Opposition Brief — Sanson v. General Motors Corp.

No. 92-1015 |

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In The

Supreme Court of the United States

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October Term, 1992

CHESTER SANSON,

Petitioner,

GENERAL MOTORS CORPORATION,

Respondent.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the Eleventh Circuit

RESPONDENT?’S BRIEF IN OPPOSITION

WILLIAM A. CLINEBURG, JR.

Counsel of Record

KING & SPALDING

Attorneys for Respondent

191 Peachtree Street

Atlanta, Georgia 30303

(404) 572-4600

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QUESTIONS PRESENTED FOR REVIEW

1. Whether Section 514(a) of the Employee Retirement

Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1144(a),

preempts petitioner’s state law fraud claim to recover benefits

under a special retirement plan covered by ERISA.

2. Whether the Court should judicially amend ERISA by

creating a form of relief Congress did not provide in BRISA 's

comprehensive statutory enforcement scheme.

PARTIES TO PROCEEDINGS BELOW

The parties to the proceedings below are set forth in the caption

of this case.

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TABLE OF CONTENTS

Page

Questions Presented .............................. i

.

Parties to the Proceedings Below .................._. li

bl iii

| Table of Citations .....................0.0........ iv

]

: Statement of Jurisdiction .......................... ]

} Statutory Provisions Involved ...................... l

StatementoftheCase ............................. 2

Reasons for ce 4

I. ERISA preempts petitioner’s state law fraud claim

: because he is seeking to recover benefits under a

7 special retirement plan covered byERISA. ..... 5

t

: Il. The Court should decline petitioner’s invitation to

judicially amend ERISA by creating a form of

relief Congress did not provide in ERISA’s

comprehensive statutory enforcement scheme. .. 15

Conclusion

a eee oe EAS eho ea bb wee 60 elec «

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Contents

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TABLE OF CITATIONS

Cases Cited:

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (1981)

PS ES OP Pe ee PE I mE Wee Sey en yey 6

Barr v. American Cyanamid Co., 808 F. Supp. 752, 16

E.B.C. 1196 (W.D. Wash. 1992) ...............-. 8,14,15

Bath Iron Works v. Director, Office of Workers’

Compensation Programs, __ U.S. __, 113 S. Ct. 692

CR 6 50duddeeehnectaessnokicucex¥anetetns 16

Baxter v. Lynn, 886 F.2d 182 (8th Cir. 1989) ........... 20

Berger v. Edgewater Steel Co., 911 F.2d 911 (3d Cir.

1990), cert. denied, 111 S.Ct. 1310(1991) .......... 14

Cefalu v. B.F. Goodrich Co., 871 F.2d 1290 (Sth Cir. 1989)

PPP ee Pree UT Pe Coe ee ee 12,15

Christopher v. Mobil Oil Corp., 950 F.2d 1209 (Sth Cir.),

cost. Gomied, LISS. Ct. GR CISPZ) 2. ce vcicscsnsccces 13,17

Coleman v. Housing Auth., 191 Ga. App. 166, 381 S.E. 2d

I ere oon cL are ote Ge bua cu os 10

Corcoran v. United Healthcare, Inc., 965 F.2d 1321 (5th

Cir.), cert. denied, 113 S. Ct.812(1992) ............ 11

|

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Vv

Contents

Devine v. Combustion Eng’g Co., 760 F. Supp. 989 (D.

| eee oe Oe PR Pot eee me Be

District of Columbia v. Greater Washington Bd. of Trade,

eee ee

Drennan v. General Motors Corp., 977 F.2d 246 (6th Cir.

1992), reh’g denied, 1993 U.S. App. LEXIS 310 (6th

DE it ci dlecG a ts 64 eae wk 4 ball ks es ae

Easterwood v. CSX Transp., Inc., 933 F.2d 1548 (11th Cir.

1991), cert. granted, 112 S. Ct.3024(1992) .........

Eckerd’s Columbia, Inc. v. Moore, 155 Ga. App. 4, 270

EOD ONG bad dia ia caw su cena deiueds

Elesser v. Hospital of Philadelphia College of Osteopathic

Medicine, 802 F. Supp. 1286 (E.D. Pa. 1992) ........

Ellis v. ANR Pipeline Co., 754 F. Supp. 103 (E.D. Mich.

SUED UNAS Lew Sueeee days ied oon ne eadret ies

a. Perey OT ETT TOUTE TTT TL ET eee

SVE FSS 8697 O295.0948346866 8 6 O's OO B.S BO S'S 64 6 6 8 O18 4 6 66%

General American Life Ins. Co. v. Castonguay, __ F.2d

1993 U.S. App. LEXIS 1412 (9th Cir. 1993) .........

Page

16, 17

15

15

17

10

vi

Contents

Page

Goins v. Teamsters Local 639 Employers Health & Pension

Trust, 598 F. Supp. 1151 (D. D.C. 1984) ............ 21

Gulf Life Ins. Co. v. Arnold, 809 F.2d 1520 (11th Cir. 1987)

Oe ee Pe ET re eee er eee 17

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S. Ct.

i$ ee 4,5, 6,7,8,9, 10, 11, 12, 13, 14, 15, 19

Katzoff v. Eastern Wire Products Co., 1992 U.S. Dist.

Bac Siew 2 + err ery Terr 17

Kelso v. General American Life Ins. Co., 967 F.2d 388

CM IN fx 0.d oa ole waddle we eaels Ginaawal> 14

Kentucky Laborers Dist. Council Health & Welfare Fund v.

