Amicus Curiae Brief — Ricketts v. Vickers

IN THI

Suprene Court of the Tlnited States

OcTOBER TERM. |9®*‘

MOTORS CORPORATION

(s;ENERAI

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Sixth Circuit

BRIEF AMICUS CURIAE Ot}

THE ERISA INDUSTRY COMMITTEI

“PORT OF THE PETITION FOR CERTIORARI

IN SI

HARRIS WEINSTEIN NW

AMY N. Moor! PO. Box 756¢

Covington & Burlins Washington, D.(

1201 Pennsylvania Ave 10? ) 662-600%

NW

P.O. Box 7566 eenady for Anticus Caries

Washington, D.C. 20044 The ERISA Industry Committee

November 22

BE BEST AVAILABLE COPY

l

TABLE OF CONTENTS

THE INTEREST OF THE AMICUS CURIAE....

REASONS FOR GRANTING THE WRIT

I. The United States Courts of Appeals Have

Divided on a Recurring Issue of Federal Jurisdic-

The Sixth Circuit Erred in Holding That This

Case Was Precis Removed From State

Court..

8 TE

u

TABLE OF AUTHORITIES

CASES

Alessi v. Raybestos-Manhattan, Inc., 451 US. 504

SOAP Ponnesyeenstenssnaicsensnnsennensenintentinmsseneenisiameense ce

Austin v. General American Life Insurance Co., 498

F. Supp. 844 (N.D. Ala. 1980).

Avco Corporation v. Aero Lodge No. 735, Inter-

national Association of Machinists, 390 U.S. 557

| SIP pcosereysorsneresesssieenenssemneesseeanbionstonsenesineseensanie.....

Metropolitan Life Insurance Co. v. Massachusetts,

LOS S. Ct. 2380 (1985) oo ccccceceeeeeeeeccccc

Workers Unions and Employees Health & Welfare

Trust, 719 F.2d 760 (Sth Cir. 1983)...

Page

passim

il

STATUTES AND LEGISLATIVE MATERIALS

Employee Retirement Income Security Act of 1974,

Pub. L. No. 93-406, 88 Stat. 829 (1974), 29 U.S.C.

FE a

es Tt I rciceeiseitinintnesncnnnincenenanivnesinns

© PRLS, SP We FL EDBCS) occccccccccccscccessceccceees

§ 514(a), 29 U.S.C. § 1144(a) ow.

EE od TL |) ec

Labor Management Relations Act of 1947, c. 120, 61

Stat. 136 (1947), 29 U.S.C. §§ 141 ef seg.

ITT TIT iat cecattniceioneiaieserinerosecitgniecenaddddeninisennenn

tiaras etcncceinisanininindisnigiaenenveneee

120 Cong. Rec. 29,942 (1974) (statement of Sen.

ES SECURE SES AE Rc eS, ST

H.R. Rep. No: 1280, 93d Cong., 2d Sess. 327,

reprinted in 1974 U.S. Code Cong. & Ad. News

ae iiacladhditdabaiiesseaienainnbdeintienemninnies

Page

passim

8

passim

passim

oO

~

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 85-688

GENERAL Motors CORPORATION,

Petitioner,

Vv.

ARTHUR TAYLOR,

Respondent.

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Sixth Circuit

BRIEF AMICUS CURIAE OF

THE ERISA INDUSTRY COMMITTEE

IN SUPPORT OF THE PETITION FOR CERTIORARI

The issue presented in this case is whether a defendant can

remove from state to federal court an action to recover benefits

under an employee benefit plan regulated by the Employee

Retirement Income Security Act of 1974 (“ERISA”).' The

courts of appeals have divided on this issue, and its proper and

prompt resolution is a matter of great significance to employers

who maintain employee benefit plans regulated by ERISA and

to employees who rely on these plans.

The ERISA Industry Committee submits this brief amicus

curiae supporting the petition for certiorari in order to urge the

' Pub. L. No. 93-406, 88 Stat. 829 (1974), 29 U.S.C. §§ 1001 ef seq.

a

2

Court to resolve this important question of federal jurisdiction.

