Amicus Curiae Brief — FMC Corp. v. Holliday

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’ OSES SPANIOL, JR,

No. 89-1048

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1989

FMC CORPORATION,

Petitioner,

V.

CYNTHIA ANN HOLLIDAY,

Respondent.

PETITION FOR A WRIT

OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF IN OPPOSITION TO THE PETITION

FOR WRIT OF CERTIORARI

John Patrick Lydon, Esquire

Counsel of Record

Sikov and Love, P.A.

1400 Lawyers Building

Pittsburgh, PA 15219

(412)261-4202

Counsel for Amicus Curiae,

Pennsylvania Trial Lawyers Association

BEST AVAILABLE COPY

i

QUESTIONS PRESENTED

l. Should this Court grant certiorari on an

ERISA preemption claim where the ERISA plan

already took advantage of certain provisions

of the state law and only seeks preemption of

certain other portions?

2. Should this Court grant certiorari and

review a Pennsylvania motor vehicle insurance

statute where there is no conflict among the

Courts of Appeals on the issue of ERISA

preemption as to such statutes and where this

Court has previously declined to review the

same result?

ii

3. Should this Court review the Third

Circuit decision concerning the meaning of

ERISA's deemer clause when the Pennsylvania

statute does not relate to ERISA plans to such

an extent as to come within ERISA's initial

preemption clause?

iii

TABLE OF CONTENTS

Page

Questions Presented...ceccccccccscecsees i

Table of Authorities... cccccceseereeces Vv

Statement of the Interest of Amicus Curiae

Pennsylvania Trial Lawyers Association..,.. l

Statutes Involved... sceccceveccvevvscces 3

Summary Of REASONS. ...ceeescccceccevesecs 5

Reasons for Denying the Writ:

I. The Petitioner having availed itself

of the benefits of the Pennsylvania

Motor Vehicle Financial Responsibility

Law cannot now argue that the law is

PPEEMPTed.. cee ccc sceseccccsessceces 10

II. The Court of Appeals did not disregard,

and its decision is not contrary to,

this Court's decision in Metropolitan

Life Insurance Co. v. Massachusetts... 13

III. There is no substantial and direct

conflict among the Courts of Appeals

that a decision in this case will

EE ESSE IETS OTT TTT TTT TT 16

iv

IV. There is no federal interest in

preempting the Pennsylvania Motor

Vehicle Financial Responsibility

iF POUTTTTLTTTTTLIT eee Te ee TT 21

Vv. The Pennsylvania Financial Responsibilty

Law does not "relate to" this plan

such that it would be preempted by

ee 0666666006 0000460058 6ERES 6b OOO 24

GOROGLUBIOD sc 0 000000 00h 0b bb0eeeseseseseseee 27

eS

Vv

TABLE OF AUTHORITIES

Page

Alessi v. Raybestos-Manhattan, Inc.,

eeeeseeoeeeeee¢e SI ASISOVSIVRSIVSASSC STITT 99E0S98 15

Baxter v. Lynn, 886 F.2d 182, reh'g

a cet. 2a » (8th Cir.

1989

eeeeoeeeeseeeseseeeespeeeeneeeeeeneseeeeeseeeeee 19

Children's Hospital v. Whitcomb, 778

F.2d 239 (5th Cir. 1985)

@eeeeoeeeoeew ease eeeeweseeweeeeeeeeeeeeeeeee? 18

FMC Corp. v. Hollida 885 F.2d 79,

reh'g denied, _—F. “S34 ___, (3d Cir.

1989)

eeeeoeeeeneeesteeneeereenstseeeeeneneeeeteeeeneneneneeeee passim

Fort Halifax Packing Co., Inc. v.

Coyne, 482 U.S. 1, 107 S.Ct. 2211,

96 L. Ed 2d 1 (1987)

eeeeseeeenetesensrteeenreeeweeespeensesteeneeeseeeeoeeeee @ 15

ansurance Board of Bethlehem Steel

orporation v. Muir, 819 F.2d

tia- Cir. 1987)

eeeeteeoeeeeeeeneeeeeeeeeeeeeseeeeeeeeeeee 6, l/

Liberty Mutual Insurance Group v.

