Petition for Writ of Certiorari — Andrews v. Alaska Operating Engineers-Employers Training Trust Fund

PC in

a eT hs

Supreme Court, U.S.

1 | FILED

94 185 uUL 5199

OFFICE OF THE CLERK

NO 94 -

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1994

RONALD B. ANDREWS

Petitioner

V.

ALASKA OPERATING ENGINEERS-

EMPLOYERS TRAINING TRUST FUND

Respondent

ON PETITION FOR WRIT OF CERTIORARI

TO THE ALASKA SUPREME COURT

PETITION FOR WRIT OF

CERTIORARI

RICHARD H. FRIEDMAN

Friedman, Rubin & White

1227 W. 9th Avenue

Suite 201

Anchorage, AK 99501

(907) 258-0704

ATTORNEY OF RECORD FOR

PETITIONER ANDREWS

ALSO ON THE BRIEF:

JOHN BERNITZ

QUESTION PRESENTED FOR REVIEW:

Does ERISA preempt state law

claims for wrongful discharge, and

breach of contract, merely because

the plaintiff is employed by an

ERISA regulated trust where’ the

state claims can be resolved without

interpreting the employee benefit

plan?

PARTIES

The parties to this suit are

fully stated in the caption, neither

party has a parent entity.

TABLE OF CONTENTS

QUESTION PRESENTED FOR REVIEW .. i

VRS eee 2. 8 ee eee Se See

same Oe Cole 2 6 ee ee ii

TABLE OF AUTHORITIES . «© «© « «6 « 4Y

OP LNA eee. s 6 + wee oe 6 ek

JURISDICTIONAL STATEMENT .....1

CONSTITUTION PROVISIONS AND STATUES

ENVOLVoW IN Tels CABR . «© ee ee a

STATEMGN.: OF THE CASE . «+ «4 « « « 38

REASONS FOR GRANTING THE WRIT... 6

is This Court Has Not Addressed,

And Other Courts Have Been

Unable To Consistently

Determine, When State Law

Protecting Employees' Rights

Is Preempted By ERISA. ... 6

Il. The Supreme Court Of Alaska

Erred: Andrews' State Law

Claims Are Not Preempted by

BMAGMR:s © + 8 tisk «= + 2 ee ee

A. The Supreme Court of

Alaska's Ruling is

BEeeneews. « « «© « 23

ii

B. Andrews' Claims Are

Not Preempted Because

They Do Not Require An

Interpretation Of

ERISA Or An ERISA

jt ae a ee |

III. CONCLUSION .... .- 36

APPENDIX A: Alaska Supreme Court

Opinion

iii

TABLE OF AUTHORITIES

CASES

Alessi v. Raybestos-Manhattan, Inc.,

451 U.S. 504, 101 S. Ct. 1895, 68 L.

ee ee ee a

Anderson v. Electronic Data Systems,

li Fea bone (oem Cah. 2998) « «SK

Andrews v. Alaska Operating

Engineers- Employment Training Trust

Fund, 871 P.2d 1142 (Alaska 1994)

é gp ae Pere ee eo say 29

ARCO Alaska Inc. v. Akers, 753 P.2d

1190, 329% (ALOSEA 35EG) . « Ae 2a

Authier v. Ginsberg, 757 F.2d 796

(San Gis Seo! sh -w@ (a) ee eee oe

Barnes v. E-Systems, Inc. Group

Hosp. Medical & Surgical Ins. Plan,

lig @. ©. &k, JAS toe Bae Auer

Foees « 5S eo ae ee ee 8

Clark v. Coats & Clark, Inc., 865

F.2¢0 1237, (lith Cir. 19893)

14, 23

Cutler v. Phillips Petroleum Co.,

71 Wash. App. 511, 859 P.2d 1251

(ee. Bee. Beene 4 ee A we eo ee 2

District of Columbia v. Greater

Washington Bd. of Trade, 113 S.Ct.

500, anak bs Bee wee fees). ls)| = CD

Eldridge v. Felec Services, Inc.,

$20 F.20 1434 (9th Cir. 1990)

PS eh a de Sos aoe Gee ae

Ethridge v. Harbor House Restaurant,

861 F.2d 1389(9th Cir. 1988). .. 14

FMC Corp. v. Holliday, 498 U.S. 52,

111 S. Ct. 403, 112 L. Ed.2d 356

(O00) ee A ee eee eee id

Fort Halifax Packing Co. v. Coyne,

inc.,; 402 0.8. 4, 107 S. Ct. d2t4,

Se t,. £d.2@ 2 (1907) . «. 10, 24, 26

Franchise Tax Bd. v. Construction

Laborers Vacation Trust For Southern

California, 463 U.S. 1, 103 S. Ct.

2841, 77 L. Ed.2d 420 ore: es «ee

General American Life Ins. Co. V.

Castonguay, 984 F.2d 1518 (9th Cir.

CE a, ag ee ee ae 37, 26

Hashimoto v. Bank of Hawaii,

699 F.20 406 (1993). . +e « So, 32

Howard v. Parsian, Inc., 807 F.2d

LEGOLLLCD GhEs Beet) «© ee 2 es »

Ingersoll-Rand Co. Vv. McClendon,

498 U.S. 133, 111 S. Ct. 478, 112 L.

Ed.2d 474 (1990)

c=. eae © 30: 16, 34, aes 49

John Hancock Mut. Life Ins. Ca. WV.

Harris Trust & Savings Bank, 114 S.

Ct. 517, 126 L. Ed. 324 (1993) 10

Knight v. American Guard & Alert,

Inc., 714 P.2d 788 (Alaska 1986)

20

Laborers Health and Welfare Trust

For Northern California v. Advanced

Lightweight Concrete Co., Inc., 484

U.S. 539, 108 S. Ct. 830 98 L. Ed.2d

Saw theeee «6 4 6 oe 4 Ss ee eS ee

Lane v. Goren, 743 F.2d 1337, 1340

[peal Gans eel 6 «6 we ee ee eee

Lingle v. Norge Div. of Magic Chef,

486 U.S. 399, 108 S. Ct. 1877, 100

L. Ed.2@¢ 410 (1966) . . . « « DB Fi

Livadas v. Bradshaw, 62 U.S.L.W.

4495 (June 14, 1994) ....e-+e« 34

Luedtke v. Nabors Alaska Drilling

Inc., 768 P.2d 1123 (Alaska 1986)

oe 86 oe © 6 eae 22, 23

Mackey v. Lanier Collection Agency &

Service, inc., 486 U.S. 825, 406 S.

Ct. 2182, 100 L. Ed.2d 836 (1988) 10

McLean v. Carlson Companies, 777 F.

Supp. 1480 (D. Minn. 1991) .. . 34

Metropolitan Life Ins. Co. v.

Massachusetts, 471 U.S. 724, 105 S.

Ct. 2380, 85 L. Ed.2d 728 (1985) 10

Metropolitan Life Ins. Co. v.

Taylor, 481 U.S. 58, 107 S. Ct.

1542, 95 L. Ed.2d 55 (1987) 10, 30

vi

Mitford v. de Lasala, 666 P.2d 1000

(Alaska i963) « «© <.«e-e«#+e8e 20, 22

Pace v. Signal Technology Corp., 41/7

Mass. 154 628 N.E.2d 20, (Mass.

SOS 4 eas Se ee -ee oe

Pilot Life Ins. Co. v. Pedeaux, 481

U.S. 41, 107 S. Ct. 1544, 95 L.

oe Oe Se Sees. so a eal » ae

Reed v. Municip ..ity of Anchorage,

782 P.2d 1155

(Alaska 1969) .« .. + « 20, 22, 39

Settles v. Golden Rule Ins., 927

24 505 (10th Cir. 1991) ....- id

Shaw v. Delta Air Lines, Inc,

463 U.S. 89, 103 S. GE.

2890, 77 L. Ed.2d 490,

501 (1983) Pree cat Oe Be Op Oe

Sorosky v. Burroughs Corp., 826 F.2d

Tous Ce Gab. Bt) «3 + 0 8 es

State v. Haley, 687 P.2d 305 (Alaska

St Cee a Bee a eee a BO

Van Camp v. A.T.&T. Information

Systems, 963 F.2d 119(6th Cir. 1992)

cert. denied 113 S. Ct. 365, 121 L.

