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

—

12)

A __ Sepseme Court, U.S,

No. 89-1298 | | FILED

ee ; , ‘

1) UL 38 | 1980

IN THE t

Supreme Court of the United spate curd

OCTOBER TERM, 1990 ‘RET AT EC

INGERSOLL-RAND COMPANY,

Petitioner,

Vv.

PERRY MCCLENDON,

Respondent.

On Writ of Certiorari to the

Supreme Court of Texas

BRIEF OF THE

NATIONAL GOVERNORS’ ASSOCIATION,

U.S. CONFERENCE OF MAYORS,

COUNCIL OF STATE GOVERNMENTS,

NATIONAL LEAGUE OF CITIES,

NATIONAL CONFERENCE OF STATE LEGISLATURES,

NATIONAL ASSOCIATION OF COUNTIES, AND

INTERNATIONAL CITY MANAGEMENT ASSOCIATION

AS AMICI CURIAE IN SUPPORT OF RESPONDENT

CHARLES ROTHFELD *

Acting Chief Counsel

BENNA RUTH SOLOMON

STATE AND LOCAL LEGAL CENTER

444 North Capitol Street, N.W.

Suite 349

Washington, D.C. 20001

(202) 638-1445

* Counsel of Record for the

Amici Curiae

WILSOK - Epae Printine Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

QUESTION PRESENTED

Whether Section 514 of the Employee Retirement In-

come Security Act of 1974, 29 U.S.C. 1144, preempts a

state common law wrongful discharge suit in which the

plaintiff claims that his employer discharged him to pi'e-

vent the vesting of his pension rights.

(i)

TABLE OF CONTENTS

QUESTION PRESENTED ........ libesnbisiadadctensaatoncasseinnesn

|

EE STE

ERISA DOES NOT PREEMPT THE STATE LAW

I cisnssanesatanevcccsstense

A. A State Law “Relate[s] To” An ERISA Plan

Only If It Regulates The Terms, Conditions, or

Administration Of A Plan ................ 1S

B. The Legislative History And Policies of ERISA

Ee

C. ERISA’s Enforcement Provision Does Not Pre-

empt Texas Common Law ......................... sihdisnni

(ili)

iv

TABLE OF AUTHORITIES

CASES: Page

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504

IY ici sn ascamniacaniensniateaaheedahet mueetee 9, 12, 24

Board of Governors v. Dimension Financial Corp. %

Ge Ts CE II rtrd Sccicncccnekncanmccgtoeiamiestundeanel 16

California v. ARC America Corp., 109 S. Ct. 1661

RSET ASR ee Soe ee ORE mT Meme em PERT ErR Ns Fret 8, 25

Conaway v. Eastern Associated Coal Corp., 358

Ff 6§ AS 8 OO Eee 15

English v. General Electric Co., 110 S.Ct. 2270

RIN scons daestecinriaihte Mets ata ees mahal Eee 8, 13, 23, 24, 25

Firestone Tire and Rubber Co. v. Bruch, 109 S.Ct.

i), eee ER eR OCR TS! 2, 21, 22, 24

Fort Halifax Packing Co. v. ‘Coyne, 482 US. 1

4) sional Seti aire aa ace passim

Franchise Tax Board v. Construction Laborers

Vacation Trust, 463 U.S. 1 (1983) —.....-0..... 22

Garner v. Teamsters Union, 346 U.S. 485 (1953). 26

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

554 (E.E. SR citi h re ake Oh eae 15

K Mart Corp. v. Ponsock, 732 P.2d 1364 (Nev.

1987) ...... ER aR nee arte whe Iw IE 15

Mackey v. Lanier Collection Agency, 486 U.S. 825

I< isiccsccccanccsncsoteidselaisacaldadaciidapiaestmiertanieaaaamiada saat passim

Massachusetts v. Morash, 109 S.Ct. 1668 (1989). 8, 9, 21

Massachusetts Mutual Life Insurance Co. v. Rus-

sell, 473 U.S. 134 (1985) —... SALT, ERE rtm oe 22, 23

Metropolitan Life Insurance Co. v. Massachusetts,

471 U.S. 724 (1985) ....... ceceeeeseceseee-PAS8iM

Metropolitan Life Insurance Co. v. Taylor, 481

U.S. 58 (1987) .. | —= 12

Motor Coach Employees v. Lockridge, 403 U.S.

274 (1971) - ens 26

Nachman Corp. ' v. ,. Pension Benefit Guaranty Corp.,

446 U.S. 359 (1980) a PS 2-3

Pacific Gas & Electric Co. v. State Energy Re-

sources Conservation & Development Comm’n,

GE Te BD CD oncierivnssntsccsnsscsesctanittiinedisbiaiiaes 12-13

Vv

TABLE OF AUTHORITIES—Continued

Page

Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41

RUINED cto caauantebiuacobebeidaliccsnamimecee aéadicanevaeesamacenoation eae passim

San Diego Building Trades Council v. Garmon,

§g 2S 3: ee cae oe 26

Savodnik v. Korvettes, Inc., 488 F. Supp. 822

PIs MIMD Sisectenedceseceeehctincockctacaceanen cecomondesccs 15

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

I geen ee ae passim

Silkwood v. Kerr-McGee Corp., 464 U.S. 238

EIU icaiciesasesioceudiciansicemaamhabdcoubanaansiaeasaibicleniiceccocemes 24

United States v. Kimbell Foods, Inc., 440 U.S. 715

| eee ; 23

United States v. Yazell, 382 U. s. 341 (1966)... nee 23

Ursice v. Bethlehem Mines, 556 F. Supp. 571

(W.D.Pa.) aff’d, 719 F.2d 670 (3d Cir. 1983) __. 24

Wisconsin Dep’t of Industry v. Gould Inc., 475 U.S.

282 (1986) ............ Se tialeaaltC ped acter eee ere 26

STATUTES:

Clayton Act, § 4, 15 U.S.C. § 15 (a)... 25

Employee Retirement Income Security Act of 1974,

Pub. L. No. 93-406, 88 Stat. 829... passim

§ 2 et seq., 29 U.S.C. § 1001 et seq. 2

§ 4(a), 29 U.S.C. § 1008 (a) oo. BB

§ 4(b), 29 U.S.C. § 1003 (b) _.......... CCAD Dae 2,3

$§ 101-111, 29 U.S.C. §§ 1021-1031... 2

§§ 202-308, 29 U.S.C. §§ 1052-1086... 2

§§ 401-411, 29 U.S.C. §§ 1101-1114 .... 2

§ 502, 29 U.S.C. § 1182 ................ PAAR CoB tle 3

§ 603 (a), 29 U.S.C. § 1188 (a) ............................ 27

§ 502(a) (1) (B), 29 U.S.C. § 1132(a) (1) (B).. 3

§ 502 (a) (3), 29 U.S.C. § 1182 (a) (3)... )=—8, 22

§ 502 (e) (1), 29 U.S.C. § 1182(e) (1) _....W... 3

i 8 4 ft RS eee passim

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

§ 514 (a), 29 U.S.C. § OD ovaconsoccnses cases _.. passim

§ 514(b), 29 U.S.C. § 1144(b) nore wet Ri d

vi

TABLE OF AUTHORITIES—Continued

Page

§$ 514(b) (2) (A), 29 U.S.C. § § 1144(b) (2) (A). 26

§ 514(c), 29 U.S.C. § 5 1144(c) x 3, 6, 10, 11

§$514(c) (1), 29 USC. 8 1144(c) (1) or ee 11

§ 514(c) (2), 29 U.S.C. § 1144(c) (2) ....00.... 11

§ 4001-4402, 29 U.S.C. §§ 13801-1461 0. 2

Energy Reorganization Act of 1974, 42 U.S.C.

§$ 5851(a) .. E trae Pe 25

Labor Management Relations | ‘Act, 29 U.S.C.

i See eat 27

National ‘Labor Relations ‘Act, 29 USC. 8 151

SERRE Re ces ER A hy ht te Po NA ee eR ES 26

Sherman Anti-Trust Act, 15 U.S.C. 25

Me ON KR eee eee oe 19

LEGISLATIVE MATERIALS:

H.R. 2, 93d Cong., 2d Sess. (1974), reprinted in

3 Legislative History of the Employee Retire-

ment Income Security Act of 1974 (“Leg.

