Petition for Writ of Certiorari — Aerospace Corp. v. Campbell

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Court, U.S.

} ILE D

97 1195 JAN 20 1998

No. OFFICE OF THE CLERK

In The

Supreme Court of the Anited States

October Term, 1997

THE AEROSPACE CORPORATION,

Petitioner,

vs.

FRED D. CAMPBELL,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

PETITION FOR WRIT OF CERTIORARI

LINDA M. LAWSON

Counsel of Record

PATRICIA A. ELLIS

BRIAN M. HOLBROOK

MESERVE, MUMPER & HUGHES

Attorneys for Petitioner

555 South Flower Street

18th Floor

Los Angeles, California 90071

(213) 620-0300

143723 (800) 274-3321 (800) 359-6859 Le oehate

A DIVISION OF COUNSEL PRESS @rviCces, Inc.

QUESTIONS PRESENTED

1. Whether the Employee Retirement Income Security Act

of 1974 (“ERISA”), codified at 29 U.S.C. §§ 1001, et seq.,

preempts an independent state law claim for punitive damages

based on an employer's alleged motive to terminate an employee

in malicious disregard of the employee’s right to ERISA-covered

benefits.

2. Whether § 502(a) of ERISA, codified at 29 U.S.C.

§ 1132(a)(1), permits the recovery of extracontractual damages,

including punitive damages, to redress the violation of rights

recognized by ERISA.

PARTIES TO THE PROCEEDING

The Complaint initially filed by respondent Fred D.

Campbell (“Campbell”) named as defendants The Aerospace

Corporation (“Aerospace”), Arthur J. Schiewe (“Schiewe”) and

Jean Breedlove (“Breedlove”). On April 7, 1993, and February

15, 1994, respectively, Campbell voluntarily dismissed Schiewe

and Breedlove as named defendants. For reasons unknown to

Petitioner, the United States Court of Appeals for the Ninth

Circuit included Schiewe in the caption of its published decision.

The caption of the case contains the names of the remaining

parties to this proceeding, Campbell and Aerospace. Aerospace

has no parent company or companies, nor does it have any

subsidiaries, whether wholly owned or otherwise.

lil

TABLE OF CONTENTS

Page

Questions Presented ........c.cccccccccvserveces i

Parties to the Proceeding ..........0.scceceesceees ii

TO CI on nce ded ve viene cceccveteucvecens iil

pe OPT EC TERE EE ELECEE RT TELE Le iv

Ee eee ee ee ere eee ee ek Te l

Opinions Below ..........ccccccccesceeccrceseens l

Benbembemt OF FUTISGICTION . oc cece rc cesccees l

Statutory Provisions Invoived .............-.+0055 l

ne OE WE CONOR ni i ccc cece ee sctcvcessncess 4

Reasons for Granting the Writ ...........-.---005: 8

I. The Petition Should Be Granted Because The

Ninth Circuit’s Opinion Conflicts With This

Court’s Prior Rulings That A Termination

Motivated By An Employer’s Desire To Deny

ERISA-Covered Benefits Is Preempted By

I Ci eee es a Vad de ih eee eas de eee sceeae 8

A. Tile Reeen OF BRISA. occ ccc cces: 8

B. Paragraph 10 Of Campbell’s Complaint

Seeks To Enforce A Right Recognized

Under § 510 Of ERISA ............... 9

Contents

C. As An Action To Enforce A Right

Recognized By § 510 Of ERISA, The

District Court Had Jurisdiction To Adjudicate

eg he errr rere eer e

D. The Allegations Of Paragraph 10 Of

Campbell's Complaint “Relate To” ERISA

And Are, Therefore, Preempted By § 514(a)

OE eS eh a RAR ie Co kak ri ees

II. The Petition Should Be Granted In Order To Resolve

The Issue Of Whether ERISA Permits The Recovery

Of Extra-Contractual Damages .............

ee PERE TE ET Eee GE ee re ee ree

TABLE OF CITATIONS

Cases Cited:

Blue Cross and Blue Shield v. Lewis, 753 F. Supp. 345

Pe Hae BOE 6458 heb keno kG bab Vi web ees

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

Fred D. Campbell v. The Aerospace Corporation; Arthur

J. Schiewe, 123 F.3d 1308 (9th Cir. 1997) ....... l,

Fred D. Campbell v. The Aerospace Corporation, et al.,

Coy. Fae, Serie Bee eee SEA eas os

Page

Contents

Page

Gaskell v. Harvard Coop. Soc’y, 762 F. Supp. 1539 (D.

Bans 1907) oc icc che ceases useacerenessn ee 17

Harsch v. Eisenberg, 956 F.2d 651 (7th Cir. 1992) ... 18

Haywood v. Russell Corp., 584 So. 2d 1291 (Ala. 1991)

So Oe eae tet eis kee eee ee ww oe 16

Ingersoll-Rand v. McClendon, 498 U.S. 133 (1990) .. passim

International Union, United Auto., Aerospace and Agric.

Implement Workers v. Midland Steel Products Co., 771

F. Supp. 860 (N.D. Ohio 1991) ...... eee e reese 16

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

SOR CIDE) oun non cei nee Rec ese ede es 8, 14, 15, 16

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

Che SOBEY ia ick ws baer kceeaesan teens tees 17, 18

Monfiletto v. John Hancock Healthplons, Inc., Civ. No.

90-5137, 1991 WL 231608, 1991 U.S. Dist. Lexis

15875 (E.D. Pa. Oct. 30, 1991) .....--- eee eee 17

Neal v. Farmers Ins. Exch., 21 Cal. 3d 910, 148 Cal.

Rptr. 389, 582 P.2d 980 CEOTE) ck ka ssdaee dees 11

O'Neil v. Gencorp, Inc., 764 F. Supp. 833 (S.D.N-Y.

POE og ii S ckics Widen eo ea eke Nee Eee eaeees 16, 17

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (2967)... 6, 2

Shaw Delta Air Lines, Inc., 463 U.S. 85 (1983) ..... op Sse

Contents

Page

Statutes Cited:

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Pe NE RE Ci we ibe W heb uke ks Make raat Mae eas 4, 6, 14

We Ss TE ROIEEE cE SE Nas on hie Some aewen wes 4,14

Pe As SPORE bh ek veh ae peas show base enis 4,6

et AAs Ot AE OOS ec cewiecd bea larcenenn i, 4

wT ee sor |) a hy: Dy Rake Ge OG OD

Be MR RUE Ci ewnasoccevederoes 2, 9 IO, 30, 12, 13

Pe Seek RE he sak cece wha thaw ass ienebs 12

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Ca See Ga Oe bab vind coewacnceebuewse 10

as RG re Oe oe Ne 10

Ee 5 RE reagan aaa a an eee 10

a Bis Re Ry. lo. ) SPR atari emp er ieet 10

Cal. Government Code § 12941(1) ................ 5

Se ne eran

vil

Contents

Rule Cited:

Supreme Court Rule 10(c) .......-eee secre eee eres

APPENDIX

Appendix A — Opinion Of The United States Court Of

Appeals For The Ninth Circuit Filed September a

ae iin ea utb ek tN R RS AKO MERA wR

Appendix B — Memorandum Of Decision In The United

States District Court Central District Of California

Dated May 13, 1995 ........- eee eee eee eeceeees

Appendix C — Opinion Of The United States District

Court Central District Of California Filed May 31, 1995

Ss oe eS Pe POR Pew RRR ee eee eee eee Oe ee ee din

Appendix D — Order Of The United States District Court

For The Central District Of California Dated October

y Se. NR ee nn re ie eee ee

Appendix E — Notice Of Removal Of Action Under 28

U.S.C. Section 1441(b) Dated March 31, 1992....

Appendix F — Judgment Of The United States Court Of

Appeals For The Ninth Circuit Filed October 22, 1997

——<"! «at fe raeawsetsaeteMtah esa BORE 2 ERED BB De

Appendix G — Order Of The United States Court Of

Appeals For The Ninth Circuit Denying Petition For

Rehearing Filed October 22, 1997 ........+++++-

24a

37a

42a

48a

49a

Vill

Contents

Page

Appendix H — Complaint For Damages For Tortious

Discharge; Bad Faith Discharge; Breach Of

Employment Contract; Age Discrimination;

Defamation (Civil Code Section 3300, 3333) ..... Sla

Appendix I — Relevant Statutes .................. 63a

INTRODUCTION

Petitioner, The Aerospace Corporation (“Aerospace”), a

California non-profit corporation, respectfully requests that a

Writ of Certiorari be issued to review the judgment of the United

States Court of Appeals for the Ninth Circuit in this case.

OPINIONS BELOW

The opinion of the United States Court of Appeals for the

Ninth Circuit is reported at Fred D. Campbell v. The Aerospace

Corporation; Arthur J. Schiewe, 123 F.3d 1308 (9th Cir. 1997)

(Appendix filed herewith (“App.”), Exhibit A). The opinion of

the District Court in Fred D. Campbell v. The Aerospace

Corporation, et al., Civ. No. CV-92-01957 DT, is not published,

but the District Court’s Memorandum of Decision and Findings

of Fact and Conclusions of Law are included in the

accompanying Appendix (App. B and C).

STATEMENT OF JURISDICTION

The judgment of the United States Court of Appeals for

the Ninth Circuit (“Ninth Circuit”) was entered on September

3, 1997 (App. F). The Ninth Circuit denied a timely petition

for rehearing on October 22, 1997 (App. G).

The jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

STATUTORY PROVISIONS INVOLVED

The Employee Retirement Income Security Act of 1974

(“ERISA”) at § 510 provides that:

It shall be unlawful for any person to discharge, fine,

suspend, expel, discipline, or discriminate against a

participant or beneficiary for exercising any right to

which he is entitled under the provisions of an

employee benefit plan, this title, section 3001 [29

USCS § 1201], or the Welfare and Pension Plans

Disclosure Act, or for the purpose of interfering with

the attainment of any right to which such participant

may become entitled under the plan, this title, or the

Welfare and Pension Plans Disclosure Act. 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 Act or the Welfare and Pension Plans

Disclosure Act. The provisions of section 502 [29

USCS § 1132] shall be applicable in the enforcement

of this section.

29 U.S.C. § 1140.

Section 502 of ERISA sets forth ERISA’s remedial

provisions:

(a) Persons empowered to bring a civil action. A

civil action may be brought —

(1) by a participant or beneficiary —

(A) for the relief provided for in subsection

(B) to recover benefits due to him under the

terms of his plan, to enforce his rights under the

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

benefits under the terms of the plan; . . .

(3) by a participant, beneficiary, or fiduciary (A)

to enjoin any act or practice which violates any

provision of this title 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 title or the terms of the plan; ...

a wee,

(e) Jurisdiction. (1) Except for actions under

subsection (a)(1)(B) of this section, the district courts

of the United States shall have exclusive jurisdiction

of civil actions under this title brought by the

Secretary or by a participant, beneficiary, or

fiduciary. State courts of competent jurisdiction and

district courts of the United States shall have

concurrent jurisdiction of actions under subsection

(a)(1)(B) of this section.

29 U.S.C. § 1132(a)(1).

Section 514(a) of ERISA describes the preemptive scope

of ERISA’s provisions:

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) [29 USCS § 1003(a)] and

not exempt under section 4(b) [29 USCS § 1003(b)}.

29 U.S.C. § 1144(a).

Title 28 U.S.C. § 1331 provides that:

The district court shall have original jurisdiction of

all civil actions arising under the Constitution laws,

or treaties of the United States.

It is also recognized that actions subject to removal from

state to federal court include:

Any civil action of which the district courts have

original jurisdiction founded on a claim or right

arising under the Constitution, treaties or laws of

the United States shall be removable without regard

to the citizenship or residence of the parties.

28 U.S.C. § 1441(b).

Finally, the doctrine of pendent or supplemental jurisdiction

provides:

[I}n any civil action of which the district courts have

original jurisdiction, the district court shall have

supplemental jurisdiction over all other claims that

are so related to claims in the action within such

original jurisdiction that they form part of the same

case or controversy under Article III of the United

States Constitution.

28 U.S.C. § 1367(a).

STATEMENT OF THE CASE

This Petition presents two issues of exceptional importance.

The first is whether the Employee Retirement Income Security

Act of 1974 (“ERISA”), codified at 29 U.S.C. §§ 1001 et seq.,

ial i ea ee ee

preempts an employee's independent state law claim for punitive

damages based on an employer’s alleged bad faith in terminating

the employee in conscious disregard of the employee's right to

ERISA-covered benefits. If such a claim is preempted, the

second issue for consideration by the Court is whether a claimant

may recover punitive damages for such conduct.

Respondent Fred D. Campbell (“Campbell”) was terminated

from his employment as a manager at Aerospace for engaging

in acts of sexual harassment and conducting personal business

on Aerospace time. Claiming that his termination was

“wrongful,” on February 25, 1992, Campbell filed a Complaint

for Damages (“Complaint”) in the Superior Court for the State

of California for the County of Los Angeles alleging that the

termination of his employment with Aerospace gave rise to the

following causes of action: (1) tortious discharge in violation

of public policy; (2) breach of an implied contract of continued

employment; (3) breach of the implied covenant of good faith

and fair dealing; (4) age discrimination in violation of California

Government Code § 12941(1); (5) common law age

discrimination; and (6) defamation.

In support of the first claim for relief for tortious discharge

in violation of public policy, Campbell expressly alleged as his

basis for the recovery of punitive damages that Aerospace had

terminated his employment in malicious disregard of his right

to ERISA-covered benefits. Specifically, Campbell alleged in

Paragraph 10 of the Complaint, in part, that:

[D]efendants knew that terminating plaintiff after

long years of service would minimize plaintiff's right

to recover and to build adequate retirement benefits,

would require plaintiff to be without certain benefits

and would make it extremely difficult for plaintiff

to obtain employment because of his high salary,

advancing age and the stigma of termination for

cause.

(Complaint, Paragraph 10, App. H).

This allegation was not contained in the Complaint’s prayer

for damages, but rather, was one of the charging allegations of

Campbell’s public policy cause of action. Illustrative of the

fact that this was an allegation independently giving rise to

damages is that this allegation was not reiterated in connection

with any other count of the Complaint. This is of particular

significance because Campbell alleged facts in support of his

claims for punitive damages in connection with his causes of

action for statutory and common law age discrimination, as

well as his claim for defamation.

