Isham v. Boeing Company, The
Filing
20
MEMORANDUM AND ORDER denying 12 Motion to Dismiss; granting 18 Motion for Leave to Amend Complaint. Signed by District Judge Richard D. Rogers on 5/22/2013. (meh)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
BRAD ISHAM,
)
)
)
)
)
)
)
)
)
_
Plaintiff,
v.
THE BOEING COMPANY,
Defendant.
Case No. 13-1098-RDR
MEMORANDUM AND ORDER
This case was originally filed in state court and has been
removed to this court.
claims for:
negligent misrepresentation, fraud through silence
and fraud.
motion
to
Plaintiff brings three state common law
This action is now before the court upon defendant’s
dismiss
for
failure
to
state
a
claim.
Defendant
contends that this case should be dismissed because plaintiff’s
state law claims are preempted under the federal ERISA statute.
This
raises
difficult
an
here
often
because
difficult
plaintiff
issue.1
asserts
It
is
perhaps
in
response
to
more
the
motion to dismiss that he is not making a claim for lost ERISA
plan benefits.
Plaintiff claims that he is seeking to recover
for the economic loss he sustained by electing to retire when he
was misled by defendant into doing so.
1
Doc. No. 17, p. 5.
This
The Tenth Circuit has remarked that “any court forced to enter the ERISA
preemption thicket sets out on a treacherous path.”
Kidneigh v. UNUM Life
Ins. Co. of Am., 345 F.3d 1182, 1184 (10th Cir. 2003) cert. denied, 540 U.S.
1184 (2004)(quoting Gonzales v. Prudential Ins. Co., 901 F.2d 446, 451-52 (5th
Cir. 1990).
assertion
is
neither
confirmed
nor
contradicted
by
the
allegations in the complaint which generally ask for actual and
compensatory
losses
for
damages,
which
but
do
plaintiff
not
seeks
specifically
damages.
describe
For
the
the
reasons
discussed below, the court is not convinced at this stage that
the objectives of ERISA would be compromised by permitting this
case
to
go
forward
upon
plaintiff’s
state
law
claims.
Therefore, the court shall deny defendant’s motion to dismiss.
Defendant also alleges that plaintiff has not pleaded his
fraud
claims
with
FED.R.CIV.P. 9(b).
sufficient
specificity
to
conform
with
But, plaintiff has filed a motion for leave
to file an amended complaint which elaborates upon his fraud
allegations.
Defendant does not oppose the motion to amend on
any grounds other than the preemption arguments which defendant
asserts make plaintiff’s attempt to amend futile.
Because the
court rejects defendant’s preemption arguments, the court shall
permit this case to go forward upon the amended complaint.
I.
12(b)(6) standards
In ruling upon a motion to dismiss brought pursuant to
FED.R.CIV.P.
pleaded
12(b)(6),
factual
the
allegations
court
in
assumes
the
as
complaint
true
and
all
well-
determines
whether they plausibly give rise to an entitlement of relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
2
II.
Plaintiff’s allegations
The
taken
following
from
recitation
Exhibit
A
to
of
Doc.
proposed first amended complaint.
plaintiff’s
No.
18
which
allegations
is
is
plaintiff’s
Plaintiff alleges that he was
a long-term managerial employee of defendant who was forced to
take a leave of absence from his employment, with defendant
Boeing’s
approval,
impairments.
after
incurring
physical
and
mental
Plaintiff further alleges that he requested and
received from defendant certain information as to the benefits
he would enjoy as an existing employee and as a Boeing retiree.
According to plaintiff, he was told by defendant that he would
retain his Boeing life insurance benefit should he elect to
retire
in
lieu
benefits.
that
he
of
attaining
Boeing
long-term
disability
Plaintiff asserts that he was never told by defendant
would
be
required
to
attain
active-duty
employment
status after returning from his leave of absence in order to be
considered eligible for his full benefit package, including the
company life insurance policy; nor was he told that his prior,
involuntary
cessation
of
long-term
disability
benefits
would
work a forfeiture of those benefits.
