Roxanne HOOK, Plaintiff-Appellee, v. The MORRISON MILLING COMPANY, Defendant-Appellant.
No. 93-4115.
United States Court of Appeals, Fifth Circuit.
Nov. 14, 1994.
Rehearing and Suggestion for Rehearing En Banc Denied Dec. 13, 1994.
38 F.3d 776
Diane Barlow Sparkman, Angela Melina Raab (lead counsel), David C. Mattax, Asst. Atty. Gen., and John M. Hohengarten, Div. Chief, Fin. Litigation Div., Austin, TX, Marcia Bove, Associate Sol. of the Plan Benefits Sec. Div., U.S. Dept. of Labor, Washington, DC, amicus.
Roxanne Hook, pro se.
Before JONES and DeMOSS, Circuit Judges, and COBB,* District Judge.
DeMOSS, Circuit Judge:
The Morrison Milling Company (“MMC“) appeals a district court‘s remand of Roxanne Hook‘s negligence action against the company. MMC argues that Hook‘s negligence claim is preempted by the Employment Retirement Income Security Act of 1974 (“ERISA“).
I.
Texas’ workers’ compensation scheme resembles the workers’ compensation schemes of many other states. The Texas Workers’ Compensation Act (“TWCA“), for example, provides that any benefits distributed pursuant to the TWCA are an employee‘s exclusive remedy for any work-related injuries or death.
Notwithstanding the risks associated with “opting out,” MMC in March 1989 elected to discontinue workers’ compensation insurance and began offering the Interim Employee Welfare Benefit Plan. The Plan pays enrollees:
certain benefits for personal injuries suffered in the course of their employment, or for death resulting from such injuries, without the necessity of showing negligence on the part of the Company, and to provide for the continuation or partial continuation of their weekly salary or wages that would otherwise be lost as a result of their inability to work because of injury or illness incurred on the job.
The parties do not dispute that the Plan is governed by ERISA. See
In consideration of my election to enroll in, and thus become eligible to receive benefits under, the Interim Plan, I hereby waive my rights under
TEX.REV.CIV.STAT. ,3 to bring suit and recover judgment against the Company and its directors, officers, agents, and employees for any damages sustained by reason of any personal injury received in the course of my employment by the Company, or by reason of death resulting from such injury. By electing to enroll in the Interim Plan, I agree that benefits payable under the Interim Plan shall be the exclusive remedy for me or my legal beneficiaries arising from any such personal injury or death.ANN. art. 8306, § 4
Hook began working for MMC in October 1990 after she elected to participate in the Plan and completed the enrollment and waiver form. In December 1990, Hook fell down a staircase at work and was injured. Hook filed for benefits under the Plan with MMC, the Plan‘s administrator. The Plan paid her a total of $5,383.03: $4,749.28 for medical expenses and $633.75 for salary continuation benefits. Hook then left her job with MMC in July 1991.
In February 1992, Hook filed a wrongful discharge and negligence action in Texas state court against MMC. MMC removed the case to federal court, arguing that the wrongful discharge claim was preempted by ERISA. Hook then filed her first motion to remand the case back to state court, which the federal district court denied in July 1992 on the grounds that ERISA preempted her wrongful discharge claim. Hook amended her petition to omit the wrongful discharge claim, leaving the negligence claim as the sole basis for her suit. She again moved to remand the case, claiming that the negligence action was governed by state law.
In December 1992, the district court granted Hook‘s second motion to remand. The court addressed two possible grounds for preemption and rejected them. First, the court held that Hook‘s negligence action is not preempted because it does not relate to MMC‘s ERISA Plan. Second, the court concluded that the waiver does not independently trigger preemption because it is incidental to her negligence action and that, alternatively, such waivers are void under Texas law.4 MMC then appealed the court‘s decision to remand Hook‘s negligence action. Hook did not file a brief on appeal and instead chose to rely on the district court‘s opinion as her brief. After oral argument, we requested5 the United States and the State of Texas to submit amicus curiae briefs to address the significant issues raised in this case, particularly because Hook did not file a brief. Amici‘s briefs were thorough and helpful, and we thank the United States and Texas for their assistance.
II.
Before analyzing our appellate jurisdiction over this appeal, we first note that the district court‘s subject matter jurisdiction was proper at all times. To begin with, this case was properly removed pursuant to
The issue of whether we have appellate jurisdiction arises from the district court‘s decision to remand the case to state court. On the one hand, we do not have jurisdiction to review a remand order if it is made pursuant to
III.