Ed.2d 278 (1992) ..... 12

STATUTES

26 U.8.C. Section 1257 ...+.s. 4

29 U.S.C.A. Sections 149-197 . . 29

vii

29 wewaie< Sections 1144(c) (1),

(6? 62) ee eee eS eee

29 U.S.C. Section 1144 (a)

:e- he Be “Eee

29 U.S.C.A. Sections 1002(1),

Reena «Ss 4 ee ee 4

29 U.S.C.A. Sections 1001-1461 . 2

29 U.S.C.A. Section 1002{1) ... 189

29 U.S.C.A. Section 1002(3) ... 48%

ae © o> | eer eee”

RS. 14 .86,080 6-6 «ws 4 6 we

LAW REVIEWS

Gregory, The Scope of ERISA

Preemption of State Law: A Study In

Effective Federalism, 48 U. Pitt L.

Rev, < ee Be Be eee eS te ea

OTHER AUTHORITIES

H.R. Conf. Rep No. 93-1280, p. 327

(A07S) 6 + 6 eS eS Oe Se eee

United States Supreme Court Rules

10:4 GS 2180s & aS SS Se ee

viii

OPINIONS BELOW

Ronald Andrews seeks’ review of

Andrews v. Alaska Operati ngineers

Employers Training Trust Fund, 871 P.2d

1142 (Alaska 1994) (attached as Appendix

A). This opinion affirmed a Superior

Court order dismissing the suit. There

was no written Superior Court opinion.

JURISDICTIONAL STATEMENT

The trial court ruled that’ the

complaint was preempted by 29 U.S.C. §

1144 (a) and dismissed the suit.

Petitioner filed a timely appeal with the

Supreme Court of Alaska. The Supreme

Court issued a final opinion on April 8,

1994. Andrews Vv. Alaska Operating

Engineers-Employers Training Trust Fund,

871 P.2d 1142 (Alaska 1994) (attached as

Appendix A). This petition is timely

filed within 90 days under Supreme Court

Rules 13.1 and 13.4. Jurisdiction is

invoked under 28 U.S.c. § 1257.

CONSTITUTIONAL PROVISIONS AND STATUTES

INVOLVED IN THIS CASE

This case involves an interpretation

of the Employment Retirement Income

Security Act of 1974 ("ERISA") Pub. L.

No. 93-406, 88 Stat. 1-514, 3001-4082

(codified as amended at 29 U.S.C.A. §§

1001-1461 (1985 & 1994 Supp.) whereby

Congress invoked the Supremacy Clause of

the United States Constitution, U.S.

Const. art. VI, cl. 2, and preempted

state law relating to ERISA.

The statutory provision at issue

states:

Except as provided in

subsection (b) of this section,

the provisions of this title

and title IV shall supersede

any and all State laws insofar

as they may now or hereafter

relate to any employee benefit

Plan described in section 4 (a)

and not exempt under section

4(b).

29 U.S.C. § 1144(a).

"State law" includes "all laws,

decisions, rules, regulations, or other

State action having the effect of law, of

any State." 29 U.8.C. ¢ 1144(c) (1).

"State" is defined to be "a State, any

political subdivisions thereof, or any

agency or instrumentality of either,

which purports to regulate, directly or

indirectly, the terms and conditions of

employment benefit plans covered by this

title." 29 U.S.C. § 1144(c) (2).

STATEMENT OF THE CASE

Alaska Operating Engineers-Employers

Training Trust Fund ("Trust") is a trust

fund established to provide job-related

training to workers represented by Local

No. 302 of the International Union of

Operating Engineers. It is subject to

regulation by ERISA and is an “employee

welfare benefit plan." 29 U.S.C. §§

1002(1), 1003(a).

Petitioner Ronald Andrews worked as

an administrative manager for respondent

from March, 1986 until his termination on

October 31, 1989. Beginning in early

1989 some of the trustees began to

question Andrews ' job performance.

George Williams, chairman of the Board of

Trustees, however, supported Andrews and

convinced other members that they should

keep him as the administrative manager.

Some time in October of 1989,

Andrews sought advice on the legality of

Williams' travel reimbursement practices

from the Trust's attorney, James Gasper.

Gasper reported the inquiry to Williams.

Williams immediately solicited and

obtained Andrews' termination from the

Board.

Andrews filed suit in state court

alleging wrongful discharge in violation

of Alaska's public policy and breach of

the covenant of good faith and fair

dealing, which is implied into every

employment relationship in Alaska. The

Trust moved to dismiss the complaint for

lack of subject matter jurisdiction,

because Andrews’ claims were preempted by

ERISA. The trial court granted the

Trust's motion and Andrews appealed to

the Supreme Court of Alaska. The Supreme

Court of Alaska affirmed and dismissed

the case for lack of subject matter

jurisdiction. Andrews files this

petition seeking review of the State

court decision.

Andrews filed a second suit, on

April 5, 1993, in federal court alleging

violations of ERISA in connection with

the same incident to avoid being time

barred from any potential claims under

ERISA. The proceedings in that case have

been stayed by stipulation until the

resolution of this appeal.

REASONS FOR GRANTING THE WRIT

I. This Court Has Not Addressed, And

Other Courts Have Been Unable To

Consistently Determine, When State Law

Protecting Employees’ Rights Is Preempted

By ERISA.

ERISA preemption is broad in both

statutory language and court

interpretation. 29 U.S.C. § 1144(a);

Shaw_v. Delta Air Lines, Inc., 463 U.S.

85, 98-99, 103 S. Ct. 2890, 2900-01, 77

L. Ed.2d 490, 501 (1983). State law that

“relates to any employee benefit plan" is

superseded by ERISA. : ao

1144(a). ERISA preemption is, however,

not without limits. Ingersoll-Rand Co.

v. McClendon, 498 U.S. 133, 139, 111 S.

Ct. 478, 483 112 L. Ed.2d 474, 484 (1990)

("Notwithstanding its breadth, we have

recognized limits to ERISA's pre-emption

clause"). "Some state actions may affect

employee benefit plans in too tenuous,

remote, or peripheral a manner to warrant

a finding that the law [is preempted by

ERISA]." Shaw v. Delta Air Lines, Inc.,

at 100, n.21 103 S. Ct. at 2901 n. 41, 77

L. Ed.2d at 503 n.21 (1983).

Under the most extreme

interpretation, any state law affects an

ERISA plan’ whose\ administrative offices

are located in that state. Because all

ERISA plans must be administered by

people, and those people will live in one

of the several states, differences in

state law will always place a burden,

albeit usually incidental, upon ERISA

' As used in this petition “ERISA plan" refers to any

employee benefit plan covered in 29 U.S.C. § 1003.

plans. If, for example, a state chooses

to have a more stringent building code

than its neighbor and an ERISA plan

chooses to move its administration

building to that state it would be

burdened by the more stringent code. In

the broadest sense, therefore, every

state law can be seen as having a

"connection" with an ERISA Plan. Shaw v.

Delta Air Lines, Inc., at 97-98, 103 S.

Ct. at 2900, 77 L. Ed.2d at 501 ("A law

‘relates to' an employee benefit plan, in

the normal sense of the phrase, if it has

a connection with or reference to such a

plan").

At what point does a burden created

by state law become so severe that the

law "relates to" ERISA and is preempted?

The point is not evident in the statute

itself. See, 29 U.S.C. § 1144(a). A

line must be judicially created between

laws whose burden is too tenuous or

remote to be preempted and laws that have

a connection with ERISA. Hashimoto v.

Bank of Hawaii, 999 F.2d 408, 410 (9th

Cir. 1993) ("as is typical in cases

invelwias federal preemption of state

law, a line must be picked out by court

decisions as to what is preempted and

what is not preempted.") Prior decisions

of this Court suggest, as Andrews argues,

that the line should be placed at the

point where an erployee's state law case

requires interpretation of provisions in

ERISA, the regulations promulgated to

implement ERISA or the terms of an ERISA

regulated plan. See e-.g., Lingle v.

Norge Div. of Magic Chef, Inc., 486 U.S.

399, 108 S. Ct. 1877, 100 L. Ed. 2a 410

(1988).