Hist.”’) (Comm. Print 1976) at 3599 0. 11, 16

H.R. 2, 93d Cong., 2d Sess. (1974) (reprinted in

3 Leg. Hist. at 3898 ............. ON Ea 11

H.R .Conf. Rep. No. 1280, 93d Cong., 2d Sess.

(1974), reprinted in 3 Leg. Hist. at 4277 .... 11, 18, 27

120 Cong. Rec. 29,197 (1974), reprinted in 3 Leg.

is a one oe 13, 18, 19, 20, 26

120 Cong. Rec. 29,933 (1974), reprinted in 3 Leg.

Hist. at 4746 ........... i i 13

120 Cong. Rec. 29,933 (1974), reprinted in 3 Leg.

Stas SO NO a 18, 20, 25

120 Cong. Rec. 29,933 (1974), reprinted in 3 Leg.

a EE Re POPPE RRS on De 18

120 Cong. Rec. 29,942, reprinted in 3 Leg. ‘Hist.

I 18, 20, 22

120 Cong. Rec. 29,942 (1974), reprinted in 3 Leg.

I . 18,19

120 Cong. Rec. 29,949 (1974), reprinted in 3 Leg.

I oe eacaaas RA RTS 18

Vii

TABLE OF AUTHORITIES—Continued

MISCELLANEOUS: Page

Kilberg & Heron, The Preemption of State Law

Under ERISA, 1979 Duke L.J. 383 = 16

Kilberg & Inman, Preemption of State Laws Re-

lating to Employee Benefit Plans: An Analysis

of ERISA Section 514, 62 Tex. L. Rev. 1313

(1984) .... icaun lade nctadaanbabion Entree tn Cantor eee acacia 11, 12, 18

IN THE

Suyprenw Cant of the United States

OCTOBER TERM, 1990

No. 89-1298

INGERSOLL-RAND COMPANY,

Petitioner,

Vv.

PERRY MCCLENDON,

Respondent.

On Writ of Certiorari to the

Supreme Court of Texas

BRIEF OF THE

NATIONAL GOVERNORS’ ASSOCIATION,

US. CONFERENCE OF MAYORS,

COUNCIL OF STATE GOVERNMENTS,

NATIONAL LEAGUE OF CITIES,

NATIONAL CONFERENCE OF STATE LEGISLATURES,

NATIONAL ASSOCIATION OF COUNTIES, AND

INTERNATIONAL CITY MANAGEMENT ASSOCIATION

AS AMICI CURIAE IN SUPPORT OF RESPONDENT

INTEREST OF THE AMICI CURIAE

Amici are organizations whose members include state,

county, and municipal governments and organizations

throughout the United States; they have a compelling

interest in legal issues that affect state and local gov-

ernments.

This case concerns petitioner’s contention that Section

514:a) of the Employee Retirement Income Security Act

of 1974, 29 U.S.C. § 1144/a), supersedes a state wrong-

2

ful discharge action in a case where the plaintiff alleges

that the defendant terminated his employment to pre-

clude the vesting of his pension benefits. This contention

has substantial importance for the States, If accepted, it

would make dramatic inroads into the States’ authority

to shape their own tort law. It also would preclude state

courts from implementing what they regard as important

public policies in an area of traditional state concern.

Amici therefore submit this brief to assist the Court in

the resolution of this case.’

STATEMENT

1. The Employee Retirement Income Security Act of

1974 (ERISA), 29 U.S.C. § 1001 et seq., is a comprehen-

sive statute “enacted ‘to promote the interests of em-

ployees and their beneficiaries in employee benefit plans.”

Firestone Tire and Rubber Co. v. Bruch, 109 S.Ct. 948,

955 (1989), quoting Shaw v. Delta Air Lines, Inc.. 463

U.S. 85, 90 (1983). To accomplish this, the statute reg-

ulates both welfare benefit plans (those that offer health,

disability, vacation, and similar benefits) and pension

benefit plans. See 29 U.S.C. § 1003\a). Certain of these

plans, however—those maintained by the federal, state,

and local governments, specified church plans, plans

maintained to comply with worker’s compensation and

similar laws, and some others—are not covered by

ERISA. 29 U.S.C. § 1003(b).

Plans that are within the reach of the statute (so-

called “ERISA plans”) are subject to fiduciary, re-

porting, and disclosure requirements. See 29 U.S.C.

$$ 1021-1031, 1101-1114. ERISA also imposes substantive

requirements on pension benefit plans in the areas of

funding, vesting, participation, and plan termination. 29

U.S.C. S$ 1052-1086, 1301-1461. See generally Nachman

Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359,

' Both parties’ letters of consent pursuant to Rule 37 of the

Rules of this Court have been filed with the Clerk of the Court.

3

374-375 (1980). In addition, Section 510 of ERISA, 29

U.S.C. £1140, makes it unlawful for “any person to dis-

charge, fine, suspend, expel, discipline, or discriminate

against a participant or beneficiary * * * for the purpose

of interfering with the attainment of any right to which

such participant may become entitled under {a benefit |

plan.”

Section 502 of ERISA, 29 U.S.C. § 1132, contains the

statuie’s enforcement provisions. In relevant part, Sec-

tion 502/(2)(1)(B) authorizes any plan participant or

beneficiary to bring a civil action “to recover benefits

due to him under the terms of his plan, to enforce his

rights 1nder the terms of the plan, or to clarify his rights

to future benefits under the terms of the plan.” Section

902'a) (3) also authorizes any plan participant, bene-

ficiary, or fiduciary to seek “to enjoin any act or prac-

tice which violates the provisions of this subchapter or

the terms of the plan,” or 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.” Section 502(e) (1) gives state courts concur-

rent juvisdiction with the federal district courts to enter-

tain “x tions under subsection (a) (1)(B)” of Section

502: the federal courts have exclusive jurisdiction to en-

tertain o'her “civil actions under this subchapter brought

by the Secretary {of Labor] or by a [plan] participant,

beneficiary, or fiduciary.”

Finally, and most importantly for present purposes,

ERESA contains an express preemption provision. Sec-

tion 5I4ia', 29 U.S.C. $ 1144/a), provides that the fed-

eral statute “shall supersede any and all State laws in-

sofar as they may now or hereafter relate to any em-

ployee benefit plan described in section 1003(a) of {title

29] and not exempt under section 1003(b) of [title 29].”

These terms are defined by Section 514(¢), which pro-

vides that the phrase “State law” includes all laws “of

any state”: the term “State” in turn is defined as any

4

State or political subdivision “which purports to regu-

late, directly or indirectly, the terms and conditions of

employee benefit plans covered by this subchapter.”” In

addition, Section 514(b) contains a number of exceptions

to the preemption provision that are not at issue here.

2. This is a wrongful discharge action brought in

Texas state court by respondent against petitioner, his

former employer. Respondent's employment was termi-

nated “after he had accumulated nine years and eight

months of service” to petitioner (Pet. App. 2a): accord-

ing to the court below, “the termination occurred exactly

four months prior to the vesting of [respondent’s] re-

tirement an¢ pension benefits, at which time [petitioner]

would have been required to contribute to {respondent’s|

pension fund.” /bid. Although petitioner “ultimately al-

lowed |respondent’s| pension to vest” (id. at 2a n.2),

respondent contended that petitioner had discharged him

“tu escape its obligation to contribute to his pension

fund.” Id. at 2a (footnote omitted). Respondent’s suit

was dismissed by the state trial court (id. at 25a-26a)

and the state court of appeals (id. at 17a-24a) on state

law grounds.

The Texas Supreme Court reversed. Pet. App. la-16a.