Tron Tron Workers Heath Fund of Fastern

Michigan, 67 gan, © “Feed 1304, reh'g

denie >. 2d ss (6th Cir. 1989)

eeeeoeeeeeeeeneeeeeeeeeeeeeeseeeeeeeee © @ 17

vi

Page

Mackey v. Lanier Collections ABCRCY 3

~ os , Ut. 9

L.Ed 2d 836 (1988)

eeeeseeoeeoeveeeeeeeeeeeeeeeeeeeeeee eee l2, 25

Metropolitan Life Ins. Co. v. 6, 7, 12

Massachusetts, 471 U.S. 704, 105 13, 14

S.Ct. 2300, BS L.Ed 2d 728 (1985) 15, 16

eeeeeoevoeeeeeeeeeeeeeeeeeeeeeeeeee eee 19

Northern Group Services v. Auto

Owners Inc. Co., 533 F.2d 85 (6th

Cir. 1987), cert. denied, 108 S.Ct.

1754 (1988)

eeeeoeeeeeeeeeeeeeeeeeeeeeeeeeeeaeeee 8, 19,

Pilot Life Ins. Co. v. Dedeaux

48i U.S. Wi, 107 S.ct. 1549, 95

L.Ed 2d 39 (1987)

eeeeeeoeeeeeeeeeeeeeeeeeeeeeeeeeneeeee 14

Powell v. Chesapeake and Potomac

Telephone Co. oF Virginia, 750 F.2d

qi9 Cith Cir. 1985), cert. denied,

S76 U.S. 1270 (1986) .ccccccccccesece 8, 19,

Reilly v. Blue Cross and Blue

Shiels United of Wisconsin, 646

: 1 th Cir.),cert. denied,

104 S.Ct. 195 (1988)... cccccccccccce 8

vii

Page

Shaw v. Delta Air Lines, Inc., 463

U.S. 55, 103 S.Ct. 2090, 77 L.Ed

2d 490 (1983)

ELLE OO Oe eee EET TT. |e 25

United Food & Commercial Workers

oyers Arizona Health &

Welfare Trust v. Pacyga, BOl F.2d

t r.

esceeeevevee2eee202e2e20202020002802828078080808080880808080787 87 8 19

STATUTES:

29 U.S.C. SLLUN (a) cc ccccccccccccvcces 5, ll,

25

75 Pa. Cons. Stat. Ann. §1719 _

eeceeveeveee2eeee282020202802802802802802808080808080887808078087808087 8 il, 12

75 Pa. Cons. Stat. Ann. §1720.....++- 11

a

1

STATEMENT OF THE INTEREST OF

AMICUS CURIAE PENNSYLVANIA

TRIAL LAWYERS ASSOCIATION

Pursuant to Rule 37.2 of the Rules of the

Supreme Court of the United States, the

Pennsylvania Trial Lawyers Association files

this Brief as Amicus Curiae supporting the

position of Respondent Cynthia Ann Holliday.

Signed consents permitting the filing of this

Brief, from Counsel for Petitioner FMC

Corporation and from Attorney Thomas 4G.

Johnson representing Respondent Cynthia Ann

Holliday, have been filed with the Clerk of

this Honorable Court. The Pennsylvania Trial

Lawyers Association is a private non-profit

association with a membership of nearly 4,500

trial attorneys in the Commonwealth of

Pennsylvania, predominately representing

2

injured parties in their attempt to seek

redress for their injuries in the Courts. The

issue of subrogation in Pennsylvania

automobile cases has a significant impact on

the interests of injured parties and on the

practive of iaw in Pennsylvania. Any

determination, therefore, by this Honorable

Court of the issues in the case at bar will

directly affect the members of the

Pennsylvania Trial Lawyers Association and the

interests of their clients.

This Brief is filed timely pursuant to

the schedule established by the Rules of this

Honorable Court for the filing of Briefs in

Opposition to a Petition for a Writ of

Certiorari.