Hope, 861 F.2d 1003 (6th Cir. 1988) ............... 14

Lea v. Republic Airlines, Inc., 903 F.2d 624 (9th Cir. 1990)

ee ee ETS eee ee Te ee ee 14

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

RI ela closes S uchuis vd od «AWD Aa ees 0 os on 18,19

Maxfield v. Central States, Southeast & Southwest Areas

Health, Welfare & Pension Funds, 559 F. Supp. 158

EE as hoch tee Wea AKO MRO G4 21

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

EE hae hinth.nocee KAN ORS k OCS AR aks ch Ke 8,9

eee TE

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Contents

Page

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

te cies Sct eeaaeek oe ae eS Oe eRe Reb Cees s 19

McKinnon v. Blue Cross & Blue Shield of Alabama, 935

Pie eRe CRUG BPED cc candccancccdscceavaes 17

Medina v. Anthem Life Ins. Co., 1993 U.S. App. LEXIS

I nn av 64 6 56060 MKS Oo hoes ee 19

Mitchell v. Mobil Oil Corp., 896 F.2d 463 (i0th Cir.), cert.

Ganiee, 115 BiG. APS CIGSO) o.oo vicio cc ccvcvccvecess 17

Nachwalter v. Christie, 805 F.2d 956 (11th Cir. 1986) .... 21

National Companies Health Plan v. St. Joseph’s Hosp.,

Inc., 929 F.2d 1558 (11thCir. 1991) ............... 20, 21

Nationwide Mut. Ins. Co. v. Darden, ___ U.S. ___, 112 S. Ct.

re eee ee eect dl ss genes bass 17

Olson v. General Dynamics Corp., 960 F.2d 1418 (9th Cir.

1991), cert. denied, __ U.S. __, 112 S. Ct. 2968 (1992)

RP Pg ee rT Pere oe rw ere 8,14, 19,20

Raymond v. Mobil Oil Corp., 1993 U.S. App. LEXIS 840

PS EEE Naval duat¥ee lust ecekeneaoakas ss 17

Reid v. Gruntal & Co., 760 F. Supp. 945 (D. Me. 1991) ... 15

Vili

Contents

Page

Settles v. Golden Rule Ins. Co., 927 F.2d 505 (10th Cir.

| eee ee cee eeess pnG ee eeseeeeksnk tek 14,20

Shaw v. Delta Airlines, Inc., 463 U.S. 85 (1983) ........ 6,13

Silverman v. Barbizon School of Modeling & Fashion,

Inc., 720 F. Supp. 966 (S.D. Fla. 1989) ............. 20

Smith v. Dunham-Bush, Inc., 959 F.2d 6 (2nd Cir. 1992) . 14

Stanton v. Gulf Oil Corp., 792 F.2d 432 (4th Cir. 1986) ... 17

Tolle v. Carroll Touch, Inc., 977 F.2d 1129 (7th Cir. 1992)

WEETTETIL ELE CURT TTL eT Le Terr Tre 14

West v. Butler, 621 F.2d 240 (6th Cir. 1980) ............ 21

Statutes Cited:

jh ik fsb PEORCEEETT CSE OET LTTE CETTE Tee l

SR PEE So's 500 ce WKdbs Chkeaes POON Whe Ss 17

EL EE 6605 pays 54 dha t4s edna bans eusess 17

SEED Cocks ends ecticcévscbsewseees 9

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nee EE bc od Ns eet noes ceunsscewavues 9

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Contents

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No. 92-1015

Inthe

Supreme Court of the United States

+

October Term, 1992

CHESTER SANSON,

Petitioner,

vs.

GENERAL MOTORS CORPORATION,

Respondent.

On Petition for a Writ of Certiorari to the United States Court of

Appeals for the Eleventh Circuit

RESPONDENT?’S BRIEF IN OPPOSITION

STATEMENT OF JURISDICTION

This Court has jurisdiction of the petition pursuant to 28

U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

The pertinent provisions of ERISA involved in this case are

set forth accurately in the Petition at 2.

STATEMENT OF THE CASE!

Petitioner worked at General Motors’ Lakewood assembly

plant for over thirty years, voluntarily retiring under the standard

provisions of General Motors’ early retirement program for

salaried employees.’ Petitioner contends that he requested

standard early retirement solely as a result of alleged

misrepresentations by his supervisor, R. L. Maraffi, that General

Motors did not plan to offer enhanced retirement benefits to

Lakewood employees and no special exception could be made for

him. Petitioner alleges that, but for Maraffi’s statements, he would

have continued his employment with General Motors at least unti!

it became clearer whether the special incentive retirement plan

would become available, and additionally contends that he met the

eligibility requirements of the special retirement plan that

ultimately became available. (App. 2a; R1-1).’

Several months after his retirement, petitioner learned that a

special retirement program had been made available to certain

eligible employees at the Lakewood plant after his retirement.

Petitioner immediately sent a letter to Lakewood management

demanding that his retirement benefits be increased to the level

1. Petitioner’s Statement sets forth as fact much that is disputed between

the parties, as well as his legal position in this case. For these reasons, General

Motors cannot accept petitioner's “facts” and herein sets forth its own Statement

of the Case.

2. Petitioner's Statement is calculated to give the impression that he has

been “hoodwinked” out of his retirement benefits. That is not the cas¢. As

petitioner concedes, he is receiving the retirement benefits to which he is entitled

under the standard early retirement plan under which he retired. What he seeks

are the enhanced benefits made available to employees who retired after he did.

3. All cites are to the Appendices in the Petition or to the record in the

Eleventh Circuit Court of Appeals.

3

provided by the special retirement pian. In that letter, petitioner did

not mention any alleged misrepresentations by Maraffi or anyone

else. (App. 2a; R2-54).

General Motors denied petitioner’s request. It explained that

petitioner was not eligible for special early retirement benefits

because not only had petitioner retired prior to the time the

program became available at Lakewood, but also his job had not

been eliminated in the reduction in force which led to the

program's becoming available at Lakewood. General Motors also

noted that the decision to have a reduction in force at Lakewood

was made after petitioner retired. (App. 2a; R2-54).