The court has faced ERISA preemption

in at least fourteen cases since 1981.7

None of these cases, however, dealt with

the employees of an ERISA plan. Nor has

the Court faced a situation where an

employee brings a state law claim which

does not require an interpretation of an

2

Solan Maia Mek Site tan Cn Stall as

Savings Bank, 114 S. Ct. 517, 126 L. Ed.2d 524 (1993);

b

113 S. Ct. 580, 121 L. Ed.2d 513 (1992); Barnes v. E-

112 S. Ct. 1, 115 L. Ed.2d 1087 (1991);

498 U.S. 133, 111 S. Ct. 478, 112 L.

Co. v. McClendon,

Ed.2d 474 (1990); FMC Comp, Halliday, 488 US. 52,

111 S. Ct. 403, 112 L. Ed.2d 356 (1 : Mackey v.

486 U.S. 825,

108 S. Ct. 2182, 100 L. Ed.2d 836 (1988); ‘Laborers

108 SC a a ee 484 U.S. 539,

108 S. Ct. 830, 98 L. Ed.2d 936 (1988); Fort Halifax

, 482 U.S. 1, 107 S. Ct. 2211,

96 L. Ed.2d 1 (1987);

» 481 U.S. 58, 107 S. Ct. 1542, 95 L. Ed.2d 55

(1987); Pilot Life Ins. Co. v, Pedeaux, 481 U.S. 41, 107

S. Ct. 1544, 95 L. Ed.2d 39 (1987);

Metropolitan Life

Ins. Co. v. Massachusetts, 471 U.S. 724, 105 S. Ct. 2380,

85 L. Ed.2d 728 (1985); is

California, 463 U.S. 1, 103 S. Ct. 2841, 77 L. Ed.2d 420

(1983); Shaw v, Delta Airlines. Inc., 463 U.S. 85, 103 S.

Ct. 2880, 77 L. Ed.2d 490 (1983);

Manhattan. Inc., 451 U.S. 504, 101 S. Ct. 1895, 68 L.

Ed.2d 402 (1981).

ERISA plan or ERISA. Ingersoll-Rand Co.

v. McClendon, 498 U.S. 133, 111 S. ct.

478, 112 L. Ed.2d 474, the decision most

closely on point, dealt with an employee,

who alleged he was fired in order to

prevent him from receiving ERISA

regulated benefits. The employee was

fired four months before he would have

vested as a ten year employee under the

ERISA Plan. The existence of benefits

under the ERISA plan was an element of

the employee's case. Texas law required

the employee to show that the principal

reason for his discharge was the

employers intent to avoid paying ERISA

benefits. Id. at 136, 112 S. ct. at 481,

112 L. Ed.2d at 482. "[Ujnder the Texas

court's analysis there simply is no cause

of action if there is no plan." id. at

140, 112 S. Ct. at 484, 112 L. Ed.2da at

485 (emphasis in original). This Court

11

|

|

concluded, therefore, that the suit

“related to" ERISA and was preempted.

Petitioner, here, presents the case

which was not decided in Ingersoll-Rand:

a plaintiff-employee whose case does not

depend upon the existence of the ERISA

plan, but whose suit could conceivably

have an incidental affect on

administration of the plan.

In the absence of an opinion by this

Court, numerous state and lower federal

courts have struggled to define where

employee claims of employer misdeeds are

preempted by ERISA. A conflicting body

of case law has developed. Some courts

apply Ingersoll-Rand broadly and preempt

nearly every state law clain. See e.g.

Van Camp v. A.T.& T. Information Systems,

963 F.2d 119, 123 (6th Cir. 1992) cert.

denied 113 S. Ct. 365, 121 L. Ed.2d 278

(1992) (sex and age discrimination claims

were preempted because "claims directly

affect the status of A.T.& T. as employer

and Van Camp as beneficiary") ; Settles yv.

Golden Rule Ins., 927 F.2d 505 (10th

Cir. 1991) (action seeking damages for

death of husband, who died of heart

attack after defendant canceled health

insurance was preempted); Howard v.

Parsian, Inc., 807 F.2d 1560, 1563 (11th

Cir. 1987) (state law action challenging

denial of ERISA benefits was preempted).

Other courts, however, recognize

that some state law employee rights have

such small impact on, or connection to,

an ERISA plan that they do not "relate

to" it and are not preempted. See e.g.

General American Life Ins. Co. __y.

Castonguay, 984 F.2d 1518, 1521 (9th Cir.

1993) (where an ERISA plan operates as

any other commercial entity, the

relationship between the ERISA plan and

13

its creditors is not one regulated by

ERISA and is, therefore, not preempted) ;

Clark v Coats & Clark, Inc., 865 F.2a

1237, 1242-1245 (llth Cir. 1989) (while

facts supporting former employee's claim

of intentional infliction of emotional

distress occurred during, the same period

as employee's ERISA claim, the two were

not related); Ethridge v. Harbor House

Restaurant, 861 F.2d 1389, 1404-05 (9th

Cir. 1988) (plaintiff's claim for

wrongful discharge as a result of union

activity mentioned lost wages and

benefits, but was not preempted because

"loss of pension benefits was a mere

consequence of, but not a motivating

factor behind, the termination of

benefit"); Sorosky v. Burroughs Corp.,

826 F.2d 794, 800 (9th Cir. 1987) (claim

for wrongful discharge which depended

upon termination without good cause was

14

not preempted) ; Lane _v. Goren, 743 F.2d

1337, 1340 (9th Cir. 1984) (age and race

discrimination claims were not preempted

because state law regulated ERISA Plan

"in its capacity as an employer, and in a

way that all other employers are

affected").

At least one state court has

expressed concern that an extremely broad

interpretation of ERISA's preemption will

protect unscrupulous employers while

denying a remedy for just employee

grievances. Pace _v. Signal Technology

Corp., 417 Mass. 154, 160, 628 N.E.2a 20,

22 (Mass. 1994). "That a statute whose

Clear purpose was to benefit employees

has become widely used as shield to

protect employers from any deceptive and

wrongful acts they may have committed

against their employees is an irony we

15

$$

find unacceptable as a governing

principle of law." Id.

In Pace an employee alleged that he

was promised six months health insurance

after termination, but under the terms of

the insurance plan his insurance coverage

ended upon termination. The court noted

that the employee was not contesting the

lack of coverage, but was only alleging

that his employer misrepresented the

existence of coverage. Because the suit

did not require an interpretation of the

ERISA plan, the court concluded that the

state law suit for misrepresentation was

not “related to" ERISA. Id. at 22.

The absence of a decisive opinion by

this Court and the existence of widely

divergent lower court decisions has

prevented consistent application of

ERISA's preemption provision.° Some

* Consistent application throughout the country is, of

course, the reason for the preemption provision in the first

16

courts have found the lack of consistent

precedent to be so frustrating they

explicitly limit their analysis of

previous decisions to those that

supported their ultimate conclusion.

utle v. Phillips e e 5. FE

Wash. App. 511, 859 P.2d 1251 1254.

(Wash. App. 1993) ("Unfortunately, there

is ample, well reasoned authority which

would support either position."); Pace v-

Signa echnolo Corn., at 157, 628

N.E.2d at 22; see also General American

Life Ins. Co. v. Castonguay, 984 F.2d at

1521 ("It's far easier to make 'I know it

when I see it' decisions in this field

than to come up with a general rule.")

The court in Cutler held that six

state law claims, including one for

breach of contract, were not preempted by

place. Ingersoll-Rand Co, v. McClendon, at 142, 111 S.

Ct. at 484, 112 L. Ed.2d at 486.

17

ERISA. Employees alleged that their

former employer had misled them into

accepting employment with the new owner

of their firm by assuring them they would

receive the same benefits. . The new owner

shut down the plant and the employees did

not receive equivalent benefits under

their ERISA plan. The Court reasoned

that ERISA was only involved in this suit

as a measure of damages and that the core

of the suit did not "relate to" ERISA.

In the face of conflicts between

state and federal courts and among the

federal circuits there is a strong need

for clear legal guidelines. ERISA is an

ambitious federal program. By its terms,

it purports to regulate all employee

benefit plans created by any employer

engaged in interstate commerce or any

industry affecting interstate commerce. *

* Employee benefit plans include both pension plans and

welfare plans. 29 U.S.C.A. § 1002(3). An employee

18

Many pewple are employed by organizations

administering ERISA regulated plans. All

of these people are within the legal

vacuum created by the absence of a

decision by this Court on whether ERISA

preempts their state law rights.

Gregory, e ope RISA Pre tion 0

State _ Law: A Study In Effective

d ism, 48 U. Pitt. L. Rev. 427, 457-

458 (1987).

The facts of this case present the

perfect opportunity to define the scope

of ERISA preemption in the employment

context. Andrews was employed by an

ERISA regulated trust. He was fired for

reporting suspected abuse of

welfare plan is “any plan, fund, or program, ,

established or maintained by an employer or by an

employee organization, or by both, to the extent that such

plan, fund, or program was established or is maintained for

the purpose of providing for its participants or their

beneficiaries, through the purchase of insurance or

otherwise . . . medical, surgical, or hospital care or

benefits, or benefits in the event of sickness, accident,

disability, [or] death . . . "29 U.S.C.A. § 1002(1).