A.
We begin by establishing the appropriate standard of review. If a district court‘s decision to remand a case to state court is based on its discretion, then we obviously review that decision for abuse of discretion. In Re Wilson Indus., 886 F.2d 93, 95-96 (5th Cir.1989). The determination of whether the court has that discretion, however, is a legal one, which we review de novo. Burks, 8 F.3d at 304. In this case, we therefore will review the district court‘s preemption analysis de novo. If we conclude that ERISA does not preempt Hook‘s suit, meaning no federal claim exists that would require the district court to maintain jurisdiction, we then will review the court‘s decision to remand for abuse of discretion.
B.
Section 514(a) of ERISA,
But as broad as ERISA‘s preemptive scope has been stated to be, it has its limits. The Supreme Court noted in Shaw that “[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.” Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. at 2901 n. 21. The Court‘s warning in Shaw on the limits of ERISA preemption stems from the Court‘s view that ERISA‘s scope, though comprehensive, remains subject to the traditional principle of federalism. In determining ERISA‘s preemptive scope, the Court has advised that we “must be guided by respect for the separate spheres of governmental authority preserved in our federalist system.” Alessi, 451 U.S. at 522, 101 S.Ct. at 1905; see also Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 244 (5th Cir.1990). To further aid us in narrowing our preemption inquiry, we have devised a two-prong test. We have found preemption of a state law claim if (1) the claim addresses areas of exclusive federal concern, such as the right to receive benefits under the terms of an ERISA plan, and (2) the claim directly affects the relationship among the traditional ERISA entities (i.e., plan administrators/fiduciaries and plan participants/beneficiaries). Memorial Hosp., 904 F.2d at 245; see also Sommers Drug Stores Co. v. Corrigan Enterprises, Inc., 793 F.2d 1456, 1467-68 (5th Cir.1986).
C.
The United States and Texas contend that Hook‘s negligence cause of action does not “relate to” MMC‘s ERISA plan.9 Both argue that Hook‘s cause of action involves only the employer/employee relationship between the two parties and, therefore, does not relate to MMC‘s ERISA plan. In particular, they argue that Hook‘s cause of action stems from MMC‘s failure to maintain
As for the waiver in MMC‘s plan, the amici parties insist that its inclusion in the plan does not alter their analysis. The mere fact, they argue, that a court may have to consider, by looking to the plan, whether Hook has waived her claim does not mean the cause of action “relates to” MMC‘s plan. They argue that Hook‘s claim, whether or not it has been waived, does not involve the administration of MMC‘s plan or the disbursement of benefits under the plan. Furthermore, they contend, the waiver is nothing more than a gimmick by MMC to trigger preemption, thereby avoiding litigation in state court. The amici rely on Westbrook v. Beverly Enterprises, 832 F.Supp. 188 (W.D.Tex.1993), a case remarkably similar to this one. In Westbrook, a non-subscribing employer offered an ERISA plan that provided medical benefits for work-related injuries. The plan also contained a “waiver-of-right-to-sue” clause, whereby the employee waived his right to sue for work-related injuries in exchange for medical benefits. In rejecting the employer‘s preemption claim, the court concluded that neither the cause of action nor the waiver related to the ERISA plan because both involved only the employee-employer relationship and not the administrator-beneficiary relationship. Id. at 189-92. Amici urge us to reach the same conclusion. Otherwise, non-subscribing employers in Texas could avoid a variety of obligations merely by requiring employees to waive their right to sue for anything as a condition for participation in the plan. Such a result, they conclude, is inconsistent with the goal of ERISA, which is “to protect employee benefits, not to provide succor for schemes that are designed to take rights from employees.” Id. at 192 (quoting Nunez v. Wyatt Cafeterias, Inc., 771 F.Supp. 165, 169 (N.D.Tex.1991)); see also Texas Health Enters. v. Reece, No. MO-93-CA-057 (W.D.Tex. Mar. 2, 1994); Pyle v. Beverly Enters.-Texas, 826 F.Supp. 206 (N.D.Tex.1993); O‘Neill v. Pro-Set Press, 1992 WL 404456 (N.D.Tex. 1992).