Thus, by the specific charging allegations of Paragraph 10

of Campbell’s first claim for relief, Campbell framed an

independent damage claim based upon Aerospace’s alleged

knowledge that its conduct would adversely affect his

entitlement to ERISA-covered benefits.' Therefore, ERISA

preempted Campbell’s claims. Accordingly, Aerospace properly

removed the action to federal court based upon federal question

jurisdiction under 28 U.S.C. §§ 1331 and 1441(b). Aerospace

premised removal exclusively upon the allegations of Paragraph

10 of the Complaint. Campbell did not challenge removal at

that time.’

1. There is no dispute that the benefits referenced in Paragraph

10 of the Complaint comprise an ERISA-covered plan.

2. Paragraph 10 was not the only reference made in the

Complaint to ERISA-covered benefits, although it was the only

reference upon which Aerospace premised the existence of federal

jurisdiction.

On April 7, 1993, Campbell voluntarily dismissed his claims

for statutory and common law age discrimination, and on

August 23, 1993, the District Court dismissed Campbell's

defamation and public policy claims in response to Aerospace’s

Motion for Summary Judgment. Thereafter, Campbell filed a

motion to remand the action to state court alleging that the

District Court lacked jurisdiction to adjudicate his claims. The

District Court denied Campbell’s motion to remand on the

grounds that Paragraph 10 of Campbell’s Complaint triggered

ERISA preemption which resulted in the existence of federal

question jurisdiction. Therefore, removal was proper. The

District Court then exercised its discretion under the doctrine

of pendent or supplemental jurisdiction and retained jurisdiction

over Campbell’s contract claims (App. D).

On June 2, 1995, following a trial, the District Court

rendered a final Order and Judgment on the merits in favor of

Aerospace (App. B and C). In response, Campbell filed a Notice

of Appeal.

On September 3, 1997, a divided panel of the Ninth Circuit

held that the allegations of Paragraph 10 of Campbell’s

Complaint did not give rise to ERISA preemption (App. A).

In this regard, the Ninth Circuit reversed and remanded the

case to the District Court with instructions to remand the case

to the Superior Court of the State of California for the County

of Los Angeles on the grounds that the District Court lacked

jurisdiction to adjudicate Campbell’s claims.

REASONS FOR GRANTING THE WRIT

THE PETITION SHOULD BE GRANTED BECAUSE

THE NINTH CIRCUIT’S OPINION CONFLICTS WITH

THIS COURT’S PRIOR RULINGS THAT A

TERMINATION MOTIVATED BY AN EMPLOYER’S

DESIRE TO DENY ERISA-COVERED BENEFITS IS

PREEMPTED BY ERISA.

A. The Reach of ERISA.

Congress created ERISA in order to promote the uniform

and predictable administration of benefits law. Ingersoll-Rand

v. McClendon, 498 U.S. 133, 142 (1990). This statutory design

achieves the Congressional goal of encouraging employers to

provide benefits to their employees. Without such uniformity,

employers who fear regulation by overlapping jurisdictions

applying inconsistent standards will likely retreat in their

provision of such benefits. See Massachusetts Mutual Life Ins.

Co. v. Russell, 473 U.S. 134, 148 n.17 (1985).

Thus, ERISA’s remedies supersede all state law, including

state common law. Pilot L. Ins. Co. v. Dedeaux, 481 U.S. 41,

47 (1987). So complete is ERISA’s preemptive reach that the

label ascribed to the preempted claim in state court is irrelevant.

Indeed, the “well-pleaded complaint” rule, which makes plaintiff

the master of his pleadings, is of no defense to ERISA

preemption and it is equally of no concern that ERISA does

not afford the remedies provided by the preempted state law

claim. /ngersoll-Rand, 498 U.S. at 145 citing Russell, 473 U.S.

at 64-67.

Given the expansive scope of ERISA, this Court has

recognized that allegations such as the one made by Campbell

in Paragraph 10 of his Complaint are subject to federal

jurisdiction because such claims: (1) conflict with § 510 of

ERISA; and, alternatively; (2) are preempted by § 514(a) of

ERISA. Each of these reasons vested the District Court with

jurisdiction over Campbell's lawsuit and the Ninth Circuit erred

when it held otherwise. This conflict between the decision of

the Ninth Circuit and this Court’s prior rulings concerning an

issue of exceptional importance, specifically, the scope of ERISA

preemption, warrants the granting of this Petition. Supreme

Court Rule 10(c).

B. Paragraph 10 Of Campbell’s Complaint Seeks To

Enforce A Right Recognized Under § 510 Of ERISA.

The Ninth Circuit’s decision directly conflicts with this

Court’s holding in Ingersoll-Rand. In Ingersoll-Rand, a

terminated employee brought a wrongful discharge action in

state court against his former employer, alleging that he was

terminated because of his employer’s desire to avoid paying

pension benefits. The employee sought to recover punitive and

compensatory damages based on various tort and contract

theories, but did not assert any cause of action based on ERISA.

This Court held in Jngersoll-Rand that an attempt to enforce

under state law any right recognized in § 510 of ERISA

“conflicts directly with an ERISA cause of action” and must,

therefore, be preempted. Ingersoll-Rand, 498 U.S. at 142. This

Court further expiained in /ngersoll-Rand that a state law

wrongful discharge claim premised in any part upon an

employer’s motive to deny ERISA-covered benefits is precisely

the type of right protected under § 510 of ERISA:

By its terms, § 510 protects plan participants from

termination motivated by an employer’s desire to

prevent a pension from vesting. Congress viewed

this section as a crucial part of ERISA because,

without it, employers would be able to circumvent

the provision of promised benefits. We have no

doubt that this claim is prototypical of the kind

Congress intended to cover under § 510.

Ingersoll-Rand, 498 U.S. at 143 (internal citations omitted).

Since Campbell alleged as an independent claim in his

Complaint that he is entitled to punitive damages by virtue of

Aerospace’s knowledge that its conduct would deprive Campbell

of his retirement benefits, Campbell has expressly placed at-

issue Aerospace’s motive to deny him ERISA-covered benefits

and has, therefore, stated a claim under § 510 of ERISA claim

pursuant to /ngersoll-Rand. The essence of Campbell’s claim

is that with this knowledge, Aerospace acted in bad faith to

deny Campbell those ERISA-covered benefits to which

Campbell was entitled. As noted by the dissenting panelist of

the Ninth Circuit, if “ERISA preempts anything, it must preempt

an independent claim for punitive damages based on any

employer’s motive to deny pension benefits.” Campbell, 123

F.3d at 1316. A contrary holding disregards the elements of a

claim for punitive damages.

Motive is an indispensable prerequisite to recover punitive

damages. Exemplary damages in California are only available

upon proof that “the defendant has been guilty of oppression,

fraud or malice.” Cal. Civ. Code § 3294(a). Under California

law, “oppression” is defined as “despicable conduct. . . in

conscious disregard of that person’s rights.” Cal. Civ. Code

§ 3294(c)(2). “Fraud” means “an intentional misrepresentation,

deceit, or concealment of a material fact.” Cal. Civ. Code

§ 3294(c)(3). Likewise, “malice” means conduct “intended by

the defendant to cause injury.” Cal. Civ. Code § 3294(c)(1). In

sum, a claim for punitive damages can only arise under

California law when “the defendant act{ed] with the intent to

vex, injure, or annoy.” Neal v. Farmers Ins. Exch., 21 Cal. 3d

910, 922, 148 Cal. Rptr. 389, 582 P.2d 980 (1978) (citation

omitted).

In the Complaint, Campbell based his independent claim

for punitive damages on Aerospace’s conduct in terminating

his employment knowing that the result would be the loss of

pension benefits to Campbell. Contrary to the Ninth Circuit's

opinion, this allegation was not simply made “to punctuate”

some other wrongful conduct.’ Campbell, 123 F.3d at 1313.

Rather, Aerospace’s alleged conscious disregard of Campbell's

right to pension benefits was the actual wrongful conduct which

gave rise to Campbell’s claim for punitive damages. By

definition, it is an allegation that Aerospace acted by design in

terminating Campbell with the knowledge and intent that in

doing so, Campbell’s ERISA benefits would be lessened.

Motive cannot be divorced from this allegation. As such,

Paragraph 10 of Campbell’s Complaint seeks the enforcement

of a right recognized by § 510 of ERISA.

C. As An Action To Enforce A Right Recognized By ys 510

Of ERISA, The District Court Had Jurisdiction To

Adjudicate Campbell’s Claims.

As held by this Court in Ingersoll-Rand, because a

termination motivated by an employer’s desire to avoid paying

3. Nor did Paragraph 10 describe a mere consequence of

Campbell's termination. Instead, Campbell elected to describe the

consequences of his termination in Paragraph 9, not paragraph 10,

of the Complaint, wherein he alleged: “[aJs a proximate result of

defendant’s conduct, Campbell has suffered harm, including lost

earnings, and other employment benefits.” (Complaint, Paragraph

9, App. H.) A similar allegation is contained in Paragraph 39 of the

Complaint in support of Campbell's claim for defamation.

ERISA-covered benefits violates § 510 of ERISA, a litigant

seeking redress as a result of such conduct must bring a claim

under the civil remedies provision of § 510(a) of ERISA:

Unquestionably, the Texas cause of action purports

to provide a remedy for the violation of a right

expressly guaranteed by § 510 and exclusively

enforced by § 502(a). Accordingly, we hold that

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.

Ingersoll-Rand, 498 U.S. at 145 (internal citations omitted).

The jurisdiction of federal courts to adjudicate § 502(a)

actions is unambiguous. Section 502(e) of ERISA makes clear

that Congress intended to vest federal courts with such authority.

For this reason, the Ninth Circuit erred when it concluded that

the District Court was devoid of jurisdiction over Campbell's

claims.

D. The Allegations Of Paragraph 10 Of Campbell’s

Complaint “Relate To” ERISA And Are, Therefore,

Preempted By § 514(a) of ERISA.

Congress made the preemption of ERISA complete,

Ingersoll-Rand, 498 U.S. at 142, thereby subjecting to federal

jurisdiction any state law claim which “may relate to” any

employee benefit plan. ERISA § 514(a), 29 U.S.C. § 1144(a).

“The express preemption provisions of ERISA are deliberately

expansive, and designed to establish pension plan regulation as

exclusively a federal concern.” Pilot Life, 481 U.S. 41 (1987);

see also FMC Corp. v. Holliday, 498 U.S. 52 (1990); Shaw v.

Delta Air Lines, Inc., 463 U.S. 85 (1983). Indeed, § 514(a) of

ERISA “is conspicuous for its breadth.” Ingersoll-Rand, 498

U.S. at 138. Thus, the District Court had jurisdiction to

adjudicate Campbell’s claims for the alternative reason that

Paragraph 10 of the Complaint was subject to ERISA

preemption by operation of § 514(a).

In Ingersoll-Rand, this Court recognized that § 514(a) of

ERISA compels the preemption of a state law wrongful

termination claim alleging a benefits defeating motive.

Specifically, the Court concluded that such adjudication triggers

an inquiry into: (1) the existence of an ERISA plan; and (2) the

employer’s benefits defeating motive in terminating

employment, /ngersoll-Rand, 498 U.S. at 140, and, therefore,

such allegations “relate to” an ERISA plan within the meaning

of § 514(a).

The same considerations which warranted a finding of

§ 514(a) preemption in /ngersoll-Rand exist in this instance.

In order to adjudicate Campbell’s contention that Aerospace

terminated him in malicious disregard of his “right to recover

and to build adequate retirement benefits,” (Paragraph 10 of

Campbell’s Complaint (App. H)), a state court would be required

to adduce both the existence of Aerospace’s ERISA plan and

Aerospace’s alleged benefits defeating motive in terminating

Campbell's employment. In the absence of either element,

Campbell could not recover for Aerospace’s alleged disregard

of his right to pension benefits. Thus, Campbell’s state law

claim clearly “relates to” an ERISA-covered plan and is,

therefore, preempted by § 514(a) of ERISA.

In sum, because Paragraph 10 of Campbell's Complaint

alleged a federal statutory right (§ 510 of ERISA), enforceable

only by a federal statutory remedy (§ 502(a) of ERISA), which

supersedes all state law (§ 514(a) of ERISA), jurisdiction vested

with the District Court by operation of 28 U.S.C. § 1331 (and

§ 502(e) of ERISA) to adjudicate Campbell’s allegation that

Aerospace wrongfully terminated him in conscious disregard

of his right to pension benefits. The District Court also properly

exercised pendent or supplemental jurisdiction to adjudicate

Campbell’s remaining claims pursuant to 28 U.S.C. § 1367(a).

Thus, the judgment entered by the District Court after a trial on

the merits was valid and the divided panel of the Ninth Circuit

was wrong to remand Campbell’s claims to state court to restart

the litigation process anew.

By its decision, the Ninth Circuit has opened the door for

state court litigants to assert, under a myriad of common law

and statutory schemes, a right to recover damages for the bad

faith handling of ERISA-covered benefits. This result turns on

its head the congressional goal of ensuring the uniformity of

pension law by the operation of ERISA’s preemption over such

claims. Accordingly, Aerospace respectfully asks the Court to

grant this Petition in order to review the erroneous decision of

the Ninth Circuit.

Il.

THE PETITION SHOULD BE GRANTED IN ORDER

TO RESOLVE THE ISSUE OF WHETHER ERISA

PERMITS THE RECOVERY OF EXTRA-

CONTRACTUAL DAMAGES

This Petition offers the Court a unique opportunity to

resolve an issue of exceptional importance which has divided

the lower courts. Prior to Jngersoll-Rand, the law appeared

settled that § 502(a) of ERISA did not permit the recovery of

extracontractual damages. Specifically, in Russell, 473 U.S. at

134, this Court foreclosed the recovery of extracontractual

damages by a claimant seeking to redress alleged violations of

0S bP LIAM Pe aA BL

ERISA (under § 409(a)) pursuant to the civil remedies provision

of § 502(a)(2). In Russell, the Court concluded that the

complete absence in § 502(a) of any mention of extracontractual

damages demonstrated Congress’ deliberate intent not to afford

such a remedy:

The six carefully integrated civil enforcement

provisions found in § 502(a) of the’ statute as finally

enacted . . . provide strong evidence that Congress

did not intend to authorize other remedies that it

simply forgot to incorporate expressly.