19

administrative funds. State law provides

a cause of action for people fired in

retaliation for reporting suspected

breaches of a fiduciary duty.” Andrews'

state law suit is one step more removed

in its relation to ERISA than was the

plaintiff's suit in Ingersoll-Rand. This

case is, therefore, an excellent

opportunity to provide a bright legal

line in the nebulous world of ERISA

preemption in employment cases.

Petitioner's allegation that he was terminated in violation

of public policy is supported by ARCO Alaska Inc, v.

Akers, 753 P.2d 1150, 1154 (Alaska 1988) ("Where a

party's conduct in breaching a contract rises to the level of

a traditionally recognized tort ... an action in tort would

lie") and A.S. 13.36.070 (trustee has duty to administer

trust for benefit of beneficiaries). Petitioner's contract

claim is supported by Reed v. Municipality of Anchorage,

782 P.2d 1155, 1158 (Alaska 1989); Knight v n

Guard & Alert, Inc., 714 P.2d 788, 791-92 (Alaska 1986):

and Mitford v. de Lasala, 666 P. 2d 1000, 1007 (Alaska

1983) (employment contracts contain an implied covenant

of good faith and fair dealing).

20

II. The Supreme Court Of Alaska Erred:

Andrews’ State Law Claims Are Not

Preempted By ERISA.

A. e s§ eme Court o Alaska's

Ruling is Erroneous.

The Supreme Court of Alaska held

that petitioner's claims for retaliatory

firing in violation of public policy and

for breach of contract were preempted

because (1) they related to ERISA and (2)

ERISA provided a remedy. In concluding

that petitioner's claims related to ERISA

the court assumed that petitioner would

base its case on an interpretation of the

fiduciary duties required by ERISA. This

assumption was not correct.

Alaska has explicitly recognized a

public policy requiring trust fiduciaries

to use trust funds for the sole benefits

of the beneficiaries. A.S. 13.36.070

(requiring a trustee to administer funds

for the sole benefit of the trust

21

beneficiaries) ; A.S. 11.46.620

(establishing a criminal violation for

misuse of trust funds); see Luedtke vy.

Nabors Alaska Drilling Inc., 768 P.2d

1123, 1132 (Alaska 1986) (["Wje look to

the entire body of law in the State of

Alaska for evidence of citizen rights,

duties and responsibilities, to determine

the public policy. .. ."). This policy

applies uniformly to all trusts

regardless of whether or not the trust is

an ERISA regulated benefit plan. Being

fired for reporting a suspected violation

of this public policy is actionable under

state law. Reed vy. Municipality of

Anchorage, 782 P.2d. 1155, 1158 (Alaska

1989); see also ARCO Alaska Inc. Vv.

Akers, 753 P.2d 1150, 1154 (Alaska 1988).

Similarly, Alaska has an implied

covenant of good faith and fair dealing

in all employment contracts. Reed _v.

Municipality of Anchorage, 782 P.2d at

1158; Mitford v. de Lasala, 666 P.2d.

1000, 1007 (Alaska 1983). The obligation

to perform in good faith prevents

employers from terminating their

employees in violation of public policy.

Id.; Luedtke v. Nabors Alaska Drilling,

Inc., 768 P.2da at 1130; Sta Vv aley,

687 P.2d 305 (Alaska 1984); Eldridge v.

Felec Services, Inc., 920 F.2d 1434, 1437

(9th Cir. 1990). Andrews' case is based

upon state law and will not require ERISA

interpretation.

The court is also mistaken that

ERISA would provide aeée=remedy i (for

violations of Alaska public policy. The

situation here is analogous to Clark v

Coats & Clark, Inc., 865 F.2d at 1242-

1245. In Clark, a former’ employee

brought a claim under ERISA that he was

fired to avoid paying benefits under an

ERISA pension plan and that his employer

intentionally inflicted emotional

distress in terminating hin. The court

held that although the facts to support

each claim occurred at the same time,

they were not related. Here, Andrews

alleges state law claims, which occurred

at the same time as a potential violation

of ERISA, but are based upon different

legal theories and are wholly independent

of any interpretation of ERISA or the

ERISA regulated benefits plan. The same

set of operative facts can give rise to

several causes of action. Plaintiffs are

generally free to pick from among the

various causes of action available, those

he or she chooses to pursue.

B. Andrews' Claims Are Not

Preempted Because They Do Not

Require An Interpretation

Of ERISA O R an

The purpose of the ERISA preemption

was best stated by this Court in Fort

24

Halifax Packing Co. v. Coyne, Inc., 482

U.8.. 4, 36? @. Cts 2021, Oh. Be AS

(1987):

An employer that makes a

commitment systematically to

pay certain benefits undertakes

a host of obligations such as

determining the eligibility of

claimants, calculating benefit

levels, making disbursements,

monitoring the availability of

funds for benefit payments, and

keeping appropriate reporting

requirements. The most

efficient way to meet these

responsibilities is to

establish a uniform

administrative scheme, which

provides a set of standard

procedures to guide processing

of claims and disbursement of

benefits. Such a_ system is

difficult to achieve, however,

if a benefit plan is subject to

differing regulatory

requirements in differing

States. A plan would be

required to keep certain

records in some States but not

in others; to make certain

benefits available in some

States but not in others; to

process claims in a_ certain

ways in some States but not in

others; and to comply with

certain fiduciary standards in

some States but not in others.

25

d. at 9, 107 S. Ct. at 2216, 96 L. Ed.

2d at 10; Ingersoll-Rand Co. Vv.

McClendon, at 142, 111 S. Ct. at 484, 112

L. Ed.2d at 486 (1990) ("[T]jhe goal was

to minimize the administrative and

financial burden oof complying with

conflicting directives among States or

between States and the Federal

Government."™).

Although the Alaska court identifies

Andrews' argument that ERISA does not

preempt suits which do not require an

interpretation of ERISA or an ERISA plan,

it fails to explicitly address it.

Andrews v. Alaska Operating Engineers-

Employment Training Trust Fund, 871 P.2d

at 1144 ("Andrews argues that this claim

is not preempted by ERISA since the claim

does not require an interpretation of the

underlying benefit plan"). Instead, the

court bases its analysis on cases where

26

the state law suit required an

interpretation of ERISA, thereby

implicitly rejecting Andrews' argument

and expanding ERISA preemption. The

court's interpretation, however,

conflicts with the Congressional purpose

of ERISA preemption. The purpose was to

avoid inconsistent regulation between

states. "Relates to" should, therefore,

be interpreted to mean any action that

requires an interpretation of any ERISA

provision or a provision in an _ ERISA

plan. This would provide the much needed

clear distinction between preempted and

not preempted state employment law

claims, while preserving the

Congressional purpose behind ERISA's

broad preemption.

Requiring preemption of conflicting

state law up to, but not beyond, the

point where the state law requires

27

interpretation of provisions in ERISA or

in an ERISA plan would further’ the

purpose behind the preemption provision

while leaving to state regulation those

areas traditionally regulated by the

individual states. Administrative

burdens caused by differing state

regulations would be de minimus. All

interpretations of ERISA provisions or

ERISA plans would be governed by federal

law creating a nationally uniform body of

law. At the same time, states would be

allowed to regulate their internal

affairs. If ERISA preempted all state

laws "federal courts would have to invent

a federal common law of contracts, torts,

property, corporations -- something that

would run against the grain of our

federal system." General American Life

Ins. Co. v. Castonguay, 984 F.2d at 1522

(Kozinski J.). In the absence of the

28

federal common law that concerns Judge

Kozinski, ERISA plans would effectively

be given a license to violate state law

eon everything from housing codes to wage

and hour requirements. Under Andrews

interpretation, the anomaly that

employees of ERISA plans’ have _ less

employment law protection than employees

of other commercial organizations within

the state (a result that follows from the

Alaska's supreme court ruling) would be

minimized. Employers would be less able

to use ERISA as a liability shield for

their misdeeds. See Pace yv. Signal

Technology Corp., at 160, 628 N.E.2d at

22.

Allowing state law claims, which do

not require interpretation of ERISA or

ERISA plans, is also supported by analogy

to cases under the preemption provisions

of the Labor-Management Relations Act of

29

1947 ("LMRA") 29 U.S.C.A. §§ 141-197.

