Amicus Curiae Brief — Jefferson-Pilot Life Insurance v. Weems

No. 95-209

In The

Supreme Court of the United States

October Term, 1995

e

JEFFERSON-PILOT LIFE INSURANCE COMPANY, INC.,

Petitioner,

WILLARD WEEMS AND JULIA WEEMS,

Respondents.

¢

On Petition For Writ Of Certiorari

To The Supreme Court Of Alabama

¢

BRIEF AMICI CURIAE OF THE CHAMBER OF

COMMERCE OF THE UNITED STATES OF

AMERICA, THE NATIONAL ASSOCIATION OF

MANUFACTURERS, THE ASSOCIATION OF

PRIVATE PENSION AND WELFARE PLANS, AND

THE ERISA INDUSTRY COMMITTEE IN SUPPORT

OF THE PETITION FOR WRIT OF CERTIORARI TO

THE SUPREME COURT OF ALABAMA

+

Of Counsel: Carot CONNOR FLOweE*

STEPHEN A. BOKAT E. Catvin GoLumBic

Rosin S. CONRAD ARENT Fox KINTNER PLOTKIN

Mona C. ZEIBERG & KAHN

NATIONAL CHAMBER 1050 Connecticut Avenue, N.W.

LitiGATION CentER, INc. Washington, D.C. 20036

1615 H Street, N.W. (202) 857-6054

Washington, D.C. 20062

(202) 463-5337 Counsel for Amici Curiae

*Counsel of Record

(Additional Counsel Listed On Inside Cover)

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

JAN S. AMUNDSON

QuENTIN RIEGEI

NATIONAL ASSOCIATION OI

MANUFACTURERS

1331 Pennsylvania Avenue, N.W

Suite 1500 — North Lobby

Washington, D.C. 20004

(202) 637-3000

JAMES A. KLEIN

ASSOCIATION OF PRIVATI

PENSION AND WELFARE PLANS

1212 New York Avenue, N.W

Suite 1250

Washington, D.C. 20005

(202) 289-6700

Mark J. UGorETz

THe ERISA INpustry

COMMITTEE

1400 L Street

Suite 350

Washington, D.C. 20005

(202) 789-1400

TABLE OF CONTENTS

Page

py 8 OP Bee aay. ©) ies |. il

STATEMENT OF INTEREST OF AMICI CURIAE... 1

Meee ebrenes dé seeeneeesceceedecdens +

The Petition Should be Granted to Eliminate the

Real and Potential Conflicts in Substantive Law

under ERISA Created by the Decision of the Ala-

EE GC vcncccesceseerccecesecceses 4

RAPE RAIOIUIEY obeseesccesoes

il

TABLE OF AUTHORITIES

Page

CASES

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

a: Reet arr pre re erry Pe ry 4,11, 12

Blue Cross and Blue Shield of Alabama v. Lewis, 753 F.

Sepp. SES CNT. Alm. TOPE) occ csevesscewcvccssceess 9

Curtiss-Wright Corp. v. Schoonejongen, 115 S. Ct.

EE CAPE ce ntvcb rene dives sckvanereeeueeéxtnaedes l

District of Columbia v. The Greater Washington Bd. of

Se, Se ee a ee Se hee ier edeecucs cxaquets: ]

FMC Corp. v. Holliday, 498 U.S. 52 (1990)........ l, 6, 7

Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987).... 11

Harsch v. Eisenberg, 956 F.2d 651 (7th Cir.), cert.

Mi Qe Re a eee eee 4

Haywood v. Russell Corp., 584 So. 2d 1291 (Ala.

| SARE ary erp mta ny Finch ring heh Nem Ana aD reas 13

Ingersoll-Rand v. McClendon, 498 U.S. 133

SO ais hb GRR Co cae eee ee Oe 1, 4, 7, 8, 9, 10

Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399

to PPP PT Oreo Per reer e Toor re yyy Tee Pr rey 8

Livadas v. Bradshaw, 114 S. Ct. 2068 (1994)......... re

Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S.

