# Amicus Curiae Brief — Ingersoll-Rand Co. v. McClendon

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0720%3A06

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1990
- **Citation:** 498 U.S. 133

## Text

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No. 89-1298

IN THE
SUPREME, COURT OF THE UNITED STATES
OCTOBER TERM, 1989

INGERSOLL-RAND COMPANY,
Petitione,
LF

PERRY McCLENDON,
Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE
SUPREME COURT OF TEXAS

MOTION AND BRIEF OF AMICUS CURIAE
AMERICAN PAPER INSTITUTE, INC.
IN SUPPORT OF PETITIONER

MARK E. BROSSMAN

“HADBOURNE & PARKE

Attorneys for Amicus Curiae
American Paper Jnstitute, Inc.

30 Rockefeller Plaza

New York, New York 10112

(212) 408-5100

Counsel of Record
Of Counsel

MICHAEL B. WEIR
RONALD E. RICHMAN

RECT AVAIL ARIE COPY

IN THE

SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1989
No. 89-1298

INGERSOLL-RAND COMPANY,
Petitioner,
Vv.

PERRY McCLENDON,
Respondent.

ON PETITION POR A WRIT OF CERTIORARI TO THE
SUPREME COURT OF TEXAS

MOTION OF AMICUS CURIAE
AMERICAN PAPER INSTITUTE, INC.
IN SUPPORT OF PETITIONER

The American Paper Institute, Inc. ("API")
hereby moves for leave to file the attached brief amicus
curiae in support of a petition for a writ of certiorari. The
consent of the attorneys for the petitioner has been obtained.
The consent of the attorneys for the respondent was requested
but refused.

API is the national trade association of the pulp,
paper and paperboard manufacturing industry. The
approximately 170 member companies of API produce more
than 90% of the pulp, paper and paperboard manufactured in
the United States. At issue in this case is the Supreme Court
of Texas’ decision that a cause of action for wrongful

2

discharge exists under Texas law when an employee aleges
that the principal reasons for his termination was the
employer's desire to avoid contributing to or paying employee
benefits. The Supreme Court of Texas held, with minimal
discussion, that the Employee Retirement Income Security
Act of 1974 ("ERISA"), 29 U.S.C. § 1144, did not preempt
the state law cause of action recognized by the court.

API is interested in this action because its
members sponsor various employee benefit plans, and many
API members have employees in several states. The Supreme
Court of Texas’ decision rejecting ERISA’s preemptive
effect, if allowed to stand, will have deleterious effects
throughout the paper industry, as well as on employers in
other industries. This decision encourages wrongful
discharge actions and permits conflicting and inconsistent
state and local decisions whenever an employee alleges that
the reason for a discharge was the employer’s desire to
deprive the employee of employee benefits or to avoid benefit
contributions. It is believed that the brief which amicus
curiae is requesting permission to file will contain a more
complete argument on the issue of ERISA preemption.

Based on the foregoing, the motion for leave to
file the attached brief amicus curiae should be granted.

Mark E. Brossman

CHADBOURNE & PARKE

Attorneys for Amicus Curae
American Paper Institute, Inc.

30 Rockefeller Plaza

New York, NY 10112

212 408-5100

Counsel of Record
Of Counsel

Michael B. Weir
Ronald E. Richman

TABLE OF CONTENTS

PAGE
Table of Authorities ........................., ii
Interest of the Amicus Curiae .................. I
EEE, SRMRESCEO ese sccercrcceccecececes 2

I. Public Policy Mandates That ERISA

Preempt State Wrongful Discharge Ac-

tions Relating to Employee Benefit
| 2

fl. Preemption of Wrongful Discharge

Claims Furthers The Purpose of ERISA
PUI ccc c ccc cc nc ceccces 4

fil. ERISA Section 510 Explicitly Applies ~

To Wrongful Discharge Actions And Is

Part Of ERISA’s Comprehensive Civil
Enforcement Scheme .............. 5

IV. The Claim Below "Relates To” An

Employee Benefit Plan and Is Pre-
A 7
er ®

a === _

5

TABLE OF AUTHORITIES

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504
Ree TT TUT Torr ete

Authier v. Ginsberg, 757 F.2d 796 (6th Cir. 1985),
cert. denied, 474 U.S. 888 (1985) .......-.555-