While noting that Texas courts traditionally have per-

mitted the termination of at-will employment without

cause (id, at 3a), the court also recognized that hoth

federal and state law have eroded this doctrine (ia. at

3a-4a) and that “|n|umerous other states have accepted

the principle that public policy can limit an employer's

power to discharge at-will employees.” /d. at da. Here,

the court found that the Texas statutes establishing pen-

sion rights for public employees demonstrate “that the

state has an interest in protecting employees’ interests

in pension plans.” The court also noted that ERISA See-

tion 510 precludes the discharge of an employee for the

purpose of interfering with his pension rights, ind added

that “|t{/he very passage of ERISA demonstrates the

5

great significance attached to income security for retire-

ment purposes.” 7d. at 5a.

The court accordingly held that “public policy favors

the protection of integrity in pension plans and requires

in this case an exception to the employment-at-will doc-

trine. This exception allows recovery when the plaintiff

proves that the principal reason for his termination was

the emplover’s desire to avoid contributing to or paying

benefits under the employee’s pension fund.” Pet. App.

5a ‘footnote omitted), The court added that ERISA did

not preempt respondent’s action “because here the plain-

tiff acknowledged in his brief to the court of appeals

that he is not seeking lost pension benefits but is instead

seeking future wages, mental anguish and punitive dam-

ages as a result of the wrongful discharge.” Jd. at 5a

n.3. The court accordingly remanded the case to the

trial court. Jd. at 5a.

Justice Cook, joined by two other Justices, dissented.

Pet. App. 5a-13a. He maintained “that the law created

today by this court relates to a pension plan and di-

rectly conflicts with the specific provisions of {ERISA |

$510 establishing a federal cause of action under

ERISA. Consequently, that section preempts our new

law through §514(a).” Pet. App. 7a. Justice Cook

added that, “because preemption of the claim at issue

leaves a plaintiff with a cause of action that can be liti-

gated only in federal court, ERISA preempts the forum

as wel! as the cause of action.” Ibid. Justice Cook also

argued that petitioner was entitled to summary judgment

and that the majority should have limited the damages

available to respondent (id. at 9a-13a). Justice Gonzalez

dissented separately (id. at 13a-16a), agreeing that re-

spondent’s action is preempted by ERISA (id. at 13a)

and noting that the court left open the question whether

respondent would be entitled to punitive damages should

he be successful on the merits of his claim. Id. at

l4a-l5a.

6

SUMMARY OF ARGUMENT

1. The controlling question here is whether the Texas

common law rule announced in this case “relate!s| to”

an ERISA plan within the meaning of Section 514. In

our view, the language of ERISA, which makes preemp-

tion turn on a state law’s relationship to a plan, cannot

encompass laws—like the one formulated by the court

below—that apply to an employer rather than to a

plan, that regulate the employer’s relationship with an

employee rather than with a plan, and that have no dis-

cernible impact whatever on a plan. In fact, it seems

clear to us that ERISA’s preemption clause reaches only

those state laws that regulate the terms and conditions

of ERISA plans, or that refer in terms to those plans.

This understanding of Section 514(a) is conclusively

confirmed by an element of ERISA that petitioner ig-

nores, but that should be crucial to the resolution of this

case: the statutory definitions that control the interpre-

tation of the preemption section. Section 514(c) defines

the universe of potentially preempted enactments to in-

clude the laws “of any State,” and in turn provides that

the term “State” describes any governmental entity that

“purports to regulate, directly or indirectly, the terms

and conditions of employee benefit plans covered by this

subchapter.” This definition was written specifically to

delimit the scope of the preemption clause; it was drafted

at the same time and by the same Conference Commit-

tee that placed the “relate to” language in ERISA. In-

deed, the portion of the definition of “State” quoted

above would be wholly meaningless if it did not set the

outer bounds of the preemption clause. By its plain

terms, then, the language of ERISA makes preemption

appropriate only if the state law, however indirectly,

“regulate's! the “terms and conditions of employee bene-

fit plans"’ We note that the Court’s decisions all have

been consistent with this definition of Section 514/a).

The state law at issue here plainly escapes preemption

under this test. It regulates the relationship between the

7

employer and its employee, rather than the ERISA plan.

It has no effect whatever on the terms and conditions of

the plan, the benefits offered by the plan, the methods by

which the plan processes or pays claims, the funding of

the plan, or other aspects of plan administration. And

while some sort of pension system (although not neces-

sarily an ERISA plan) presumably must be in place for

the employee to have a cause of action, that hardly makes

the law an attempt to regulate the terms and conditions

of an ERISA plan.

2. Petitioner contends that Texas law must “relate to”

a plan within the meaning of Section 514(a) because it

bears some similarity to ERISA Section 510. But the

test set out in Section 514/a) requires relation to a plan,

not relation to some other provision of ERISA. Indeed,

before adopting the current language of Section 514(a),

Congress considered and rejected a preemption test that

looked to the overlap between state and federal law—the

very test that petitioner contends for now. Petitioner’s

related argument that the Texas law somehow mukes ref-

erence to an ERISA plan is equally meritless. The Texas

Supreme Court’s decision sets out a rule that is directed

at any attempt to prevent the vesting of any benefit,

whether or not an ERISA plan is involved. Texas law

therefore makes no express reference to ERISA, and does

not “single| | out ERISA plans, by express reference, for

special treatment.” Mackey v. Lanier Collection Agency,

486 U.S. 825, 838 n.12 (1988).

3. Our reading of Section 514(a) draws additional

support from ERISA’s legislative history and_ policies.

Each of the principal sponsors described the provision as

preempting the state regulation of plans; the examples

they provided of laws that would be superseded all in-

volved attempts to regulate plan terms or administration.

The legislative history also makes quite clear, as the

Court has noted, that the overriding purpose of Section

514(a) was to ensure that the administrative practices

of multistate benefit plans would be governed by only a

8

single set of regulations. But the Texas law at issue here

has absolutely no effect on plan administration or

policies.

In arguing to the contrary, petitioner and its amici

maintain that the availability of punitive damages in

state court might discourage employers from creating or

maintaining plans. But even if petitioner is correct in

its assertions that punitive damages are unavailable un-

der ERISA (a question this Court has left open) and

that they are available under Texas law (a question the

court below did not resolve), it remains the case that the

state law at issue here does not in any sense regulate the

terms and conditions of plans, or raise the threat of dis-

uniformity. And any effect that the decision below might

have on employer behavior surely is too tangential and

speculative to warrant preemption; after all, this Court

already has rejected the proposition that ERISA pre-

empts every state tort or contract law that makes the

operation of a plan more expensive.

ARGUMENT

ERISA DOES NOT PREEMPT THE STATE LAW AT

ISSUE IN THIS CASE.

Petitioner’s argument (Br. 19-21) is grounded largely

on general assertions about the breadth and clarity of

the ERISA preemption provisions. But these are pain-

fully slender props on which to support petitioner’s cen-

tral contention. In fact, in the ERISA setting this Court

repeatedly has “presume|d| that Congress did wot intend

to pre-empt areas of traditional state regulation.” Met-

ropolitan Life Insurance Co. v. Massachusetts, 471 US.

724, 740 (1985) (‘emphasis added!. See Massachusetts

v. Morash, 109 S.Ct. 1668, 1675 (1989): Fort Halifas

Packing Co. v. Coyne, 482 U.S. 1, 19 (1987). See gen-

erally, e.g., English v. General Electric Co., 110 S.Ct.

2270, 2278, 2280 (1990); California v. ARC America

Corp., 109 S.Ct. 1661, 1665 (1989). This case—which

9

involves an application of state tort law “—thus squarely

presents a form of state regulation that presumptively

is “ ‘preserved in our federalist system.’” Morash, 109

S.Ct. at 1675, quoting Fort Halifax, 482 U.S. at 19.

At the same time, the meaning of Secticn 514 is hardly

crystalline. To the contrary, the Court repeatedly ‘and

rather charitably) has noted that ERISA’s preemption

provisions “perhaps are not a model of legislative draft-

ing.” Metropoli‘an Life, 471 U.S. at 739. See Pilot Life

Insurance Co. v. Dedeauxy, 481 U.S. 41, 46 (1987):

Alessi v. Raybestos-Manhattan. Inc., 451 U.S. 504, 523-

524 (1981). But whatever the provision’s outer bound-

aries, it is clear that Section 514 is not as broad as peti-

tioner seems to suggest: state laws are not preempted

simply because they deal generally with the subject of

employee benefits ‘see, e.g., Fort Halifax, 482 U.S. at 19;

Morash, 109 S.Ct. at 1674-1675), and Section 514/a)

does not even supersede all state laws that apply directly

to ERISA plans. See Mackey v. Lanier Collection

Agency, 486 U.S. 825, 840-841 (1988).