Se SEs bees 65 604bebckecud veces see eeeeerrs 6, 9, 11

McClendon v. Ingersoll-Rand Co., 779 S.W.2d 69

SOs SEE ences udoded way eee dak Rkeoekedehend eres . 8

McDonald v. Artcraft Elec. Supply Co., 774 F. Supp.

eS ae. | Serre ee ee .9

McRae v. Seafarers’ Welfare Plan, 920 F.2d 819 (11th

ie I Globe ok aaa SRE Nee MOREE 10

iii

TABLE OF AUTHORITIES - Continued

Page

Mertens v. Hewitt Assoc., 113 S. Ct. 2063 (1993)...10, 11

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S.

FO ENP Sos eee cbeeuecneeayertd Cheeesavessercicess 6

National Posters, Inc. v. NLRB, 494 U.S. 1026 (1990) ..... 2

New York State Conference of Blue Cross & Blue

Shield Plans v. Travelers Ins. Co., 115 S. Ct. 1671

2 Pay anne ree pel tn ME eile PERN) <= ea an ee 4

Patterson v. Shumate, 113 S. Ct. 13 (1992)............. 1

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) ..... 10

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983)...11, 13

Spinelli v. Gaughan, 12 F.3d 853 (9th Cir. 1993)....... 10

UAW v. Midland Steel Prods. Co., 771 F. Supp. 860

FB ee nes hn ich hI Beas 9

Varity Corp. v. Howe, 115 S. Ct. 1792 (1995)........... 1

Willmar Elec. Service, Inc. v. NLRB, 113 U.S. 1252

oe amr iy) ene Su oe Ny UY Mie 2

STATUTES

Employee Retirement Income Security Act of 1974, 29

U.S.C. § 1001 et seq.:

section 409, 29 U.S.C. § 11D... cccccccccouss 5, 6, 9

Section 502(a), 29 U.S.C. § 1132(a)......... 6, 8, 9, 13

Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B)....... 6

| Section 502(a)(2), 29 U.S.C. § 1132(a)(2) ............ 6

Section 502(a)(3), 29 U.S.C. § 1132(a)(3) ......... 6, 10

TABLE OF AUTHORITIES — Continued

Page

Section 502(e), 29 U.S.C. § 1132(e) ... 6

Section 510, 29 U.S.C. § 1140. 5, 6, 8

Section 514(a), 29 U.S.C. § 1144(a) . 5

LEGISLATIVE History

S. Rep. No. 127, 93d Cong., Ist Sess. 1 (1973),

reprinted in 1974 U.S.C.C.A.N. 4838 . 11

H.R. Conf. Rep. No. 1280 (1974) . 6

102 Cong. Rec. $15,762 (daily ed. Aug. 22, 1974).... 12

120 Cong. Rec. 29197 (1974) 5, 13

120 Cong. Rec. 29209 (1974) . 1]

120 Cong. Rec. 29928 (1974) . 12

120 Cong. Rec. 29933 (1974) ...... —

120 Cong. Rec. 29942 (1974) 5

OTHER

Denise Clemow and Lisa Lattan, ERISA Section

510 Claims: No Right to a Jury Trial Can Be Found,

73 Neb. L. Rev. 756 (1994)... .cccccccccccccces 9

Richard Rouco, Available Remedies Under ERISA

Section 502(a), 45 Ala. L. Rev. 631, 645-46 (1994)

ee

STATEMENT OF INTEREST OF AMICI CURIAE!

The Chamber of Commerce of the United States of

America (“the Chamber”) is the largest federation of

business companies and associations in the world. With

substantial membership in each of the 50 states, the

Chamber represents nearly 215,000 businesses and pro-

fessional organizations and serves as the principal voice

of the American business community. Over 6500 of those

members are located in Alabama, and many more do

business in Alabama.

An important function of the Chamber is to represent

the interests of its members in important matters before

this Court, the lower courts, the United States Congress,

the Executive Branch, and independent regulatory agen-

cies of the federal government. The Chamber has sought

| to advance those interests in this Court by filing briefs

amicus curiae in cases of importance to the business com-

munity.*

The National Association of Manufacturers (“the

NAM”) is the nation’s oldest and largest broad-based

industrial trade association. Its nearly 13,500 member

companies and their subsidiaries employ approximately

1 This brief is being filed with the written consent of the

parties pursuant to Rule 37.2. Letters of consent are being filed

simultaneously with the Clerk of the Court.

