Brown v. United Parcel Svc ( 2000 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-10092
DAISY BROWN, In the Matter of
the Marriage of Daisy Brown and
Bobby Brown, and in the interest
of Tamela Laveria Brown and
Timberly Marie Brown, Children,
Plaintiff-Appellant,
versus
UNITED PARCEL SERVICE, INC.; BOBBY BROWN,
Defendants-Appellees.
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Appeal from the United States District Court
for the Northern District of Texas
USDC No. 4-97-CV-837-Y
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October 31, 2000
Before REYNALDO G. GARZA, HIGGINBOTHAM, and BENAVIDES, Circuit
Judges.
BENAVIDES, Circuit Judge:*
Bobby Brown, a retired United Parcel Service (UPS) employee,
is a participant in the UPS Retirement Plan (Plan), which is
regulated by the Employee Retirement Income Security Act of 1974,
§ 514(a), 29 U.S.C. §§ 1001-1461, (ERISA). In 1994, prior to
Bobby Brown’s retirement, his wife, appellant Daisy Brown (Brown)
filed a divorce suit in Tarrant County. He retired the next year
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
at the age of 51. The parties entered into an Agreed Decree of
Divorce and a Qualified Domestic Relations Order (QDRO) in state
court. The QDRO provided that Brown would receive sixty percent
of Bobby Brown’s UPS retirement benefits. Prior to the entry of
this order, Brown’s attorney forwarded to the corporate benefits
department at UPS a copy of the proposed domestic relations order
for approval by the Plan as a qualified order. In the
transmittal letter to Carol Hopkins, a clerk who worked in the
UPS corporate benefits department, Brown’s attorney stated that
it was his understanding that Bobby Brown was currently receiving
$2,162.19 per month from the Plan. In that letter, he also
requested that Hopkins confirm that Brown would receive monthly
payments of $1,297.31 from the Plan. Brown asserts that Hopkins
confirmed these figures. According to UPS, there is nothing in
writing to establish that Hopkins (or anyone connected with UPS
or the Plan) made such a confirmation.
After the close of the divorce proceedings, it was
determined that the monthly payments to be distributed to Brown
would be significantly less than the anticipated figure set forth
above. Naming her former husband as the respondent, Brown filed
a motion in state court for enforcement and clarification of the
divorce decree and the QDRO. She later amended her pleading to
include UPS as a respondent, alleging that it had not paid her
the benefits to which she believed she was entitled under the
Plan.
2
UPS removed the proceeding to the federal district court on
the ground that Brown’s claim was completely preempted by ERISA.
UPS thereafter filed a motion for summary judgment, seeking to
have Brown’s claim dismissed because UPS was neither the Plan nor
the administrator of the Plan and, thus, not a proper defendant
to the claims.
Brown responded by moving both for leave to amend her
complaint and for a remand to state court. Brown agreed that she
could not recover against UPS for the payment of retirement
benefits and sought to amend her complaint by deleting any such
allegation. Instead, she asserted that she was seeking relief on
her theories of negligent misrepresentation and promissory
estoppel.1 According to UPS, Brown’s amended complaint asserted
that UPS had misrepresented to her the “amount of retirement
benefits that would be provided to Daisy Brown.” Further, she
expressly requested that the court “make specific findings
awarding [her] 60% of the [UPS Plan] proceeds paid since
February 29, 1996 and 60% of any future proceeds received from
1
Brown asserts that by amending her complaint, the district
court no longer properly exercised removal jurisdiction. The
propriety of removal, however, hinges on the status of the
complaint at the time of removal. Therefore, post-removal
amendments are irrelevant to the jurisdictional determination. See
McClelland v. Gronwaldt, 155 F.3d 507, 517 (5th Cir. 1998). In
Brown’s original complaint, she alleged, as a beneficiary under the
ERISA plan, that UPS improperly paid out her share of benefits
under the plan and demanded that UPS immediately pay the benefits
to which she is entitled. Thus, Brown’s original claim was
completely preempted, rendering removal appropriate.
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that plan.”
The district court issued an order: (1) denying Brown’s
motion to remand; (2) granting UPS’ motion for summary judgment
“to the extent that [Brown] has attempted to obtain ERISA plan
benefits from UPS;” (3)granting Brown’s motion to amend her
complaint; and remanding Brown’s remaining claims to state court
pursuant to 28 U.S.C. § 1441(c).