MMC‘s argument that Hook‘s claim is preempted hinges on the waiver. MMC, in other words, bypasses the issue of whether an unsafe workplace claim, by itself, relates to an ERISA plan and argues only that the inclusion of the waiver in its plan means Hook‘s cause of action is one that necessarily relates to the plan. MMC contends that this case is controlled by Christopher v. Mobil Oil Corporation, 950 F.2d 1209 (5th Cir.1992). In Christopher, the employer sponsored an ERISA retirement plan that permitted employees, subject to certain criteria, to receive their pension benefits in one lump-sum payment rather than by the typical method of monthly installments. The employer subsequently modified the plan by changing the criteria that employees had to meet to qualify for the lump-sum option. The employer, however, failed to disclose the plan amendment to its employees. Several employees sued their former employer. They alleged that the employer‘s actions in amending the plan, and then failing to disclose the new
We noted that a court, in addressing the employees’ claims, “would have to examine, at a minimum, the operation of the plan prior to the amendment.” Id. at 1218. The employees’ claim therefore closely resembled employee claims of wrongful termination, wherein the employee asserts that the employer fired him to avoid vesting of pension benefits. Id. (citing Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)). We concluded that, in both instances, the employees’ common law claims were preempted, i.e., the claim relates to an ERISA plan, “[b]ecause the underlying conduct at issue here cannot be divorced from its connection to the employee benefit plan.” Id. at 1220. MMC insists that Christopher controls this case because a court considering Hook‘s claim will have to “examine” MMC‘s plan. The waiver, which is an integral part of the plan, is also a significant factor in determining the validity of Hook‘s claim, MMC argues. Thus, while an unsafe workplace claim may otherwise be unrelated to an ERISA plan, MMC concludes, the claim necessarily relates to the plan once a court has to consider whether Hook has waived her claim, evidence of which is included in the plan.
In addition to Christopher, MMC relies on a Sixth Circuit opinion to argue that mere consideration of the waiver by a court triggers preemption. Van Camp v. AT & T Info. Sys., 963 F.2d 119 (6th Cir.1992). In Van Camp, an employee, who refused to be reassigned, was faced with the option of either retiring early or being demoted. The employee chose to retire, whereupon the employee signed a statement saying he was retiring voluntarily and that he understood that his election to retire under the employer‘s ERISA pension plan was irrevocable. The employee later sued the employer, alleging that the employer‘s efforts to reassign him were discriminatorily motivated and, therefore, violated state laws against discrimination. Without relinquishing his rights under the pension plan, the employee sought back pay, front pay, and compensatory and exemplary damages.
The Sixth Circuit, relying in part on our decision in Sommers Drug Stores, held that the employee‘s claims were preempted. Van Camp, 963 F.2d at 122-24. The court began by noting that the employee‘s state law claims obviously were inconsistent with the retirement agreement: the employee claimed he was discriminatorily forced into retirement, whereas the plan indicated that he had voluntarily retired. Thus, the court reasoned, the determination of whether the employer‘s ERISA plan was valid became the “fulcrum” upon which the case turned. Id. at 123. Because “[s]uch a determination could be made only with reference to ERISA and would affect the existing benefit plan and the relations between [the employee and the employer] as ‘principal ERISA entities,‘” the Sixth Circuit concluded that the claims related to the plan and therefore were preempted. Id. (indirectly quoting Sommers Drug Stores, 793 F.2d at 1467). MMC maintains that Hook‘s claim similarly relates to its ERISA plan in that her claim is inconsistent with the plan. To consider her claim, a court must determine the validity of MMC‘s plan and its waiver. MMC argues that, as the Sixth Circuit concluded, such a determination involves the relationship between ERISA entities and thus comes within ERISA‘s preemptive sweep.