2 See, e.g., Varity Corp. v. Howe, 115 S. Ct. 1792 (1995); Cur-

| tiss-Wright Corp. v. Schoonejongen, 115 S. Ct. 1223 (1995); District

of Columbia v. The Greater Washington Bd. of Trade, 113 S. Ct. 580

(1992); Patterson v. Shumate, 113 S. Ct. 13 (1992); Ingersoll-Rand v.

McClendon, 498 U.S. 133 (1990); FMC Corp. v. Holliday, 498 U.S.

52 (1990).

85% of all manufacturing workers and produce over 80%

of the nation’s manufactured goods. More than 158,000

additional businesses are affiliated with the NAM

through its Associations Council and National Industrial

Council. Like the Chamber, the NAM seeks to further the

interests of its members by, inter alia, filing briefs amicus

curiae in this Court.®

The Association of Private Pension and Welfare Plans

(“the APPWP”) is a broad-based, non-profit trade asso-

ciation founded in 1967 to protect and foster the growth

of the Nation’s private employer-sponsored employee

benefit plan system. The members of the APPWP include

both small and large employer sponsors (including many

Fortune 500 companies) of employee benefits plans, as

well as numerous plan support. organizations, such as

consulting and actuarial firms, investment firms, banks,

insurers and other professional benefit organizations.

This broad-based membership. provides the APPWP with

substantial expertise and experience in the entire spec-

trum of issues relating to all types of benefit plans.

The ERISA Industry Committee (“ERIC”) is a non-

profit association committed to the advancement of

employee retirement, health, and welfare benefit plans of

the Nation’s largest employers. All of ERIC’s members do

business in more than one state, and many have

employees in all fifty states. The association has a strong

interest in matters affecting its members’ ability to

deliver benefits, their cost and effectiveness, as well as

> See, e.g., Livadas v. Bradshaw, 114 S. Ct. 2068 (1994); Willmar

Elec. Service, Inc. v. NLRB, 113 U.S. 1252 (1993); National Posters,

Inc. v. NLRB, 494 U.S. 1026 (1990).

the role of those benefits in the Nation’s economy. Both

ERIC and APPWP have filed amicus curiae briefs in

numerous cases involving important issues for the

employee benefit plan community.

Members of the Chamber, the NAM, the APPWP and

ERIC have a vital interest in the proper interpretation and

application of the Employee Retirement Income Security

Act of 1974 (“ERISA”), because they collectively sponsor

hundreds of thousands of employee pension and welfare

benefit plans covered by ERISA. In particular, they have a

substantial interest in ensuring that the statute is inter-

preted and applied in a uniform and consistent manner

across the nation, because many of these plans cover

participants and beneficiaries in multiple states.

The decision below, which holds that state courts

may establish federal common law under ERISA, and

holds further, contrary to the vast majority of federal

courts, that ERISA authorizes extracontractual damages

and jury trials, could result in varied interpretations of

ERISA and inconsistent decisions thereunder. This is of

enormous concern to the companies who sponsor

employee benefit plans. Indeed, it is of particular concern

to the thousands of Chamber, NAM, APPWP and ERIC

members in Alabama, the many other members who

sponsor plans covering participants in Alabama, and the

members who are providing fiduciary services to plans in

Alabama, all of whom may now be subject to different

obligations and remedies under ERISA, depending on

whether they are sued in state or federal court.

6

ARGUMENT

The Petition Should be Granted to Eliminate the Real

and Potential Conflicts in Substantive Law under

ERISA Created by the Decision of the Alabama

Supreme Court

Just last term, the Court reiterated “Congress’s intent

to establish the regulation of employee welfare benefit

plans ‘as exclusively a federal concern.’ ” New York State

Conference of Blue Cross & Blue Shield Plans v. Travelers Ins.

Co., 115 S. Ct. 1671, 1677 (1995) (quoting Alessi v.

