a defense to state law claims.See also Jones v. Prudential Ins. Co. of Am., No. 99-CV-5458, 2000 WL 274009, at *2 n. 1, *4 (E.D. Pa. Mar. 10, 2000) (comparing § 502 with § 514; claims preempted under § 502 are necessarily preempted under § 514). Section 514 provides in relevant part as follows:
(a) Supersedure; effective date
Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title. This section shall take effect on January 1, 1975.29 U.S.C. § 1144(a). The Supreme Court, as discussed below, has addressed this preemption provision on numerous occasions consistently remarking on the breadth of its preemption powers.
B. Preemption of State Law Claims Asserted in Counts Two Through Six 1. Plaintiff's State Law Claims Are Preempted by ERISA § 514
Congress enacted ERISA in order "to promote the interests of employees and their beneficiaries in employee benefit plans."Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983). In addition to safeguarding employees from the abuse and mismanagement of funds that had been collected to finance employee benefits, ERISA also was intended to safeguard employers' interests by "eliminating the threat of conflicting or inconsistent State and local regulation of employee benefit plans." Id. at 99 (quoting 120 Cong. Rec. 29933 (1974)) (internal quotation marks omitted). To further this second goal, section 514 of ERISA provided for the preemption of all state law causes of action "insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a). InIngersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990), the Supreme Court noted that ERISA's "pre-emption clause is conspicuous for its breadth," and that its "deliberatively expansive" language was designed to establish pension plan regulation as exclusively a federal concern. 498 U.S. at 138 (citations omitted). Further, "to underscore its intent that § 514(a) be expansively applied, Congress used equally broad language in defining the `State law' that would be pre-empted. Such laws include `all laws, decisions, rules, regulations, and other State action having the effect of law.'" Id. at 138-39 (quoting ERISA § 514(c)(1), 29 U.S.C. § 1144(c)(1)). The ERISA preemption analysis poses two dispositive questions: (1) whether the plan at issue is an "employee benefit plan," and (2) whether the cause of action "relates to" this employee benefit plan.Id. at 139-40.
It is undisputed that the LTD Policy at issue in this case is one covered by ERISA. See 29 U.S.C. § 1002(1) (providing that a covered benefit plan includes one for the purpose of providing disability benefits). Thus, the only issue remaining in the preemption analysis is whether plaintiff's state law claims "relate to" the LTD Policy. "A law `relates to' an employee benefit plan . . . if it has a connection with or reference to such a plan." Ingersoll-Rand, 498 U.S. at 139 (quoting Shaw, 463 U.S. at 96-97). In Ingersoll-Rand, the Supreme Court set forth a test to determine whether a state law cause of action "relates to" an ERISA plan. The Court stated that a state law cause of action is expressly preempted by ERISA where a plaintiff, in order to prevail, must prove the existence of, or specific terms of, an ERISA plan. Id. at 140. Where the court's inquiry must be directed to the plan, the cause of action "relates to" the ERISA plan. Id. Applying this test here leads to the conclusion that plaintiff's state law claims for breach of contract, fraud and/or negligent misrepresentation, negligence, breach of the covenant of good faith and fair dealing, and violations of Pennsylvania's Wage Payment and Collection Law are all preempted under ERISA.
Despite the breadth of ERISA's preemption provision, the Supreme Court recognized that "[s]ome 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."Shaw, 463 U.S. 100 n. 21.
Plaintiff's state law claims are preempted by ERISA because plaintiff, in order to prevail, must prove the existence of, or specific terms of, an ERISA plan. See Reilly v. Keystone Health Plan East, Inc., No. 98-CV-1648, 1998 WL 422037, at *3 (E.D. Pa. July 27, 1998) ("If the existence of an ERISA plan is a critical factor in establishing liability and the court's inquiry must be directed to the plan, the action relates to an ERISA plan and is preempted.") (citing Ingersoll-Rand, 498 U.S. at 139-40). All five of plaintiff's state law claims allege that but for the mishandling of her enrollment card by ROA, plaintiff would have been covered under the long term disability plan.See Pl.'s Sec. Am. Compl. ¶¶ 29-31, 33-34, 39-40, 42-44, 47-48, 52-54. In her Second Amended Complaint, plaintiff alleges that because of the state law violations pled in Counts Two through Six, plaintiff suffered damages resulting from the "loss of benefits due under the LTD Policy" and "loss of waiver of premiums as provided under the policy." Id. ¶¶ 31, 39, 44, 48 and 54. These are the same damages plaintiff seeks from ROA in her ERISA claim in Count Seven of the Second Amended Complaint.Id. ¶ 63. These also are the same damages plaintiff seeks in her ERISA claim against NML in Count One of the Second Amended Complaint. Id. ¶ 27.
The only exhibit attached to the Second Amended Complaint is the LTD Policy and that policy is referenced in every count of the complaint as the basis for plaintiff's claims. Id. Ex. A. In Count Two of the Second Amended Complaint, plaintiff claims that "ROA did not timely submit all necessary paperwork to NML and take all other necessary steps in order to enroll [plaintiff] for coverage under the LTD Policy. These constitute breaches of ROA's employment agreement with [plaintiff]." Id. at ¶ 30. Similarly, in Count Three of the Second Amended Complaint, plaintiff alleges that ROA represented to her that "she was an insured under the LTD Policy and/or failed to disclose to [plaintiff] that she was not an insured under the LTD Policy because ROA had failed to properly take all necessary steps to enroll her." Id. ¶ 33. Plaintiff further contends that ROA's misrepresentations and non-disclosures "were material in encouraging [plaintiff] to believe that she was an insured under the LTD Policy, and to take no further action on her own behalf in order to enroll in the plan, to correct any errors made in connection with her attempt to enroll for coverage, and/or to otherwise procure insurance for herself." Id. ¶ 34.