Indeed, the most notable element of petitioner’s analy-

sis is its failure to offer a workable test to determine just

when it is that a state law “relate|s| to any employee

benefit plan” within the meaning of ERISA. And the

omission is telling. In fact, a -state law is preempted

under that language only if it regulates the terms or

conditions of ERISA plans, or otherwise is applied to

affect the administration or operation of those plans.

This test for the application of Section 514/a) follows

directiy from the statutory language and legislative his-

tory, and accords most fully with the policies that under-

lie ERISA,

“Wrongful discharge suits are hardly novel; as petitioner’s

amict Chamber of Commerce et el, recognize, a substantial majority

of States now recognize such suits in varying circumstances. See

Br. 26-27.

10

A. A State Law “Relate[s] To” An ERISA Plan Only If

It Regulates The Terms, Conditions, Or Administra:

tion Of A Plan.

1. As the Court repeatedly has indicated, “a! law

‘relates to’ an employee-benefit plan, in the norma! sense

of the phrase, if it has a connection with or reference to

such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S.

85, 96-97 (1983). See Mackey, 486 U.S. at 829: Fort

Halifax, 482 U.S. at 7-8; Pilot Life, 481 U.S. at 47:

Metropolitan Life, 471 U.S. at 739. This definition surely

reaches laws that refer in terms to ERISA plans, or that

regulate the terms and administration of those plans.

But it is difficult to see how statutory language that re-

quires a relationship to “any employee benefit plan” can

encompass state laws—like the one at issue in this case—

that apply to an employer rather than to a plan, that

regulate the employer’s relationship with an employee

rather than with a plan, and that have no discernible im-

pact whatever on an ERISA plan.’

This understanding of Section 514(a) is conclusively

confirmed by an element of ERISA that petitioner wholly

ignores, but that should be crucial to the resolution of

this case: the express definitional provision that Con-

gress placed in Section 514‘c¢) to control the interpreta-

tion of “th[e| [preemption] section.” 29 U.S.C. § 1144

(ec). This provision does not define the term “relste to.”

But it does define the universe of potentially preempted

3 Of course, if a plaintiff prevailed in a suit such as this one he

might be reinstated in his job and, as a consequence, again become

a participant in his emplover’s plan. That is hardly certain, how-

ever; respondent himself seeks neither reinstatement nor plan

benefits (see Pet. App. 5a n.3), and the Texas Supreme Court said

nothing about the scope of available remedies for wrongful dis-

charge. See generally Pet. App. 5a. But in any event, reinstate-

ment generally is available as a remedy under analogous state

anti-discrimination laws. That plaintiffs who successfully invoke

those laws might become pension plan participants hardly is a basis

for preemption under ERISA.

11

enactments to include the laws “of any State” (Section

514'¢)(1)), and in turn provides that the term “State”

describes any governmental entity that “purports to req-

wlate, directly or indirectly, the terms and conditions of

employee benefit plans covered by this subchapter.” Sec-

tion 514/¢} 12) (emphasis added).

This definition was written specifically to control the

interpretation of the “relate to” clause. As originally

passed by the respective Chambers of Congress, neither

the House nor the Senate versions of the bills that be-

came ERISA contained a definitional section. See H.R.

2, 93d Cong., 2d Sess. $ 699/a), reprinted at 3 Staff of

Subcomm. on Labor of the Senate Comm. on Labor and

Public Welfare, 94th Cong., 2d Sess., Legislative History

of the Employee Retirement Income Security Act of 1974

3999, 3820 (Comm. Print 1976) [hereinafter Leg. Hist.)

‘Senate versioni; H.R. 2, 93d Cong., 2d Sess. § 514,

reprinted at 3 Leg. Hist. 3898, 4057-4059 (House ver-

sion). Instead, that section was drafted by the Confer-

ence Committee along with the “relate to” language. See

H.R. Conf. Rep. No. 1280, 93d Cong., 2d Sess. 83 (1974 ¥

reprinted at 3 Leg. Hist. 4277, 4357-4358. Its purpose

therefore could only have been to delimit the scope of the

preemption clause. Indeed, the portion of Section 514 (ce)

quoted above would be wholly meaningless if it did not

set the outer bounds of the statute’s preemptive effect.

And needless to say, Section 514(a) cannot be divorced

from the provision that defines its terms: “the term

‘State’ either inforn:s the meaning of ‘relate to’ or im-

poses independent requirements of its own.” Kilberg &

Inman, Preemption of State Laws Relating to Employee

Benefit Plans: An Analysis of ERISA Section 514. 62

Tex. L. Rev. 1313, 1325 (1984). In either event, the ex-

press language of ERISA makes preemption appropriate

only if the state law, however indirectly (or even inad-

vertently', “regulate|s]” the “terms and conditions of

employee benefit plans.”

12

29 The Court’s decisions all have been consistent with

this understanding of Section 514(a). The Court has

found that state laws “relate[d] to” ERISA plans when

those laws affected benefit computation levels (see

Alessi, 451 U.S. at 507-508, 524), mandated payment of

particular benefits or modified the terms of a plan (see

Metropolitan Life, 471 U.S. at 739; Shaw, 463 U.S. at

88-90), provided for “‘suit[s] by a beneficiary to recover

benefits from a covered plan” (Metropolitan Life Insur-

ance Co. v. Taylor, 481 U.S. 58, 62-63 (1987); see Pilot

Life, 481 U.S. at 43, 47-48), or otherwise “expressly

refer|red| to—indeed, solely applied to—ERISA em-

ployee benefit plans.” Mackey, 486 U.S. at 829. Ali of

these, of course, are Cases in which the state law ef-

fectively regulated the substance of plan benefit or pay-

ment policies.’ On the other hand, state laws that did not

affect the operation of plans have escaped preemption

even when they regulated employee benefits. See Fort

Halifax, 482 U.S. at 22-23. See also Mackey, 486 U.S.

at 833-834. Indeed, this distinction explains why “run-

of-the-mill state-law claims such as unpaid rent, failure

to pay creditors, or even torts” (Mackey, 486 U.S. at

833) may be applied directly to plans; although such

laws may have a very substantial effect on plans, they

do not regulate plan terms, benefits, or administration—

and therefore do not “relate to” plans.

It should be added that this is not a novel approach

to preemption. The Court has held, for example, that

Congress preempted the field of nuclear safety regula-

tion, just as it has preempted the field of ERISA plan

regulation. See, ¢€.g., Pacific Gas & Electric Co. v. State

4When—as in Mackey, which in part concerned special state

garnishment rules that applied only to ERISA plans (see 486 U.S.

at &828-829)—‘“a state law on its face imposes obligations on em-

ployee benefit plans, the law clearly ‘relates to’ the plan, because it

invariably announces a purpose to regulate the manner in which

plans operate within the law-creating state.” Kilberg & Inman,

supra, 62 Tex. L. Rev. at 1331 (footnote omitted).

rece distinguishable from English because ERISA

enactments at issue i Sngli | wonets

mee nts at issue in English, contains an express pr

provision. Br. & n.10, 20 n.20 | cate Gc

iE R . a ? oS .

