Sam v. Creare, Inc. CV-93-54-B 08/27/93

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW HAMPSHIRE

Richard G. Sam v. Civil No. 93-54-B Creare, Inc. O R D E R On February 1 , 1993, defendant, Creare, Inc. ("Creare")a removed this case to this court from Grafton County Superior Court. In his state court petition, plaintiff, Richard G. Sam ("Sam"), alleged that Creare, Sam's former employer, improperly denied his request to review certain financial information concerning Creare.^[1] Creare contends that the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et sea., preempts Sam's state law claims and vests federal question jurisdiction in this court. Sam disagrees and moves that his case be remanded to state court.

last 18 months.'" I d . 5 9. He also specifically inquired into Creare's profit sharing plan for fiscal year 1992. Three days later, Sam further stated:

"Under RSA 292-A:52 [sic] a shareholder is entitled to a corporation's financial statements. Even under your view Mr. Sam continues to be a shareholder by virtue of his 'I' shares. We now broaden our request: since it appears Mr. Sam has received an inordinately small share of profits for all years he held stock (197 9-present), we request copies of the Creare financials for all those years." Id. 511. On September 24, 1992, Sam made demands under the provisions of RSA 293-A:52, II, as follows:

" . . . [Sam] is entitled to full information regarding the financial status of [Creare] . . . from 1979 to date. I would therefore request the following:

1. Full and complete records of actual stock ownership and resulting beneficial stock ownership in Creare . . . for each year from 1979 to date.

defendants from removing complaints grounded in state law if the only basis for federal jurisdiction is a defense arising out of federal law. See, e.g.. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987); Franchise Tax B d., 4 63 U.S. at 10; Fitzgerald, 882 F.2d at 587. However, an exception to the well- pleaded complaint rule exists where Congress has "so completely preempt[ed] a particular area" that complaints arising in that area are "necessarily federal in character." Taylor, 481 U.S. at 53-64. One area that is "so pervasively regulated by Federal law is that of employment retirement benefits." Fitzgerald, 882 F.2d at 587. Through ERISA, Congress sought to

protect . . . participants in employee benefit plans and their beneficiaries, by reguiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.

29 U.S.C. § 10 0 1 (b).

"In addition to comprehensively regulating certain employees welfare benefit plans, ERISA specifically preempts most state laws that 'relate to' plans covered under ERISA." Fitzgerald, 882 F.2d at 587-88 (guoting 29 U.S.C. § 1114(a)). "Based on the Congressional intent to preempt clearly set out in ERISA, the Supreme Court . . . has held that causes of action within the scope of the civil enforcement provisions of ERISA, ... 29 U.S.C. § 1132(a), are removable to federal court." I d . (citing Taylor, 481 U.S. at 66).

Turning to the instant case, it is undisputed that federal jurisdiction does not appear on the face of Sam's petition. Accordingly, I must determine whether his claims "relate to" a plan covered under ERISA and are thus preempted, and whether his petition falls within the scope of the civil enforcement provisions of that Act and is thus removable to federal court.

B. ERISA Analysis

"ERISA is a comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans." Shaw v. Delta Air Lines, 463 U.S. 85, 90 (1983). The provision sets out "participation, funding, and vesting reguirements on pension plans" and establishes "various uniform standards, including rules concerning reporting, disclosure, and fiduciary responsibility, for both pension and welfare plans." I d . at 91. As part of the statutory scheme designed to regulate such plans, "Congress formulated a sweeping preemption clause." Mccov v. Massachusetts Inst, of Technology, 950 F.2d 13, 16 (1st Cir. 1991), cert, denied, 112 S. C t . 1939 (1992). This clause, 29 U.S.C. § 1144(a), preempts "any and all State laws insofar as they may now or hereafter relate to any employee benefit plan" covered by ERISA. (emphasis added). The only state laws expressly exempted from ERISA's preemptive scope are those regulating insurance, banking and securities, and criminal laws of general application. 29 U.S.C. § 1144(b).