Raybestos-Manhattan, Inc., 451 U.S. 504, 523 (1981)). As the

Court explained:

Congress intended “to ensure that plans and

plan sponsors would be subject to a uniform

body of benefits law; the goal was to minimize

the administrative and financial burden of com-

plying with conflicting directives among States

or between States and the Federal Govern-

ment ..., [and to prevent] the potential for

conflict in substantive law . . . requiring the

tailoring of plans and employer conduct to the

peculiarities of the law of each jurisdiction.”

Id. (quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133,

141 (1990)).

Completely disregarding these principles, the Ala-

bama Supreme Court held that state courts may establish

federal common law under ERISA, even if the law they

establish is inconsistent with the law established by the

federal courts. Pet. App. 16a.* The court further held that

4 References to “Pet. App.” are to pages in the appendix to

the Petition.

extracontractual damages and jury trials are available in

actions alleging violations of ERISA §§ 409 and 510, 29

U.S.C. §§ 1109 and 1140, contrary to most of the federal

courts that have addressed these issues. Id. at 17a, 19a. If

allowed to stand, this decision will have significant

adverse implications for Alabama plan sponsors and

fiduciaries, who may be subject to different obligations

and remedies depending on whether they are sued in

state or federal court. The decision is, moreover, of con-

cern to all plan sponsors and fiduciaries; if the Alabama

courts are permitted to establish their own federal com-

mon law under ERISA, the courts of other states may well

follow suit. Such a result would wholly undermine the

intent of Congress as expressed in both ERISA and its

legislative history.

According to one of its sponsors, ERISA’s “crowning

achievement” was the “reservation to Federal authority

[of] the sole power to regulate the field of employee

benefit plans.” 120 Cong. Rec. 29197 (1974) (statement of

Representative Dent). Other sponsors echoed these senti-

ments. 120 Cong. Rec. 29933, 29942 (1974) (statements of

Senators Williams and Javits). But one need not rely on

the legislative history to ascertain Congress’s intent in

this regard; it is abundantly clear from ERISA itself,

particularly its preemption and enforcement provisions.

In section 514 of ERISA, Congress provided, with

certain narrow exceptions, that the provisions of Titles I

and IV of ERISA “shall supersede any and all State laws

insofar as they may now or hereafter relate to any

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

§ 1144{a). As this Court has said, “[t]he pre-emption

clause is conspicuous for its breadth.” FMC Corp. v. Holli-

day, 498 U.S. 52, 58 (1990). It “displace[s] all state laws

that fall within its sphere, even including state laws that

are consistent with ERISA’s substantive requirements.”

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739

(1985).

Congress’s intent in this regard is also apparent from

ERISA’s “carefully integrated” civil enforcement provi-

sions,5 which provide for exclusive federal jurisdiction

over all actions arising under Title I of ERISA. ERISA

§ 502(e), 29 U.S.C. § 1132(e). The only exception is for

actions by a participant or beneficiary “to recover bene-

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

rights under the terms of the plan, or to clarify his rights

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

§ 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). State courts have

concurrent jurisdiction over actions under this subsec-

tion. ERISA § 502(e), 29 U.S.C. § 1132(e). Significantly,

each of the actions described in subsection 502(a)(1)(B) is

an action that can be resolved by reference to plan terms;

these actions are permitted to be brought in state courts

of competent jurisdiction because these actions “do not

involve application of the title I provisions.” H.R. Conf.

Rep. No. 1280, 327 (1974).®

> Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146

(1985).

6 The language of sections 502(a) and (e) makes clear that

the court below lacked jurisdiction over the Weems’s action,

which seeks damages for alleged violations of ERISA §§ 409 and

510, 29 U.S.C. §§ 1109 and 1140. Subsections 502(a)(2) and (3) are

the enforcement mechanisms for violations of sections 409 and

510, but state courts have concurrent jurisdiction only for

actions under subsection 502(a)(1)(B). See Petition at 9-11.