Clark v. Coats & Clark, Inc., 865 F.2d 1237 (ilth
CE eine bu deswncendendceweseveses

Conaway v. Eastern Associated Coal Corp., 358
$.B.26 423 (W. Va. 1966)... ccc ccteccccees

Dependah! v. Falstaff Brewing Corp., 653 F.2d
1208 (8th Cir.), cert. denied, 454 U.S. 968 and
7 Lt OT | eee eeerrererrrrerce

Dister v. Continental Group, Inc., 859 F.2d 1108
CPE MED. oes esnevescnseccseesaneuesss

Firestone Tire and Rubber Co. v. Bruch, 109 S. Ct.
SD occ cas Coa h sc ok ee ceeeeseese aan

Fitzgerald v. Codex Corp., 882 F.2d 586 (ist Cir.
EN 5460 eke ne renee bauneeeee sa deeee vues

Si rrrererrrrerrr rer rT Tree rT re

Franchise Tax Board v. Construction Laborers
Vacation Trust, 463 U.S. 1 (1983) ............

Gavalik v. Continental Can Co., 812 F.2d 834 (3d
Cir. 1987), cert. denied, 484 U.S. 979 (1987)

PAGE

PAGE
Hovey v. Lutheran Medical Center, 516 F. Supp.

Ss SEE Wisse basbecacapscuscses 3
KMart Corp. v. Ponsock, 732 P.2d 1364 (Nev. 1987) 3
McClendon v. Ingersoll-Rand Company, 779

PEE heh ks ee sésccncocccrs 4,7
Metropolitan Life Insurance Co. v. Massachusetts,

Pe UC 068 pen eeeecccusvsscacecs 5,7
Pane v. RCA Corp., 868 F.2d 631 (3d Cir. 1989) .. 3
Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41

RO rrr oe cee nen ne eee passim
Savodnik v. Korvettes, Inc., 488 F. Supp. 822

8 I ee A ae ee 3
Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) .. 3,5,7
Sorosky v. Burroughs Corp., 826 F.2d 794 (9th Cir.

NS £406. 5 OF 4 ee aoe ee a ae 3
Statutes
Employees Retirement Income Security Act of 1974

("ERISA"), 29 U.S.C. §§ 1001 ef. seg. ......... passim

ERISA § 2(b), 29 U.S.C. § 1001(b) ........... 5

ERISA § 502(a)-(g), 29 U.S.C. § 1132(a)-(g) ... 6

ERISA §510,29U.S.C.§1140 .............. passim

ERISA § 514,29 U.S.C. § 1144 .............., passim

ERISA § 514(a), 29 U.S.C. § 1144(a) ......... 7

Legislative History

120 Cong. Rec. 29197 (1974) ....... 00.0 ccc cee, 5

IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1989
No. 89-1298

INGERSOLL-RAND COMPANY,
Petitioner,
Wa

PERRY McCLENDON,
Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE
SUPREME COURT OF TEXAS

BRIEF OF AMICUS CURIAE
AMERICAN PAPER INSTITUTE, INC.
IN SUPPORT OF PETITIONER

American Paper Institute, Inc. ("API")
respectfully submits this petition, amicus curiae, pursuant to
Rule 36 of the Rules of the Supreme Court of the United
States, in support of a petition for a writ of certiorari to the
Supreme Court of Texas.