In Count Four of the Second Amended Complaint, plaintiff alleges that ROA was responsible for the timely submission of the paperwork required to enroll plaintiff in the LTD Policy. Id. ¶ 42. Plaintiff further contends that "ROA did not timely submit all necessary paperwork to NML and take all other necessary steps in order to enroll [plaintiff] for coverage under the LTD Policy. This constitutes negligence." Id. ¶ 43. In Count Five of the Second Amended Complaint, plaintiff alleges that "ROA's conduct, as described in this Complaint, constitutes breach or breaches of the covenant of good faith and fair dealing implied in the employment agreement between ROA and [plaintiff]." Id. ¶ 47. The "conduct" described in the Complaint is ROA's failure to enroll plaintiff under the LTD Policy. Finally, in Count Six of the Second Amended Complaint, plaintiff alleges that "ROA's failure to enroll [plaintiff] for coverage under the LTD Policy constituted a violation [of] the WPCL." Id. ¶ 53.
As set forth above, all of plaintiff's state law claims are premised solely on ROA's alleged failure to enroll plaintiff under the LTD Policy. Reference to the LTD Policy is required for consideration of each state law claim. The terms of the LTD Policy must be consulted in order to calculate the damages plaintiff seeks. The state law claims clearly make "reference to" and have a "connection with" the LTD Policy. If the LTD Policy did not exist, plaintiff would have no claims against ROA. Thus, the allegations in plaintiff's state law claims are related to the ERISA plan and are preempted under ERISA § 514.
2. Case Law Supports Preemption of Plaintiff's State Law Claims
Preemption of plaintiff's state law claims is supported by case law. In Hampers v. W.R. Grace Co., Inc., 202 F.3d 44 (1st Cir. 2000), an employee brought a state law claim alleging that her former employer breached an employment contract by failing to enroll her in the employer's supplemental executive retirement plan ("SERP"). Id. at 46-47. The court concluded that the district court did not err when it found that the plaintiff's common law breach of contract claim was preempted by ERISA § 514. The Court of Appeals determined that the plaintiff's state law contract claim against the defendant "related to" the ERISA plan at issue because it was an alternative enforcement mechanism to ERISA's exclusive enforcement scheme. Id. at 54. Five of the seven factors considered by the court in Hampers are applicable in the case at bar and support this court's decision that plaintiff's state law claims must be preempted: (1) plaintiff's state law claims allege the same conduct that underlies her ERISA claim; (2) the relief requested by plaintiff focuses primarily on the LTD Policy benefits; (3) plaintiff calculates the amount of her damages by reference to the LTD Policy; (4) the central liability questions at issue in plaintiff's state law claims must be viewed in light of the terms of the LTD Policy; and (5) the conduct at issue in the state law claims resulted from decisions and actions made by ROA, and its agents, in its capacity as an ERISA employer with responsibility and authority over the ERISA plan. Compare Hampers, 202 F.3d at 54 (seven factors).
The Third Circuit Court of Appeals has utilized the "relates to" test to preempt state law claims in the ERISA context. In1975 Salaried Retirement Plan for Eligible Employees of Crucible, Inc. v. Nobers, 968 F.2d 401 (3d Cir. 1992), cert. denied, 506 U.S. 1086 (1993), the court was guided byIngersoll-Rand, and held that the state law claims in that case were preempted because they depended on the existence of the ERISA plans. The court reasoned that if the ERISA plans did not exist, the employee's state law claims would not exist. Id. at 406. Furthermore, the calculation of damages required construction of the plans. Id. The court found the argument that the claims should not be preempted because the claims were against an employer, not the plans or their administrators, unpersuasive in light of Ingersoll-Rand which concluded that ERISA preempted an action against an employer. Id.
In McMahon v. McDowell, 794 F.2d 100 (3d Cir.), cert. denied, 479 U.S. 971 (1986), the court found the employees' contract and WPCL claims, seeking pension contributions and fringe benefits, were preempted by ERISA since they related to employee benefit plans under ERISA. Id. at 106. Among other factors, the court considered that the "[p]laintiffs would be able to determine the amount of any recovery under the WPCL only by reference to the benefit plans and the provisions of ERISA." Id. Moreover, the court noted the WPCL, as invoked by the plaintiffs, "does not merely relate to [the] pension plans, it competes with the mechanism that Congress carefully established in ERISA itself." Id. The court rejected this attempt concluding: "Plaintiffs are here attempting to avoid ERISA's mechanisms for enforcing benefit plan contributions and to substitute instead a state regulation that circumvents the scheme carefully devised by Congress. This they may not do."Id. at 107 (citations omitted).
More recently, the Fourth Circuit Court of Appeals noted that ERISA "does not seek to preempt all state laws that might apply to an ERISA plan administrator, but only those laws that undermine the `nationally uniform administration of employee benefit plans.'" Darcangelo v. Verizon Communications, Inc., 292 F.3d 181, 194 (4th Cir. 2002) (quoting Travelers, 514 U.S. at 657) (emphasis deleted). The court explained that when an ERISA plan administrator takes action entirely unrelated to the administration of the plan, liability for that action is not preempted by ERISA since that action does not threaten the uniformity of plan administration. Id. Likewise, ERISA does not preempt general state laws covering non-fiduciary acts unrelated to an ERISA plan. Id. In light of these considerations, the court concluded that the plaintiff's first four state law claims (claims under Maryland law for negligence, invasion of privacy and the confidentiality of medical records, and unfair and deceptive trade practices) were not preempted by ERISA. The court agreed that the key question was "whether the conduct complained of in the plaintiff's complaint is conduct undertaken by [the defendant] in the performance of its plan administration fiduciary duties for an ERISA plan." Id. at 189. Because the court found that the conduct complained of in the first four state law claims was "conduct entirely unrelated to the discharge of its duties under the plan," the court concluded that the claims were not preempted by ERISA. Id. at 194.