In accordance with Supreme Court Rule 36.1, the ERISA

Industry Committee has submitted this brief within the time

allowed for the filing of an opposition to the petition, and it has

filed with the Clerk of this Court written consents to its

participation from all parties to the proceeding below.2

THE INTEREST OF THE AMICUS CURIAE

The ERISA Industry Committee (“ERIC”) is a nonprofit

association of over one hundred corporations doing business in

a wide variety of American industries. A list of ERIC’s

members is set forth in the appendix hereto.

All of the members of ERIC do business in more than one

state, and some members maintain pension and welfare plans

that provide benefits to employees in all fifty states. ERIC’s

membership includes a broad cross-section of major employers

maintaining pension and welfare plans for their employees.

Disability payments are among the benefits provided by such

plans.

Millions of persons are covered by plans that provide

disability and other benefits. Most claims for benefits made

under these plans ae resolved without controversy. Inevitably,

however, some claims are disputed, and some disputed claims

result in litigation. Although the litigated cases represent a

small percentage of the aggregate number of claims filed, most

of ERIC’s members are involved in benefit claim litigation each

year. Some are involved in only a few suits each year. Others

may face several dozen benefit claim suits in a single year.

Individual members of ERIC may be named as defendants in

suits arising under the same benefit plan in a number of

different states. Many of these suits are filed in state courts, and

ERIC’s members therefore frequently confront the question

whether such actions may be removed to a United States

district court.

2 Separate petitions for certiorari have been filed by the two defendants

in this acon. The companion petition is styled Metropolitan Life Insurance

Company v. Taylor, No. 85-686.

For these reasons, it is of central importance to the

members of ERIC that there be an authonitative resolution of

the issue presented here. Unless this Court decides in what

circumstances defendants may remove cases brought in state

courts to contest the denial of benefits under ERISA-regulated

plans, many members of ERIC will experience repeated dis-

putes over the forum in which such actions should be heard.

REASONS FOR GRANTING THE WRIT

The decision below demonstrates the conflict of decisions

among the United States courts of appeals on the issue pre-

sented in this case. The issue is an important and recurring one,

and also is one on which the court below has erred.

I. The United States Courts of Appeals Have Divided on a

Recurring Issue of Federal Jurisdiction.

As the Sixth Circuit acknowledged in the opinion below,

the removal of benefit claim cases to federal courts is the

subject of a direct conflict in decisions among the United States

courts of appeals. Taylor v. General Motors Corporation, 763

F.2d 216, 219 (6th Cir. 1985), App. Sa.2 The Sixth Circuit held

in this case that ERISA’s preemption of state law claims does

not provide a basis for removal. See id. at 219-20, App. 6a-8a.4

3 All citations to pages of the Appendices refer to the Appendices to

General Motors Corporation's Petition for Writ of Certiorari.

* See also Powers v. South Central United Food & Commercial Workers

Unions and Employees Health & Welfare Trust, 719 F.2d 760 ( Sth Cir. 1983).

In Powers, the beneficiary of an employee welfare pian had sued the plan in

State court under a Texas consumer protection statute, alleging that a plan

fiduciary had misrepresented the plan’s coverage. The defendant removed

the case to federal district court on the ground that the plaintiff's claim was

preempted by ERISA. The district court held that the case had been properly

removed because the conduct of which the plaintiff complained was ac-

tionable under ERISA as a breach of fiduciary duty, and the ERISA cause of

action preempted plaintiff's state cause of action. The Fifth Circuit reversed,

holding that defendant’s ailegation that ERISA preempted the state cause of

action merely stated a defense to plaintiff's claim and thus did not create an

adequate basis for removal

4

The Tenth Circuit reached the opposite conclusion in Ree v.

General American Life Insurance Co., 712 F.2d 450 (10th Cir.

i983). There the plaintiff had brought suit in state court to

recover disability benefits under an insured welfare plan offered

by his employer. The Tenth Circuit, although “[r]ecognizing

that there is some split of authority,” held “that the insurance

program of the sort here involved does come within the ambit

of ERISA, and that the case was properly removed.” 712 F.2d

at 452. The district courts have also diverged in determining

whether claims for benefits under ERISA-regulated plans are

removable.$

Unless this Court resolves the issue, the respective powers

of state and federal courts to hear a large number of suits ® will

remain the subject of uncertainty and confusion.

