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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1994
- **Citation:** 513 U.S. 874

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_0171%3A1. Public record. Not legal advice.