— s principal sponsors made quite clear, was simply

pool the field for Federal regulations.” ;

{ ( ; _ P i, . . y* . ae

am pinggos a of Sen. Williams), reprinted at 3 Leg. Hist. 4745

See a , o7 “ Bivis aey, oe, * >).

eae a arg (remarks of Rep. Dent) (“preemption of the

a $ ‘eprinted at 3 Leg. Hist. 4670; id. at 29,942 (remarks of

at’ Hav " a ‘ ¥ pays : i

oa ms em (“the displacement of State action in the field 7

it h “a oyee benefit programs”), reprinted at 3 Ley Hist 1771

Boonen d make no difference to the analysis that Connee | ha |

c y ’ , } , j J ; ; te ge | ,

pted the field explicitly rather than by implication. As a re a

i é - AS ‘esull,

k / i] ¢ . ay if « Pp ’ p , . . »

ad . I

13

—— a

et Conservation & Development Comm'n

nage Si (1968). Just last Term, however, in

Ris Clink cieaae sa hagprsieeey similarity to this one,

eral law pree oe rejected the contention that fed-

pare sd I | mpted a state tort claim brought by an

ployee at a nuclear facility who asserted that che had

been termin:

inated for compl: ini

. alning about safety jiolati .

The € ourt expla ined that prin lations.

age sonar Theva that in some remote way may

— te sar ear safety decisions made by those

rir berger own nuclear facilities can be said to

aed rsh oe ae field. We have no doubt,

wage and child go ats ue dean ag nye

facilities would not be ween ted oan ¢ nck oon

laws could be said to : ; Hall penal ye

resource allocation ris on wae hee gt

ing on radiological safety. iene

English “. General Electric Co., 110 S. Ct. at 227

Instead,” the Court added, “for a state atid ” fall

pane the pre-empted zone, it must have some poor

— na eBect on the decisions made by those

- , or operate nuclear facilities concerning radio-

ogical safety levels.” Jbid.° Preemption in the nuclear

5 Petiti ap’s on ( 7

etitioner’s amict Chamber of Commerce et al suggest that thi

& ha F « is

, unlike the

But the point of Section 514. as

“to pre-

120 Cong. Rec. 29,932

ot pri-

14

field accordingly is appropriate only when the state law

regulates some aspect of nuclear safety—just as pre-

emption under ERISA is appropriate only when the state

law regulates some aspect of plan benefits or administra-

tion.

The state law at issue here plainly escapes preemption

under this test. It regulates the relationship between the

employer and its employee, rather than the ERISA plan."

It has no effect whatever on the terms and conditions of

the plan, the benefits offered by the plan, the methods by

which the plan processes or pays claims, the funding of

the plan, or other aspects of plan administration. In-

deed. the Texas law’s only arguable connection to peti-

tioner’s plan arises from the requirement that some sort

of pension system (although not necessarily, as we €X-

plain below, an ERISA plan) presumably must be in

place for the employee to have a cause of action. But

that hardly makes the law an attempt to “regulate” the

“terms and conditions” of a plan, or gives the law any

effect on the operation of a plan. If this attenuated asso-

ciation may be said to affect the plan at all, it plainly

does so “in too tenuous, remote, or peripheral a manner

to warrant a finding that the law ‘relates to’ the plan.”

Shaw, 463 U.S, at 100 n.21.'

urse, that state laws necessarily do not

they are directed at employers. A

law requiring that employers make specified contributions to a plan,

for example—or, for that matter, requiring that employers create

plans offering certein benefits— plainly would fall within the scope

of the preemption clause. So would state laws mimicking many

of the provisions of ERISA cited by petitioner (Br. 43) and its

Chamber of Commerce et al. 91-23). But they would

gulate, albeit indirectly, the operation

The Texas law at issue here has no

6 We do not suggest, of c¢

“relate to” plans simply because

amici (Br.

do so because they would re

or administration of plans.

such effect.

rting that “{federal and state |

. non-interference laws like

RISA-covered plans and are

7 Petitioner is incorrect in asse

courts have uniformly found that state

that of the State of Texas ‘relate to’ E

15

3. P i j ’ ° 4

re — oe principal attempt to demonstrate that

which prohibit ote dhe to” a plan turns on Section 510

its the discharge of a pl: mar ‘

t ier ‘ : OF & plan participant “for

a ragga of interfering with the attainment of eny

pier an.” 29 U.S.C. $1140. As we understand it

mas “ed pe to suggest that a state law “relate|s]

of ERISA. Bi 21-24 ee ee ree

. 4 . re "at. ut Section 514 (/; ) : .

tion ‘ rer . a) requires rela-

le Pine not relation to some other provision of

JRISA, ere 1S no reason to s

law “rel: % re suppose that a state

a to Fe within the specific (and as we

: ove, specifically define , 5)

, ed) meaning of the pr

emptio <3 the pre-

2 ‘ ahcgem simply because that law parallels, in part

y Dsncarete provision of ERISA that was enacted for

so atically differing purposes. To the contrary, as peti

. ) re itself surely reeoenizes (see Br. 29-22). Con res

ons ( . . A . ‘ oal, ess

a and rejected a preemption test that looked to

preempted.” Br. 44 (emphasis i =

’ P a phasis In original > 5 .

( - ee = gina r. The Tex: 8 Si remo

Rio itself cited two federal decisions that. r¢ eae ie oh eg

= mn identical to the one in this case (Pet. App hie — ves

“a a ne explicitly concluded that “New York poss es es

909, pop to ERISA,” Savodnik v, Korvettes, Ine 188 IF oon

2, 826 (E.D.N.Y. 1980), and the s a - TS oe OUP

Se vodnik 4 ; ek e second relied on the analysis of

aap Hovey v. Lutheran Medical Center. 516 F mi ee

oe y P . oe Ps 8 Tye). ipeP

ane aera 198] Pee see also K Mait Corp. v’. Po) socl nt bate

Se | Piper . ee 1987) (recognizing aciion for dismissal ng? : “a

rae of retirement benefits without discussing ERTS: wae

~ = It is not at all clear that one of the NOE RT ' Ss om

y petitioner actually holds that actions such as thi z con ie

, > — wu aid S me are we

re en In Conway v. Eastern Associated Cool C ped au My

423. 4297 TW. . P 0TP,, O38 SED

ans =. (W.Va. 1986 ) (footnote omitted), the ibe dd ig —

at “[t!his area is preempted by Federal ERISA "os ————

such rrony ae See er i

ae ge ful discharge] is illegal under 29 U.S.C. $1.40" J

. ears "OVE @ = oS 7e . . ; f

pl . tie owever, that the court believed ERISA sv) 7

vig ly 9 . . . : ‘ «4 ard <j yr) , ‘

: yd oo ntion that his discharge violated public peli ian

court accordingly wen < public poiicy. The

l | viy went on to note that the action w ;

marred (see 358 S.F.9d ; ~ ne vas not iim

“nr sanied Tel : .E.2d at 427 n.1l) but added that the nini oy

ae Bae evidence whatsoever to support th's al! ay

wr r Weshar ' ; . : Ss anegat oar

ongful discharge There fore, we he VW] that ¢} ‘ ‘ ]

’ phe ; f rye] (* ,

correctly dismissed this cause of action.” Jhid

16

the overlap between state and federal law-—the very test

that petitioner contends for now.

Goine into conference, the Senate bill that became

ERISA would have pree npted state laws “insofar as

they may now or hereafter relate to the subject matters

requiated by this Act.’ HLR. 2, $ 699(a), 938d Cong., 2d

Sess. (Mar. 4, 1974) ‘emphasis added), reprinted at 3

Leq. Hist. 3599, 38209. By replacing that language with

the current statutory formula, Congress adopted a system

that preempted “state laws relating to plans covered by

ERISA as opposed to subjects covered by the Act.”

Kilberg & Heron, The Preemption of State Law Under

ERISA, 1979 Duke L.J. 383, 390 ‘emphasis in original).

Of course, in some important ways the change broadened

ERISA’s preemptive effect; that may be seen in several

of the ERISA cases already decided by the Court.“ But

‘n other circumstances, as here, the change effectively

narrowed the scope of preemption. “(T]he words actually

chosen by Congress to effectuate its will” (Board of Gov-

ernors v. Dimension Financial Corp., 474 U.S. 361, 372

/1986)) thus do not reach the Texas law challenged by

petitioner, and that should be the end of the matter. See

Fort Halifax, 482 U.S. at 9-12.