Russell, 473 U.S. at 146-47 (citation omitted).*

Consistent with this analysis, subsequent courts refused to

allow claimants to recover extracontractual damages for the

violation of rights recognized by ERISA. Such refusal abruptly

changed with this Court's decision in Ingersoll-Rand. In

Ingersoll-Rand, the plaintiff, like Campbell, sought punitive

damages against his employer under state law theories of

recovery which were preempted by ERISA. At the conclusion

of the majority opinion, Justice O’Connor wrote:

The preceding discussion also responds to the Texas

court’s attempt to distinguish this case as not one

within ERISA’s purview . . . . [T]here is no basis in

§ 502(a)’s language for limiting ERISA actions to

only those which seek “pension benefits.” It is clear

that the relief requested here is well within the power

of federal courts to provide. Consequently, it is no

4. While the Court in Russell left unresolved the availability

of punitive damages under § 502(a)(3) of ERISA, the Court's

rationale suggested that neither § 502(a)(2) nor § 502(a)(3) permit

the recovery of extracontractual damages.

answer to a preemption argument that a particular

plaintiff is not seeking recovery of pension benefits.

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

This language has created a rift among the lower courts

regarding the availability of extracontractual damages under

ERISA. Some courts have read the quoted language of

Ingersoll-Rand as overruling Russell and its progeny. In Blue

Cross and Blue Shield v. Lewis, 753 F. Supp. 345 (N.D. Ala.

1990), the Northern District of Alabama stated:

[a]ccording to Jngersoll-Rand, a court, state or

federal, in an ERISA case, may, as an ERISA remedy,

award extracontractual, even punitive, damages, that

is, if the facts call for such a remedy.

Lewis at 347. See also International Union, United Auto.,

Aerospace and Agric. Implement Workers v. Midland Steel

Products Co., 771 F. Supp. 860, 863 (N.D. Ohio 1991) (“[t}he

Supreme Court’s holding in Ingersoll-Rand v. McClendon .. .

conclusively establishes the availability of legal remedies under

ERISA.”); Haywood v. Russell Corp. 584 So. 2d 1291, 1297

(Ala. 1991) (“[t}he Supreme Court, in /ngersoll-Rand, has now

specifically held that the courts are authorized to award damages,

both extracontractual, and even punitive, where the facts support

them, even though they are not specifically provided for in

ERISA.”).

Other courts disagree. In O’Neil v. Gencorp, Inc., 764 F.

Supp. 833 (S.D.N.Y. 1991), the Southern District of New York

granted a motion to dismiss the plaintiffs’ claim for punitive

damages for the reason that punitive damages are unavailable

as a remedy for breach of fiduciary duty under ERISA. Rejecting

the plaintiffs’ argument that Jngersoll-Rand supported their claim

for punitive damages, the Southern District observed:

Had Justice O’Connor intended, as plaintiffs claim,

that [her] analysis of § 510 was overruling the

considerable amount of federal case law barring

punitive and extracontractual damages under ERISA

(particularly the cases which specify that punitive

damages are unavailable under § 510), she

undoubtedly would have so stated.

Furthermore, since Justice O’Connor’s dicta in

Ingersoll-Rand discusses remedies under § 502(a)

generally and are not limited to § 520(a)(3), one

would also expect an explanation of the effect on

Russell’s holding that punitive damages are

unavailable under § 502(a)(2), as well as a

distinction from Russell’s elaborate rationale for

generally excluding punitive damages in ERISA

actions.

O'Neil at 834. See also Gaskell v. Harvard Coop. Soc’y, 762

F. Supp. 1539, 1544 (D. Mass. 1991) (“[{H]ad the Supreme

Court intended to expand the realm of potential relief available

under ERISA, . . . it would have done so explicitly. Such a

departure from precedent likely would not have been

accomplished in a single sentence, in dicta, at the close of an

opinion focused exclusively on a wholly different issue”);

Monfiletto v. John Hancock Healthplans, Inc., Civ. No. 90-

5137, 1991 WL 231608, at 2, 1991 U.S. Dist. Lexis 15875, at

5 (E.D. Pa. Oct. 30, 1991).

Moreover, the Eleventh Circuit, in holding that

extracontractual damages are not available under § 502(a)(3)

of ERISA, explicitly found that such a holding did not conflict

with Ingersoll-Rand. See McRae v. Seafarers’ Welfare Plan, 920

F.2d 819 (11th Cir. 1991), wherein Judge John Minor Wisdom,

sitting by designation, explained the Ingersoll-Rand dicta as

follows:

The Supreme Court was stating that federal law

provides relief for ERISA actions other than those

that seek to recover pension benefits, such as the

plaintiff's cause of action for wrongful termination.

The Supreme Court is not holding that the specific

remedies this plaintiff had sought under state law

are necessarily the remedies that will be afforded.

McRae, 920 F.2d at 821.

The lower courts have called upon this Court to put an end

to this confused state of affairs:

Although we do not necessarily subscribe to this or

any other explanation of what the Supreme Court

might have meant by the /ngersoll-Rand dicta, we

are not rash enough to believe that the Court intended

to overrule settled law in most of the circuits, as

well as narrowly limit — if not overrule — its own

decision in Russell in such an off-hand manner. Of

course, we do have a “plain meaning” argument to

contend with. And it is possible that Justice

O’Connor did intend to limit Russell severely.

Nevertheless, we think the prudent course is to follow

Judge Wisdom in his interpretation. We will

continue to doubt the availability of extracontractual

damages under ERISA until a more plausible signal

reaches us from above.

Harsch v. Eisenberg, 956 F.2d 651, 660 (7th Cir. 1992)

(emphasis added).

Supreme Court Rule 10(c) recommends the granting of a

petition for writ of certiorari to address “an important qu stion

of federal law that has not been, but should be, settled by this

Court.” Aerospace requests that this Court seize this Petition as

the appropriate opportunity to resolve whether ERISA allows

the recovery of extracontractual damages and to clarify its

holding in /ngersoll-Rand.

CONCLUSION

It is of exceptional importance that the congressionally

mandated scope of ERISA preemption be respected and applied

with consistency. It is equally important for the lower courts to

know whether ERISA permits the recovery of extracontractual

damages.

In this instance, the District Court properly exercised

jurisdiction in adjudicating Campbell’s claims. The divided

panel of the Ninth Circuit erred when it held otherwise. That

decision created an unwarranted exception to ERISA preemption

for state law bad faith claims and implicitly sanctioned the

recovery of punitive damages for the violation of ERISA’s

provisions. Accordingly, Aerospace respectfully requests that a

Writ of Certiorari be issued to review the judgment of the Ninth

Circuit.

Respectfully submitted,

LINDA M. LAWSON

Counsel of Record

PATRICIA A. ELLIS

BRIAN M. HOLBROOK

MESERVE, MUMPER & HUGHES

Attorneys for Petitioner

555 South Flower Street

18th Floor

Los Angeles, California 90071

(213) 620-0300

APPENDIX

APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

FILED SEPTEMBER 3, 1997

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 95-56007

D.C. No. CV-92-01957-DT(GK)

FRED D. CAMPBELL,

Plaintiff-Appellant,

Vv.

THE AEROSPACE CORPORATION; ARTHUR J. SCHIEWE,

Defendants-Appellees.

OPINION

Appeal from the United States District Court

for the Central District of California

Dickran M. Tevrizian, District Judge, Presiding

Argued and Submitted October 9, 1996 — Pasadena,

California

Filed September 3, 1997

Before: Melvin Brunetti, Stephen S. Trott, and Sidney R.

Thomas, Circuit Judges.

Appendix A

Per Curiam Opinion; Partial Concurrence and Partial Dissent

by Judge Thomas

SUMMARY

Labor and Employment/ERISA

The court of appeals reversed a judgment of the district

couret in part, affirmed in part, and remanded with instructions

to remand to the state court. The court held that a state wrongful

termination action is not preempted by the Employee Retirement

Income Security Act (ERISA) when the loss of employee

retirement benefits is relied on in a prayer for punitive damages.

Appellant Fred Campbell was discharged by his employer,

appellee Aerospace Corporation. Campbell filed suit in

California state court for tortious discharge in violation of public

policy and related claims. Campbell alleged he was terminated

for “blowing the whistle” on Aerospace’s illegal billing of the

government. In his prayer for punitive damages, Campbell

alleged that Aerospace knew that terminating him after long

years of service would negatively affect his retirement benefits.

Aerospace removed the case to federal court and moved

for summary judgment. It asserted that Campbell had failed to

identify the constitutional or statutory provision which

established the public policy allegedly violated. In response,

Campbell cited an Aerospace policy which warned employees

to comply with the False Claims Act (FCA). The district court

granted summary judgment in favor of Aerospace on the tortious

discharge claim.

Campbell moved to remand the case to state court. The

district court denied the motion, ruling that ERISA required the

Appendix A

matter to remain in federal court. A jury found Aerospace not

liable on the related claims.

On appeal, Campbell challenged the district court’s subject-

matter jurisdiction and presented a state-law theory that

established the public policy element. Aerospace responded that

(1) because Cambell charged that it intended to deprive him of

benefits by terminating him, his claim related to an employee

benefit plan and was therefore preempted by ERISA, and (2)

the FCA was an alternative source of federal-question

jurisdiction.

ERISA supersedes state laws insofar as they relate to any

employee benefit plan covered by ERISA. Although a state law

may relate to a plan even if the law is not specifically designed

to affect such plans or the effect is only indirect, the preemptive

power of ERISA is not without limit. Congress’s intent in passing

ERISA was to ensure that plans and plan sponsors would be

subject to a uniform body of benefits law.

A state common law cause of action for wrongful discharge

is preempted by ERISA when the complaint alleges that the

employer had a pension-defeating motive in terminating the

employment. Campbell did not claim that his employer’s motive

in terminating him was the destruction of his retirement benefits,

but that the loss of benefits was a consequence of his wrongful

termination. There is a discernible and critical difference

between an employer who “knows” that the obvious

consequences of terminating an employee for whatever cause

includes the loss of benefits and one who is “motivated” to

terminate an employee for purposes of saving money or

destroying the employee’s benefits. Campbell’s allegation in his

claim for punitive damages did not state a cause of action that

“relates to” an employee benefit plan.

Appendix A

The conclusion that ERISA did not preempt the claim was

inconsistent with Congress’s intent in enacting ERISA. The

existence of an ERISA plan was irrelevant to Aerospace’s action.

There was no risk of different state standards governing the same

benefits-related conduct, because the conduct — the employer’s

employment decision — was motivated by independent

considerations.

Campbell’s citation to the FCA as a source of public policy

did not implicate a federal interest sufficiently substantial to

confer federal-question jurisdiction. The federal interests at stake

militated against allowing a backdoor FCA state claim to form

the basis of federal jurisdiction. Such a result would derogate

the detailed requirements Congress chose to impose on FCA

litigants.

California statutory law established the same public policy

element as the FCA and provided an alternative state-law theory

to support Campbell’s claim.

Judge Thomas concurred in the portion of the opinion

concerning the FCA, but dissented in the portion of the opinion

concerning ERISA. Judge Thomas reasoned that if ERISA

preempts anything, it must preempt an independent claim for

punitive damages based on an employer’s motive to deny pension

benefits.

‘~COUNSEL

Allan F. Grossman, Encino, California, for the plaintiff-

appellant.

Patricia A. Ellis, Meserve, Mumper & Hughes, Los Angeles,

California, for the defendants-appellees.

Appendix A

OPINION

PER CURIAM:

OVERVIEW

Fred D. Campbell sued his employer, The Aerospace Cor-

poration (“Aerospace”), in state court for wrongful and tortious

discharge. The case was removed to federal court on an ERISA

preemption theory because his complaint referred in a prayer

for punitive damages to a negative impact on his retirement

benefits. Campbell did not prevail on any of his causes of action.

He appeals, claiming that the district court had no subject matter

jurisdiction to hear his case.

To decide Campbell’s claim, we must answer two ques-

tions. First, does ERISA necessarily preempt a state cause of

action involving wrongful discharge where the loss of employee

retirement benefits is relied on in a prayer for punitive damages?

And second, does Campbell’s invocation of federal law as the

source of the public policy tortiously violated by his discharge

supply federal question jurisdiction? We hold that ERISA did

not preempt his causes of action and that the incorporation of

the federal False Claims Act into the state-law claims did not

confer subject matter jurisdiction. We therefore reverse and

remand with instructions to the district court to remand this

action to state court.

BACKGROUND

In response to his termination from Aerospace, Campbell

brought suit in California state court, alleging six causes of

action, including tortious discharge in violation of public policy.

Appendix A

Campbell alleged he “was terminated for ‘blowing the whistle’

on illegal activity of defendant Aerospace, to wit, illegally billing

the U.S. Air Force.” The critical allegation at issue here is

contained in paragraph 10:

In doing the acts set forth above, defendants knew

that terminating plaintiff after long years of service

would minimize plaintiff's right to recover and to

build adequate retirement benefits, would require

plaintiff to be without certain benefits and would |

make it extremely difficult for plaintiff to obtain

employment because of his high salary, advancing

age and the stigma of termination for cause....

Defendants conduct warrants the assessment of puni-

tive damages.

Aerospace contends that because Campbell charges that Aero-

space intended to deprive him of benefits by terminating him,

his claim “relates to” an employee benefit plan and is there-

fore preempted by ERISA. Campbell, on the other hand,

maintains that this allegation was made only to justify punitive

damages, which he sought in order to punish Aerospace for its

egregious conduct in terminating him for engaging in protected

whistle-blowing activities.

Based on the paragraph 10 allegation, Aerospace removed

the case to federal court. Campbell did not challenge removal

at that time. The parties stipulated to dismissal of two claims of

age discrimination, and Aerospace moved for summary judgment

on the remaining claims. In its motion for summary judgment,

Aerospace claimed that Campbell failed to specify the source

of public policy violated by his termination, an element of his

tortious discharge claim. In response, Campbell invoked only

Appendix A

the federal False Claims Act, 31 U.S.C. §§ 3729-3731. The court

granted partial summary judgment on Campbell’s claims of

tortious discharge in violation of public policy and of

defamation, leaving the rest for trial.