In Darcangelo, the plaintiff alleged that the defendants, without her consent, improperly obtained from her medical providers confidential information regarding her mental health in order to have plaintiff declared a "direct threat" under the Americans with Disabilities Act of 1990, so they could terminate her employment. Darcangelo, 292 F.3d at 188.
However, the plaintiff's fifth state law claim, a contract claim, was preempted because "the contract in question is an ERISA plan." Id. The court explained that "an action to enforce the terms of a contract, when that contract is an ERISA plan, is of necessity an alternative enforcement mechanism for ERISA § 502" and is therefore related to an ERISA plan and preempted by ERISA § 514. Id. at 195.
See also Berger v. Edgewater Steel Co., 911 F.2d 911, 923 (3d Cir. 1990) (state law claims of misrepresentation regarding benefits preempted), cert. denied, 499 U.S. 920 (1991); Pane v. RCA Corp., 868 F.2d 631, 635 (3d Cir. 1989) (state law claims of breach of contract, breach of covenant of good faith and fair dealing, and emotional distress arising out of the administration of an ERISA employee benefit plan preempted); Bartlett v. Pennsylvania Blue Shield, No. 02-CV-4591, 2003 WL 21250587, at *2 (E.D. Pa. Mar. 31, 2003) (state law claims for breach of contract, violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, fraudulent misrepresentation, and breach of duty of good faith and fair dealing preempted); Miller v. Aetna Healthcare, No. 01-CV-2443, 2001 WL 1609681, at *1 (E.D. Pa. Dec. 12, 2001) (state law claims for breach of contract, violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, fraudulent misrepresentation, and insurer bad faith, all based on failure to provide benefits promised, preempted);Zurzola v. Alfa-Laval Separation, Inc., No. 95-CV-2840, 1996 WL 187556, at *5 (E.D. Pa. Apr. 17, 1996) (state law claims of misrepresentation regarding existence of plan preempted);Campbell v. Emery World Wide, No. 93-CV-6568, 1994 WL 519708, at *2-*3 (E.D. Pa. Sept. 22, 1994) (state law claims of intentional and negligent infliction of emotional distress, gross negligence and loss of consortium preempted). And see Lee v. E.I. DuPont de Nemours and Co., 894 F.2d 755, 756-58 (5th Cir. 1990) (state law claims of fraud and negligent misrepresentation preempted even though plaintiff left with no remedy).
Similarly, the instant plaintiff's state law claims are preempted by ERISA. Like the state law claims in Nobers andMcMahon and the preempted state law claim in Darcangelo, the instant state law claims require reference to and consideration of the terms of an ERISA plan. As in Nobers, reference to an ERISA plan is required to calculate damages. Unlike the state law claims that were not preempted inDarcangelo, the conduct complained of by plaintiff here was undertaken by ROA and its agents in the performance of their plan administration fiduciary duties for an ERISA plan.
3. The Supreme Court's Decision in Travelers
In response to the preemption arguments advanced by ROA, plaintiff relies almost exclusively on the case of New York State Conference of Blue Cross Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645 (1995). Plaintiff argues that inTravelers, the Supreme Court "abandoned" the "relates to" test as articulated in Shaw, Ingersoll-Rand and the Court's other decisions.
Plaintiff is incorrect in asserting that Travelers abandoned the "relates to" test used in prior Supreme Court precedent when applying ERISA's preemption provisions. At issue in Travelers was a New York statute which required hospitals to collect a surcharge from patients covered by certain commercial insurers and health maintenance organizations, but not from patients covered by Blue Cross/Blue Shield plans. Id. at 649. The Court reemphasized the breadth of ERISA's preemption provisions in light of Congress's "intent to establish the regulation of employee welfare benefit plans `as exclusively a federal concern.'" Id. at 656 (quoting Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981)). The Court also restated its prior holding in Shaw, that "[a] law `relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such plan." Id. at 656 (quotingShaw, 463 U.S. at 96-97.) The Court, however, refused to read the term "relate to" in section 514 literally, reasoning that to do so would provide no stopping point for ERISA preemption. Id. at 655-57. The Court noted that with respect to the particular state statute at hand, while the statute did not "reference" an employee benefit plan, it was unclear whether the statute had a "connection with" such plan. Id. at 656. In order to make this determination, the Court looked "to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive." Id. The Court concluded that the particular New York statute at issue did not satisfy the Shaw "relates to" test. The Court found that while the statute had an "indirect economic effect on choices made by plan buyers, including ERISA plans," it did not "bind plan administrators to any particular choice and thus function as a regulation of an ERISA plan itself," and therefore had no "connection with" the plan. Id. at 659. InTravelers, the Court did not abandon the "relates to" test, rather, it further clarified the test to address a particular state statute. In doing so, it cautioned against an "uncritical literalism" that would make preemption turn on "infinite connections." Id. at 656.