These cases provide insight because

Congress chose to model ERISA's

preemption on the, then existing,

preemption clause in LMRA. Metropolitan

Life Insurance Co. v. Taylor, 481 U.S.

58, 65, 107 S. Ct. 1542, 1547, 95 L.

Ed.2d 55, 64; Pilot Life Insurance Co. v.

Dedeaux, 481 U.S. 41, 54, 107 S. Ct.

1549, 1557, 95 L. Ed.2d 39, 52 (1987)

("The legislative history demonstrates

that the pre-emptive force of [ERISA's

civil remedy provision] was modeled after

§ 301 of LMRA"). Congress specifically

stated that ERISA's civil remedy

provision, 29 U.S.C. § 1132(a), is

modeled upon the civil remedy provision

in the LMRA. HR Conf. Rep. No. 93-1280,

p. 327 (1974). The purposes of the

preemption provisions in the two labor

statutes are the same. Metropolitan Life

30

Insurance Co. v. Taylor, at 65, 107 S.

Ct. at 1547, 95 L. Ed.2d at 64.

In LMRA cases, this Court

established the distinction which

petitioner argues is applicable to ERISA.

In keeping with the purpose of LMRA's

preemption provision to provide uniform

interpretation of labor agreements and

federal law, state law claims are only

preempted when their resolution requires

an interpretation of either LMRA or the

collective bargaining agreement. Lingle

v. Norge Div. of Magic Chef, Inc., 486

U.S. 399, 108 S. Ct. 1877, 100 L. Ed.2d

410 (1988) (unanimous decision) ("[Wje

hold that an application of state law is

pre-empted by § 301 of the Labor

Management Relations Act of 1947 only if

such application requires the

interpretation of a collective-bargaining

agreement"). All other rights conferred

eB |

by state law are not preempted. Livadas

v. Bradshaw, 62 U.S.L.W. 4495, 4499 (U.S.

June 14, 1994) reversing 987 F.2d 552

(9th Cir. 1993). Lingle's state law suit

for retaliatory discharge was not pre-

empted because it did not require an

interpretation of the collective

bargaining agreement.

The distinction created in Lingle

has been applied to Alaska law by the

Ninth Circuit in Eldridge vy. Felec

Services, 920 F.2d 1434. Plaintiff was

injured on the job and filed a claim for

workman's compensation. His employer

discharged him. He then filed suit for

both breach of Alaska's convenant of good

faith and fair dealing and discharge in

violation of public policy. Plaintiff's

theory was that he was’ fired in

retaliation for filing a workman's

compensation claim and for encouraging

32

others to file similar claims. The court

held that the employer's motivation in

discharging plaintiff controlled and

consequently there was no need to

interpret the collective bargaining

agreement. Id. at 1439. The suit was,

therefore, not preempted by LMRA.

Eldridge is parallel to the

situation in this case. Petitioner is

bringing a suit for breach of the

covenant of good faith and fair dealing

and for discharge in violation of public

policy. He alleges that he was fired in

retaliation for reporting a_ suspected

misuse of funds. The employer's

motivation for the discharge is primary.

There is, therefore, no need to interpret

any ERISA plan.

The Alaska Supreme Court relied upon

several cases interpreting state whistle

blower laws. See Hashimoto v. Bank of

33

Hawaii, 999 F.2d 408 (9th Cir. 1993);

Authier v. Ginsberg, 757 F.2d 796 (6th

Cir. 1985) cert. denied, 474 U.S. 888,

106 S. Ct. 208, 88 L. Ed.2a 177 (1985);

McLean v. Carlson Companies, 777 F. Supp.

1480 (D. Minn. 1991); see also Anderson

v. Electronic Data Systems, 11 F.3d 1311

(5th Cir. 1994) (not cited by the Alaska

Supreme Court). In all of these cases,

however, plaintiff's claim required an

interpretation of whether there had

actually been an ERISA violation. In

Hashimoto and McLean the state whistle

blower protection statute required that a

suspected violation be reported in good

faith. The trial would necessarily

involve a showing that there was a reason

to believe ERISA was, in fact, violated,

which would in turn require interpreting

ERISA. In Authier, plaintiff alleged

that he was fired for fulfilling duties

34

proscribed by ERISA. "ERISA created a

substantive element of the Michigan

action[.]" Authier v. Gingberg, 757 F.2d

at 800. At trial, plaintiff would have

to show that he was acting in accordance

with ERISA.

In contrast to these cases,

petitioner's state law suit does not

depend upon any showing of an_ ERISA

violation -- or of Andrews' good faith

belief in an ERISA violation. There is

no question that had Mr. Williams done

what petitioner thought he did it would

violate Alaska's public policy against

abuse of funds by fiduciaries. See A.S.

13.36.070. The fact that petitioner

suspected and reported such a violation

is enough to entitle him to be protected

from retaliatory firing upon reporting

his suspicions. Reed v. Municipality of

Anchorage, 782 P.2d at 1158. There is no

35

need for petitioner to make any showing

as to existence of an ERISA violation.

III. CONCLUSION.

Ronald Andrews was the Trust's

employee. As such, he was’ afforded

certain rights by Alaska law. These

rights exist independent of ERISA and

should not be preempted by ERISA. This

Court has not had the opportunity to

decide the scope of ERISA preemption in

the context of employees of ERISA plans.

Other courts have created a conflicting

and confusing body of case law. Under

the Supreme Court of Alaska's ruling,

Andrews, like all those who are employed

by ERISA plans, has less’_ protection

against employer misdeeds than his fellow

state citizens simply because he worked

for an ERISA plan. The Court should

grant certiorari to provide guidance in

this important area.

36

Respectfully submitted this zt

day of fuse , 1994.

| te boeP

JOHN BERNITZ ~~

riedman, Rubin & White

1227 W. 9th Avenue, Suite 201

Anchorage, Alaska 99501

(907) 258-0704

<

RICHARD H. FRIEDMAN

Friedman, Rubin & White

1227 W. 9th Avenue, Suite 201

Anchorage, Alaska 99501

(907) 258-0704

ATTORNEY OF RECORD FOR

PETITIONER RONALD ANDREWS

37

APPENDIX A

ALASKA SUPREME COURT OPINION

THE SUPREME COURT OF THE STATE OF ALASKA

RONALD B. ANDREWS, )

)

Appellant, ) Surpreme Ct. No.

) S-5615

vs. )

)

ALASKA OPERATING ) Superior Ct. No.

ENGINEERS-EMPLOYERS ) 3AN-91-2241 CI

TRAINING TRUST FUND, )

OF AE ION

)

Appellee. )

) April 8, 1994

Jeffrey A. Friedman, Friedman, Rubin

& White, Anchorage, for Appellant.

Bruce McKenzie, Donaldson, Kiel &

McKenzie, P.S., Seattle, Washington, and

Russell Winner, Winner & Associates,

Anchorage, for Appellee.

Before: Moore, Chief Justice,

Rabinowitz, Matthews and Compton,

Justices, and Bryner, Justice, pro tem.”

MOORE, Chief Justice.

Sitting by assignment made pursuant to article IV,

section 16 of the Alaska Constitution.

APPENDIX A - PAGE 1

INTRODUCTION

This case arises out of a dispute

between the fiduciaries of an employee

welfare benefit plan governed by the

Employee Retirement Income Security Act

(ERISA). Ronald Andrews was terminated

from his position as _ administrative

manager of the Alaska Operating

Engineers-Employers Training Trust Fund

(the Trust). He then filed suit alleging

that he was discharged to prevent him

from reporting possible misuse of trust

funds by a trustee. In his complaint, he

asserted that his termination violated

the public policy of Alaska and

constituted a breach of the convenant of

good faith and fair dealing. The Trust

responded by arguing that these claims

were preempted by ERISA and were

therefore subject to the exclusive

jurisdiction of the federal courts. The

APPENDIX A - PAGE 2

trial court agreed with the Trust and

dismissed Andrews' claims. We affirm.

ACTS OCEEDINGS

The Alaska Operating Engineers-

Employers Training Trust Fund is a

collectively bargained, joint

management/labor trust fund, subject to

coverage under ERISA as an “employee

welfare benefit plan." 29 U.S.C. §§

1002(1), 1003(a) (1988). The purpose of

the Trust is to provide job-related

training to apprentices and journeyment

represented by Local No. 302 of the

International Union of Operating

Engineers.

