Reply Brief — Ingersoll-Rand Co. v. McClendon

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No. 89-1298 ey; 21 Be

IP ANIOL JR.

IN THE

Supreme Court of the United Sittes

OCTOBER TERM, 1990

INGERSOLL-RAND COMPANY,

Petitioner,

PERRY MCCLENDON,

Respondent.

On Writ of Certiorari to the Supreme Court of Texas

REPLY BRIEF FOR THE PETITIONER

GLEN D. NAGER

(Counsel of Record)

JONES, DAY, REAVIS & PoGuE

1450 G Street, N.W.

Washington, D.C. 20005-2088

(202) 879-3939

Of Counsel: HOLLIs T. Hurp

WILLIAM T. LITTLE JONES, Day, REAVIS & PoGUE

GILPIN, PAXSON & BERSCH One Mellon Bank Center

2300 First Interstate Tower 2°00 Grant Street |

1300 Post Oak Boulevard Pittsburgh, Pennsylvania 15219

Houston, Texas 77056-3010 (412) 391-3939

(713) 623-8800 Counsel for Petitioner

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WILSON - EPES PRINTING Co., INc. - 789-0096 - WASHINGTON, D.C 20001

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ERISA 5 005, 29 U.S.C. § 1185

“RISA § 510, 29 U.S.C. § 1140

ISA $ 514, 29 U.S.C. § 1144

ISA § 514(a), 29 U.S.C. § 1144 (a)

ISA, $ 514(b), 29 U.S.C. § 1144 (b)

ISA, $ 514(c) (2), 29 U.S.C. ~ 1144(¢) (2)

Health Maintenance Organizations Act. 42 U.S.C.

‘ 300e-10

120 Cong. Rec. 29209 (1974), reprinted in 3 Legis-

é H story oF the Bn pli {@¢4 Ret remert [n-

come se rity Act of 197 4 (‘*‘Leaq slatiae His-

tory’) (Comm. Print. 1976) 4703-04

120 Cong. Rec. 29938 | 1974), reprinted in 8 Leais-

lative History 4746

120 Cong. Rec. 29935 (1974), reprinted in 3 Leqis-

ve History 4751

“0 Cong. Rec. 29942 (1974). reprinted 3 Lea

lative History 4770

120 Cong. Rec. 29949 (1974), ed in 3 Leais-

ative History 4789

120 Cong. Rec. 29951 (1974), reprinted in 3 Lea

H / L797

S. Rep. No. 3838. 98d Cor t Sess. (1973)

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ployers from Offering Coverage, 17 Pension Re

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1990

No. 89-1298

INGERSOLL-RAND COMPANY.

Pe titione i.

PERRY MCCLENDON.

Re sponde nt.

On Writ of Certiorari to the Supreme Court of Texas

REPLY BRIEF FOR THE PETITIONER

l. Respondent and his amici first argue (Resp. Br

11-14; Nat’l Gov. Assoc. et al. Br. 8-9; NELI ACLU Br.

3-4) that protection of employees against wrongful inter-

ference with their rights under pension plans is a tradi-

tional area of state regulation which is of no concern to

ERISA. That simply is not true. Respondent and his

amici cite no authority for their proposition except the

decision below, another very recent state court decision.

and two decisions of a single federal district court that

was interpreting the law of New York some six years

after ERISA was passed.’ The paucity and recent vin-

f

'See K Mart Corp. v. Ponsock, 732 P.2d 1364 Nev. 1987

Savodnik v. Korvettes, Inc.. 488 F-. Supp. 822 (E.D.N.Y. 1980):

Hovey v. Lutheran Medical Center. 516 F. Supp. 554 (E.D.N.Y.

1981). Though the U.S. District Court for the Eastern District

2

tage of those decisions would itself seem to refute the

claim of tradition. In any event, a pre-ERISA survey

reveals that such a state-law based claim was rejected in

the only case in which it was presented. See Annotation.

Rights and Liabilities as Between Employer and Em-

ployee With Respect to General Pension or Retirement

Plan, 42 A.L.R.2d 461, 479 (1955).