Travelers was not the first case in which the Supreme Court emphasized that congressional intent should act as a guide in applying the "relates to" test. In Ingersoll-Rand, a case decided in 1990, five years prior to the Travelers decision, the Court stated that the question of "whether a certain state action is pre-empted by federal law is one of congressional intent." Ingersoll-Rand, 498 U.S. at 137-38 (quotation omitted). The purpose of Congress is the "ultimate touchstone."Id. at 138.
In cases decided after Travelers, the Supreme Court reaffirmed its application of the "relates to" test. In Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141 (2001), the Court reiterated its holding in Shaw that "a state law relates to an ERISA plan, `if it has a connection with or reference to such a plan.'" Egelhoff, 532 U.S. at 147 (quoting Shaw, 463 U.S. at 97). The court repeated its caution in Travelers stated above, and urged courts to look both to "the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive," as well as to the nature of the effect of the state law on ERISA plans.Id. (quoting Travelers, 514 U.S. at 565). The Court inEgelhoff agreed that the Washington state statute at issue in that case had an "impermissible connection with ERISA plans."Id. The Court identified the following impermissible connections: the statute bound ERISA plan administrators to a particular choice of rules for determining beneficiary status; the administrators must pay benefits to the beneficiaries chosen by state law, rather than to those identified in the plan documents; the statute implicates a core area of ERISA concern, namely it governs the payment of benefits, a central matter of plan administration; and the statute interferes with nationally uniform plan administration by subjecting plans to different legal obligations in different states. Id. at 147-48.
In De Buono v. NYSA-ILA Med'l and Clinical Servs. Fund, 520 U.S. 806 (1997), the Supreme Court discussed the Court's previous ERISA preemption cases. The Court noted that in Travelers, and in its earlier cases, it had held that the literal text of section 514 was "clearly expansive." Id. at 813 (quotingTravelers, 514 U.S. at 655). The Court further explained that in Travelers, it cautioned that the text of section 514 could not be read to "extend to the furthest stretch of its indeterminacy, [or] for all practical purposes preemption would never run its course, for [r]eally, universally, relations stop nowhere." Id. (quotation omitted). The Court explained the impact of Travelers on the determination of whether a state law relates to ERISA benefit plans.
In our earlier ERISA pre-emption cases, it had not been necessary to rely on the expansive character of ERISA's literal language in order to find pre-emption because the state laws at issue in those cases had a clear "connection with or reference to," Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 . . . (1983), ERISA benefit plans. But in Travelers we confronted directly the question whether ERISA's "relates to" language was intended to modify "the starting presumption that Congress does not intend to supplant state law." 514 U.S. at 654. We unequivocally concluded that it did not, and we acknowledged "that our prior attempt[s] to construe the phrase `relates to' d[o] not give us much help drawing the line here." Id. at 655. In order to evaluate whether the normal presumption against pre-emption has been overcome in a particular case, we concluded that we "must go beyond the unhelpful text and the frustrating difficulty of defining its key term, and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive." Id. at 656.De Buono, 520 U.S. at 813-14 (footnote omitted). The Court concluded that the New York law at issue in De Buono, which imposed a gross receipts tax on hospitals, was not the type of state law Congress intended ERISA to supersede. Id. at 815. The Court noted that the state law did not forbid a method of calculating pension benefits which federal law permits, require employers to provide certain benefits, nor expressly refer to ERISA or ERISA plans. Nor was "the existence of a pension plan . . . a critical element of a state-law cause of action." Id. Rather, the situation was one where a particular ERISA fund had arranged to provide medical benefits for its plan beneficiaries by running hospitals directly, rather than purchasing the same services at independently run hospitals. The Court noted that "[a]ny state tax, or other law, that increases the cost of providing benefits to covered employees will have some effect on the administration of ERISA plans, but that simply cannot mean that every state law with such an effect is preempted by the federal statute." Id. at 816 (footnote omitted). In a later case, Aetna Health Inc. v. Davila, 124 S.Ct. 2488 (2004), the Court, primarily addressing complete preemption under ERISA § 502, reemphasized the breadth of ERISA's preemption provisions in section 514. stating that "ERISA includes expansive pre-emption provisions . . . which are intended to insure that employee benefit plan regulation would be `exclusively a federal concern.'" Id. at 2495 (quoting Alessi, 451 U.S. at 523).
The Court acknowledged in Travelers that there might be a state law that produces economic effects, intentional or otherwise, so acute "as to force an ERISA plan to adopt a certain scheme of substantive coverage or effectively restrict its choice of insurers" and such a state law "might indeed be pre-empted under [section] 514." Travelers, 514 U.S. at 668.
The instant case is distinguishable from Travelers, Egelhoff, and De Buono. First, the instant matter does not require this court to examine a particular state law to determine whether it has a connection with or makes reference to an ERISA plan. Rather, the court is presented with tort and contract claims arising under state law. The state law claims at issue here are of the ordinary variety which clearly have a connection with or make reference to an ERISA benefits plan. As stated earlier, supra at p. 12-13, each and every claim in plaintiff's Second Amended Complaint references the LTD Policy. Interpretation of its provisions is required to calculate plaintiff's requested damages. Application of the "relates to" test to the state law claims at issue in the present case does not lead to absurd results based upon infinite connections. Rather, preemption of the instant state law claims fulfills Congress's intention of preventing plaintiffs from pursuing multiple remedies in addition to those outlined and approved by Congress in ERISA. Thus, with respect to the state law claims raised in the instant matter, Travelers does not require the application of a test other than the "relates to" test as enunciated in Shaw and Ingersoll-Rand.