Il. The Sixth Circuit Erred in Holding That This Case Was

Improperly Removed From State Court.

Respondent’s action was properly removed to federal court

because his claim can be maintained only under ERISA. The

removal statute, 28 U.S.C. § 1441, permits defendants to re-

move to federal court “any civil action brought in a State court

5 Compare Tolson v. Retirement Committee of Briggs & Stratton Retire-

ment Plan, 566 F. Supp. 1503 (E.D. Wis. 1983) (holding that removal is

appropriate where state cause of action is preempted by ERISA) and Calhoon

v. Bonnabel, 560 F. Supp. 101 (S.D.N.Y. 1982) (same) with Lederman v.

Pacific Mutual Life Ins. Co., 494 F. Supp. 1020 (C.D. Cal. 1980) (holding

that removal is not appropriate in action against insurer for benefits under

ERISA-regulated plan) and Austin v. General American Life Ins. Co., 498

F. Supp. 844 (N.D. Ala. 1980) (same).

6 Although no published statistics are available to show the number of

ERISA cases removed to federal court each year, the Administrative Office of

the United States Courts compiles such statistics for its own use. A Civil

Program Analyst for the Administrative Office’s Statistical Analysis and

Reports Division, Non-Criminal Branch, has advised the amicus that 424

ERISA cases were removed from state courts to the federal district courts

during the period from July |, 1984, to June 30, 1985. The same Civil

Program Analyst has informed the amicus that a total of 5,214 ERISA cases

were docketed in the federal courts in the same period, including the 424

removals. Letter from Pamela D. Crawford, Civil Program Analyst, to Amy

N. Moore ( November 19, 1985).

of which the district courts of the United States have orginal

jurisdiction ... .” Thus, a defendant has the nght to remove an

action “arising under the... laws...of the United States” on

the ground that such an action falls within the original jurisdic-

tion of the district courts under 28 U.S.C. § 1331. Because of

the preemption provisions of ERISA, sections 502(a) and

514(a), respondent’s action necessarily “arises under” federal

law and lies within the original jurisdiction of the district court.

The conclusion of the court below that it need not deter-

mine whether ERISA preempts respondent’s claim is based on

its finding that “plaintuff has not asserted a federal claim.” 7 See

Taylor vy. General Motors Corporation, 753 F.2d at 219, App.

6a. In reaching this conclusion, the Sixth Circuit failed to

recognize the distinction between a case in which federal

preemption constitutes a discrete defense to a claim under state

law and a case in which federal law supersedes state law that

impinges on an area exclusively of federal concern. This

distinction is clearly set forth in a respected treatise on the

federal courts:

[P]reemption is used in the law in more than one

sense. In many instances pre-existing state nights of

action are cut off by federal law. In these situations

preemption is a defense to the state claim, and the

rule that jurisdiction must be based on the complaint

rather than on defenses is enough to defeat removal.

There are other situations, however, of which § 301

of the [Labor-Management Relations] Act is the

most conspicuous, in which it ts held that federal law

has taken over an entire subject matter and made it

inherently federal....If state law has been pre-

empted in this sense, so that a state nght of action has

been replaced by a federal mght of action, plaintiff

’ The complaint does not identify the body of law that is said to provide

the basis for the relief sought. See App. 25a-29a. However, a defendant's

ability to remove a case should not depend on the presence of legal citauons

in the complaint. See Calhoon v. Bonnabei, 560 F. Supp. 101, 104-05

(S.D.N.Y. 1982) (citing cases )

6

necessarily is stating a federal claim whether he

wishes to do so or not, and the case is removable.

C. Wright, The Law of Federal Courts 216 (4th ed. 1983)

(footnotes omitted). This distinction between claims that are

inherently governed by federal law and state law claims

overcome by federal law defenses provides the basis for the

decision in Franchise Tax Board v. Construction Laborers

Vacation Trust, 463 U.S. 1, 22-27 ( 1983).®

It is difficult to imagine a plainer expression of congres-

sional intent to replace state rights of action with federal nghts

of acuon than that found in ERISA. Congress included in

ERISA two provisions that demonstrate the breadth of the

intended preemption of state law in cases arising from federally

regulated employee benefit pians. These are the specific

preemption provisions of section 514(a) of ERISA and the

jurisdictional provisions of section 502(a) of ERISA.