UPS moved the district court to reconsider its order of
remand and to dismiss all of Brown’s claims against UPS because
they were preempted by ERISA. The district court granted UPS’
motion for reconsideration and dismissed Brown’s claims against
UPS for the reasons stated in UPS’ motion (the claims were
completely preempted by ERISA). The district court denied
Brown’s later motion to reconsider. Brown now appeals.
DISCUSSION
This Court reviews a district court’s ruling on a motion for
summary judgment de novo. Thomas v. LTV Corp., 39 F.3d 611, 616
(5th Cir. 1994). “A motion for summary judgment is properly
granted when competent evidence establishes the absence of a
genuine issue of material fact and that the movant is entitled to
judgment as a matter of law.” Id. (citing Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552 (1986)). In
its order granting UPS’ motion for reconsideration and to
dismiss, the district court found that ERISA completely preempted
Brown’s “claims against UPS for negligent misrepresentation and
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promissory estoppel are preempted by [ERISA] for the reasons
urged by UPS.” Because of this finding of complete preemption,
the district court had no power to remand the claims to state
court. See Giles v. NYLCare Health Plans, Inc., 172 F.3d 332,
337 (5th Cir. 1999) (explaining that if a defendant demonstrates
that a claim is completely preempted by ERISA, the district court
may not remand).
There are two types of preemption under ERISA. Conflict, or
ordinary, preemption exists when a state law cause of action
“relate[s] to” an employee benefit plan governed by ERISA. See
29 U.S.C. § 1144(a); McClelland v. Gronwaldt, 155 F.3d 507, 516
(5th Cir. 1998). Conflict preemption is typically a defense to a
state cause of action and does not appear in the complaint.
McClelland, 155 F.3d at 516; Giles, 172 F.3d at 337. Therefore,
conflict preemption, without more, does not allow a case to be
removed to federal court because it does not present a federal
question. Id.
Complete preemption, on the other hand, exists when a state
cause of action is conflict-preempted by ERISA (thus, an analysis
of conflict preemption is the first step in determining whether a
claim is completely preempted) and also comes within the scope of
29 U.S.C. § 1132(a). See McClelland, 155 F.3d at 517-18 & n.34.
Specifically, § 1132(a)(1)(B) provides a remedy for beneficiaries
to recover benefits due under the terms of a plan, to enforce
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rights under a plan, or to clarify rights to future benefits
under a plan. When a complaint raises a state cause of action
that is completely preempted, the district court may not decline
to exercise jurisdiction, because that cause of action actually
presents a federal question. Giles, 172 F.3d at 337. Thus, a
claim for benefits, to enforce rights to benefits, or to clarify
rights to benefits is completely preempted, regardless of how the
plaintiff’s characterizes her claims in the complaint.
This Court has previously held that ERISA preempts state law
claims that have the effect of orally modifying an ERISA benefit
plan and increasing plan benefits for participants who claim to
have been misled. See Lee v. E.I. DuPont de Nemours & Co., 894
F.2d 755, 757 (5th Cir. 1990); Cefalu v. B.F. Goodrich Co., 871
F.2d 1290, 1295 (5th Cir. 1989); Degan v. Ford Motor Co., 869
F.2d 889, 895 (5th Cir. 1989). This Court has also found that
ERISA does not preempt a state law claim in the context of
negligent misrepresentation when the claim is brought by “an
independent, third-party (health care provider) against an
insurer.” Transitional Hospitals Corp. v. Blue Cross and Blue
Shield of Texas, Inc., et. al., 164 F.3d 952, 954 (5th Cir.
1999). In the instant case, Brown is not an independent third
party, but a beneficiary under the ERISA plan. UPS, as the plan
sponsor, is also a ERISA entity. See 29 U.S.C. § 1002(16)(B)
(“plan sponsor” means the employer who establishes or maintains
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the employee benefit plan); § 1002(8) (“beneficiary” means a
person who is entitled to a benefit under an employee benefit
plan).