Petitioner disputes General Motors’ reasons for denying him

enhanced benefits. He claims that he would not have retired if

Maraffi had not misled him in two respects:

1) by allegedly assuring petitioner that Maraffi

would request that Lakewood plant management make an

exception by providing special early retirement benefits to

him alone and yet failed to make that request; and

2) by advising him that the special early retirement

program would not be made available at the Lakewood plant,

allegedly knowing atthe time that it would be. Based on these

alleged misrepresentations, petitioner sued for fraud and

seeks to recover, inter alia, the enhanced incentive retirement

benefits, as well as compensatory and punitive damages.

(App. 2a; R1-1).

After the close of discovery in the district court, General

Motors moved for summary judgment on the ground that, inter

alia, petitioner's state law fraud claims related to a qualified

employee benefit plan and were, therefore, preempted by ERISA.

The district court denied General Motors’ Motion for Summary

4

Judgment; its motion for leave to file a Motion for

Reconsideration; and its motion for immediate interlocutory

appeal. (App. 2a, 24a-26a).

Thereafter, this Court held in Ingersoll-Rand Co. vy.

McClendon, 498 U.S. 133, 111 S. Ct. 478 (1990), that ERISA

preempted a former employee’s state law claim of wrongful

discharge against his employer. The district court then agreed to

reconsider General Motors’ Motion for Summary Judgment and

granted it based on a “faithful application” of McClendon. The

district court also denied petitioner leave to amend his complaint to

assert an ERISA claim because it would be “futile.” (App. 2a, 24a-

26a).

On appeal, a panel of the Eleventh Circuit Court of Appeals

affirmed the district court, with one dissent. Petitioner filed a

timely Petition for Certiorari with this Court. (App. la-16a). This

response is being filed at the Court’s request.

REASONS FOR DENYING THE WRIT

This is not a proper case in which to grant a writ of certiorari

because the Eleventh Circuit correctly interpreted and applied

Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S. Ct. 478

(1990), to hold that petitioner’s claim for enhanced retirement

benefits “relates to” General Motors’ special retirement plan and

is, therefore, preempted by ERISA. Although petitioner purported

to bring this action as a common law fraud claim, his claim is

premised upon the existence of the special retirement plan and

seeks the benefits which that plan provides.

The Eleventh Circuit also properly denied petitioner leave to

amend his complaint because petitioner cannot state a claim under

ERISA; therefore, an amendment would be futile. Petitioner does

not seriously dispute this aspect of the decision below, inasmuch as

5

he acknowledges that he is not a participant or beneficiary under

the literal language of ERISA. Petitioner nonetheless asks this

Court to judicially amend ERISA to provide a form of relief not

provided by Congress to a class of persons for whom Congress

provided no relief. Only Congress should provide that relief.

I.

ERISA PREEMPTS PETITIONER’S STATE LAW

FRAUD CLAIM BECAUSE HE IS SEEKING TO

RECOVER BENEFITS UNDER’ A _— SPECIAL

RETIREMENT PLAN COVERED BY ERISA.

Petitioner's arguments against preemption (as well as Judge

Birch’s dissent in the Eleventh Circuit) boil down to a refusal to

accept that this Court meant what it said in /ngersoll-Rand Co. v.

McClendon, 498 U.S. 133, 111 S.Ct. 478 (1990). In McClendon,

the Texas Supreme Court held that an employee could recover

pension benefits in an action against his employer for wrongful

discharge even though the employee was claiming that the

principal reason for his termination was the employer’s desire to

avoid contributing to or paying benefits under the employee’s

pension fund. 498 U.S. at__, 111 S. Ct. at 481. This Court reversed,

holding that ERISA preempted the state common law claim. This

Court relied on Section 514(a) of ERISA, which preempts:

[AJny and al] State laws insofar as they may

now or hereafter relate to any employee benefit

plan described in section 1003(a) of this title

and not exempt under section 1003(b) of this

title.

29 U.S.C. § 1144(a) (emphasis added).

In finding McClendon’s claim preempted, this Court reasoned

6

that “[a] law ‘relates to’ an employee benefit plan, in the normal

sense of the phrase, if it has aconnection with or reference to such a

plan.” McClendon, 498 U.S. at__, 111 S. Ct. at 483 (quoting Shaw

v. Delta Airlines, Inc., 463 U.S. 85, 96-97 (1983)). Under this

“broad, common-sense meaning” a state law may “relate to” a

benefit plan, and thereby be preempted, even if the law was not

specifically designed to affect such plans or only indirectly affects

such plans. McClendon, 498 U.S. at__, 111 S. Ct. at 483 (quoting

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47 (1987)); Alessi v.

Raybestos-Manhattan, Inc., 451 U.S. 504, 525 (1981).

McClendon, consistent with this Court’s long-standing

expansive interpretation of the ERISA preemption clause, noted

that the clause is “conspicuous for its breadth.” 498 U.S. at__, 111

S.Ct. at 482; see also FMC Corp. v. Holliday, 498 U.S.52,__, 111

S. Ct. 403, 407 (1990). Its “deliberately expansive language” was

“designed to establish pension plan regulation as exclusively a

federal concern.” McClendon, 498 U.S. at __, 111 S. Ct. at 482

(quoting Pilot Life, 481 U.S. at 46).

Thus, although recognizing that ERISA preemption was not

unlimited, this Court had “no difficulty” concluding that ERISA

preemption applied to the employee’s wrongful termination claim.

McClendon, 498 U.S. at__, 111 S. Ct. at 482-83. The employee’s

cause of action specifically referred to, and relied upon,-. the

existence of a plan. To prevail, the employee had to plead, and the

court had to find, that an ERISA plan existed and that the employer

had a pension-defeating motive in terminating employment. This

Court concluded that the Texas cause of action “related to” an

ERISA plan. 498 U.S. at __, 111 S.Ct. at 483.