Campbell then unsuccessfully moved to remand the case to

State court. The district court concluded that ERISA required

the matter to remain in federal court. The parties tried remaining

two claims — breach of implied contract and breach of the

implied covenant of good faith and fair dealing — to a jury,

which found Aerospace not liable.

Campbell brought this appeal, challenging the district

court’s subject matter jurisdiction.

STANDARD OF REVIEW

Because Campbell failed to oppose and preserve an objec-

tion to removal, we consider on appeal “not whether the case

was properly removed, but whether the federal district court

would have had original jurisdiction of the case had it been filed

in that court.” Grubbs v. General Elec. Credit Corp., 405 U.S.

699, 702 (1972). We review de novo the existence of federal

subject matter jurisdiction. Export Group v. Reef Indus., Inc.,

54 F.3d 1466, 1469 (9th Cir. 1995). Whether ERISA preempts

state law is a question of law, which we review de novo. Jnland

Empire Chapter of Assoc. Gen. Contractors v. Dear, 77 F.3d

296, 299 (9th Cir. 1996).

DISCUSSION

I. ERISA Preemption

The Employee Retirement Income Security Act of 1974

(ERISA), codified at 29 U.S.C. § 1001 et seq., is a

Appendix A

“comprehensive statute designed to promote the interests of

employees and their beneficiaries in employee benefit plans.”

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

514(a) of ERISA provides that its provisions “shall supersede

any and all State laws insofar as they may now or hereafter relate

to any employee benefit plan” covered by ERISA. 29 U.S.C.

§ 1144(a) (emphasis added). The parties do not dispute that

Aerospace’s plan is an ERISA-covered plan. Thus, we must

determine whether the state law relied upon in Campbell’s

complaint “relates to” an employee benefit plan.

The Supreme Court has determined that Congress used the

words “relate to” in a broad sense: “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.” Shaw, 463

U.S. at 97 (emphasis added). Furthermore, a claim alleging

termination “for the purpose of interfering with the attainment

of any right to which such participant may become entitled under

the plan,” 29 U.S.C. § 1140, relates to ERISA. A state law may

relate to a plan “even if the law is not specifically designed to

affect such plans, or the effect is only indirect.” Jngersoll-Rand

v. McClendon, 498 U.S. 133, 139 (1990).

However, the preemptive power of ERISA is not without

limit. “Some state actions may affect employee benefit plans in

too tenuous, remote, or peripheral a manner to warrant a finding

that the law ‘relates to’ the plan.” Shaw, 463 U.S. at 100 n.21.

Recently, the Court has acknowledged that the terms “relate to”

and “connection with” are not sufficiently helpful in determining

the limits of ERISA’s preemptive powers. New York State

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

Co., 115 S. Ct. 1671, 1677 (1995). “If ‘relate to’ were taken to

extend to the furthest stretch of its indeterminacy, then for all

Appendix A

practical purposes preemption would never run its course, for

‘really, universally, relations stop nowhere.’ ” Jd. (alterations

and citations omitted); see also California Div. of Labor

Standards Enforcement v. Dillingham Constr., N.A., Inc., 1997

WL 63013, at *10 (U.S. Feb. 18, 1997) (Scalia, J., concurring)

(“The statutory text provides an illusory test, unless the Court

is willing to decree a degree of pre-emption that no sensible

person could have intended — which it is not.”). Thus, the Court

concluded that “[w]Je simply must go beyond the unhelpful text

and the frustrating difficulty of defining its key term, and look

instead to the objectives of the ERISA statute as a guide to the

scope of the state law that Congress understood would survive.”

Id. The Court has recognized that Congress’s intent in passing

section 514(a) was:

“to ensure that plans and plan sponsors would be

subject to a uniform body of benefits law; the goal

was to minimize the administrative and financial

burden of complying with conflicting directives

among States or between States and the Federal

Government, and to prevent the potential for conflict

in substantive law requiring the tailoring of plans

and employer conduct to the peculiarities of the law

of each jurisdiction.”

Id. (quoting Ingersoll-Rand, 498 U.S. at 142) (alterations

omitted). With this understanding of the broad but not limitless

scope of ERISA preemption and the Court’s guidance in

directing us to consider the purposes of ERISA, we turn to the

application of ERISA preemption to state wrongful termination

law.

In determining whether ERISA preempts state common law

causes of action for wrongful discharge, both the Supreme Court

10a

Appendix A

and the Ninth Circuit have focused on the employer’s alleged

motivation in terminating the employee, concluding that a claim

is preempted when the complaint alleges that “the employer had

a pension-defeating motive in terminating the employment.”

Ingersoll-Rand, 498 U.S. at 140; see Ethridge v. Harbor House

Restaurant, 861 F.2d 1389, 1405 (9th Cir. 1988) (no preemption

when loss of benefits is not “a motivating factor” behind

termination).

In Ingersoll-Rand, 498 U.S. at 135-36, the Court confronted

whether ERISA preempted a state common law tortious

interference in violation of public policy claim where an

employee alleged that his employer unlawfully discharged him,

four months prior to the vesting of his pension rights, to avoid

making contributions to his pension fund. Under the applicable

state law, an employee could recover when the principal reason

for termination was the employer’s desire to avoid contributing

to or paying benefits under the pension fund. /d. at 140. Thus,

the Court recognized that “the existence of a pension plan is a

critical factor in establishing liability under the State’s wrongful

discharge law. As a result, this cause of action relates not merely

to pension benefits, but to the essence of the pension plan itself.”

Id. at 139-40. The Court concluded that “in order to prevail, a

plaintiff must plead, and the court must find, that an ERISA

plan exists and the employer had a pension-defeating motive in

terminating the employment.” Jd. at 140.

The Ninth Circuit has similarly held that the employer’s

alleged motive in terminating the employee is critical. A claim

does not relate to ERISA “when the loss of pension benefits

was a mere consequence of, but not a motivating factor behind,

the termination of benefits.” Ethridge, 861 F.2d at 1405

(quotation omitted) (emphasis added). In Ethridge, the plaintiff

7 a

lla

Appendix A

brought a claim for tortious discharge in state court, alleging

that he was terminated from his employment in retaliation for

his union activities. In his complaint, Ethridge asserted that “the

above said wrongful acts of Defendants, w[ere] a substantial

factor in causing damage and injury to Plaintiff, including loss

of employment and benefits.” Jd. at 1404 (alterations omitted).

Relying on the plaintiff’s use of the word “benefits,” the

defendants attempted to remove the case to federal court on the

ground of ERISA preemption. We rejected their argument.

Ethridge did not claim that his employer's true motivation for

discharge was to deprive him of pension rights, but merely

alleged that the loss of benefits was a consequence of the tortious

discharge. Id. at 1405. Therefore, Ethridge’s claim for tortious

discharge was not preempted simply because he sought to

recover lost salary and benefits.

Similarly, in Karambelas v. Hughes Aircraft Co., 992 F.2d

971, 974 (9th Cir. 1993), the plaintiff, former in-house counsel

for the defendant, brought a breach of employment contract

claim, alleging that his employer terminated him because it

needed a scapegoat after a costly legal error. Defendants sought

to justify removal by pointing to plaintiff’s acknowledgment,

in his deposition, that one reason for his termination was

probably to avoid the vesting of his pension rights. We rejected

this contention, reasoning:

Here the heart and soul of the complaint is

Karambelas’ outrage at the fact that he was made a

scapegoat .... His complaint does mention that he

was terminated just before his retirement benefits

vested, but that was clearly in the nature of a jeremiad

or, at most, a consequence of the scapegoating wrong

that was perpetrated upon him.

12a

Appendix A

Id. Again, mention of the loss of benefits as a consequence of

termination did not give rise to ERISA preemption where the

employer was motivated by other concerns.

On the other hand, and in contrast to Ethridge and

Karambelas, we have held that where the plaintiff’s claim or

theory alleged that the employer terminated the employee to

avoid paying benefits or sought to prevent the discharged

employee from obtaining benefits, ERISA preempted the claim.

See, e.g., Tingey v. Pixley-Richard West, Inc., 953 F.2d 1124,

1131 (9th Cir. 1992) (wrongful termination claim pre-empted

because plaintiff’s sole theory was that his employer terminated

him to deny him medical insurance benefits after his son was

born with spina bifida); Felton v. Unisource Corp., 940 F.2d

503, 507 (9th Cir. 1991) (claim brought under state wrongful

termination and state disability discrimination law was

preempted because plaintiff alleged that employer fired him to

avoid paying his medical insurance benefits after he contracted

lung cancer); Sorosky v. Burroughs Corp., 826 F.2d 794, 800

(9th Cir. 1987) (breach of contract/wrongful discharge claim

based on theory that employer agreed to provide retirement

benefits then sought to prevent acquisition of those benefits was

preempted to the extent that it referred to the employee benefit

plan).

We recognize that, unlike Ethridge, Campbell complained

not only that he lost benefits as a consequence of his termina-

tion, but that Aerospace knew of this result. We nonetheless

conclude that Ethridge’s holding that a claim does not relate to

ERISA when the loss of benefits is a “mere consequence of, but

not a motivating factor behind” the termination controls this

case. Thus, we focus on Aerospace’s alleged motivations in

terminating Campbell.

tata tine ies

G8 Rat NOL he AB ah

13a

Appendix A

Like Ethridge, Campbell did not claim that his employer’s

motive in terminating him was the destruction of his retirement

benefits, but rather he alleged that the loss of benefits was a

consequence of his wrongful termination. The allegation of

Aerospace’s knowledge does not change the fact that the

deprivation of benefits was not Aerospace’s motive, but merely

a proximate result of the termination. There is a discernible and

critical difference between an employer who “knows” that the

obvious consequences of terminating an employee for whatever

cause include the loss of benefits and one who is “motivated” to

terminate an employee for purposes of saving money or

destroying the employee’s benefits. Thus, Campbell’s allegation

that Aerospace knew he would lose his benefits as a consequence

of his termination, made in his claim for punitive damages, does

not state a cause of action that “relates to” an employee benefit

plan. The substance of his tortious discharge claim was that

Aerospace was motivated by a desire to retaliate for his whistle-

blowing. To hold otherwise would be to revive the problem New

York State Conference tried to eliminate, i.e., a definition so

broad that nothing escapes its reach.

We find support for our conclusion in the Fifth Circuit’s

opinion in Rozzell v. Security Services, Inc., 38 F.3d 819, 822

(Sth Cir. 1994). In Rozzell, the Fifth Circuit encountered facts

similar to those before us and, in a well-reasoned opinion, held

that ERISA did not preempt a cause of action alleging willful

deprivation of benefits as part of its punitive damages claim

because the substance of the claim was limited to state law

retaliatory discharge. Rozzell alleged that his employer had

wrongfully terminated him in retaliation for pursuing statutory

rights guaranteed under the Texas Workers’ Compensation Act.

Although Rozzell’s complaint contained only one state statutory

cause of action, the defendants seized upon an allegation, made

14a

Appendix A

in conjunction with a prayer for punitive damages, that the

plaintiff was wrongfully terminated “ ‘to willfully deprive

plaintiff of the compensation and benefits of [his] job’ ” and

removed the suit as preempted by ERISA. /d. at 821. Invoking

the well-pleaded complaint rule and looking past the words

contained in the complaint to the substance of the claim alleged,

the Fifth Circuit concluded:

[I]t remains patently clear that the substance of his

claim is limited to the state law retaliatory discharge

cause of action. He included the word “benefits” in

his accusation of the requisite malice for punitive

damages, not as a separate claim for relief. Rather,

the allegation of lost “benefits” related back to the

retaliatory discharge in order to punctuate that

wrongful conduct. Therefore, the substance of Roz-

zell’s complaint alleges only one cause of action that

is governed exclusively by state law.

Id. at 822. Just as the substance of Rozzell’s claim was wrongful

termination in retaliation for filing a workers’ compensation

claim, the substance of Campbell’s claim was wrongful

termination in retaliation for his whistle-blowing activities.

Campbell did not allege that the deprivation of his benefits was

in and of itself wrongful or illegal. Like Rozzell, he pointed to

Aerospace’s knowledge of these consequences “to punctuate that

wrongful conduct.”

Our conclusion that ERISA does not preempt this claim is

consistent with Congress’s intent in enacting ERISA. Unlike

Ingersoll-Rand, in which the state law precluding termination

to avoid paying benefits risked subjecting employers to

inconsistent substantive standards concerning benefits plans, the

15a

Appendix A

existence of an ERISA plan is irrelevant to the employer’s action

in the case before us. There is no risk of different state standards

governing the same benefits-related conduct, because the

conduct at issue here-the employer’s employment decisions —

is motivated by independent considerations. Thus, federal

preemption of causes of action involving state wrongful

termination law, where the employer’s decisions are motivated

by non-ERISA-related interests, would not serve “to promote

the interests of employees and their beneficiaries in employee

benefit plans.” Shaw, 463 U.S. at 90.

ERISA therefore does not preempt Campbell’s claims and

thereby confer subject matter jurisdiction.

II. The False Claims Act

Aerospace argues that there is an alternative source of fed-

eral question jurisdiction: the False Claims Act (“FCA”). In order

for a federal district court to assert federal question jurisdiction

pursuant to 28 U.S.C. § 1331, the plaintiff’s claim must “arise

under” federal law. Where state law creates the cause of action,

federal jurisdiction may nonetheless be available if “it appears

that some substantial, disputed question of federal law is a

necessary element of one of the well-pleaded state claims.”

Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463

U.S. 1, 13 (1983); see Merrell Dow Pharmaceuticals, Inc. v.

Thompson, 478 U.S. 804, 808-12 (1986); see also Rains v.

Criterion Systems, Inc., 80 F.3d 339, 347 n.10 (9th Cir. 1996)

(“Merrell Dow suggests that even if the federal law incorporated

into a state law claim creates a private right of action, the federal

interest may still prove insufficiently substantial to confer

federal-question jurisdiction.”).

l6a

Appendix A

To establish a tortious discharge cause of action, a plaintiff

must prove as one element that a fundamental public policy

exists that is delineated in constitutional or statutory provisions.

Gantt v. Sentry Ins., 4 Cal. Rptr. 2d 874, 881-82 (1992). In his

complaint, filed in state court, Campbell alleged that Aerospace’s

actions violated the public policy of California:

The actions of defendants and each of them violated

the public policy of the State of California, to wit,

employers must provide employees due process and

must follow their own written policies and

procedures regarding termination. Furthermore,

plaintiff was terminated for “blowing the whistle”

on illegal activity of defendant Aerospace, to wit,

illegally billing the U.S. Air Force which is funded

with taxpayers’ money.