In any event, regardless of whether the Court's conclusions inTravelers mark a clarification of the "relates to" test, or present an announcement of a new narrower test, plaintiff's state law claims are preempted under the Court's holdings in the Travelers case. In Travelers, the Supreme Court held that when a state law cause of action provides an "alternative enforcement mechanism" to ERISA's enforcement regime, the action is related to an ERISA plan triggering preemption. 514 U.S. at 658 (citing Ingersoll-Rand, 498 U.S. 133). The inquiry requires the court to look beyond the face of the complaint and determine the real nature of the claim. In the present case, plaintiff's state law claims are based on the failure of ROA to enroll plaintiff for coverage under the LTD Policy and plaintiff seeks to recover damages that are calculated upon the disability payments she would have received as an insured under the LTD Policy. Plaintiff has brought a claim under ERISA, which is based on precisely the same conduct that underlies her state law claims. Accordingly, pursuant toTravelers, the state law claims must be viewed as alternative mechanisms for obtaining ERISA plan benefits, and are thus preempted. Therefore, this court concludes that plaintiff's state law claims are preempted by ERISA and ROA's request for summary judgment must be granted on plaintiff's state law claims (Counts Two through Six).
4. Whether ERISA Applies to Plaintiff
In her Second Amended Complaint, plaintiff pled that she is an ERISA "participant." (Pl.'s Sec. Am. Compl. ¶ 58.) In its Motion, ROA assumes this contention to be true. (ROA's Mem. Supp. Summ. J. at 2 n. 1 and 7 n. 6 (citing cases); ROA's Reply Mem. Supp. Summ. J. at 2-4.) Plaintiff argues that a genuine issue of material fact exists regarding whether plaintiff is an ERISA "participant." (Pl.'s Mem. Opp. Summ. J. at 1-2.) Plaintiff contends that if she is not a "participant" as defined in ERISA and, therefore, lacks standing to bring a claim under ERISA, her state law claims are not preempted because ERISA does not apply to her. Plaintiff is incorrect.
In Pane v. RCA Corp., 868 F.2d 631 (3d Cir. 1989), the plaintiff brought a cause of action against his employer alleging claims under ERISA and New Jersey state law for breach of contract and intentional infliction of emotional distress. The employer had refused to grant the employee a severance agreement awarded to certain other managers. Id. at 634. The lower court concluded that the state law claims were preempted by the broad preemption provisions of ERISA § 514(a). Id. at 635. On appeal, the Third Circuit Court of Appeals affirmed the lower court's dismissal of the underlying ERISA claim, in part because the plaintiff was not a "participant." Id. at 637-38. When the ERISA claim failed, the Third Circuit Court of Appeals did not revive the preempted state law claims in order to provide the plaintiff with a remedy.
Similarly, in Arkans v. Cole Vision Corp., No. 93-CV-4406, 1994 WL 197172 (E.D. Pa. May 18, 1994), the plaintiff brought ERISA and state law claims alleging that he was an employee of the defendant and that he was terminated in retaliation for his request for ERISA benefits. The court stated that claims "relate to" an ERISA plan if they are premised on its existence. Id. at *2. The court concluded that since all of plaintiff's common law contract claims for ERISA benefits were based on the existence of the plan, they all were preempted by ERISA § 514. Id. The court also found that since plaintiff was not a "participant" under ERISA, he had no standing to sue under ERISA. Id. at *1-*2. The court afforded plaintiff the opportunity to amend his complaint to assert claims not related to the plan. Id. at *2. The court did not permit plaintiff to reassert the state law claims already preempted by section 514.
In Lee v. E.I. DuPont de Nemours and Co., 894 F.2d 755 (5th Cir. 1990), the plaintiffs argued that ERISA § 514 would not preempt their state law fraud and misrepresentation claims because "the misrepresentation they allege prevented them from becoming `participants' in the ERO program, which they argue is a prerequisite to standing under section 1132(a), [ERISA § 502(a)]. Therefore, plaintiffs contend, section 1144(a) [ERISA § 514] does not preempt their misrepresentation claims." Id. at 757. The Fifth Circuit Court of Appeals rejected this argument relying on two of its own cases, Cefalu v. B.F. Goodrich Co., 871 F.2d 1290 (5th Cir. 1989) and Degan v. Ford Motor Co., 869 F.2d 889 (5th Cir. 1989). In Lee, Cefalu, and Degan, the plaintiffs sought to recover benefits under their former employers' ERISA plans, benefits to which they would have become entitled but for a misrepresentation by the employers during their employment on which the plaintiffs relied to their detriment. In all three of the cases, the court found that ERISA preempted the state law claims "despite the fact that ERISA itself provided no remedy for the alleged misrepresentations." Lee, 894 F.2d at 757 (discussing its earlier holdings in Celafu and Degan). The court noted that Degan was particularly damaging to the plaintiffs' argument:
On this score, Degan is particularly damaging to plaintiffs' position, because in Degan we affirmed dismissal of the state law breach of contract claim despite our explicit recognition that Degan's oral contract and promissory estoppel claims were "not cognizable in suits to enforce rights to pension benefits" under ERISA. Degan, 869 F.2d at 895. Describing the employer's misrepresentation as a "betrayal without remedy," we nonetheless concluded that the congressional policy in favor of exclusively federal regulation of pension plans required the result, and we therefore held the state law claims were preempted under section 1144.Lee, id.
The same results apply here. Plaintiff pled that she is a "participant" under ERISA. (Pl.'s Sec. Am. Compl. ¶ 58.) Considering the evidence in the light most favorable to plaintiff, as this court is required to do, the court accepts this fact as true. See Celotex, 477 U.S. at 322. However, assuming that plaintiff is not a participant, her state law claims do not avoid the broad preemptive powers of ERISA § 514(a). Claims such as plaintiff's which relate to an ERISA plan, are handled exclusively under ERISA. The fact that plaintiff's ERISA claim fails does not mean that she can resurrect her preempted state law claims. This type of uncertainty and duplication is exactly what Congress intended to avoid with its enactment of ERISA.