We agree with amici that Hook‘s claim, standing alone, is not preempted by ERISA because it affects only her employer/employee relationship with MMC and not her administrator/beneficiary relationship with the company. In this sense, the claim is distinctly different from various other common law claims found to be preempted by ERISA. In Ingersoll-Rand, for example, an employee sued his employer for wrongful discharge, alleging that the employer fired him to avoid making contributions to his ERISA-covered pension fund. The Court ruled that the employee‘s claim was preempted because it “makes specific reference to, and indeed is premised on, the existence of a pension plan.” Ingersoll-Rand, 498 U.S. at 140, 111 S.Ct. at 483. Similarly, Christopher, the case on which MMC relies, involved common law
Hook‘s unsafe workplace claim, however, is totally independent from the existence and administration of MMC‘S ERISA plan. She neither seeks benefits under the plan nor claims that MMC improperly processed her claim for benefits. She seeks only damages for MMC‘s alleged negligent maintenance of its workplace. Numerous federal district courts in Texas have concluded that a tort claim alleging an unsafe workplace does not relate to an ERISA plan. See e.g., Westbrook, 832 F.Supp. 188; Pyle, 826 F.Supp. 206; Gibson v. Wyatt Cafeterias, 782 F.Supp. 331 (E.D.Tex.1992); O‘Neill, 1992 WL 404456; Nunez, 771 F.Supp. 165. In our view, Hook‘s claim is even further removed from ERISA‘s preemptive reach than other common law claims which somehow involved an ERISA plan but nonetheless did not relate to it. In Sommers Drug Stores, for example, the ERISA plan itself sued the parent company and the company‘s principal shareholder for breach of fiduciary duty. We noted that although the claim seemed to affect relations among the principal ERISA entities, that appearance was misleading. Sommers Drug Stores, 793 F.2d at 1468. The claim, we found, actually centered on relations between a corporate director and a shareholder and thus was not preempted. Likewise, in Memorial Hospital, a hospital sued an insurance company for breach of contract as well as negligent misrepresentation.10 We concluded that, while the breach of contract claim clearly was preempted because it was a claim for benefits, the negligent misrepresentation claim was not preempted because it neither sought benefits under the plan nor alleged improper processing of benefits. Memorial Hosp., 904 F.2d at 243-50; see also Hartle v. Packard Elec., 877 F.2d 354 (5th Cir.1989).11 Thus, ERISA‘s preemptive scope may be broad but it does not reach claims that do not involve the administration of plans, even though the plan may be a party to the suit or the claim relies on the details of the plan.
Admittedly, the presence of the waiver in this case complicates the issue of whether Hook‘s claim is preempted. Amici
The Ninth Circuit, in Employee Staffing Services v. Aubry, 20 F.3d 1038 (9th Cir. 1994), rejected a similar attempt to broaden employers’ authority under ERISA. In Employee Staffing, the employer had argued that California‘s attempts to enforce its workers’ compensation statute were preempted because the employer had already included benefits for work-related injuries in its ERISA plan. In rejecting the employer‘s arguments, the Ninth Circuit reasoned:
Syntactically, the preemption of “laws” and exemption of “plans” might be construed to place the power to exempt in the employer‘s hands, when it adopts a plan, instead of the state legislature‘s hands, when it promulgates laws. But a construction which attributes a rational purpose to Congress makes this locus of power unlikely, because it would accidentally allow employers to avoid the century-old system of workers’ compensation.
Id. at 1041. While Employee Staffing involved ERISA‘s exemption for workers’ compensation, we concur with its reasoning that ERISA was not enacted to allow employers to control which laws or claims are preempted and those which are not. With the exception of Van Camp, 963 F.2d at 122-24, we find no authority for the proposition that a law or claim is preempted merely because the employer crafts its ERISA plan in such a way that the plan is inconsistent with that law or claim. We decline to follow the Sixth Circuit‘s analysis in Van Camp.
Instead, we choose to adhere to our traditional mode of analysis, as prescribed in
As we stated in Memorial Hospital, “[a] preemption provision designed to prevent state interference with federal control of ERISA plans does not require the creation of a fully insulated legal world that excludes these plans from regulation of any purely local transaction.” Memorial Hosp., 904 F.2d at 250 (quoting Rebaldo v. Cuomo, 749 F.2d 133, 138 (2d Cir.1984)). In other words, ERISA was not meant to consume everything in its path. In Shaw, the Supreme Court “express[ed] no views about where it would be appropriate to draw the line” between those claims that are too tenuous or remote to warrant preemption and those that are not. Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. at 2901 n. 21. In this case, we draw the line here: a common law negligence claim which alleges only that an employer failed to maintain a safe workplace does not “relate to” an ERISA plan merely because the employer has inserted a waiver of the right to bring such a claim into its ERISA plan.13
D.
Having concluded that the district court properly determined that ERISA does not preempt Hook‘s negligence cause of action against MMC, we now turn to the district court‘s discretionary decision to remand the case to state court. Given that we accord district courts significant deference when reviewing their decisions for abuse of discretion, Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 883-84 (5th Cir.1988) (en banc), we find no reason to disturb the court‘s decision to remand Hook‘s suit to state court.