Complaint, J 7. Notably, Campbell did not refer either to a

specific state statute or to the FCA in his complaint. However,

in its Motion for Summary Judgment in the district court,

Aerospace asserted that Campbell had failed to identify the

constitutional or statutory provision which established the public

policy allegedly violated. In response, Campbell cited an

Aerospace Policy and Practice Memorandum which warned

employees to comply with the FCA and quoted relevant

provisions of the FCA. On appeal, Campbell presents a state-

law theory, contending that California Labor Code section

1102.5(b) also establishes the public policy element.

We begin our analysis by again noting that the question

before the court is not whether removal was proper,' but whether

1 If this were the question, the answer clearly would be no. An

(Cont'd)

Ah Sih teas tte.

17a

Appendix A

the district court would have had jurisdiction had the case been

filed in federal court “in the posture it had at the time of entry

of federal judgment.” Harris v. Provident Life & Accident Ins.

Co., 26 F.3d 930, 932 (9th Cir. 1994); see Felton, 940 F.2d at

507-08. Applying the Grubbs rule, we therefore give due

consideration to Campbell's reference to the FCA.

Aerospace claims that Campbell, in citing the FCA as the

source of public policy, Campbell raised a substantial, disputed

question of federal law. We disagree. We hold that Campbell’s

citation to the FCA did not implicate a federal interest

sufficiently substantial to confer federal-question jurisdiction.

We find no compelling federal judicial interest in embracing

this case as a federal question. The federal interest in protecting

whistleblowers, in order to expose fraud against the government,

is sufficiently advanced through the federal scheme. In enacting

the FCA, Congress created a very specific private remedy. It

(Cont'd)

action filed in state court may be removed only if the district court could

have exercised jurisdiction over the action if originally filed there.

Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). In order for a

complaint to state a claim “arising under” federal law, it must be clear

from the face of the plaintiff's well-pleaded complaint that there is a

federal question. Campbell did not allege a specific state or federal theory.

In these circumstances, removal would have been improper, because an

alternative state-law theory exists — California Labor Code section

1102.5(b). See Duncan v. Stuetzle, 76 F.3d 1480, 1486 (9th Cir. 1996)

(“[I}f a single state-law based theory of relief can be offered for each of

the three causes of action in the complaint, then the exercise of removal

jurisdiction was improper.”); Ultramar America Limited v. Dwelle, 900

F.2d 1412, 1414 (9th Cir. 1990) (“The fact that an alternative theory of

relief exists for each claim alleged in the complaint, one not dependent

upon federal law, is itself grounds to defeat federal question jurisdiction.”).

18a

Appendix A

carefully established explicit prerequisites to qui tam actions,

including precise filing requirements. 31 U.S.C. § 3730. Its

protection against adverse employment actions extends

specifically to employees for their acts “in furtherance of an

action under this section.” Jd. § 3730(h). Indeed, to allow a state-

law claim to circumvent these requirements and limitations by

generically referencing the “public policy” of the FCA would

contravene the statute. Thus, the federal interests at stake

strongly militate against allowing a backdoor FCA state claim

to form the basis of federal jurisdiction. Such a result would

derogate the very detailed requirements Congress chose to

impose on gui tam FCA litigants.

Moreover, Campbell’s citation to the federal policy

protecting whistleblowers does not alter the fundamental nature

of his state-law tort action. Finally, we note that California

statutory law establishes the same public policy element as the

FCA and provides an alternative state-law theory to support

Campbell’s case.

We therefore hold that Campbell’s incorporation of the FCA

as the source of public policy violated did not raise a sufficiently

substantial, disputed question of federal law so as to confer

federal-question jurisdiction.

CONCLUSION

We conclude that the district court did not have subject

matter jurisdiction over Campbell’s case. We reverse and remand

this case to the district court with instructions to remand it to

the Superior Court of the State of California for the County of

Los Angeles.

REVERSED and REMANDED WITH INSTRUCTIONS.

19a

Appendix A

THOMAS, Circuit Judge, concurring in part and dissenting in

part:

I concur with Section II of the majority opinion concerning

federal jurisdiction under the False Claims Act, but respectfully

dissent from Section I concerning the impact of ERISA and the

judgment.

If ERISA preempts anything, it must preempt an

independent claim for punitive damages based on an employer’s

motive to deny pension benefits. ERISA preemptively regulates

such an action by making it unlawful to discharge or discriminate

against a plan participant “for the purpose of interfering with

the attainment of any right to which such participant may become

entitled.” 29 U.S.C. § 1140. Indeed, ERISA preempts all state

law claims founded on alleged improper processing of pension

or other plan benefits. See Pilot Life Ins. Co. v. Dedeaux, 481

U.S. 41, 57 (1987) (“Dedeaux’s state law suit asserting improper

processing of a claim for benefits under an ERISA-regulated

plan is not saved by § 514(b)(2)(A), and therefore is preempted

by § 514(a).”); Kanne v. Connecticut Gen. Life Ins. Co., 867

F.2d 489, 493 (9th Cir. 1988) (state common law claims arising

from improper claims processing are preempted by ERISA,

requiring vacation of judgment “insofar as it awards

compensatory and punitive damages arising out of the common

law claims”).

Under California law, punitive damages may only be

awarded if the defendant acted with “fraud, oppression or

malice.” Campbell sought exemplary damages because Aero-

space allegedly acted with malice to reduce or deny his pen-

sion benefits. As Campbell acknowledged, he made this

accusation to “recover punitive damages from the defendant.”

20a

Appendix A

Under California law, malice implicates motive. “ ‘Malice’

means conduct which is intended by the defendant to cause

injury to the plaintiff or despicable conduct which is carried on

by the defendant with a willful and conscious disregard of the

rights or safety of others.” California Civil Code § 3294 (1992).

Federal preemption is ordinarily a federal defense to a

plaintiff’s suit. However, Congress may so completely preempt

a particular area that any civil complaint raising this select group

of claims is necessarily federal in character. Metropolitan Life

Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987). Complete

preemption occurs when the preemptive force of a law is so

“extraordinary” that it “converts an ordinary state common law

complaint into one stating a federal claim for purposes of the

well-pleaded complaint rule.” Jd. at 65.

ERISA is a complete preemption statute. Ingersoll-Rand v.

McClendon, 498 U.S. 133, 138-39 (1990). Congress intended it

“to establish pension plan regulation as exclusively a federal

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

523 (1981). Specifically, ERISA preempts any law which

“relates to” an employee benefit plan covered by ERISA. Felton

v. Unisource Corp., 940 F.2d 503, 508-09 (9th Cir. 1991). In a

wrongful termination claim, ERISA completely preempts any

state law claim which “relates to” an employee benefit plan

covered by ERISA. Ingersoll-Rand, 451 U.S. at 140;

Metropolitan Life, 481 U.S. at 67.

To be sure, “[nJo ERISA cause of action lies when the loss

of pension benefits was a mere consequence of, but not a

motivating factor behind, the termination of benefits.” Ethridge

v. Harbor House Restaurant, 861 F.2d 1389, 1405 (9th Cir.

1988)(quotation and alteration omitted). However, if the

2la

Appendix A

employer is alleged to have a pension-defeating motive in

terminating the pension benefit, the cause of action “relates to”

an ERISA plan and is preempted. Ingersoll-Rand, 498 U.S. at

140.

The allegations which form the basis of Campbell’s inde-

pendent punitive damage claim are founded on Aerospace’s

improper motive in attempting to minimize or deny his pen-

sion benefits. As such, the independent punitive damage claim

is subject to ERISA preemption and federal jurisdiction.

Campbell cites Rozzell v. Security Servs., Inc., 38 F.3d 819,

822 (Sth Cir. 1994) for the proposition that if only punitive

damages are implicated, ERISA does not preempt the state cause

of action. However, unlike the plaintiff in Rozzell, Campbell’s

complaint specifically alleged that Aerospace was motivated by

a desire to deprive him of pension and employee benefits in its

termination decision. When motive is specifically implicated in

alleged benefit denial, ERISA preempts. This conclusion is

unavoidable in this instance given the broad preemptive force

of ERISA. See Ingersoll-Rand, 498 U.S. at 140; Ethridge, 861

F.2d at 1404.

The majority views Campbell’s punitive claim as incidental

to his wrongful termination claim, citing Ethridge for the

proposition that a claim does not relate to ERISA “when the

loss of pension benefits was a mere consequence of, but not a

motivating factor behind the termination of benefits.” Ethridge,

861 F.2d at 1405. This may be a plausible construction of

Campbell’s complaint, but one with which I must respectfully

differ. If Campbell had simply used the word “benefits” in the

context of his termination claim, as the plaintiff did in Ethridge,

I would agree. However, Campbell has framed an independent

22a

Appendix A

damage claim based on his employer’s motive in denying or

reducing his pension benefits. Under his theory, his entitlement

to punitive damages was not the proximate result of his alleged

wrongful discharge, but rather the manner in which Aerospace

treated his pension. Campbell has not retreated from this

position, nor attempted to reframe his complaint to align it more

closely to Ethridge. He truly aims for a jury award based upon

Aerospace’s alleged improper motives in administering his

pension.

When a plaintiff seeks significant additional money

damages on a tieory founded on manipulation of his pension

benefits, his claim rises beyond “mere consequence” and

becomes subject to ERISA preemption. Thus, although I might

personally prefer the rule espoused by the majority, I cannot in

good conscience reconcile it with ERISA’s exceptionally broad

preemptive language, nor with the Supreme Court’s and our

construction of it.

In the real world of litigation, Fred Campbell has had his

day in court. He was fired for alleged sexual harassment, racism,

poor performance and running a consulting business out of his

office. He countered with a wrongful termination suit,

contending he had, in fact, been terminated for whistleblowing.

An investigation revealed, among other matters, that he had

printed business cards for his personal consulting business listing

his Aerospace telephone number; that office contained virtually

no evidence of any work he was performing for Aerospace; that

he had improperly touched a number of female employees and

made inappropriate sexual remarks; that he had never engaged

in any “whistleblowing” until he was suspended as a result of

numerous complaints by co-workers; and that no fraud had

occurred about which one might rightfully blow a whistle. His

Bee rig, Hobe. ie z

23a

Appendix A

claims were fully aired before the district court, tried to a jury

of his peers, and found to be without merit. I suspect the state

trial judge may find it ironic that this case is being returned for

litigation anew because the plaintiff has alleged an independent

punitive claim, even though all the underlying causes of action

have been rejected on the merits after thorough consideration.

The majority, in good faith, has reached a different

conclusion. However, because I believe the district court was

right on all counts and that our precedent compels a different

result, I respectfully dissent from Section I of the opinion and

the judgment.

24a

APPENDIX B — MEMORANDUM OF DECISION IN THE

UNITED STATES DISTRICT COURT CENTRAL

DISTRICT OF CALIFORNIA DATED MAY 13, 1995

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CASE NO. CV 92-1957 DT

FRED D. CAMPBELL,

Plaintiff,

vs.

THE AEROSPACE CORPORATION; JEAN BREEDLOVE;

ARTHUR J. SCHIEWE; DOES 1-100, inclusive,

Defendants.

MEMORANDUM OF DECISION

The above-entitled matter came on regularly for trial on

May 23, 24, 25 and 26, 1995. Timothy V. Milner, Esq. of the

law firm of Snyder & Milner represented and appeared for the

plaintiff, FRED D. CAMPBELL. Linda M. Lawson, Esq. and

Patricia A. Ellis, Esq. of the law firm of Meserve, Mumper &

Hughes represented and appeared for the defendant, THE

AEROSPACE CORPORATION. All other defendants were

previously dismissed.

After considering the pleadings, testimony, exhibits,

evidence and arguments of counsel, this Court rules as follows:

1. Judgment in favor of defendant, THE AEROSPACE

CORPORATION, as against the plaintiff, FRED D.

25a

Appendix B

CAMPBELL, on all remaining causes of action as set forth in

plaintif’s Complaint. Specifically, this Court finds in favor of

defendant on:

a. Breach of implied contract of continued employment.

There was no such showing of any such breach. Plaintiff

was an at will employee terminated for good cause in that

there was substantial evidence presented to the satisfaction

of the Court that disclosed a disturbing pattern of sustained

complaints of sexual harassment in the work place over a

period of time. The Court finds that it was reasonable for

defendant to suspend and ultimately terminate plaintiff for

cause; and,

b. Breach of the implied covenant of good faith and fair

dealing. There was no such showing of any such breach.

For the reasons set forth above, the defendant’s decision

to terminate plaintiff was not pretextual. The Court finds

5 sul.icient evidence that good cause existed to suspend and

terminate plaintiff for sexual harassment in the work place.

2. Defendant to recover its costs of suit from plaintiff.

3. Defendant to prepare a Judgment in accordance with this

Memorandum of Decision.

DATED: MAY 01 1995

s/ Dickran Tevrizian

DICKRAN TEVRIZIAN

United States District Judge

26a

Appendix B

I hereby certify that this document was served by First Class

mail, postage prepaid, to all counsel (or parties) at their

respective most recent address of record in this action on this

date.

DATED DEPUTY CLERK

27a

APPENDIX C — OPINION OF THE UNITED STATES

DISTRICT COURT CENTRAL DISTRICT OF

CALIFORNIA FILED MAY 31, 1995

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CASE NO. CV 92-1957 DT

FRED D. CAMPBELL,

Plaintiff,

VS.

THE AEROSPACE CORPORATION; JEAN BREEDLOVE:

ARTHUR J. SCHIEWE; DOES | -100, inclusive,

Defendants.

FINDINGS OF FACT AND

CONCLUSIONS OF LAW

COURT’S FINDINGS OF FACT

1. THE AEROSPACE CORPORATION (“AEROSPACE”)

is an independent non-profit California corporation whose

central mission is to perform general systems engineering and

integration services for military space-related programs and

other programs essential to national security.

2. From March 25, 1968 to February 1974 and November

1979 through September 30, 1991, plaintiff was employed by

AEROSPACE as a Member of the Technical Staff (“MTS”).