Section 514(a) of ERISA provides that the statute “shall

supersedé any and all State laws insofar as they may now or

hereafter relate to any employee benefit plan....” 29 U.S.C.

§ 1144(a). The preemption provision reflects Congress’s judg-

ment that “{t]he emergence of a comprehensive and pervasive

Federal interest and the interests of uniformity with respect to

interstate plans required . . . the displacement of State action in

8 In Franchise Tax Board, a California agency filed suit in state court to

enforce levies against funds held in an ERISA-regulated trust for the benefit

of several delinquent taxpayers. This Court found that the lower courts had

improperly invoked ERISA as a basis for removal of the action. The Court

noted that the defendants could look to ERISA for a preemptive defense to

the state tax levy, but it found that ERISA did not provide the plainua with a

preemptive cause of action because ERISA “neither creates nor expressly

denies a cause of action in favor of state governments to enforce tax levies or

for any other purpose.” 463 U.S. at 25. The opinion carefully distinguished a

tax levy case from a benefit claim by the beneficiary of an ERISA-covered

plan. Jd. at 24. The Court noted that section $02(a) of ERISA affirmauvely

creates a cause of action in favor of plan beneficiaries, and so might provide a

basis for removal of an action that sought to recover benefits under state law

Id.; see page 7, infra. The very core of the present case Is respondent’s effort

to recover benefits provided by an employee benefit plan that is governed by

ERISA

the field of private employee benefit programs.” 120 Cong.

Rec. 29,942 (1974) (statement of Sen. Javits). This Court has

read the preemption provision of ERISA broadly to effectuate

the congressional intent. See Shaw v. Delta Air Lines, Inc., 463

U.S. 85 (1983); Alessi v. Raybestos-Manhattan, Inc., 451 U.S.

504 (1981).

In addition to the explicit preemption provision of section

514(a), Congress gave the federal courts broad jurisdiction

over cases involving ERISA-governed benefit plans in section

502(a) of ERISA. Congress emphasized that cases brought

under the authority of section 502(a) were to be decided under

naticnally applicable principles of federal law. Congress stated,

moreover, that this grant of jurisdiction under section 502(a)

was intended to be analogous to the grant of jurisdiction over

labor disputes found in section 301 of the Labor Management

Relations Act. Both grants of jurisdiction, Congress said, were

intended to establish causes of action “arising under the laws of

the United States....” 9

This Court has long recognized that section 301 of the

Labor-Management Relations Act preempts state rights of

action to enforce contractual mghts under collective bargaining

agreements covered by the Act, and so provides a basis for the

removal of such actions to federal court. See Avco Corporation

v. Aero Lodge No. 735, International Association of Machinists,

390 U.S. 557 (1968). In Aveo, this Court held that complaints

advancing causes of action under collective bargaining agree-

ments governed by federal law are removable to federal court

whether or not the plaintiff purports to plead a case solely under

state law. A similar rule must prevail in employee benefit cases,

if the congressional will is to prevail. In fact, in Franchise Tax

Board v. Construction Laborers Vacation Trust, this Court

stated, “It may be that, as with § 301 as interpreted in Avco,

any state action coming within the scope of § 502(a) of ERISA

would be removable to federal district court, even if an

* The legislative history of section 502(a) of ERISA states that actions

under section 502(a) “are to be regarded 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.” H.R. Rep. No. !280, 93d Cong..

2d Sess. 327, reprinted in 1974 U.S. Code Cong. & Ad. News 5107

otherwise adequate state cause of action were pleaded without

reference to federal iaw.” 463 U.S. at 24 ( footnote omitted ). '°

The allegations of respondent’s complaint necessarily

made the present case removable under these principles. Re-

spondent filed a two-count complaint against General Motors

Corporation and its insurer, Metropolitan Life, in a Michigan

trial court. He claimed wrongful discharge and improper

termination of his disability benefits. His rights under General

Motors’ employee benefit and insurance programs are at the

core of the controversy. The second count pleaded in the state

court expressly rested on the provisions of General Motors’

disability benefit plan and alleged that benefits due to petitioner

under that plan had been wrongfully withheld.