INTEREST OF THE AMICUS CURIAE

API is the national trade association of the pulp,
paper and paperboard manufacturing industry. The
approximately 170 member companies of API produce more

than 90% of the pulp, paper and paperboard manufactured in
the United States. API respectfully submits this brief amicus
curiae to urge the Supreme Court to grant the petition for

2

a writ of certiorari to the Supreme Court of Texas. The latter
Court held incorrectly that a cause of action for wrongful
discharge exists under Texas law when an employee alleges
that the principal reason for his termination was the
employer's desire to avoid contributing to or paying employee
benefits. The Supreme Court of Texas held, with minimal
discussion, that the Employee Retirement Income Security
Act of 1974 ("ERISA"), 29 U.S.C. § 1144, did not preempt
the state law cause of action. API is interested in this action
because its members sponsor various employee benefit plans,
and many API members have employees in several states.
The Supreme Court of Texas’ decision rejecting ERISA’s
preemptive effect, if allowed to stand, will have deleterious
effects throughout the paper industry, as well as on employers
in other industries. This decision encourages wrongful
discharge actions and permits conflicting and inconsistent
state and loca! decisions whenever an employee alleges that
the reason for a discharge was the employer’s desire to
deprive the employee of employee benefits or to avoid benefit
contributions.

ARGUMENT
I

PUBLIC POLICY MANDATES
THAT ERISA PREEMPT
STATE WRONGFUL DISCHARGE ACTIONS
RELATING TO EMPLOYEE BENEFIT PLANS

As the Court recognized in Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41 (1987), it is not surprising that the
Court is again called upon to interpret the scope of ERISA
preemption "[g]iven the ‘statutory complexity’ of GRISA's
three pre-emption provisions, as well as the wide variety of
state statutory and decisional law arguably affected by the
federal pre-emption provisions ... ." supra at 47 (citation
omitted). The decision of the Supreme Court of Texas

3

presents important ERISA preemption issues which have not
been addressed by the Court. Further, the opinion conflicts
with decisions of various federal circuit courts and the
Supreme Court of West Virginia. See Fitzgerald v. Codex
Corp., 882 F.2d 586 (1st Cir. 1989), Pane v. RCA Corp., 868
F.2d 631 (3rd Cir. 1989), Sorosky v. Burroughs Corp., 826
F.2d 794 (9h Cir. 1987), Dependahi v. Falstaff Brewing
Corp., 653 F.2d 1208 (8th Cir.), cert. denied, 454 U.S. 968
amd 454 U.S. 1084 (1981), and Conaway v. Eastern
Associated Coal Corp., 358 S.E. 2d 423 (W. Va. 1986).

The Court has never squarely addressed whether
ERISA preempts state wrongful discharge actions involving
benefit issues. Pilot Life, supra, Metropolitan Life Insurance
Co. v. Taylor, 481 U.S. 58 (1987), Shaw v. Delta Air Lines,
Inc., 463 U.S. 85 (1983), and Alessi v. Raybestos-Manhattan,
Inc., 451 U.S. 504 (1981), addressed related issues conceming
preemption of state common law claims and statutes, but did
not address wrongful discharge actions.

This is a critical issue to the members of API, as
well as employers in other industries. A recent study has
shown that approximately 39 states have recognized in
various circumstances that an employee has a common law
right of action for wrongful termination where the discharge
violates public policy. Four other states have not ruled out
recognition of a public policy exception. I. Shepard, P.
Heylman and R. Duston, Without Just Cause: An Employer's
Practical and Legal Guide on Wrongful Discharge 18, BNA
Special Report (1989). At least one other state and two
federal district courts have recognized a cause of action for
wrongful discharge based upon allegations of intended
interference with potential pension benefits. See K Mart
Corp. v. Ponsock, 732 P.2d 1364, 1365 (Nev. 1987). See also
Savodnik v. Korvettes, Inc., 488 F. Supp. 822, 826 (E.D.N.Y.
1980), Hovey v. Lutheran Medical Center, 516 F. Supp. 554,
557-58 (E.D.N.Y. 1981).*

° In none of these cases did the court discuss ERISA preemption.