Plaintiff asserts that he
relied
failure
upon
defendant’s
advice
and
to
retired without returning to active-duty status.
according
to
the
complaint,
plaintiff
3
was
warn
when
he
Thereafter,
informed
that
his
entire Boeing retirement entitlements were in full force and
effect.
This continued for three years until February 2011 when
plaintiff was notified by defendant for the first time that his
entitlement to a premium-free Boeing life insurance policy with
a face value of $223,000 was no longer valid.
Defendant is
alleged to have told plaintiff that plaintiff was not entitled
to the life insurance policy because plaintiff had not returned
to an active-duty status before notifying Boeing of his decision
to retire and that his prior, involuntary cessation of long-term
disability benefits would cause a forfeiture of the benefits.
Plaintiff asserts that he would not have retired if he had known
what Boeing now contends were his actual rights as an employee.
Plaintiff
generally
prays
for
actual
and
compensatory
damages to compensate him for losses sustained as a result of
defendant’s
alleged
negligence
and
fraud.
Plaintiff
alleges
that his “damages were suffered in connection with a transaction
that
defendant
intended
to
influence,
to
wit
decision as to whether to retire from Boeing.”
plaintiff’s
Doc. No. 18-1,
¶¶ 26, 36.
III. The court is not convinced that plaintiff’s alleged state
law claims seek relief which is contrary to the objectives of
ERISA and warrants preemption.
Defendant
“fundamentally
contends
claims
for
that
the
plaintiff’s
recovery
of
claims
benefits
under
are
an
ERISA employee benefit plan” and that they are preempted under
4
29 U.S.C. § 1144(a) because they “relate to” an ERISA-regulated
employee
benefit
plan.
Doc.
No.
13,
p.6.
Section
1144(a)
provides that ERISA “shall supersede any and all state laws
insofar as they may now or hereafter relate to any employee
benefit plan. . . .”
Plaintiff
reinstatement
denies
of
any
that
he
is
seeking
ERISA-regulated
the
benefit
recovery
of
or
employment.
Plaintiff states that he “intends to seek the accrued worth of
his
financial
losses
arising
retirement from Boeing in 2007.”
from
his
wrongfully-induced
Doc. No. 17, p. 3.
Plaintiff
specifically denies that he seeks the worth or value of any life
insurance policy guaranteed to Boeing employees.2
A. Preemption factors
To repeat, § 1144(a) states that ERISA “shall supersede any
and all state laws insofar as they may now or hereafter relate
to any employee benefit plan. . . .”
Whether the state common-
law rules governing misrepresentation and fraud “relate to” an
ERISA plan, requires the court to consider the objectives of
ERISA as well as the nature of the effect of the state laws on
ERISA
plans,
since
the
state
2
common-law
rules
governing
Plaintiff also argues that the court should consider the result in Felix v.
Lucent Technologies Inc., 387 F.3d 1146 (10th Cir. 2004). The court, however,
agrees with defendant that Felix concerns an issue of preemption under a
different section of ERISA - - so-called “complete preemption” under § 502(a)
- - instead of preemption under § 514 of ERISA which is the section argued by
defendant in this case. This court has diversity jurisdiction which supports
the removal of this case and therefore, the court does not need to consider
the issue of “complete preemption” that was decided in Felix.
5
misrepresentation and fraud do not expressly refer to employee
benefit plans.
See Egelhoff v. Egelhoff, 532 U.S. 141, 147
(2001); New York State Conf. of Blue Cross and Blue Shield Plans
v.
Travelers
Ins.
Co.,
represents
a
shift
recognized
by
the
514
in
U.S.
analysis
Tenth
Circuit
645,
of
in
656
(1995).
preemption
Carroll
v.
This
issues
Los
as
Alamos
National Security, LLC, 407 Fed.Appx. 348 (10th Cir. 1/19/2011).
There,
the
court
stated
beyond
the
unhelpful
that
text
the
and
the
“Supreme
Court
frustrating
has
go[ne]
difficulty
of
defining [‘relate to’] in favor of look[ing] 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 352
(quoting, De Buono v. NYSA-ILA Med. & Clinical Servs. Fund, 520
U.S. 806, 813-14 (1997)).