28a

Appendix C

3. At the time plaintiff was terminated from his employment

on September 30, 1991, plaintiff's job title was Manager, Level

2, Sensors Section Electro-Optical Systems Department,

Engineering and Technology Group.

4. Aerospace has adopted and implemented written Policies

and Practices which govern the terms and conditions of

employment. Among these policies are those relating to

termination of employment, conflicts of interest and sexual

harassment.

5. During the course of his employment at AEROSPACE,

plaintiff was provided with copies of AEROSPACE’s written

Policies and Practices.

6. AEROSPACE Policy No. 1-16, entitled, “Employee

Conduct-Conflict of Interest,” requires each employee, every

two (2) years, to make a statement that the employee has read

and understands the Company’s conflict of interest policies and

has no outside business interest. As of February 22, 1990,

plaintiff had executed a “Conflict of Interest Certification.”

7. AEROSPACE Practice 4 No. 2-35-2, entitled, “Sexual

Harassment,” provides, in relevant part, as follows: “As part of

its commitment to equal employment opportunity, the Company

prohibits any form of sexual harassment on the part of

employees, and treats sexual harassment as a serious form of

illegal discrimination.” ©

8. AEROSPACE Practice 2-35-2, entitled, “Sexual

Harassment,” provides, in relevant part, as follows: ... “Any

form of sexual harassment is contrary to the Company’s

commitment to equal employment opportunity. Sexual

(Sl Macht PIG cans MN it EI halk ihe

29a

Appendix C

harassment will lead to disciplinary action up to and including

termination.”

9. As part of its ongoing efforts to prohibit any form of

sexual harassment from occurring at the work place,

AEROSPACE sponsored Sexual Harassment Awareness

Programs and required that its managers, including plaintiff,

attend. The attendees of the programs were informed of the

nature of sexual harassment and the many forms it can take.

10. On or about July 11, 1991, JEAN BREEDLOVE

(“BREEDLOVE”), Principal Director, Sensors Systems

Subdivision, received a report from an exiting employee that

plaintiff, an employee in her subdivision, was sexually harassing

female secretaries and female engineers and conducting personal

business on Company time.

11. BREEDLOVE conducted preliminary interviews with

several female employees with whom plaintiff worked to

ascertain whether there appeared to be any merit to the

allegations that plaintiff was engaging in acts of sexual

harassment and/or that plaintiff was engaged in operating his

own business on Company time.

12. BREEDLOVE reported the results of her preliminary

investigation to AEROSPACE’s Equal Employment Opportunity

(“EEO”) Office.

13. Since the results of the preliminary investigation

revealed that the allegations of plaintiff’s misconduct appeared

to have merit, on July 16, 1991, plaintiff was suspended without

pay pending a complete investigation.

30a

Appendix C

14. Between July 16, 1991, and August 1, 1991,

AEROSPACE conducted a thorough and complete investigation

into the allegations of plaintiff’s misconduct.

15. As part of the investigation into the allegation of sexual

harassment, AEROSPACE interviewed fourteen (14) employees

in plaintiff’s Department.

16. These personal interviews and inspections revealed that

(1) plaintiff had repeatedly made statements of sexual nature

causing embarrassment and humiliation to numerous female

employees; (2) plaintiff had engaged in unwelcome back,

shoulder and/or neck rubs; and (3) plaintiff was actively pursuing

personal business matters of a limited nature on AEROSPACE

time.

17. Many of the women interviewed stated that they were

frightened and intimidated by plaintiff and expressed concern

that plaintiff would retaliate against them physically or in a

punitive manner because of their participation in the

investigation.

18. Personal letterhead, address sheets, invoices and/or

business-type cards were discovered in plaintiff’s office.

19. Plaintiff and his wife were identified on letterhead as

“Engineering & Data Management Consultants” or “Engineering

and Information Systems Consultants.”

20. Prominently displayed on each business-type card was

plaintiff's AEROSPACE telephone and voice mail numbers.

3la

Appendix C

21. Interviews with several employees who worked in

plaintiff’s area revealed that plaintiff received telephone calls

from his “clients” and counseled them during normal business

hours. The employees stated that they were able to overhear

these conversations because plaintiff spoke loudly into the

telephone, or used the speaker phone, and did not close his door

to ensure privacy.

22. An inspection of plaintiff's timecards, office and review

of various computer disks, including those used by secretaries

who supported plaintiff, raised issues as to the amount of

AEROSPACE work performed by plaintiff during the two (2)

years he held the position of Manager.

23. Numerous floppy disks identified as “personal” were

located in plaintiff’s office, as well as numerous entries on hard

drive denoting personal files entered into and worked on by

plaintiff during core work hours.

24. Pursuant to AEROSPACE’s internal grievance process,

plaintiff challenged his suspension.

25. In accordance with grievance procedures, AEROSPACE

advised plaintiff, in writing, of the specific charges against him,

i.e., sexual harassment and conducting personal business on

Company time. Plaintiff was also provided with written

summaries of the outcome of the investigation conducted by

AEROSPACE.

26. In response, plaintiff denied all of the charges against

him and submitted a detailed “Response to Allegations of

Misconduct” on August 12, 1991.

32a

Appendix C

27. During this time, AEROSPACE continued its

investigation to determine the appropriate course of action to

be taken with respect to plaintiff’s employment status. As part

of this further investigation, AEROSPACE obtained sworn

declarations from female employees who had been interviewed

regarding the charges of sexual harassment against plaintiff.

28. The female employees expressed concern that plaintiff

owned two (2) guns and was a member of the National Rifle

Association (“N.R.A.”). This concern was expressed to

management.

29. Following the completion of the investigation into the

allegations of plaintiff’s misconduct, AEROSPACE determined

that more than sufficient evidence existed to substantiate the

charges that plaintiff had engaged in acts of sexual harassment

and had conducted personal business on Company time.

30. Notwithstanding the results of the investigations and

the conclusion that plaintiff’s conduct warranted immediate

termination for cause, AEROSPACE attempted to locate an

alternative position for plaintiff within the Company.

31. No alternative position could be located where plaintiff

would not have interaction with the female employees who had

complained of plaintiff’s sexual harassment.

32. On September 17, 1991, plaintiff was advised in writing

that he was placed on an unpaid leave of absence until September

30, 1991, at which time his employment would be terminated.

33. AEROSPACE further advised plaintiff that it would

agree to rescind his termination and allow him to retire effective

33a

Appendix C

November i, 1991, should plaintiff choose to accept

AEROSPACE’s Retirement Incentive Plan (“RIP”).

34. Plaintiff declined to accept the RIP and, as a result, his

employment with AEROSPACE was terminated for cause

effective September 30, 1991.

35. At no time did plaintiff report his “concern” regarding

AEROSPACE’s inappropriate billing practices to the U.S. Air

Force.

36. At no time did plaintiff conduct any investigation to

substantiate his “belief” that AEROSPACE was inappropriately

billing the U.S. Air Force.

37. Atno time during AEROSPACE’s investigation into the

allegations of plaintiff's misconduct did plaintiff advise

management of his “belief” that AEROSPACE was not properly

billing the U.S. Air Force.

38. At no time during AEROSPACE’s internal grievance

process did plaintiff advise management of his “belief” that

AEROSPACE was engaged in illegal billing activities.

39. AEROSPACE Policy No. 2-60, entitled, “Termination

of Employment,” provides that “[a]n involuntary termination

may involve ... a discharge for cause . . .”

40. Plaintiff was charged, and ultimately terminated, for

conducting personal business on AEROSPACE time and

engaging in sexual harassment.

34a

Appendix C

41. This Court finds that AEROSPACE had reasonable

grounds to conduct an investigation into the allegations that

plaintiff had engaged in acts of sexual harassment and had

conducted personal business on Company time.

42. The investigation took place over a two (2) month time

period and included interviews with numerous percipient

witnesses.

43. BREEDLOVE was not a party to the employment

contract between AEROSPACE and plaintiff.

44. While this Court has found that AEROSPACE had

reasonable grounds to conduct an investigation into the

allegations as set forth in paragraph 41, this Court finds that

only the charge that plaintiff had engaged in several acts of

sexual harassment over a period of time is substantiated by the

evidence. The evidence presented to this Court on the issue that

plaintiff had conducted personal business on Company time is

inconclusive.

45. A Grievance Appeals Board hearing on plaintiff’s

grievance was convened on September 24, 1991, pursuant to

Step 4 of Practice 2-35-1 dated March 3, 1989, entitled,

“Employee Grievance Procedure.”

46. This Court finds that, after considering all of the

information and testimony provided during the grievance

procedure and grievance hearing, the Grievance Appeals Board

properly concluded that Management of AEROSPACE

CORPORATION acted in accordance with Company policies

and practices which govern the suspension of plaintiff based

upon evidence of sustained complaints of sexual harassment in

the work place over a period of time.

acter enaeeeereeanaieeiill

RE OES

Cae en Ne &

35a

Appendix C

47. This Court further finds that plaintiff’s ultimate

termination for sustained complaints of sexual harassment in

the work place over a period of time was proper.

COURT’S CONCLUSIONS OF LAW

1. This Court has jurisdiction over the parties and subject

matter of this lawsuit based upon federal question jurisdiction

pursuant to the Employee Retirement Income Security Act of

1974 (“ERISA”), 29 U.S.C. Sections 20092, et seq., pursuant

to 28 U.S.C. Sections 1331 and 1441(b).

2. AEROSPACE had good cause to terminate plaintiff’s

employment on the issue of sexual harassment.

3. AEROSPACE acted in good faith in terminating

plaintiff’s employment.

4. Accordingly, there is no genuine issue as to any material

fact remaining and AEROSPACE is entitled to a judgment as a

matter of law on all remaining causes of action.

5. Accordingly, there is no genuine issue as to any material

fact remaining and AEROSPACE is entitled to a judgment that

plaintiff’s claim for breach of implied contract of continued

employment be dismissed, as a matter of law.

6. Accordingly, there is no genuine issue as to any material

fact remaining and AEROSPACE is entitled to a judgment that

plaintiff's claim for breach of the implied covenant of good faith

and fair dealing be dismissed, as a matter of law.

36a

Appendix C

7. If any of the foregoing controverted facts are construed

to be conclusions of law, the same shall be deemed to be

conclusions of law. If any of the foregoing conclusions of law

are construed to be uncontroverted facts, the same shall be

deemed to be uncontroverted facts.

DATED: MAY 31 1995

s/ Dickran Tevrizian

DICKRAN TEVRIZIAN

United States District Court

I hereby certify that this document was served by First Class

mail, postage prepaid, to all counsel (or par‘ies) at their

respective most recent address of record in this action on this

date.

DATED DEPUTY CLERK

37a

APPENDIX D — ORDER OF THE UNITED STATES

DISTRICT COURT FOR THE CENTRAL DISTRICT OF

CALIFORNIA DATED OCTOBER 12, 1993

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Case No. CV 92-1957-DT (Tx)

FRED D. CAMPBELL

Plaintiff,

vs.

THE AEROSPACE CORPORATION; JEAN BREEDLOVE;

ARTHUR J. SCHIEWE; DOES 1-100, INCLUSIVE

Defendants.

ORDER DENYING PLAINTIFF’S

MOTION TO REMAND

Background

This action arises out of Fred D. Campbell’s (“Plaintiff”)

suit against the Aerospace Corporation (“Aerospace”), Jean

Breedlove, Arthur J. Schiewe, and Does 1-100, Inclusive

(collectively, the “Defendants”) for wrongful termination.

Plaintiff filed his complaint in California Superior Court

on February 25, 1992 alleging: (1) tortious discharge in violation

of public policy; (2) beach of implied contract of continued

employment; (3) breach of the implied covenant of good faith

and fair dealing; (4) age discrimization in violation of California

38a

Appendix D

Government Code Section 12941(a); (5) common law age

discrimination; and (6) defamation. Defendant Aerospace

removed the action to this Court on March 31, 1992 based on

federal question jurisdiction, namely, the Employee Retirement

Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001,

et seq.

On April 7, 1993 Plaintiff dismissed, with prejudice, his

fourth and fifth claims for relief for statutory and common law

age discrimination. On August 23, 1993 this Court granted

Defendant Aerospace’s Motion for Summary Judgment and

dismissed Plaintiff's first and sixth claims for relief for tortious

discharge in violation of public policy and defamation. The

remaining claims are Plaintiff's second and third claims for relief

for breach of an implied contract of continued employment and

breach of the implied covenant of good faith and fair dealing.

Plaintiff then filed a motion to remand the pending matter

to California Superior Court on the grounds that no ERISA issues

had been pled or arisen during discovery. This motion is now

before this Court.

Discussion

A. Standard

At any time prior to final judgment, the federal court may

remand the case to the state court for a defect in removal

procedures or for lack of subject matter jurisdiction. 28 U.S.C.

§ 1447(c). A plaintiff's motion for remand effectively forces

the defendant, the party who invoked the federal court’s removal

jurisdiction, to prove whatever is necessary to support the

petition. That is, the plaintiff must prove the existence of

39a

Appendix D

diversity, the amount in controversy, or the federal nature of the

claim. Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir. 1992).

In ruling on a reward motion, this Court ordinarily

determines removability from the complaint as it existed at the

time of removal, together with the removal notice. Additionally,

this Court, in determining whether to remand the action to state

court, must carefully examine Plaintiff's complaint to ascertain

whether it was removable due to the existence of a federal

question, even though Plaintiff couched his pleading exclusively

in terms of state law.

ERISA contains a broad preemption provision. ERISA states

that, with some exceptions, ERISA “shall supersede any and all

State laws insofar as they may now or hereafter relate to any

employee benefit plan . . .” 29 U.S.C. § 1144(a). When a plaintiff

brings an action in state court which contains causes of action

preempted by ERISA’s civil enforcement provisions, the case is

removable to federal court. Metropolitan Life Insurance Co. v.

Taylor, 481 U.S. 58 (1987).

B. Removal for Existence of Federal Question

In Defendant Aerospace’s Notice of Removal, they asserted

that a federal question was in issue pursuant to 28 U.S.C.

§ 1441(b). Specifically, Aerospace argued that ERISA issues

existed as Plaintiff's claims were premised on Aerospace’s

alleged interference with the attainment of pension and other

employment benefits provided to Aerospace employees under

an employee benefit plan within the meaning of ERISA. Thus,

according to Aerospace, Plaintiff's state law claims were

preempted by ERISA.