Section 4 of ERISA, 29 U.S.C. § 1003, specifically includes

such plans among those that ERISA regulates. Accordingly,

respondent’s action is one that could have been brought in the

federal courts under section 502(a) of ERISA. The action is

brought within the exclusive coverage of federal law by both

section 502(a) and section 514(a), and therefore is one that

should be removable as of rieli: seader 28 U.S.C. § 1441.

Because it did not und»rstand the controlling force of these

principles, the Sixth Circuit sistakenl» failed to recognize that a

claim for disability benefits u» ‘er an ERISA-regulated plan is |

within the original jurisdiction of the federal courts.

~

ERISA expressly provides a cause of action in favor of the

respondent and expressly preempts the state cause of action

under which he brought his complaint. For these reasons,

respondent’s benefit claim is subject to the same analysis that

this Court applied to section 301 of the Labor-Management

'© A claim for benefits under an ERISA-regulated plan is clearly “within

the scope of § 502(a) of ERISA.” Although this Court held in Metropolitan

Life Ins. Co. v. Massachusetts, 105 S. Ct. 2380 ( 1985), that a state mandated-

benefits statute was saved from preemption by § 514(b) of ERISA as a state

law “which regulates insurance,” nothing in the decision suggests that this

insurance savings Aduse applies to a claim for benefits under an insured

welfare benefit plan. Nor does it appear that respondent has suggested that

§ 514(b) should apply to this case. But see Dedeaux v. Pilot Life Ins. Co.,

770 F.2d 1311 (Sth Cir. 1985) (holding that ERISA does not preempt

common law claims against insurers for disability payments )

Relations Act in Avco: his claim “is purely a creature of federal

law, notwithstanding the fact that state law would provide a

cause of action in the absence of [the federal statute].”

Franchise Tax Board v. Construction Laborers Vacation Trust,

463 U.S. at 23 ( describing the Avco holding). Thus, the action

was properly removed to federal court.

CONCLUSION

This case was properly removed to the United States

District Court because Congress intended issues affecting em-

ployee benefit plans regulated by ERISA to be governed by

federal law. Thus, Congress included in ERISA a broadly-

worded clause preempting all state laws insofar as they “relate

to any employee benefit plan.” ERISA § 514(a), 29 U.S.C.

§ 1144(a). The action therefore is one “arising under” the laws

of the United States, 28 U.S.C. § 1331, and accordingiy was

properly removed to the federal courts under 28 U.S.C. § 1441.

It is of paramount importance that this statutory provision

be honored. Employers cannot fairly and effectively negotiate

and administer employee benefit plans with nationwide cov-

erage unless questions concerning the rights of plan benefi-

clanes are resolved by the application of Amiform principles of

federal law. These principles are most effectively developed

and consistently applied by the federal courts, which are

familiar with ERISA and with the precepts of federal tax and

labor law that often contribute to the resolution of ERISA

cases. If plaintiffs are permitted to defeat federal jurisdiction by

filing their complaints in state court and arguing that they rest

their claims solely on preempted provisions of state law, then

defendants in benefit claim suits will be denied the access to a

federal forum with which Congress provided them.

The question whether plaintiffs may force employee ben-

efit cases to be litigated in state court is a recurring question that

merits this Court’s attention. In the absence of a prompt and

definitive resolution of this important junsdictional issue by this

Court, the confusion among the inferior federal courts will

persist, and the development of the uniform federal law that

10

Congress mandated for the governance of employee benefit

plans will be impaired

The petition for a wnt of certioran should be granted.

Of Counsel:

HARRIS WEINSTEIN

AMY N. Moore

Covington & Burling

1201 Pennsyivania Ave..,

N.W

P O Box 7566

Washington, D.C. 20044

November 22, 1985

Respectfully submitted,

JOHN M. VINE

(Counsel of Record)

1201 Pennsylvania Avenue,

N.W.