The Tenth Circuit has described the objectives of ERISA as
follows:
In enacting ERISA, Congress intended to “protect
. . . the interests of participants in employee
benefits plans and their beneficiaries . . . by
establishing standards of conduct, responsibility, and
obligation for fiduciaries of employee benefit plans,
and by providing for appropriate remedies.” 29 U.S.C.
§ 1001(b). Preemption of state law works toward that
end by subjecting plans and plan sponsors to a uniform
body of law and minimizing the administrative and
financial
burdens
of
complying
with
conflicting
directives among states or between states and the
federal government.
6
Woodworker’s Supply, Inc. v. Principal Mut. Life Ins. Co.,
170 F.3d 985, 990 (10th Cir. 1999).
The Tenth Circuit has
also recognized four categories of state laws that “relate
to” a benefit plan and are preempted by ERISA:
(1) laws regulating the type of benefits or terms of
ERISA plans;
(2) laws creating reporting, disclosure, funding or
vesting requirements for such plans;
(3) laws providing rules for calculating the amount of
benefits to be paid under such plans; and
(4) laws and common-law rules providing remedies for
misconduct growing out of the administration of such
plans.
Id.
Here, of course, we are concerned with the fourth category
and
asking,
generally
under
the
applicable
misrepresentation
facts
alleged
common-law
are
being
by
rules
invoked
by
plaintiff,
whether
governing
fraud
plaintiff
to
and
provide
remedies for misconduct growing out of the administration of an
ERISA plan.
Preemption is not appropriate “if the state law has only a
tenuous, remote, or peripheral connection with ERISA plans as is
the case with many laws of general applicability.”
District of
Columbia v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130 n. 1
(1992)(quotations and citations omitted).
The Tenth Circuit has
stated that “[c]laims that solely impact a plan economically
generally” are not preempted.
Estate
of
Simper,
407
F.3d
David P. Coldesina, D.D.S. v.
1126,
1136
(10th
Cir.
2005).
Moreover, claims which refer to ERISA plan components simply to
7
determine whether the elements of negligent misrepresentation
can
be
established
preemption.
or
to
calculate
See Carroll, supra.
damages
do
not
mandate
The Tenth Circuit has stated
that “[t]he fact that an ERISA plan was merely part of the means
by
which
[a
defendant]
allegedly
fraudulently
procured
plaintiffs’ dismissal does not necessarily compel the conclusion
. . . that that state law claim is ‘premised on’ the existence
of an ERISA-covered plan.”
Raymond v. Mobil Oil Corp., 983 F.2d
1528, 1538 n. 14 (10th Cir.) cert. denied, 510 U.S. 822 (1993).
Unless
the
state
law
claim
affects
“’the
structure,
the
administration, or the type of benefits provided by an ERISA
plan, the mere fact that the law has some economic impact on the
plan does not require that the law be invalidated.’”
Coldesina,
407 F.3d at 1136 (quoting Airparts Co. Inc. v. Custom Benefit
Servs. of Austin, 28 F.3d 1062, 1065 (10th Cir. 1994)).
“What
triggers ERISA [preemption] is not just any indirect effect on
administrative procedures but rather an effect on the primary
administrative functions of benefits plans, such as determining
an employee’s eligibility for a benefit and the amount of that
benefit.”
1062,
1065
Airparts Co., Inc. v. Custom Ben. Services, 28 F.3d
(10th
Cir.
1994)(interior
quotations
omitted).
“’[L]aws that have been ruled preempted are those that provide
an alternative cause of action to employees to collect benefits
protected by ERISA, refer specifically to ERISA plans and apply
8
solely to them, or interfere with the calculation of benefits
owed to an employee.
Those that have not been preempted are
laws of general application – often traditional exercises of
state power or regulatory authority – whose effect on ERISA
plans is incidental.’”
Monarch Cement Co. v. Lone Star Indus.,
Inc., 982 F.2d 1448, 1452 (10th Cir. 1992)(quoting Aetna Life
Ins. Co. v. Borges, 869 F.2d 142, 146 (2d Cir.) cert. denied,
493 U.S. 811 (1989)).
But, “ERISA preemption is triggered when
there is an effect on the primary administrative functions of
benefit plans.”