Beginning in 1986, Andrews was

employed as administrative manager of the

Trust. As administrative manager,

Andrews had broad responsibilities,

including recruiting and_ supervising

apprentices and Trust employees,

APPENDIX A - PAGE 3

transferring money from the _ Trust's

investment manager to the Trust's

checking account and disbursing checks on

behalf of the Trust.

In 1989 some of the trustees

became concerned about Andrews' job

performance. Andrews alleges that George

Williams, the chairman of the Board of

Trustees, convinced the other trustees

not to fire him. In October 1989,

Andrews approached James Gasper, the

Trust's attorney, with questions about

the propriety of Williams' travel

expenses and reimbursement. The

following day, Gasper informed Williams

of Andrews' inquiry. Andrews alleges

that shortly thereafter, Williams agreed

that he should be fired. On October 31,

Andrews was given notice of his immediate

termination.

APPENDIX A - PAGE 4

$

2

In March 1991 Andrews filed a

complaint in the superior court based

upon his termination. Count I of the

complaint alleged that Andrews "was

terminated in order to prevent him from

giving information and testifying about

the possible misuse of Trust funds" in

violation of the "express public policy

of the State of Alaska and the United

States of America." Count II alleged

that "(tjhe Trust breached the covenant

of good faith and fair dealing by firing

plaintiff for reporting possible misuse

of Trust funds."

The Trust filed a motion to

dismiss for lack of subject matter

jurisdiction, arguing that Andrews’

claims were preempted by ERISA and

subject to the exclusive jurisdiction of

the federal district courts. After

briefing and oral argument, the superior

APPENDIX A - PAGE 5

court granted the Trust's motion as to

all claims. This appeal followed.

DISCUSSION

A. Standard of Review

The issue presented by this

appeal is whether the superior court had

subject matter jurisdiction over Andrews'

claims. This is a question of law,

subject to de novo review by this court.

Under this standard, we will

independently review the matter and adopt

the rule that is most persuasive in light

of precedent, policy, and reason. Guin

v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska

1979).

B. ERISA Preemption

Section 514 (a) of ERISA

provides that "the provisions of this

subchapter .. . shall supersede any and

all state laws insofar as they may now or

hereafter relate to any employee benefit

APPENDIX A - PAGE 6

plan described in section 1003(a) of this

Catle. « « o*- 29. Vibe Ci B® 2286 ta)

(1988). Under the Act, the term "State

law" refers to "all laws, decisions,

rules, regulations, or other State action

having the effect of law, of any State."

Id. at § 1144(c).

The United States Supreme Court

interpreted this provision in Ingersoll-

Rand Co. v. McClendon, 498 U.S. 133

(1990). In Ingersoll-Rand, the employee

brought a wrongful discharge action under

various state law contract and tort

theories, alleging that the principal

reason for his termination was his

employer's desire to avoid contributing

to his pension fund. Id. at 135-36. The

employer responded by claiming that the

suit was preempted by ERISA.

Construing § 514(a) of the Act,

the Court stated that "'[t]he pre-emption

APPENDIX A - PAGE 7

clause is conspicuous for its breach.' .

Its ‘deliberately expansive' language

was ‘designed to establish pension plan

regulation as exclusively a federal

concern.'" Id. at 138 (quoting FMC Corp.

v. Holliday, 498 U.S. 52, 58 (1990) and

Pilot Life Ins. Co. v. Dedeaux, 481 U.S.

41, 46 (1987)); see also Tingey v.

Pixley-Richards West, Inc., 953 F. 2d

1124, 1130 (Sth Cir. 1992) ("ERISA's

preemption clause .. . is to be read

expansively."). The Court further noted

that "(tjhe key to § 514(a) is found in

the words ‘relate to.'"

A law “relates to" an

employee benefit

plan, in the normal

sense of the phrase,

if it has a

connection with or

reference to such a

Digs «+ +s » Under

this "broad common-

sense meaning," a

state law may "relate

to" a benefit plan,

and thereby be pre-

empted, even if the

APPENDIX A - PAGE 8

law is not

specifically designed

to affect such plans,

or the effect is only

indirect.

Ingersoll-Rand, 498 U.S. at 139 (citing

Shaw _v. Delta Air Lines, 463 U.S. 85, 96-

97 (1983) and Pilot Life, 481 U.S. at

47).

Based upon this broad

interpretation, the Court held that the

employee's claim for wrongful discharge

was preempted by ERISA. The Court noted

that "the existence of a pension plan

[was] a critical factor" in establishing

the employer's liability under the state

wrongful discharge law. Id. at 139-40.

Thus, the Court concluded that the cause

of action clearly "relate[d] to an ERISA-

covered plan within the meaning of §

514(a)." Id. at 140.

C. Preemption of Andrews' Public

Policy Claim

APPENDIX A - PAGE 9

Andrews' complaint alleges that

his “employment was terminated in order

to prevent him from giving information

and testifying about the possible misuse

of Trust funds." The complaint further

alleges that discharge on this basis

"violate[s] the express public policy of

the State of Alaska and the United States

of America." Andrews argues that this

Claim is not preempted by ERISA since the

claim does not require an interpretation

of the underlying benefit plan, and that

the public policy allegedly violated does

not arise solely from ERISA.

Courts addressing ERISA

preemption in this context have uniformly

held that state law retaliatory discharge

and whistleblower [sic] claims based on

alleged violations of public. policy

"relate to" ERISA plans and are thus

preempted. For example, in Hashimoto v.

APPENDIX A - PAGE 10

Bank of Hawaii, 999 F.2d 408 (9th Cir.

1993), the court addressed ERISA's

preemptive effect on a state wrongful

termination action alleging a violation

of Hawaii's Whistle Blowers' Protection

Act.? In Hashimoto, the employee

complained to her superiors abut[sic]

"potential and/or actual violations...

of the reporting and disclosure

requirements and fiduciary standards of

ERISA." 999 F.2d at 409. She contended

that "but for her objections she would

not have been discharged from

employment." Id. at 410.

The United- States Court of

Appeals for the Ninth Circuit, citing

Ingersoll-Rand, noted the considerable

1

In Hashimoto, the employee did not expressly base her

suit on an alleged violation of “public policy." However,

Hawaii's Whistle Blowers' Protection Act may be viewed

as a codification of the state's public policy against

termination based upon the reporting of a suspected

violation of the law. Thus, Hashimoto and other whistle

blower act cases are analogous to the instant case.

APPENDIX A - PAGE 11

breadth of ERISA preemption. Id. at

410-11. The court stated:

[A] trial of

Hashimoto's Claim

would require an

interpretation of the

ERISA plans as_ to

which she raised her

objections about the

Bank's fulfillment of

its fiduciary

obligations. Even

though such

examination by the

court would only have

to proceed to the

point of determining

Hashimoto's good

faith, some

interpretation of

ERISA would probably

be required.

Id. at 411. Based on this analysis, the

court concluded that the claim was

sufficiently “related to" an ERISA

benefit plan to be preempted. Id. at

411-412.

Similarly, in McLean v. Carlson

Cos., 777 F. Supp. 1480 (D. Minn. 1991),

the employee claimed that she was

APPENDIX A - PAGE 12

discharged in retaliation for reporting

to her superiors violations of ERISA in

connection with the administration of an

employee benefit plan. Id. at 1481. The

court held the claim, which arose out of

a state whistle blower statute, to be

preempted. In concluding that the claim

"related to" an ERISA plan, the court

stated:

To prove her claim

[under state law),

plaintiff must

demonstrate that she

reported violations

of law "in good

faith." To the

extent plaintiff

reported violations

of ERISA, plaintiff

must describe the

conduct she perceived

to be violative of

ERISA with reference

to the ERISA

provisions which the

conduct purportedly

contravened. . . .

Plaintiff's claim

refers to the plan

and depends upon its

existence. Further,

to the extent it

depends upon reported

APPENDIX A - PAGE 13

violations of ERISA,

plaintiffs' state law

claim would provide a

remedy for conduct

arising, albeit

indirectly, out of

the administration of

an ERISA plan.

Id. at 1483 (footnote omitted) (citing

Ingersoll-Rand, 498 U.S. at 140).

The court reached ae similar

conclusion in Authier v. Ginsberg, 757

F.2d 796 (6th Cir. 1985), cert. denied,

474 U.S. 888 (1985). In Authier, the co-

administrator of an ERISA profit-sharing

plan filed a state law claim for

discharge in violation of public policy.

id. at 798. He alleged that he was

terminated in retaliation for sending a

letter to his co-administrators and the

plan's participants expressing concerns

regarding the implementation of proposed

changes to the plan. Id. He argued that

he was obligated under ERISA to inform

APPENDIX A - PAGE 14

his co-fiduciaries and the participants

of the potential problems. Id.