By granting jurisdiction solely to federal courts over

actions involving the interpretation and application of the

statute, Congress made clear its intent that all regulation

of employee benefit plans was to take place in the federal

sphere. As one commentator aptly put it:

The relevance of the exclusive jurisdiction pro-

vision becomes apparent when coupled with

section 514(a)’s expansive preemption provi-

sion. Together, the provisions display a clear

statutory scheme constructed for the purpose of

“federalizing” the law governing employee ben-

efit plans.

Richard Rouco, Available Remedies Under ERISA Section

502(a), 45 Ala. L. Rev. 631, 645-46 (1994). In fact, “Con-

gress’s expressed intent that federal courts develop a

federal common law to aid interpretation of ERISA sug-

gests a corollary congressional intent to establish com-

plete federal occupation in the area of employee

benefits.” Id. at 646 (footnote omitted).

As the Court explained in Ingersoll-Rand, which involved

application of ERISA’s preemption clause, allowing both

state and federal law to govern employee benefit plans

would be unworkable:

Particularly disruptive is the potential for con-

flict in substantive law. It is foreseeable that

state courts, exercising their common law

powers, might develop different substantive

standards applicable to the same employer con-

duct. . . . Such an outcome is fundamentally at

odds with the goal of uniformity that Congress

sought to implement.

498 U.S. at 142.

The decision below creates precisely the “potential

for conflict in substantive law” identified by the Court in

Ingersoll-Rand. After erroneously holding that state courts

have the authority to create federal common law under

ERISA, the Alabama Supreme Court compounded its

error by reaching a conclusion that is wholly inconsistent

with the views of most of the federal courts, including the

Court of Appeals for the Eleventh Circuit, within which

the Alabama court sits. And ironically, the lower court

reached this result by purporting to interpret a passage

from Ingersoll-Rand.

In Ingersoll-Rand, the issue before the Court was

whether ERISA preempted a participant’s claim under

Texas law that his employer discharged him to avoid

contributing to his pension fund. 498 U.S. at 135-36. Not-

ing that the Texas cause of action “purports to provide a

remedy for the violation of a right expressly guaranteed

by § 510 and exclusively enforced by § 502(a),” the Court

held that “ ‘due regard for the federal enactment requires

that state jurisdiction must yield.’” Id. at 145 (quoting

Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S. 399, 409

n.8 (1988)).

Because the plaintiff in Ingersoll-Rand was seeking

compensatory and punitive damages rather than lost pen-

sion benefits, the Texas Supreme Court had concluded the

action was not within ERISA’s purview. Id. at 136 (citing

McClendon v. Ingersoll-Rand Co., 779 S.W.2d 69, 71 (Tex.

1989)). At the conclusion of her opinion for the majority,

Justice O’Connor responded to this point. After noting

that “there is no basis in § 502(a)’s language for limiting

ERISA actions to only those which seek ‘pension bene-

fits,’ ” she added, in a sentence that the court below

selenide

misconstrued, “[i]t is clear that the relief requested here is

well within the power of federal courts to provide.” Id. at

145.7

A few courts, like the court below, have interpreted

this passage to mean that compensatory and punitive

damages are available to participant-plaintiffs under

ERISA § 502(a), and that, accordingly, trial by jury is also

available under that provision. See, e.g., McDonald v.

Artcraft Elec. Supply Co., 774 F. Supp. 29, 33-34 (D.D.C.

1991); UAW v. Midland Steel Prods. Co., 771 F. Supp. 860,

863-64 (N.D. Ohio 1991); Blue Cross and Blue Shield of

Alabama v. Lewis, 753 F. Supp. 345, 346 (N.D. Ala. 1990). A

large majority of the federal courts have rejected that

interpretation, however, refusing “to believe that the

Court intended to overrule settled law in most of the

circuits, as well as narrowly limit — if not overrule — its

own decision in [Massachusetts Mut. Life Ins. Co. v. Russell,

473 U.S. 134 (1985)] in such an off-hand manner.” Harsch

v. Eisenberg, 956 F.2d 651, 660 (7th Cir.), cert. denied, 113 S.

Ct. 61 (1992). See also id. at 657-60 (collecting cases);

Denise Clemow and Lisa Lattan, ERISA Section 510

Claims: No Right to a Jury Trial Can Be Found, 73 Neb. L.

