Wis.LIRC ER Decision: Reich, Frederick - June 30, 1999 - ERISA pre-emption of claim of retaliatory denial of disability pension

STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

FREDERICK C. REICH, Complainant

LADISH CO INC, Respondent

FAIR EMPLOYMENT DECISION
ERD Case No. 199802467, EEOC Case No. 26G981669

An administrative law judge (ALJ) for the Equal Rights Division of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission agrees with the decision of the ALJ, and it adopts the findings and conclusion in that decision as its own.

DECISION

The decision of the administrative law judge (copy attached) is affirmed.

Dated and mailed June 30, 1999
reichfr.rsd : 125 : 9

/s/ David B. Falstad, Chairman

/s/ Pamela I. Anderson, Commissioner

/s/ James A. Rutkowski, Commissioner

MEMORANDUM OPINION

The complainant, Frederick Reich, appeals from the ALJ's dismissal of his complaint. The ALJ affirmed, on different grounds, an Equal Rights Officer's preliminary determination dismissing his complaint. Specifically, the ALJ decided that Reich's claim of discrimination is pre-empted by the Employee Retirement Income Security Act (ERISA, 29 U.S.C. � 1001 et seq.).

Apparently, sometime before the termination of his employment with the respondent in July 1995, Reich had applied for disability retirement benefits under the respondent's pension plan. However, the respondent concluded that he was not entitled to disability retirement benefits under the pension plan, stating that a prerequisite for disability retirement benefits was a requirement that the individual also qualify for Social Security disability benefits, and that Reich's application for Social Security benefits had been denied. On April 2, 1998, after several appeals before the Social Security Administration, an administrative law judge for that agency determined that Reich was entitled to Social Security disability benefits retroactive to August 22, 1994. On the basis of this April 2, 1998 Social Security Administration determination, Reich again sought disability retirement benefits under the respondent's pension plan. However, by letter dated April 21, 1998, the respondent notified Reich that the company's pension plan did not permit him to apply for disability retirement benefits after his status as an employe had ended. The respondent's position was that under the pension plan, in order to be a "participant" the individual must be a "covered employee," and that upon Reich's termination of employment he had ceased to be a "covered employee."

Reich subsequently filed the instant complaint of discrimination with the Equal Rights Division on July 20, 1998. Reich's complaint of discrimination alleges that the respondent retaliated against him for having filed prior complaints of discrimination by denying him a disability pension even though he had met the plan's definition of disabled. Further, he alleged that as a result of being denied the pension disability benefit he was also ineligible for HMO coverage that is provided to people covered by the disability pension.

In one of his prior complaints, Reich had contested the respondent's July 1995 termination of his employment. That case ended with a dismissal of his complaint. The ALJ's decision references another of Reich's complaints of discrimination against the respondent, which also ended in dismissal.

The ALJ concluded that Reich's case "must be dismissed because it deals entirely with the question of whether the terms of an ERISA plan were properly applied to Reich, something that ERISA has clearly declared to be the exclusive province of ERISA." (ALJ decis., p. 2) In reaching this conclusion, the ALJ noted that "The essential elements of Mr. Reich's complaint are that: (1) he met the eligibility requirements for disability retirement benefits according to the terms of the plan; (2) the plan allowed him to request the benefits after his employment with the company had ended; and (3) the company's refusal to grant him benefits was an act of retaliation for his having filed previous ERD complaints." Id.

"ERISA is 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, 32 FEP Cases 121 (1983) (Citations omitted). " The term `employee benefit plan' is defined as including both pension plans and welfare plans." Id. "Section 514(a) of ERISA, 29 U.S.C. � 1144(a), pre-empts `any and all State laws insofar as they may now or hereafter relate to any employee benefit plan' covered by ERISA." Id. "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." Id. Under this "broad common-sense meaning," 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." Ingersoll-Rand Co. v. Perry McClendon, 498 U.S. 133, 111 S.Ct. 478 (1990), citing Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41, 107 S.Ct. 1549 (1987).

There are exceptions to ERISA's broad pre-emptive power, however. For example, � � 514(b)(2)(A) and (b)(4) exempt from � 514(a)'s pre-emptive provision, state laws regulating insurance, banking, and securities, as well as generally applicable state criminal laws. This case does not involve such state laws.