The reason why there is no tradition of state regula-

tion of wrongful interference with rights under pension

plans is precisely the reason why such regulation relates

to pension plans. There is little danger of wrongful in-

terference with employees’ rights under plans when such

rights are minima! (as, for example, when there is no

vesting). It is only when minimum standards are estab-

lished for plans (such as vesting) that the danger arises

that employers will attempt to evade those standards

through wrongful discharge or other wrongful inter-

ference. The states have had no reason to prohibit

wrongful interference with rights under pension plans

because traditionally they have not established minimum

standards for pension plans.°

It was only when Congress established minimum stand-

ards for plans in ERISA that it became necessary to es-

tablish an enforcement mechanism to assure enjoyment

of those rights free from wrongful interference. Thus,

while ERISA does not purport to regulate the entire

of New York “firmly believe[d]” (Sarodnil:, 488 F. Supp. at 825

that the courts of New York would recognize a state-law cause of

action for discharge to interfere with the attainment of a pension,

it cited no New York case so holding, nor has respondent cited any

New York case so holding, either before or after Savodnik.

* As this Court noted in Malone v. White Motor Corp., 435 U.S.

497, 507, 510-511 (1978), the legislative history of the federal]

Welfare and Pension Plans Disclosure Act of 1958 disclosed little

state regulation of pension plans up to that point. Indeed, there

was little state regulation of pension plans until a handful of

States acted just prior to ERISA, as exemplified by the Minnesota

law at issue in Malone, which was passed in April 1974,

3

employment relationship, it is vitally concerned with the

one portion of it that plainly relates to plans—where

the employer acts for the purpose of interfering with the

attainment of benefits under a plan. The employer's

purpose to interfere with the employee's rights under a

plan is the direct connection with the plan and the factor

that marks off this area of the employment relationship.’

The field of employee benefit plans therefore includes

this portion of the employment relationship, and the ef-

fort of respondent and his amici to draw a line between

the plan and the empioyment relationship (preserving

the latter for state regulation) must fail. Discharge to

interfere with attainment of benefits under a_ pension

plan is the very spot where the plan and the employment

relationship overlap.*. When an employer “makes a com-

mitment systematically to pay certain benefits” through

a plan, the obligation to refrain from discharging or

otherwise discriminating against an employee for the

purpose of interfering with the attainment of those bene-

fits under the plan is just another of the “host of obliga-

tions” undertaken in connection with the plan. Fort

Halifax Packing Co. v. Coyne, 482 U.S. 1, 9 (1987).

“ERISA pre-emption in this area is completely consistent with

the cases cited in the briefs of respondent and his amici (Resp.

Br. 21-23, 26-27; Nat'l Gov. Assoc. ef al. Br. 23; NELI/ACLU Br.

11). Those cases concerned laws addressing other areas of th em-

ployment relationship, i.e., where the state laws were not concerned

with the employer’s conduct because it had a connection with or

reference to an employee benefit plan, but rather because it Was

wrongful for reasons entirely unrelated to any plan.

‘As explained in detail in our opening brief (at 26-36). the

legislative history leaves ne doubt that Congress understood protec-

tion against wrongful interference with rights under plans to be

part of the field of emplovee benefit plans that it was pre-empting

for exclusive federal] regulation. See, e.g., 120 Cong. Ree. 29935

1974), > printed in 3 Legislative Histo, yvoof the Empl Nee Retire-

ent Tneonie Security Act of 1974 (“Legislative History’) (Comm.

Print 1976), at 4751 (remarks of Sen. Javits) (protection against

4

That Congress has pre-empted state laws which attempt

to redefine or complement this obligation is clear from

the text of Section 514. Section 514(b) specifically ex-

cepts from ERISA pre-emption state laws concerning

such traditional areas of state regulation as insurance,

banking, and securities, as well as criminal laws of gen-

eral application. See 29 U.S.C. § 1144(b). It contains

no exception, however, for state employment laws. Con-

gress did not intend to leave it to the states to decide

how to prevent employers from evading the minimum

standards of ERISA. That is a task that Congress

carried out effectively in Section 510 of ERISA and

precluded the states from undertaking in Section

514(a).®

2. Respondent and his amici err in contending next

(Resp. Br. 11-48; Nat’i Gov. Assoc. ef al. Br. 10-14;

NELI/ACLU Br. 5-9) that Section 514 (ce) (2) of ERISA

limits the class of state laws that may “relate to” a plan

ard that the Texas common law at issue here is not

within that class. Actually, Section 514(¢) (2) js not a

limitation but an extension of the term “State”.

Section 514(¢c) (2) is not, as respondent and his amici

suggest, the definition of the term “State” in ERISA.

wrongful interference with rights under plan is one of the “14

basic rights” guaranteed by ERISA, along with participation, vest-

ing, accrual, and so forth).