C. Plaintiff's ERISA Claim — Count Seven 1. The Relief Plaintiff Seeks is Unavailable
ROA argues that summary judgment should be granted on plaintiff's claim under ERISA, stated in Count Seven of the Second Amended Complaint, because the relief she seeks is not available under any part of section 502 of ERISA, 29 U.S.C. § 1132. Plaintiff admits that she is not entitled to benefits under the LTD Policy because she was never enrolled in that policy. (N.T., 1/11/05, at 15.) Rather, in her Second Amended Complaint, plaintiff seeks to collect directly from ROA monetary damages equal to the amount she would have received under the LTD Policy. (Pl.'s Sec. Am. Compl. ¶¶ 31, 39, 44, 48, 54.)
The Supreme Court made clear in Great-West Life Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210-21 (2002), that only equitable relief may be obtained for a breach of fiduciary duty under ERISA. ERISA § 502(a)(3), 29 U.S.C. § 1132. Section 502(a)(3) authorizes a civil action "by a participant . . . (A) to enjoin any act or practice which violates . . . the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of . . . the terms of the plan." 29 U.S.C. § 1132 (a)(3). The Court explained that "`equitable' relief must mean something less than all relief." Great-West, 534 U.S. at 209 (quotingMertens v. Hewitt Assocs., 508 U.S. 248, 258 n. 8 (1993)) (emphasis in original). In Mertens, the Court rejected an interpretation of the statute that would extend the relief obtainable under section 502(a)(3) to whatever relief a court of equity is empowered to provide. The Court concluded that such a reading would "render the modifier [equitable] superfluous."Mertens, 508 U.S. at 257-58. Rather, the term "equitable relief" in section 502(a)(3), must refer to "those categories of relief that were typically available in equity." Great-West, 534 U.S. at 210 (quotation omitted) (emphasis in original).
Section 502 of ERISA authorizes five different types of civil actions that may be brought under ERISA. Only section 502(a)(3) is implicated in the instant case. Section 502(a)(1)(A) authorizes a beneficiary to sue for statutory damages when an administrator refuses to provide certain requested information. Section 502(a)(4) allows a beneficiary to sue for failure of a fiduciary to provide information submitted to the Internal Revenue Service. Neither section is implicated in this case because plaintiff does not contend that ROA failed to provide either type of information. Section 502(a)(1)(B) allows a civil action to recover benefits due; in the instant case, plaintiff admits that she is not entitled to recover benefits due under the LTD Policy from NML. (N.T., 1/11/05, at 15.) Section 502(a)(2) allows damages to be recovered only by the ERISA plan itself; plaintiff here is seeking a remedy payable to herself. The subsection that best fits plaintiff's breach of fiduciary duty claim is section 502(a)(3), the "`catchall' remedial section."Varity Corp. v. Howe, 516 U.S. 489 (1996). Section 502(a)(3) authorizes the court to grant "appropriate equitable relief" to redress ERISA violations.
Money damages, such as those sought by plaintiff in the instant matter, are "the classic form of legal relief." Id. (quotingMertens, 508 U.S. at 255) (emphasis in original). The Court explained when an action is a suit for money damages: "`Almost invariably . . . suits seeking (whether by judgment, injunction, or declaration) to compel the defendant to pay a sum of money to the plaintiff are suits for `money damages,' as that phrase has traditionally been applied, since they seek no more than compensation for loss resulting from the defendant's breach of legal duty.'" Id. (quoting Bowen v. Massachusetts, 487 U.S. 879, 918-19 (1988) (Scalia, J., dissenting)).
Judge Joyner recently addressed this issue in Ranke v. Sanofi-Synthelabo, Inc., No. 04-1618, 2004 WL 2473282 (E.D. Pa. Nov. 3, 2004). In that case, the court concluded that the plaintiff's claim under ERISA § 502(a)(3) for breach of fiduciary duty requested relief outside the scope of "appropriate equitable relief" authorized by ERISA. Id. at *5. Judge Joyner explained as follows:
In determining whether the relief sought under ERISA is legal or equitable, a court is required to examine the basis for the plaintiff's claim and the nature of the underlying remedies sought. Great-West Life Annuity Ins. Co. v. Knudson, 534 U.S. 204, 213 (2002). Remedies traditionally viewed as equitable include injunction, mandamus, and restitution, but not compensatory or punitive damages. Mertens v. Hewitt Assocs., 508 U.S. 248, 255-56 (1993). . . . The Supreme Court in Great-West identified a few instances where a judicial remedy requiring one party to pay money to another will not qualify as legal money damages. For example, specific performance of a contract to pay money, a traditionally legal remedy, may be available in equity if it is sought in connection with an injunction "to correct the method of calculating payments going forward," or where payment on the contract is necessary to "prevent future losses that [are] either incalculable or would be greater than the sum awarded." Great-West, 534 U.S. at 211-14. Restitution, in the form of a constructive trust or equitable lien, may be an appropriate equitable remedy where the action does not seek to impose personal liability on the defendant but rather to restore funds or property identified as belonging to the plaintiff and traceable to funds in the defendant's possession. Great-West, 534 U.S. at 211-14.Id. at *6. Judge Joyner further noted that in applyingGreat-West, courts are split as to whether a plaintiff alleging breach of fiduciary duty under ERISA and seeking payment of benefits or reinstatement into a benefit plan is seeking a legal or an equitable remedy. Id. (citing cases). The court inRanke concluded that the relief sought by the plaintiff in that case, while presented as an equitable "make-whole" remedy, was closer in nature to a legal remedy not authorized by ERISA § 502(a)(3). Id. at *7. Judge Joyner explained his conclusion:
Plaintiffs, while not alleging that they are in fact entitled to increased benefits under the terms of the current plans, claim that they are entitled to these benefits because they suffered harm from reliance on Defendant's misrepresentations. This form of relief appears to be within the scope of non-equitable money damages defined by the Supreme Court as "compensation for loss resulting from the defendant's breach of legal duty." Great-West, 534 U.S. at 210 (citing Bowen, 487 U.S. at 918-19). As the requested remedy in this case would ultimately require Defendants to pay out a sum of money upon Plaintiffs' retirement, and as this remedy does not appear to fall within one of the few exceptions outlined in Great-West, we find that Plaintiffs' request for reinstatement of benefits is not within the scope of "appropriate equitable relief" authorized by ERISA § 502(a)(3).Id. See also Metropolitan Life Ins., Co. v. Hamm, No. 01-CV-6340, 2003 WL 22518183, at *4 (E.D. Pa. Oct. 10, 2003) (monetary relief for losses suffered by plan resulting from breach of fiduciary duty not equitable relief under ERISA § 502(a)(3)); Kishter v. Principal Life Ins. Co., 186 F. Supp. 2d 438, 445-46 (S.D.N.Y. 2002) (compensatory damages not available for ERISA breach of fiduciary duty claim).