This Court thus rejected the employee’s argument that the

pension plan was irrelevant and that the sole issue in a wrongful

discharge action was the employer’s improper termination motive:

a

7

The argument misses the point, which is that

under the Texas court’s analysis there is simply

no cause of action if there is no plan.

498U.S.at __,111S.Ct. at 484 (emphasis in original).

This Court further concluded that preemption of the state law

claim for wrongful termination was consistent with the goal of

ERISA preemption:

Section 514(a) was intended to ensure that

plans and plan sponsors would be subject to a

uniform body of benefit law; the goal was to

minimize the administrative and financial

burden of complying with conflicting

directives among States or between States and

the Federal Government. . . . It is foreseeable

that state courts exercising their common law

powers, [sic] might develop different

substantive standards applicable to the same

employer conduct, requiring the tailoring of

plans and employer conduct to the peculiarities

of the law of each jurisdiction. Such an

outcome is fundamentally at odds with the goal

of uniformity that Congress sought to

implement.

498 U.S.at __,111S.Ct. at 484 (citations omitted).

The reasoning of McClendon applies squarely to the claims

which petitioner asserts in this lawsuit. In the absence of General

Motors’ special retirement plan, petitioner would have no reason

to claim misrepresentation. Moreover, petitioner’s claim is aclaim

for benefits under an ERISA-covered plan: he seeks to recover the

enhanced retirement benefits he alleges he would have received

I TI———————s

8

under the special early retirement plan but for General Motors’

alleged misrepresentations. Accordingly, petitioner’s claim of

misrepresentation “relates to” General Motors’ employee benefit

plan and is preempted by ERISA. See, e.g, Olson v. General

Dynamics Corp., 960 F.2d 1418, 1421 (9th Cir. 1991), cert. denied,

__ U.S. __, 112 S. Ct. 2968 (1992); Barr v. American Cyanamid

Co., 808 F. Supp. 752 16 E.B.C. 1196, 1202-03 (W.D. Wash.

1992).

9 ee 9

Stated another way, to prevail on his claim of fraudulent

misrepresentation, petitioner must prove that General Motors

intentionally misrepresented a material fact to him, knowing he

would rely on it; he relied on it; and he was damaged as a direct

result of the alleged misrepresentation. See, e.g., Eckerd’s

Columbia, Inc. v. Moore, 155 Ga. App. 4, 270 S.E. 2d 249 (1980).

The material facts at issue in this case are whether General Motors

misrepresented petitioner’s eligibility for the special retirement

program — an employee benefit plan indisputably subject to

ERISA — and whether General Motors knew the plan would be

available at Lakewood when it told petitioner it would not. Section

514(a) is directly applicable to these claims because both the

material facts petitioner claims General Motors misrepresented

and the damages sought relate directly to the special retirement

plan. Thus, the special retirement plan is not incidental to

petitioner’s cause of action; it is central to it.

The Court recently expanded McClendon’s broad reading of

ERISA’s preemptive scope, holding that a state law relates to a

covered benefit plan for preemption analysis if it refers to or has a

connection with such a plan, “‘even if the law is not desiqned to

affect the plan or the effect is only indirect,’... and even if the law is

‘consistent with ERISA’s substantive requirements.’” District of

Columbia v. Greater Washington Bd. of Trade, __U.S.__, 113 S.Ct.

580, _. (1992) (emphasis added) (citing McClendon and

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

9

(1985)). In Washington Bd. of Trade this Court first observed that

workers’ compensation plans are themselves exempt from ERISA

regulation. See 29 U.S.C. § 1003(b)(3). Despite this exemption of

workers’ compensation plans from ERISA’s reach, this Court held

that ERISA preempted a District of Columbia law that required

employers who provide health care benefits to their employees to

provide equivalent coverage to employees eligible for workers’

compensation benefits, to the extent that the law applied to

employers whose plans were covered by ERISA. The law was not

preempted to the extent it applied to employers whose plans were

exempt from ERISA, such as “governmental” or “church” plans

under Sections 4(b)(1) and (2). See 29 U.S.C. § § 1003(b)(1) and

(2).

Thus, even the express exemptions from ERISA coverage do

not limit the broad preemptive sweep of ERISA with regard to state

laws that affect covered plans. If a plan is covered by ERISA, any

State regulation of that plan is preempted, including indirect

regulation by direct regulation of an exempt plan. Because the state

fraud law at issue here would indirectly regulate an ERISA-

covered plan through its direct regulation of the benefit

relationship between General Motors (the provider of the ERISA-

covered plan) and petitioner (who seeks additional benefits under

the plan), the State law is preempted under Washington Bd. of

Trade.

Petitioner asks this Court to narrow its focus solely to the fact

that a misrepresentation occurred; he contends that the content of

the alleged misrepresentation is irrelevant. This argument misses

the point, just as the employee’s argument in McClendon missed

the point.* The content of the misrepresentation relates to

4. Inhis Eleventh Circuit dissent, Judge Birch analogizes petitioner's claim

to that of a woman, the manager of a pension plan, who alleges that her employer

has sexually harassed her. He argues that because the female employee might

have to prove the existence of the pension plan under state law, her one ey

(Cont'd)

10

petitioner’s desire to obtain benefits available only under General

Motors’ special retirement plan. This represents a bald attempt to

circumvent plan requirements in order to obtain additional benefftts

for which petitioner was not eligible.°

As in McClendon, preemption of petitioner’s claim is

consistent with the goal of ERISA preemption. It is foreseeable

that state courts exercising their common law powers over claims

of alleged misrepresentations could develop different substantive

(Cont'd)

be lost under the majority’s decision. This argument fundamentally

mischaracterizes the scope of ERISA preemption defined both in this Court's

precedents and in the decision below. Whether the female manager's claim be

predicated on Title VII of the Civil Rights Act of 1964 (which is expressly not

preempted by ERISA; see 29 U.S.C. § 1144(d)) or on Georgia tort law, the

existence of the pension plan in her case is irrelevant; her claim is premised upon

being subjected to conduct, of a sexual nature, which was offensive and

unwelcome, and which altered the conditions of her employment. See, e.g.,

Coleman v. Housing Auth., 191 Ga. App. 166, 167, 381 S.E.2d 303, 305 (1989)