° As noted in our opening brief (at 14-45), with the exception

of the court below, the federal and state appellate courts that have

addressed ERISA pre-emption of state laws regulating employe:

conduct that is directly connected to the plan, by reason of the

employer’s purpose to interfere with attainment of benefits under

the plan, have uniformly agreed that such state laws are pre-

empted. To this unanimous opinion of the federal and state ap-

pellate courts has now been added the United States Department

of Labor, the agency charged with regulating (29 U.S.C. $1135),

investigating (29 U.S.C. § 1124 , and enforcing (29 U.S.C. § 1132

a)(5), th Title I of ERISA. See United States Br. 9-21].

v0

“State” is defined in Section 3(10) of ERISA as “any

State of the United States, the District of Columbia,

Puerto Rico, the Virgin Islands. American Samoa, Guam,

Wake Island, and the Canal Zone.” 29 U.S.C. £1002

(10). Section 514(¢)(2) adds to this definition of

“State” by providing that, solely for the purpose of Sec-

tion 514, the term “State” “includes a State, any politi-

cal subdivisions thereof, or any agency or instrumental-

ity of either, which purports to regulate, directly or in-

directly, the terms and conditions of employee benefit

plans covered by this subchapter.” 29 U.S.C. § 1144/e)

(2) (emphasis added). Rather than contracting the

scope of the phrase “relate[s] to,” Section 514(e) (2)

plainly extends the term “State” to reach any instru-

mentality of a state if that instrumentality is attempting

to regulate the terms and conditions of employee bene-

fit plans.

The legislative history reveals that Congress intended

to extend the term “State” so that “State professional

associations acting under the guise of State-enforced pro-

fessional regulation, should not be able to prevent unions

and employers from maintaining the types of employee

benefit programs which Congress has authorized—for

example, prepaid legal services programs—whether closed

or open panel... .”” 120 Cong. Rec. 29933 (1974), re-

printed in 3 Legislative History, at 4746 (remarks of

Sen. Williams!. But Congress understood that simply

adding instrumentalities to the definition of “State”

would have gone too far, because the phrase “relate to”

could then reach the ethical rules of state bar associa-

tions or prevent them from disciplining members with

regard to their service to pre-paid legal service plans.

See 120 Cong. Rec. 29949 (1974), reprinted in 3 Leqis-

lative History, at 4789 ‘colloquy between Sens. Taft and

Javits). Therefore, Congress limited this extension of

the term “State” to activity purporting to regulate the

terms and conditions of plans, which only confirms Con-

6

gress’s understanding that, the phrase “relate to” encom-

passes far more than regulation of the terms and condi-

tions of plans.*

In all events, respondent’s interpretation of Section

914(ce) (2) cannot be reconciled with the plain language

of Section 514(a). Any law that purports to regulate

the terms and conditions of an employee benefit plan nec-

essarily “relate[s] to” that plan. It would have been

nonsensical to provide that such laws are pre-empted only

“insofar as they may now or hereafter relate to any em-

ployee benefit plan.” 29 U.S.C. 8 1144(a). Moreover, in-

terpreting Section 514(a), this Court has repeatedly

stated that the test of pre-emption is whether the state

law “has a connection with or reference to” an ERISA-

covered plan, Shaw v. Delta Air Lines, Inc., 463 U.S. 85.

97 (1983), and has held state laws pre-empted that did

not even arguably regulate the terms and conditions of

a plan. See, e.9., Mackey v. Lanier Collection Agency &

Service, Inc., 486 U.S. 825, 829 (1988) (state law that

exempts plan from state regulation “relate|s] to” plan

and is pre-empted). Respondent’s interpretation cannot

be squared with the Court’s understanding of Section

914(a)’s language.’

* This explains the remarks of Rep. Dent quoted by amici Na-

tional Governors’ Association ef al. (Nat'l Gov. Assoc. et al. Br. 19).

Rep. Dent was referring to how ERISA pre-emption cleared away

the obstacles thrown up Dy state professional societies in the same

way as the HMO Act of i973 pre-empted rules of state professional

societies that hindered formation of HMO’s. The narrow, specific

pre-emption of listed state laws in the HMO Act (42 U.S.C. $ 300e-

10) cannot properly be compared to the sweeping pre-emption of

ERISA.

‘In addition to Mackey, respondent's position conflicts with deci-

sions of this Court in three other cases where the state law regu-

lated the administration or operation of the plan, specifically, the

manner of processing claims, rather than its terms and conditions.

Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134 (1985),

i

In order to maintain his position in light of this

Court’s prior decisions, respondent would have to depart

from the plain meaning of the word “conditions” in Sec-

tion 514(c) (2). While “conditions” plainly refers to the

conditions of eligibility for benefits under the plan, re-

spondent instead would have to read it to mean the sur-

rounding conditions within which the plan operates (a

reading that would also be inconsistent with the legis-

lative history cited above). But that understanding of

the term “conditions” applies to the Texas law at issue

here as well: the Texas law regulates the conditions

within which plans operate just as surely as the cited

decisions—by regulating one side of the triangular re-

lationship among the employer, the employee, and the

plan.®

3. Respondent and his amici also fail in their attempt

(Resp. Br. 24-27; Nat’l Gov. Assoc. et al. Br. 15-18, 24-

27; NELI/ACLU Br. 13-14) to come to grips with the

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987), and Metro-

politan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987).

Recognizing this deficiency in respondent’s argument. amici

National Governors’ Association et al. (Nat’l Gov. Assoc. et al. Br.

19-14) propose a different new test for pre-emption—whether the

state law regulates either the terms and conditions or the adminis-

tration and operation of a plan. That test cannot be derived from

any language in the Statute, least of all from respondent’s and

amici’s argument regarding Section 514(¢)(2), which, according

to respondent and his amici, limits pre-emption to state laws regu-

lating the terms and conditions of plans.

‘Congress understood that effective regulation of the field of

employee benefit plans requires regulation of all three sides of the

triangle and accomplished such regulation in ERISA: employee

versus plan (e.g., vesting requirements), employer versus plan

(e.g., funding requirements), and employer versus employee (e.9.,

protection against wrongful interference with rights under plan).

Respondent and his amici admit that state laws regulating the

first two sides of the triangle relate to employee benefit plans and

‘ire preempt d (Resp. Br. 20-21: Nat’] Gov. Assoc. et al. Br. 14,

n.6); they cannot explain why Congress would have failed to pro-

vide pre-emption cf state laws regulating the third side.

O_O

8

structure and legislative history of ERISA. They have

no response to the obvious conclusion that Section 510 of

ERISA demonstrates the understanding of Congress that

non-interference laws “relate to” plans (and, indeed, are

vital to the effective regulation of plans).

Faced with the fact that the Texas law treats a sub-

ject that is treated by ERISA, respondent and his amici

are forced to argue that Congress intended to allow the

states to treat some of the subjects treated by ERISA.

They base this argument on the fact that Congress re-

jected a pre-emption provision that was limited to state

laws treating the same subjects as ERISA. As explained

in detail in our opening brief (at 26-36) and in this

Court’s opinion in Shaw v. Delta Air Lines, Inc., 463

U.S. at 98, however, from the beginning of its considera-

tion of ERISA, Congress was unwavering in its inten-

tion to pre-empt state laws treating the same subjects

as ERISA. When, in conference committee, Congress re-

placed the “same subject” formulation with the “relate

to” formulation, it did so only to broaden, not to con-

tract, the scope of ERISA pre-emption.

As for this Court’s conclusion (Pilot Life Ins. Co. v.

Dedeauxz, 481 U.S. 41, 54 (1987)) that ERISA’s compre-

hensive civil enforcement mechanism is exclusive, re-

spondent and his amici argue that the exclusive force of

ERISA Section 502 is limited to claims for benefits un-

der Section 502(a) (1) (B). However, since violations of

Section 510 are remedied by an action under Section

502(a) (3), their position would require the Court to

hold that one subparagraph of Section 502(a) provides

exclusive remedies and one does not—a distinction that

would be out of step with the Court’s previous holding

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 reme-

dies were intended to be exclusive.” Jd.

9

Nor does this Court’s recent decision in English v,

General Electric Co., 110 S. Ct. 2270 (1990), offer re-

spondent any comfort. In English, the Court’s analysis

was not guided by “explicit statutory language” ( id. at

2275) commanding pre-emption: the Court specifically

distinguished ERISA as an example of a federal statute

that does explicitly define the extent of pre-emption

(ibid.). The Court in English found the argument for

pre-emption unpersuasive because it would have resulted

In pre-emption of state criminal laws of general applica-

tion; ERISA contains an express exception preserving

state criminal laws of general application (29 U.S.C.