"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 96-97. Moreover, "a state law may 'relate to' a benefit plan, and thereby be pre-empted, even if the law is not specifically designed to affect such plans, or the effect is only indirect." Inqersoll-Rand Co. v. McClendon, 498 U.S. 133, 139 (1990) (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 47 (1987)); accord Shaw, 463 U.S. at 98.

In the final analysis, "the guestion whether a certain state action is pre-empted by federal law is one of congressional intent." Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 208 (1985). While the task of discerning congressional intent can sometimes be difficult, section 1114(a)'s "bold and capacious language provides a particularly incisive manifestation of congressional purpose, thus easing the judicial chore." McCoy, 950 F.2d at 17; see also Inqersoll-Rand Co . , 498 U.S. at 138:

The key to [the preemption provision] is found in the words "relate to." Congress used those words in their broad sense, rejecting more limited pre-emption language that would have made the clause "applicable only to state laws relating to the specific subjects covered by ERISA." (guoting Shaw, 463 U.S. at 98); Pilot Life Ins., 481 U.S. at 46 (the preemption clause's "deliberately expansive" language was "designed to 'establish pension plan regulations as exclusively a federal concern'") (guoting Alessi v. Ravbestos-Manhattan, Inc., 451 U.S. 504, 523 (1981)).

Notwithstanding its "long shadow," McCoy, 950 F.2d at 17, the Supreme Court has recognized limits to the ERISA preemption clause. See Shaw, 463 U.S. at 100 n.21 ("[s]ome 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"); see also Inqersoll-Rand Co . , 498 U.S. at 139 (and cases cited therein). Although it is not always easy to distinguish those state statutes that "fall prey to ERISA"from those that "stand fast," the Court of Appeals for this Circuit has instructed that, "to the extent that gray areas exist, the policy rationales that permeate ERISA and its preemption clause can afford sound guidance in determining what state laws may survive." McCoy, 950 F.2d at 17-18. The preemption clause was intended

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. Otherwise, the inefficiencies created could work to the detriment of plan beneficiaries. Inqersoll-Rand Co., 498 U.S. at 142. The Supreme Court "has often justified [the preemption clause's] elongated reach by citing Congress' desire to avoid a 'patch-work scheme of regulation [which] would introduce considerable inefficiencies in benefit program operation.'" McCoy, 950 F.2d at 18 (guoting Fort Halifax Packing Co. v. Covne, 482 U.S. ^[1], 11 (1987)).

C. Application

In the instant case, it is clear that Sam's state law claims under RSA 293-A:522 relating to the Creare benefit plan are e.g., 29 U.S.C. §§ 1021-30. To find that Sam's state law claims are not preempted could undermine the policy rationale inherent in ERISA -- the avoidance of a "patchwork scheme" of inconsistent state law regulation which "would introduce considerable inefficiencies in benefit program operation." See Fort Halifax, 4 82 U.S. at 11; accord Inqersoll-Rand Co . , 498 U.S. at 142; McCoy, 950 F.2d at 17-18.

Not only are Sam's state claims preempted by ERISA, they also come within the scope of the civil enforcement provision of that Act and are therefore removable to federal court. See Fitzgerald, 882 F.2d at 588. Section 1132(c) provides in pertinent part:

Any administrator . . . who fails or refuses to comply with a reguest for any information which such administrator is reguired by this subchapter to furnish to a participant or beneficiary . . . within 30 days after such reguest may in the court's discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such relief as it deems proper.

beneficiary" for the relief provided in section 1132 (c) . Finally, section 1132(e) states that "[e]xcept for actions under subsection (a)(1)(B) of this section,3 the district courts of the United States shall have exclusive jurisdiction of civil actions under this subchapter brought by . . . a participant, beneficiary, or fiduciary. ..." Accordingly, I find that Sam's action is "necessarily federal in character by virtue of the clearly manifested intent of Congress. It, therefore, 'arise [s] under . . . the laws . . . of the United States,' and is removable to federal court by the defendant . . . ." Taylor, 481 U.S. at 67 (citations omitted).

August 27, 1993 cc: Thomas Richards, Esq. Richard Bell, Esq.