(setting forth examples of conduct that constitutes actionable sexual harassment

under Georgia common law). Her claim is not preempted because no material

fact of her claim is premised on the existence of the pension plan and she is not

seeking recovery of benefits from the plan that would have been available but for

the harassment. Cf. General American Life Ins. Co. v. Castonguay, __ F.2d__ ,

1993 U.S. App. LEXTS 1412 (9th Cir. 1993) (“ERISA doesn’t purport to regulate

those relationships where a plan operates just like any other commercial entity -

for instance, the relationship between the plan and its own employees. . . . State

law is allowed to govern these relationships, [sic] because it’s much less likely to

disrupt the ERISA scheme.”).

5. Petitioner’s reliance on Judge Birch's observation that it should not

matter for preemption analysis whether General Motors lied about

theavailability of an Oldsmobile automobile or a special retirement plan benefit

is equally misplaced. If the Oldsmobile were a benefit provided under an

ERISA-covered plan, a claim premised upon an alleged misrepresentation

relating to the availability of the Oldsmobile would likewise be preempted.

1]

Standards in cases involving employee retirement plans, and other

ERISA plans as well. For example, some states might provide that

the misrepresentation must relate to the amount of benefits, others

that the misrepresentation must involve eligibility, and others that

punitive and emotional distress damages are available, despite the

limited remedies available under ERISA where benefits have been

denied. See 29 U.S.C. § 1132.

Congress provided specific, limited remedies precisely to

avoid the possibility of additional remedies being created which

could jeopardize the solvency and desirability of various ERISA

plans. Were petitioner’s proposed judicial amendments to ERISA

allowed, it also might lead employers to reconsider the advisability

of providing benefit plans. In McClendon, this Court recognized

that different states could develop different rules and that to allow

this possibility to upset the uniform body of federal benefit law

which ERISA created is contrary to the goals of ERISA. 498 U.S.

at__, 111 S.Ct. at 484. See also Corcoran v. United Healthcare,

Inc., 965 F.2d 1321, 1332 (Sth Cir.), cert. denied, 113 S. Ct. 812

(1992) (ERISA preempts Louisiana Statutory wrongful death

action against benefit plan utilization review provider where

“allowing the [] suit to go forward would contravene Congress’s

goals of ‘ensur[ing] that plans and plan sponsors would be subject

to a uniform body of benefit law’ and ‘minimiz[ing] the

administrative and financial burdens of complying with

conflicting directives among States or between States and the

Federal Government. ’”)(quoting McClendon).

Petitioner contends that the Georgia statute at issue does not

relate to General Motors’ pension plan because the statute does not

refer specifically to a pension plan and because the alleged fraud

was perpetrated by General Motors’ managers, not by any

individual acting in a trust or fiduciary Capacity relative to an

ERISA-covered plan. The fundamental flaw in this argument is

that it ignores that the Texas “law” preempted in McClendon —

12

wrongful discharge in violation of public policy — generally

applied in situations that had nothing to do with pension plans, just

as Georgia law recognizes fraud actions that have nothing to do

with pension plans. Texas law was preempted, however, in the

specific situation where the claim presented concerned a violation

of public policy premised on the existence of a pension plan.

General Motors does not argue that fraud claims that have nothing

to do with pension plans or their benefits are preempted.

Petitioner’s specific claim is preempted because it is premised on,

and would not exist but for the existence of, an ERISA-covered

pension plan. Likewise, the employer in McClendon acted not as a

plan fiduciary or administrator in terminating McClendon, but as

an employer. There is no substantive difference between those

facts and petitioner’s allegations against General Motors.

Moreover, the fact that the damages petitioner is seeking

include the precise amount petitioner would have received if he

were eligible for the retirement plan demonstrates the relationship

between this lawsuit and the special retirement plan. In Cefalu v.

B.F. Goodrich Co., 871 F.2d 1290 (Sth Cir. 1989), the Fifth Circuit

recognized the relationship between the amount of damages

sought and ERISA preemption. In finding that ERISA preempted

petitioner’s state law fraud claims, the court stated:

Petitioner's claim has a definite connection to

an employee benefit plan. Petitioner concedes

that if he is successful in this suit his damages

would consist of the pension benefits he would

have received had he been employed by TCI. To

compute these damages, the court must refer to

the pension plan under which petitioner was

covered when he worked for Goodrich. Thus,

the precise damages and benefits which

petitioner seeks are created by the Goodrich

Employee Benefit Plan.

13

Id. at 1294 (emphasis supplied); accord Christopher v. Mobil Oil

Corp., 950 F.2d 1209, 1218 (Sth Cir.), cert. denied, 113 S. Ct. 68

(1992).

Petitioner is also wrong in contending that nothing in ERISA

evidences a Congressional intent to extinguish his state law fraud

claim even though it is “a significant and universally recognized

remedy.” (Petition at 11). This Court implicitly rejected this

argument in Pilot Life when it stated, “the common law causes of

action raised in Dedeaux’s complaint [which included fraud in the

inducement], each based on the alleged improper processing of a

claim for benefits under an employee benefit plan, undoubtedly

meet the criteria for pre-emption under § 514(a).” 481 U.S. at 48.

Indeed, this Court has repeatedly recognized that Congress

expressly limited the scope of ERISA preemption only by the

requirement that the state law at issue “relate to” an employee

benefit plan. Congress rejected more limited preemption langnage

which would have rendered the clause “applicable only to state

laws relating to the specific subjects covered by ERISA.” E.g.,

McClendon, 498 U.S. at__, 111 S. Ct. at 482 (quoting Shaw v.