$ 1144(b) (4)). The state law in that case had a differ-

ent purpose from the federal law; here, the state law

not only has the same purpose as the federal law ( pro-

tecting employees’ interests in pension plans), but is

designed to enforce exclusively federal standards for

plans. This Court had previously found that the fed-

eral scheme at issue in English was to be supplemented

by state tort remedies: the Court has previously found

that ERISA does not permit state tort remedies (Pilot

Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987)). The

whistleblower remedy at issue in English was created 24

years after Congress occupied the field in the Atomic

Energy Act; Sections 902, 510 and 514 of ERISA were

developed and enacted together as a carefully integrated

and exclusive scheme. And, in English, the Court ex-

pressly distinguished the comprehensive pre-emptive

force of the National Labor Relations Act; ERISA pre-

on og is modeled on that Act (Pilot Life, 481 U.S. at

-56).°

*It should also be noted that English was not a wrongful dis-

charge case; the wrongful discharge claim was rejected by the

district court and not appealed (110 S. Ct. at 2274 n.4). In this

Court, English claimed only that the employer’s conduct prior to

the discharge was outrageous and remediable under the state tort

law (id. at 2274-2275). Thus, unlike this case, the employer’s

conduct was actionable under State law for an entirely different

reason from why it might have been actionable under federal law.

10

4. As for the policy of ERISA, respondent and his

amici err (Resp. Br. 24-29; Nat’! Gov. Assoc. et al. Br.

“18-24; NELI/ACLU Br. 12-13) in citing the Fort Hali-

fax case for the proposition that the purposes of ERISA

(and ERISA pre-emption) are limited to promoting uni-

formity in the administrative practices of plans. In

Fort Halifax, this Court focused on the question of ad-

ministrative practices, not to determine whether the state

law “relate[d] to’ a plan, but whether there was a

“plan” to which the state law related. The Court. held

that a “plan” does not exist in the absence of administra-

tive machinery: thus, the Maine law in that case did not

relate to a “plan” because it did not affect any on-going

administrative machinery or call such an administrative

machine into being. 482 U.S. at 12-13. The Court did

not hold that where, as in this case, there is indisputably

an ERISA-covered plan, a state law “relate{s] to” the

plan only if it affects the administrative practices of the

plan.

Respondent’s argument ultimately overlooks the fact

that the most fundamental purpose of ERISA, from

which all of its provisions spring, is to “promote the in-

terests of employees and their beneficiaries in employee

benefit plans.” Shaw v. Delta Air Lines, Inc., 463 US.

at 90. ERISA promotes the interests of employees in

their plans in a variety of ways, of which regulation of

the administrative practices of plans is just one. No

less important than any other way is assuring that em-

ployees enjoy their rights under their plans free from

wrongful interference by the employer.” In attempting

to do the same, the Texas law directly implicates the pur-

poses of ERISA.

*” Other ways include: assuring that all plans meet minimum

standards for participation, vesting, accrual, etc. (Part 2 of Title

I of ERISA); assuring that employers make adequate contribu-

tions to plans (Part 3 of Title I); assuring that the assets of plans

are properly invested (Part 4 of Title I); and guaranteeing bene-

fits when plans terminate with insufficient assets (Title IV).

11

Indeed, the Texas law threatens to defeat the pur-

poses of ERISA. When considering ERISA, Congress

understood that rules which appear on their face to

promote the interests of employees could, if too severe,

ironically work against the purpose of promoting em-

ployees’ interests in their plans by discouraging employ-

ers from establishing or continuing plans. See, €.g., S.

Rep. No. 383, 93d Cong., Ist Sess. 19 (1973), reprinted

in 1 Legislative History, at 1063, 1087; 120 Cong. Rec.

29209 (1974), reprinted in 3 Legislative History, at

4703-4704 (remarks of Rep. Collier); 120 Cong. Rec.

29951 (1974), reprinted in 3 Legislative History, at

4797 (remarks of Sen. Bentsen) ; see also Shaw v. Delta

Air Lines, Inc., 463 U.S. at 96-100, 104-106; Fort Hali-

fax Packing Co. v. Coyne, 482 U.S. at 10. State-law

based causes of action for wrongful interference with

the attainment of rights under a plan—imposing poten-

tially different substantive standards of conduct, with

different procedural and proof requirements, as well as

possible jury trials and punitive damages—are just such

types of state laws. They would upset the balance that

Congress struck and work against the congressional pur-

pose of promoting employees’ interests in plans.

