Supplemental Brief — Equibank v. Lash

, SEP 14 1982

No. 92-127 se

i, LERS

In The

Supreme Court of the United States

October Term, 1992

.

EQUIBANK AND EQUIMARK CORPORATION,

Petitioners,

JAMES W. LASH, individually and on behalf

of other Equibank employees and former

employees similarly situated,

> Respondents.

¢

Petition For A Writ Of Certiorari

To The Supreme Court Of Pennsylvania

°

PETITIONERS’ SUPPLEMENTAL BRIEF IN

SUPPORT OF PETITION FOR A WRIT OF

CERTIORARI AND REPLY TO RESPONDENTS’

BRIEF IN OPPOSITION TO PETITION

¢

H. WooprurF TurRNER, Esq.

JoserH C. Swaim, Jr., Esq.

Of Counsel: Cuar-es Ke tty, Esq.

Patrick J. McELHInny, Esq.

*

James R. Manion III, Esq.

RICHARD J. KveIn, Esq. KIRKPATRICK & LOCKHART

Equibank 1500 Oliver Building

Two Oliver Plaza Pittsburgh, PA 15222

Pittsburgh, PA 15222-2705 (412) 355-6500

Counsel for Petitioners,

Equibank and Equimark

Corporation

September 14, 1992

*Counsel of Record =

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

OR CALL COLLECT (402) 342-2831

re er ert ne ee

Pursuant to Supreme Court Rules 15.6 and 15.7, Peti-

tioners file this Supplement Brief in Support of Petition

for a Writ of Certiorari and Reply to Respondents’ Brief

in Opposition to Petition.

The court below held on three grounds that Section

914(a) of ERISA, 29 U.S.C. §1144(a), does not preempt

Respondents’ claim of breach of a “contract to form a

plan.” Lash v. Equibank, No. 128 Pittsburgh 1989 (Pa.

Super. Sept. 18, 1989) (“Lash”) at B8-12. Certiorari should

be granted in this case because a conflict among the lower

courts exists with respect to each of the grounds that

formed the basis of the decision below. See Petition for a

Writ of Certiorari (the “Petition”) at 7-14. Sanson v. Gen-

eral Motors Corp., 966 F.2d 618 (11th Cir. 1992), decided

after the Petition was filed, further illustrates the conflicts

among the lower courts and the confusion over the

proper scope of ERISA preemption.

Respondents’ Brief in Opposition to the Petition com-

pletely ignores the single most important reason for cer-

tiorari: protecting the broad scope of ERISA preemption

from continued erosion arising from the unjustified

extension of Fort Halifax Packing Co. v. Coyne, 482 U.S. 1

(1987). Instead, Respondents contend that conflicts identi-

fied in the Petition are not squarely presented because the

decision below turned solely upon the determination that

no ERISA benefit plan existed. This contention is flatly

wrong. The issues identified in the Petition are properly

before this Court.

1. The Sanson Case Demonstrates Continuing Confu-

sion Over the Scope of ERISA Preemption.

The day after Petitioners filed their Petition, the

United States Court of Appeals for the Eleventh Circuit

decided Sanson v. General Motors Corp., 966 F.2d 618 (11th

1

2

Cir. 1992), adding its voice to the conflict surrounding the

proper scope of ERISA preemption. The Sanson plaintiff

asserted a state law claim of fraudulent misrepresentation

concerning pension benefits. Although the claim was

asserted against the plaintiff’s former employer, not the

plan, the court of appeals held that the claim “related to”

an ERISA plan and was preempted by Section 514(a) of

ERISA under the following rationale:

The existence of a pension plan subject to ERISA

is a critical factor... . The measure of damages

would be the amount of benefits Sanson would

have received under the retirement plan. Such a

determination demonstrates the relationship

between the lawsuit and the special retirement

plan.

Id. at 620. Thus, Respondents incorrectly claim that courts

uniformly hold against preemption even where a one-

time, lump-sum damage award will be measured by the

terms of an employee benefit plan. See Opposition Br. at

9-13.

Sanson conflicts with the decision below on at least

two grounds. First, unlike the court below, the Sanson

court found preemption despite the fact that the claim

was not made against a plan, but against plaintiff’s past

employer. Compare Lash at B11 with Sanson, 966 F.2d at

620. Second, Sanson held there was preemption because

the damages claimed would be measured by reference to

an ERISA plan, but the Lash court rejected this contention.

Compare Lash at B12 with Sanson, 966 F.2d at 620. Accord-

ingly, Sanson adds to the conflicts described in the Peti-

tion, see Petition at 9-10 nn.12, 14, and vividly illustrates

the continuing nature of the conflicts among the lower

courts on the important and recurring question of the

proper scope of ERISA preemption.