Delta Airlines, Inc., 463 U.S. 85, 98 (1983)). Moreover, to

underscore its intent that section 514(a) be applied expansively,

Congress chose equally broad language in defining the “state

laws” which are preempted to include “all laws, decisions, rules,

regulations, or other State action having the effect of law.” 29

U.S.C. § 1144(c)(1).

Moreover, there is no indication in ERISA or its legislative

history that fraud actions to recover pension benefits will be

exempted from ERISA preemption. When Congress sought to

exempt a “law” from ERISA preemption, it did so expressly. See

29 U.S.C. § 1144(b) and (d). Moreover, in deciding what actions

could be brought under ERISA, Congress, rather than rely on state

law, crafted a comprehensive remedial scheme in Section 502 of

ERISA itself. 29 U.S.C. § 1132. Section 502 specifically provides

14

for claims relating only to a failure to pay benefits or for breach of

fiduciary duty; it specifically does not provide for a fraud action to

recover benefits.

The decision of the Eleventh Circuit holding that ERISA

preempts state law fraud claims insofar as they “relate to” ERISA -

plans is consistent with decisions from other jurisdictions both

before and after McClendon. See Tolle v. Carroll Touch, Inc., 977

F.2d 1129, 1136-37 (7th Cir. 1992)(ERISA preempted employee's

claims for breach of contract and breach of duty of good faith and

fair dealing arising out of termination, allegedly to deprive him of

benefits); Kelso v. General American Life Ins. Co., 967 F.2d 388,

391 (10th Cir. 1992) (ERISA preempts claim for misrepresentation

regarding coverage under benefit plan); Olson, 960 F.2d at 1421

(ERISA preempted state law fraud claim where employee alleged

that employer misrepresented level of benefits available upon

retirement); Smith v. Dunham-Bush, Inc., 959 F.2d 6, 10 (2nd Cir.

1992) (ERISA preempted employee's misrepresentation claim

based on an oral promise to pay pension benefits); Settles v. Golden

Rule Ins. Co., 927 F.2d 505 (10th Cir. 1991) (ERISA preempted

state law wrongful death, breach of contract, and fraudulent denial

of insurance coverage action); Berger v. Edgewater Steel Co., 911

F.2d 911, 923 (3d Cir. 1990), cert. denied, 111 S. Ct. 1310 (1991)

(ERISA preempted employee’s state law claims for

misrepresentation regarding terms of early retirement plan); Lea v.

Republic Airlines, Inc., 903 F.2d 624 (9th Cir. 1990) (ERISA

preempted state law claims for negligence, breach of contract,

fraud, and equitable relief relating to termination of retirement

income plan); Kentucky Laborers Dist. Council Health & Welfare

Fund v. Hope, 861 F.2d 1003 (6th Cir. 1988) (Fund's claim to

recover benefits allegedly paid in violation of the plan was

preempted by ERISA because, regardless of whether the claim was

phrased as a “fraud action” or “equitable action” for restitution, the

action required the court to examine the terms of the plan); Barr,

15

808 F.Supp. at __, 16 E.B.C. at 1202-03 (ERISA preempted state

law fraud claim alleging that employer misrepresented availability

of early retirement program); Elsesser v. Hospital of Philadelphia

College of Osteopathic Medicine, 802 F. Supp. 1286, 1290-92

(E.D. Pa. 1992) (guardians’ claims on behalf of incompetent

patient alleging negligence, misrepresentation, and breach of

contract against health maintenance organization held preempted);

Devine v. Combustion Eng’g Co., 760 F. Supp. 989 (D. Conn.

1991) (fraudulent inducement and breach of contract); Reid v.

Gruntal & Co., 760 F. Supp. 945 (D. Me. 1991), later proceeding,

763 F. Supp. 672 (D. Me. 1991) (fraudulent and negligent

misrepresentation); Ellis v. ANR Pipeline Co., 754 F. Supp. 103

(E.D. Mich. 1991) (ERISA preempted Ellis’ state law claims of

fraud and estoppel).

In sum, the Eleventh Circuit correctly concluded that

McClendon mandates preemption of petitioner's state law claims

which “relate to” General Motors’ employee benefit plan.

Petitioner is, therefore, foreclosed from circumventing the plan’s

requirements to obtain additional benefits.

THE COURT SHOULD DECLINE PETITIONER’S

INVITATION TO JUDICIALLY AMEND ERISA BY

CREATING A FORM OF RELIEF CONGRESS DID NOT

PROVIDE IN ERISA’S COMPREHENSIVE STATUTORY

ENFORCEMENT SCHEME.

Petitioner admits that he is not a participant or a member of

any of the other classes of persons specifically identified in Section

502 of ERISA as those who may bring a civil action pursuant to

ERISA. Indeed, he acknowledged in the Eleventh Circuit that any

state law fraud amendment to his complaint would be futile under

ERISA (Appellant’s Brief at p. 17), and argued that the court

16

should fashion appropriate relief by creating a federal common law

fraud claim under ERISA.®

Petitioner’s argument would require this Court to amend

ERISA in two respects: by judicially amending Section 502 to

provide standing to petitioner and by creating a common law

ERISA claim not specifically enumerated in Section 502. The

Court should decline this invitation to engage in judicial

legislation.