Kisor v. Advantage 2000 Consultants, Inc., 799
F.Supp.2d 1204, 1212 (D.Kan. 2011).
consider
whether
the
claim
principal ERISA entities.
affects
It is also important to
the
relationship
between
“[C]laims that do not affect the
‘relations among the principal ERISA entities, the employer, the
plan,
the
preempted.”
B.
plan
fiduciaries
and
the
beneficiaries’
are
not
Id. (quoting Woodworker’s Supply, 170 F.3d at 990).
Analysis of defendant’s arguments for preemption
Although
plaintiff
contends
that
he
does
not
seek
to
recover any benefit encompassed by an ERISA plan in this action,
defendant maintains that preemption is still mandated because
the foundation for plaintiff’s claims are that plaintiff was
misled regarding his entitlement to coverage under an ERISA plan
and that this induced him to retire to his economic detriment.
Defendant
argues
that
to
establish
9
the
fraud
and
misrepresentation
claims
alleged
would have to establish:
terms
were
or
communications
were
the
complaint,
plaintiff
the terms of the ERISA plan; what
not
differed
in
communicated
from
the
terms
to
of
him;
the
how
plan;
those
whether
there was a miscommunication or a “noncommunication”; whether
the
communicator
knew
the
true
terms
of
the
plan;
whether
plaintiff possessed the plan’s documents; and the reasonableness
of his reliance upon the alleged misrepresentations.
Defendant
asserts that this will require the court to analyze the plan’s
terms and plaintiff’s eligibility.
Doc. No. 19, p.9.
These arguments are not sufficient to warrant a finding of
preemption on the face of the pleadings.
Defendant’s arguments
focus upon the fact that plaintiff’s claims “refer” to an ERISA
plan.
But, as mentioned earlier, the Supreme Court seems to
have shifted somewhat away from asking the broad question of
whether
the
state
law
“refers”
to
an
ERISA
plan
toward
acknowledging the normal presumption against preemption of state
law and looking at whether the objectives of the ERISA statute
would survive the application of the state law.
U.S.
at
813-14.
Defendant
does
not
argue
De Buono, 520
that
allowing
plaintiff’s claims to continue would be contrary to protecting
the interests of plan participants or that it would increase the
administrative
benefit plan.
or
financial
burden
of
operating
an
employee
For instance, plaintiff’s claims do not appear to
10
threaten the fundamental premise that the right to receive ERISA
benefits derives from the written terms of the plan.
may
be
argued
administration
necessarily
that
of
plaintiff’s
an
require
employee
claims
benefit
preemption
if
the
grow
plan,
effect
While it
out
the
does
that
of
not
incidental.3
is
There is no persuasive argument before the court at this moment
that
plaintiff’s
state
law
claims
would
incidental effect upon the ERISA plan.
have
more
than
an
Nor does defendant argue
that the structure or type of benefits provided by the ERISA
plan will be impacted by plaintiff’s claims.
plaintiff’s
claims
appear
to
involve
Finally, while
relations
between
plan
participants and an employer, the court does not believe this is
sufficient by itself to justify preemption.
Defendant has cited various Tenth Circuit cases in support
of
its
preemption
distinguishable.
argument.
We
also
We
note
find
that
most
these
of
cases
the
to
cases
be
were
decided before the Supreme Court’s shift in analyzing the issue.
In Straub v. Western Union Telegraph Co., 851 F.2d 1262
(10th
Cir.
1988),
the
plaintiff
made
a
claim
for
increased
pension benefits while arguing that defendant committed breach
3
We observe that some state laws which do impose some burdens on the
administration of ERISA plans have been held not to “relate to” the plans for
the purposes of preemption analysis.
Id. at 815-16; see also, Mackey v.
Lanier Collection Agency & Service, Inc., 486 U.S. 825, (1988)(acknowledging
that lawsuits may be brought against ERISA plans for “run-of-the-mill statelaw claims such as unpaid rent, failure to pay creditors, or even torts
committed by an ERISA plan”).