The court held the claim

preempted. Id. at 800. Although the

court noted that the cause of action was

"predicated technically upon the [state]

common-law cause of action for discharged

in contravention of public policy," it

concluded that "as applied in this case,

the action relates to an ERISA pension

plan." Id. The court based its holding

on the fact that ERISA created the public

policy element at issue and that the

action turned upon a fiduciary's duties

under ERISA. Id.; see also Maxfield v.

Central States, Southeast & Southwest

Areas Health, Welfare & Pension Funds,

559 F. Supp. 158, 160-62 (N.D. Ill. 1982)

(holding a whistleblower [sic] claim

alleging violations of ERISA and the

APPENDIX A - PAGE 15

public policy of Illinois to be preempted

by ERISA).

In addition to finding that

state law causes of action in this

context are “related to" ERISA plans for

preemption purposes, the cases discussed

above also relied upon the fact that

ERISA provides a remedy for such claims.

See Hashimoto, 999 F.2d at 411-12;

Tingey, 953 F. Supp. at 160. ERISA

section 510 states, in relevant part:

It shall be unlawful

for any person to

discharge, fine,

suspend, expel, or

discriminate against

any person because he

has given information

or has testified or

is about to testify

in any inquiry or

proceeding relating

to this ‘apter...

- The provisions of

section 1132 of this

title shall be

applicable in the

enforcement of this

section.

APPENDIX A - PAGE 16

29 U.S.C. § 1140 (1988). Section

502(a) (3) provides that a civil action

may be brought

by a participant,

beneficiary, or

fiduciary (A) to

enjoin any act or

practice which

violates any

provision of this

subchapter or the

terms of the plan, or

(B) to obtain other

appropriate equitable

relief (I) to redress

such violations or

(ii) to enforce any

provisions of this

subchapter or the

terms of the plan.

29 U.S.C. § 1132(a)(3) (1988) .?

In Hashimoto, the court

determined that §§ 502 and 510 of ERISA

“may be fairly construed to protect a

person in Hashimoto's position if, in

fact, she was fired because she was

protesting a violation of law in

2 Section 502(e)(1) further provides that "the district

courts of the United States shall have exclusive jurisdiction"

over such actions. 29 U.S.C. § 1132(e)(1) (1988).

APPENDIX A - PAGE 17

connection with an ERISA plan." 999 F.2d

at 411. Based on this finding, the court

held that, to the extent an_ ERISA

violation was involved, the specific

provisions of ERISA protecting whistle

blowers preempted application of the

state whistle blowers act. Id. at 412.

The court further concluded that

"(bjecause the preemption is total, what

appeared on its face to be a state cause

of action is in fact a federal cause of

action and must be recharacterized as

such." Id.

Similarly, in Maxfield, the

court concluded that the plaintiff's

action for discharge in contravention of

state public policy was’ preempted,

"because 29 U.S.C. §§ 1132 and 1140

expressly provide a remedy for this

wrong. ERISA's broad remedial policy

coupled with its express preemption

APPENDIX A - PAGE 18

provisions indicate that Congress

intended to occupy the field of employee

benefit plans." 559 F.Supp. at 160; see

also Ingersoll-Rand, 498 U.S. at 145

("When it is clear or may fairly be

assumed that the activities which a State

purports to regulate are protected' by §

510 of ERISA,' due regard for the federal

enactment requires that state

jurisdiction must yield. '") (citation

omitted); Tingey, 953 F.2d at 1130-31

("ERISA preempts state law causes of

action that offer remedies for the

violation of rights expressly guaranteed

by ERISA and exclusively enforced by

ERISA's civil enforcement mechanism, and

exclusively enforced by ERISA's civil

enforcement mechanisn, § 502(a).");

elton v. Unisource Corp., 940 F.2d 503,

509 (9th Cir. 1991) (quoting Ingersoll-

Rand).

APPENDIX A - PAGE 19

In Authier, the court discussed

the rationale behind the rule that state

retaliatory discharge and whistle blower

claims are preempted by the

"comprehensive enforcement scheme"

provided by ERISA. 757 F.2d at 801.

Allowing a fiduciary

to bring a state law

cause of action for

retaliatory

discharge, as in the

present case, will

create inconsistency

in the enforcement of

ERISA. Initially,

since all states do

not recognize such an

action, the recourse

for a terminated

ERISA fiduciary will

depend upon the

fortuity of the

location of his

employment.

Moreover, even in the

states which do

recognize an action

in a fiduciary's

favor, the state

courts will have to

define both the scope

of a fiduciary's

duties under’ ERISA

and the available

remedies. Clearly,

allowing the remedies

APPENDIX A - PAGE 20

available to an ERISA

fiduciary discharged

for complying with

ERISA to turn upon

the state of his

employment and a

state court's

interpretation of

ERISA's provisions

runs contrary to

Congress' desire to

establish a uniform

federal law

regulating pension

plans.

Id. at 802 (footnote omitted).

Based on the above authorities,

we conclude that Andrews' claim for

wrongful discharge in contravention of

the public policy of the State of Alaska

is preempted by ERISA. Andrews' action

clearly "relates to" an employee benefit

plan under § 514 of ERISA. a> ¥.8.¢. ¢

1144(a) (1988). By alleging that he was

fired “in order to prevent him from

giving information and testifying about

the possible misuse of Trust funds."

Andrews expressly ties his claim to the

existence of the Trust. Since it is

APPENDIX A - PAGE 21

undisputed that the Trust is governed by

ERISA, Andrews' claim necessarily refers

to and depends upon an ERISA benefit

plan. See McLean, 777 F. Supp. at 1483.

In addition, ERISA creates and codifies

the public policy element of Andrews’

action. Authier, 757 F.2d at 800; see

also Ingersoll-Rand, 498 U.S. at 140 (to

prevail, plaintiff must establish that

employer had pension-defeating motive in

terminating her employment). A trial of

Andrews ' claim would require the

interpretation of a fiduciary's

Obligations under ERISA. ° See

Hashimoto, 999 F.2d at 411; Authier, 757

F.2d at 800, 802; McLean, 777 F.Supp. at

1483. Finally, Andrews'' claim would

"provide a remedy for conduct arising,

albeit indirectly, out of the

The provisions governing fiduciary duties under ERISA

are found at 29 U.S.C. §§ 1101-14 (1988).

APPENDIX A - PAGE 22

administration of an ERISA plan."

McLean, 777 F. Supp. at 1483.

In addition, ERISA provides the

exclusive remedy for the wrong alleged by

Andrews. As a fiduciary, * Andrews is

authorized under § 502(a) to bring a

civil action in federal district court to

enforce ERISA's retaliatory discharge

provision. See 29 U.S.C. §§ 1132, 1140

(1988).

Andrews' arguments that

preemption is inappropriate with respect

to his public policy claim are

unpersuasive. He cites two Ninth Circuit

cases which suggest that state law claims

Section 3(21)(a) of ERISA, 29 U.S.C. § 1002(21)(a)

(1988), defines fiduciary as one who "(I) . . . exercises any

discretionary authority or discretionary control respecting

management of such plan or exercises any authority or

control respecting management or disposition of its assets, .

- Or (ili) . . . has any discretionary authority or

discretionary responsibility in the administration of such

plan.” Under this broad definition, Andrews clearly

qualifies as a fiduciary with respect to the Trust. See

Hashimoto, 999 F.2d at 411 (agents of trustee are

fiduciaries under § 1002 (21)(a).

APPENDIX A - PAGE 23

arising out of a plan's status as an

employer are not subject to preemption.

However, both cases are distinguishable

from the instant situation.

In General American Life Ins.

Co. v. Castonguay, 984 F.2d 1518, 1521

(9th Cir. 1993), the court discussed

ERISA preemption in terms of the

"relationships" regulated by the statute.

The court stated that "ERISA doesn't

purport to regulate those relationships

where a plan operates like any other

commercial entity--for instance, the

relationship between the plan and its own

employees ... . State law is allowed

to govern these relationships, because

it's much less likely to disrupt the

ERISA scheme than in other situations."

ig. at 1522.