Section 514(d) provides a further exception, which states that "nothing in this title shall be construed to alter, amend, modify, invalidate, impair, or supersede any law of the United States." Title VII is a "law of the United States." Since Title VII specifically preserves nonconflicting state laws, the Court in Shaw interpreted � 514(d) as dictating that ERISA only pre-empts state laws that prohibit practices that federal law permits. (Stated differently, if the discrimination prohibited under state law is also prohibited under Title VII, such claim is not pre- empted by ERISA.) The Court reasoned that given the importance of state fair employment laws to the federal enforcement scheme (for example, Title VII's requirement that initial recourse be made to state administrative remedies when an employment practice prohibited by Title VII is alleged to have occurred in a state or locality which prohibits the practice and has established an agency to enforce that prohibition), pre-emption of such state laws would impair Title VII to the extent that the state law provided a means of enforcing Title VII's commands. Conversely, the Court concluded that insofar as state laws prohibit employment practices that are lawful under Title VII, however, pre-emption would not impair Title VII within the meaning of � 514(d).

As noted by the ALJ, under Shaw, it might seem that under � 514(d) this case should not be pre-empted since Title VII, like the Wisconsin Fair Employment Act (WFEA), has a protection against retaliation. As the ALJ went on to note however, Shaw concerned an allegation that the terms of a benefit plan were themselves discriminatory against pregnant employes, which was not an issue that came within ERISA's civil enforcement provisions. In contrast, Reich's contention is that he is entitled to disability termination benefits under the plan, properly interpreted, a claim that ERISA enforcement provisions provide an exclusive remedy. See ALJ decis., p. 2, fn. 3. As the Court stated in Shaw, "ERISA does not mandate that employers provide any particular benefits, and does not itself proscribe discrimination in the provision of employee benefits." 463 U.S. at p. 91. (Emphasis added) Under the civil enforcement provisions of � 502(a), among other things, a participant or beneficiary may sue to recover benefits due under the terms of the plan, to enforce the participant's rights under the terms of the plan, or to clarify rights to future benefits under the terms of the plan. Sec. 502(a)(1)(B). Under � 502(a), a participant or beneficiary may also sue to enforce the terms of the plan. Sec. 502(a)(3)(B).

A further exception to � 514(a)'s pre-emption provision, not relevant here, exempts from ERISA coverage employe benefit plans that are "maintained solely for the purpose of complying with applicable workmen's compensation laws or unemployment compensation or disability insurance laws." Sec. 4(b)(3).

On appeal, the complainant asserts that " It is.his contention that his state law claims alleging discriminatory retaliation by the Respondent should not be preempted by ERISA. While the result of the discrimination is that Complainant has been denied his pension benefits, the ERISA statute does nothing to address the discriminatory motivation on the part of the Respondent." (1 ) The complainant's assertions fail. The express pre-emption provisions of ERISA are deliberately expansive, and designed to "establish pension plan regulation as exclusively a federal concern." Pilot Life, supra., quoting, Allessi v. Raybestos-Manhattan, Inc., 451 U.S. 504 (1981). Further, the merits of Reich's ERD claim depend entirely upon what constitutes a "proper" interpretation of the respondent's pension plan. As noted by the ALJ, in Buckley v. Arcadian Corp., 790 F. Supp. 643 (M.D.La. 1992), aff'd, 977 F.2d 578 (5th Cir. 1992), it was concluded that the plaintiff's state discrimination law claim was pre-empted by ERISA because her claim was directly related to and intertwined with the denial of her benefits under the plan, for which she had a remedy under ERISA. Finally, as noted by the Court in Pilot Life, Congress intended � 502(a) to be the exclusive remedy for rights guaranteed under ERISA, stating that:

".the detailed provisions of � 502(a) set forth a comprehensive civil enforcement scheme that represents a careful balancing of the need for prompt and fair claims settlement procedures against the public interest in encouraging the formation of employee benefit plans. The policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA. `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.' "

481 U.S. at 54 (quoting Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985).

The Court in Pilot Life then went on to note that the legislative history of the civil enforcement provision demonstrates that the pre-emptive force of � 502(a) was modeled after � 301 of the Labor Management Relations Act of 1947 and that:

"Congress was well aware that the powerful pre-emptive force of � 301 of the LMRA displaced all state actions for violations of contracts between an employer and a labor organization, even when the state action purported to authorize a remedy unavailable under the federal provision. Section 301 pre-empts any `state-law claim (whose resolution) is substantially dependent upon the analysis of the terms of an agreement made between the parties in a labor contract.' "

Pilot Life, 481 U.S. at 55 (internal quotation omitted).

Based upon all of the above, the commission affirms the ALJ's decision dismissing the complaint in this matter.

cc:
Monica Murphy
Lawrence C. Hammond

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Footnotes:

(1)( Back ) The case file shows that while Reich's case was proceeding before the ERD, Reich filed a federal court action seeking relief under ERISA.