LEE GARDNER, PETER DECHANTS, DAVID LINER, WILLIAM MEYERS, KEITH JUNK, and MASCO CORPORATION, as Assignee of Timothy Wadhams, Plaintiffs-Appellants, v. HEARTLAND INDUSTRIAL PARTNERS, LP, HEARTLAND INDUSTRIAL ASSOCIATES, LLC, TIMOTHY LEULIETTE, and DANIEL TREDWELL, Defendants-Appellees.
No. 11-2327
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
May 10, 2013
13a0133p.06
Before: DAUGHTREY, KETHLEDGE, and DONALD, Circuit Judges.
RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b). Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 2:09-cv-13292—Denise Page Hood, District Judge. Argued: October 3, 2012.
COUNSEL
OPINION
KETHLEDGE, Circuit Judge. The question presented in this case is whether Plaintiffs’ state-law tort claim—for tortious interference with a contract that happens to be a pension plan subject to the
We take the facts as set forth in Plaintiffs’ complaint. Defendant Heartland Industrial Partners, L.P., is a Delaware investment firm that formerly held an ownership interest in Metaldyne Corporation, an automotive supplier in Michigan. Defendant Timothy Leuliette is a co-founder of Heartland and was the CEO and Chairman of the Board of Metaldyne at all relevant times here. Defendant Daniel Tredwell is likewise a Heartland co-founder and was a Metaldyne Board member during the relevant times. Plaintiffs are former Metaldyne executives.
In August 2006, Heartland agreed to sell its ownership interest in Metaldyne to another investment firm, Ripplewood Holdings.
Ripplewood threatened to back out of the deal when it found out about the $13 million SERP obligation. In response, Leuliette and Tredwell persuaded Metaldyne‘s Board (of which they were Chairman and a Member, respectively) simply to declare the SERP invalid. The Board did so on December 18, 2006, though it did not notify Plaintiffs of that fact at the time. The Ripplewood deal closed less than a month later, on January 11, 2007. Leuliette personally collected more than $10 million as a result of the deal.
A month after the deal closed, Metaldyne notified Plaintiffs that it had invalidated the SERP. In response, Plaintiffs filed several lawsuits, including this one in the Wayne County, Michigan Circuit Court. The suit pled a single state-law claim against Heartland, Leuliette, and Tredwell, for tortious interference with contractual relations. The factual basis for the claim was their role in the invalidation of the SERP. Defendants removed the case to federal court, contending that Plaintiffs’ claim was “completely preempted” under ERISA. Defendants also filed a motion to dismiss the case on that ground. Plaintiffs filed a cross-motion to remand the case to state court. In an order entered September 30, 2010, the district court denied Plaintiffs’ motion to remand and granted Defendants’ motion to dismiss.
We review the court‘s dismissal de novo. The issue before us is jurisdictional: whether Plaintiffs’ complaint stated a federal question under
But there is an exception to the well-pleaded complaint rule: “when a federal statute wholly displaces the state-law cause of action through complete pre-emption, the state claim can be removed.” Davila, 542 U.S. at 207 (brackets and internal quotation marks omitted). Although ERISA‘s express-preemption clause does not have this effect, another section of ERISA does. Section 1132(a)(1)(B) provides that “[a] civil action may be brought . . . by a participant or beneficiary . . . 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 issue here is whether Plaintiffs’ state-law “tortious interference with contractual relations” claim is within the scope of
By its plain terms, “[t]he two-prong[ed] test of Davila is in the conjunctive. A state-law cause of action is preempted by § [1132](a)(1)(B) only if both prongs of the test are satisfied.” Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 947 (9th Cir. 2009). We choose to focus upon the second requirement here.
Whether a duty is “independent” of an ERISA plan, for purposes of the Davila rule, does not depend merely on whether the duty nominally arises from a source other than the plan‘s terms. In Davila itself, for example, a Texas statute imposed on HMOs a duty to “‘exercise ordinary care when making health care treatment decisions.‘” Id. at 212 (quoting
The court reached the same conclusion in Arditi v. Lighthouse International, 676 F.3d 294 (2d Cir. 2012). There, the plaintiff‘s employment agreement with Lighthouse recited Lighthouse‘s obligations to the plaintiff (Arditi) under Lighthouse‘s pension plan. When Lighthouse thereafter denied benefits to Arditi under the plan, he brought a state-law claim for breach of the employment agreement. The Second Circuit held that Lighthouse‘s duty under the contract was entirely derivative of its duty under the plan—absent any duty under the plan, there was no duty under the contract—and thus the contractual duty was not “separate and
But the contrary was true in Stevenson v. Bank of New York Co., Inc., 609 F.3d 56 (2d Cir. 2009). There, the Bank asked Stevenson, a senior executive, to accept a transfer to an affiliated bank in Switzerland. Stevenson was a participant in the Bank‘s ERISA plan. Per the plan‘s terms, Stevenson would lose that status once he transferred to the Swiss bank. In order to induce Stevenson to accept the transfer, however, the Bank promised to maintain Stevenson‘s status as a plan participant while he was in Switzerland. The Bank later reneged on that promise. Stevenson sued for breach of contract, arguing that the Bank‘s promise was independent of the plan. The Second Circuit agreed: the Bank‘s obligation to maintain Stevenson‘s status as a participant did not derive from the plan—indeed, the plan said the opposite—but instead arose from a “separate promise” made by the Bank. Id. at 60. It was true, the court noted, that the Bank‘s promise referred to its plan “as a means of establishing the value of that promise.” Id. at 60–61. But that did not make the promise dependent on the plan for purposes of complete preemption. For two reasons: first, the plan‘s terms were relevant to the “extent of [Stevenson‘s] damages,” not to the existence of the duty itself; and second, those “damages would be payable from [the Bank‘s] own assets, not from the plans themselves.” Id. at 61.
This case is like Stevenson. Defendants’ duty not to interfere with Plaintiffs’ SERP agreement with Metaldyne arises under Michigan tort law, not the terms of the SERP itself. And more to the point—unlike the state-law duties in Arditi and Davila, respectively—Defendants’ duty is not derived from, or conditioned upon, the terms of the SERP. Nobody needs to interpret the plan to determine whether that duty exists. Thus, Plaintiffs’ claim is based upon a duty that is “independent of ERISA [and] the plan terms[.]” Davila, 542 U.S. at 210.
But Defendants argue that the SERP‘s terms are relevant to the Defendants’ liability in another way. Under Michigan law, a claim for tortious interference with contract has three elements: “(1) the existence of a contract, (2) a breach of the contract, and (3) an unjustified instigation of the breach by the defendant.” Badiee v. Brighton Area Sch., 265 Mich. App. 343, 366–67 (2005). Defendants say that Metaldyne elsewhere asserts that it has not breached the SERPs. And thus, Defendants contend, we must interpret the plan‘s terms in order to determine liability—rather than just damages, as in Stevenson.
The premise of that contention is that a claim is subject to complete preemption under
A determination of Defendants’ liability therefore does not require any interpretation of the SERP‘s terms. It is true, of course, that those terms would likely be relevant in measuring the amount of Plaintiffs’ damages. As shown above, however, that is beside the point for purposes of Davila‘s second prong. Moreover, in this case, as in Stevenson, any damages “would be payable from [Defendants‘] assets, not from the” plan itself. 609 F.3d at 61. Finally, Heartland‘s remaining arguments pertain less to preemption under
Davila‘s second requirement for preemption under
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The district court‘s order of September 30, 2010 is reversed, and the case remanded with instructions for the district court to remand the case to the Wayne County Circuit Court.