Here, plaintiff seeks payment of the benefits she would have received had ROA not breached its fiduciary duty to enroll her in the LTD Policy. This remedy does not fall within the narrow set of remedies defined by the Supreme Court as appropriate under ERISA § 502(a)(3). As in Ranke, the relief plaintiff requests "appears to be within the scope of non-equitable money damages defined by the Supreme Court as `compensation for loss resulting from the defendant's breach of legal duty.'" Ranke, 2004 WL 2473282, at * 7 (quoting Great-West, 534 U.S. at 210) (citation omitted). Moreover, the relief plaintiff seeks cannot be considered a request for restitution or one implicating a constructive trust because, under Great-West, such remedies are appropriate only where the specific property being sought is identifiable and in the hands of the defendant.Great-West, 534 U.S. at 214. In this case, the money to which plaintiff has a claim is in the hands of NML, the insurance carrier, not ROA. However, plaintiff admits that she is not entitled to payments under the LTD Policy from NML because she never became an insured thereunder. (N.T., 1/11/05, at 15.) The money she seeks from ROA is the monetary damages she suffered as a result of ROA's breach of fiduciary duty in its failure to enroll plaintiff under the LTD Policy and plaintiff's reliance on ROA's alleged misrepresentations concerning her enrollment under the LTD Policy. This type of compensatory damages is precisely the kind that the Court in Mertens and Great-West decided is not an equitable remedy.
In Count Seven of her Second Amended Complaint, plaintiff identifies her damages as "consequential and compensatory damages." (Pl.'s Sec. Am. Compl. at 11.) Plaintiff does not identify the damages she seeks as equitable in nature. Plaintiff also seeks "all other damages recoverable under law." Id. Again, this request phrases the request for damages in terms of legal damages, not equitable damages. However, liberally construing this statement as a request for all other relief, including equitable relief, as the court may deem appropriate, plaintiff does not suggest, nor can this court fashion, an equitable remedy appropriate under ERISA § 502(a)(3). See Kishter, 186 F. Supp. 2d at 446 (court considered request in complaint for "such other . . . equitable relief as the Court deems appropriate," as invitation to use its "ingenuity" to suggest a form of equitable relief that would be appropriate; the court was unsuccessful in fashioning such a remedy).
For all these reasons, the court finds that the relief plaintiff seeks, monetary damages, is unavailable under ERISA. Consequently, summary judgment on plaintiff's claim for breach of fiduciary duty under ERISA must be granted.
2. No Remedy
Plaintiff contends that she would be left without a remedy if her state law claims are preempted by ERISA and her ERISA claim failed because no damages were available to her under ERISA. (N.T., 1/11/05, at 39.) This is a misunderstanding of ERISA and Congress's intent in enacting the statute with its two expansive preemption provisions, ERISA §§ 512, 514.
In Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987), the Court addressed in detail the preemptive force of ERISA § 502(a). The court reasoned that the conclusion that section 502(a) was intended to be exclusive is supported not only by the language and structure of the civil enforcement provisions, but also by the legislative history in which Congress declared that the preemptive force of section 502(a) was modeled on the exclusive remedy provided by section 301 of the Labor Management Relations Act ("LMRA"). Pilot Life, 481 U.S. at 52, 55 (citing H.R.Conf.Rep. No. 93-1280, p. 327 (1974), U.S. Code Cong. Admin. News 1974, pp. 4639, 5107). The Court discussed the strong preemptive effect of LMRA § 301: "Congress was well aware that the powerful pre-emptive force of § 301 of the LMRA displaced all state actions for violation of contracts between an employer and a labor organization, even when the state action purported to authorize a remedy unavailable under the federal provision."Pilot Life, 481 U.S. at 55 (emphasis added).