In the present case, however,

Andrews' claim does not arise from a

APPENDIX A - PAGE 24

3

{

&

g

2

4

4

.

relationship in which the Trust operates

"like any other commercial entity." The

Claim is based on, and arises directly

out of, alleged misuse of ERISA trust

funds. As discussed above, a state cause

of action such as this one would in fact

implicate the duties and requirements of

ERISA, and therefore raise the danger of

disrupting the ERISA scheme.

Andrews also cites Lane _ v.

Goren, 743 F.2d 1337 (9th Cir. 1984), in

support of his argument that ERISA does

not preempt state claims arising out of a

plan's status as employer. In Lane, the

court held that a state employment

Giscrimination claim against an _ ERISA

benefit plan was not preempted. Id. at

1340. The court concluded that the state

law claim applied to the plan "in its

capacity as an employer, and in a way

that all other employers are affected.

APPENDIX A - PAGE 25

It simply cannot be said that state law

which prohibits dismissal of an employee

because of race "relate[{s} to,' ‘has a

connection with' or ‘reference to' [sic]

an employee benefit plan under these

circumstances." Id.

Lane is also distinguishable

from the instant case. Unlike Andrews'

claim, the discrimination claim presented

in Lane did not involve or require the

interpretation of the fiduciary

requirements of ERISA, nor was it

suggested that ERISA itself provided a

remedy for the discrimination alleged.

In this case, however, the substance of

Andrews' action is clearly remediable

under §§ 502 and 510 of ERISA.

Additionally, we find Hashimoto to be

controlling in the present case.

Hashimoto clearly contemplates the

preemption of a state law wrongful

APPENDIX A - PAGE 26

Nie Sele eked a

discharge claim in the context presented

here.

Andrews also cites a decision

of this court in support of his argument.

In aska State Council o arpenters v.

ite otherhood o arpenters oca

1281, 727 P.2d 306 (Alaska 1986), we

concluded that a state action relating to

the selection of the trustees of an ERISA

benefit plan was not preempted. In

reaching this conclusion, we recognized

that “[sjome state actions may affect

employee benefit plans in too tenuous,

remote, or peripheral a manner to warrant

a finding that the law "relates to' a

plan." Id. at 309 (quoting Shaw v. Delta

Air Lines, 463 U.S. 85, 100 n. 21

(1983)). We also noted that "the state

law at issue--contract law and the law

governing the functioning of

APPENDIX A - PAGE 27

organizations--is traditionally a field

left to the states." Id. at 310.

The analysis in Carpenters is

an applicable to the present case. In

Carpenters, this court expressly stated

that the fiduciary duties created by

ERISA were not at issue. 34a. we

distinguished Authier on the grounds that

the case "required an interpretation of

the duties created by ERISA--clearly a

federal matter." Id. The present case

is distinguishable from Carpenters on the

Same grounds, since Andrews' claim of

"misuse" of trust funds requires an

interpretation of the uses’. permitted

under ERISA. In addition, we further

noted in Carpenters that "ERISA preempts

state law wherever state law has an

impact on the matters regulated by ERISA:

disclosure, funding, reporting, vesting,

and enforcement." Id. at 309. Clearly,

APPENDIX A - PAGE 28

Andrews' claim has an impact on the

enforcement of rights protected by ERISA

and should therefore be preempted. °

Based on the above analysis, we

affirm the lower court's order dismissing

Andrews' claim that his termination

contravened the public policy of the

State of Alaska. This claim is preempted

by ERISA and is subject to the exclusive

> Andrews suggests that § 510 of ERISA is not implicated

in this case, since his retaliatory discharge claim is based on

an internal report, not a report to a public body. Andrews

asserts that "ERISA does not provide a remedy" for such

action. However, both Hashimoto and McLean Clearly

hold that discharge in retaliation for a report made

internally is actionable under ERISA. In Hashimoto, the

court held that § 510 of ERISA protects a person who is

fired for complaining to her superiors about potential

ERISA violations. The court, in reaching this conclusion,

stated that "[t]he normal first step in giving information or

testifying . . . would be to present the problem first to the

responsible managers of the ERISA plan. If one is then

discharged for raising the problem, the process of giving

information or testifying is interrupted at is start: the

anticipatory discharge discourages the whistle blower

before the whistle is blown." Hashimoto, 999 F.2d at 410-

11. See also McLean, 777 F. Supp. at 1484 ("[I]t would

seem anomalous for the court to prohibit actions by

plaintiffs who allege to have been discharged for reporting

violations of ERISA to their employers while concurrently

permitting actions by those who seek to remedy the same

violations through legal action.").

APPENDIX A - PAGE 29

jurisdiction of the federal district

courts.

D. Preemption of Andrews' Good

Faith and Fair Dealing Claim

Andrews' complaint also alleges

that “[(t)he Trust breached the covenant

of good faith and fair dealing should not

have been dismissed.

In support of this argument,

Andrews relies on cases which have held

some claims to be preempted by ERISA,

while allowing other state law claims to

survive. For example, in Sorosky v.

Burroughs Corp., 826 F.2d 794 (9th Cir.

1987), the employee brought several state

law actions against his employer,

including wrongful discharge, breach of

the implied convenant of good faith and

fair dealing, conspiracy to interfere

with protected property rights, and age

discrimination. Id. at 798. These

claims were based on several different

APPENDIX A - PAGE 30

theories. First, he alleged that his

employer sought to prevent him _ from

acquiring retirement benefits under an

ERISA plan. Id. at 800. In the

alternative, he alleged that he was fired

without good cause. Id. At trial, the

employer removed the case to federal

district court, which granted summary

judgment in favor of the employer. Id.

at 798.

On appeal, the court affirmed

in part and reversed in part. Id.

Addressing ERISA preemption, the court

noted that the employee had a federal

Claim under ERISA to enforce his right to

the retirement benefits provided by the

benefit plan. Id. at 800. Therefore,

the court found that his state law claims

were preempted "to the extent that [they]

refer[red] to the employee benefit plan."

The court further held that the claims

APPENDIX A - PAGE 31

for wrongful termination and breach of

the implied convenant of good faith and

fair dealing were not preempted to the

extent they relied on "theories

independent of the benefit plan." Id.

In inge Vv. Pixley-Ric s

West, Inc., 953 F.2d 1124 (9th Cir.

1992), a wrongful discharge case

involving an alleged motive to interfere

with ERISA-protected insurance benefits,

the court stated that "ERISA preemption

of an employee's action for wrongful

termination, breach of employment

contract, or the like turns on the

employee's theory of why the termination

occurred." 14. at 1131 (footnote

omitted). Discussing ERISA's application

to the employee's claims, the court

concluded:

[I]t might be argued

that Tinguey would

have an action for

breach of employment

APPENDIX A - PAGE 32

contract with or

without the existence

of a benefit plan.

Arguably, Tingey's

contract cause of

action does not "make

specific reference

to,* nor is it

"remised on," the

existence of a

benefits plan...

and therefore it

should not be

preempted. As will

be shown, however,

this argument fails.

° s ingey's

underlying theory of

e cas volves

around the denial of

benefits, his claim

falls unde RISA's

far-reaching

preemption clause.

Id. at 1131 n.2 (emphasis added) (citing

Ingersoll-Rand, 498 U.S. at 140.

In the present case, the

underlying theory supporting Andrews!

Claim for breach of good faith and fair

dealing is that he was fired for

reporting possible misuse of ERISA trust

funds. For the same reasons discussed

above regarding Andrews' public policy

APPENDIX A - PAGE 33

Claim, this cause of action also "relates

to" ERISA and is thus preempted. See

Tingey, 953 F.2d at 1131 N.2; orosky,

826 F.2d at 800 (claims preempted to the

extent they rely on theories implicated

by ERISA). Therefore, we affirm the

trial court's dismissal of Andrews'

second claim for lack of subject matter

jurisdiction.

CONCLUSION

Precedent clearly establishes

that Andrews' causes of action for

discharge in violation of public policy

and for breach of the covenant of good

faith and fair dealing are preempted by

ERISA. The underlying theory supporting

both of these claims is that Andrews was

terminated for reporting possible misuse

of an ERISA benefit plan's funds. As

discussed in Hashimoto and other cases,

these claims "relate to" an employee

APPENDIX A - PAGE 34

iis hints wits ee Sere ee Bi ey ¢

benefit plan and are remediable under

ERISA's comprehensive regulatory scheme.

Therefore, preemption is proper’ and

complete. We therefore AFFIRM the trial

court's order dismissing Andrews' state

law claims for lack of subject matter

jurisdiction.

APPENDIX A - PAGE 35