11
of contract and negligent misrepresentation.
The Tenth Circuit
held that the claims were preempted by ERISA and compared the
claims to those in Anderson v. John Morrell & Co., 830 F.2d 872
(8th Cir. 1987) where it was alleged that oral representations
amounted to an offered promise of improved benefits accepted by
the employee’s performance of work.
Id. at 1264.
Thus, it
appears in Straub, unlike this case, plaintiff was making a
claim for benefits and that the claim might affect the structure
of how benefits were paid by the plan.
In Kelley v. Sears, Roebuck and Co., 882 F.2d 453 (10th Cir.
1989),
the
plaintiff
against
an
insurance
brought
company
a
in
common-law
charge
of
bad
faith
handling
a
claim
claim
against a long-term disability policy which was provided as an
employee
benefit.
The
plaintiff
contended
that
the
company
miscalculated his benefits and refused to cash out his policy.
Unlike the allegations currently before the court, the complaint
concerned the loss of benefits and the alleged misadministration
of benefits.
In Settles v. Golden Rule Ins. Co., 927 F.2d 505 (10th Cir.
1991), the plaintiff claimed that the death of her husband was
caused
by
a
stress-induced
heart
attack
resulting
from
the
wrongful termination of his insurance coverage.
The court ruled
that
plaintiff
the
state
law
claims
brought
by
the
were
preempted because the alleged injury was directly tied to the
12
termination of plan benefits and thus concerned the improper
administration of the plan.
appear
that
plaintiff
is
Id. at 509.
alleging
his
Here, it does not
plan
benefits
were
improperly terminated.
In Wilcott v. Matlack, Inc., 64 F.3d 1458 (10th Cir. 1995),
the
plaintiff
asserted
negligent
and
fraudulent
misrepresentation claims (as well as other state tort claims)
alleging that he relied to his detriment upon a representation
that utilizing disability leave would not jeopardize his job and
that
he
lost
benefits.
access
to
short-term
and
long-term
disability
The circuit court held that some of the state law
claims were not preempted, but that the misrepresentation claims
were preempted because they related to whether an employee’s
disability benefits were secured by guarantees against adverse
job consequences.
Id. at 1464.
Once again, the case at bar
appears distinguishable because plaintiff is not alleging he was
discharged for exercising his right to benefits under the plan.
Finally, in Karls v. Texaco, Inc., 139 Fed.Appx. 29 (10th
Cir.) cert. denied, 546 U.S. 961 (2005), the plaintiff brought
breach
of
contract
and
fraud
allegations
administration of his benefit request.
relating
to
the
The plaintiff alleged
that the benefit payments were too small and were not commenced
at the proper time.
These claims appear to relate more to a
13
claim for plan benefits and to the administration of an ERISA
plan than the allegations in the present case.
IV. Plaintiff’s fraud claims as alleged in the proposed amended
complaint shall not be dismissed.
Defendant’s motion argues that plaintiff’s fraud claims are
not alleged with sufficient specificity.
Plaintiff, however,
has asked for leave to file an amended complaint which adds
allegations to his fraud claims.
motion
for
leave
to
amend,
In response to plaintiff’s
defendant
suggests
that
granting
leave to amend or proceeding upon the amended complaint would be
futile because plaintiff’s fraud claims are preempted by ERISA.
Defendant does not assert that the amended complaint is too
vague or otherwise in violation of FED.R.CIV.P. 9(b).
The court
has now rejected defendant’s preemption arguments on the basis
of the allegations currently before the court.
Accordingly, the
court finds that plaintiff should be permitted leave to file the
amended
complaint
and
the
court
shall
reject
defendant’s
arguments to dismiss plaintiff’s fraud claims.
V.
Conclusion
For the above-stated reasons, defendant’s motion to dismiss
(Doc. No. 12) shall be denied and plaintiff’s motion to amend
the complaint (Doc. No. 18) shall be granted.
14
IT IS SO ORDERED.
Dated this 22nd day of May, 2013, at Topeka, Kansas.
s/Richard D. Rogers
United States District Judge
15
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