In support of his standing argument, petitioner cites the Sixth

Circuit’s decision in Drennan v. General Motors Corp., 977 F.2d

246 (6th Cir. 1992), reh’g denied (en banc), 1993 U.S. App. LEXIS

310 (6th Cir. 1993), claiming that it could “significantly affect the

outcome in [his] case.” (Petition at 12 n.3). The Sixth Circuit’s

rationale in that case is somewhat unclear. It appears, however, that

the court reasoned that had the early retirement plan been offered

while the plaintiffs were employed by General Motors (it was not),

they would have been eligible to participate. From this

hypothetical premise the court leapt, without support or logic, to

the conclusion that the plaintiffs satisfied the definition of a

“participant” under ERISA. In other words, plaintiffs were

accorded standing because “but for” General Motors’ alleged

misconduct, they could have been participants, if the plan had been

offered. It is the decision in Drennan, not this case, that stands

ERISA’s statutory enforcement scheme on its head.

This Court has, in effect, previously rejected the Drennan

court’s analysis by attributing natural and conventional meanings

6. Petitioner made this argument for the first time on appeal before the

Eleventh Circuit, and for that reason it should not be considered. See Bath Iron

Works v. Director, Office of Workers’ Compensation Programs, __ U.S. __, 113

S. Ct. 692, 698 n. 12 (1993); Easterwood v. CSX Transp., Inc., 933 F.2d 1548,

1551 (11th Cir. 1991), cert. granted, 112 S.Ct. 3024 (1992).

17

to the statutory language setting forth the categories of persons

entitled to sue under ERISA. See Firestone Tire & Rubber Co. v.

Bruch, 489 U.S. 101 at 117-118 (1989); (“the term ‘participant’ is

naturally read to mean either ‘employees in or reasonably expected

to be in, currently covered employment,’ [], or former employees

who ‘have ... a reasonable expectation of returning to covered

employment’ or who have ‘a colorable claim’ to vested benefits,”

[]) (emphasis supplied, citations omitted); Nationwide Mut. Ins.

Co. v. Darden, __ U.S. __, 112 S. Ct. 1344 (1992) (refusing to adopt

expansive definition of “employee” despite liberal policy and

purpose of ERISA; rather, traditional general common law (not the

law of any particular state) definition of “employee” applies in

ERISA action).’ The Eleventh Circuit has consistently and

faithfully applied this construction of the statute. See McKinnon v.

Blue Cross & Blue Shield of Alabama, 935 F.2d 1187, 1191 (11th

Cir. 1991) (executrix of former participant’s estate is not

participant or beneficiary as defined in 29 U.S.C. § 1002(7), (8));

Gulf Life Ins. Co. v. Arnold, 809 F.2d 1520, 1524 (11th Cir. 1987)

(“Section 1132 is essentially a standing provision: it sets forth

7. Several other courts have expressly rejected the Sixth Circuit's “but

for” analysis based on their reading of this Court's decision in Firestone. See,

e.g., Raymond v. Mobil Oil Corp., 1993 U.S. App. LEXTS 840 (10th Cir. 1993)

(“To say that but for Mobil’s conduct, plaintiffs would have standing is to admit

that they lack standing and to allow those who merely claim to be participants to

be deemed as such”); Katzoff v. Eastern Wire Products Co., 1992 U.S. Dist.

LEXIS 18992 (D. R.I. 1992). The Fifth Circuit, on the other hand, adopted an

analysis similar to Drennan in Christopher, allowing plaintiffs to be deemed

participants because, but for the employer's violation of ERISA, the employees

would be current employees with a reasonable expectation of receiving benefits.

960 F.2d at 1221. This Court denied certiorari in Christopher. Cf. Mitchell v.

Mobil Oil Corp., 896 F.2d 463, 474 (10th Cir.), cert. denied, 111 S. Ct. 252

(1990) (retirees who have received all vested pension benefits due under plan

lack standing); Stanton v. Gulf Oil Corp., 792 F.2d 432, 435 (4th Cir. 1986)

(rejects “but for” analysis as conferring participant status on every employee

who but for some contingency may become eligible).

18

those parties who may bring civil actions under ERISA and

specifies the types of actions each of those parties may pursue.

Those standing provisions must be construed narrowly; civil

actions under ERISA are limited to those parties and actions

Congress specifically enumerated in Section 1132.”) (emphasis

added).

As the Eleventh Circuit correctly noted, petitioner’s argument

for judicial amendment to ERISA is also fundamentally at odds

with this Court’s previous decision in Pilot Life, which rejected

such an extension of the remedies available under ERISA:

[T]he detailed provisions of Section 502(a) set

forth a comprehensive civil enforcement

scheme that represents a careful balancing of

the need for prompt and fair claim settlement

procedures against the public interest in

encouraging the formation of employee benefit

plans. The policy choices reflected in the

inclusion of certain remedies and the exclusion

of others under the federal scheme would be

completely undermined if ERISA-plan

participants and beneficiaries were free to

obtain remedies under state law that Congress

rejected in ERISA. “The six carefully

integrated civil enforcement provisions found

in Section 502(a) of the statute as finally

enacted ... provide strong evidence that

Congress did not intend to authorize other

remedies that it simply forgot [or decided not]

to incorporate expressly.” (emphasis in

original).

Pilot Life, 481 U.S. at 54 (quoting Massachusetts Mutual Life Ins.

19

Co. v. Russell, 473 U.S. 134, 146 (1985)) (cited with approval in

McClendon, 498 U.S. at__, 111 S. Ct. at 485).

Petitioner’s attempt to distinguish Pilot Life and McCrae v.

Seafarers’ Welfare Plan, 920 F.2d 819 (11th Cir. 1991),* on the

narrow ground that they dealt with the availability of relief

(punitive and extra-contractual damages) not expressly provided

by ERISA, while his claim addresses standing to sue, is

unpersuasive. First, the Pilot Life holding is not so narrow. In that

case, this Court used the quoted language from Russell, which held

that punitive damages were unavailable in an action under Section

409(a) of ERISA, as further support for Pilot Life’s holding that the

plaintiff’s state common law contract and tort claims (including

fraud) relating to the alleged improper processing of his disability

benefits were preempted. Second, the issue in all these cases is

whether ERISA should be judicially expanded to provide relief

that Congress either forgot or chose not to provide under ERISA’s

comprehensive statutory enforcement scheme. Petitioner’s

argument that the Court would only be creating a form of relief for

a class of persons for whom Congress, whether through

inadvertence or choice, created no relief makes a distinction

without a difference. The job of amending ERISA, whether to add

beneficiaries or increase the relief available, should be left to

Congress.