SS we

3

2. The Three Conflicts Identified In the Petition

Are Properly Presented to This Court.

Respondents do not dispute the existence of several

substantial and direct conflicts among the courts regard-

ing the proper analysis of the “relate to” standard of

Section 514 (a) of ERISA.! Respondents contend, however,

that the three conflicts identified in the Petition are not

properly presented because the “sole issue adjudicated”

below was that “where there is no plan in existence, there

is no ERISA preemption.” Opposition Br. at 8. Respon-

dents are incorrect. Each of the rulings identified in the

Petition formed a necessary part of the decision below.

The Pennsylvania court first found that no plan exis-

ted, but that did not resolve the case.2 The court charac-

terized Respondents’ claim as one for breach of “a

' Although Respondents do attempt to distinguish some of

the cases identified in the Petition, these attempts are based on

the contention that a plan admittedly existed in most of those

cases. See Opposition Br. 8-11, 14. For purposes of the issues

presented in the Petition, however, that factual difference is

insignificant. The decision below, like the cases cited in the

Petition, involved an analysis whether state law claims are pre-

empted by ERISA. It is the soundness of these analyses that is

the focus of the Petition.

2 Petitioners have consistently contended that, regardless

of the label applied to their claim, Respondents have alleged

that they are entitled to damages consisting of benefits from an

ERISA plan, albeit a plan that was never formally established or

funded, and that ERISA therefore preempts Respondents’

claims. See Petition at 14-15, Lash at B5, B8, Preliminary Objec-

tions at E4-5. Indeed, the trial court concluded that Respondents’

contention was that “the defendants failed to pay a benefit

provided for by an established in-place employee benefit plan.”

Lash v. Equibank, No. G.D. 88-19416 (C.P. Allegheny County) at

C9-10. Furthermore, as described in the Petition, the proposed

ESOP was inextricably linked to termination of the Pension

4

contract to form a plan,” Lash at B10, but recognized that

merely so labelling Respondents’ claim did not dispose of

the preemption argument. Consequently, the Superior

Court expressly considered “[t]he question . . . whether

or not the claims presented by Lash [as characterized by

the court] are preempted by ERISA.” Lash at B8. The court

determined that claims for breach of “a contract to form a

plan” were not sufficiently “related to” a plan so as to be

preempted by Section 514(a) of ERISA. See Lash at B8-12.

The correctness of the “relate to” holding is, therefore,

properly presented to this Court. See Raley v. Ohio, 360

U.S. 423, 436-37 (1959) (There is “no question” that a

federal claim is properly presented for this court’s juris-

dictional purposes if the court below passed on it.).

Three separate rulings formed the basis of Superior

Court’s “relate to” holding:

(1) A claim for a one-time, lump-sum damage

payment, even though measured by the

terms of the proposed ESOP and the size of

the reversion from the Pension Plan, did

not relate to an employee benefit plan

(B12);

(2) The claims “are not made against Equimark

or Equibank in their capacity as fiduciaries

of any proposed plan, but rather are made

against them as past employers” (B11); and

(3) The claims did not implicate certain core

concerns of ERISA, 1.e., “the operation,

establishment, or administration of an

employee benefit plan.” (B11)

The court below did not specifically identify any one of

these rulings as dispositive of the “relate to” issue, and a

Plan, a defined benefit plan, which involved special legislation

amending ERISA. See Petition 15-16, nn.20, 22.

5

reversal of any one of these rulings could, therefore,

change the conclusion that Respondents’ claims are not

preempted. Accordingly, the propriety of each of these

rulings is fairly presented to, and considered by, this

Court.

As demonstrated in the Petition, a substantial and

direct conflict among the lower courts exists with respect

to each of the rulings of the court below. The genesis of

those conflicts is the attempt, by some courts, to expand

upon the Fort Halifax decision as a means to limit the

broad scope of ERISA preemption. This case presents an

excellent opportunity to protect the scope of ERISA pre-

emption on multiple grounds and to end the widespread

misuse of Fort Halifax. A writ of certiorari should there-

fore issue to the Supreme Court of Pennsylvania.

Respectfully submitted,

H. Wooprurr TURNER

JosePpH C. Swain, Jr.

CHARLES KELLY

Patrick J. McELHINNYy

KIRKPATRICK & LOCKHART

1500 Oliver Building

Pittsburgh, PA 15222

(412) 355-6500

Attorneys for Petitioners,

Equibank and Equimark

Corporation

Of Counsel:

James R. Manion III, Esa.

RICHARD J. KLEIN, Esa.

EQUIBANK

Two Oliver Plaza

Pittsburgh, PA 15222-2705