Petitioner also insists that Texas common law must be

preempted because it makes “ ‘reference to’’’ an ERISA

plan. Br. 20, quoting Shar, 463 U.S. at 97. This is sim-

ply incorrect. On its face, the Texas Supreme Court's

decision sets out a rule that is directed at any attempt

to prevent the vesting of any retirement benefit, whether

8 Shaw, for example, involved state 'aws that mandated the pay-

ment of certain disability benefits ad precluded plans from dis-

criminating on the basis of pregnancy. See 463 U.S. at 88-90.

These laws were preempted because they regulated and therefore

plainly “relate! d} to”—plans, even though ERISA itself “does not

regulate the substantive content of welfare-benefit plans.” Metro-

politan Life, 471 U.S. at 732. See Shaw 463 U.S. at 91.

17

or not an ERISA plan is involved. See Pet. A 5a.®

tec “ the Court explained in Mackey, a state te pares

wa a wed a plan within the meaning of Shaw only

wong ne “_ contains an “express reference to ERISA”

S6 U.S. at 830); the Court noted “the disparate treat-

ment accorded to non-ERISA benefit plans” by the stat

law at issue In Mackey (id, at 830 n.4), and held that

any state law which singles out ERISA plans, b “

press gp gen for spr treatment is aeamueal

It is this ‘singling out’ that pre- state

law at issue].” Jd, at 838 n.12 hens tipsy oe aa

The state law here, however, does not single out ERISA

plans. And it should no more be preempted because it

ya the general area of retirement benefits eee

= idle wey Halifax preempted because it involved

pony “ps . area of severance benefits. See Fort Halifax

&2 5. at 12. Indeed, the Texas law plainly is valid

as applied to non-ERISA plans: under Mackey the im

micht he vulnerable to attack under ERISA if it in te , .

patina employers who operated ERISA eee ie

~ ) ry $ r ‘ , « > .

— y favorable treatment by ~rotecting them from

Petitioner similarly complains (Br. 20 n.4) that a state

prea pags ted Pag to a plan's provisions to determine

rer evasion of pension obligations could have been

the reason for dismissal of an employee. Under the Texas

a however, state courts do not award plan benefits au

otherwise apply the plan; as the Texas Supreme Cou *t

noted, the plan document is relevant only insofar as it

presage explain the motivation behind ithe em.

ployer’s] initial termination of [the emplovee].” Pet

App. 2a-8a n.2. This use of the plan as evidence hard! )

justifies preemption: “interpretation alone hee et ed

u “ ’ . . My 4 .

Indeed, the court specifically pointed to state statutes th

erie its al ente

pension plans for nil lic . Sealed : mae te

Pet. App. da. public employees who are not covered by ERISA,

18

stitute regulation of the terms and eoagiogee a Mg a plan.

Kilberg & Inman, supra, 62 Tex. L. Rev. at 1500.

BR. The Legislative History And Policies Of ERISA Cut

Against Preemption.

Secti a "s addi-

1. Our understanding of Section 51d ia ) niga 3

tional support from ERISA’s legislative histor — =

iev. The evolution of ERISA’s preemption prov 2 we a

erhaps unfortunately, become familiar. See Met) ps. ns

os Life, 471 U.S. at 745-746; Shaw, 4638 U.S. : —

As we explain above, for present purposes pom

notable element in the development . the regen Sano

" fas é ent of a tes c s

~y language was the abandonme yore

prayer prea by ERISA and the substitution of kg

c ate 3 ; : ard

C ‘cnositive a state law’s regulatory Impac

hat makes dispositive a 5 —

prt And the significance of this change is og hand

by the floor debate, which offers the only useful discu:

* ’ ; 1

sion of Section 514(a)’s meaning.

Each of ERISA’s principal sponsors decerthed wees

514 as setting aside ‘“non-Federal a —.

benefit plans.” 120 Cong. Ree. 29,197 ha py: i.

f Rep. Dent) (emphasis added), reprintec et

His! 4670. See id. at 29,933 (yemarks of peg con gyri

al is , is 5-4746; id. at 29,942 ‘re-

reprinted at 3 Leg. Hist. 4745 rb a an

arks Sen. Javits), reprinted at 3 Leg. m

prea soi examples offered during wedi ma

laws that would be superseded—professiona _ ; . /

of the contents of legal services — 7 : Ae

29.949 (remarks of Sen. Javits), ry singe = po

Hit. 4789: id. at 29,933 (remarks of Sen. Wi aon 8 =

rinted at 3 Leg. Hist. 4746), compelled sporyratngget =

: ; ‘of lans (see id. at 29,942 (remarks of Sen. ‘ sire )s

rant at 3 Leg. Hist. 4771), imposition of fiduciary

: : Cacti 514(a) was

1 As we note above, the current language of Sect < / t simply

a F ; . “ence ‘port s

: ‘to mar » Conference Rep

. a a ence. For its part, the : end

-ritten in conference. . ; : 1980, 93

} h es the statutory language. See H.R. Conf. a cone 165650

ecnoes on ta . ‘ " is Pit, 40o.

C 9d Sess. 283 (1974), reprinted at Leg. Hist

onyv., ys . has ** . .

19

requirements on plans (see ibid. (remarks of Sen. Javits),

reprinted at 3 Leg. Hist. 4771), and the like "—thus ali

involved attempts to regulate the administration of or

benefits offered by plans. While this list is not exhaus-

tive, it certainly is suggestive of the sorts of state laws

that were thought to “relate to” ERISA plans.

Indeed, the one general indication of the manner in

which Congress intended the preemption provisions to

apply supports our reading. Representative Dent, floor

manager for the bill in the House, explained that ERISA’s

preemption provisions “followed to a large extent the

Same approach as in Public Law 93-222 * * * where the

regulation of health maintenance organizations [HMOs]

was foreclosed to state authority—section 113(a) [sic].” ™

120 Cong. Rec. 29,197 (1974), reprinted at 3 Leg. Hist.

4670. The statute to which Representative Dent referred

preempted state laws relating to the creation and organi-

zation of HMOs—just as Section 514 of ERISA preempts

laws that regulate the terms and conditions of plans.

But nothing in that statute reached peripheral state rules

of the sort at issue here."

"Senator Javits offered the fullest description of Section 514's

impact, stating that, “[i]n view of Federal preemption, State laws

compelling disclosure from private welfare or pension plans, im-

posing fiduciary requirements on such plans, imposing criminal

penalties on failure to contribute to plans—unless a criminal statute

of general application—establishing state termination insurance

programs, et cetera, will be superseded.” 120 Cong. Rec. 29.942

(1974), reprinted at 3 Ley. Hist. 4771.

' Congressman Dent in fact had in mind Section 1311(a).

'SThe statute thus preempted laws requiring medical socict)

approval for the creation of HMOs, requiring that physicians

constitute a defined percentage of an HMO’s governing body, re-

quiring that all or a percentage of physicians in the locale be

permitted to participate in providing services for the HMO. or

requiring that HMOs meet specified capitalization or other finpn-

cial requirements. &7 Stat. 931.

20

2. The legislative history also makes clear why Con-

gress made preemption turn on a finding that state law

regulates plan terms or administration: the fundamental

purpose of the preemption provision was elimination of

“the threat of conflicting or inconsistent State and local

regulation of employee benefit plans.” 120 Cong. Ree.

29,933 (1974) (remarks of Sen. Williams), reprinted at

3 Leg. Hist. 4745-4746. See id. at 29,197 (remarks of

Rep. Dent) (“eliminating the threat of conflicting and

‘neonsistent State and local regulation”), reprinted at 3

Leg. Hist. 4670. Congress thus intended to sweep asidé

“multiple and potentially conflicting State laws” so as to

ensure “unformity with respect to interstate plans.” Jd.

at 29,942 (rc narks of Sen. Javits), reprinted at 3 Leg.

Hist. 4770-4771.