Rev. 756, 777-78 nn.169, 170 (1994) (collecting cases).

In Russell, of course, the Court held that a participant

may not recover extracontractual damages under ERISA

§ 409 for a breach of fiduciary duty. 473 U.S. at 142. And

while the Court expressly reserved judgment in Russell as

to the availability of extracontractual damages under

” Thus, for example, a court can order various types of

equitable relief, including, on facts like those in Ingersoll-Rand,

reinstatement and/or restitution.

ee

10

ERISA § 502(a)(3), id. at 139 n.5, the question was

resolved in Mertens v. Hewitt Assoc., 113 S. Ct. 2063 (1993),

which held that only traditional equitable relief is avail-

able under ERISA § 502(a)(3). See Spinelli v. Gaughan, 12

F.3d 853, 857 n.3 (9th Cir. 1993) (language in Ingersoll-

Rand which “could possibly have been read as allowing

federal courts to award compensatory and punitive dam-

ages under section 502(a)(3)” must be deemed “super-

seded by Mertens”).

The court below nevertheless concluded that extra-

contractual damages and jury trials are authorized under

ERISA, and that it was free to disregard the contrary

views of the federal courts, including the Court of

Appeals for the Eleventh Circuit. See, e.g., McRae v. Sea-

farers’ Welfare Plan, 920 F.2d 819, 820 (11th Cir. 1991)

(“[t]he weight of authority in both the Eleventh Circuit

and other courts indicates that extra-contractual damages

are not available as a form of relief under ERISA

§ 502(a)(3)”). By so concluding, the court has created for

Alabama employers and fiduciaries not merely the

“potential for conflict in substantive law,” but an actual

conflict of just the sort Congress endeavored so mightily

to avoid.

The potential adverse impact of this conflict on

fiduciaries and employers is self-evident. Less apparent,

but no less real, is the potential adverse impact on plan

participants. The “uniformity of decision” that ERISA

was designed to foster, 120 Cong. Rec. 29933 (1974) (state-

ment of Sen. Williams), was part of Congress’s effort to

balance participant protections against the burdens

imposed on employers. See, e.g., Mertens, 113 S. Ct. at

2071; Ingersoll-Rand, 498 U.S. at 144; Pilot Life Ins. Co. v.

11

Dedeaux, 481 U.S. 41, 54 (1987); Russell, 473 U.S. at 148

n.17; Alessi, 451 U.S. at 515. Congress was concerned that

if those burdens were too great, ERISA would “force

employers to end their plans or perhaps discourage other

employers from beginning them,” 120 Cong. Rec. 29209

(1974) (statement of Rep. Collier), contrary to ERISA’s

fundamental goal of “promot[ing] the interests of

employees and their beneficiaries in employee benefit

plans.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983).

See also S. Rep. No. 127, 93d Cong., 1st Sess. 1 (1973),

reprinted in 1974 U.S.C.C.A.N. 4838 (discussing purposes

of ERISA, including controlling costs associated with

management of employee benefit plans).

As the Court recently noted, ERISA is “an enor-

mously complex and detailed statute that resolved innu-

merable disputes between powerful competing interests -

not all in favor of [participants}.” Mertens, 113 S. Ct. at

2071. Congress recognized that maintaining an employee

benefit plan involves a significant commitment, and that

the most efficient way to meet that commitment “is to

establish a uniform [benefit] scheme, which provides a

set of standard procedures to guide processing of claims

and disbursement of benefits.” Fort Halifax Packing Co. v.

Coyne, 482 U.S. 1, 9 (1987). If, however, an employer is

subject to conflicting law, depending on whether suit is

brought in state or federal court, differing benefit prac-

tices and administrative procedures might be required.

“Faced with the difficulty or impossibility of structuring

administrative practices according to a set of uniform

guidelines, an employer may decide to reduce benefits or

simply not pay them at all.” Id. at 13 (footnote omitted).

ERISA’s comprehensive “federalization” of employee

12

benefits, ignored by the court below, was aimed at mini-

mizing this risk.