4

If the decision below is not reviewed and
reversed by the Court, employers will be bombarded with
wrongful discharge claims alleging that a discharge was
prompted to avoid payment of employee benefits. The
Supreme Court of Texas’ decision also held that an employer
who discharges an employee in order to avoid benefit
contributions commits a tort under state law. Whenever an
employee covered by a benefit plan is terminated, a res‘t is
cessation of benefit contributions on behalf of the former
employee. If the decision below is permitted to stand, every
_ discharge may be challenged in state court on this theory.

Employers will be subjected to a multiplicity of state
wrongful discharge actions decided under different rules,
laws, and decisional authority.

U

PREEMPTION OF WRONGFUL
DISCHARGE CLAIMS FURTHERS THE
PURPOSE OF ERISA PREEMPTION

It is ironic that the Supreme Court of Texas, in
holding that a Texas wrongful discharge cause of action
exists, cited ERISA Section 510, 29 U.S.C. § 1140, to support
its proposition that public policy recognizes the importance of
protecting employees’ interests in pension plans. The Texas
Court added, "[t]he very passage of ERISA demonstrates the
great significance attached to income security for retirement

". McClendon v Ingersoll-Rand Co., 779 S.W.2d 69,
71 (Texas 1989). The Supreme Court of Texas’ own opinion
recognizes the strong federal interest in regulating wrongful
discharge actions relating to benefit claims.

Preemption of state wrongful discharge claims
relating to employee benefit plans furthers the purpose of
ERISA preemption. ERISA’s unique preemption provisions
were designed to develop a body of federal substantive law to

5

resolve issues involving rights and obligations under
employee benefit plans. See Firestone Tire and Rubber Co. v.
Bruch, 109 S. Ct. 948, 954 (1989); Franchise Tax Board vy.
Construction Laborers Vacation Trust, 463 U.S. 1, 24 n.26
(1983). In enacting ERISA, Congress intended to "round out
the protection afforded participants by eliminating the threat
of conflicting and inconsistent State and local regulation.”
120 Cong. Rec. 29197 (1974) (remarks by Representative
Dent). Consequently, Congress preempted state law if it
“relates tc” employee benefit plans. The Court has on several
occasions, broadly interpreted, the preemption provisions of
ERISA. See Pilot Life Ins. Co. v. Dedeaux, supra at 46,
Metropolitan Life Insurance Co. v. Massachusetts, 471 U.S.
724, 739 (1985), Shaw v. Delta Air Lines, Inc., supra at 98,
Alessi v. Raybestos-Manhattan, Inc., supra at 523. The
decision below undermines the application of the uniform
national standards of conduct that ERISA was designed to
create and is contrary to the Court's interpretation of ERISA
preemption. See ERISA Section 2(b), 29 U.S.C. § 1001(b).

Il

ERISA SECTION 510 EXPLICITLY APPLIES
TO WRONGFUL DISCHARGE ACTIONS
AND IS PART OF ERISA’S COMPREHENSIVE
CIVIL ENFORCEMENT SCHEME

Section 510 of ERISA explicitly applies to claims
of wrongful discharge relating to benefit claums. Section 510
states, in relevant part,:

It shall be unlawful for any person to discharge, fine,
suspend, expel, discipline, or discriminate against a
participant or beneficiary for exercising any right to
which he is entitled under the provisions of an
employee benefit plan . . . or for the purpose of
interfering with the attainment of any right to which
such participant may become entitled under the plan,
this subchapter, or the Welfare and Pension Plans
Disclosure Act.

6

Violations of Section 510 are enforced pursuant to the civil
enforcement scheme set forth in ERISA. See Section 502(a),
29 U.S.C. §1132(a). The Court has recognized the

ive nature of ERISA’s enforcement provisions.
Pilot Life Ins. Co., supra at 46. State law causes of actions
modelled on Section 510 improperiy intrude on the exclusive
reservation to federal authority of the sole power to regulate
the field of employee benefits.