In Pilot Life, the Supreme Court concluded that "[t]he deliberate care with which ERISA's civil enforcement remedies were drafted and the balancing of policies embodied in its choice of remedies argue strongly for the conclusion that ERISA's civil enforcement remedies were intended to be exclusive." Id. at 54. The Court explained:
In sum, the detailed provisions of § 502(a) set forth a comprehensive civil enforcement scheme that represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans. The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA.Id. In Pilot Life, the Supreme Court recognized that some plaintiffs may be left without a remedy if not permitted to pursue state law remedies rejected by Congress in enacting ERISA. Moreover, ERISA provides no guarantee that a claim brought under its provisions will be successful. ERISA does not provide for the reinstatement of preempted state law claims if a plaintiff's ERISA claims are denied. Again, this would undermine Congress's intent to make ERISA plan regulation a matter solely of federal concern and to promote the provision of benefits by providing a uniform system of claims management.
In Hampers v. W.R. Grace Co., Inc., 202 F.3d 44 (1st Cir. 2000), the Court of Appeals confirmed its earlier holding that when a plaintiff's state law claims are preempted and the plaintiff's ERISA claim failed because it sought no appropriate remedy, the court must decline any invitation to "fashion a federal remedy not authorized by ERISA's remedial scheme." Id. at 51 (discussing its holding in Turner v. Fallon Cmty. Health Plan, Inc., 127 F.3d 196 (1st Cir. 1997), cert. denied, 523 U.S. 1072 (1998)). The court noted that the plaintiff in Turner argued "that if ERISA provided no federal [damages] remedy, it ought not be read to preempt his state-law claims;" alternatively, "if ERISA preempted the state-law claims, then a federal remedy ought to be inferred or created by the court to permit damages" to be recovered by the plaintiff. Hampers, 202 F.3d at 50 (quoting Turner, 127 F.3d at 198). The court in Hampers reiterated that the court cannot create a remedy under ERISA where none exists, even if it means that an aggrieved party may be left without a remedy. Id. at 51. As also noted by the Second Circuit Court of Appeals, "preclusion of remedy does not bar the operation of ERISA preemption." Smith v. Dunham-Bush, Inc., 959 F.2d 6, 11 (2d Cir. 1992) (citing cases from the other Circuit Courts of Appeals).
The court in Kishter v. Principal Life Ins. Co., 186 F. Supp. 2d 438 (S.D.N.Y. 2002), recognized that the plaintiff there, like plaintiff here, was left with no remedy under ERISA or under state law. The court explained as follows:
The fact that plaintiff has no remedy under ERISA, and therefore will have no adequate remedy if his state-law claims are preempted, is immaterial to the above analysis. . . . Although the result disappoints this plaintiff, the express purpose of ERISA's preemption provision is to make the statute "the exclusive remedy for rights guaranteed under ERISA." Romney [v. Lin], 94 F.3d [74, 80 (2d Cir. 1996)] (quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 144 (1990)) (internal quotation marks omitted). "The policy choices reflected in Congress's inclusion of certain remedies and exclusion of others would be `completely undermined' if ERISA plan participants and beneficiaries could freely obtain remedies under state law that Congress has rejected." Smith [v. Dunham-Bush, Inc.], 959 F.2d [6, 11 (2d Cir. 1992)] (quoting Pilot Life, 481 U.S. at 54).Id. at 447 (citations omitted).
In Difelice v. Aetna U.S. Healthcare, 346 F.3d 442 (3d Cir. 2003), then Chief Judge Becker, in a concurring opinion, noted that "§ 514(a) preempts state causes of action to enforce ERISA-guaranteed rights even when § 502 provides no substitute federal cause of action." Id. at 457. Chief Judge Becker recognized that this "regulatory vacuum" creates situations in which "plan beneficiaries have little or no recourse for even the most egregious violations of their rights, for the remedies contained in § 502 are incapable of making victims whole; indeed, in many cases they actually create incentives for HMOs to mistreat their plan participants." Id. at 457. Chief Judge Becker explained that because ERISA's remedial scheme often provides no remedies for litigants, litigants go to great lengths to identify state causes of action that are not preempted by ERISA. Id. at 459. Clearly, the Third Circuit Court of Appeals has recognized that preempted state law claims remain preempted even should the ERISA claim fail, and plaintiffs must attempt to devise state law claims not preempted by ERISA. See also Rego v. Westvaco Corp., 319 F.3d 140, 148 (4th Cir. 2003) (court will not fashion claims under federal common law to fill gaps in the ERISA statutory scheme); Lee v. E.I. DuPont de Nemours and Co., 894 F.2d 755 (5th Cir. 1990) (state law claims preempted even though plaintiff would be left with no remedy).
In light of these and other considerations, Chief Judge Becker suggested the need for Congress or the Supreme Court to intervene. 346 F.3d at 465-67.
Plaintiff also argues that this court should not find ERISA preemption because any damage award would be satisfied from the assets of ROA and not from the disability insurance carrier. This argument must be rejected. See Nobers, 968 F.2d at 406 (noting that Supreme Court rejected argument that state law claims should not be preempted because the claims were against employer and not the ERISA plan) (citing Ingersoll-Rand).
Although unfortunate for this plaintiff, the fact that she has no remedy under ERISA, and no remedy under state law since her state law claims are preempted, is immaterial to the analysis of the court. This court must apply the law as written by Congress and interpreted by the Supreme Court and the Third Circuit Court of Appeals. Congress made deliberate choices in drafting and enacting ERISA. Plaintiff's state law claims are preempted by ERISA § 514. Her claim under ERISA for breach of fiduciary duty fails because the remedies she seeks are unavailable under ERISA. ROA's motion for summary judgment is GRANTED and judgment will be entered in favor of ROA and against plaintiff on Counts Two through Seven of the Second Amended Complaint.
An appropriate order follows.