The Court accordingly has recognized that “Tt}he focus

of the statute thus is on the administrative integrity of

benefit plans.” Fort Halifax, 482 U.S. at 15. In its most

comprehensive analysis of the preemption provision’s pur-

poses, the Court explained that the legislative history

reflect{s] recognition of the administrative reality

of employee benefit plans. An employer that makes

a commitment systematically to pay certain benefits

undertakes a host of obligations, such as determining

the eligibility of claimants, calculating benefit levels,

making disbursements, monitoring the availability

of funds for benefit payments, and keeping appro-

priate records in order to comply with applicable re-

porting requirements. The most efficient way to meet

these responsibilities is to establish a uniform admin-

‘strative scheme, which provides a set of standard

procedures to guide processing of claims and dis-

bursement of benefits. Such a system is difficult to

achieve, however, if a benefit plan is subject to dif-

fering regulatory requirements in differing States.

A plan would be required to keep certain records in

come States but not in others; to make certain bene-

fits available in some States but not in others; to

21

process claims in a certain way in som

é e States but

not in others ; and to comply with certain fiduciary

standards in some States but not in others.

Port Halifax, 482 U.S. at 9. The Court therefore found

it “clear that ERISA’s pre-emption provision was

prompted by recognition that employers establishing and

maintaining employee benefit plans are faced with the

task of coordinating complex administrative activities.

Pre-emption ensures that the administrative prac-

tices of a benefit plan will be gov J

governed by on

set of regulations.” /d. at 11." y only a single

Although petitioner (Br. 36-41) and its amici (Br

Chamber of Commerce et al. 26-28) struggle gamely to

demonstrate that Texas law will have an adverse effect

on plans, they do not—and plainly could not—suggest

that ‘state law create[s] the prospect that an employer’s

administrative scheme would be subject to conflicting re-

quirements” (Fort Halifax, 482 U.S. at 10); “|t]he Com-

pany makes no contention that its [state] statutory duty

has in any way hindered its ability to operate its retire-

ment plans in uniform fashion.” Jd. at 14. And that

should dispose of petitioner’s case, for Texas law accord-

ingly “present[s] none of the risks that ERISA is in-

tended to address.” Morash, 109 S.Ct. at 1673.

It should be added that, even on their own terms, the

assertions of petitioner and its amici about the adverse

impact of the Texas law are substantially overstated

Petitioner seems especially concerned about the possi-

4 This understanding explains why ERISA preempts state laws

that regulate plans even when those laws are consistent with the

federal statute’s underlying purpose. See Metropolitan Life, 471

U.S. at 739; Mackey, 486 U.S. at 829. Laws that exceed ERISA's

minima would subject multistate plans to varying somsioctante ie

different States. It should be noted, however, that the prospect of

increased administrative or litigation costs cannot justify pre

emption where it is not required by the plain terms of Section

514(a). See Mackey, 486 U.S. at 831-832; compare id at oenaee

(Kennedy, J., dissenting). Cf. Firestone, 109 S.Ct. at 956 ——

22

bility of punitive damages awards against employers.

Asserting that such damages are unavailable in actions

brought under Section 502(a)(3) to enforce Section 510

of ERISA, petitioner (Br. 39) and its amici (Br.

Chamber of Commerce et al. 26-27) complain that the

prospect of punitive damages liability in state tort actions

will discourage employers from creating plans. We note

that this complaint is premature; the Texas Supreme

Court held only that respondent had asserted a proper

cause of action, and left open the scope of the remedies

available to respondent if he ultimately prevails on the

merits of his claim. See Pet. App. 5a.’° Moreover, the

premise of petitioner’s argument—that punitive damages

are unavailable in federal court—may well be mistaken:

this Court has left open the question whether such dam-

ages may be awarded under Section 502(a)(3), see

Massachusetts Mutual Life Insurance Co. v. Russell, 473

U.S. 134, 139 n.5, 144 n.i2 (1985), and there are com-

pelling reasons to believe that punitive damages should

be available under the provision."

15 Justice Gonzalez noted in dissent that “|t]he court * * * does

not resolve whether the plaintiff is entitled to all damages pleaded,”

adding that “[t]his is essentially an open question.” Pet. App. ld4a.

Justice Gonzalez also explained that, in Texas, “[a]s a general

rule, the damages available for common law wrongful termination

are contractual in nature.” Jd. at l5a.

16 Both Congress and the Court have made it clear that “courts

are to develop a ‘federal common law of rights and obligations un-

der ERISA-regulated plans.’” Firestone, 109 S.Ct. at 954, quoting

Pilot Life, 481 U.S. at 56. See also, ¢.g., Franchise Tar Board v.

Construction Laborers Vacation Trust, 463 U.S. 1, 24 n.26 (1983);

120 Cong. Rec. 29,942 (1974) (remarks of Sen. Javits), reprinted at

3 Leg. Hist. 4770-4771. In doing so, “ ‘state law where compatible

with national policy may be resorted to and adopted as a national

rule of decision. .. . Here, of course, there is little federal law

to which the court may turn for guidance. State regulation of

insurance, pensions, and other such programs, however, provides a

pre-existing source of experience and experiment in an area in

which there is, as yet, only federal inexperience. * * * [S|tate

statutory sources of law will no doubt play a major role in the

23

In any event, even if punitive damages are available

in state but not in federal court, it hardly seems likely

that the prospect of additional liability for wrongful dis-

charges that already are illegal and actionable under fed-

eral law will have much of an impact on the formulation

and maintenance of plans. Whatever effect Texas law has

by “attach[ing] additional consequenecs to retaliatory

conduct by employers” surely “is neither direct nor sub-

stanual enough to place petitioner’s claim in the pre-

empted field.” English, 110 S. Ct. at 2278. After all. as

this Court already has made clear, it cannot be the case

that a state law—such as a run-of-the-mill state tort or

contract law—is preempted simply because it makes it

more expensive for employers to operate plans. See

Mackey, 486 U.S. at 831-832. The same plainly is true of

petitioner’s complaint (Br. 37) that, apart from questions

of remedy, varying procedural devices will be applied in

state wrongful discharge actions; the suggestion that em-

ployers will terminate plans to avoid state jury trials in

cases that already may be remedied in federal court is

simply incredible.'*? And most important, in neither case

development of a federal common law under ERISA.’ ” Massachu-

setts Mutual, 473 U.S. at 157-158 n.18 (Brennan. J. concurring

in the judgment) (citation omitted). Cf. United States v. Kimbell

Foeds, Inc., 440 U.S. 715, 728 (1979): United States v. Yazell, 382

U.S. 341, 356-357 (1966). And as petitioner’s amici recognize

(see Br. Chamber of Commerce ef al. 26-27), this bacheround

of state tort law—to which federal courts should refer in defining

the scope of the action for violation of ERISA Section 510 —tvpically

makes punitive damages available in circumstances such as those in

this case. |

7 Petitioner also argues (Br. 37-38) that the scope of the action

defined by the Texas Supreme Court permitting recovery “when

the plaintiff proves that the principal reason for his termination

was the employer’s desire to avoid contributing to or paying

benefits” (Pet. App. 5a)—differs from the substantive scope of

Section 510. We find it hard to believe that petitioner seriously

advances this contention: if it does, its lengthy exegesis of Section

510 (see Br. 23-24, 26-36), which is premised on “the obvious com-

parability between ERISA Section 510 and the Texas law” (Br.

24

does the state cause of action in any sense regulate the

terms and conditions of ERISA plans.

Of course, a state law that does not “relate to” a plan

might nonetheless be preempted if it actually conflicts

with a substantive provision of ERISA. Cf. Fort Halijaz,

482 U.S. at 19. But that plainly is not the case here:

as the Court noted in a related setting, “[p]aying both

federal fines and state-imposed punitive damages

would not appear to be physically impossible. Nor does

exposure to punitive damages frustrate any purpose of

the federal remedial scheme.” Silkwood v. Kerr-MeGee

Corp., 464 U.S. 238, 257 (1984). That understanding is

true of ERISA as well, a statute that was, after all,

“enacted ‘to promote the interests of employees and their

beneficiaries in employee benefit plans.’” Firestone, 109

S.Ct. at 955, quoting Shaw, 463 U.S. at 90.

C. ERISA’s Enforcement Provision Does Not Preempt

Texas Common Law.

Finally, petitioner (Br. 25-26) and its amici (Br.