To appreciate the threat, one need only look to an area

where Congress did not pre-empt state laws—state reg-

ulation of the content of insurance policies purchased by

insured health plans. In this area, state regulation has

had a dramatic effect on employee benefit plans—a mas-

sive nationwide shift from insured plans to self-insured

plans (or, in some instances, to abandonment of plans)

in order to avoid varying state insurance laws.’ In the

‘1A national survey of employers under the auspices of the

Health Insurance Institute of America in 1988 documented the

dramatic shift from insured to self-insured plans since ERISA.

It concluded that, whereas 5 percent of employees were enrolled in

self-insured health plans in 1975, over 60 percent were enrolled in

self-insured plans in 1987, and the principal explanation was the

desire to avoid varying state insurance laws. Gabel, Jajich-Toth,

12

Same way, as noted in our opening brief (at 39-40), the

threat of state court actions, tried to a jury, with puni-

tive damages, would create a strong disincentive to estab-

lish or continue pension plans. Even if an employer es-

tablished or continued a plan, there would be strong pres-

sure to alter the vesting rules in the plan to minimize

the risk of lawsuits—either delaying vesting for as long

as possible or avoiding the problem by providing full and

immediate vesting. And, where an employer operates in

more than one state, varying state law requirements

would push the employer toward breaking up the plan

into separate pieces or reducing the plan to the lowest

common denominator—a Hobson’s choice that ERISA

pre-emption was specifically designed to avoid. See Alessi

v. Raybestos-Manhattan, Inc., 451 U.S. 504, 514, 524-

525 (1981).

In any event, respondent’s casual doubt about the

magnitude of the threat is beside the point. Congress

employed blanket pre-emption in Section 514(a) in or-

der to avoid any balancing tests—to avoid “endless liti-

gation over the validity of State action that might im-

a

de Lissovoy, Rice & Cohen, The Changing World of Group Health

Insurance, 7 Health Affairs 48, 58-59 (1988).

See also More Companies Choosing to Self-Insure Benefits, N.Y.

Times, August 3, 1990, at D10 (“51 percent of the firms that

converted to self-insurance from 1981 to 1984 would not have done

so if there were no state-mandated benefits.”); Laws on Health

Benefits Raise Firms’ Ire, Wall St. J., December 28, 1988, at Bl

(“To avoid the added insurance costs, many large companies are

adopting self-insurance plans, which are exempt from the mandate

laws. And because only those companies that offer health plans

are obliged to offer the benefits imposed by the mandates, some

concerns have decided not to offer insurance plans at all.”); State

Mandates Raise Insurance Costs, Keep Employers from Offering

Coverage, 17 Pension Reporter (BNA) No. 16, at 647 (April 16,

1990) (“Research on the effect of State mandates on employer-

sponsored health insurance coverage has shown that mandates

increase costs and discourage some employers from sponsoring

health coverage for workers... .” 3

13

pinge on Federal regulation” (120 Cong. Rec. 29942

(1974), reprinted in 3 Legislative History, at 4770 (re-

marks of Sen. Javits) ).

5. Finally, there is no basis to respondent’s contention

(Resp. Br. 30) that petitioner cannot raise the ERISA

pre-emption defense in this case. This Court has long

held that, where the highest court of a state has actually

passed on a federal question, any inquiry into how or

when the question was raised in the state courts in irrel-

evant to the exercise of the Court’s jurisdiction. See

Charleston Federal Savings & Loan Ass’n v. Alderson,

324 U.S. 182, 185-186 (1945); see also Orr v. Orr, 440

U.S. 268, 274-275 (1979) ; Raley v. Ohio, 360 U.S. 423,

436-437 (1959). The Supreme Court of Texas passed on

petitioner’s ERISA pre-emption defense, and this Court’s

review of that decision is therefore entirely appropriate.

For these reasons, as well as those set forth in our

opening brief, the judgment of the court below should be

reversed and remanded.

Respectfully submitted,

GLEN D. NAGER

(Counsel of Record)

JONES, Day, REAVIs & PoGuE

1450 G Street, N.W.

Washington, D.C. 20005-2088

(202) 879-3939

Of Counsel: HOLuis T. Hurp

WILLIAM T. LITTLE JONES, DAY, REAVIs & PoquE

GILPIN, PAXSON & BERscH One Mellon Bank Center

2300 First Interstate Tower 500 Grant Street .

1300 Post Oak Boulevard Pittsburgh, Pennsylvania 15219

Houston, Texas 77056-3010 (412) 391-3939

(713) 623-8800 Counsel for Petitioner

August 1990