In Hubbard v. Blue Cross & Blue Shield Association, 42 F.3d
942 (5th Cir. 1995), this Court held that an ERISA plan
beneficiary’s claim for fraudulent inducement where “the essence
of [the] claim [was] that her benefits under the plan were
improperly denied” was completely preempted and thus provided a
basis for removal jurisdiction. Hubbard was a participant in an
ERISA-governed health benefit plan insured by Blue Cross. She
contracted cancer, and the plan refused to provide coverage for
certain requested treatments. Hubbard sued the Blue Cross and
Blue Shield Association, a third party that was not the insurer,
plan, or plan administrator, claiming that the Association
generated “secret” policy interpretation guidelines followed by
her insurer and that the Association wilfully concealed those
guidelines from her, causing her to fail to procure other
adequate health coverage. Hubbard, 42 F.3d at 944. This Court
held that because the essence of Hubbard’s claims were that her
benefits under the medical plan were improperly denied, and
because resolution of her claim would require an inquiry into the
interpretation and administration of the plan, her claim was
preempted by ERISA such that a federal question existed on that
claim. See id. at 945-946. Also, in Cefalu, the plaintiff
alleged he was misled by his employer, Goodrich, as to the amount
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of retirement benefits to which he was entitled. He alleged that
he relied on the misrepresentation to his detriment by purchasing
a Goodrich franchise rather than continuing employment with a
successor following the sale of his former employer by Goodrich.
Cefalu, 871 F.2d at 1292. This Court held in that Cefalu’s
claims were preempted by ERISA. See id.
Brown’s claims are analogous to both Hubbard and Celafu.
She alleges she is not seeking ERISA benefits, but asserts that
she relied on UPS’ misrepresentation regarding Plan benefits in
not negotiating for other property in the divorce settlement.
Like Cefalu, the precise damages Brown seeks were created by the
Plan, and to use any other source as a measure of damages would
force this Court to speculate on the amount of damages. See id.
at 1294. Though this court has found in certain instances that a
claim for fraudulent misrepresentation is not completely
preempted, this case does not fall within within that subtle
distinction. See Smith v. Texas Children’s Hospital and UNUM
Life Insurance Co., 84 F.3d 152 (5th Cir. 1996). In Smith, the
plaintiff sued her second employer for benefits she relinquished
due to her second employer’s misrepresentation. In essence, the
Court held, that Smith was not suing for benefits under an ERISA
plan, but for damages because “Texas Children’s misled Smith when
it told her that she could keep what she had.” Smith, 84 F.3d at
155-156. In the instant appeal, like in Celafu, Brown is suing
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UPS for lost benefits under the UPS plan.2 Even in Smith, the
Court acknowledged that a claim against Texas Children’s for
ERISA benefits would be completely preempted by ERISA.
Nevertheless, the Smith court concluded that Smith had a
claim based on vested benefits relinquished that was separate and
apart from a claim to ERISA benefits. Smith, 84 F.3d at 155.
Moreover, the Smith Court noted that if “Smith had no benefits
before joining Texas Children’s, she could only claim relief
[against Texas Children’s] based upon benefits to which she was
entitled under Texas Children’s ERISA plan” and that “ERISA would
preempt such a claim.” Id. at 157. Though Brown argues in
district court that Smith controls this appeal, she never argues
that she had a vested right to anything other than the Plan
benefits. Brown merely speculates that she would have a better
bargaining position had she not relied UPS determintion of
benefits. A better bargaining position is far from losing vested
benefits which the Smith Court found to be necessary to create a
fraudulent inducement claim separate and apart from ERISA.
When read in its entirety, Brown’s complaint indicates she
believes she is due more benefits under the Plan than she is
2
The Smith court noted that “Cefula could not have asserted
a claim based upon benefits given up, since his termination, not
[the employers’] misrepresentation, caused the loss of additional
benefits . . .” Thus, “ERISA preempted Cefalu’s claim because he
sought to hold [the employer] liable in contract for additional
benefits beyond what he has under [the employer’s] ERISA plan.”
Smith, 84 F.3d at 156.
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currently receiving, in essence, a claim for benefits or at least
to clarify her right to benefits. Brown currently has a right to
receive benefits from UPS, but because she thought she would be
receiving more, she is suing UPS for additional benefits.
Brown’s amendment did nothing to change her claims: both her
amended complaint and original complaint are based on the same of
set of operative facts. Brown has merely given her claim
against UPS a different name -- it is still the same claim she
brought in her original complaint against UPS which she concedes
is completely preempted. As in Hubbard, a determination of
whether UPS made a misrepresentation as to the terms of the Plan
and the benefit to which Brown is entitled would require an
analysis and interpretation of the Plan itself. Therefore, the
claim falls under § 1132(a)(1)(B) as an action to recover
benefits or clarify her right to future benefits. See Hubbard,
42 F.3d at 945-946; see also Giles, 172 F.3d at 337.
Therefore, Brown’s claims are completely preempted by ERISA
because they come within the purview of 29 U.S.C.
§ 1132(a)(1)(B). Thus, the district court properly exercised
jurisdiction over this claim. Accordingly, the judgment of the
district court is AFFIRMED.
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