Chamber of Commerce et a/. 16-17) seem to sugyest thet

ERISA’s enforcement provision, Section 510, may of its

24 n.7), would be irrelevant. Indeed, the question presented by

petitioner is whether ERISA preempts state laws that permit an

employee to challenge a discharge designed to “interfere with

his attainment of benefits under an ERISA-covered pension

benefit plan.” Br. i. And the Texas Supreme Court’s language does

not, in fact, seem notably different from that used by federal courts

in describing the cause of action under Section 510. See, e.y.,

Ursie v. Bethlehem Mines, 556 F. Supp. 571, 574 (W.D. Pa.)

(condemning “strategy of reducing pension payments from the cor:

porate treasury”), aff’d in relevant part, 719 F.2d 670, 6i2 (3d

Cir. 1983). In any event, if Texas law does not “relate to” a plan

it need not precisely parallel federal law to escape preemption. Cf.

English, 110 S. Ct. at 2278. Of course, if state law actually con

flicts with a provision of ERISA (see Pet. Br. 28), or prohibits con-

duct that is permitted by ERISA, it will be preempted for that

reason. See generally Fort Halifar, 482 U.S. at 19; Alessi, 451 U.S.

at 524-525.

25

own force preempt Texas common law. This contention

is without merit. Where an enforcement provision ap-

pears in the same statutory subchapter as an express

preemption provision, the latter provision surely defines

the scope of preemption.'* In any event, “[{o]rdinarily,

state causes of action are not pre-empted solely because

they impose liability over and above that authorized by

federal law.” ARC America Corp., 109 S.Ct. at 1667.

See, e.g., English, 110 S.Ct. at 2280.” Indeed, “{o]rdi-

narily, the mere existence of a federal regulatory or en-

forcement scheme, even one [that is] detailed * * * does

not by itself imply pre-emption of state remedies.” Jd.

at 2279.

In English, the Court accordingly rejected the conten-

tion—identical to the one made by petitioner here—that

the omission of a punitive damages remedy from a com-

prehensive federal remedial scheme (which provided for

reinstatement, back pay, compensatory damages, and at-

torney’s fees) should be understood to preempt a state

cause of action for punitive damages. Jd. at 2273 n.2,

2279-2280 (interpreting Section 210 of the Energy Reor-

ganization Act of 1974, 42 U.S.C. § 5851(a). There is no

reason for a different outcome under ERISA.

'* Petitioner (Br. 34, 36) and amici Chamber of Commerce et al.

(Br. 13-14) seize upon Senator Williams’ statement that “the sub-

stantive and enforcement provisions of the conference substitute

are intended to preempt the field for Federal regulation.” 120 Cong.

Rec. 29,933 (1974), reprinted at 3 Leg. Hist. 4745-4746. But the

substantive and enforcement provisions have this effect through

operation of Section 514(a); otherwise, the preemption clause would

be meaningless. Again, then, the crucial question here is the scope

of the “relate to” cliuse.

'’ That is true even when the federal courts have exclusive juris-

diction to entertain claims under the federal cause of action, as

is the case, to give just one example, in actions under the Sherman

and Clayton Acts, the provisions of federal law that were asserted

to have preemptive force in ARC America. See 15 U.S.C. §§ 4,

l5(a).

26

It should be added that the reliance of petitioner ( ri

25) and its amici (Br. Chamber of Commerce et al. 14-

15) on Pilot Life is misplaced.” The Court did not a

suggest that ERISA’s enforcement provisions Meco

have preemptive force; it was conceded that the state a

at issue “relate[d] to” an ERISA plan, and the ques “4

before the Court was whether a state-law action chal-

lenging the plan’s payment methods “fall under an —_

tien to § 514(a),” the so-called saving clause. Pilot Li “

481 U.S. at 47-48. And while the Court did look ei e

enforcement provisions to help inform its understan ac

of the saving clause (see id. at 52), the Court ve “

dispositive that the case involved the claims sett emen

process, explaining that the enforcement agony re-

flect a “balancing of the need for prompt and fair claims

settlement procedures against the public interest in -

couraging the formation of employee benefit plans. ; d.

at 54. This is wholly consistent with our understanc ne

that the preemption of actions challenging plan paymnen

terms was a central purpose of the preemption clause.

Indeed, the decision in Pilot Life primarily turned on

the nature of the claim as one seeking benefits from a

plan. The Court’s holding substantially relied on Con-

20 ici Chamber of Commerce et al. also rely (Br. 19-20) on

Pree Dep’t of Industry v. Gould Inc., 475 U.S. _ nae

and other cases involving the National Labor prone —

29 U S.C. $151 et seq., to support their argument that the ’ =

courts are ousted of jurisdiction here. But those perigee et

apposite; they turned on the primary jurisdiction of t Se re

Labor Relations Board under that statute and the impo sages

the administration of the Act that these pong 9m ~ the

in the first instance to the [NLRB].” San Diego But po oe

Council v. Garmon, 359 U.S. 236, 244-245 (1959). Bg te

Motor Coach Employees v. Lockridge, 403 USS. “7 - :

Garner v. Teamsters Union, 346 U.S. 485, 490-491 (1955).

21 This clause, Section 514(b)(2)(A), saves from preemption un-

der Section 514(a) “any law of any State which regulates ao oe

banking, or securities.” See generally Metropolitan Life, 471 U.S.

at 739-747,

27

gress’s decision to model the Section 502(a) cause of ac-

tion against plans and their fiduciaries on Section 301 of

the Labor Management Relations Act, 29 U.S.C. § 185.

The Court noted that,

‘| U|nder the conference agreement, civil actions may

be brought by a participant or beneficiary to recover

benefits due under the plan, to clarify rights to re-

ceive future benefits under the plan, and for relief

from breach of fiduciary responsibility. ... [Wlith

respect to suits to enforce benefit rights under the

plan or to recover benefits under the plan which do

not involve application of the title I provisions, they

may be brought not only in U.S. district courts but

also in State courts of competent jurisdiction. A//

such actions in Federal or State courts are to be re-

garded as arising under the laws of the United States

in similar fashion to those brought under section 301

of the Labor-Management Relations Act of 1947.”

Pilot Life, 481 U.S. at 55, quoting H.R. Conf. Rep. No.

1280, 93d Cong., 2d Sess. 327 (1974) (emphasis added by

the Court). Plainly, the “all such actions” are those

brought to recover plan benefits. The Court thus explained

that “Congress’ specific reference to § 301 of the LM 0

describe the civil enforcement scheme of ERISA ma

clear its intention that all such suits brought by bene-

ficiaries or participants asserting improper processing of

claims under ERISA-regulated plans be treated as fed-

eral questions governed by §$ 502(a).” Pilot Life, 481

U.S. at 56 (emphasis added). Respondent’s suit, in con-

trast, which was not brought against a plan, and does not

relate either to benefits ** or to the other terms and condi-

tions of a plan, is not affected by the Pilot Life analysis.

*2 Although petitioner notes (Br. 42) that respondent at one point

sought relief for loss of various benefits, that is not part of the

cause of action approved by the Texas Supreme Court. The court

noted that petitioner had allowed respondent's pension to vest,

and explained that “the pension plan issue is relevant in order to

explain the motivation behind |petitioner’s] initial termination of

28

CONCLUSION

The judgment of the Texas Supreme Court should be

affirmed.

Respectfully submitted,

CHARLES ROTHFELD *

Acting Chief Counsel

BENNA RUTH SOLOMON

STATE AND LOCAL LEGAL CENTER

444 North Capitol Street, N.W.

Suite 349

Washington, D.C. 20001

(202) 638-1445

* Counsel of Record for the

July 18, 1990 Amici Curiae

respondent.” Pet. App. 3a n.2. Indeed, the Texas Supreme Court

held that petitioner’s action is not preempted precisely because “the

plaintiff acknowledged in his brief to the court of appeals that

he is not seeking lost pension benefits but is instead seeking future

wages, mental anguish and punitive damayes as a result of the

wrongful discharge.” /d. at 5a n.3 (emphasis in original).