40a

Appendix D

Plaintiff's motion to remand is premised, however, on the

contentions that his Complaint does not state a claim under

ERISA and that no ERISA claims have arisen during the course

of discovery. However, Plaintiff’s Complaint belies this

allegation. Plaintiff’s Complaint with respect to his first claim

for tortious discharge in violation of public policy alleges that

“defendants knew that terminating plaintiff after long years of

service would minimize plaintiff’s right to recover and build

adequate retirement benefits, would require plaintiff to be

without certain benefits and would make it extremely difficult

for plaintiff to obtain employment because of his high salary,

advancing age and the stigma of termination for cause.”

(Complaint, p.4). Thus, according to Plaintiff, Defendants acted

to deprive Plaintiff of pension and employee benefits through

Plaintiff’s termination.

No ERISA cause of action lies when the loss of pension

benefits is a mere consequence of, but not a motivating factor

behind, the termination of benefits. Ethridge v. Harbor House

Restaurant, 861 F.2d 1389, 1405 (9th Cir. 1988). But while

Plaintiff's Complaint primarily mentions lost benefits in the

context of damages suffered as a result of the wrongful

termination, Plaintiff also alleges that the Defendants’ actions

in terminating Plaintiff were motivated by a desire to deprive

him of pension and employee benefits. This allegation

sufficiently states a cause of action under ERISA; ERISA creates

a federal cause of action over an employee’s claims to recover

benefits due him under the terms of the plan. Clorox v. U.S.

Dist. Ct. for N.D. of California, 779 F.2d 517, 521 (9th Cir.

1985). Thus, although Plaintiff’s Complaint is couched in terms

of state law, the first cause of action arises under and is

preempted by ERISA. As a result, this matter was properly

removed to federal court.

4la

Appendix D

C. Continuing Federal Jurisdiction

This Court is familiar with both the facts and issues in this

case. Therefore, at this time, this Court will exercise its discretion

and retain jurisdiction to hear all remaining claims.

Accordingly, this Court hereby DENIES Plaintiff’s Motion

to Remand.

IT IS SO ORDERED.

DATED: OCT 12 1993

stamped/DICKRAN TEVRIZIAN

Dickran Tevrizian, Judge

United States District Court

42a

APPENDIX E — NOTICE OF REMOVAL OF ACTION

UNDER 28 U.S.C. SECTION 1441(b)

DATED MARCH 31, 1992

LINDA M. LAWSON #77130

PATRICIA A. ELLIS #130044

HELEN DOMANSKY #156119

MESERVE, MUMPER & HUGHES

333 South Hope Street, 35th Floor

Los Angeles, California 90071

Telephone: (213) 620-0300

Attorneys for Defendant

THE AEROSPACE CORPORATION

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Case No.

NOTICE OF REMOVAL OF ACTION

UNDER 28 U.S.C. SECTION 1441(b)

[Los Angeles Superior Court Case No. YC 010541]

FRED D. CAMPBELL,

Plaintiff,

vs.

THE AEROSPACE CORPORATION; JEAN BREEDLOVE;

ARTHUR J. SCHIEWE; DOES | - 100, Inclusive,

Defendants.

43a

Appendix E

TO THE DISTRICT COURT OF THE UNITED STATES,

CENTRAL DISTRICT OF CALIFORNIA, AND TO

PLAINTIFF, FRED D. CAMPBELL, AND HIS ATTORNEYS

OF RECORD:

PLEASE TAKE NOTICE that on March 31, 1992,

defendant, The Aerospace Corporation (“Aerospace”),

contemporaneously with the filing of this Notice, is removing

the above-referenced action from the Superior Court of the State

of California for the County of Los Angeles to the District Court

of the United States. The Removal is based on the following

grounds:

1. This action has been removed to this Court based upon

federal question jurisdiction pursuant to 28 U.S.C. Sections 1331

and 1441(b). This suit is one of a civil nature over which the

District Court of the United States has original jurisdiction.

2. This case was initiated against Aerospace in the Superior

Court of the State of California for the County of Los Angeles

on February 25, 1992. Aerospace received a copy of the

Summons and Complaint on or after March 4, 1992. No prior

pleading has been served on Aerospace. Aerospace has filed this

Notice of Removal of Action within one (1) year of

commencement of the action and within thirty (30) days of first

having received the Summons and Complaint.

3. This action raises a federal question under the Employee

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

Sections 1001, et seq.

4. Plaintiff's Complaint is premised upon Aerospace’s

alleged interference with the attainment of pension and other

44a

Appendix E

employment benefits provided by Aerospace to its employees

under an employee benefit plan. Specifically, in the first claim

for relief, i.e., “Tortious Discharge in Violation of Public Policy,”

plaintiff alleges that “defendants knew that terminating plaintiff

after long years of service would minimize plaintiff’s right to

recover and to build adequate retirement benefits, [and] would

require plaintiff to be without certain benefits ...”. See

Complaint, page 4, paragraph 10. Plaintiff specifically requests

damages for loss of “employee benefits.” See Complaint, page

11, paragraph 1.

5. The pension and other employment benefits to which

plaintiff refers throughout the Complaint are embodied in an

employee benefit plan provided by Aerospace to its employees.

That employee benefit plan is governed by ERISA.

6. Title 29 U.S.C. Section 1003(a) provides that ERISA

shall apply to any employee benefit plan which is not excluded

under 29 U.S.C. Section 1003(b), if it is established or

maintained by any employer engaged in interstate commerce or

ary industry or activity affecting interstate commerce. Aerospace

alleges that it is a corporation engaged in interstate commerce

or in activities affecting interstate commerce. The employee

benefit plan provided by Aerospace to its employees is not

excluded from ERISA coverage under the provisions of 29

U.S.C. Section 1003(b).

7. Title 29 U.S.C. Section 1002(3) defines the term

“employee benefit plan” to include an “employee welfare benefit

plan” or an “employee pension benefit plan.” Title 29 U.S.C.

Section 1002(1) defines an “employee welfare benefit plan” to

be:

45a

Appendix E

[Ajny plan, fund, or program which was heretofore

or is hereafter established or maintained by an

employer ... for the purpose of providing for its

participants or their beneficiaries, through the

purchase of insurance or otherwise, (A) medical,

surgical or hospital care or benefits, or benefits in

the event of sickness, accident, disability, death or

unemployment...

Title 29 U.S.C. Section 1002(2)(A) defines an “employee

pension benefit plan” and “pension plan” to be:

[A]ny plan, fund, or program which was heretofore

or is hereafter established or maintained by an

employer... that... (i) provides retirement income

to employees...

8. Aerospace alleges that its employee benefit plan is an

“employee benefit plan” within the meaning of ERISA since it

provides, among other benefits, medical and pension benefits

for its employees.

9. Since plaintiff’s lawsuit for wrongful discharge is

premised upon Aerospace’s alleged interference with the

attainment of pension rights and other employment benefits

under an employee benefit plan, plaintiff’s state law claims are

preempted by ERISA. Ingersoll-Rand v. McClendon, _ U.S.

—, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990); Sorosky v. Burroughs

Corp., 826 F.2d 794 (9th Cir. 1987); Pilot Life Insurance

Company v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549, 95 L.Ed. 2d

39 (1987).

10. Although a complaint which raises only state law claims

is not ordinarily removable to federal court based upon a federal

46a

Appendix E

preemption defense to the state laws claims, federal preemption

under ERISA falls within an exception to the “well-pleaded

complaint” rule because Congress has so “completely

preempted” the area of employee benefit plans. As a result, any

claims alleging an employer’s interference with the attainment

of benefits under an ERISA plan “. . . [aJre not only preempted

by ERISA but also displaced by ERISA’s civil enforcement

provisions . . . to the extent that complaints filed in state courts

purporting to plead such state common law causes of action are

removable to federal court under 28 U.S.C. Section 1441(b).”

Metropolitan Life Insurance Company v. Taylor, 481 U.S. 58,

107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).

11. Because plaintiff's lawsuit is one to establish liability

and recover damages for an employer’s alleged interference with

the attainment of pension and other employment benefits under

a plan governed by ERISA, the action is a civil one over which

this Court has concurrent original jurisdiction pursuant to 29

U.S.C. Section 1132(e)(1). Accordingly, by virtue of the

provisions of 28 U.S.C. Section 1441(b), this action may be

removed to this Court.

12. This Court may exercise pendent jurisdiction over any

state law claims arising from a nucleus of operative fact common

to both the state law claim and the ERISA claim. Nishimoto v.

Federman-Bachrach & Associates, 903 F.2d 709 (9th Cir. 1990);

Sorosky, supra at 800.

13. Aerospace is informed and believes, and on that basis

alleges, that no other defendant, other than itself, has been served

with process herein.

14. All of the process, pleadings and orders received by

Aerospace are attached as Exhibit “A.”

Sa a a a

47a

Appendix E

DATED: March 31, 1992

LINDA M. LAWSON

PATRICIA A. ELLIS

HELEN DOMANSKY

MESERVE, MUMPER & HUGHES

s/Patricia A. Ellis

By: Patricia A. Ellis

Attorneys for Defendant

THE AEROSPACE CORPORATION

48a

APPENDIX F — JUDGMENT OF THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

FILED OCTOBER 22, 1997

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

NO. 95-56007

CT/AG#: CV-92-01957-DT(GK)

FRED D. CAMPBELL

Plaintiff - Appellant

THE AEROSPACE CORPORATION; ARTHUR J. SCHIEWE

Defendants - Appellees

APPEAL FROM the United States District Court for the

Central District of California, Los Angeles.

THIS CAUSE came on to be heard on the Transcript of the

Record from the United States District Court for the Central

District of California, Los Angeles and was duly submitted.

ON CONSIDERATION WHEREOPF, It is now here ordered

and adjudged by this Court, that the judgment of the said District

Court in this cause be, and hereby is reversed and remanded

with instructions. Costs taxed.

Filed and entered October 22, 1997

49a

APPENDIX G — ORDER OF THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

DENYING PETITION FOR REHEARING

FILED OCTOBER 22, 1997

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 95-56007

D.C. No. CV-92-01957-DT(GK)

FRED D. CAMPBELL,

Plaintiff-Appellant,

THE AEROSPACE CORPORATION; ARTHUR J. SCHIEWE,

Defendants- Appellees.

ORDER

Before: BRUNETTI, TROTT, and THOMAS, Circuit Judges.

Judges Brunetti and Trott have voted to deny the petition

for rehearing. Judge Thomas voted to grant the petition for

rehearing. Judges Brunetti and Trott would deny the suggestion

for rehearing en banc. Judge Thomas has voted to grant the

suggestion for rehearing en banc.

50a

Appendix G

The full court has been advised of the suggestion for

rehearing en banc and no judge of the court has requested a

vote on it. Fed. R. App. P. 35(b).

The position for rehearing is DENIED and the suggestion

for rehearing en banc is REJECTED.

Sla

APPENDIX H — COMPLAINT FOR DAMAGES FOR

TORTIOUS DISCHARGE; BAD FAITH DISCHARGE;

BREACH OF EMPLOYMENT CONTRACT;

AGE DISCRIMINATION; DEFAMATION

(CIVIL CODE SECTION 3300, 3333)

WILLIAM G. CORT, ESQ. State Bar No. 50326

DaCORSI AND CORT

21051 Costanso Street

Woodland Hills, California 91364

(818) 592-0058

Attorneys for Plaintiff

FRED D. CAMPBELL

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

CASE NO.:

FRED D. CAMPBELL,

Plaintiff,

Vv.

THE AEROSPACE CORPORATION; JEAN BREEDLOVE:

ARTHUR J. SCHIEWE; DOES 1 - 100, Inclusive,

Defendants.

COMPLAINT FOR DAMAGES FOR TORTIOUS

DISCHARGE; BAD FAITH DISCHARGE; BREACH OF

EMPLOYMENT CONTRACT; AGE DISCRIMINATION:

DEFAMATION (CIVIL CODE SECTION 3300, 3333)

52a

Appendix H

Plaintiff alleges:

1. Defendant, The Aerospace Corporation (hereinafter

“Aerospace”) is and at all times mentioned herein, was a non-

profit corporation organized and existing under the laws of the

State of California with its principal place of business in Los

Angeles County, California.

2. Defendant Does 1-100, inclusive were at all times

relevant herein employees, agents, and or members of the Board

of Directors of defendant Aerospace. Plaintiff is ignorant of the

true names and capacities of defendants sued herein as Does

1-100, inclusive, and therefore sues these defendants by such

fictitious names. Plaintiff will pray leave of this court to amend

this complaint to allege the true names and capacities when

ascertained.

3. Defendants Breedlove and Schiewe were at all times

relevant herein, employees and agents of defendant Aerospace

and members of defendant Aerospace’s management team.

Defendant Aerospace consented to, ratified and authorized the

acts of defendants Breedlove and Schiewe herein.

4. Plaintiff is informed and believes and thereon alleges,

that each of the defendants herein was, at all times relevant to

this action, the agent, employee, representing partner or joint

venturer of the remaining defendants and was acting within the

course and scope of that relationship. Plaintiff is further informed

and believes, and thereon alleges, that each of the defendants

herein gave consent to, ratified, and authorized the acts alleged

herein to each of the remaining defendants.

53a

Appendix H

FIRST CAUSE OF ACTION

(Tortious Discharge in Violation of Public Policy)

5. From March 25, 1968 to February, 1974 and November,

1979 through September 30, 1991, plaintiff was employed by

defendant Aerospace as a member of the technical staff.

6. On or about July 16, 1991, plaintiff received Notice of

Suspension without pay. On September 17, 1991, plaintiff

received notice from defendant Aerospace that he was terminated

effective September 30, 1991. Plaintiff did not receive any pay

from July 20, 1991, to September 30, 1991. Plaintiff was

terminated allegedly for cause while he was still in the process

of grieving his suspension pursuant to published Aerospace

corporate policy and practice. Plaintiff was furthermore denied

access to his personal and professional property and files, which

remained on defendant, Aerospace’s, property. This property was

important to plaintiff's defense of the charges. Some of

plaintiff's personal and professional files were also permanently

destroyed by defendant, Aerospace. Plaintiff had also made

known to other members of management his belief that

defendant Aerospace was not properly billing the U.S. Air Force,

defendant Aerospace’s major client. Defendant, Aerospace, was

billing hours to the Air Force that were not properly chargeable

to specific programs but were, rather, chargeable to overhead.