IV.
We hold that Hook‘s common law negligence suit against MMC, which alleges only that MMC maintained an unsafe workplace, does not relate to MMC‘s ERISA plan and therefore is not preempted by ERISA. We AFFIRM the district court‘s decision to remand this case to district court.
EDITH H. JONES, Circuit Judge, dissenting:
With due respect to my colleagues, I disagree with their conclusion that Ms. Hook‘s negligence claim against her employer Morrison Milling Co. was not preempted by her participation in the employer‘s ERISA benefits plan. I therefore dissent.
Texas is among a handful of states that do not require its employers to furnish state-mandated worker‘s compensation coverage. Morrison Milling availed itself of the privilege of being a nonsubscriber, but it also sought to compensate its employees for their on-the-job injuries. To do so, the company established an ERISA welfare benefits plan and permitted, but did not require, employees to enroll in that plan. Under the plan, they would receive benefits for on-the-job injuries comparable to or better than those under the state program simply by proving that an on-the-job injury occurred. In exchange for the certainty and promptness of
Hook liked the plan‘s provision for benefits, which she collected after falling down a staircase at work. She did not like the waiver of right to sue, however, so she also filed suit against Morrison Milling for negligence.
This sequence of events should make it obvious why the majority is wrong in concluding that Hook‘s lawsuit does not “relate to” an ERISA plan for purposes of federal preemption. If all of Morrison‘s employees tried to have their cake and eat it by collecting benefits and then suing Morrison Milling, Morrison Milling could not afford the luxury of providing its welfare benefit plan. The plan is a substitute for, not a vehicle to finance, employee litigation.
Not only is the waiver of right to sue economically essential to Morrison Milling‘s plan, but Hook‘s claim legally “relates to” the plan by challenging the enforceability of that waiver. I cannot follow the majority‘s assertions to the contrary. First, the majority states that, taken alone, Hook‘s claim against her employer based on an unsafe workplace would not be preempted. This might well be true in the absence of a waiver. The majority then opines that even considering the waiver, the question is not whether Hook‘s claim “is preempted because the waiver, as a part of the plan, relates to Hook‘s claim. Instead, the appropriate question . . . is whether the claim or law relates to an ERISA plan.” Apparently, one should focus only on the negligence claim, ignoring that it squarely conflicts with a provision of this ERISA plan. This logic is rather like a borrower‘s accepting money under a promissory note and asking the court to ignore its reference to a security agreement.
Without parsing the majority‘s analysis further, I think they have simply overlooked the breadth of the ERISA preemption doctrine, and in particular, the significance of the Supreme Court‘s holding in FMC Corp. v. Holliday, 498 U.S. 52, 111 S.Ct. 403, 112 L.Ed.2d 356 (1990). The Court held in FMC that a subrogation clause by which an employee agreed to reimburse the ERISA plan for benefits paid if the employee recovered on a claim in a liability action against a third party preempted Pennsylvania‘s Motor Vehicle Financial Responsibility Law. That state law purported to override any right of subrogation of a tort recovery in a motor vehicle accident. 498 U.S. at 55, 111 S.Ct. at 406. The Supreme Court reasoned that the anti-subrogation law had a “connection to” the ERISA plan because it “prohibits plans from being structured in a manner requiring reimbursement in the event of recovery from a third party.” Id. at 58, 111 S.Ct. at 408. Neither the amici nor the majority have in my view successfully distinguished FMC Corp. from this case. In FMC Corp., the injured ERISA beneficiary surrendered his right to sue free of subrogation rights to the ERISA plan, whereas in this case, the injured party has ostensibly surrendered her right to sue for work-related injuries. None of the cases cited by the majority concerning the nature or extent of an “ERISA relationship” for purposes of preemption analysis is relevant here; Hook‘s claim directly draws into question the enforceability of the plan‘s waiver of right to sue.
Like the majority, I reach this conclusion without having expressly to decide whether the waiver of right to sue would be enforceable, although I have concluded that if Texas law governs this question, it ought to be enforceable.2
But despite my unease with this conclusion, I cannot overlook the breadth of ERISA preemption and the applicability of FMC Corp. v. Holliday in this case.
I respectfully dissent.