3

STATUTES INVOLVED

In addition to the statutes identified by

Petitioner, this case involves Section 1719 of

the Pennsylvania Motor Vehicle Financial

Responsibility Law of 1984 (the "Financial

Responsiblity Law") which provides:

(a) General rute. - Except for

workers' compensation, a policy

of insurance issued or

delivered pursuant to this

subchapter shall be primary.

Any program, group contract or

other arrangement for payment

of benefits such as described

in section 1711 (relating to

required benefits) 1712(1) and

(2) (relating to availability

of benefits) or 1715 (relating

to availability of adequate

limits) shall be construed to

contain a provision that all

benefits provided therein shall

be in excess of and not in

duplication of any valid and

collectible first party

benefits provided in section

1711, 1712 or 1715 or workers’

compensation.

75 Pa. Cons.

(Purdon 1984),

Stat.

4

Ann.

§1719(a)

© he ee

5

SUMMARY OF REASONS

The Petitioner seeks to have this Court

determine that Section 514(a) of the Employee

Retirement Income Security Act of 1974

preempts the Pennsylvania Motor Vehicle

Financial Responsibility Law of 1984. If the

state law were preempted, it would be

preempted for all purposes. Both the District

Court and the Court of Appeals, however, found

that the Petitioner herein availed itself of

the benefits of the Financial Responsibility

Law to reduce the amount that it would have

been required to pay on behalf of the

Respondent. The decisions of this Court do

not allow an ERISA plan to pick and choose

those parts of a state law which benefit the

6

plan but "preempt" those parts that the plan

does not find desirable. Consequently,

certiorari should not be granted herein where

Petitioner has already taken advantage of the

law it now seeks to have preempted.

The Petitioner incorrectly argues that

the Court of Appeals for the Third Circuit did

not follow this Honorable Court's decision in

Life Insurance

Metropolitan Company iv.

Massachusetts, 471 U.S. 724, 105 S.Ct. 2380,

85 L.Ed. 2d 728 (1985).

The decision of the Court of Appeals in

this matter specifically cited Metropolitan

Life and the Court of Appeals for the Third

Circuit has applied the dictates of

Metropolitan Life in prior decisions. See

Insurance Board of Bethlehem Steel Corp. v.

wee Ree Ar Ore

Muir,

7

R19 F.2a 408 (1987). The Court of

Appeals simply held that Metropolitan Life was

not controlling in this case.

There is not a substantial and direct

conflict among the Courts of Appeals on this

issue. The decisions cited by Petitioner to

support its argument of conflict involve

different issues than the question of

preemption of a state automobile no-fault

insurance statute. It is noteworthy that this

alleged "conflict" has existed for quite some

time and that this Honorable Court has on at

least three prior occasions refused writs for

certiorari in the same cases used by

Petitioner to support its present argument

about this "conflict".1 The Petitioner

presents no reasons as to why this Court

should now grants its petition having thrice

refused this issue.

This

case does not have national

Significance such as would justify consuming

the judicial resources of this

Honorable

Court. In addition, this amicus curiae

1. Powell v. Chesapeake and

Potomac Teiephone Go. oF Virginia

780 F.2d “id (ath Cir. 1985), cert.

denied, 476 U.S. 1170 (1986); Reilly —

v. Blue Cross and Blue Shield Unites

of Wisconsin, 046 F.od

» cert. denied

r.

104 S.Ct. 145

(1988); Northern roup Services,

Inc. v. Auto Owners Insurance Co.,

: ° Jif. ), cert.

denied, 108 S.Ct. 1754 (i988).

;

3

if

9

presents an alternative argument that the

statute herein does not "relate to" ERISA such

that it should he preempted.

10

REASONS FOR DENYING THE PETITION FOR

WRIT OF CERTIORARI

I. THE PETITIONER HAVING AVAILEND ITSELF OF

THE BENEFITS OF THE PENNSYLVANIA MOTOR

VEHICLE FINANCIAL RESPONSIBILITY LAW

CANNOT NOW ARGUE THAT THE LAW

PREEMPTED. ”

It is uncontested that the FMC

Corporation took advantage of those provisions

of the Pennsylvania Motor Vehicle Financial

Responsibility Law that were helpful to it.