ERISA protects not only employee benefits;
Section 510 protects participants and beneficiaries from
adverse employment actions related to their ERISA rights.
This section applies to any claim of improper discharge
relating to benefits. Perry McClendon alleges that he was
discharged for the purpose of interferirig with his right to a
pension. This claim falls squarely within the ambit of Section
510 and is clearly preempted. See, e.g., Dister v. Continental
Group Inc., 859 F.2d 1108 (2d Cir. 1988), Gavalik v.
Continental Can Co., 812 F.2d 834 (3d Cir. 1987), cert.
denied, 484 U.S. 979 (1987).

The Supreme Court of Texas, in rejecting ERISA
preemption, eppears to emphasize the damages available
under state tort law which may not be available under ERISA,
such as punitive damages and compensation for mental
anguish. In addition, under a state wrongful discharge action,
there may be a right to a jury trial, which may not be present
under ERISA. The policy choices reflected in the selection of
remedies under ERISA would be "completely undermined" if
employees were free to obtain remedies under state law that
Congress rejected in ERISA. Pilot Life, supra at 42; see also
Authier v. Ginsberg, 757 F.2d 796, 801-2 (6th Cir. 1985).*
As stated by the Court in Pilot Life:

° The remedies provided under ERISA are extremely broad and
include injunctive relief, appropriate equitable relief, and reasonable
attorneys’ fees and costs. ERISA Section 502(a) and (g), 29 U.S.C.
$$ 1132(a) and (g).

7

The 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.

Pilot Life, supra, at p. 54.

If state courts are permitted to grant remedies in
actions relating to employee benefits that were expressly
rejected by Congress in drafting ERISA, the exclusive federal
regulatory scheme will be emasculated.

IV

THE CLAIM BELOW "RELATES TO" AN
EMPLOYEE BENEFIT PLAN AND IS PREEMPTED

The Supreme Court of Texas concluded that
ERISA preemption was not applicable because the plaintiff
was not seeking lost pension benefits but was instead seeking
future wages, compensation for mental anguish and punitive
damages as a result of the wrongful discharge. McClendon,
supra at 71. This case raises important questions conceming
the interpretation of the term "relate to” as set forth in ERISA
Section 514(a), 29 U.S.C. § 1144(a).

The Supreme Court of Texas completely ignored
this Court’s analysis concerning the meaning of the term
"relate to any employee benefit plan" set forth in Section
514(a). The Court has interpreted the term “relate to”
expansively. See Ft. Halifax Packing Co. v. Coyne, 482 US.
1, (1987), Metropolitan Life Insurance Co. v. Massachusetts,
supra, Alessi v. Raybestos-Manhattan, Inc., supra. In Shaw v.
Delta Air Lines, Inc., supra at 97, the Court held that the
phrase should be given its broad common-sense meaning,
such that a state law "relates to” an employee benefit plan if it
has a "connection with or reference to such a plan”.

8

For example, in Pilot Life, an employee brought
State common law tort and contract actions asserting improper
processing of a claim for benefits under an insured employee
benefit plan. The Court stated that the employee’s state
common law claims of tortious breach of contract, breach of
fiduciary duties, and fraud in the inducement "related to” an
employee benefit plan and fell under ERISA’s preemption
ions. supra at 47. But see Clark v. Coats & Clark,

Inc., 865 F.2d 1237 (11th Cir. 1989).

In the case below, Perry McClendon alleges that
Ingersoll-Rand terminated him to escape its obligation to
contribute to his pension fund. Despite his failure to seek
pension benefits, his claim plainly relates to the Company's
pension plan. A “common-sense” understanding of the phrase
“relates to" leads to the conclusion that this case is preempted
by ERISA. Shaw, supra, at 97.

CONCLUSION

Based on the foregoing, the petition for a writ of
certiorari should be granted.

Respectfully submitted,

MARK E. BROSSMAN

CHADBOURNE & PARKE

Attorneys for Amicus Curiae
American Paper Institute, Inc.

30 Rockefeller Plaza

New York, New York 10112

(212) 408-5100

Counsel of Record
Of Counsel

Michael B. Weir
Ronald E. Richman

a

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0720%3A06. Public record. Not legal advice.