Like the Eleventh Circuit, the Ninth Circuit has not read Pilot

Life as narrowly as petitioner. Thus, it rejected in Olson the

creation of a federal common law fraud claim — petitioner’s

second proposed judicial amendment to ERISA — because it

8. See also Medina v. Anthem Life Ins. Co., 1993 U.S. App. LEXIS 1317

(Sth Cir. 1993) (uncorrected opinion) (court will decline invitation to fashion a

federal common law remedy to provide plaintiff the right to recover punitive or

extra-contractual damages; Pilot Life teaches that ERISA’s civil enforcement

remedies were intended to be exclusive).

20

“would defeat the scheme created by Congress in ERISA.” 960

F.2d at 1423.9

ERISA does, moreover, specifically address claims of fraud

by a participant or beneficiary. See 29 U.S.C. § 1141. The only

remedy provided for a violation of this provision of ERISA is a

criminal fine or imprisonment for not more than one year, or both.

Because 29 U.S.C. § 1141 addresses the issue of fraud, under

Pilot Life, petitioner’s common law fraud claim is precluded.'° The

enforcement of this section is, moreover, exclusively the duty of

9. Petitioner not only seeks to assert such a claim, petitioner contended in

the Eleventh Circuit that he knew exactly how Congress would have fashioned it.

Georgia state law, he argued, provides “a most appropriate source for the

development of a federal common law in this area.” (Appellant's Brief at p. 20).

He has failed in his petition to identify which source he now recommends for his

federal common law fraud claim.

Under petitioner’s approach in the Eleventh Circuit, a plaintiff in any one

of the fifty states would be able to bring an ERISA common law fraud action

predicated upon the law of the forum state. Such an approach ignores that, “[t)he

primary purpose behind ERISA was to achieve uniformity. . . .” See Silverman v.

Barbizon School of Modeling & Fashion, Inc., 720 F. Supp. 966, 972 (S.D. Fla.

1989). See also Settles, 927 F.2d at 510 (holding that petitioner's state law claim

that defendants’ termination of benefits caused her husband's wrongful death

was preempted by ERISA; “ERISA must prevail . . . where a state law cause of

action may in any way hinder the development of a uniform body of federal labor

law governing employee benefit plans”); Baxter v. Lynn, 886 F.2d 182, 196 (8th

Cir. 1989) (state subrogation laws applying to insurance contracts are not saved

from ERISA preemption in part because “[a}pplication of differing state

subrogation laws to plan providers throughout the United States would frustrate

ERISA’s uniform treatment of benefit plans”).

10. The Eleventh Circuit, consistent with this Court's precedents, has

adopted the rule that a court should not exercise its authority to fashion federal

common law where ERISA addresses the issue in dispute. National Companies

(Cont'd)

21

the U.S. Attorney General. West v. Butler, 621 F.2d 240, 243-244

(6th Cir. 1980) (29 U.S.C. § 1141 provides criminal penalties for

interference with a participant's rights where such interference is

accomplished by, inter alia, fraud); Goins v. Teamsters Local 639

Employers Health & Pension Trust, 598 F. Supp. 1151, 1155 (D.

D.C. 1984) (29 U.S.C. § 1141 does not provide private cause of

action; enforcement is exclusive prerogative of Attorney General);

Maxfield v. Central States, Southeast & Southwest Areas Health,

Welfare & Pension Funds, 559 F. Supp. 158, 160 (N.D. Ill. 1982)

(dismisses claim for wrongful discharge brought under 29 U.S.C.

§ 1141).

To the extent that petitioner alleges that General Motors

engaged in conduct which is prohibited by 29 U.S.C. § 1141,

petitioner has no civil remedy under ERISA. If petitioner is

(Cont'd)

Health Plan v. St. Joseph's Hosp., Inc., 929 F.2d 1558 (11th Cir. 1991);

Nachwalter v. Christie, 805 F.2d 956 (11th Cir. 1986).

In Nachwalter, the court refused to apply as a matter of federal common

law the state law doctrine of estoppel, reasoning that:

(t}he claim that Congress intended for the federal courts

to create a body of federal common law to govern ERISA

cases does not, as petitioner suggests, give a federal

court carte blanche authority to apply any prevailing

state common law doctrine it chooses to ERISA cases. A

federal court may create federal common law based on a

federal statute’s preemption of an area only where the

federal statute does not expressly address the issue

before the courts. . . . [F)ederal courts may not use state

common law to re-write a federal statute.

Id. at 959-960 (citations omitted). It is precisely that sort of carte blanche

authority that petitioner would have this Court exercise in stepping outside the

framework of ERISA to create a common law fraud action under the

circumstances presented.

22

dissatisfied because 29 U.S.C. § 1141 may not provide him with

the remedy he would prefer (or even with any remedy), he should

take the matter to the body that created ERISA’s enforcement

scheme — the United States Congress.

Petitioner is inviting the Court to amend ERISA by creating a

common law exception for non-participants and non-

beneficiaries; his proposed exception would also provide a

different remedy from that provided by statute and may have

different elements in each state. This Court should decline his

invitation.

CONCLUSION

For all the foregoing reasons, General Motors urges that this

Court deny the Petition for Writ of Certiorari.

Respectfully submitted,

WILLIAM A. CLINEBURG, JR.

KING & SPALDING

Attorneys for Respondent

191 Peachtree Street

Atlanta, Georgia 30303-1763

(404) 572-4600

Dated: March 1, 1993