In additiou, the plaintiff had repeatedly and specifically

requested additional services and equipment essential to the

efficient and effective utilization of the staff that he managed.

This support was denied.

7. The actions of defendants and each of them violated the

public policy of the State of California, to wit, employers must

provide employees due process and must follow their own

54a

Appendix H

written policies and procedures regarding termination.

Furthermore, plaintiff was terminated for “blowing the whistle”

on illegal activity of defendant Aerospace, to wit, illegally billing

the U.S. Air Force which is funded with taxpayers’ money.

8. As a proximate result of plaintiff's conduct as described

in paragraph 6 above aad in violation of public policy as set

forth in paragraph 7 aoove, defendant, Aerospace, terminated

plaintiff's employment on September 30, 1991.

9. As a proximite result of defendant’s conduct, plaintiff

has suffered harm, including lost earnings, and other

employment benefits, the cost of seeking new employment and

other damages in an amount to be proven at trial.

10. In doing the acts set forth above, defendants knew that

terminating plaintiff after long years of service would minimize

plaintiff's right to recover and to build adequate retirement

benefits, would require plaintiff to be without certain benefits

and would make it extremely difficult for plaintiff to obtain

employment because of his high salary, advancing age and the

stigma of termination for cause. Defendants further subjected

plaintiff to ridicule, shame and embarrassment with regard to

fellow employees as plaintiff was escorted out of defendant

Aerospace’s place of business, was not allowed to remove his

personal and professional property from his personal office and

was humiliated by defendants in front of his co-workers. The

alleged charges against plaintiff were also made known

throughout the company, in addition, the defendant management

attempted to find substantiation for their original charges and

then found additional grounds for dismissal when the original

charges were found to be baseless as defendant, Aerospace,

chose not to mark the allegations and accompanying

—EEEE——___a

55a

Appendix H

documentation “Company Private” per corporate practice which

would restrict it’s dissemination to carefully chosen employees

investigating the charges. This oppressive conduct was

committed by employees, agents, managing agents and the

Board of Directors of defendant, Aerospace. Defendants conduct

warrants the assessment of punitive damages.

11. Defendant, Aerospace, authorized and ratified the

conduct of the officers, employees, agents, Managing agents and

Board of Directors as alleged in paragraph 10 by retaining the

employees, agents, managing agents and Board of Directors and

officers after learning of their conduct toward plaintiff and failing

and refusing to discipline or reprimand these individuals. The

authorization and ratification was by a corporate officer

employee, director and/or managing agent of Aerospace.

SECOND CAUSE OF ACTION

(Breach of Implied Contract of Continued Employment)

12. Plaintiff incorporates herein by reference paragraphs

1 through 5 of the first cause of action as if fully set forth herein.

13. Plaintiff received good to excellent performance

evaluations, merit increases, raises, and promotions. Plaintiff

was assured on numerous occasions that he would not be

arbitrarily terminated and relied on the provisions of company

written policy and corporate memorandums regarding

termination to conclude that plaintiff and defendant, Aerospace,

had entered into an implied contract that plaintiff would not be

discharged unless there was good cause to do so.

14. Based on the oral representations and promises and

conduct of defendant, Aerospace, as set forth in paragraph 13

56a

Appendix H

above, plaintiff had an employment contract with defendant,

Aerospace, that he would be employed by defendant, Aerospace,

so long as his performance was satisfactory and that defendant,

Aerospace, would not discharge or terminate him without good

and just cause.

15. The terms of the employment contract included, but were

not limited to, the following: Defendant, Aerospace, would not

discharge or terminate plaintiff without good cause and fair

warning, that any charges for cause would be fairly and

objectively investigated and that plaintiff would be guaranteed

due process in defending the allegations.

16. Plaintiff, at all times, fulfilled his duties and conditions

under the contract and has been ready, willing and able to

continue performing them in a competent and satisfactory

manner.

17. Notwithstanding the implied promises to terminate the

employment contract only for good cause, on or about September

30, 1991, defendant, Aerospace, terminated plaintiff’s

employment without just cause, failed to provide plaintiff with

due process in defending the charges and did not fairly and

objectively investigate the allegations against plaintiff.

18. As a proximate result of defendants’ breach of the

employment contract, plaintiff has suffered and continues to

suffer losses in earnings and other employment benefits in an

amount to be established at trial.

57a

Appendix H

THIRD CAUSE OF ACTION

(Breach of Covenant, Good Faith, and Fair Dealing)

19. Plaintiff incorporates herein by reference paragraph |

through 5 of the First Cause of action and paragraphs 13 through

18 of the Second Cause of Action.

20. The Employment Agreement referred to above

contained an implied covenant of good faith and fair dealing,

which obligated defendant to perform the terms and conditions

of the agreement fairly and in good faith and to refrain from

doing any act that would prevent or impede plaintiff from

performing any or all of the conditions of the contract that he

agreed to perform, or any act that would deprive plaintiff of the

benefits of the contract.

21. Plaintiff was employed by defendant, Aerospace, for a

total period of approximately 17 years, off and on and reasonably

relied on the provisions of company policy and memorandum

relative to termination. Plaintiff relied on defendant, Aerospace,

that it would implement company policy and procedure in

terminating plaintiff if good cause existed for plaintiff’s

termination.

22. Plaintiff performed all the duties and conditions of the

employment agreement.

23. Defendants knew that plaintiff had fulfilled all his duties

and conditions under the contract.

24. Defendants breached the implied covenant of good faith

and fair dealing under the employment agreement by terminating

58a

Appendix H

plaintiff intentionally, maliciously and without probable cause,

in bad faith and for reasons extraneous to the contract. In fact,

defendants discharged plaintiff, not because of alleged poor

performance, and misconduct but because plaintiff had “blown

the whistle” on defendant Aerospace’s billing policy with regard

to time properly chargeable to specific U.S. Air Force programs.

Such motives were contrary to public policy and extraneous to

the employment relationship and were intended to deprive

plaintiff of the benefits thereof.

25. Defendant, Aerospace, further breached the implied

covenant of good faith and fair dealing by violating and failing

to follow its’ own personnel policies by not following time

limitations and providing plaintiff due process through the

Aerospace grievance procedure. Defendant Aerospace

terminated plaintiff prior to the completion of the grievance

process and totally failed to properly resolve the issues raised

in each of the plaintiff’s three grievances.

26. As a proximate result of defendants’ breach of the

implied covenant of good faith and fair dealing, plaintiff has

suffered and continues to suffer losses in earnings and other

employment benefits to his damage in an amount to be

determined at trial.

FOURTH CAUSE OF ACTION

(Age Discrimination Government Code Section 12941(a))

27. Plaintiff repleads and incorporates herein by reference

paragraph | through 5 of the First Cause of Action. Plaintiff

was over the age of forty years at the time of his discharge.

59a

Appendix H

28. Plaintiff has satisfied all administrative requirements

by filing a claim with the Equal Employment Opportunities

Commission or the Fair Employment and Housing Commission.

Plaintiff has received a right to sue letter less than one year

from the date of the filing of this complaint.

29. Plaintiff was terminated from his employment because

he was over the age of forty (40) years.

30. As a proximate result of defendants discriminating

against plaintiff because of his age he has suffered and continues

to suffer loss in earnings and other employment benefits,

emotional distress and “front pay” damages. As a further

proximate result of defendants discrimination, plaintiff requests

attorney’s fees pursuant to Government Code Section 12965(b).

FIFTH CAUSE OF ACTION

(Age Discrimination, Common Law,

Government Code Section 12993)

31. Plaintiff repleads and incorporates herein paragraphs

27 through 30 of the Fourth Cause of Action.

32. Plaintiff was discriminated against by being terminated

from employment because he was over the age of forty (40)

years.

SIXTH CAUSE OF ACTION

(Defamation)

33. Plaintiff repleads paragraphs 1 through 5 of the First

Cause of Action as if fully set forth herein.

60a

Appendix H

34. On or about July 16, 1991, and for a period to and

including September, 1991, defendants spoke and caused to be

published the following words of and concerning the plaintiff:

“Plaintiff was charged with working during company time on

personal business and plaintiff was charged with sexually

harassing female co-employees.” The words and publications

were distributed during the course of an investigation concerning

plaintiff’s employment. These utterances were not kept company

private as is company procedure concerning an investigation of

an employee’s termination for cause. Furthermore, plaintiff was

summarily escorted from the company premises in full view of

co-employees on or about July 16, 1991.

35. The words and publications were defamatory per se

because they tend to injure plaintiff in his profession by imputing

to him dishonesty and sexual harassment of co-employees.

Plaintiff was in a managerial position at the time of these

allegations, which are unfounded and destroyed plaintiff’s ability

to effectively manage employees at defendant, Aerospace’s place

of business.

36. The words and publications were heard and seen by

several co-employees whose names are not known to plaintiff.

37. The words and publications were false and have never

been proven or substantiated by defendants.

38. As a result of the above-described words and

publications, plaintiff has suffered general damages to his

reputation in an amount to be proven at trial.

39. As a further proximate of the above-described words

and publications, plaintiff has suffered the following special

damages, loss of earnings and fringe benefits package from

6la

Appendix H

employment, all to his damage in an amount to be proven at

trial.

40. The gravity of the charges was such that the plaintiff

was ethically required to inform the counseling center where he

performed part-time psychological counseling. As a direct result,

plaintiff was terminated from his counseling position to prevent

potential compromise of the center’s licensing. This termination

forced the transfer or termination of several clients with potential

compromises of their emotional health. Plaintiff has lost earnings

from his counseling position in an amount to be proven at trial.

41. The above-described words and publications were

disseminated by the defendants with malice toward plaintiff in

that the charges against plaintiff to terminate him for cause were

proffered because plaintiff questioned the billing method utilized

by defendants in billing the U.S. Air Force. Plaintiff charged

that defendants were billing the U.S. Air Force for time that

was not properly chargeable to specific Air Force programs. As

a result, defendants viewed plaintiff as a “whistle blower” and

trouble maker and set upon a course to discredit him in his

profession. Plaintiff was humiliated and embarrassed when

defendants chose to personally escort him out of defendant

Aerospace’s place of business without allowing plaintiff to

defend himself nor allowing plaintiff to remove his personal

and professional property and files from defendant, Aerospace’s,

place of business. The above-described action by defendants

and each of them, justifies an award of punitive damages.

WHEREFORE, plaintiff prays for judgment against

defendants and each of them as follows:

1. For damages for breach of contract according to

proof, including lost earnings and other employee

benefits, past and future;

62a

Appendix H

2. For compensatory damages according to proof,

including lost earnings and other employee benefits,

costs of seeking employment and damage for

emotional distress, humiliation and mental anguish;

3. For prejudgment interest on lost earnings and

benefits at the prevailing legal rate from November

30, 1990;

4. For lost earnings, present, past and future as a

marriage, family and child counselor (MFCC) from

July 20, 1991;

5. For punitive damages in an amount appropriate

to punish defendants and deter others from engaging

in similar misconduct;

6. For attorney’s fees;

7. For reinstatement to employment;

8. For costs of suit incurred herein by plaintiff;

9. For such other and further relief as the court

deems proper.

DATED: February 10, 1992

DaCORSI AND CORT

BY: s/ William G. Cort

WILLIAM G. CORT

Attorneys for Plaintiff

FRED D. CAMPBELL

63a

APPENDIX I — RELEVANT STATUTES

29 U.S.C. § 1132(a)(1)

The Employment Retirement Income Security Act of 1974 at

Section 502(a):

(a) Persons empowered to bring a civil action. A civil

action may be brought —

(1) by a participant or beneficiary —

(A) for the relief provided for in

subsection (c) of this section, or

(B) to recover benefits due to him

under the terms of his plan, to enforce his

rights under the terms of the plan, or to

clarify his rights to future benefits under

the terms of the plan; ...

(3) by a participant, beneficiary, or fiduciary (A)

to enjoin any act or practice which violates any

provision of this title 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 title or the terms of the plan; . . .

(e) Jurisdiction. (1) Except for actions under

subsection (a)(1)(B) of this section, the district courts

of the United States shall have exclusive jurisdiction

of civil actions under this title brought by the

Secretary or by a participant, beneficiary, or

fiduciary. State courts of competent jurisdiction and

district courts of the United States shall have

64a

Appendix !

concurrent jurisdiction of actions under subsection

(a)(1)(B) of this section.

29 U.S.C. § 1140

The Employment Retirement Income Security Act of 1974 at

Section 510:

It shall be unlawful for any person to discharge, fine,

suspend, expel, discipline, or discriminate against a

participant or beneficiary for exercising any right to

which he is entitled under the provisions of an

employee benefit plan, this title, section 3001 [29

USCS § 1201], or the Welfare and Pension Plans

Disclosure Act, or for the purpose of interfering with

the attainment of any right to which such participant

may become entitled under the plan, this title, or the

Welfare and Pension Plans Disclosure Act. 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 Act or the Welfare and Pension Plans

Disclosure Act. The provisions of section 502 [29

USCS § 1132] shall be applicable in the enforcement

of this section.

29 U.S.C. § 1144(a)

The Employment Retirement Income Security Act of 1974 at

Section 514(a):

Except as provided in subsection (b) of this section,

the provisions of this title and title IV shall supersede

65a

Appendix I

any and all State laws insofar as they may now or

hereafter relate to any employee benefit plan

described in section 4(a) [29 USCS § 1003(a)] and

not exempt under section 4(b) [29 USCS § 1003(b)].

28 U.S.C. § 1331

The district courts shall have original jurisdiction of

all civil actions arising under the Constitution, laws,

or treaties of the United States.

28 U.S.C. § 1367(a)

[I]n any civil action of which the district courts have

original jurisdiction, the district court shall have

supplemental jurisdiction over all other claims that

are so related to claims in the action within such

original jurisdiction that they form part of the same

case or controversy under Article III of the United

States Constitution.

28 U.S.C. § 1441(b)

Any civil action of which the district courts have

original jurisdiction founded on a claim or right

arising under the Constitution, treaties or laws of the

United States shall be removable without regard to

the citizenship or residence of the parties. Any other

such action shall be removable only if none of the

parties in interest properly joined and served as

defendants is a citizen of the State in which such

action is brought.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.