At a minimum, this included having the

applicable automobile insurance carrier pay

its full Ten Thousand ($10,000.00) Dollars of

medical benefits coverage before FMC paid any

benefits on behalf of the Respondent.

(Petition for Writ of Certiorari at page A4.)

The plan of the FMC Corporation specifically

incorporated into its

terms "no-fault"

ho ed et ah RM EBL BR ce BS

;

:

:

11

automobile insurance plans such as_ the

Pennsylvania law in question. (See Petition

at page A3.) Having now availed itself of

those provisions of the Financial

Responsibility Law which it considered

beneficial to itself, the Petitioner now

suggests that federal law should preempt those

portions of the Financial Responsibility Law

find beneficial, in

which it does not

particular Section 1720. It is important to

note that the FMC plan in this case was

included in section 1720 of the Financial

Responsibility Law by its identification in

of benefits provision of

the coordination

section 1719.

The Petitioner misunderstands the scope

of the preemption clause in Section 514(a) of

12

ERISA. The Petitioner cannot "pick and

choose" those portions of a state law which

are of benefit to it and seek to "preempt"

other portions. If a law is preempted, it

does not matter that portions of it would be

beneficial to the Petitioner or consistent

with ERISA requirements. Metropolitan Life

Insurance Co. v. Massachusetts, 471 U.S. 724,

105 S.Ct. 2380, 2389, 85 L.Fd. 2d 728 (1985);

Mackey v. Lanier Collections Agency, 486 U.S.

825, 108 F.Ct.

(1988).

2182, 2185, 100 L.Ed. 2d 836

FMC took advantage of Section 1719 of the

Financial Responsibility Law pertaining to the

coordination of benefits between automobile

insurance and _ the

plan and is therefore

estopped from arguing that other portions of

of ab te ti

s se es ne

13

the law should be preempted by FRISA. No

explanation has ever been offered by FMC at

any time during the pendency of this matter as

to why or how certain parts of the Financial

Responsibility Law would be preempted but not

Since FMC by its conduct has

other parts.

relied on and used the Financial

Responsibility Law to its own advantage, it is

estopped from arguing that the law is

preempted by ERISA.

II. THF COURT OF APPEALS DID NOT DISREGARD,

AND ITS DECISION IS NOT CONTRARY TO,

THIS COURT'S DECISION IN METROPOLITAN

LIPE INSURANCE CO. V. MASSACHUSETTS.

The Petitioner argues in its Petition

that the Court of Appeals for the Third

Circuit ignored this Court's decision in

14

Metropolitan Life when it analyzed the

congressional intent behind the ERISA

preemption, savings and deemer clauses. This

is simply incorrect.

This Court has repeatedly held that it is

necessary to analyze the purpose behind the

preemption clause to determine the intent of

Congress in order to decide if a state law is

preempted by ERISA. Shaw v. Delta Air Lines,

Inc., 463 U.S. 85, 95, 103 S.Ct. 2890, 77

L.Ed. 2a 490 (1983); Metropolitan Life, 105

S.Ct. at 2389; Pilot Life Ins. Co. v. Dedeaux,

48] U.S. 41, 51 - 52, 107 S.Ct. 1549, 95 L.Fa.

2d 39 (1987).

While the preemption clause of ERISA is

ver? broad, this Court has determined that "we

must also presume that Congress Aid not intend

eee eer. ee ee

nn

15

to pre-empt areas of traditional state

regulation." Metropolitan Life, 105 S.Ct. at

2389. Certainly state automobile insurance

laws are familiar examples of an area of

traditional state regulation. See Metropol-

itan Life, 105 S.Ct. at 2383.

that the preemption

Congress intended

clause of ERISA would not interfere with the

ability of the states to regulate their

traditional areas of responsibility.

ERISA preemption analysis "must

be guided by respect for the

separate spheres of govern-

mental authority preserved in

our federalist system".

Fort Halifax Packing Co., Inc. v. Coyne, 482

U.S. 1, 107 S.Ct. 2211, 2221, 96 L.Ed. 24 1

(1987), citing Alessi v. Raybestos-Manhattan,

16

Inc., 451 U.S. 504, 522, 101 S.Ct. 1895, 1905

(1981). This is exactly the analysis which

the Court of Appeals undertook in this matter.