P.O. Box 7566

Washington, D.C. 20044

(202 ) 662-6000

Attorney for Amicus Curiae

The ERISA Industry Committee

APPENDIX

la

THE ERISA INDUSTRY COMMITTEE

MEMBERSHIP LIST

November, 1985

Aetna Life & Casualty Company

Alexander & Alexander Services, Inc

Allied Corporation

Aluminum Company of America

AMAX Inc.

American Telephone & Telegraph Company

Amoco Corporation

Apache Corporation

Adantic Richfield Company

Baltimore Gas and Electric Company

Bank of America N.T. & S.A.

Bankers Trust Company

Bell Communications Research

Bell South Corporation

Bethlehem Steel Corporation

The Boeing Company

Bristol-Myers Company

Buck Consultants, Inc.

Champion International Corporation

The Chase Manhattan Bank, N.A.

Chevron Corporation

Ciba-Geigy Corp.

Citibank, N.A.

The Coca-Cola Company

Columbia Gas System Service Corp

Combustion Engineering, Inc.

Connecticut General Life Insurance Co

he Continental Group, Inc.

Coopers & Lybrand

Dana Corporation

Dart & Kraft Inc.

Deere & Company

Delta Air Lines Inc.

Digital Equipment Corp

2a

R. R. Donnelley & Sons Company

The Dow Chemical Company

Dow Corning Corp.

Dresser Industries, Inc.

E.I. du Pont de Nemours & Company, Incorporated

Eastman Kodak Company

Eli Lilly and Company

Equitable Life Assurance Society of the United States

Exxon Corporation

Federated Department Stores. Inc.

FMC Corporation

Ford Motor Company

General Electric Company

General Mills, Iric

Genefal Motors Corporation

W.R. Grace & Co.

The Greyhound Corporation

Grumman Corporation

GTE Corporation

Gulf & Western Industries, Inc.

Frank B. Hall Consulting Company

John Hancock Mutual Life Insurance Co.

A.S. Hansen, Inc.

Hazlehurst & Associates, Inc.

H.J. Heinz Company

Hewitt Associates

ICI Americas, Inc.

International Business Machines Corporation

International Harvester Company

International Paper Company

International Telephone & Telegraph Corporation

Internorth, Inc.

Johnson & Higgins, Inc.

Johnson & Johnson

Knight-Ridder Newspapers, Inc.

The LTV Corporation

Manufacturers Hanover Trust Company

William M. Mercer, Inc.

Metropolitan Life Insurance Company

Minnesota Mining & Manufacturing Co

3a

Mobil Oil Corporation

Mutual Life Insurance Compar ° of New York

Nabisco Brands, Inc.

NYNEX Corporation

Occidental Petroleum Services, Inc.

Olin Corporation

Owens-Illinois, Inc.

Pacific Gas & Electric Company

J. C. Penney Co., Inc.

Pennzoil Company

PPG Industries, Inc.

Procter & Gamble Company

The Prudential Insurance Company of America

Ralston Purina Company

RCA Corporation

R.J. Reynolds Industries, Inc.

Rockwell International Corporation

Sara Lee Corporation

Sears, Roebuck and Company

Shell Oil Company -

The Southland Corporation

Sperry Corporation

Standard Oil ‘Company of Ohio

Sun Company, Ins.

Tenneco Inc.

Texaco Inc.

Textron Inc.

Time Incorporated

Towers, Perrin, Forster & Crost y Inc.

The Travelers Insurance Company

TRW Inc.

Union Camp Corporation

Union Carbide Corporation

United S:ates Steel Corporation

Unocal Corporation

United Technologies Corporation

U S WEST, Inc.

Westinghouse Electric Corporation

The Wyatt Company

Xerox Corporation

CERTIFICATE OF SERVICE

I certify that on this 22nd day of November, 1985. I served

the foregoing brief on each of the parties by sending three

copies thereof by first class mail, postage prepaid, to:

Davip M. Davis, Esq.

General Motors Corporation

3044 West Grand Boulevard

Detroit, Michigan 48202

WiLtiaM J. Toppeta, Esq.

One Madison Avenue

New York, New York 10010-3690

DENNIS P. BRESCOLL, Esq.

Brescoll & Associates, P.C.

48 North Walnut Street

Mt. Clemens, Michigan 48043

JOHN M. VINE