To be sure, the conflict at issue here involves only

additional damages for alleged violations of existing stat-

utory provisions; i.e., the “federal common law” created

by the Alabama Supreme Court in this case will not

necessarily alter the design or administration of

employee benefits plans. But the decision nevertheless

implicates the concerns expressed by Congress and the

prior decisions of this Court. It is indisputable that the

decision below will increase the cost of providing

employee benefits; few plaintiffs will bring suit in federal

court if they think they may be able to win extracontrac-

tual damages from a sympathetic jury in a state court. To

offset these additional costs, employers may choose to

reduce or discontinue their benefit plans, contrary to

Congress’s goal, in enacting ERISA, “to improve and

encourage the expansion of private [benefit] plans.” 120

Cong. Rec. 29928 (1974), 3 Leg. Hist. 4732 (quoted in

Alessi, 451 U.S. at 516 n.12).8

Furthermore, while this decision itself relates only to

damages, it establishes a precedent — that state courts

8 See also 102 Cong. Rec. $15,762 (daily ed. Aug. 22, 1974)

(statement of Senator Nelson):

[Cost is] an important factor in determining whether

a pension plan will be adopted. Unduly large

increases in cost can impede the progress of the pri-

vate pension system. For this reason, . . . Congress

tried to adopt provisions which strike a balance

between providing a meaningful protection for the

employees and keeping costs within reasonable limits

for employers.

13

may establish federal common law under ERISA - that

threatens to undermine totally the federal uniformity that

Congress sought to ensure.? Employers may now be sub-

ject to suit in state courts across the nation. They will be

subject to inconsistent decisions in these courts. And, of

course, they may be subject to punitive and compensa-

tory damages.

In Shaw v. Delta Airlines, 463 U.S. at 104, the Court

observed that “Congress applied the principle of pre-

emption ‘in its broadest sense to foreclose any non-Fed-

eral regulation of employee benefit plans. ...’ ” (quoting

120 Cong. Rec. 29197) (emphasis added). As even the

court below recognized, this means that state courts may

not regulate employee benefit plans by applying state

law. The result is no different, however, if state courts are

permitted to create and apply their own federal common

law under ERISA.

CONCLUSION

This Court has repeatedly upheld the balance that

Congress sought to achieve in ERISA, by refusing to

impose burdens on employers not contemplated by the

statute, and by confirming the enormous importance of

? Tempting though it may be to dismiss the decision below

as an aberration, this case marks the second occasion on which

the Alabama Supreme Court has concluded that state courts

may establish federal common law under ERISA, including

allowing extracontractual damages and jury trials in actions

under ERISA § 502(a). See Haywood v. Russell Corp., 584 So. 2d

1291 (Ala. 1991).

14

uniform and consistent federal regulation of employee

benefit plans. For the foregoing reasons, the time has

come to do so again. The petition for certiorari should be

granted and the decision of the Alabama Supreme Court

should be reversed.

Respectfully submitted,

Of Counsel: Caro. CONNOR FLOwe*

STEPHEN A. BOKAT E. Carvin GOLUMBIC

Rosin S. CONRAD ARENT Fox KINTNER PLOTKIN

Mona C. ZEIBERG & KAHN

NATIONAL CHAMBER 1050 Connecticut Avenue, N.W.

LitiGATION CENTER, INc. Washington, D.C. 20036

1615 H Street, N.W. (202) 857-6054

Washington, D.C. 20062

(202) 463-5337 Counsel for Amici Curiae

gee *Counsel of Record

QUENTIN RIEGEL

NATIONAL ASSOCIATION OF

MANUFACTURERS

1331 Pennsylvania Avenue, N.W.

Suite 1500 —- North Lobby

Washington, D.C. 20004

(202) 637-3000

James A. KLEIN Mark J. UGoretz

ASSOCIATION OF PRIVATE THe ERISA Inoustry

PENSION AND WELFARE PLANS COMMITTEE

1212 New York Avenue, N.W. 1400 L Street

Suite 1250 Suite 350

Washington, D.C. 20005 Washington, D.C. 20005

(202) 289-6700 (202) 789-1400

October 1995