This analysis was in keeping with the clear

mandate of the decisions of this Court.

The decision by the Court of Appeals is

in accord with the reasoning of Metropolitan

17

no such conflict.

As noted above, the Court of Appeals in

the case at bar did follow the required

analysis set forth by this Court in

Metropolitan Life. The particular issue in

Life.

III. THERE IS NO SUBSTANTIAL AND DIRECT

CONFLICT AMONG THE COURTS OF APPEALS

THAT A DECISION IN THIS CASE WILL

RESOLVE.

The Petitioner argues that the Court of

Appeals for the Third and Sixth Circuits are

in conflict on this preemption issue with the

Courts of the Fourth, Fifth, Seventh, Eighth

and Ninth Circuits which Petitioner states

"have followed Metropolitan Life". There is

Metropolitan Life involved whether a state law

could mandate that a self-funded ERISA plan

must provide certain benefits. Both the Third

and the Sixth Circuits have held in accord

decision in

with this Court's

Metropolitan Life that such state laws are

preempted by ERISA. Insurance Board of

Bethlehem Steel Corporation v. Muir, 819 F. 2d

408 (3d Cir. 1987); Liberty Mutual Insurance

Group v. Iron Workers Health Fund of Eastern

Michigan, 879 F.2d 1384 (6th Cir. 1989). In

cases involving state laws mandating the

18

provision of certain benefits, there is an

easily applied "bright-line" test of whether

the ERISA plan is self-funded as opposed to

fully insured. Such a simplistic test does

not work in analyzing the preemption issue as

it involves a state motor vehicle "no-fault"

statute which clearly encompasses an area of

traditional state regulation. The analysis

provided by the Court of Appeals for the

Third Circuit in this case was totally in line

with the dictates of this Court.

The decisions cited by the Petitioner

from the other Courts of Appeals are not in

direct conflict with the decision at bar.

Both Children's Hospital v. Whitcomb, 778 F.2d

239, (5th Cir. 1985) and Reilly v. Blue Cross

and Blue Shield United of Wisconsin, 846 F.2d

oe ah

Fein ad 6 ee ae Oe ee ee (eee en

|

5

:

:

:

:

19

416 (7th Cir. 1988), cert. denied, 194 S.Ct.

145.(1988), dealt with state requirements that

a plan provide certain benefits or state law

remedies to force a plan to provide certain

benefits. These decisions are directly

determined by Metropolitan Life. Both Baxter

v. Lynn, 886 F.2d 182 (8th Cir. 1989) and

United Food & Commercial Workers v.

Pacyga,

801 F.2d 1157 (9th Cir. 1986) dealt with state

common law prohibitions against subrogation.

Neither involved a comprehensive state motor

vehicle insurance statute where the analysis

used by the Court of Appeals herein was

necessary given the traditional state interest

Powell v.

in automobile insurance. In

Chesapeake & Potomac Telephone Co. of

~Virginia, 780 F.2d 419 (4th Cir. 1985), cert.

20

denied, 1170 (1986),

476 U.S. the issue was

the application of the state insurance trade

practices law to the plan, which would have

required that the state "deem" the plan to be

an insurance company.

Only Northern Group Services, Ince. v.

Auto Owners Insurance Co.,

1987),

833 F.2d 85 (6th

Cir. cert. denied, 108 S.Ct. 1754

(1988), involved the same issue as the case at

bar. Petitioner concedes that both Courts of

Appeals applied the same reasoning and reached

the same conclusion. This Court refused to

review the Northern Group Services decision.

It is noteworthy that even if one were to

use the broad generalizations that Petitioner

uses in attempting to argue that there is a

conflict, the cases cited by Petitioner

eT ee a ere ee Tver een ONG ce te is Oe ln Be abet

SP Ca eh

21

clearly establish that this Court has on at

least three prior occasions refused to resolve

the alleged conflict. Powell, cert. denied,

476 U.S. 1170 (1986);

104 S.ct. 145 (1988); Northern Group Services,

Reilly, cert. denied,

cert. denied, 108 S. Ct. 1754 (1988).

iV. THERE IS NO FEDERAL INTEREST IN

“ PREEMPTING THE PENNSYLVANIA MOTOR VEHICLE

FINANCIAL RESPONSIBILTIY LAW.

Both the case at bar and the Northern

Group Services case involved state no-fault

’

automobile insurance laws and a state's

uniform scheme of coordination of benefits.

In neither case is there 4 discernable federal

interest and the holdings are quite limited

to the facts set forth in those cases.

22

The issue involved in this case is a

preemption of the Pennsylvania Financial

Responsibility Law and not just the section

that the Petitioner does not find beneficial

to its interests. If the Financial

Responsibility Law were preempted by FERISA,

the Petitioner is under the incorrect

assumption that its plan would then become the

law of Pennsylvania for all of its

beneficiaries. It is particularly noteworthy

that the subrogation clause of the FMC Salary

Health Plan as spelled out at page A4 of the

Petition for Writ of Certiorari specifically

provides that a beneficiary under the plan

bringing a liability claim against any third

party must claim benefits paid pursuant to

the FMC plan and must reimburse the plan for

23

all benefits provided. The enforcement of

such plan provisions would fly directly in the

face of the Pennsylvania "no-fault" motor

vehicle insurance system and could change the

rules of state pleading and procedure in

third-party tort liability cases where a plan

beneficiary was involved. No-fault motor

vehicle insurance laws traditionally restrict

the ability of injured parties to collect

certain benefits in third party tort suits.

The provisions of the FMC plan would not

be substituted for the Financial

Responsibility Law but rather this Court or

another federal court would have to establish

Federal "common law" as to automobile

liability claims and coordination of benefits

provisions. It certainly was never the

24

inte

ntion of Congress that the federal courts

woul

d adopt a national uniform System of

aut

omobile insurance Claims and Procedur

e

Pursuant to ERISA,

co

rrect decision in this case, The Petiti

on

fo

r 6Certiorari Should be denied by thi

s

Honorable Court,

V. TH

EAD Wor tn ag MMCrAL tStonerazz am

A I

THAT IT WOULD BE PREEMPTED BY ERISA

.

Although the Court of Appeals fop the

y

25

benefit plans, 29 U.S.C. §1144(a), this amicus

curiae argued in that Court that the Financial

Responsibilty Law does not come within the

scope of the ERISA preemption in the first

place.

It is firmly established that not all

state laws with an impact on ERISA plans are

preempted. This Court determined in Mackey v.

Lanier Collections Agency that FRISA did not

supersede the Georgia garnishment law and as

part of its discussion listed numerous state

laws which “although obviously affecting and

involving ERISA plans and their trustees, are

not pre-empted by ERISA §514(a)." 108 S.Ct.

2187. In Shaw v. Delta Airlines, Inc., 463

U.S. 85, 87, 103 S.Ct. 2890, 2901, 77 L. Ed.

2d 490 (1983), this Court held that "some

26

state actions may affect employee benefit

plans in too tenuous, remote, or peripheral a

manner to warrant the finding that the law

‘relates to' the plan".

The Pennsylvania Financial Responsibility

Law is not aimed at ERISA plans nor does it

deal with the subjects regulated by ERISA.

The Pennsylvania Law is concerned with

no-fault automobile insurance, not employee

benefit plans. It does not require employee

benefit plans to provide coverage for

automobile accidents or even to provide any

health benefits coverage at all. The

Financial Responsibility Law does not

materially "relate to" or "proport to

regulate" ERISA plans and therefore is not

27

preempted.

CONCLUSION

‘The analysis by the Court of Appeals was

sound and as directed by this Court's prior

decisions. The Petition for Writ of

Certiorari should be denied by this Honorable

Court.

Respectfully Submitted,

SIKOV AND LOVE, P.A.

Counsel of Record for Amicus Curiae

Pennsylvania Trial Lawyers

Association

1400 Lawyers Building

Pittsburgh,.-PA 15219

(412)261-4202